The year of financial apocalypse
may be 5 years away
TIMES NEWS NETWORK[ THURSDAY, JUNE 28, 2007 03:56:04
MUMBAI: Economists, fund managers and technical
analysts rarely agree with each other. But if
it is 2012, many of them seem to have a consensus.
For them, 2012 spells only one thing — global
meltdown in financial markets.
The present boom in the financial markets may
come to an abrupt end in 2012, feels a Harvard
University Economist Jeffery Frankel. According
to him, the reason is very simple. He feels that
markets move in from seven years of lull and seven
years of boom. But in between these two phases
the flow of money stops. 2012 is that year when
there is a chance that liquidity from global emerging
markets will get drained out.
The last time this happened was in 1997 when
the Asian market hit the peak and there was a
capital flight out of Asia. Before that in 1982,
Mexico faced problems after the oil price crisis
that was experienced by the country which affected
the world. Due to fall in oil prices Mexico suffered
heavily due to loss in revenues.
This backdating of 15 years takes us to 1697,
which marked the end of the Mayan Kingdom. The
Mayan King Pacal Voltan was known for his prophecies
and was known for his knowledge of numbers. Pacal
Voltan speaks about the end of the world on December
21, 2012, a year which many believe is the year
of the apocalypse.
Diego Arevalo is a fund manager who is presently
in Guatemala and is intrigued by Pacal Voltan
and his prophecies. Apart from his day job of
fund management he takes a keen interest in the
Mr Arevalo who spoke to ET on e-mail believes
that there is something out there which is not
easy to understand. He has been talking to a lot
of Mayan experts and is of the opinion that the
world may not actually come to an end as depicted
by the prophecies of Pacal Voltan. “The
world is going to go through some drastic change
around that year. There will be an impact on global
financial markets. But doesn’t it intrigue
us that so many theories are converging in one
year and these theories are coming in from different
parts of the world.”
To prove his point Mr Arevalo talks about the
Elliott Waves. Technical analysts use the Elliott
Waves to understand the movement of the markets.
The Elliott model proposes that the market prices
alternate between five and three waves and in
a way represents fractals. These waves are based
either on multi-decades to weekly patterns and
are called as major cycles or minor cycles. According
to Mr Arevalo we are touching the ‘Wave
V’ in 2012.
Wave V, Fibonacci number is the last wave in
an upward trend of a major cycle. Since these
waves are fractals, they appear at various point
in time. The macroview or supercycle has Wave
V located in 2012. “I expect a reversal
at that exact point in the markets, possibly a
great correction in the form of a depression.
The Mayan calendar expects something more disruptive.
I think an event derived from global warming is
something what they expect.”
Maybe Mr Arevalo has a point. Indian technical
analysts are of the opinion that there is nothing
wrong with the Indian markets for the next two
to three years. “In technical analysis we
don’t look beyond two to three years. But
I don’t see anything going wrong for India
in this time. It is very difficult to point out
what will happen in 2012,” says a senior
technical analyst from Mumbai.
Financial markets are waiting for a volatility
shock. Nobody knows in what fashion or which part
of the world this shock will come from. Till then
fund managers and economists have enough time
to meet Mayan Shamans or understand Elloit Waves.