dow unquestionably unstable and dangerous, page-56

I put this chart on the XJO thread the other day but i thought it may provide some clarity to the underlying conditions in the US.

As i said earlier market tend to move up for 17 years and then sideways for 17. it's been that way since pharaoh dreamed of 7 fat cows and 7 skinny cows. the US had 17 up years from 82 to 99.....they were due to move into a consolidation phase. i guess this is where the short tenure of leaders in a democracy is at odds with the long term moves of economies........Alan Greenspan and George Bush should be held accountable at this point.......interest rates were reduced in the US in the early 2000's to keep the party going. Cheap credit caused a bubble in assest...property and shares....The US consumer used his falsely inflated home as an ATM machine.

Note on the chart how up to about 1999 housing equity was not a substantial contributor to GDP.....however after 1999, when the economy should have been consolidating, it was kept going with subprime....Home equity represented the bulk of GDP....we now face an extended period where home equity will not be helping the GDP

the US has 2 issues now to deal with

1. they must now face the lengthy consolidation that they tried to tip toe around...there are no more home ATM machines, no cheap credit.....there is nowhere left for the consumer to get the necessary fund to keep spending

2. they must now fix and face problems subprime has caused. For example there are millions of vacant homes in the US that will take years to be cleared. IE the housing industry will now contibute less (or nothing) than it otherwise would have in this already low growth period.

Kacy's chart is lovely and all but it stops in 2007. we already know the market peaked then as the last of the subprime money was used up. But what will 2008 and 2009 look like ?? Banks with large chunks of cash disappearing into thin air, no consumer spending, no new homes being built.

really there is no point being in denial...it's not a pretty outlook