Hi WTSherman,
<<I won't believe that its over until the DJI is more like 8000 than 10,000. NAZ could possibly hit 12-1500.>>
My Nasdaq target is 1400 if we are lucky, 900 if we are not; DJIA 6000. For different reasons, we can agree that matters will go lower.
<<how much this will mean to the overall U.S. economy I'm not terribly sure>>
Me neither, but prefer to watch and study for now, from the hill top, through powerful sniper scope.
<<Japan's bubble saw many times that.>>
Can not single out just real estate and compare that way, as the Japanese had more of a land crunch, higher savings, and lower interest rate to support that single aspect of the bubble. Matters are relative, and in aggregate basis, believe the US bubble has the Japanese bubble beat. The script says: bursting bubble, less security margin, more bad debt, less lending, less investment, more unemployment, less income, more unrest, less prices. Repeat loop until prices of all that is worthwhile found market clearing level, then rebuild next bubble.
<<company's and consumers can maintain their debt at levels they can afford in a down economy. I'm sure the AG realizes the importance of this, he'd better or the wheels will come off.>>
Agree with your look on debt, but believe matters more severe. Genuinely believe, by the maestro's utterances, he is less than all powerful, certainly tired, possibly senile.
<<I think this is a major difference between the U.S. and Japanese situations. The banks in Japan held huge amounts of corporate stock and real estate as "assets" on their books.>>
We will soon find out about the US bankers, so much more clever with each banking crisis, repeated at regular intervals. View is better through those high powered sniper scopes I referred to earlier.
<<Another difference is that Japanese company's have not, historically, been terribly "profitable" by U.S. standards.>>
The Japanese companies, like the US companies, must have made decent and even outsized profit at some point or other, otherwise they would not have been once feared Japanese companies. They then locked on to "built market share/capacity", financed by the bubble, and then bursted by the same bubble.
The CSCO, ORCL etc experience a momentary (historically speaking) instance of outsized profit, driven by new technologies, as these technologies never fail to do in the early days. The historic scripts support this view. Now, we will see how the rest of the script play out.
<<I don't see the same thing here. First, company's are generally much more profitable than in Japan, so they have more room.>>
I agree that this is true, on the surface. But I also think the US will tolerate no serious and massive governmmet support on the scale of the Japanese experience, and thus the markets will fall further, faster, but hopefully recover sooner. This is the opportunity, made better if the sniper rifle is loaded, and ammunition is plentiful.
<<Second, they will lay off people, and are, to keep from having cash flow problems.>>
And thus the markets will fall further and faster, as more US folks are directly involved in the equity markets than the Japanese at any time in theirs. The unemployed in Japan are cushioned by private savings.
<<Thirdly, the banks are not nearly in the same condition as those in Japan.>>
The banks are in trouble, but they are "just" banks, not people.
<<only modest inflation in real estate>> must be taken in the context that land is plentiful in the US everytime a city is allowed to expand, or new cities built. In the aggregate, it is definitely not certain that US real estate is less manical than Japans, as measured by percentage of GDP, or debt to equity ratios. I do not know these numbers, only suspect that they may be comparable, else the US folks are disappointing in the dimension of the bubble they can create.
<<Lastly, as a percentage of GNP the debt of the U.S. government is a tiny fraction of the debt of Japan's government and has been growing smaller and smaller for the past five years.>>
The Japanese government debt was perfectly manageable before onset of 15 years crisis. The government debt in the US has been cleverly transferred to the individuals, courtesy of Green$pan.
<<I think the U.S. is probably in for a rough year or 18 months of either "no growth" or "negative growth", but, that it will rebound from that.>>
I agree with that for now. So you see, we are not gloom and doomers here on the thread. We are simply cautious folks out to make a killing from a field soon to be filled with wounded companies.
<<Japan, on the other hand, is pretty much screwed.>>
Here I again agree with you for now. The specific reasons matter less.
Our primary disagreement may be on "proper positioning" to benefit the most from a pending opportunity.
Message 15452663
Chugs, Jay |
