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Nor-LA-SD-guy.
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April 17, 2009 at 11:31 AM #383670April 17, 2009 at 11:35 AM #383039
davelj
Participant[quote=Rt.66]
You make a good point about Japan; they were in a better position than us, post RE bubble bursting. From what I have read, we are following Japan’s model in dealing with this crisis. [/quote]Recall, however, that Japan’s bubble was 2 1/2 times the size of our bubble relative to GDP. Anecdotally, at the peak of Japan’s property bubble, the land surrounding the Imperial Palace in Tokyo was worth more than all of the real estate in California. Amazing but true.
My point is that while we have a shitty savings rate and a LOT of debt to pay down, the Japanese were in worse relative shape because the sheer size of the bubble was so large and 95% of the debt was domestically held (only 74% of our debt is held domestically).
An analogy. Who is worse off… A guy that has a mortgage of $800K on a property worth $250K, but he’s got $50K in the bank, OR
A guy that has a mortgage of $350K on a property worth $250K, but he’s got $10K in the bank?
The first instance is Japan in 1995. HUGE deflating bubble but plenty of savings (relative to the U.S.). The second instance is the U.S. right now – smaller (but still big) deflating bubble with much lower savings. From a systemic standpoint, the size of the Japan’s bubble – with all that entails – trumps its larger savings rate by a FACTOR vis-a-vis our crappy situation here in the US.
So, yeah, we’re mildly screwed. We’re deflating a big ass bubble and we don’t have much in the way of savings. But, the Japanese, despite a higher savings rate, were in MUCH worse shape than we are right now purely due to the size and dispersion of their bubble and the amount of bad debt relative to GDP that they had to eat.
April 17, 2009 at 11:35 AM #383309Participant[quote=Rt.66]
You make a good point about Japan; they were in a better position than us, post RE bubble bursting. From what I have read, we are following Japan’s model in dealing with this crisis. [/quote]Recall, however, that Japan’s bubble was 2 1/2 times the size of our bubble relative to GDP. Anecdotally, at the peak of Japan’s property bubble, the land surrounding the Imperial Palace in Tokyo was worth more than all of the real estate in California. Amazing but true.
My point is that while we have a shitty savings rate and a LOT of debt to pay down, the Japanese were in worse relative shape because the sheer size of the bubble was so large and 95% of the debt was domestically held (only 74% of our debt is held domestically).
An analogy. Who is worse off… A guy that has a mortgage of $800K on a property worth $250K, but he’s got $50K in the bank, OR
A guy that has a mortgage of $350K on a property worth $250K, but he’s got $10K in the bank?
The first instance is Japan in 1995. HUGE deflating bubble but plenty of savings (relative to the U.S.). The second instance is the U.S. right now – smaller (but still big) deflating bubble with much lower savings. From a systemic standpoint, the size of the Japan’s bubble – with all that entails – trumps its larger savings rate by a FACTOR vis-a-vis our crappy situation here in the US.
So, yeah, we’re mildly screwed. We’re deflating a big ass bubble and we don’t have much in the way of savings. But, the Japanese, despite a higher savings rate, were in MUCH worse shape than we are right now purely due to the size and dispersion of their bubble and the amount of bad debt relative to GDP that they had to eat.
April 17, 2009 at 11:35 AM #383496Participant[quote=Rt.66]
You make a good point about Japan; they were in a better position than us, post RE bubble bursting. From what I have read, we are following Japan’s model in dealing with this crisis. [/quote]Recall, however, that Japan’s bubble was 2 1/2 times the size of our bubble relative to GDP. Anecdotally, at the peak of Japan’s property bubble, the land surrounding the Imperial Palace in Tokyo was worth more than all of the real estate in California. Amazing but true.
My point is that while we have a shitty savings rate and a LOT of debt to pay down, the Japanese were in worse relative shape because the sheer size of the bubble was so large and 95% of the debt was domestically held (only 74% of our debt is held domestically).
An analogy. Who is worse off… A guy that has a mortgage of $800K on a property worth $250K, but he’s got $50K in the bank, OR
A guy that has a mortgage of $350K on a property worth $250K, but he’s got $10K in the bank?
