Today’s gag-me MSM tidbit

Richard Thaler in the NYT business section with the stated-as-gospel-truth chestnut that “high tax rates distort incentives” (read: I’m a capital fund manager now so I represent the wealthy, and I stand with N. Gregory Mankiw, that Big Establishment Mouthpiece, in defending the wealthy) that completely misses the Big Picture that America is falling apart, turning into a feudal society with attendant loss of productivity and distortions of aggregate demand.  Just for fun I got the top marginal tax rates from the Tax Foundation for married filing joint (here) and plotted them against real GDP growth, smoothed and with postwar trend:

So if correlation were causation, we’d want to raise top marginal tax rates!  But of course the hidden variable causing both is a (disintegrating) social contract.

That these mainstream guys can stare at the Big Picture—gigantic debt-to-GDP ratio, extreme concentration of wealth and income, banana republic national economic management—the biggest transfer of wealth from the middle class to the wealthy in history—all historical precursors of depression—and continue to spout the same of principles of macroeconomics platitudes indicates severe brain damage to me.  Or just possibly an intellect compromised by where the corpus is getting its bread and butter.

The failure of our political system to make an intelligent choice on the tax deal (CBO estimates $900 billion added to deficit over five years) almost guarantees that there will be a credit markets catastrophe within a few years and a further collapse of U.S. domestic effective demand.  Is this evidence of a higher intelligence at work in our social dynamics?  Suggestive that only in the most extreme crisis will people become mobilized enough to attempt truly rational and just solutions to what ails us?  And are the forces of the status quo ready to throw the U.S. economy down the drain to preserve, for some interval, their relative position?  Because if the happiness literature has taught us anything, it is that relative position drives us human monkeys, and that all that stuff about “growth is good” has merely put us on a hedonic treadmill that goes nowhere fast.  Above a certain level of real income, happiness appears to depend mostly on relative position and relative “socioeconomic status.”

Until the American people demand that sacrifice be shared the country will continue to split apart, methinks, into the lords and the serfs… or something we can hardly imagine.

Selected references

Getting off the hedonic treadmill, one step at a time

Beyond the hedonic treadmill

Does relative income matter?

Building a better America, one wealth quintile at a time

America, the barbaric

Here is a cogent exposé of America’s bankrupt value system.  And even America’s poor have been taught to blame themselves (Low incomes make poor more conservative, study finds - physorg).  It is instructive that it is the “liberal”—and often bellicose—Paul Krugman gets the honor of being shredded here.

Via:  Truthout

Reconsidering Japan and Reconsidering Paul Krugman

Sunday 12 December 2010

by: Steven Hill, t r u t h o u t | News Analysis

Shibuya, Tokyo. (Photo: - reuben -)

The New York Times is doing a series on Japan, which the Times describes as an examination of "the effects on Japanese society of two decades of economic stagnation and declining prices." Reading the series is about as cheery a task as rubbernecking at a car wreck on I-95, but, unfortunately, the Times series simply repeats the "conventional wisdom" about Japan put out by the same economic experts who missed an $8 trillion housing bubble in the United States, and, in fact, have been wrong on most of the big economic issues over the past two decades.

Look at it this way: In the midst of the Great Recession, the United States is suffering through nearly 10 percent unemployment and 50 million people without health insurance. A new report has found over 14 percent of Americans living below the poverty line, including 20 percent of children and 23 percent of seniors, the highest numbers since President Lyndon Johnson's War on Poverty. That's in addition to declining prospects for the middle class and a general increase in economic insecurity.

How, then, should we regard a country that has 5 percent unemployment, health care for all of its people, the lowest income inequality and is one of the world's leading exporters? This country also scores high on life expectancy, low on infant mortality, at the top in literacy, and low on crime, incarceration, homicides, mental illness and drug abuse. It also has a low rate of carbon emissions and is doing its part to reduce global warming. In all of these categories, this particular country beats both the US and China by a country mile.

Doesn't that sound like a country from which Americans might learn a thing or two about how to get out of the mud hole in which we are stuck?

Not if that place is Japan. During and before the current economic crisis, few countries have been vilified as an economic basket case as much as the Land of the Rising Sun. Google "Japan and its economy" and you will get numerous hits about Japan's allegedly sclerotic economy, its zombie banks, its deflation and slow economic growth. This malaise has even been called "Japan syndrome," a monicker that sounds like a disease to warn policymakers - as in, "You don't want to end up like Japan."

