Anyone who was on a college campus in the 1970s might not imagine that demonstrators against the Vietnam War and the current anti-tax Tea Party attendees could be moved by the same force. In both cases, though, negative social mood has contributed to the kind of polarization that brings out the desire to protest and march.
We haven't yet seen the kind of massive rallies that were common in the 1970s, but as the bear-market rally peters out and the bear market re-appears, we may witness more people willing to march for their beliefs. As socionomics, the science of social prediction, describes it, bull markets reflect positive social moods and social harmony, while bear markets reflect negative social moods and social unrest. Bob Prechter explains the connection among the markets, social mood, polarization and conflict in his New York Times best-selling book, called Conquer the Crash, which came out in a second edition the end of 2009. Here's an excerpt from Chapter 26, which describes what to expect when markets turn bearish.
Polarization and Conflict
In essence, bull and bear markets are social mood trends. Social mood trends have consequences.
A positive social mood has positive social consequences. The great bull market of the past quarter-century created a wonderful world. Major antagonists in the areas of politics, religion and race kissed and made up. The Cold War ended. Communism collapsed. Markets became global and sophisticated. The world embraced, to one degree or another, capitalism and freedom. The Information Age was born. Even country music got raucous and happy. In the 1990s, people felt secure, and today wealth abounds.
Generally speaking, that environment has been safe, profitable and fun. However, social mood trends are a two-way street. When the positive trend ends, a negative one takes over for a while. Those trends have social consequences, too: destructive ones, which affect finance, the economy, politics and all kinds
of social relationships.
[Editor's note: The Dow is currently in a bear-market rally, according to Elliott Wave International's analysis, with the larger bear market due to re-assert itself. In this next section, Prechter outlines what happens during bear markets, some of which has already begun to crop up.]
…
The main social influence of a bear market is to cause society to polarize in countless ways. That polarity shows up in every imaginable context — social, religious, political, racial, corporate and by class. In a bear market, people in whatever way are impelled to identify themselves as belonging to a smaller social unit than they did before and to belong more passionately. It is probably a product of the anger that accompanies bear markets, because each social unit seems invariably to find reasons to be angry with and to attack its opposing unit. In the 1930s bear market, communists and fascists challenged political institutions. In the 1970s bear market, students challenged police, and blacks challenged whites. In both cases, labor challenged management and third parties challenged the status quo.
In bear markets, rallies, marches and protests become common events. Separatism becomes a force as territories polarize. Populism becomes a force as classes polarize. Third parties, fourth parties, and more, find constituents. Bear markets engender labor strikes, racial conflict, religious persecution, political unrest, trade protectionism, coups and wars. In the area of personal behavior, part of the population gets more conservative, and part gets more hedonistic, and each side describes the other as something that needs reform. One reason that conflicts gain such scope in depressions is that much of the middle class gets wiped out by the financial debacle, increasing the number of people with little or nothing to lose
and anger to spare.
Excerpted from Chapter 26 of Conquer the Crash, You Can Survive and Prosper in a Deflationary Depression, by Robert Prechter, 2nd edition published 2009
No comments:
Post a Comment