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Matching Monthly Copper and Nikkei Quantum Lammert Fractals: The Global Commodity and Equity Second Fractal Devolution Pathway

Matching Monthly Copper and Nikkei Quantum Lammert Fractals: The Global Commodity and Equity Second Fractal Devolution Pathway

19 December 2009
By comparing different valuation fractals and relative valuations of nations' composite equities, inferences can be made about the relative respective degree of artificial elevation of valuations created by the various central banks with the various central banks' nonmarket noneconomic creation of money. Greater radii of the created bubble's surface valuations well correlate to relatively greater creations of money.   Comparing the Nikkei vice US and Euro composite equities, there has been relatively more recent monetization over the last 9 months by the western central banks vice the Japanese central bank.

  As the financial industries are using the infinite credit from their sister central banks primarily to speculate and leverage their gains in non real estate loans, non personal loans, non corporate loans , i.e., to speculate in equity, commodity, and bond markets  and derivatives thereof, malinvestment non economic based distorted bubble valuations  have been created in these markets. The financial industries are preparing to profit from a collapse of this bubble as money will rotate rapidly into the debt market from the commodity and equity markets.

Had the private sector had to finance the 300-350 billion dollars of US treasury bills and short term debt, the investment money available for the equity markets would be 300-350 billion dollars less or an added  net outflow of 30 billion a month for the last nine months. In fact there was insufficient money in the private sector real economy to support more debt. Without the ex nihilo creation of money, retrenchment in the greater than 50 percent of the economy related to governmental direct and indirect funding would have been necessary causing political and social ramifications and a very severe reinforcing and telescoping deflationary contraction.

The effect of the Central Bank's Interventions in addition to temporarily sustaining the ultimately unsustainable predominantly government funded US economic-debt-entitlement system was to maintain as possible the contractual agreements between private citizens and small corporations with the banking/financial industry; i.e., keep their debt contacts intact - while negating, canceling, and monetizing the contracts and obligations and liabilities of the elite financial industries who are merged with and are part of  the central bank system.

The term 'central bank system' may be a linguistic concept whose time has come to better understand the relationship of the central banks and the financial industries.

The central bank is the financial industry; the financial industry is the central bank; collectively this central bank system with a very dependent political and entitlement system has superseded the real economy which has flourished since 1787 under  the rules of  the US Constitution. It is well correlative that the US grand 150 year second fractal nonlinear collapse is occurring at a time when the system can only be sustained by artificial ex nihilo massive money creation by  a superseding central bank system - superseding over both the private economic sector, over the congress, and over the basic tenets found in the 1787 constitution.

When will the true nonlinear phase of the collapse transpire?  For the answer from the science of Saturation Macroeconomics observe the monthly quantum fractal growth and decay patterns of Copper and the Nikkei - both representative of the ongoing credit bubble, massive overbuilding, massive over supply,  massive governmental and private debt.  

Copper is a very useful industrial and manufacturing metal. As a proxy, copper can be used to represent the massive building program in China.  However, just like the US 1920's with its massive manufacturing  of durables,  there is great oversupply. In the twenties credit was used to purchase items and the US available consumer market was saturated.  In China the assets are priced too high relative to consumer wages and a similar saturated available consumer market exists.  A good portion of  Chinese domestic housing is now  unoccupied and unoccupiable by the available consumer pool. There is a housing bubble.

For the Nikkei, a 40000 valuation, twenty years ago, represented the apogee of the Japanese speculative real estate market. The Japanese government embarked on a US 1930's plan of massive domestic projects spending plan with a near zero interest rate policy - all resulting in the highest national debt to GDP ratio of  all industrialized countries.

The Nikkei's long term fractal decay pattern 57/129/81 of ?129 months whose first decay fractal base of 57 months includes the 1989-1990 high {{10/26/23///36/94///26/56 of ?59/?40-59 months}} has been described in previous posts.  It is the Nikkei's 3rd decay fractal starting at its Nadir in 2003 that is of interest and exactly matches the monthly Fractal growth pattern of Copper, the proxy for Chinese growth, oversupply and consumer saturation.

Copper's monthly fractals denominated in dollars are deformed somewhat by the dollar's sharp 25 percent decline against other currencies in the 24 months of 2002 and 2003. In 2003 a 5/11/12 month fractal of 26 months matched the 26 month base of Nikkei's 2003 3rd decay fractal ( first decay fractal 57 months; second decay fractal 129 months; third decay fractal in evolution).  The Nikkei's 26 month fractal is composed of a 5/13/10 month fractal (X/2.5x/2x).

The Nikkei's second fractal is now at 56 months with a second fractal nonlinear end expected between 2x and 2.5x or between 52 and 65 months. Note that for the Nikkei's second fractal, x and 2x of the 26 month base. or the 26th and 52nd month represented the high and the secondary high for  the second fractal with the last 4 months 53,54,55, and 56 at lower valuations tan the 52 month high.

For Copper the second fractal to its 26 month base  is composed of two fractal series: the first a perfect Lammert growth and decay sequence of  7/16/14/10 months or x/2-2,5x/2x/1.5x/ and the second composed of a interpolated fractal with the initiating first fractal base of 11 weeks found in the 1.5x or 10 month fourth decay fractal of the preceding 7/16/14/10 month growth and decay series. This 11 week fractal is followed by a 27/22 second and third weekly fractal progression or 11/27/22/5 of 16-18 weeks or 11 to 13 weeks to a nonlinear low below - significantly below the preceding  low.

For the Nikkei a 20-22 1/2 declining week first fractal base ending in March 09 would ideally have a second fractal low at 2.5 x  or at 50 - 56 weeks or in 9 -15 weeks matching the copper's expected low in 11-13 weeks.  Likewise, a interpolated 11/26/22/3 of 16-17 week fractal can be observed for the Nikkei matching the 11/27/22/5 of 16-18 week progression for copper.

Massive second fractal nonlinear  devaluation for both the Nikkei and Copper and for world commodities and equities are expected  within the next  9-15 weeks.

For the central banking system including its financial industry, this devolution will represent a tremendous opportunity to amass yet more wealth.  Wall street is the Federal Reserve.