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


Generational Dynamics Web Log for 25-Jan-2014
25-Jan-14 World View -- That '1929 feeling' may be back on Wall Street

Web Log - January, 2014

25-Jan-14 World View -- That '1929 feeling' may be back on Wall Street

'Geneva II' Syria peace conference is more political play-acting

This morning's key headlines from

Terrorist bombings in Egypt may affect Saturday's revolutionary celebrations

Huge crater in front of Cairo police station from Friday's terrorist bombing (Reuters)
Huge crater in front of Cairo police station from Friday's terrorist bombing (Reuters)

Egypt's terrorist bombings had previously been taking place far away from Cairo, in the Sinai or in northern Egypt, but as of Friday morning, have now come to the most well protected part of central Cairo. A large terrorist blast exploded at the police building in central Cairo, killing four people and injuring 76 others. Hours later, once person was killed by a bombing in Giza. Late Friday morning, a third explosion at a Giza police station near the pyramids caused no casualties. But in the afternoon, a bombing at a Giza movie theatre left one person dead.

The spate of terrorist bombings has infuriated the public, who are widely blaming the Muslim Brotherhood for the bombings, and praising army general Abdel al-Fattah al-Sisi for declaring MB to be a terrorist organization.

The Muslim Brotherhood says they had nothing to do with the bombings, while al-Qaeda linked Sinai terrorist group Ansar Jerusalem (Ansar Bayt al Maqdis or Champions of Jerusalem) is claiming credit for the bombings. This group has claimed credit for several major terrorist bombings in the past.

Saturday is the third anniversary of the start of the 2011 Egyptian Revolution that led to the ouster of Hosni Mubarak. Many political groups had planned big public celebrations on Saturday, but some of them are being pulled back, giving as a reason fear of violent clashes with the Muslim Brotherhood. Al-Ahram (Cairo) and BBC

That '1929 feeling' may be back on Wall Street

This week is the first time in a long time that I've thought that the market has the "1929 feeling." Those feelings only became stronger on Friday with the dramatic 2% plunge in Wall Street stocks. Financial pundits gave these reasons for the plunge:

These are all likely to be long-term trends, and the sense of gloom that I'm detecting suggests that some change might be about to happen.

But this could all fall apart in the next few days. Perhaps Wall Street will recover from the big losses this week, and start growing again. We know that a crash is coming, but it's impossible to predict the timing. All we can do is guess, and depend on our "feelings," which can be wrong.

By the way, according to Friday's Wall Street Journal, the S&P 500 Price/Earnings index (stock valuations) on Friday (January 24) morning was 18.20, which is lower than the 18.72 of last month, but still astronomically high. It was only as recently as 1982 that the P/E index was 6, and it's about due to return to that level, as it does periodically, every 30 years or so. This would push the Dow Jones Industrial Average from its current 15,900 down to the 3,000-4,000 level, or lower, which is what Generational Dynamics is predicting.

So if that "1929 feeling" is going to turn into a 1929 crash at this time, then there are some things to look for in the next two months. The main thing to look for would be a gradual net fall, combined with a couple of wild fluctuations -- say, a 6% fall, then an 8% rise. In fact, if you take into account what's been happening in emerging markets, then it may be fair to say that this is already happening. This would set what might be called the "panic mood," where people would be anxious to avoid the next 6% fall, and that would trigger a much bigger fall, and a spiral downward. Reuters and AFP

'Geneva II' Syria peace conference is more political play-acting

A new Syria peace conference is going on in Geneva, Switzerland, and it certainly qualifies as a bizarre bit of political theatre. It's called "Geneva II" because there was an earlier Syrian peace conference in Geneva in June, 2012, now called "Geneva I." There was a communique issued after Geneva I, and it called for an end to the Syrian civil war by the resignation of president Bashar al-Assad, and instituting a new transitional government with members from the former al-Assad government, as well as members from the opposition.

Well, now it's time for Geneva II, and here are the realities:

So on Thursday, the two sides were in separate rooms, but they were supposed to meet with one another in the same room on Friday. Well that was canceled because of the above disagreement. But then UN and Arab League Special Envoy to Syria Lakhdar Brahimi stepped into the picture. He played "shuttle diplomacy," moving back and forth between the two rooms, and finally was able to announced that the two sides would meet in the same room on Saturday!! And this was described as a "major breakthrough"!!

Even if the civil war did end, on whatever terms imaginable, there would still be a resumption of peaceful protests. And remember that's how the war started -- the genocidal monster al-Assad responded to the peaceful protests by flattening civilian neighborhoods and torturing children. When the peaceful protests began again, what would al-Assad do next? Irish Times

(Comments: For reader comments, questions and discussion, see the 25-Jan-14 World View -- That '1929 feeling' may be back on Wall Street thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-Jan-2014) Permanent Link
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