Highlights of the Business Week – 10/4/14

This was an exciting and interesting week for financial markets. Aside from yo-yo like fluctuations of pharmaceutical and biotechnology stocks, large corporations made far-reaching moves that have implications in the future market developments.  

1.       The Chinese dragon has not fallen asleep and we are often reminded of its prowess through economic fireballs that it likes to shoot at us. Surprisingly enough, this time it was an Internet-based e-commerce company that decided to go public with aspirations to become a counterweight to Google. From the glorious days of its IPO on September 19^th, the Alibaba stock has fell this week and was recently traded as low as $85.61 per share. This is a shame, considering all the hype that was broadcasted by every news channel.

I would be charting this territory very carefully, because Alibaba is a relatively unknown company and its future is highly depended on Chinese quasi-liberal policies. China is not an open society which espouses liberal ideals of democratic conduct. Therefore the marketplace remains highly unpredictable and is at the mercy of Chinese politburo. As long as this company is run and monitored by Chinese officials, I wouldn’t bet on its future creativity and dynamism.

Alibaba can spread its tentacles beyond the Great Wall of China only if it is given similar autonomy as Google and Yahoo companies enjoy in the West.   

Furthermore, there are reports that children of Chinese officials are either employed or have significant stakes in the company. Although key figures with ties to the government could be interpreted as a good sign, many investors remain skeptical.

Alibaba is a risk prone conglomerate, but is worthy enough to be put on my Market Watchlist.

2.       On Monday, September 29^th, eBay announced that it will spin off PayPal, which was eBay’s electronic payment service business. This was followed by reports that Alibaba and Google juggernauts are contemplating its acquisition, which will expand their empires and will certainly enrich their portfolios. If Google succeeds with this deal, PayPal will be introduced into the Android system and pose direct competition to the new Apple payment system.

      PayPal is going to become a separate company and a very attractive one due to its healthy cash flow. Apparently, half of eBay’s revenue was derived from PayPal’s electronic transactions and commerce.

      The New York Times reported that venture capitalist Carl Icahn had been working tirelessly pushing for the break up, but faced fierce opposition from the eBay management.

      Eventually, eBay management acquiesced to the spin-off calls made by Icahn and PayPal became a separate publicly traded company. This move will be completed by the end of next year.

      Carl Icahn saw eBay as nuisance and hindrance to the thriving nature of PayPal and believes that becoming a separate company will help it focus on its core values.  

      The financial metrics sing praise to PayPal and since it is going to be a publicly traded company I would put it on my Watchlist and monitor its developments very closely.

      

Important PayPal numbers from The New York Times article:

Accounted for 41% of revenue of eBay

153 million active digital wallets

Handles mobile payments, employed by apps such as Uber and Airbnb

3.       This week kicked off a historically volatile month of October, which is a great month for both big gains and big losses. A month of great opportunities and unexpected threats. In a Yahoo Finance article, Patti Domm of CNBC quotes Jeff Kleintop, chief global investment strategist at Charles Schwab:

"October is historically a turnaround month, where the markets tend to turn around after weakness but often the weakness carries on into October. Maybe, we have to get to the middle of the month-until we get some Chinese data and then we turn around. We think stocks are probably headed higher from here to year end."

This is a perfect time to search for stocks that have temporarily fell in price due to outstanding uncertainties in the marketplace. As the dollar continues to grow its muscles, I wouldn’t bet on commodities, such as gold and silver but keep trading stocks with high volatility ratings.

**Please note that all referenced articles are embedded in the blog post and can be accessed by clicking on the blue colored text.**

Update on Silver - 10/2/14

As was discussed in my previous blog post, silver is still in the downward trend and is most likely to stay on this course. The price of silver has fallen to $17.01 per troy ounce, which is more than $1 drop comparing to the prior 2 weeks. The price of gold continues to trade sideways, but has more hopes of returning to the new highs.

Historically speaking the health of the economy is directly correlated with the price of gold and silver. The downward trend of these commodities is indicative of improving economic times.

The positive reports on the improving US economy, including a 0.5% increase in consumer spending, will continue to drive down the prices of precious metals. Consequently, the Fed might increase the interest rates next year to offset the inflation and provide stability to the macroeconomic climate. There are many other signs in the economy that signal positive trends.

Due to the continuing downward trend of silver, my recommendation is to hold off of any purchases and continue to wait until silver hits mid-teens or gets close to that mark. At that point, it is advisable to start slowly accumulating silver at relatively low prices. The next phase of the business cycle will be shaped by a downward curve, and coupled with the increased federal interest rate, the price of silver might go up in the 2^nd half of the year 2015.

Unfortunately, the price of commodities is difficult to predict. Don’t fall for the hype or doom and gloom scenarios, which are broadcasted to get you to buy their silver and gold products. Unless you are looking for a long-term hold of commodities, gold and silver can be profitably traded only during the times of high volatility, akin to what was happening during the Great Recession of 2007-2009. At that time, the prices of silver and gold were fluctuating every day and gains were made in a matter of weeks. Due to the sideways trading, silver and gold remain a long-term solution at this point.  

**Please note that all referenced articles are embedded in the blog post and can be accessed by clicking on the blue colored text.**

Geopolitics v. Markets

Global Economics Monthly: September 2014 report published by the prestigious Council on Foreign Relations (CFR) provides an interesting analysis on the connection between geopolitical conditions and financial markets.

Generally, market watchers scan the political landscape and look for developments that might affect the world of finance. In turn, the harvested data is used to develop market predictions and determine the current volatility levels.

However, this connection is not always so clear-cut. The crises in Ukraine and current turmoil in the Middle East are striking testimonies to this reality. The spillover effects are different for each country. For instance, China has economic buffers that protect it from many existential shocks.

The report goes on to say that market investors might overestimate the impact of political developments on the financial markets. The cause and effect factors are not always clear and the implications of political changes mostly depend on the country’s connectedness to the global markets.

So, what are some of the metrics we can look at?

The central bank policy plays a major in shaping the economic realities. For instance, the low interest rate stimulates economic growth and provides incentives to open new businesses and take risks. The author mentions that the federal interest rates are expected to go up in mid-2015.

One of the trusted metrics that is used to measure market volatility is the VIX index. Current figures show that market volatility has risen, but continues to remain at historically low levels. This news provides some confidence for market traders.

