Is it possible that we can suffer like Japan has?


This is what has happened in Japan over the past twenty years


We have already had a lost decade here in the USA.


Is this where we are headed?  A few thoughts on why we might be headed down this ugly road:

1. Unemployment rising every month……to double digits? More unemployment equals more problems for sure. Click here for the BOL stats and chart

2. Biggest credit bubble in history with record debt to GDP. In the Great Depression, that ratio topped at 250% – we are now at 350%. Click here for that graph

3. S&P normalized 10 year earnings have troughed three times since 1915 in the 6 to 7 x range. We are at over 13X now.(see my earlier blog posting for this graph) or click here

4. Markets rarely correct to the averages – they almost always over-correct……

5. It is now cool to be frugal – saving, a new sport for US citizens, will hurt consumer spending.

6. Retirees are being destroyed – portfolios decimated and very low interest rates on their savings.

7. Real estate foreclosures, credit card defaults, record personal and business bankruptcies and commercial real estate foreclosures/defaults are continuing at alarming levels.

8. Banks are still sick and in need of lots more capital according to Meredith Whitney, the CIBC banking analyst guru.

Last but not least, we are in uncharted waters. No one, not even the famed Warren Buffett has been here before…….

I sure hope this is 100% wrong….but hope is not a strategy!


2 Responses to “Is it possible that we can suffer like Japan has?”

  1. patrick thomson Says:

    All of the things you cited are relevant. Add the fact that US Manufacturing has been in decline for over 25 years and things look very bad.

    The argument used to go that Technology and the high end service economy would replace old, smoke stack America. Well it really hasn’t. First, more and more technology jobs are in the Far East, not America. With respect to high end services, particularly financial services, well we only need to looks at end product of the credit bubble.

    The USA, unfortunately, seems to be on the threshold of decline. Whether this ends up being a temporary blip on the road to a greater prosperity or the end of our “World Power” status remains to be seen.

  2. Gail Grace Aills Says:

    What’s a girl to do?

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