Pete Kendall's Socio Times: A Socionomic Commentary

October 22, 2006
Where There's Smoke, There's Ire
See a smoker in Omaha? Dial 9-1-1
Nebraska city imposes toughest enforcement policy in nation
Omaha's tough new anti-smoking ordinance banning the practice in nearly all public places comes with an even tougher enforcement policy.

The Nebraska city's elected leaders and police department are urging residents who see violations to call the 9-1-1 emergency system for an immediate response.

Omaha banned smoking in public Oct. 2. Penalties are $100 for the first offense, $200 for the second and $500 for the third and subsequent infractions.

Teresa Negron, sergeant in charge of public information for the police, explained the department encourages observers of infractions to pick up the phone to report the infraction – just like they would for any other crime they observe being committed.

Omaha police insisted residents should use 9-1-1 to report smoking law violators.

October 23, 2006
Into the Abyss of Baghdad
By Patrick J. McDonnell
BAGHDAD —I covered Iraq for two years, beginning a few months after the March 2003 U.S.-led invasion. For the last year, I have been gone. I wondered how the country had changed.

I found that this ancient byway of Islamic learning and foreign invaders has gone over to the dark side. A year ago, car bombs, ambushes, daily gun battles and chronic lack of electricity and gasoline were sapping the city. But not this: the wanton execution of individuals because of sect — a phenomenon so commonplace it has earned a military shorthand: EJK, for extrajudicial killing.

Every day the corpses pile up in the capital like discarded furniture — at curbside, in lots, in waterways and sewer lines; every day the executioners return. A city in which it was long taboo to ask, "Are you Sunni or Shiite?" has abruptly become defined by these very characteristics.

Once-harmonious neighborhoods with mixed populations have become communal killing grounds. Residents of one sect or the other must clear out or face the whim of fanatics with power drills.

On a recent patrol in Adamiya, one of the capital's oldest sections, U.S. soldiers went door to door speaking with merchants and residents, trying to earn their confidence. Everyone seemed cordial as people spoke of their terror of Shiite militiamen. Then a shot rang out and a soldier fell 10 yards from where I stood with the platoon captain; a sniper, probably Sunni, had taken aim at this 21-year-old private from Florida ostensibly there to protect Sunnis against Shiite depredations. The GI survived.
Los Angeles Times

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A Run on Intolerance From Baghdad to Omaha
By: Pete Kendall, October 23, 2006
There is no mistaking the footprints of a big bear market. One of the most prominent changes is the shift away from the permissiveness and feelings of alignment with others to a sudden public fetish for restriction and control.
The Elliott Wave Financial Forecast, May 2004

Bear markets don’t appear everywhere at once. They assume control of different sectors and advance at different rates. Obviously, social mood is much more depressed in Iraq than it is in the United States. In fact according to the Dow Jones Industrial Average,  the bear market is not yet underway. Intolerance toward smokers in Omaha is certainly nothing compared to the religious intolerance that is now pressing down on the city of Baghdad. But it’s the direction of the trend and the comprehensive nature of the ban that is critical. The transition from a peak in social mood is evidenced by the “ultimate goal” of the smoking ban, which is to “protect everybody from secondhand smoke.” The first bites of the bear market, which is represented by the lower highs of the S&P and the NASDAQ,  are also visible in a series of incremental attacks on the old bull market social order. Back in early 2004, when the momentum of the rise from October 2002 low peaked and stocks hit a temporary high, EWFF listed a series of bans and crackdowns on everything from bull fighting to ecstasy (see Additional References below).  Here in Socio Times we’ve also covered a series of more recent controls like a ban on junk food in schools by the state of California (see September 19, 2005 entry) and various advances in the anti-immigration movement (see series of entries beginning with that of August 21). Omaha’s willingness to put up the “toughest enforcement policy in the nation” even as the Dow Jones Industrial Average moved to new heights, shows that the urge for restriction and control is getting stronger. The situation in Iraq is haunting reminder of how efforts to control and manage opposing forces tend to intensify rather ameliorate problems in bear markets. The more pronounced the effort to forcibly stem the tide, the worse the violence gets. As EWFF concluded in May 2004, “even wise and well-conceived bear market reforms and dictates tend to have unintended negative consequences.” 

