Posts Tagged ‘Democrats’
For politicians to do what is right, first citizens must do what is right.
Of all the many, many stupid things that most Americans do, nothing is more insane than the ritual every two years of reelecting incumbent members of Congress. Countless opinion polls find that the public has incredibly low levels of positive regard for Congress. Just one in 10 Americans approves of the job Congress is doing, according to a Gallup poll released a few weeks ago, tying the branch’s lowest approval rating in 38 years.
Yet this year as in past years, unless Americans take back control of their country, voters will again reelect nearly all incumbents. Often, some incumbents do not even have any significant opposition. For example, in the 2000 election cycle, out of 435 House seats, 64 members had no major-party opponent, and in 2008 every House race in Arkansas was uncontested by a major party according to the Center for Voting and Democracy. Political redesign of congressional districts, gerrymandering, is widely done to ensure reelection of incumbents or one party.
The main way that incumbents get removed from office these days is when they lose in a party primary election, or die, or get themselves into a sex or corruption scandal. Primaries often replace the incumbent with someone else from the same party who will, in time, become an incumbent. That replacement is often a more extreme partisan than the previous incumbent.
The usual rationale for this survival of incumbents given by political analysts and writers is that although the public correctly sees Congress as a whole as incompetent, dysfunctional and incapable of serving critical public interests, they somehow think that their own Representatives and Senators are worth reelecting. This, of course, makes no sense. If this had validity, then cumulatively and nationally it would make sense to keep incumbents in office and Congress would get better and better with each election. In fact, Congress has become worse and worse with each election. This holds true in a genuine bipartisan sense, as nearly all incumbents, regardless of party, do not deserve to be reelected.
If Congress as a whole stinks, which it clearly does, then it is only logical to believe that this bleak condition must result from nearly all incumbents contributing to the mess. The exceptions are not defined by simply being the ones on your ballot.
How can a democracy function and have any deserved credibility when the electorate stubbornly refuses to act honestly and appropriately to get rid of the elected representatives who have proven themselves incapable of governing with competence and honor?
There must be better explanations.
Here is a likely one. Most Americans have become beholden to one of the two major political parties even if they are not officially members of them and may even consider themselves as uncommitted or independent. Moreover, a majority of people find themselves living in places where their favored party has predominated. When election time rolls around they cannot get themselves to vote for the candidate from the “other” party and they refuse to vote for third party candidates. Or they are so fed up with an awful government and political system that they do not vote at all, or not for congressional races.
Another contributing factor might be related to the lesser evil mode of thinking. The incumbent loser that you know is, somehow, thought to be better than the competing candidate you do not know, especially one from the “other” party. Reelecting incumbents is like some form of hallucinatory fantasy deemed the safer choice as if keeping them in office will magically turn out to be different and better than in previous times. They have seen the light, gotten the message, turned the corner, become what they once promised to be, and so on. Nuts. Congressional experience is not to be rewarded; it must be penalized for rotten performance.
Third, incumbents almost always have the most money because they have already been corrupted by money. More money means more advertising and more lies. Lies work. Especially for the many information-poor voters that are easily swayed by campaign propaganda. The big popular lie of omission these days is staying completely away from their congressional record. No incumbent wants to be seen as an experienced Washington insider. If you failed on the job, why would you?
In our country effective representative government is crucial. To keep reelecting congressional incumbents that nearly always deserve to be fired is unpatriotic, subversive and antithetical to the ideals of our constitutional republic.
This year ten Senators and 42 Representatives are not running for reelection. Odds are that far fewer incumbents will be voted out of office, if historic trends continue. For House elections from 1982 to 2008 only one in three voters did not vote for a winning House representative and 73 percent of House races were won by landslide margins of at least 20 percentage points. The power of incumbency reduces much needed political competition which a healthy democracy requires.
If the royalty of incumbency does not stop there is no hope whatsoever of putting the nation on a much better track. It does not matter who is elected president. In the end, if the fractured Congress we have witnessed for years perseveres the US is doomed to join the list of once great global powers that went down the toilet.
Flush congressional incumbents out. Now. Or be complicit in the death of American democracy. Stop making excuses, rationalizing. Throw incumbent turds out of office. Even more important than not voting for the challenger or incumbent from the “other” party is not voting for the incumbent of your party, even if it threatens party control of the House or Senate.
If you do not help fire Congress, then you deserve to suffer personally from what the federal government does or does not do. Make you voice really heard this year.
Contact Joel S. Hirschhorn through www.delusionaldemocracy.com
The question is, will someone deliver this between now and November?
You can see the text of this speech here.
The question is, will someone deliver this between now and November?
My fellow Americans;
Almost exactly four years ago the stock market began a sickening plunge that would shake the world. Declining from just over DOW 11,000 to under 7,500 in two short months, only to fall another 1,000 points in the next three, this period marked an unprecedented time of government intervention that you were told was for all of our good, and the good of our nation.
You were lied to.
The intentional expansion of debt unbacked by anything was the cause of the market crash. This intentional fraud perpetrated upon all of you went back to the Tech Crash in 2000, and goaded Americans into taking out loans that could not be repaid to cover up the malfeasance of those who had systematically looted Americans’ retirement accounts and offshored their jobs during the 1990s.
Nobody makes bad loans on purpose under ordinary circumstances, because doing so guarantees a loss. So these Wall Street and Banking swindlers did something very creative – they sold that debt, which they knew was bad when it was originally issued to Americans all over the world to various pension funds, insurance companies and other investors. They lied about the credit quality of the borrowers, they lied about what they had put into the securities and they skimmed off billions in fees and bonuses. By doing so they shifted the loss onto others — your pension, your state, your personal investment account.
