Oct 20 2008
The current economic crisis that caused so much pain and anxiety as it intensified to a credit meltdown about a month ago, supports Maslow Window forecasts in this weblog and elsewhere. Specifically, the long wave timing and character of the crisis is supportive of the Long Wave/Maslow Window (LW/MW) forecast model first published in Cordell (1996), and more recently in Cordell (2006), and expanded in this weblog. The LW/MW model is summarized HERE.
“We are now in the midst of a major financial panic,” according to author John Steele Gordon in the Wall Street Journal (10/10/08). But there have been several over the last 200 years; Gordon counts 9, including this one.
21stCenturyWaves.com has highlighted a class of panics that follow Maslow Windows; they appear 16 to 18 years after their 56 year energy cycle peaks (peaks are in 1801, 1857, 1913, 1969, 2025). This includes the Panic of 1873, the Great Depression beginning in 1929, and the Crash of 1987 (Black Monday). Gordon asserts that the “ordinary recession” of 1929 degenerated into the disaster known as the Great Depression because the Federal Reserve was ineffective; he believes that it’s reorganization in 1934 kept the Crash of 1987 from having any “lasting effect on the economy.”
Gordon’s mention of the 1819 panic completes the pattern:
Each Maslow Window of the last 200 years is followed by a panic 16-18 years after its energy cycle peak. This supports the LW/MW model by demonstrating that major economic events — in this case, post-Maslow Window panics — of the last 200 years are closely associated in time with long-term fluctuations in the economy.
21stCenturyWaves.com has also characterized a class of panics that predate Maslow Windows by about a decade. For example, the Panic of 1837 preceeded the opening of the mid-19th Century Livingstone Maslow Window (of “Dr. Livingstone, I presume?” fame) by 10 years and was a time of very high unemployment when 40% of the country’s banks failed. Ironically, about a month ago I was in the process of writing a new post on the Panic of 1893 and its similarities to today — and trying to develop the courage to forecast a similar crisis today (!) — when the credit meltdown occurred. The Panic of 1893 caused estimated unemployment over 10% for 5+ years. It lasted 18 months but was followed by another recession that lasted until 1897. The combination of GDP declines of several % coupled with population growth meant that GDP per capita didn’t recover to 1892 levels until 1899.
Although the Panic of 1893 began about 10 years before the opening of the 1903 Adm. Peary Maslow Window, the 1903-1913 decade featured exceptional ebullience, including the daring, world-famous races to both N. and S. poles, and construction of the greatest MEP of the last 200 years (until Apollo): the Panama Canal.
One loose end is the Panic of 1949; according to the pattern, the mid-20th Century Apollo Maslow Window began in 1959 and 10 years earlier we should expect a panic. Of course, happily it didn’t occur. Gordon attributes this to the Fed reorganization of 1934 and the post-W.W. II boom. An important lesson is that long-wave timeframes suggest when certain types of events are likely to occur, not when they must occur. Through knowledge of these long-term patterns, we are capable of avoiding disasters.
But what of the future? Gordon links our current crisis to the birth of huge interstate banks in the 1990s, and “Congress’ attempt to force banks to make home loans to people who had limited creditworthiness…” This “created another crisis in the banking system that is now playing out.” Today the New York Times (page 1) profiles Henry Cisneros, who was President Clinton’s top housing official in the mid-1990s, and one of the inadvertant early architects of the current panic.
The Panic of 2008 began about 7 years before the opening of the next scheduled Maslow Window (near 2015). Although 2008 is roughly the expected timeframe for a panic, long-term trends over the last 200 years suggest it arrived a little late, and could have started in 2005 (about one decade before 2015). Or, this may signal the 2015 Maslow Window itself may open a little late.
It’s likely the Panic of 2008 — and the upcoming 2015 Maslow Window — will have more in common with the pre-Maslow Window panics of 1837 and 1893, than it will with the Great Depression of 1929 — a post-Maslow Window panic. Especially if our political leaders can bring themselves to enact a unified, well-capitalized, appropriately regulated banking system.
Consider the technological wonders of the mid-19th Century Maslow Window — Suez Canal, Great Eastern ship, etc. — and those of the early 20th Century Window — Panama Canal, the Titanic, etc. — and their riveting equatorial Africa and polar region Great Explorations, respectively. How scintillatingly unparalleled for their day, despite their pre-Window panics.
More on what the current panic suggests about our future in an upcoming post.