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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (48690)	2/18/2006 10:50:33 AM
From: Think4Yourself	Read Replies (1) \| Respond to of 306849

I agree that corporates are in good shape right now, and have a two year horizon for my comment, although it used to be longer. The reason why is that americans have been using their home equity as a piggy bank because they foolishly assume home prices can only go up. There are signs that this phase is ending, whether it be due to rising interest rates, too much debt, or not enough home equity. If home prices start dropping, and there are signs this is happening as well, quite a few people are going to have negative home equity. At the very least this is going to scare people about their own financial condition, as well it should! People are going to cut back spending and some people might even try something novel: saving money. If america as a whole significantly cuts back spending then corporate profits will quickly dry up.