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To: Michael Watkins who wrote (6398)	3/20/2001 12:14:03 PM
From: Jill	Respond to of 8925

Wish I could be around at 2:15 but I'm being shown around a genetics lab........ Loved Teresa's post. Have to figure out that yahoo talk thing this weekend. It didn't work for me. Thx for all your good, diabolically bearish, insights :-)

To: Michael Watkins who wrote (6398)	3/20/2001 1:17:27 PM
From: Lane Hall-Witt	Respond to of 8925

MW -- Pimco: Thanks for posting these notes from Bill Gross. One additional factor that he didn't mention in his March note is the rapid increase in consumer debt. Not only has the savings rate been in free fall, as he shows, but consumer debt has risen at an alarming rate, too. According to the most recent Federal Reserve Statistical Release G19, consumer credit grew at a 12.5 percent annual rate in January 2001. We're not only failing to save for a rainy day, but we're going to have to pay off debt -- lots of it -- when that rainy day hits. When the rainy day arrives, or even comes into view as a looming danger, it's going to be extremely hard to motivate people to continue spending and investing like there's no tomorrow. As the case of Japan shows all too clearly, it's easy to create an asset bubble when credit is flowing freely and everyone feels confident about the future, but it's hard to reverse the downward momentum when people are overleveraged and living in fear of those rainy days. I worry that the U.S. faces the very real prospect of a liquidity-trap slowdown, similar to the one that Gross says is afflicting Japan. Federal Reserve Statistical Release G19 federalreserve.gov Federal Reserve Statistical Release G19 Historical Data (January 1943 - January 2001) federalreserve.gov Federal Reserve Household-Debt Service Burden (1980-2000) federalreserve.gov