SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 179.78+4.1%3:54 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: marginmike who wrote (91230)1/4/2001 12:37:55 PM
From: slacker711  Read Replies (3) of 152472
 
The money in Japan was spent inflating Real Estate. The money here was used to inflate Tech stochs.

I think that this is where the comparision doesnt work. The two types of investments have significant differences in both the psychological and financial aspects. A bubble in real estate is far more likely to create a crisis for institutions than one in equities. The loans that are used to buy real estate are more leveraged and less liquid than stocks. This allows banks (and other institutitions) to keep these loans at a book value much higher than they are actually worth. It is this type of situation which creates a crisis of confidence....since you dont really know how "clean" the books of anything you invest in are. JMO....but this is what killed Japan. They never faced the depths of the problems....they kept stringing out the situation.

The collapse in equities is felt much more swiftly along the entire chain. However, it is generally limited to the chain itself (in most cases). Noone is worrying weather any of our banks is going to go under.

OTOH...I think that AG acted correctly in raising interest rates to prick the bubble. Eventually the rise in the NAZ might have caused exactly the type of situation you are talking about (prolonged recession caused by lack of faith in institutions). I just dont think that we reached that point.

Slacker
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News