The routinization of financial calamity

Reuter’s has an upbeat article about financial markets today. It begins, worryingly enough, observing that “Profit warnings, breaches of key index levels, record oil prices, stressed consumers and investors seeking safety provide the background for markets this week,” but introduces what for me is a new term in this context: capitulation.

Are the markets about to “capitulate?”

There has been no classic “capitulation” — a market concept which states that heavy, sometimes panic, selling of stocks heralds the bottom and a beginning of an upturn. But there is enough gloom around to make a contrarian bullish.

“You are beginning to get into capitulation territory now,” said David Bowers, joint managing director of Absolute Strategy Research and consultant to Merrill Lynch for its monthly global fund manager sentiment survey.

Oh, so capitulation is a “good” thing. It heralds a turnaround, a return to the inevitable bull market, in which the wealthy see the increased stock values that they regard as their due. While a broader bear market, in which “investors may start selling not only poorly performing stocks such as financials but also those which have not done too badly this year,” is possible, that we have terminology for this suggests we’ve seen it all before, in a way that this is routine.

So it is routine that oil and food prices skyrocket, people around the world riot over prices, and banks have to be bailed out. Just a spot of rough weather, you see. The rich will be just fine in their massive yachts that can withstand hurricanes, while the poor are wrecked on the shoals.

Author: benfell

David Benfell holds a Ph.D. in Human Science from Saybrook University. He earned a M.A. in Speech Communication from CSU East Bay in 2009 and has studied at California Institute of Integral Studies. He is an anarchist, a vegetarian ecofeminist, a naturist, and a Taoist.

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