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The Post-Bubble Business Cycle - Stephen Roach

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    "In this case, the devil may already be in the detail. Breaking down the GDP by type of product reveals that deflation has already emerged in goods and structures but remains absent in services. That’s right, on a year-over-year basis as of 2Q02, prices were actually down 0.7% in the goods portion of the GDP and off 0.9% for structures -- product groupings that collectively account for 48% of real GDP. Only in services -- where price measurement can often be sheer fantasy (i.e., the service derived from homeownership) -- was inflation holding at a positive 2.3% annual rate in 2Q02. In other words, deflation has already reared its ugly head in a very large portion of the US economy. This mirrors the painfully classic results of a post-bubble economy. Popped asset bubbles are the stuff of an enduring price destruction"

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