Tale Of Black Monday In Amazing Charts, & More #Insights

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.

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 

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.

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

Next Meltdown Worse Than 2008, & Other Top Insights

The Next Downturn Will Be Worse Than 2008 And What You Can Do About It? 

Get ready for the next crisis, it's going to be far worse than 2008. Get out of debt. Money in the bank may not be there when you need it. A core holding in precious metals is a must. Invest in alternative energy for your home, it will pay a huge return. Be careful of your investments in Wall Street, they may not be there when you most need them. Most of all, be prepared!

Economists claim Australia in midst of largest housing bubble on record

AUSTRALIA is in the midst of the “largest housing bubble on record” and when it bursts it will be a “bloodbath”.

This is the assessment of two housing economists who claim Australia is on track for a US and Irish-style collapse because of an oversupply of housing in the country.

In a frank and scathing submission to the upcoming parliamentary inquiry into home ownership which will begin this Friday, Lindsay David and Philip Soos criticise politicians and the housing industry for perpetuating the myth of housing shortages in major capital cities.

They claim there is actually an oversupply of housing, especially in Victoria.

TOP  INVESTMENT INSIGHT

US  Oil Production Now Past 

 "PEAK  SHALE OIL"

 Source : OILPrice.com 

The Way Humans Get Electricity Is 

About to Change 

Forever 

Solar power will eventually get so cheap that it will outcompete new fossil-fuel plants and even start to supplant some existing coal and gas plants, potentially stranding billions in fossil-fuel infrastructure. The industrial age was built on coal. The next 25 years will be the end of its dominance.

A World Without Work

This winter, I traveled to Ohio to consider what would happen if technology permanently replaced a great deal of human work. I wasn’t seeking a tour of our automated future. I went because Youngstown has become a national metaphor for the decline of labor, a place where the middle class of the 20th century has become a museum exhibit.

Climate Change Health Risk Is a 

'Medical Emergency,’ Experts Warn 

The report, commissioned and published by The Lancet medical journal, was compiled by a panel of specialists including European and Chinese climate scientists and geographers, social, environmental and energy scientists, biodiversity experts and health professionals.

Collapse, Part 2: The Nine Dynamics of Decay   

Rome didn't fall so much as erode away. That's the template for collapse.



While collapse may be sudden, the decay that generated the collapse had been rotting away the foundation for years or decades. In distilling the vast literature on collapse into nine dynamics, I am drawing upon many other authors' work, including: 

The Collapse of Complex Societies 

The Great Wave: Price Revolutions and the Rhythm of History 

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century 

The Shock Doctrine: The Rise of Disaster Capitalism

Overshoot: The Ecological Basis of Revolutionary Change

The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization 

Collapse: How Societies Choose to Fail or Succeed 

The Long Descent: A User's Guide to the End of the Industrial Age 

Reinventing Collapse: The Soviet Example and American Prospects

 Top Weekly Ideas and Insights

The Extinction Debate

"#GREECE Will Be Worse Than 2008 Meltdown" - Dr. Peter G Kinesa

Why Greece May Be the New Lehman

Here we go again. This time it’s Europe’s fault, and the crisis could be worse than last time, at least politically.

Remember when in 2008 Hank Paulson’s U.S. Treasury Department decided to let Lehman Brothers go down, pour encourager les autres, and then found that it brought les autres crashing down too? Well, Germany and the other euro-zone members are now trying to repeat that brilliant trick with Greece. If you were looking for where the next big financial meltdown might begin, you need look no further. 

Chances are, it is about to happen in Europe.

If it does, the political consequences could be even worse than last time. Strangely enough, the political risks are easier to evaluate than the economic ones. The risk of a Greek default or exit from the euro begin in Greece: If the left-wing party that runs the new government, Syriza, is discredited, following the discrediting of the old establishment parties, this risks strengthening the fascist alternative, Golden Dawn. Read More.

Greek Dominoes Could Bring Down EuroZone

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.