This weekend dead birds have been falling from the sky and dead fish washing up
on beaches. Today's Telegraph has the headline "Aflockalypse now!" The tongue in
cheek article asks: were the sinister wildlife deaths reported around the globe
foretold in the Bible, or just coincidence? Several outbreaks occurred deep
inside the Southern US Bible Belt prompting shocked locals to search for
religious meaning. But it doesn't stop with the bible belt, end of the world
type theories are selling even in sunny Californian. The New Age crowd claim Dec
2012 is the end of a 5,125 year cycle in Mayan astrology.
A few weeks ago we experienced a full moon, winter solstice, and total lunar
eclipse on 21 December 2010. This rare combination last occurred on 21 Dec 1638 (Gregorian Calendar). Looking back, 1638 was in fact in a very exciting
point in history. In 1638 Protestant victories in Northern Germany marked a
turning point in the 'Thirty Years' War' between Catholicism and Reformation. In
1638 Oliver Cromwell sent the famous letter, still surviving, which describes
his spiritual awakening. In this letter he said he was sure the Reformation had
not gone far enough, that England was still living in sin, and that Catholic
beliefs and practices needed to be purged. So 1638 was a vital moment in the
transition between St Francis of Asisi's feminine vision of Christianity, and
Martin Luther's more masculine vision. In France, 1638 was the year Louis XIV
'The Sun King' was born, but more importantly, it was also the year René
Descartes began writing his Meditations, the book widely regarded as
kick-starting the Age Of Enlightenment. In China 1638 was year the first Qing Emperor was born, and a
few years later the rather effeminate Ming dynasty ended. In the Middle East
Murat IV all but wiped out Shia Islam. Murat the IV was quite a character, an
enormously powerful man who wielded a 60kg mace with his right arm. I doubt his
enemy the Shah Safi could have even lifted the mace. The sultan was famous for
having no intellectual or cultural interests, instead he spent his time drinking
wine, smoking opium, and indulging himself in various other pleasures. The
citizens of Baghdad were under siege at the time of the eclipse and surrendered
to Murat three days later. North America was still a backwater in the early
1600s, nevertheless, 1638 was the year John Harvard died leaving the charitable
legacy which created Harvard University.
Adding to the sense of foreboding, 2010 has also seen some extraordinary
weather. Several countries set record high temperatures in the summer of 2010,
then the winter of 2010 turned out to be exceptionally cold and wet. Weather
records for 1638 are pretty sketchy, but October 1638 is famous for the 'Great
Thunderstorm' of Widecombe-in-the-Moor England. A ball of fire fell from the sky
and burnt down a church in the middle of evening services, killing and injuring
several members of the congregation. One study I found claims that according to
data on births and deaths recorded by Church parishes in Sussex England during
the early 1600s, 1638 and 1639 showed the highest mortality rates. An old
Theosophical pamphlet called the "Theory Of Cycles" looked for patterns in
extreme weather conditions and said "in 1639 the harbour of Marseilles was
covered with ice to a great distance". On campaign in Northern Germany the
Protestant Field Marshal Johan Banér
also recorded an uncommonly cold winter in 1638.
So the interesting question is: will historians look back on 2010 with as much
excitement as 1638? Personally I think it will indeed be remembered as a watershed year.
January 2010 saw an outpouring of articles on the rise of China. For example,
writing in the Financial Times, Niall Ferguson said:
I am trying to remember now where it was, and when it was, that it hit me.
Was it during my first walk along the Bund in Shanghai in 2005? Was it amid the
smog and dust of Chonqing, listening to a local Communist party official
describe a vast mound of rubble as the future financial centre of south-west
China? That was last year, and somehow it impressed me more than all the
synchronised razzamatazz of the Olympic opening ceremony in Beijing. Or was it
at Carnegie Hall only last month, as I sat mesmerised by the music of Angel Lam,
the dazzlingly gifted young Chinese composer who personifies the Orientalisation
of classical music? I think maybe it was only then that I really got the point
about this decade, just as it was drawing to a close: that we are living through
the end of 500 years of western ascendancy.
For fans of statistics some 2010 China benchmarks include: becoming the world's
largest energy user, becoming the world's second largest economy, topping
the OECD survey of world education standards (Shanghai), becoming the world
leader in a high tech industry (high speed rail).
The credit crisis began in 2008, but it has taken until 2010 for the
implications to really sink in. In August 2010 Joseph Stiglitz summed up the
lessons of the credit crisis with an article called "Needed: a new economic
paradigm":
The blame game continues over who is responsible for the worst recession
since the Great Depression – the financiers who did such a bad job of managing
risk or the regulators who failed to stop them. But the economics profession
bears more than a little culpability... Bad models lead to bad policy...
Economic theory had already shown that many of the central conclusions of the
standard model were not robust. We knew that even small information asymmetries,
or imperfections in risk markets, meant that markets were not efficient.
