Convergence and divergence between Japan and the US

I have called for this crisis to take anywhere from 10 to 25 yrs before we see any turn around. I have called for RE to drop a lot and as much as 50% in some places, I have called for the Dow to fall 50%, among other forecasts that I have made in the past.

Now after looking at data from Japan I realize that things can get even worse. Here are some observations:

In Japan’s RE boom a piece of land about 3.41 square kilometers of land on which the Emperor's palace sits was worth all the land in California, no need to tell you what happened shortly after.

In its peak the Nikkei was over 38000, today it is under 8000
The down at its peak was over 14000, in this down turn it has gone as low as under 7200 (do you see what can possibly happen?)

Japan started out sourcing jobs to other pats of Asia.
The US has done the same

Japan lowered interest rates as much as they can to avoid their crisis but it did not work
The US is also doing this

Japan had a lost decade in the 90’s and a horrible one this decade also
Will the US suffer the same fate?

Japan had very little debt
The US has massive debt

Japan had a Trade Surplus
The US has a trade deficit

Japan created a lot of paper over a ten yr period
The US has created just as much in a third of the time

Japan was able to avoid a depression
Will the US be able to avoid a depression?


Well we are doing all of the same things the Japanese did but only much faster. Japan was able to avoid a depression because of a trade surplus and very little foreign debt compared to the US. Because of the trade deficit, overall debt and monetary inflation in the US, there is no way in the hell the US can avoid the Greater Depression. As a matter of fact it has already started.

The world is full of stupid people and every time I hear someone says “go out and spend” to get us out of this, I add one more idiot to the list. You cannot create more debt to get out of debt, you do not create long term solutions by going into debt, now sir! You solve financial problems by saving and paying off those debts. Saving instills confidence in individuals and countries. Saving provides capital for innovations. Debt only encourages leveraging that transfers wealth from the poor and working class to the power class and it props up the fractional reserve banking system that facilitates this transfer of wealth from the working class and poor to the power class.

What will save us and avoid a crisis of this magnitude in the future is saving and a gold backed currency, without these, life will be a living hell for the foreseeable future.

In closing I will restate another forecast I made many times; Gold will hit 2K by the end of 2011. And to that I will add Oil will go to 100 dollars a barrel within 3 years.