On the political landscape, one can look at the Eurozone, which is plagued with systemic problems. The lack of economic resilience has made it vulnerable to external crises and shocks. Furthermore, due to Europe’s connectivity with the rest of the world, European problems are world’s problems.

Therefore, market players should look to Europe and check the VIX index to tailor their moves in the game. 

Follow @ArseniyAK

Positivity In The Purported Market Bust

Is the US stock market in the downward curve in the proverbial business cycle of boom and bust?

For entire summer, the proliferation of bad news has been evident from every headline and talking point. Countries consider cessation from their parent nations, the Euro zone is facing a serious financial conundrum and economic sanctions continue to escalate against Russia’s aggression. In addition, the gold and silver continue to trade sideways and the future of stock market is clouded in mystery.  

  

Operating in uncertain financial environment is becoming a key feature of every analyst and practitioner.

We are told that the capital managers are increasing their short positions. The stock market has been bearish, will this continue and manifest into a crash akin to 2008? It has been over five years since the last one. Are we entering into the bust phase of the financial cycle?

In the investment circles it is well known to follow the moves of “financial alchemists”, who tend to over perform during downturns and market crashes. The portfolio of major venture capitalists is often the indicator of where the market is going. The hedging moves signify that the financial markets will go through some systemic changes in the future.

[Buffett’s $55 Billion Gamble is a Bet on U.S. Collapse,Warns CIA Economist, by Money Morning Staff Reports]

In an exclusive interview with Money Morning, CIA financial analyst Jim Rickards, warns of the imminent stock market crash that would result in the widespread market meltdown.

Although I would not ascribe to the doom and gloom scenario, there are a number of signs that investors need to look at.

If we are entering into the time of financial uncertainty, how can we save and multiple little that we have? 

The stock portfolios can be converted into cash or other liquid assets. Another option is to reallocate them into less volatile stocks that are less susceptible to market changes. The recommendation is to purchase low volatility stocks with a healthy dividend yielding history.

We can use a variety of metrics to determine the volatility of a given stock. In simple terms, volatility is the responsiveness of a given stock to the market changes.

Beta, which is provided by many trading platforms, is one of these metrics. The beta of less than 1 indicates that the stock will not fluctuate as much in response to the changes in the market. Beta of more than 1 indicates a highly volatile stock. This does not mean that the stock will crash or quadruple each time there is a change, but the fluctuations become more frequent and at a shorter period.

When good stocks plummet or fall in price, the crowd tends to sell their positions at whatever prices they can get. The prevalent philosophy among affluent investors is to hold strong to their positions and, yes, buy more when the prices are still low. Whatever came down will eventually come back up. That's their game plan and they follow it judiciously.

Of course, it's easy to say but hard to do.

However, consider this as a practice period to test your positions and charter new territories. Be positive, because the time of change is also the best opportunity to look for greater and better things.

Good luck...because you'll need it.

Follow @ArseniyAK

Dude, Where Is My Gold…And Silver?

Nowhere to be seen, because the prices have fallen dramatically over the past 3 years. In fact, the prices of precious metals have dropped so much that investors forgot that they are even an option. The gold has descended to the $1,232 mark and has been oscillating in that range for a while.  Some wonder if precious metals are still worth the investment. George Soros certainly thinks so. He is known to hedge his capital in gold and silver before the expected “financial shock”.

In the aftermath of the Great Crash of 2008, gold and silver prices continued to rise, thereby reinforcing many wild speculations that the price of gold will reach $2,500 and beyond. Of course, it never did. Precious metals like any other financial instruments require undivided attention and constant scanning of the environment. The economic, political and social forces shape the value trend of every commodity in the marketplace. However, a mere “hope” cannot be traded in open markets.

I believe that hope is what drove many people to buy gold and silver coins with an inflated expectation that they will reap great wealth in the near future.

It should be remembered, that gold and silver are good hedging financial vehicles and long term investment tools. Precious metals are fantastic to diversify your portfolio, but poor for short term trading. If you are looking for a high risk / high return instruments, stock market is your best choice.

Following the Great Recession of 2008, a number of radio talk show hosts and TV pundits were advising every freedom loving patriot to purchase gold and silver to protect their financial portfolios. Some commentators went as far as stating that everything will crash and the country will descent into chaos and destruction. The only protection they saw was canned food, bullets and real gold. As is usually the case, the doom and gloom scenarios never materialize.

Gold kiosks and exchange shops were sprawling across the country and folks from all walks of life were getting into precious metals. These actions have driven the prices up to unprecedented levels and reinforced the inflated expectations of rapid wealth creation. The lucky bunch had made money in the bullish trend, while others procrastinated and ended up with the cheaper commodities.

Wealth managers consider gold and silver as hedging mechanisms that they employ in the volatile economic times. However, precious metals have remained part of a relatively long-term investment strategy.

Furthermore, the current macroeconomic indicators show that the US economy is continuing to improve, thereby suppressing gold and silver prices. 

For almost three years, silver has been in the bears market and the price has fallen to a new low. Technical analysts predict that silver will continue to trade sideways due to the uncertain political climate. This trend will be partially determined on the outcome of the conflict between Russia and Ukraine. Geopolitics is a known factor of influence in the financial markets.

What is the lesson learned? Markets are volatile, dynamic and prone to change. The market place is susceptible to the gravitational forces that will bring the inflated expectations down to the grim reality of supply and demand.

For instance, currently the silver is trading at $18.69 per ounce and it is difficult to predict where it is heading next. It might reach a base level and shoot back up to the upper 20s or remain in the teens until the next crisis. The prediction that silver will reach $50 mark is unrealistic at best and deceiving at worst.  We are more likely to see silver to trade sideways and continue to stay in a $15-20 price range.

Therefore, my recommendation is to refrain from accumulating gold and silver. For silver, I would wait until the price drops to mid-teens (or gets close) and then make buying moves. For gold, the geopolitics will decide where our money will go.

Why Iran?

Have you wondered why Iran keeps making its way back to the headlines in America? The fear mongering abounds, the outcry does not seem to cease and a nuclear apocalypse is said to be imminent. The threat remains the same—Iran almost, almost…already…kind of got the bomb. No, wait…it got all the necessary components, nuclear fuel from Russia, etc. to make the bomb that it can use to leverage its position in the Middle East.

