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Originally posted by GreenBicMan
At first glance, I am sure you are calling me crazy. Perhaps the same people that were calling me crazy when I said we would have positive GDP growth this year. But again, let me prove you wrong. It will be easier to detail this in "example" form. I basically conjugated this after visiting a friends party for their kids this weekend.
1. Family is being f-closed on.
2. Family was still going to have a birthday party for their kids either way.
3. With the money that they are not paying the bank right now, they are spending on extra presents for their kids and extra food for adults at party (important)
Now, #3 is quite important, and this alone should tell you what I am getting at. It is the AMERICAN CONSUMER at its finest. While it seems totally outrageous that they would be spending more, they ARE! So this gets me thinking..
Foreclosures are GOOD FOR THE ECONOMY. We are weeding out the weak and the people that should have never have had this loan to begin with. Now I know certain circumstances apply in certain situations, but deal with me.
Now, using this same example. This Family will continue of course to spend well over their means, but they will be doing it in a RETAIL MARKETPLACE and NOT to a bank. This family will now be renting a house that is $300 cheaper a month, and YOU WANT TO GUESS WHAT THEY WILL DO WITH THE REST?.. Thats right, spend it irrationally.
In summation, NEVER DISCOUNT THE AMERICAN CONSUMER.
Multiply this by the number of homes being foreclosed on * .75 (the variable for the average american consumer) = BULL MARKET CONTINUATION TO ME
I look forward to an interesting debate if anyone would like to disprove my theory.
Originally posted by deepred
You have built your theorem around broad generalizations, both situational and behavioral and have forced the entire consumer base into classifications needed to support your theory.