When Depressed Social Mood Explodes

Since early December, the social mood as obserbed in Hawaii's people as well as local current events has been extremely somber, similar to how the mood of a person experiencing a severe depression would appear.  The peak of this seems to have been yesterday's news of the death of the well-respected, long term senator, Daniel Inouye.

The MoodCompass team has been watching for signs of a shift in this social depression.  When a person has a serious depression and then begins to come out of it, whether through medication, treatment, or time, they are briefly in heightened danger.  All the strong emotions that have for the most part been "depressed" become energized and may show up in bouts of rage, destructive behavior, even suicidal behavior.

Today, marks the first sign in weeks of a shift from that extremely serious, depressed social mood configuration.  Where it goes next is crucial.  Does it take on the bipolar configuration and move to a manic pattern?  Does it become rageful or destructive?  Or, will it move to a more benign, life-affirming configuration?

Because we are currently on alert for a potential Hawaiian crisis, the possibility of a developing  explosive mood (or event) is something to pay careful attention to.

For more information on the MoodCompass project, see http://moodcompass.com.
 

Global Collapse in Progress - January 2010

In 2009, world leaders put together a concerted effort to forestall economic catastrophe. They took the problems created by excessive consumption and overspending, and attempted to make them magically disappear through overspending and encouraging even more consumption. As the New Year begins, the bill comes due. The party’s over.

The global context changes drastically along with the turn of the calendar. There are clues to what causality we may assign to this, but it’s always difficult to name a context that has not yet been seen. Right around the New Year weekend, geopolitical issues rise significantly, the U.S. government appears weak or vulnerable, and the global system is perceived as breaking down. As the first week of the year begins, economic concerns rise sharply and U.S. government activity level rises. However, before connecting these dots prematurely, there are more clues to examine.

In the first week of the year and into the second, there is an elevated risk of extreme natural event(s) occurring. There are also global themes of national identity and isolationism. This would be the period with the highest likelihood for the Mayon volcano in the Philippines to erupt, or any of a number of related consequences. It would also be a time that Iran would be most likely to seriously flirt with regime change once again, which in turn could create havoc with the world’s energy supplies.

Overall, there is a global shift in mood from optimism that some sort of economic recovery is on the horizon, to one of extreme seriousness, helplessness, and apathy. Perhaps January is our introduction to the next decade. This next ten years should see an increase in scarcity, hoarding, and even wars over basic resources; and natural disasters on a scale we have never seen. The changes in our world will cause us to examine our values, and our lifestyles will surely change. January 2010 is likely only the beginning of a long and painful collapse of the world as we have known it. Welcome to 2010.
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The preceding was an excerpt from the January 2010 issue of MoodCompass. (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation)

Is the Dollar Really Dead? Don't Fall For It!

Many have been discussing the Dollar's demise. There have been panic sell-offs of Dollars in the forex market, and U.S. Treasuries are being abandoned wholesale. Yet, this is the kind of extreme in sentiment that most often occurs at a market top or bottom. It's true that the U.S. government is borrowing unprecendented amounts of money. It's true that some countries including China, the U.S.'s primary creditor, is exploring alternatives in reserve currencies. However, as much as China, Russia, Iran, and other nations might wish there were another place to turn, the global system is intricately complex, and rests on a foundation based in debt and U.S. Dollars. Things can not safely change that fast. Also, as global anxiety climbs, and people are once again forced to liquidate assets that are primarily priced in Dollars, the U.S. currency will rise in value against the "commodity" currencies.

Even if there is still one more brief, but possibly extreme panic, holders of the U.S. Dollar will once again find their currency gaining in favor. Inflation worries will be a spector of the past, and deflation will once again be the primary concern. We've been here before. This is what it looks like at a social mood top, as markets in general begin to break down once again, and as Treasuries and the U.S. Dollar are sought as "safety." The Dollar may indeed collapse at some point, and inflation may very well soar to unbelievable heights as resources become more scarce. However, for now, and perhaps for some time to come, the Dollar may find support as the Great Recession continues to play out, and the spectre of Depression once again begins to lurk in the shadows.

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Excerpt from the October 2009 MoodCompass:

October 19 – 25: A Solution? U.S. government crisis resolved one way or another. U.S. Dollar declines sharply. Inflation concerns up sharply.

