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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (4080)	5/31/2001 7:10:54 PM
From: pater tenebrarum	Respond to of 74559

i agree, it takes time. an example for this is e.g. the fact that Japanese bank loan growth only went negative in 1996, a full 6 years after the initial bursting of the asset bubble and well into the time when it had become clear that the banks were in deep trouble. the underlying psychological momentum of the boom doesn't break right away...since every previous crisis has been successfully overcome by vastly increasing financial sector leverage, and the consequent pumping up of asset prices. of course we have some very strong hints this time that it won't be that easy anymore, and that the bust is serious, and will have staying power. some economists point to the continued growth in the monetary aggregates as evidence that this is not so...but they forget that higher energy prices and other recurring expenditure inflation is being monetized. as well as of course the housing inflation, which is the GSEs playground. the latter is imo on the cusp of reversing into a deflation. their error can probably partly be explained by their failure to question the usefulness of the official inflation statistics.