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    Default Is the storm past?

    Is the storm past?
    June 26, 2006 (MarketWatch)

    It's been a rough few weeks, but one seasoned observer is beginning to relax, slightly. Actually, it's two, Pamela and Mary Anne Aden, who publish their Aden Forecast from Costa Rica.

    They wrote Friday: "The markets are rebounding ... be it gold, silver. The U.S. stock market, the global markets and currencies ... they are all rising from their sell-off lows, while the dollar and bonds decline. The rises have further to go."

    AntiSpin: We're not ready to take a chill pill yet. Mr. Market has a few more surprises. We need to see a lot of finance upside-down to turn right-side up before we call the all-clear. For example, there was a time when a person who failed to pay off a debt was called a "deadbeat." Now that term is applied to persons who pay of their debts. On the flip side of the Monthly Payment Consumer coin is the "I need to make loans no matter what" banker. Of course, this whole mad course of lending is driven by the need for Bank X to make more loans than Bank Y, even if both are running out of credit-worthy borrowers, to maintain growth rates of share prices. They all ran out of customers years ago, at least what they'd have classified as a viable "customer" based on credit ratings and income history in, say, 1995. Of course, you can always charge a higher rate of interest to a less credit-worthy customer. How profitable it is! In the short run. But lending money to people who can never pay it back, whether it's a "emerging market" country (read: a country run by unreliable versus a reliable dictatorships) or the Jones' after they've sunk 60% of their monthly take-home into a McMansion, it's still bad business. Is China an emerging market? Tough call. With several thousand years of history, they consider the USA an emerging power, while they've taken a breather for a couple of centuries.
    Last edited by FRED; 06-26-06 at 02:00 AM.
    Ed.

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