Are we in for a kondratieff winter? (starting this sumer)

Are we in for a kondratieff winter?

Could our next kondratieff summer be green, with green energy?

I am not an over-paid economist but think I have common sense and intuition.

I have a feeling we're heading towards a turning point.


Starting with greed in housing markets, this reminds me of the Dutch tulip rush: The Dutch Tulip manias



Also reminds me of the California gold rush (1848 -1850)



Most people came from all over the world after 1949, after the gold rush had finished.




We know the last housing bubble corrected itself between 1985 and 1996 (11 year correction)

Click on image below to enlarge

....just look where the current cycle is right now: up above on the right


And what about the huge wave of introductory low ARM mortgages reseting this year? I got lots of info from Patrick.net by the way

I found this image in June 2007: (2008 is projected worse than 2007)

http://www.beearly.com/charts/mortgage-resets1262007.png


And what about oil production that drives everything right now (allowing for these tulips to grow).

The crude oil discovery chart below, shows we peeked finding oil before 1970:

Source image: http://www.clv101.plus.com/vt/discovery.gif


I see a similar wave pattern in this oil discovery chart to the 'ARM reset' wave chart above.


And demand today is going up uP UP !



It seems demand has increased beyond max output since June mid 2007:



Maybe this explains the steap $ per barrel increase this year, we reached the golden $100

If everything is about 'supply and demand' where cost goes up when demand is high



and crude oil demand is going up everywhere....





and we are going to get less of it...



including other non renewable energy sources....




With most of the oil now found in dangerous parts of the world:




and population growth expanding by billions.... (The J curve)







I think to myself... Houston, we have a problem:

I am certainly not sharing the population increase images because I think more billions should not be born, but I do think we should acknowledge QUICKLY how we think about our situation and DO something!

and NOW!

I pledge for Wind, Solar, clean electricity, efficiency, sustainability.

Today's stocks have already crossed the top line in this chart below. The last time they crossed this high was 1929, then almost as high in 1966 mini crash, then the 1987 black Monday crash which looks tiny, then the 2000 dot-com-bubble crash that also looks small now, we are still not in a great place according to history:



Has anyone heard of the kondratieff winter?
Long term stock markets suggest we are reaching a 'delayed' winter.

Here is an image to sum up a long interesting article I read about kondratieff:





I see the chart more like this:



Until we find a sustainable way of life.....











Maybe walking or taking a bus is not such a bad idea after all!


Click on image to enlarge CARS BUS BYCICLES

The world consumes about this much refined oil per second of each day and night: (84 million barrels of oil each day)





The 52 US states use this much:



The energy situation has been measured in many different ways. I am just showing a few charts to show my perspective on things. I hear biodiesel has already peaked and ethanol is not going to help. It costs too much energy to grow a field of corn (which also feeds one person for a year) to create one tank of gas. Nuclear energy for more electricity will cost energy to mine the uranium, as well as dispose of the waste. Building more nuclear power stations will not be a quick process, as it is politicized. I can see why, as a nuclear accident can effect generations of people. So far nuclear energy amounts to just a third of North America's total energy use, and even less for the world.

If I had money, I would buy energy stocks and they would be Green as the leaf on a tulip!




Please send me your comments, as I may post them in my next blog! Thanks!

Very close to a bank melt down last week

My March prediction of a bank melt down seems to have come very close last week.

Here is one article I found from a well established and conservative British newspaper covering what happened:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/23/ccfed123.xml

"There was the risk of a total meltdown at the beginning of last week. I don't think most people have any idea how bad this chain could have been, and I am still not sure the Fed can maintain the solvency of the US banking system."


I am amazed!

If just one US high street banks was to run into a problem with liquidity, how long would it take for American customers to start another "run on the bank"? I would not be surprised at all at this stage. After all, this has already happened on more than one occasion in past history:

1634-1637 - The Dutch Tulip manias
1717-1719 - The British South Sea Bubble
1717-1720 - The French Mississippi Company
1815-1830 -The Post Napoleonic Depression
1929-1939- The Great Depression

Interesting to read back on past a blog

March 18 2008: Well, I read my blog from last December and it seems a setup for a bank crisis is really unfolding and 1929 style chaos could be just around the corner, oh boy...

In December 2007, I wrote:

My concern now is that we are going to see panic in March 2008.
Last week I was at a stop light and I noticed a car had broken down. Some people in the broken down car got out and started to push it away. But from three cars behind, some people who did not notice the breakdown started to get very angry. They made noise with their hooter, siren, horn (what ever you want to call it) saying "what the F#*k is going on"

Seeing this behavior for something trivial really make me wonder, what will we see once everyone lives in anxiety, following a collapse of banking plus a spike in the price of oil???

Here are some articles to show where we are today and why I think the big wave of crisis that will affect nearly everyone is going to be very soon, oh heck, I hope we all survive this mess: (credit for article links goes to Patrick.net)

How This Crisis Is Different (washingtonpost.com)
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/17/AR2008031702150.html?referrer=emailarticle&ref=patrick.net

It's said that we're in the worst financial crisis since the Great Depression. Maybe. But remember the S&L crisis of the mid-1980s? Or the commercial banking crisis of the late 1980s (from 1988 to 1992, 905 banks failed). Or the 1997-98 Asian financial crisis, which sent South Korea, Indonesia and other countries on a boom-bust rollercoaster? All were frightening. What distinguishes this crisis -- which brought down Bear Sterns over the weekend -- is that it involves the entire financial system, not just depository institutions, and it's more mystifying than any of its predecessors.

