Saturday, March 26, 2005

A Consequence of Recession

One inevitable consequence of recession, especially one which accompanied an interest rate spike which made meeting mortgage payments difficult (either because you're unemployed or because you took Uncle Alan's advice and got an ARM), would be that large numbers of people would dip into their 401(K) plans. They'd pay their taxes, pay the 10% penalty, and drain the accounts.

On a positive note, however, this could cause the stock market to crash so much that price earnings ratios would fall to levels low enough that the future growth predictions by privatizers would be plausible!