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Well, it finally happened. The world famous, bullet-fast, no-speed-limit German autobahns may soon become just like every other highway – boring.
"For the first time in the country's highway history," reported Germany's Deutsche Welle this week, "a German state has set a speed limit on its Autobahn…limiting car traffic to 120 km per hour."
Calls to slow down the autobahns were sounded several times this decade – because, reportedly, "The danger of serious accidents…is reduced wherever there is a speed limit" (DW), and because fast driving "senselessly wastes energy and harms the climate." (Reuters)
(That's true, going pedal to the metal produces more greenhouse gases than crawling like a parade float on Thanksgiving Day. But then, so do cows. Yes, cows – because, according to the United Nations, "at least 18% of the global warming effect comes from livestock, more than is caused by all the world's transportation systems." Strange that no one yet has proposed outfitting every cow with a catalytic converter. Probably just a matter of time, though.)
Last proposal to slow down the autobahns came out in 2004, when Germans said they "would welcome the introduction of a sweeping speed limit" of 130 km/h. (DW) The timing of that proposal hardly came as a surprise to students of Elliott wave and socionomics, the science of social prediction based on the Wave Principle.
You see, over the years, we have noticed that speed limits usually get introduced during bear markets in stocks and repealed when bullish times return. Why? Blame (and thank) social mood.
The Wave Principle teaches that the stock market is the best indicator of a society's overall level of optimism and pessimism – a.k.a. social mood. When people are happy (positive social mood), stocks are up. When social mood falls, stocks go down – and, it seems, so do highway speed limits.
For example, in 1974, after the DJIA (read: social mood) had been on a losing streak for several years, the U.S. lowered its speed limit to 55 mph nationwide – a move that “institutionalized the nation's depressed pace,” as we at EWI put it later. The limit was only lifted in 1995, after two decades of rising social mood, stock market and the economy.
(It's worth noting that the State of Montana went to the opposite extreme in 1995 – and eliminated highway speed limits altogether. But four years later, when the collective mood in the U.S. was starting to peak as a precursor to the bear market that crushed stocks in 2000, Montana joined the suit and capped its highway speeds at 75 mph.)
Another example is Australia. Until 2002, its Northern Territory remained the only place in the world (besides Germany) that had no official speed limit. However, in 2002, as the Australian ASX 200 stock index continued to fall, the Territory's government made the first step towards speed restrictions and slowed down one of its major highways to 110 km/h.
Getting back to Germany, in 2000-2003, the DAX, the country's main stock index, lost over 70%. At the time, Germany was clearly Europe's bear market leader, so the 2004 push to set a federal 130-km/h speed limit was only logical, from a socionomic point of view.
But what about now, you may ask? Why would Germans pass the first actual speed limit law now, after the DAX had rallied strongly for five full years, indicating German's improving social mood? Well, take a look at this chart:
Notice that since last summer, the DAX lost around 1700 points, or close to 20%. Conventional economists define declines of 20% or more as bear markets, so it's not a stretch to say that Germany's social mood took a major hit over the past eight months. So, while this deserves a more thorough socionomic investigation, the timing of the speed limit law introduction does seem to fit with the general pattern we at EWI have observed.
Will this be the end of an era for everyone who's ever dreamed of someday "opening it up" on a German autobahn? If history is any guide, it all depends on social mood. Watch Germany's stock market, and you might just get your answer.
(Ed. – You will find Elliott Wave International's latest forecasts for Germany's DAX and other European indexes online right now in the latest, April issue of EWI's European Financial Forecast.)