Today's Goldman Sachs report on the U.S. banking industry has an amusing section where they have quite a number of graphs to prove that we're not going to end up like Japan. They write: "The collapse of an enormous asset bubble, a banking and credit crisis, zero interest rates, central bank balance sheet expansion, and massive fiscal stimulus have caused some people to question whether the scenario here could continue to play out like Japan, where loans declined for eight years after the peak and interest rates remained near zero." Loan shrinkage has indeed been trending just like Japan-but the U.S. cut interest rates and addressed a looming crisis much faster than Japan did. But what are banks doing now? They're favoring securities over loans.
While very slight year-over-year growth in loans is expected to resume in 2011, loans have recently dipped and stuttered hard.
And while banks were making money off securities-"cash was swapped into securities at a very similar yield" as loans-now that party train is over. "As a result, as bank security portfolios continue to mature, banks are faced with the decision of buying expensive short-term assets or taking significant interest rate or duration risk given the lack of lending opportunities." Oh yes, the "lack" of lending opportunities. That's it.
...Raw jellyfish lunchboxes for the foreseeable future. Soy sauce, if you're lucky.
I really think so.
This post is screaming for a dick joke.
at the onset of this spectacular series of failures i had hope that we would avoid japan's "lost decade". now, not so much
White losers across American quietly rejoice over their improved sexual prospects.
The US is not going to be lucky enough to have the lost decade Japan had which was not so much lost but missed. Yes, the Japanese economy was nominally stagnant but with deflation the same wage buys more each year. The Japanese economy is not within 100 miles of being as bad as commonly depicted, and not within 1000 miles of how bad the US economy will be.
The Japanese made the mistake of frustrating the liquidation of bad investments after the burst of their bubble economy and creating zombie industries, locking valuable resources into inefficient modes of production. The US has done much worse than this. It has not only prevented a certain amount of resources to be used more productively elsewhere but has ensured that more and more resources will be expended in creating shit for which there is no market. The US is going to have dawn of the dead remake zombie industries, not the ones content to lumber in place like the japanese have.
Well, what happened is that they leveraged all their risk on the last thing they had available: the poor. There's not big a big "boom" to the US economy in decades. The replacement of workers with machines has had a negative effects of cheapening the goods that we produce and creating a less-skilled workforce. Finding decent carpenters and other craftsmen is nearly impossible, but service employees are a dime a dozen. By keeping their money ever-closer to their breast-pockets, the nation's wealthy has cheapened the value/output of its workforce. This will take generations to repair, if it is repaired at all.