Thanks. I'll use that chart as the base for more comment:
If you were to reconsider that chart as if it were the 12 month daily chart for a POS penny P&D operation... and you knew that from 1982 on it was running up that benefit showing as growth of the business, only as it was increasing the debt load faster and faster over time ?
And, if you were aware that in 1994/1995, unable to sustain that pace of growth in the debt they'd been enabled in taking on, they suddenly came up with some new "scheme" for enabling access to additional funds to fuel the trend more, so that it basically meant they were conducting a fraud ? Then, beginning in 2003, when that too quit working and became unsustainable, they began using derivatives based on the creation of fraudulent debts to fuel another leg up ?
By mid 2008 that wasn't enough to keep their Ponzi afloat... so, when the market caught on in 2009, they came up with a new scheme to apply government guarantees to those fraudulent obligations ?
Still, even with that bandaid applied to backstop the prior fraud rather than clean it up, there wasn't any ability to con-tinue.
So, with that as the context... should you see the stock drop back to the blue line, that it was able to follow as long as they added to the debt at that fixed rate... even though that prior access to credit doesn't exist any more ?
Or, should you see the point of departure in 1994 as the origin in the deviation that will require the market to apply a correction ? In the typical NORMAL market function, you'd expect to see the correction adjust to the downside by an amount equal to the expression of the excess on the upside... So, if the blue line defines that metric from which deviation is properly computed, we've already made that correction. But, if that isn't the proper metric (given the sustained flow in growth of credit that existed to create that blue line doesn't exist now) then, maybe, the proper correction to expect would be one defined by the excursion in the excess above the 4000 level attained in 1994... Adjusting for real growth in the economy as well as the portion of price that is reflecting nothing but fraud and excess, that would probably require correcting back to the 4000 level... which is roughly the base of the left shoulder in the head and shoulders pattern we see being created in that time frame.
Or, should you see the point of departure in 1982, that is what enabled establishing the blue line, as itself being the point of origin in the policy departure which is being corrected now, with the acceleration in debt taken on from that point on all basically being wholly unsustainable in fact... ??? Then, I guess the proper correction would be... more significant.
Which is correct ? I don't think you can answer without knowing what the exit to be engineered from the EXCESS DEBT problem will look like...
Most assume that the resolution will occur within the context of the markets operating as expected in an controlled inflationary environment... when it has been a turn into DEFLATION risks that have dominated the reality since roughly 2001... and it is those risks which are exposed by the dual collapse in 2002 and 2009.
Prior "exits" were engineered by trying to paper over the problem, while making it worse... the CRA based debt acceleration paired with deterioration in loan quality begun in 1994, the derivatives based acceleration into blatant fraud in 2003... and, the biggest fraud of all, the "full faith and credit" being applied in back stopping the bank frauds in 2009, which transfers the consequences of the frauds from the banks that created them to the taxpayers... but, note, that latest "exit" is an exit only for the banks... it doesn't come paired with any new method of re-enabling any new and larger acceleration in the flow of money... ??? The merry go round stopped... and the banks handed the bag to taxpayers to be the bag holders. They are also obstructing any other possible exit... the point of my prior post.
To get out of this mess... you need to fix the problem with the corruption dominating the banks. The only changes we've seen instead operate to further institutionalize the problems... and, given that "the banks" = "the Fed", there likely isn't any exit that exists, without eliminating the Fed...
That, as my prior post addressed, means that the ONLY exit there is left, is either for them to use the printing presses... or for them to dither until the deflationary depression gathers enough momentum that it cannot be stopped.
But, the mantra we hear is about "unusual uncertainty" ? What that means is... they won't crank up the printing presses until after it is too late... so, we'll likely get both an accelerated entry into a "double dip" that might not have a bottom... and an accelerated response to that event, which will be necessary to be able to counter it...
Of course, change might happen in the next election... and for now, I think that potential is the only thing keeping hope alive.
Correction IS possible, but, real correction will require fixing what is broken, eliminating the banks preferred position, and altering the structure of their incentives, while re-enabling real competition, all of which is very unlikely to happen... particularly with the change likely to result in the next election. The requirement is to re-enable a high level of real market competition... in every sphere... which has long since been co-opted to control by corporate conglomerates in the U.S.
That is why the "fuel" applied since 1994 hasn't had the expected impact in fostering real growth and new competition... rather than merely accelerating aggregation while enabling market fraud.
There is also large risk that externally imposed "events" might occur, either of themselves (say, a final collapse of the Euro) or they might be expected to be initiated, in an attempt by competitors to create "recognition events" (say, use of Iranian nuclear weapons, or Iran sinking a carrier in the Gulf). The risks include a very high probability of coordination among opponents... China, Venezuela, North Korea, Iran and Syria... likely with some new September 11 event, and a high level introduction of cyberwarfare.
The sort of weakness that has been imposed on the U.S. by the purposeful errors of the banks, still unchecked by Congress, the Courts or the Executive... is a fairly natural prelude to the coming of WWIII... and war is often used as the most useful tool available as a distraction from what otherwise might become a proper fixing of blame in responsibility for creating other problems.
Given the chart patterns you see... what sort of timing would you expect might occur for the evolution in recognition events ? It isn't a hard question... just apply the skills as you would with a POS penny stock whose P&D is coming apart at the same time convertibles are being converted, and other debts are coming due... Correct for natural transitions tied to and enabled by the 2010 and 2012 election schedules, which will drive necessary changes in market focus... and then, be ready...
JMHO
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