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To: ild who wrote (198668)	10/19/2002 6:58:07 PM
From: ild	Read Replies (1) \| Respond to of 436258

* * * Carl, I want to thank you one more time for all the insight you give us. I really enjoy reading your thoughts on the weekend. This week's note on DEBT was one of the best. Debt is an incredible drag on the economy. It takes either earnings or debt to fund growth. You point out the problem with earnings every week, and, of course, debt is also a huge problem. GDP is the numeric metric for output in the United States. GDP is roughly $10.4 trillion. Federal debt is approximately $6.2 trillion up from $5.8 trillion in 2001 and approximately $1 trillion in 1982. There is another $1.4 trillion at the State level. Net Federal and State debt is around 75% of GDP and growing. This is the number all the CNBC commentators use and say "it is manageable". Household debt is the combination of consumer debt and mortgage debt. That combination is now over $8.1 trillion. We have all heard about home refinancing and reducing the amount of equity we have in our home while refinancing. Homeowner equity as a percentage of Household assets has dropped from over 70% in 1982, the start of the bull market, to less than 55% now. Credit card debt has also continued to climb. Net Household debt is 80% of GDP and climbing up from 50% in 1982. We are beginning to hear the words from the commentators that "the consumer is about tapped out." Household debt burdens are at 14% of disposable income up from 11% in 1994. One in seven of those households had monthly payments of at least 40% of their income. Home Loan Delinquency Rates (percentage past due) are at historic highs. Credit card delinquencies are up 30% in the past year with 4% past due. Oh yes, saving rates are almost zero down from 12% in 1982. (Everyone was counting on the 20% growth in the market for savings.) The Fed is helping out. Record low interest rates have made all this debt growth possible. In a period of deflation, where I agree with you that Cash is KING, DEBT becomes an incredible DRAG. Since it takes debt or earnings to fund growth, I, like you, just do not see the funding mechanism for a sustained recovery. Deficit spending devalues the currency. The only alternatives to your magic wand, in my opinion, are inflation (devaluation of the $) or massive defaults. Debt then, is the biggest obstacle I see to the start of a sustainable rally in the market. Earnings or lack thereof are second in my view. EDITOR: Don't think the market can't rally because of lousy fundamentals. It can and it will, but the chances of a sustained bull market are virtually nil, in my opinion. Certainly, with valuations at current levels, the market is just a place for trading, not investing. decisionpoint.com

To: ild who wrote (198668)	10/20/2002 9:38:06 PM
From: Earlie	Respond to of 436258

Ild: They are deep in cash, and have a monopoly. I agree that their business is not likely to grow dramatically, but there are better targets out there. Seek out the debt draggers. (g) Best, Earlie

To: ild who wrote (198668)	10/21/2002 12:49:12 AM
From: 10K a day	Respond to of 436258

>MSFT I think you see (Systems) a shell (FREE BSD) and something like a free mozilla browser with yahoo messenger (or relay chat or take your pick) pre installed... problem is...it's gonna' be REALLY REALLY low end...and who's gonna sell it cause the margins are just gonna be paper thin... I mean it's doable...but it's gonna hurt ...and i think somebody will make money doing it... I think MSFT is a wildcard in say...china...cause somebody wil put a little c executable on a shell and give it away for nothing...and microsoft and their license revenue gonna' be left scratching their head...

To: ild who wrote (198668)	10/21/2002 1:16:52 AM
From: 10K a day	Read Replies (1) \| Respond to of 436258

> MSFT I think you gotta' decide if they ADD VALUE for 150 dollars with the promise of having to pay them another 150 dollars in a year... If you got all the essentials...and it's easy...and it works...I don't know why you want to pay them... they aren't going out of business....but the stock watering is insidious...and it's going to effect them in ways other than just dilution... i think the market become fragmented in time with many OS flavors...it's gonna' take a while...but it will happen...it's all free now anyway...you can't compete with free... this is way early...in the game..