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Non-Tech : Home Depot (HD) -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (991)	8/18/2002 9:24:51 PM
From: Don Earl	Read Replies (1) \| Respond to of 1169

Joan, <<<I am not sure the parents of these kids understand how interesting things could get>>> I hope I'm wrong about the future, but I just don't see much to suggest we aren't on the verge of an instant replay of 1929. There aren't enough assets in the country to cover the leverage that's out there. Somewhere along the line debts have to be paid. On the last two homes I sold, both buyers came in with higher offers to finance closing costs. A seller can usually figure on knocking off 10% of the selling price in closing costs. If a house costs $200K and a buyer finances $207K to cover closing costs, they are basically $27K in the hole on day one. Buy a new SUV with a zero percent loan from the car company. Use bank cards to pay for groceries and other current expenses, then play the balance transfer game with bank card offers that show up in the mailbox on a daily basis. I'm sure the banks love the easy credit plans offered by the home improvement warehouses, it increases their chance of breaking even in Chapter 7. And as long as GAAP allows the home improvement warehouses to hide debt and credit exposure off the balance sheet, there might even be a few suckers to take some stock off insider's hands when they exercise their options. The problem with long periods of prosperity, like the 20's and 90's, is no one is able to comprehend the possibility that prosperity can come to an end. It's okay to live beyond one's means as things will only get better, the stock market will always go up (buy the dips on margin), and there will always be more credit available if things get a little tight. At 2 years into the bear market; $7 trillion in stock market wealth has been wiped out, unemployment is hovering around 6%, and bankruptcies are at record levels with something like 1.5 million cases filed in the past 12 months. At the same time, outstanding credit card balances are also at record levels and still increasing. The price to pay off the debt is a major depression. If most economists and stock market analysts aren't able to figure it out, it isn't likely the average person on the streets will see it either. Retailers, finance companies and banks have the highest exposure to consumer defaults. Life insurance companies have the highest exposure to corporate defaults, with the added exposure to consumers needing access to liquid assets. It's a mystery to me why anyone is buying or holding stock in anything right now. I'd rather be wrong than right, but I have a hard time putting much faith in an economy where people are borrowing money to buy food.