It’s a conditional “Yes” – and while this is normally the kind of thing that we save for our Peoplenomics.com subscribers, the reason UrbanSurvival is here is so a large following can track (and grade) our thinking on economic matters. Even if we differ on the politics of free lunches and what-not.
A bit of background on all this work: I took my masters in business back in the late 1990’s and my focus was on long wave economics. Shortly thereafter, I did a paper in September of 1999 which was called “Death By DotCom ” (DBDC)
I’d become aware of the long wave during my news director days from 1970 to 1983 in Seattle. Many brilliant people contributed to my thinking including Howard Ruff who was out promoting his Rough Times and the late financial novelist Dr. Paul Erdman ( Silver Bears, Crash of ’79, and who can forget The Billion Dollar Sure Thing.” )
Erdman actually spent some time in prison because in those days, the head of a Swiss bank, which he was before writing, was responsible even when underlings did something wrong – which they did – so he took the penalty. My, how times have changed? Notice Jon Corzine is back? Like I said, different times back then…
Point is that I’ve been studying the “Long Waves” in the economy for coming up on 50-years now. And not sure I’ve come to any conclusions except to say that a) there are waves but their analysis is complex because b) all waves are self-similar depending on how you “adjust your data.” Still, all have similar impacts.
By the way, this matter of “data adjustment” is precisely the fraud of “climate change.” You see, in economics there is a semi-rigorous set of rules for “seasonally adjusting” data. In Climate studies, there is no such set of rules and so “adjustments” are as much designed to get more grant money and build resumes, rather than actually measuring for and rigorously discounting the massive measurement distortions of things like “heat islanding.”
But that’s not the point of today’s little ditty, either. No, what we’re going to do is simply line up two number series on a chart, draw some lines and allow you to draw your own conclusions.
A word about the data sets. The black trace in the following chart is the Dow Jones Industrials from 1920 through the mid 1930’s. The Dow was a very good representative of the economy back then because the index included transports, manufacturing, and so forth. I won’t bore you with looking up the individual components, but their version of “tech” was radio and companies like RCA. There were also “trusts” which are not entirely dissimilar from sector ETF’s we have today.
Naturally, we like to think of ourselves as the “best and smartest people ever” but the Truth argues the point. I recently bought a 1,096 issue collection of Popular Mechanics on eBay (it was like $30-bucks on 4 CD’s) and it is amazing to read about the electric vehicles that were being trialed for postal delivery work in 1905! So much for best and brightest, huh?
The second set of numbers has its basis in my masters work. This is a modern “Aggregate Index” of US Markets. You see, in order to get the same proportion of “all industry” that was represented in the compact Dow a hundred years ago, you need to include weighted portions of the Dow, the S&P, and the NASDAQ in order to understand the modern market.
Next, you “norm up” the old 1920’s data so it’s scaled the same as present times and what you get is this:
A word, or two, about what this chart represents – in my view which is not to be taken as trading advice!
The first area circled – at left “A” – is where the 1929 market began its blow-off. At “B” we have the modern analog..
The black arrows and the red arrows are explained in the chart text and that really forms the investor decision – paradox really – that we presently face.
Sure, sure, everyone likes to say “This time it will be different!” but that’s a pantload because it always ends the same regardless of whether you’re talking Tulipmainia (1632-1637), or the South Sea Bubble (1716, but that’s going from memory) to the 1840’s Depression in the US, the Long Depression from 1873 through almost 1900 and of course the Great Depression of the 1930’s. All the same tune.
There are some commonalities in terms of investor survival strategies. The main one you ought to be concerned about is preservation of a job and a roof over your head.
When the banks began to fail in the 1930’s they called in mortgages and that forced people out of homes. Banks back they had loosey-goosey reserve requirements and when bank woes (and runs) began, the little banks (down at the corner within walking distance) simply shut their doors.
When people lost their homes, another knock-on was that people were no longer able to fend for themselves from their home gardens. If you search “The Hungry Years,” after you get through the Neal Sedaka album hits, with any luck you’ll get to The Hungry Years: A Narrative History of the Great Depression in America.
That’s the kind of thing you ought to be reading instead of having your head up your (digital game-based distracted) butt. Because there’s much to be learned.
Coming up on 10-years ago, one of Elaine’s boy’s asked m e what I thought about him taking a job with the Post Office.
“At some point in history, it would be a terrible idea – you’d be out of the rising tide of a soaring economy. But, you’re in a position where you don’t have the inclination to learn heavy-duty programming and develop quick-turn-over IP, so take the longer view and remember that government workers generally kept their jobs in the Great Depression.”
