stox

christian11 at mindspring.com christian11 at mindspring.com
Mon Feb 21 08:23:38 PST 2000



>No, he didn't. He said: "Other things equal, this condition will
>involve equity discount factors high enough to bring the rise in
>asset values into line with that of household incomes, thereby
>stemming the impetus to consumption relative to income that has come
>from rising wealth."

Questions: What's the "this condition" that he's talking about?

What are the equity discount factors that he's referring to?


>Brad De Long wrote:


>If earnings are a constant share of household incomes, then all he is
>saying is that price/earnings ratios shouldn't go up any more.


>At least he didn't say that they had to go down immediately...

Is this disagreement between you and Doug about the role of earnings relative to asset prices? I mean, Brad, were you suggesting that Greenspan was suggesting that asset prices could continue to go up, as long as earnings as a share of household income went up?

All best Christian



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