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

To: Taikun who wrote (53172)	2/9/2006 1:28:29 AM
From: kris b	Respond to of 110194

You can't lower the assets without writing off liabilities It all depends what is gone go down faster, assets or liabilities. I think it is the former. Household assets are RE + stocks + bonds. If all three classes go down 80%, households can only default on mortgages, the rest was bought with cash. It is not just foreigners who are on the hook, up to 70% of US banks assets are RE related. How about US pension funds, insurance co's, etc. By defaulting americans will be screwing themselves/banks and their pensions. Btw. Guy had a wrong number. Household liabilities are 20 trillion (11.4 trillion in mortgages and 8.6 trillion in revolving debt) so equity is more like $ 43 trillion not $ 51 trillion.