It’s not often that I do this – it’s a Saturday afternoon and I’ve interrupted my day to post this.

You have to read the March 2014 issue of Elliott Wave Theorist – it does mean BUYING it, you don’t obtain this type of information for free I’m afraid.  You will need to subscribe to the Elliott Wave Theorist to obtain March 2014 issue

You are highly unlikely EVER to read the content of the report in the mainstream media and it also helps to confirm/back-up what I’ve been saying about the Fed and USA Government.  If you’re an American then the implications are massive not only for your Investments but your lives, If you’re not an American citizen then it’s bound to have an impact on your Investments/Life to some degree – better to be prepared, than “suddenly out of the blue” find out

In fact this report/months EWT applies to EVERYBODY in the world, it is that important, all I can do is alert you (you can lead a horse to water, but you can’t force it to drink) you’ve been alerted!

Here’s a link:


20 Signs That The Global Economic Crisis Is Starting To Catch Fire

Another great article from – subscribe to his site and get the updates as they are released.

Read the article below, get a cup of tea or coffee, read the article again and think of the deep impact of the statements.

I’m intrigued by #19 – I noticed the coincidence a few weeks back and have been trying to link them, something eventually will surface and you can bet that something is going on that we are not yet aware of.

On the grander scheme of things, these types of events are the common aspects associated with Deflationary Depressions, if you have read up on socionomics then you’ll understand how it fits.

I have to state, in case new readers to the blog read this post – I don’t agree with the US market outlook, yes things are very very bad, I just don’t think the stock market will act as everyone is thinking – I have posted my thoughts on the likely stock market movements in other blog posts – search through them to see.

Any it’s another great article, enjoy reading it.

20 Signs That The Global Economic Crisis Is Starting To Catch Fire

Posted: 13 Feb 2014 02:59 PM PST

Lighting A Match - Photo by Sebastian RitterIf you have been waiting for the “global economic crisis” to begin, just open up your eyes and look around.  I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be “irrelevant” to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon.  Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber’s wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet.  After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008.  As you will see below, the problems are not just isolated to a few countries.  This is truly a global phenomenon.

Over the past few years, the Federal Reserve and other global central banks have inflated an unprecedented financial bubble with their reckless money printing.  Much of this “hot money” poured into emerging markets all over the world.  But now that the Federal Reserve has begun “tapering” quantitative easing, investors are taking this as a sign that the party is ending.  Money is being pulled out of emerging markets all over the globe at a staggering pace and this is creating a tremendous amount of financial instability.  In addition, the economic problems that have been steadily growing over the past few years in established economies throughout Europe and Asia just continue to escalate.  The following are 20 signs that the global economic crisis is starting to catch fire…

#1 The unemployment rate in Greece has hit a brand new record high of 28 percent.

#2 The youth unemployment rate in Greece has hit a brand new record high of 64.1 percent.

#3 The percentage of bad loans in Italy is at an all-time record high.

#4 Italian industrial output declined again in December, and the Italian government is on the verge of collapse.

#5 The number of jobseekers in France has risen for 30 of the last 32 months, and at this point it has climbed to a new all-time record high.

#6 The total number of business failures in France in 2013 was even higher than in any year during the last financial crisis.

#7 It is being projected that housing prices in Spain will fall another 10 to 15 percent as their economic depression deepens.

#8 The economic and political turmoil in Turkey is spinning out of control.  The government has resorted to blasting protesters with pepper spray and water cannons in a desperate attempt to restore order.

#9 It is being estimated that the inflation rate in Argentina is now over 40 percent, and the peso is absolutely collapsing.

#10 Gangs of armed bandits are roaming the streets in Venezuela as the economic chaos in that troubled nation continues to escalate.

#11 China appears to be very serious about deleveraging.  The deflationary effects of this are going to be felt all over the planet. The following is an excerpt from Ambrose Evans-Pritchard’s recent article entitled “World asleep as China tightens deflationary vice“…

China’s Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China’s $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications.

#12 There was a significant debt default by a coal company in China last Friday

A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China’s shadow bank sector.

#13 Japan’s Nikkei stock index has already fallen by 14 percent so far in 2014.  That is a massive decline in just a month and a half.

#14 Ukraine continues to fall apart financially

The worsening political and economic circumstances in Ukraine has prompted the Fitch Ratings agency to downgrade Ukrainian debt from B to a pre–default level CCC. This is lower than Greece, and Fitch warns of future financial instability.

#15 The unemployment rate in Australia has risen to the highest level in more than 10 years.

#16 The central bank of India is in a panic over the way that Federal Reserve tapering is effecting their financial system.

#17 The effects of Federal Reserve tapering are also being felt in Thailand

In the wake of the US Federal Reserve tapering, emerging economies with deteriorating macroeconomic figures or visible political instability are being punished by skittish markets. Thailand is drifting towards both these tendencies.

#18 One of Ghana’s most prominent economists says that the economy of Ghana will crash by June if something dramatic is not done.

#19 Yet another banker has mysteriously died during the prime years of his life.  That makes five “suspicious banker deaths” in just the past two weeks alone.

#20 The behavior of the U.S. stock market continues to parallel the behavior of the U.S. stock market in 1929.

Yes, things don’t look good right now, but it is important to keep in mind that this is just the beginning.

This is just the leading edge of the next great financial storm.

The next two years (2014 and 2015) are going to represent a major “turning point” for the global economy.  By the end of 2015, things are going to look far different than they do today.

None of the problems that caused the last financial crisis have been fixed.  Global debt levels have grown by 30 percent since the last financial crisis, and the too big to fail banks in the United States are 37 percent larger than they were back then and their behavior has become even more reckless than before.

As a result, we are going to get to go through another “2008-style crisis”, but I believe that this next wave is going to be even worse than the previous one.

So hold on tight and get ready.  We are going to be in for quite a bumpy ride.

Lighting A Match - Photo by Sebastian Ritter

Probably The Most Important Investment Report You’ll Read This Year

Here’s your chance to read an exclusive Elliott Wave International report – I keep banging on about how good their research and analysis is – well this is your chance to see for yourself.  They’re releasing parts of the report every day for a week, once you’ve signed up for FREE, they’ll make sure you get the reports.

As usual ignore any reference to wave counts, they look good and work after the fact, what we are looking for here is the factual analysis on the state of the economy and it’s potential effects – this kind of analysis, as I’ve mentioned before, just does not get published by the mainstream media and when your money is at stake it’s important to have the facts to then make Investment decisions from

I personally swear by EWI’s Independent research , it helps me to see the bigger picture that you can’t see from the mainstream media



Exclusive invitation: Our friends at Elliott Wave International have just released their new 50-page  report for independent investors, The State  of the Global Markets — 2014 Edition: The Most Important Investment Report  You’ll Read This Year. Normally priced at $199, they have allowed us on an  exclusive, limited-time basis to share with you the choicest selections from it  for FREE.Learn more and read the report now >>

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Consider yourself warned.

The global market outlook is far less rosy than the  so-called experts would have you believe.

  • Global stocks have set record highs, yet sentiment readings have hit off-the-charts extremes.
  • Gold, silver and bonds are in multi-year bear markets.
  • Investors in major markets around the world are exposing their money to unprecedented (and mostly unknown) risks.
  • Regional economies recently said to be “recovering” are slipping back into recession.
  • And despite widespread excitement for stocks, Main Street is still struggling.

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Bear Market stress catching up with you?

Bear-Market Stress is Weakening Society

We published our disease/epidemic study in the May
and June 2009 inaugural issues
of The Socionomist. We
concluded that for as far back as history provides data, social mood
appears to have dramatically influenced the health of societies.

As it happened, our study was published near the bottom of a Primary-degree
bear market and the onset of the Swine Flu pandemic. From an Elliott
wave perspective, an even larger-degree trend toward negative social
mood began a decade earlier, in March 2000, when the S&P 500 Index
was some 19% higher than it is today. Elliotticians label this trend
“Supercycle” degree, which is two degrees larger than the
Primary-degree bear market mentioned above.

