From Dan Denning at the Old Hat Factory:

--How did we miss this? A giant Costco has opened in Melbourne down at the Docklands. Costco is discount warehouse shopping at its finest. The mammoth stores are stocked to the gills with everything from nappies to red meat. The store in Melbourne opened its doors yesterday morning around 4:30 AM.

--And none too soon! The big box retailers are soon to be dinosaurs. They are living monuments to cheap energy and globalisation. Only cheap energy and cheap global labour make it possible for goods to be shipped this far and sold this cheaply.

--We thought this era of retail decadence was well and truly over with the Global Financial Crisis. But the Costco opening is a nice, nostalgic coda to the whole era of misallocated real resources and capital. While the suburban-retail-housing economy of America crumbles, Australia has built a small shrine to that way of life down in the Docklands.

--Mind you, we don't have any problem with lower prices. There's a bit of snobbery about American attitudes toward Wal-Mart and other giant retailers like Costco. After all, isn't it a good thing when a large part of the population can reduce the amount of money it spends on basic food and necessities? These stores really do lower prices on the things people buy every day. To that extent, they should be celebrated as an achievement of capitalism.

--Of course there are consequences to organising your economic life around discount retailing. Mom and pop shops-mostly neighbourhood places with friendly faces (if higher prices)-can't compete with goods and textiles imported by the container ship full from Asia. The folksy local retailer is crushed under the heel of the big box with the big global footprint.

--This necessarily changes the job market too. Some small businesses-usually the largest employer in an economy-go to the wall if the big box retailers start popping up everywhere. More and more jobs in the economy shift to lower-wage retail sales. Fewer people are employed making things and more are employed selling them (often on credit).

--Gosh. It feels like we're writing a history of what happened to the American economy over the last twenty years. Cheap oil, credit, the container ship, sophisticated logistics systems...all of these combined to deliver a one-off massive decrease in the cost of living for Western workers. Whether or not the lower cost of living resulted in a higher quality of life is a different question. And the trade off was the slow erosion of real wages from globalised labour.

--Anyway, the appearance of the Costco in Australia is like a time machine from the retail past arriving. A massive Tardis from Dr. Who, filled with the cheapest underwear on offer and mountains of washing detergent, deeply discounted. We will probably head on down this weekend to see if they have Coca Cola by the barrel.

--Nothing in the market can compete with our excitement about the appearance of Costco. But yesterday we speculated that energy would be the best inflation beater of the next ten years. And out in Perth, The West is reporting that, "Australia is on the verge of another WA-led resources boom that promises to dwarf the last surge, lock in thousands more jobs and be worth billions of dollars to WA businesses."

--The paper refers to the Gorgon LNG project. Gorgon is not, at least in this case, an ugly, snarling, snake headed female figure from Greek mythology. Nope. In this case, Gorgon is a $50 billion Liquefied Natural Gas (LNG) project that aims to produce 40 trillion cubic feet of LNG off the coast of Barrow Island in Western Australia. The project exists because energy itself is no longer cheap, but still in demand.

--The main partners in the development of Gorgon are Chevron, Exxon Mobil, and Royal Dutch Shell. In fact, just last week Exxon signed a $25 billion deal with India's Petronet to sell 1.5 million tonnes of Gorgon LNG to India each year for the next twenty years. That's a big off-take agreement. There will be more, probably from firms in India, China, Japan, and Korea. Asian power utilities prefer cleaner-burning LNG in their electricity producing plants.

--A final investment decision by the partners is expected early next month. But that's a near certainty now. With the WA and Federal governments granting the environmental permits necessary, there was only one big hurdle left, and that was cleared yesterday. Once it's played out, the Gorgon field has been identified as a place to store captures carbon dioxide.

--Yesterday, the Federal government indemnified the partners once the site is closed. That essentially means that the gas partners are responsible for producing LNG. The Federal government, meanwhile, assumes any risk if there is a problem with using the site as a place to store captured carbon dioxide.

--Gorgon is Australia's biggest energy project. But it is not one punters will probably make much money on. The big companies involved in the project have massive global exploration and production portfolios. As big as Gorgon is-and as important as the off-take agreements are to firms in Asia-Aussie punters ought to look at the three or four other prospective LNG producing regions in Australia.

--This is what your editor and Kris Sayce have been up to for the better part of the last six months. Kris has cherry-picked the best plays from Queensland's unconventional LNG plays near Gladstone in the >Australian Small Cap Investigator. Over at >Diggers and Drillers, your editor has looked at other unconventional gas plays, mostly natural gas trapped in sandstone formations in certain basins around Australia (so-called 'tight gas.')

--Who knows which projects will end up prospering? No one yet! Already, some of the stocks are prospering on the speculation. Investors know that energy is Australia's most valuable long-term commodity export. The smaller players in the market are already pricing that development in.

--We still have a few energy-related projects to add to our resource shopping list. We don't think we'll find them at Costco. But maybe we will finally find some Captain Crunch!

And now over to Bill Bonner in Ouzilly, France:

You could look at market cycles narrowly - just by keeping your eye on price movements. Or you can look at the Big Picture...all the connections between markets and the rest of the world...in the hopes of understanding what is BEHIND the price movements and where it might take them.

Friday, the Dow dropped 76 points. It's probably going down soon...but maybe not yet. The Dow would have to rise to about 10,350 to equal the '29 bounce. And heck, it's not September yet. September is traditionally the worst month for investors...followed by October, November, December, January, February, March, April, May, June, July and August.

