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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Victor Lazlo who wrote (37515)	2/25/2000 1:07:00 AM
From: Jdaasoc	Read Replies (1) \| Respond to of 93625

Victor C analysts have cellphones in their cars, I would guess... Mayor Gouliani would probably impound their vechile for driving while on cellphone just like they do for drunk driving and excessive speeding Now so comments from mine favorite analyst Irvin Kellner. It's OK to be very long RMBS but not on much margin. john cbs.marketwatch.com Give me liberty and give me debt Our debt is piling up at an alarming rate By Dr. Irwin Kellner, CBS MarketWatch Last Update: 9:37 AM ET Feb 22, 2000 Kellner's forecast Commentary section NEW YORK (CBS.MW) -- Add another concern to the worries cascading up and down the corridors of Wall Street -- the record levels of debt piling up on the books of banks and other lenders. Margin debt set a record in January, rising 7 percent in that month alone, to $244 billion. In spite of the fact that the U.S. economy has been expanding nonstop for almost nine years, both consumers and businesses are carrying huge amounts of debt. On the consumer side, the Federal Reserve calculates that the average household's total debt load (including home mortgages) now exceeds its annual income -- for the first time in history. Business is no slouch, either. The ratio of debt-to-equity for the companies in the S&P 500 is now 116 percent, according to McKinsey -- even higher than the 84 percent posted at the end of the junk bond explosion of the 1980s. Even more ominous is the fact that a growing chunk of business borrowing is considered low-quality in nature. Sub-prime loans on the books of the banks now total $100 billion, up by an annual rate of 80 percent since 1995. Margin debt record As for investors -- forget about it! Margin debt set a record in January, rising 7 percent in that month alone, to $244 billion. Since September, this debt, which is on the books of those brokers who belong to the New York Stock Exchange, has jumped by a whopping 36 percent. Of course, stock prices have climbed as well, but margin debt as a percent of market values last month touched 1.57 percent, equaling the record set in fall 1987 -- just before that year's stock market crash. Investors have bet that stock prices will rise in the future -- something that hasn't quite panned out over the past month. They are beginning to get calls from their brokers, asking them to put up more money in order to maintain their positions. And while margin requirements are 50 percent today compared with only 5 percent back in 1929, the fact remains that over half of all households are in the market now vs. only 3 percent 70 years ago. This means that a bigger swath of the economy would be affected today, should the market continue its slide. More than anything that the Fed might do with interest rates, this leverage could put the kibosh on our aging boom. Dr. Irwin Kellner, chief economist of CBS MarketWatch, is Weller professor of economics at Hofstra University.