<<As long as employment remains high, debt will continue to increase, and
deflation is no threat.>>
Terry, This is an assumption that is stated so often it seems to have become the eleventh commandment. On that basis alone I find it suspect. The combined effects of debt saturation and asymmetrical wealth response can go into play even while the average person is in relatively good shape. People who feel they have lost something as the market drops, and who already have mortgaged their futures are likely to step lightly, even in the face of reduced interest rates.
If the average consumer pulls back, who is going to go to the table to eat more pie? Not the government at the moment. And many businesses are getting knocked around in the first stages of a slowdown. Belt tightening is not the time for more pie.
My feeling is that the market is trying to ignore its source. Still trying to claim it IS the economy, and all the bad news is just for the folks who drive to work in the morning. The players, the real economic movers, can ignore that mundane day to day stuff.
I do not know how many times they can ramp up the curve, or how many rumors of Big Al and his committees pending action can be floated, or how many more times real bad news can be bought into. But its like the guy on the beach in Lanikai Hawaii. After fighting the surf erosion for years, he finally knocked down his home and abandoned the million dollar property. The ocean finally won, it generally does. |
