16 October 06
Wednesday 18 October 2006 - DAY 372 of a 159/398/372 of 398
Maximum 2003-2006 X/2.5X/2.5X Growth Fractal
On the previous EF posting on this weekend, the fractal saturation
solution for the Wilshire's 2002-2006 echo three- phase growth fractal
was delineated. A smarter fractalist might have been able to delineate
the big picture pattern in May 2005 - after the end of the Wilshire's
second growth fractal. The x/2.5x/2.5x patterns were already there
with a 40/100/100 rolling fractal to the 5 January 2005 top. For this
extremely myopic fractalist, 97 percent of the elephant's picture had
to be drawn in large bold and black letters, before the whole elephant
could be imaged - pretty bad and not much to be said for personal
gestalt or analytical abilities. Day 398 of the third fractal is the
ideal final day of maximum saturation.
A personal basic flaw in interpretation of valuation fractals for the
last four years has been in viewing the fractal system predominantly
in the context of an the expected 140 year plus second fractal
saturation collapse. This has been continuously reinforced with a
number of recurrent lower order ideal 2.5x second fractal units with
their characteristic terminal punctuation of nonlinear decay. Missed
was the equally important recurrent theme of three phase quantum
x/2.5/2.5x maximum growth fractal. This X/2.5X/2.5X maximal growth
pattern also occurred in a recurrent theme throughout the last 4 year
What lies at the end of the third fractal's maximal growth? Is it a
slow unwinding or is it a profound cataclysmic macroeconomic collapse
reflecting the extent of over valuation and over saturation of a
6-year predominantly debt-driven illusive asset wealth phenomena that
characterizes the new manufacturingless United States?
One thing is true and not arguable. All Congressional Budget Office
formulas and equation's regarding the longevity and viability of US
(and state and local) entitlement programs are based on a linear 2-3
percent GDP growth model. What would happen to that model if a
contraction occurred equal to or much worse than the 40-45 percent
contraction of GDP in the 1930's?
Commodities: LIMIT UP
As predicted on the week-end posting, the CRB was ... limit up on
Monday 16 October. Treasuries fell with the yield up to 49.30, with an
inversion of yield over the thirty year of .11 percent.
Investment money will, over the next 5-6 weeks, temporarily exit the
bond market, drive commodity- especially grain- prices up and support
higher equity prices. At the Wilshire's secondary saturation point -
secondary to its March 2000 high - at 159/298/298 days, the system's
available investment money will have been optimally 'self assembled'
into both a maximally saturated summation index composing the sum of
the commodity and equity markets. At the system's saturation point,
interest rates will be higher reflecting that particular investment
area's transiently exiting funds (and higher commodity prices). Higher
interest rates will cast gloomy shadows over those recent real estate
speculators and those otherwise recently acquiring mortgages in the
over supplied housing market.
Qualitatively, these are the ideal conditions for a very old, very dry
and decayed forest to be ignited and consumed, No external events such
as lightening are necessary for collapse at the macroeconomic
saturation area. The activation energy exists within the complex
system at the saturation point. Like oily rags and gasoline
inappropriately stored in the attic on the hottest of summer days,
spontaneous combustion will occur.