Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: CalculatedRisk who wrote (23503)	2/14/2005 11:32:17 AM
From: John Vosilla	Read Replies (2) of 116555

The lesson of Japanese quicksand. When I was short Japanese stocks in 1989, a very smart friend told me: "They'll never let that market go down. It will just work off the excesses by going sideways for maybe a decade." Well, we now know that was not the case. The reason Tokyo unwound the way it did was because of the unstable nature in which the Japanese stock and real estate mania had been created. That's similar to the situation we face today. Again, it's not so much the current data. It's how we got here, and what that implies going forward. That is a big stretch by Fleck as usual. Japan 1989 was a bubble of epic proportions across the board. Today the US bubble is in coastal real estate, bond market and the overleveraged consumer not the stock market. If anything the corporate balance sheet is stronger than ever today as a result of the 2000 bust.

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