	Generational Dynamics
	Forecasting America's Destiny ... and the World's

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Dow Passes 9000 / Mideast Peace Plan Takes Off

This is a big test for Generational Dynamics, which predicts that the good news won't last. (04-Jun-03)

Summary Today's news is that the Dow passed 9000 and that the Mideast Peace Plan is taking off. Those events are good news for the economy and for peace, but they're also an important test for Generational Dynamics, which predicts that we're falling into a new economic depression and that the Mideast will still have a major war soon.

Prior to the end of the Iraq war, analysts were predicting that the stock market would take off like a rocket. At first, the postwar rebound seemed to fizzle (see here).

But now that rocket seems to have taken off. Since mid-March the Nasdaq has risen 28 percent, the S&P 500 index has gained 23 percent, and the Dow Jones Industrial Average (DJIA) has gone up about 20 percent, closing today at 9039.

And on the world scene, things are looking rosy as well. Jordan's King Abdullah says that he's optimistic about the peace process and that it's "back on track."

Israeli Prime Minister Sharon has promised to dismantle the "illegal outposts," the renegade Israeli settlements in the West Bank, making it possible to have a "contiguous" Palestinian state next to Israel.

Mahmoud Abbas, the Palestinian Prime Minister, promised to end the suicide bombers, and said, "we repeat our renunciation ... of terrorism against the Israelis wherever they might be."

These were strong, positive words on all sides in support of President Bush's Mideast Road Map, which is now creating enormous worldwide hopes for a long-term peace in the Mideast.

Important Test for Generational Dynamics

Both the rising stock market and the increasing hopes for peace in the Mideast set important tests for Generational Dynamics, which predicts that at this time in history we're going in quite a different direction.

Generational Dynamics predicts that we're in the third year of a 1930s-style depression. Specifically, the prediction is that the stock market will fall to the 4,000 level by around 2006, and won't go up above 6,000 again until after 2015. That means that the current stock gains represent a new bubble, a bubble that will burst with major adverse news.

On January 1 of this year, I predicted that the DJIA would be around 7000 or lower at the end of 2003. That's not as certain as the prediction in the last paragraph, but I'm sticking to it for the time being. The prediction of a new depression is based on analyses using several different methodologies, all of which point to the same unfortunate conclusion. (Click here for the Finance section.)

With regard to the Mideast, Generational Dynamics predicts that Jews and Palestinians in the current generation are replaying the fault line war that occurred from 1936-1949, and that a major new war will break out before long. Click here for further information.

So today's events do indeed represent a major test for Generational Dynamics. Even though I enjoy being right as much as the next guy does, I still hope that Generational Dynamics is proven wrong, since then we'll all be better off. But I don't think that's going to happen.