Financial topics

[Trevor]

Well, Germany's the only one in halfway decent financial shape. Granted, it's still not good, but compared to the others, they're doing quite well. If they refuse to bail out other countries, then the resulting financial collapse will be blamed on them. "If you just bailed Greece out, we wouldn't be in this mess!" Considering they've already had two bailouts over the past 2 years, it's a load of crap, but it wouldn't matter.

If they do continue to bail them out, they go broke themselves because their neighbors debts will ultimately collapse them too. It's almost impossible to bail out Spain or Italy. Granted, we'll probably help out too once that happens, but even that won't keep them afloat long. Then we've got to consider who might end up being next on this list. Spain and italy looked pretty stable a year ago; who's going to start imploding next?

[Marc]

Technical indicators, as guides to stock selection, arguably work best for ultra-short timeframes. They may also have validity for timeframes longer than that, but the length of the timeframe considered, correlated with available and historical financial news, behavioral-finance knowledge, and type(s) of industry under consideration should all especially be taken into account, I feel, for such longer timeframes. —Best regards, Marc

[aedens]

http://www.cityam.com/latest-news/germa ... -debt-caps

[Trevor]

I just looked up the DJIA for the 1920's. I noticed that the stock market fell around 1919-1920, rapidly picked up, with the bubble beginning around 1924. This time around, the bubble's lasted a lot longer.

[Higgenbotham]

Now we see the polarity inversion effect. The reverberations of past crises and hatreds are now sown so deep as to prevent regeneration and a new Dark Age resolution is nearly guaranteed complete in my opinion.

Very interesting commentary, Higgie. While I personally tend to not think that we're headed towards a new Dark Ages unless something really goes "nuclearly wrong," I have to admit that I'm amazed at the Hurculean efforts that the world has cobbled up so far (and will continue to cobble up for awhile) to prevent financial Armageddon. In fact, to be a bit "potentially contrarian" again, I actually somewhat wonder if we could see a Fifth Turning (following this Fourth Turning) in the USA and some other countries. Again, with all those weapons of mass destruction out there such that maybe even the Chinese Generation-X'ers may be a bit hesitant to use them (with their X'ers also being mindful of Sun Tzu's "wait-patiently" tactics), I do wonder if there could be a significant possibility of not having a crisis war in the next 10–15 years, followed by seeing something really blow in the not-too-distant future after that. Heck, if Bernanke can keep it up, maybe we can get China's Communist government to self-implode in about the year 2030 or so, although that might be wishful thinking. —Best regards, Marc

I agree with a lot of what you're saying. I would expect the beginning phases of a descent into a Dark Age to be milder than if an actual cleansing and regenerative process were to occur instead. In a descent into a Dark Age, one way to look at it is we continue to borrow more from the future instead of stopping at some point and replenishing the future. That is what clearly continues to happen, as we can see. There are many symptoms of that, but an obvious one is the failure to have enough children to replenish the population and we see that across all of the Western societies with Japan taking the lead. As Peter Drucker has commented, this is unprecedented. Tying that into what you said, many of those parents who have that one precious child instead of three or four as in the past are not going to want to send that one child off to war to die. So in terms of an organized nation state versus nation state version of warfare as has been seen in the past, I don't see it under a Dark Age descent scenario. Instead, I can imagine something like rogue or surreptitious releases of killer viruses, limited release of nuclear material, limited power grid failures and so on tailored to hit certain genetic groups or limited geographical areas where the source of the attack is difficult to trace. This type of warfare would probably not be terribly effective and would be more of a wearing down process that is not regenerative like a typical fourth turning "total war" would be; in other words, Dresden would not be rebuilt to a higher standard than previously, as an example. Chernobyl, the Twin Towers, Katrina, and Fukushima come to mind as harbingers of things that have not yet been reconstructed to a higher standard and perhaps can't or won't be (though the replacement of the Twin Towers is due to be complete by 2013).

[Marc]

So in terms of an organized nation state versus nation state version of warfare as has been seen in the past, I don't see it under a Dark Age descent scenario. Instead, I can imagine something like rogue or surreptitious releases of killer viruses, limited release of nuclear material, limited power grid failures and so on tailored to hit certain genetic groups or limited geographical areas where the source of the attack is difficult to trace. This type of warfare would probably not be terribly effective and would be more of a wearing down process that is not regenerative like a typical fourth turning "total war" would be....

If the United States does enter a Fifth Turning, I could certainly see civil unrest and low-scale terrorism that would make whatever the Tea Party or Occupy Wall Street is currently doing look tame in comparison. An interesting wild card would be China if it also enters a Fifth Turning: does it try to pick a fight with the West, or does it simply devolve into civil war? If it devolves into civil war without picking a fight with the West, I think that there is a good chance that there would be, as the Fifth Turning in the United States wears on, an eventual effort to "declare war on all the civil unrest" in the United States in a manner that is somewhat like a pseudo–civil war occurring, which finally provides a regeneracy event for the United States. It would certainly be a fascinating but quite unnerving scenario, although probably far less worse than a nuclear war breaking out. —Best regards, Marc

[Trevor]

I don't see a fifth turning happening this time around. China's rapidly falling apart to the point where fewer business are willing to move overseas there. Not only that, but their one-child policy has created about 100 million excess males. Generally speaking, when this happens, they either go off to war or start trouble at home.

How I'm guessing this will play out is that either Taiwan formally declares independence or things in China fall apart to the point where they either redirect that energy towards external enemies or they're going to face another civil war. If I was a Chinese General Secretary, I could make the calculation that whatever China suffers in a war with the United States will be trivial compared to what a civil war would do. After all, we can fight a quick war against them and Taiwan to unite the country, because they obviously do not have the willpower to fight a long, difficult war, which it surely will be.

[Marc]

Hi, Trevor,

Mindful of the possibility of getting into a war with China, you could possibly see the US really going out on a limb to try to help the Chinese economy in a backdoor way (but in a way which also promises to do things to help the US economy in order to make the scheme politically palatable). Maybe that could get both countries to a Fifth Turning. However, I can easily see major conflict between both countries before then if China really has a lot of civil unrest in the next 10–15 years, for the reasons you indicated. Thanks for the insights. —Best regards, Marc

[Trevor]

China's economy has been growing at 10 percent for about 20 years and yet they're still becoming less and less stable. The latest report of mass incidents have it at close to 200,000 for 2011. That's an almost unimaginable number.

In Europe, one country after another is collapsing in spite of all these bailouts. If it was just one or two countries, they'd be able to put off the day of reckoning for a while, but it's not. Country after country is crashing and burning, with some further on the road to collapse than others. As for us, I noticed the unemployment rate is beginning to go up again. we're in a better position because we haven't spent ourselves into the ground to the degree that the Europeans have, although we're catching up quite quickly.

This time, it may not be a row of dominoes so much as taking out everyone at the same time.

As for the war, I'm expecting it to begin around the 2015 range.

[Marc]

As an appeasement to China, perhaps "mass incidents" can be made a new Olympic sport for the Summer Olympics, to net the country a lot of extra gold....

But seriously, if war with China breaks out, I'm personally looking at a longer horizon for it starting, due to the likely ability of the Fed to intervene much more in the global economy, but I do acknowledge that we're surely in a Fourth Turning in North America, Europe, and China. —Best regards, Marc