I have been meaning to post something about global economics and the Water Dragon for some time but Dragon has been a pretty tough month for me so no time to post until now. But in any case, this article is long over-due. This post focuses specifically on a discussion of global economics but I must caution as follows:

a) I am not an economist. That is not my professional qualification and so nothing in this post should be construed in any way as ‘professional advice’.

b) I am not a professional stock market analyst. That is not my professional qualification and so nothing in this post should be construed in any way as ‘financial advice’.

c) CAVEAT. EMPTOR. If you chose to act upon the opinion rendered in this post, you do so at your own risk. I accept no legal liability as I do not make any legal warranties here.

And just in case it isn’t clear enough – the purpose of this post is for me to opine on the state of the global economy or economic possibilities, risks and opportunities, based on BaZi. So if you lose money because you decided to take my word for it, it’s your own fault. I disavow everything.

So, with that…let’s talk economics. But first, a refresher is in order. Here is the chart for 2012:

 

Now, it is important when we want to understand any form of activity, such as global economics, that we also take into account the MONTHLY PILLARS for 2012. Here they are:

Now, one of the easiest no brainer ways to work out when global events are potentially going to be unleashed is to look at two things: Clash and Combination. 

By looking at these two things, you may not be able to know EXACTLY what is going to happen, but you know SOMETHING is going to happen. Which is better than thinking NOTHING will happen.

Looking at the monthly pillars, we are interested in looking at which pillars will have the greatest impact by way of interaction with the BaZi chart of the year. Clearly, Monkey month stands out given that it has a high number of interactions with the chart – Monkey is a combination with the Grand Duke of the year, which is Dragon (and combinations with the Grand Duke are always significant), it clashes with the Tiger, silent pushes out a Rat (which Harms the Goat).

So, clearly, August is going to be an interesting month indeed. (we’ll get to interpretation in a bit).

Dog month of course naturally would already have been on the list of suspects since it is the month that Clashes with the Grand Duke – here we can see that the Dog month in addition to being in a Clash interaction with the Year, is also in Combination with the Month, is a Destruction with the Day Branch of Goat and finally, is a Harm to the Rooster. Without a doubt, this is a whammy to take notice off. The question therefore is how things play out. Logically, this can play out in a number of ways:

Scenario 1: Monkey month serves as a precursor or early warning system for what is going to happen in October.

Scenario 2: Monkey month represents the peak in so far as the positives of the year go and that everything from after Monkey is probably going to be downhill.

Scenario 3: Monkey month provides a false sense of security, people cruise along thinking everything is just fine, and Dog will represent a complete reversal that catches people completely off guard.

If we are to look at it from a very ‘bottom line’ (aka, Direct Wealth) attitude standpoint, volatility is likely to be high – volatility being code-word for ‘unpredictability’ and accordingly it is good to sit things out. However, it is always good to try to understand what is likely to happen because in every crisis they say, there is an opportunity. So, let’s take a stab at possibly trying to figure out what the Monkey and Dog are likely to indicate, considering the three possible scenarios above. To do that, we must first factor in all the interactions, with the 10 Gods into the picture. In effect, read the chart as if it were a person.

Wu Shen 戊 申 month brings the Direct Wealth Star and Direct Officer Month as the Day Master of 2012 is Yi Wood. The strong appearance of what are regarded as the ‘legitimate’ Stars in the BaZi pantheon would suggest that this is a good month generally. Broadly speaking, it would suggest that in the broad context of the world economy, things are getting on track. Law and order is back in place, new governments are establishing their authority (recall, we have just come off a major European election in France, and as I write this, the Egyptian election has just been concluded), and austerity (a very Direct Wealth quality) would have stopped becoming a dirty word. The implication is that August marks a turn-around in the situation that began back in 2008 (the leftovers which have clearly stayed with us through 2009, 2010 and 2011) and that the recovery that never really was a recovery! 

The indication that austerity measures will finally be accepted can also be implied from the Monkey and Tiger clash which involves the Direct Officer clashing with the Rob Wealth Star suggesting spending being reigned in by law or by the need for discipline or essentially, by those in power (the Direct Officer in essence, is shorthand for Powers That Be). Yes, there is definitely an emotional price (Monkey x Tiger represents an emotional clash) but the presence of the Clash, together with the Direct Wealth and Direct Officer Stars, implies that the German austerity insistence finally triumphs.