No one has been more influential in defining this narrative than New York Times columnist and Nobel-Prize-winning economist Paul Krugman. Throughout the 1990s, and still occasionally today, Krugman has skewered Japan's economy and its leaders. In the late 1990s, Krugman wrote a series of gloom-and-doom articles, complete with equations, theories and titles like "Japan's Trap" and "Setting Sun," bluntly stating: "The state of Japan is a scandal, an outrage, a reproach. It is operating far below its productive capacity, simply because its consumers and investors do not spend enough."

Krugman was commenting on Japan's so-called "lost decade" of the 1990s, when the Japanese economy was considered sluggish and underperforming. But let's look at some of the Japanese metrics during that time. Throughout the 1990s, the Japanese unemployment rate was - ready for this? - about three percent. Not 30 percent, that's three percent: about half the US unemployment rate at the time. During that allegedly "lost decade," the Japanese also had universal health care, less inequality, the highest life expectancy and low rates of infant mortality, crime and incarceration. Americans should be so lucky as to experience a Japanese-style lost decade.

Reopening the case of Japan raises some important questions. How do economists such as Krugman decide what to value and prioritize, or what to measure? What is an economy for? To produce the prosperity, security and services that people need? Or to satisfy economists and their equations, theories and models? For too many economic Cassandras, if their spreadsheet columns don't add up, if the surplus nations don't balance the deficit nations and the supply doesn't meet the demand, then disaster surely awaits.

Krugman has gone on the attack again recently, this time in a debate over fiscal stimulus versus deficit reduction as a strategy toward economic recovery. As a stimulus hawk, he has written that the Germans - one of the few economic bright spots in a struggling global economy - "seem to be getting their talking points from the collected speeches of Herbert Hoover." He is criticizing Germany for the same reason he criticizes Japan; he says the country is not spending or consuming enough to stimulate its economy.

But what exactly are the Germans or the Japanese supposed to buy more of? Surely Krugman has visited both countries, and it's plainly evident that neither are lacking in any material goods or modern trinkets to speak of. Americans are the only ones who seem to think they need three refrigerators, four televisions and a car for everyone in the household. Too many economists have yet to figure out that it is this consumer-driven economic model that has crashed and burned.

Japan's economy has been and remains successful. Germany's is thriving as well. Unlike the trickle-down US economy, Japan and Germany have reached an economic steady state in which they don't need roaring growth rates to provide for their people, and here's why: they are better at sharing the wealth produced by their economies to foster a more broadly shared prosperity among their populaces.

But for the economic experts, apparently, it doesn't matter if people's needs are being met; what matters is whether their theories and equations balance. It's no different with media outlets such as The New York Times, which has been getting it wrong for years – they also missed an $8 trillion housing bubble, as well as the lie on weapons of mass destruction in Iraq (prompting the Times to issue an unprecedented mea culpa to their readers). In the same way, the Times and the rest of the media have been missing the real story about what is occurring in Japan and Europe.

As a result, there is a commonsense aspect to this story that gets lost amid the rhetoric and the headlines. Two lessons of our times are that economic bubbles eventually burst, and that the environmental consequences of unbridled growth in this age of global warming are severe. The world needs to figure out how advanced economies can provide for their people without relying on roaring growth rates driven by asset bubbles. If consumer-driven growth was the order of the day in the post-World War II era, going forward it is going to be steady-state economic growth - growing not too fast, but not too slowly - and learning to do more with less. Yet stimulus hawks like Krugman don't seem to get this; they want to crank the "growth machine" into full gear with huge government stimulus spending.

But the real game is no longer strictly about economic growth; it's also about sustainability. The era of US-style trickle-down economies is over for wealthy countries because trickle-down is neither economically sound nor ecologically sustainable. The developed nations must lead the way towards a different path of development. This is not an easy challenge, yet it is the course that Japan and Germany have chosen. If the US didn't have such a trickle-down economy that has produced so much inequality - if it was better at sharing its wealth - perhaps it wouldn't need so much fiscal stimulus and growth.

At the recent G-20 meeting in Seoul, South Korea, German Chancellor Angela Merkel rebuffed President Barack Obama and Treasury Secretary Timothy Geithner's appeals to go back to the toxic economics of Wall Street capitalism. Said Merkel, "It is essential to return to a sustainable growth path." One cause of the crisis, she said, was that "we did not have sustainable growth. In many countries growth was built on debt and [speculative] bubbles."

