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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Global Markets And The Mayan Magic Market Wave

Stock-Markets / Financial Markets 2011 Oct 03, 2011 - 08:50 AM GMT

By: Andrew_McKillop

Stock-Markets

Best Financial Markets Analysis ArticleGOLD NEWS – The gold price fell sharply on Monday 26 September, plunging $44.25 to $1,615 per ounce.  On September 6, the gold price had reached its all-time historic high, at $1,922.20 per ounce. 
Never once in the whole year of 2001, even immediately after 9/11 did the New York gold price ever reach $300 per ounce. In September 2011 the price fell by $300 per ounce in one month.


We can laugh, or simply scratch our heads at news like this, and the absolutely linked,  programmed and inevitable fall of about $25 for the barrel price in recent weeks, silver prices falling off a cliff, and sharp pullbacks in the price of copper, other metals, grains, sugar, vegetable oils, rubber and all other commodities. To be sure, mainstream media tells us trader sentiment and programmed trading will push prices up again, to a certain extent after each ritual slaying. But the outlook is sombre and clear: equities, commodities and global economic growth have a one-way ride programmed for them: down.

As we know, or cognescenti can tell us the average synodical revolution of Venus is 583.92 earth days and the orbital period of Venus is the fundamental basis of Mayan numerology. Mesoamericans applied and worshipped the spiral principle. Mayan inscriptions include many images of spiral growth patterns from nature, including nautilus and other molluscs (including globigerinae, planorbis votex, terebra, turritellae and garden snails) with logaritmic growth shell spirals. The shell was used in Mayan carvings and inscriptions to indicate "zero." Adding zeros is the backbone of modern finance.

SIMPLER THAN FIBONACCI
The most basic reason for the recent ritual paper asset bloodletting is easy to name. Equity prices and all so-called "financials" like government bonds, bank and insurance stocks had also crashed: since late July, building through August and into September most big name banks, like France's Societe Generale, the USA's JP Morgan, the UK's RBS, Ireland's Allied Irish Bank and a string of others like UBS of Switzerland suffered share price falls of 65% or more through 6 weeks. Unsurprisingly, bank chiefs have their begging bowls tendered for multi-billion-dollar bailouts and handouts from political deciders who would most certainly not dream of putting a simple question by referendum to their democracy-loving populaces. The question: Yes or no to more handouts for the banks ?

In Europe, the charade of aiding Greece to aid the banks which feed off its monstrously swollen debt pile is now traditional daily newsfeed. If not aided and of course, the banks will crash. How they got into that mess is an entirely different question, not for average idiot media consumers.

For a brief period - and possibly a longer period - gold and silver are being retrograded from money metals, to simple commodities. They were liquidated due to sellout in the upstream and much vaster financial space, engaged in a logarithmic-type spiral descent to a de facto situation where money metals will be the only money in town, a town in the throes of civil strife with civil war on the horizon. Most European TV viewers outside Greece are supposedly so uninterested in what happens to average Greeks whose lives are being ruined by the charade that the show plays on, and on, along with street protests in Wall Street, Tel Aviv, Madrid, Lisbon, Dublin or London. There is No Alternative except austerity, joblessness and more government taxes - and more bailouts for the Lucky Few gamblers who turn the roulette wheel of the financial casino.

RECURSIVES AND PYTHONS
The programmed and certain process setting up the baleful end-of-party is what we can call a "recursive" period. We have a manful and ritual attempt by traders, institutional investors, central banks and other heavyweights, yipped on and up by politicians and their mainstream media drones, to keep the party going and build back the upturned pyramid, but the chances of that happening are weak. The degree of conviction is low, making this a "python type" recursive: as chart gazers will tell the unanointed, it gets weaker and bulges less each notch down, like a rat swallowed by a python with a simple chorus line. The pile of fake value can and will tumble again in a less and less decent, shorter and shorter interval from now on.

Extreme and senseless gyrations in "tradable asset values", building from and driven by the most recent (and all time) high in the nominal value of tradable assets on world financial and commodity exchanges, in February 2011, have at least achieved one thing. Average persons know and have daily proof this is a game of inveterate and clumsy gamblers and has nothing to do with the so-called real economy. The trading frenzy always ends in a crash. It does nothing at all to stabilize the price of basic necessities at reasonable levels. The only real mystery for average persons is how and why fake value turns into real debt and real austerity when the party crashes.

The vast and literally unreal but glistening pile of tradable value - possibly 60 trillion dollars or the equivalent a whole year's global GDP - on the world's 16-largest financial and commodity exchanges, depending which day or week you look at the pile, can only be unstable, despite the official claim to the contrary that ever growing tradable asset value does not encourage and enable fraud and theft. The fundamentals-based analysis of why the pile is bad for the real economy - unlimited but ignored "counterparty risk" - has been well explained by Nassim Nicholas Taleb and others.

To be sure, mainstream and government-friendly media works hard, each day and 24/7 to ram the message into our skulls that trading frenzy "is the economy", or a surrogate for the economy, and is good for the economy. If the DJ, Dax, Hang Sen and Nikkei are up today, things are fine. If they are down, we hope they will bounce back up real soon, along with the dollar, oil, gold, food, copper and all other supposed "real assets'. There is No Alternative. The asset space is seamless.

DEBT BASED GAMBLING
Compulsive poker and roulette players are known to have one common dream: unlimited credit. Since July 2011, the primal fear of sovereign debts imploding generates predictable yelps for government and public cash in hundred-billion-dollar dollops from the financial fraternity: if they dont get the cash.....its the Apocalypse. At that exact moment fake assets turn into real liabilities, like Cinderella going backwards in time, and the real economy is pushed even further down by the onslaught - meaning more unemployment, misery and poverty for the vast majority of persons. Economic growth plunges to zero, and then into recession, state tax receipts fall, government debts spiral even further, and harsh austerity programmes are the only music in town.