Additional References
May 2004, EWFF
One of the great things about the Wave Principle is its tremendous scope. Users can take the stock market count and, by examining changes in the culture through similar wave positions in the past, do quite well at forecasting the social future. Readers certainly seem to appreciate this value. It can work the other way, too. There are times when broad changes in the social realm can be used to confirm the wave count. This appears to be one of those moments. There is no mistaking the footprints of a big bear market in the changing social landscape. One of the most prominent changes is the shift away from the permissiveness and feelings of alignment with others to a sudden public fetish for restriction and control. Here’s how The Wave Principle of Human Social Behavior described some of the key traits that create this reactive, bear market craving for regulation and revenge: “A waxing negative social mood appears to correlate with a collective increase in discord, exclusion, unhappiness, anger, opposition, depression, destructiveness and a desire for power over others.” Since the NASDAQ 100’s peak in January, the papers have been filling up with headlines that describe the major and minor effects of this mass emotional downswing. Suddenly, in totally unconnected sectors of the planet, the perception is that tolerance, efforts to “keep up with the Joneses” and openness have all gone too far and “something needs to be done.” The following news diary shows how fast and deep the latest trend change is snapping into action.

January 13 “Feds Crack Down On ‘Raves’: Prosecutor Pursues Organizers of Parties.” In the late 1990s, raves were a night-life staple. Now they are “widely considered notorious havens for illegal drugs like ecstasy.” Ecstasy is to Cycle V as LSD was to Cycle III in the 1960s. Like LSD, it is a psychedelic that was actually legal at the start of its bull market. “Users report feeling blissed out, energetic and emotionally open and loving.” Ecstasy, which is known as an “empathogen” because of its ability to facilitate empathy, fit perfectly with the bull, but society sees it as downright irritating now.

February 12 “Bush to Crack Down on Nuclear Black Market.” Remember back in 2000 when the world was considered so open and safe that nuclear secrets were turning up behind copy machines at U.S. weapons labs? That view has changed. The U.S. Energy Department has also announced “major steps to improve security including the removal of plutonium and highly enriched uranium from Lawrence Livermore National Laboratory and other weapons sites.”

March 8 “Crackdown on Cursing Starts.” A year ago, the FCC enforcement bureau ruled that use of the f-word at last year’s Golden Globe awards was not indecent because it was unrelated to a sexual act. But now it says that pop star Bono did, in fact, violate Federal regulations when he accepted his award.

March 10 “Senators Tell Baseball To Crack Down on Steroid Use.” Last October, when the “designer steroid” case hit the papers, EWFF explained that it was “stuck on page 3” because the market was still trending higher. We said, “Look for it to rise toward the front page as the downtrend intensifies.” Following the reversals from early 2004 highs in all three averages, baseball’s steroids problem did, in fact, make it to the front page. Notice, however, that crowds are still making their way out to the ballparks. That’s because stocks are still near their highs. When stocks collapse, the fans will file out and steroids will be cited as a major reason. But the real reason is the anger of fans, which is mostly still to come.

March 23 “Revenge Vowed Over Israeli Attack on Founder of Hamas.” The “unprecedented escalation” of the conflict in the Mideast is perfectly consistent with the long track record of Mideast turmoil, which suffered similar escalations near the downturns of 1929, 1966 and 1973. In the 1990s, it disappeared only to make a dramatic reappearance with the Palestinian riots, which hit in October 2000, right after the start of wave (3) of 1.

April 6 “Barcelona Bans Bullfighting.” Barcelona bans bull market?

April 8 “FCC Fines Clear Channel $495,000 for Making ‘Alleged Indecent Content.’” What was standard fare for “shock jock” Howard Stern during the bull market has now cost radio stations $500,000 in fines.
“Princeton Plan Seeks To Ease Grade Inflation.” Near the lows of the 1970s, Princeton handed out A’s to about 30% of students. Between 1997 and 2002, the percentage jumped to 45%, and grades below B became relatively rare. As the bear market continues, grade point averages will fall with stocks.

