http://www.contraryinvestor.com/moprinter.htm (repost of VERY important read. AUGUST ESSAY)
Rarely do I repost a link, but I wanted to make sure all my readers got this one and spent the time reading and digesting it. If you hope to, or this is your desire to understand our current environment then do not skip over this read.
I finally got around to doing so this morning over coffee, and all I know was crystalized in an instant.
INDEED, our economy IS the housing market and the consumers ability to continue to EXPAND it's credit/debt now more than ever before.
More than 80% of previous GDP was housing and consumption!
Things are different this time?
Yes they are, after every previous RECESSION, Consumer's REAPAIRED their balance sheets, pulled in their horns. NOT this time! credit debt continued to expand even as housing prices rose, % of home equity has not! Homes were used as an ATM machine. (also consider NEXT Recession, we will have NO pent up demand to dig our way out!)
Knowing that SO many extremes exist, historical levels, and knowing that our entire economy depends on this continuing is what is at the root of my worry.
For those who think Alan Greenspan and the FED are some kind of miracle workers, may have a change of heart after reading this article.
I have made it my purpose, to cry out to anyone who will listen to consider what may lie ahead. And if I help ONE person avoid disaster, I can live with that.....should my concerns be born out.
Now, more than ever before, the shell game must continue, but of course indefinately it cannot, and it is MHO, we are at the "rubber meets the road" intersection. This folly of ever expanding debt and leverage already reaching new extremes, is running out of time.
Duratek
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