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To: Freedom Fighter who wrote (214338)	1/14/2003 6:51:20 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 436258

Wayne, we definitely disagree on corporate debt. The telecoms are obvious targets, but everyone from industrials to banks to insurance cos. to energy cos are swimming in debt. The only thing preventing even more massive corporate bankruptcies, at a rate much higher than the all time record set last year in the second year of the Bush Depression, are the low interest rates. There are very few decent corporate credits left. 9 US cos are AAA, and one of those is BMY, so there may soon be 8. The number of AA cos. has dropped by 2/3 in the past 10 years, despite all the former AAAs dipping into that category. I am not as worried about the bankruptcies, yet, as the total inability of cos. to make investments that make them competitive. During the 90s they mostly bought other cos. and computers, which didn't do much of a job on the competitive front, and now they're buying nothing and spending little on the future. As the Austrians say, this spending is what causes employment and it is derived from the savings of the employed. A virtuous cycle. Now we have borrowing and downsizing, a vicious cycle. I can see where you would consider debt double counted, but I'd also say its undercounted. Fannie and Freddie don't bother me on the debt side, just the stock side. They have Uncle Sugar to bail them out. But the regional banks got nobody. If they don't get paid on a mortgage, they may not only default on paying for that mortgage to their lenders, but all their other mortgages and credit card debt. Once you seek bankruptcy protection, nobody gets paid. So, if only 10% of the debts go sour, it could have the effect of making 100% of that bank's debt go sour. True, as long as the system holds up, somebody will take over that good debt at a price. But the entire system is tottering. So, we have the Bush deep deficit policy for the Federal govt. The States and localities would go to debtors' prison back in the old days. The individuals are borrowed to the hilt. Corporations have piled up the debt to equity ratio. I don't want to be a major lender in that environment.