Global Investment cycles

2011-05-29T15:36:00.002-04:00

!--CHART BEGIN-->
Source: tradingeconomics.com

Wilshire 5000 US Dollar

2009-10-29T08:21:00.001-04:00

Euro

2009-10-24T11:28:00.003-04:00

US Dollar

2009-10-24T11:28:00.001-04:00

Debt as % Of GDP 2008

2009-10-24T11:12:00.000-04:00

SP Bank Index Shanghai Baltic Index

2009-10-24T09:36:00.001-04:00

AMAZON APPLE Rio Tinto Shanghai Irish Market Shanghai SP Bank Index

2009-10-24T09:22:00.002-04:00

FTSE ASEAN

2009-10-24T08:42:00.001-04:00

Wilshire 5000

2009-10-22T10:16:00.001-04:00

1980-2008 Annual Global Production of PV

2009-10-17T11:17:00.000-04:00

2009-10-17T10:06:00.001-04:00

Chinese RMB

2009-10-16T08:58:00.001-04:00

Wilshire with retracement

2009-10-13T10:13:00.001-04:00

Wilshire 5000

2009-10-13T08:18:00.001-04:00

US Dollar

2009-10-09T18:55:00.001-04:00

2009-10-05T15:11:00.001-04:00

Baltic CRB Index

2009-10-05T14:33:00.002-04:00

US 30 Year Bond

2009-10-01T08:33:00.001-04:00

Light crude

2009-09-24T07:17:00.001-04:00

Shanghai

2009-09-21T11:03:00.001-04:00

Amex Biotech Index

2009-09-18T15:26:00.002-04:00

http://finance.yahoo.com/news/Genomics

Commodities Indexes

2008-08-13T09:59:00.001-04:00

A correction or is the bull market over?

These targets will be the judge on the outcome of the commodities market. Clearly, they can correct massively and still be in a bull market. If this is the greater unwind, then we will see the long-term trend lines broken.

I believe the Chinese Olympics are a watershed moment. Once we confirm that the last superpower is being impacted by the great unwind (fourth quarter this year) then that will last us know that the last of the dominos to fall is here.

If you look at exports to GDP, China is more dependent on the rest of the world for growth, so it would be logical that if your two largest clients are in trouble and getting worse then your own business will be greatly impacted.

CRB Index Hong Kong

2008-08-06T03:47:00.001-04:00

The break in the CRB INDEX is confirming the global slowdown. The credit crisis has spread to Asia as Hong Kong M3 contracted 3.8% over the past year.

Big Picture Update

2008-07-30T08:05:00.001-04:00

The MBA market composites finished down for the week ending July 25, 2008. The market index fell by 14.1% for the week. Most of this fall was due to the refinance index, which fell by 22.9%, but the purchase index also lost significant ground with a 7.8% loss. Activity on the demand side of mortgage markets remains at a near comatose level thanks to the continued deflationary trend and to relatively high contract rates.

Ford's Finance Arm Tightens Lease Terms on Trucks, SUVs

http://online.wsj.com/article/SB121734798153793667.html

In a debt-laden society, it is imperative that the exponential growth of debt inflation continue or we will witness a deflationary unwinding of all assets. One of the keys in the big picture is home prices. Home prices continue to fall in value in the US and as we all know, it is spreading around the world.

AMEX OIL INDEX attached,

On another note the commodities cycle and oil picture continue to confirm that the deceleration in global growth. If we have seen the high for oil this cycle then inflation numbers will peak over the coming quarter. That will allow central banks the headway to aggressively lower interest rates and for governments bonds to outperform other assets.

Banking Sector

2008-07-24T06:48:00.001-04:00

And who is responsible for breaking the faith? In this country no one is responsible. American banking is governed by law; the law assumes that bankers cannot be trusted not to ruin themselves and their depositors. Therefore, we have more laws to mind banking practice than any other peopleand more bank failures in spite of them. The federal and state governments employ thousands of examiners who go round and round, looking into the private books of the banks to see if they are solvent and law-keeping, and the law says that when they find one to be insolvent they must shut it up immediately. And still they fail.

A BUBBLE THAT BROKE THE WORLD By GARET GARRETT June 1 1932

How history repeats itself. Financials were extremely oversold.. due for a bounce.

Q. Is the bottom in? A. Have homes stopped falling in value?

Wilshire 5000 Target

2008-07-21T14:12:00.001-04:00

Rally until Sept?

Pakistani Investors Stone Karachi Exchange as Stocks Plunge

2008-07-17T14:38:00.000-04:00

http://www.bloomberg.com/apps/news?pid=20601087&sid=a111C0hsxBic&refer=home

Asset deflation is spreading..

Big picture

2008-07-16T10:47:00.000-04:00

Leading indicators are accelerating to the downside outside of China. Lagging indicators are topping here, (CRB index inflation global growth). I would expect that the hard down phase would occur in the third or fourth quarter. Oil prices will collapse once it becomes evident that Chinas unsustainable growth is slowing, that would probably be not until the fourth quarter of this year... too much of the current peak oil fears are based on continued growth that would have never occurred outside of the credit cycle.

The global unwind is accelerating as Canada has now joined the asset deflation game.

I looked at the current models this morning and there is a high probability of a Fed cut within the week.

A large drop in oil prices along with central banks easing would be good catalysts for this oversold market.

S&P GSCI INDEX

2008-07-09T11:55:00.000-04:00

Was that the blow off top?

Target for the Wilshire 5000

2008-07-07T09:43:00.001-04:00

Credit Market "New Era"

2008-07-05T09:42:00.000-04:00

"The thesis of this paper is that the existing depression was due essentially to the great wave of credit expansion in the past decade. There is a lamentable lack of comprehensive and accurate data concerning this process of debt creation. But highly suggestive information may be assembled regarding the growth of bank loans and investments; the increase in mortgage indebtedness, urban and rural; the increasing volume of securities outstanding; and the expansion of installment credit [I]n the six years after 1922, loans and investments held by banks had increased over $18 billon. This is over 45 per cent

"The great field of credit expansion in the last decade lies in the realm of urban real estate mortgages We have undoubtedly expanded the credit structure, spending today and postponing the accounting until tomorrow. We have been guilty of the sin of inflation. And there will be no condoning the sin nor reduction of the penalty because the inflation is of credit rather than a monetary one.

"Thus the area covered by credit sales enlarges and the volume of credit expansion increases. As in monetary inflation the immediate results seem favorable. Credit expansion results in business activity, in full employment, in optimistic outlook and in a flood of gratulatory literature proclaiming us wiser than our predecessors. But the evidence is consistent and cumulative. The past decade has witnessed a great volume of credit inflation. Our period of prosperity in part was based on nothing more substantial than debt expansion.

"Several financial devices of recent invention have contributed to this process of debt inflation The Federal and Joint Stock Land Banks refinanced a growing proportionof rural land mortgages into long term paper. This gave the borrowers security Of similar tendency but more obvious in its recent developments is the newly originated and rapidly introduced device of urban real estate bonds. As a method of credit inflation this plan could hardly have been bettered The volume successfully sold rolled up with the speed of the proverbial snowball traveling down a steep hill. The fruits of such sales gave us building activity and contributed to the flush times of the decade

The Quarterly Journal of Economics - November 1930
Charles E. Persons, excerpt from "Credit Expansion, 1920 to 1929, and its Lessons"

"In a flood of gratulatory literature proclaiming us wiser than our predecessors..." It seems we could insert Bernanke here..

