Occupy Wall Street -- Day 26

It is quite clear that Occupy Wall Street is on a collision course with rising authoritarianism throughout the Unites States as mass arrests have taken place in Boston and Seattle, implying that we are seeing evidence of rising authoritarianism even in the blue states. Michigan continues to lead the charge in terms of increasing authoritarianism, as evidenced by the latest developments in which new state laws are in the works that are aimed at overriding local laws.

There is one difference between the Tea Party and Occupy Wall Street -- the difference is that the Tea Party as allowed to do as they wanted without push-back from governments, whereas Occupy Wall Street has been on a constant collision course with rising authoritarianism.

From a socionomic perspective, both the Tea Party and Occupy Wall Street have a common denominator -- they are both motivated by a bearish social mood as angry people take to the streets. In fact, they both exhibit identical patterns, but at different degrees of trend.

The Tea Party formed in February 2009, during Intermediate wave (5) of Primary wave [1] down (2007 - 2009). The Tea Party peaked just after the March 2009 low, then steadily lost steam as Primary wave [2] up (2009 - 2011) continued to unfold. By the time the Primary-degree bear market rally peaked, the Tea Party appeared to be a "spent force". The complete write-up on the socionomic perspective of the Tea Party is here at Socionomics Institute's website (take a look at the chart on the write-up).

So far, Occupy Wall Street has followed the same pattern as the Tea Party. Here is a chart of the DJIA with important events pertaining to Occupy Wall Street added.

The chart shows all of Minute wave [v] of Minor wave 1 down (May 2011 - Oct 2011) as well as the early part of Minor wave 2 up that is starting to unfold. Both the Tea Party and Occupy Wall Street formed during the fifth wave of a larger downward impulse. Afterwards, both the Tea Party and Occupy Wall Street grew in size and picked up steam through the rest of the downward impulse. After the low point of the downward impulse was reached, the protest peaked and started to lose steam. Occupy Wall Street peaked (for the year) on October 6, 2011, 2 days after Minor wave 2 up started to unfold.

Here is a chart of Occupy Wall Street using Google Trends, which shows the search volume of the subject on the Internet over time, as well as the news reference volume. The end of Minor wave 1 down (May 2011 - Oct 2011) and the beginning of Minor wave 2 up is also indicated on the chart.

There is also an element of linear trend extrapolation in play as well. When Occupy Wall Street first appeared, Keith Olbermann of Countdown was the only journalist that covered the events. By the time Occupy Wall Street peaked for the year on October 6, 2011, virtually everyone in the mainstream media was talking about the protests, and people became convinced that the protests would continue to pick up steam in the coming days and weeks ahead.

For the rest of the year, rising positive social mood associated with Minor wave 2 up will chill the Occupy Wall Street protests in the same way that the rising positive social mood associated with Primary wave [2] up (2009 - 2011) resulted in the Tea Party losing steam over time. Occupy Wall Street is predicted to lose steam as Minor wave 2 up continues to unfold. 

If Occupy Wall Street persists through Minor wave 2 up, the next wave of increasing bearish social mood, namely Minor wave 3 down, will re-ignite the Occupy Wall Street protests with people taking to the streets in much larger numbers than today starting in February 2012. Considering that the Occupy Wall Street protests are already in a direct collision course with increasing authoritarianism, it is very likely that police departments will step up their efforts to break the back of the protests -- look for the police to utilize tear gas and water cannons on the protesters in addition to mass arrests even if the protests remain peaceful, and the standoff could get ugly quick after the center of Minor wave 3 down (which would be also the center of Intermediate wave (1) of Primary wave [3] down) is reached around March 2012.

Occupy Wall Street Gains Momentum

With the low point of Minor wave 1 down in sight, bearish social mood continues to increase at all levels. One of the protests that continues to gain steam is the movement that carries the name "Occupy Wall Street". Not only is the protest continuing to gain steam, but it has also spread to a number of cities such as Boston, Los Angeles, and even Washington DC. The protests started on September 17, 2011 and continue to grow in extent and numbers.

