2015 Bear Market, Not 2008 Bear Market: Because It's Much Worse & More #News

Why The Bear Of 2015 Is Different From The Bear Of 2008

Are there any conditions now that are actually better than those of 2008?

It's tempting to see similarities in last week's global stock market mini-crash and the monumental meltdown that almost took down the Global Financial System in 2008-2009. The dizzying drop invites comparison to the last Bear Market that took the S&P 500 from 1,565 in October 2007 to 667 on March 9, 2009.

But this Bear is beginning in circumstances quite different from 2007-08. 

Let's list a few of the differences:

1. Then: Markets and central banks feared inflation, as WTIC oil had hit $133 per barrel in the summer of 2008.

Now: As oil tests the $40/barrel level, markets and central banks fear deflation.

2. Then: China had a relatively modest $7 trillion in total debt, considerably less than 100% of GDP.

now: China's debt has quadrupled from $7 trillion in 2007 to $28 trillion as of mid-2014, an astonishing 282% of gross domestic product (GDP)

3. Then: Central banks had a full toolbox of unprecedented monetary surprises to unleash on the market: TARP, TARF, BARF (OK, that one is made up) rescue packages and credit guarantees, quantitative easing (QE), zero interest rate policy (ZIRP) and direct purchases of mortgages, to name just the top few.

Now: The central bank toolbox is empty: every tool has already been deployed on an unprecedented scale. Every potential new program is simply a retread of QE, yield curve bending, asset purchases, etc.--the same old bag of tricks.


What the Latest Currency 'War' is All About

The heart of the matter is that Beijing has stepped on the gas in a quite complex long game; to liberalize the yuan exchange rate; allow it to free float against the US dollar; and establish the yuan as a global reserve currency.

China’s Dramatic Rise, and What It Means

Over the past 30 years, real per capita income has grown by more than 1,300%. Over the last decade alone, China quadrupled its industrial output. It now produces more automobiles than the US and Japan combined.

The Rise and Fall of Arab intellectual discussion concerning the “Arab Spring” 

Discussion has shifted in recent years – from one concerning freedom, justice, democracy and rights into a political wrangle between antagonist camps. The people, who revolted across various Arab countries are now marginalized.

Millions of Yemenis 'staring at famine' as war rages

UN food agency describes conditions in war-torn nation as "perfect storm" as millions face massive food insecurity.13 million, adding that one in five of the country's population were suffering from severe food insecurity.

Yemen after 5 months 'already looks like Syria after five years of war'

 

Entrenched poverty, months of intensified warfare and limits on imports because of an international embargo have contributed to "catastrophic" conditions 

A Seven Amazing Charts From Black Monday

The damage in the markets created by the decline since last Thursday, particularly on Monday, is significant. We have noticed 7 amazing facts on Monday August 24th, which will go into history books as another ‘Black Monday.’

The volatility index VIX registered a 6-year high, spiking ‘out of the blue’ to levels not seens since the great crash of 2008 / 2009. See the two red circles in the first chart.

The Dow Jones literally crashed in 3 trading days, a decline not seen in many, many years. The days of the October lows of last year were ugly, but that is nothing compared to the last 3 days. The Dow Jones lost more than 2,000 points in those 3 days, a loss of 11.4% from high to low.

Learning Success: 

APPLY Tips From The Best

Sir Richard Branson, Virgin Group – Anyone who owns more than 400 companies and is worth billions of dollars is clearly doing many things right. We admire Richard Branson’s tenacity, and his personal brand

Are YOU Prepared For Coming #Collapse - Some Planning Ideas

Preparing For The Next Market Collapse

Summary

·    About two-thirds of Americans anticipate another financial crisis.

·    More are worried about a market crisis than are prepared for one.

·    Here is what works and what doesn't in a total market collapse.

It is an uncertain world and I want to be prepared

According to recent survey data from Northwestern Mutual, 67% of Americans believe that over time, there likely will be more financial crises. However, are these Americans prepared for the next one? A market collapse to be a possibility that many investors are vaguely aware of, but fewer have taken concrete steps to plan for. This is not something that I specifically expect and it is certainly not something that I hope for. It is something that I insure against in a prudent, moderate way. Read More

Why Prepare For Anything?

