BobS
The author of this article, Stephen Roach, known as “Dr. Doom” in the late 1970’s for his correct predictions of inflation, is spot-on. His parallels between Japan’s long real estate bubble and following deflation and our similar path cannot be ignored.
Looking back at Japan’s long slump, it is easy to see their policy failures in fixing the problem. Our current bubble deniers claim we are smarter now than the Japanese have been. The scary thing about our current situation, however, is that there may not be fixes–both monetary and fiscal policy tools won’t work. Stimulus may only aggravate inflation and weaken the dollar. Still, they will be tried by our politicians because they are expedient and show “They care”.
I believe the decline will continue at an accellerating pace, and the bottom will be when foreigners buy up US real estate in a massive way. The cheap dollar only makes it more attractive. At some low point, foreign buyers savvy enough and gutsy enough will act…there is already some evidence of this happening. Look for more to happen.
