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

To: kris b who wrote (46938)	12/9/2005 3:27:17 PM
From: westpacific	Respond to of 110194

U.S. debt expands at fastest clip in 18 years (If this is not the crack up boom.....what is, global liquidity, call it what it is D E B T!) Thursday, December 8, 2005 10:01:01 PM afxpress.com WASHINGTON (AFX) -- Americans increased their household debt at an annual rate of 11.6% in the third quarter, the fastest growth in 18 years, the Federal Reserve said Thursday in its quarterly flow of funds report Total outstanding debt in the household sector rose to $11 trillion Total debt in the economy increased at a 9.1% annual rate, one percentage point faster than in the second quarter, to $25.72 trillion Non-federal borrowing grew at a 10% pace, the fastest in six years. Total nonfederal debt outstanding grew to $21.13 trillion. Net national savings fell by $120.5 billion at an annual rate. It was the first quarter that net savings had been negative since the Fed began tracking the data in 1952 In the household sector, borrowing was paced by real estate loans. Mortgage debt grew at a 14% pace, while credit card debt increased 5.4% Meanwhile, household net worth increased at 10.6% annual rate to a record $51.09 trillion on increases in the value of assets already held. Real estate assets grew by $546 billion Net investments by households fell at an annual rate of $72 billion. Investments in directly held corporate equities fell at an annual rate of $556 billion Borrowing by businesses increased at a 7.4% rate, down from 9.1% in the second quarter The federal government's debt increased at a 5.1% rate, up from 0.1%. State and local government debt grew at a 12.6% rate, up from 6% in the second quarter. Disposable personal income increased at a 2.8% annual rate to $9.04 trillion. Household net worth was 5.65 times disposable income, up from 5.54 times in the second quarter Even with the hit from Hurricane Katrina, corporate profits continued to account for 13% of national income in the third quarter, the highest level since 1956 Compensation of employees rose to 66.4% of national income from 64.9%. It's the highest level in four years This story was supplied by MarketWatch. For further information see www.marketwatch.com For more information and to contact AFX: www.afxnews.com and www.afxpress.com

To: kris b who wrote (46938)	12/9/2005 5:57:15 PM
From: NOW	Respond to of 110194

i think you missed his point

To: kris b who wrote (46938)	12/10/2005 2:02:44 AM
From: regli	Respond to of 110194

> I have no debts and mountain of cash.< Cash is really money in a currency. If the cash you own is in a weak currency you will not be able to sustain your purchasing power. I believe the dollar will be significantly devalued over the next decade and therefore being in cash vs. gold may not be a very smart proposition. Here is Marc Faber's take on this: quamnet.com Just imagine what the Fed's reaction would be if both the Dow Jones and housing prices dropped by 10%! Money printing would be back in earnest because the Fed believes (erroneously, I may add) that it has the power to indefinitely postpone recessionary periods. Now, if the Fed prints money, all asset prices will rise in nominal terms whereby some prices will rise more than others, while the currency of the money printing country -- the US -- will weaken. The only problem for us investors is to recognize and forecast, which prices will increase the most, consumer prices or asset prices, and if asset price inflation continues, as occurred in the past twenty years, specifically which asset prices will move up the most. Moreover, if the US dollar weakens it is important to define against what the dollar will depreciate. The importance of being invested in the "right asset class" is evident from the diverging performance of the Hang Seng Index or of Hong Kong property prices and oil since 1997. So, whereas the Hang Seng Index and Hong Kong property prices have not risen, since 1997, crude oil is up by more than four times! I would expect similar diverging performances among different asset classes to emerge in future as well. In particular, I am a believer that at some point in future, investors will lose faith in the value of US dollar denominated bonds and in the US dollar. At such time, investors will drive US interest rates much higher resulting in tumbling bond prices and rush into anything but US assets such as equities and bonds. This does not mean that all US dollar assets will collapse in nominal terms, but they could collapse against a "hard currency" such as gold or possibly against non-US dollar currencies, provided foreign central banks pursue tighter monetary policies than the US. This, however, is an issue about which we cannot really be certain, as all central bankers have a propensity "to print money". Therefore, I feel that asset prices will tend to depreciate against the only currencies for which the supply is limited -- gold, silver, and platinum.