The Present Financial Meltdown

Presently the world has encountered the worst financial crisis since the great depression from 1929 to the early 1930s. It was triggered by the subprime loan granted by financial institutions to subprime lenders to finance homebuyers in US. This phenomenal is catastrophic, affecting billions of people around the world causing numerous major business failures, depressive commodity prices, massive unemployment, wiping out shares worth trillions of US dollars from the bourses around the world. Many companies and individuals faced bankruptcies, homes repossession and even pensioners were not sparred; bringing untold miseries to millions worldwide.

This financial crisis had brought down many once mighty corporations to their knees causing and prompting their governments to bail them out. In order to prevent a run for the banks many sovereign governments also have to guarantee bank depositors to prevent massive withdrawals that can cause a collapse in the financial systems around the world. Leaders of major economies rallied to find viable solutions; like taking drastic measures to inject massive funds and implement stimulus packages into their financial system to prevent the crisis from escalating and snowballing. This major phenomenal brings havoc and miseries to billions of people around the world.

Now let us take a perspective view on the economic condition of the major economies particularly US and Western Europe prior to this crisis. Preceding the trigger of the current financial crisis the world was experiencing a fantastic run for most stock markets; breaking and setting new stock market indices around the world. Companies have been reaping fantastic profits, mega mergers and acquisitions, banks and financial institutions were giving out easy loans without sufficient collaterals. Massive loans were created through secondary papers to tap the excessive funds derived from the colossal savings, particularly by the Asian economies after their currencies crisis a decade ago.

The excess and cheap money coupled with low inflation pushes interest rates lower in many advanced and emerging markets. This spurred greedy bankers’ creativity with profit maximizing as their prime motives fueling the meteoritic rise of shares prices creating and breaking new records for most stock market indices. Commodity prices also have reached to unprecedented heights initiated and attributed by speculators and hedge funds, causing commodities futures to break new records in a short span of time. Secondary papers were bought and sold freely; resulting in the lost of control in regulating them promoted by the free economies of the western world. As a result the effect on its failures have caused a contagious and domino effect on the rest of the world economies.

I Ching's Concept of Heaven, Earth and Humanity.

The development of I Ching was based on the philosophical concept of the merging of Heaven, Earth and humanity by the ancient sages. This concept has been established into an organic whole forming the foundation and development of the ancient Chinese culture. As the book of changes, it propounds the concept of the Truth of Heaven and Earth and also extended it to the Truth of Humanity.

Tao of Change

The Tao of Change or Tao of I is the main theme of the I Ching which propounds the universal concept of changes. The main relevant theme of the Tao of I that propounds for this matter maintains :

  1. That everything is in the process of continuous change,
  2. By rising and falling alternately
  3. In a progressive, evolutionary advancement manner.
  4. When changes proceed beyond its extreme,
  5. It alternates to the opposites.

It elucidates that one should adapt to changes and adjust his efforts appropriately according to the situation and time. It also reveals that change is certain and absolute, but the principle of change never changes, according to I Ching. This subscribed to the principle of living in harmony with nature and one must adapt to the changes in situation particularly when facing a crisis in our lifetime, otherwise one is asking for trouble.

Perspective View of I Ching on the Current Financial Turmoil

Now let us critically analyze and relate the crisis by expounding the main theme of the I Ching, the Tao of Change. A perspective view using I Ching to provide us an insight why the crisis is inevitable can be answered by expounding the concepts of the Tao of I or Tao of Changes. It can be critically analyzed and explained as follows.

Expounding the Tao of I on the Current Financial Turmoil

Empirically the Tao of Change has proven that its concept is universally recognized and accepted via; phenomenal historical events, social, political, economical changes, technological and scientific progress by analyzing and reviewing historical records. We delved further into this universal concept by unveiling the pattern of the progress of mankind by observing and analyzing the rise and fall of dynasties of the past, changes in governments and vast improvements of quality of lives in general. Ever since early civilization till modern era, people all over the world are enjoying better food, shelters, improvements in personal and social security also better comforts and vast improved economic well beings through advancement of science and technology and so on.

In order to delve further into this concept let us analyze each and every theme to concur its relevance to mankind particularly; human social and economic activities and also major economic phenomenal that warrants our attention.

a) That everything is in the process of continuous change

Unless there is a major phenomenon such as financial turmoil, economic upheavals or dramatic turn of phenomena events we do not pay much attention to this concept promulgated by I Ching; that everything is in the process of continuous change. This is reveals by the 64 Hexagrams to denote the six stages of change indicating the process of continuous change from one situation to another. It is best illustrated by the process of continuous movements of the Tai Chi to elucidate this concept of the Tao of Changes.

In a modern and dynamic society, everything is changing at an unprecedented pace. Let us take the case of the present technological advancement and changes in the field of telecommunications such as the internet, mobile phones, TVs and other modes of communication. Never in the history of mankind has witnessed such a fast pace of changes; new and advanced gadgets introduced in the marketplace so frequent that existing ones purchased recently may consider as outdated and prices of these items fall drastically once competitors introduced better and newer ones.

