THE BIG PICTURE THAT HAS BEEN SET IN MOTION BY 100s OF YEARS OF BELIEFS

As long time subscribers since 1996 have read over the years I discovered an astro related long term cycle in the mid 1980s long before I began this site. In fact the MAJOR reason I started to post AstroEcon in the first place was to publish the thesis below with a 1996 time stamp on it. LOLOL I had no idea in January 1996 posting my findings on this subject would eventually become a newsletter and more. The brief outline below is a refresher.  

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The long term cycles of greatest impact on the economy and ON HISTORY ITSELF are guided by the various relationships between Saturn Uranus and Pluto. There are specific astrological reasons these three planets are the drivers of social and economic cycles. Uranus and Pluto have to do with drastic changes of a chaotic nature and Saturn with "consequences" of past behavior.   We can easily see the effect on market charts from the STANDARD ASPECTS (the ANGLES) such as squares, oppositions, and conjunctions between Saturn,  Uranus, and Pluto. What is not so easy to see are the longest cyclic relationships between all three planets as a group which are the more subtle midpoint cycles between them.  The longest duration threesome relationship is roughly 67-68- years in duration and is defined as...  
Uranus location at exactly the midpoint of Saturn and Pluto. ( U = S/P )
I DO NOT think it is coincidental this length of time is also roughly the average productive time span of a human life.  The exact hits in the past few hundred years that we have detailed historical data to study data on fall around 1776, 1852, 1930, 1997.  The planets orbits are ELLIPTICAL so there cannot be a CLEAN perfect sign wave periodicity to the cycle. Retrograde motions further distort the exact timing of this midpoint relationship which drags out some periods of maximum influence out for 3-4 years at a tipping point. Experience working with this long cycle and the sub waves within created by the ASPECTS indicate at least 10 years on either side of the exact tipping point are significant for finding the long term changes manifesting. In other words the cycle is so long in duration it is VERY hard to maintain enough perspective to notice massive creeping changes except in a single human lifetime. 

The Saturn = Uranus / Pluto midpoint cycle tends to produce equity mania highs near the time when it is at a tipping point and deflationary collapse in the decade after that speculative top. Everyone knows history repeats itself but in truth the cycles only rhyme with each other. In hind sight we always know how foolish the mania was...  but the majority never seem to grasp it before it does the damage. A theme ALWAYS seems to be "this time is different".  As you will see in the next paragraph there is a reason why this time is different comes up because the context of the 68 year cycle DOES shift geographically in a larger approximately 200 year cycle. 

A second variable to a time cycle is necessary to proceed from it being useless theoretical information to move to actual practical use.  With TIME we also have to know PLACE to use it. Specifically an understanding that there is a three way ROTATION to the geographic manifestation of the specific effects of this major cycle. 
THIS GEOGRAPHIC ROTATIONAL ELEMENT IS THE MOST IMPORTANT DISCOVERY I HAVE EVER MADE. Without PLACE as part of the equation there is almost no chance of using this information in practical terms. 

The three way cycle rotation is divided GEOGRAPHICALLY in this way. 
Asia, Europe, and the western hemisphere. 
The rotational shifts of dominant power and economic out performance rotate from east to west between the three geopolitical areas as.. 
DOMINANCE, EMERGENCE TO DOMINANCE, AND STAGNATION. 

Knowing where each region is located in a TIME, AND LOCATION context of the 200 year cycle is the key to understanding it well enough to profit from it.  

Playing this cycle is ONLY for the PATIENT. And by that I mean LONG TERM MULTI GENERATION WEALTH CREATION. 

CURRENTLY

We now have a general basis for looking at what the implication of the most recent 1996-1997 cycle tipping points might mean to us today. We are currently 10 years past that inflection point which means (due to the length of the cycle) we are only about now able to confirm what was just speculation back in 1996... We can finally see the major changes are IN PROGRESS.   AFTER 2050 the world as we knew it in1996 will be turned upside down in a way unimaginable in 1996 ... Asia will be dominant, Europe will be emerging to dominance and the USA will be stagnant and irrelevant. 

The red highlighted area below was originally posted in the 2003 year ahead update and is only slightly edited for this update.

***** The USA is in the transition from world domination to inevitable stagnation
The USA is in a similar position to Great Britain in the post 1929 tipping point period. 
Great Britain did not have a depression in the 1930's and so far the USA has not had the condition yet after the 1990s crisis point. The dominant empire crumbling is in motion now and a stunning attack on the most important city of the nation has taken place. Specialty the bombing of London early in WWII and 9/11 are the same signal. Vulnerability  .. once unthinkable.. this is a key element here. 
The USA being just past a dominant peak still has the ability to lay off the consequences of economic mistakes on others even if it is becoming vulnerable. This delay tactic of accepting a less dominant role works in the early crumbling empire context but only maintains dominance for so long.  The damming up of consequence by the delay to face irrelevance eventually plays out as a debased currency.  There is a culmination point to be reached in this and we are still far from the worst of it here in the USA. Way down the road a future version of Soros will bankrupt the Fed as this phase manifests near the bottom of the stagnation period. 

NOTES for 2006. The Iraq war is draining the vitality out of the economy at an alarming rate. This war was all about maintaining empire status and not helping the Iraqi's. The eventual withdrawal from Iraq will be a signal that the next and more accelerated phase of decline is underway.  One very severe consequence appears to involve reparations for the use of depleted uranium. 

