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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Cactus Jack who wrote (10136)	10/2/2008 9:10:22 AM
From: Terry Whitman	1 Recommendation Read Replies (2) \| Respond to of 33421

>Isn't a recession necessary to make the economy stronger in the big picture? < That's the Austrian School in a nutshell. The Keynesian model, which is what the U.S. and most others have followed for the past 50 years says that government spending and control of the money supply can prevent large economic contractions. There are many examples where gov't intervention has likely helped, but at the cost of devaluation of the currency, and a heavy burden on the taxpayer. There are also examples of where incessant gov't meddling and huge expansions of the money supply did not work. The best example of this is the Japanese experience of 1985- present. mises.org My mentor told me years ago that demographically, Japan was about 10 years ahead of the U.S.A. Major trends that occurred 10 years ago in Japan, should be similar to today in the U.S. Unfortunately, if we continue to implement the Japanese Keynesian methods, we should expect similar results. In fact, it is unclear whether their secular bear market has even ended yet, 18 years later.. finance.yahoo.com

To: Cactus Jack who wrote (10136)	10/2/2008 7:34:43 PM
From: John Pitera	Read Replies (3) \| Respond to of 33421

Hi Jack, I agree with you that the function of market cycles is to weed out the inefficient and marginal producers. And those firms that climbed into a businesses during boom times without having any core competancy in the business. This worldwide globalized recession is going to be seen as very severe regardless of what happens here. Great question, it's a thoughtful one. Ira Jersey of Credit Suisse points out that the FED shows that for the very first time since the series has been calculated in 1952, the US consumer paid down debt and delevered in the second Quarter of 2008. This is the very first time this has ever happened, in the post WWII period. All of this balance sheet destruction is really freezing credit everywhere. John