Society has been expressing this larger trend toward increasingly
negative social mood through a variety of health-related symptoms.
For example, our 2009 study said,

Stress–born of the same fear that drives stock prices lower,
tanks economies and escalates foreclosures–also increases the risk
of disease. … Foreclosure–being forced out of your home–is one
of the most disruptive and stressful financial calamities that a family can suffer.1

Two years later in its October 2011 article, “Foreclosures Are
Killing Us,” The New York Times echoed The Socionomist:

Foreclosure is not just a metaphorical epidemic, but a bona fide
public health crisis … . A growing body of research shows that foreclosure
itself harms the health of families and communities … . A paper
released last month by the National Bureau of Economic Research found
that people living in high-foreclosure areas in New Jersey, Arizona,
California and Florida were significantly more likely than those in
less hard-hit neighborhoods to be hospitalized for conditions like
diabetes, high blood pressure and heart failure. …

More than one-third of homeowners in our study had symptoms of major
depression. The N.B.E.R. study found significantly more suicide attempts
in high-foreclosure neighborhoods. For every 100 foreclosures, it
found a 12% increase in anxiety-related emergency-room visits and
hospitalizations by adults under 50. Losing a home disrupts social
ties to neighbors, schools, jobs and health care providers–ties that
under better circumstances promote good health.2

Indeed, our 2009 study showed foreclosure and flu maps of the continental
United States, graphically illustrating the relationship between stress
and susceptibility to disease.

Foreclosures Are Still Killing Us: The foreclosure epidemic
and consequent stress have visibly worsened since March 2009.

Our study also said, “An extended bear market causes neurological
change across a broad spectrum of society … . The effects of social
stress will increase with the bear market.” We quoted the American
Psychological Association:

The most chronic stressors–which change people’s identities or social
roles, are more beyond their control and seem endless–were associated
with the most global suppression of immunity; almost all measures
of immune function dropped across the board. The longer the stress,
the more the immune system shifted from potentially adaptive changes
(such as those in the acute ‘fight or flight’ response) to potentially
detrimental changes, at first in cellular immunity and then in broader
immune function. Thus, stressors that turn a person’s world upside
down and appear to offer no ‘light at the end of the tunnel’ could
have the greatest psychological and physiological impact.3

In other words, the longer and more extreme a period of stress, the
more debilitating its impact on health.

How are we faring? In the 30 months since our initial study, society
has indeed continued to flag. Let’s look first at various stressors
from around the world and their link to social health.

The Mood Decline Has Undercut Society’s Well-Being

In various places around the world, it increasingly sucks to be human.
The Christian Science Monitor recently wrote, “The standard of
living for Americans has fallen longer and more steeply over the past
three years than at any time since the U.S. government began recording
it five decades ago.”4 Also in the U.S., the unofficial
misery index–the sum of unemployment and inflation rates–is now
at its highest point since 1983, which was just after the grueling
16-year Cycle-degree bear market. “The pace of change has been
incredibly rapid and incredibly tough on the less educated,”
says Mark Zandi, chief economist for Moody’s Analytics. Another economist
says, “it appears large segments of the workforce have moved
permanently into lower-paying positions.”4 The Gallup-Healthways
Well-Being Index hit a 32-month low in October,5 and Federal
Reserve data showed in December that “Americans got much poorer
last quarter, as their collective household net worth suffered the
biggest decline in three years.”6 A Marist Institute
for Public Opinion survey finds that one third of Americans say their
financial problems are chronic, and “64% of Americans worry that
they won’t be able to pay their families’ expenses… .”4 For
many, the light at the end of the tunnel is steadily dimming.

A recent survey by the UK’s Chartered Institute of Personnel and Development
indicates that stress has now surpassed heart attack, stroke, cancer
and back problems to become the most common cause of long-term sick
leave. The survey describes strong links between job security, stress
levels and mental health problems.7 One U.K. professor
goes so far as to say, “Stress is the 21st century equivalent
of the Black Death.”8 (That may be an exaggeration, but chronic
stress certainly does increase susceptibility to disease, as multiple
studies show.)

Greece is a case study in the psychological impact of a negative mood
trend. In June 2011, Time headlined, “The Greek Mental-Health
Crisis: As Economy Implodes, Depression and Suicide Rates Soar.”
Time said Greek psychiatrists recently reported a 25% to 30% increase
in the number of patients. The Greek suicide rate increased by 18%
from 2007-2009, with higher estimates for 2010. “The Greek identity
has suffered a tremendous blow,” said one psychiatrist. “[People]
are ashamed. The entire world today thinks that the Greeks are cheaters
and the black sheep of Europe. This is very hard to accept.”9

In the United States, people also are increasingly sad. The CDC reported
in October that Americans’ “use of antidepressant drugs has soared
nearly 400% in the past 20 years,” making them the most frequently
used medications by people ages 18-44.10 Mental health professionals
cited several possible reasons for the spike, including the “struggling
economy and the record number of layoffs and home foreclosures.”
Medco Health Solutions recently reported,

More than one in four American women took at least one drug for conditions
like anxiety and depression last year, according to an analysis of
prescription data. [The] use of drugs for psychiatric and behavioral
disorders in all adults rose 22% from 2001.11

And for the second year in a row, in 2010 the number of U.S. soldiers
who killed themselves exceeded those who died in combat.12 July 2011
brought “the highest monthly toll ever recorded,” according to the
National Journal.13 A CDC study recently found that the U.S. suicide
rate for adults of working age rises during economic hardship and
declines during prosperity. With laudable insight, the authors cautioned
that the correlation could be non-causal: “… a third factor may increase
the risk of both suicide and unemployment.”14

Socionomics holds that there is indeed a significant third factor,
society’s mood, which influences both societal health and the economy.

A Perfect Storm of Mood, Malaise and Pathogens

Some of the health problems we face during a negative mood trend result
from our behavior during the preceding positive trend. For example,
our 2009 report said,

The breadth of the recent peak in social confidence is evident in
decades of widespread complacent overuse of antibiotics and the consequent
emergence of antimicrobial drug-resistant organisms. … Complacency
about disease may be the ultimate expression of overconfidence.1

The four ascending lines in Figure 1 plot the percentage increase
in rates of antibiotic resistance of three bacterial threats to public
health and the rising rate of MRSA hospitalizations.15
The descending line shows the number of new antibiotics approved by
the FDA. The dangerous divergence is largely due to two reasons, one
biological and one profit-related: 1) antibiotics inevitably lose
effectiveness over time–especially if overused–as bacteria evolve
and adapt, and 2) short-course antibiotics are far less profitable
for pharmaceutical companies than are long-term drugs that do not
lose effectiveness, such as cholesterol-lowering statins. Regarding
profitability, a June 2011 article in Drug Discovery & Development
said, “In 1990, nearly 20 large pharmaceutical companies were conducting
antibiotic R&D. Today, fewer than five Big Pharmas retain active
research programs.”16 Earlier this year, Pfizer announced
deep research cuts, while Johnson & Johnson, the world’s largest
pharmaceutical firm, dropped antibiotics research entirely.

Figure 1

Meanwhile, since our 2009 study, there has been a steady stream of
new reports of rising antibiotic resistance in old enemies.

