Exclusion in the Market

Exclusion in the Market: Anti-isms
by Vadim Pokhlbkin
June 8, 2004


In another sign that Western Europe is feeling less inclusive in 2004, émigrés increasingly get a cold shoulder. (This despite the fact that, in the long run, most countries in Western Europe need more immigrants to counter diminishing birth rates, a topic discussed in the April 2004 European Financial Forecast.)


The fear and hatred of strangers or anything foreign has a long history, stretching at least back to the ancient Greeks from whom the word “xenophobia” originates. Name any nation around the globe – Japan, Germany, the United States – and it’s easy to think of examples of xenophobic behavior, whether those within the country feared opening their shores to foreigners or hated certain people within their own borders based on their religion or the color of their skin.

With the progress of the bear market in Europe, xenophobia and exclusionism are becoming more pronounced. Here’s what The Elliott Wave Theorist back in 1992 had to say about social manifestations of a bear market mood:

“Major bear markets are accompanied by a reduction in the size of people’s unit of allegiance, the group that they consider to be like themselves. At the peak, it’s all ‘we’; everyone is a potential friend. At a bottom it’s all ‘they’; everyone is a potential enemy. When times are good, tolerance is greater and boundaries weaker. When times are bad, intolerance for differences grows, and people build walls and fences to shut out those perceived to be different. Ultimately, persecution and war result.”

Let’s look at four examples of xenophobia and exclusionism going on in Europe now:

Exlusion in the Market: 1. Anti-Immigration Behavior Rampant

In May, Europe’s “unit of allegiance,” clearly continued to expand as 10 new members were added to the European Union. But this appears to be an aftereffect of the long bull market and the countertrend rally from March 2003. The incoming tide is anything but inclusive, however, as anti-EU sentiment continues to crop up in many countries. In an article headlined, “Just Too Big for Its Roots,” in the May 1, 2004, edition of the Sydney Morning Herald, reporter Peter Fray says the newly expanded EU “has the capacity to implode under the weight of its own vaulting ambitions, voter apathy, and the rise of EU-scepticism, populism and nationalism in several countries, including Slovakia and, more importantly, Poland and the Czech Republic.”

In another sign that Western Europe is feeling less inclusive in 2004, émigrés increasingly get a cold shoulder. (This despite the fact that, in the long run, most countries in Western Europe need more immigrants to counter diminishing birth rates, a topic discussed in the April 2004 European Financial Forecast.)

Throughout the continent, politicians are also winning supporters with platforms against letting foreigners into their countries. A further example of an anti-immigration mood: Britain broke out in ethnic riots in the summer of 2001, fueled by increasing rejection of those who are not “truly British.”

Exclusion in the Market: 2. Extreme Right-Wing Political Victories

Racist incidents, ethnic divisions, and right-wing political victories based on an appeal to racism and exclusionism have increased in Europe since 2000. Politicians on the extreme right (or left) often are the mouthpieces for all kinds of “anti-” behaviors. The classic example is Adolph Hitler and fascism. Today, politicians in many European countries who happen to be on the far right end of the spectrum are offering up ideas that under bull-market circumstances would go nowhere. Often, they are creating new parties to attract voters who are feeling more exclusionary as the bear market mood drags on.

The first signs of polarization among Europeans came as early as 1997, when Jorg Haider, the leader of the Austrian extreme-right-wing Freedom Party, got nearly 28% of the national vote for the European Parliament. (Eleven years earlier, in 1986, the party had received only 4% of the national vote.) In March 2004, the Freedom Party went on to win a surprising election victory in the province of Carinthia.

In the Dutch 2002 parliamentary elections, a center-right Lijst Pim Fortuyn party adopted slogans like, “This is a full country. I think 16 million Dutchmen are about enough.” It came in second.

France has had its own brush with an extreme politician gaining prominence. In spring 2002, Jean-Marie Le Pen, who heads the French extreme-right National Front political party, won the second-largest number of votes out of 16 French presidential candidates. The Economist could barely contain its amazement: “With due respect to Austria’s Jorg Haider or the Dutch Pim Fortuyn, nowhere else in the democratic world since 1945 has a xenophobe as unabashed as Mr. Le Pen made such a showing.”

New parties or fringe parties like Le Pen’s National Front often spring up during bear markets. In February 1989, The Elliott WaveTheorist pointed out how these parties play a role:

“In a formalization of the negative mood within a bear market, one or more of the new parties is likely to represent ideals inimical to individual liberty (such as socialist, racist, fascist or fundamentalist). In some cases, such as in Russia in the teens, Germany in the 30s, China in the late 40s, Cambodia in the 70s, and Iran in the late 70s, such parties have achieved power.”

As if to confirm this view, one of The Economist’s political commentators recently wrote: “In a number of apparently civilized countries, such as Austria, Italy and Denmark, political parties hostile to immigrants and in some cases with fascist antecedents now participate in coalition governments.”

Exclusion in the Market:3. Anti-Americanism on the Rise

Europeans have long cited reasons to despise “ugly Americans.” But the Bush Administration’s perceived high-handed attitude toward European governments over the Iraq intervention has given people in Europe a whole new lightning rod for their hatred of America.

Since 2000, European politicians have used the anti-Americanism trump card to win more than one election:

In 2002, Germany’s Gerhard Schroeder successfully campaigned by attacking the Bush administration’s Iraq policy.

In March 2004, Spain’s Jose Luis Rodriguez Zapatero also campaigned against the situation in Iraq and won.

Now, Romano Prodi, the head of the European Commission, appears on election posters in Italy that include the slogan, “Iraq, a mistaken war.”

Politically, Europe has moved into an “us-against-them” posture, with the United States cast in the role of adversary. This point of view is a sharp change from the decades-long view of Europe and the United States as democratic partners in the world at large.

Exclusion in the Market: 4. Anti-Semitism on the Loose Again

Bear markets often result in persecution of various people who are seen to be “not like us.” No clearer example exists than in the rise of anti-Semitism in Europe:

As early as August 2000, there were reports of a dramatic increase in the number of attacks against Jews across Europe.

Attacks on Jews and synagogues intensified in the fall of 2000, with the start of the Palestinians’ second intifada against Israel. (The fact that the second intifada began in 2000 is a highly significant fact that validates the premise of a global reversal in social mood that year.)

Young Muslims have perpetrated many of those attacks on Jews and synagogues. However, Europeans’ general support for Israel has steadily waned since 2000, along with their desire to reject hatred of Jews, especially on the left. It waned together with the end of a 50-year-old European bull market. In fact, a 2003 EU poll showed that Europeans rated Israel as the “biggest threat to world peace.”

And the numbers show no sign of diminishing – according to a BBC report, for example, France’s statistics showed six times as many anti-Semitic violent incidents and threats in 2002 as in 2001.


All these “anti-isms” spring from the same source: the emerging bear market in social mood. As Europe heads lower, the urge to close ranks and close out others will metamorphose into open conflict and escapist activities. The decline has a long way to go, so the likelihood is that the national boundaries separating EU members will regain much of their historic significance. And at least some of these emerging bear market impulses will serve as the basis for successful political movements.

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