In the meantime, politically dysfunctional Pakistan and rogue North Korea have tons of weapons and missiles, but these facts make only an occasional appearance in the mass media outlets. In addition, the aforementioned countries do not receive the same level of demonization as Iran does.

Thus, the question arises: Why Iran? Why Iran and not North Korea, Pakistan or even Somalia (save for the occasional pirate stories).

What makes Iran so special to be the prime target of every newspaper commentator and TV pundit? Furthermore, what do we know about Iran, its history, culture, heritage and current situation to throw our weight behind all proposed sanctions, embargoes and other devastating actions.

Why Iran remains the target of the USA foreign policy? This is the intellectual challenge I am willing to undertake to understand the idiosyncrasies of this situation. Moreover, I hope my readers will assist me in furthering this understanding.

The relations between USA and Iran began to deteriorate after the Iranian popular revolution of 1979, which ousted the monarch and established the Islamic Republic of Iran. In the aftermath, America adopted a harder line toward the Middle East in order to preserve the regional status quo.

Regular readers of the Foreign Affairs magazine, published by the prestigious Council on Foreign Relations, might have read numerous policy articles on the Middle East region. The apparent fact is that this region is composed of diverging nation-states, some of which have aspirations for regional dominance. In order to preserve status quo, America is actively engaged in the region to prevent any one country from reaching the status of the regional hegemon and to continue to set its own policy. 

The Iraq was taken out of the picture during the American led invasion in 2003. The next aspiring actor in the region is Iran. Its strength and vitality must be extinguished in order to fulfill the policy of preventing any one power to control region’s development, thereby ensuring the preservation of American primacy in the region.  

It is quite apparent that United States’ policy toward Iran is twofold. First, all the war conflicts and military operations carried out by the Western governments appear to take place around Iran, which is in tune with the policy of encirclement and containment. Second, United States will use any means necessary to prevent the ascent of any one country into the hegemonic sit of power in the Middle East. The hegemon will ultimately dictate its policy to the region and might unite all Arab states under one common front, which will pose a threat to the U.S. interests in the region.

Even if Iran does go nuclear, should we become more fearful of it than of rogue North Korea and unpredictable Pakistan who currently have the capability to carry out a nuclear strike? In addition, Pakistan is politically unstable and vulnerable to terrorists and non-state actors who contemplate stealing a nuclear device. Furthermore, have you seen any real military response to the threats that North Korea has been issuing since it has acquired a nuclear weapon? So, why all this focus on Iran, who in addition to lacking nuclear weapons, does not have a delivery system for a successful launch?

Although, the Iranian government is known for their radical rhetoric and unwarranted threats, but they exercise reasonable caution when it comes to taking military actions outside their borders. Tehran is not as crazy as the leader of the North Korea and it is in their interest to preserve stability and uniformity in the Middle East. The fanatical speeches are mostly directed towards dissenting political bodies and other troublemakers who are considered a threat to the Iranian regime.

      

It is true that in the current international nuclear non-proliferation climate, the leading countries would like to see a nuclear de-escalation and a shift toward a safer world. However, countries who choose to live and act independently should not be muscled and intimidated by more powerful world actors.  

As was pointed out by Mohammad Java Zarif in the Foreign Affairs magazine, Iran is one of the few countries that “remained independent from outside powers and practiced genuine nonalignment, lending it a particular freedom of action within the existing global order.” Perhaps Iran’s independence is another reason why it has to pay the price to the new global order that is attempting to emerge. Iran wants to take its own road to happiness, whatever they conceive it to be, which apparently deviates from the Western plans.  

Well, I wonder what happened to the concept of Inclusive Diversity and why can’t the West leave Iran alone. 

Instead of taking a hard-nosed approach, U.S. government should focus on economic growth and development.

To sum up, I would like to leave you with the quote from Hillary Rodham Clinton, which appeared on the pages of the Foreign Affairs magazine. Her article in the November/December 2010 issue is titled “Leading Through Civilian Power” and focuses on the American diplomacy and development abroad. Perhaps an economic miracle that was achieved in the South Korea and Japan can be replicated elsewhere.

“Economic growth is the surest route out of poverty, and expanding and strengthening middle classes around the world will be key to creating the just and sustainable international order that lies at the heart of the United States’ national security strategy.”

For anyone interested in the works used for this blog post, please contact the author. I strongly encourage comments and suggestions.

arskoz86@gmail.com

Inception: A Labyrinth of Inner Voyage

Introduction:

As we are in the process of entering into the new age of rapid change and informational battlefield or what Jacques Attali dubs as the “virtual nomadism”, there is an emergence of a dire need for a new type of thinking. The intellectual clique in the West is drifting away from the linear approach to the gradual acceptance of more convoluted modes of reasoning, coupled with the increased interest in a labyrinthine thinking and cognitive complexities. Who better than Dr. Attali can prepare us for the strange future that is lurking around the corner, to help us solidify the new realities on the firm basis of the ancient pathways to wisdom.

The Western consumerist society for far too long has been based on the unsustainable premises of endless and overindulging consumption driven by the desire for instant gratification, which inadvertently overshadowed the infinite treasure hidden deep within ourselves. Those who dare to survive in the current social transformation must embrace certain ideals in the form of nonlinear thinking and multi-tasking intellectual initiatives.  

The Hollywood blockbuster movie Inception (2010) will serve as a visual aid in the author’s hunt for the new spiritual meanings and intellectual techniques that will become useful in the journey to the center of many social labyrinths that we inhabit. The task can be achieved via understanding of ourselves. Inception shall be examined through the prism of Dr. Attali’s intellectual brilliance on the topic of labyrinths and the concept of the new nomadic man, because that movie has all the earmarks of the classical labyrinthine structure, where the easiest and the shortest path is not always the correct one. Ultimately the meandering paths of the labyrinth can teach us about our inner beings and prepare us for a more nomadic and less sedentary world of tomorrow.

