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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: John Vosilla who wrote (28003)	3/7/2005 12:20:14 PM
From: mishedlo	Read Replies (1) of 110194

I think much of what you mentioned is offset by strong cash positions on the corporate side, productivity gains and easier monetary policy. It would be nice to compare the debt crammed down during the S&L bust and telecom meltdown relative to GDP and then do a projection of debt cleansing relative to GDP by a 40% decrease in home prices in the coastal bubble markets. Much of that "strong cash position" on the corporate side is now being wasted in stock buybacks at absurd prioces, merger mainia etc. Even if the latter were not true, I guess I would say "so what?" The problem is that the consumer is 70% of the economy. What good is that cash balance going to do them? In a consumer led recession just who is going to want to borrow except those sitting with negative equity in their houses and no job to boot? The debt cleansing in the S&L bust affected primarily businesses (banks etc). I do not know a single individual that was directly affected. If we have a housing bust now, everyone will know someone that was affected. Mish

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