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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (102513)9/26/2009 11:49:44 PM
From: SouthFloridaGuy1 Recommendation  Read Replies (1) of 116555
 
Possible, Mish, but I think the Japan scenario is thrown out the window if housing prices begin to rise. They've definitely stopped falling - the data is indisputable. I know the bears' arguments about option arm resets, foreclosure pipeline, etc. in 2010. I think it's overplayed as an issue, especially if the leading economic indicators are accurate in terms of assessing the recovery.

And like you have pointed out on your blog in the past, stock markets fall during deflation - and they certainly don't rally 50%.

One thing the Fed and US gov't did differently was to target asset prices. Flawed as that may be, it is far more effective than the Japanese strategy of giving money to the banks directly and asking them to lend.

Japanese banks hoarded - I don't think US banks will...lending standards have already been relaxed and spreads are contracting just as violently as they widened.

Flawed as people think the "Stress tests" were, the fact is that we are tracking the optimistic scenarios laid out by Treasury whereas the capitalization requirements were based on the Japanese experience.

Yes, the workout will take some time, it always does - but the recovery could be far swifter and stronger than people think...this feels a lot like the early 90's.

Extrapolation during good and bad times is the most intellectually easy thing for people to do.
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