Posts Tagged ‘work week’

By all indications this is the end of the world (market) as we know it…

November 22, 2008 3 comments

When the market closed on Thursday the Standard and Poor 500 index announced to anyone savvy enough to understand that the era of stock markets had drawn to a close.

And, not surprisingly, no one marked that moment.

Certainly the major news outlets covered what was a pretty horrendous day, but there is something left unsaid, something so entirely foreboding, so dire about the closing number – 752 – it is quite the fear whose name must not be spoken: Double Top.

This is the largest such formation ever seen in the history of market.

Just to give you an idea of the scale what just occurred on Thursday: the completion of the S&P double top is akin to the opening of the Seven Seals. defines the double top this way:

The double top is a major reversal pattern that forms after an extended uptrend. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between.

An innocuous enough definition, one might not understand how this applies to the closing chart of the S&P 500 on Thursday. So we will show you what it looks like when the chart of the S&P 500 is displayed for the years 1929 to 2008:


Still not impressed?

What you are seeing is the performance of the S&P for the last 80 years. As you will note, somewhere around the mid-1980s the chart start going parabolic – i.e., begins to climb at an unsustainable rate. By the time of the Clinton Administration – about 1995 – the rate of climb became even more unsustainable.

When the market crashed starting in 2000, it fell for 3 years before reaching the bottom.

But, thanks to Washington, and the beginning of the war against Iraq, the market once again rose to the previous 2000 peak by 2007.

This is where the double top finally made its appearance, and, from there, fell to complete itself finally on last Thursday.

Still not so impressive, until you realize a double top is what is known as a major reversal pattern, which is any chart pattern which signals a reversal of the direction of the market.

Since World War II the overall trend of the market has been up.

This pattern says the overall trend will now be down.

We bet you want to know how far down, since all your retirement is invested in the market through personal saving, investments, 401(k)s and 403(b)s, and, state and corporate pension funds.

How far down pretty much determines when, and under what conditions, you may retire in the near or less near future.

Well, to put it bluntly, the chart says don’t bet on any retirement.

It also says: Don’t bet on any mutual funds, banks, or any other financial instruments.

Don’t bet on insurance companies, or, annuities.

Don’t bet on home equity, or, savings.

A double top has clear predictions about what the future holds for the S&P. It may get it wrong this time, but you would be advised not to bet on that either.

Stockcharts has this to say about how bad the current market meltdown will get in all probability:

The distance from support break to peak can be subtracted from the support break for a price target. This would infer that the bigger the formation is, the larger the potential decline.

Support for our chart was in the area of 800. On Thursday, November 20, 2008, the S&P closed below 755 – thus breaking its support and closing at a level not seen since 1997.  The S&P had reached about 1550 at it peak.

Following the method used in the Stockchart quote, we subtract the support, 800, from the peak, 1550, and arrive at the likely target for the S&P in the coming months: 800 minus 750 equals 50.

The last time the S&P was near 50 was about the same time Harry S. Truman was putting his signature to National Security COuncil Memorandum 68.

The S&P chart is essentially saying there has been no real expansion of economic activity since then.It was all smoke and mirrors, as the market will likely demonstrate for us in the coming months.

The S&P chart is essentially saying there will no stock market within a matter of months. It will be gone, and all the capital market connected to it will be gone as well.

Nothing will likely prevent this fall.

We will only be able to avoid the horrendous consequences, but that will require a very aggressive reduction of working hours, and the virtual elimination of government.

Notes on a Work Free Society has been posted to Creative Capitalism project

June 29, 2008 1 comment

We have posted the piece, Notes on a Work Free Society, to Michael Kinsley’s new blog, Creative Capitalism.

The blog is part conversation, part collective publishing project, designed to address billionaire Bill Gates’ concept of Creative Capitalism.

As Kinsley sums up Gates’ idea:

Despite his move from capitalism to philanthropy, Gates believes that some of the world’s problems — especially the problems of the world’s poorest countries — are too big to be solved by philanthropy. Only capitalism can address them successfully. But — as he argued in a speech at Davos in January — capitalism is much better at serving the needs of the the prosperous than the needs of the poor. He goes on to argue that capitalism needs to be, and can be, reformed to solve this problem. He called this new system “creative capitalism.”

Asks Kinsley,

So why isn’t his approach — make the money, then give it away; “to every thing there is a season,” and so on — the right approach? That is one question raised by creative capitalism. There are others. Wouldn’t the small-d democratic approach be: make the money and then tax part of it away? When corporations start giving money away or devoting it to good works, aren’t they cheating their shareholders? (That was Milton Friedman’s position, you won’t be surprised to hear.)

To explore these questions, I’m producing a book. And “producing” is the right word. This is a literary experiment as well. The book will be derived from a private website and a public blog in which economists and others debate whether “creative capitalism” is meaningless, dangerous, useless, maybe useful, very useful, or brilliant. Anyone interested is welcome to join in at As the project progresses other contributions to the book will be published on this site and perhaps elsewhere — all in the spirit of web collaboration. The book will be out by the end of the year.

Notes on a work-free society

June 25, 2008 4 comments

Since, this is the summer before 2008 election season, perhaps, it might be a good time to just take a step back and consider our situation beyond the next four years, as it may influence how we decide to vote, and what we might demand of those for whom we vote.

Thinking more long term should be easy, since between now and the end of August will be silly season – consisting mostly of catfights among the candidates over who is whiter or blacker, older or more inexperienced, more patriotic, tougher on terrorism, has more flag pins in his lapels, and, more likely to betray every campaign promise sooner.

In another thread, we have been writing on the topic of government’s share of GDP, in light of Barack’s likely November victory over the bankrupt Republican Party, and its unbridled quest to bankrupt the rest of us.

