Mystery Science Theater 3000

The High Priests of Globalisation

Published on October 16, 2004 By geser nart In Politics

In the present essay we shall deal with a very common symbol, the struggle between the Eagle and the Snake. Fights between eagles and snakes have actually been observed, and it is easy to understand that the sight of such a struggle must have made an indelible impression upon human imagination in its infancy. The most powerful of birds was fighting the most dangerous of reptiles. The greatness of the combat gave the event an almost cosmic significance. Ever since, when man has tried to express a struggle or a victory of cosmic grandeur, the early memory of this event has been evoked.

Allegory and the Migration of Symbols

A 100-year bear market?
Today's headlines confirm Prechter's dark predictions
By Paul B. Farrel
Oct. 13, 2004

ARROYO GRANDE, Calif. (CBS.MW) -- Ten years ago Robert Prechter, a brilliant market technician and editor of the Elliott Wave Theorist newsletter, sent me a review copy of his book "At the Crest of the Wave: A Forecast of the Great Bear Market."

I've waited long enough. It's time to review it, along with the new two-volume work on his "New Science of Socionomics." Why now? Because, unfortunately for America, reality is rapidly catching up with Prechter's dark scenario ... whether we like it or not.

Let me explain: Back as early as 1978 Prechter predicted the beginning of the "raging bull market of the 1980s." Nobody believed him then either. Yet later he was named "Guru of the Decade" by the Financial News Network. He was a credible voice.

Then in his 1995 "At the Crest of the Wave," Prechter predicted the end of this raging bull. However, the market failed to cooperate with the guru. The Dow pushed through 4,000 for the first time. The bull continued roaring. The Information Technology Revolution took off. The Dow nearly tripled in five years.

Meanwhile, here was one of America's most respected market forecasters predicting that the market was going down, not up. He predicted a historic crash, with the Dow collapsing 90 percent to 400, and the world falling into a 100-year bear market. Worse yet for Prechter, Wall Street optimists poured fuel on the fire with book titles like Dow 36,000, Dow 100,000 and The Roaring 2000s. With near religious fervor, Americans embraced the New Economy's promise of everlasting global prosperity.

Then came the sobering realities of the new millennium: A collapse of the technology engine, a devastating bear market, out-of-control government debt, massive domestic problems, a worldwide energy crisis and an accelerating deadly war on terrorism.

Blind to the coming storm

Given this rapid, dramatic shift -- from the glowing promises of the '90s to the dark realities of today -- we felt forced to re-examine Prechter's predictions of a devastating market crash and a 100-year bear market.

Prechter's message never wavered: Recently he told me: "One thing I've repeated consistently is that the great bear market will take the DJIA at least below 1,000 and likely to below 400. Precedents for this severe a decline are the English stock prices in 1720-1722 and American stock prices in 1929-1932."

No, NO! Damn it, no red-blooded American, including me, wants to admit that this doomsday scenario is possible. Even if it is! Why? Our mindset: Optimism dominates the American spirit! Always has. Negativity this profound is against our nature, alien to our soul. We instinctively reject it, deny it, tune it out. Don't look, it'll go away. Right?

Wrong! While we could easily dismiss Prechter's predictions during the manic '90s, the truth is the world is becoming more dangerous, threatening and ominous every day. This sudden and dramatic shift suggests that while the timing of Prechter's predictions was off in the short-term, his core theories may still be deadly accurate: The world is racing headlong into a catastrophic market crash and a 100-year bear market.

Ahead of his time

Prechter is now looking like a genius who simply arrived ahead of his time. In 1978 he was four years early. In 1995 he was five years ahead of his time. This was even more evident when I reviewed his "New Science of Socionomics."

In this work Prechter applies the Elliott Wave principles to mass social behavior and forces us to step out of our quarterly earnings myopia to look ahead at the long-term, for decades and even centuries. This level of thinking is difficult if not impossible for investors today.

Prechter's work reminded us of the economics prize the Nobel committee awarded to psychologist Daniel Kahneman of Princeton in 2002. Kahneman deals with relatively simple microeconomic ideas, stuff investors intuitively understand. Prechter's ideas are in a more complex macroeconomic arena. Both, however, undermine Wall Street's time-honored "rational man" theory: individual investors make irrational decisions.

The differences are stark: In contrast to Kahneman's simple approach, Prechter's Elliott Wave Theories are loaded with esoteric mathematics, Fibonacci ratios, Kondratieff cycles and robust fractals. Technicians love all this stuff and maybe someday even the Nobel committee will. But, unfortunately, most investors on Main Street and even Wall Street get turned off by all numbers and formulas technicians rely on.

So, investors reject Prechter warnings for three reasons: His methods are too esoteric for a mathematically challenged nation, his predictions too dark for America's culture of optimism and his timing was off -- he missed the tail end of the raging bull.

