Veteran traders know that capitulation is close when you have people making such outlandish statements. While I understand what he is trying to say (with respect to asset bubbles) but he is comparing apples to oranges. Taken from the TheStreet.com:

Learning From Japan’s Experience
1/4/2008 2:41 PM EST
Does anyone remember how the Japanese stock market opened 1990 on a similar note to the U.S. market this year? That was caused by the collapse of Japan’s real estate bubble.

The cause and effect relationship doesn’t appear to so different here. So I believe that the Japanese experience (a decade-long bear market) has considerable relevance.

Position: None

Wow…talk about a “bold statement.” Here is the truth from my perch: the Japanese asset bubble is nothing like we are experiencing at the moment. The Japanese bubble was just downright aweful…Some highlights from the their bubble economy:

- At the height of the bubble, a commonly-quoted claim was that the land beneath the Imperial Palace in Tokyo was worth more than the entire state of California.

-Prices were highest in Tokyo’s Ginza district in 1989, with choice properties fetching over US$1.5 million per square meter ($139,000 per square foot).

-Japan implemented stringent tariffs and policies to encourage the people to save their income. With more money in banks, loans and credit became easier to obtain, and with Japan running large trade surpluses, the yen appreciated against foreign currencies.

Note to this Street.com writer: we are not anywhere near this extreme. In fact, I would be willing to also say that our Fed policymakers are so much more in tune with the economy than their Japanese counterparts were at that time. Its no secret that quantitative analysis is so much better these days.

Japan had a host of other issues that has affected that country: super-high corporate tax rates, lifetime employment guarantees for workers, a declining population base and a once-corrupt banking system.

Is the US economy stalling a bit? Yes, without question. Are we at the extreme that Japan is? No way!

Last 5 posts by Agustin Gonzalez

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