Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	1/4/2002 6:29:37 AM
From: Baldur Fjvlnisson	Read Replies (2) of 74559

So, what's supposed to drive the "recovery"? Consumer demand? Well, this holiday season was basically ONE BIG SALE, discounts on top of promotions and discounts on top of that. Consumer debt is at a record high and the labor market is crumbling. Household earnings are in decline. Everything from computers to automobiles comes with zero% financing now. Is that indicative of demand pressures? Right. Capital spending? As some here may have noticed; tech Co's are saddled with tremendous overcapacity, for example DRAM has been sold at below cost for months. The reason? Probably stone dead demand. Corp. debt is at a record high. What's the use of restocking inventories when demand is dead? It may sound strange - and some Einsteins out there will probably be quite shocked - but it's actually rather difficult to find businessmen dumb enough to borrow capital to build unneeded capacity or to buy capital goods in the face of a crumbling labor market. So, where's the recovery supposed to come from?

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