Minyan Nimesh Writes:



For almost thirty years, count them, for almost thirty years people like you have predicted that our economy will collapse and the end of the consumer. Throughout all of those years, it didn't happen. No matter how many logical arguments the "gloom and doom" crowd has made, it hasn't happened.

can’t



Chronology Of Things

That

Can't

Happen

One of the reasons the Fed was created was to manage the economy and prevent further depressions. Guess What? The biggest deflation in history, the great depression, happened 17 years later.

At one time economists thought that inflation and recession could not happen at the same time. It happened anyway. A new term was coined for it “Stagflation”.

Deflation supposedly couldn't happen in a fiat regime. Japan proved otherwise.

If you asked anyone in Japan if housing prices could fall for 18 straight years, they would have said "It can't happen". It did happen.



For 30 years people have said US housing prices would never again decline on a national scale. They were wrong. It happened.

It's Different Here

Faulty Premises

It's Different Here.

It's Different This Time.

The Fed won't let deflation happen.

For almost thirty years people like you have predicted that our economy will collapse and it hasn't happened.

Where Prechter Went Wrong

Why The Credit Bubble Lasted For Decades

Single household breadwinner became two household bread winners

Interest rates were at 18% headed to 1%

Internet revolution provided tremendous numbers of jobs

Lending standards declined

Housing boom provided jobs

Rising asset prices supported consumption



Major Bubbles Fueled By Greenspan

Greenspan fueled an overall stock market bubble by bailing out banks exposed to Long Term Capital Management. For more on LTCM please see Genius Fails Again.

Greenspan fueled a dotcom bubble in 1999-2000 out of irrational fear of a Y2K crash. Greenspan embraced the productivity miracle and was worried about the economy overheating just months before it imploded. The story is documented in FOMC minutes.

Greenspan fueled an even bigger bubble between 2003-2006 by embracing ARMs and slashing interest rates to 1% to bail out his banking buddies caught up in bad loans to dotcom companies and bad loans to countries like Argentina.

What They Were Saying And When

In 1999-2000 people were saying "The Nasdaq hasn't crashed yet so it's not going to".

In 2006 Lereah wrote: Why The Real Estate Boom Will Not Bust . Ironically, it already had.

. Ironically, it already had. In 2007 many are writing me with reasons why the credit bubble will not bust. It already has. However, just like housing in 2006, the implications have not yet been fully felt.

could

Can The Fed Inflate Out Of This Mess?

appeared

Problems Bernanke Faces

Falling real estate prices



Subprime housing mess

Alt-A mortgage mess

Pay Option ARM mess

Sharply rising unemployment

Rising credit card defaults

Commercial Real Estate implosion

Global wage arbitrage

Falling US dollar

Overheating China

Slowing global economy

Tapped out consumers

Implosion of $500 trillion in derivatives



Solvency issues at banks

Forced unwind of massive Yen carry trade

Boomer retirement

Pension plan assumptions in an economy starving for yield

Rising corporate defaults



success

Trends Do Not Die Easily





succeed

Chuck Prince Dances At the Top

Unsound Beliefs Foster Unsound Actions

can't

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