Poor Japan, once the envy of the world now a basket case on its death
bed looking for help from an indifferent and clueless world. The Japanese people saved, saved, saved while the corupt government and its crony banks pilaged and drained the system of most of its wealth. Japan is like an Alchoholic dying of psorosis they're watching the US on a six year drunken buying binge for which they have been funding with its Treasury purchases. Japan looks at the US and reminisces of the good times back in the 80's. Times when they paid $ 2B for a golf course or $ 120M for a Van Gough painting, $2M for a 1 BR apartments in Tokyo or $1M for a Golf Membership.
Fast forward a decade and you have the US in a feeding frenzy with it's bloated stock market with it's ever expanding PE's. Grandmothers, Soccer moms, Blue Collar workers all invested. The US with $5K Beanie Babies, $ 500 Tickle Me Elmos, $ 50 cigars and $ 200 steaks and countless other signs of excesses. Will Japan go quietly or will they take the US and the world with them?
The bubble gets bigger, the blowoff more dangerous. The market went to 6,800 when Korea (# 11 economy) collapsed. The forecast was for 10% growth in 98 and the economists told us the US is an island onto itself. Fast Forward to today,the market is 30% higher, the # 2 economy is on the verge of collapse, Russia is in revolt, Asia is barely holding on and South America may be the next to go and Earnings for the 1stQ are down .4% with clouds on the horizon.
If our market pulled back in October from 6,800 to say 5,500 that would have been a healthy correction. If the market now goes from 9,100 or 9,500 to 6,500 or 5,500 in a month or two the margin calls, cash shortages in funds, derrivatives unwinding and panic in general may plunge the US and the world into a recession/depression. |
