patrick.net

Come now Peter. I’m all for doom and gloom, but let’s not bet too hard against american innovation. Look what we’ve done with mortgages, in only a few short years!

I guess a little innovation and creativity is harmless. :)

Blue states, red states…..It’s made-for-TV-soundbite-divide-and-conquer- short-attention-span crap. If CA fails, lots of red states will hurt. If TX fails, lots of blue states get hurt.

Very true.

Peter P says:
The housing market of Hong Kong and Japan went down more than 50% but there were no soup lines. (Both cultures drink soups)

The economy can most definitely take a 80%+ drawdown in the housing market without taking much permanent harm.

Exactly. I would argue that a housing market drop would actually be beneficial for the economy, since all of a sudden new home owners would not have to refrain from buying vacation travel, furniture or decent food anymore to make the mortgage and property tax payments.
The sooner, the better.
That is, if the drop does not coincide with nasty events like bank crashes or currency crisis.

TWIT: It's fun to disagree with you. I will light a candle by my shrine to General Lee for you. ;)

(Actually, I do a have a portrait of him in my living room. My Mother inlaw in VA has some possessions that make a truly impressive shrine. The Smithsonian would be hard pressed to do better)

"Rather Eurocentric, wouldn’t you say?"

No. The Kondratieff cycle is an emergent pattern. It would emerge given the same laws of economics in any century, on any continent, or any planet, regardless of culture. Kondratieff was writing about the global system. However, complex systems tend to organize themselves as fractal patterns. Once Karl Marx applied Charles Darwin to sociology, the stage was set for Kondratieff to view economies as emergent complex systems, regardless of culture, time or place.

I am quite certain that large national economies can run an internal cycle at the same time that they are a single particpant in the global cycle. It is the internal US cycle that I am modelling.

RE: China, it is certainy large enough to run an internal cycle, but I need to look more into how central planning effects/distorts the cycle. On the global level, they are definitely a rising challenger from a balance of power perspective. Their ability to drive commodity prices proves that they are part of the gloabl Kondratieff cycle. However, I must confess, I have been looking at North America more, because it interests me to a larger extent. I'll move one level up in the pattern at a future date.

Much more to follow when I get around to posting my master work. I'm going to argue that the conservatives will use the same strategy to bring down their internal enemies (blue states) that they used to bring down the Soviet Union. Centrally planned and managed economies (welfare states of any kind) inherently create what is known as a "stable disequilibrium." These sysems slide in protracted decay and can be caused to spontaneously collapsed if stressed. That's why the Soviet Union broke apart. That's what the quote above about Massachusetts suggests--stable disequilibrium.

When I was in school, I had several profs that had served in presidential cabinets. They are definitely sophisticated enough to look at domestic politics in such terms. In fact, some of them were around to refine cold war strategy over the years. A few of them even knew Goerge Kennan personnally.

Would they harm blue state economies to increase their own power, even if it temporarily harmed their own? Yes, I think so. That's where nationalism comes in, and nationalism is a reason that the Lee discussion is far more relevant than it appears. Do I sound crazy for bringing up things that happened 140 years ago? I hope not; It's the scale that my analysis fits. Wait until I bring up the Cavalier/Puritan rivalry. There are plenty of people in the horsey set in VA that are still bitching about getting justice for their murdered king................

--Deo Vindice

Well, the trade deficit situation is also a stable disequilibrium. Will the bursting of the housing bubble cause the whole system to collapse? It does seem plausible.

Housing bubble is also a stable disequilibrium, isn't it? ;) Interesting.