paul cries mea culpa.... i oughta too

we both he nig shot he and little no shot  i got the lot bubble right and early enough to be cassandras
but we both blew the melt down scenarion

paul:

"my old work on balance sheet stuff focused on corporate rather than household debt, and that I was entirely concerned with the balance sheet effects of a movement in the exchange rate as opposed to, say, a drop in housing prices."


".... I really, really should have connected the dots and seen how a burst housing bubble could produce similar effects — but I didn’t; I thought the end of the bubble would be nasty, but failed to realize how nasty. Mea culpa."


okay what's he saying and not saying here ?


balance sheet asset value   blow outs can crimp spending in a protracted fashion

lot bubles blow out there fore  a prevassive massive lot bubble blowing out
 will lead to .....big household  spending crimps

now he's not even talking about the september credit system melt down here
in fact if we hack out the months from bear stearns bail to the obama bail...big bail  II 
with only a two day stop to apply both the bush bail ..big bail  I
and of course all the private bank balance sheet boosting purchasing activity
by  gentle ben's fed .....

we go to the after math of the lot buble burst and its impact on household spending and from there threu the ramifications of that to the global  production system
and jobs jobs jobs

what did we miss ?
well both the velocity of the lot  value contraction and the depth of its impact on
immediate spending

i figured the decline of lot values would be slower a lot slower and contrasted its prospective protracte dynamics
with the rapid bursting of the dot.com bubble in '00

this led me and i think paul to miss the impact on the credit system ...even if we knew about the big hi fi harboring of all that shakey lot value backed paper
--i thought they'd sold it to suckers ..spread it far and wide and could ride out
 the problemds associated with  slowly sink lot  values  ---

i saw a decade of householder grinding but not a hi fi blow out
first world stagnation but no need for a great bail epic

the point however
 as suggested by the imaginary by pass of  summer fall '08
 is this

yes we fell faster and prolly further then i and paul expected
but once we stablized
the difference was only the obviousness of the stag ahead

swimming that far under water is harder on the nation's lungs
then swimming nearer to the surface

upshot we were headed for a first world stag
but the excess idling of capacity has added additional problems
the momentary near free fall for two quarters is a monument of shame
to wall street
 not to the broader structural problems
   created by a macro policy
that fueled household  spending with unsustainable
lot collateral based credit flows

all along from  1998 on perhaps and ceratinly from 2000 on
we needed  to run a sinking dollar policy to increase exports
and certainly post dot. com burst a TP system acceleration
not a lot value acceleration
to increase the   present  income of
  ever   credit constrained
             low and middle members of the  by job  work only earners club