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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (7149)	2/6/2004 3:38:51 PM
From: gregor_us	Read Replies (1) \| Respond to of 110194

Consumer Credit Expansion is an Awesome Stat. Thanks for the post. Debt service is crowding out the ability to spend further. Every new homeowner becomes an "underperforming" consumer, IMO. And the Federal Govt. --with its new announcement for boffo Treasury sales all along the Curve--it will crowd out activity in the capital markets. "I think we've gotten into a weird area..." Bill Murray, in Tootsie.

To: mishedlo who wrote (7149)	2/7/2004 12:24:21 PM
From: Ramsey Su	Read Replies (1) \| Respond to of 110194

Putting things in a different perspective. The entire consumer debt load is only $2 trillion. Adding $500 billion budget deficit this year is like this debt load all of a sudden going up 25%. How about cost to finance? a 1% hike in interest rate would cost consumers an extra $20 billion to service the debt. or - more accurately calculated - We need to go back to 1999, 2000, 2001 etc and look at the average interest rate for this consumer debt. I believe the rate dropped significantly soon after 9/11/2001. My point being that the drop in debt service cost needs to be factored in. The growth rate would be much lower if interest rates had been higher. Now the question is - are consumers really better off and they do not need to borrow or are they so drained even with the most favorable rates and terms, they can't borrow any more? Anyone got current default data? BK filings?