EEUU- The Bubble economy

It seems like we go from Bubble to Bubble. The Tech/Internet Bubble, the Housing Bubble, the Private Equity as Debt Bubble. We need a Bubble of Stability, for about 10 years.Banks have a big incentive to make loans. It's either that or increase the ATM fees, right? When rates are low, it is easier to service debt. The Fed was very generous after 9/11. Recall that housing and auto sales took off. Every time there is a national calamity, people should get a new car and nice new house, I guess. But this seems to be how we manage our economy, any more.Rates are still quite low. It does make sense for people to use debt when debt is cheap. The subprime mortgage problems are over here, the debt for (stock) equity is over there.
I used to own Alltel. It didn't have much debt, after they did some recapitalizations. They had a lot of flexibility. The new owners will have a ton of debt. This certainly affects the decisions they make. They, essentially, have to be quicker and more accurate in their future decisions, I think. Maybe that is a good thing.

If inflation stays low, rates will stay relatively low. Over time, debt will assume a new role. Or maybe equity prices will rise enough to make using debt unattractive. We don't know what the balance point is, and obviously private equity is another mania.

There are always changes, and people screaming that the sky will fall. Any idiot could have seen that housing was overdone. Just drive through Phoenix, winter of '05, and pick up the used Arizona Republic at an Whattaburger. We know that everything in this country gets overdone to the point of shrugging astonishment. It's as if the Fed sits around and finally says "Well, if we let that sucker go another hour, hour and a half, the economy is coming down and Western Civilization dies by the 5 o'clock news cycle."

It's not like journalists say things like "I think on that Alltel deal they have about 2.75 billion too much debt. That will crimp them when they have to build out their 4G services, and they'll end up selling off the company piecemeal around the 13th of October, 2011."

The best you can say is that there are excesses. Bill Gross sells muni bond funds that buy 'extra' bonds using debt. We make debt to buy debt. That increases the yield. I tend to think this a a silly thing to do, but maybe it works. I guess it's a funny thing about debt. It works really well, but when you get in trouble, you don't have a lot of choices.

We really like fixing huge messes in this country. That's the beauty of the thing. Bush probably didn't wait long enough, until the mess was a bloated oozing pustule. Remember when they said the S and L thing would be so bad, we'd never dig out? Or tech would never recover? I hope we are like a cat, with 9 lives. Hopefully more than 9, maybe 20.
Anyway, When writing about 'turmoils' we have to also take into consideration what the countries mission is for a long time past say for the past 25 years. It is capital formation. This mission when played can lead to all sorts of turmoils like the many explained, in the financial markets. New innovations or old ones in new packages etc; are all turmoils causing but the net result is capital being enlarged. So everyone may have one reason or the other to narrate but these are things one has to live with and wsj is doing a good job picking up the nity grity, teenie weenie things which everyone thinks is the cause atleast the decision makers can be proactive about short run effects though the long run effects are under control like capital widening.
To a previous article on balance of payment I don't think one need to worry much since the economic directive is 'if the local economy generates enough capital and whatever is produced is consumed then balance of payment deficits need not be a thing to worry about'.
So I believe debt bubble or balance of payment worries are all unfounded which are short term in nature but the longer term mission is going great guns.