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

To: jimmg who wrote (76572)	12/25/2006 11:51:00 AM
From: russwinter	Read Replies (3) \| Respond to of 110194

Amazing, you (and the market) seem to be willing to dismiss one warning sign after another. This source develops consumer liquidity a bit beyond "just" demand deposits. prudentbear.com Piscataqua's conclusion: The pace at which debt service and consumption depletes money supply has accelerated in 2006 to about $30 billion per month. In order to immediately improve this measure from ($30) billion to $0, households would need to cut nominal spending by nearly 4%. Interest rates have little to do with it, as rates are now at 2001 levels, a time when consumer liquidity was much healthier.

To: jimmg who wrote (76572)	12/25/2006 12:47:36 PM
From: bart13	Respond to of 110194

My credit card bill gets automatically paid out of my money market account at Fidelity. No demand deposits required. Note how money market deposits are up strongly. Too many people have a thesis and then go out to try to find evidence to support it. Everyone would be better off to allow the data to draw you toward the logical conclusion. Consumer spending is not falling off the cliff. In a sense, that's my point - I don't know and haven't seen any decent broad data in the whole area. Many folk either don't have a money market account or don't use it like you (and probably most other SI folk). Its also true that money market balances are up, same with MZM. MZM is expanding at over 4% y/y lately after having bottomed around 1% in early 2005. I don't think there's much question though that some very significant percentage of folk are more crunched now than a few years ago, and also have a lower broad standard of living when all factors are taken into account. How many, I don't know - but that set of charts I recently put together for Russ from epi.org data sure shows the wealth gap widening greatly since the '70s. A similar picture on CPI and CPI+lies adjustments appears on longer term broad household net worth, in the sense that real growth is lots lower than most realize. I don't intend to assert that consumer spending has fallen off a cliff, just that there are increasing signs in my book that it will drop and perhaps quite significantly... and data dependent be me too.