Since the combination between the Monkey month and the Dragon year produces Water, this denotes that there will be as a result of the actions of the Direct Officer, some measure at last, of economic life. Water denotes movement, which is regarded as an indication of economic activity and since this month’s combination produces strong Water, this would suggest that the economy finally gets ticking. Further, the element produced, which is Water, is the Resource Star of Yi Wood. The financial system, as represented by bonds and various other paper financial instruments, which are essential for the global economy to keep on ticking, is represented by the Resource Star. So the financial system would also appear to start ticking again. Thus, a sudden movement or spike in the stock markets and an uptick of IPOs or perhaps even, just more banking and financial activity would probably take place in August 2012.  

The problem also is the fact that the Resource Star is so strong here – in particular, the silent push of the Dragon and Monkey produces the Rat, which represents the Indirect Resource Star. And the Indirect Resource Star is stealthily in a Harm interaction with the Goat, which represents the Indirect Wealth Star for Yi Wood.

Now, this carries several implications. When you have the Indirect Resource Star and the Indirect Wealth Star appearing together and also interacting together, this means that two of the 偏 星 Pian Xing or Indirect Stars have snuck into the equation. And so the implications of the Direct Wealth and Direct Officer Stars that are in the Monkey month have been diluted by the two Indirect Stars that are now hiding in the shadows.

Note: For those who have not read Joey Yap’s 10 Gods, the Indirect Stars, specifically, 7K, IR and IW, are regarded as being less prized compared to the DO, DW and DR Stars, because of the sly implications of the Indirect Stars.

You also have two sly stars, in a ‘implied’ interaction with the BaZi of the year. Again, this strongly carries an implication of subterfuge or things not looking like the way they are. Stuff is going on behind the scenes that nobody probably is paying attention to or more likely, that someone has conveniently overlooked!

More importantly, Indirect Resource and Indirect Wealth are the stars that most closely connect to the stock market phenomenon known as ‘irrational exuberance’. Indirect Resource in particular represents a false sense of optimism or an overly optimistic outlook (but in some instances, can also represent knowing something is wrong but opportunistically profiting from it anyway).  So my view is that we are going to get some kind of economic pop of some sort (most likely due to the stock markets rather than anything) and on some artificial confidence that things are finally on track with regards government policy and austerity measures and most importantly, a renewed sense of confidence (that arises from predictability – recall, DW and DO are the conservative Stars that tend towards being predictable and consistent). BUT, that pop will be artificially stimulated OR will be the result of an overly optimistic outlook, or just a sort of herd mentality. (and as an aside, if there is any one of the 10 Stems that represents a Bubble, I would imagine Gui Water would be it). So, August ends in a wonderful rally, which has everyone going around telling themselves, the good times are back (Indirect Resource remember?).

Rooster 己 酉 comes around and brings with it the Indirect Wealth Star and the 7 Killings Star. Now, here, we are going to get a clear reversal of fortunes in the making. The Indirect Wealth Star, coupled with the 7 Killings Star is essentially indicative of slaughter in the markets, especially for the retail investors or even the small time players. Indirect Wealth seated on 7 Killings typically denotes a high degree of speculation (which means, volatility) and also, the tendency for the market when such energies dominate, is for people to essentially scalp each other in the name of their own profits. It isn’t let the buyer beware so much as don’t go into the water when the sharks are eating. Behaviour on the global markets will be highly aggressive and profit driven with little regard for anything else (7 Killings is a ‘naked’ 7 Killings here – meaning, that’s the ONLY THING that is in the equation – winning at all costs). Most likely, these are the people who know that August was artificially created stimulation (or pure Luck) and are trying to make the most before they get out. The 7 Killings Star also denotes paranoid behaviour, suggesting again, that markets will be easily spooked or that investors/traders will at the slightest twitch, sell of positions, triggering again, herd like reactions on the markets globally. The operative word here is probably ‘SPOOK’ – jittery sentiments, coupled with traders out to make a killing, is a recipe for volatility (although it should be noted, big money players and highly aggressive traders need volatility to make money).

After the gyrations of Rooster, in comes Dog 庚 戌. Dog of course clashes the Dragon – the Direct Wealth Stars are negatively affected in this chart, along with the Indirect Wealth Star as well. The element of Earth is involved. This would suggest that some kind of real estate crisis is going to be the centerpiece of the issues – whatever housing market issues that the US experienced in 2009 will suddenly resurface or prove to have not gone away adequately, or there may be a real estate related crisis in Europe possibly that causes issues.  

