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To: pater tenebrarum who wrote (40759)	11/26/2000 12:23:17 PM
From: Oblomov	Read Replies (1) \| Respond to of 436258

Heinz, Yes, 48.8% of families have direct or indirect stock holdings. This is up from 40% in 1995 and 32% in 1989. But the median value of such holdings is $25K. Not insignificant for most HHs, but small compared to home equity and privately-held business equity. Also, note that the figure above includes stock holdings in retirement accounts and pension plans. Although total stock holdings constitute (median) 54% of financial assets, excluding these illiquid holdings which for most do not constitute spendable wealth, we see that the figure is closer to (median) 35%. And, as can be seen in the survey linked below, the bulk of the gains during the great bull market of the 90s (which has been a bull market in both stocks and real estate) have been in the top income and net worth categories. Meanwhile, it is the middle class that has taken on an enormous debt load, creating two new classes not before seen in the US, that of rentier and vassal. Although the aggregate savings rate is below zero, it is not below zero for everyone. For example, the debt service/income ratio for the middle two net-worth quartiles (25th-50th %ile and 51st - 75th %ile) are 19.0% and 19.7% respectively. More telling, the % of HHs in each of these two quartiles with a debt service ratio greater than 40% was 14.8% and 12.5% respectively. federalreserve.gov So, I think that a bear market could certainly influence the spending habits of the upper-middle and upper classes, but might not have much direct impact on the spending habits of middle-class J6P. But, in Minskyan terms, it appears that many middle-class HHs have been transformed into "speculative units"... which could become "Ponzi units" as a result of even a slight reduction in consumer confidence. I believe that the necessary process of debt deflation is already underway. Dr. Greenspan appears to be confused as to whether he should be defending the creditor rather or the debtor.