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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (25790)	3/16/2005 7:06:18 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 116555

From Bill Fleckenstein tonight:: Out Sprout the Shoots of Seismic Change So, what does today's break in GM mean? I believe it's the start of billiard balls moving around the financial system in a way that will seriously add to the troubles already in existence. I believe that when the real-estate market finally breaks, we are going to experience an economic period very similar to what Japan has endured for the last 10 years. One reason why Japan's bust has been this bad is that it has faced a sizable real-estate bust and and a stock bust at the same time. Originally, America was only dealing with an equity-market bust. But with the Fed trying to bail it out with a housing bubble, we, like Japan, will also now experience a housing bust and a real estate bust at the same time. To top it all off, the Japanese save about 11% and we save less than 2%. We have a massive current-account deficit. They have a surplus. So, there is every reason to think that as we encounter the twin busts, we will experience a period like they did, only worse. While the macro imbalances are going to work against us, we do have one thing working in our favor: Our brand of capitalism tends to clear out the dead wood and clean up problems in less time than Japan's semi-centrally-planned approach to capitalism. However, our creative-destruction mechanism has been held at bay by Easy Al and the boys for so long that it has made the problems that much worse. Though the busts that lie before us are unavoidable, at least we can hope that if Al and the Federal government are forced to "stand aside," thanks to the discipline of a falling dollar, it will mean that we experience the pain over a shorter period, rather than a longer one. In other words, it's going to happen, so let's just get it over with.