Kondratieff Winter
Other than reading a few articles in passing, I know little of Kondratieff's theory. I have spent more than a little time on what I refer to as the generational market cycle. This cycle takes about 35 to 36 years. Moreover, each generation has a tendency to "not make the mistakes of their parents". This results in, economically, a generation being more like their grandparents. Thus, we end with a two cycle period of around 71-72 years. This would make the current downturn more similar to the '30s than the '70s.
Countervailing this, is the behavior of the Fed. In the '30s, especially at the beginning, the Fed was stingy. Exactly the opposite occurred in the '70s. We had deflation in the '30s, and sever inflation in the '70s. As I stated some months ago, I believe the Fed has decided they liked the '70s better. Hence with the printing presses running, one should anticipate all that that implies – inflation, lower dollar and higher gold.
However, no matter how hard the Fed tries, history does not repeat, only rhymes. While we may get an “oil shock” comparable to ’74 or ’78, “this time around, we may not. Also, The mania was much more sever in ’00, than in ’66 (alternating generations), so there is more to “work off”. One last difference this time is the degree of globalization. Globalization seems to be an exacerbating effect. It helps during the up cycle, but can be injurious during the down cycle.
In any event, with P/Es still sky high, and the Boomers not yet at the retiring age, this secular bear period has only begun.
JMO
lurqer |
