Maniac in Motion

3 Reasons Why the U.S. Will Avoid a Recession: I'm Skeptical

You bring up good points. We don't have savings to absorb any more shocks. Foreigners are evidently not inclined to buy more US assets, and we should be fearful that we begin seeing outflows of T-bill securities.

Moreover, the guy writing that article misses the point. The rally recently compensated for passing over the crisis. What's still priced into the market is decelerating cash flows from losses of jobs. Less jobs available, less income, less cash flow to pay debt.

The expansionary forces assume we still are irrationally exuberant to buy more Garmin GPS units for all out friends. With the news tossing out the R-word and the F-bomb (foreclosure, people) on a nightly basis, it's pretty safe to say consumers are more carefully watching how they spend their money right now.

The affordability index naturally assumes current incomes and cash flows. And you know what happens when you assume. If jobs are declining, overall incomes are declining, and the affordability index rises. We evidently won't see that change until the National Association of Realtors stops saying, "It's always a good time to buy a house," and revise the median income they use to calculate their indices.