Platinum Wealth Partners - Top Investors Edge

There is little doubt that it makes good sense to craft back-up and disaster plans. Flexibility and prompt responsiveness, too are critical factors. Plans a,b c and so forth forth should be established.

However, one must be realistic as to what lies ahead - that could a collapse beyond all proportions and unprecedented in human and economic history.

This is our greatest fear , and its likelihood is great.

International Offices

April 29, 2015

WALL ST Now Panicky Over #Greek Default Risk

Greek default? Wall Street Says Don't Risk It!!!

NEW YORK — Top executives on Wall Street and senior policymakers in Washington are warning their European counterparts not to let Greece default and leave the Eurozone, fearing the market reaction at a time of sluggish growth in the U.S. and instability in the global economy.

Some say they are not as freaked out as they were in 2012 about the prospect of always-in-crisis Greece getting kicked out of the Eurozone, which could happen if a deal isn’t reached quickly. Some would even like to let the Greeks go and move on with life. But then people mention Lehman Brothers. And the Russian default. And even an assassination in Sarajevo in 1914. And theoretical discussion of how better prepared the world is for a Greek exit quickly turns into fevered rumination on how it still might spark global financial Armageddon. Read More.

Greeks Seem To Be A Bit Unnerved TOO!

Platinum Wealth Partners - Top Investors Edge

It is understandable that Wall St is on edge because the global financial system is so interconnected - a proverbial house of cards. But the problem child does not show any signs of change and could quickly tumble the Eurozone; thereby trigger a roaring ripple around the globe.
.
In the end, Wall Street is not the only one suffering from anxiety attacks.


International Offices
April 28, 2015

Unbelievable PLUNGE In US New Home Sales

US New-Home Sales Collapse in March

Sales of new U.S. homes plummeted in March, as the spring buying season opened with sharp declines in the Northeast and South.

The Commerce Department said Thursday that new-home sales fell 11.4 percent last month to a seasonally adjusted annual rate of 481,000. This marks a swift reversal from an annual sales pace of 543,000 in February, which had been the strongest performance in seven years.

Purchases of new homes have been volatile on a monthly basis, although sales during the first quarter of 2015 are higher than in 2014. The volatility points to a real estate market still finding its footing in the aftermath of the housing bubble that triggered the Great Recession in 2007 and the weak recovery that has followed. Read More.

Not That Long Ago 

SPECIAL REPORT: #5 Patterns of STOCK #MARKET CRASHES

SPECIAL REPORT

This exclusive North American article will be broken into a series of five consecutive posts providing our readers with  useful market edges and insights that are unprecedented amoung peers, into the empirical patterns behind historical and "possibly future stock market crashes." The article is sourced and supported by the author's research; having first been published earlier in renowned European journals. Applying such knowledge wisely, thereby optimizes the chances for better decisions and increased wealth - First Financial Insights, Toronto, April 2015

New Stock Market Crash, A Pattern?

Part 5 - Will The Share Indexes Go Down Any Further?

Calculating share indexes as described before and showing indexes in historical graphs is a useful way to show which stage the industrial revolution is in.

Introduction, Growth, Flourishing and Decline

<< Fig Typical course of market development >>

The third industrial revolution is clearly in the saturation and degeneration phase. This phase can be recognized by the saturation of the market and the increasing competition. Only the strongest companies can withstand the competition or take over their competitors (like for example the take-overs by Oracle and Microsoft in the past few years). The information technology world has not seen any significant technical changes recently, despite what the American marketing machine wants us to believe.

During the pre development phase and the take off phase of a transition many new companies spring into existence. This is a diverging process. Especially financial institutions play an important role here. These phases require a lot of money. The graphs showing the wages paid in the financial sector therefore shows the same S curve as both revolutions.

<<  Fig Historical excess wage in the financial sector >>

Investors get euphoric when hearing about mergers and take overs. Actually, these mergers and take overs are indications of the converging processes at the end of a transition. When looked at objectively each merger or takeover is a loss of economic activity. This becomes painfully clear when we have a look at the unemployment rates of some countries.

New industrial revolutions come about because of new ideas, inventions and discoveries, so new knowledge and insight. Here too we have reached a point of saturation. There will be fewer companies in the take off or acceleration phase to replace the companies in the index shares sets that have reached the stabilization or degeneration phase.

