<<victor, you are right about folks spending up their equity. i know a guy who took $40k out of his equity and bought qcom at $100. he was not alone.>>
I know of a guy who took his "savings" as well as some savings from his family memebers, and started Amazon.com !! Now instead of "savers" they call themselves "insiders" ! <gg>
And I personally know a couple who use every penny of their savings, along with loans from family, to buy $500k houses and rehab them and sell them for $800k. So they show up as lousy savers, who are not "with the progam" !
<<my assumption is that the savings rate will revert at least back the historical avg, as will debt, thereby constricting demand in the future. if you look at both savings and debt, we are in outlier regions and i don't see anything fundamental that has changed for good. i do see a stock market staring down disaster. NEVER in the history of the world, has a BUBBLE been sustainable. not only that, they invariably end in disaster. that disaster, imho, will casue folks to tighten their belt, furthering the disaster.>>
Some rules need to be changed, maybe car loans and credit cards should be harder to get, and definately brokerage account margin levels should be tightened.
I think a lot of folks will be affected to varying degrees, by the market drop and the slowign economy - some affected very little or not at all. The ones to be affected most will be the ones who got too carried away with thinking that the bubble was real, and assumed that the economy for the next five yrs would be just as good as the last five years. |
