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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (93131)	11/18/2001 12:06:17 PM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 132070

KT, >> how high rates go before they eat the lunch of borrow short, lend long IMO, this could go on for years. Do you have a different view of the time frame. >>Those two have stimulated the economy much more than direct govt. spending and any reigning in of their borrow and spend like drunk sailors management styles will clobber the economy. IMO, it is not just the government reigning in borrow and spending. The consumer and corporations reigning in borrowing and spending is just a devastating. My thoughts at the moment is the government, corporations and consumer balance sheets are not in good shape relative to historical norms. It looks like corporations and the consumer together with their bankers and the courts are "starting" to clean up this problem. As we all know preservation of capital attitudes are not good for an economy that was fueled with debt. It probably is happening because some of the balance sheets are so bad that lenders are not or can not take on any more high risk debt. Bankruptcies are increasing and in IMO if folks could borrow more they will not file bankruptcy. (I am aware of the new bankruptcy legislation and I have no idea what percent of these people are just taking advantage of the opportunity.) There has to be some interest rate level where the benchmark (10 year treasury) will just do in the process where balance sheets can not be fixed and "sugar" happens . <g> The Cleveland Fed keeps some fairly good inflation numbers, at least less fabrication than comes out of the administration. The last time I looked we were running at a little over 4%. This post may not make any sense. <ggg> Joan