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

To: Joan Osland Graffius who wrote (64216)	7/8/1999 6:26:00 PM
From: per strandberg	Read Replies (1) \| Respond to of 132070

I did a little search on credit cards. Just for fun, I answered "Yes" to the question "Have you declared yourself bankrupt in the last 7 years?". "No" to "Are you a student". "No" to "Are you employed, earning more than 12000$ a year?". I expected to be turned down by all CC-companies, but lo and behold, I got 7 answers, with a total credit line of 32K. The catch: 19.2% - 19.8% APR, no IAPR. Looks like they are hoping for less than 50% defaults. Amazing!

To: Joan Osland Graffius who wrote (64216)	7/8/1999 10:27:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Joan, >>The big question is when does the system fall apart under its own weight. << I'm not sure it's possible to answer that question for a variety of reasons. I can only pass on some of my thoughts. We haven't blown up yet for a couple of reasons. The US has been able to expand credit rapidly despite our relatively low savings rate partly because we have been getting strong demand for US dollars from foreigners in the form of bond/bill purchases. Second, bank credit and money supply has been expanding faster than real GDP growth for the last few years but it hasn't spilled over into CPI inflation. It appears to be flowing primarily into assets like real estate, stocks, leveraged bond positions, etc.. One would think it would eventually spill over, however.... In my view the CPI, GDP, productivity, and most other government figures are all highly suspect. They are difficult to define and measure even if you are trying to do the best job possible. My observations of the way the system works has made me so cynical that I'm at the point where I consider all of it essentially nonsense. IMHO most government stats have little value for investors. They are a way for politicians to justify policy decisions they want to make while making themselves look good. And of course a way for Wall ST. to further justify the unjustifiable. At a minimum we can say that virtually every change made since 1995 (I think) has made GDP, CPI and productivity look better than the prior method, So the numbers aren't comparable. Summed up, we've been able to expand the bubble with easy money and foreign credit. I think it will take a reversal of those inflows or credit demands that are really extreme relative to savings to really cause some trouble. It is clear that reality won't do it. Every bullish argument in the latter 90s has already been shot to hell. Be it Asia, earnings growth, interest rates (the 30 year treasury is back where it was in 1995), the global system being more stable etc... If we get into issues of earnings quality forget it. For every failure in the hoped for reality the bulls spun a new tale, new model, or whatever to justify the lunacy. So I think we can be reasonably sure that people aren't going to wake up one day and say "I don't want to own "x" at 75x overstated earnings anymore". Wayne