The Italian Association of Microbiologists says 15,000 Italians per
year get dangerous, drug-resistant infections in hospitals. According
to the Independent, infection outbreaks can be so virulent that “Sometimes
the only solution is to close the hospital.”17 In April,
researchers warned, “gonorrhea is increasingly developing resistance
to all of the antibiotics we have to treat it in the United States.”18
In July, scientists found “superbug” gonorrhea in Japan that is resistant
to all recommended antibiotics and could become a global public health
threat.19 In May, bedbugs carrying antibiotic-resistant
MRSA appeared in Vancouver.20 In June, Europe was hit with
an “entirely new super-toxic”21 strain of E. coli bacteria,
a food poisoning outbreak that spread to at least 10 countries and
in Germany alone sickened 3,816 and killed 54.22 In August,
on the same day that scientists identified S. Kentucky, a new salmonella
superbug they fear may spread globally, U.S. officials reported a
multi-state outbreak of S. Heidelberg, a different strain of antibiotic-resistant

In October, Scientific American reported that MRSA ST398, a strain
of drug-resistant Staphylococcus aureus first identified in pigs in
the Netherlands in 1994, was “recently found in about half of the
pigs and farmers tested in Iowa.” The article says, “The rate of human
[ST398] infections is going up in Denmark and the Netherlands …
We are just looking at the beginning of an epidemic.” Some of the
cases cannot be linked to livestock, suggesting that the bacterium
has evolved human-to-human or other transmission capability. Scientific
American wrote that the 29 million pounds-per-year of active antibiotics
used in U.S. food animals have resulted in “a profitable meat industry
… but also one of the most effective systems for the evolution and
transmission of antibiotic-resistant strains of bacteria that an engineer
could devise.”24

On November 17, 2011, The European Centre for Disease Control and
Prevention said, “the percentage of carbapenem-resistant K. pneumoniae
has doubled from 7 per cent to 15 per cent. … [It] is ‘particularly
worrying’ because carbapenems are the last-line antibiotics for treatment
of multi-drug-resistant infections.”25

New multi-drug-resistant microorganisms, such as gram-negative bacteria,
are evolving at a stunning pace as well. One pathogen that originated
in India, New Delhi Metallo-Beta-Lactamose (NDM-1), is not a bacterium
at all, but a bacteria-produced enzyme. Some strains of bacteria can
transfer the gene for NDM-1 production to other strains via horizontal
gene transfer, which is essentially a non-reproductive, natural form
of genetic engineering. Transmitted via food, water and human contact,
NDM-1 makes bacteria resistant to a broad range of antibiotics, including
powerful last-resort antibiotics. NDM-1 is increasingly common in
the U.K., and the CDC identified it in three U.S. states in June 2010.26

The Rising Potential for a Syndemic

The diverging trends depicted in Figure 1–the increases in drug-resistant
bugs versus the decline in the number of new antibiotics–have roots
in decades of complacency about the threat of infectious diseases.
But the critical, take-home point is the timing. This chink in society’s
immunological armor has begun to widen just as social mood is set
to plunge further and create a legion of fears, problems and stressors.
In fact, our 2009 study warned of a coming “syndemic,” a combination
of ills–such as poverty, hunger, stress, violence, diseases and lack
of medical care–that amplify declines in social welfare and create
what epidemiologists call an “excess disease burden” on the population:

A spiraling decline in social mood stacks [relatively] minor stressors–such
as subprime defaults and falling stock prices–atop bigger stressors,
such as job losses and falling house prices. This enables future stressors–crowding,
homelessness, family violence and depression–all of which increase
the risk of epidemic disease.

This is the same conclusion reached by two researchers, Johannes Krause
and Hendrik Poinar, who recently led a team that unearthed and fully
sequenced the ancient DNA of Yersinia pestis, the suspected cause
of 14th century Europe’s Black Death. The researchers found the ancient
DNA to be genetically identical to that of modern Yersinia, which
still infects thousands of people each year and produces similar symptoms
but spreads slowly and is far less virulent. Krause speculated, “[Perhaps
the] Black Death behaved differently from modern Yersinia infection
due to Europeans’ total lack of previous exposure. Another possibility
is co-infection with other pathogens, a so-called syndemic.”27
Poinar made it even clearer:

For a long time we thought the bug was the culprit … but now we
suspect that the interplay between the disease and humans was what
made the medieval plagues so devastating. Fourteenth century London
was crowded, cold and damp. Large parts of the population were malnourished
and many were carrying other diseases, such as the flu. Then suddenly
the plague arrives with the merchant ships from Southern Europe. It
was a perfect storm.28

Such conditions were not present in 2009 during the swine flu pandemic,
which nevertheless killed thousands of people and “fulfilled every
scientific condition for a pandemic.”29 Should they be
present next time, the casualties should grow by multiples. And conditions
are changing in ways that could favor the development of such a syndemic.
As we noted in 2009, “The bear market will bring some degree of breakdown
in the health care system.” Deflationary conservatism will squeeze
hospitals, physicians, pharmaceutical companies and Medicare even
as health and social crises arrive from multiple directions. Already
we see warning signs. According to a report on NPR, drug companies
and doctors have rationed critical drugs whose demand has outstripped
supply for short periods, including “a wide range of medications:
cancer chemotherapy agents, anesthetics, antibiotics, electrolytes
needed for nutrient solutions, and dozens more.”30 In fact,
The New York Times wrote, “at least 180 drugs that are crucial …
have been declared in short supply–a record number. Prices for some
[of them] have risen as much as twentyfold.”31

Our study said, “The ebbing tide of social mood will reveal even more
[food-safety] laxity and cause even more hardship.” The same is true
of drug safety, as the bear market has already forced hospitals to
use substandard suppliers. NPR reported, “[Nine] Alabama patients
died and 10 others got seriously ill after getting bacteria-contaminated
intravenous feeding solutions made by local pharmacies.”30
The elderly–a large segment of the rapidly aging demographic–are major
consumers of health care resources. Old people are more likely to
suffer from chronic and disabling disease, and many depend on multiple
prescription drugs for quality of life, and even life itself. Even
without an epidemic, these people and the health-care system are highly
vulnerable to supply-chain disruption.

According to a September Time article, Dr. Irwin Redlener, the director
of the National Center for Disaster Preparedness said, “when it comes
to public health, we may actually be worse off than we were a decade
ago. … There have been tremendous cuts in virtually every program
that has to do with preparedness.” Time also summarized a new report
by the Trust for America’s Health and the Robert Wood Johnson Foundation:

■ Thirty-three states have cut funding for public health, with 18 of
those states cutting funding for two years in a row.

■ Local public health departments have cut about 29,000 jobs, representing
19% of the public health workforce.

■ Federal support for public health preparedness has been slashed by

■ The United States has 50,000 fewer public health workers than it
did 20 years ago, and one-third of public health workers may retire
within five years.

■ The medical system’s ability to care for a “massive influx of patients
remains one of the most serious challenges for emergency preparedness.”32

Recognition is Dawning

The influence of the post-2000 negative trend in social mood on the
U.S. healthcare system is becoming clearer. As the trend continues,
researchers will increasingly recognize the strong connection between
social mood and societal health. Researchers will likely begin with
the erroneous idea that the flagging economy, not negative mood, is
the underlying cause of the decline in collective health.

“Prolonged Illness Found Among Idle [Unemployed],” headlined The New
York Times in April 1933, in the pit of the Great Depression. The
article described a New York State Health Department study of “1,600
families chosen at random from the files of public welfare agencies.”
The researchers found higher morbidity rates than had two previous
studies, one of which was conducted ten years earlier:

Sickness is unusually prevalent among the more than 300,000 families
on the public relief rolls in the State. … Individual illnesses
among the unemployed families, although only slightly more numerous
than normal, were unusually prolonged, more than 40% of those disabled
by illness on the day of the survey having been ill for more than
a year.33

Jumping ahead to 2011, research by evolutionary scientist Randy Thornhill
has developed a fascinating “‘parasite stress’ model of human society,
which considers all disease to be a parasite on human society”:

He has already used it to predict that people in disease-ridden regions
will be more xenophobic, and prefer to associate with relatives and
close neighbors. These “collectivist” societies opt for strongly conservative
values and autocratic governments, which Thornhill says minimizes
the risk of contracting diseases. By contrast, people in countries
with low disease rates tend to be more individualistic and democratic…
. Thornhill [with a colleague] has now found a link between disease
and violence. The pair compared murder and disease rates from 48 US
states and found that high disease rates correlated with high murder

Social Fear Threatens Medical Science

Scientists are striving to understand a long list of primary pathogens
with pandemic potential. For example, H5N1 bird flu, a lethal virus
that is scarily similar to the 1918 flu that caused the deadliest
global pandemic ever recorded, currently cannot spread easily among
mammals. But researchers recently demonstrated that “five mutations
in just two genes have allowed the virus to spread between mammals
in the lab. Scientists note that “the virus is just as lethal despite
the mutations.”35 Controversy is brewing over whether these
scientists should be allowed to publish their complete methodology
via the Internet.36 The common practice of widely sharing
research to better human health may become a casualty of the negative
social mood trend. People increasingly fear such “dual use” research
could also enable terrorists to make powerful biological weapons.