When Prechter's "At the Crest of the Wave" arrived back in 1995 I was publishing a financial newsletter. I dismissed the book for all three reasons. I now believe that was a big mistake. Today he makes sense, even if psychologically I do not want to believe him.

Reality catching up with dark theories

The world has gone through a historic shift in the past five years. And while the credibility he earned in the '80s would be intact if he had simply not jumped the gun and used 2000 as the start date of the great bear rather than 1995, there is, nevertheless, a chilling sense that his world view is unfolding on a daily basis with terrorist killings, oil over $50 a barrel, America's huge $51 trillion debt and independent predictions of a global cultural war that will last decades, eventually escalating to a nuclear holocaust.

Today I see Prechter as the ultimate contrarian in predicting a dark scenario -- a 100-year bear market -- at a time when America was gushing with the eternal promises of the '90s New Economy and Information Revolution. His work parallels Kahneman's Nobel effort.

But while Kahneman's work essentially confirms what we already know about the value of asset allocation, buy-and-hold and indexing strategies for individual investors, Prechter's "New Socionomics" model focuses on mass behavior that has a life of its own, creating rather than reacting to world events. In Prechter's model, individual investors may be controlled by "subjective, unconscious, pre-rational impulses to herd determine financial values," but markets are still "patterned and probabilistically predictable."

So where does that leave us? Marching headlong into a 100-year bear market says Prechter. And while his predictions may still be unacceptable to you and me, the harsh reality is that the facts seem to be rapidly catching up with his theories. And that restores his credibility.

Comments

CrispE

on Oct 16, 2004

geser nart:

While not a student of Prechter (his analysis is too esoteric for a guy trading every day) I follow his logic and agree with some of the principles he espouses. The main point of economics that many miss is that macroeconomics follows certain patterns because the operations of the economy run in cycles and always has. What that means is that there is no such thing as "the new economy" or the "new economic model."

Many in the 1980's and 1990's liked to think that advances in computers and communications were an impetus to "a forever growth cycle" that would continually lift the economy and cause growth to be ever present. Even when recession came in 2001 they said recession would be staved off. But the underlying fundamentals (natural resources, labor costs, etc.) are still the pillars for the economic analysis the same as they were before we could phone pictures of our silly faces to our girlfriends hundreds of miles away.

Very good article!

geser nart

on Oct 21, 2004

What if you were told that you would no longer be able to use that paper and would be forced to rely upon electronic technology for every single transaction you were to make? How would this affect your freedom and privacy?

Moving Toward a Cashless Society

"Money - in the traditional sense no longer exists. It died two decades ago when Richard Nixon forever abolished the gold standard. Since then, money as we once knew it has been replaced by an unstable new global medium of exchange that is called 'megabyte money'... megabyte money is a threat not only to our country's long-term growth and prosperity, but to the individual as well."
- Joel Kurtzman, The Death Of Money, 1993

During 1995 we saw some of the most profound changes that the world has ever known move out from the shadows of secrecy and intense preparation. The world of finance led the way in such changes. The most basic area of finance presently undergoing massive change is the very means by which transactions take place - the use of money itself.

We all have used paper to obtain goods and services that we need and desire but have we ever thought about why the use of paper in the form of bank notes entitles us to cars and entertainment and food and shelter? The only way that paper with writing on it can entitle us to goods and services is through our faith in the ability of the Reserve Bank, the government, or private individual to redeem or back that paper with something of value.

What if you were told that you would no longer be able to use that paper and would be forced to rely upon electronic technology for every single transaction you were to make? Would this make you more efficient in the manner in which you conducted your affairs? Would you be pleased to no longer carry paper or coins? How would this affect your freedom and privacy? The following investigation looks at these questions and reveals the alarming dangers to individual freedom posed by the drive toward a cashless society.

The Gradual Replacement of Cash

Kevin SigRift, a U.S. economist at Norwest Corp., says there are many products now available to the general public that are ushering in the use of electronic money in favor of its paper counterpart. "Certainly there are jumps in technology that have facilitated this. For instance, a product that we market at Norwest is a debit card. It is a Visa Card (credit) but it's a debit card, so the money comes out of your checking account," he explained.

The card Mr. SigRift described is a fairly common bank card that allows you to spend your own money from an account you hold and with that same card being able to charge an item while shopping. Mr. SigRift said these cards are being used more often.

"This year [1994] across the country, Visa's volume (the number of times that the Visa Card is used) is up massively. Check writing is up only two percent in comparison. There has been a structural shift from checks to debit cards and credit cards," he said.

Is the convenience of a card that prevents you from going through your pocket fumbling for paper bills and loose change and at the same time allows you to borrow money in an instant worth the interest payment? What if you were able to do all of your banking and purchase from your home? Would your participation in a cashless society then be feasible?

