Alex wrote:
>IMHO, the probable thing, and at the same time unprecedented in its depth
>(would this merit the qualification of "improbable"?), would be a recession
>scenario, of drastic and painful consequences (and not equally distributed,
>neither domestically nor across the borders).
also, the most probably thing is that US policy-makers will try to
institute measures that shift the problems from now into the future, likely
encouraging deeper or wider problems in the future. This can be seen in
microcosm in the Cheney/Rove (a.k.a. "Bush") tax cut, which does stuff like
creating a sudden rise in the estate tax ten years or so from now, while
shoving some people into a higher tax bracket a couple years from now (due
to the role of the "Alternative Minimum Tax").
>... The WSJ article is consistent with our analysis. Moreover, our 'private
>expenditure function' is influenced, among others, by the evolution of
>prices in the stock market *and* in the housing/ real state market.
>However, any form of credit, refinancing, or whatever *based on a
>debt/wealth* indicator is misleading; or, as Jim put it, "it continues the
>development of a bubble economy". Looking solely at the house market, what
>is going on now in the US seems a reminiscence of the Japanese bubble a
>decade ago (from the very little I know of it).
my impression is that though the US has a bubble economy at this point, it
is not as spectacular as the one that Japan suffered from immediately
before its popping, since there is less spectacular asset inflation in
housing and real estate, along with less mutual interaction between the
equity markets and the real-estate markets. Further, the roles of the two
countries in the world system are different. But we shall see...
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
