23 December 2005 

Equities Saturated.....


 With the first day occurring on  October  13, 2005 as an up going day and hence double counted,  the terminal decay fractal  pattern appears to be a 12/30/12 of 30 day sequence , with terminal money for equity saturation occurring in the last 2 weeks of the third fractal 30 day sequence. The money pool supporting equities is at an historical low - American savings are negative -but money has recently been created through borrowing during this holiday period.

Within the final 30 days of this 12/30/12 of 30 day fractal  there is still a possibility of 2-4 days of growth completing a 3/8/4 of 6-8 day final growth sub fractal.  There are two possible terminal decay fractal sequences. The first is a 5/5 of 12/12  day sequence with 18 additional days to the primary decay bottom. If a primary or secondary top is made in two trading days a final decay fractal pattern of 3/8/8 is possible.  This too would mean a primary bottom in 18 additional trading days.

If there is a stock market crash in January 2006, the question arises as to whether a rapid lowering of the fed fund rates to the zero range will cause yet another round of borrowing, housing speculation, housing asset inflation, and a macroeconomic and equity recovery through yet another cycle of consumer borrowing and money creation. What is clear at this  point is that America cannot produce and manufacture itself out of the debt hole and entitlement money obligation system that it now finds itself in. The Comptroller for the United States knows this. The only option is to lower interest rates and loan terms to an extent that the consumer, now unable to use bankruptcy protection, can both gradually pay off his substantial debt relative to earnings and perhaps borrow more based on asset inflation. The Japanese banking system used this ploy in 1990 and and experienced 13 years of equity deflation temporarily ending in 2003.

Like any pyramid scheme, the scam fails when there are not sufficient bottom feeders supporting the base. If the remaining entry level American service sector workers cannot support the pyramid base, or if there is a contraction in consumer spending secondary to the disconnect between ongoing wages and the cost of living including inflated real estate taxes and fuel costs, the pyramid scheme will falter and implode just as occurred many times times before every 60-80 years over the last 450 years for  every leading hegemony.

Gary Lammert