Well, it looks like the deflationary trap may be here, with the CPI down 1% last month, and core CPI falling 0.1%, the first drop since 1982.

The fact that housing starts and requests for building permits are falling off reinforces the idea that we are heading towards a major downturn.

Of course, it’s not just residential real estate. We are now seeing that mortgage backed securities for commercial properties are seeing increasing insurance costs and delinquencies.

In the larger world of the credit crunch, Calculated Risk’s Credit Crisis Indicators are largely unchanged.

BTW, S&P has downgraded monoliner bond insurer Ambac again.

In energy, oil fell again, on high inventory reports.

In currency, the dollar fell in response to continued news of a recession.

Let’s see…Anything else??? Oh…Yeah, the Dow closed below 8,000 for the first time in 5 years, 7,997.28.