  

Inception and the Hunted Voyager:

In the opening scenes of the movie one may notice numerous labyrinthine renditions on the walls and maze like patterns on the windows, even the logo of the Legendary Pictures, the production company, is drawn in a form of a maze. Thus the movie makers prepare their attentive spectators to enter into the world that is totally different from the one they are accustomed to, because for a long time the public has been deliberately deprived of the benefits of nonlinear thinking. The curved and the complex thought was abandoned in favor of a straight line.

The viewer quickly learns that what seems real can be a false perception, an illusion of the mind that can play very elaborate tricks and deceive even the most skilled dream walker. After understanding the basic set-up of the world of Inception the viewer begins to anticipate a strange journey that will consist of dark paths, dead-ends, various traps and hard to spot exit points.

The realm of a dream can be interpreted as the mirror image of one’s personality, encompassing its defects and imperfections and the unresolved psychical dramas manifesting in a series of die hard projections ready to sabotage the most stable and beautiful dream mission. The extractor is the person who is able to tap into the inner workings of the human mind and extract valuable information with serious implications in the real world. The process is reminiscent to psychoanalysis or an attempt to find the root cause of an ill sentiment. It can also be equated to the induced hypnotic state and the specialist’s search for hidden or forgotten information in the client’s mind. In any case the extractor or the inceptor lies on a couch and submerges into the universe of infinite subconscious to look for the right star on the endless night sky.

Dom Cobb (played by Leonardo DiCaprio) is the leading extractor on the team, who is highly skilled in the corporate espionage business and is able to utilize the psychoanalytical methods to enter into the subject’s subconscious to find the closely guarded information. However after his wife’s suicide inserted a seed of self blame the journey through the labyrinth into the subject’s mind became a very ugly commute rendering his architectural abilities rather feeble and ineffective. He became the “hunted voyager” being pursued by his own demons, the projections of his subconscious guilt, stemming from the sentiment of horrific responsibility for his wife’s death. Even during the business missions the personal predicaments and unresolved inner conflicts created a barrage of obstacles which slowed him down in the extraction or the inception process by many folds.

            To conquer the last monster spawned by Dom’s subconscious, he had to confront his past wrongdoing and confess his sins to Ariadne. Cob reveals that he planted an idea in the recesses of his wife’s mind “that her world is not real” because he felt that they had to stop living indefinitely in the dream world and escape it to return to their real children and home.

  (Scanned from The Labyrinth in Culture and Society: Pathways to Wisdom)

Nonlinear Thinking:

Since the advent of electromechanical computers and algebraic logic of computer language the Western person developed a peculiar type of reasoning process that follows a straight line, a path that was prearranged and preprogrammed by technological specialists. The public had abandoned the curved and complex accepting the straight and singular road to the understanding of things. We are taught in the West to follow the linear, straight and short path to the discernment. This type of conditioning disabled our innate faculties responsible for grasping the depth of labyrinths in our daily lives and meanings of symbols placed all around us. Ultimately it created a mass of people who are easily conned and manipulated by politicians, salesmen and televangelists.  

Life is an elaborate structure, a network of many paths, sharp corners and dead ends, and one cannot get to the center by cheating and cutting through the maze. However we are persuaded to believe that we can, as long as we put our trust in some charismatic leader who promises to take the quickest road and lead us into the room full of treasures. Consequently we voluntarily succumb and follow him/her, or speaking in the biblical terminology, we abandon the narrow and difficult pathway in favor of the broad way. During the venture after the chosen leader the followers are oblivious about the real goals that are being pursued by the leading party and things usually unravel to the detriment of the larger part of blind adherents. 

When faced with an issue and a desire to reach an optimum solution or understanding one has to examine the problem from multiple angles. The object of the study has to be approached in a manner of a private detective, who is scanning over all scenarios and possibilities, taking into account all the surrounding factors to derive at the best possible answer. Many roads should be taken to test if they are the right ones. The time must be used wisely to ponder things over. Unfortunately in the artificial society of today the efficiency, speed and transparency are the celebrated virtues of progress.  

As far as the critical thinking is concerned we had given that ability away to the visual and printed media, to the television talking heads and experts who are willing to debate every possible subject for us and all we are left to do is accept one or the other opinion. Our minds are slowly becoming atrophied due to the lack of exercise. Our intellects are being conditioned to the point of simplicity as we are taught to be politically correct at work, in the grocery store and even in the churches. By the way the political correctness is also shaped in a form of a straight line, an Orwellian orthodox party line which has zero tolerance for deviation.

Those who are in control of society do understand the principles of nonlinear thinking, thus they are able to come from many different angles on the average person. They use the successful scientific techniques of shock and awe, through repeated cycles of crises, to drive the person into the state of utter shock, and as a result of that a man or a woman stands in dismay and is ready to accept any solution that is rushed forward. Thus the populace is controlled and the big plans move ahead into fruition without any hindrances.

Unpredictable actions are part and parcel of the curved line and of the meandering path. Those who do follow the straight line are extremely predictable and therefore easily exploitable by the designers or experts of the labyrinth. The con game can be played nicely on the naïve and shallow person who is unable to grasp the depth of things, afraid to step into the unknown and fearful of the dark corners of the maze.

However in the long run it is the complex path that will triumph over the singular one. Therefore follow the commandments of the traveler of labyrinths, do not fear and have the courage to enter into the door of the life itself.

Pavlovian Conditioning:

In the Inception movie Mr. Saito employs Cobb’s team to perform an inception, or the implantation of an idea in the subconscious mind, on Robert Fischer, that would lead to the conviction to breakup his father’s vast energy empire. In the preliminary meetings the team discusses various means and techniques that can be used to inject an idea into their subject’s mind in a way that it will not be rejected later on as a foreign substance. Cobb underscores the necessity of the intense emotional experience during the inception process as a vital prerequisite for a suggested thought to sink in deeper in the subject’s mind. By the end of the movie when Robert reaches the deepest point in his subconscious the emotions grow tense and he is crying. Therefore whatever happens during that high emotional state will stay in the person forever, changing his very earthly existence. The key to inception is the premise that the subconscious is motivated by emotion and not reason.

Ivan Pavlov, the Russian Nobel prizeman in Medicine, observed both dogs and humans in the area of suggestibility and conducted extensive studies on the conditioned reflexes and the general methodology of suggestion. Pavlov’s work led to the understanding that ideas or beliefs embedded during the conditions of stress or fatigue rub in deeper into the person’s mind and are very difficult to be eradicated. Similar methods of persuasion and brainwashing have been applied by political and religious demagogues in the past eras with great ingenuity and talent.

