Fun with extrapolation

Since the 1990s, the stockmarket has been showing such freakish returns that many thought we were in a "new paradigm", whatever that means.

So I've looked at the Dow adjusted for CPI since late 1928, and calculated max/min lines on the basis of the highs in 1929 and 1966, and the lows in 1932 and 1982, to see just how unrepresentative the last decade has been. If we saw a return to these imaginary trends, the next Dow low could be less than half the present value. If, if, if...

Coincidentally, Jim Kunstler is predicting much the same:

By May of 2009, the stock markets will resume crashing with the ultimate destination of a Dow 4000 before the end of the year.

But I think it may take longer than that. The Elliott-wavers are looking for a final upwave first. Having said that, the last 10 years have been out of all comparison with the 70 years before.

Spot the trends

The CIA World Factbook gives global GDP per capita as $10,200 (in purchasing power parity terms). This puts the average standard of living somewhere between Kazakhstan and Mexico. On the same basis, per capita income is $43,800 in the USA and $31,800 in the UK .

Generally, the poorer the country, the higher the income inequality as measured by the Gini Index (except for Azerbaijan, according to this from the ESRC).

The Factbook estimates 30% combined unemployment and underemployment in many non-industrialized countries; developed countries typically 4%-12% unemployment.

There are enormous fortunes to be made (by some) arbitraging the economic differences between countries.

In the USA and the UK, we are relentlessly spending more than we are earning.

What are our governments' plans for us to remain rich? And given the correlation between income and equality, do our business, media and political elites have much incentive to make and seek support for such plans?