Roger Cass, The Last Optimist

Cass has an insatiable appetite for numbers. The passion hit him at the age of eight, when he first read about the Olympics and filled an entire summer writing page after page of related statistics, calculating the odds of winning. Another child would have enjoyed the spectacle; Cass needed the comfort of numbers. For him, it's all about accuracy. Cass's projections are founded on a study of data that is so deep and extreme that Tulloch says, "Only Alan Greenspan works numbers so deeply."

Once Cass has done his ant work, he zooms up to full human size to convert the data into concepts. At this level, Cass tracks liquidity, what Braudel labeled "the sphere of circulation." "When there's no liquidity, it's like pumping the engine when the tank is dry," Cass says. "Global money supply, international bank lending, foreign exchange -- these things are all gas in the tank."

But sometimes the tank can dry up. Sometimes capital can get locked up in nonproductive areas through lack of confidence. And lack of confidence, says Cass, comes from not understanding the waves.

Are waves mystical -- or mathematical?

What happens when you tell people that the future has been written in the past and that for the past 200 years, it has been coming straight at us in long, orderly waves? What happens is that people don't want to hear it. They want the future to be all new! Improved! The latest outpost of progress!

And when you tell people that long-wave analysis is the brainchild of Nikolai Kondratieff, a Russian agricultural economist who was head of the Conjecture Institute, they tend to reject it as fantasy. But for Kondratieff, it was pure fact. In 1928, he predicted worldwide economic collapse, based on his study of history. He was denounced as "wrong and reactionary" by his government and deported to Siberia without a trial. Sentenced to solitary confinement, he became mentally ill -- never a good marketing strategy for a controversial theorist -- and died in prison, just as the Great Depression, which he had also predicted, was devastating Western economies.

All of this helps to explain why waves feel mystical. "Mainstream economists in the United States have dismissed waves as 'a form of occultism,' " Cass says. "Most people have a fundamental distrust of long-term growth. They're still focused on the short-term business cycle and don't put a great deal of faith in 27-year views of expansion and contraction. There's a basic skepticism about the underlying theory. But it works. I've been collecting data for 30 years."

And to Cass, the data offers a sound explanation for the way that waves form. "Waves are caused by excesses of production, investment, and liquidity in the expansion phase that carries the seeds of its own destruction," he says, "leading to overproduction, investment and lending, shortages of raw materials, rising costs, and, eventually, declining demand, profits, and investment. People see the long view as deterministic. They are afraid that they can't predict things over such a long cycle. But I like determinism. There is a comfort to it. It makes investment planning easy. You only have to make one basic decision every 50 years: whether to buy or to sell. If you apply that theory to the market, if you get fully invested in equities at the right point of a down cycle and sell at the midpoint of an up cycle, you can make a tremendous amount of money. This bull market began in 1982, which was precisely the midpoint of the down cycle. The midpoint of this up cycle is 2007. The market still has 6 strong years."

All the future asks is confidence.

Now we're ready to ask the big question: How does Cass explain what we're going through now? Investment, he says, is a psychological state. When people and businesses hoard their money, growth slows. So what changed the psychology? "If you look at cultural events -- not just economic factors -- and the whole mosaic of human experience, it becomes clear that the election mess in Florida last year had a severe effect," Cass says. "It was very divisive. It had a negative effect on race relations and the political system in the United States, and the results of that will be felt for a long time. It had an effect on confidence, which is the key factor. Americans are upset over the political direction of their culture, and that affects the psyche of the American consumer. Businesses simply stopped spending money in November and December. The loss of confidence in the political system and in the economy, and the Fed's delayed response in cutting interest rates, are two critical reasons why we have this falling off of the cliff."

In the 1930s, after two decades of high capital investment and rapid growth, the auto industry plummeted. In the past year, after two years of radical capital investment and spectacular growth, the dotcom world collapsed. The auto industry's sudden decline presaged the arrival of the Great Depression. Will the demise of the dotcoms bring about the same result?