Combined with a sound the conditioned reflex or the trained response in the brain can be enhanced. For instance catchy tunes and sticky melodies are used in the television commercials as the delivery agents for the corporate messages that are projected into the viewers’ minds. The television viewers have often pointed out that they remember nonsensical commercials with a greater ease than more important things from their immediate experiences. Youngsters and adults walk in the broad daylight humming to themselves the toothpaste or cereal commercials, whistling the popular song of the day and other tunes engineered by public persuaders. What they fail to realize is that all of that is used to change their behavior in a direction that is suitable for someone’s commercial purposes. Marketing propagandists work hand in hand with corporate giants to sell the mass produced stuff to the consumers of the West.

In the instance of political brainwashing Hitler utilized all the available methods of persuasion that were produced from the scientific and technical advancements of the early 20^th Century. Radio was used to deliver propaganda to the masses and influence the opinions of many with the single transmission. Furthermore Hitler delivered all of his important speeches during the night, because he was intuitively aware that people are tired and hence will succumb faster to the propagandist speech. The psychological resistance becomes feeble during the times of physical fatigue, thus susceptibility increases respectively. Similarly the advertisers pay more money to show their product ads during the evening hours, because the viewers are at the higher level of suggestibility and less critical to what is being projected into them.

  

In addition to that evangelists and preachers are not free from the use of various psychological mechanisms to stir up emotions and affect higher nervous system. William Sargant provides a fascinating account in his book Battle for the Mind of the techniques for religious conversion practiced by popular evangelists. What kind of methods contribute to the sudden conversion of the large groups of people? The content of the sermon does not really matter when one begins to investigate the causes behind the momentary transformation of minds.

The preachers play with religious sentiments of people, focusing on stimulating the emotions rather than concentrating on proving the specific doctrines of church’s creed. Therefore the road to conversion is led more by the psychological manipulation than an appeal to reason and logic. The common rhetoric applied in the sermons to stir up emotions includes the guilt motivating descriptions of the sinful human nature and the inescapable prospects of hell. The common features of the protestant speech in the past century have been the detailed and vivid accounts of the latter days and the closing proximity of Jesus Christ’s second coming.  The end of the world is nigh, today is the day of salvation, repent and believe in the Gospel, are the common catchphrases to move people into action. Faced with that kind of fear mongering about the Judgment Day, the person will soften up and become more placid for a religious transformation. The preacher’s eloquence and the teaching’s consistency built up on the innate religious feelings present in every person and combined with the scare tactics of impending doom and gloom form a powerful cocktail able to move the masses from one pasture to another, from the present “ungodly” state to the more righteous one.

The conversion sermons often begin with a horrendous picture of hell that awaits all sinners and nonbelievers after life. The fatalistic images are perpetuated and it is proclaimed that everyone is under sin, there is no escape and a possibility of punishment is great. Under severe stress and with no end in sight the brain breaks down, which becomes an ideal time to implant ideas or behavioral patterns into the subjects’ minds. The psychological catharsis is reached when a salvation plan is offered in a form of repentance and acceptance of the true faith or the church’s creed. Equipped with that kind of psychological trickery the priests and evangelists were able to successfully convert people by thousands at a time. John Wesley is an ideal example, because his sermons are typified as the articles of emulation for young preachers who desire to go into the world to “save souls”. Wesley’s sermons consisted of two parts, an account of fire and brimstone and a salvation package of repentance and faith.

Essentially Dom Cobb and his team launched a classical brainwashing campaign in the Pavlovian fashion to condition the person under psychological stress, which is the favorable state for implanting an idea that will blossom and become part of that person.   

           

        

Theseus and Ariadne:

There are clear parallels between the Inception and the Greek myth about Theseus and Ariadne. Both Dom Cobb and Theseus managed to go through the tortuous labyrinth with the help of a young damsel, Ariadne, kill the monster and save lives.  

When Theseus attained manhood he was set on the dangerous journey to Athens, during which he encountered bandits and robbers, outwitting them or defeating them with his physical strength. Dom Cobb took a great risk by taking a plane to Los Angeles and performing an inception at the same time, overcoming the fear of being thrown in jail for the rest of his life. Robert Fischer’s hostile projections that pursued the inception team are equivalent to the highway bandits that Theseus faced on the road to Athens.

Theseus penetrated into the Cretan labyrinth to deliver Athens from the ominous tribute and to save the sacrificial victims. Dom Cobb entered into limbo to find Robert Fischer and Mr. Saito and pull them back to the reality.         

  (Scanned from The Labyrinth in Culture and Society: Pathways to Wisdom) 

Each member of the team carries an amulet, a totem to determine if they are located in another person’s dream space. Theseus had a magical thread and a ball of wax that helped him venture through the labyrinth and kill Minotaur.

Ariadne not only helps Cobb to traverse and solve the labyrinth, but she also helps him with deep psychological dilemmas by listening to his confession. She gives an advice to confront the destructive guilt, to find the monster that is hiding in the labyrinth of his soul and slay it. Ariadne leads Cobb to forgiveness and to the state of absolution in his consciousness.  

  

The Minotaur was personified in Mal Cobb, Dom’s deceased wife who created obstacles and impeded the progress of the journey through the three levels of the dream world. Dom Cobb was indirectly responsible for Mal’s suicide which led to the formation of destructive guilt that hunted everyone who shared the dream with Dom until the growing beast was met face to face and the unbearable infliction was eradicated.      

          

The Information Age:

In the knowledge-based society of the Western Hemisphere the people have understood that one of the most precious commodities in the world is information, or what the philosophers of the Age of Enlightenment used to call knowledge. Dom Cobb was searching for sensitive information that proved to be valuable for corporate executives in the market competition against their economic rivals.  

