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

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To: UncleBigs who wrote (57745)	4/9/2006 12:05:02 PM
From: russwinter	Read Replies (2) of 110194

Consumers currently maintain transactional balances equal to only about 3 weeks of expenditures(6% versus 8.33% based on a monthly amount equal to 1/12th of annual expenditures). Even before we entered the 2001 recession, consumers started at an amount equal to one month worth of balances. Historically, consumers maintained closer to 2 months worth of liquidity. The consumer liquidity question is even more perilous than it appears. Not only have U.S. households allowed their liquidity levels to drop, but our consumer cash flow model shows that they now have negative everyday cash flow on a monthly basis! prudentbear.com

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