Is Overindebtedness Pushing Us Into a Deflationary Spriral?

"No emergency can justify the return to inflation," Ludwig Von Mises said some eons ago. Just what would Von Mises say in response to the current cycle of aggressive monetary easing, I wonder?

This Von Mises market aphorism was January 30th quote of the day on Barry Ritholtz's blogsite, The Big Picture, after the Federal reserve had cut interest rates for a total cut of 1.25 bps to 3% in just 8 days. That is some high octane stimulus.

The Von Mises quote created the fodder for plenty of chatter in the comment section that afternoon. Most of the participants considered the inflationary aspects of the Fed's aggressive monetary easing. However, as bad as the inflationary pressures are, there is a strong deflationary headwind playing out in the housing market and taking hold of the economy in a manner similar to what gripped the US economy during the Great Depression of the 1930's. In short, all the talking heads over at the Big Picture may be quite wrong-headed about their inflation expectations as a result of this monetary stimulus.

I mean, why else would the Fed so aggressively and so suddenly attempt to stimulate the economy with excessive monetary ease, and advocate swift and decisive government intervention with fiscal stimulus? Do you think they don't know the moral hazards of what they are doing? What is at stake here are the risks of another debt-deflation spiral like we had in the 1930's and therein lies their concerns. Even if they won't speak it, others are beginning to.

Consider this if you will: "In the fourth quarter of 2007, new foreclosures averaged 2,939 a day, double the pace of a year earlier. In the 1930s, lenders were seizing homes at an average rate of 3,000 a day, adjusted for today's housing stock size," according to RealtyTrac Inc.

U.S. mortgage foreclosures are set to top 1 million this year and home prices are falling at the fastest pace since the Great Depression. Bloomberg reported that the median home prices peaked in July 2006 at $230,000, and as of January 2008, the median home price has fallen 9.5% to $208,400 eighteen months later.

Merrill Lynch's economist David Rosenberg sees "potential for another 25% to 30% downside over the next two years" in home prices on top of the already 9% drop. A 35% drop from the peak median home price of $230,000 essentially reprices it to $151,000 in 2010. Many homeowners at risk have no money down in their home. To a degree then, the financial burden will not fall on the homeowners losing their homes, but back on the financial institutions and loan originators involved in this whole credit creation/lending process.

Financial institutions' real debt burdens are beginning to soar amidst a current debt deflation crisis created by escalating foreclosures and falling home prices. To mitigate the burden of this growing crisis, there is anecdotal evidence banks are beginning to liquidate these unwanted assets at firesale prices. Deutsche Bank and other banks have been slashing prices on repossessed homes to get rid of them. In a recent transaction mentioned on BusinessWeek's Hot Property blog, Deutsche Bank sold a house in Woodbridge, Va. in December for $150,000, less than half its last sale price of $315,000 in the spring of 2005.

If the median home price declines anywhere near 25%, this could spell B-I-G T-R-O-U-B-L-E for the U.S. economy. "Keep in mind, says Merrill's Rosenberg, that the relatively puny price decline to date has already pushed home-loan delinquencies to their highest level in 20 years."

The Call for Intervention

Lehman Brothers' Thomas Russo said "The direction we are heading isn't a good one. We need significant fiscal and monetary intervention. The measures being taken by the Hope Now program to freeze ARM resets being advocated by everyone from Treasury Secretary Henry Paulson, Goldman Sachs, JP Morgan, "just aren't enough" says Russo.

"The whole financial system has taken an amazing hit already and the bulk of the mortgage resets are still to come... Declining home values will prompt people to snap their wallets shut [leading to underconsumption]. ...About $550 billion of subprime loans will reset before 2009 and most borrowers will have no option except to walk away, because the drop in home prices and an increase in lending standards will prevent them from refinancing or selling."

Housing Crisis is Already Reaching Catastrophic Proportion

William McCarthy, a 62-year old mortgage broker, who declared bankruptcy in July 2007 when his 18-year old mortgage business failed, said he had "a client who called me sobbing because his wife committed suicide rather than face eviction."

McCarthy himself is facing eviction Feb 11 after his lender foreclosed on the interest-only ARM he and his wife took out in 2005, for a ranch home without stairs to help his wife out who has a heart condition. They planed to sell their primary residence before the ARM reset, but it did not sell. "Now, they are losing both properties" reports BN. His wife "goes to bed crying every night, and there is nothing I can do" says McCarthy. The banks won't even return my calls."