Why was this false sense of security from the use of this steroid of debt fostered onto the public again?

No fear yet!

2008-07-05T07:35:00.001-04:00

The market is very sold, but there is not enough fear and no positive impetus for the market, yet.

Irish Market

2008-07-03T06:40:00.001-04:00

No sudden crash just a steady deleveraging; the Irish is a good proxy for the global markets. Ten years of gains gone,. While the market is becoming cheap, it will be interesting to see if relative value goes by the way of the do do bird

Global Bank Index FTSE EPRA Nar Index

2008-07-02T09:59:00.001-04:00

Both the global banking index and the global Real index points to new lows., while the leaders are oversold, the global economy is not going to heal until the banking index turns around, highly unlikely as the Global Real Estate boom is turning into a bust.

Fw: Ex-Intel head pushes electric cars

2008-06-30T16:35:00.001-04:00

http://www.chicagotribune.com/technology/sns-ap-grove-plug-ins,0,5941045.story

"The drumbeat of the electrical transportation is accelerating like nothing I've ever seen in my life," he said.

Grove says the fledgling plug-in hybrid movement offers parallels to the Homebrew Computer Club from the mid-1970s that helped electronic hobbyists in Northern California set the stage for personal computers. Plug-in hybrid conversion shops could spread the technology in similar ways.

"The personal computer ... went to individuals first before it went to corporations. The conversion goes to individuals," Grove said. "Electric cars ... the corporations are sitting, wishing this whole friggin' thing to go away. Which is exactly what the computer companies' attitude was to personal computers

The Japanese spend about 1 million a minute on alternatives research, it is a wonder they are so far ahead of most car companies. A point about alternatives that I agree with in the Solar Revolution is that energy will become decentralized, like computers..

Extremes

2008-06-29T07:55:00.000-04:00

Monthly charts on two important indicators, one is leading the other is lagging, BOTH are at extremes..

Why the banking system is more important because a bank with deposit of 5 million can lend out 100 million, so a fall of 50% does not translate into 2 million but 50 million. That's the problem with asset deflation because capital requirement means selling or curtailing lending, which is why the Fed is panicked, because the market is doing the tightening for them. and that credit contraction is now going on in the US.

CSP

2008-06-26T13:15:00.001-04:00

Today from the CSP conference, this map, which shows the land mass required to power all the worlds' energy needs is about 2%.

What was interesting during the conference was the direct cost inputs were very realistic and are either today cost competitive or will be within two years.. Also the future cash cow for utilities once capital costs were gone, because the advantage of CSP or any alternative is that the fuel is free, which will make it with time cost competitive with any other type of energy.

If all cost were factored in over a ten to fifteen year period,, such as CO2 taxes, long-term fuel uses of uranium, oil, coal then CSP competes TODAY with any other type of energy., and it only become cheaper with time because fuel prices are guaranteed not to go up.

It is up to society and politicians to make the change.

Inflation Not the problem

2008-06-26T09:13:00.001-04:00

http://bigpicture.typepad.com/comments/files/053008_Welling_Edwards-Montier_REPRINT.pdf

So it's likely that you're going to get a rapid decline in the U.S. current account deficit over the next 6 to 12 months, which means the emerging economies' surpluses come down very sharply, so they don't have to intervene so much in their currencies which means the growth in their money supplies collapses, which means the growth of liquidity in their economies collapses. Any analysis of what drives emerging market growth rates and emerging market equities and bond performance, shows that the printing of money by these emerging economies' central banks has been a huge factor in bolstering their economies. But that is going into reverse in the next 6 to 12 months, in a major way. The reserves will still grow, but at a much, much slower rate. That will produces a big sucking noise in terms of the impetus for emerging market growth, and actually put downward pressure on commodities. If you blow up the emerging market growth story, then you kick away the crutch for the secular bull market in commodities for a while.

I cannot tell you how many reports that I read that Asia can grow exponential from here! The exponential growth came about from cheap credit and oil prices. So where is Asia going to be in about ten years. Will it collapse because of the toxic use of coal to facilitate growth from the west, which came about from credit, which is akin to steroid use? I mean how are you supposed to grow if your two biggest clients are headed for a major slowdown, which is over 50% of your business? Do you think the collapse in their stock markets are telling us something??

Have you ever seen a body builder come off steroids, no matter how hard they work out or eat properly there mass will collapse anywhere from 30-50%. That exactly what is going to happen to the OECD countries over the next ten years. Simply because the steroid in this case was credit, and that credit has begun a systemic unwinding which was a movement of consumption to the present. That is gone today. It is delusional to think that as a company or country it can do well when their major customers are retrenching.

BRIC

2008-06-25T07:32:00.001-04:00

http://en.wikipedia.org/wiki/BRIC

How well are the BRIC countries holding up? Most of the OECD numbers point to a deceleration with the exception of Russia.

Commodities

2008-06-25T07:12:00.001-04:00

The exponential rise is intact, with a rise it will force the savings surplus countries to rein in growth, more importantly it will stop the madness of the central bankers from stopping the global leverage unwind, which according to indicators will accelerate this fall.

http://ap.google.com/article/ALeqM5ivNvD_jdPad4lPulmUIt1_aw2xvwD91H0GKG0

Architect hopes new skyscraper keeps us spinning

Giant wind turbines installed between every floor, he said, will generate enough electricity to power the entire building, and lifts will allow penthouse residents to park their cars right at their apartments.

With all that capital flowing into Dubai the great building boom continues, this has to be an interesting concept if ever built.

The houses that saved the world March 30 2002

2008-06-23T18:27:00.001-04:00

ITS OVER!

Debt Deflation Update June 1 2008

2008-06-20T07:15:00.000-04:00

Debt Deflation---In his debt-deflation hypothesis, Fisher asserted that (nominal) over-indebtedness and deflation are the dominant forces that account for "great" depressions. Specifically, he argued that given nominally denominated debt contracts, a protracted fall in prices and nominal incomes substantially increased real debt burdens, led to debtor
Insolvency, lowered aggregate demand, thereby contributed to a continuing decline in the price level, and thus further increases in the real burden of debt.

"The very effort of individuals to lessen the burden of their debts increases it, because of the mass effect to liquidate. The more the debtors pay, the more they owe. The more the economic boat tips, the more it tends to tip. It is not righting itself, but is capsizing." Irving Fisher 1933 The Debt-Deflation Theory of Great Depressions

Model update

Interest rates- Are moving back higher, I would caution that if inflation hold and interest rates would spike, the OECD countries Real Estate and stock market would correct massively...this is NOT the seventies...The consumer it up to their eyeballs in debt

House prices are accelerating to the downside, home prices around the world are peaking and more are rolling over, Canada will join the list within this quarter

Credit growth- slowing and decelerating

Wage growth- rolling over OECD countries

Bank Lending- The markets are doing much of the tightening, and many global banks are raising lending standards. (Not what you want to do in a the global credit cycle)

Gas and food- I understand that many think that this is inflationary, but unless wage demand picks up around the world, it forces consumers in the industrialized world to curtail discretionary income. The other half of the world economy spend an inordinate amount of their incomes for the necessities of life, they can least afford higher gas and food prices.

Business cycle- If we understand one thing about business cycles and recessions is that they cure inflation very quickly... all of the world economies are approaching the end of their prospective business cycle.. I would watch once it is evident that Asia is rolling over, probable after the Olympics, that commodities will correct, that will be the signal the deflation is on its way.

