CAR,
I fail to see the relationship between asset prices and unemployment insurance extensions. For you everything seems to be about unions and globalization.
If the asset prices are maintained for the rich, then you the poor unions/middle class can force their hands by reverting to simple living, not buying their stuff and maybe not even paying taxes. Paying taxes can be avoided if poor simply barter goods/services with each other.
If the union folks and middle class default things and default big time, the asset prices are bound to fall. However, they will never get that next ipad or the smart phone on credit.
But going back to my original question, the drop in asset prices will affect the rich most. The unions and middle class had nothing to begin with other than being sold some “dreams” and “told” about things.
The question is: how will the creditors react when they find out they have lost a chunk of their asset values and very little to claim against it?[/quote]
Asset prices (receivables and the value of that debt) can remain artificially high if the Fed/govt maintains the ability of the working/middle class to pay off their debts. We can “extend and pretend” for much longer, and during this time, much of that privately held debt can be sold off to the govt (think: refinancing privately-held mortgages to govt-backed GSE/FHA mortgages, etc.).
For as long as payments are being made, the value of the debt held by “the rich” can remain higher than if all debtors were to default en masse, which is exactly what would have happened if we didn’t get all the interventions.
