The coming USA Wall Street bubble bursting will make the
Japanese real estate bubble just child's play. That Japanese bubble
caused Japan to lose several decades in a malaise state trying to
recover.
A bubble burst hitting Wall Street will wipe out the
banks, hedge funds, retirement funds and depositors of those banks. In
fact, I would even suggest that retirement funds are just waiting for
this to happen to wipe their slate clean without having to answer to the
retirees. Retirement funds are mostly bankrupt and just operating like
Ponzi schemes of using new member's contribution to pay off more and
more older retirees. It is not sustainable. A default will be a blessing
in disguise for them.
The only trap being laid now is the word
of the Fed and Treasury, still painting a rosy picture of the USA
economy. Yellen and Powell can fool some people most of the time, most
people some of the time, but not all people all the time.
Anonymous
How long can one keep blowing a balloon and keeping it from bursting? The only result is making a small bang into a bigger bang. Clear and simple logic.
ReplyDeleteThe Japanese real estate bubble burst seems like a lesson that the USA did not learn. The USA always believe in its 'exceptionalism' or US$ hegemony. That is not so clear cut today with de-dollarization on its doorstep.
ReplyDeleteJapan was happily blowing up the real estate bubble, keeping interest rates at rock bottom and thinking the party will go on forever. It was not to be. After all, bubbles are created by man and can be destroyed by man. With the low interest rates, Japanese were able to borrow tons of money to invest in real estate, and when the bubble burst, they lost their pants. And so did the lenders, the big banks. Japan never really recovered from the real estate collapse over the next two decades.