Are we headed into a Kondratieff Winter?

DNADave

I did a search but didn't find anything here about it....maybe worth reading up on.

secondrepublic

Interesting question... some would say we're already in the K-winter. This quote is from 2008:

"A Kondratieff Winter is the correction of a credit expansion. During an inflationary credit expansion capital moves up the pyramid. During the deflationary credit contraction, or Kondratieff Winter, capital burrows down the pyramid to safety. This is why stock markets have been crashing as investors flee into T-Bills."

Stocks markets are back up from '08 lows, but T-Bills are the real winner, and the process of de-leveraging continues.

derryb

I think it's rather "chilly." Good thing I've got a nice stack of "firewood." Hardwood and softwood.

RedTiger

Of course we are, the question is the timing.

This guy who bought the domain name below was writing about it in what looks to me like 2003. Would folks say he was right? Or wrong? Or early? It is nine years if my estimate on the timeline is correct, and while times are bad, this doesn't qualify as a 100-year-flood kind of depression yet, except maybe in a very few countries such as Iceland.

http://kondratieffwinter.com/blog/k-wave/kondratieff-summary/
link

As I have said many times Chicken Little is always with us. There is always someone saying the sky is falling, or about to fall tomorrow. I'll leave it to the readers to say if the 2003 Chicken got it right or wrong. One good thing (and bad thing) about the Internet is stuff gets archived, and lousy predictions, and flip-flops can be highlighted. I've had my fair share of clunker calls, and flip-flops, so I probably should not be throwing too many stones.

Mesquite

Not knowing what a Kondratieff Winter was, I had nothing to contribute. But, I ran across This today and thought I recognized the name. A quote from the article "the Kondratiev wave describes the ebb and flow of economic growth and contraction, and lends itself to a four-part seasonal rhythm as well… labeled appropriately spring, summer, fall, and winter. To cut right to the chase, subscribers of this theory believe that we have moved into the winter season. A Kondratiev winter brings greatly reduced economic activity as the market corrects for any prior misallocation of capital (which the world has seen plenty of in the last 50 years)."

There is more. I note that the spelling of the name differs (slightly) from the spelling you provided. Perhaps the new spelling will yield more results in a search?

cladking

<< <i>
As I have said many times Chicken Little is always with us. There is always someone saying the sky is falling, or about to fall tomorrow. I'll leave it to the readers to say if the 2003 Chicken got it right or wrong. One good thing (and bad thing) about the Internet is stuff gets archived, and lousy predictions, and flip-flops can be highlighted. I've had my fair share of clunker calls, and flip-flops, so I probably should not be throwing too many stones. >>



I'm often wrong on short term predictions but can be eerily close on long term ones.

I think we're within a year of turning the corner here but it would be bad in the long term to recover
without making a lot of changes to the way things are done in the financial markets.

Mesquite

More on the Kondratief winter here.

Interesting article.

"The K Wave is the great cycle of human action in the global economy, both free market and government sponsored coercive human action. The final decline of the K Wave is unfolding globally as the final business cycle of this long wave tops out and turns down. Investors should prepare for a final round of global financial systemic shock that will shake global markets to their foundations.

The ancient Jubilee debt cycle, with a fixed date of debt cancellation in the future, was to prevent the excessive build up of debt in the system. International free market capitalism is the greatest system ever devised by man, but it does not have a Jubilee debt forgiveness target date in the future to prevent the buildup of excessive debt. Instead, international free market capitalism has a global K Wave depression, which purges economically unsustainable debt and cleans the excesses and overproduction from the international system. The creative destruction of a long wave winter always lays the groundwork that triggers a new K wave spring season, a new beginning for the global economy."

jmski52

it would be bad in the long term to recover without making a lot of changes to the way things are done in the financial markets

Yes. And I can't remember the last time that a financial reform bill did anything good. This last one was nothing to brag about. I don't think many people really know what was in it. I don't, other than shifting some fees around. As I recall, it put more restictions on capital movements and cash transactions.

It did nothing to restrict the central bankers from securitizing mortgage loans and leveraging them up - that crap is still happening, and the bad loans all got transferred to Freddie and Fannie, i.e., the Treasury, i.e. you and me. I don't know about you, but I really don't appreciate it.

What does that have to do with the Kondratieff Cycle? In my limited experience, it looks like the cumulative effect of Fed policy and the Treasury's ballooning debt has been simply to delay the deleveraging. The leveraging continues at the rate of $1.4 to $1.6 Trillion a year, and most of it is now being done in the public sector instead of the private mortgage sector.

There's no deleveraging going on, except in selected markets that have already been exploited beyond their normal capacity to function. As some have mentioned in this forum already, the next pool of capital to be targeted for harvesting by the banking cartel appears to be the baby boom's retirement funds.

I don't think that the real Kondratieff Cycle will kick in until reality kicks in and the markets are allowed to equilibrate on their own, without massive government and banking intervention. We're still in the "hope" phase. If there were ever a time to be cautious about personal debt and spending, this is it.

Justacommeman

It is generally twenty degrees colder on this Forum then anywhere else. PM wind chill factor.

MJ