Updated: Jittery Markets - Is a Crash Imminent?, page 2

Long-Wave Theory

The Russian economist, Nikolai Kondratieff, proposed a macro-economic theory based upon the movement of commodity prices and interest rates in Capitalist economies, that describes long-term boom/bust cycles every 50-60 years. These cycles consist of four distinct 'economic seasons':

1) Spring: Inflationary growth phase, lasting 20-25 years, and defined by a fall in unemployment, and a rise in productivity and wages. There is also a social mood of accumulation and the desire for new product manufacture

2) Summer: Recession or 'Stagflation' as economic growth reaches it's limit, excess production during the first phase now produces a shortage of human and material resources, placing a strain on the economy and increasing the impact of inflation. This phase lasts for 20-25 years

3) Autumn: Deflationary Growth or 'Plateau Period' is marked by a rise in prices both of human and material resources, and manufactured goods. This phase lasts for 7-10 years and is marked by a social attitude of affluence, and combined with the desire to continue consumption, culminating in a massive rise in debt, eventually wealth-consumption expands beyond rational limits, heralding an economic slide into a depression/crash

4) Winter: Depression. The accumulated wealth of the previous phases runs out forcing the economy into a period of collapse, lasting 3-5 years, followed by a deflationary period lasting 15 years as the economy bottoms-out, before starting the cycle all over again.

(this site has a good layman's explanation of long-wave theory: www.kwaves.com...)

At present we are in the final stages of the Autumn Phase, with consumer and corporate debt spiralling out of control. The prices of oil&gas are rising, and aggressive strategies are being realised as the most powerful nations seek to control prime resources, such as the oil-wars in the mid-east, and recently the Russian oil/gas/power situation in Ukraine and other fomer Eastern-bloc countries....the worst is yet to come.