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The Coming End of American Triumphalism

-- Bradford DeLong (, May 04, 2000


> stock market valuations and in the value of the dollar. Claims that > current American stock market values are sustainable rest on a belief > that attitudes toward risk have changed and that the marginal investor > in the stock market now expects a Treasury bond-style rate of return > from equities. But no one holding Cisco or Yahoo today does so because

I'm inclined to agree, but the best counter-argument I've heard is that the bubble is kept afloat by the 401k effect - until boomers start to retire (there is no way to move your 401k into cash except maybe to by a t-bond fund).

Is that effect significant?

-- Michael Froomkin (, May 04, 2000.

I read De Long all the time and like his stuff.

There is a whiff here of some likely-Freudian based discontent in this essay. I notice it in academic writing and also in the antics of the neo-anarchists, which I suspect we will be reading about Sunday morning. It has something to do with being left behind, with finding a rationalization for one's self worth in the face of the colossus, with being a Person rather than a consumer represented by a cookie, with the sheer weariness one has when one is supposedly bright and finding one's predictions time after time wrong, befuddled with the totally unrelenting and dull bulk of the US character.

I think it is a scale problem. I think of Bismarck, who did seem to nail the US special status and situation. Upon learning his German General Staff was preparing war plans for a conflict with the US, Bismarck ordered them to cease and desist; "The US is not a country, it is a continent." He implied all plans used to fight the US were silly and only one outcome could be realized. Few seem to be able to scale the US, not in terms of quality but in terms of quantity. It is better if one is a disgruntled worker, academic, or even spectator, to see the US as one of many nations. The truth is actually that the US is all alone, totally up to itself to bungle or succeed. The rest of the world is solely to allow for leavening of the US loaf (from the US perspective) - and even then there is more than enough domestic yeast to make the bread rise. It is like the study of certain species that have no predators or challenges, like certain giant tree sloths or fungi that can be miles across, I understand, growing underground in the rainforest. To apply concepts one uses to consider the lions or the deer does nothing to understanding these organisms.

Therefore I am immediately suspect about any analysis that uses other countries to make their main point about the US current status or future. Japan really didn't matter 15 years ago and they don't matter now - as long as they don't start bombing things. Japan really mattered 15 years ago to the "chattering class" and they matter now to the "chattering class". That isn't a value judgement, just a fact. The incredible size of the US in its happy accident of location, location, and location is the story and will be the story until the US either self destructs , is over run by barbarians or something, or suffers some massive geographical accident, like a comet hitting St Louis. But until then, the way to consider the US is to be focused on Milwaukee, not Tokyo. But no academic wishes to go to conferences in Milwaukee and it demeans their credentials if all I say here is taken seriously - after all, why did they learn French? Or read about Richeleau? Now I am very concerned about Japan as it will impact markets as folks take their lead from such analysis or from japanese flows, but the ongoing status and objectives of the US remains the same. Also, the stock market has very little to do with what the US is or is going to be, as much as the lieks of me would like to think otherwise in terms of how important (unimportant) our jobs are.

When one makes such statements, especially if one is sitting in the US as one makes these views known, it usually makes non-Americans see red as it is considered to be a value judgement rather than what is really almost solely an observation of geography. But it is a fact. Whether Japan becomes twice as powerful or whether it disappears off the face of the earth as far as economic power goes will likely mean nothing to me. But the same certainly cannot be said about the US from a Japanese perspective. This seemingly crass statement drives well meaning folks nuts, for surely it cannot be so obvious and one factored; but it is that way and has been that way since the continent was expropriated a century ago. De Long seems to be saying, if he is saying anything, that the US has a business cycle.

-- Robertson, Mac (, May 04, 2000.

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