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

To: bond_bubble who wrote (67968)	8/10/2006 2:32:56 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

It is wrong to focus on just housing alone and talk about credit deflation. Credit deflation has to be talked in terms of where all the money is flowing during the boom. I believe there is still room for money to flow and continue the boom - housing market anxiety withstanding. Yes and no. Is it wrong to talk ONLY about housing. Yes. But it will start there and spread. There are massive numbers of people that will be affected by a housing bust. Real estate agents, carpenters, brick layers, lumber companies, roofers, plumbers, painters etc. Those people when out of a jobs or making less money will be eating out less at Applebees, McDonalds, and the fancy places too. People will stop buying boats (already happening). People will stop buying trucks (sales down 45% - already happening). Wages will fall, tips will fall, and unemployment will rise. With it bankruptcies will rise. The stock market will sink. There will be a "time preference shift" towards savings vs consumption across a broad segment of society. That time preference shift is already underway. It started with housing and will spread. It may take years and years to play out. Mish