But what's this? The morning news: Chinese stocks suffered their worst day since November - with the Shanghai index down 6%.

The rally is probably not over; still we wouldn't want to be long when the market opens in New York this morning. [Ed. Note: By the time the US edition of the DR came out, the Dow had lost close to 200 points.]

Many analysts regard everything beyond the price data as noise. You never know whose ideas or whose explanation or whose predictions are correct, they say. All you really know for sure is the price.

According to the Efficient Market Hypothesis, the price has in it all the information, theories and delusions of all the players in the world. By this reasoning, the price information is 'perfect.' No one can know more about what a stock should sell for.

Many analysts think they can watch the patterns of price movements and find some clues at to what they will do next. They see 'heads and shoulders,' ascending triangles and descending tops...and think they mean something. For us, here at The Daily Reckoning, price movements tell us something, but only in their extreme form...and only because we have an intuition about the way nature works.

When we see a price that has suddenly shot up, for example, we expect that it will suddenly shoot down sometime in the future. When we see a series of price increases over a long period of time, on the other hand, we expect to see a series of price declines over a long period of time, too. If we look closely, we find that the price at the end of the long incline is exceptionally high...and the price at the end of the long decline is exceptionally low. We believe - intuitively and logically - that exceptional things don't remain exceptional for very long. That's why they are exceptional. Broadly, when prices are exceptionally high they will fall - to the point where they are exceptionally low, and vice versa.

Beyond that, we draw little nourishment from the price numbers. They don't tell us why things are happening. And while we recognize that it is impossible ever to really know why anything happens (the number of butterflies possibly flapping their wings in China is beyond our comprehension), we are nevertheless heirs to the old story-telling tradition of our deathward marching tribe. We want to know why things happen the way they do...we want heroes and villains...we want winners and losers...we want a plausible story that explains what is going on.

We have maintained an episodic correspondence with Jack Lessinger for nearly 20 years. Jack is a "socio economist." That is, he's looking at the big picture of economic trends as they fit into the wider world of social life.

What Jack sees - in his new book, The Great Prosperity of 2020, is a series of booms and busts that correspond to the way people think about themselves...what they want...and how they want to live.

This is what defines American capitalism, he believes. And then he connects these phases of American capitalism to development patterns and real estate trends. Since about the beginning of the 19th century, he sees three major forms of capitalism - the small-scale frontier capitalism which peaked out about the mid-1800s...followed by large- scale industrial development which reached its zenith, according to Jack, at the beginning of the 20th century...followed by the consumer society that we grew up with.

Each major trend rises and falls. Prices rise and fall with them. The first wave of development raised prices of frontier land, first in the Mississippi River basin...and then out on the prairies. In real terms, farmland in some part of the mid-west hit peaks in the speculative fever of the 1880s that have never been seen since. Then, the development of the next phase pushed up values in major industrial centers - particularly in Chicago - whose growth far surpassed the older cities such as New York and Philadelphia. There too, prices in inner city Rust Belt metropolises have never been higher. Then, came the Material Age...when the consumer was king. Every king wanted his own suburban castle...and his carriage, with horsepower provided by Chevrolet or Ford.

The bigger picture was that energy was cheap and US manufacturing was leading the world in the post-WWII era. Cheap energy seemed to make suburban life a sensible, affordable alternative to the city. In the suburbs you had the advantages of being close to a major city - with access to jobs, entertainment and education. You also had the advantages of country living - backyard swimming pools, gardens, lawns, fresh air, and space.

Movement to suburbia began in the '20s. By then, the first suburbs were being built north of Baltimore...connected to the downtown area by tramways and paved roads. The richest families began by buying summer places on the high ground of Guilford and Mount Washington. Then, as transportation improved...and the cities became more and more crowded with immigrants and factory workers...the rich lived year-round in their leafy refuges.

As the trend developed, the suburbs spread...and the middle classes joined the exodus. By the '80s, practically all that was left in the central cities were drug addicts and welfare recipients.

Meanwhile, in the early phase of the consumer trend, wages for ordinary working stiffs were going up rapidly. A guy could graduate from high school, get a decent job, and expect to earn more and more money. This gave him the wherewithal to buy more and more stuff. So buying stuff became a national pastime. "He who dies with the most stuff wins," was the basic rule of the game.

The first challenges to stuff culture came early, says Jack. The hippies and counter-culture movements of the '60s were basically a reaction to the excesses of consumerism and suburbanism. Then, prodded by the oil crisis, there was a counter-trend movement towards self- sufficiency and independence in the '70s. Those early attacks were beaten back by credit and bubble markets. It seemed crazy not to enjoy the benefits of stuff culture when it was at its apogee in the late 20th century.

But now the consumer economy has played itself out, says Jack. It is spent, wornout and passé. Here at The Daily Reckoning we described the Bubble Epoque - the final, blowout phase of the trend - day by day, during the 2001-2007 period. Now, we are describing the bust-up. The consumers are broke. The suburbs are démodé. The lust for stuff has given way to a lust for security, stability, and simplicity.

The shift from one major trend to another one is typically marked by depressions. The transition period requires retooling, re-pricing and often, relocating. The suburbs are unlikely to be a growth area in the next socio-economic trend. Instead, it is likely that suburban property hit its all-time high in 2005-2006. We will never see those prices again - ever. People will move. They will move to new areas.

The "season of depression," to use Jack's term, usually lasts 20-30 years. We are in one now. He puts the end of the depression - and the beginning of a new period of prosperity - at 2020.