In Dog month, the Direct Wealth Star is Clashing with another Direct Wealth Star, along with being in a Bullying Punishment with a Indirect Wealth Star – everything here screams asset-related crisis or “asset crunch” , meaning,  there is a cash squeeze as to much money is tied up in non-liquid assets. Now, the assets involved may not necessarily be toxic since it is a proper Wealth Star that is involved BUT you can still have an asset crunch even though good assets are involved. We are also seeing a huge oversurplus of coal in China – and coal would certainly be Earth! Construction is also earth, which suggests again something real-estate related since construction is largely connected to the property industry.

Note: The term “asset crunch” is mine – as I vaguely understand it from an economic standpoint, the situation i have described is a liquidity/solvency issue again. See this article on “The Asset Crisis of Emerging Economies” for the high finance version. My concept of it is essentially refers to a situation where too much money/cash is tied up in huge assets such as property or manufacturing, and this creates economic problems when there is no turnover of the properties/assets. 

Alternatively, as Earth represents trust, there is an implication that any goodwill accrued to governments or institutions in charge of regulation (such as the IMF or even the SEC) suffers a blow – recall, in Dog month, the Direct Officer Star of the year is on top. Accordingly, this indicates that the ‘victim’ or ‘involved party’ in the Clash will be the Direct Officer or something that represents the Direct Officer, of which governments, regulating bodies and any kind of institution with legal power, would qualify. On a broad macro perspective, we could say any legitimate government in the world would suffer from this problem. Since Geng is the one on top, and Geng represents the West, this MIGHT suggest the US is the party in question. 

If we were to engage in a little Shifting Palace, Geng Metal’s Indirect Resource Star is involved in the Clash with the Year and Indirect Resource represents intangible reputation (usually, perception or goodwill). Further, we already have a theme of Indirect Resource being strong in the year 2012. So…from irrational exuberance, we may find we have irrational paranoia or lack of trust. Further, there is also a bullying punishment involving Geng Metal’s Direct Resource Star in the form of Goat, which again, suggests, trust related issues or reputation related problems, stemming from inconsistent behavior or from inconsistent policies.

Note: For those who are not familiar with the Indirect Resource Star, it represents irrationality but is also the star of Paranoia or suspicious mindedness. Again, please refer to the Ten Gods by Joey Yap for clarification if you need it.

Finally, we have the Harm related to the Rooster, which is the 7 Killings Star. Again, the Direct Wealth Star is involved in the equation. The Harm is an interaction that has a sudden but most significantly highly emotional quality to it. The Stars involved strongly hintsat a problem caused by panic or paranoid (the 7 Killings Star can also be paranoid or react impulsively) behaviour, relating to assets yet again. But, because two disparate Stars are involved (the Direct Wealth star is the goodie goodie, the 7 Killings Star is the sly star), there is no consistent theme in the Harm. The implication to my mind is that people perceive the problems caused by the asset crunch as being the product of unfair rules (7 Killings typically denotes the attitude or belief of a one set of rule for the ‘common people’ and another set of rules for the elites/dare-to-dos) or there is simply an irrational anger over how money issues or monetary policy has been handled.

Now, it would be obvious by this point that my thinking is that the likely scenario is going to be that of the Monkey creating a false sense of security, that ultimately all comes crashing down in the Dog. Irrational exuberance in August will soon give way to irrational paranoia and volatility in the markets in October, which in any case, is tradtiionally always a bad month for stock markets around the world. This year, it should not be any different. Indeed, it might even be a bit more drastic that expected, largely due to the false feel good factor that will be created in August by the Monkey.

My main foreast is that there will be a major real estate crunch coming in October, with many people already being caught up in the crunch once in April (Dragon), and mild intensification in July, and a huge blow in October.Again, I am not claiming to be a sage since anyone with eyes would be able to discern this, at least in KL, where the number of auctioned properties has drastically increased since the start of the year. But I am putting my forecast in writing to make it clear as to how I have derived this conclusion. Individuals with extensive real estate holdings that they are hoping to use to generate speculative income will be the most likely victims, particularly those who are heavily over-leveraged as a result of their property investments. Even those who feel they have cashflow positive properties and a small clutch of speculative properties will get hit if the value of their speculative properties exceeds the cashflow generated by their cashflow positive properties. The bottom line is that those who are heavily into physical assets are likely to see or face a crunch because when cash gets stuck in the economy overall due to too many people putting their money in a single asset class (namely property), even those who are financially secure will get caught because their income is affected by the cash crunch.

Cash will certainly be king come November 2012 and those looking to shop for real estate might well want to consider holding off till November. Indeed, more pickings may become available after January 2013, which will be when those who held out and survive THE SQUEEZE in October would receive the final body blow.