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It should be interesting to watch. It really is all going to depend how deep this recession is. And by definition, you only have that answer in hindsight. Two quarters of poor growth.
But the general public has not yet gotten their heads around the magnatude of this current problem.
It is true that it began in the bubble of the real estate market just as the nasdq crash started in the bubble of the technology market. But this one has a deeper economic pinning to it. In this case, the bubble in real estate was created by excess credit and basically, free money. That four year plus policy created within the greater US economic system, an environment of extreme leverage. And leverage is a two edged sword and now must swing the other way. The Feds find themselves in a no win situation- if they rescue the system they recreate the same excess credit environment as before and discourage saving which is right now at zero. Only to end in a bigger crash down the line. If they ignore the problem and simply shore up the banking system liquidity, at some point they will be 'pushing on a string' and , mixing metaphors, the dominos will fall pushing the greater economy into a deeper recession.
This is why the markets reacted so badly to the 3/4 interest rate cut coming between meetings. For the 'guys in the water' it seems like a rescue plan. But for the ' guys in the boat' it seemed like an over reaction and a confirmation that the government is truly worried that we will all soon be in the water!
Koi, especially high end koi, are very often purchased by home equity loans. And this is one of the 'free money' areas that was created over the past four years. The feds are investigating many institutions that were leaning on apprasiers to over value homes for home equity loan purposes. This will be the next scandal as so many took that money out of the line of credit and spent it and now do not have the necessary equity in their homes to refinance ( 20% equity ownership is what most institutions will return to and remember most homes are only worth 80% of what they were worth at the top). So expect this credit source to tighten up in 2008-09. JR
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