FormerSanDiegan – I had never looked at bubbles in the way that you present – ie, one every 2.5 years – the frequency certainly bears looking at
That’s a lot of bubbles happening in a short time!
I wonder how the frequency correlates to the date 1971 when Nixon closed the gold window – I would suspect that bubble frequency increased after that point
Perhaps when all the countries in the world are using fiat currencies (as they are today) it isn’t appropriate to focus on individual asset bubbles – it may be that the bubble to focus on is the credit/debt bubble – ie, individual stock market and real estate bubbles are only pimples on the back of the giant planet-wide credit/debt bubble
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The magnitude of money/credit/debt creation going on right now is truly mind-boggling – the US is creating new money/debt at an 11-12% annual rate – China is doing so at an 18% rate – all the other central banks are doing their part also – supposedly the global rate is around 12% right now
This newly created ‘wealth’ has to go somewhere – it appears that it is flowing from one bubble to the next
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What is the end game for all this credit/debt creation?
One of the theories that intrigues me is the Kondratieff Winter (Google search it if you care)
Kondratieff was a Russian economist who discovered a long-term cycle in Western economies – the cycle is more than 50 yrs – Kondratieff divided the cycle into 4 parts and correlated them to the seasons of the year
The Kondratieff Winter is when all the financial excesses are washed out of the system – most paper wealth disappears – businesses/enterprises that are economically non-viable fail – asset prices return to their fundamental basis – etc
Essentially, the K-Winter resets the economic system so the next cycle can start
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I have mixed feelings about long-term cycles – I suspect they may be like statistics in that you can prove anything you want if you focus on the right data and exclude everything else
With that said, these are some long-term cycles that I find interesting:
1. Kondratieff – depending on whose interpretation you use, the bottom of the next K-Winter should fall in the 2010-2012 timeframe
2. Kress 120 year cycle – bottom in 2010-2014 timeframe
3. Fourth Turning event due 2005’ish – Fourth Turning is a book by William Strauss and Neil Howe which says that every four generations there is significant turmoil, usually war or disease or both
4. collapse of exponentially expanding fiat currency due 2016’ish – George Ure (www.urbansurvival.com) theorizes that no fiat currency can be expanded for more than 83.5 years – at that point the interest on the debt goes parabolic and the whole mess collapses under its own weight
