A quick commentary for tonight and then more over the weekend.

First I need to address the housing starts data from this morning. The headline number was a gain of some 8%, sounds great, and the media went to town with it. However, it was nothing to get excited about. On the contrary, it showed that single family home construction is still declining. The reason for the increase in the top line number was the amount of new starts on apartment complexes and other multi family type dwellings which increased a whopping 40%.

So let us think this one through. Home builders can’t sell single family homes, the market is saturated with existing homes up for sale along with new homes sitting empty that the builders are still trying to unload. The economy is getting worse on rising inflation, rising unemployment, and banks and mortgage companies have tightened up their loan criteria for home buyers. So what is a home builder to do if they want to stay in business? They build apartments, that’s what.

In the coming 2 to 10 years, the growth of renters will accelerate as less people will be buying homes. The housing bubble will not correct over night, home prices will not suddenly bottom and people will buying them up left and right. No, the housing bubble burst has left a bruise in the entire housing industry and one which will take over a decade to resolve completely in my view. And that is being somewhat generous in my assessment for the economy is going to remain at a snails pace of growth for some time to come.

The "American dream’ of owning a home turned into a free for all with the sub prime lending. But that is gone, and in its place will be a rise of renters again. This is an economic shift in the country, and it will not go back to being what it was just a few years ago. Home ownership will continue to decline for some time to come.

The level of disagreement by the so called professionals as to whether the market is going to new highs or is going to new lows remains at high levels. Jim Cramer just a few weeks ago had proclaimed that the bottom was in and that was all there was to it. Tonight, Mr. Cramer has adopted a neutral stance on the market having hit bottom or not. I think even Jim Cramer is coming to understand that the economic conditions may have an impact on the market. Duh… you think Jim?

It was interesting… Jim Cramer said he had lunch with his old boss from Goldman Sachs today. Perhaps he and his buddy at Goldman discussed the markets and the economy and Mr. Cramer is seeing trouble ahead? This morning Goldman Sachs downgraded the entire retail sector on the deteriorating economy and rising inflation. Across the street analysts at Citigroup issued buy ratings on retail stocks. Wow, these pros can’t even get in sync with each other, so why should we believe them when they pump the markets?

You know something, this is nothing new. It is a repeat of 2000/2001 all over again. How well I remember the financial shows calling the bottom, the analysts calling for ‘great opportunities’ to buy, and on and on. It is scary to be witness to this same talk all over again. Think for a minute, over the past 8 months of this crisis how many times have you heard someone in the media tell you "This looks bad, we can’t say how bad it will become, better be safe and pull your money out of the market to be on the safe side"? Anyone tell you that on TV? No, and they did not do that in 2000 either. The only ones who would make such claims were the independent analysts. And they were ridiculed for it. Same thing is happening this time.

Last night someone crawled out from the woodwork and left a comment on our site that we were essentially wrong in our thesis of the market and economy. The last time that person left a comment like that on our site was last December, just before the market nose dived. Well, I take it that he left another comment again as a sign of another nose dive coming… LOL

Lisa and I are sticking to our thesis, and it will remain that way until we see positive evidence of the economy turning around. But, that has not happened yet. And has only become worse.

I will have more over the weekend, but I’ll leave you tonight with a chart that our member "Steve" emailed to me tonight. Again great work Steve.

The chart is a side by side comparison of the bear market the began in 2001 to the bear market we are in now. They are strikingly similar, but what is much more important here is that at this same point in time in 2001 there was just as much bullish ‘buy,buy,buy" calls as we are having now. Back then the calls by the media and analysts were much more bullish. At least this time there is some disagreement, but the overall sentiment is bullish by the media. And once again it is up to us independent analysts to say it like it is. Our only agenda is to speak the facts.