Her finance minister, Wolfgang Schauble, was even more blunt. He described American policy as "clueless" and said the American growth model is stuck in a deep crisis. "The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base." Catch the irony: Germany - previously sneered at by US pundits for its "weak and sclerotic" economy - is lecturing America about how to grow our economy. Given Germany's 6.7 percent unemployment (compared to 9.6 percent in the US) and an impressive record at manufacturing things that the rest of the world wants to buy, the Obama administration, as well as Paul Krugman, should be listening attentively.

This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Ron Paul on WikiLeaks

Congressman Paul is 75, but in great shape.  I would vote for him for President. 

Free speech under attack

Joe Lieberman wants to be able to shut down the Internet.  The most recent canard from the State Department is that Julian Assange is not a journalist because he has a political agenda (is there a journalist anymore who doesn’t have a political agenda?).

It’s important to remember that the police are on the government payroll and will do whatever they are asked to do to “preserve order.”  The Espionage Act criminalizes thought crimes.  The American ruling class has hardened their hearts to the crimes of their empire and to the suffering of their fellow citizens.  The Republican Party has taken the lead in hard heartedness but it is a bipartisan effort.  Already it is a crime to electronically record the police.  I am concerned that the jack boot of fascism will come down hard in the next collapse of "animal spirits.”  The ruling class clings greedily to its spoils, and is willing to take the country down to do so, since there are more attractive investment opportunities abroad….

The New McCarthyism – Gonzalo Lira.  Detailed deconstruction of the mind-f**k that the MSM media have done to you in the past few weeks.  Extremely refreshing and alarming.  We have a lynch mob mentality forming in America.  A must read.

Naomi Wolfe on the Espionage Act – Any indictments based on this act should be met with horror.

This week, Senators Joe Lieberman and Dianne Feinstein engaged in acts of serious aggression against their own constituents, and the American people in general. They both invoked the 1917 Espionage Act and urged its use in going after Julian Assange. For good measure, Lieberman extended his invocation of the Espionage Act to include a call to use it to investigate the New York Times, which published WikiLeaks' diplomatic cables. Reports yesterday suggest that U.S. Attorney General Eric Holder may seek to invoke the Espionage Act against Assange.

These two Senators, and the rest of the Congressional and White House leadership who are coming forward in support of this appalling development, are cynically counting on Americans' ignorance of their own history -- an ignorance that is stoked and manipulated by those who wish to strip rights and freedoms from the American people. They are manipulatively counting on Americans to have no knowledge or memory of the dark history of the Espionage Act -- a history that should alert us all at once to the fact that this Act has only ever been used -- was designed deliberately to be used -- specifically and viciously to silence people like you and me.

The Espionage Act was crafted in 1917 -- because President Woodrow Wilson wanted a war and, faced with the troublesome First Amendment, wished to criminalize speech critical of his war. In the run-up to World War One, there were many ordinary citizens -- educators, journalists, publishers, civil rights leaders, union activists -- who were speaking out against US involvement in the war. The Espionage Act was used to round these citizens by the thousands for the newly minted 'crime' of their exercising their First Amendment Rights. A movie producer who showed British cruelty in a film about the Revolutionary War (since the British were our allies in World War I) got a ten-year sentence under the Espionage act in 1917, and the film was seized; poet E.E. Cummings spent three and a half months in a military detention camp under the Espionage Act for the 'crime' of saying that he did not hate Germans. Esteemed Judge Learned Hand wrote that the wording of the Espionage Act was so vague that it would threaten the American tradition of freedom itself. Many were held in prison for weeks in brutal conditions without due process; some, in Connecticut -- Lieberman's home state -- were severely beaten while they were held in prison. The arrests and beatings were widely publicized and had a profound effect, terrorizing those who would otherwise speak out.

Presidential candidate Eugene Debs received a ten-year prison sentence in 1918 under the Espionage Act for daring to read the First Amendment in public. The roundup of ordinary citizens -- charged with the Espionage Act -- who were jailed for daring to criticize the government was so effective in deterring others from speaking up that the Act silenced dissent in this country for a decade. In the wake of this traumatic history, it was left untouched -- until those who wish the same outcome began to try to reanimate it again starting five years ago, and once again, now. Seeing the Espionage Act rise up again is, for anyone who knows a thing about it, like seeing the end of a horror movie in which the zombie that has enslaved the village just won't die.

