RE: Holiday Sales May Be Worst in More Than Decadeasy credit = higher debt levels, higher debt levels = higer repayment obligations
higher repayment obligations = less money chasing goods, less money in capital goods, stock buy-back yada yada
in an environment of overcapacity (post bubble) this results is asset values falling
higer levels of debt mean more people are selling assets which just reinforces that action
Fed has tried to ease the debt repayment obligation by lowering interest rates...although the rates paid by corporations have not been affected unless they ahve renegotiated
Of course some people have not used the lower rates to pay off more of thier debt, but to in fact increase their debt levels
At some point easy credit becomes irrelevant , creditors do not want to lend money to people/companies whose debt levels are too high
and people/companies with high debt levels don't want to borrow
money gets sucked out of the economy and into paying off debt. Assets get sold off to pay off debt. the demand for cash (Visa doesn't accept bullion) goes up and assets, and all assets, get sold off at firesale prices to pay off debt
the bottom of equities deflation will probably be marked when companies start buying each other for cash (say intel buying jdu or nortel)