Ice/Gottfried - Thanks for the re-assuring thoughts. I wonder,
however, if some of them cut both ways?
<...Another factor that would cushion any shock to the
financial markets is today's widespread use of credit cards...>
American consumer (personal) debt is at an all time high...
The money going out to cover this reduces investment inflows.
And personal bankruptcies are also at an all time high.
Whilst you may not notice a direct effect on the market *today",
this certainly has an indirect effect on our market *tomorrow*.
During your MBA studies, you may recall that one of the key
Intermediate MacroEconomic principles is how personal debt
reduces capital injection inflows into our economy. It is
a leakage that drains savings/investment capital. I would
prefer to see overall consumer debt decline to a level of
about 6-8%, as I have not yet developed a taste for tomato
soup (chicken noodle is not so bad). Witness the Fed bailout
of the S&L scandal from a few years ago, and you'll realize
that "my debt" could, under circumstances unforseen to you,
can become "your problem".
<...Another factor that would cushion any shock to the
financial markets is our current communications technology.
Money moves around the world at the speed of light today...>
This doesn't reassure me either. World markets and economies have
a domino relationship. Those remarks last month from the
Japanese official regarding our Treasury securities affected the
bond market in hours. So the speed of light seems more like a
hatchet rather than a bandage. If I recall correctly, the bond
market went to hell in hours and by the end of the day, the
Japanese official issued a clarification to stave off further
damage. Perhaps I should start developing a taste for Shark Fin
soup as well, (although with the current price of shark fin, I
don't think we'll get much should a collapse occur.
<...I agree with GM's obversations...>
I think Gottfried made some very good points about the
'survivability' of such a calamity. I do get some comfort
in this. His past experience credits his case very well. Still,
by his own admission, his resources 'potentially' allow him to
come out of it in better shape than, say, ME!
I not preaching doom and gloom for our economy. But I am
concerned that the global interdependance of the world's
economies, factored with a US stock market that 'appears'
to defy the law of gravity, is forcing me to ask "What's
the ticker symbol for Campbell's?"
-MrB
"This message brought to you by: an x2" |
