<TASR shares >
They really like the tulip bulb mania stuff now: internet, bulletin board, other crap. Market has an extremely frothy look to it, especially going into a subsistence crisis and Train Wreck.
Here's some notes on the consumer, if anybody cares to add to it?
Of course my theory, is that's it's mostly about borrowing. We had a little refi boomlet from mid-Jan to then end of March. Refi index ran from roughly 3500 to 5000, so that got some money into people's pockets. But it wasn't a transforming event like the 03 refi boom, so really only enough new heroin to maybe just fund more inflation (F3IP) and pay higher food and energy bills. The tax refunds are now mostly spent, and were up only 13.5%, so was kind of a dud, maybe just enough to pay for a month or two or higher energy costs, not really contribute to the economy.
So this is before the next stage of the Train Wreck. If you look at the post war retail sales last year you see a big cluster. May, 2003 was a huge credit card usage month, and then the refi boom and tax cuts kicked in terrific retail sales in June-July-August. So that's the comparable going forward, and without the benefit of the tax cuts, and only a smaller refi boomlet, and with much higher prices to pay for the "stuff". Of course the inflation may give the appearance of robust sales, but it won't translate into units moved. I think as long as rates are low, the consumer will now substitute their credit cards again (in lieu of refis) to F3IP.
But as the Train Wreck keeps gathering steam, many of the firms that got locked into long term contracts start going under, and laying off workers. If the utilities can't pass on higher coal and NG, they will collapse to, and folks will get laid off there. Retailing because of slowing business, ditto. The financial sector is the biggie. I guess it might linger on if there isn't an inflation panic. It all depends on if the Fed control rates, or someone else does. If it's the Fed the financial sector will continue to do well (in the very shot run) loaning F3IP to people so they can pay for their new high bills, more expensive stuff, and put food on the table when they are laid off in the Train Wreck. If the finance spigget gets shut off (voluntarily or non-voluntarily), I will be over at Misheldo's site discussing the deflationary scenario. |
