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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ild who wrote (86665)3/28/2001 11:07:07 AM
From: pater tenebrarum  Read Replies (2) of 436258
 
i doesn't give me any doubts, at least not yet. consumer sentiment graphs tend to follow the Elliot Wave Principle too, i.e. the primary trend downwaves are going to be interrupted by corrective up-waves from time to time. all my analysis of US household debt points to the most financially stretched consumer in human history, who has in addition seen his net worth evaporate at an astonishing, and unprecedented pace.
in the last significant recession in the mid 70's, the savings rate rose from insignificant levels to very high levels very quickly. so the US consumer is no stranger to retrenchment when circumstances warrant it.
and they do warrant retrenchment now. already mortgage and credit card delinquencies are rising sharply, and the latest refi bout (which as usual extracted even more equity from homes, the prices of which are bloated by a real estate bubble that is the next in line to burst) will be deeply regretted by many imo.
the pace at which the consumer has lately accelerated his dis-saving habit suggests to me that many people are engaging in Ponzi finance to merely pay their recurring (and sharply higher , e.g. energy and medical/insurance costs) bills, and maintain their living standard, while hoping for the stock market to recover.
at some point disillusionment will set in, and the savings rate will repeat its '74 feat, and actually begin to rise. this is necessary for the economy's long term health, but it will serve to sharpen the near term pain and corporate earnings will continue to deteriorate as a result.
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