I agree with everything wildbill wrote and I'd add a few things:


"Getting back to debt - with all the equity losses in the markets - a few trillion now since last spsring - thats a few trillion that can no longer be used to service debt much less retire it."


I'm not sure if your talking about corporate debt or debt held by consummers.


" Next, what will happen is companies like GE, Xerox, etc., will have to sell bonds to raise cash to service debt as will individuals - provided that they own bonds."


Ok it seems like corporations because it's unclear what you mean about individuals selling bonds. Doubtful that this would happen. It's much more likely that and I think the past 20 years have born this out is that corporations will cut costs significantly instead of leveraging their operations. In fact there's a definite trend in increasing unemployment now. What this endangers is consummer spending. Which is 2/3 of GDP.


"That will drive interest rates up while further depressing the markets."


If corporations leveraged themselves a great deal I would believe this to be inflationary.


"This was a debt implosion that had to happen and was happening before the tragedy - and now exacerbated by it. Mortgage delequencies are now in percentage terms at the highest rate than since the GREAT DEPRESSION."


The 'D' word being thrown about that's a bullish sign.


"Next will be credit cards going belly up, then corporate debt which is held by major banks and brokerage houses. DEFAULT, DEFLATION, AND DEPRESSION - the three D's, are here. Oh yes, the biggest component of GDP will fall next - medical care costs."


There are 4 components to GDP consummer spending, government spending, investment spending, and net exports. The biggest component of GDP is consummer spending. As I've written before government spending is on the rise; our net exports are on the rise witness our recent decline in balance of trade deficits and decline in the dollar; investment spending has been in a depression for about a year now and really has nowhere to go but up especially given the current interest rate environment; and consummer spending is softening. Consummer spending is the big economic risk right now IMO and certainly this tragedy hasn't helped consummer confidence. However, there are a lot of incentives for the consummer right now so we'll see how things play out. The markets will be watching the consummer sector very closely.


"If people in their 50's are losing money at a rapid rate in this market - believe me they are not going to pay $700-$800 per month for a health insurance plan - and neither are their employers."


They'll probably be trimmed from the work force in a declining economy.


" Doctors may have to deliver babies for a chicken down the road. Same with drug manufacturers - the prices will have to come down or they will be resonsible for practicing human euthanasia on a massive scale as people simply wont' have the money for their medicines."


Lot's of doom and gloom. True or false, there is seldom euphoria near a market bottom?