I think Japan saw its real estate bubble pop. Remember at the end of the '80s, Japanese banks were big and real estate there had run up.
So the supposition was that it would take a long time to recover from the real estate deflation.
Welll...not so fast...the big problem in Japans RE market was that they bought a whole ton of inflated real estate OUTSIDE of Japan and in a lot of cases had to walk away or wait 10-15 years for the prices to recover.
Further, we dont really have a long time to wait to 'recover' from the market downturn. As I discussed in a recent real estate thread, people who were home owners before 2003 are still sitting on a tidy little profit, unless they got stupid and cashed out their house and bought toys. The house I bought in the San Francisco Bay Area is worth 3x what I paid for it at todays 'deflated' rates. The home I bought in the Sacramento area in 1996 is worth almost twice what I paid.
According to Zillow value charts, many homeowners in the 'bubble' states are still sitting on an 8-10% annualized growth rate on their properties, even after the "withdrawal".
So its sort of tough to 'recover' when you're up
Further, Japanese culture doesnt accept bankruptcy very well. People in debt tend to pay it off, even if it takes forever. Companies with wayward management that should crash and burn are propped up annually by the government. The Japanese government has been happy with artificially low interest rates running almost two decades now. People dont spend, they save. Many businesses pay off debt rather than make capital investments.
I cant see any of that happening in the US for decades and decades. Not even part of it.
Oh and the oil price recovering around Xmas, a conspiracy theorist might say after the election prices will go right back up.
They'll be back up next year as the speculators drive prices up over $4 again and towards $5, so we get to feel good about it when the prices drop back down closer to $4. We're being tempered.
As far as deflation from the drops in commodities and oil, it looks a little more to me like thats just going to take the peak off the inflation trend, not drop to a deflationary level. We'd need to see $2 gas and food prices drop in half to get into that area. Not going to happen.
Helena said 'hitler', so we may be approaching a Godwin event...