I predicted in 2006 that the forces that wish to strip American citizens of their freedoms, so as to benefit from a profitable and endless state of war -- forces that are still powerful in the Obama years, and even more powerful now that the Supreme Court decision striking down limits on corporate contributions to our leaders has taken effect -- would pressure Congress and the White House to try to breathe new life yet again into the terrifying Espionage Act in order to silence dissent. In 2005, Bush tried this when the New York Times ran its exposé of Bush's illegal surveillance of banking records -- the SWIFT program. This report was based, as is the WikiLeaks publication, on classified information. Then, as now, White House officials tried to invoke the Espionage Act against the New York Times. Talking heads on the right used language such as 'espioinage' and 'treason' to describe the Times' release of the story, and urged that Bill Keller be tried for treason and, if found guilty, executed. It didn't stick the first time; but, as I warned, since this tactic is such a standard part of the tool-kit for closing an open society -- 'Step Ten' of the 'Ten Steps' to a closed society: 'Rename Dissent 'Espionage' and Criticism of Government, 'Treason' -- I knew, based on my study of closing societies, that this tactic would resurface.

Let me explain clearly why activating -- rather than abolishing -- the Espionage Act is an act of profound aggression against the American people. We are all Julian Assange. Serious reporters discuss classified information every day -- go to any Washington or New York dinner party where real journalists are present, and you will hear discussion of leaked or classified information. That is journalists' job in a free society. The White House, too, is continually classifying and declassifying information.

As I noted in The End of America, if you prosecute journalists -- and Assange, let us remember, is the New York Times in the parallel case of the Pentagon Papers, not Daniel Ellsberg; he is the publisher, not the one who revealed the classified information -- then any outlet, any citizen, who discusses or addresses 'classified' information can be arrested on 'national security' grounds. If Assange can be prosecuted under the Espionage Act, then so can the New York Times; and the producers of Parker Spitzer, who discussed the WikiLeaks material two nights ago; and the people who posted a mirror WikiLeaks site on my Facebook 'fan' page; and Fox News producers, who addressed the leak and summarized the content of the classified information; and every one of you who may have downloaded information about it; and so on. That is why prosecution via the Espionage Act is so dangerous -- not for Assange alone, but for every one of us, regardless of our political views.

This is far from a feverish projection: if you study the history of closing societies, as I have, you see that every closing society creates a kind of 'third rail' of material, with legislation that proliferates around it. The goal of the legislation is to call those who criticize the government 'spies', 'traitors', enemies of the state' and so on. Always the issue of national security is invoked as the reason for this proliferating legislation. The outcome? A hydra that breeds fear. Under similar laws in Germany in the early thirties, it became a form of 'espionage' and 'treason' to criticize the Nazi party, to listen to British radio programs, to joke about the fuhrer, or to read cartoons that mocked the government. Communist Russia in the 30's, East Germany in the 50's, and China today all use parallel legislation to call criticism of the government -- or whistleblowing -- 'espionage' and 'treason', and 'legally' imprison or even execute journalists, editors, and human rights activists accordingly.

[…]

10 reasons to shun stocks

The inestimable Paul Farrell.  A must read. 

10 reasons to shun stocks till banks crash – Paul Farrell

Alfred McCoy, Taking Down America

A very thoughtful piece from www.tomdispatch.com on where the world may be going in several different scenarios.  It points out that if the international corporate elite indeed trumps the nation state in power and influence, that the next period may be international feudalism, with the pattern of extreme inequality seen in the U.S. under corporate hegemony spreading across the rest of the world.  Serfs of the world, unite!  One of the best reads I’ve come across for Big Picture.  And indirectly highlights the need to keep the Internet open—and speech free—as at least a possible countervailing force against the sheer dead weight of money.

Alfred McCoy, Taking Down America

Boomer bust

www.Contraryinvestor.com has a nice write-up of the demographic nightmare facing the stock market.  As www.zerohedge.com has been reporting for a while, the insider sell-to-buy ratio has been exploding recently, as insiders read Rosie.  So to counter the funny-money Santa Claus rally that’s popping on the Street today, take a read of what the Age Wave suggests for the future.  When contemplating the miserable yields available under ZIRP (though surfing the yield curve can be fun in a tax-deferred way), remember that some coke head somewhere once wrote a book titled “Less Than Zero,” which probably summed up his knowledge of mathematics, but also sums up what might be expected from equity returns over the next decade….  My question:  will the Big Bottom, when it finally arrives, be a buying opportunity?  It has to be, doesn’t it, by the iron laws of behavioral overshooting…?

