As frequent readers of the Toomre Capital Markets LLC ("TCM") Insights section are aware, Lars Toomre has been vacillating about the magnitude and duration of the economic slowdown that can be attributed to the decline in United States housing prices. Another hard data point has emerged that suggests that the economic slump may be more deep and prolonged (like certain members of Federal Reserve Board of Governors were worried about as reflected in the minutes of their March 2008 meetings).

On Monday April 7^th 2008, The Los Angeles Times ran a story entitled Idle Cars Signal a Downturn which details how "The nation's top hauler of container rail freight, BNSF Railway Co., is parking miles of rail cars in Montana and elsewhere because there isn't enough freight to keep them rolling." These are not just a few cars either. Apparently Burlington Northern Santa Fe Corp., has parked upward of 1,000 cars in Montana alone, spokesman Gus Melonas said. More are parked in other parts of the company's 32,000-mile system, which operates in 28 states and two Canadian provinces.

"There's been a downturn in international business and therefore this equipment is not necessary at this point," Melonas said. The cars standing between Helena and Great Falls, Montana constitute 5% of the BNSF fleet, Melonas said. He declined to say what percentage of the fleet was parked elsewhere, citing confidentiality issues.

After the 80,000 decline in U.S. monthly payrolls for March (and substantial downward revisions to the two previous monthly tallies) as reported on April 4^th 2008, there is considerable talk about whether indeed the United States is now in a recession. There also is considerable variation in how deep and how long such a recession period might last. As Toomre Capital Markets LLC ("TCM") attempts to make sense of these various forecasts, Lars Toomre is again reminded of a quote from Kelvin Throop III: Isn't it interesting that the same people who laugh at science fiction listen to weather forecasts and economists?

TCM is now wondering whether some of today's extreme economic downturns are not indeed science fiction. The United States economy is incredibly resilient. While there definitely is a downturn expanding throughout the upper mid-west states of Ohio, Indiana and Michigan, and there is a housing decline that is particularly acute on the perimeter states that experienced extreme housing increases in the last dozen years, total unemployment remains around five percent. As long as people continue to have jobs, there will be some spending and eventually the consumer sentiment numbers will improve.

The key question TCM is reflecting on is what happens if the consensus about projected amount of foreclosures proves to be wrong. The current consensus is that the total number of foreclosures will be close to 1.5 million. There are projections out in the investment community that foreclosures could total as much as four or even five million residences. If there latter projections come true, the United States definitely will slip into a recession that is extremely deep and prolonged.

In short, how does one get one's mind around foreclosure forecasts? And just how important is this emerging phenomena called "jingle mail" to this credit crisis? Reader thoughts and comments are welcome.