The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: GraceZ who wrote (6544)	11/3/2002 8:30:39 PM
From: reaper	Read Replies (1) of 306849

<<How could this possibly be viewed as a negative development? >> well, when a large portion of the American workforce draws their paychecks from dinosaur overcapitalized US companies / industries (telecom wireless and wireline; auto all down the food chain; airlines. insurance companies are quickly falling into this bucket, as is investment banking / trading, and in one person's humble opinion the real estate sector will be there soon enough. i'm not sure how this is NOT a negative development. companies that need money can't get it. Ford is being largely shut out of the normal syndicated loan and public debt markets, and is instead relying more and more on asset-backed paper. Sears is doing the same. Even small broke-dick companies like PSS Worldwide Medical are doing it. while this seems like a free lunch, it of course isn't as the asset-backs have a preferred/senior claim on the assets of the business, which further subordinates normal loan/debt holders, making conventional (i.e. non-structured) finance even more expensive. the fact that Microsoft has abundant liquidity is beside the point. Microsoft's liquidity is no more relevant to the economy than is my liquidity. What matters is the liquidity of the marginal borrower, and it is slipping. that is unequivocably not good. btw, i'm still looking for some more 8-10 P/E stocks to short. any ideas?? Cheers

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