Malcolm:
I intend to play the role of resident bull, or perhaps more accurately, deferred bear, on this thread. So please allow me to put the deferred bear case once more.
>>Jay Chen correctly predicted the tech crash<<
I would not begin to argue with this. In fact, to paraphrase an old joke, Jay has actually predicted four or five of the past one crashes. But seriously, I know that Jay has an unusually well-grounded take on all things investment. My goal is only to advance the case that predictions of TEOTWAWKI are premature.
>>As for "postponing" the predicted time of the disaster, nobody is silly enough to give an exact date.<<
OK. But a prediction without a timetable is useless, as the implicit reason for predicting is successful market timing. In fact, I would say a TEOTWAWKI prediction without a timetable is worse than useless, as it results in incurring large opportunity costs while positioned for the cataclysm. I would argue that the current laundry list of structural problems in the US economy may be necessary but is not sufficient to cause TEOTWAWKI. I have also advanced the case that TEOTWAWKI will in fact occur when, due to boomer demographics, US final domestic demand turns down fairly suddenly at the end of this decade. My proposal includes a defined cause-effect relationship. The generalized, around every corner TEOTWAWKI model does not.
>>For most of the last 13 years the ordinary Japanese people have been saving like mad.<<
Not so true of late. The Japanese savings rate has slid quite close to the savings rate in the US. This is, like all things economic, heavily influenced by Japanese demographics. yomiuri.co.jp
And, without getting too cute about it, what good has their savings rate done them in the last decade or so?
>>Conclusion: we'll see sky high interest rates in the US<<
I disagree. US interest rates will remain at low levels for the rest of this decade as inflation pressures remain absent due to high productivity and the China factor. I have said before that the Fed's current inflationary monetary policy is deliberately designed to offset these powerful deflationary forces. After 2010, interest rates will slide to levels that make current interest rates look high. If we're lucky, the US will only look like 1990s Japan for 15 or so years. If we're not, let's just say it'll be a once-in-a-lifetime opportunity for anyone with cash. |
