K -wave winter?

silverharp

The K wave was developed by a Russian Economist who was sent to Siberia for his troubles, it is basically a way of looking at the economy from a long term cyclical perspective 60/70 years divided into 4 seasons, the 70's would generally be seen as the "Summer" , the 90's as "Autumn" so now we are in the winter phase. An analyst I follow but this article together based on where he thinks we are in the "winter"
looking at the economic system using cyclical tools seems to have gone out of fashion, as the Fed etc as abolished the business cycle! Ha!


In David Knox Barker’s book The K- Wave, is a brief list of the events that have historically marked the Winter season:

* “Global Stock Markets Enter Extended Bear Markets”

Given the performance of the Chinese, US, and other stock averages around the world there should be little doubt about this one.

* “Trends During Winter: Stocks Down, Bonds Up, Commodities Down”

I would say that this is occurring.

* “Interest Rates Spike In Early Winter Then Decline Throughout”

In June 2004 the Discount rate was at 2.00%. By June 2006 it was at 6.25%, and since August 2007 the Fed has been forced to cut the Discount rate back to 2.25%. So, this too, seems to fit.

* “Economic Growth Slow or Negative During Much of Winter”

I doubt that many will argue that growth is now slow and in many cases negative.

* “Commercial and Residential Real Estate Prices Fall”

This obviously began back in 2006 and is still in a major slump.

* “Bankruptcies Accelerate and High Debt Eliminated by Bankruptcy”

This has obviously begun and is no doubt related to the housing and credit bubbles.

* “Social Upheaval and Society Becomes Negative”

We are only just beginning to see this.

* “Banking System Shaken and New One Introduced”

The banking system is now only beginning to be shaken. There should be much more to come.

* “Free Market System Blamed and Socialist Solutions Offered”

This has not yet happened, but just wait.

* “National Fascist Political Tendencies”

More to come.

* “Debt Level Very Low After Defaults and Bankruptcy”

This has not happened.

* “Trade Conflict Worsen”

This basically has not happened.

* “View of the Future at a Low Ebb”

This has not happened as everyone seems to be looking for the bottom.

* “New Work Ethics Develop Since Jobs are Scarce”

If I can assure you of one thing, it is that this has not happened.

* “Greed is Purged from the System”

I can absolutely assure you that this has not happened yet.

* “Real Estate Prices Find Bottom”

This has not happened.

* “There is a Clean Economic Slate to Build On”

Not happened yet.

* “Investors are Very Conservative and Risk Averse”

Again, this has absolutely not occurred.

* “Interest Rates and Prices Bottom”

Not happened.

* “A New Economy Begins to Emerge”

Has not happened

* “Stock Markets Reach Bottom and Begin New Bull Markets”

Again, we aren’t there yet.

As I look at the overall cyclical/technical picture, I believe that there is indeed evidence to support the idea that we have moved into K-wave winter. At the very least, these historical markers laid out by Mr. Barker should not be ignored. Until I see evidence to the contrary I also believe that it would be prudent to keep this list of events in mind as we watch the developments along the way. Then if, and only if, evidence to the contrary presents itself, at that time the assumption that we haven’t moved into K-Wave winter would be warranted.

Tim W. Wood