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Contrary to the assumption that originated in the English-speaking world, the economic cycles can't be eliminated - and because it had been attempted to do so for so long (since the 1980's), when the downturn finally came, it was particularly severe.  I saw it coming because my background is not from the English-speaking world, I come from the German-speaking world (and am fluent in the language) - and the kind of economics that actually anticipates such things comes from the German-speaking world as well, more specifically, it is called Austrian economics.  And the analysis method that I actually used to anticipate the downturn years in advance came from Russia, it is the Kondratieff wave, which is compatible with Austrian economics, but not with Keynesian economics, which is the economics that became prevalent in the English-speaking world (before being adopted by many other countries, as well, in modern times, since the English-speaking world now thoroughly dominates the world as a whole). 

The reality is that I predicted in the summer of 2001 that if the Fed saved the economy in the early 2000's again, which it did, then the imbalances would be built up to the point by sometime in 2007-2010 that the Fed would lose control of the economy - which would result in a deep recession that time in addition to a deep downturn in the stock market.  I think I can say conclusively that that happened.  But I also predicted that the imbalances would be so great by then that the Fed would not be able to get control of the economy (fully) back - which would result in the stock market and economy reverting back to the way they normally go during a big downturn - down, up, down.  The upturn would be a classic bear market bounce, not a new bull market - and it, in fact, has had the characteristics of a bear market bounce, not a new bull market.  That is why there will be another downturn (and, in fact, that is what the term bear market bounce implies, that is why it is called that, it is part of a larger bear market). 

Most economic and finance professors in America are saying that the downturn of 2008 was very much an extraordinary event.  That is the way the typical finance or economics professor in America would see it.  That is because their most basic assumption is based on Keynesianism (in terms of economics), in other words, it is the idea that an economy can be kept going forever, which is now mandated by the law against recessions in terms of the current interpretation of the law (the law actually expired in 2000 - interestingly enough) and is proven, in their view, by the Great Moderation, the recessions having become ever-more-mild from the early 1980's onward - until 2008.  Most American professors regard what happened in 2008 as an anomaly, it does not fit in with their theories, but my claim is that the severe downturn of 2008 happened precisely because previous downturns after the early 1980's were not allowed to run their full coarse - that is why they were so mild - and it was precisely because I knew, once I knew about the law against recessions, why the authorities were doing that, and that they would continue to do that, that I knew it was almost certain that the authorities would get overwhelmed sometime in 2007-2010 and there would therefore be a huge stock market AND economic downturn then.  That downturn happened. 

So my point of view is that the event of 2008 was extraordinary only because of its sheer size, a size which in my opinion was inevitable because of what came before after the early 1980's - and I was, in fact, able to predict the event, both its severity and approximate timing, more than 7 years in advance because I know exactly what is going on. 

If you want to know what is really going on, talking to an American professor is not going to help you - I had to unlearn virtually everything I was taught about economics in college before I finally figured out what was really going on.  I had assumed that my economics professors knew what they were talking about because they had Ph.D.'s - but I will now tell you what the flaw in that idea is. 

My background, in terms of my actual degree, is scientific - I have an extensive scientific background, especially in physics and chemistry, and my degree is in engineering.  In the hard sciences such as biology, chemistry, and physics, the rules are simply the rules, they are hard and fast, they are not based on any assumptions, and they have been tested conclusively (which usually does not take a long time such as decades or even centuries in terms of active testing - and in occasional cases where new evidence does come out over such a long time-frame, the evidence is investigated and the rule modified slightly if necessary).  The fact that the rules are so dependable is why those sciences are called the hard sciences - think gravity and the way chemical reactions work (which are utterly dependable in terms of the results you get - or the modern world would not even have been possible). 


The social sciences - which are any "science" involving people, such as psychology, sociology, or economics - do not work that way.  Observations are made - but they are just observations, they are not mathematically provable, and it takes a long time to be even just almost totally certain about anything.  I think the reason why the mainstream economists were so dismayed by what happened in 2008 - and many are just trying to brush it off as an anomaly as a result - is because by 2008, they had been experiencing the Great Moderation for so long that things were just about to the point where enough time had gone by that they thought they could consider it proven that recessions were being eliminated from the system.  But that is not the scientific method - if something happens that you do not expect, you investigate it, you do not brush it off.  I think the main problem is that in social sciences like psychology and sociology, it is possible to study a subject matter frequently and/or extensively in a not inordinate amount of time and so not an enormous amount of time goes by before some definitive conclusions can at least be tentatively accepted.  But recessions happen only every few years - so it takes a long time to come to a definitive conclusion.  As noted, I think the economic community in America was just about to the point of definitively concluding that recessions were being eliminated from the system when the big downturn of 2008 hit - and they were so totally dismayed by that that they did not even want to believe it was happening.  So many in the economic community are just trying to brush the big downturn off as an anomaly - "Just get things back to the way we were before and we will be back to where we wanted to be, again!" 