From the Week by Week Highlights of Global Mood, Perception, and Behavior on Page 2 of the October MoodCompass: http://anewstory.org/markets/Oct09_MoodCompass.pdf (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation).

Just a Few More Stock Market Crashes to Go!

This month there is some good news and some bad news. First, the good news: there is only a month or two left of really bad stock market crashes. Next, the bad news: the same as the good news.

President Obama has been saying it's going to get worse before it gets better. The next two months should look pretty bad for the global economy. More people will lose jobs, more banks will be on the edge of failing, etc. However, just when it looks like there will never be an end to all of the bad news, in just a few months from now, things will start to stabilize. It won't be the end of the economic downturn, that is still a few years away (according to the cycles we follow). However, it will mean a reprieve for a bit, perhaps six months, or even more. An upturn in the collective mood would be rather refreshing. I sure would love a surge of good news for a change.

Below is an except from this month's MoodCompass:
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February 2009 – Can’t We All Just Get Along?

Last month was rather interesting. There were so many puzzle pieces that looked so bad at a time that seemed like everyone should be celebrating – the drop in optimism and associated stock market downturn, U.S. Treasuries being sold off even though the stock market was declining, and an increase in anti-U.S. sentiment after a new, fairly popular president was supposed to take office. We were right on with the pieces of the puzzle. There was an actual 5% drop in the stock market on Inauguration Day itself. China, Pakistan, and the Arab world as a whole were less than pleased with the United States the very week the new president took office. However, as a whole, things were more or less “normal.” We must admit that we too were caught up in the expectations that a new president would mean that at least the mood should get better for a moment, and were concerned about what seemed to be a discrepancy. The new president is for the most part doing exactly what he said he would do, what the majority of Americans elected him for, yet the U.S. (and global) collective mood continues to sour.

In February, there are more reminders that things continue to be all too normal. Mid-month the stock market begins to crash (again!). The U.S. government is perceived to be disorganized, incompetent, and fragmented. With this configuration, it is likely that internal fighting and self-interest will impede agreements on any proposed solutions to the economic crisis (which should appear to be getting completely out of control). Whether or not they can get it together next month, we’ll have to see. Regardless, don’t look for any improvements in the economic outlook before spring! This next couple of months of stock market losses might be considered a grand finale of the “show” we have been watching since late 2007. During this period there is a heightened risk of social instability throughout the world, meaning a higher than normal likelihood of demonstrations, riots, and geopolitical escalation.

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http://anewstory.org/markets/Feb09_MoodCompass.pdf (current issue viewable by subscription only; reprinted with permission of A New Story Foundation)

The Next Banks to Fail

I just received this list from Weiss Research and would like to pass it on. This is their list of major banks most likely to fail. They consider a "C" rating to be a "yellow light" and a "D" rating to be an indication that you may seriously want to consider moving your money somewhere else. They also say to be on the alert for the "C" rated banks to be downgraded to "D".

In Like a Lion - March 2008

If you watch the news or follow the financial markets, March may get a bit scary. If not, you may not notice the fallout from March for a few months. Because the mood configuration for March signals a likely severe stock market decline I strongly encourage you to consider moving funds in IRAs or 401(K)s from growth funds to guaranteed income funds. However, even this is not a sure thing in the current environment. The best investment is cash or U.S. Treasury bonds, regardless of how little interest that pays. The worst investment is almost anything else.

As far as later fallout, the Fed chairman Bernanke testified today that the economy is in serious trouble, that unemployment is likely to rise, and that some banks are likely to fail at some point. Some of this is likely to happen sooner than later. It is not hard to imagine people wondering whether the Great Depression II is upon us by the end of next month. There is little to do financially to prepare at this point. The best thing to do is to invest in mutually supportive relationships. When times are tough, independence is not an asset, it is a liability. Spirituality may be a source of strength for those who have such an understanding. Cherish each happy moment. Our basic values will be challenged in the next few years. We may have to reassess what the most important things in life really are.

