On Fri, Apr 18, 2008, Edmund Storms wrote:

I'm confused. Perhaps someone on this list has the
answer. Everyone who has discussed the issues here seems
to agree to the following:

1. Increase in energy cost will drive up food and other
commodity prices, which will reduce consumer spending.

2. Increased cost of personal transportation will reduce
consumer spending.

3. The collapse of the housing market will reduce consumer

4. The fed generated inflation will reduce consumer

5. Loss of jobs will reduce consumer spending.

Consumer spending determines the profit of companies. So,
why then is the stock market going up?

Hi Ed,

One approach to this question is to view stock market
performance as extrinsic, a symptom of something else.
Stalin ordered the economist Kontratieff (Kondratiev) to
prove that capitalism had a one-way ticket to destruction.
Instead, Kondratieff proved with data that capitalism has
ups and downs.  For this, Stalin sent him to Siberia.

Alan Greenspan, who, in "Age of Turbulence", says we are in
Iraq for the oil [and not to produce it] reveals himself
as  a fan of Joseph Schumpeter, which makes Greenspan a
believer in Kondratieff -- which goes far in explaining
the actions of the Federal Reserve during the current
Kondratieff trough war.

Greenspan's winking at the sub-prime loan business shows
his confidence that nothing can derail the upswing,
displaying the genius of the Bush administration in
being able to have an apparent recession and a war at the
same time.  (Who just profitted from the recent run on
Bear Stearns?)

The Kondratieff Wave averages about 55 years.  Of course
shorter and longer cycles are superimposed on it.  The
problem with Schumpeter's attribution of the Kondratieff
Wave to an innovation cycle is the same problem associated
with the positive correlation between ice cream sales and
the number of drownings: correlation is not causation.
This is made clear by the correlation of the K-wave with
a war cycle:

1794, Ohio, The Battle of Fallen Timbers

1846, Oregon, "Fifty-Four Forty or Fight" ---- Mexico,
"Remember the Alamo"

1898, Havana Harbor, "Remember The Maine"

1950, Korea, "Better Dead than Red" (1953 -- The
U. S. overthrows the government of Mohammad Mossadeq
in Iran.)

2001, New York City, Twin Towers, "Bring our enemies to
justice, or bring justice to our enemies" (2003 -- The
U. S. overthrows the government of Saddam Hussein in Iraq.)

The above are all K-wave trough wars, hearalding the start
of an economic upswing.

Then there is always the downside, the bitter wars:

1812, Beginning of the end of the Napoleonic Wars

1861, End of slavery in the United States, "A house divided
against itself cannot stand."

1914 (to 1945), This war lasted 31 years, similar to the
Thirty Years War (1618 - 1648) in savagery and fanaticism
(from trench warfare slaughter to the death camps) -- End
of the state system formalized by the Congress of Vienna
in 1815

1964, Vietnam, End of the struggle in south-east Asia for
the remains of the Japanese, French, and British empires

2018 - 2023, Start of the next war of bitterness.  Can we
avoid this appointment in Samarra?  At their last meeting
did Putin tell Bush that he would use force to defend Iran,
or did they just have a good laugh?  Were the Russians
able to turn bin Laden on us without much objection from
the White House?  Or was this a especially savage move in
the Great Game?  In any case, the Kazakh War of 2020 will
be no joke for the American people.

So I can't answer your question.  This is sort of the
lemming theory of history.  I'm sure if lemmings could
talk, they would have very good reasons for marching into
the ocean.

Jack Smith

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