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2008: Banks, regulators and accountability

In Business and Environment, Ethical Investing and Social Enterprise by Dr Neil HairLeave a Comment

In numerology, the symbols of the ‘universal year’ tell us the likely pattern of events for a calendar year, and what course of action can best navigate the year. Year 2008 was no exception, and gave us guidance on how to extract ourselves from this collective mess. In recent months, governments and regulators have finally got the message.

 

In the second half of Year 2007, commentators said we were experiencing the worst financial crisis for many years, inter-bank trust evaporated overnight and credit markets froze around the world. With the benefit of hindsight, we were just practising for what was to come in 2008! Apparently there hasn’t been a year of financial turmoil to match 2008, since the Wall Street crash of 1929 and the ensuing Great Depression of the 1930s. The Bank of England governor described conditions as the worst in British banking since the start of World War I, when the banking system almost collapsed; the Brazilian president said speculators had turned the world into a gigantic casino; governments underwrote and recapitalised their ailing banks. In USA, the weaker banks fell like tenpins, gobbled up by larger banks; Wall Street became a shadow of its former self, with only two of five top investment banks surviving; Germany’s Finance Minister said USA’s economic dominance was on the wane. In October, the chief executive of ANZ Bank remarked wryly on his February warning of a financial “Armageddon”; he’d understated the impact, the situation was much worse!

The Financial Crisis

This article seeks to address three questions; why did the financial crisis occur?; will there be some lasting benefit? and when will the crisis end? The techniques of mundane astrology and numerology will be used to seek a deeper meaning to the crisis. Warren Buffett, celebrated investor and sometime richest man in the world, labelled some of the less transparent products on offer from banks as “weapons of mass financial destruction”. No wonder governments and regulators felt it necessary to step in to take these dangerous toys away.

US Sub-Prime Crisis

The underlying source of this global financial meltdown is not hard to find, beginning as it did in USA’s sub-prime mortgage crisis. Billions of dollars were made available to low-income families to buy their own home and live out the American dream. This government-inspired generosity fully emerged in the Clinton era, when banks were pressured to lend to the less fortunate in society. In a post 9/11 world, with interest rates as low as 1%, loans were easily available irrespective of credit risk. In an ideal world, home prices go up forever, and banks imagined any defaulting loans would simply be recovered from profitable sales! So confident were banks of this strategy, sub-prime loans were parcelled up into mortgage-backed securities and sold around the world to unsuspecting banks and investors, reassured by respected ratings agencies. What could possibly go wrong?

Up until 2006, things did go reasonably well, then the unthinkable happened. A housing price bubble developed, then burst and home prices began to fall. Home loans in the USA have tended to be ‘non-recourse’ following the Great Depression, meaning that distressed borrowers can simply move out and send the keys back to the bank with no responsibility to repay the loan. Sounds like a recipe for disaster!

Astrological View

In the parallel universe of astrology, some compelling planetary movements were afoot during the build-up of the crisis. Former US Federal Reserve chairman, Alan Greenspan, testified to US Congress that the sub-prime crisis first emerged in March 2006, timing perfectly with the first conjunction [0 degrees] of Neptune’s passage to the Moon [homes, families, places of security] in USA’s Gemini rising ‘peoples’ chart’. Neptune, the God of the oceans, excels at creating illusions to test our discernment, boosting idealistic dreams with such feeling they become believable and when we are suitably mesmerised, pulls out the rug like a magician. “Hey presto!” Sound familiar? A wonderfully creative force for underwater fantasies, but entirely questionable for sub-prime mortgages!

The symbolism of Neptune’s passage was precise. US economists and real estate advisers, not astrologers, commonly described loans where home value was less than debt as “under water”. Dreams of ever-rising house prices, the hidden nature of risky loans, unsuspecting banks being duped – all are key signatures of Neptune who loves to gloss over the detail! In the second quarter of 2007, Saturn, ‘Mr Accountability’, came on the scene to confront ‘the illusionist’ by opposition [180 degrees]. US investment bank, Bear Stearns, immediately came under pressure with major sub-prime losses, finally collapsing in March 2008, and it’s all been downhill from there. Many investment banks and other financial institutions have been snared by Neptune’s grand illusion; and Saturn has taken great pleasure in cracking the whip of accountability! ‘Bear’ markets became the norm by late 2008, suitably (but not truly) named after Bear Stearns.