The accurate and up to date information empowers the “Insiders” on the Wall Street in making sound decisions fast and in a correct manner, which usually turns out to be very lucrative. Large enterprises rely on their think tanks to gather and analyze data to create 5, 10, 25 year plans in order to project accurately into the future, taking into account all the possible scenarios that can affect their business models and strategies. The modern marketing is premised on the understanding of the American psyche, which was developed by public relations specialists like Edward Bernays, who applied certain scientific techniques to exploit all the hidden and dark corners of public’s minds to influence and direct the consumers towards industry-friendly consumption choices. After the successful round of studies and tests conducted by behaviorists the informational tidbits enter into commercials and movies with the purpose to influence our psyche in the predesigned directions. Finally the right information is the key in the current interconnected virtual space.

Therefore the proper accumulation and understanding of information can help anyone to make healthy personal decisions and gather a more abundant harvest in the monetary or other material form. Furthermore the refinement of its exactitudes will grant a penetrating insight in order to navigate safely through global financial markets and other internet-based systems, which became the new road networks that connect the entire world under one global trade and communication systems.

Consequently the information becomes an aide towards understanding of things and an idea, which is a culmination of accumulated and analyzed information, begins to take its roots to form a contagious and a resilient intellectual virus. Individuals with right ideas are always a menace to the totalitarian political regimes which tend to ostracize those who produce unwanted ripple effects that upset the social fabric. For instance, Soviet dissidents, although were celebrated in the West for revealing the truth, were heavily persecuted, tortured and put in labor camps for speaking out about the injustice and the lawlessness in the Soviet System.

A person who understands the situation and has a linguistic ability to convey his thoughts to others in a coherent fashion constitutes an explosive element that can demolish the slave grid of any social system. The dictators from time immemorial were more afraid of a person with an idea than a weapon. Ideas are bulletproof and tend to outlive the people who are holding them in their hearts and minds. Armed with a right set of ideas the populace can march ahead to the fulfillment of freedom and liberty for all.

Internet—a Labyrinth of Information:

As the Western Society is becoming more Internet based, we are in desperate need to learn how not to get lost in the informational labyrinths of endless paths beset by infinite distractions. As we delve deeper into the virtual world it will become increasingly harder to preserve our ability of independent thought, to refrain from the machine like reasoning and keep our sanity intact. Humans were created to operate both on emotion and logic and experience a vast array of feelings, which computers do not provide. Here are some of the things to keep in mind when coming aboard the vessel of an Internet browser that sails in the sea of digital information.

One needs to learn how to navigate through the turbulent waters of the Internet and develop a sense of a guide. It is fairly easy to get lost in the crossroads and forks manifested in hyperlinks which permeate the viewing page. We need to develop a form of digital stoicism to become resilient to the distractions of the flashing ads, attractive commercial offers and links promising more delightful information. Staying focused and concentrating on the object of study without deviating from the main course and without getting lost in the paths of endless data is the most difficult thing to achieve on the journey through the virtual continent.

Once on board of the browser the digital sailor needs to place a marker on the map to signify the destination point and prepare for an experience of trial and error. Duly equipped the Internet sailor will be able to avoid dangerous encounters with monster viruses, overcome the temptations from the islands of sensuality and safely arrive at the harbor with the purpose to exchange information.

A person with refined skills and abilities will find his or her travel through the Internet maze extremely beneficial, because less time will be spent on exploring useless paths and more locations of hidden informational treasure will be revealed.

Bon voyage to all!      

Escapism:

During the confession to Ariadne Dom Cobb made a revelation that being in the dream world for too long can blur the line between the dream and reality. There is a strong correlation between that and people living in the age of computers, where they spend long hours in the virtual world of video games and Hollywood fiction. The spectators who tap into the virtual realm of moving pictures do not suspect that their cognitive states are being affected in the process. The images and messages projected from the screen become engraved in the subconscious and evolve into more concrete thoughts in the person.

Furthermore movies generate an emotional response in the viewer, which in turn solidifies the buzz words and slogans pronounced by the movie characters. These catchphrases form ideas and conclusions in the person’s mind and logically influence all the subsequent individual development.

When we plug our brains into a television or a computer we volunteer for a download of daily slanted information of non-personal origins, something that was not produced by us and whose intentions are totally unknown. If we are not the originators of our ideas and conclusions then we become an easy prey to the workings and machinations of outside parties, because we are oblivious about their primordial intent. Opinions mold actions and whoever has control over the mind via scientific persuasion or dictatorial rule controls the human being walking on earth.

The above narrative is akin to the process of inception, once accepted an implanted idea grows in the person’s subconscious and becomes extremely resilient, almost impossible to be rooted out. The delicate part of the mission is to convince the person that he or she is the true progenitor of that idea.      

However there is another side to the world of fiction. There are a growing number of people who escape into the virtual world from the harsh realities of the real world. They come from school or work and go to some kind of game station to play with their magical heroes, slaughter terrorists and build imaginary towns. You might live in six by eight feet squalor, but your computer screen shows a bright red shiny Ferrari parked in front of a Florida mansion surrounded by palms and ladies serving cocktails, and it feels much better. In certain instances the emotions that are expressed in the movies can begin to function as the only avenues where we can experience them, slowly replacing the emotions that we are not allowed to vent in the real world.

  

If an individual is not careful enough, then there is a high possibility to get lost in the fictional world and lose an ability to distinguish between truth and fiction, fact and fancy. If the brain is heavily saturated with fictional accounts and images that one is not meant to encounter every day, then that process is bound to produce in the person a surrealistic outlook on the real things that take place in the world. For instance, most of us who grew up on action films, horror movies and combat simulation games became gradually desensitized to the images of blood and death. We no longer grow indignant and become shocked by the grotesque footage from the streets of Baghdad or reports of mass slaughter in one of the African villages. 

Dream within a Dream:

The less obvious patterns of labyrinths are embedded in the captivating plot of the movie Inception. Multi-level dream world is symbolic of the complexity of the real world in which the struggle for existence takes place. It involves convoluted structures with crossroads or conflicting decisions to be made, alternate routes, which can lead to more problems if one avoids the main thorny path and finally the dead ends or the spirit of futility that inflicts each human being in tough circumstances. To conquer that destructive spirit one must reverse his or her way, remember the wrong turns that were made, search for the unexplored paths and choose the road that will lead out of the maze. The greater the intricacy of the levels the greater the prize that awaits at the end of the journey.  

