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
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