Interesting article, Ron, thanks for posting. I think it illustrates one of the differences between our bubble and Japan's bubble. It says, "The authorities have been struggling to deal with the problems of debt deflation for just over 11 years now. However, land prices are falling faster than ever and the Nikkei 225 index is in danger of setting a new low for the post-bubble era." A good deal of the debt was created over a decade of wildly inflated real estate prices, which pushed up "value" of everything else as well. While people in Silicon Valley, NYC, and maybe a couple of other places might disagree with me, that sort of widespread bubble doesn't exist here. Not to that extent, at any rate. Of course, I know some real estate agents who think that they would love to help make it happen. But our deepest bubble didn't become the underpinning of our entire economy the way Japanese real estate did.
That is why it was OK for AG to hold off a little long on dropping rates, and why he should probably be cautious from here on out. However, he is treading a fine line, as he doesn't want to cause a recession which might stoke the fires for a large tax cut which might lead to another bubble which in turn would lead to disaster. Better slower and steady growth than unbalanced torrid growth, IMO. |
