The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: GraceZ who wrote (17072)	2/10/2004 1:46:19 PM
From: Elroy Jetson	Read Replies (1) of 306849

Let's examine your statement and most will suddenly understand why Stephen Roach of Morgan Stanley now describes the American economy as being based on "asset inflation." "Ask yourself this, if Americans had little or no savings since 1986 or so as you state, what is it that so many are concerned about them having lost trillions in the stock market correction? Could it be that there is a flaw in the way savings is calculated in that it doesn't count unrealized gains?" - Grace Zaccardi You claim a loss of trillions in savings because of the collapse of the bubble. Just imagine if the bubble had been 1,000 times bigger - why you'd be claiming a loss of quadrillions!! Stocks or tulip investments ultimately only have the value of their income stream. This is what Roach means by an "asset inflation" based economy. The actual income of the economy doesn't increase greatly, only the asset prices do. Oh yes, pro-forma nonsense may misrepresent actual earnings but that's an illusion, just like the imagined wealth represented by the stocks or the tulips.

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