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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: John Vosilla who wrote (23523)2/14/2005 11:42:27 AM
From: mishedlo  Read Replies (2) of 116555
 
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.

Yes and no

Given that the consumer is 70%+ of the economy, consumer debt is far more important than any strengthening in corporate sheets

Corporations did indeed strengthen their sheets but have begun a bunch of silliness all over again just like 2000 - share buybacks and mergers etc at absurd prices. Quite a few companies even went to the bond market for the explicit purpose of share buybacks. Finally lots of the "assets" on the sheets of corporations are questionable: e.g. consumer debt

The consumer credit bubble is worse that what Japan had in many ways. The govt can always print its way out of govt debt, the govt can not print its way out of consumer debt. Nor is their a PPT for houses like their is for stocks and bonds.

People maintain that this is not Japan, because Japan had savings and we do not. I agree, it makes our credit bubble worse, not better, and it will make the ultimate deflation worse as well.

Mish
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