One of the joys of being old (like over 70) is Elaine and I can still remember the “old days.” In my case, it was the grandparent’s home (on dad’s side) where grandma Bessie fed the whole family: Husband, three boys, and two girls out of the garden out back that took up the whole backyard. On Elaine’s side it was grandparents living in a home without running water and an outhouse – which she remembers as a child. Along with the proverbial “pot to piss in” when it was too cold to go to the outhouse.
No, this is not a nostalgia trip. The point is you can read up of any of the Great Recessions, look at the “human suffering” angles and then sort them out using our seven major systems of life that we cover more deeply in various Peoplenomics report.
You see, when the crap hits the fan it hits what? Peoples’
- …and Finances
Regardless of whether you put any stock in our ” 1929 Replaying” possibility, the key things to focus on (out here, not in phone-space and cyber worlds) is the real-deals. How are you going to eat? Where is your food from right freaking now and what are your supply vulnerabilities?
Apply that kind of “If Disaster, then X, Y, and Z happen, and my plan to avoid that pain is to “right now” get on with avoidance actions 1, 2, 3,. and however much it takes.
We have very well-off friends and we far, far below our means. But that’s a matter of choice.
On the Peoplenomics side tomorrow, there’s a long article coming up about how to prepare a serious shop an how one can be organized (with pictures and examples). We’ve also got a “Great Tomato Race” going because we are doing some actual growing/yield/labor comparisons because that is the kind of information you really need to have worked out in advance of the crap hitting the rotor.
OK, sorry to get off on a rant (almost a junior Peoplenomics report but not). I just wanted to put some of these concepts “out there” so when you read things like articles a bout food growing and building a massive home shop on the Peoplenomics side of the house, it’s not that we’ve lost our “economic star to steer by.” It’s that we’re in a period – if the chart above is anywhere near right – when we should all be paying down debt and getting ready for what could be coming.
Although we may give a certain presidential candidate a lot of crap about Native American heritage, we also publicly acknowledge that “Elizabeth Warren says the ‘warning lights are flashing’ for the next economic crash” is the best outlook we have heard on the economy from any of the hopefuls including Trump. Trump’s problem is that if the bubble blows before 2020, he’ll be a single term prez. And this chart says that’s something to spend some time thinking about.
We now return you to an abbreviated morning report…
Redbook and some housing price data coming later, but for now, the market’s set to open up a hunsky, or so. +103 on the Dow at click time.
Possibly Useful Information (PUI)
This being National Tequila Day…
Rate cut hype is everywhere: Since 1990, the stock market does this every time in the week ahead of a Fed rate cut is but one example. If the Fed actually anticipates the correction to come, there’s a chance to hyper-extend the rally we’ve been in since 2009 but that’s a long shot.
Counterpoint in “What Is The World Going To Look Like If Rates Ever Normalize”. I’d remind you rates in 1929 were topping 6% in New York.
An American Leadership Crisis is becoming “normal” as Gartner Survey Shows Only Half Of Business Leaders Feel Confident Leading Their Teams Today.
Another Historical replay: Historic US Senate hearing eyes cannabis banking hurdles, but major reform seen as long shot. The rhyme part? Depressions bring legislative relief by drugging the masses. So when we note that Prohibition ended Dec 5, 1933, we will not expect national loosening of the Harrison Act and other anti-weed laws until the bottom of the Great Depression to Come. When it gets here, it’s a good marker to go long again…
Watch LMT: Lockheed Martin profit rises 22% on higher F-35 deliveries. More important? LMT is leading in compact fusion development. Long shot but…
Got’cher “rockers?” Harley-Davidson cuts 2019 shipments guidance after sales slump. We swear Harley could be a giant among the younger people with less dough if they’s just build a Honda-90 clone… But hey, obvious to a marketing/rider doesn’t mean it will fly…
There goes another Fed Vacation on the taxpayer’s dime: Budget Deal Avoids U.S. Government Shutdown Before 2020 Election.
Mid-Engine –Finally! Look, my ’86 Porsche 944 had a mid-engine, as did the 1970’s 914 and especially the screaming 914-6. So,, based on the mid-engine 914 being brought out in 1969, we figure it has taken GM’s high performance Corvette just over half a century to catch up with Porsche. 51-years late, here comes the C8: 2020 Chevrolet Corvette: Why It Was Time to Move the Engine.
Well, time to move my engine to the feed bin, so moron the ‘morrow…