Friday, April 17, 2009

PEI Strikes Again

For those of you who don't know, PEI stands for the erstwhile Princeton Economics International. The one time money management outfit has nothing to do with Princeton University other than being located in the same New Jersey town that is home to the aforementioned august university. PEI was run by a brilliant but possibly shady economist by the name of Martin Armstrong. Armstrong has been in prison for years for refusing to cooperate with the courts around a case that is shrouded in mystery. Suffice it to say that there are many who, whatever their feelings about Mr. Armstrong's innocence or guilt may be, laud his brilliance on matters pertaining to finance and economics.

And so, with that bit of background in mind, I'd like to offer that while it may not be on your radar screen presently, Sunday the 19th marks, as per Mr. Armstrong' s work, another of his well known, and equally well regarded, economic confidence model turn dates. This one happens to be an interim turn date, and my view is that, especially given that, to my knowledge, Mr. Armstrong's turns were meant to be quite precise and not wide band turns, that it is likely marking another top in the economy. I do not view March 6th, when the stock market put in its lows, as some sort of proxy for the turn date, which is not a market turn model by definition. This is not to say that markets can't turn precisely on Mr. Armstrong's dates, they can, and I believe have, but I do not think that the stock market's lows in March coincided with the latest turn. Since we have been hearing little but tepidly happy talk about the economy for quite a while now, I'd just like to offer, on behalf of the latest turn date, that we buyers best beware!


Mike said...

Interesting. The S&P looks pretty damn overbought lately, and gold and other PMs look deeply oversold. If he picked April 19, he may be right on track.

Edwardo said...

Armstrong's is not designed to catch market change in trends, but rather general economic trend changes, though I think there have been some notable turns that coincided with specific market highs and lows.

Edwardo said...

Meant to write,

Armstrong's work is not designed...

Thai said...

Edwardo, I read this post and remembered how you told me you had finally seen what a bubble health care and education had become. I thought you might like some updates. And while you are angry at Wall Street Bankers (and Hell I am more and more every single day), think a little about how the rest of us are starting to look at your neighbors.

So I thought you might be interested in reading a little bit about the very real consequences your hometown industry has inflicted on others (though I will admit that none of the students in this particular article are from Boston area schools).

And then remember education debt doesn't go away in bankruptcy!

Apparently the (ostensibly liberal) educational establishment will do to their own what they would scream bloody murder against were they to see others do it.

And remember, most education and health care based economies vote heavily democratic. Do you think Boston faculty are ready to shed jobs as they forgive debt in order to help indebted students out???

Or do you think they think you and I as fellow taxpayers should do it instead?

Just think about the politics of this one for a second- I can see strange bedfellows arising indeed.

And remember, health care and education are the real economy. They represent a much larger % of the economy than either housing or finance or the two put together.

We live in interesting times indeed.

Anyway, hope you are well


Edwardo said...

Thai, as a resident of Boston, and for many years Cambridge, the respective homes of two of the planet's most high powered and prestigious educational institutions, I not infrequently ruminate on the economic prospects for this area given that the pillars of the local economy, education, technological R&D, and health care, are all in bubbles destined to pop.

My sense is that the glittering gold medal brands of MIT and Harvard will likely survive the impending epochal change in the nation's educational infrastructure intact and untarnished, but of that I am hardly certain.

As for the fate of the rest of this area's many educational institutions, well, the implacable economics described in the article at the link you provided are none too comforting for those who dream of the continuation of the status quo.

In answer to your questions, I say, "not bloody likely" to the first, and to the second. "quite possibly if they thought it would fly and not damage their relatively secure positions"

I hope you are well, also.

Thai said...

"My sense is that the glittering gold medal brands of MIT and Harvard will likely survive the impending epochal change in the nation's educational infrastructure intact and untarnished"

I tend to agree (remember I am the one who believes Pareto income distributions are as invariant as gravity for all time).

As I do with all of your responses.

... And of course I know you live there, which is why I like to tease you ;-)

Be well

DED said...

I was barely able to afford college back in the late 80's. By the end of it, I was using my newly minted credit cards to pay for school. I feel their pain.

Since my intended career never panned out, I found a new one (my timing was fortuitous). Still, I spent my first 8 years after college saddled with enormous amounts of debt. And yes, I repaid every single penny.

What did I take from my experience? That colleges were overrated and certainly overpriced. I do think that we're going to see a contraction in the number of universities out there as fewer and fewer people are able to afford a college education.

Are there any colleges that are too big to fail? Will we see bailouts of our nation's universities? Anything's possible in Bailout Nation.

Thai said...

"Anything's possible in Bailout Nation."- LOL!!!

I just realized that IF they do it for everyone, then they do it for no one.

Maybe the trouble really is there are simply not enough bail outs!

The problem is we don't have enough!