There have been attempts over the decades at doing economics in the sense of the hard sciences by using mathematical models, but those models have never been totally entirely satisfactory and completely failed to see the downturn of 2008 coming.  I think the urge to attempt extensive mathematical modeling in economics came out of the late 19th and early 20th centuries when it was assumed that any mass-scale phenomenon can be modeled mechanically or even scientifically - and economics, or at least macroeconomics, is a mass-scale phenomenon.  Psychology is more personal - at least usually so - and sociology is more abstract, more general, as far as I can tell (I have never actually studied it).  But economics is a social science - it involves people as the subject - and therefore there is no chance that any mathematical model will every be as accurate as mathematical models typically are in the hard sciences.  That is part of why the economic models did not see the downturn of 2008 coming.  And that is also the reason why my model - the basis for this website - which is a conceptual model, not a mathematical one, does not pinpoint the timing of my anticipated events.  I do not even try to run my model on a computer - I use my brain, which was easily able to see the downturn of 2008 coming, but I do not think I would be able to run my model on a computer, since my model's main use at a practical level is to determine timing of changes in addition to knowing how to be positioned in any given phase of the model in the first place, and the timing of my model is somewhat dependent on what people are doing at any given time.  Even if I would create an entirely mathematical version of it so I could run it on a computer (I am not even sure that could even be done, I doubt it), I think a purely mathematical version would be so complex that one would lose sight of what is going on - figuring out which parameters to change when, to determine near-term timing, in response to what all the people are actually doing at any given time, would probably be a Herculean task.  It is much easier to just run it through my brain.  And the best I can do, even using my brain, even on a near-term basis, with regard to timing is about a month - people have free will and that affects the timing. 

So I do not even try to pinpoint the exact timing - knowing it is coming, and approximately when, is plenty good enough for people to be able to prepare and protect themselves.  I was even wrong about the exact timing of the stock market crash of 2008 - I was warning by the end of September that a stock market crash was likely by the end of October (once the Wall Street traders realized how bad the economy had gotten in the meantime while Congress was debating the bailout package), but the crash happened at the beginning of October already.  But if someone had been listening to me back then (which no one was - and my website was not up yet), they would have had (more than) enough time to get out of the stock market before the crash actually happened.  (I do not wait until the last minute to make my predictions - and, in fact, tend to be early, but wasn't in the case I just talked about, but things do not happen so quickly in the world of humans that I was not able to get my warning out with, for all practical purposes, plenty of time to spare.) 

If you really want to find out what is going on these days, you have to get your information from someone who thinks in very unusual terms for an American and actually saw recent events coming.  I am not the only one in that category - and I actually make reference to some others in the related links on this website - but I have the combination of having been the most accurate about seeing the downturn and the timing of it coming years ahead of time and talking in the least technical terms and providing the most frequent updates (or not tremendously extensive updates - my updates are usually not as long as the text on this web page) to keep people on track in terms of their thinking (which is typically very hard to do unless one is as independent-minded as I am). 

I predicted the downturn of 2008 in the summer of 2001 - to happen sometime in 2007-2010.  I further predicted that there would be an upturn after that that would have the characteristics that it has had - a bear market bounce in the stock market and a very slow recovery in the economy - which will be followed by another downturn that will be even worse than the first one. 

One can look for optimism all one wants - from whatever source one wants to believe, and for whatever reason one wants to believe that source, i.e., however much credibility one thinks that source has - but if that does not actually match reality, one will be disappointed in the end.  Many people look to the mainstream economists for economic information because the mainstream economists are the traditional source of such information in modern times, but being (too) optimistic is exactly what the mainstream economists themselves are doing.  That is one reason why the computer models of the mainstream economists don't work, or at least did not predict the downturn of 2008, because their models include, or are at least based on, their assumption that the economy can keep going forever, which is not true. 

By the way, as for predictions of the IMF over the years (this time around - that the soft patch will go away in the second half of 2011), they have not been very useful when a crisis was brewing, but most people's memories are so short that they can't remember that fact during the crisis or after it.  And the situation is no different for Bernanke - he predicted in the first half of 2008 that the second half would be OK.  No one remembers that.  I did not predict in the first half of 2008 that the second half would be bad - but I had predicted years earlier that there would be a crisis sometime in 2007-2010 and so I did not put much stock in Bernanke's optimistic statements during the first half of 2008 to begin with because I knew the situation would not last - even if it went past 2008.  And then when oil prices went way up in the summer of 2008, I knew that the crisis that I had been predicting was going to happen sooner rather than later - in other words, in 2008 yet, rather than by the end of 2009 or, at the very latest, in early-to-mid 2010.  So I was prepared for a crisis all along - and knew the entire time that it was coming.  I will add that the IMF said as part of its latest release that if the various countries, especially America and in Europe, do not take immediate steps to reduce their budget deficits (which I guess the IMF assumes they will), they are "playing with fire."  That is true - but it is far too late for any such warning to have any effect, and would not have had any effect anyway because of what happens at the current stage of the Kondratieff wave historically, which has been put on steroids this time because of the enforcement of the law against recessions.  Deep debt was and is inevitable this time - and the consequences of that are also completely inevitable in the meantime.  Things are far too far along for anyone to be able to do anything about that anymore at the level of nations, which is what the IMF is talking about - the only thing that is still possible to do is to get people to do something about it at a personal level, and that is what this website is all about. 

By the way, in light of the recent additional weakness in the economy, I am starting to see renewed estimates that it could take as long as 2018 for the economy to fully recover.  These estimates are based on a law-against-recessions mentality, which the American society is thoroughly steeped in in the meantime.  The reality is that the economy is not going to fully recover - at least not for a long, long time - and it is going to get much worse than it is at the top of the partial recovery before that ever has a chance to happen. 

One can either prepare for the situation getting much worse - or go down with the ship.  I think most Americans are going to go down with the ship.  I hope I can help some people avoid that - although as emphatically as many people say at the top of the partial recovery that they are convinced that the future will be good, I really have doubts that I am going to be effective at all.  People, especially in the financial industry, are showing the classic signs of super-overoptimism that show up at every major top.  I am not surprised, since the Fed sure made sure this would be a major top, due to the continued attempted enforcement of the law against recessions.  In other words, the Fed was going to make sure it went up as much as possible (the stock market, not the economy - the economy did not go up much in the process, as I predicted it would not) - before things come back down, and that is not good, it means the absolute maximum number of people are going to be fooled before things come back down again, thereby maximizing the damage.