US Bubbles Compared To Japan
At MSN Money the Contrarian Chronicler, Bill Fleckenstein, put together a great comparison of the Japanese bubbles and the current markets. "Here in America, we had a wild stock bubble. But when it burst, there were not a lot of bad debts and defaults to impair the financial system. Yes, we had a couple of sizable implosions like WorldCom and Enron, but they were more isolated events."
"I think a lot of people have dropped their guards and no longer worry about how nasty the financial environment could get. Why? Simply because the fallout from the equity bubble has seemed so manageable. Folks no longer worry that we might be forced to contend with a Japanese-like experience because, so far, we haven't. But that doesn't mean we won't."
"However, in the real-estate mania that Fed Chairman Al Greenspan has fomented..we see the complete abdication of responsibility in real-estate lending standards. This has been the major factor in driving prices to wild levels, and in allowing people to live beyond their means via the housing ATM."
"When our real-estate bubble bursts, and it will burst, we will be left with a financial system riddled with bad loans, as well as consumers who've not only lost their housing ATM, but also owe more on their homes than they're worth."
"Given our lack of savings and massive deficits, we could experience a recession much deeper, though probably shorter, than Japan's."