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To: marginmike who wrote (91230)	1/4/2001 12:37:55 PM
From: slacker711	Read Replies (3) \| Respond to of 152472

The money in Japan was spent inflating Real Estate. The money here was used to inflate Tech stochs. I think that this is where the comparision doesnt work. The two types of investments have significant differences in both the psychological and financial aspects. A bubble in real estate is far more likely to create a crisis for institutions than one in equities. The loans that are used to buy real estate are more leveraged and less liquid than stocks. This allows banks (and other institutitions) to keep these loans at a book value much higher than they are actually worth. It is this type of situation which creates a crisis of confidence....since you dont really know how "clean" the books of anything you invest in are. JMO....but this is what killed Japan. They never faced the depths of the problems....they kept stringing out the situation. The collapse in equities is felt much more swiftly along the entire chain. However, it is generally limited to the chain itself (in most cases). Noone is worrying weather any of our banks is going to go under. OTOH...I think that AG acted correctly in raising interest rates to prick the bubble. Eventually the rise in the NAZ might have caused exactly the type of situation you are talking about (prolonged recession caused by lack of faith in institutions). I just dont think that we reached that point. Slacker

To: marginmike who wrote (91230)	1/4/2001 1:18:37 PM
From: Jordan Levitt	Read Replies (2) \| Respond to of 152472

Mike, Agreed. But... One key difference between Japan and the U.S. is that Japan does not have proper bankruptcy law. When you combine that with their "jobs for life" philosophy you do not get the much needed redeployment of productive assets. Both the people and the capital assets remain somewhat in limbo. This makes recovery much more difficult; actually almost impossible.

To: marginmike who wrote (91230)	1/4/2001 1:44:39 PM
From: Dennis O'Bell	Read Replies (1) \| Respond to of 152472

Real estate doesn't enhance productivity the way computer and data communications (fiber optics...) has and these improvements in productivity are not at all illusory. The velocity of money alone doesn't compare today with 20 or more years ago. There's still undeniably been a bubble, but the worst of the i-tulip stuff has been already washed out. I just saw something from Trimtabs to the effect that Tuesday just saw the greatest fund outflows in history! It's that kind of irrational pessimism that needs to be avoided at this point, just as it was necessary to start a controlled deflation of the Nasdaq bubble last spring.

To: marginmike who wrote (91230)	1/4/2001 9:01:43 PM
From: Yamakita	Read Replies (1) \| Respond to of 152472

Marginmike, most of what you say about Japan presupposes that Japan's political economy is like that of the rest of the G-8 countries. It just isn't true. The inflation of real estate was entirely engineered by the Ministry of Finance, who thought they could create, pretty much out of thin air, the concept of virtually unlimited free capital. They ordered the banks to do the real estate loans. That situation is in no way similar to the inflation of US tech stocks, which were bid up essentially on the promise of a new, more efficient economy. Japan's inflation of land was thuggery, pure and simple; much of it was carried out by actual thugs, the yakuza. Moreover, Japan's capital markets are an intricately designed house of cards. Because companies don't use GAAP, shareholders--most of whom are other companies that "crosshold" the shares of one another--are totally clueless about the real state of a company's books, many of which have been routinely cooked and boiled for so long that they are fork-tender. Your comparisons with Japan are WAY off. Yamakita (erstwhile MOF employee)