But will intervention work? However much Russo and others would like to see interventionist methods work, many government agency programs simply are not working as hoped for. President Bush proposed helping 1 million subprime borrowers avoid foreclosure with state tax exempt bonds, but "states don't want the risk any more than private lenders do." States and state municipalities are in a boatload of fiscal trouble to begin with. Falling home prices mean falling property tax receipts. If anything, they will have to borrow money to stay afloat themselves!

But that is not even the issue - 'yet.' State housing agencies already offering refinancing options are finding that "more than 50% of subprime borrowers are being rejected by state programs because their homes have lost too much value or they have accumulated too much debt. Often the borrower just has too much debt and the home does not have the value to support the refinancing" said Geoffrey Cooper at MGIC. That is the beauty of how negative amortization works.

Dawn Larzelere, director of the Ohio Housing Finance Agency found many applicants to be ineligible because they'd missed a mortgage payment in the last year. "I don't think our lending standards are too high. I think people have gotten in too far over their head" she said.

It is for reasons like this that Alex Pollock, former president of the Federal Home Loan Bank of Chicago, is urging "the creation of a federal lending agency based on the Home Owners Loan Corp., or HOLC, created by Congress during the Great Depression."

An Eternal Housing Boom is Out of the Question

General economic theories about 'overinvestment' and 'overindebtedness' suggest that once a boom ends and the contraction begins the downturn is accompanied by deflation. That certainly seems consistent with where our current boom-bust cycle in the US housing market is headed.

Wilhelm Ropke described the phenomenon as follows: "The credit expansion setting the boom going proceeds by way of the interest rate being 'too low.' The too low rate invited a general increase in investment, which then leads the mechanism of the boom drifting towards its ultimate debacle. ..Introducing a general overinvestment disrupts the equilibrium of the economic system. It allows more to be invested than is saved, and makes available the necessary increase in money capital from credits, which do not originate from savings, but are created out of nothing through the banking system...The demonstration that the credit expansion of the boom leads to overinvestment provides at the same time a proof that the capital formation induced by credit creation, and the extension of production that it sets going, leads to a painful reaction expressing itself in the crisis and depression. This reaction can indeed be postponed by a further increase of the credit supply but only at the price of a corresponding aggravation of the ultimate reaction. An eternal boom is therefore out of the question. - Crises and Cycles circa 1936

Elaborating on the solutions attempted by the government and Federal Reserve during the 1930's Freidrich Hayek observed that, "To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which bought it about. Because we are suffering from a misdirection, we want to create further misdirection....We must not forget that for the last six to eight years, monetary policy all over the world has followed the advice of the 'stabilisers.' It is high time that their influence, which has already done enough harm, should be overthrown." - Monetary Theory and the Trade Cycle circa 1933

A century before Von Mises, Ropke, and Hayek, there was John Stuart Mill, another laissez-faire proponent who held the opinion that "in all the more advanced communities, the majority of things are worse done by the intervention of government than the individuals most interested in the matter would do them, or cause them to be done, if left to themselves." - Principles of Political Economy, circa 1848

Modern Day Laissez-Faire

Echoing Wilhelm Ropke of yesteryear is Pimco's Mark Kiesel who has recently been quoted as saying that "rescuing borrowers will only worsen the economic misery for everyone. Keeping the market from correcting itself only prolongs the problem....The housing market will find its own bottom, without a government bailout." Kiesel is suggesting that market forces today are akin to the debt-deflationary spiral of the 1930's and that they are simply far more powerful than any measures interventionists can hope to achieve.

Irving Fisher, another economist who lived through the roaring twenties and the Great Depression, believed the "great cause of overborrowing" was easy money. "The depression grew out of a boom, which started in a credit currency boom, which started from a debt boom...there were international debts of every description, long and short, public and private, the obligations running in every direction."

What Fisher describes about obligations running in every direction back in the 1930's is eerily similar to the runs on our modern day Shadow Banking System (a term coined by Bill Gross and Paul McCauley and which I have written about in earlier reports), where subprime counterparty risks are unknown and unquantifiable, morphing into a thousand "Waldo's" popping up everywhere as the housing crisis evolves.