Symbolism of 2008

Clearly, the problems of 2008 have been building for some time. Mistrust between financial institutions, unsure of each other’s sub-prime losses, spread like a tidal wave in August 2007 and the credit crisis was born. Banks disengaged from other banks, fearful for their own survival. Liquidity in the financial system was maintained only by central banks injecting funds.

In numerology, the symbols of the ‘universal year’ tell us the likely pattern of events for a calendar year, and what course of action can best navigate the year. Year 2008 was no exception, and gave us guidance on how to extract ourselves from this collective mess. In recent months, governments and regulators have finally got the message.

To understand the workings of universal year 2008, numbers 2, 00 and 8 are interpreted separately, and as a whole pattern [2+0+0+8 = 10 Þ 1]. Number 1 is the key to 2008, a number of leadership, initiative and new beginnings, suggesting a bold new beginning is possible for the world. It is highly significant that the Asia Europe Group of 40 nations meeting in Beijing on the weekend of October 25-26, recognised the need for a new beginning for the global financial system, stating, “Leaders pledge to undertake effective and comprehensive reform of the international monetary and financial systems.” UK Prime Minister Gordon Brown and the World Trade Organization have also called for a new ‘Bretton Woods agreement, to define new guidelines for the global financial system. Crisis is so often a prerequisite for change!

Number 2 is supportive, nurturing, caring, sensitive and accepting, while number 8 is a number of business enterprise, financial management, control and direction. Numbers 2 and 8 together resonate to the ‘sensitive management’ of issues; laying down laws and regulations; accountability and responsibility; setting borders and boundaries; defining unique identity; managing balance sheets and accounts, and other business-related activities. In 2008, issues involving leadership accountability, racism, identity fraud, borders and boundaries have occurred with regularity; but by far the major focus has been business, banking and finance. Quite literally, the global financial crisis which emerged has required the utmost ‘sensitive and careful management’.

How else could you describe the actions of US Federal Reserve chairman, Ben Bernanke, who tried to soothe the US and global financial markets, conscious of not repeating the insensitivity of predecessors, which led to the Great Depression; US Treasury Secretary, Henry Paulson, who bailed out Wall Street to the tune of $US700 billion; free-market US President, George Bush who acted more like a left-wing socialist with state buyouts of vital financial institutions. UK Prime Minister Gordon Brown, latter-day villain of financial deregulation, shot from ‘zero to hero’ when he proposed the master stroke which soothed the credit crisis – that governments should take responsibility for their own banks. Australian Prime Minister, Kevin Rudd, similarly rose in the polls when he safeguarded bank deposits and announced a stimulus package to protect the Australian economy.

Late in the year perhaps, but world leaders finally got it! 2008 is a year of major new beginnings for the world and requires sensitive and caring management to usher it through. For the first nine months of 2008, world leaders seemed to believe that the free market had the intelligence to regulate itself. Yet, as Alan Greenspan ruefully conceded to US Congress, more government supervision of the free market is required and more responsibility assumed by banks for their securitised products.

Number zero represents the storehouse of the past, equivalent to Hades mythologically and to Pluto astrologically, and so the double zeroes of 2008 suggested there would be hidden issues to deal with around accountability and responsibility… and how! Quite literally, we could have expected ‘holes’ [0s] to appear in balance sheets, and they did; very large holes in US investment and other banks due to sub-prime losses. Bear Stearns, Lehman Brothers, Merrill Lynch, Citigroup and UBS were just a few of the culprits.