There has been a number of significant developments since "Occupy Wall Street" started:

1 -- On September 24, 2011, a group of protesters were maced by police officers. This event provoked a response from the hacker group Anonymous with the ultimatum that subsequent acts of brutality will result in the police department getting cut off from the Internet.

2 -- On September 26, 2011, Michael Moore showed up at the protests, giving a speech at Liberty Plaza.

3 -- On September 28, 2011, actress Susan Sarandon appeared at the protests, denouncing the wealth gap between the wealthy and the working class. On that same day, Transport Union Workers of America (TWU Local-100) throws their backing with the protests.

4 -- On September 29, 2011, the protests spread to San Fransisco as a group of protesters attempt to occupy Citibank, Chase, and enter a Charles Schwab financial institution.

5 -- On September 30, 2011, AFL-CIO president Charles Trumka speaks out on the protests, recognizing the need for balance between the real economy and the financial economy. Unions started to become increasingly involved in the "Occupy Wall Street" protests.

6 -- On October 1, 2011, The "Occupy Wall Street" protest continued to gain support from more unions as two national unions, National Nurses United and Laborers' International Union of America, cast their full support for the protests. Protests spread to a number of cities as Boston, Washington DC, Seattle, Portland, Chicago, and many others are affected. A large group of protesters shut down half of Brooklyn Bridge for several hours. The occupation of the bridge is followed by mass arrests with over 700 protesters arrested by the end of the day.

7 -- In spite of the mass arrests, protesters remained defiant with many people determined to remain at the scene for the long haul.

Another aspect of bearish social mood that is evident is authoritarianism. The NYPD wasted no time arresting protesters when "Occupy Wall Street" commenced in an effort to stop the protest from picking up momentum. So far, almost 750 protesters have been arrested since the protests started, yet the protests continue to pick up momentum.

In the short term, expect "Occupy Wall Street" to continue picking up momentum with more people showing up. Expect the NYPD to step up the mass arrests in an effort to put an end to the protests. Once Minor wave 1 down in social mood is complete around October 10, 2011, expect the protests to slowly abate (but not completely) over time as Minor wave 2 up unfolds through the rest of the year.

If "Occupy Wall Street" persists into February 2012, increasingly bearish social mood associated with Minor wave 3 down will act to re-ignite the protests with a much larger number of people (possibly rising to 20000 or more by April 2012) taking part in the demonstrations. Tensions between the demonstrators and the NYPD could turn very ugly in the aftermath of reaching the center of Intermediate wave (1) (of Primary wave [3] (2011 - 2016)) down around March / April 2012 with the possibility of the NYPD resorting to the use of deadly force to end the protests.

Rising Tide of Bearish Social Mood

As we head towards the low point of Minor wave 1 down within the much larger Primary wave [3] down, we continue to see a rising tide of bearish social mood. The rising tide is manifesting itself in many ways, from continued protests, increased strife and discord in the political arena, increasing recognition that a trend change has taken place in the economy, and yes, more downgrades from Moody's.

Here is an updated chart of the DJIA, with Minute wave [v] of Minor wave 1 down in focus.

We entered the strongest portion of Minute wave [v] down on late Tuesday, with Minuette wave (iii) in progress and on track to continue until around October 4, 2011 with a target of 10100 in the DJIA.

For many months, I had been predicting that Minor wave 1 down would end in early October 2011. It is now possible to make a more precise forecast -- Minor wave 1 down should end around October 10, 2011 with a target of 9950 for the DJIA and 1025 for the S&P 500.

The rising tide of bearish social mood has been manifesting itself in many ways in the last several days:

1 -- A large protest has been unfolding in Wall Street in the streets of New York City. The protest, which has involved  over a thousand people, have been part of a campaign "Occupy Wall Street" with the aim of calling for structural economic reforms and calling out the misdeeds of the wealthy. Even though the protest has been relatively peaceful, police have blocked demonstrators from reaching the New York Stock Exchange, and a number of demonstrators have been arrested.