Here’s another example. The Washington Post reported on December 8:

Imagine computer-designed viruses that cure disease, new bacteria
capable of synthesizing an unlimited fuel supply, new organisms that
wipe out entire populations and bio-toxins that target world leaders.
They sound like devices restricted to feature-film scriptwriters,
but it is possible to create all of these today, using the latest
advances in synthetic biology.37

Scientists at Celera Corporation used the “equivalent of a laser printer
that can ‘print’ DNA” to assemble the first-ever synthetic life form
in May 2010. The Post wrote, “Prices are falling exponentially. …
Eventually, like laser printers, DNA printers will be inexpensive
home devices.”

Security futurist Marc Goodman wrote on his website, “In effect, the
human genome is merely another operating system waiting to be hacked.”38
He warned of new custom-designed bioterror pathogens that could target
the genome of an individual or a group. “Bio-crime today is akin to
computer crime in the early 1980s,” Goodman said. “Few initially recognized
the problem, but one need only observe how the threat grew exponentially
over time.” Increasingly negative social mood recasts technological
boons as threats, meaning that science may soon be constrained by
the same authoritarianism that is shutting down portions of the Internet.

The intersecting trends of rising fear and scientific denialism–socionomic
traits of bear-market thinking–are also evident in the anti-vaccine
crusade and in accusations that the 2009 swine flu pandemic was actually
a hoax, a conspiracy by vaccine profiteers. Try telling that to the
families of the flu victims. Should another pandemic erupt near the
next major low in social mood (EWI has forecast the end of Supercycle
wave (a) in 2016), a syndemic is likely and hoax charges
are unlikely, as there will be far too many victims to ignore.

The Mood Decline Is Endangering Kids and Society’s Future Well-Being

Doctors at the Boston Medical Center and in four other big cities
say they are “seeing more hungry and dangerously thin young children
in the emergency room than at any time in more than a decade of surveying
families. … chronic hunger threatens to leave scores of infants
and toddlers with lasting learning and developmental problems.”39
The child poverty rate has been trending higher since the 2000 social
mood peak. “The State of America’s Children 2011,” a Children’s Defense
Fund report released in July, revealed other stressors of the young
resulting from the negative mood trend:

■ The number of homeless children and
youth in U.S. public schools increased 41% from 2006 to 2009.

■ The number of children [in households that receive] food stamps rose
rapidly since 2000 to reach a record 15.6 million children in 2009.

■ The number of children who fell into poverty between 2008 and 2009
was the largest single-year increase ever recorded.40

Poverty is not the only bear-market monkey on children’s backs. Parents
tend to grow more neglectful and abusive in a negative mood trend.
Our June 2009 study noted,

Today’s bear market is already damaging the youngest generation. The
May 21 Miami Herald reports that the severity of child abuse, the
number of child deaths and the number of cases of shaken baby syndrome
have all increased while the markets have fallen. A May 20 CBS News
story reports that children’s hospitals in Phoenix, Pittsburgh, Boston,
and Seattle have seen 20 to 40% increases in child abuse cases in
the past year, and that in Beaufort, South Carolina, where unemployment
in a five-county area is up 700%, child abuse cases have increased
64% over the past year.

Health Day reported on a study in the October 2011 issue of Pediatrics:

A new study examined the rate of abusive head trauma [AHT] seen among
kids under age five in various U.S. locales from 2004 to 2009. Researchers
found that the rate of such trauma rose from about nine per 100,000
children to nearly 15 per 100,000 during that time period–coinciding
with the onset of the recession and massive job losses.41

Other research teams reported a doubling of abusive head trauma during
the recession. The authors of the Pediatrics study concluded:

The rate of AHT increased significantly in 3 distinct geographic regions
during the 19 months of an economic recession compared with the 47
months before the recession. This finding is consistent with our understanding
of the effect of stress on violence. Given the high morbidity and
mortality rates for children with AHT, these results are concerning
and suggest that prevention efforts might need to be increased significantly
during times of economic hardship.42

Teens and young adults express the rising stress in an “alarming new
trend,” according to a February 2011 Pediatrics study:

[Teens are] creating and sharing YouTube videos about cutting, burning
or otherwise harming themselves–and even demonstrating techniques.
… Young people say they do it to cope with stress or traumatic experiences
… . Most do it in secret, hiding scars under long-sleeved shirts
and confiding only in anonymous people online.43

The researchers say YouTube provides self-destructive teens a community
of support that normalizes the behavior. And it’s not just YouTube.
“Other websites promote anorexia, autoerotic asphyxiation, even how-to
guides for suicide,”43 said USA Today.

Earlier in 2011, the media blamed the languishing economy for rising
rates of reported child abuse. Now, armed with a new report from the
Department of Health and Human Services,44 they say there
is no such relationship. Yet, data in that report show that child abuse
fatality rates rose by 40% between 1999 and 2008. Socionomists posit
that the negative trend in social mood influences both the economy and
the severity of child abuse.

Children suffer increased physical and psychological stress in bear
markets, prolonging the legacy of a major mood decline.

Two Pedophile Scandals Display Socionomic Timing

It is no surprise to socionomists that a major child sexual abuse scandal,
such as the one that recently engulfed Penn State, went unreported during
the bull market but finally erupted during a negative social mood trend.
As the June 2002 issue of The Elliott Wave Theorist observed about the
Enron scandal, “During the bull market, few cared. There was
consistent misbehavior for a decade, but there was no scandal until
well after the trend changed.”

The same psychology has been operative at Penn State. Former coach
Jerry Sandusky’s alleged sexual predation of young boys spanned several
mostly positive-mood decades, and the current negative mood trend
has only now drawn back the curtain on his misdeeds. Megan McArdle,
senior editor for The Atlantic, struggled to understand the cover-up
that followed the Sandusky affair:

I cannot imagine how a bunch of people somehow tacitly agreed not
to do anything about it. … We’re all still left with a large, unanswered
“why?” I am fundamentally a cynic: I believe that people will do almost
any awful thing. But I need a reason. And I cannot find one in any
of this.45

Socionomics not only provides that reason but essentially predicted
the behavior.

The Associated Press got closer to the reason when it noted similarities
between the Penn State saga and the child sexual abuse scandal that
rocked the Catholic Church in the early 2000s. “The sort of instinct
to protect the institution is very similar,”46 said author
Philip Lawler. And it held intact all during the bull market. Then,
during a negative mood phase, heading toward the stock market low
of 2002, the Boston Globe widely exposed the Catholic scandal and
won a Pulitzer Prize. Fox News reported on December 5 of this year
that the Hollywood film industry might also have a history of child
abuse hidden away; if so, expect more of it to surface.47
Why? As increasingly negative social mood desanctifies one institution
after another–banks, Wall Street, democracy, capitalism, education,
the Federal Reserve–abused or aggrieved individuals finally find anger,
courage and supportive outrage from others, inducing them to speak
out, and the public is disposed to seek vengeance.

Figure 2

And finally, here is an international survey that shows child abuse
rates fluctuating with social mood. Figure 2 is one of UNICEF’s Innocenti
Report Cards.48 For each country listed on the right, two bars show
two different five-year averages of the annual number of deaths from
maltreatment per 100,000 children under the age of 15 years. The pale
bars show rates for a five-year period in the bear-market 1970s. The
dark bars show five years in the bull-market 1990s, which saw improvement
in the majority of the 23 industrialized nations. UNICEF summarized
the 1970s-1990s bear-to-bull improvement:

[In] 14 of those countries, the rate of child deaths from maltreatment
has fallen, in some cases steeply. In a further four countries the
rate has remained stable and in five countries there has been an increase
(though in all except Portugal the increase is so small as to be of
little statistical significance).

