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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Earlie who wrote (258206)	9/1/2003 2:46:45 PM
From: Tummus1	Read Replies (1) of 436258

Earlie I completely agree with your assessment. I kept a copy. To the various points you made I might add the following: -Mortgage refinancing has been keeping the economy afloat of late. That is ending and all of that cash is drying up. American’s have been turning their equity in to debt. How many people refinanced and put their cash into the stock market? At the top. -If the bottom were in then historically at this point household debt should have declined to reflect the realignment in people’s priorities. This beggining to happen but it has a way to go I think. -If the bottom were in then historically real estate prices should have declined by now from their top. They are now at a peak. This is unprecedented but analysts will tell you that’s a good thing. I doubt it though. -The last 12 months were the worst 12 months on record for personal bankruptcies. Maybe this is a lagging indicator (like unemployment). Buts its funny how all of the bad news items are conveniently lagging indicators. -How is it that California, the world’s 6th largest economy, is turning into a train wreck and no one seems to notice or care? -I believe that there is something not right with the Fannie Mae/Freddie Mac situation. The shakeup in the leadership at Freddie Mac may only the tip of the iceberg but I think that there is more going on than meets the eye. Warren Buffet warned in one of his news letters to shareholders that the derivatives that Fannie Mae/Freddie Mac are involved in are “financial weapons of mass destruction” that could bring down the whole economy. I am not saying this is likely but just having that statement hanging out there should give anyone pause. Also see these links: bayarea.com marketwatch.com On the geopolitical front, your points on Iraq were the most significant and likely. But I think there are additional issues, (that are more wild cards) that could bring down the economy hard. Again just having them out there should be unnerving to those who believe the worst is over. They would include: - A new terrorist attack on the US. This is actually likely and obvious but people just shrug it off. No one can predict the effect on the market if a jetliner (or two) is shot down over Miami. - The fall of the Saudi Royal family. There are experts who say it is inevitable. It may not happen for a long time, but hey nobody predicted the fall of the Berlin Wall , it just happened one week. - N. Korea’s nuttier than a fruit cake. Tummus1

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