Rebirth of financial system

The double zeroes of the Noughties decade have continually brought issues to light, relating to the surrounding digits of the universal year [ref: previous articles in LivingNow magazine]. However, there is no denying the upheaval and excavation of the financial system, observed in 2008, bears the hallmarks of Pluto, the Master of Excavation. Written off by the International Union of Astronomers as a dwarf in 2006 and sent into planetary oblivion, non-astrologers asked, “Is this the end for Pluto?” The events of 2008 are Pluto’s ‘business as usual’ reply! Pluto has returned undiminished, entering a new phase from January 26 in the conservative business-oriented sign of Capricorn.

Planetary symbol of transformation and rebirth, Pluto completes one cycle around the sun every 246 years. Pluto last entered Capricorn in 1762, and soon US colonists were beset with a controlling, taxing government in Great Britain. All taxes and no representation did not appeal. So the colonists rebelled and in 1776 the United States of America was born. During an earlier passage of Pluto through Capricorn from 1516, Martin Luther rebelled against the authoritarian Catholic Church, notably against its monetary measures on indulgences, and the Reformation in Europe began.

Given the extreme financial and economic focus of 2008, it is highly significant that Pluto has completed one full cycle from the birth of capitalism in the mid-1700s. World media have questioned if we are witnessing the collapse of capitalism; a wreath was pinned to a lamppost outside the Bank of England; and USA, bastion of the ‘free market’, has resorted to socialist practices of state ownership. Clearly, we are not witnessing the death of Pluto, more likely the death and rebirth of Western capitalism! Capitalism will most likely reincarnate as a blend of West and East, more inclusive of community, looking to the well-being of the poor as well as the rich. Evidence of this shift can be seen in the economic summit planned for November 15 in Washington, originally for G7 nations, who since World War II have had a strangle-hold on global finance policy, but now extended to G20 nations. Eastern and other emerging financial forces such as China, India, Brazil, South Africa and Australia have demanded representation. The centre of gravity of the financial world has changed!

The world of global finance is in the process of being transformed and the financial crisis has been fundamental in prompting change. As Pluto entered Capricorn in late January, Microsoft’s Bill Gates argued at the Davos Economic Summit that capitalism was not serving the world’s poor, especially in Africa. His speech got scant coverage in the media; perhaps big business did not want the world to know that capitalism needs reform! Chinese Premier Wen Jibao, at the Asia Europe Group summit called for reform of the global financial system with a new balance sought between innovation and additional regulation – so appropriate to the opposition [180 degrees] between Uranus [innovation] and Saturn [regulation] culminating in the heavens on November 4. In late October, UK Prime Minister Gordon Brown appealed to China and the Gulf States to assist the International Monetary Fund and World Bank, again largely US and European-run bodies, with financial emergencies in Europe. It seems indisputable that the world is being drawn by crisis to work as one community, and this can only be of long-term benefit for the world. The financial pain endured in 2008 may have to be weighed up against the bigger picture of long-term global well-being. This may be what the passage of Pluto through Capricorn is demanding of us.

History suggests that whenever Pluto enters Capricorn, sign of business, government, hierarchy and the Establishment, the status quo is permanently transformed and structures within society reformed. 2008 is no different, which helps explain why people and nations alike find themselves perched on the precipice of change. Change is non-negotiable with Pluto, but if we choose to change, is it possible the precipice could magically disappear?

When Will the Crisis End?

Regulators are almost all we hear about in these times of financial instability. It may seem they came too late upon the scene, however, in fairness they were in evidence early in 2008. Regulators’ demands for stricter accountability were being met especially by US banks, which wrote off huge losses from their ‘toxic’ sub-prime loan books, and were responsibly trying to recapitalise. Despite US markets having the worst first quarter in history in 2008, things were reasonably stable in the first five months due to supportive central banks and regulators, and the Dow Jones Industrial Average [DJIA] lost only 3% overall. Investors were not joyous at banks’ lack of transparency on risk and demanded full disclosure, but on the whole banks were complying.