 

(Scanned from The Labyrinth in Culture and Society: Pathways to Wisdom)

The extraction/inception team’s job consists of navigating through people’s minds which are structured like a maze. The thoughts can get lost in the multiple sets of bifurcations that lead to cognitive compartments. To recall something from the memory one must follow the exact path that the thought took to the place of its dwelling in the recesses of the mind. The sequence of memories could be aligned or questions could be asked by a person who wants to withdraw an informational packet from the client’s head.

Ariadne is auditioned for the job of dream architect by Cobb, who gives her an assignment to draw a maze in two minutes that will take more than one minute to solve. She was faced with a task of creating an intricate structure which fell under the magnificent definition of the labyrinth pronounced by the Roman patrician Seneca, that is “to create an infinity of paths within this finite space”. After few failed attempts a circular labyrinth triumphs over the square mazes. Unicursal labyrinth has only one correct path that leads to the center and is considered to be the superior form which celebrates the indirect and curved path.

The circular forms even appear in our imaginations during meditation and prayer. To help believers in their spiritual journey Dr. Lauren Artress of Grace Cathedral in San Francisco had taken the dimensions of the Chartres labyrinth in France and replicated it in her home parish. The eleven circuit labyrinth is walked for spiritual healing and psychological therapy since 1994. People report profound transformations of consciousness after experiencing the labyrinthine walks. Gradually the Christian faith turns to and regains the ancient values hidden in the complex forms that were unfortunately suppressed during the Dark Ages in Europe. 

 

(Taken from the website http://www.gracecathedral.org/visit/labyrinth/)

Ariadne is hired to create an intricate network of streets and confusing alleyways within a finite space, because the complex architecture will hide the inception team from the projections of a person’s subconscious who is dreaming. The person’s subconscious tends to become hostile and violent once it begins to sense foreign objects, which is similar to the monster in the labyrinth having an acute sense for an outsider. 

In one of the scenes Cobb is chased by agents hired to kill him through the zigzagging city streets and indirect alleyways. He escapes by squeezing through a narrow opening between two houses, which is a visual demonstration that exit points are often more difficult than the inner paths themselves.

During the times of nomadic people the seasonal encampments and temporary dwelling areas were organized in the labyrinthine form with enclosures and meandering village streets to protect the sacred altar and the tent of the chief. The complicated patterns in which the tribal village was organized were passed on through generations and kept in the memory of the members of the tribe, thus the outsider was not aware about that and would get lost in the labyrinthine paths.

In the third level of the dream Dom Cobb due to the shortage of time decided to cut through the maze to bring Robert Fischer faster to the safe room. Cobb insisted for Ariadne to reveal an alternate route, thus he chose the straight line and forgot that the shortest and the quickest path is not the best. Those who try to circumnavigate the labyrinth or cut through the convoluted structure will find themselves in a more perplexed stage. Cheating in the labyrinth is a futile attempt that can only lead to disastrous consequences, in the movie Robert was shot by Dom’s projection and a couple of inceptors had to go into the limbo state to retrieve the lost members of the team.

Cheating in the labyrinth defeats the purpose of the entire experience during the traversal in the circles, because at the heart of that structure the person is supposed to achieve spiritual enrichment and personal fulfillment.     

In the final stages of the multi layered dream world Robert Fischer opens up a safe with the key information that decided the outcome of the mission and Dom Cobb finally resolved his personal issues with the past and the quest was complete.

     

Death and Resurrection:

In order to come back to the previous stage in the dream or return back to reality a synchronized system of “kicks” was developed which involved the participant falling or dying in his or her sleep. This idea is akin to the perennial concept that one must die to be born again, which was prevalent throughout the mystery schools of antiquity and still performed during the rite of initiation in various esoteric orders.

 (Scanned from The Labyrinth in Culture and Society: Pathways to Wisdom)

Death and resurrection is a common theme or attribute in the rites of many philosophical societies. Various religious cults beseech their adepts to die to this world, to the old self and resurrect to the new life and the whole new understanding of how this world operates. During the initiation ceremony into the occult organizations the inner workings of the physical realm are whispered into the initiate’s ear followed by the iteration of meanings of symbols which are incrementally revealed during the accession to the higher degrees. 

 

The Holy Bible instructs a Christian convert to die to the sins of this world, to take the cross and follow the Savior Jesus to the life everlasting. The neophyte is taught to go on the Calvary, because only through the death of Jesus Christ a believer can enter into Heaven. Christ was predestined to die from the foundation of the world so whoever believes in him shall live forever. In Eastern Philosophical tradition a believer who reaches nirvana escapes the tortuous cycle of birth, death and resurrection, thereby entering into a higher realm of existence.     

 (Taken from Wikimedia.org)

According to Manly P. Hall the initiate into the Egyptian Mysteries and similar esoteric schools of antiquity performed a rite of symbolic death, laying in the tomb and then being metaphorically resurrected by the hand of the priest wearing the mask of a lion. Thus whoever was accepted into the Temple was considered to be twice born or the one risen from the dead. This allegorical ceremony was essential for the later introduction to the Great Plan of cosmic unfoldment.

 (Scanned from The Lost Keys of Freemasonry)

The labyrinth has been commonly regarded as the journey of the dead. In the Epic of Gilgamesh a demigod had to venture through the tortuous paths of magic forest to find and slay the hideous monster and rescue the damsel. In the Cretan tale Theseus traversed through the labyrinth to kill Minotaur to save lives of young sacrificial victims. In Hinduism the concept samsara presupposes a continuous cycle of birth and death which can only be escaped through the attainment of moksha or the release from the earthly suffering and repeated deaths. To leave this samsaric prison The Tibetan Book of the Dead advises the dead person to remain still and seek the light behind all consciousness. The intricate cycles of living and dying of samsara are identical to the labyrinth drawn in a form of a circle with numerous concentric rings inside of it. In the Christian New Testament Jesus Christ descended into hell to preach to the imprisoned souls before he was raised to Heaven and glorified in a new body (1 Peter 3:19-20). According to Virgil, Aeneas, who was condemned to wander in the maze, had to go through Hades, the kingdom of the dead, to escape his prison. Thus one must go through death to experience life anew.

The descent into the limbo state is equivalent to the descent into Hades or hell. That narrative is present in all cultures which incorporated the story of a dying god into their holy teachings. The myth of a dying god is an account of personal redemption and regeneration, an allegory that teaches the person to become illumined and wise through self-sacrifice, to teach the devotee how to meditate above illusion and attain self-realization.     

