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To: mishedlo who wrote (201471)	10/31/2002 8:56:17 PM
From: Win-Lose-Draw	Respond to of 436258

he's an optimist. eom.

To: mishedlo who wrote (201471)	11/1/2002 9:28:10 PM
From: Knighty Tin	Read Replies (3) \| Respond to of 436258

Mish, Thoughts and implications: The Clinton "surplus," which was phony to begin with, is Flubya Bush's deep deficit now and likely to grow further. The idiocy of tax cuts in the face of wildly increasing govt. deficit spending is what made 1981 and 1982 so lousy in the economy. Don't get me wrong. Ronnie Babe spending too much on defense to bankrupt the Russkies was worth it because we have our current peace dividend. Nobody would dare attack us in our own country now. Well, except for terrorists and snipers and folks like that, but we can't afford the resources to stop them. It is certainly possible, but extremely expensive, so we'll apply a bandaid to the sucking wound and hope nobody notices. It will not be long before the govt. is puking over the fact that they stupidly got rid of first, the twenty year bond and then the thirty year T-Bond. The intermediate end of the market will not be able to handle our huge additions to debt. Does that mean T-bond rates will go up? Not immediately. There is currently a big crowding out of corporate debt in favor of govt. debt. The big losers will be corporations, who will have to pay ever increasing rates while "rates" are going lower for Treasuries, GSE and AAA muni debt. AA debt, corporate and muni, will probably be stable, though that isn't certain. A and below will become dead meat. So, corporations will have increased expenses in the form of interest rates at a time when debt as a % of capitalization is at an all-time high. And pricing power at at least an intermediate low. Your GEs, Microsofts and others with high credit ratings will prosper at the expense of faster growth cos. that employ more of America. 50% of US workers work for small cap cos. The credit rating agencies will be under greater pressure and somebody will ask how IBM maintains such a high credit rating with 40% debt in their capitalization. Which will be higher if and when they get the pension fund in shape. Bankruptcies will zoom up. Gen-X will never see penny one, in today's penny, from Social Security. Probably a bit of unrest when I cruise by in my limo and waving my Social Security check stub out the window at them. <g>