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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (61688)	5/22/2006 11:35:14 PM
From: GST	Read Replies (1) \| Respond to of 110194

In Japan the role of real estate was to provide some basis to collateralize loans for companies to provide them with free money to invest -- as you pointed out. On a much much smaller scale we see the same game played by individuals in the US. The difference is that it killed the Japanese economy because these loans could not be called for fear of bankrupting the entire corporate sector -- banks and operating companies alike. Cross holdings of shares made this far worse. In the US the bad loans will get flushed down the toilet and the property will be priced to market in relatively short order -- an expensive mess to be sure -- and a disaster for those speculators who waited too long to get out -- but hardly an automatic national economic meltdown. Japan 1990 and the US today are like night and day -- more like opposites than they are similar.