Previous financial crises so weakened the banks and savings and loans that they lost their primacy. As recently as 1980, they supplied almost half of all lending -- to companies, consumers and home buyers. Now their share is less than 30 percent. The gap has been filled by "securitization": the bundling of mortgages, credit card debt and other loans into bond-like instruments that are sold to all manner of investors (banks themselves, pension funds, hedge funds, insurance companies).
.....Financial institutions (banks, investment banks, hedge funds and others) are interconnected through networks of buying, selling, borrowing and lending. These require confidence that commitments made will be commitments honored. If confidence collapses, the processes of extending credit for the economy and of trading -- for stocks, bonds, foreign exchange -- may also collapse.

Sub-prime collapse 'beyond the US Federal Reserve'
http://www.news.com.au/story/0,23599,23393912-462,00.html?ref=patrick.net

The crunch bites deeper in the US (news.bbc.co.uk)
http://news.bbc.co.uk/2/hi/business/7302140.stm?ref=patrick.net

Can't Grasp Credit Crisis? Join the Club (nytimes.com)
http://www.nytimes.com/2008/03/19/business/19leonhardt.html?ref=patrick.net

Can't Grasp Credit Crisis? Join the Club (nytimes.com)
http://www.thetrumpet.com/index.php?q=4954.3219.0.0&ref=patrick.net

Bernanke's dollar sinks worldwide (news.yahoo.com)
http://news.yahoo.com/s/ap/20080313/ap_on_bi_ge/diving_dollar?ref=patrick.net

Greenspanspeak (solari.com)
http://www.solari.com/blog/?p=703&ref=patrick.net

My intuition looks spot on so far, I am sad to say

Well, I have been watching the markets and I think the prediction I had last summer is getting close: Here is what I wrote to myself.

Monday June 25:

>>I am writing this as a time capsule to show (I have a
>>sense of knowing) what is going on in the world.
>>I think we're on the brink (about two weeks away)
>>from an economic breakdown --a depression as close
>>to the 1930's.  I am not an economist but I have
>>read enough on the web to judge this is happening
>>and am writing this down before it happens.

Dec 17th 2007:

So here is what we are reading today from:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/14/ccbanks114.xml

The massive cash injection from the Bank of England, along with funds from its international counterparts, is welcome but too little to calm the fears sweeping money markets

A mere 24 hours after the western world's major central banks banded together to announce an almost unprecedented set of money market rescue operations, by early afternoon yesterday it was all too clear that the medicine was not having the desired effect.

(OK, more than two weeks than I thought, but five months is close):

My concern now is that we are going to see panic in March 2008.
Last week I was at a stop light and I noticed a car had broken down. Some people in the broken down car got out and started to push it away. But from three cars behind, some people who did not notice the breakdown started to get very angry. They made noise with their hooter, siren, horn (what ever you want to call it) saying "what the F#*k is going on"

Seeing this behavior for something trivial really make me wonder, what will we see once everyone lives in anxiety, following a collapse of banking plus a spike in the price of oil???

I am keeping this blog to keep a time stamp of my intuition. I read a lot and I want to share my thoughts....

Please send some comments!

Unfortunately the S. H. eye. T seems to be hitting the fan

Is the stock market about to go into a free fall?

I think it will be falling down stairs over the next year. The past 20 years of easy credit surely can't sustain artificial wealth any longer... It seems we are reaching a pivotal moment. I remember in the past it was difficult to get overdrafts from banks. Now we are offered credit cards with $10,000 limits with introductory 1 or 2 % interest rates. Where does all this money come from? The business news on October 16 2007 is looking very concerning.

I feel I want to learn more about sustainable living. Today someone wrote me an email related to sustainability so I feel my writing may be having an effect!

Crude oil at a record high - $84 now per barrel.
http://www.thehindubusinessline.com/blnus/08161305.htm

Big U.S. Banks Try to Restore Confidence in Credit Markets:
http://www.nytimes.com/2007/10/16/business/16fund.html?ref=business

Also I just felt a small earthquake a few minutes ago. I am going to check the news now to see what it was.

Ah, here it is a 4.2 Quake in Mt. Baldy:
http://quake.wr.usgs.gov/recenteqs/Quakes/ci10285533.html

Looking back on my first blog post two months ago

I found it very strange to read back something from only a couple of months ago. My "Intuition tells me people are going mad" blog was based on reading a lot of financial news, but also on living and talking to lots of people. It seems things have got from bad to worse since June. During this time I have not added more to my blog, but I did write some mails to myself that I want to share below:


Mon Jun 25, 2007

I think we're on the brink (about two weeks away) from an economic breakdown --a depression as close to the 1930's. I am not an economist but I have read enough on the web to judge this is happening and am writing this down before it happens.