Just Where Is The Equity In All Of This? – contraryinvestor.com

Will 2012 be as critical as 1860?

Jim Quinn’s The Burning Platform has a nice summary with topical speculations on where we’re at in the fourth turning.  Strauss and Howe’s The Fourth Turning is put down by Amazon’s own reviewer as a “pseudo-scholarly tract,” which is a misnomer (it is a tract, and it is scholarly).  Since it was written in the mid-1990s as a professed work of prophesy, the authors have gotten the tone of unfolding events pitch perfect.  They really seem to have their finger on the pulse of American history.

The presidential election of 2012 may or may not elect the leader around which the “regeneracy” phase of the Crisis can proceed.  Of the crop of potential candidates identified in Quinn’s article only Ron Paul has the dedication to the principles of the Constitution that might truly restore the “spirit of America,” in my humble opinion. 

Quinn doesn’t discuss what really brought us out of the Depression, in my view (and implicitly, Robert Reich’s)—the equalization of incomes in World War II that restored balance to domestic aggregate demand (see Saez reference embedded here). 

It remains to be seen if aggregate demand will be rebalanced in this Crisis turning.  Strauss and Howe identify four possible resolutions:

1.  The end of humankind
2.  The end of modernity
3.  The end of “America”
4.  The end of the seventh modern saeculum

Might also be worth reviewing Johansen and Sornette on the end of humankind’s growth era.

Quinn’s article is worth reading.

Have a great week!

Animal spirits: collapse not imminent

With the unemployment rate at 9.8 percent, confidence continues to chug upward in what I’m afraid will be a vain attempt to regain positive territory, speaking in terms of the relationship of the unemployment rate to adaptation level.  I continue to expect the next collapse of animal spirits—the defining characteristic of a recession—to occur in about 2013.  This assumes no significant improvement in the unemployment rate.  The hopeless political situation in the United States implies that no matter who wins the next presidential election, it will be considered a defeat by the people.  Continued debt defaults, banking problems and contractionary policy will probably be thrown into the mix.  Here are the charts:

For confidence to collapse in 2013 it is sufficient that unemployment begin trending up again, regardless of any (negligible) improvement between now and then.

The yield curve plus animal spirits recession probability forecasting model continues to show no hint of a collapse of confidence in the next year (the NYFRB’s model agrees):

I have written about effect of ZIRP, Zero Interest Rate Policy, on ability of the yield curve to forecast recession.  It may be true as John Hussman points out that it might be more difficult for the curve to invert, but there is no evidence that the relationship between short and long rates has fundamentally changed in magnitude.  If we see the 10-year yield in the neighborhood of one percent, watch out.  It would take only relatively mild pressure at the short end to tip things over (yes, I am expecting deflation of many asset classes in the intermediate term):

The big economic story, and why Obama isn’t telling it

A Democratic clear thinker on the essential worthlessness of the President to his party or to his professed beliefs.  The Plutocracy (aka the Kleptocracy) rules!  Blame Government!  Cut your own benefits so the rich can have more! 

The only weakness of the article is that Reich doesn’t recognize the (in my estimation) primary cause of the increasing inequality, namely the glorification of greed that has consumed the national psyche since Reagan.  This represents the opportunistic streak in the genetics of the mostly self-selected American people run amok.  Why should a CEO of an American corporation today be worth 400 times the median income when thirty years ago he or she worked for 30 times it?  No reason other than the winner-take-all economy we’ve developed, a reflection of our social values.  The depression will in all likelihood deepen until the distribution is flattened out.

Via:  Robert Reich

Quiz: What’s responsible for the lousy economy most Americans continue to wallow in?

A. Big government, bureaucrats, and the cultural and intellectual elites who back them.

B. Big business, Wall Street, and the powerful and privileged who represent them.

These are the two competing stories Americans are telling one another.

Yes, I know: It’s more complicated than this. In reality, the lousy economy is due to insufficient demand – the result of the nation’s almost unprecedented concentration of income at the top. The very rich don’t spend as much of their income as the middle. And since the housing bubble burst, the middle class hasn’t had the buying power to keep the economy going. That concentration of income, in turn, is due to globalization and technological change – along with unprecedented campaign contributions and lobbying designed to make the rich even richer and do nothing to help average Americans, insider trading, and political bribery.

So B is closer to the truth.

