new credit threat to banks, page-27

KG.

It was candidly pointed out in prior discussions that history does not repeat it rhymes... and in this case we are seeing a change in Global economic Power, a cross the oceans change to China.

The US is not flattening... you can not look at mere graphs and say if it's 50% of it in 1930 or 1970 (or whatever).... it's going to be 50% of it now... that's totally ridiculous... the reason is simple...

If a car's real worth (inflation adjusted) is let's say $10, then if the car is purchased for $20 in 1970 and falls back to $10 then it has fallen by 50%. But if the price purchased was $50 in 2008 does it only fall back to $25 (ie 50%) ? - I think you know the answer to this one.

In the same way you can not take a non-inflation adjusted linear graph and say it fell 50% then so it's going to fall 50% now... that's why we eed to look at the underlying values and adjust the values to a rational PE basis and then compare.. this is why Shiller's model is so much more relevant... see the post here How Low can America go?