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How bad could it get? Think Japan

本文发表在 rolia.net 枫下论坛The fear that the U.S. will face the same deflationary spiral is making the rounds again.
July 23, 2002: 10:35 AM EDT
By Justin Lahart, CNN/Money.com Staff Writer

NEW YORK (CNN/Money) - For years, the Japan question has come up only to be quickly swatted down. There's no way we'd let our economy languish for 12 years like the Japanese have, said the optimists. This is America, and when we've got a problem we fix it.

One of Japan's biggest problems has been deflation -- a decline in overall price levels -- and a June paper from the Federal Reserve titled, "Preventing Deflation: Lessons from Japan's Experience in the 1990's," has got the U.S.-is-Japan worries revving again.

"Everyone's talking about the Fed's deflation paper," said Credit Suisse First Boston bond market strategist Mike Cloherty. "You're starting to see a lot of people talk about Japan and comparing it to here."

The comparison isn't hard to draw. Japan had a bubble, the United States had a bubble. Japan's banks are unwilling to lend to businesses despite low interest rates, and U.S. banks are increasingly unwilling to lend despite low interest rates.

And now the Fed paper raises a worry that the same deflationary forces that have helped prevent a Japanese recovery could happen in the United States too. Deflation impedes economic growth by discouraging spending. For consumers, there's no sense in making a big-ticket purchase when you may be able to pay less at a later time. And when prices are falling, businesses earn progressively less on what they sell, making banks reluctant to lend to them.

It's a vicious cycle, and in Japan, it has contributed to a stock market 70 percent below where it was in December 1989 at the peak of its bubble.

The deflation scenario is gaining adherents. In a recent note PIMCO economist Paul McCulley called on Fed Chairman Greenspan to commit to raising the rate of inflation in order to prevent a deflationary episode. (Because PIMCO, with over $250 billion in assets, is the biggest bond fund manager, McCulley's point of view matters to the market -- regardless of whether he's right.)

Tuesday Princeton economist and The New York Times editorialist Paul Krugman weighed in. "[I]f there's one thing we've learned from Japan's experience," he wrote, "it is that when you face the risk of a deflationary trap -- still not the most likely scenario, but not as unlikely as it seemed a few months ago -- it makes no sense to 'save your ammunition,' holding interest rates in reserve." The Fed should move now, he concluded.

Still not buying it
With the Fed paper making the rounds, Morgan Stanley chief U.S. economist Richard Berner has been fielding calls from worried clients. He thinks their concerns are overdone. "The Fed paper has been overinterpreted," Berner said. "People are treating it as news, and it's not."

The paper has likely been in the works for a long time -- Berner suspects it was begun around a year and a half ago. It doesn't represent new concerns at the Fed; it's just another piece of research that the Fed churns out every month.

(Other exciting papers that came out in June include "Finding numerical results to large scale economic models using path-following algorithms: a vintage capital example" and "Does the labor share of income drive inflation?")

Northern Trust chief U.S. economist Paul Kasriel thinks that if anything it's inflation that investors should worry about. "The Fed is printing money and the dollar is declining," he said. "Commodity prices are moving up." All are hallmarks of inflation.

Still, ignoring the lesson of Japan is a bad idea, thinks Ron Napier, the head of Napier Investment Advisors. Salomon Brothers' chief Asian economist in the 1980s, Napier is reminded how many times he was pooh-poohed in the late 1990s for saying that the U.S. stock market was just as much of a bubble as Japan's was. Thinking that the aftermath couldn't be as bad is similarly wrongheaded.

"All the economists are saying it's a normal cycle, it's time for the U.S. to recover," said Napier. "They said that in Japan, too. We want to think we're in our own unique boat here, so we'll escape it."

Napier thinks the aftermath of bubbles, no matter where they occur, have long legs. He notes that deflation wasn't a problem at the outset for Japan either. It was just that the excesses bred by the Japan's late 1980s exuberance left banks unwilling to lend to companies, despite low interest rates. (Sound familiar?) Companies that had once been flush were forced to go begging. Consumers held the line for a while but as unemployment rose they stopped buying like before. Occasionally it would look like Japan was finally working its way out of the rut and policy makers would declare the battle won -- only to see the economy slide anew.