Variables -China and Asia Chinas growth rates will slowly decelerate. Here is why, The US is headed into a recession, so is Europe, gas prices were raised yesterday, China is increasing reserves, the Yuan is headed higher, so are interest rates, and lastly the stimulus of the Olympics will be gone

-66%

2008-06-19T10:38:00.001-04:00

Sub index down 66%, back to the initial panic in early 07, top in 2001, and the Asian crisis of 1997.

The fastest growing economy pays the price for speculative money, seems no matter what your political persuasion , human nature is the same!!

Alternative Energy Update

2008-06-18T10:59:00.000-04:00

IBM to Push CIGS Cells as Cheap Alternative to Silicon

http://www.ecogeek.org/content/view/1768/83/

Tech Giant Intel Joins IBM and Applied in Big Solar Bet

http://www.cleantechblog.com/2008/06/tech-giant-intel-joins-ibm-and-applied.html

http://www.cleanedge.com/reports/reports-solarUSA2008.php

All the major players are now focusing on solar.. As long as oil prices head higher the green movement is going to accelerate. There are two huge advantage to solar, one the learning curves are faster than any type of energy play, two implementation is faster than any other type of energy use. Efficiency rates are improving and costs are coming down in spite of energy cost rising ten time in the past decade.

Backward looking governments will look for more oil, uranium and coal to solve problems while the private sector forges ahead.. The green movement will simply continue to grow because of price, and top of that they are the fastest growing industries in the world..

One other aspect that many people seem to miss is that the poorest parts of the world have an abundance of solar radiation..

As Dr. Scheer said, "the price of fossil energy will only go up, going forward, and renewable energy costs will only go down. Anyone who relies on traditional fossil energy does so at their own peril."

Did you notice the Fuel costs...FREE

US 30 Year bond

2008-06-16T07:38:00.002-04:00

The long-term trend line is intact, the deflationary forces of credit contraction, home prices falling and stock prices, and now higher interest rates. While I think this is temporary, it is worth watching because this only decelerates credit demand.

US Household Assets

2008-06-14T07:29:00.000-04:00

Chart courtesy of BNP Paribas Economic Research

Not since the great depression have US households seen their home, stock and pension values fall in value... what is interesting in that time frame we did not see commodities prices head higher, now to put a nail in the coffin, maybe I should say a rivet... interest rates are headed higher.. If the Fed has to raise rates... my indicators say no for now... this will accelerate the big unwind.

Checkmate for the central bankers..

Technical signs flash warning for "Toronto" house market

2008-06-13T09:57:00.001-04:00

http://www.thestar.com/Business/article/442529

Of course, it's all part of a pattern which was evident to me - and anyone else with a grasp of reality - months ago. Sales volumes crash first, prices later. In fact, an analysis of the last Canadian housing declines in the Eighties and early Nineties shows the pattern clearly - the greatest of fools are those who are tricked by numbers, blinded by greed, and buy into a market where prices are high and sales thin. Garth Turner

I would add the household formation in Canada is about 180,000 and we have been building about 220,000 this decade..

The Toronto composite high weighting in energy in holding the index, while most sub-indexes are headed lower...

US Debt Deflation

2008-06-13T06:28:00.001-04:00

I did some numbers, if this model is right, that is I have the right inputs, we should from March 08 on see the first signs of a credit contraction.

INPUTS

ASSETS ---Falling

Banking- restrictive lending, Real Estate, commercial, stocks, mortgage Equity withdrawal

Borrowing-demand has plateauted, except credit card growth

Incomes -falling

Costs-- Rising

Shanghai Property Index

2008-06-11T09:27:00.001-04:00

Here is an update from last year, regarding the Shanghai Property index, many on the list could not find places to short the index... so much for China will not let the stock market fall before the Olympics.

Oil prices

2008-06-10T09:34:00.003-04:00

http://www.morganstanley.com/views/gef/archive/2008/20080610-Tue.html#anchor6508

Malaysia announced on June 4 that the country’s retail fuel prices would be raised by an average of 47.8%. Amid surging world oil prices, Malaysia is the fourth economy in the region to decide to raise domestic retail fuel prices recently; the others are India (10-15% on June 4), Taiwan (13-16% on May 28) and Indonesia (25-33% on May 24).

Will China be the next to hike retail fuel prices? At it stands now, China’s domestic retail fuel prices are only about half of the international benchmark levels. This means that if China’s domestic retail fuel prices were to be allowed to converge to international levels, they would need to rise by 70-90%, depending on the product type.

That is a large number; they will probably wait until after the Olympics to raise prices. The systemic slowdown is spreading around the world; we could see a dramatic falloff in demand over the coming year. Let prices do what they always do is change supply and more importantly change demand.

I hope to have the final numbers regarding oil, but I am sticking with 150-200 dollars a barrel. At that price, oil becomes too expensive as a major source of energy... The trend that accelerated in 1998 is still on tract... Oil, uranium and coal prices are heading higher, and alternative prices continue to fall.

Shanghai Composite

2008-06-10T09:34:00.001-04:00

http://www.latimes.com/business/la-fi-asia11-2008jun11,0,2533856.story

The systemic slowdown continues

Irish Market New Lows

2008-06-10T06:42:00.001-04:00

I have been using the Irish Market as a precursor to the global stock markets… the chart tells the story..

S&P Super 1500

2008-06-07T07:35:00.000-04:00

The chart tells the story

Debt Deflation

2008-06-06T14:11:00.001-04:00

It appears these comment I made back in Feb are becoming more of a problem, US home prices are still falling, and many OECD countries are witnessing the same problem.

The causes of asset deflation and the serving of that debt came about because of banks and individuals and some corporations were unable to service existing debt with overinflated assets. Once the cycle of asset deflation starts it starts the process of the upwind in reverse. Asset inflation allows banks and corporations to lever more. That process started to unwind in the US in 1925, with the unwinding of Florida real estate, the inflation in assets moved to stocks in the late twenties, while there signs that the economic was already slowing dramatically.

Debt deflation, indebtedness-overinflated assets- asset prices fall-losses- repayment-distress selling- -money contraction-spending=deflation

The feedback of assets falling started a process of feedback of continued selling to get out of debt. Banks were calling in loans and this accelerated the process. Once you stated to see layoffs the consumption and continued pullback continued, then as incomes fell again to service the debt became a further problem. I will not go into the governed polices that made the situation worse.

Fisher, Bernanke, and Minsky all agree that all tried to reduce their level of debt accelerate the process of selling assets, understand that as assets fell the balance sheets of banks, the contraction of money supply during the thirties was in part of debt being reduced as prices continued to contract. It became an endless loop. Counter to many arguments the Fed and the authorities did nothing, what they could to stop the last great unwind, but it all came down to servicing the debt, which are affected by assets values, employment and income. Take one or two or even three, the economy can survive, give the economy over inflated assets with debt levels that are brought upon by very low interest rates, and financial engineering then it is only a matter of time before the house of cards starts to unwind.

The only way to continue this supercycle of debt are much lower rates, much higher inflated assets, more of Wall Street’s creative financial engineering, that can only come about if assets have not started to fall, once it breaks it’s over.

Morgan Stanley World

2008-06-05T13:40:00.001-04:00

The push by the market has not held... the bear market rally seems to be over...

