The Great Convergence

As the current economic and financial crisis continues to unfold, one can no longer ignore the mysterious yet shockingly accurate economic confidence and cycle models developed by Martin Armstrong. For those of you who have not heard of him, Armstrong is the former chairman of the Printion Economics Institute Ltd who was imprisoned because of securities fraud and contempt of the court.



For my KhronoStock PRO subscribers, I provided a somewhat detailed analysis of Armstrong’s 8.6 Years Economic Confidence Model and how cycles are computed. In addition, I mapped out the situation with the US stock market in the near future based on his cycles.

For here within StockTock, I would like to point out the truly historical moment that we are living in right now, a moment when the 8.6 year economic confidence peak arrived during late February of 2007 and the 37.33 year financial crisis reached in 2008 “converged”. I calculated these cylces back historically and such convergence is rare. The last close one was the 8.6 year economic confience peak in 1929 and the financial crisis towards the late 1933. However, we all know that the stock market actually bottomed during the summer of 1932. Thus, the current economic and financial situation that we are facing right now is a different animal. The figure below is from Armstrong’s 77-page book “It’s Just Time” that he wrote while in prison.

As we can see, we are currently in the midst of this steep economic decline that won’t bottom until sometimes in June of 2011.

The views from many economists today have been consistently wrong because their view of historical data is limited to no more than 40 years. Without understanding cycles and making statement such as “the current recession is over due to the initial jobless claims data (the earliest data goes back to 1964)” or “consumer sentiment hit rock bottom because the last time it reached 50s was in the 1980s” are just igorant and will continue to be unreliable.

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