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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Zeev Hed who wrote (82735)6/21/2002 10:07:10 AM
From: Earlie  Read Replies (2) of 99280
 
Zeev:

As I noted earlier, we will be on opposite sides of some issues, and this is one of them.

I don't know which process we eventually utilize as we move into a depression, but that is where I think we are going. Over a cliff (crash) or gut-wrenching multi-year "grind-down? Who knows, but a full-blown debt catharsis is the destination to my mind.

I think there is just one item standing between us and a full-blown depression and that is the fannie/freddie refinancing madness. That game is the thing that keeps the consumer buying and we are of course at the point where the economy is completely dependent on consumer spending.

Take a look at the percentage of family income that is now required to support the home mortgage. It has darned near doubled over the last few years. Lose one job in a two job family and that mortgage is in trouble. Note also that the number of mortgages that are non-performing is climbing fast. Way up over anything we have seen in the past (and that even as lay-offs accelerate!). I also think your $60,000 figure is low. Both the actual dollar figure as well as the percentage of total home purchase price have risen dramatically over the last few years. The percentage of actual home equity retained by a family has also been falling for a many moons now.

I hope that you are right in your view, and I fervently wish that it is just an "adjustment", but the big picture stuff suggests worse to me.

Best, Earlie
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