The heavy debt burdens borne by subprime borrowers today is fast becoming heavier with falling home prices. The big fear today is that falling home prices amidst ARM resets borrowers can ill afford, will lead to distressed selling, which will further depress already falling home prices - creating a debt deflation spiral that Irving Fisher addressed 70 years ago.

The Liquidation Stampede

Irving Fisher goes on to say that "if liquidation for some reason gets into a stampede, it wipes out credit currency, which lowers the price level and reduces profits, which forces business into further liquidation, which further lowers the price levels and reduces profits and so on and on - a tail spin into depression, ...We now come to the paradox that if the debt gets big enough, the very act of liquidation puts the world deeper into debt than ever. Each dollar represented in the unpaid balance grows faster than the number of the dollars reduced by liquidation. Payments could not catch up with the 'real' indebtedness - the more we paid the more we owed...the people's real debts are heavier than in 1929, heavier than in 1932, heavier than ever before in all history. Their interest, rent, and taxes are also heavier, and at the same time, their real income and real wealth are less."

According to calculations by Macroeconomic Advisers, the last time household real estate, stocks and real incomes all declined in a quarter was during the 1974 recession, reported Bloomberg on Jan 29. `Wealth had been rising because of strong home prices'' and stock gains, said Chris Varvares, president of Macroeconomic Advisers in St. Louis. ``Now, we are losing that prop to consumption, so it all comes down to growth in real income.'' As these three-legged props to consumption are all flattened out simultaneously, the downward risks to consumer spending and 'underconsumption,' as well as the economy, begin to mushroom. The only viable prop left to the economy may just be a huge increase in government spending (see Gross' comments below).

We live in times with striking parallels to Hayek and Fisher's 1930's style depression and possibly the 1970's. We already have rising interest rates on falling home values (via ARM resets), higher rents. Just how far are we from the brink of a 1930's style liquidation that "gets into a stampede?"

How badly this story plays out in the end, no one has a clue. Do the interventionists and 'stabilizers' save the day? Or will the boom-bust theories of Laissez-Faire economists Ropke and Kiesel come to fruition, possibly leading to a liquidation stampede and debt deflation spiral that Irving Fisher and Friedrich Hayek witnessed in the early 1930's?

The Dreaded D Word

One thing is crystal, there is unanimous consensus, even if the D word has yet to be uttered, on both sides of the camp that the US economy is at risk of entering the mouth of a debt deflation spiral, one which could put us on the brink of economic collapse reminiscent of the Great Depression. I am not saying the scenario is a plausible one, but this worst case scenario is more real and more tangible than at any other time in my life.

Bill Gross in summarizing the main tenet of Paul Krugman's book "The Return of Depression Economics', 1998, argues that "the crucial task of future policy would be to bolster demand as was the case in the FDR-driven 1930's as opposed to encourage supply which has been the case since the Reagan revolution."

"Because [Gross goes on to say] demand in the form of consumption has been artificially and fictitiously stimulated in recent years by financial engineering run amuck, there is a legitimate question as to whether its black hole imploding destructiveness can be totally countered with another dose of lower yields and deficit spending packages. The $150 billion "return to sender" deficit plan advanced by Bush and the Congress, for instance, amounts to just 1% of GDP and is of marginal benefit to long-term prosperity…

The U.S. needs a Krugman "demand-based" fiscal package alright, but a $300-$500 billion permanent one, because as the system of modern day levered shadow finance slows to a crawl, or even contracts at the edges, its ability to systemically fertilize economic growth must be called into question. To provide a stable recovery path, government spending needs to fill the gap - not consumption. Public works programs, badly needed infrastructure repairs, as well as spending on research and development projects should form the heart of our path to recovery.

"As Keynes theorized and then Krugman affirmed, when private demand falters, it becomes the responsibility of government to fill the breach. Because it likely will not do so effectively until after a new Administration is elected in late 2008, the U.S. economy and its somewhat coupled global companion will sleep walk for some time and a resumption of prosperity as we knew it will be dependent on reforms of monetary and fiscal policy resembling the 1930s more than our past decade." - Gross' emphasis not mine

Sources: Business Week, Bloomberg News, Pimco.com, Marc Faber, Tomorrow's Gold

Comments

[User 146128]

Classical Keynesian "pump priming" alone won't "fill the breach".
Stagflation won't go away without corrrecting the current account deficit.

