Over the past year, I and other astrologers have warned of the upcoming collapse of what I have called the Relentless Optimism of the Pluto in Sagittarius period.  Back in May, I wrote:

As predicted in this column, stock markets around the world rallied in April with US stock funds rising nearly 5% in that month following Pluto’s retrograde turn as it heads back into Sagittarius. The Sagittarian optimism that has fueled overspending, overborrowing, overinvesting, and a drastic increase of home sizes and prices sank into despair when Pluto first entered Capricorn in January.

As Pluto retrograded back through Sagittarius, money writers weren’t sure whether to fall on the side of the bulls or the bears but astrologers knew that the end of the expansion was just a matter of time.  

Some financial analysts are agreeing with astrologers, calling this a “Sucker’s Rally.”

Jean-Marie Eveillard, who runs the $US22 billion ($23.5 billion) First Eagle Global Fund, is skeptical the gains can last because the worst housing slump since the Great Depression will reduce earnings. S&P 500 companies are valued at 22.7 times profit, the most in four years.

Options traders are paying 63% more to protect against a drop in the S&P 500 than to bet on a gain, the widest difference since at least 2005.

”It may be a suckers’ rally,” said Eveillard, who is based in New York. ”Investors want to believe. But if I’m right, then there’s truth to the argument that this is the worst financial crisis since the end of World War II. The same kind of reflex is the wrong reflex.”

Pluto changed direction on the 9th, and immediately Fannie Mae and Freddie Mac, the vehicles through which America mortgaged its security to pay for its lifestyle, were taken over by regulators.  Shortly thereafter several banks failed, and today we have the bankruptcy announcement of Lehman Brothers and the fall of AIG, an insurance giant who was heavily invested in mortgage instruments.

Sagittarius is the sign of expansion and optimism, and Pluto’s travels through Sagittarius brought with it an optimism that seemed to be endless.  The stock market would forever go up, home prices would forever inflate, and all you had to do was borrow as much money as you can to fully leverage your lifestyle.  Capricorn is the sign of the reality check, and Pluto entered Capricorn back in January, bringing the first taste of that reality check.  The US chart has Sagittarius rising, and optimism is our middle name.  We don’t like the hard work and discipline that Capricorn requires, and Pluto in Capricorn will be difficult for Americans.