The following excerpts are from A New Story's March MoodCompass

Geopolitical Tensions Escalate -- US Stock Market Crashes

The defining shift in mood for February was seen in the extreme change in the way that United States society views the rest of the world. Previously, the world was seen as a relatively stable place to transact business. Although there had been concerns about a slowdown in the U.S. economy, there was an assumption that growth in the rest of the world would well be able to compensate. The shift in February from high Directing to high Manic saw the view of the non-U.S. world change from a growth focus to one of uncertainty, chaos, and fragmentation. Geopolitical uncertainty propelled crude oil to new records in spite of the undue stress such high prices are placing on already fragile economies. In March, this theme of an unsafe world is continued. In such an uncertain geopolitical context, what else can global investors do, but make a massive move to "take money off the table?" Thus the global sell-off ensues. U.S. markets may lose in excess of 15% at the lowest points this month.

March News Highlights

The following is based on a combination of recent events, global trends, and the March oscillations of social mood

Following on increasing geopolitical crises from last month, tensions in Israel reach a high pitch, with violence in Gaza and a new war looming with Hezbollah in Lebanon. Peace negotiations brokered by the US forestall major Israeli retaliation, but tensions remain high all month, punctuated with increasing outbreaks of violence. Both Hamas and Hezbollah are increasingly vocal throughout the month, taunting and threatening Israel. Israeli forces and embassies remain on high alert. Syria may take up sides this round, and Iran reiterates its firm backing of Syria should Israel attack. Israel's PM Ehud Olmert continues to assert that Iran is conducting secret efforts to develop a nuclear warhead, in increasingly hostile tones.

The situation in the Darfur region of Sudan will have become critical early in March. The United Nations gives repeated warnings of a full-scale war spanning the entire region, encompassing neighboring Somalia, Eritrea, and Chad, perhaps spreading into DRC and/or the northern part of Kenya. Widespread starvation will reach critical levels, as food aid deliveries are intercepted before they can reach distribution points. Fragile Kenyan peace negotiations may break down as a result.

The United States will continue to have difficulty in reviving the waning interest of countries assisting its efforts in Afghanistan, even as Taliban resurgence advances on positions long secured by coalition forces. Continued post-election instability in neighboring Pakistan will further stretch the American forces, and may lead to a crisis near month's end. India may make a statement of caution toward the Musharraf government if the instability is not quelled.
Economic conditions worldwide deteriorate through March, resulting in a rapid decline in US stock prices across all sectors (estimated losses 15-20%). There may be scattered news and rumors of renegotiating global currencies agreements, resulting in several sharp drops in the USD. Continued high prices in crude oil will be driven by Middle East instability, tempered by recession indicators in the US, and coupled with record-high reserve levels. OPEC negotiations may be strained as various elements renew their push for a general acceptance of a "basket of currencies," heavily weighted with Euros and Yuan.

http://anewstory.org/markets/March_MoodCompass.pdf
(subscription required to view; reprinted with permission)

Clouds of Economic Despair

In the last few days, two people, on two separate occasions, approached me with their concerns about what is happening in the markets. One of them said that he couldn't say exactly why, but it feels like a "Great Depression" might be imminent. He has never been involved in stocks, nor cares much at all about the world of finance. The other also had no money in the markets herself, but was concerned for a friend who had a significant sum in various investments. What has stood out from these encounters, is the sense of alarm from two people who normally could care less about the stock market or economic indicators.

There has been increasing talk of the possibility of a recession in the financial news. I have seen a few of them come and go in my lifetime, with little personal impact, other than a looming possibility of a job lay off which I was fortunate enough to escape. Yet, during those other recessions I don't recall anyone who I personally knew speaking of "Great Depressions" or describing a sense of large, imminent, engulfing doom. Something is different this time. Whatever is happening, is not like any of the recessions I have lived through. I can't help wondering whether people had such feeling in 1929 just before the big crash.

It is impossible to know whether we will have a one big event market crash such as that fateful October in 1929. It may not really matter. Whether we have a single big crash event, or a consistent and persistent economic contraction, the result would be the same. We may be witnessing the beginnings of a profound transformation of the lifestyles we have become used to.

The only practical advice I had for my friends is this: For the time being, and for at least a couple of years, stay away from long term investments; don't buy a house. Stay away from the stock market and money market funds, keep your debt down, and hold on to cash. And by the way, in case what is going on means that banks will be failing, and that looks likely, make sure your money is in a conservative, solidly rated bank.

This could be a long, rough ride.