The trigger for massive volatility in US and world markets was the collapse of Lehman Brothers on September 15, when the US Government chose not to support the failing investment bank, against the best advice of universal year 2008, which predicted “sensitive [2] management [8] of unexpected financial holes [00]” was the best strategy. By choosing an alternate path, the US Government unwittingly hurled the US and global financial system into a black hole. Only ten days earlier, the Bush Administration had taken over mortgage providers and guarantors Fannie Mae and Freddie Mac, then bailed out cash ‘black hole’ American International Group to the tune of $US120 billion. The US Federal Reserve also helped facilitate the purchase of failed sub prime culprit Bear Stearns by JPMorgan Chase in March 2008. Making an example of Lehman Brothers showed rare “insensitive management”, with massive consequences!

On June 14, Pluto moved ‘retrograde’ into the extrovert sign of Sagittarius, after an initial four and a half months in the more cautious sign of Capricorn. From mid June to June 30, the DJIA lost 7.77% in value and despite massive swings in September, June 2008 was actually a worse month in terms of overall losses [10% against 6%]. This is highly significant, as the re-entry of Pluto into Sagittarius coincided with the emergence of a negative perception which was exacerbated in September and October. While Pluto was in Capricorn, from January 26 to June 14, the major issues were slowly but surely being addressed by banks, but once in the ‘exaggerating’ environment of Sagittarius, problems gradually became ‘bigger than Ben Hur’!

Following the demise of Lehman Brothers, the DJIA fell 504 points and major volatility set in with ups and downs of 3 to 4.5%. The US Government’s $US700 billion bailout package to restore “liquidity” to the US credit system was rejected in the House of Representatives on September 29, causing the largest points loss in US history of 777.7 points (-7.5%). Spooky about the 7s! Unprecedented volatility now took hold in US markets. The US Senate and House of Representatives passed the $US700 billion bailout in early October, but still the US markets were unsettled and in the first 10 days of October lost 22%. This free-fall was halted only through action by the UK Government to invest in British banks, followed by several European nations, and later the US Government. On October 13, the US market rebounded a super-confident 11%, before resuming its almost daily routine of down 8%, up 5%, down 5%. October was a nightmare for US markets, with the best week for 34 years to October 31 [up 11%], and the worst month for 20 years [down 14%]. How extreme is that? Courtesy of Pluto in Sagittarius, I expect.

Credit markets finally began to thaw from the great freeze of August 2007, following the emergence of bank deposit guarantees and nationalisation of banks in Europe by mid October. Yet, no sooner had the thaw begun, governments, investors and businesses began worrying about something else! Now it was the global economy and world recession was deemed unavoidable. As an observer, it’s not hard to form the view that the financial world, governments and media have talked themselves into a very negative state of mind. The June to November retrograde phase of Pluto in Sagittarius appears to have exaggerated negative beliefs, at the same time forcing the global community towards urgent transformation of the financial system.

The Good News

The good news is that Pluto will move forward into the more cautious, long-term aspirational sign of Capricorn on November 27, and leave behind Sagittarius, ‘the exaggerator’, for another 246 years! Governments have responded to the crisis, bringing in much needed regulation and control, and have stated the intention of reforming the global financial system to reflect the new reality of an expanded global community. If a focus can be urgently brought to negotiate, even implement, for the sake of argument, a new ‘Bretton Woods agreement to regulate an enormously more complex 21st Century financial world, I have a hunch things may settle down and some economies may not go into recession. Pluto in Capricorn may simply revert to its relentless pursuit of responsibility, accountability, ethics, reform of capitalism, but in a less extreme and more cautious, workman–like manner.

The world will soon enter 2009, and a whole new ball game, quite unlike 2008. The flow will return on many levels, and 2008’s new-found rules, regulations and boundaries may prove very useful.

 

Dr Neil Hair is the principal of the Sydney School of Numerology, teaches numerology and astrology and consults privately to individuals and businesses. He wishes to acknowledge The Australian and Sun Herald newspapers for original source material. 

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