When I’m not writing books, pursuing projects in Old Man Labs, or just trying to keep up with 30 acres of land that gets 55-inches a rain a year, our main focus continues to be on long wave economics.
The “hero” of this field is Nikolai Kondratiev who proposed that there is a regular 48-64 year ‘heartbeat’ to how the economy runs.
Not that there aren’t other counts – of course there are. Including one that a colleague and I proposed in 2001. That was based on the saturation of the currency with debt. Compared to 1913 when the Federal Reserve seized power over money in this country, we’d down to about 4-cents of purchasing power on the dollar…and likely to go down further.
What drives the long wave has always been something of a mystery. I belonged to a University of Colorado group from 1996 to about 2003 (when it petered-out) that discussed the problem on a daily basis.
Some thought it was just that every so-many expansions and contractions, an economy would just need a major reset. Biblical evidence of this is spelled out as Jubilee Years in the book of Leviticus.
On the other hand, my colleague and I looked at it as a major change in the money regimen. Governments regularly destroy their currencies through debt and taxes. That cycle seems to run about 83.5 years when we did the math on it.
Another theory has to do with saeculum-based economics.
The core of this is the old saying that the economy renews itself every three generations. One generation “makes it.” One generation “uses it” while the third generation “blows it.”
This is closely tied with the notion of an 80-year socio-economic cycle.
One of my colleague from way back in the Long Waves Group (Jas Jain) slices it as a possible 80-year political crisis cycle.
He goes on to explain:
“According to a historian, FDR firmly believed in the 80-Year political crisis cycle and he thought that the 1930s (80 years since 1850s and 160 years since the 1770s) portend the next crisis and he believed that he is the man to deal with the next crisis. At the time he was the Governor of New York and he decided that he would run for the presidency in 1932. The rest is history.”
The problem we have is that it makes America’s survival beyond the 2030 period problematic.
We can attribute this to a couple of things: One is the coming Robotics Revolution. We don’t have enough “real work” for humans to do once the serious robotics start hitting the market.
In a recent article in AutoNews, former GM whiz Bob Lutz looked out 25-years and said get ready to “Kiss the Good Times Goodbye.”
Take Lutz seriously. While at Chrysler/Dodge he was the key force behind the Prowler and Viper projects. Guy’s got serious vision.
Back to point, as any economy approaches a long wave economic bottom – where interest rates sag to all-time lows, there’s little government can do.
We have such a period coming in 2018.
At that time, the Fed will be trying to raise interest rates. They need to do so because without an increase, pensions will start blowing up all over the place. Most pensions were designed for a 7-percent long-term return on investments.
Fast-forward to modern times (like today) and where is the 7-percent return?
It sure as hell isn’t in Real Estate. Perhaps in a few hot markets like the South Bay or Seattle, but mainly, property taxes are going up most places as fast as values.
Throw in Amazon and Wal-Mart – which I refer to on the Peoplenomics subscriber side as the Barbarians at the Mall, and now we have a perfect collapse scenario: Down will go malls, and with it long-term investments from life insurance and pension funds. Yee gads.
In will come robotics, out will go humans. But, since humans need jobs in order to earn an income, what will they all do?
In the world Lutz sees – maybe as long as 20-25 years out, there won’t be privately-owned vehicles anymore. We pointed out to subscribers recently that GM’s plans to launch an automated self-driving car service to take on Uber and Lyft was just the opening round. Timeline? Two years from now.
Think what happens when – just to use a category – there are no more private cars. What happens to all those jobs in auto shops? Accessory manufacturers, customizers, body shops? Remember, with self-driving cars, the “accidents” should be reduced to almost nothing.
People don’t have a very clear vision of the future. They tend to “look at their feet” – and not up the trail a ways.
We still see Bitcoin as going higher, perhaps after another pullback. But the shape of the curve of its valuation is similar to tulips during that mania, or to the shape of the 1929 debacle more recently.
Starting tomorrow, we will get ADP job numbers. Thursday the Challenger job cut report will be out, and then Friday the Official Federal Number. They should all be pretty good.
However, I’d hasten to point out that should such metrics have been in place in 1928 and 1929, they would show similarly robust economic conditions.
Again, policymakers run on data and the data is always two to four months behind the world.
When I looked today, the Dow futures were up 66. But this is likely because going into year-end, Wall St. execs have a major personal financial incentive to “paint the tape” and make things appear rosy – even if they aren’t. Reason? Bonuses are based on performance of investments, not on the actual gains returned to clients.
While it would be foolish to “Call the top” here, it’s also true that “What goes up will come down.” That applies as much in markets as cryptocurrencies and food prices. The opposite is also true: “What goes down will come up.” We expect that of things like oil in 2018.
In the meantime, we will suffer through one political and social crisis after another.
And this gets us to this morning’s collection of idiocy displayed by public officials of all parties.
Ready? Here’s Stupid…
Shall we run through the list?
Clinton Aides Went Unpunished After Making False Statements To Anti-Trump FBI Supervisor, headlines the Daily Caller.
Politics isn’t supposed to be fair or even-handed. It’s all about Teflon.
Both sides of the aisle, too: “Trump’s lawyers mount a new defense: A president can’t obstruct justice. Is that true?”
As the National Review lays it out, the idea is that obstruction means the Mueller (fishing expedition) is trying to play “Pin the Impeachable Offense on the Donald.” Only, they’re a little less direct is saying it.
Even the Wall Street Journal says Mueller is stonewalling Congress and is protecting the FBI…but the theater of it all will drag out who knows how long…
Trump Travel Ban Upheld
Trade Data: The Hole Got Deeper
While the Trump Bump continues in markets, we find the latest trade figures (just out) of interest:
“The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.7 billion in October, up $3.8 billion from $44.9 billion in September, revised. October exports were $195.9 billion, down less than $0.1 billion from September exports. October imports were $244.6 billion, $3.8 billion more than September imports. ”
Productivity and Costs data tomorrow.
While the Dow (is that the Plunge Protection Team tossing money to arb up the Dow?) is up, Nasdaq futures fall as tech selloff continues.
If the Dow-to-NASDAQ relationship was the same as a month, or so back, the Dow ought to be 820 points lower than Monday’s close.
Rational has nothing to do with markets, however.
With Bitcoins at $11,800 each early, I’m thinking fried tulips for breakfast… U.S. investors overweight in stocks despite market fears: study.
The Real Syria Agenda
Over the past several years, we have been quite clear explaining what the war in Syria was all about and how both Turkey and Lebanon figured into the mix.
Quite simply, there is a HUGE natural gas deposit that begins offshore from Lebanon and goes north – and it can feed Europe for a good long while. This is called the Leviathan field.
The problem – and why there has been so much fighting in Syria, tensions in Turkey, and obstinacy from Lebanon is that there had been plans to run a gas pipeline from Lebanon north through Syria, through Turkey and into Europe that way.
Take it all off the table…here’s the workaround for regional war:
If you route the pipe undersea and head for Cyprus and Greece, who needs a war in Syria over (behind the headlines) gas pipeline rights of way?
Of course, this doesn’t mean peace will break out. Memos take a while to get out to the front lines, so Bomb kills 8 in Syria, IS claims attack.
Radio Reminder: On CoastToCoastAM
“First Half: Business consultant and financial writer George Ure shares predictions and his most recent work tying together unexplained phenomena including missing flights, levitating stones, and the Bermuda Triangle into one unified theory. ”
Gee, I may have to listen…meanwhile, off to watch ’em pump them futures…