In the graph below we see the share price/income ratio over the past two industrial revolutions. At the end of the 2^nd industrial revolution in 1932 this index reached 5. At the moment we are at 15. The index prices can still go down by a factor 3.

<< Fig industrial revolutions: share price / income ratio >>

Will history repeat itself?

Humanity is being confronted with the same problems as those at the end of the second industrial revolution such as decreasing stock exchange rates, highly increasing unemployment, towering debts of companies and governments and bad financial positions of banks.

<< Fig Two most recent revolutions: US market debt >>

Transitions are initiated by inventions and discoveries, the knowledge of mankind. New knowledge influences the other four components in a society. At the moment there are few new inventions or discoveries. So the chance of a new industrial revolution is not very high.

History has shown that five pillars are indispensable for a stable society

<< Fig The five pillars for a stable society >>

At the end of every transition the pillar Prosperity is threatened. We have seen this effect after every industrial revolution.

The pillar Prosperity of a society is about to fall again. History has shown that the fall of the pillar Prosperity always results in a revolution. Because of the high level of unemployment after the second industrial revolution many societies initiated a new transition, the creation of a war economy. This type of economy flourished especially since 1932  up to now. (i.e. US Hegemony)

Now, societies will have to make a choice for a new transition to be started. Without applied knowledge of the past there is chance for a better future, if any...

NEXT - Tomorrow... 

 ONE LAST PROFIT - CI ???

 Is This A Message? 
Why Do These Charts Trend Together?

WHO'S  NEXT?

And this happens...

COMPARE THESE CORRELATIONS: 
ANY VISUAL RELATIONSHIPS?

JUDGEMENT DAY...

ABOUT ARTICLE 

The article “A new stock market crash, a pattern?”, in dutch  "Nieuwe beurskrach, een wetmatigheid?” was published  in a magazine “Tijdschrift voor economisch onderwijs” (magazine for economical education), a monthly publication of the VECON, A union of teachers in economic and social subjects in the Netherlands. 

Wim Grommen writes: This paper advances a hypothesis of the end of the third industrial revolution and the beginning of a new transition. Every production phase or civilization or human invention goes through a so- called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. The paper describes the four most radical transitions for mankind and the effects for mankind of these transitions: the Neolithic transition, the first industrial revolution, the second industrial revolution and the third industrial revolution.

SPECIAL REPORT: #4 Patterns of STOCK #MARKET CRASHES

SPECIAL REPORT

This exclusive North American article will be broken into a series of five consecutive posts providing our readers with  useful market edges and insights that are unprecedented amoung peers, into the empirical patterns behind historical and "possibly future stock market crashes." The article is sourced and supported by the author's research; having first been published earlier in renowned European journals. Applying such knowledge wisely, thereby optimizes the chances for better decisions and increased wealth - First Financial Insights, Toronto, April 2015

New Stock Market Crash, A Pattern?

Part 4 -  Stock Index Graphs Are Fata Morganas.

What does a stock exchange index like DJIA, S&P 500 or AEX really mean?

The Dow Jones Industrial Average (DJIA) index is the oldest shares index in the United States. A select group of journalists of The Wall Street Journal decide which companies are included in the most influential stock exchange index in the world. Unlike most other indices the Dow is a price average index. This means that shares with a high price have a great influence on the movements of the index.

A History Lesson 

The S&P index is a market value index. This index, compiled by credit evaluator Standard & Poor’s, includes the 500 largest US companies, based on their market capitalization

The Amsterdam Exchange Index (AEX) is the most important stock exchange index in the Netherlands. It shows the development of share prices of the top 25 funds of the Amsterdam Stock Exchange, based on trading. The AEX is the average price of the shares of those funds.

In many graphs the y-axis is a fixed unit, such as kg, meter, liter or euro. In the graphs showing the stock exchange values, this also seems to be the case because the unit shows a number of points. However, this is far from true! An index point is not a fixed unit in time and does not have any historical significance.

An index is calculated on the basis of a set of shares. Every index has its own formula and the formula gives the number of points of the index. Unfortunately many people attach a lot of value to these graphs which are, however, very deceptive.

·        An index is calculated on the basis of a set of shares. Every index has its own formula and the formula results in the number of points of the index. However, this set of shares changes regularly. It is therefore very strange that different sets of shares are represented by the same unit.
After a period of 25 years the value of the original set of apples is compared to the value of a set of pears. At the moment only 6 of the original 30 companies that made up the set of shares of the Dow Jones at the start of the acceleration of the last revolution (in 1979) are still present.