What Triggers the Change to Deflation?

A trend of credit expansion has two components: the general willingness to lend and borrow and the general ability of borrowers to pay interest and principal. These components depend respectively upon (1) the trend of people's confidence, i.e., whether both creditors and debtors think that debtors will be able to pay, and (2) the trend of production, which makes it either easier or harder in actuality for debtors to pay. So as long as confidence and production increase, the supply of credit tends to expand. The expansion of credit ends when the desire or ability to sustain the trend can no longer be maintained. As confidence and production decrease, the supply of credit contracts.

The push by the market has not held... the bear market rally seems to be over...

How do economists forecast any recovery in the global economy since the long-term secular trend of credit is over??

US Long-term rates

2008-06-05T13:38:00.001-04:00

The US economy needs much lower rates or else the credit deceleration will increase, this will only place more downward forces on the economy.

The seasonality for rates are in the Apr-June time frame..

S&P Bank Sector

2008-06-04T08:37:00.003-04:00

Long lead indictors continue to point to a gradual global systemic unwind, as more and more of the global banking system faces write-downs.

The global economy cannot afford higher rates, note the huge drop-off in mortgage apps and refinance this morning in the US because of the move back up in interest rates. If we were to get a move of higher rates in the global economy, I do not know how this could not accelerate the deflationary forces of asset deflation...

Northern Ireland

2008-06-04T08:37:00.001-04:00

http://calculatedrisk.blogspot.com/2008/06/northern-ireland-bursting-bubble.html

Today the Irish Financial Index also broke the March lows... the great deflationary forces are spreading...

The UK Economy

2008-06-03T19:35:00.001-04:00

The fifth largest economy UK is decelerating very quickly as the impact of higher interest rates, oil and gas prices along with house prices having rolling over and bank tightening lending standards is impacting growth.. This systemic unwind of credit expansion is spreading.

China's Wind Power Development Exceeds Expectations

2008-06-02T08:50:00.001-04:00

http://www.worldwatch.org/node/5758

In 2007, cumulative wind installations in China exceeded 5 gigawatts (GW), the goal originally set for 2010 by the National Development and Reform Commission (NDRC), China's top economic planner. The Commission had set the target in its 2006 mid- and long-term development plan for renewable energy. The plan's target for 2020 was 30 GW, a level that is now projected to be reached by 2012, eight years ahead of schedule.

In March, the NDRC revised its mid-term target, doubling it from 5 GW to 10 GW for 2010. Yet this new goal is still too modest, with wind installations likely to reach 20 GW by 2010 and 100 GW by 2020. China is witnessing the start of a golden age of wind power development, and the magnitude of growth has caught even policymakers off guard.

I would have thought that it would take about twenty five to thirty years before the world would switch to alternative energy in a large way. The run up in oil prices is now accelerating that change even faster, that should not be a surprise with the large run up in oil prices.

Expect "real exceeds expectations" to continue as long as oil prices move higher. Oil, gas, uranium, and coal will eventually become too expensive to use as any form of energy.

Debt is the Financial system's Carbon Dioxide

2008-06-02T08:18:00.002-04:00

http://www.debtdeflation.com/blogs/wp-content/uploads/2008/06/KeenDebtWatchNo23June2008.pdf

There are at least five strong similarities between this ecological issue and the economic one

Of accumulating debt:

While in one sense this slowing down in debt growth is a good thing--in that an unsustainable trend may finally be coming to an end--it also may presage very tough economic times ahead. One aspect of my focus on the debt to GDP ratio is the contribution that change in debt then makes to aggregate spending. Aggregate demand in the economy, for everything from commodities to net asset transfers, is the sum of both income (GDP) plus the change in debt

Today, the annual change in debt is the source of over 19% of aggregate demand. Should that turn around–as it must even to stabilise the debt to ratio at its current historically unprecedented level–then demand in the economy could “unexpectedly” evaporate.

Since the world has experienced a global boom it would only make sense that a global economic contraction will take place. The run up in gas prices as I suggested would happen if any type of reflation attempts would occur just have made the problems worse. Long term indicators clearly show the global economy continues to decelerate.

S&P Bank Sector

2008-05-31T07:53:00.001-04:00

Japan experienced a deflation in recent years because the bursting of its asset-price bubble in the early 1990s created huge losses in its banking system. The Japanese banks had financed the asset-price bubble. When it burst, the debtors could not keep current on their loans to the banks and therefore were forced to turn back the collateral to the banks. The market value of the collateral, of course, was less than the amount of the loans outstanding, thereby inflicting huge losses of capital to the Japanese banks. With the decline in bank capital, the Japanese banks could not extend new credit to the private sector even though the Bank of Japan was offering credit to the banks at very low nominal rates of interest

Paul L. Kasriel

The line in the sand is drawn..

How do you answer the probability of this outcome? Are home prices falling? Are home prices peaking or rolling over around the world? Is the recession spreading? Are the banks tightening lending standards? Are foreclosures increasing? Does the commodities blow off help consumers? Are long term indicators pointing up or down?

You have got your answer...

S&P GSCI

2008-05-30T13:30:00.001-04:00

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_gsci/2,3,4,0,0,0,0,0,0,1,1,0,0,0,0,0.html

Monthly and daily chart attached,

Peak oil is legit; everyone now talks about peak oil, as Don Coxe launches his new fund, as Sprott launches his IPO as macleans magazine covers the Malthusian end of the world thinking, as price are forecasted to go to 150, 200 300 500 dollars a barrel, you know we are near the end… in price

Canada GDP/ TSX INDEX

2008-05-30T08:58:00.001-04:00

http://www.statcan.ca/Daily/English/080530/d080530a.htm

Real gross domestic product (GDP) edged down 0.1% in the first quarter of 2008, its first quarterly decline since the second quarter of 2003. The economy, which had started to lose momentum in the second half of 2007 as exports declined, stalled in the first quarter due to widespread cutbacks in manufacturing, most notably in motor vehicles. In addition, weather disruptions hampered economic activity in the quarter. Economic output contracted 0.2% in March. Final domestic demand advanced 0.6% in the quarter on the strength of consumer spending. Inventory accumulation eased considerably in the first quarter, after two quarters of large build-ups.

The strength in the TSX is solely because of energy, every other sub index is in a downtrend...

US 10 & 30 Year rates

2008-05-29T07:16:00.001-04:00

The long-term trend line is still intact for long-term yields. This higher interest is the last thing the US economy can afford, as you would have the combination of higher commodities prices, higher interest rates, decelerating credit growth, and falling asset values that is toxic to economic growth. This combination is a tsunami of future debt deflation counter to inflation fears around the world

On that note, I get quite a bit of emails that inflation is in our future, the point to the shadow statistics numbers. I agree with these numbers, inflation is probably much higher that the governments would let us know. However, I ask the question, if rates were really reported then the bond market would have taken off which would have not allowed the Real Estate market to blow off which would have not brought us where we are today...

I suggest that you look at Asia in the 1997-1998 periods where inflation numbers collapsed within a year… I would suggest that this would be the case as the global recession spreads... Real Estate is a lagging indicator, so is inflation so is the commodities blow-off... Do you really believe the economy can grow at all if we get another move of over 20-30% in commodities and or interest rates?

Checkmate for the global economy.