If EWI’s social mood outlook proves correct, this trend will reverse.
We believe an understanding of socionomic causality can help scientists
solve the mystery behind such changes. Complicating the outcome, however,
will be the concurrent tendency of negative social mood to increasingly
cast the scientific method itself as suspect.49

We hope you have enjoyed this report on
the study of epidemics and disease. If you would like to have studies
like this delivered to you each month as soon as they are published,
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prepare for major changes in social mood. Access
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Social Mood Impels Feelings of Certainty and Uncertainty

Social Mood Impels Feelings of Certainty and Uncertainty

By Alan Hall, originally published in the August 2012 Socionomist

Today, your boss could hand you a raise—or a pink slip. Tomorrow, you might narrowly avoid a car crash—or get T-boned.

The future is equally uncertain at all times—in both bull and bear markets. Yet many investors and the media perceive the world to be far more uncertain during negative mood phases. Consider this excerpt from Chapter 18 of The Wave Principle of Human Social Behavior (1999):

[People] equate uptrends with predictability and downtrends with unpredictability. The Harper’s Weekly quote from 1857 includes the phrase, “never has the future seemed so incalculable as at this time.” Translation: “The market has been falling for several years.” The media constantly characterize market setbacks as injecting “uncertainty” into a picture of the future that presumably was previously as clear as crystal. I am not exaggerating when I say that this foible is timeless.1

The distinction is more than academic. It illustrates that humans use events to justify their collective mood. The reason? Social mood itself is unconscious—and therefore, by definition, unperceived. Yet it produces powerful feelings. One of those feelings is uncertainty. When we observe widespread expressions of certainty or uncertainty, we can use them as indicators of public mood—and plan accordingly.

Quantifying Uncertainty Over the years, researchers have developed hard evidence that allows us to link changes in the volume of expressions of uncertainty with bull and bear markets. Let’s begin by looking at several uncertainty indexes.

1. Measuring Economic Policy Uncertainty Economists Scott R. Baker, Nicholas Bloom and Steven J. Davis developed their Index of Economic Policy Uncertainty in their February 2012 paper, “Measuring Economic Policy Uncertainty.”2 The authors used three measures to construct their index: (1) newspaper coverage of economic policy, (2) the number of federal tax code provisions set to expire, and (3) what they refer to as “disagreement among economic forecasters.”

Figure 1

Figure 1 plots the monthly Inflation-Adjusted Dow (the Dow Jones Industrial Average divided by the Producer Price Index) against the authors’ index. The Dow/PPI reveals the true extent of the 13-year bear market that has been largely disguised by repricing stocks in depreciating dollars. This index has also reflected fear and uncertainty in the past, as its largest declines prior to 2000-2012 occurred in the bear markets of 1929-1932 and 1966-1980.

Note that social mood creates a major division on this chart at the Dow/PPI peak in January 2000. Now observe that just a few months prior, the uncertainty index reached its second-lowest level in nearly three decades. Note also that most of the significant peaks in the uncertainty data correspond to significant lows in the Dow/PPI. And finally, note that the overall negative social mood trend since 1999 has accompanied increasing expressions of uncertainty.

Figure 2

Figure 2 shows the authors’ Index of Economic Policy Uncertainty as published in their paper. The authors labeled each significant peak in their index with an accompanying event and wrote, “The index spikes near consequential presidential elections and after major events such as the Gulf wars and the 9/11 attack.” At first glimpse, one might think these events—most of which are “negative” in nature—caused the spikes in uncertainty. But socionomics asks this critical question: “What generated the negative events?”

Figure 3

To answer that question, Figure 3 plots the nominal Dow against the same Index of Economic Policy Uncertainty. We shaded significant positive-mood trends (rising stock prices) blue and negative-mood trends (falling stock prices) brown. As you can see, uncertainty increases during negative social mood trends.

But here’s the shocker: In every major uncertainty spike except 1986, multi-month downturns in the Dow and upturns in uncertainty preceded the events listed in Figure 2. Given this chronology, it appears that negative social mood motivated both the scary events and the uncertainty.

A final observation: Baker, Bloom and Davis rightly connect uncertainty and fear…

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Far dated view on the UK’s involvement in Europe

Will the UK remove itself from the EU (European Union)?

I write this article as a full UK national and citizen, born, bred and educated in the UK.

On Wednesday 23rd January 2013, our prime minister David Cameron, gave a speech outlining the UK’s role within the EU – you can find the speech by googling it, I won’t reprint it here because the speech is not the purpose of this post –  the outcome in 2017 is the purpose of this post.

David Cameron has outlined providing a full in or out referendum to us on being part of Europe in 2017.

The last time the country had chance to vote was in the 1970’s, when I was only a few months old, so I’ve never had a say on Europe, since the 1970’s we’ve not been a fully paid up member of the EU but we have been very well versed in it’s policies and culture.  for instance in our supermarkets Banana’s have to CONFORM to EU size and curvature directives, unless they can’t be sold, another is that rather than working in pounds and ounces we have to work in kilograms and grams – there’s actually hundreds of silly EU rules that we have to abide by! – In other words the EU tell us what we can and can’t do in various area’s of life and commerce.

To be fair previous governments have negotiated various opt outs and vetoes so that we aren’t forced to abide by all rules, but still in my eyes the EU’s involvement in UK life has and will continue to cause friction and problems.

The problem many people in the UK are seeing is that we are funding the EU but being taken for a ride by them!  When things get tough at home people don’t like this and start to ask questions of their MP’s and government (Hence David Cameron’s speech).  This is classic protectionism and quite right, why fund an organisation who waste our money and give it to other countries from which we obtain very little in return.  It has everything to do with political stability in the EU and keeping our fingers in the EU pot as well as having trading links.

I can understand the political argument, I don’t like the “You scratch my back and we’ll scratch yours when required” deals, but they happen.  The EU are a huge part of our trading links which makes them very important.

To the ordinary man and woman on the UK’s streets, I’m pretty sure they just see us funding the EU and being told how to live our lives by the EU!  If the perception deteriorates further over the years then the likely outcome of the vote in 2017 should be NO [we want OUT].  What could cause those events?……..

How is all this linked to Trading and Investing?

Well, it has everything to do with the TIMING.

I’m pretty sure, although I’m guessing that David Cameron has set the 2017 date because he thinks by then the whole country will be feeling better by way of improved economic conditions – this is SOCIONOMICS!

Now, I’ve studied market performance going back centuries and if the stock markets follow trends and cycles of the past, then this year 2013 for 3-4 years (2017) should result in a sideways to falling stock market over that 3-4 year period [expected NOT guaranteed, based on past cycles].

This takes us to the year 2017 and to the vote we have been promised on Europe.

If the above market cycle happens, then the UK public’s mood will not be very happy (as I think Mr. Cameron is banking/hoping on).  These periods of extreme stagnating and/or falling stock market performance will create severe anger within the UK and if this happens then I’d be very very surprised if the UK votes YES to joining Europe in the in/out vote.

So I am making a prediction, 4 years out, based solely upon a expected contracted stock market over the next 4 years, that in 2017 when we go to the polls to vote the UK public will vote NO to being in Europe.

If on the other hand I am completely wrong and from say 2015-2017 the stock market has been rising I’d expect the opposite result, as the politicians focus on the positive aspects of being part of the EU.

Yes I am making a prediction and yes I have a 50:50 chance of being right, but I’ve listed my reasons based solely on stock market action from 2013-2017 and especially the period 2015-2017.

If you removed the stock market out of the equation, then I have no idea what will happen – I need the stock market to form my prediction, search through my other Socionomic articles and you’ll see I was spot on for the re-election of President Obama in the USA elections of 2011 – even though the big banks were banking his rival.