Fri Jul 27, 2007

Looks like I was correct so far, but off by three weeks:
http://business.guardian.co.uk/story/0,,2136510,00.html

Fri, 10 Aug 2007

And today it has got really bad!
http://news.bbc.co.uk/2/hi/business/6939757.stm
I predict a new Enron type of scandal has just started and will keep going until there is panic in September. This is not my wish, especially as I have lots of money tied up in my pension 401k, but I think this is happening.


Tue Sep 11, 2007

It looks from this report that the roller coaster is edging away from the top
-hold on tight: http://news.bbc.co.uk/2/hi/business/6981285.stm
I think October and the beginning of November will reach the top
speed before any slow down and we we be feeling the spring and summer
hangover in 2008.

Mon Sep 17, 2007

And here we go with the banks, when the last bank crisis of this size
was 1866: http://news.independent.co.uk/business/news/article2973527.ece



---

Unfortunately, intuition tells me unless we focus sharply on sustainable living and renewable energy, we will approach a greater level of crisis with food shortages. I have seen a lot of evidence showing potential supply and demand problems in the way we market manufacture and distribute our food. I believe our food processing infrastructure is fundamentally unsustainable and this will show up dramatically as energy prices inflate along side unpredictable weather patterns. The price of food could reach critical levels including shortages in Britain and parts of the US by early as 2009. We need to take action right now and invest in the future with solar and wind energy and FAST FAST FAST - NOW NOW NOW. If I had money, I would invest in some of these technologies as we are likely to see huge enterprises within 10 years.

Intuition on housing bubble

Ok, it is 11:14 on a Sunday night and I should probably go to bed, but I have decided to start blogging for the first time instead of writing emails to people.

I have been wanting to talk about intuition for a while, this time with regard to money, as I find my own intuition has really helped me get by without a crisis so far. Since living in California for ten years, I have come to realize, or to believe, that we, as a people (sounds like the president talking) are on the whole good, with one or two opinions and ego, but we tend to follow mostly what others do around us. In a way, this is a good thing. If we were all totally different, we may live in chaos or out of control. However, people all doing the same thing can also get out of control. Take, for instance what happened when the banks decided to make borrowing a lot less expensive to bolster the economy at the beginning of the century. It was apparently a great idea at the time for everyone to benefit lower rates, but I think the Fed was waiting for an accident to happen. You see, making changes at a Fed level is like navigating a huge ship. Once the decision has been made, the ship follows a course. It takes a long time to play out and if unpredictable, takes a longer and difficult time to correct, sometimes not before the vessel hits something. So after the Fed lowered rates, people realized they could get a lot more without paying so much interest. In fact, at times there was no interest to pay back. People were receiving dozens of 0% credit card offers, 0% 4by4 SUV car deals from dealerships advertising like mad on the television, and for the first time,fantastic rates on mortgages available to lower income families, meaning they could be offered a mortgage for the first time. It is almost as if the gates had been opened. The credit availability to business and everyone allowed people to start making big plans to buy more.

Everyone was feeling optimistic.At this time around 2002, I had already racked up some credit card bills and I didn't have any mortgage. One of the reasons I did not purchase a house is because I felt my rent had been good for a long time ($900) and I was not a resident of the US. The last time I checked with Bank of America in 1999 as a non resident, I had to put down 30% of the capital. After 2003, things must have changed, as every time I went out to meet my friends at the Irish pub, they would say I was crazy for not wanting to buy a house. I kept hearing things like I was losing lots of money. When I defended myself and said I had made some inquiries but was still in the process of improving my credit score, I was told this was ridiculous. Someone offered me their broker who could apparently get just about any mortgage, pay off all my credit cards and raise a second loan for a down payment to my first time house in Los Angeles California. I was told within a month or two, my credit cards would be payed off because the house will have increased. At this time, these words may have been correct, but intuition told me this is just a flash of energy and by the time I try to join in, I will be too late.

Since 2003, I have kept my job and have managed to reduce my credit card dept by 60%.
I have no idea if I would have made a profit or not buying a home in 2003, but looking at a house near me on Zillow.com, I see it is listed as a $734,554 on Sunday 29 July 2007, but it sold last week for only $555,000.
http://www.zillow.com/Charts.htm?chartDuration=10years&zpid=20824390

My intuition tells me people are very optimistic when it comes to wishing fortunes, but they tend to believe truths as they grow more exaggerated over time, like how prices of homes will continue to grow 10%+ each year. This is what I mean by people doing the same things can get out of control. I am glad I have taken my time. I keep reading story after story about people not paying their mortgage depts. Having any sort of dept is very stressful and I imagine people put their head in the sand to alleviate stress when ever they can, because stress hurts. I feel very sorry for someone who has followed the crowd and is unable to pay $4000 + a month after their two year introductory ARM rate has raised. I would be interested to know if I would have made a loss if I had bought in 2001 for $320,000 with no deposited and a credit score of 600? My intuition tells me I would be paying a lot more than my current $1350 a month rent now. As a result, spending an extra 2650+ a month now, I would probably have a bigger credit card dept, or my mortgage would have money taken out to re-pay higher rate credit cards.

Good night!