That thread has led us back to the Woodrow Wilson Administration and the earliest moment when the idea took hold in Washington, that it could permanently command ever greater resources simply by actively expanding the economy, and, our collective time on the job.

Which caused us to consider the following: Is it possible to set the goal of creating a work free society in the next twenty years as the national economic priority? Not just reduce working time, but, eliminating work entirely – is this possible?

It is, we admit, an astonishingly arrogant policy objective.

In our collective mythology work has always existed, and, is likely to be a constant companion of humanity until the species is extinct.

But wait a minute – is that really true?

Work today consists of leaving our homes and entering the employment of one or another corporation for wage, salary or commission – each of these being relatively recent inventions. Work, as we now define it, mostly did not exist two hundred years ago, and, is likely an occurrence of only limited historical duration.

In fact, up until about 1940, the time our industrial era ancestors spent at work shrank more or less continuously, and, free time away from work gained a greater share of their daily lives.

So, it really is possible to speak of a future where we – or at least our children – could be free of any economic necessity to work.

If you give it some thought, you quickly realize a work free life has always been with us, in one form or another, for most of human civilization. Imagine a work free life as a product – a widget, for example – this widget has always been available, but it was just a really, really, expensive, and, as such, beyond the means of most members of society.

However, kings could afford it; the upper caste of most ancient societies could afford it. And, there are people of our own age (Warren Buffet, for instance) who could easily afford. Still, by and large, the price of a free time widget remains well beyond the means of most of us – a luxury item.

Conceptually, then, creating a work free society is a simply matter of getting the price of this widget to the point where it is inexpensive enough to be enjoyed by everyone in society – free would be even better.

There is a precedent for reducing the price of very expensive items like our free time widget to zero: see, for example, the History of the Book.

Up until quite recently book production was a very long tedious process, involving many months of intense labor. Just as important, making another copy of a book – the Christian Bible, for instance – consumed as much time as the production of the original.

As you would expect, a book was highly prized as a result, and, as much a symbol of wealth as it was a means of transmitting information.

Today, you can have your very own copy of the Bible by going to this site and creating a copy for yourself in about 5 seconds – depending on the speed of your internet connection.

Of course, the publishing industry is not all that happy with this, but who cares?

The same is true for just about any piece of music you might wish to enjoy – once digitized, a rare piece of literature, or, the latest Jay-Z CD is instantly available in whatever quantities we demand.

When production costs approach zero, price disappears – and, despite the RIAA‘s constant, and, annoying complaints to the contrary, even the most powerful lobbies in the world can’t recover their market when that happens.

The journey from tedious months-long reproduction of the Bible and other ancient texts to a portable document format (.pdf) download took thousands of years and an innumerable series of technological innovations.

And, during this long transition, not one person ever conceived that ultimately the reproductions of books, music, stage performances, etc., might become so cheap as to be costless, and, as a result, without any market price at all.

No one had that as a goal; no one saw any further than the next step in that process, until – BAM- it happened, like a bolt out of the blue. But, that collective effort has, over the centuries, turned those things which would have once been for the exclusive enjoyment of the very wealthiest in society into a common object of use with little more market value than rain water.

And, I think this can also be true for our free time widget: exclusively enjoyed today by the likes of Warren Buffet, enjoyed tomorrow by everyone.

It can be argued that the free time widget is actually composed of hundreds of very important products we likely will consume over our entire lifetime – each of which require a definite amount of time to produce, and, which can’t be simply digitized down to zero production cost.

For instance, my twin his-and-her Hummers cannot be reduced to a few million bits of digital information.

But, as we have witnessed since the founding of this country, the fact that an object cannot be reduced to digital information does not imply it cannot be virtually cost free to produce.

The best example for this is agriculture.

When our nation was founded, 99 percent of of its citizens made their life by farming. It literally took the bulk of all the nation’s work time to set food on the table.

Today, only about one half of one percent of the population remain in farming – an astonishing reduction in the work time devoted to feeding ourselves accomplished in about 200 years.

It is impossible to digitize a Hummer, but, it is still possible to so lower the work time effort of producing one it becomes costless.

Moreover, projects of this astonishing scale have been undertaken several times in the Twentieth Century.

During the Great War and again during the World War II, the United States managed to free more than half its production to wage a global catastrophe. Nations around the globe made similar efforts. This required such a feat of economic management as to have dwarfed any and all previous efforts combined in the long history of humanity toward such an end.

By freeing production to support the war effort, the United States, Britain, France, and Germany were also unwittingly reducing the cost of free time – all that stuff and all those men on the battlefield killing each other were supported by the rest of society, and contributed nothing to society’s living standard.

When you prove a nation has the capacity to devote half of its GDP to a global military catastrophe, you also prove half the cost of a free time widget can be eliminated through sustained concerted effort.

In 1950, as we will show, the Truman Administration undertook a similar effort to sustain an global encirclement of the Union of Soviet Socialists Republics which lasted for some 40 years, and, which machinery still is in place today.

In 1961, President John Kennedy proposed the nation undertake an effort to place a human footstep on the Moon – a massive feat of science and engineering which revolutionized virtually every field of human knowledge – up to, and including, breakfast drinks.

Imagine the impact the challenge of creating a work free society would have on our society today.

It is as simple – or complex – as taking a product exclusively enjoyed by only the very wealthiest in our society, and, bringing the cost of producing that product so low as to be free – and, we certainly have experience doing that.

That is the great challenge of the opening decades Twenty-First Century – and, it could be accomplished in as little as twenty years if only there were some exotically different kind of candidate for president in this year’s race.

Barack, can you smell what we’re cooking?