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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Lymond who wrote (61655)	6/8/1999 10:33:00 AM
From: Freedom Fighter	Respond to of 132070

John, >>I believe your 260% figure includes financial sector liabilities, which is effectively double counting since these liabilities are used to fund loans to households, businesses, governments and the like.<< I made a similar observation in a prior post. Much of this debt (though not all) is borrowing to buy securitized loans. (FNMA, FRE, GNMA etc...) So I am not more concerned about defaults as a result of this financial sector debt. However, one could also conclude that there is presently tons of debt that is owned on margin (or similar to margin). This opens up all sorts of other risks to the system. I also suspect (although I am not certain) that the entire pricing structure of this debt is dependent on being able to continue financing and expanding this sector. No easy task in a low savings country. Wayne

To: Lymond who wrote (61655)	6/8/1999 11:51:00 AM
From: Mike M2	Respond to of 132070

John, good point about the double counting. I do not know for certain if the double counting methodology has been consistent over time but I suspect it has which would not significantly impact the message of the excesses of debt . My source for the 140% Debt/GDP in 1929 was James Davidson's " THe Great Reckoning" p. 307. In 4Q98 corporate repurchases of shares exceeded earnings - not a very productive use of capital IMO. In 1929 $2 of debt was added for every dollar of GDP growth in 1998 $2.75 of debt was added for every dollar of GDP growth - my source is The Richebacher Letter. I have to extend my Netscape capabilities to look at your data -thanks for the links and interesting observations. BTW do you have a link for Chris P ? Message 10014736 THX Mike