[lbo-talk] Alas, poor Citibank!

[Carl Remick]

On Nov 6, 2007 10:34 PM, Doug Henwood <dhenwood at panix.com> wrote:
>
> On Nov 6, 2007, at 9:28 PM, Robert Wrubel wrote:
>
> > I don't suppose there are any numbers to support that
> > oft-repeated claim -- say, total amount of new equity
> > lines last year as a percent of total sales of goods
> > and services?
>
> Well yeah. There are some numbers. Fed economist James Kennedy has
> been updating estimates of mortgage equity withdrawal (MEW) that he
> first did in partnership with a guy named Alan Greenspan in a 2005
> paper, latest version at:
>
> <http://www.federalreserve.gov/PUBS/feds/2007/200720/200720pap.pdf>.
>
> They/he estimate(s) that MEW proceeds devoted to spending equaled
> about 2% of total personal consumption from 2002-2005, and about 92%
> of house improvement expenditures (which aren't consumption, but
> residential investment). ...

Hmm, I would argue that these expenditures in household improvement
*are* consumption, not capital investment, since they have been made
prior to a collapse in housing values, thus do not now add to the
owners' equity.

BTW, I apologize for a number of egregious typos in recent posts.  I
am reduced to hunt-and-peck typing these days, and my proofreading
skills seem to have declined also -- pretty embarrassing for a writer.

 Plus, all these typing flaws serve to obscure what is otherwise
crystalline logic :)

Carl