Stocks and GDP

JayHecht at aol.com JayHecht at aol.com
Thu Jan 28 08:13:36 PST 1999


In a message dated 1/28/99 8:29:42 AM Central Standard Time, dhenwood at panix.com writes:

<< As happens now & then, though, if too many units

(households, businesses, governments) default on their debt, you can get a

deflationary cascade of defaults, as happened 1929-33 in the U.S. We had a

hint of that in the U.S. from 1989-92, but thanks to a $200 billion bank

bailout and the bottomless generosity of Alan Greenspan, disaster was

averted. >>

Japan of course is in the "anomalous" position of having households with too much savings (i.e. leakages from aggregate demand) and banks and industries not able to pay back debt because of the former's "irresponsible" behavior.

Jason



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