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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Real Man who wrote (78002)1/22/2007 8:10:59 PM
From: Tommaso  Read Replies (2) of 110194
 
As Marc Faber points out, it only take a little liquidation at the margins to unleverage the whole thing. Not everyone has to sell. But as soon as values of assets start dropping, the basis for lending contracts.

But this contraction need not affect commodity prices. People will go on paying higher prices for necessities (food, gasoline, electricity) even as they are forced to abandon formerly high-rpiced assets. And with their dwindling cash reserves and meager income they will continue to bid up the prices of essentials.
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