Social mood waxes and wanes positively and negatively. A positive social mood is associated with a host of social phenomena, such as bull markets, bright colors, short skirts, re-election of incumbents, peace, and deregulation. A negative social mood is also associated with a host of social phenomena, such as bear markets, dark colors, falling hemlines, rejection of incumbents, discord, and regulation.
A subtle but important point: Although social mood governs social events, it fluctuates independently of such events. In other words, wherever mood goes, events will follow.
Though he doesn't mention it in the above quote, positive social mood is associated with the formation of political and economic unions, while negative ones are associated with their decrease or destruction. During times of positive social mood, people are accepting of cultural differences, while during periods of negative mood people become far less tolerant, even xenophobic.
Regardless of whether one accepts Prechter's explanation of causality, we are clearly in a time of declining social mood. This week's headlines make this clear:
"Merkel says German multicultural society has failed"
"Italy is closing the door on Gypsies"