Sunday, January 20, 2008
'Decay Model E' : Oct 1987 and ? Jan 2008: the Terminal 23 July 1987 and 16 August 2007 x/2.5x/2x/1.5-1.6x Lammert Nonstochastic Fractal Sequences
In 1987 the US macroeconomy during and after the rapid Wilshire October equity devolution was in a healthy state. Underpinned by massive percentage GDP deficit cold war military expenditures, by its position as a world creditor nation with high savings, by its NAFTA-less WTO-less role as a net exporting and manufacturing nation, by its role as the foremost innovative technology R and D developer and manufacturer of microcircuits and computer chips - very equivalent to the 1950's transistor revolution- and by the related ongoing explosive marketing of the PC, the 1987 US macroeconomy was a global economic steamroller. The tranisent nonlinear October 1987 equity collapse was quite simply secondary to transient overvaluation and investor saturation; a nonstochastic saturation event that occurred in an otherwise remarkable economic growth period. Over twenty years later, the US macroeconomy suffers from a most severe dysequilibrium, the necessary consequences of 'globalization' of its formerly more nationalistic US corporations. Maximal profit motive drove US corporate CEO's and boards of directors to make business decisions and influence American politicians in the passage of globalization agreements that would maximize corporate profits. Ultimately corporate profit motive has relegated the American consumer to a significantly indebted borrower - with corporations gaining large profits from the financial debt business and the business of importing and distribution of cheap labor produced items to the US consumer market. During this same time low interest rates - politically and economically necessitated by the 32 month or so collapse of the high tech bubble, lending parameters of the financial industry, and artificial transient wealth created from the resulting inflation of the housing bubble synergistically provided the dynamics for the unsustainable debt driven economic growth. Globalized corporations had record profits - reaping benefits from both lending to American consumers and selling cheap-labor imported manufactured goods. First, the saturated and overvalued housing bubble crested and remaining investment money was focused on the equity and commodity markets. As the available investment money further contracted by ongoing debt default and associated restricted lending, the residual was lastly focused on the commodity markets. At the end there will be inadequate amounts of investment money available to support commodities. Without any particular Federal Reserve monetary action, residual investment money, as many times past predicted, has optimally flowed into the US federal debt market driving the ten year note to a four year low. The 2008 US macroeconomy is triply saturated: saturated with a large supply of overvalued assets, saturated with asset over-ownership, and saturated with debt - all three supported by a contracting number of disproportionally service-related US jobs. 2.6 trillion dollars has undergone devolution from the Wilshire's 11 October 2007predicted high. January 2008 is not October 1987. It likely represents the nonlinear devolution area of a major generational consumer saturation time phase predicted in The Economic Fractlist. Near ideal Lammert x/2.5x/2x/1.5x fractal progression may soon occur. For the 1987 Wilshire it was 9-10/24-25/20/15 days and for the 2008 Wilshire it may likely be 17-18/44/34/25-27 days.