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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 (9758)	3/8/2004 9:05:14 PM
From: jackjc	Respond to of 110194

I see it as a matter of ratio, while the 1 or 2 million newly unemployed lose their credit buying ability, the 100M still working can easily make up for that with the easier and easier terms available, this can go on until gov policy (not likely) or FEAR makes them pull back. Maintaining an overdeserved lifestyle despite price hikes by just signing your name, is too tempting.

To: mishedlo who wrote (9758)	3/8/2004 9:14:44 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

<If people are out of jobs will they have any money to> Only a certain percentage are out of jobs, and the answer to all your questions is YES. The evidence is that they've (the rest who are employed apparently?) been borrowing at 7.4 times ($1,424 trillion) their wage and salary growth ($193 billion) since the end of the official recession in Nov. 2001 to YE 2003. January and February because of refi mini-boom is running at an even higher rate. I think the tipping point only occurs when: 1. Rates go up at least 100 bps on mortgages, which would completely shut down the refi and purchase market. I agree that the economy will be very vulnerable to even small rate increases now. 2. There's a credit panic, spreads widen, etc. This could happen irrespective of rates I suppose, could be one outcome. 3. I see consumer exhaustion as secondary, they just don't know when to stop. They think they are rich based on what neighbor's are selling houses for and what their mutual funds have delivered lately. 4Q, 2003 was another blow-out on the asset bubble front. reuters.com 4. I see a few hundred thousand job losses as fairly insignificant in the face of this credit and bond bubble monster. If we got a massive employemtn collapse, it would be a different story. The inflationary train wreck might do that, but it won't be the status quo or "quiet exhaustion" thesis.