Booms, Busts, and Recoveries Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Mark Adams who wrote (11691)	12/7/2001 6:16:52 PM
From: Ilaine	Read Replies (1) of 74559

No question but that debt has a deflationary tendency all by itself. If someone is able to service the debt out of cash flow, no problem. If that person loses the ability to service debt out of cash flow, he/she is forced to sell off assets. It's called a "fire sale." Or maybe the debtor doesn't sell the assets, and the creditor gets a judgment and then sells the assets, e.g., foreclosure. Same difference. Fire sales and foreclosures rarely (never?) get the fullest, best price for property. The debtor is better off selling cheap than going through legal proceedings because there are additional costs involved. But unless you are able to pull the wool over their eyes, buyers sniff out forced sales and then they stonewall until the price comes down. Similar situations occur without the additional ratchet downward of forced sales and legal proceedings. If you are in dire straits, you can't hold out for top dollar, you have to take the first credible offer. Therefore, (unserviceable) debt causes deflation.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next