After seeing more data today, I predict the US economy will be into a recession by the first or second quarter of 08. I believe this recession will last at least 2 quarters, possibly up to 4.

My reasoning is this: The US GDP is driven 2/3 by consumers and 1/3 by business. The consumer has propped up the GDP for the last few years by spending both 100% of his earnings (93% of americans live paycheck to paycheck) plus the increasing equity in his home. Homes were appreciating at an average rate of 10-20% on average (much higher in some areas) and americans were spending all of their new found wealth. They remorgaged their house thanks to those ubiquitous teasers on the WEB that offered lower monthly installments. They used this money to live a better life but were living way beyond their means. Now, over the last 12 months, not only do they not have this extra money available from increasing equity in their homes, they have less equity in their homes. About 13% less equity. So they have to learn to live on lower revenues and at the same time their mortgage rate increases. Personal spending power is quickly eroding. Gaz prices going up adds another hole in their wallet.

Businesses are also starting to see the extent of the damage caused by the greedy mortgage companies. Banks are taking it on the chin but companies like Home Depot (27% lower earnings) and Loews (10.2% lower earnings) are not escaping this awful mess.

GDP will be the ultimate witness to how damaging this fiasco will be and a recession is in the cards IMHO.

Thanks to emerging markets, the world economy will not go into a recession but may see a protracted no growth period of 2 to 6 quarters.

I hope I am wrong on some of these predictions and please feel free to give me feedback. However, only time will tell how the US economy survives this macro-economic mess.

Luckily for us NOT longs, the world will still need nickel, copper, PGE...Thanks to China and India...