UK House prices

2008-05-29T06:37:00.000-04:00

http://www.nationwide.co.uk/hpi/historical/May_2008.pdf

Annualized fall of over 25%

Research by Morgan Stanley reveals that countries hosting the Olympics usually enjoy something of a boom in the year leading up to the event, only to be followed by a slump during the following eighteen months. Particularly noticeable downturns were experienced by Australia in 1956, Japan in 1964, the US in 1984 and Korea in 1988. Spain fell into recession the year after their 1992 Olympics, while more recently Athens and Sydney saw some 2 per cent shaved off their growth.

Four major forces are unfolding over the next three years that should line up for a pronounced global slowdown. One most if not all Real Estate cycles or Kuznets cycles (the longest on record are coming to a close) that propelled most of the artificial demand from the 2000-2008 growth in the world, two China hosting of the Olympics, will be the additional drag on the global economies once it is over this summer, three we are witnessing global tightening not from the central banks but from the market as banks are forced to tighten lending standards, this propelled unsustainable consumer spending, over the past 8 years. And lastly the generational and or baby boomers in the developed west have or are approaching their peak years in spending. These deadly ingredients pose a potential rapid deceleration in a debt laden global economy forming the potential for an systemic accident in the global economy..

Powerhouse

2008-05-28T14:04:00.001-04:00

http://www.powerauthority.on.ca/sop/

http://www.powerhouseprogram.ca/index.htm

Now it's easier than ever to buy and install a renewable energy system for your home. Enersource Hydro Mississauga, Hydro One Networks and Hydro One Brampton Networks are proud to offer zero-interest loans* or rebates through the PowerHouse program.

Customer benefits of PowerHouse Loan

Interest free loans to help you overcome the upfront cost of converting to "Renewable Energy"
Save thousands of dollars in interest costs with zero-interest loans* only the principal amount needs to be re-paid
Convenient access to financing from your kitchen table
Financing amounts from $2,000 up to $50,000
Amortization periods of up to 120 months (depending on loan amount)
No lien on residence loans are totally unsecured
Quick credit decisions
No down payment requirement
No hidden application fees
Monthly payments as low as $25
Flexible repayment options loans can be repaid in full or partial without penalty
Payment through direct debit from customers' Canadian financial institution account

This is what governments do best help speed up with the transition to alternatives and let the market supply the goods.. programs like these are why Germany is one of the global leaders in alternative energy

Bring on the solar revolution

2008-05-28T12:39:00.001-04:00

http://www.hermannscheer.de/en/index.php?option=com_content&task=view&id=203&Itemid=13

Many environmentalists are pessimists and don't believe in technical fixes. But you are a real techno-optimist

Yes, because I see the opportunities for renewables. I see that they can provide 100 per cent of our energy, and they can be introduced very fast. All the great technological revolutions happen much more quickly than even the experts and enthusiasts guess. The forecasts for the spread of cell phones and IT were all overtaken by the reality. The renewable revolution will be the same. The IT and mobile phone revolutions were also the first technological revolutions in modern times that were not about centralising power. They were about decentralising. And this will happen to energy from renewables. The big old-fashioned power stations and long supply chains will be replaced by local supplies for local markets. This is changing the tide of history.

The decentralizing is extremely important to understand as this will empower everyone to provide there own energy and grow there own food.. counter to the pessimistic misleading ignorant peak everything promoters.. creative destruction at its best

Checkmate for the global Economy

2008-05-28T07:06:00.001-04:00

The global business cycle is now caught with two options, try to inflate the commodities cycles is going to kick you in the teeth, deflate you are going to accelerate the deflationary forces from falling asset prices. We have debt levels that are decelerating around the world; we have commodities in the late stage of a blow-off that if they move much higher is going to crimp discretionary demand very quickly. If we get any spike in interest rates, you are going to collapse Real Estate in every major developed market because the consumer is up to their eyeballs in debt.

The US is in a recession, Europe about to go into a recession, the BRIC countries decelerating very quicklyprobably a recession in 2009... Markets have corrected the bear market rally... interest rates are at a critical level, spreads are moving up again..

On another note GM has fallen back to the levels of 1982, hopefully there aggressive move to hybrids and plug in electric cars will revive this once great company...

Solarbuzz Reports World Solar Photovoltaic Market Growth of 62% in 2007

2008-05-28T06:29:00.000-04:00

http://www.solarbuzz.com/Marketbuzz2008-intro.htm

Meanwhile, thin film production more than doubled from 181 MW in 2006 to 400 MW in 2007, accounting for 12% of total PV production.

SA, First Solar is the leader in this field... and one of the "creative destruction technologies"

Solar production grew at 33% per annum prior to 2006, at that pace it would exponentially provide all of the world's electricity in 25 years. With higher oil and gas prices, that is moving growth rates much higher as expected. If growth rates sustain at this level 62%, (I expect them to move even higher) then it could provide all of the worlds electricity within 15 years.

All the same, time oil prices moved in price 10 times we have seen prices fall for solar and efficiency rates move up. This is only going to accerlerate more so as the auto industry moves to hybrid and plug in cars.

There is a good chance for some great deals on solar over the next 2 years as a huge supply of plants comes on board. It seems certain that within 5 to 10 years, oil, coal, and uranium will price itself out of the market. This does not cover the exponential growth in CSP, wind, geothermal, tide, and algae.

GLOBAL PHOTOVOLTAIC (PV) MANUFACTURING CAPACITY

2008-05-27T15:10:00.001-04:00

According to Gaetan Rull, analyst at Yole Developpement, "The production capacity for wafer based solar cells will increase 62% and reach 10GW in 2008." One of the reasons identified by Yole Développement, is the anticipation of the renewed availability of silicon that will start in late 2008 and will drastically increase in 2009-2010. Leaders have succeeded in securing long term supply agreements and want to be ready when poly-Si will be available. Visibility on specific projects is reduced after 2010. Leading cell manufacturers have an-nounced their projects up to 2011 but medium and small companies have not disclosed their plans. Yole is tracking expansion projects on a daily basis and will update production capacities as soon as information is available. Regarding modules activities, Germany, Spain, USA and China are leading and Japan consolidating.

Signet Solar Rolls Out Industry's Largest Silicon Thin Film Solar Photovoltaic Modules

http://www.i-micronews.com/lectureArticle.asp?id=1490

Signet Solar, a manufacturer of silicon thin film photovoltaic modules announced the fabrication of the industry's first ever Gen 8.5 (5.7 m2) silicon thin film solar PV module at its new factory near Dresden, Germany in a record setting ten months from the start of construction.
After finishing construction of the 200,000 square foot production facility in only seven months, Signet Solar completed installation of equipment and started initial fabrication in less than three months. Signet Solar's technology lowers the cost of photovoltaic (PV) modules by combining proven silicon thin film technology, with very large area manufacturing and an industry standard equipment set. The initial modules from the fully automated module manufacturing line met the specification of the product and were confirmed by independent testing by Fraunhofer Institute.

The solar revolution continues..

China volume exports

2008-05-27T08:33:00.001-04:00

http://www.nbc.ca/bnc/files/bncpdf/en/2/e_commentaire_cg_20080523.pdf

The dominos of a credit contraction is spreading, month by month the numbers are get worse.. all long leading indictors point to this

As the ECRI calls it "pronounced, persistent, and pervasive" and its global

Bank Of America

2008-05-27T08:01:00.001-04:00

The largest commercial bank in the US is clearly pointing to a resumption of the secular bear market, another bellwether GE week broke the march lows, and both are Dow Jones components

US 30 Year rates

2008-05-26T11:52:00.001-04:00

The long bond which is most sensitive to inflation continues to fall, the general media and investing public still focuses on inflation but they are missing the big picture. One global Real Estate value are moving lower and many are accelerating to the downside. Two Europe, Canada, Australia and soon Asia are in the late stages of the business cycle. And as with all business cycle inflation and commodities are the last to roll over.

