I've thought some more about the housing bubble. It seems to me that Bendites were much more vigilant six months or a year ago, when the national statistics first started coming in and it first became apparent the boom was slowing, than we are now. So now we think we've internalized the fact that there is a slowdown, but nothing seems to have really changed. We aren't really feeling it.

I compare it to the moment in the horror film, when the character is certain that there is something dangerous out there, the tension builds.....and a cat leaps out. Of course, the character relaxes. And THAT'S when the monster jumps out.

I was leery of the sport card boom almost from the beginning. Four years into the boom, 1988, the worst happened, though it didn't become obvious for a couple more years. The cards started showing up in the chain stores, I started to get competition from other shops, it didn't seem like cards were all that hard to get anymore. Supply had caught up to demand. Some of the early collectors were starting to drop out.

I held my breath. Nothing happened. Sales stayed strong. Two more years went by, and I decided I was wrong. Sports cards were for real.

THEN the monster jumped out. By then, I was so over extended, that I got caught flat footed.

I try not to get too far ahead of myself, these days. That's one of the reasons I do so much reordering, instead of ordering it all in advance where I could get an assurance of supply and a better price. Because if more than half of my material is coming in on a weekly reorder basis, more than half of my material can be left unordered if needed. It's the major reason I've kept my credit borrowing to a minimum, why I've tried not to borrow too much money off the equity of the house (though I did borrow some), and why I've tried not to increase the overhead in the downtown store by hiring more employees, or buying a P.O. S. computer, or moving to a bigger, splashier place, or advertising.

Remember, break-even is: FIXED EXPENSES, divided by the % of profit margin, equals gross sales. The lower the fixed expenses, the higher the profit margin, the easier it is to reach.

I have no doubt I could push sales higher, by increasing my fixed expenses and lowering my profit margin, but if there was the slightest slowdown, I'll be stuck.

I think we are in the very dangerous moment. I know this intellectually, while emotionally, I'm not quite ready to accept it. Everything I see and read leads me to believe that we are in the same place as sports cards in 1988. The slide has already begun, but not enough information has been released, those in charge of the information are still able to distract us with words; with smoke and mirrors, and we aren't feeling any pain yet. No one we know has lost their job, though a few people have had their hours cut. It just doesn't seem all that bad.

But I can look at the slowdown in housing starts, the lack of good paying jobs, the fact that some of my major customers are in the building business, that prices have gotten so high that we are pushing our luck with out-of-towners, that other places in the country that used to be growing as fast as us (Florida and Las Vegas) are hurting, and that the prices are starting to soften. On a scale of 1 to 10, we are at an 8 in warning signs. We're probably already hurting, but the pain hasn't quite reached our brains yet.

O.K. I think I've convinced myself. Because that's what it takes. The prevailing mood is almost impossible to break through, which is why these booms keep going long after everyone knows its a bit crazy, and why the downturns are so painful and hard to turn around. I can't emphasize the importance of psychology in all this. It may become difficult to sell a house at ANY price, and at some point, prices will stabilize but sales may stay stagnant. I shudder to think of all the real estate, builders, loan companies, title companies, etc. etc. employees we have around here. I cringe at the number of businesses that I think are being supported by the boom town mentality (either as equity businesses, or as businesses that cater to the boom).

And all those rich folk who think Bend is so great? Given the slightest smell of desperation, and they'll move along, with all those people who cater to them.

It may not happen. I think it will. I hope I'm wrong.