This is a direct challenge to the 99% of people who arent interested in, dont need or dont want trading frenzy and fraud to ruin their lives. This especially concerns the 85% of all people who are straight losers from the process, if we assumed that at least in several countries about 15% of the population get a living out of the finance industry's whirring slot machines and roulette wheels. The challenge has been taken up right across the Arab world, in Spain and Greece, Israel, Thailand, India and many other countries now including the USA.

Public opinion is getting it right on what we can call "late stage mutant capitalism", the variety that we have in the so-called advanced industrial countries for around 30 years.  This so-called neoliberal New Economy model of how to operate an economy is above all obsessed by the claimed primal role of markets.

The vast difference between a debt-levered market trading derived financial products far into the future - and selling local food products only today on a market stall like Sidi Bouzid in Tunisia - has already affected modern history. The first parasitically weakened the second to the extent that it just wasnt possible for Bouzid to keep on going.He committed suicide in public.

ALTERNATIVES AS IF WE TOOK THEM SERIOUSLY
The main result of marketizing everything is: rising prices and falling real wages and revenues for the straight majority of persons. The primal fault in the machine is the loarithmic spiral of paper asset value, relative to lumbering and slow growing real economy faced with so many resource, environment and economic challenges it really isnt worth listing them. Like we know, turning anything and everything into tradable assets, starting with houses, apartments and lodgings delivers one-only real world result: insane real estate prices almost anyplace in the so-called developed world. The same for food and energy and minerals prices.
 
Cop-out rhetoric tells us the only choice is North Korea or North America, Soviet Russia or Putin's Russia: anybody with any sense can only choose the second. The command economy or the market economy. End of discussion.

Both are failures but the first model died first, explaining why we have No Alternative. Mutant markets-plus-debt created the trap we have, but this a fait accompli or No Alternative is an unpolite way of saying we have imminent daily risk of total implosion of all financial markets, whether equities or commodities, along with total collapse of governent debt financing, and the conversion into paper chaff of the world's only go-anywhere use-anywhere "reserve currencies", the dollar, euro and yen.

Because government friendly media runs a seamless barrage of brainwashing news, views and business talk, and because average people are scared by something as big and dire as "choosing" between total implosion or business as usual, the story usually peters out, here. Survival business takes over, for example freeze dried foods, longlife medicines, home electric generators, weapons, bomb shelters, self-defence training and gold buying, all cranked up on the outlook of the coming Siege Economy - showing that some people think there is an alternative economy and society !  

Being radical, the answer is real easy: just flip the clock back 40 years and forward 40 years. The results are interesting. 40 years back, less than 1-in-2 of all people living today existed on the planet. 40 years forward we dont know how many will be living (say anywhere between 67% and 133% of today's 7  billion, maybe less but not more), but for the other things fixing what kind of economy we can have - and will have - we can be really sure.

NEW WORLD - DIFFERENT ECONOMY
Both Peak Oil and Peak Gas, despite shale and frac gas resources, will have come and gone. The economy (whatever kind it is) will have shifted away from oil in a big way. The gas bubble will itself be winding down in a big way. It happened despite the rearguard action of Ecological Royalty and green commissars. Coal reserves will have been heavily developed, all over the world but this will not stop coal from getting a lot more expensive. By 2055 early generation and wildly uneconomic, even anarchic alternate energy quick fix vanity projects like offshore windfarms and solar polar plants may be strange museum pieces on the horizon, along with hulks of abandoned but still dangerous nuclear power plants, totally shunned after a couple more Fukushima-type disasters. Global energy consumption from fossil fuels will have had no choice at all but to decline in a big way.

As we know, "green energy" turned into a financial boom-bust at record speed and was hyped through the ceiling by the spiral asset marketizing process of the No Alternative economy. Maybe we can replace 50% of so of current fossil energy with green energy? Maybe we cant - meaning that maybe we dont need to because we have a de facto different economy, neither siege nor super ripoff, and a lot calmer than today because there was No Alternative.

To most people that seems drastic, but too bad. It happened because we also have really serious stacked-up and cumulative problems with global food and water supplies, metal supplies, and even lumber and cement supplies. Short of everything! Recycling will be very big in 40 years time because, like New Economy boomers tell us, there is No Alternative. Most people dont give a damn that deep ocean fish species numbers are crashing. They are also uninterested by bee populations crashing by 80% in a string of countries - but this mass suicide is in fact and reality a lot more newsworthy than thrilling suicide bomb attacks in Waziristan and really is trying to tell us something.

BACK 40 AND FORWARD 40
Clicking back 40 years, what do we find ? Hedge funds had only just started. They were minuscule and special outfits looking after the cash of worried Rich People and already losing it ! But because they were so small they didnt matter. Their ability to manipulate and distort the price of everything and anything was almost zero. Banks were banks, only banks, 40 years ago. The same for insurance companies. They did not run and finance hedge funds, and lose crazy bets with sickening regularity - so they could insure ordinary people and ordinary things, and lend money to ordinary persons and businesses for ordinary things. As we know, that is not possible today because banks and insurers "are fighting for their lives", and losing.

Financial markets existed 40 years ago, to be sure, and even had panics and crises just like today - but their total apparent or nominal or tradable asset value was one-tenth of today's grotesque upturned pyramid of fake value. When they predictably had an "asset implosion", losing 60% or 70% of all that fake value in a few weeks, or even days, nobody cared very much because it had almost no effect on the real economy. Gambling was for consenting adults in private - not our Only Hope.

How it all happens, and when it happens is another story. Maybe soon. The potential of a spiral-type fast forward is high and growing and the dice are stacked against the present somber farce, called No Alternative.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2011 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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