***** The EU is in the transition now from a stagnation period to the emergence to dominance phase
The EU is about where USA was in the big cycle rotation around the US Civil War. The formation of the EU is exactly the kind of forcing together of disassociated parts with very different economic agendas that led to the USA civil war. A war does not have to be the resolution for the EU in this current cycle phase but it MIGHT be. What is CERTAIN however is the EU needs an ABE LINCOLN who will galvanize the union one way or another. My read for now is the EU takes the shape of a "more perfect union" in a long term sense some time after a HUGE crisis around 2010. In the emergence to dominance phase a severe economic setback is due at about 1/3rd of the cycle time period. In this case 2010 is about right but could be as late as 2020. This is a cycle point where a long term investor should be switching some assets out of Asia into Europe during this crisis phase because a MASSIVE SEVERAL DECADE LONG  EQUITY MANIA IS IN GERMINATION. 

Notes on 2006. The EU is still in a phase where immigration is a problem and this is not dissimilar to the integration of slaves in the USA body politic in the 1860s. It is assumed that this may be at the root of the expected crisis in 2010 - 2020 not a civil war but a potential unconventional war on racial and ethnic factors. 

***** Asia is in the transition from emergence to dominance into actual domination. 
Although Japan was very early in rolling over to a deflation crisis the rest of Asia was precisely "on time" with the "Asian contagion" crisis in the 1996 - 1997 period. 
Asia is in the position similar to the USA after the deflationary collapse in the 1930s. Japan is in the lead with a 13 year bear market already under it's belt. I do not look at Japan as the eventual leader in Asia but sort of a grandfather of what is to come. 

There are nuances when it comes to specifics within each geopolitical sector. Within ASIA Japan is far ahead of most nations in time so AS OF NOW it is almost certainly well past the equivalent equity market bottom phase where the USA found itself at the1942 equity low. Japan is the prime place to be looking at FIRST. Japan equity should not get much cheaper in absolute value in USD than NOW. Lets face it the dominant companies of Japan produce the best products, and the only reason these stocks were down in 2002 is they have had VERY POORLY RUN BANKS standing in the way. They also have not established a MILITARY power as yet. Recent developments in N Korea will eventually bring a militarization to accompany Japans economic power. This will also serve to be regenerative reflation which Japan needs to get started on. 

NOTE on 2006. The Japan holder EWJ did bottom in 2003 at 7 dollars and is trading at 14 or so as of this writing. I believe a long term investor should consider investing some of the equity withdrawn from the USA in EWJ on dips into the 10-12 area I expect to see in 2007. . The next phase for this index is to out perform the USA by a wide margin in the decades to come. 

As the long term cycle works itself through the rest of Asian equity markets currently lagging Japan's time rotation by about 6-8 years they will come off RELATIVE VALUE LOWS. My assumption is that China and India in some sort of collaboration will be the eventual winners when the pinnacle of the domination phase in post 2050 occurs. I believe shifting out of leading edge Japan into China and India will be necessary some time soon probably related to a MILITARY crisis. Once the issues of Taiwan and N. Korea have been settled I expect the dominance phase will be accelerating. 

PLAYING THE ROTATION

For starters a basic assumption must be the US equity market will severely under perform Asia long term. The exception is during 2003 - 2007 when the USA has a strong bear market retrace rally in a final attempt to maintain it's dominance and empire. I see this refusal to step down from empire status as eventually not just being a failure but a big reason for the decades of stagnation ahead in the US. In other words the struggle itself is an accelerant.

Until the ongoing unification crisis is solved for the EU the USA will remain about par with the EU or even out perform at times. The EU will only be a stellar performer very late in the long cycle which will culminate in an equity mania in EU stocks starting roughly around 2020.  The exponential run ups seen in the USA in the 20s and Japan in the 1980s will repeat over a decade or two in the 2040s and 2050s. . Think in terms of a switch from Asia to EU equity in the post 2020 period as getting in on the best bull cycle of the 21st century. ONLY DURING THE SECOND HALF OF THE CYCLE WILL THE EU OUTPERFORM ASIA. 

LONG term deflation fears for the USA are unfounded for one reason. The eventual outcome will be some sort of hyperinflation. The short term another matter on a deflationary condition. (like JAPAN) and this is especially true from now into 2008 -2011.. Deflation does not originate in the USA it is being IMPORTED from Asia to Wal-Mart. Because the US is still dominant (but will be weakening soon) it can still seemingly control the importation of Asian deflation to suit it's needs. So far the account deficits and massive imbalance in currency reserves of over 1 trillion owed to China seem benign.  The eventual end of the Asian deflation importation to the USA will be a purposeful political decision made by politicians in Asia to revalue currency.  I suspect this may be an outcome of the USA to own up to the debts. Ultimately the only recourse during a fully mature stagnation phase is a debasing the currency where the overwhelming debt load accumulating during stagnation is called in.  In other words the USA will continue to give Asians paper money assets and not real assets until Asians wont take it any more. No one from Asia will want to trade something REAL for a piece of paper at some point. The only solution at some point will be for the USA to go back on a gold standard but this will have to be after a default. The longer it takes to get to that default the higher the FIXED price of gold will be. If we see it early such as in 2012? maybe 1500 to 2000 an ounce. If Gold becomes money again late? Geez maybe 3,500 an ounce is not unrealistic. 

The view on the long term U=S/P as of 2006