With U = 7.6, same as last month, the topping process in animal spirits seems to be underway. The adaptation level of U is 8.5, down 0.1 from last month. I am assuming that U will stabilize for a few months and then shoot up as self-organized criticality in the labor market kicks in. The interesting thing about this cycle, like the one in the early Seventies, is that consumer sentiment as measured by the Michigan index seems to be looking through the next slump to the next expansion already.
The political economy of the situation, in my read, is as follows: Obomba would be better off to take his recession now so that the economy is coming back in 2016 for Hillary or whoever. But the Congressional elections next year could swing radically Republican if the economy is in recession (as I expect it to be). If Ben continues to taper, he may help the Democrat in 2016, but it may hardly matter, as the Congress will have gone to the Republicans and the people may be convinced that the Democratic (and democratic) agenda has failed, and they will opt for a “strong leader.”
The one thing Republican administrations are really good at is shutting the economy down (reference). But would be consistent with their ultimate agenda of bringing feudalism back to the Western world, IMHO.
And since Ben is a servant of Wall Street, which today favors the Republicans, he will continue with the taper, executing a “wash and rinse” cycle on the stock and bond markets similar to that of the early Seventies. The inflation gets going in a few years, along with a perhaps MMT-validated increase in deficit spending (see Warren Mosler’s profile in the NYT here), which is all of course consistent with my and others’ hypothesis of a credit super nova yet to come, as the sovereigns, slaves to the banks (at least in the West), compete in a race to debase. We have Sornette’s forecast of the date for the phase transition in to what can only be a world-wide deflation as about 2020. And all this is consistent with the very prescient prophecies of Strauss and Howe in the The Fourth Turning.
P.S. I am still unemployed, so anyone knowing of opportunities for a non-derivatives oriented finance geek, please let me know.