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I'm considering buying some USG because the upside potential seems so great if the housing market (and USG) return to their previous highs. But I have some reservations that I wonder if folks here have considered:

1) I know USG went bankrupt in 2001 due to the abestos settlement. But I have seen some reference to earlier bankruptcies. Has USG gone bankrupt during earlier housing downturns? If this is true, are we to believe they have the financial strength to survive today this mother of all housing meltdowns?

2) An Overbuilt Country: Our political leaders have been using housing to prop up the economy for years by relently stimulating overbuilding in the housing market. We are the most overhoused country on earth. Our cities are in an advanced stage of decay, with vast tracts of abandoned housing because government has contrived a whole array of incentives to assure that more housing is built every year than we really need. Every housing start that exceeds our real needs setts in motion a process that ends in another house falling vacant in our inner cities. The finacial meltdown we are suffering today might just lead to a return to sanity and we will be building many fewer houses in the years ahead. If so, USG will be many years returning to it's former heights.

3) Profit Margins: Margins in Drywall (and housing in general) are better when politicians accomodate the industry by pumping it until it reaches boom proportions. I'm guessing we won't see the industry at such peak intensity anytime soon. So even if sales achieve 80% of the past pace, profits are likely to remain below that level.

Are these factors why USG has declined so precipitiously? Does USG not have a realistic chance of returning to recent highs any time soon?
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