Wednesday, August 8, 2012

THE CALL OF WINTER



Well here we are. We are facing directly into the teeth of the Kondratiev Winter. Denial may make you feel better but you might want to take a few substantive steps for the end of the supercycle. We talked years ago about stagnation first then the cleansing. The Fed isn't finished with Stagnation and it won't be until you are in maximum pain. Which means printing is going to become extreme. This has all taken place in similar form before and Ben is very much aware of where we are. He knows exactly what the trouble is and he knows what he must do.However, stagnation does not always mean that markets are mature. Markets were temporarily oversupplied during the high growth period from the 1870s-90s, during which time there was also a lot of creative destruction in industries like iron, which was displaced by steel, and labor, which was displaced by machinery, but re-employed because of growth. The stagnation phase is characterized by a lack of good investment opportunities that leads to low interest rates. In the past, investments offering exceptional returns or low interest rates, or a combination, led to lowered credit standards which, in turn, created a speculative boom and high debt levels, followed by a crash and financial crisis. Past speculative excesses included canals, railroads, farm land, real estate and the broader stock market. Carlota Perez describes the roles of financial capital and production capital in the cycle. Perez also says excess financial speculation is likely to occur in the "frenzy" stage of a new technology, such as the 1998–2000 during the dot-com bubble.
This is the law of nature that must be obeyed and the only defense that the Fed and Ben have is to print. They can label it with whatever alphabet soup they wish but this is the winter. A price must be paid. Many pundits claim the Fed can print us out of this conundrum they have created by overleverage, hubris, slaughtering millions in the name of "nation building" and "fighting terrorism", laughing at the plight of tens of millions losing their manufacturing jobs, all while stacking the deck for themselves. That's right....by now most participants in the casino know its rigged. No longer do we have the arguments whether the game is rigged or not. We know it is. Of course some still cling to the notion this is a new phenomenon......it isn't.....its just completely in the open now. One thing is certain nature is coming. For every action there is an opposite and equal reaction. Stated another way....You screw nature and she screws you back just as hard...... We have all experienced the law of nature in our own personal ways. It may take time but eventually you reap what you sow.
Roughly two generations must pass before stupidity reigns supreme......60 years for the cycles
The technological cycles can be labeled as follows:
  • The Industrial Revolution—1771
  • The Age of Steam and Railways—1829
  • The Age of Steel and Heavy Engineering—1875
  • The Age of Oil, Electricity, the Automobile and Mass Production—1908
  • The Age of Information and Telecommunications—1971     
Another way to look at the above is the following
  • 1. (1600–1780) The wave of the Financial-agricultural revolution
  • 2. (1780–1880) The wave of the Industrial revolution
  • 3. (1880–1940) The wave of the Technical revolution
  • 4. (1940–1985) The wave of the Scientific-technical revolution
  • 5. (1985–2015) The wave of the Information and telecommunications revolution
  • 6. (2015–2035?) The hypothetical wave of the post-informational technological revolution
We are fooling with nature and predicting how man's creation of the "ultimate moral hazard" will affect the culmination of this cycle is beyond my pay grade. We are pushing on several extremes at this point, not to mention our perceived "freedoms" as a nation. 

What I do feel is unavoidable is a price to pay. Another simple conclusion is the "tipping point". That is......when it becomes clear that counter-party risk is the key and loss of complete CONfidence occurs resulting in the so-called moment of recognition "panic" that drives billions and trillions into ANYTHING that is real or has no counterparty risk. If you can't see this train coming then just stand in the tunnel watching that light at the other end. gl...thanks wikipedia for your help.


14 comments:

  1. SSRI lifting off from confirmed resistance cross

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  2. YES! And doesn't this say it all, Greece now printing euros! Just when I thought I'd seen everything: http://www.zerohedge.com/contributed/2012-08-08/greece-prints-euros-stay-afloat-ecb-approves-bundesbank-nods-no-one-wants-get

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  3. Gasoline went to far too fast...Or the economy is strong enough to handle it(as said on Cnbs) ha ha.

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  4. Keep in eye on DMND for squeeze...wait until news...shorts are in heavy...look at 52 wk high..restating earnings...

    PANL was unreal squeeze today...still going on..

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  5. The Soy Bean coil has sprung. Tomorrow is big USDA crop Report due out. Any thought Kli on the beans now with today's surge? Corn is now at a new all time high too. can anyone say ouch!
    I feel a chilly Winter wind starting to blow.. Looks like the Stock Market is about to roll over.. Watch out on the PM's Stocks guys. I have Tomorrow as a turn date for stocks. Could be ugly by days end. Hint.. The Euro and Dow Transports.. I love the game..
    Matt

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    1. look for a "better than expected" report tomorrow.......if not then turn out the light...there will attempts to take out the longs and tomorrow would be perfect

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    2. just remember the other side of the long trade on the beans and corn is the Fed

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  6. NKTR reports earnings after the bell. It has been selling off all week, and hit support at 8.01 today. Now it is in the green. This morning, I was thinking of taking a chance by buying some cheap calls, but I think it is too risky. Will save the money and buy some RWM at some point--? Friday??

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  7. gold flirting with 1620 close.....it would take confirmation for me to think we are out of this range....also of interest are the weekly candles building showing breakouts on several miners......selective buying so far on the best

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  8. RE:BRD not sure whether you own it since you posted the chart am assuming so. FWIW, this is the first miner I owned when it was Apollo Gold, got out long, long ago w/a small loss. My friend who also bought thinks it is a scam where the management mines just enough to pay themselves huge salaries, pay debt and then issue new shares to dilute shareholders. Of course this doesn't mean it cannot triple.

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    1. hehehe.....thanks sista i have a tiny position and will not add

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  9. http://financialsurvivalnetwork.com/2012/08/martin-armstrong-debt-is-money-which-is-why-were-all-going-broke-part-1-2/

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  10. ctso had another good volume day gonna play it for a pop on lots of shares still no rain to speak of just isolated down pours guys at the round table say there are so many cattle at the sale barns that they are calving there most around here are just moving entire herd but they are just hobby farmers said they would take up wade fishing gasconade river is low as i have ever seen dont want to drag their boats over the shoals most elections here were very tight like no one knows what direction to take

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    1. thanks for input dog.....very good analysis on electorate

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