Asset Bubbles as the Path to Recovery: I Think We're Turning Japanese

President Obama is in Asia, talking with various trading partners about the future of the global economy. The topic of America's biggest exports - U.S. dollars and asset bubbles - is likely to come up during these discussions unless, somehow, they've all missed comments coming from last week's APEC gathering as reported in the Wall Street Journal.

Bubble Fears Surface at APEC Gathering
The U.S. has limited ability to stop the dollar's recent decline, World Bank President Robert Zoellick said Friday, as he and several Asian leaders expressed concern that global stimulus measures could be inflating asset bubbles.

"Given the role of the dollar, frankly, there's not a tremendous amount one can do other than try to run a good, sound policy and restore the U.S. economy to growth," Mr. Zoellick told a panel discussion on the sidelines of the Asia-Pacific Economic Cooperation forum annual summit.
...
Several expressed concern that the global stimulus, especially the flood of liquidity pumped out by central banks, could create asset bubbles. "What central banks did in the face of the crisis is just open the tap of liquidity," the World Bank's Mr. Zoellick said. The increased liquidity could lead to inflation, such as in commodities. Asset bubbles "could undermine confidence in 2010," he said.

Hong Kong Chief Executive Donald Tsang said he was he was "scared" that the U.S. may be following the example of Japan -- tackling its recession with overly loose policies that could, in turn, inflate asset bubbles

Yes, we do seem to be turning more and more Japanese, at least in regard to the policy of "extend and pretend" when it comes to assets held on banks' balance sheets.

It seems to have become conventional wisdom that, if we can only get asset prices back to their 2007 levels, all our problems will go away.

Comments

[Michael Clark:]

I really think so.

Nov 15 06:27 AM

[User 353732:]

We are not turning Japanese......we do not have the same luxury the Japanese did and still do, which is to decline, slowly and peacefully into a comfortable national old age and subservience to the vigorous Nations that seek to shape the world in their image.

The Japanese, especially the Japanese middle class, have accepted their gradual decline in the material quality of life and influence in the world economy. They are also reconciled to shifting their allegiance from the US to whoever else will be the dominant Asia -Pacific power.

America, however, must now either decline rapidly and fall fast and far well below the Japanese or....In a tremendous moral, intellectual and economic renewal and surge by its still large but fragmented and compressing Middle Class regenerate itself.

The US Regime with its vanity, avarice, fiat dollar, internal coercion and external cowardice, and financial toxic vapors cares only about its power and wealth. It believes in nothing bigger than its ego and belly. As long as the ego and belly continue to gorge themselves, the US Regime cares nothing about America, especially the America of Middle Class hopes, aspirations, fears, and values and the America of the Constitution.

If the US Regime endures, then America's descent into moral, intellectual and financial bankruptcy is assured. If the Middle Class can regain its legacy sense of mission and purpose and recover its traditional self confidence then the Regime can be overcome and expelled and America will again ascend.

We will not be Japanese...We will be Americans( or former Americans), either much lesser than the Japanese or or much greater.

Nov 15 07:44 AM

[OldSusanna:]

Touche', User 353732! We, the People, need to unhitch the trailer! The incumbents will fall only when Americans utilize their immense power and wield that big-stick our founders placed so firmly in our hand--our vote! Let's find great people and get them elected!

Nov 15 10:23 AM

[Old Trader:]

"It seems to have become conventional wisdom that, if we can only get asset prices back to their 2007 levels, all our problems will go away."

Yep, and getting drunk again is a great hang-over cure, too....but not too good for the liver.

Nov 15 11:52 AM

[The Geoffster:]

The vote is meaningless when the voters do not demand the strict adherence to limited Constitutional government and the protection of their Constitutional rights. The Constitution has been eviscerated with the complicity of the voters who accept the benefit of unconstitutional laws and encourage the power grabs of their representatives in the name of fairness, welfare, jobs and whatever ideology floats your boat. We have the government we deserve because we did not honor the Constitution our forefathers gave us. In the final analysis, we gladly trade our liberty for our welfare.


On Nov 15 10:23 AM OldSusanna wrote:

> Touche', User 353732! We, the People, need to unhitch the trailer!
> The incumbents will fall only when Americans utilize their immense
> power and wield that big-stick our founders placed so firmly in our
> hand--our vote! Let's find great people and get them elected!

Nov 15 06:33 PM

[hock:]

Events in past 15 years increasingly show that American political and banking leadership is near bankrupt morally, and many of its people are decieved into believing Hollywood type of rhetoric. Rhetoric has became the work itself. When a nation have too many leaders who lack moral, upright long-term vision for the people, and people believe in lies, gratification rather than deliberate sacrifice, it will decline than maybe perish in due time. Honesty, hardwork, thrift, faithfulness, enterprise, diversity in unity and care for others especially those who are smart and rich are the basics (true Judeo-Christian values) that made America great in the past.
The Japanese as a people have contentment, unity and savings which have been mitigating the effects of poor leadership.

Nov 15 06:56 PM

[OldSusanna:]

The Geoffster--Well and eloquently put... I'm doing my best to become more informed (and more politically active) and hopefully, millions more (quite literally), are doing the same.

Nov 15 07:20 PM

[macro -N- i...:]

Americans are too selfish to even understand the definition of nationalism, let alone actually do it. Yes, when there is a disaster, everyone does their thing and says "look at us world, we care". But at a fundamental, nation strenghtening level it doesn't exist. If you read 'Why the rest hates the West' you'll see that most countries don't want the empty materialism that defines America. The last sentence of the article says it best: If the relative value of assets returns, everything beneath it is o.k. , no matter how we achieve it. How could you possibly believe that giving a child ( a supposedly subservient government) access to the nations home equity line of credit (the parent people) will have prudent results? Americans couldn't begin to understand the quiet devotion of the Japanese. We will collapse before we restrain ourselves, it's the American way.

Nov 15 07:33 PM

[Fanatical Y...:]

LOL!!

No, really: I Laughed out LOUD!! Hah!!


On Nov 15 11:52 AM Old Trader wrote:

> "It seems to have become conventional wisdom that, if we can only
> get asset prices back to their 2007 levels, all our problems will
> go away."
>
> Yep, and getting drunk again is a great hang-over cure, too....but
> not too good for the liver.

Nov 16 06:24 PM