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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: smolejv@gmx.net who wrote (13247)1/11/2002 9:20:21 AM
From: AC Flyer  Read Replies (2) of 74559
 
DJ:

You may have an excellent beak, but sniffing from the other side of the Atlantic you miss a few key scents.

We have recently had some above trend growth in the economy, the stock market and in housing prices that we will pay for with a couple of years price stagnation, but there will be no crash(es). Why?
1. Population Growth: the world wants to live in the good ol' US of A. US population will be ~ 400 million by 2050. npg.org
2. Personal Income Growth: We are a wealthy country and getting wealthier fast: bea.doc.gov
3. The 1997 TAXPAYER RELIEF ACT. Section 121 allows a homeowner to pay NO CAPITAL GAIN TAXES on the sale of their primary residence if they meet the following requirements: Couples filing a joint tax return can exclude up to $500,000 of the capital gain on the sale of their primary residence, and single filers can exclude up to $250,000. The home must have been the primary residence of both spouses for 24 of the prior 60 months. This is an incredibly significant change in tax treatment.

I would like to suggest that what your beak is missing is this: The US is an economic powerhouse that while superficially similar to other first-world countries (Canada, Germany, etc.) has fundamental differences driven by free markets, by American entrepreneurial energy and by the demand growth and labor supply resulting from fast population growth. The 21st century belongs to the US and China. The rest of the world is a sideshow.
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