Well we had a credit crisis in August, but the Fed came to the rescue. The subprime market is nonexistent. And the housing market is in free-fall. But the economy is weathering the various crises quite well. Wasn't the GDP at an very high 4.9% last quarter, when we were in the middle of the credit crisis? And Abu Dhabi injects $7.5 billion in capital into Citigroup, setting the market's mind at ease. All iseems well. So lets party!

However, I think when we look out the window from the lofty market heights, we see a few fire trucks starting to gather, and those sirens are telling us that more are on the way. There is smoke coming from the building. Attention must be paid. 

An increasing number of well-respected analysts are suggesting that a recession is either already starting or will soon be here, and the list is growing every week. The Economist predicts a recession is highly likely. Jan Hatzius of Goldman Sachs forecasts a recession and that the growing credit crunch will reduce lending by about $2 trillion (that's with a t, thank you).

The normally bullish Richard Berner of JP Morgan writes: "Risks to the consumer are rising, and the risk of outright US recession is higher now than at any time in the past six years: Housing is in sharp decline, consumers are vulnerable, and companies may cut capital spending and liquidate inventories. A strong contribution from global growth is still a huge positive, but spillovers from US weakness to trading partners may hobble that lone source of strength. These pressures could last longer or be more intense than I expect. And even if the economy skirts overall recession, corporate earnings will likely decline."

So the fire trucks gather, the Fed, ready to lower rates and the Banks pumping in money to stave off impending doom!