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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Maurice Winn who wrote (6388)7/29/2001 12:57:25 PM
From: LTK007  Read Replies (1) of 74559
 
<Max, the Nasdaq halved and while that meant financial disaster for huge numbers of people, in the broader viewpoint, there was no major problem. Instead, USA production and employment continued almost unabated in Y2K and Alan had to keep turning the screws to squeeze the economy down.>i have been studying leveraging by the u.s. consumer and they are now at a level that is equivalent to mass margin calling danger if market does not behave well.They have gotten around the stricter margin laws that we now have versus 1929,via dangerous to the max credit usage and mortgage refinancings.
One big aspect of the consumer maintaining spending this year has been a wild rush to turn house equity into cash,which many have been then been spending or putting in the market on an average down basis.(the average for house holder ownership of their homes has dropped precipitously from 85% to 56%)
In short,today many investors are as acutely vulnerable as in 1929-1933 disaster.
A halving of the indexes would set off crisis indebtednesss by millions of people,and forced redemptions/liquidations would become like the proverbial snowball rolling down a lengthy mountain snow slope.
In short an avalanche could well erupt.
I again repeat i see many of the U.S investors in the single greatest over leveraged status perhaps in our history,this is huge factor regards future events.Paxmax
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