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

To: AC Flyer who wrote (20593)	6/30/2002 1:20:02 AM
From: smolejv@gmx.net	Respond to of 74559

Re debt on general and specifically private debt: it's a question of proportions, of sustainability. This approach is reflected in mortgage rates, at least here in Germany: you get prime for up to 60 or 70% of the property value (not spot price!) and after that you get 25, 50 or even 100 basis point piled up sooner than you can say "Hold it". The banker saying in so many words:"Fine, but now it's my risk and it will cost you THAT much". On question of proportions: again in a rather conservative way, the balance sheet, the liability side, would usually have two big entries, equity and debt. If the debt is below lets say 5%, it's hard to get loans ("...no history...") and if it's above 40% same thing starts to happen. In this context there's no need for the word "need" - it's like discussing the morality of public transportation. It's more a question of where the current working point of the world economy (in this multidimensional space of business) is. I would just say two things: it's not an equilibrium point it's moving. ...with one big item driving it being DEBT. dj