Anyway this is one to refer back to over the years and especially in 2017, thought I’d get it in nice and early.

The Hovis Trader

A Free 40-Page Download: A very insightful Investment Report for 2013

Dear investor,

Consider yourself warned.

Please find links to a very rare FREE publication from my friends at Elliott Wave International, providing their thoughts and outlook for the economy and major worldwide markets.

Please note that this is Elliott Wave International personal views and nothing might not come of their concerns, views or predictions.  I personally subscribe to Elliott Wave Internationals publications that you can obtain this rare insight to – why?  Because their level of analysis is superior to others and it fits my analytical nature perfectly, In short I love their analysis because the content is never seen in the mainstream media and its relevant, I DO NOT trade or invest or analyse my potential trades using Elliott Waves – for me it does not suit my style so I personally ignore any reference to wave counts and the like, but the financial analysis is second to none and very useful to me to form an idea of what’s going on in the world [financially].

It’s also interesting to see that Elliot Wave International have time cycles that expire in 2016, this fits in well with my long-term outlook and time cycles – my time cycles are completely different to those in the report but they both bottom in 2016!

The global market outlook is far less rosy than the emperors-minus-their-clothes would have you believe.

  1. Global stocks are near multi-decade, technical price junctures.
  2. Regional economies recently said to be “recovering” are now slipping back into recession.
  3. Despite a multi-year rally in stocks, the AP reported on Dec. 27 that mainstream investors are selling shares at breakneck pace. “It’s the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II.”

Politicians and central bankers worldwide reassure investors that the credit crisis of 2007-2009 will turn out to be nothing more than a footnote in market history — despite the compelling proof that it never truly ended.

Meanwhile, U.S. Congress made a final-hour fiscal cliff deal to delay addressing its gargantuan budget woes, Europe remains in turmoil, and Asia-Pacific regions and emerging markets are charting surprising courses of their own.

Just as the timeless fable warns, sometimes it takes a single voice in a crowd to tell everyone the emperor wears no clothes. EWI’s new report, The State of the Global Markets — 2013 Edition, is that voice.

Packed with timely charts and analysis, this 40-page tour de force tears down the popular investment myths of today and replaces them with hardcore reality.

  • It tells you what’s really going on in the global marketplace.
  • It reveals market pitfalls no one else sees coming.
  • It uncovers once-in-a-lifetime investment opportunities.

To get ahead of the markets in 2013, you must think independently. This 40-page report gives you the tools and the direction you need to gain a competitive edge.

Download The State of the Global Markets — 2013 Edition now (for FREE), and enjoy dozens of independent global market insights that will prepare you to survive and prosper in 2013 and beyond.

Follow this link to download your free 40-page report, The State of the Global Markets — 2013 Edition, now.

(Don’t miss out. It’s only available until April 16.)

If you are trying to make head or tail of whats going on in the world economy then this 40 page report goes a heck of a long way to describing what’s happening and WHY!

With my best wishes for a prosperous 2013,

The Hovis Trader

P.S. This report is available to you for free for a limited time, exclusively from EWI. Please download it now while its valuable year-in-preview advice can help your portfolio in the New Year. Download the 40-page report now.

About the Publisher, Elliott Wave International Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

A Historic Peak in the Amount of U.S. Government Entitlements

[Article] A Historic Peak in the Amount of U.S. Government Entitlements.


Click the link to skip through to an interesting article on rising benefits.


Was Obama’s re-election a surprise?

Not to those of you who follow and understand Socionomics.

The stock market predicted this outcome, no matter how close the polls were in the run up to the election – I had a nice bet on the outcome based solely on this theory.

You can find a lot of information from:

This can also be backed up by Elliott Waves publication: The Mania Chronicles (book) as you will see social mood in action at key market tops and bottoms and all the accompanying economic “projections”.  Def worth reading


Obama’s into his 2nd and final term as President of the USA – he can’t serve another term so he’s out of office in 4 years time whatever happens.  BUT, let’s make a few predictions based on Socionomics (my understanding of it):

  1. It ALL depends upon the stock market action in the preceding years prior to the 2016 elections – If the stock market is or has been DOWN hard in the preceding 2 years prior to election i.e. 2014 onwards then the odds of a change of political party is HIGH
  2. If the stock market has been rising steadily in the preceding 2 years 2014-2016 then things should be as they have been this time – roughly equal – when this occurs people tend not to “rock the boat” and keep things as they are and avoiding change – but probability suggests that after 2 successive terms of the same political party, the USA public are more likely to change the political party for the next President
  3. I’m expecting a very major Time Cycle to top out in 2013, this should have the effect of forcing the markets downwards – If this lasts until 2016 then the chances of a complete change of political party winning the race for the white house is VERY HIGH – this will be virtually confirmed by No.4 if No..4 occurs
  4. Assuming No.3 – in the preceding months in the run-up to the actual Presidential election if the markets continue to trend DOWN (hardish) then the odds are extremely high that the public will boot out the current political party and simply replace them with the opposition!

You can see that NONE of this is based on political policy!  Its based solely upon SOCIAL MOOD expectations based on stock market movements – obviously the bigger the stock market movements the better and I would only use this method on major things such as elections that occur infrequently – trying to use this to make daily or monthly predictions won’t work.

I’m based in the UK – in 2008 we had the credit crunch, banks going pear shaped (bust) etc etc – the government of the day was Socialists – the stock market tanked hard and furious 2008-09, elections were held in May 2010, from March 09 – May 2010 the stock market actually ROSE quite a lot – BUT the public obviously were still angry at the Labour government for “causing” the crash as they booted them out and swiftly changed their votes to the opposition parties! – This outcome could have been virtually predicted as the stock market, property and commodity markets fell hard in 2008 – people lost large %’s of their personal wealth – the natural emotion is to blame someone and who bigger or better to blame and inflict pain on than the government (of whom forces you to comply to laws and taxation….etc) by showing them whose boss and kicking them out of power (of which they crave!)

Check out the Wikipedia page – the figures might not be 100% accurate but you get the gist:,_2010

If you are not looking at how things on greater scales all link into the markets then you are missing out – Life is all interlinked – and by ignoring the signs the vast majority of people suffer through ignorance that ultimately affects their personal wealth.  As I mention in “Your Investment Life” by failing to understand how everything is inter-linked you are putting your own financial future on the line through obtaining poor Investment results over the years, which ultimately affects the quality of your life upon retirement or whatever the purpose of the funds was for.

Anyway, let’s what how the markets unfold and what actually happens closer to the next election in 2016

The Hovis Trader

Authoritarianism: The Complete Socionomic Study

Authoritarianism: The Complete Socionomic Study

By Alan Hall, originally published in the April 2010 and May 2010 Socionomists

Part 1: The Wave Principle Governs Fear and The Social Desire to Submit Mention authoritarianism and most people imagine its ultimate incarnation—a dictator wielding top-down control. The socionomic perspective, however, paints a fuller picture.

Authoritarianism begins with a negative social mood trend, which in turn spawns a desire among some to submit to authority and among others to coerce their fellows to submit. At the same time, still others, caught up in the same emotional climate, battle against authoritarianism.

We forecast that a continuing long-term trend toward negative social mood will produce increasingly authoritarian—and anti-authoritarian—impulses and eventually lead to the appearance of severe authoritarian regimes around the globe.

