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11 June 06 Final
Update
The Third and Final Postscript to the 6 May 2006 Nonlinear Posting
The Nonlinear Decay Portion of Generationally Saturated Markets -
Its Utility As A Leading Economic and Macro Social-Political Indicator
Looking from afar at the qualitative decay valuation curve of the great
British South Sea Bubble's two year 96 plus percent collapse which
fooled even the great mind of a subsequently poorer Sir Issac Newton,
valuation decay with a 70 loss of value is apparent over less than a month or
so of its primary nonlinearity devolution phase. Newton, who ironically had a
unique understanding and perception of the
small-to-great-mass-coupled
-with-short
distance apple-to-earth nonlinearity produced within a greater field
of lulling linear (curvilinear) relationships of circling heavily
bodies, failed to anticipate a comparable nonlinear force occurring in
economic systems. The well described but still as of yet only
empirically known force of the earth's gravity causing the accelerated
nonlinear drop of the apple is similar to the immutable and empirical
saturation forces producing periodic nonlinear drops in market systems
within the fractal patterns of smaller order time units. A ten day
chart of any tradable asset will reveal these small nonlinearities.
All of these nonlinear drops at smaller order time units, are
occurring within a system that appears from a human longevity time
frame and adult market interest time frame to be reassuringly linear.
At generational macroeconomic saturation points where the population of
speculators, consumers, and borrowers have been exhausted limited by the
constraints of ongoing wages, the cost of borrowing, over production
of assets, and the over valuation or inflationary costs of those
assets- at these points- the nonlinear drops are proportionally
greater with greater follow-on consequences. A slowing forward
velocity of Mercury at some critical point in its long term future
may 'rapidly' and 'nonlinearly' spiral this sky lab - earth
equivalent heavenly body into the sun. Perhaps this has already
occurred for ancient unnamed planets a,b, and c which were a billion
years or so ago very proximate to the sun.
While the generational economic saturation and maturation of the
complex debt-wage-asset system occurs with regular periodicity, the
follow-on nonlinear phase of value devolutions of leading asset
classes may represent a consistent marker for macro economic,
macrosocial, and macropolitical dislocations and turmoil that
thereafter ensue. The magnitude of severity of these follow-on
disruptions may be in proportion to the degree of leading asset
nonlinear absolute devolution or fractal decline
which is in turn proportional to the degree of credit expansion via the
preceding debt creation cycle.
The US cold war economy, transitioned to the 1990's new
paradigm IT economy (and collapse), and the coexistent new
global dollar debt for low cost Asian goods economy and the
new housing bubble economy via low interest and ARM housing credit
expansion have occurred in rapid order over the last 55 years
with never a declining year of GDP growth. This is continuous US GDP
growth is unparalleled in its 230 year history. The US accumulative
and accelerating yearly international debt imbalances in trading IOU's
for foreign products are likewise unparalleled. The economic growth
of IOU receiver and producing countries has never before been so
dependent on a foreign consumer willing to take on so much debt. The
10 percent 1929 margin equivalent leveraged debt expansion has been
eclipsed by the current unregulated US lending industry targeting a
much larger population in their pursuit of the 'traditional American
Dream'. Like all 70 or so year economic cycles the current
generational nonlinear devolution will end with a new cycle of growth,
but not before a terrible price is likely extracted in terms of
follow-on macro social political dislocations.
Just as with growth, assets decay appears to occur in discrete fractal
patterns, as the liquidation phase of overproduced and /or overvalued
assets 'grows' or accelerates in discrete quantitative units. While
the nonlinear phase of 1720 was quite efficient, computerized trading
as shown in 1987 has the potential for unparalleled liquidation
efficiency. The computer's efficiency in 87 brought about regulations
with trading breaker rules dependent on hourly and daily percentage
decays within the market. Even without the efficiency of the computer,
because this generational macroeconomic saturation point lies at the
end of a 148 year second fractal sequence, nonlinearity will be
limited only by these paradoxically 'computer enforced' artificial
'time-outs'.
Back to quantitative fractal analysis. The first fractal decay pattern
for the Wilshire starting on 11 May or in the final trading hours of
the preceding trading day and ending at the low on 24 May was a
y/2.5y/2.5y or 2/5/5 daily classical curvi-linear capacitor-like
Gompertz-like decay fractal. The European markets were stronger with
day 3 of the 5 day US Wilshire third decay subfractal marking their
lows. Thereafter, there were 7 additional days of growth. The first
completed inverse growth decay fractal was a
4/10/9-10 fractal x/2.5x/2.5x. for a probable inverse growth decay
base of 17 days using the second and third subfractals for a primary base.
Another major 2-2.5x daily Wilshire break point approaches. The first 45
day fractal sequence of the October based 45/ (30/60 or 26/65) had as
a starting base a 5-12 day sequence.This occurred in concert with the
previously identified 11/27/22-27 day decay sequence starting in August
2005. The resulting 56-57 day non dominant base fractal is easily
identifiable and has as its starting day the intraday low on 13 October
2005. A line drawn from the end of the above cited 45 day sequence
does not touch upon the low of 13 October, defining the 5-12 days as
an initiating base for the subsequent primary 45 day dominant base
sequence.
13 October for the secondary non dominant base of 56-57 days is double
counted because it starts at a low and ends on a high. Friday 9 June
2006 was day 111 of an expected 111-113 day maximum 2x second
fractal sequence sequence. Because day 111 is occurring near or as the
potentially lower lower high; is contained near the end of the first
inverse growth subfractal of a second inverse growth fractal(with 17 days
being the primary inverse growth fractal base), and is occurring
in a technically weakening market, the next 27-28 trading days or 6
weeks ( ie,, x/2-2.5x :: 56/112 of 140days )may well contain the expected
nonlinearity befitting of the terminal portion of the US's dual
generational, debt saturated, consumer saturated, and production
saturated macroeconomic-148 year old Grand Second Fractal.
While generationally analogous to the nonlinear ends of the 16th
century Spanish debt expansion, the 17th century Dutch tulip
asset-debt mania, the 18th century British Southsea stock- debt mania,
the relatively greater percentage of population
participating in asset overvaluation enabled by a systematic
pervasive US lending industry - whose telemarketed, computerized, and
aggressive primary business and sole goal is maximizing debt expansion
- has resulted in a collective US debt burden and overvaluation of
assets relative to wages proportionally greater than any preceding
historical macroeconomic saturation points.
The nonlinearity at the terminal portion of the current second 148
year US grand fractal cycle, reasonably can be expected as having the
potential for the greatest percentage drop in the shortest period of time.
The sudden devolution of current asset valuations likewise could potentially
have greater and more vexing- social-political ramifications and dislocations
as compared to prior historical periods of turmoil following collapses
from generational macroeconomic saturation areas of debt and
consumption. Large scale political and social turmoil are the carts
that are pulled(or overturned) by the antecedent macroeconomic horse
stumbling into the unexpected very deep and low viscosity quicksand
found atop generational asset saturation areas.
Annoucing New Academic Interest Alcove Website:
'Bioutilities of the Cellular High Energy State Metabolic Pathway'
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