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"The US is closer to a Japanese-style outcome today than at any time in recent history." Perhaps ever, in fact, given the level of past excesses, creating a monstrous debt overhang.
Rosenberg's visual analysis showed a frightening post-bubble decline in both countries by the numbers:
(1) Since the mid-1990s, Japan's private residential spending plummeted by nearly 60%. America, since 2006, matched it in much less time, and the trend remains down.
(2) Since 1988 in Japan, housing credit crashed from over 20% annually to around 3%. US home mortgage liabilities peaked around 2003, moved sideways until 2007, then plummeted from around 13% annually to negative numbers because of mounting foreclosures.
(3) Japanese short term interest rates fell from 8.5% (in 1990) to near zero in 1995 and remained there. US short rates fell from around 5% (in 2007) to near zero where they're likely to remain indefinitely.
(4) Over the past decade, the Bank of Japan (its central bank) expanded credit exponentially, its level remaining at unprecedented levels. In 2008, the Fed acted likewise, expanding its balance sheet recklessly to help banks, not Main Street it ignores.
(5) Fiscal policies in both countries created unprecedented, dangerous, deficits. For over two decades, Japan had no surpluses. America's last one was in 2001. It's been all red ink thereafter, especially since 2008.
(6) In 1991, Japan began a protracted deleveraging cycle as reflected in its 10 year government note yield and benchmark Nikkei Index. It peaked on the last trading day of 1989 at nearly 39,000. Currently, it's at around 10,500 with minimally many more years, maybe decades, needed to recover fully.
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