I’m mostly out of pocket today (holidays and all that), but a quick look at the papers reveals that the US is still on target for a decaying economy and eventual hard landing:
• Slowing Is Seen in Housing Prices in Hot Markets
http://www.nytimes.com/2005/10/04/realestate/04reals.html
sigh . . . old news• Bankruptcy Filings Soar As Tougher Law Nears http://online.wsj.com/article/SB112839161016359261.html
This one is going to be nasty• Big S.U.V.’s Lag in Sales, Hindered by Gas Cost http://www.nytimes.com/2005/10/04/automobiles/04auto.html
In September, industrywide sales of large S.U.V.’s were down 43 percent from a year earlier.
(See also: Sales of SUVs Fall Sharply
http://online.wsj.com/article/SB112810411178056944.html• Oil Producers Gain Global Clout From Big Windfall http://online.wsj.com/article/SB112838919128959188.html
There’s a security issue, here, as well as an economic one.• Home Builders’ Stock Sales: Diversifying or Bailing Out? http://www.nytimes.com/2005/10/04/business/04builders.html
A friend observes: Don’t you know why the bigwigs are blowing out in size? Simple: Because they think the stock is gonna’ trade higher.
(Ha!)I have a few words here:
• If housing slumps, how safe are you?
http://www.msnbc.msn.com/id/9582621/
Housing now infects everythingLastly, PIMco’s Bill Gross opines that "If real housing prices decline in the U.S. in 2006 or 2007, a recession is nearly inevitable."
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2005/IO+October+2005.htm
I am all too well aware of my own biases and selective perception; As of now, this remains a minority viewpoint. By the time it becomes the dominant meme, I will (hopefully) be looking to go long . . .
Have an informed, happy and healthy New Year!
Typo, or Freudian Slip commentary on the auction price mentality fueling the housing price mania?
“If the housing bubble bursts, you may be more exposed than you think, especially if you won financial-services and consumer stocks.”
http://www.msnbc.msn.com/id/9582621/
How about emerging and European markets? Do you suppose their correlation with US markets will decrase, or will a hard landing in the US take everything down everywhere?
And A Happy, Healthy & Prosperous New Year to you too!
1932-2006 – The Second 74 Year SubCycle of the US
Second Grand Fractal? A Replay of 1858-1932?
As the United States enters the possible turbulent time frame
of its second major decay fractal since 1858, its government,
corporations, and people are not in good fiscal shape. The first major
decay cycle ended in 1932 for a total of 74 years. By recent fractal
analysis the second cycle may likewise end in an additional 74 years
or in 2006. A nearly unimaginable asset and economic deflationary
collapse is possible.
The imbalances in the world’s leading GDP economy are profound. Since
1982 America’s GDP has been stimulated by a general trend of falling
long term interest rates -set at the high bar by Mr. Volcker. Before
1982, the US GDP was stimulated by post World War II European
rebuilding, real smoke stack and factory mass production, interstate
highway building, social spending, Vietnam war spending, and cold war
military spending. In the last few years massive tax rebates and ultra
low interest rates combined with imprudent and unregulated lending
practices have created historical personal debenture spending
resulting in housing overvaluation and secondary debt accumulation
from second mortgages. Unlike the 150 years prior to 1948 where nearly
half the years were contracting GDP’s, the post 1947-48 years have had
all positive GDP growth – a historical anomaly. The breaking branch
today is so much higher than the one perched on in 1929.
The severity of America’s occult economic illness may be judged by the
trends in total federal revenues since 1966. Total tax revenues have
historically doubled every 7-10 years. From the CBO’s historical
tables, there was doubling in revenues in the following years from
1966: 1974,1980,1990, and 2000. Since 2000, total revenues have
actually decreased with a loss of several trillion dollars of
traditional revenue growth.
Without the borrowed social security funds from the empty ‘lock box’,
governmental borrowing would tax even the abilities of the ‘world glut
of foreign dollar saving recipients.’ Social security tax revenue
nearly matches personal income tax revenue and has come to represent
merely an additional tax that offsets the summation of all federal
expenses. There is no money in the social security trust fund;
interest earned in the trust fund is an accounting mirage; and the
fallacy of depicting future solvency based on assets and interest
earned in that trust fund is likewise, purely an illusion. Solvency
and future payments to a growing number of retirees will be based on a
dwindling ratio of predominately US service-type workers with their
lower wages and increased personal income taxes to maintain needed
discretionary spending. For linear thinkers a look at the US CBO
report for the out years is instructive. Where is the projected growth
in GDP coming from? The maximum economic stimulation has been spent.
Likewise a look at the past CBO report from 2000 with its forward
projection of budgetary surpluses in 2001-2010 is instructive on the
effects that an equity collapse has on projected surpluses.
The macroeconomy is efficient. Asset deflation does occur and occurs
in discrete fractal patterns. It is not chaotic. A look at the DJIA
from 1929 to 1932 is instructive.
The last major monthly growth fractal pattern for US equities started
in late 1994. The monthly pattern was:
14/32-34/28; a low occurred 1.5x later at month 21 for nearly a
perfect x/2-2.5x/2x/1.5x pattern.
