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To: Jordan Levitt who wrote (121247)	7/3/2002 9:10:19 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 152472

the thing I don't get is if the consumer never stopped spending during this cycle -and they are now more leveraged than ever- where is the recovery going to come from ? answer: there can be no recovery! in all past recessions consumer spending picked up and acted as a tailwind in the recovery phase. this was possible because consumers pared debt way down during the contraction phase, but that has not happened in this recession. rather, consumers have boosted spending to the point where home equity percentage is now the lowest ever. Best case: I think the consumer is going to crap out just when corporations begin to timidly spend leaving a moderate to sideways economic environment with an expensive stock market. That does not bode well for the overall market that is pretty frightening as a best case, but i agree with you. the more likely case is that corporate spending does not cover the consumer shortfall, although govt spending will increase due to our coming war with Iraq and ongoing anti-terrorist efforts. this should pave the way for higher inflation, which will be bad all around. when faulty pension assumptions and options expenses are taken into account the S&P 500 is trading at something like 40 times earnings ! i can only think cos will lobby hard to keep these facts out of public awareness. however, now is certainly a good time for consumer groups and investor activists to lobby for more corporate honesty, and when cos stop lying about their expenses, i think the only direction for most stocks will be down.