All Clowns Must Be Destroyed Message Board

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Pastimes : All Clowns Must Be Destroyed

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To: SeaViewer who wrote (29533)	4/26/2000 9:48:00 PM
From: pater tenebrarum	Read Replies (1) of 42523

rest assured, in a deflationary collapse, labor costs won't go up anymore. in such a scenario unemployment would rise to the point where wage demands would moderate in favor of job preservation activities (suck up to boss, etc....). i still think it's possible that the credit excesses in the economy could lead to a total reversal of fortunes once a slowdown begins. already default rates in below investment grade debt are at a record. so are personal bankruptcies. the interlocking house of cards in the form of derivatives is as of yet completely untested in recessionary conditions. we will see, but i wouldn't rule out a systemic shock that damages confidence to the extent that people begin to save and stop spending and consuming like there's no tomorrow. all the players in the leveraged financial games are dependent on their counter parties staying afloat and solvent. once one or two big players are with their backs to the wall, the dominoes will begin falling. that was really the reason why the Russian crisis and LTCM scared the be-jeezus out of everybody. it looked for a while as if the house of cards was going to collapse.

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