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

To: Perspective who wrote (61712)	5/23/2006 2:51:26 AM
From: GST	Read Replies (3) \| Respond to of 110194

The impact of Japan's bubble was the exact opposite of the impact in the United States -- in Japan it fueled export oriented investment and in the US it fueled import oriented consumption. These are COMPLETELY opposite. The degree of distortion was clearly far greater in Japan. And the consequences were severe -- 17 years of economic stagnation. The result of our bubble is likely to be a drop in consumer spending and a rise in prices along with falling housing prices. Will it take 17 years of economic stagnation to work through the housing situation in the US? Not likely. It will take a few years at most. And in that time we will face the consequences of a far more serious distortion -- the price of the dollar. The valuation of the dollar will adjust, and that is far more likely to disrupt life as we know it than is the housing bubble. For the dollar, there is no solution except a painful drop and a very difficult adjustment process for anybody holding dollars.

To: Perspective who wrote (61712)	5/23/2006 10:23:29 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

"The point of my last post was that our bubble has produced far worse distortions in aggregate behavior than in Japan." I agree with that. This should accelerate the speed of the debt cleansing downturn for many in the US. We have a lot of experience with speculative behaviour this past generation from telecom, tech, RTC, Enron ect.. Usually bottoms after a sharp 2-3 year correction of all the misallocation of capital..