Cisco stock is down 55 percent from its high, Intel 58 percent, Lucent Technologies 80 percent. Bearish analysts say aspects of today's prosperity are illusory, and unsustainable. This is, they say, because, as in America in the 1920s and in Japan more recently, the prosperity has been paid for by improvident borrowing. There certainly has been a surge of borrowing by corporations and consumers, and now asset values are declining and the debt remains. Profits have been an unsustainably high portion of GDP and wages an unsustainably low portion.
Corrections are underway.
In the automobile sector, the inventory of vehicles is alarmingly high. The nation's savings rate approached zero during the 1990s spending binge. Now spenders are retrenching, feeling poorer and fearing layoffs. Before the bubble of Internet optimism popped, too much office space was built and rented, advertising agencies expanded too much based on dot-com advertising, too many high fliers made more trips to Tiffany's and pricey restaurants than they can now make. JWR contributor George Will's column by clicking here.