Are we headed into a recession? Will there be an unwinding of the past few years? Has household debt and home prices gotten too high to be sustained?

Recent WSJ articles points out (a) a panel of economists now put recession odds a 1 in 3, (b) history shows that we dont recognize a recession until many months after it has started.

September is almost over now but at the start of the month, I predicted this would be the month. If its gonna happen, it will start now.

Apparently September has a history as a down month but that is trader lore. The important thing is that September marks the end of the quarter.

So much of the market hysterics the past two months has been about mortgages and uncertainty. Once accounting periods end, companies will be forced to disclose their loses and their liabilities - that will end some of the uncertainty. (I say "some", because if things look bad, companies will do whatever they can to cover it up.) We have already seen some fallout in the US, Britain, and Japan.

This week the Fed will decide whether to cut the Fed rate and several wall street firms will announce their quarter results. Wall Street is begging for a rate cut. Will the Fed bail them out?

Of longer-term significance, this month the government started to get into the act. SEC investigations of the bond rating agencies could lead to more unpleasant disclosures about banking collusion and a need for reform. Senators are also talking about how to help families that were taken advantage of while not helping investors and businesses that took huge risks. With tens of thousands of job losses in the mortgage industry already, we could see a return to mortgage practices of the past.

And to top things off, Greenspan released a book and did an interview on 60 Minutes - where he lambasted the Bush administration and their financial policies. *ouch*