[flow5]

The Gospel:
Aphorism? “Federal reserve had cut interest rates for a total cut of 1.25 bps to 3% in just 8 days. That is some high octane stimulus” Interest rates operate through the supply of and demand for LOAN-FUNDS, not according to the Keynesians, supply & demand for money. There’s no such guarantee that a decline in interest rates presages an increase in monetary flows (MVt). Plus, “easy” money & “tight” monetary policies are relative to the supply of goods and services offered in the marketplace

It isn't within the power or responsibility of the Federal Reserve to hold unemployment or even Gross Domestic Product to "tolerable" levels. In fact, to assume that the Federal Reserve can solve our unemployment problems is to assume the problem is so simple that its solution requires only that the Manager of the Open Market Account buy a sufficient quantity of U.S. obligations for the accounts of the 12 Federal Reserve banks. This is utter naiveté.

“We must not forget that for the last six to eight years, monetary policy all over the world has followed the advice of the 'stabilizers.'” Pure tripe. Monetary policy has relied on a “Taylor” like rule with assorted condiments (i.e., the federal funds bracket racket). It’s intuitively obvious that there were colossal rates-of-change in monetary flows (MVt) associated with the housing boom. Contrary to Gross there’s nothing artificial about these numbers.

“Von Mises, Ropke, Hayek, John Stuart Mill…laissez-faire proponent who held the opinion the majority of things are worse done by the intervention of government…": Encouraged by our “deregulated” environment, commercial bank legal reserves are no longer binding, and under the prevailing administrative “climate” institutions that provide a “financial smorgasbord”, including the capacity to create money have proliferated. We have discovered, too late, that money creation cannot be exposed to the forces of a free market. The money supply is not self regulatory. If private profit institutions are to be allowed the “sovereign right” to create money, they must be severely regulated in the management of both their assets and their liabilities.

Gross’s nondescript notion of “a showdown banking system” is queerly Keynesian. I.e., the lending capacity of financial intermediaries is almost exclusively dependent on the volume of monetary savings placed at their disposal. The commercial banks, on the other had, could continue to lend if the public should cease to saving al altogether. The lending capacity of the commercial banks is dependent on monetary policy, not the savings practices of the public.
If there is a parallel today with the Great Depression it is that we suffer from a brew of ill-advised deregulation and regulatory permissiveness that fostered an atmosphere in which greed seemed to triumph, especially if a little fraud was diluted with a heavy dose of incompetent supervision by the authorities & their examiners.
(1) U.S. needs a Krugman "demand-based&quo... fiscal package alright, but a $300-$500 billion permanent one” (Classical Keynesian pump-priming) (2) “Keynes theorized & then Krugman affirmed, when private demand falters, it becomes the responsibility of government to fill the breach”, (3) dependent on reforms of monetary and fiscal policy resembling the 1930s more than our past decade. Krugman & Gross bastardize reality

There were years during this period when the “free” excess legal reserves held by the member banks were larger than the volume of “free” required reserves. The exercise of Fed policy was likened “to pushing on a string”.
Relative to nominal GDP we had the highest deficits during WWII and interest rates approximating the lowest levels of the Great Depression. Interest rates on Treasury obligations ranged from less than on percent on TBs to 2 ½ percent on long term bonds. This was accomplished by the Fed pegging the rates on all governments through the unlimited use of their open market power.
At the same time due to rationing and the absence of available goods transactions velocity of demand deposits fell from around 20 to 13. The production of houses and automobiles was virtually stopped and credit rationing severely reduced the demand for all types of goods and services not directly connected to the war effort this plus controls on prices and wages kept the reported rate of inflation down.

Not only were World War II deficits an unprecedented proportion of GDP; about 45 percent of the debt was monetized
It should have come as no surprise that we did not have a “primary” post-war depression; our problem was excess demand and inflation, not deflation and depression. By the end of 1942, unemployment was no longer a problem, and the bankers had fully regained their confidence; the banks no longer held excessive legal reserves. Massive deficit financing had ended the Great Depression.

