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24 September 2011: The Self-Organizing Self Assembly Bounded Global Macroeconomic System: The September 2011 Historical Global Equity Crash


When did the Global Equity Decay Fractal Series commence?

Decay begins near and integrates end growth ....

The Wilshire's incipient 34 day base decay fractal began on 30 April 2011, a trading day before the Wilshire's 11 October 2007's secondary high on 2 May  2011.

30 April 2011 represented the third fractal 4th day of a 2/5/4 day:: x/2.5x/2x growth fractal with a 2/5/5 day :: x/2.5x/2.5x  blow-off valuation on 2 May 2011 with minutely gaps to new highs and ending near the low of the day.   From 30 April 2011 a  34 day 5/13/11/8 day ::x/2.5x/2-2.5x/1.6x forms the decay base for the historical devolution of global equities.

 (For the DAX the sequence is 5/13/12/8 also x/2.5x/2-2.5x/1.6x but with an extra trading for a base of 35.)

The daily valuations of the equity commodity system are based on the available money-good debt supporting it.

Good debt  is debt that will be repaid through the self balancing self correcting economy's ongoing work demand and ongoing wages.

 Bad debt is that which is eventually defaulted on.

The macroeconomy grows through debt creation. The valuations of the macroeconomy's assets grow when denominated in increasing money-debt aggregates.

The classic business cycle where the asset inventory is overproduced and/or over consumed causes countervailing wanning job demand to continue production, wages required  to support previously acquired debt  are collectively reduced, and a percent of debt becomes bad and is defaulted on.

The financial industry's thirty-five years of financial engineering of making money from leveraged bets on future asset valuations, 400 % of annual GDP churning and  rapid trading of derivatives of assets, and leveraged schemes to create shell game pools of virtual  money to produce what is not needed by the economy and can not be reasonably maintained, et. al. et. al., et. al.,-  has taken over the real economy.
Politicians and their Financial Industry Secretary of Treasury's have joined in the madness taking a mindless  carte blanche laissez faire head in the rectum deregulation sans regulation approach. Ten to twenty trillion for the Wall Street London casino owners and austerity programs for the citizens to pay the bill.

While by the laws of Saturation Macroeconomics a great retrenchment would have occurred at this time period anyway, the bad rules and the absence of good rules by our leaders controlled by their Financial Industry and Wealthy Elite benefactors and campaign supporters have created an ultra leveraged money-debt system whose nonlinear implosion has great potential for global instability

While the science of saturation macroeconomics views US equity patterns back to 1789 with a nodal low in 1858 as the  US 70 year base first fractal with 2011 within the final 2x-2.5x nonlinear window of a 154 year second fractal composed of two subfractal series, the first ending in 1932 and the second beginning in 1932  -  a smaller focus on the time period from 1982 may elucidate the patterns more clearly. This time period which in the larger picture  forms the terminal portion of the 1858 second fractal  existed under the qualitative umbrella of the 1982 Volcker inflation controlling US interest rate set point. Since 1982 and for the last 29 years  interest rates on US debt instruments have been progressively trending lower.

The first fractal for the Wilshire from 1982 to 1990  incorporates 34 quarters (3 month time units). Notice that a terminal decay month in 1982 is integrated into the first quarterly growth fractal. (growth begins in decay  - and integrates that decay within the first larger time unit.)

The second fractal begins in 1990 and is composed of a 17/34/34 quarter x/2x/2x series with the 34 quarter of the third fractal containing April, May and June 2011 and the Wilshire's key reversal day 2 May 2011, the Wilshire's secondary high - secondary to its nominal high on 11 October 2007, a date prospectively predicted by the patterned science of saturation macroeconomics.

July August and Sept 2011 complete the 84 quarter of a 1982 ideal 34/85 quarter :: x/2.5x Lammert first and second fractal series and October November December 20011 will complete the 85th quarter of the second  fractal series.

So what is the empirical and predicted daily macroeconomic system quantum fractal pattern that will take the asset-money-debt deterministic macroeconomic system system to its 85th quarter second fractal secondary low sometime in the October, November December 2011 time frame.

The initial daily base decay sequence for the DAX and Wilshire were defined above and immediately below:

The Wilshire's incipient 34 day base decay fractal began on 30 April 2011 , a trading day before the 11 October 2007's secondary high on 2 May  2011. The 34 day base fractal ended on 16 June 2011

30 April 2011 represented the third fractal 4th day of a 2/5/4 day:: x/2.5x/2x growth fractal.  The next day a  2/5/5 day ::x/2.5x/2.5x  blow-off valuation was completed with minutely gaps to new highs and ending near the low of the day. This occurred  on 2 May 2011.  From 30 April 2011 a  34 day 5/13/11/8 day ::x/2.5x/2-2.5x/1.6x forms the decay base for the historical devolution of global equities.

  For the DAX the sequence is 5/13/12/8 days, also a deteriorating x/2.5x/2-2.5x/1.6x four phase Lammert fractal series but with an extra trading for a decay base of 35.)

The second decay fractal is composed of two sub fractal series,
the first  subfractal series for the Wilshire and DAX are:

 From 16 June 2011 to 9 August 2011 Wilshire a 38 day first  subfractal  series of
  : x/2-2.5x/2x/1.6x :: 6/13/12/10 days = 38 days

and for those same dates for the  DAX a 39 day first sub fractal series
of : y/2y-2.5y/2-2.5y :: 8/16/17 days = 39 days

The second subfractal series for the Wilshire and DAX are composed of a
11/24 of 27-28 day series for the Wilshire and
a(3)7/17/10 of 13-14 day series for the DAX

Note that Wedesday 21 September 2011 represent the 2x day for DAX: day 70 with a 35 day base and day 68 for the Wilshire with a 34 day base.
Thursday 22 September. Note the characteristic nonlinear lower gap between 21 and 22 September 2011 which heralds the terminal 2-2.5x portion of the second fractals of the DAX 30 April 2011 35/70 days and the Wilshire 34/68 days.

A historical crash is expected during the next 3 trading days.

The final third fractal decay series taking global equities to the 2011 85th quarter low will likely be 1.6y of the base fractal completing a y/2y+/1.6y patten 34-35/73-75/54-55 days with an ultimate low in mid to late December 2011.

For the Wilshire a mathematical possibility is a 8/20/16/13 day deteriorating x/2.5x/2x/1.6x. This would interpolate with the 9 August 2011 11/27-28 day series.

Time will tell.

 But the system's asset valuation time course patterns are too exact, too quantum of a form to occur by chance.  Qualitatively it is known that massive debt which has been heretofore viewed as an asset with co lateral worth and borrowing power, will under default and cease to exist. The value of system's remaining housing, equity, and commodity(including gold and silver as has been stated many times before) assets
will be denominated in a much money-good debt quantity.

Before January 2011 the DAX will be trading below 2000.

These observable patterns serve as a validation of saturation macroeconomics as a true science.