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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (56030)	7/5/2000 2:13:10 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 99985

re: debt quality: There will be no problem servicing existing (or higher) debt loads, as long as unemployment rates stay below 5%, and inflation stays below 4%. Debt loads, for consumers and companies, are very high, by historical standards. This is a function of the fact that everyone is employed, and the cost of borrowing is near the lowest in a generation. As long as everyone has a job, they can continue borrowing and spending. The spending, in turn, means companies will have the cash flow to service their debts. No problem. If we get a soft landing next year, and credit standards tighten only modestly, and inflation stays below 4%, then the debt burden will not be a problem. If this rosy scenario doesn't pan out, then you are right to be worried. To early to tell (I'll know for sure by 12/31/01 whether there was a recession in 2001), but I'm betting on a soft landing.