The Coming Perfect Economic Storm

Maybe you caught Henry Paulson and Alan Greenspan on "Meet the Press" last Sunday morning, or maybe you didn't. Either way you didn't miss much, except the fact that they both looked like they were lying through their teeth. Paulson was VISIBLY shaking as he answered questions in that halting delivery of his, there were times when he seemed almost too frightened to speak. He was hiding something. Something BIG.

NOTE: Watch Paulson's left thumb as he tries to speak at about 3:15 into the video!

Then I found this from Minyanville in my email:

Last week, Ron Coby talked about how US markets were developing large head and shoulder tops.

In this video (SEE BELOW: They have made changes to the internet where you can't download stuff like you used to.), Ron Coby talks about how this played out across weekly charts and the global markets, and why he believes we could be seeing a perfect storm for global markets. If so, what's the upside of down in 2010?

Click here to watch the video.

Kondratiev Waves

I won’t bore you with the details of the makeup of K-Waves, just that the primary data points are related to wholesale prices which, as you can see in red in the chart above, have sky-rocketed since 1940. But the author briefly describes the general theory of Kondratiev waves…

A Kondratiev economic cycle is divided into four “seasons”, spring, summer, fall and winter. The analogy of the seasons is consistent with what you would expect. Spring is a time of re-birth after a long hard winter, time to sow, plant and produce. Summer is lazy and full of doldrums. Autumn is a time to reap the harvest and store the results of the spring work and winter is a dangerous time when those that survive are the ones that successfully harvested what they produced and safely hunkered down against the bitter elements.

The four seasons in a 50-60 year Kondratiev Wave are:

•Spring (20-25 years) – Inflationary phase with rising stock prices and increased employment and wages.
•Summer (3-5 years) – Stagflation phase with rising interest rates, rising debt and stock corrections. Imbalances lead to war.
•Autumn (7-10 years) – Deflation phase where falling interest rates lead to a plateau and stock prices increase sharply.
•Winter (3-5 year collapse and 12-15 year readjustment) – Depression phase with stock and debt markets collapsing and commodity prices increasing.

Those that argue for the validity of Kondratiev waves say we are just entering the Winter Phase. Note that the above chart indicates the winter has started and will perhaps bottom around 2016.

In 1929, the a wave collapsed from $386 dollars to $195 dollars, a total of $191 dollars, or almost 50% of its value in a single drop.

In 2007, the a wave collapsed from $14280 dollars to $6440 dollars, a total of slightly more than 50% of it’s value in a single drop.

This is a chart showing the Dow Jones Industrial Average during the 1929 Crash and the Great Depression









This is a chart showing the 2007 Crash and the projected Great Depression II

In 1930, the b wave rallied back from $195 dollars to $297 dollars regaining approximately 53.5% of the value it had lost. In 2010, the b wave rallied back from $6440 dollars to $10767 dollars regaining approximately 55% of the value it lost.

As interesting as those comparisons are, even more uncanny is the comparison of the moving averages and Bollinger band properties. Looking at the dashed inserted area copied from the 1929 chart, you can see that the Bollinger bands, the 55 day and the 233 day moving averages are a nearly identical fit and the 21 day average is very close. Only the 144 day average is slightly askew due simply to a difference in the internal price fluctuation between the 55 and 233 day averages. While the visual and technical continuity are quite astonishing, the predictive implications are just as amazing…

Remember that the K-waves and the constant dollar Dow charts both pointed to the stock market bottoming around 2016? Well, note that the bottom of the inserted portion of the 1929 chart appears to bottom in the early part of the year 2016.

And finally, Robert Prechter’s group at Elliott Wave International predict that the Dow will bottom at around $400 dollars. Note that a projection of the bottom of the inserted chart section points to approximately $400 dollars.

http://www.thepanicnews.com/

It's that last part, the $400 value DOW! It's now valued at over $10,000! If this is even CLOSE to being right we haven't even begun to see the bottom regardless of what Paulson, Greenspan, Bernake or Geithner say.

It looks to be an awfully stormy summer!

(And many summers to follow.)

I HATE Horror movies so I add this with trepidation not wanting to cause undue fear but, the truth is truth and it is the truth that sets us free. May God have mercy on His people!