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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 380.060.0%4:00 PM EST
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From: elmatador8/31/2007 2:36:16 AM
   of 218012
 
Collapses were good to emerging markets. "Rising asset prices result in bubbles and malinvestments, which invariably lead to busts in direct proportion the preceding bubble. The only solution to the bust is to ride it out, allowing prices to fall and the assets to liquidate, permitting the capital that has been misallocated to be put to more productive uses."

As per Austrian school.

I refer to Asian Meltdown 1998: Once collapse came, it removed the capital where it was misallocated and put it to productive use elsewhere or let it create a bubble away from here.

Japanese were pouring their capital stock into Indonesia and other countries. They dismantled the factories and reassembled them in Malaysia, Indonesia and the Philippines.) This created a competition among those countries to supply the stuff made by those factories.

Prices collapsed and they were left holding the bag. Today Japan is not exporting capital stock in the form of factories but exporting Yen in desperate bid to avoid going back to the insignificance it came from.

It is a lesson for countries that gets out of its demographic window and do not do population replenishing. Whenever I saw a collapse, I learned the lesson. This lesson, I can apply today to the Sam Peckinpah** of the real estate misallocation of capital.

** Sam Peckinpah "used the telephoto lens to great effect. (Elmat looks to the action from very far away) and was a pioneer in the use of flash cuts, and the intercutting of normal, slow and very slow motion shots during action scenes." (The time scale of a crash is long and even though you know what it is going to happen, it is very slow the movements.)
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