fnu149

Lehman's Collapse: Broader Economic Damage Unlikely

The problem I think is that for the economy, it only feels like it has just started to turn more south. For the past 14 months, it was really the market that affected the the economy and not the other way. The collapse of these financial derivatives instruments were not the collapse of the real economy yet. Think of it this way, for the past say 10 or even 20 years American have been a big spending nation. Simply your spending money source are mainly from (your personal income form job, capital gain, savings, and borrowed funds). Savings have been depleted to a negative level already, and all I can see is that the other 3 sources are diminishing too. Yet, the consumer spending is still hanging on. But for how much longer? I understand it is very difficult to time the market to say when the consumers can no longer keep up their spending pace on a consistent basis (year plus). Yet, it is now making more sense that perhaps, we might face a bigger recession that you might think. Look at the past 20 or so years, dow jones have really go through a big bull market (rising over 1300%) Yet this is also the time period that Americans spend the most money. The question you have to ask is that can this keep on going indefinitely w/o a big correction?