Again, until wages move higher much higher we will not have a repeat of the seventies, house value were not deflating, and wages growth were accelerating, wage growth in the most important global economy is moving lower.

If by any chance we were to get much higher oil prices much higher interest rates would it not make sense in a debt laden society that this will guarantee a global depression, which then would collapse demand for commodities, we are already witnessing this in North America and Europe, asset deflation will accelerate this until the global consumer repairs there balance sheets.

I am still in the deflation camp until global asset deflation stops.....

US Traffice Volume Trends

2008-05-24T11:57:00.003-04:00

http://www.dot.gov/affairs/fhwa1108.htm
The FHWA's "Traffic Volume Trends" report, produced monthly since 1942, shows that estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent as compared with March 2007 travel. This is the first time estimated March travel on public roads fell since 1979.
At 11 billion miles less in March 2008 than in the previous March, this is the sharpest yearly drop for any month in FHWA history

http://www.fhwa.dot.gov/ohim/tvtw/08febtvt/08febtvt.pdf

http://4.bp.blogspot.com/_pMscxxELHEg/SDc1Ia_dmdI/AAAAAAAACCI/iBjoNSROKzY/s1600-h/VehicleMiles.jpg

Price is now affecting demand.... Oil prices are now becoming speculative..

Oil and Gas prices

2008-05-23T07:32:00.001-04:00

Numbers that I have seen thrown around are that for every .01 cent increase in the price of gas costs the US consumer 1 billion dollars, that's money that would have been spent elsewhere, if you include Canada that would be about $1.1 billion and with Europe that about 2.4 billion dollars.

These prices are finally starting to have an effect on consumption, as we see that numbers for the US could actually fall this year.

If we get any more of a spike in oil this year, this will put a nail in the coffin for the global economy... something has to end the supercycle of debt permanently, since central bankers will not stop the insanity.

Europe

2008-05-23T07:05:00.000-04:00

Like dominos the global recession is spreading to Europe as the combination of a higher Euro, credit deceleration, falling and or peaking Real Estate values, and higher oil and food prices take a toll on the European consumer.

Currently my indicators show that Asia is now decelerating, not enough to affect growth but we shall see that impact within a year... more to come!

Global Housing Markets

2008-05-22T14:23:00.000-04:00

http://www.economist.com/finance/displaystory.cfm?story_id=11412518

US DECLINE IN HOUSE PRICES ACCELERATES

2008-05-22T11:30:00.002-04:00

http://www.ofheo.gov/media/hpi/1q08hpi.pdf

Annualized decline of 7%. Systemic

Real Estate prices declines are one of the key ingredients for debt deflation.

Canadian Real Estate

2008-05-22T10:52:00.000-04:00

http://www.tvo.org/TVOsites/WebObjects/TvoMicrosite.woa/wo/8ezmD9yDKWEE59yH6sJvwM/2.0.0.33.29.26.3.13.1.1

It's the biggest investment most of us will ever make -- buying a house. And over the past several years there's been a huge real estate boom. But it appears the boom is over and now the question is -- will we see a bust? Garth Turner is a financial commentator and Member of Parliament. His new book is called Greater Fool: The Troubled Future of Real Estate.

Take a look at the chart above, interest rates are at a much lower level than 1989 yet the affordability is plunging. The prospects for Canadian Real Estate are very poor since the demographics picture also changes over the next five years.

I would challenge any Canadian to look at the cost of owning home with a forty year amortization, you are better off renting. Price gains are decelerating, a high probability for the top in price gains in 2008.

Global House Prices/Price to rent ratio/ Price to income ratio

2008-05-22T10:47:00.002-04:00

Annex Table 60. House price ratios
Long-term average = 100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Price-to-rent ratio
United States 96.1 93.0 92.0 90.9 89.8 89.4 89.7 90.0 91.6 93.4 96.7 100.6 103.6 108.1 116.4 128.2 134.8
Japan 133.3 134.9 125.8 117.3 112.0 108.1 104.5 101.6 99.4 96.3 92.5 88.5 84.5 80.0 75.2 71.7 69.5
Germany 92.3 88.6 84.9 83.1 83.1 82.1 81.3 78.6 77.0 74.8 72.5 71.7
France 82.8 81.6 81.6 85.9 93.5 100.5 106.1 115.4 129.3 143.9 155.9
Italy 93.0 83.2 80.7 82.5 87.1 92.2 98.8 106.0 113.4 119.2 123.7
United Kingdom 106.9 95.5 87.1 83.8 82.2 79.7 80.1 85.6 94.3 102.3 116.0 122.6 138.8 157.7 170.1 168.9 164.3
Canada 100.7 100.1 102.0 106.2 112.1 104.5 104.8 109.8 109.1 112.4 113.3 115.6 127.4 138.1 150.1 163.6 179.1
Australia 91.8 91.1 91.8 93.7 96.4 96.0 93.9 94.8 98.8 103.2 108.4 116.8 135.5 157.2 163.4 162.2 169.3
Denmark 78.2 75.9 72.4 69.6 75.9 80.0 87.4 94.9 101.5 105.5 109.4 112.8 113.9 114.5 121.2 139.1 165.8
Spain 134.2 140.4 128.8 117.6 113.1 110.9 105.9 104.0 104.0 107.4 111.3 116.9 130.9 150.6 171.2 188.2 198.5
Finland 117.6 112.5 124.9 133.0 139.8 144.0 151.4
Ireland 45.7 44.7 42.6 46.0 51.2 51.6 59.4 68.1 86.6 120.5 127.8 118.7 132.3 158.4 171.9 179.3 172.9
Korea 133.6 132.2 115.1 105.0 99.0 94.6 91.9 91.6 81.3 83.3 85.0 85.0 94.3 99.2 98.1 98.8 103.9
Netherlands 71.1 70.1 72.1 74.0 79.2 81.3 87.3 94.6 102.1 115.1 130.2 140.4 147.8 149.9 151.5 154.9 158.4
Norway 69.0 67.7 75.7 79.3 85.2 93.0 100.9 108.7 120.8 124.1 124.7 122.2 131.6 139.3 154.4
New Zealand 91.7 87.3 88.1 88.5 94.0 96.5 101.6 104.5 100.4 103.1 100.8 103.3 109.6 124.2 137.5 149.2 156.9
Sweden 108.6 96.8 81.1 68.3 70.2 68.8 68.6 74.4 83.7 93.0 103.0 108.7 112.8 119.3 130.9 142.7 157.6
Switzerland 132.8 118.7 106.2 95.8 95.1 90.4 84.5 81.1 80.4 79.7 79.3 78.6 81.4 83.6 84.5 84.3 84.7
Price-to-income ratio
United States 94.6 93.0 90.6 90.3 88.8 87.9 87.6 87.1 86.8 88.0 88.5 92.8 95.8 99.2 103.8 112.7 116.6
Japan 118.1 115.5 107.9 101.8 97.6 95.9 95.0 92.2 90.7 88.8 87.2 86.5 82.7 79.6 74.2 70.5 67.5
Germany 90.5 88.1 85.1 82.8 81.6 79.5 76.6 74.6 72.4 69.6 67.0 65.7
France 85.5 83.9 82.9 86.8 89.7 92.5 96.1 105.2 116.5 130.2 140.4
Italy 104.2 103.3 96.5 91.2 82.8 78.2 78.9 82.1 85.9 88.2 93.0 99.7 106.1 111.1 114.6
United Kingdom 112.7 101.3 90.4 83.8 83.2 79.2 77.8 79.7 85.5 91.0 99.2 101.0 113.6 126.0 136.4 136.5 140.1
Canada 101.9 104.4 104.4 105.2 108.4 100.9 100.5 100.6 96.0 95.8 93.5 94.4 101.4 107.8 113.1 120.2 126.7
Australia 98.5 101.1 99.3 98.8 97.3 93.6 90.5 92.6 97.6 100.6 102.1 108.8 126.2 145.3 144.5 139.2 142.6
Denmark 81.5 78.8 75.4 74.7 81.2 80.8 87.4 95.8 100.4 108.7 112.5 112.6 113.5 113.3 118.0 134.6 154.4
Spain 120.3 123.8 115.2 108.4 107.2 99.4 96.6 96.0 96.5 98.4 99.1 102.7 114.6 131.2 144.4 154.3 158.8
Finland 94.0 87.4 92.1 92.7 93.8 97.9 104.3
Ireland 84.2 81.2 79.4 75.0 77.7 75.4 79.9 87.6 103.0 118.3 124.4 119.9 123.5 134.7 143.1 147.7 155.4
Korea 165.2 148.4 123.6 108.5 91.8 82.6 74.3 71.6 63.2 59.7 58.6 58.8 65.1 68.5 66.0 64.1 64.8
Netherlands 70.6 72.1 73.8 80.7 86.6 89.7 96.1 102.0 108.6 122.2 134.8 136.7 145.6 153.3 157.4 163.4 167.2
Norway 72.5 69.4 77.4 78.9 82.4 87.2 89.9 96.3 105.0 110.5 106.5 101.3 107.4 109.6 127.6
New Zealand 83.1 80.1 82.2 84.1 93.9 96.0 101.9 103.9 98.4 94.4 95.4 92.2 101.8 115.3 132.1 147.7 152.6
Sweden 100.9 95.1 82.2 71.9 74.2 72.9 73.5 77.5 82.8 87.2 91.9 91.6 92.9 96.5 103.5 109.9 119.3
Switzerland 123.5 113.9 104.8 97.4 96.2 90.0 84.8 81.6 79.3 77.6 74.9 73.2 77.9 79.7 80.5 79.1 78.2
Source: Various national sources and Nomisma, see table A.1 in Girouard, N., M. Kennedy, P. van den Noord and C. André, "Recent house price developments: the role
of fundamentals", OECD Economics Department Working Papers, No. 475, 2006 and OECD estimates.