The 28 months at the top which incorporates the March 2000 peak
becomes the base for the
major decay fractal with an expected end at 2.5x or 70 months. The
equities are currently in their 60th month of this 70 month evolution.
Since October 1998, this month and week completes a maximal 15/37/37
monthly fractal growth cycle and a maximal 59/157/157 weekly fractal
growth cycle.
The timing for the end of the 70 month devolution matches the end of
an ideal 1.5x weekly decay fractal for the completed 30/75/60 week
growth cycle. 1.5x of the 30 month base would be 45 weeks. The
Wilshire is currently in week 2 of this potential 45 week decay
fractal.
If this interpretation is correct, a most interesting and elegant
defining daily decay pattern is possible dating from the ideal peak of
of third growth fractal 12/30/24 on 28 July 2005 with a base beginning
16 trading days earlier on the fateful day of 7/7/2005.
A defining fractal cycle beginning on 7/7/2005 would add to the
coincidences and ironies of the two years of devasting hurricanes
that have ‘punished’ the swing state in the 2000 Presidential election
and America’s corporately owned oil refineries
Gary Lammert http://www.economicfractalist.com/
1932-2006 – The Second 74 Year SubCycle of the US
Second Grand Fractal? A Replay of 1858-1932?
As the United States enters the possible turbulent time frame
of its second major decay fractal since 1858, its government,
corporations, and people are not in good fiscal shape. The first major
decay cycle ended in 1932 for a total of 74 years. By recent fractal
analysis the second cycle may likewise end in an additional 74 years
or in 2006. A nearly unimaginable asset and economic deflationary
collapse is possible.
The imbalances in the world’s leading GDP economy are profound. Since
1982 America’s GDP has been stimulated by a general trend of falling
long term interest rates -set at the high bar by Mr. Volcker. Before
1982, the US GDP was stimulated by post World War II European
rebuilding, real smoke stack and factory mass production, interstate
highway building, social spending, Vietnam war spending, and cold war
military spending. In the last few years massive tax rebates and ultra
low interest rates combined with imprudent and unregulated lending
practices have created historical personal debenture spending
resulting in housing overvaluation and secondary debt accumulation
from second mortgages. Unlike the 150 years prior to 1948 where nearly
half the years were contracting GDP’s, the post 1947-48 years have had
all positive GDP growth – a historical anomaly. The breaking branch
today is so much higher than the one perched on in 1929.
The severity of America’s occult economic illness may be judged by the
trends in total federal revenues since 1966. Total tax revenues have
historically doubled every 7-10 years. From the CBO’s historical
tables, there was doubling in revenues in the following years from
1966: 1974,1980,1990, and 2000. Since 2000, total revenues have
actually decreased with a loss of several trillion dollars of
traditional revenue growth.
Without the borrowed social security funds from the empty ‘lock box’,
governmental borrowing would tax even the abilities of the ‘world glut
of foreign dollar saving recipients.’ Social security tax revenue
nearly matches personal income tax revenue and has come to represent
merely an additional tax that offsets the summation of all federal
expenses. There is no money in the social security trust fund;
interest earned in the trust fund is an accounting mirage; and the
fallacy of depicting future solvency based on assets and interest
earned in that trust fund is likewise, purely an illusion. Solvency
and future payments to a growing number of retirees will be based on a
dwindling ratio of predominately US service-type workers with their
lower wages and increased personal income taxes to maintain needed
discretionary spending. For linear thinkers a look at the US CBO
report for the out years is instructive. Where is the projected growth
in GDP coming from? The maximum economic stimulation has been spent.
Likewise a look at the past CBO report from 2000 with its forward
projection of budgetary surpluses in 2001-2010 is instructive on the
effects that an equity collapse has on projected surpluses.
The macroeconomy is efficient. Asset deflation does occur and occurs
in discrete fractal patterns. It is not chaotic. A look at the DJIA
from 1929 to 1932 is instructive.
The last major monthly growth fractal pattern for US equities started
in late 1994. The monthly pattern was:
14/32-34/28; a low occurred 1.5x later at month 21 for nearly a
perfect x/2-2.5x/2x/1.5x pattern.
The 28 months at the top which incorporates the March 2000 peak
becomes the base for the
major decay fractal with an expected end at 2.5x or 70 months. The
equities are currently in their 60th month of this 70 month evolution.
Since October 1998, this month and week completes a maximal 15/37/37
monthly fractal growth cycle and a maximal 59/157/157 weekly fractal
growth cycle.
The timing for the end of the 70 month devolution matches the end of
an ideal 1.5x weekly decay fractal for the completed 30/75/60 week
growth cycle. 1.5x of the 30 month base would be 45 weeks. The
Wilshire is currently in week 2 of this potential 45 week decay
fractal.
If this interpretation is correct, a most interesting and elegant
defining daily decay pattern is possible dating from the ideal peak of
of third growth fractal 12/30/24 on 28 July 2005 with a base beginning
16 trading days earlier on the fateful day of 7/7/2005.
A defining fractal cycle beginning on 7/7/2005 would add to the
coincidences and ironies of the two years of devasting hurricanes
that have ‘punished’ the swing state in the 2000 Presidential election
and America’s corporately owned oil refineries
Gary Lammert http://www.economicfractalist.com/