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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (35949)	7/10/2003 4:38:03 PM
From: Seeker of Truth	Read Replies (3) \| Respond to of 74559

Energyplay, the graphs you cite are simply wonderful! Everybody that seriously wants to protect and increase their capital should study them. They show that consumer debt is at a record high and corporate debt is near the record high but is slightly receding. What causes the latter improvement? Bankruptcies. When an entity goes bankrupt its debt becomes zero. This can have a sizeable effect on the entire total of corporate debt. Do we need more bankruptcies? It seems so. Or else corporations must reel in their spending for a protracted period. As for consumers, I believe that in the long term there must be a gradual increase in household debt as a fraction of the GNP because we have more home ownership and more car ownership and these big ticket items cannot be had by the ordinary person without taking on more debt. Nevertheless the increase looks horrific to me, exceeding what should be a healthy slow increase. So here we have the crux of the problem. Are we going through a healthy correction of the debt problem? It's not at all visible at the various levels of government. It's not at all visible at the household level. Paying down debt has been quite easy for more than a year but we don't see any reduction, just a continual increase. Bankruptcies have started to make the corporate finances look better but the change is still small. You cite the demographic change. As the population ages it does tend to save more. That's a new factor to me; thank you for introducing it. That factor may save the situation from an utter rout, but it seems to me that we still need more "correction" i.e. debt reduction via, among other things, exit from the stock market. I can't see an impressive rise in the market in the near future especially as the aging population is less risk inclined. Though I interpret your data less optimistically than you do, you have provided valuable info.