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Japan's two lost decades: An end to the Japanese lesson | The Economist This article has something to say about how long Bubble popping can take. If you want to get the pain over quickly then you need income to support asset prices. Upping minimum wage is the single most effective way of doing this.
Ah, if only they had raised their minimum wage 10X, their problems would have ended by 1991. I guess those Japanese aren't as smart as we thought...
That is about the long and the short of it. (8x is about what they would have needed, their housing bubble was twice as big as ours) They tried printing money and government spending and it took 20 years and more to get over their bubble. They have had no economic growth for about 20 years. If you want economic growth you need to balance debt and income. Upping income is the less painful way of getting balance restored.
Location: Sitting on a bar stool. Guinness in hand.
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Quote:
Originally Posted by newonecoming2
The housing bubble is a big drag on the economy. That one thing in my opinion will take a long time to undo. Until it is undone the economy will suck. Don't be confused by having another bubble. It will still suck even with another bubble.
The short quick fix is to up minimum wage to $30/hr.
Just a conversation we had on the business board. You may find it interesting.
As for me the housing issue is a concern for sure. It going to take awhile to clear it all out especially considering we still have resets this year and the next. But housing is not the end all be all of the economy.
Really to me the lynch pin to a better economy at this point is creating jobs/or business hiring for jobs that have the capacity/demand for it. There is liquidity out there. Even with stricter lending rules. So really to me it a lack of confidence on the part of companies to hire folk because they are still nervous about the environment for business. Which with this last report may ease the mind of some of those companies. I think once we start whittling down the unemployment rate overall the American consumer while still cautious will start spending again (we will buy with less debt this time around, I think). Which will allow for things to right themselves. And while I don't think we will ever achieve the heights we had from let say 1990 to 2006 we will stabilize to something that will be comfortable enough for us to deal with. My guess this will all take place by the end of this decade perhaps a tad earlier. But it just a guesstimate.
But I will also say that your right about the bubble business I'm starting to get concerned about certain commodities out there that are starting to run at all time highs. We'll have to see where this goes.
Quote:
Originally Posted by newonecoming2
That is about the long and the short of it. (8x is about what they would have needed, their housing bubble was twice as big as ours) They tried printing money and government spending and it took 20 years and more to get over their bubble. They have had no economic growth for about 20 years. If you want economic growth you need to balance debt and income. Upping income is the less painful way of getting balance restored.
I understand your point. But do we have the political will at this point to do this? I have my doubts.
Just a conversation we had on the business board. You may find it interesting.
As for me the housing issue is a concern for sure. It going to take awhile to clear it all out especially considering we still have resets this year and the next. But housing is not the end all be all of the economy.
I didn’t get to the bottom of the link yet I will keep on it tho.
Quote:
Originally Posted by baystater
Really to me the lynch pin to a better economy at this point is creating jobs/or business hiring for jobs that have the capacity/demand for it. There is liquidity out there. Even with stricter lending rules.
The problem is debt to income ratio. There is plenty of money to lend but not enough people that are out of debt far enough to barrow more money.
Quote:
Originally Posted by baystater
So really to me it a lack of confidence on the part of companies to hire folk because they are still nervous about the environment for business.
The environment for business sucks because of the collapsing debt bubble.
Quote:
Originally Posted by baystater
Which with this last report may ease the mind of some of those companies. I think once we start whittling down the unemployment rate overall the American consumer while still cautious will start spending again (we will buy with less debt this time around, I think).
The problem gets to be that to keep spending without manufacturing jobs or high value added jobs then you need more debt. Outsourcing and supply side economics drove the debt bubble. It did this by the necessity of having to loan out the money to run the economy instead of paying wages to run the economy.
Quote:
Originally Posted by baystater
Which will allow for things to right themselves. And while I don't think we will ever achieve the heights we had from let say 1990 to 2006 we will stabilize to something that will be comfortable enough for us to deal with. My guess this will all take place by the end of this decade perhaps a tad earlier. But it just a guesstimate.
With a housing bubble ½ the size of Japan’s it should take ½ the time to recover.
Quote:
Originally Posted by baystater
But I will also say that your right about the bubble business I'm starting to get concerned about certain commodities out there that are starting to run at all time highs. We'll have to see where this goes.
I understand your point. But do we have the political will at this point to do this? I have my doubts.
Are you saying that can we sell the plutocracy on it? They made a lot of paper money on the bubbles. Upping minimum wage would require them to admit that their gains were paper and not real. Reality will bit them on the but one way or another.
Fourth-quarter growth revised down to 2.8 percent - Yahoo! Finance (http://finance.yahoo.com/news/Fourthquarter-growth-revised-rb-3911888706.html?x=0&sec=topStories&pos=main&asset= &ccode= - broken link)
So less momentum than first thought, and now we have sharply higher energy prices added to the mix along with still-deteriorating housing conditions. If the high hopes for next week's Feb unemployment report don't pan out we could be right back where we were 6 months ago...
Fourth-quarter growth revised down to 2.8 percent - Yahoo! Finance (http://finance.yahoo.com/news/Fourthquarter-growth-revised-rb-3911888706.html?x=0&sec=topStories&pos=main&asset= &ccode= - broken link)
So less momentum than first thought, and now we have sharply higher energy prices added to the mix along with still-deteriorating housing conditions. If the high hopes for next week's Feb unemployment report don't pan out we could be right back where we were 6 months ago...
Not to mention much higher cost of commodities.
This is not going to be pretty.
Especially when Saudi Arabia goes into turmoil, mid March.
Fuel will jump up past $6 a gallon and go to $10 a gallon quickly.
Especially when Saudi Arabia goes into turmoil, mid March.
Fuel will jump up past $6 a gallon and go to $10 a gallon quickly.
Then what?
double dip here we come.
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"Surprise" 4Q10 GDP downward revision to 2.8%
