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2005-04-16 Home Front: Economy

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Posted by MBA 2005-04-16 9:02:36 AM|| || Front Page|| [11135 views since 2007-05-07] Top

#1 What turns a cyclical downturn into a prolonged recession is debt that can't be repaid (in bad times) and there is way too much debt out there. Far higher than it has ever been in the past. Oil prices will get the recession going but debt will prolong it.

Posted by phil_b 2005-04-16 5:26:47 PM|| 2005-04-16 5:26:47 PM|| Front Page Top

#2 That's why we have printing presses Phil.

Posted by Shipman 2005-04-16 6:49:23 PM|| 2005-04-16 6:49:23 PM|| Front Page Top

#3 Count on this development being used as part of the lefties' argument against the President's Social Security plan.

Posted by Bomb-a-rama 2005-04-16 9:10:31 PM|| 2005-04-16 9:10:31 PM|| Front Page Top

#4 A bit hyped for a 1.86% drop, I'd say.

Posted by Tom 2005-04-16 9:22:26 PM|| 2005-04-16 9:22:26 PM|| Front Page Top

#5 there is way too much debt out there

Whose debt, specifically?

Posted by trailing wife 2005-04-16 10:41:03 PM|| 2005-04-16 10:41:03 PM|| Front Page Top

#6 Our Chinese "friends"?

Posted by Frank G 2005-04-16 10:53:52 PM|| 2005-04-16 10:53:52 PM|| Front Page Top

#7 A bit hyped for a 1.86% drop, I'd say.

They're not going to be picky. Anything that happens that can be used to their advantage, will be.

Posted by Bomb-a-rama 2005-04-16 10:58:52 PM|| 2005-04-16 10:58:52 PM|| Front Page Top

#8 tw, many American consumers have been living beyond their means, resulting in our massive trade deficit and also the trade surplus (and therefore employment) in other countries.

A lot of American consumer spending is being financed/enabled by credit cards and home equity loans. The latter is a particular problem because home values are ephemeral and subject to bubbles -- just because the house is worth $xxx today doesn't mean you will be able to sell it for that tomorrow, especially as the baby boomers retire and want to trade down.

Result: consumers getting tapped out, more bankruptcies &/or slower spending --> lower sales and profits for companies. What has kept this whole dynamic going as long as it has been is cheap goods from China, but the hidden costs of that are now facing the western economies directly.

Ironically, but no coincidentally, the best off Americans tend to have international investment portfolios. But if there is a worldwide slowdown due in part to high oil prices, even holding oil stocks won't immunize them entirely from losses.

Posted by MBA 2005-04-16 11:01:09 PM|| 2005-04-16 11:01:09 PM|| Front Page Top

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