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To: GraceZ who wrote (6562)	11/3/2002 10:08:30 PM
From: reaper	Read Replies (1) \| Respond to of 306849

Grace, maybe something got lost in translation and if so i apologize, but i thought the gist of the posts you were making (to which i only responded to the last) was that there was in fact no credit crunch because credit-worthy borrowers could get financing. follow-on thoughts to this premise are that certain equities of credit-worthy companies are worth buying today, and that the bond-market rally (particularly treasuries) has ended ('warning shot' was i think the language used). to which i can only say that i dis-agree. the fact that Microsoft and Pfizer (and you and I) have ample liquidity available to them (which they don't need) is irrelevant. on the other hand, a whole host of companies, from telecom to insurance, could really use some credit and folks are none too psyched to extend it to them, or if it is extended it is on uneconomic terms. there is still a lot of market cap tied up in a lot of these dinosaurs, and more importantly a lot of paychecks in industries that are structurally over-capitalized. what i believe you will discover is that the credit bubble will continue to rot from the periphery in. as these over-capitalized industries, which as noted pay a lot of people and account for a lot of GDP, continue to shrink due to the un-availability of credit (which credit unavailability is CORRECT as return on capital is less than cost of capital in these businesses), the financial projections and credit worthy-ness of their vendors will slowly come into question. and so on and so on down the line. Roadway Express, for example, is deemed a 'credit-worthy' business today; one need not have the manufacturing or retail community shrink much more to suddenly make Roadway a bad credit. which would then of course kill Wabash (were it not already dead <g>), etc. there is a credit contraction going on. finance is being taken away from more and more marginal borrowers (companies like S and F on the corporate side, and many sub-prime consumers on the consumer side) and as this happens the P&Ls and financial condition of what you think are credit-worthy businesses (and consumers) will also continue to rot, slowly. i am encouraged by your bond market comments (or at least my interpretation of them; again please forgive is something was lost in translation). i heard from no fewer than 5 highly-educated friends at brunch today that the bond market rally is over (at least one of them was kind enough to thank me for the money i made them <g>) and about how much capital one can lose in a bond-market rout. your voice is another echo in this chorus. frankly, all you bond bears are starting to sound like a lot of us stock bears sounded in 1998. Cheers