2 -- We face the threat of another government shutdown as the GOP and the Democratic Party continue their game of chicken over disaster aid to communities affected by Hurricane Irene.

3 -- Attacks in the political arena have become more aggressive in the last several days as President Obama takes his jobs legislation campaign directly on Rep. John Boehner's home turf, and the GOP stepped up attacks against Obama with insistent accusations of "class warfare". Yesterday, Elizabeth Warren blasted the GOP's class warfare charge as well as their tax cuts for the rich.

4 -- As evidence of increasing recognition of a trend change in the economy, George Soros is now saying that "the double-dip recession is in progress in the United States". In the context of the larger picture, however, the trend change won't be recognized by economists and analysts until the center of Intermediate wave (1) (of Primary wave [3] down) is reached, which should occur around May 2012.

5 -- Moody's downgraded three of the "too big to fail banks" on Wednesday, with Bank of America, Wells Fargo, and Citigroup Inc, all having their credit ratings lowered.  The downgrade indicates that the banks are in worse financial shape now than they were before the TARP bailout in 2008. No downgrade occurred in 2008. The downgrade is also an indication that the Obama Administration will end up bailing out the "too big to fail" banks around May 2012. The original TARP was launched just before the center of Primary wave [1] down was reached in October 2008. Look for the Obama Administration to launch TARP 2 around May 2012, near the center of Intermediate wave (1) of Primary wave [3] down.

The DJIA, S&P 500, and the Wilshire 5000 should hit the lows of the year around October 2011, then they rally for the rest of the year, completing Minor wave 2 up around early January 2012.

Job Market Collapse Sparks Protests

The collapse of the job market is in progress, and there is increasing awareness of the issue. Even though we are yet to see a monthly job report that indicates that layoffs have resumed, layoffs continue to accelerate as more and more companies and businesses throw people out of work.

We are now seeing an outbreak of protests over the job market issue. A large number of protests have erupted in the last two weeks as outlined in the Daily Kos article on the many instances of constituents displaying their frustration at GOP town halls.

Here is a partial list of articles showing the large number of job market related protests that have erupted throughout the United States:

1 -- Ordinary Americans Continue to Deliver Progressive Messages at Republican Town Hall Meetings.

2 -- Members of Congress face job protests.

3 -- Invisible Town Hall Revolution Continues to Roll, with real impact on GOP.

4 -- Republicans at home face protests from liberal, labor groups.

5 -- Unemployed protest outside Fitzpatrick's office.

It isn't just Republicans that are getting the blame for the collapsing job market. People are blaming Obama as well, as evidenced by the latest gallop poll that indicates that Obama's approval rating on the economy dropped to a new low of 26%. Obama's overall approval rating is down to 39%, another new low. Even now, Obama is facing a great deal of criticism from unions and labor groups on the jobs issue as well as the debt ceiling deal.

It doesn't help that President Obama's proposals for creating jobs involves a substantial amount of magical thinking, as the proposal mostly revolves around creating more free trade agreements and extending tax credits to businesses and corporations.

The Obama Administration will attempt to pass a "jobs bill" after Labor Day. People in the mainstream media are optimistic that a jobs bill can be passed, but the optimism is mostly a product of optimistic social mood associated with a big wave 2 in a bear market. There is no chance of any type of jobs bill getting passed as polarization in politics will continue to increase with the GOP accelerating farther to the right over time, making compromise impossible.

As Primary wave [3] down (2011 - 2016) continues to unfold, expect protests to increase in size, extent, duration, and assertiveness. The protests at town halls are numbering from dozens to a few hundred now, but as social mood continues to become more and more bearish, the protests will increase in size, reaching 20,000 or more by early 2016 as more and more people take to the streets.