[PEN-L:412] Re: Re: Re: Naive question on Japanese Debt

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

Barkley and Jeff both write about the harm done by bursting bubbles.  If harm
is done by bursting bubbles then expanding bubbles should be doing some
good.  The stock market prosperity [is it still prosperous?] should be spread
all over.  One of the chief messages of Doug Henwood's Wall Street was that
it is largely confined to the financial sector.

Jeff mentions the collapse of collateral.  Again, I do not think that this is
often the case.  The clearest example of this harm is rising interest rates
curtailing construction.  I am not sure how big a factor that would be today.

I agree that historically the collapse has been associated with great
damage.  My suspicion is that the damage occurs because the losses are
socialized.  I also suspect that the linkages that cause the damage should be
smaller today than ever before.  Am I off base here?

Rosser Jr, John Barkley wrote:

> But, somehow when major bubbles burst there is often damage
> to the financial system that then feeds back on real
> investment.  Both Mill and Marx saw that as a major factor
> in macro downturns.
> Barkley Rosser
> On Fri, 31 Jul 1998 10:33:29 -0700 Michael Perelman
> <michael@xxxxxxxxxxxxxxxxx> wrote:
>

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx