Weekly Musings 18
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For those who are new to the Musings: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books.
Mark your calendar: August 2014 and September 2015
As anyone who has glanced at my books "Weblogs and New Media" and "Survival+" knows, I am interested in cycles: business cycles of debt expansion and repudiation, generational cycles, cycles of resource depletion, and various timing schemes that seem to align rather well with market and financial turns.
The skeptic rightly wonders if cycles are simply patterns which the human mind overlays onto the chaos of history to make sense of things. There is no doubt that element, for who can deny the human mand seeks patterns in apparent disorder? KIt is one of our greatest gifts, to seek organizing principles that explain the apparent randomness of events.
But then the human mind is prone to generate patterns of behavior, even if it is a simple yin-yang reversal of greed and fear, endlessly repeated.
Long-time readers know that two books have persuaded me that there is more to "long cycles" than mere overlays: "The Fourth Turning," which makes the case for a repeating historical cycle of four generations, and "The Great Wave: Price Revolutions and the Rhythm of History" which makes a case for alternating long-wave cycles of stable prices and rising inflation.
The study of these cycles and others such as the Kondratieff Cycle of economic expansion ("spring") and contraction ("winter") has led me to speculate that the world is about to roll over into a deep global recession that was merely pushed forward via "extend and pretend" during 2007-2011.
This global contraction is the inevitable consequence of enormous imbalances in the global economy. But nothing goes up or down in a straight line, and recently I have concluded that the bottom of this cycle may well occur around 2014.
Long-time readers know that I have been writing on the credit-housing bubble since 2005; since bubbles tend to trace out symmetrical rises and declines, then the 2000-2007 rise of the housing bubble projects an eventual bottom 7 years out from the bubble top, thus 2007 + 7 = 2014.
I now expect this bottom and the resulting financial crisis to trigger a political reckoning in which the financial and resource problems at the heart of the global imbalances are at least partially addressed. This would then set the stage for a "false dawn" recovery that would last a few years.
Everything would be notched down to a lower level in this political reckoning, a level that would enable a return to some semblance of stability.
In the crisis stage, cash would be king, and assets in all classes would be very cheap in relation to previous valuations. All these assets would rise sharply in the "false dawn" recovery.
I call this phase "false dawn" because the deep structural imbalances would still remain. The final crisis around 2020-21, which aligns with "The Fourth Turning" date with revolutionary destiny in 2021, can be seen as the intersection of several "long-wave" cycles.
In that tumultuous period, the imbalances will be resolved one way or another--hopefully in a positive manner. In a positive transformation, the old assumptions of "how the world works" will be set aside as no longer relevant, and new models of sustainability will be embraced.
Nobody knows what will happen tomorrow, much less in 2014-2015, but it is nonetheless interesting that "cycle analyst" (bad pun, forgive me) Martin Armstrong has recently called a turn of his 8.6 year cycle on June 13, 2011:
In Armstrong's projection, there are cyclical phase shifts likely in July, 2013, August 2014 and the 4.3 year "half-cycle" turn in September, 2015. November 2017 marks another likely transition point, with the entire 8.6 cycle closing in January 2020.
It is interesting, at least to me, that these dates correspond rather well with my own projections for a bottom in 2014 and a political crisis-resolution. Armstrong's half-cycle point of September, 2015, thus looks like an interesting target for the resolution and the start of the "false dawn" recovery.
His 2020 date for a new cycle lines up rather well with "The Fourth Turning's" prediction of a profound political and economic crisis beginning around 2020-2021 (i.e. 1861, 1941, 2021).
This is of course all speculation, but it aligns rather nicely with Kondratieff's "winter" cycle of debt repudiation and credit contraction.
Is there anything to Armstrong's 8.6 year cycle? That is up to each person to judge. but it is interesting that extending the cycle back two decades generates some relevant turning points:
January 2003, the Bullish turning point in the stock market following the dot-com bust of 2000-2002.
Mid-1994, shortly before the Great Bull Market in technology took off.
The implicit investment strategy of my "2014 bottom and crisis, followed by a sharp rally" theory is to accumulate cash and be ready to buy assets at bargain-basement prices in 2014-2015 when credit will be dear and cash will be scarce.
This is not advice or a prediction, it is only a thought experiment projection of various cycles proposed by various people. It is based my own reading of many cycles, and is not an extension of Mr. Armstrong's views or work.
From Left Field:
(Thanks to U. Doran)
(Thanks to Mike D.)
(Thanks to Shyam)
This
incredible model airport is based on Hamburg Airport and features 40 planes and 90 vehicles that autonomously move around the airport.
It took seven years to build and cost a staggering $4.8 million.
Quote of the week:
"Spontaneous eloquence seems to me a miracle." Vladimir Nabokov
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charles
