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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Petrol who wrote (7508)	9/27/2002 11:41:43 AM
From: Jim Willie CB	Read Replies (1) \| Respond to of 89467

cuts from Daily Reckoning on auto and housing sector What holds the economy together is the heroic spending of the homeland consumer. But what is he spending? The BBC reports that Americans are earning less money this year than last - the median household income fell 2.2% to $42,228. The only way he could possibly increase his spending would be by borrowing money. Not surprisingly, the two consumer sectors that have shown the most growth - autos and housing - are those where financing is most relaxed. But even these two lend-happy industries seem to be breaking down. Auto sales are slipping and, as Eric elaborates below, housing is looking weaker and weaker. GM shares lost $3.41 on Monday. GM and Ford bonds are being treated like near-junk...trading at 300 and 400 points, respectively, over treasuries. In the end, you cannot build real prosperity on debt, the Austrians tell us; you have to build on savings. That is a lesson that needs to be relearned every three generations or so. Unfortunately, the tuition can be painfully expensive. --------------- Meanwhile, down on the other side of the tracks, where we ordinary folks buy and sell our homes, the recent data are not very encouraging. Housing starts fell in August for the third straight month. And building permits dropped as well. Yesterday came word that existing home sales fell a "surprising" 1.7% last month. Add to this bad news the fact that a record 5.7% of all mortgages are delinquent and that foreclosures are on the rise and suddenly, what was once a pillar of strength for our economy looks more like a pillar of salt. The housing market still seems fairly robust from all outward appearances. But most bubbles do...until they don't.