From what I understand, one could argue that there was such a "bubble" in the case of the UK, Spain, and Ireland. But adding the Netherlands to the list seems odd.

Yes, housing prices are rather high (leaving aside the large rental market), but the current situation hardly seems to merit the epithet "bubble". The sale price of housing did increase significantly in the 1990s. From 1996 through 2001, the sales price of housing increased by over 10% each year, reaching 18% in 2000. But since 2003, such increases have moderated significantly, remaining in the region of 4% per year since then.

I am not sufficiently expert to say whether a 4% per year increase is still "too much", but it doesn’t seem to be consistent with the double-digit increases that one sees in "bubble" situations elsewhere (or that one saw in the Netherlands in the 1990s).

Most recent figures are avalable from the Centraal Bureau voor de Statistiek, at:

http://statline.cbs.nl/StatWeb/publication/?VW=T&DM=SLNL&PA=71533ned&HD=080422-2242

What tough questions? Care to give any examples? how did you hear about these quietly asked questions? sources pls! i do remember a story some NPC members actively argueing against the 3gorges dams during an NPC session and had their microphones suddenly switched off. mind you that must has been years ago under JZM; i wonder how China’s political systems has changed since. I had previously thought your description of Japan’s policy making would apply just as well to China.

and Netherlands and Ireland

Simply put all the countries with low unemployment are country with high private household debt and high home prices…

China is doomed and DC is just fun to read. If anybody wants sustaible growth then it s easy to understand that it works through balanced trade, strong environmental protection, a fair divide of the value added and stable private debt.

Do you see that in any country in the world right now ?

I see developping countries depending on exports, with wages too low to provide home consumption and HUGE environmental destruction and on top of this companies with HUGE debt loads… So it s easy to see that they ll be belly up pretty soon.

I do suspect that most of the deep-deep out of the money put options were bought by people holding credit default swaps on Bear.

wrong. more leverage with the out of the money

The fact that people started selling puts at 15, told you that the market was thinking that Bear was rather jittery.

Also there is no way that insiders could have benefited from this without sirens going off. Among other things, people in the financial industry are not allowed to short stocks in their own accounts, and all accounts that you or anyone in your household gave control over send regular reports to compliance.

"…With each passing year, the U.S. economy relies less on the production of agricultural and factory goods and more on services to fulfill the American Dream. Today, four-fifths of our jobs are in services… We are a service-sector-driven economy, plain and simple…The United States, like Chicago, can continue to prosper only if it faces economic change head-on, choosing to compete rather than retreat, seeking out new opportunities in a globalizing economy, where goods, services, money and ideas flow freely across international borders.

One of these opportunities—maybe the best one—lies in exporting services… Data from nearly all parts of the world show us that consumers tend to spend relatively less on goods and more on services as their incomes rise… Once people have met their basic needs, they tend to want medical care, transportation and communication, information, recreation, entertainment, financial and legal advice, and the like…China, India and other countries will shop the globe for what they cannot find at home or what is better elsewhere. Here, we have advantages in many areas. Medicine, finance, education, legal services, forensics, architecture and design, engineering technology, film and other aspects of entertainment—in these service areas and more, America is second to none… Productivity determines pay. And America’s services workers are among the world’s most productive… The capital of our times is human, not mechanical…workers create value with their minds… Economic theory tells us that nations will export what can be produced by factors they have in relative abundance. This is the principle of comparative advantage. Countries with significant mineral wealth will sell oil or copper. Those with large tracts of fertile land will sell wheat, corn or beef. Those with cheap labor and large stocks of machinery—think China—will sell run-of-the-mill factory goods. America’s highly knowledgeable and experienced services workers are our nation’s relatively abundant factor. That is what we sell to the world. That is where our future lies…" http://www.dallasfed.org/news/speeches/fisher/2008/fs080417.cfm

Guest –

"What would you think of a country that accepts garbage financial instruments for cash, you think that country will last ?"

what is the over under on China lasting ten years? Last I checked, China had a lot more US agencies on its central bank balance sheet than the fed, and a currency mismatch to boot. And then there is the CIC, which handed over cash for blackstone’s equity …

If you look at my actual post, i think you will see a lot of recognition that the US is in a bit of trouble (the dollar is weak b/c US fundamentals are weak — that isn’t exactly rah rah american is great). at the same time the reality is that a lot of other governments are through their central banks providing a lot of credit to the US … more quite frankly than I think is healthy for the US.

above all tho i don’t get why a whole set of countries that think the US is the source of much global trouble still link their currency to the dollar, the currency of the prime trouble maker … that ain’t the fault of the yanks, generally speaking, tho we seem guilty of putting some pressure on the gulf to stick to their pegs.

Certainly none of the Bear insiders made any money from the deal. The Fed insisted on a low purchase price specifically to punish Bear-Stearns and also didn’t open the discount window to broker-dealers until after Bear was dead.

DC: If after all is said and done the $25 Billion primary assets are sold for more that $25 Billion, the difference goes to J.P. Morgan regardless of the outcome on the secondary facility of $30 Billion. No matter how you cut it, J.P. Morgan wins.

Pretty much. The reason for this is that the Fed didn’t have much choice. The second Asian markets opened, there was a chance that the world financial system would have disintegrated if a deal hadn’t been made.

DC: The best the FED can do is get their money back with interest and the worse they can do is lose about $25 -$40 billion. The FED would have been far better to just buy the assets at Bear’s and J.P.Morgan’s valuation.

The Federal Reserve doesn’t have the people or the expertise to run an investment bank. To make the deal work, you have to guarantee the trades that you make, which means that you need someone looking over the traders shoulders.

Also, I don’t think that the Fed has the legal authority to buy a bank, and it wasn’t going to get in less than 24 hours.