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To: Ilaine who wrote (116158)	8/8/2001 5:20:29 PM
From: Skeeter Bug	Respond to of 436258

>>It seems to me that the most meaningful measure of consumer debt is the ratio to disposable personal income. That tells you whether the consumer can pay it or not. If debt is going up but income is going up, too, what's the problem?<< coby, this is a great measure... disposable income tends to stop abruptly as folks lose jobs (was it a net loss of 1 million that i recently heard reported?). my view is that we turned from the mutha of all positive spirals into a negative spiral in 3/2000. iow, i believe you will see the 7.9% figure rise over the next several years. significantly. that is, assuming it is even a real figure. bad assumption given the way the govt likes to rig figures...

To: Ilaine who wrote (116158)	8/8/2001 5:56:54 PM
From: Jack of All Trades	Read Replies (1) \| Respond to of 436258

Problem is with debt you must pay interest on it... So income can rise but it must rise faster than debt. At some pt debt gets so high that interest is exceeding income rise... Looking at your disposable income figures they are running last year ~17% as that falls the interest on debt will look much larger...

To: Ilaine who wrote (116158)	8/8/2001 7:17:20 PM
From: Thomas M.	Read Replies (3) \| Respond to of 436258

That is debt service, not debt. That reflects the benefits of the decline of interest rates from 15-20% down to 5%, which of course cannot happen from here. Most of the old folks who were bearish over the past 5 years were bullish in the early 1980s, because they realized that interest rates were too high, and would eventually decline and provide a big boon to the economy. From 1980 to now, household debt has gone from 65% of disposable income to 105%, from 50% of GDP to 75%. Homeowners' equity has gone from 70% to 55%. Corporate debt has gone from 30% of GDP to 45%, and from 40% of revenues to 70%. All of these figures are at post-WWII highs. Tom