A Society’s Definition of Normal Constantly Changes To begin our study, we must look at how a society determines what is socially, politically and morally “Normal.” Different large-degree mood trends create dramatically different perceptions of normalcy, even in the same country. Positive mood trends produce increasing confidence and consensus; negative mood trends produce fear, anger, polarization, discord and challenges to the status quo. Chapter 14 of The Wave Principle of Human Social Behavior (HSB, p. 227-228) says:

A waxing positive social mood appears to correlate with a collective increase in concord, inclusion, a desire for power over nature … . A waxing negative social mood appears to correlate with a collective increase in discord, exclusion, a desire for power over people … .1

In the United States, for example, the massive 1950s-1960s Cycle wave III bull market featured broad agreement on many basic values and norms. Increasing inclusionism ushered Alaska and Hawaii into statehood in 1959, and society’s desire to express its power over nature led to, among other massive ambitions, the moon landings in the late 1960s and early 1970s. In contrast, today—10 years into a Grand Supercycle-degree bear market—U.S. society’s perception of itself and its future has radically changed. Increasing discord and exclusionism is evident in calls for secession, threats of violence against members of Congress and Arizona’s recent passage of highly restrictive anti-immigration legislation. As for power over nature: opposition to genetically modified foods and to carbon-producing industry show the opposite impulse, and NASA’s share of the federal budget is one-tenth what it was in the 1950s.

Around the globe, the desire for power over nature is yielding to the desire for power over people. Segments of society are increasingly accepting this as “normal”; others are battling against that view.

Introducing the Socionomic Nolan Chart Social polarization is not limited to the one-dimensional political spectrum of left versus right. It also includes the opposing views of anarchy and authoritarianism. The first image in Figure 1 is our adaptation of the Nolan Chart, a simple diagram that depicts these complex political dynamics. David Nolan posits that left-wing liberalism advocates personal freedom, and that right-wing conservatism advocates economic freedom; libertarians advocate both, and authoritarians neither. We added the inner diamond to Nolan’s picture to show the distinction between the consensus that occurs during a bull trend and the polarization of views during a bear.

A Society’s Perception of “Normal” Is Constantly Changing

Figure 1

Images 2 through 6 in Figure 1 portray how a society’s perception of what is “normal” shifts over time.

  1. Snapshot of bull market, with the consensus view arbitrarily positioned in the center.
  2. Beginning of Bear Market: Polarization begins. People abandon the consensus view.
  3. Mood decline accelerates: Polarization increases, as do calls for separation, opposition and destruction of the status quo. Society’s sense for what is “normal” loses definition.
  4. Majorities form and one prevails: Society’s new normal gels nearer one of the corners.
  5. Mood trend bottoms, reverses: A new bull market begins. Polarization decreases. Partisans begin to embrace compromise and re-form a centrist view.
  6. Bull market under way: Society desires peace and cooperation. Optimism and willingness to compromise prevail. “Normal” may begin a slow shift, but even as the perception moves, society maintains consensus.

A large-degree mood reversal can accomplish a dislocation of views in a relatively short time. For example, the 1929-1932 Supercycle wave (IV) mood decline set up a dramatic change in the United States’ consensus view of “normal.” First, the trend toward negative mood polarized society and diffused consensus, throwing “normal” into flux. Once the bottom formed, the majority began to emphasize unity and self-sacrifice in the face of external enemies; a new centrist-diamond “normal” coalesced, lower and further left than before. This new normal persisted into the 1950s bull market, when U.S. citizens displayed unusual compliance with reduced economic freedom via record-high tax rates. The consensus held for 50 years, with moderate Democrats Kennedy and Clinton and moderate Republicans Eisenhower, Nixon and Bush reflecting the middle-of-the-road political viewpoint.

Bull markets generate consensus even in societies that are very near a Nolan extreme. For instance, the Supercycle wave (IV) of 1929-1932 caused Soviet society to polarize as well. Amid rising factionalism in 1929, Joseph Stalin attempted a hard-left, super-authoritarian move to collectivize agriculture. The authoritarian/anti-authoritarian conflict took a heavy toll:

Farmers considered this policy a return to serfdom. They resisted and destroyed about half the U.S.S.R.’s ­livestock—some 55 million horses and cows—whereupon Stalin responded by sending about a million families into exile. This conflict, and a catastrophic decline in grain production, exacerbated the famine of 1932-1933 that killed between five and 10 million people. —Global Market Perspective, “A Socionomic Study of Russia,” November 20072

After Supercycle wave (IV) bottomed, the Soviet centrist diamond re-formed near the repressive authoritarian pole. Then from this unlikely position, the bullish mood behind Supercycle wave (V) unified Soviet society enough that it achieved remarkable success in its space program. The Soviets orbited the first satellite, Sputnik, in 1957; put the first man into space in 1961; and landed the first spacecraft on the moon in 1966.

In contrast, declining mood currently has one of the world’s leading democracies implementing authoritarian practices. In 2004, the British government’s own information commissioner warned that the country risks “sleepwalking into a surveillance society.” Since then surveillance has only increased, while the nation debates whether to accept the scrutiny.

Large-degree bear markets can lead to calls for freedom, authoritarianism, left-leaning and rightist solutions. Where a country ends up is unpredictable. What is predictable is that societies tend to look far different after major mood declines than they did before them.

Bear Markets Encourage Authoritarianism Past issues note that the stock market is our best measure of social mood. Our studies also show that the complete U.S. stock record, with British data preceding, is an excellent meter of long term global mood. Such is the case with our study of authoritarianism. (For more on why U.S. stocks reflect global mood, see “A Socionomic Study of Russia,” November 2007 Global Market Perspective; call our offices for details.)

Figure 2 shows that over the past 300 years, major bear markets hosted most of the notable examples of authoritarianism. There are incidents of authoritarianism in bull markets, but they are fewer and smaller. Let’s review the history:

Grand Supercycle wave & produced both an increasingly authoritarian Great Britain and the American Revolution as a response.

In Supercycle wave (I), Cycle wave IV included the United States’ Tariff of 1828. The South called it the “Tariff of Abominations” because it supported the North’s industry at the expense of the South’s agriculture. The September 2001 issue of The Elliott Wave Theorist explains the forecasting value of fourth waves:

The negative themes in “wave four” within the “five waves up” presage those that will dominate, more dramatically and on a much bigger scale, in the ensuing “three waves down.” In this case, wave IV discord foreshadowed the coming extreme polarization of Supercycle wave (II), which led to the American Civil War.3

Historians associate the 1850s—the second leg down of Supercycle (II)—with the Authoritarian Decade in Great Britain, Austria and Prussia. In Europe Reshaped 1848-1878, J.A.S. Grenville writes:

The decade of the 1850s presents an extraordinary contrast to the turmoil of the ‘hungry forties’ … . The state was paternalist and authoritarian.4

The authoritarian impulse was not limited to those countries. In the United States, Lincoln suspended the writ of habeas corpus, which allows appeal against unlawful imprisonment, and dismissed the states’ understanding that they could secede from the Union at will. In France, Napoleon III revived and extended Napoleon I’s authoritarian nationalism. His police state tactics—spies, arrests, political trials and restrictions on freedom of speech, assembly and the press—“provided the old ruling classes of Europe with a new model in politics”  (A History of Western Society, McKay, Hill, Buckler).

Later, Cycle wave IV of Supercycle (III) brought the initial rise of the authoritarian left via the Bolsheviks in the 1917 Russian Revolution. To a lesser degree, it also brought authoritarianism to the United States. Sociologist Robert Nisbet wrote:

The West’s first real experience with totalitarianism—political absolutism extended into every possible area of culture and society, education, religion, industry, the arts, local community and family included, with a kind of terror always waiting in the wings—came with the American war state under [President Woodrow] Wilson.5

The American Protective League—a quarter-million volunteer vigilantes authorized by the U.S. attorney general—spied on, assaulted, detained and otherwise violated the civil rights of citizens. They were joined by:

A mammoth web of patriotic organizations enlisting thousands of volunteer spies … . The Liberty League, the American Defense Society, the Home Defense League, the National Security League, the Anti-Yellow Dog League … the Boy Spies of America, the American Anti-Anarchy Association, and the Sedition Slammers.6

In Liberal Fascism, Jonah Goldberg detailed that during the late teens, the Wilson Administration censored, harassed and threatened the American press. In Abrams v. United States (1919), the Supreme Court upheld a sedition verdict and a sentence of 20 years in prison for five Russian immigrants who tossed anti-American leaflets from the windows of buildings in New York City. The government also imprisoned U.S. citizens for verbalizing opposition. For example,

In Waterbury, Conn., a salesman was sentenced to six months in jail for remarking that Lenin was “one of the brainiest” of the world’s leaders.7

The larger decline of Supercycle wave (IV) brought more extreme authoritarianism. Millions of Russians died as a result of Stalin’s collectivization of agriculture and Purges. Fascists seized power and began militarizing Italy, Germany and Japan. Authoritarianism increased in America as well, but less so than in other countries. HSB (p. 284) observes:

One manifestation of [the] mood extremity was the increased enrollment in and disruptive activity by the Communist Party in the U.S. In contrast to the German experience, however, the most extreme political forces never achieved political control … .8

The Franklin Delano Roosevelt administration flirted with dictatorship, redistributed wealth and made extraordinary efforts to “pack” the Supreme Court.