It was true, as the Keynesians insisted, that monetary policy didn’t matter; fiscal policy was everything. No more. Never will we allow a financial panic to get out of hand, and never will we have another Great Depression. That does no mean the future is rosy. The future holds the prospect of sharply declining levels of consumption for the vast majority of the American people, who will be facing years of stagflation. It is probable that we will never be able to dig ourselves out of the present morass of debt and still operate the economy within the framework of a free capitalistic system.
Paul Krugman's book "The Return of Depression Economics', 1998, argues that "the crucial task of future policy would be to bolster demand as was the case in the FDR-driven 1930's as opposed to encourage supply which has been the case since the Reagan revolution…Public works programs, badly needed infrastructure repairs, as well as spending on research and development projects should form the heart of our path to recovery.”
The basic idea of supply side economics is to create an economic milieu that will foster increased production of higher quality goods and services which can be marketed at competitive prices. To achieve these objectives we need to reduce monopolistic elements in the price structure (monopolistic prices of goods or services tends to increase prices and restrict output); increase labor productivity; reduce unit labor costs; reduce transfer payments to the non-productive sectors; eliminate excess regulatory burdens, excessive rates of taxation on producers and savers, etc.
Like Krugman’s position: There is one all-important ingredient that the supply-siders ignore; namely that the demand for capital goods is a derived demand, derived from primary consumer demands. That even in a capitalistic system the end and objective of all production is human consumption. The demand for inventory or plant and equipment, however far removed from the ultimate consumer, is derived from final consumer outlays in the marketplace.
If the monies represented by Deficit financing are spent on projects which increase productivity and reduce waste, the deficits are beneficial no matter how financed. The initial inflationary effects of bank financing are quickly overcome by the larger output and lower unit costs. Debt incurred which reduces unit costs of production and promotes the health and welfare of the population obviously is “good” debt.
Debt incurred to finance transfer payments (interest, pensions, etc.) is of dubious quality.. Any enterprise, private or public, is in dire straits if it has borrowed in order to make such payments. That is to say classical “pump priming” will provide only some relief. There is a finite limit to this “remedy” Deficit financing to rescue the economy from a depression or even to prevent recessions because of the deficit’s sheer size.

Conspicuously absent from the prescriptions presented is our current account debacle. The U.S. dollar is no longer a safe haven for foreign capital. Nowadays there is a significant exchange rate risk. And the U.S. is no longer an economically undeveloped nation, but is increasingly an international debtor, what evaluation should be places on our huge trade and current account deficits? For the very short run these deficits keep prices and interest rates lower than they otherwise would be and they subsidize our standard of living. But the deficits also are inexorably forcing the dollar down in terms of its foreign exchange value—and no consortium of central bankers, treasury secretaries, et al. can stop the process

With a chronically depreciating dollar foreigners will be much less inclined to invest in the U.S. on a creditor ship basis, thus pushing up interest rates. The rising cost and diminishing volume of imports will contribute to an increase in inflation, and the expectation of further inflation will also push up interest rates. This spells stagflation.

A weak currency is not a cause; rather it is a symptom of a weak, noncompetitive economy. In time, of course, a declining dollar will eliminate the deficit in our balance-of-trade. But the price exacted will be a sharp decline in imports, principally oil, and the purchase of foreign services, reflecting our relative poverty and inability to compete in the international economy. The fact that we are the world’s number one producer of smart bombs will not arrest that trend.

