Getting more short ETFs

Continuing to add to my short ETFs this AM

UltraShort Russell 2000 (TWM)
Ultrashort Financials ProShares (SKF)
Ultrashort Real Estate Proshares (SRS)

US Home Prices fell 3.2% in the last quarter - and I still think we are in the 3rd inning of this game. A lot of stubborn home owners who have held firm on their prices, but as each month passes the cost of owning 2 mortgages or for the speculators, the cost of capital to own a mortgage you didn't mean to own for the long term only grows. Inventory numbers yesterday were 9+ months worth of housing supply. And now we are returning to a more normalized (pre 2002) set of buyers available for these homes, and suddenly homes that are $400K are no longer 'affordable' to almost anyone. Certainly not the teacher/accountant professional couple who SHOULD be able to afford a home in America.

Also saw a news report today that American consumers are now defaulting in larger number on their credit cards. Per CNNMoney:

• American consumers are defaulting on their credit cards at a sharply higher rate compared to last year, in what could be another consequence of the recent subprime mortgage market crisis
• In addition, late payments are also up, cardholders are showing signs they are less willing to pay and credit card companies have written off 30 percent more payments during the first half of this year versus a year ago
• "The combination of higher interest rates and a softer real estate market diminished the attractiveness of mortgage refinancings in which many borrowers reduced their more expensive credit card debt by drawing on the equity in their home," Moody's told the paper.
• At the same time, Moody's said that the people defaulting on their credit cards may not be the same individuals defaulting on their subprime home loans. The agency cited stricter underwriting standards in the credit card industry and the fact that borrowers with little or no equity in their homes may choose to default on their residence before giving up their credit card, according to the paper.

I saw a similar article about 4 weeks ago in relation to people are paying their credit cards BEFORE their home mortgages. This is a new phenomonan in our overextended, credit at all costs society. With the advent of all these 0% down, closing costs rolled into principal mortgages, people have little incentive to pay their house payment when they know they will be kicked out soon enough. So they are essentially renting for free until foreclosed and kicked out. Also the article cited that credit card companies collection agencies are much more aggressive since in general pre 2002, most mortgage buyers actually paid their mortgages except in case of job loss/medical catastrophe etc. What is different now is people are still employed and there is no new emergency in their life - aside from the fact their rates are going to reset and they have no equity to draw down on their homes to continue extending out the inevitable. So why pay at all? That seems to be what is happening.

I know this was all forgotten the past week and half because the Fed will cut rates by 25 basis points on Sept 18 but really, this won't matter one iota to these people who are turning more upside down on their homes by the week. As you can see, I am extremely bearish on this for the foreseeable future. Anyone thinking this will all be cleaned up by Jan 2008 is fooling themselves. Eventually the issue will be somewhat contained but not even close yet. These are not new theories, but I just think the market is still glossing over the risks... maybe because most of the market think is in NY where housing pressure has not really hit as much as in other parts of the country....

TWM is now nearly 5% of the portfolio, SRS and SKF 3% each.

Long TWM, SRS, SKF in fund and in personal portfolio.