Celebrated results, such as Adam Smith’s invisible hand, did not hold; the
invisible hand was invisible because it was not there... [yet] like the
Ptolemaic attempts to preserve earth-centric views of the universe, [we
economists turned a blind eye to these failings. Now our eyes have been forced
open, and it is time for a whole new economic paradigm].
In December 2010 Wolfgang Schäuble finally figured out what economics in the
21st Century means for democracy. In an article in the Wall Street Journal
he said:
Sometimes it takes crises so that Europe moves forward. In this crisis,
Europe will find steps toward further unification. It isn't easy. You can't just
command European states and their populations... Public opinion will need time.
This is true in all democracies... In Europe the nation state as the sole level
of policy-making has exhausted its effectiveness... I am not the last
pro-European in Germany, perhaps I'm the first European of the 21st century.
Of course Schäuble is mostly only talking about overriding democracy and forcing
responsible policy onto the feckless Greeks, Portuguese, Spanish, Italians etc.
But the end of democracy is not just a European thing. 2010 is the year we
realized Obama is another idiot and America is doomed. 2010 is the year we gave
up on democracy in Iraq, Afghanistan and Pakistan. In democratic India the 2010
news has been relentlessly negative - from the commonwealth games to exploding
satellites. In a February 2010 article in the Times, the well known journalist
Anatole Kaletsky said:
THE most important statements are often those that are left unsaid. At Davos,
the question that nobody quite dared to utter was clear: will the new model of
economics that emerges to dominate the world will be a radically reformed
version of the Western democratic system or some variant of the authoritarian
state-led capitalism favoured in China?
But the 2011 Davos will be different. These sentiments are no longer left
unsaid, they are shouted from Eastern roof tops. So 2010 is the year the Western
elite began to get it: liberal democracy doesn't work, the future is paternal
authoritarianism, Christian morality is dead, the world is moving toward hard
headed rationality.
It's not just the year the elite awoke. Although the masses don't understand
what has occurred in the world of economics and democracy, 2010 is the year
their populist rejection of the moral liberal consensus attained critical mass.
Under pressure from changing public opinion, politicians across Europe crossed
the Rubicon in 2010. Angela Merkel declared multiculturalism a failure, Nicolas
Sarkozy began expelling Romanian Immigrants, Hungary began to move away from
a free press, and Sarah Palin's Tea Party went viral. So it's not just the elite that changed in 2010, it's really
the beginning of the mass rejection of Western values. This, as fans of my web
site know, is the beginning of the sociological nervous breakdown I have been
claiming is close.
What about the lunar eclipse? Could Carl Jung's theory of synchronicity be
possible? Could the moon reflect psychological energy, and the eclipse an
important moment in history? Several studies have shown that crime statistics, car
accidents and medical emergencies are statistically higher during a full moon.
For example, according to an article in Time Magazine called "Medicine: Blood &
the Moon", an American doctor investigating tonsillectomy surgery bleeding
crises supposedly noticed a statistical correlation between crisis frequency and
full moons.
As a trader I have personally noticed a correlation between full moons and
market movements. It it not easy to describe this correlation, but I can give
some famous examples. Lehman's Brothers, for example, went bankrupt on September
15th 2008, which was a full moon. Perhaps it had been on its last legs for a
while, but the full moon drove Hank Paulson looney and he decided to blow up the
world. On the full moon of January 21st 2008 Société Générale liquidated Jérôme
Kerviel's rouge trading position causing panic. After the Sep 11th Attacks the
stock market was closed until Sep 17th 2001, another full moon. Whilst I haven't
seen any studies that prove a correlation between the moon and the financial
markets, I know several traders open to the idea. The full moon supposedly
represents a time of excitement. If you think you the market is overbought the
full moon might be a good time to sell, if you are waiting for a breakout the
full moon might help.
What would Confucius have said? The moon is traditionally associated with the
feminine, and the sun the masculine. The moon and the sun appear to be the same
size in the sky because, by one of those strange coincidences, although the sun
is 400 times bigger than the moon, it is also 400 times further away. In the
same way the moon and sun are said to be equally powerful in human personality.
The moon is often imagined as emotional and individualist, the sun as pragmatic
and socially useful.
A solar eclipse occurs when the moon blocks the sun, imagine someone full of
extroverted functional energy taking a moment to reflect internally on what is
going on. A famous solar eclipse during the 585BC 'Battle of Halys' ended the
war between the Lydians and the Medes. The armies stopped fighting during the
eclipse, and later agreed to a peace treaty. Perhaps we can imagine the Solar
Eclipse over Europe in August 1999 as a chance to reflect amidst the madness of
the dot com bubble.
