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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Hawkmoon who wrote (2208)	11/11/1999 12:38:00 PM
From: Skeet Shipman	Read Replies (1) of 3536

Ron,The opposing argument: I think spending above income is limited by the depletion of spendable savings, non-retirement account savings, and a level of accumulated debt as a multiple of income. Aggregate statistics are misleading in this area. Household quintile data shows a more constraining picture. The argument that asset appreciation justifies excessive household debt could have been used by the Japanese in their bubble. Debt pay-back periods and the percentage debt /assets are forms of this rationalization. Since corporate earnings and employment are functions of spending growth, once we reach the point spending is constrained by income growth, the boom is over! and the crisis has begun! In my opinion, this will occur long before demographics predicts because of the above reasons. (Our present situation is no different than the past housing booms and busts.) Skeet

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