FTSE Global Banks

2008-05-21T09:40:00.001-04:00

A scan of the world clearly illustrates that the banks indices are now rolling over, market has to hold the lows of yesterday for the bear market rally to continue.

"Schumpeter's incremental innovation of an emergent techno-economic paradigm in real time"

2008-05-21T09:25:00.001-04:00

http://www.hermannscheer.de/en/index.php?option=com_content&task=view&id=197&Itemid=13

"We're talking about the most important and exciting structural change of civilization since the beginning of the industrial age," he says, with another chuckle. "The benefits and ramifications are huge. Not only do renewables mitigate climate change, they also give us cleaner cities, improved health, revitalize the agricultural economy so that the farmers of today will become the oil sheikhs of tomorrow, and fight underdevelopment and deprivation in the developing world."

One of the most exciting aspects, he says, is the boost given to the freedom of individuals as they become less dependent on conventional power and its providers. "You give people energy independence and you get social commitment - you only get that with renewable," he argues.

Even national security issues could be overcome, and wars over energy become obsolete. "Look at all the political support there is for oil and gas," he says. "For a start, you could get rid of the British costs for military commitment in Iraq which belongs to the oil bill. Think of the savings!"

At some point, Scheer believes his ideas will become commonplace. He lets the 19th-century German philosopher Arthur Schopenhauer make the point for him. "There are three stages to a new idea," Scheer says. "At first, it is ignored. Second, there is strong opposition against it. And finally, those who once opposed it set about introducing the initiatives themselves as if they'd been theirs all along."

Hermann Scheer has called most energy experts "part of the problem, not part of the solution," at an awards presentation in Brussels.

This man is going to change the world for the better, if you are interested in the alternative energy world I highly recommend his book "Energy Autonomy"

Alternative is going to free consumers not only to cheap energy, but also cheap food and water, as the altenrative costs fall dramatically it will allow anyone to produce there own food anywhere in the world.

It is interesting that Japan and Germany are leaders in this field as there consumption of oil and gas falls. The US could be the leader, but it seems on protecting the old toxic use of oil and uranium. I guess much higher oil and gas prices will force change on the rest of the west!! You would think that sending over 600 billion dollars annually to many countries that they consider there enemy would accelerate

this process, hopefully the public will realize that there is a much better way to spend there energy dollar every year!

When I first started looking into alternatives three years ago, I would have never imagined the bewildering creative destruction of the alternative energy world.

A good email friend has called one of the these great trends,

"Schumpeter's incremental innovation of an emergent techno-economic paradigm in real time"

Here's to a green future!

Model update May 1 2008

2008-05-17T13:35:00.002-04:00

Valuations- more overvalued, earnings are not keeping up with stock values so dividend yields are falling

Monetary policy- markets are tightening

Investment cycle-near the end of the cycle, commodities and inflation sensitive industries (the world has not falling into a recession yet)

Sentiment worsening for the public, improving for the markets, a negative (contrary indicator)

Growth prospects- the global economy has no prospects for growth, outside of the alternative energy field

Profit cycle- peaked rolling over.

ECRI-Negative

LEI-negative

Global OECD-negative, and for more countries they are rolling over. We are about at the same point at the end of 2000 in terms of the global slowdown.

Debt deflation model---

House prices are accelerating to the downside, home prices around the world are peaking and more are rolling over.

Credit growth- slowing and decelerating

Wage growth- rolling over

Bank Lending- The markets are doing much of the tightening, and many global banks are raising lending standards. (Not what you want to do in a the global credit cycle)

Gas and food- I understand that many think that this is inflationary, but unless wage demand picks up around the world, it forces consumers in the industrialized world to curtail discretionary income. The other half of the world economy spend an inordinate amount of their incomes for the necessities of life, they can least afford higher gas and food prices.

Variables-

Oil and food prices are still rising negative for the economy and it forces discretionary spending will be curtailed.

Chinese Olympics- One of the four drivers for the Asian economies will be gone, after North America and Europe slow down consumption

US Election- negative for the markets if the Democratic Party wins (not a political view just that they will more than likely increase taxes)

Long Term

Kuznets cycle- down phase is spreading around the world

Demographics- the global baby boom will be moving away from Real Estate and spending.

Generational cycle- winter is upon us…

Summary, all the models point to a deceleration for the global economy, worsening profits and for a fundamental change in global consumer spending...

S&P 1500 Super Composite

2008-05-16T14:21:00.000-04:00

Now the major market faces massive headwinds... more to come..

