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business newsRelationship Between History and Finance?
By
Peter Atwater
Jun 01, 2010 12:45 pm
Looking back at 12 year cycles, let's just hope that history neither repeats nor rhymes.
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I was recently asked if I had any updates to my “Math Curse” article from earlier this year. Unfortunately, or fortunately, depending on your perspective, I don’t.
But over the weekend, I'm afraid that my Math Curse may have morphed into something more like History Hysteria. You see, last week, the Wall Street Journal ran an article about the first “flash crash,” which, while new to me, happened in the spring of 1962. That's 48 years ago. Also known as 576 months, which made me go “Hmmm”. All I could think was 576 as in 1576 -- the S&P all-time high?
While I'm sure it's nothing more than coincidence, the whole thing made me check out what was happening in the world over the past century, using 12-year cycles counting backward from 2010. And here are a few things that I found, which in light of current events, I thought readers might find of interest:
1914 -- On June 28 Arch Duke Ferdinand was assassinated; the First World War officially began on August 1 when Germany declared war on Russia and the first shots were fired. 1914 also saw the official formation of Mussolini’s Fascist movement.
1926 -- On March 3 and then again on the 24th, stock prices plunged following a “planned investigation of the oil industry by the government, a decline in commodity prices, and a possible cutback in iron and steel production.” And on April 25, Reza Khan crowned himself the first Shah of Persia (now Iran). July brought the near financial collapse of France, and, per media reports, “The French people [were] very suspicious of politicians during this financial crisis,” after a new French government “asked citizens to pay part of their taxes early so that it [could] meet domestic expenses and make payments on foreign debt.” Finally, also in July, a Congregational minister and a former federal judge testified before Congress claiming that Prohibition was “responsible for an increase in crime and insanity in the US.”
1938 -- January brought the first official US employment report, noting that one-fifth of all Americans were unemployed. Hitler promoted himself to military chief on February 4; on March 14 Germany invaded Austria. November 9 was “Crystal Night.” On March 18 Mexico seized 17 American and British oil companies, and on October 30 H.G. Wells broadcast “The War of the Worlds”.
1950 -- On June 25, North Korea invaded South Korea, and, following the United States response in July, China entered the war on November 9. By December, Harry Truman had declared a state of emergency in the US, warning that the “full and rich life” guaranteed by the Bill of Rights had been put in jeopardy by the “Communist menace.” Wage and price controls were implemented as well.
1962 -- In addition to the “flash crash” mentioned above, this year also brought the Cuban Missile crisis at the end of October.
1974 -- In addition to the resignation of President Richard Nixon on August 8, the year brought gas shortages and high inflation. On September 23, then-President Gerald Ford said that escalating oil prices set by producing countries would lead to a worldwide depression and, in Ford’s words, “the breakdown of world order and safety.” And speaking of which, India completed its first underground nuclear test on May 18.
1986 -- January 31 was the Challenger explosion and April 30 was Chernobyl. On November 18, Ivan Boesky pleaded guilty to insider trading charges.
1998 -- In addition to the mega-mergers of Citibank (C) and Travelers (TRV); Worldcom and MassMutual Corporate Investors (MCI); and Chrysler and Daimler Benz (DAI), the year also brought the Russian currency crisis, the failure of LTCM, and the founding of Google (GOOG). The end of May was marked by “competing” nuclear tests by India and Pakistan. And the US Embassy bombings in Tanzania and Kenya took place in early August. Finally, in the first second following the end of 1998, the Euro became the official currency for most of Europe.
So there you have it. Not exactly auspicious company if you ask me. Let’s just hope that history neither repeats nor rhymes.
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