Customer Reviews

Long-Wave Rhythms in Economic Development and Political Behavior

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The topic of this book is the economic cycle called the long wave or Kondratiev cycle. The Russian economist Kondratiev did not discover these cycles, but he was the first to study them in detail. Long waves may be responsible for various long term trends: the slow down in productivity growth and wages after 1973, the "Reagan revolution", Toynbee's cycles of War and Peace, stock cycles (my focus) and others. This is the reason why people study them. The idea that long waves are major factors in these trends (or that they are even relevant at all) is controversial. Berry's book represents a modern day treatment of this topic.

I bought this book when I was researching the Kondratiev cycle as a possible explanation for stock market cycles (see my book Stock Cycles for more information). Berry presents an excellent overview of the longwaves literature in a single moderately-priced volume, and it is an excellent place to start a serious study of long waves. What I really liked about the book was the strongly empirical flavor where historical inflation and GDP data were smoothed and plotted in various ways that really "bring the cycles out". The focus is on letting the data "tell their own story", which was most refreshing in my opinion.

Berry examines the factors associated with the long wave (Kondratiev Wave) and its sub-wave cousin the Kuznets Cycle as they affect the growth of city-building and overall economic growth and decline in the U.S. since the beginning of the republic.

According to Berry, the "stagflation peak" of 1981 will eventually give way to a recession/depression trough sometime between 2006-12. Contrary to the otherworldly optimism and manic expectations of Wall Street and the American public at large, Berry expects a deflationary cycle to begin at any time (March 1998), resulting in mass restructuring and dislocation that will require most of the next decade to resolve.

Following the trough around 2010, however, Berry expects the K-Wave and Kuznets cycles to resume their growth period, which is expected to rise into the growth period peak in the early 2030s.

In the context of A. Gary Shilling's "Deflation...", one would be wise to seriously consider reallocating his or her investment portfolio to perpare for a severe decline in stock prices (50% or more by 2002), in order to avoid the serious losses associated with the Kuznets deceleration wave and the collapse portion of the K-Wave. Bonds will be an attractive alternative to stocks following the panic and collapse phase, as interest rates will dramatically fall as will consumer prices throughout the next decade.

I was disappointed in the shortsightedness of the author. The book only went through cycle analysis. There was no attempt to identify rhythms which can be more than dynamic cycles.

For a while now I have noticed,charted and annotated price/time action of the S&P500. What is evident is very short duplications of time intervals, maybe once, twice or thrice and then a new time interval will emerge. This is not a cycle and not a dynamic cycle. This is a pattern and it has never been documented before to my knowledge.

Just measure time in 50%, 100% & 200 intervals on adjacent price moves or alternating price moves. You will find the market moves 1,2,3,4 steps of the same time and then that time interval disappears as another one replaces it.

The arithmeticians have never been able to figure it out because it appears cyclish in short time spans, but disappears and cannot be accounted for with any equation. I was hoping for verification of what I see visually on my charts when I map it out. I guess the human mind is still more powerful at recognizing patterns than any computer mathematical algorithm.

The author makes no analysis of the Gann multi-year time spans that reoccur with an exactness to the day at times, but exhibit no cycle tenancies. 1998-2002 = 4yrs : 2002-2007 = 5yrs : 1987-2002 = 15yrs : 1987-2007 = 20yrs :