"Nothing would suit me better than to have some route that would allow me to transfer funds from my bank account to somebody else with the touch of a button from my PC (Personal Computer) so that I could do all my banking by sitting in front of my PC. I could do it on the spot instead of having to write out checks," said Al Smith, senior vice president and principal economist for NationsBank. Mr. Smith sees the move toward a totally electronic economy as a sign of the times, a choice of a new generation.

"I think there is an age difference. Most older people don't even know how to type, but the 20 and 30 year-olds think nothing of sitting in front of a PC and typing something and keeping a record. I think the age difference is slowing the transition (from cash to electronic currency) but we are moving pretty rapidly into an age where the chip is the king and check is passe," he said.

The chip that Smith mentioned is the vehicle being used to drive the world into an electronic economy. The June 27, 1994 edition of Fortune magazine spoke of its role: "The heart of this new economy is the tiny microprocessor, the transistor-packed silicon chip that combines with clever software and laser optics to make possible what we globally call the Information Age."

Not everyone is enthralled by some of the ramifications of the Information Age. Paul Richard of the San Diego based National Centre for Financial Education, sees little reason to switch to a cashless system and is concerned about it. Mr. Richard's group provides investment, financial and spending information to the public.

"The real danger is too heavy a hand watching over your life. It's nobody's business where you spend your money so long as you earn it legally. No government entity should know where you spend money for groceries," he said.

The government would be able to monitor purchases, spending habits and businesses patronized, Mr. Richard explained. People have concerns about the misuse of such extensive, personal information, he said, adding, "It's really frightening when you think about it."

Matt Ziebro, manager for Operation Strategy magazine, a monthly financial magazine, said that the move from cash to electronic money is a part of a well-organized attempt to unify the world and control it through its currency. He said the media and government are playing a role in the move to a cashless world and that the government has a history of creating so-called "bad guys" in order to enact certain legislation or influence the public to call for major changes.

Mr. Ziebro cites the "smart card" that will be used as a form of electronic money that has other uses that border on the invasion of privacy. "The 'smart cards' are ready to go. They are able to store information on a credit card with the use of a microchip. The 'smart card' would then hold your bank account, all of your identifying information, everything about you...," he said.

Smart Cards

While large purchases have been the domain of credit cards, small purchases are to be targeted by the so-called 'smart cards' or "stored-value cards".

"Store-value cards have a microchip embedded in them that allows the cards to 'load' money at a bank machine and dispense it through a retailer's equipment at the point of sale," writes Jim Silver in The Australian, 22/8/95. "The goal is to get people to use the new cards for purchases such as fast food, bridge or mass transit tolls and vending-machine items," he adds.

In the future, there will be no need to stop at a tollway. Your special vehicle-mounted transponder, which contains a microchip or a slot for a 'smart card', will be automatically read and an amount deducted when you pass under highway scanners. Other 'smart cards', already developed in Australia, enable you to make a purchase by simply tapping your card on a retailers card-reader. The enclosed microchip and antennae "talks" via radio signals to the card-reader and deducts the required amount.

Who's behind the production of 'smart cards'? According to a report in Bloomberg, "A coalition of United States financial services and technology companies plans to use leading banks to develop stored-value cards that can replace cash for small purchases. MasterCard, 11 banks and two technology companies... said they would form SmartCash, a company that would develop and distribute stored-value cards." A more apt description might be a coalition of various agents of the 'New World Order' seeking to monopolise the distribution of this latest mod-con of control!

Implants

Possibly the most frightening aspect of the movement toward a cashless society is the emergence of technology that would allow a microchip to be placed in the human hand that would identify every human being on the planet and allow them to buy and sell without coins, paper or a card.

One expert on this new "biochip" technology charged that the U.S. government will introduce a national I.D. card, supposedly to end illegal immigration, that will extend into commercial activity. This card will be the last step before the government will move to place a biochip in the right hand of every American, said Terry Cook, a retired Los Angeles deputy sheriff and a former fraud investigator.

Already throughout the world, a number of biochip programs have been instituted on animals. In Los Angeles, the name of the program is INFOPET. In this program an I.D. chip is injected into animals in order to identify them. The chip is made by a Destron company based in Boulder, Colorado. Destron was taken over by Hughes Aircraft Corp. of southern California. Hughes is a major defense contractor of the U.S. government. Destron also has licensed computer giant Texas Instruments. These are the two largest manufacturers of this type of technology in the world.

Convenience or conspiracy, you decide. But like it or not the cashless society is on its way. Those who still disbelieve should go through their records asking themselves, "How did I make my last purchase, cash or credit?"

The above article appeared in New Dawn No. 33 (November-December 1995)

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