Here’s an exercise in global linguistic similarities and stock market bubbles. In the early 1980’s, the Japanese government literally promoted a babaru (i.e., bubble economy) .They implemented a master plan to raise property values, stock prices, manufacture cheap capital, and encourage exports. As a follow-up, the Japanese initiated an ongoing program of zaitech (i.e.,financial engineering and speculation) to stimulate the domestic economy.

Babalú was the name of a fabulous song introduced in the 1950’s by Desi Arnaz, then Cuba’s greatest export to the U.S.. Babalú is Spanish for medicine man or witch doctor, as gurus in santería and voodoo are called. The barbaru (perhaps a Japanese mispronounciation of babalú) also dealt with voodoo magic. As a result of zaitech voodoo, the Tokyo Dow Jones went up tenfold (1000%) !

At the peak of this barbaru, an 800 ft2 apartment in Tokyo was equivalent in value to Donald Trump’s Mar A Lago estate in Palm Beach and the grounds of the Imperial Palace in Tokyo was valued in excess of all of California’s real estate !!

Finally, because of unrealistic valuations and excessive debt adding to concerns that their barbaru would burst, the government pricked the bubble lightly by raising interest rates in disregard of a fundamental principle of economics: expensive credit is a bubble (barbaru) killer. Obligingly, the Tokyo stock market responded and went into a prolonged dive for the entire decade of the 1990’s, dropping 60% of its then value. Japan’s economic and banking crises have still not been resolved and the Tokyo Dow has yet to recover to its pre-barbaru days.

Respected money manager, David Dreman, in a March 8th Forbes article, "Bubble Psychology" presents a tongue-in-cheek calculation for a Dow 1,000,000 by 2030.

Just released is a controversial book entitled, "Dow 36,000" by Glassman and Hassett, academic theorists and, babalús of "new era" magic. These American Enterprise Institute fellows claim there is no bubble. They deride distinguished Federal Reserve chairman Alan Greenspan’s concerns for the market’s pending bubble-burst. The book’s bizarre gospel, extols new era valuation principles while debunking proven methods of valuation. The markets, they claim, will not soon go down, totally disregarding ominous comparisons to Japan’s barbaru and 1929‘s bubble blow-out.

"Dow 36,000" also fails to effectively respond to these facts:

• this year’s total stock market has produced more stock declines than advances (i.e., breadth measurement) notwithstanding the 30 stocks comprising the Dow Jones Industrial Average. attaining record highs,.

• since May 1998, the majority of stocks on the New York Stock Exchange have traded below their 200 day moving average roughly 80% of the time and,

• Breadth was also seriously negative in the two years preceding the 1929 crash. By 1932 , 89% of share values were wiped out.

• national, corporate and personal debt have reached historically high proportions

So much for globalization and linguistic similarities. My fearless forecast?

The Dow Jones Industrial Average will plunge to 6500 long before it reaches the 36,000 fantasy projection.