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Robert Prechter, a market analyst who has correctly called all the ‘hiccups’ in the financial market, has crossed economy with sociology and came up with the concept of socionomics.

The idea is that behind all that is happening in the human realm lies something he calls ‘the social mood’ and if we want to understand what lies in store for us we’d be better off trying to figure out the changes in this mood rather than doing complicated econometric calculations or social forecasting.

Maybe not very scientific but he was spot on in his predictions – up to now, anyway.

According to his method this piece if news is akin to a new dawn: “The minibar may soon be extinct in most hotel rooms as guests spend more time in the lobby than in their rooms” (The most attentive among you will notice that I left out ‘experts say’ – because I feel that over reliance on ‘expertise’ is one of the explanation for what has happened  – but this is another, even if closely related, topic)

Why?

First of all because ‘hotel dwellers’ are very good predictors of socio-economic trends, they tend to have more resources and be more involved in significant decision making processes than the regular Joe.

Secondly because the main thing that let the last crises happen was a strange disconnection between those who made the most significant economic and political decisions and those who had to suffer them. Things happened as if those at the driving wheel were convinced that they could pursue their individual goals (getting rich and powerful) regardless of the consequences their behavior inflicted on the rest of the people.
Even stranger is the fact that too many of the rest of us validated that attitude by copying it. Remember that the financial meltdown started when people in the US could no longer service the huge debts they (irrationally we consider now) piled upon their most prized possessions, their own houses? And people did that exactly because they foolishly tried to mimic ‘the life style of the rich and wealthy’!

Thirdly, by being a ‘divergence’  this is a very powerful signal.
Let me be a little more specific. In ‘technical market analysis’ a divergence happens when the price of something trends in one direction while one or more ‘indicators’ trend in the opposite one. Usually a divergence is a reliable signal that the price will soon change its trend also.

In this case the ‘price’ is the general attitude of the people towards everything. Before 2007 carelessness was the norm, ‘live today as if it were your last’. Prices were paid, no questions asked and everybody retreated to their gilded dens to savor they prey. People left the city centers where individuals of different extractions lived intermingled and together with small businesses and shops and congregated in walled in communities in the suburbia where the population is self segregated according to various criteria – money first and ethnicity, ‘alternative life styles’, etc. on a second level. Strangely enough social life in quite a large number of these communities is almost inexistent, the inhabitants coming and going without noticing their neighbors. Meanwhile the size of the housing units grew without any real reason since the number of the family members living together has shrunk. The size of the cars used for commuting also grew because ‘bigger cars are safer’ – another strange development since while indeed bigger cars are somewhat safer there are some more efficient ways of increasing overall safety: public transport, rail, defensive driving…

The indicator is the attitude of the ‘hotel-dwellers’ – who, as I mentioned before, are a very interesting cross section of the society. During the bubble years we have witnessed the apparition of the room service – the mighty didn’t want to mingle with the less fortunate, he wanted his whims to be privately catered for – and the mini-bar – the ‘less fortunate’ wanted to enjoy the same perks, couldn’t afford the price so had to settle for less variety.
‘Conventional wisdom’ has it that the advent of technology would have enforced that trend, with wireless connectivity at his disposal why would a hotel guest already hooked up to FB, Netflix and the Cloud ever come out of his room except maybe to go to his business meetings, the beach or the gym?

And here we have a ‘divergence’ gaping at us: while the society at large is trying desperately to resume ‘business as usual’ “People are migrating out of their rooms rather than being in the rooms,” !

Several things might have contributed to this. Some of the hoteliers reduced the area covered by free wireless to the lobby area to lure their guests out in the open where they could be enticed to buy other services, the ‘technology’ became so affordable as to become accessible to the cost conscious, etc., etc., but the essential thing is that public attitude is changing.

Now we’ll have to wait and see where this incipient change in ‘the social mood’ will take us to.

PS. By clicking his picture you’ll get to a very interesting interview of Bob Prechter. The most interesting part starts at 15:00 where he discuses how people look up to the government for a solution.

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