HJ, you need to raise your standards; this article is seriously flawed throughout.
"But as the numbers become bigger the potential consequences for the US are more hair-raising. In fact, US household savings have declined, as a percentage of disposable income, from 10.6 in 1984 to an estimated minus 0.3 per cent in 2001, according to the Organisation of Economic Co-operation and Development - the lowest in the OECD area apart from New Zealand. "
This obviously omits small business/family bus ownership (completely unkown to people in most countries of the world), IRA's, 401ks, 403bs, Education Savings acounts that are in fact sponsored by our own state and federal governments, and home equity.
Besides, the Japanese are the world champions in saving their money in bank acounts, and look where it has gotten them!! Why do all the "experts" always ignore this inconvenient fact?
"The disproportionate role of the stock market in the American model thus results in more extreme imbalances than elsewhere. "
"elsewhere," the machete, the gun, rampant government corruption, phony real estate "values", socio-economic class, and/or socialist government oppression are the key factors in the economy. Is that better than a daily auction of company equity shares? I think not.
"Such market dependence creates a heightened risk of boom-and-bust cycles and financial disruption. "
In 95% of the world, there are no "boom-and-bust cycles" because there has never been a boom. Just thousands of years of bust. Only strife and chaos and vast adult populations who can only steal and pimp their kids to get money. And in England, the big cycles are centered around tourism, coal, and north sea oil. In France it is who should get the most welfare from the govt - the "students" or the 30-somethings (actually in France most of the 30-somethings are still "students" since there are no jobs.) They all feed off it! oh well.
<<The business sector, meanwhile, is already in the grip of a sharp negative wealth effect precipitated by the plunge in technology stocks on the Nasdaq exchange. >>
anywhere else, there would be goons in the streets burning cars and ransacking stores.... and they would call themselves "students"
"The trouble with a model that is so vulnerable to the mood swings of markets is that central bankers have not worked out how to manage the moods. They hesitate to make asset prices a target of monetary policy because they are reluctant to make judgments about the "right" level for markets. "
This person has no clue as to the role of the Fed.
"Once the mistake is made and they are at the wrong end of a boom-and-bust cycle, central bankers have to confront the problem of steering between the perils of inflation and deflation. "
Article author has no clue as to the role of the Fed.
"The difficulty is that slashing US interest rates in the hope of propping up stock markets may not have much impact if households and businesses are bent on rebuilding their balance sheets. If, on the other hand, the interest-rate remedy does work, the imbalances in the economy will be exacerbated. So the Fed will be digging a bigger hole. "
This person has no clue as to the role of the Fed.
"Parallels between the US today and Japan in the 1990s should not be taken too far. Unlike Japan, the US macro-economoy enjoys a budget surplus, while the micro-economy is not afflicted with the same structural rigidities. "
wow, what a brilliant observation... this dude should be published somewhere!
LOL! |
