if you look at the stories that CNBC runs, they would cut you off after 10 seconds if you started saying people should buy good stocks and let them eventually get noticed, as of course they need people to watch every minute, every day, and your strategy DARES to suggest that people could actually turn off their computers and TV's for days on end and still make money <g>
they just had a guy on from the NY fed who presented some interesting data showing that while total household debt has increased in the past several years, to a record high as widely reported, people who took cash out of their houses in the recent refi boom actually used it to pay down other debt, and to make purchases that they would have made with higher cost debt or with money they took out of other assets (i.e. selling stocks or funds), so the overall purchases of "toys" didn't increase any more than it does in any normal year, and in fact the data supports the idea that people were actually very fiscally responsible with their money
another point that they made is that credit card debt as a % of total household debt actually went down, which would mean that people would be paying considerably less for the interest service on their debt, as mortgages carry much lower rates than credit cards on average, and mortgage interest is tax deductible
i don't want to sound pollyana-ish, it's clear that the majority of households still carry far more debt than they "should," but it seems that over time the economic cycle of borrowing and repaying continues in basically the same gradual progression...and of course as long as people don't default en masse, this borrowing is great for the economy as it increases consumption, adds profits to financial companies, and one of these days, will hopefully even create some jobs <g>
carl |