Even more disturbing is the fact that with every change in the set of shares used to calculate the number of points, the formula also changes. This is done because the index which is the result of two different sets of shares at the moment the set is changed, must be the same for both sets at that point in time. The index graphs must be continuous lines. For example, the Dow Jones is calculated by adding the shares and dividing the result by a number. Because of changes in the set of shares and the splitting of shares the divider changes continuously. At the moment the divider is 0.132319125 but in 1985 this number was higher than 1. An index point in two periods of time is therefore calculated in different ways:

Dow 1985 = (x1 + x2 + ........+x30) / 1

Dow 2009 = (x1 + x2 + ........ + x30) / 0,132319125

In the nineties of  the last century many shares were split. To make sure the result of the calculation remained the same both the number of shares and the divider changed (which I think is wrong). An increase in share value of 1 dollar of the set of shares in 2009 results is 7.5 times more points than in 1985. The fact that in the 1990-ies many shares were split is probably the cause of the exponential growth of the Dow Jones index. At the moment the Dow is at 9665 points. If we used the 1985 formula it would be at 1279 points.

·        The most remarkable characteristic is of course the constantly changing set of shares. Generally speaking, the companies that are removed from the set are in a stabilization or degeneration phase. Companies in a take off phase or acceleration phase are added to the set. This greatly increases the chance that the index will rise rather than go down. This is obvious, especially when this is done during the acceleration phase of a transition.
This is actually a kind of pyramid scheme. All goes well as long as companies are added that are in their take off phase or acceleration phase. At the end of a transition there will be fewer companies in those phases.

<<Fig 3^rd industrial revolution and the S&P 500  >>

FINAL Part #5 -  Will The Shares Go Down Any Further?

THINK - Can You Draw Blood From A Floating Rock In Space?

ABOUT ARTICLE 

The article “A new stock market crash, a pattern?”, in dutch  "Nieuwe beurskrach, een wetmatigheid?” was published  in a magazine “Tijdschrift voor economisch onderwijs” (magazine for economical education), a monthly publication of the VECON, A union of teachers in economic and social subjects in the Netherlands. 

Wim Grommen writes: This paper advances a hypothesis of the end of the third industrial revolution and the beginning of a new transition. Every production phase or civilization or human invention goes through a so- called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. The paper describes the four most radical transitions for mankind and the effects for mankind of these transitions: the Neolithic transition, the first industrial revolution, the second industrial revolution and the third industrial revolution.

SPECIAL REPORT: #3 Patterns of STOCK #MARKET CRASHES

SPECIAL REPORT

This exclusive North American article will be broken into a series of five consecutive posts providing our readers with  useful market edges and insights that are unprecedented amoung peers, into the empirical patterns behind historical and "possibly future stock market crashes." The article is sourced and supported by the author's research; having first been published earlier in renowned European journals. Applying such knowledge wisely, thereby optimizes the chances for better decisions and increased wealth - First Financial Insights, Toronto, April 2015

New stock market crash, a pattern?
Part 3 - Three Drastic Transitions

Three Drastic Transitions

When we go back into the past, three transitions took place with far-reaching effects.

The First Industrial Revolution

The first industrial revolution lasted from around 1780 tot 1850. It was characterized by a transition from small scale handwork to mechanized production in factories. The great catalyst in the process was the steam engine which also caused a revolution in transport as it was used in railways and shipping. The first industrial revolution was centered around the cotton industry. Because steam engines were made of iron and ran on coal, both coal mining and iron industry also came to bloom.

This revolution ended in 1845 when Friedrich Engels, son of a German textile baron, described the living conditions of the English working class in “The condition of the working class in England“. The result of this revolution: an immense gap between rich and poor.

A New Philosophy Intoxicates Human Ideas, Systems And Deeds

The Second Industrial Revolution

The second industrial revolution started around 1870 and ended around 1930. It was characterized by ongoing mechanization because of the introduction of the assembly line, the replacement of iron by steel and the development of the chemical industry. Furthermore coal and water were replaced by oil and electricity and the internal combustion engine was developed. Whereas the first industrial revolution was started through (chance) inventions by amateurs, companies invested a lot of money in professional research during the second revolution, looking for new products and production methods. In search of finances small companies merged into large scale enterprises which were headed by professional managers and shares were put on the market. These developments caused the transition from the traditional family business to Limited Liability companies and multinationals.

