And as my mentor during the second half of the century, he helped me predict the bond market crash of 1979, the stock market crash of 1987 and much more. It comes as no surprise to me — and, I presume, to you as well — that history repeats itself: Despite differences in color and details, events tend to follow patterns that are structurally and functionally similar. What does come as a surprise, however, is the fact that all of the shocking events I've mentioned so far began or peaked in the month of October. But it does make me stop and ask: Is there a cycle — or combination of cycles — that, due to patterns deeply embedded in history, come together in the tenth month more often than mere chance would dictate? Consider some of the most salient Octobers of the 20th and 21st centuries, and then make up your own mind: October 1907 — Panic of '07. A major bond offering by New York City fails ... the copper market collapses ... Standard Oil is slammed with a massive $29 million fine for antitrust violations ... and stocks plunge. On October 22, Knickerbocker Trust, the second-largest trust company in the United States, is forced to suspend operations, triggering an especially intense wave of fear on Wall Street plus massive cash withdrawals from New York banks. The U.S. Federal Reserve does not yet exist. But J.P. Morgan steps in to play the role of lender of last resort, injecting liquidity into financial markets by buying up bonds, orchestrating multimillion loans, and preventing a wholesale collapse in the economic system. The Ottoman Empire has been encouraging Muslim populations of Bosnia to join the Empire and move to districts of northern Macedonia to restore the number of Muslims in the region. Meanwhile, Muslim immigrants join Albanian Muslims in a series of uprisings. Peter the First of Serbia issues a declaration in support for Serbian and Albanian Christians living under Ottoman rule, declaring that his army will "join the Holy War to free our brethren." Soon Montenegro, Bulgaria, Serbia and Greece declare war on the Ottomans. The events foreshadow World War I, ultimately claiming the lives of more than 16 million soldiers and civilians. October 1918 — influenza pandemic. This is the deadliest month of the deadliest pandemic in history, with a record 195,000 Americans succumbing to influenza in just 31 days. Before it's all over, 50 to 100 million people are killed and 500 million are infected worldwide. October 1923 — German hyperinflation. Prices in Germany are rising at the most rapid pace of almost any month in history, driving the value of the German mark down to more than four trillion to the dollar. Making matters worse, separatists and communist movements in Germany spread to Bavaria and Saxony.
October 1938. Hitler's first major armed expansion. German troops occupy the Sudetenland, the Czech region inhabited by 3 million ethnic Germans. By October 10, the region is fully under Nazi control. Seven years later, the end of World War II ushers in a long era of global stability. But in 1971, Nixon abandons the gold standard and effectively devalues the U.S. dollar, setting the stage for rampant inflation in the United States and a collapse in the value of the U.S. dollar. October 1979 — bond market collapse. U.S. Treasury bond prices suffer their worst collapses in history, as Fed Chairman Paul Volcker imposes Draconian measures in a desperate — but ultimately successful — attempt to kill the inflation monster that has plagued the U.S. for nearly a decade. Separately, the Soviet Union prepares to invade Afghanistan. October 1987 — Crash of '87. The 19th is Black Monday — a Dow plunge of nearly 25%, its worst single-day percentage decline in history and nearly double the crash recorded on Black Monday 1929. Among the key forgotten preludes to the stock market disaster: a 50% collapse in crude oil prices a year earlier. October 1997 — Dow mini crash. On the 27th day of the month, the Dow suffers a 554-point plunge, wiping out more than $663 billion in market capitalization. October 2001 — America's longest war. When the Taliban government in Afghanistan refuses to extradite Osama bin Laden, the U.S. and the U.K. launch Operation Enduring Freedom, beginning the longest war in U.S. history, still raging today. October 2008 — global market Armageddon. The IMF warns that the entire world's financial system is "on the brink of systemic meltdown" as the world's stock exchanges experience some of their worst declines in history. The crisis is so threatening that the U.S. Federal Reserve and all major central banks around the world embark on a radical, history-smashing escapade of rampant, nearly nonstop monetary easing and money printing, the consequences of which are still unknown. Back to the Present Most people associate the term "Black October" with a stock market crash. But as you've seen from these many historical examples, the financial markets are only one of several focal points where the forces of history can strike. Others include currency markets, key centers of geopolitical conflict, and the U.S. government itself, each playing pivotal roles in setting the course of history. I repeat: It would be an overstatement to say that the month of October itself is the critical force behind these events. But it would also be a mistake to assume that October of 2015 has so far been uneventful. Quite to the contrary, this month has already delivered ...
Good luck and God bless! Martin by Martin Weiss |
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Δευτέρα 12 Οκτωβρίου 2015
October Crashes, Collapses and Upheavals
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