And what about the other big investment bubble of the last 100 years, the U.S. stock market in the 1920s? In the aftermath of that, too, the government struggled to revive the economy and couldn't. And just like in Japan, there was a period of falling prices.

For the twentieth century, at least, the answer to the question, "What happens when you let the air out of a bubble?" has been "It deflates."更多精彩文章及讨论,请光临枫下论坛 rolia.net
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Replies, comments and Discussions:

  • 枫下茶话 / 政治经济 / dow 降到7809,Nasdaq 降到1283,都突破了关口,而且没有回弹迹象。懂行的朋友能不能谈谈,北美经济恢复有没有戏。快拿身份了,要不要为回国做点打算。
    • lots of friends lost money on stock. :(
    • 我不懂行, 但我认为恢复只是时间问题,因为大量的资金根本找不到可以投资的地方. 美国股市还是有诱惑力的, 只要有持续利好消息, 飙升幅度一定同样惊人...我现在的疑问是现在的股市是不是仍然超过其本身的价值呢?
      • 关键什么程度算是谷底。
      • 其实是人的心理作用.现在的市盈率不低,虽然股票跌,可是公司利率本来就不高.
    • It's time to buy, spend the all saving to buy. Within three month, you will get almost doubled. buy, buy, buy.
    • The biggest crisis this time is about credit. People r really sick of big copanies cooking books. If more dirt digged out, market will go down beyond ur imagination.
    • don't forget the US is still the only unreplaceable leader in the world, so as its new economy high tech firm, if they are not growing stock, no one could be.
    • imho, dow is still attractive, nasdaq is dead :P
    • How bad could it get? Think Japan
      本文发表在 rolia.net 枫下论坛The fear that the U.S. will face the same deflationary spiral is making the rounds again.
      July 23, 2002: 10:35 AM EDT
      By Justin Lahart, CNN/Money.com Staff Writer

      NEW YORK (CNN/Money) - For years, the Japan question has come up only to be quickly swatted down. There's no way we'd let our economy languish for 12 years like the Japanese have, said the optimists. This is America, and when we've got a problem we fix it.

      One of Japan's biggest problems has been deflation -- a decline in overall price levels -- and a June paper from the Federal Reserve titled, "Preventing Deflation: Lessons from Japan's Experience in the 1990's," has got the U.S.-is-Japan worries revving again.

      "Everyone's talking about the Fed's deflation paper," said Credit Suisse First Boston bond market strategist Mike Cloherty. "You're starting to see a lot of people talk about Japan and comparing it to here."

      The comparison isn't hard to draw. Japan had a bubble, the United States had a bubble. Japan's banks are unwilling to lend to businesses despite low interest rates, and U.S. banks are increasingly unwilling to lend despite low interest rates.

      And now the Fed paper raises a worry that the same deflationary forces that have helped prevent a Japanese recovery could happen in the United States too. Deflation impedes economic growth by discouraging spending. For consumers, there's no sense in making a big-ticket purchase when you may be able to pay less at a later time. And when prices are falling, businesses earn progressively less on what they sell, making banks reluctant to lend to them.

      It's a vicious cycle, and in Japan, it has contributed to a stock market 70 percent below where it was in December 1989 at the peak of its bubble.

      The deflation scenario is gaining adherents. In a recent note PIMCO economist Paul McCulley called on Fed Chairman Greenspan to commit to raising the rate of inflation in order to prevent a deflationary episode. (Because PIMCO, with over $250 billion in assets, is the biggest bond fund manager, McCulley's point of view matters to the market -- regardless of whether he's right.)

      Tuesday Princeton economist and The New York Times editorialist Paul Krugman weighed in. "[I]f there's one thing we've learned from Japan's experience," he wrote, "it is that when you face the risk of a deflationary trap -- still not the most likely scenario, but not as unlikely as it seemed a few months ago -- it makes no sense to 'save your ammunition,' holding interest rates in reserve." The Fed should move now, he concluded.

      Still not buying it
      With the Fed paper making the rounds, Morgan Stanley chief U.S. economist Richard Berner has been fielding calls from worried clients. He thinks their concerns are overdone. "The Fed paper has been overinterpreted," Berner said. "People are treating it as news, and it's not."

