We have been calling for an ugly end to this speculative, credit-backed, social mood peak, fiat paper fueled, crazy borrowing and lending environment, boosted by ultra-easy money for some time. As the thing rolled on it simply got more and more insane, more and more leveraged, and more and more based on shoddy fundamentals, really an economy moving based on the weight of increasing speculative leverage. The party simply continued to get more excitable based on drunken leveraging of already questionably valued assets.

It appears as though the turn in broad market sentiment is starting to hit full bore, and in very rapid fashion I must add.

It is hard for me to even write a concise post on the subject because their is so much coming to the forefront at once, but, to put things simply, a lot of people are saying “Oh, shit…” at once right now. It’s what happens when social mood comes down from insane peaks of exuberance and ignorance of fundamentals and market history.

Before I bore you with my overly verbose prose, be sure to check out the following insightful articles, some mainstream, some not, which point out the increasing awareness on the part of a variety of market participants that now may be a time to batten down the hatches.

First, Mike Shedlock’s commentary on massive bets being placed on fools.

Then, the article “Mish” references, highlighting the fact that people made a ton of money betting on fools.

Then, a nice summary of the lack of insight of modern economists forecasting consumer spending, provided by the venerable Paul Kasriel. As asset values contract, be on the lookout for significant consumer retrenchment in our negative savings environment.

Also, two mainstream analyses from soon to be Rupert Murdoch-owned CBS Marketwatch (yuck, time to get a new site to visit for mainstream news, Murdoch and his Fox News posse are a joke). David Weidner writes on the reality that any deal was fair game, regardless of the lack of credit of the borrower (why???). While Paul B. Farrell wonders which of 20 valid reasons will befall the long-in-the-tooth equity markets.

Oh, and the 10th largest mortgage provider now teeters on bankruptcy after missing margin calls. Similar to the Bear Stearns fiasco, mortgage issues are laying waste to mucho capital.

At the end of the day, the day of reckoning is one day closer.

Filed under: Social Mood, Economics