April 9 “Feds Crack Down On Tax Shelters.” Back in 1999, when the Dow’s peak was just months away, The Elliott Wave Financial Forecast noted that property seizures were down 98%, and “IRS agents are turning nice.” This was probably one of the clearest signs that the approaching peak in social mood was likely to stand for years to come. Now, the era of the nice-guy IRS agent is ending. The IRS is beefing up “enforcement” and training its sights on “high-income taxpayers.”

April 11 “Dutch Cannabis Crackdown.” “In an increasingly conservative Netherlands,” drug laws are being drafted that “may bring an end to Amsterdam’s anything-goes reputation.” The Dutch government will propose a ban on the sale of the country’s strong home-grown cannabis. Police have already shut down many of the city’s famous hash bars. “The crackdown has reduced the number of cannabis coffee shops from 2,000 a few years ago to about 700 today.”
“War’s Full Fury Is Suddenly Everywhere.” Several reporters concurred with this assessment from The New York Times: “The atmosphere in Iraq has completely changed. In just a week, a fading guerilla war has exploded into a popular uprising.” The reporter says, “I was left with the question: why now?” A Mideast historian offered a explanation that edged closer to socionomics: “The killing of four American contract workers in Fallujah on March 31 and macabre celebration afterward made extreme violence possible and even invigorating. These examples whip up emotions. Pack mentality can overcome reason and propriety.” The error in this analysis is that it attributes the emotion to the action, when it is the other way around. The killings and the escalating conflict that followed were an expression of a crashing social mood.

April 23 “Louisiana May Ban Low-Slung Pants.” A Louisiana representative who is “tired of catching glimpses of boxer shorts and G-strings over the lowered belt lines of young adults,” has submitted a bill that will punish anyone caught wearing low-riding pants with a fine of as much as $500 or as many as six months in jail, or both. It probably won’t pass (not yet, at least), but the bill clearly expresses a shift away from the permissiveness that reined through the end of the great bull market. “I’m sick of seeing it,” said the bills sponsor. “The community’s outraged.” (As the Dow chuggs lower, we may find out where the term “blue laws” come from.)

April 26 “Patriot Act Popular, Giving Bush an Edge.” This is probably one of the most profound evidences of the potency of the new socionomic trend. Just weeks ago, the Kerry campaign was planning to use the acts intrusion on civil rights as a campaign issue: “But instead of the ideal issue to use against President Bush,” the Democrats have discovered that the public is squarely behind the measure. “In a turnabout, the act suddenly has emerged as a cornerstone of Bush’s re-election campaign.”
“Vengeance is Mined It’s payback time. That’s been the mantra for a variety of movie characters determined to bring justice to an unjust world.” Four vendetta movies, The Punisher, Walking Tall (a remake of the original Buford Pusser revenge flick that came out in February 1973, one month after at the start of the bear market of 1973-1974), Kill Bill Vol. 2 and Man on Fire have come out in just the last four weeks. All four hit it big at the box office, with debuts at No.1 or No. 2.

April 29 “China Orders Banks To Suspend Making Commercial Loans.”
“First Criminal Charges Brought Under New U.S. Anti-Spam Law.” Nobody likes spam, but during the bull market everybody put up with it. Saying it’s “gone too far,” U.S. prosecutors have launched the first volley in what promises to be an ongoing attack on many bull market business tactics.

Bear markets are necessary because they correct the excesses of the preceding rise. At big turns, like the one that began in 2000, they bring a wave of reality that breaks down many of the illusions of the bull market years. By the end of the current bear market, baseball will be back on a level playing field, third graders who can’t read won’t be advanced to the fourth, and the airwaves will be safe for the ears of children. But the sobering process is never smooth because virtually every restriction or call for retribution listed above creates a response by an adversary in the same negative mental state. After Israel assassinated Hamas leader, Sheik Ahmed Yassin, a Hamas official responded, “Words cannot describe the emotion of anger and hate inside our hearts.” When Yassin’s successor was also assassinated on April 18, the headline said, “Hamas Vows ‘Volcano of Revenge.’” The more progress the U.S. forces make in Iraq, the more non-aligned parties join the fight and the more terrorists it creates. Another problem is overzealous implementation: The FCC’s new rulings caused radio stations to pull songs like Lou Reed’s Walk on the Wild Side, which has aired for years without complaint. In this way, even wise and well-conceived bear market reforms and dictates tend to have unintended negative consequences.

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