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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (6544)	11/3/2002 4:07:51 PM
From: SouthFloridaGuy	Respond to of 306849

<<How could this possibly be viewed as a negative development? Good companies with good cash flow sufficient to pay debt can borrow funds and receive favorable rates while those companies who don't have good balance sheets are cut off from cheap credit. This is the way it is suppose to work.>> I agree 100%!!! But what happens when bankers (JP Morgan Chase comes to mind) have already lent tremendous amounts of money to poor companies? Or when poor companies are 80% of domestic industry (Airlines) and you have a Fed Chairman that wants to save his cronies. Basically, you get the current situation, a 1.5% Fed Funds rate after a supposedly mild recession and recovery. It's circular and it can only go on as long as foreigners are willing to accept our funny money US Dollar. Once the foreigners bail (and we got first wind of that in the Spring), that's it. Guys like Soros are betting that Foreigners are in the process of finding value in other markets - my guess is that he will be proven correct as the dollar devaluation starts the second stage this month.

To: GraceZ who wrote (6544)	11/3/2002 8:30:39 PM
From: reaper	Read Replies (1) \| Respond to of 306849

<<How could this possibly be viewed as a negative development? >> well, when a large portion of the American workforce draws their paychecks from dinosaur overcapitalized US companies / industries (telecom wireless and wireline; auto all down the food chain; airlines. insurance companies are quickly falling into this bucket, as is investment banking / trading, and in one person's humble opinion the real estate sector will be there soon enough. i'm not sure how this is NOT a negative development. companies that need money can't get it. Ford is being largely shut out of the normal syndicated loan and public debt markets, and is instead relying more and more on asset-backed paper. Sears is doing the same. Even small broke-dick companies like PSS Worldwide Medical are doing it. while this seems like a free lunch, it of course isn't as the asset-backs have a preferred/senior claim on the assets of the business, which further subordinates normal loan/debt holders, making conventional (i.e. non-structured) finance even more expensive. the fact that Microsoft has abundant liquidity is beside the point. Microsoft's liquidity is no more relevant to the economy than is my liquidity. What matters is the liquidity of the marginal borrower, and it is slipping. that is unequivocably not good. btw, i'm still looking for some more 8-10 P/E stocks to short. any ideas?? Cheers