The next major bearish period, Cycle wave II (1945-48), echoed Supercycle (IV). It launched the careers of two of history’s most notable authoritarians: Kim Il Sung of North Korea in 1948 and Mao Zedong of the People’s Republic of China in 1949. Kim imposed isolation and economic deprivation on North Korea. Mao’s authoritarian Great Leap Forward (1958-1961) led directly to the largest famine in history. This particular Mao program came during a bull phase in much of the world. But Mao’s subsequent and more overtly violent Cultural Revolution (1966-1976) came during Cycle wave IV. It killed as many as 30 million people.

Just before Mao began his bloody Cultural Revolution in China, Nicolae Ceauşescu assumed power in Romania. The year was 1965 and a long bull market (Cycle wave III) was nearing an end. Early on, Ceauşescu enjoyed popular support for his independent nationalism and challenges to Soviet dominance. But as Cycle wave IV matured, Ceauşescu began to emulate the totalitarian systems of China, North Korea and North Vietnam. He expanded government control into many areas of Romanian life, outlawing contraception and divorce, for instance. He starved Romania’s economic growth and controlled the media to create an idealized and heroic public image of himself.

In 1975, with Cycle wave IV still under way, Pol Pot led the Cambodian Khmer Rouge movement to power, imposing agrarian collectivism, civilian relocations, slave labor and executions. His genocides killed as many as 2.5 million Cambodians.

In Iran, the shah’s increasingly despotic reign ended with the even more authoritarian Islamic Revolution in January 1979. A few months later, Saddam Hussein used security forces to assume control of the government in nearby Iraq and quickly suppressed all political opposition. In 1980—as wave IV was finally grinding to its end—Saddam invaded Iran. The eight-year conflict, among the longest and deadliest wars of the 20th century, ended in stalemate, with estimates of up to 1 million dead.

Such actions are among the fruits of major declines in social mood.

Resurging Authoritarianism Today Another bear market began in 2000, and authoritarianism is waxing along with it.

Figure 3

Liberal democracies, which feature constitutional protections of individual rights from government power, have risen in concert with the Dow Jones Industrial Average since the early 1800s. That trend appears to be faltering. Figure 3 is from the February 2010 issue of The Elliott Wave Financial Forecast (EWFF), which observed:

Just as stocks struggled higher in the 2000s, the number of liberated democracies slowed dramatically. A slight tick down, from 90 to 89 “free” countries in 2009, confirms what we said here last month: The social effects of the bear market are mostly still to come. … According to Freedom House, 2009 was “marked by intensified repression against human defenders and activists in 40 countries.” It was the fourth straight year of increased repression, “the longest stretch of civil rights setbacks” in 40 years.9

Freedom House is an international organization that researches and advocates democracy, political freedom and human rights. Its director of research, Arch Puddington, wrote “Civil Society Under Threat,” published in the spring 2009 issue of Harvard International Review. It begins with this warning:

After several decades of consistent progress, the state of global freedom has entered a period of stagnation and possibly even decline … . Among the principal targets of the new authoritarianism is civil society. The result has been a notable reversal for freedom of association throughout much of the world.10

After a long trend toward positive social mood, authoritarianism’s popularity hit bottom in the 1990s, when the Soviet Union collapsed and political scientist Francis Fukuyama proclaimed “the universalization of Western liberal democracy as the final form of human government.” Now, just a decade later, authoritarianism is resurgent.

Redefining Freedom Both Russia and China have histories of extreme authoritarianism, and both countries are now attempting to recast democracy as a blend of free markets and authoritarian politics. British historian Timothy Garton Ash calls authoritarian capitalism “the biggest potential ideological competitor to liberal democratic capitalism since the end of communism.” A June 2009 Foreign Policy Magazine article, “Authoritarianism’s New Wave,” describes the countries’ impressive new global media tactics:

Today’s authoritarian regimes are undermining demo­cracy in updated, sophisticated, and lavishly funded ways … . The Kremlin has launched Russia Today, a multimillion-dollar television venture … . ­Beijing has reportedly set aside at least $6 billion for these media expansion efforts.11

Meanwhile, many liberal democracies themselves are becoming increasingly authoritarian. In October 2001, President George W. Bush signed the USA Patriot Act, giving law enforcement officials unprecedented access to Americans’ telephone and electronic communications. The Bush administration itself has been widely criticized for suspending habeas corpus and employing torture in off-shore prisons such as Guantanamo Bay and Abu Ghraib.

The British think tank Adam Smith Institute reports that the U.K., a nation with less than one percent of the world’s population, possesses one quarter of the world’s security cameras. Ironically, Britain in February introduced a new law—Section 76 of the Counter-Terrorism Act 2008—that can send those who photograph police to jail for 10 years.

A graphic example of Britain’s nascent authoritarianism, reminiscent of Orwell’s 1984, is this poster, which first appeared throughout London in October 2002. It advises citizens to feel secure under the surveillance. In a more recent example, the popular British radio show TalkSport broadcast a government anti-terrorism advertisement—available on YouTube—encouraging citizens to be suspicious of neighbors who keep to themselves, close their curtains or use cash instead of credit cards. The ad ominously counsels, “If you suspect it, report it.”

Some authoritarian tragedies begin this way. Robert Gellately, author of The Gestapo and German Society: Enforcing Racial Policy 1933-45, writes of his surprise upon reading a collection of 19,000 Gestapo files that Nazi officers were unable to burn before the Allies arrived:

I had found a shocking fact. It wasn’t the secret police who were doing this wide-scale surveillance and hiding on every street corner. It was the ordinary German people who were informing on their neighbors … . business partners turning in associates to gain full ownership; jealous boyfriends informing on rival suitors; neighbors betraying entire families who chronically left shared bathrooms unclean or who occupied desirable apartments.12

Electronic Freedom A Princeton University Internet expert says, “The inconvenient truth is that authoritarianism is adapting to the Internet age” (St. Louis Today, March 4, 2010). In addition to providing governments a cheap online channel for distributing propaganda, the Internet makes it easier for them to spy on their own citizens. Here are just a few examples.

In February, U.S. President Barack Obama extended three provisions of the Patriot Act, allowing the government “to obtain roving wiretaps over multiple communication devices, seize suspects’ records without their knowledge … and conduct surveillance of someone deemed suspicious” (Christian Science Monitor, March 1, 2010). The Obama administration also recently unveiled a new computer intrusion detection system called Einstein 3 to guard against cyber attacks. The Department of Homeland Security insists the system does not compromise privacy: “No agency traffic is collected or retained by US-CERT unless it is associated with a cyber threat.” As cyber threats increase with the bear market, however, so will the private information associated with them, likely widening Einstein’s scope.

Also in February, the French National Assembly passed a bill to “allow unprecedented control over the Internet … . a new level of censorship and surveillance” (Der Spiegel February 17, 2010).  The bill creates “one of the toughest censorship regimes of any robust democracy in the Western hemisphere” (Ars Technica, February 17, 2010).

Google Inc. notes, “The number of countries that censor the Internet has grown from a handful eight years ago to more than 40 today…”

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