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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: kris b who wrote (75448)12/13/2006 5:58:25 AM
From: Mike Johnston  Read Replies (1) of 110194
 
Don't forget the fact that most households have been getting a free ride in several aspects:

1. Long term interest rates went down from 5.20% to 4.40% recently, despite the fact that inflation is much, much higher than that.

2.Stock market is very strong, 401K balances are doing very well and extremely well if partially invested in foreign markets.

3.Housing prices while declining are not collapsing. The declines so far are small considering the enormous increases in recent years.

4.Higher end is experiencing record incomes.

5.Millions of households refinanced their mortgages for 15-30 years at 4.5-5% in 2003, which is free money considering current inflation at much higher levels and annual housing inflation from 40-50% to as much as 100% in 2003-2005

6.Gas prices declined in recent months.
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