Stagflation Involves a wage -price spiral

2008-05-15T09:22:00.000-04:00

A critical element for any serious inflation to take hold, also global growth would have to accelerate to bring wage inflation spiraling higher, both are not the case today.

FTSE Global Banks

2008-05-10T10:17:00.001-04:00

So go the banks so goes the market, sell in May go away, trend line broken, coppock has not turned up.....

Dow Jones Composite

2008-05-10T09:24:00.001-04:00

One of the stronger broader indices have now broken the bear market rally trendline, next week all of the other indices should be telling the same story.

Wilshire 5000 Update

2008-05-09T11:45:00.002-04:00

The Wilshire 5000 must hold 14,000 or the bear market rally is over..

US Monetary Base is stalling, Why?

2008-05-02T09:37:00.001-04:00

http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&width=1000&height=600&preserve_ratio=true&s[1][id]=AMBSL

http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s[1][id]=AMBSL&s[1][range]=10yrs

Euro zone within recession territory

2008-05-02T09:11:00.001-04:00

The recession dominoes spreads.....

Annex Table 60. House price ratios
Long-term average = 100
	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
Price-to-rent ratio
United States	96.1	93.0	92.0	90.9	89.8	89.4	89.7	90.0	91.6	93.4	96.7	100.6	103.6	108.1	116.4	128.2	134.8
Japan	133.3	134.9	125.8	117.3	112.0	108.1	104.5	101.6	99.4	96.3	92.5	88.5	84.5	80.0	75.2	71.7	69.5
Germany						92.3	88.6	84.9	83.1	83.1	82.1	81.3	78.6	77.0	74.8	72.5	71.7
France							82.8	81.6	81.6	85.9	93.5	100.5	106.1	115.4	129.3	143.9	155.9
Italy							93.0	83.2	80.7	82.5	87.1	92.2	98.8	106.0	113.4	119.2	123.7
United Kingdom	106.9	95.5	87.1	83.8	82.2	79.7	80.1	85.6	94.3	102.3	116.0	122.6	138.8	157.7	170.1	168.9	164.3
Canada	100.7	100.1	102.0	106.2	112.1	104.5	104.8	109.8	109.1	112.4	113.3	115.6	127.4	138.1	150.1	163.6	179.1
Australia	91.8	91.1	91.8	93.7	96.4	96.0	93.9	94.8	98.8	103.2	108.4	116.8	135.5	157.2	163.4	162.2	169.3
Denmark	78.2	75.9	72.4	69.6	75.9	80.0	87.4	94.9	101.5	105.5	109.4	112.8	113.9	114.5	121.2	139.1	165.8
Spain	134.2	140.4	128.8	117.6	113.1	110.9	105.9	104.0	104.0	107.4	111.3	116.9	130.9	150.6	171.2	188.2	198.5
Finland											117.6	112.5	124.9	133.0	139.8	144.0	151.4
Ireland	45.7	44.7	42.6	46.0	51.2	51.6	59.4	68.1	86.6	120.5	127.8	118.7	132.3	158.4	171.9	179.3	172.9
Korea	133.6	132.2	115.1	105.0	99.0	94.6	91.9	91.6	81.3	83.3	85.0	85.0	94.3	99.2	98.1	98.8	103.9
Netherlands	71.1	70.1	72.1	74.0	79.2	81.3	87.3	94.6	102.1	115.1	130.2	140.4	147.8	149.9	151.5	154.9	158.4
Norway			69.0	67.7	75.7	79.3	85.2	93.0	100.9	108.7	120.8	124.1	124.7	122.2	131.6	139.3	154.4
New Zealand	91.7	87.3	88.1	88.5	94.0	96.5	101.6	104.5	100.4	103.1	100.8	103.3	109.6	124.2	137.5	149.2	156.9
Sweden	108.6	96.8	81.1	68.3	70.2	68.8	68.6	74.4	83.7	93.0	103.0	108.7	112.8	119.3	130.9	142.7	157.6
Switzerland	132.8	118.7	106.2	95.8	95.1	90.4	84.5	81.1	80.4	79.7	79.3	78.6	81.4	83.6	84.5	84.3	84.7
Price-to-income ratio
United States	94.6	93.0	90.6	90.3	88.8	87.9	87.6	87.1	86.8	88.0	88.5	92.8	95.8	99.2	103.8	112.7	116.6
Japan	118.1	115.5	107.9	101.8	97.6	95.9	95.0	92.2	90.7	88.8	87.2	86.5	82.7	79.6	74.2	70.5	67.5
Germany						90.5	88.1	85.1	82.8	81.6	79.5	76.6	74.6	72.4	69.6	67.0	65.7
France							85.5	83.9	82.9	86.8	89.7	92.5	96.1	105.2	116.5	130.2	140.4
Italy			104.2	103.3	96.5	91.2	82.8	78.2	78.9	82.1	85.9	88.2	93.0	99.7	106.1	111.1	114.6
United Kingdom	112.7	101.3	90.4	83.8	83.2	79.2	77.8	79.7	85.5	91.0	99.2	101.0	113.6	126.0	136.4	136.5	140.1
Canada	101.9	104.4	104.4	105.2	108.4	100.9	100.5	100.6	96.0	95.8	93.5	94.4	101.4	107.8	113.1	120.2	126.7
Australia	98.5	101.1	99.3	98.8	97.3	93.6	90.5	92.6	97.6	100.6	102.1	108.8	126.2	145.3	144.5	139.2	142.6
Denmark	81.5	78.8	75.4	74.7	81.2	80.8	87.4	95.8	100.4	108.7	112.5	112.6	113.5	113.3	118.0	134.6	154.4
Spain	120.3	123.8	115.2	108.4	107.2	99.4	96.6	96.0	96.5	98.4	99.1	102.7	114.6	131.2	144.4	154.3	158.8
Finland											94.0	87.4	92.1	92.7	93.8	97.9	104.3
Ireland	84.2	81.2	79.4	75.0	77.7	75.4	79.9	87.6	103.0	118.3	124.4	119.9	123.5	134.7	143.1	147.7	155.4
Korea	165.2	148.4	123.6	108.5	91.8	82.6	74.3	71.6	63.2	59.7	58.6	58.8	65.1	68.5	66.0	64.1	64.8
Netherlands	70.6	72.1	73.8	80.7	86.6	89.7	96.1	102.0	108.6	122.2	134.8	136.7	145.6	153.3	157.4	163.4	167.2
Norway			72.5	69.4	77.4	78.9	82.4	87.2	89.9	96.3	105.0	110.5	106.5	101.3	107.4	109.6	127.6
New Zealand	83.1	80.1	82.2	84.1	93.9	96.0	101.9	103.9	98.4	94.4	95.4	92.2	101.8	115.3	132.1	147.7	152.6
Sweden	100.9	95.1	82.2	71.9	74.2	72.9	73.5	77.5	82.8	87.2	91.9	91.6	92.9	96.5	103.5	109.9	119.3
Switzerland	123.5	113.9	104.8	97.4	96.2	90.0	84.8	81.6	79.3	77.6	74.9	73.2	77.9	79.7	80.5	79.1	78.2

Source: Various national sources and Nomisma, see table A.1 in Girouard, N., M. Kennedy, P. van den Noord and C. André, "Recent house price developments: the role
of fundamentals", OECD Economics Department Working Papers, No. 475, 2006 and OECD estimates.