Musings Report #4 1-23-16 The Decline of Centralized Power
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The Decline of Centralized Power
Many of the most profound dynamics affecting our world operate beneath the surface of media and political awareness, and manifest only after long periods of gestation.
One such dynamic I am tracking is the decline of centralized power. This is not a simple trend, as it is occurring across a wide spectrum of centralized power: political, social and financial.
One of my favorite quotes is attributed to Napoleon Bonaparte, who was in a position to grasp the limits of centralized power: "Do you know what amazes me more than anything else? The impotence of force to organize anything."
We can see what Napoleon was talking about in many different examples of centralized power running aground on the shoals of social and economic fragmentation.
In Syria, the social order was disintegrating even before the intervention of the major powers: the social-cohesion glue that connected Syria's many subpopulations was weakening long before civil disorder broke out.
Coercion is costly and clumsy, and no substitute for a widely shared social contract: secret police can suppress open dissent only by impoverishing the economy or if the vast majority continue to have faith in the social contract.
Dropping more bombs cannot unify what has fragmented in Syria.
In Germany, the centralized Establishment is pushing a policy of essentially open immigration--a policy that is alienating wide swaths of the German citizenry, fragmenting what was historically a relatively unified social contract/order.
In the U.S., those not blinded by denial are observing a generalized anger with the centralized Establishment that crosses conventional political lines: people are angry with the ruling Elites of both parties, who are mystified by this rising frustration with their self-serving rule.
The ruling Elites have no coherent response, and the propaganda designed to placate the masses only further alienates the ruled from the rulers.
One reason why the ruling Elites in most nation-states have no coherent response is the ruling Elites are themselves fracturing along deep fault lines, as the interests of various Elites are increasingly in conflict with the interests of other Elites.
This fragmentation of the centralized Elites characterizes the decline of empires such as Rome: once the ruling class has lost its coherence, this fragmentation seeps down the social and economic pyramid to the entire society.
One reason why the U.S. efforts in "nation-building" failed so completely in Iraq and Afghanistan is the fragmented nature of those states offered little leverage to Imperial power.
Looking forward, we can anticipate "The impotence of centralized force to organize anything."
Summary of the Blog This Past Week
Central Banks Are Out of Tricks 1/21/16
Another Reason Why the Middle Class and the Velocity of Money Are in Terminal Decline 1/20/16
The Coming Era of Financial Triage 1/19/16
What's Eroding the Middle Class? 1/18/16
Best Thing That Happened To Me This Week
A 3-day trip to Kauai to visit old friends; my first trip to the Garden Isle in 30 years.
Market Musings: Last Chance to Sell?
Bear markets are not hard to identify in retrospect: a simple chart is enough. I've marked up a 10-year chart of the S&P 500 with very basic indicators: the 50-week moving average (the blue line) and MACD (lower panel).
If we look at the 2008-2009 Bear market, we see that the Bear market was baked in once price fell below the 50-week MA and could not rise back above that line, and MACD declined below the neutral line.
These two indicators are sufficient to identify a Bear market. We can add all sorts of fancy technical and quantitative analysis, but these two indicators are sufficient.
Note that the 2008-2009 Bear market offered a "last chance to sell" in 2008: a final rally kissed the 50-week MA while MACD rose but did not breach the neutral line.
Shifting our gaze to the present, MACD has fallen below the neutral line, and price is almost 200 points below the 50-week MA. If price rises back up to kiss the 50-week MA while MACD remains below the neutral line, this would be a "last chance to sell."
A third indicator also aligns with this basic Bear market set-up: the 20-week MA crosses below the 50-week MA in a classic "death cross."
In 2008, this death cross aligned with MACD falling below the neutral line, and we observe this same alignment in 2015.
It's easy to over-complicate things. Based on these basic signals, the stock market is in the early phases of a Bear market until price decisively breaches the 50-week MA and MACD decisively breaks above the neutral line.
Should the SPX roar back up to the 50-week MA at 2,040 or so, that would parallel the "last chance to sell" in the 2008 Bear market.
As a last observation, it seems the majority of investors are extremely complacent, and expect the market to recover from every decline. This complacency sets up the potential for a much more severe decline, as sellers will hesitate until it's too late, and the resulting panic-selling will crash the market.
From Left Field
What's Eating Silicon Valley -- good overview....
I quizzed dozens of Silicon Valley elites about inequality. Here's what they told me.
Your job is about to get 'taskified' -- in construction and clothing manufacturing, it's called piecework...
Aretha Franklin (You Make Me Feel Like) A Natural Woman -- with the Prez and the song's composer Carol King watching...
Japan Keeps This Train Station Running for Just One Regular Passenger-- now this is community service...
As China's economy slows, workers feel the sting -- this story is repeating millions of times, but outside the focus of the usual U.S.-centric punditry....
How Americans Got So Fat, in Charts -- no surprise, but still surprising....
11 Reasons Why I Never Want To Own A House Again -- contrarian....
Community Solar Is Going To Explode Next Year -- invest in the local energy grid...
A sign of disaffection, rural worship of Chairman Mao is treated with caution -- social disorder is in the air...
Rubik's Cube Classes Giving Kids Competitive Edge In China (1:55)-- file under "can we compete as we dumb down?"
MIT States That Half of All Children May be Autistic by 2025 due to Monsanto -- is the link proven or conjectured?
"The authority of those who teach is often an obstacle to those who want to learn." Cicero
Thanks for reading--
charles |
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