But A is the story Republicans and right-wingers tell. It’s a dangerous story because it deflects attention from the real problem and makes it harder for America to focus on the real solution – which is more widely shared prosperity. (I get into how we might do this in my new book, Aftershock.)

A is also the story President Obama is telling, indirectly, through his deficit commission, his freeze on federal pay, his freeze on discretionary spending, and his waivering on extending the Bush tax cuts for the rich.

Most other Washington Democrats are falling into the same trap.

If Obama and the Democrats were serious about story B they’d at least mention it. They’d tell the nation that income and wealth haven’t been this concentrated at the top since 1928, the year before the Great Crash. They’d be indignant about the secret money funneled into midterm campaigns. They’d demand Congress pass the Disclose Act so the public would know where the money comes from.

They’d introduce legislation to curb Wall Street bonuses – exactly what European leaders are doing with their financial firms. They’d demand that the big banks, now profitable after taxpayer bailouts, reorganize the mortgage debt of distressed homeowners. They’d call for a new WPA to put the unemployed back to work, and pay for it with a tax surcharge on incomes over $1 million.

They’d insist on extended unemployment benefits for long-term jobless who are now exhausting their benefits. And they’d hang tough on the Bush tax cuts for the wealthy – daring Republicans to vote against extending the cuts for everyone else.

But Obama is doing none of this. Instead, he’s telling story A.

Making a big deal out of the deficit – appointing a deficit commission and letting them grandstand with a plan to cut $4 trillion out of the projected deficit over the next ten years — $3 of government spending for every $1 of tax increase – is telling story A.

What the public hears is that our economic problems stem from too much government and that if we reduce government spending we’ll be fine.

Announcing a two-year freeze on federal salaries – explaining that “I did not reach this decision easily… these are people’s lives” – is also telling story A.

What the public hears is government bureaucrats are being paid too much, and that if we get the federal payroll under control we’ll all be better off.

Proposing a freeze on discretionary (non-defense) spending is telling story A. So is signaling a willingness to extend the Bush tax cuts to the top. So is appointing his top economic advisor from Wall Street (as apparently he’s about to do).

In fact, the unwillingness of the President and Washinton Democrats to tell story B itself promotes story A, because in the absence of an alternative narrative the Republican story is the only one the public hears.

Obama’s advisors explain the President’s moves are designed to “preempt” the resurgent Republicans – just like Bill Clinton preempted the Gingrich crowd by announcing “the era of big government is over” and then tacking right.

They’re wrong. By telling story A and burying story B, the President legitimizes everything the right has been saying. He doesn’t preempt them; he fuels them. He gives them more grounds for voting against raising the debt ceiling in a few weeks. He strengthens their argument against additional spending for extended unemployment benefits. He legitimizes their argument against additional stimulus spending.

Bill Clinton had a rapidly expanding economy to fall back on, so his appeasement of Republicans didn’t legitimize the Republican world view. Obama doesn’t have that luxury. The American public is still hurting and they want to know why.

Unless the President and Democrats explain why the economy still stinks for most Americans and offer a plan to fix it, the Republican explanation and solution – it’s big government’s fault, and all we need do is shrink it – will prevail.

That will mean more hardship for tens of millions of Americans. It will make it harder to remedy the bad economy. And it will set Republicans up for bigger wins in the future.

Sunspots and stock market returns

Data monthly on sunspots is available from NASA here.  The history of the Dow Jones Industrial average can be downloaded from finance.yahoo.com.   The chart below shows the sunspot cycle and and rolling 66 month price-only returns to the Dow, representing half of the approximately 11 year length of the solar cycle.  The trend lines are both over 132 months, the length of the solar cycle.

It is evident that there is some correlation with the solar cycle appearing to lead (I’m sorry, I’m just having fun).  The biggest 5.5 year blow off was in 1987, with the secondary blow off occurring in 2000.  Sunspot activity has been very low recently, although the next cycle is poised to peak in 2012 or 2013.  This site provides some interesting historical correlations.  Charles Nenner believes the cycle, along with other factors, forecasts a major war beginning in about 2013 (link), and a Dow going to 5000 in the next several years.

What is supportive of the hypothesis of a major slowdown of human activity in general (“the change”) in the future, however, is the NASA forecast for the next solar cycle, which is very, very low.

Source: NASA

The climate of the early nineteenth century was notably cool (source), with the winter of 1810 being described as “arctic.”  The winters of 2032 and succeeding ones might be similar if it takes a low cycle to really cool off.  Or, at least, global warming might be mitigated.