19 August  06 

19 August 06 epilogue to the 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 percent 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 mathematically 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
macroeconomic saturation forces producing periodic nonlinear drops in market
systems -operating by simple quantum mathematical  fractal patterns
composed of serially smaller fractal time units. A ten day chart of
any tradable asset will reveal these recurring fractal patterns and
the nonlinearities of devaluation. 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 accumulative 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,
2 billion, and 4 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, transitioning to the 1990's new
 paradigm IT economy (and collapse), and thereafter 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  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 and predatory 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

 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

 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.

 Announcing a New Academic Interest Alcove Website:

 'Bioutilities of the Cellular High Energy State Metabolic Pathway'

.... On day 140  of the 56/140 sequence the underperforming NDX hit a
closing low...

4 August was not the second shoulder to 5 May 2006 shoulder of March
2000 for the Wilshire. There appear precise smaller nondominant
fractal patterns within larger dominant fractal patterns. The 21/53/53
(x/2.5x/2.5) pattern following the 12/3024/18 day (x/2.5x2x/1.5x)
fractal pattern from October 2005 lows was apparently such a smaller
nondominat fractal pattern.  As 2 June 2006 represents the current 5
May 2006 secondary shoulder high, it is technically possible that this
high may yet be bested within the context of expected fractal growth
and explained moneywise by smarter fund managers selling equities to
weaker managers and investing the money in long term US debt.  The ten
year note has increased its inversion magnitude with respect to the
three month treasur and the thirty year bond is threatening to invert.
Again a 5 percent yield in a deflationary scenarion will
retrospectively be a solid investment, assuming default does not

There are two operative Wilshire intertwining fractal patterns of
interest. Just like the two fractal bases of 52(x) and 56(y)days
determined by the low days and the touching underlying slope lines
that started in August 2004 and ended exactly 130(2.5x) and 140(2.5y)
days later at nodal lows and a nonlinear gap before day 130
characterizing a second fractal, two fractal bases have emerged from
the October 2005 lows.

The expected start date date of the October 2005 base fractal was at
the termination of the dominant fractal sequence starting in August
2004 or 52/130/130. The third fractal of this sequence ended on day
117 (with a starting day up) with a nodal low on day 127. The interval
base between this nodal points was 12 days(again with day 117 double
counted because of growth during the entire day. This started the
sequence of 12/30/24/18 x/2.5x/2x/1.5x with days 23-24 of the third
fractal representing week 75 of a 30/75/75 x/2.5x/2.5x week fractal.

An ideal 11/27/27 day y/2.5y/2.5y declining fractal preceding the
October 2005 low ended on day 22 or y/2.5y/2y with a nodal low on day
27 which rested in the middle of the initiating October 2005 12 day

The two dominate larger scale base are 56 and 45 days in lenth and
determined by the underlying slope line from the low on 3 January 2006
drawn backards to the nodal lows 45 and 56 days before. Notice that
the underlying slope line of the 56 day base is broken by the first
day of 45 base sequence.  Stated otherwise the a slope line touching
on the 45 day bookend lows falls below the 55 day initiating day.
Because of this and the expected natural end of the 52/130/130 fractal
occuring at day 127, the dominate of the two intertwining bases is the
45 day base.

The expected seqence of the dominant 45 day base is:

45/113/90 with an expected 2x high of the second fractal at day 90 or
10 may 2006.

Note day 113, the expected nodal low of the second fractal sequence is
indeed the low, occurring on June 14, 2006.

The 113 day second fractal contains week 75 of the 30/75/75 weeek
fractal and day 24 of the 12/3024/15 day fractal. Week 75 and day 24
occur within an initiating fractal base of 30 days.
The 2x second fractal of this base day 60 occurs on 9 May 2006.

The expected sequence of the nondominant 56 day base is 56/140/112.

A closing low for the underperforming NDX occurred on day 139-140 with
a like higher nodal low for the Wilshire and an actual low on day 136
or 18 July 2006.

Between the actual lows of these two intertwining fractals there 24
trading days with currently an equal number of trading after the 18
July low for a total of 47 trading after the 14 June 2006 low.

The dominant fractal count for the Wilshire is 45/113/47 days. The 47
days are composed of two 24 days fractals.  The final growth fractal
appears to be a 5/12/10 of 10-12 daily fractal.

The potential initiating daily decay fractal of 30 days containing the
75th week and 24th day is a

30/75/75 day ideal sequence.

In this ideal sequence currently the Wilshire is on day 58 of a
30/75/58 of 75 day sequence.

In this fractal scenario, there are potentially two more days of
growth perhaps equaling or exceding the 2 June high and a total of 17
more days to a first nodal low with a historical nonlinear devaluation
contained with that 17 days.

An alternative fractal count is 29-30/72-73(with day 72-73 as a nodal
low)/61 0f 72-73 with a nonlinear first nodal low in 11-12 days with
likewise a nonlinear devaluation within that time frame.

This site has always been intended for academic interests only. It
pursues the hypothesis of a macroeconomy and long term credit cycles
that can be integratively characterized by a near ideal quantum
fractal evolution of asset valuations.  Towards the end of a
generational credit cycle - under the constraints of wage dependent
nonsustainable and defaultable debt loads, inflation, consumer
saturation, and overproduction - all which have been precipitated
primarily by unregulated and imprudent  lending practices and
secondarily by an earlier excessive lowering of interest rates, a
terminal nonlinear conclusion is anticipated.
The credit cycle appears very near that nonlinear event.

Gary Lammert