The real culprit seems to be the cost of our products relative to their quality. Inferior is not a good buy at any price. The problem is that further depreciation of the dollar will not correct our foreign trade deficit.
Nouriel Roubini
“The “shadow banking system” (as defined by the PIMCO folks) or more precisely the “shadow financial system” (as it is composed by non-bank financial institutions) will soon get into serious trouble. This shadow financial system is composed of financial institutions that – like banks – borrow short and in liquid forms and lend or invest long in more illiquid assets. This system includes: SIVs, conduits, money market funds, monolines, investment banks, hedge funds and other non-bank financial institutions. All these institutions are subject to market risk, credit risk (given their risky investments) and especially liquidity/rollover risk as their short term liquid liabilities can be rolled off easily while their assets are more long term and illiquid. Unlike banks these non-bank financial institutions don’t have direct or indirect access to the central bank’s lender of last resort support as they are not depository institutions. Thus, in the case of financial distress and/or illiquidity they may go bankrupt because of both insolvency and/or lack of liquidity and inability to roll over or refinance their short term liabilities.”
This evaluation concerning the financial intermediaries is universal. There is total myopia and a complete misconception concerning the fundamental role of the commercial banks vis a vis financial intermediary’s .in the savings-investment process. Economists haven’t been unable to fashion the role of the commercial banks from a system’s standpoint. Commercial banks create new money when they make loans to or buy securities from the non-bank public. The commercial banks do not, and cannot, loan out existing deposits. .The confusion arises from a unique feature of the commercial banking system; the whole is not the sum of the parts in the money creating process.
Like Roubini says, the universal problem encountered by the financial intermediaries has been adverse interest rate differentials, the difference the intermediaries paid to attract and hold savings, and the return on long-term lending commitments made at an earlier and lower rate periods. Even for the most efficient intermediaries, a positive spread of at least two percentage points was required to break even.
What we should be concerned about is how to promote the orderly and continuous flow of monetary savings into real investment. And that objective is accomplished by eliminating the payment of interest on savings deposits at commercial banks (Reg Q in reverse). The revival of financial intermediaries is dependent on it (a repeat of 1966).
Quickly the principle issues: Everybody flunked accounting:
Commercial Banks as a system don’t loan out anything. They create money when they make loans
Money creation is not self-regulating
You can’t take money out of the banking system (only the FED can)
Savings transferred through the intermediaries never leaves the CB system. The intermediaries are the customers of the CBs.
Savings held within the commercial banking system are lost to investment or to any other type of expenditure.
From the standpoint of the economy the banks shouldn’t pay for something they already have. Payments on CB savings raise all interest rates; induce disintermediation among the financial intermediaries, shrink real-gdp, & decrease CB profits.
The long-term solution for the financial intermediaries (which originally didn’t have Reg Q ceilings) is to get the money creating depository institutions out of the savings business.

[TexasRadio]

Hey flow5,

Instead of going on like Jude Wanniski, why don't you submit these article length comments as.....articles? I am sure Seeking Alpha would at least consider publishing them.

[History101]

NAFTA, policing the world, and funny money are now rearing their ugly heads. We will never come to grips with this problem. Years ago, bankers learned how to create wealth out of thin air. Politicians, industrialists, and military leaders learned how to tap into the banker wealth.
Our towns used to be full of stores that sold United States made products. As time went on and real income declined, in order to maximize short-term profits, manufacturers shipped our jobs overseas. We brought in the Wal-Marts to bring us cheap goods from around the world. Now, we have dollar stores for those that cannot even go to Wal-Mart. No jobs, no money, no homes. How long did they think this could go on?

[MyronShlapak]

Good point History101 except that trade is not the problem. The problem is Competition. If you believe in a Capitalist society then you must believe in Competition. The competition is killing us.

Had the bigwigs in Detroit spent the money on research, instead of giving themselves ever-larger bonuses, they might have developed a more fuel-efficient car. A car that got 100 miles to the gallon, looked well ran cleanly and needed only minimum maintenance. Would it matter much if the car cost a couple of thousand more because it was made in America. I don’t think so.

[jurp]

I once showed a fellow where a a shoemaker was, and how new resoles, would save him money to pay off 32k in credit card debt.
(yes, he had a graduate degree)

So, if/when money/loans/job is not available, goods must go down until a buyer is found. Hence the 1921 house I grew up in, declined 5k a year until it was bought for 20 k in 1941.

Unfortunately one has to be 77 years old, like me, to remember WPA workers on the corner, families doubling up in one house.

May the 47 million baby boomers enjoy their forced education in thrift.

[flow5]

"May the 47 million baby boomers enjoy their forced education in thrift." That's an understatement.

[WAKEUP]

I try to read as much from all points of view as I can, on the current financial situation. Frankly, all I see, so far, at best, is a lot of hopeful scenarios. No one has a comprehensive plan for solving this mess, at least no one whose thoughts I have been able to find in print. The truth is, it's looking more and more like we have easy-monied ourselves into one hell of a classic mess, and until most or all of the fictional wealth that was created is gone, we are left with one fact: It is not going to be warm and fuzzy, financially, for a long time (A decade would be a light sentence.) Recession is inevitable, and depression is not out of the question. And yes, I am talking about a situation in which almost everybody has number of friends and/or relatives who are out of work, if they are not out of work, themselves. Houses and cars will be cheap, but few will be able to buy these things, because of unemployment or inability to qualify for a properly underwritten loan. Auto repair shops and home repair companies will do well, I think, because people will repair what they have, after they realize they can't just go out and buy a replacement item, the way we've gotten used to, lately. The weak will commit suicide; the rest will learn, at last, to save at least a small portion of what they earn, when they are working.