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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (729251)	3/5/2006 2:25:18 PM
From: pompsander	Read Replies (2) \| Respond to of 769670

I agree that higher rates have a roll to play at present but while they might cool inflation build-up, there is a difficult balancing act to be made with all the homeowner and other consumer debt out there. Maybe people should not become over-leveraged, but we have an economic model that encourages it. Pre-approved credit cards in the mail, Ditech offering to take your home equity and finance it so you can take a vacation. There is the constant fear that the consumer will stop buying, thus bringing the economic expansion to a stop....so we encourage buying, not saving. Long term this is not healthy and there is always a reckoning. I agree with Karen that when people are flipping houses like people were flipping internet stocks in 1999 there could be significant danger when the dust settles. I remember Arizona in the early 1980s when people just walked away from their houses, bought t inflated values with easy money. The banks suffered by having to take em and unload em, and then everyone else suffered by banks tightening credit and slowing business investment.