In the stage of technological advancement when new gadgets are constantly introduced and widely used, older models are quickly replaced since we may not be able to find any replacement parts. Such changes inevitably forced us to buy the new models to adapt to the mode of the present system used for communication such as; emailing, short messages through mobile phones, internet banking, use of personal computers and so on. In a way we are forced to adapt to these changes, otherwise it inconveniences us and it is unthinkable not to have a mobile phone nowadays.

b) By rising and falling

The process of continuous change follows a pattern of ups and downs indicating the concept of rising and falling, expounds by the wavelike pattern of the 64 Hexagrams. The Tao of Change elucidates the rising and falling, no matter how short, it is still considered as a change. It indicates a change of a situation demonstrated through the Short Wavelike process of change from the odd-numbered Hexagram to the even-numbered Hexagram.

The other is a bigger change from one group to another group, a major change to an entire new situation. Such changes are revealed by the hidden concept of change on the ups and down movements of the 64 Hexagrams rearranged by King Wen. The Long Wavelike process of change patterns is represented by the 8 stages of the sequential movements of the 64 Hexagram; each Hexagram represents a particular state of the situation.

It is obvious that the process of continuous change is subject to a pattern of rising and falling in any situation in short term. In human affairs especially activities relating to economic and financial performance of businesses or investments; a pattern of rising and falling of these activities always hold true. This can be revealed from the data compiled for statistical purpose especially presented in charts of various forms over a particular time frame.

We can have a clearer view on the rise and fall if such recorded data are presented in graphical charts indicating its pattern over a period of time. Relevant charting models are employed for recording, charting and forecasting to control, monitoring, budgeting and planning and presentation purposes. We normally find such economical and financial data published in business, financial news, government economic and statistical data or financial performance by listed companies.

The rising and falling of the performance on economic and financial activities can be revealed in the form graphical charts when presenting the data of its activities. The revelation on the pattern of movements of the ups and downs will concur the manner of the change will follow the concept of the Tao of Change. Observing the patterns of all spheres of human activities since civilization has proven its truth and lends credent to its concept. Understanding and realizing its concept will enlighten and provide us a holistic view when assessing a situation to make better judgment/decision for ourselves.

c) In a Progressive Evolutionary Advancement Manner

The concept of progressive evolutionary advancement was propounded by King Wen’s rearrangement of the 64 Hexagrams according to its sequential movements as presented in the 64 situations in 8 wavelike cyclical patterns. It starts with the ‘Creative Power’ in Hexagram 1 - representing the Heaven follows by the ‘Responding’ in Hexagram 2 - representing the Earth. After Heaven and Earth came into existence, myriads things were produced creating a cyclical movement as reflected by the remaining sequential 62 Hexagram; ending with ‘After Accomplished’ in Hexagram 63 and ‘Before Accomplished’ in Hexagram 64. After the cycle is completed as shown in Hexagram 64 then a new cycle begins and this will continue again and again in a continuous process. However, a new cycle will progress in advancement as propounded by the main theme of the Tao of Change.

In human society, we witnessed the progresses in many fields; improvement of quality human lives in the long term, the scientific and technological advancements. The pace of changes has become more evident particularly over the immediate past few decades in terms of better health care, cheap electrical and electronics appliances, affordable automobiles, personal computers and mobile phones for telecommunications and so on. At the same time mankind also experience vastly improved living standards in basic necessities like food and utilities, comforts in the form of better homes, heath care, social securities, education and so on. In the social front, people are enjoying more freedom nowadays compared to the past, reflecting social development and progress.

Today most people can also travel for leisure in comfort by air, road, rail or sea. Many people can also afford automobiles that was not possible a few decades ago especially for many developing countries. Some comforts of today are considered as luxuries a few decades ago and only enjoyed by the upper strata of the society and a handful privilege ones. Today most countries, particularly the developed ones also provide free tertiary education which was not possible and was only confined to the upper strata of the society. This indicates the overall general improvements of the lives of man kind in all aspects.

d) When situations proceed beyond its extreme

In order to understand I Ching one should know the hidden principles of the Tao of Change. This is the main theme of the I Ching that provides guidance for us to adapt and live harmoniously; whether with nature, personal life or regulating our activities especially on insufficiencies or excesses. The core concept is to harmonize our activities to prevent any situation from exceeding its extreme since it will alternate to its opposites. As we know the process of change is not straight or smooth and the best way is to allow an orderly change without causing any disruption and upheaval. Any abrupt and extreme change of any situation makes it more difficult for us to adapt as the change may be too much for us to take, causing disruption and turmoil.