A lunar eclipse, on the other hand, occurs when the moon
looses the illumination of the sun. Imagine a drunk loosing his family, this
nervous breakdown provokes a psychological turning point. Lunar eclipses are
more feared, and there are several famous lunar eclipses in history which
supposedly portended great social change. For example, we have the famous lunar
eclipse that occurred just before democratic Athens lost the Peloponnesian War
with Sparta in 413BC. Another famous lunar eclipse occurred during the siege of
Constantinople which ended the Roman Empire. Another lunar eclipse occurred on
16 September 1978, three and a half hours later a violent earthquake shook Iran
killing 25,000 people, six months later the Shah of Iran was overthrown by the
Iranian Revolution. During the early 1970s Middle Eastern countries outraged by
US support for Israel refused to sell America oil, provoking the oil crisis and
wreaking havoc on the world economy. In order to safeguard its oil supply
America then started plying Arab politicians with cash, driving a wedge between
the people and the leadership, turning the Middle East into a tyranny. Of course
this can not last forever, today populist protest manifests as terrorism and
increasingly tension. Iran
was the first Arab county to cast off the American puppet leadership - but it
will not be the last! I am not advocating Hezbollah, but psychological evolution is not a monotonic progression to good.
What is the psychological transition taking place today? The move away from
Semitc values, from individualism to collectivism, from egalitarianism
to elitism, from liberty to paternalism, from emotion to rationality. It's
another shot at the The Age of Enlightenment, I call it the The Age of
Enlightenment Part II.
From Washington to Mexico City to Athens to Mogadishu to
Tunis to Islamabad the problem is the same – corrupted values and governmental
incompetence. The Eurozone struggles are but a microcosm of this problem. In the run up to 1638 the challenge was population growth, today the growth
of emerging market countries yet again hurls civilisation up against resource challenges.
Saint Francis of Assisi's vision of Christianity was deeply submissive,
dependent on others, uninterested in theological theory, transcending self by
suffering and rejection of pleasure, exuding love in uncomplicated benevolence.
As the world evolved, as population density increased, the black death and
starvation killed vast numbers, and Puritans sensed the practical failings of
Saint Francis of Assisi's Christianity and built something more suitable to the
prevailing challenges of life. We are back in the same place today.
Incompetent government is unsustainable, in the long run it is death. Today pretty
much every country in the world except Singapore and China is run so badly it
can not last. Now one of the
interesting things is what this economic breakdown means for geopolitics
because the temptation for the dying democracy of America to invade the Middle
East and grab their oil will be enormous. Do you seriously think a bankrupt
failing America run by the Tea Party could resist? The American Revolution is up
there in lights with the French Revolution. You think people are better today?
The truth is people are worse, everything they believe is total junk, and when
it all comes away they will go absolutely insane. Germany already went through
this process in the 1930s, and it is the least sick nation in the Western World,
but America is absolutely finished. The Middle East has a huge journey ahead of
it, the move from Semitic morality to rationality, but they are not
individualists, postmodernists and democrats. Look at Attuturk, he exemplified
Enlightenment rationality, although the psychological turmoil killed him. Like
the Middle East America hasn't even started to reject Christianity, but America
adds much more serious issues on top. Hitler is nothing compared to what the
American have in store for themselves.
There was a mad Chinese rebel leader called Zhang Xianzhong around 1638 who used
to write pomes to death. "Kill Kill Kill Kill Kill Kill" he said. Over
population became an issue in China as well as in Europe, for example the 1628
Great Famine of Shaanxi. So Zhang Xianzhong killed to reduce the population in
the name God. The population of Sichuan fell from 3,000,000 to 18,000. When his
soldiers had finished killing everyone they could find he divided them in two
and set them upon themselves. Perhaps, one day America will go this mad. Or
maybe Zhang Xianzhong wasn't mad at all? Perhaps it was the best possible
response to population pressure at the time.
Einstein once said nuclear weapons make a world government unavoidable. Of
course they called him a crackpot, yet I think he was just ahead of his time.
The uneven distribution of resources necessitates a world government, especially
given the huge resource challenges we face. In the distant future all the land
in the world will be owned by a single global government, and it will distribute
the rental income across the global population. No one could resist this global
government, even with nuclear weapons to defend themselves they need to trade.
So this outcome is inevitable, it is just a question of time, and the founders
of the Eurozone were dimly aware of this. On the way massive conflict is
probably unavoidable, and China should bring its armed forces up to speed,
because it might need them.
What about the Winter Solstice? Perhaps the move from Autumn to Winter parallels
the move from 20th Century profligacy to 21st Century austerity. It is certainly
going to be a terribly painful transition loved only by those who love the clear
headed beauty of winter. Keep in mind Stalin's advice: "a single death is a
tragedy, a million is a statistic".
They say 'as within, so without', 'as above so below' - and strange as it is the
full moon, winter solstice, and total lunar eclipse do mesh rather well with the
profound psychological moves ahead. We are back where we were in 1638,
population growth and primitive religion. We blew it back then, this time we
will make it.
This is going to be my last article for a while I am afraid. I wish I had gotten
a chance to write about the advantages of state owned real estate, also more on
the what Europe should be doing to compete. Alas I am afraid I am very tied up
for the next few months.