Consumerism Transforms Into Religiosity

After the roaring twenties the revolution ended with the stock exchange crash of 1929. The consequences were disastrous culminating in the Second World War.

The Third Industrial Revolution

The third industrial revolution started around 1940 and is nearing its end. The United States and Japan played a leading role in the development of computers. During the Second World War great efforts were made to apply computer technology to military purposes. After the war the American space program increased the number of applications. Japan specialized in the use of computers for industrial purposes such as the robot. By now the computer and communication technology take up an irreplaceable role in all parts of the world.

How Long Can We Continue Making Stuff?

The acceleration phase of the third industrial revolution started around 1980 with the introduction of the micro processor. The third industrial revolution has clearly reached the saturation and degeneration phase.

Dow Jones Industrial Average

<< Fig Exchange rates of Dow Jones during the latest two industrial revolutions. During the last few years the rate increases have accelerated enormously.>>

NEXT Part #4 - Stock Index Graphs Are Fata Morganas.

THINK:  
Possible Train Wreck Ahead?

ABOUT ARTICLE 

Wim Grommen writes: This paper advances a hypothesis of the end of the third industrial revolution and the beginning of a new transition. Every production phase or civilization or human invention goes through a so- called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. The paper describes the four most radical transitions for mankind and the effects for mankind of these transitions: the Neolithic transition, the first industrial revolution, the second industrial revolution and the third industrial revolution.

The article “A new stock market crash, a pattern?”, in dutch  "Nieuwe beurskrach, een wetmatigheid?” was published  in a magazine “Tijdschrift voor economisch onderwijs” (magazine for economical education), a monthly publication of the VECON, A union of teachers in economic and social subjects in the Netherlands. 

SPECIAL REPORT: #2 Patterns of STOCK #MARKET CRASHES

SPECIAL REPORT

This exclusive North American article will be broken into a series of five consecutive posts providing our readers with  useful market edges and insights that are unprecedented amoung peers, into the empirical patterns behind historical and "possibly future stock market crashes." The article is sourced and supported by the author's research; having first been published earlier in renowned European journals. Applying such knowledge wisely, thereby optimizes the chances for better decisions and increased wealth - First Financial Insights, Toronto, April 2015

New stock market crash, a pattern?
Part 2 - The S-Curve of Transition

Examples of historical transitions are -

the demographic transition and the transition from coal to natural gas which caused transition in the use of energy. A transition process is not fixed from the start because during the transition processes will adapt to the new situation. A transition is not dogmatic.

Can We More To A Sustainable System?

Four transition phases -

In general transitions can be seen to go through the S curve and we can distinguish four phases (see fig. 1):

1.      a pre development phase of a dynamic balance in which the present status does not visibly change

2.      a take off phase in which the process of change starts because of changes in the system

3.      an acceleration phase in which visible structural changes take place through an accumulation of socio cultural, economical, ecological and institutional changes influencing each other; in this phase we see collective learning processes, diffusion and processes of embedding

4.      a stabilization phase in which the speed of sociological change slows down and a new dynamic balance is achieved through learning

A product life cycle also goes through an S curve. In that case there is a fifth phase:

5.      the degeneration phase in which cost rises because of over capacity and the producer will finally withdraw from the market.

The S curve of a transition:

<< Fig Four phases in a transition best visualized by means of an S curve.>>

NEXT Part #3 - Three Drastic Transitions

THINK - is anything really too big to fail? 

ABOUT ARTICLE 

Wim Grommen writes: This paper advances a hypothesis of the end of the third industrial revolution and the beginning of a new transition. Every production phase or civilization or human invention goes through a so- called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. The paper describes the four most radical transitions for mankind and the effects for mankind of these transitions: the Neolithic transition, the first industrial revolution, the second industrial revolution and the third industrial revolution.

The article “A new stock market crash, a pattern?”, in dutch  "Nieuwe beurskrach, een wetmatigheid?” was published  in a magazine “Tijdschrift voor economisch onderwijs” (magazine for economical education), a monthly publication of the VECON, A union of teachers in economic and social subjects in the Netherlands.