>>if you disagree that the nikkei is a valid comparison, please state your specific reasons<<
Gladly. When you discuss the Nikkei you are looking at the symptom and not the problem. The Nikkei, in general, reflects the Japanese economy, its employment, and that country's ability to attract capital and dollars, etc. So your argument is flawed because you are focusing on past symptoms in Japan and are speculating that those symptoms will eventually occur in the U.S.
The main problem with Japan that led to the symptoms was the Japanese government refused to take proactive measures to clean-up their banking system in an expedient manner. When banks don't lend because of their loan problems, then companies can't borrow, and then companies hire fewer workers, and then consumers spend less, and then companies profits sink, then they lay off more workers, and around and around it goes.
The U.S. market is where it is today simply because we have dealt with our banking problems. We are now at full employment and since consumer spending accounts for 2/3 rds of the GNP, all is well. This is why the problems in SE Asia didn't have a material impact on the overall U.S. economy and thus the overall stock market. We are a consumer and debt driven economy. Until the banks shut off the flow of ever increasing credit lines to consumers, then the party won't stop. (My credit card "lines" alone have increased by 25% to well over $100,000 in the first 6 months of this year. A record rate of increase.)
I am concerned that this full employment condition will cause measured inflation. (Inflation is already occuring at a much higher level because of increasing real estate prices...which aren't measured.)
Time to (get ready to) buy the dip. I sure hope it arrives this year. The fund managers will NOT allow the DOW to close out the year below 10,000 this year. On Wednesday, "measured" inflation will be reported to be well within tolerance for the markets. Tomorrow the markets get nervous and sell off. (I pray.) |
