The Holy Grail of Economics

Today we dig deeply into the cause of periodic economic depressions (which could be closer than you’d think) and come up with a surprising result.

While cycle theorists, such as Nikolas Kondratiev believed in the 48-64 year “long wave” we find evidence that there’s more driving periodicity than simple interest-rate fluctuations.

First, however, headlines and those amazingly prescient charts of our including an update on out Boolean Logical Comparison of two candidates for parallel timing circa 1929.

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The Holy Grail of Economics — 10 Comments

  1. The markets today (and for the last decade) are like being in agriculture back in the 80’s. Anybody that could run a farm or ranch was making money hand over fist. New cars and tractors and silos, etc. were everywhere. But those who acted like this would never end and overextended with debt and non producing assets (stock buyback?) were out of business before the end of the next decade, merged with those wise enough to recognize the cycle. Take a 10 year look at Apple stock and see if your trading efforts produced a better after tax and fees return.

    Trading profits may be included in the GDP, but it’s a zero sum game, your profit is someone else’s loss.

    The other illusion is that if there are a million shares out there, and someone over pays (deliberately?) for 10k shares, it does not necessarily make the other 990k shares worth that price. Especially if that run up was done by an algo in collusion with other algos primed to harvest from that move. In a system that can generate profits when a stock goes down, this removes a lot of integrity from the system. Half the crowd hopes equities do not do well.

  2. Good report, G.

    Thinking about your recent ATM example.

    Simply put, I’m noticing a lot of local mortgage companies are refusing to innovate even as their current business models are failing.

    I mentioned “Rocket Mortgage” here – basically it’s an online/phone app to apply for a mortgage.

    The smaller mortgage shop owners I know said, “that’ll never catch-on. Applicants need the one on one personal experience”. – wrong. People want the speed of the Rocket.

    The newer thing in industry is “automated asset verification”. This automates underwriting of a mortgage.

    Basically, the mortgage shop asks the applicant for all their user names and passwords for ‘asset’ accounts. Software logs into the accounts of the applicants and verifies assets. The smaller mortgage shop owners I know say, “people won’t reveal their personal user names and passwords” – how wrong they are.

    Automated asset verification is catching on quickly as the software eliminates the need for applicants to chase their tails looking for documents. People are lazy and punching in their codes is adding speed to the transaction. For the innovative mortgage shop keeper everything is getting streamlined and costs are being reduced.

    Automated asset verification lowers the cost of writing a mortgage for the shopkeeper as Underwriters are eliminated.

    Mixing automated asset verification with online apps also helps to eliminate mortgage Processors.

    All this to say the back office of banks has been eliminated. It’s just a matter of time – the next collapse, before people see the change occurred.

    • You have it exactly right! Housing Bust II, Trump’s son of Obama’s?

    • That seems wreckless to me to give out your passwords. Ive heard of a new brokerage that does that to set up the funding through the traders bank acct path.

      I called my bank about giving such info out and they didn’t recommend it…if your bank acct is hacked and you tell the investigators you gave out your passwords it can delay or even deny the refunding of stolen funds.

      It amazes me how easily people give out their very personal information.

      • You give out your passwords, and then go in and change them. I allow my Mac to auto generate passwords when are then encrypted and stored on the computer for automatic retrieval, so all my passwords are 12 digits but I don’t need to remember them.

  3. The Stochastic Indicators went to a SELL signal at the close of the 3 Indexes on 2/28/18 (1600 hours).

    George, buying a 3x ETF short on Friday before the weekend takes some nerve. It may keep you waking up at 2:30 am. Stochastics are on Ure side.

  4. A beautiful full moon on the snow eastern horizon a bit of light. Total snow amount for year about 7’ here in north Idaho. This fantasy market has been a long ride