The Economic Fr...'s  Instablog

The Historical Nonlinear 2011 Collapse: The Wilshire's 9 August  2011 10-11/23/22 of 23-28 Day :: x-y/2-2.5x-y/1.6x-2.5x transition  2-2.5y Final time based historical collapse

The operations of the Global Macroeconomy are mechanical and dependent upon the global interactive debt-money-asset system.

The growth and decay the valuations of the macroeconomic system's assets which include debt and the relative value of currencies follow time based saturation curves which represent limits to asset over production, asset over valuation, bad debt existence, and asset appreciation or devaluation relative to other assets within the system.

Money exponential leverage by the Wall Street and London Financial Industry and Financial Industry sponsored laws favoring speculation in equities and commodities  asset over traditional bank savings  over the last 30 YEARS created  three REPETITIVE speculative asset bubbles.

The two principal time based laws of asset valuation  progression are remarkable simple:

First Law: A four phase  time based fractal series: three of growth and one of decay

x/2-2.5x/2x/1.5-1.6x  with

1st Law:  First Corollary:  a nonlinear drop between 2x and 2.5x characterizes the second fractal

1st Law  Second Corollary: initial asset growth valuation begins (or is time integrated) in the terminal area of the preceding decay fractal. Larger fractal time units integrate for instance terminal monthly decay)

Second  Law: A 3  phase  time based fractal decay progression of y/2y-2.5y/2y-2.5y

Second Law Corollary: Initial Decay begins in the Final Growth area

Using the First Law and month time based fractals and nodal lows  from the March 2009 low the Wilshire is currently at a 5/13/10/7 of 7-8 month progression

Using the First Law  Corollary: A Wilshire 1982 34/85 of 85 quarter series is observed with a nonlinear drop expected in the October-November-December 2011 85th quarter of the 85 quarter second fractal

Using the Second Law Corollary, the final growth area for the March 2009 Wilshire was the 10th month of the third fractal: 5/13/10 months which occurred  in late April 2011 (2 May was the absolute peak.)

Second Law: The y base first decay fractal located in the area of the end April high was 25 days in length starting 18 April 2011 and ending 23 May 2011. The second decay fractal of 50-63 days :: 2y-2.5y the base of 25 days - was composed of two First Law fractal series: a 3/8/6/4 day series and a 6/13/12/10 day series taking the Wilshire to a 55 day low on 9 August 2011.ll

Second Law: The third  Wilshire decay fractal series starting on 9 August 2011 which completes the 25/55/48 of 55 day :: 2/2-2.5y/2-2.5y decay fractal series is itself a y/2-2.5y/2-2.5y decay series of 10+/23/12 of 23-28 days.

Currently the 9 Wilshire 2011 growth fractal is at 10+/23/22 days:: x/2-2.5x/2-2.5x days.  Growth will give way to decay will a final 10+/23/17 of  23-28 days.

For the DAX a similar  18 April 24/56 day first and second decay fractal :: y/2.5y is observable with a First Law 23 May 3/8/6/5 day 4 phase fractal  sequencing followed by Second Law 8/16/17 day :: y/2-2.5y/2-2.5y  decay fractal series and ending on 9 August 2011. The DAX fractal sequence has an initiating  3 day sequence  followed by a 7/17 day first and second fractal series following the First Law First Corollary with a gap between day 16 and 17 of the second 17 day fractal. The 7/17 day fractal pattern continues forming a new 10 day base::  7/17/10 days. The 10 day base is composed of a 2/5/5 day :: y/2.5y/2.5y decay fractal. The final pathway from this 10 day base is expected to follow the First Law First Corollary of x/2-2.5 or 10/16 of 20-25 days with nonlinear collapse of the equity system between day 20 and day 25 of the second fractal.

US bonds/Notes  have completed a 5/13 week first and second fractal series with a historical blow -off to 150 year low interest rates as the European currency  and bonds suffer the weight of debt default and money supply implosion.

Gold, silver, non US debt commodities will all undergo nonlinear collapse in valuation  within the Second Law of Saturation Macroeconomics 9 August 2011Wilshire terminal area:10+/23/22 of 23-84 days :: y/2-2.5y/2-2.5y timeframe and matching  larger 18 April 2011 25/55/53 of 55 days :: y/2-2.5y/2-2.5y timeframe.