The Tribal Voyage:

By the end of the movie the viewer is convinced that in order to persevere through the labyrinth the traveler is not required to carry large weapons. The wit and cunningness are more effective than firearms. In fact all material possessions are an encumbrance to the traversing nomad, whose wealth is concentrated in his or her past experiences, gained knowledge and skills and relationships with the fellow travelers. Inception has correlations with the tribal voyage which unites individuals from all walks of life and diverse skill sets into one group to kill a mammoth that is impossible to tackle by a single man.

Our nomadic ancestors differed in many ways from the sedentary societies that we became accustomed to for the past three thousand years. The nomads held in high esteem the virtue of individuality and cherished the time they spent in solitude. However they were able to join together under the banner of solidarity and mutual respect when the situation demanded a concerted effort. The individual differences between them were temporarily put aside to confront a common problem. Each member of the union understood and reinforced the values of mutual respect and courtesy toward each other, but retained to his or her individualistic dispositions. Working together and preserving a personal uniqueness simultaneously is one of the hardest tasks on this planet. However this tribal union should not be confused with a socialistic utopian approach, because it is polar opposite from conformity or uniformity. Instead it is a temporary union for the sake of solving an individually insurmountable problem. Those who can master this method will be able to advance further and faster in the Darwinian world with utmost independency from the oppressive external forces.    

Confession—the Cleansing of the Soul:

Inception is the story of human struggle, a battle that takes within the hearts and minds of everyone.

Dom Cobb’s bad memories and regrets disabled him as a dream architect. The entire mission was sabotaged and on the brink of total failure because Cobb had destructive guilt which projected out of his subconscious in the form of a freight train and Mal’s violent outbursts. Cobb was able to reconcile with himself through the sacrament of confession or what Christian theologians call the cleansing of one’s consciousness or soul.

Anyone who is downtrodden by the past mistakes and guilt can express his or her feelings to a trusted person, e.g. a priest. Confession, which is ignored in many Protestant communities as a sacred rite, is an important part of a healthy spiritual life and is an essential element that keeps the individual moving forward. Whether it is a priest or a close friend, talking to somebody about personal problems will have a positive effect on the psyche and overall physical health.   

  

       

Memory—A Magical Thread:  

Upon Cobb’s descent into the state of limbo memory was the only viable tool available for stimulating the mind of Mr. Saito to help him remember the arrangement with Cobb. With the absence of external help memory becomes the magical thread to find the correct path out of the labyrinth. In the maze like world with sharp corners and twists, the experienced traveler uses the memory to recall past events, precedents of the bygone days in order to reconstruct the timeline of past happenings and realize the present location in the complex structure.

During our journey on earth we can only rely on ourselves, on our five senses and our personal memory. In many cultures the children are trained in memorizing verses of great poets, learning religious prayers, sometimes employing labyrinthine type of drawings to memorize these texts. It would prove highly advantageous in the adult years if the person was learning things by heart during his or her childhood. Our nomadic ancestors relied on the memories stored in their heads or preserved in their culture and passed on by their elders. The individual memory is the only trusted citadel of reference that one can be sure of, granted that the person is sane and has no pathological diseases. Today the short and the long term memory should be used to decipher through the confusing and contradicting barrage of news that is being projected from the glowing screens of our electronic devices. This is a prerequisite to the understanding of the current social and political circumstances.   

    

Do Not Fear:

Life is a labyrinth and standing at the threshold the participant must find courage to enter. If one prefers the broad avenues and straight paths, afraid of sharp corners and dim, obscure ways, then he or she is not properly prepared to face up to the challenges of the meandering networks.

The only reason Cobb and Ariadne were able to accomplish the mission was their bravery, which allowed them to go into the limbo state with a possibility of never coming back to reality. They were willing to get lost in the unchartered territories of their minds to find their nomadic partners and complete the job.

Do not fear is the commandment of a traveler of labyrinths. Do not be afraid to get lost in the indirect paths, in the presence of bifurcations and in the face of inevitability of forthcoming failures. To run into errors on the journey of the quest does not imply any lose, because new failures deliver new tools to be used for the refinement and perfection of the self. The person with a brave heart and appropriate level of cunningness has enough capacity to take a rough ashlar and cut it into a perfectly shaped stone to be socially useful in the construction of the building. Therefore do not be afraid of failures that lie ahead, instead welcome them with joy and prepare to extract something useful from your experiences, whether they are ill or weal.

Conclusion:

We live in the world that is growing increasingly complex and henceforth more challenging. The best and the worst of times are upon us. The global forces, including the sophisticated advances in communication technologies, are bringing all countries together and the new convoluted networks are being formed. Politics, economics and social sciences are compelled to confront these new global circumstances and respond by penetrating into the newly structured labyrinths. Those who will acquire the necessary and applicable navigation skills in the world of Internet and interdependent trade systems are destined to come through relatively unscathed into the new age of world peace and stability.

However it will not be a smooth transition and a sacrificial altar will be placed at the entrance to the global labyrinth. Certain sacrifices will be required in order for the World State to rise from the ashes of the old order and land on the firm platform of international respect and solidarity. The world of tomorrow will be divided into haves and have-nots and the decisions made today will determine the individual placement at the table of global commerce.

Understanding the realities listed above is the first step in the battle, acting upon that understanding is the hardest but also the most rewarding part of it. The word to the wise: educate yourself, stand firm, walk upright and do not let yourself be deceived on the road to the New World Order.    

          

(Scanned from The Labyrinth in Culture and Society: Pathways to Wisdom)

Bibliography:

Attali, Jacques. The Labyrinth in Culture and Society: Pathways to Wisdom. Berkeley, CA: North Atlantic Books, 1999.

Hall, Manly P. The Lost Keys of Freemasonry. New York: Macoy Publishing and Masonic Supply Company, 1923. (1957 edition)

Huxley, Aldous. Brave New World Revisited. New York: Harper & Brothers, 1958.

Keightley, Thomas. The Mythology of Ancient Greece and Italy. New York: D. Appleton and Company, 1878.

Sargant, William. Battle for the Mind. New York: Doubleday & Company, 1957.