The first instance is Japan in 1995. HUGE deflating bubble but plenty of savings (relative to the U.S.). The second instance is the U.S. right now – smaller (but still big) deflating bubble with much lower savings. From a systemic standpoint, the size of the Japan’s bubble – with all that entails – trumps its larger savings rate by a FACTOR vis-a-vis our crappy situation here in the US.
So, yeah, we’re mildly screwed. We’re deflating a big ass bubble and we don’t have much in the way of savings. But, the Japanese, despite a higher savings rate, were in MUCH worse shape than we are right now purely due to the size and dispersion of their bubble and the amount of bad debt relative to GDP that they had to eat.
April 17, 2009 at 11:35 AM #383544Participant[quote=Rt.66]
You make a good point about Japan; they were in a better position than us, post RE bubble bursting. From what I have read, we are following Japan’s model in dealing with this crisis. [/quote]Recall, however, that Japan’s bubble was 2 1/2 times the size of our bubble relative to GDP. Anecdotally, at the peak of Japan’s property bubble, the land surrounding the Imperial Palace in Tokyo was worth more than all of the real estate in California. Amazing but true.
My point is that while we have a shitty savings rate and a LOT of debt to pay down, the Japanese were in worse relative shape because the sheer size of the bubble was so large and 95% of the debt was domestically held (only 74% of our debt is held domestically).
An analogy. Who is worse off… A guy that has a mortgage of $800K on a property worth $250K, but he’s got $50K in the bank, OR
A guy that has a mortgage of $350K on a property worth $250K, but he’s got $10K in the bank?
The first instance is Japan in 1995. HUGE deflating bubble but plenty of savings (relative to the U.S.). The second instance is the U.S. right now – smaller (but still big) deflating bubble with much lower savings. From a systemic standpoint, the size of the Japan’s bubble – with all that entails – trumps its larger savings rate by a FACTOR vis-a-vis our crappy situation here in the US.
So, yeah, we’re mildly screwed. We’re deflating a big ass bubble and we don’t have much in the way of savings. But, the Japanese, despite a higher savings rate, were in MUCH worse shape than we are right now purely due to the size and dispersion of their bubble and the amount of bad debt relative to GDP that they had to eat.
April 17, 2009 at 11:35 AM #383675Participant[quote=Rt.66]
You make a good point about Japan; they were in a better position than us, post RE bubble bursting. From what I have read, we are following Japan’s model in dealing with this crisis. [/quote]Recall, however, that Japan’s bubble was 2 1/2 times the size of our bubble relative to GDP. Anecdotally, at the peak of Japan’s property bubble, the land surrounding the Imperial Palace in Tokyo was worth more than all of the real estate in California. Amazing but true.
My point is that while we have a shitty savings rate and a LOT of debt to pay down, the Japanese were in worse relative shape because the sheer size of the bubble was so large and 95% of the debt was domestically held (only 74% of our debt is held domestically).
An analogy. Who is worse off… A guy that has a mortgage of $800K on a property worth $250K, but he’s got $50K in the bank, OR
A guy that has a mortgage of $350K on a property worth $250K, but he’s got $10K in the bank?
The first instance is Japan in 1995. HUGE deflating bubble but plenty of savings (relative to the U.S.). The second instance is the U.S. right now – smaller (but still big) deflating bubble with much lower savings. From a systemic standpoint, the size of the Japan’s bubble – with all that entails – trumps its larger savings rate by a FACTOR vis-a-vis our crappy situation here in the US.
So, yeah, we’re mildly screwed. We’re deflating a big ass bubble and we don’t have much in the way of savings. But, the Japanese, despite a higher savings rate, were in MUCH worse shape than we are right now purely due to the size and dispersion of their bubble and the amount of bad debt relative to GDP that they had to eat.
April 17, 2009 at 12:17 PM #383074Rt.66
Participant“Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.
April 17, 2009 at 12:17 PM #383343Participant“Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.
April 17, 2009 at 12:17 PM #383530Participant“Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.
April 17, 2009 at 12:17 PM #383578Participant“Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.
April 17, 2009 at 12:17 PM #383710Participant“Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.
April 17, 2009 at 12:24 PM #383084SDEngineer
Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
April 17, 2009 at 12:24 PM #383353Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
April 17, 2009 at 12:24 PM #383540Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
April 17, 2009 at 12:24 PM #383588Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
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