This concept was adopted and incorporated into the I Ching Oracles for divination purpose, using the 3-coin method. This hidden concept is integrated into the process of recording the outcome of the divination. A change is effected only if the outcome of the throw/toss ended up in either 3 heads or 3 tails; showing an extreme situation. Once the outcome is either on 3 heads or 3 tails, then it is taken as a changing line; from a Yin line (3 tails) to a Yang line and a Yang line (3 heads) to a Yin line. Hence, this concept is reflected in the divination using the 3 coin method for consulting the I Ching Oracles.

When a situation proceeds to its extreme the change is abrupt and drastic and it will reverse the situation into the opposite direction; like reversing an inflation situation into deflation or from an extremely rich person to become a bankrupt overnight triggered by the turn of a single event like the subprime loan crisis.

The Situation Prior to the Financial Meltdown

Now let us critically examine the situation before the current financial meltdown to give us a holistic view on the truth of the concept that when situations proceed to its extreme, it will alternates to the opposites. Prior to the current financial meltdown the world’s financial and economic situation was extremely robust; most corporations are making unusual huge profits, indices of bourses around the world shot to frenzy heights, commodity prices particularly crude oil broke new high records again and again. Consumer spending and demand of private homes was at all time high attracting investors and flock of speculators.

Credit line was easily given by innovative banks and greedy bankers to plunge into the lucrative loan business. Loans can be obtained without sufficient collateral due to low interest rates on the abundant supply of money and greed of bankers. The unusual robustness was not supported by fundamentals and was running out of control creating the craziness and bringing failures to the financial system spiraling into the current financial and economic turmoil. The lack of the control by the US government to prevent an overheating economy by leaving it to the free market forces has turned it into a catastrophic and disastrous financial meltdown. Any extreme situation like this only needs an event like the subprime loan crisis to trigger off the panic button.

e) It Alternates to the Opposites

The procedure of divination using the 3 coin method incorporates this concept; when situation proceeds to its extreme, it alternates to their opposites in the form of the Changing Line. The Changing line has an attribute and denotes the change of circumstances transforming the present situation into a new situation. Where a change is gradual and not abrupt, it is normal and within expectation, it is much easier to handle and easier for us to adapt and plan for it.

However, in an extreme situation the change will be drastic, abrupt and disruptive especially when a situation reaches its peak. Such change can be disruptive as it has many adverse implications. The Book of Changes contains the change of any extreme situation and reversing into an opposite situation. Examples are; Hexagram 11 – Advance to 12 - Obstruction, 17 – Adapting to 18 – Remedy, 29 – Critical to 30 – Enlightenment, 41 – Decrease to 42 - Benefit and 63 – After Accomplished to 64 – Before Accomplished are good examples.

It is crucial for us to understand the laws of change; so that we can respond and adapt to changes in the most suitable ways, particularly on our activities to prevent the situation from exceeding its extreme as it alternation to its opposites will create far reaching effect in term of damages and upheavals.

The Situation before and after the Financial Meltdown

Let us examine the economic situation and outlook then and the situation now. Prior to the financial meltdown, the economic outlook was rosy and positive forecast was made for better growth in term of GDP and better profit for most corporations. Inflationary pressure was mounting and the price of consumer goods rose unabatedly and cost of living also spiraled. Even prices of essential food like rice a staple food, a controlled item of most Asians countries was not sparred from this inflationary pressure which had never been experienced before. The price of crude oil and other commodities shot up crazily resulting in many defaults on numerous forward contracts and contractors and manufactures put in a bind causing many mega projects to be abandoned.

After the economic meltdown, we are experiencing an opposite situation. The economic outlook was bleak and gloomy, the once robust economic growth are recording negative growth in GDP for most developed countries. Many conglomerates, corporate giants and medium and small size companies are recording heavy losses or much lower profit. Inflation reverse into deflation; prices of most consumer goods fall drastically, mass lay off of workers, unemployment is on the rise and people’ confidence shattered and pessimism is the order of the day. Trillions worth of the share markets and property prices were wiped off. Prices of crude oil, commodities and even essential food also dropped drastically to a more realistic level. The present situation is the reversal of the preceding situation and causing disruption, damage and havoc and it will take few years to normalize the situation.


It will also provide a perspective view on ourselves in dealing with our personal affairs that we have a control over them. In this manner we can respond and adapt to changes in the most appropriate and suitable ways.

The implications can be very profound particularly involving a worldwide contagious effect on the financial, economic, social, political and personal aspects. It involves a wide spectrum of the society and bringing untold miseries to the people such as; business bankruptcies, wreckage of family harmony, downfall of few governments and erosion of pensioners’ savings.

By understanding and practicing the treasure of the Tao of I or Change, it can provide us invaluable guidance to help avoid such devastating human created phenomena. The ancient Chinese have been practicing it for a few thousand years as the laws of change propounded by the Tao of Change is universally recognized and accepted. It will also provide us a perspective view to deal with our personal affairs that we have a control over them. In this manner we can respond and adapt to changes in the most appropriate and suitable ways.