      The paper has likely been in the works for a long time -- Berner suspects it was begun around a year and a half ago. It doesn't represent new concerns at the Fed; it's just another piece of research that the Fed churns out every month.

      (Other exciting papers that came out in June include "Finding numerical results to large scale economic models using path-following algorithms: a vintage capital example" and "Does the labor share of income drive inflation?")

      Northern Trust chief U.S. economist Paul Kasriel thinks that if anything it's inflation that investors should worry about. "The Fed is printing money and the dollar is declining," he said. "Commodity prices are moving up." All are hallmarks of inflation.

      Still, ignoring the lesson of Japan is a bad idea, thinks Ron Napier, the head of Napier Investment Advisors. Salomon Brothers' chief Asian economist in the 1980s, Napier is reminded how many times he was pooh-poohed in the late 1990s for saying that the U.S. stock market was just as much of a bubble as Japan's was. Thinking that the aftermath couldn't be as bad is similarly wrongheaded.

      "All the economists are saying it's a normal cycle, it's time for the U.S. to recover," said Napier. "They said that in Japan, too. We want to think we're in our own unique boat here, so we'll escape it."

      Napier thinks the aftermath of bubbles, no matter where they occur, have long legs. He notes that deflation wasn't a problem at the outset for Japan either. It was just that the excesses bred by the Japan's late 1980s exuberance left banks unwilling to lend to companies, despite low interest rates. (Sound familiar?) Companies that had once been flush were forced to go begging. Consumers held the line for a while but as unemployment rose they stopped buying like before. Occasionally it would look like Japan was finally working its way out of the rut and policy makers would declare the battle won -- only to see the economy slide anew.

      And what about the other big investment bubble of the last 100 years, the U.S. stock market in the 1920s? In the aftermath of that, too, the government struggled to revive the economy and couldn't. And just like in Japan, there was a period of falling prices.

      For the twentieth century, at least, the answer to the question, "What happens when you let the air out of a bubble?" has been "It deflates."更多精彩文章及讨论,请光临枫下论坛 rolia.net
    • 老洪初学乍练,大家不要拍砖。(另:老洪俺最近芹菜炒肉丝颇有些心得,有感兴趣的可以切磋一下)
      就目前来看还没有反弹的迹象,很多人预测年末可能是探底的时候。如果国会可以通过讨论中的几项公司管理法案,也许会是利好消息。如果法案通过,圣诞平安,新年过后希望会有起色。
    • 下面的报纸摘要对判断美国经济的大气候甚具参考价值。
      本文发表在 rolia.net 枫下论坛美国过去一百年出现过两次大熊市secular bear market,第一次是29至42年,特点是通货收缩;第二次是66年至82年,特点是通货膨胀;估计2000年开始的这次secular bear market既不是通缩也不是通账,而是低利率、低通账率及低增长率。不过,投资技巧一如上述两次大熊市,当市场出现非理性拋售(throw out the baby with bath water)时,才是入市时机。虽然历史经常重复,但细节每次不同。例如29年持有现金是大赢家,66年持有黄金才是大赢家,这一次是不是持有外币才是大赢家?成功的方法永远不会刻在石头上!面对secular bear market持盈保泰为首要任务;在熊市中输得最少的已是赢家。至于夸夸其谈的股市专家,他们过去几年的投资成绩如何?
      此次熊市将维持多长时间?答案是较大部分人的估计为长,因为牛市不可以在现水平的P/E开始。上次美股熊市在66年开始75年见底,但真正牛市是在82年才开始,美股P/E由66年的23倍降至82年的8倍;此次熊市在2000年3月开始后,甚至巴菲特的要求(未来5-10年在股市只能赚取每年6-7%的回报)亦变成苛求。
      纽约时代广场的「负债时钟」debt clock重新装上,上面显示全国负债6万亿美元,平均每一美国家庭负债6万5千美元。
      自2000年3月24日至今,投资者在美股的损失已达7万亿美元。更多精彩文章及讨论,请光临枫下论坛 rolia.net
      • Great facts. Although crucial. Heard more and more people sold houses to keep surviving after lost too much in stocks. Both white guys and Chinese. Even the 'economists' dare not continue to lie 'recover next year'.