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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: marek_wojna who wrote (20398)	6/27/2002 10:54:29 PM
From: AC Flyer	Read Replies (2) \| Respond to of 74559

>>Are they planning to write off existing consumer debt to start new shopping spree? Or maybe US will introduce new magic credit card with no limit, no minimum payments, no monthly statements to keep the morale of the consumers at proper level?<< You know, this puritanical attitude towards debt puzzles me, particularly from the world outside US borders. The only reason the US is able to run a current account deficit is because y'all want US dollars. If the governments of the ROW ran sound fiscal policies and encouraged entrepreneurialism, y'all would prefer your currencies to ours. As far as consumer debt goes, it's just not that complicated. More borrowers plus lower interest rates = increase in aggregate consumer debt. That's where we happen to be right now. Try and visualize it as a flow process, with more borrowers entering the debt pipeline than are leaving it. When the demographic tide turns, more borrowers will exit the debt pipeline than enter it and aggregate consumer dent will fall. This all works just fine until there is some major economic discontinuity. Then debt is repudiated, companies go bust, lives are ruined, people jump from buildings, then back to square one. Capitalism at work. Got a better idea, woj?