Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Ilaine who wrote (16560)	3/7/2002 8:54:39 PM
From: Ilaine	Respond to of 74559

>>The Resurrection of Risk Anirvan Banerji - ECRI Working Paper <snip> Behind the veil of these illusions lay a harsher reality. In fact, much of what was assumed to be permanent was actually due to a run of good luck. The fallacy behind the optimistic arguments lay in the assumption that the reduction in volatility was caused by systemic changes and controllable factors rather than temporary good fortune. It is not commonly known that, luckily for the U.S. economy, the 1990s was a period dominated by asynchronous global recessions, when key economies took turns going into recession. One reason this is so little understood is that many countries like Japan use the word recession to mean something quite different from its meaning in the U.S. Because many countries saw long periods of virtually uninterrupted growth in the years that followed World War II, it was difficult for them to see the conceptual relevance of classical business cycle contractions. Instead, a couple of decades ago, many countries, along with the OECD, focused on alternating periods of above-trend and below-trend growth – called growth cycles in the U.S. to distinguish them from classical business cycles – as the primary way to monitor cyclical fluctuations in their economies. In fact, periods of below-trend growth, also called growth recessions in the U.S., began to be called recessions, and some people even started referring to them as business cycle recessions, compounding the confusion. In this context, it is not surprising that there is almost universal acceptance of the notion that Japan has been in a decade-long recession, even though Japanese GDP grew at more than a 3% annual rate from late 1993 to early 1997, and at a 2% annual rate from early 1999 to the spring of 2000 – below par for Japan, but still an expansion. No doubt, monitoring growth cycles can be very useful in international economies. But by effectively relegating classical business cycles to the dustbin of economic history, economists may have impaired their own ability to monitor and thus anticipate classical cyclical contractions abroad. That is why it is so seldom recognized that the 1990s saw long periods of asynchronous business cycle expansions and contractions in the major economies.<< businesscycle.com