Originally written by John Bunch on November 6, 2008 10:01 PM However, let's just say that financial crises are not American by nature. Japan had a highly consensus-oriented (to put it mildly) culture in 1990, and the economy was the opposite of quarterly-profit driven (I remember in 1993 a businessman in Germany telling me that the Japanese managers would plan "250 years into the future" (!). Their markets were tightly regulated, and their bubble burst. Ditto the Asian financial meltdown of 1997, etc. There are U.S. companies like SAS that are very "European" in their overall mentality (35-hour workweek, day care on site, etc.), and there are European companies that are more "American".

Through "internationally" coordinated action, the yen appreciated from 360 to 80 per dollar in the 80s. Do you expect international funds not to flow into Japan to help inflate the bubble and make it a more memorable bang?

As if that was not enough, the Americans then started complaining that Japanese workers were putting in too many hours and therefore had no time to spend their money which would increase imports. Incredibly, the Japanese government did increase the number of public holidays to appease the then number 1 market and sole security guarantor.

If you compare the Japanese public holidays for 2009 with that of London and New York, you will find that Tokyo has 17 days of public holidays versus 9 for New York and 8 for London. For patriotic types of holidays, New York has 3 (Washington's Birthday, Memorial, Independence) while Tokyo has 4 (National Foundation, Showa, Constitution Memorial, Emperor's Birthday). In addition, can the US beat public holidays in Tokyo for Greenery Day, Marine Day, Health and Sports Day, Children's Day, Culture Day, and not to mention the traditional Coming of Age Day?

SHANGHAI (AFP) — Spotting an opening in the global fight for talent, China's ambitious financial institutions are planning recruiting trips to London and Wall Street on the wounded financial titans' home turf.

Sovereign fund China Investment Corporation has begun a global search, multi-billion dollar Chinese-French fund Fortune SGAM plans interviews on Wall Street and Shanghai's government is headed to London and New York next month with job offers in hand.

The Crisis & What to Do About It
By George Soros

The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil or a particular country or financial institution defaulting. The crisis was generated by the financial system itself.

In my book The New Paradigm for Financial Markets, I argue that the current crisis differs from the various financial crises that preceded it. I base that assertion on the hypothesis that the explosion of the US housing bubble acted as the detonator for a much larger "super-bubble" that has been developing since the 1980s. The underlying trend in the super-bubble has been the ever-increasing use of credit and leverage. Credit—whether extended to consumers or speculators or banks—has been growing at a much faster rate than the GDP ever since the end of World War II. But the rate of growth accelerated and took on the characteristics of a bubble when it was reinforced by a misconception that became dominant in 1980 when Ronald Reagan became president and Margaret Thatcher was prime minister in the United Kingdom.

The misconception is derived from the prevailing theory of financial markets, which, as mentioned earlier, holds that financial markets tend toward equilibrium and that deviations are random and can be attributed to external causes. This theory has been used to justify the belief that the pursuit of self-interest should be given free rein and markets should be deregulated. I call that belief market fundamentalism and claim that it employs false logic. Just because regulations and all other forms of governmental interventions have proven to be faulty, it does not follow that markets are perfect. http://www.nybooks.com/articles/22113

Originally written by John Bunch on November 9, 2008 9:21 AM I don't really understand your point. What do holidays have to do with Japan's bubble in 1990 ?

Try eating Washington apples with the skins intact. It was used to illustrate that the bubble had some American input (the US was not totally blame-free) and the holidays were just a follow-up pressure from US.

But talking about the relation of holidays and bubbles, President Roosevelt did declare a 1-week bank holiday (to prevent bank-runs) on his first day in office!

Now that, thanks to that piece of advice, everyone is sitting safely on their cash, here comes the next word of wisdom:

John H. Cochrane: Is Now the Time to Buy Stocks?

Professor's bottom line:

If you're less leveraged, less affected by recessions, and have a longer horizon than the average, it makes sense to buy. If you're more leveraged, more affected by recession or have a shorter horizon, it might be the time to sell, even though you might be cashing out at the bottom. If you're about the same as everyone else, do nothing and relax. If you're wrong, at least you will have excellent company.

If you are none of the above, just go back to work, stupid!

Jacek

Either that, or attend the Subprime Econ. 101 lectures here: Post #156700

Nanna