http://www.silverbearcafe.com/privat...tion_cycle.png
the author considers the American economy to soon be moving out of the 'denial' stage, and moving solidly into the 'fear' stage
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http://www.silverbearcafe.com/privat...tion_cycle.png
the author considers the American economy to soon be moving out of the 'denial' stage, and moving solidly into the 'fear' stage
^^^ not even close. Arguably some areas of the US are more deeply into the fear stage and flirting with desperation i.e. California / Florida etc. However most areas of the US are just now reaching the fear stage, as evidenced by a relatively small cutback in consumer 'discretionary' spending. And arguably the US stock markets, with the exception of certain highly publicized sectors, still hasn't let go of the denial stage.
It's not likely that we'll reach the despondency stage until the US stock markets take a 20% decline from current levels, until the US unemployment rate flirts with 10%, until the personal bankruptcy rate flirts with 5%, until a majority of Americans must make a choice between buying groceries or paying their utility bills or buying gas to get to work, etc.
In terms of our most famous economic cycle, the despondency stage roughly corresponds to 1933 ... meaning that where we are now roughly corresponds to 1930. This also goes hand in hand with various economic projections from the big financial houses that a 'bottom' won' t actually be in until 2011 or so.
this of course is going to be driven by ongoing mortgage defaults ... from the same link ...
http://bp2.blogger.com/_5vkPiCEjjdg/...24d_resets.png
... shows that subprime interest rate resets will still be increasing in 2008, and that Alt-A and prime resets will then start to rear their ugly heads as well !
I think when the Alt-A's start showing up is when we are going to see revolving credit get hit too.
^^^ agreed ... if not a bit sooner due to foreign lender fear factor re commercial paper - which has traditionally been the source for revolving credit capital. Canada already has a fairly deep problem developing in this regard.