Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: John Vosilla who wrote (22580)	2/1/2005 1:32:26 PM
From: mishedlo	Read Replies (1) of 116555

Surely not what I remember from the last tightening cycle in 1994. This tightening cycle is almost over. This is NOT 1994. That said, they are jumping all over each other to keep "earnings up". If defaults rise and new loans do not come piling in, earnings growth will fall and stocks will get hammered. How or why they do not see the risk in what they are doing is totally beyond me, but it is a competitive frenzy to get new loans now as if housing is never going to fall. As long as they keep making loans consumers will keep spending it. The party is over when a) there is no home equity left b) fear of a credit crunch set in c) lending standards tighten d) the home construction boom ends e) there is a significant and sustained turn down in jobs f) consumers simply refuse to take on more debt all of those will happen of course, which one starts the ball rolling has yet to be finalized Mish

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