But that wasn’t the worst of it. Having shifted all of the liability for these losses to you, these banksters and Wall Street swindlers then went even further. They petitioned Congress and Treasury, having donated copious amounts of money to political campaigns for decades, to bail them out, arguing that there would be massive civil unrest and even that the government would collapse if they did not get their way.
This is why TARP was passed even though you, the people, told Congress by a 300:1 margin not to do so.
If this swindle had ended in TARP, it would have been bad enough. But these greedy Wall Street executives and Banksters weren’t done with fleecing you. In fact, they were just getting started.
See, they still had trillions of dollars of worthless exotic and impossible-to-value financial instruments — enough to sink their banks several times over. So rather than lose their jobs, lose their companies and take their just medicine for what they had done, they conned Congress, Treasury and The White House into running a combined $5 trillion in deficits over the last four years. This amounts to about 10% of the economy every year since 2008.
You have been told that this, too, was for your benefit. That too is a lie. By running these monstrous deficits the Federal Government has effectively raised taxes on everyone, across the board, in the amount of those deficits — to the tune of 10% or more every year for the last four years.
If you’re in the middle class you know it’s been tough; gasoline, food and other necessities have gone up in price dramatically. Health care has become more expensive. Your ability to buy the things that you need has been severely damaged and the job market has been trashed. The reason this has happened is that the government’s deficit spending is nothing other than a tax on your income and assets — indeed, it is a tax on every transaction in the economy.
Ben Bernanke of The Fed has argued that his “Quantitative Easing” has helped the jobs market and will continue to. This too is a lie; the entire and only purpose of this program is to allow the government to continue to run its monstrous deficits — that is, The Fed is responsible for taxing you as an unelected private body.
The funds from this tax are not going into the economy. They are going to fill the hole in the big banks’ balance sheets. These large financial firms, banks and Wall Street companies, went from having about 20% of the size of the economy in debt in 1980 to over 120% in 2007, an expansion in relationship to the size of the economy of six times. From the start of the crash to today this has contracted to right near 90%, which is still more than four times where it was historically.
This credit peaked at 17.1 trillion in 2008. Today it stands at 13.9 trillion, or $3.2 trillion less. Mortgages, which are largely held by these financial institutions, declined by $1.061 trillion during this time. Adding these together you get approximately $4.3 trillion.
The Federal Government, on the other hand, added $4.7 trillion in debt during the same time.
To put this in plain English virtually all of the Federal Government’s deficit spending did exactly nothing to benefit you; it all went to these large banks, Wall Street firms and other financial institutions.
This is why the economy and labor market have not recovered; none of the deficit spending went to actually help you. It instead went to bail out all the swindlers on Wall Street and in the big banks that caused the crash in the first place.
This is the big lie that nobody will discuss openly and honestly. But arithmetic doesn’t care about politics; it just is. 2 + 2 will always equal 4. And it is long past the time when a political leader should be willing to stand, face the American public, and tell the truth.
The truth is that the government cannot spend more than it takes in via taxes. This is not a matter of opinion, it is a matter of fact. If the government attempts to do so via deficit spending then that deficit spending destroys the purchasing power of your money, whether saved or in the form of wages, and is exactly identical economically as if taxes had been raised. Since we all agree that there are things government should do, taxation is inevitable.
But when you are taxed it should happen where you can see it, and what you’re told the money is spent to do should be what it is spent for. You should not be ripped off twice — first with dodgy deals and then again by being forced to bail out speculators who made bad bets.
So to the American people, I make you these promises. If you elect me I will jail those bankers and Wall Street hotshots who lied to you, to your pension funds and to others in industry. I will stop deficit spending and put an end to the unbacked and fraudulent emission of credit. I will submit to Congress and demand passage of a bill that puts teeth into The Fed mandate for stable prices, ending the shell game of inflation and back-door taxation, backing that mandate with criminal and severe civil penalties for non-performance. I will protect depositors if we must should banks fail, but nobody else; lending people money is a hazardous enterprise, and the cost of that lending should reflect the risk. If you loan someone money who can’t pay it back, under my administration you will lose your capital. If you swindle someone under my administration, no matter how you do it, you will be indicted, arrested, tried and if convicted imprisoned and your assets will be stripped to pay back those who you stole from.
Finally, I will stop banks from lending out money on an unbacked basis unless they actually have capital or an asset valued at the market behind each and every loan, without exception, because what they have been doing for the last 30 years is functionally identical to counterfeiting of the United States dollar.
The stock market is likely to disapprove of this and I am telling you that I will do all of this in advance, so that you, like everyone else, can sell your stocks if you’d like. You should not buy stocks because The Fed and government will prop up prices, but rather because you believe in a company’s business prospects. Likewise, housing will likely fall dramatically in price, but you should buy a house to live in and raise your family, not as a form of speculation. If you do not own a house now, you would obviously like to have lower prices rather than higher ones, and if you do, and bought it as a place to raise your family then this adjustment should not bother you.
There are many people who will decry this approach, but it is the right thing to do. Nobody should be able to rob the public and get away with it. Further, your purchasing power will be restored; those of you who have saved and been prudent in your lives will find that your personal financial situation will improve significantly, while those of you who are in debt up to your eyeballs will still be as broke, but for this we have a solution in our bankruptcy courts – and you should use it rather than continue to suffer from creditors hounding you over bills you cannot afford to pay.
Next, I will dismantle the special monopoly-style protections that the health industry has lobbied for and accumulated. DVD players went from $1,000 to $50 in just a few short years. There is no reason that mature medical technologies like MRIs should not undergo the same sort of price decrease, and were there actual competition that’s exactly what would happen. These changes are too numerous to detail in one short speech, but you may rest assured that if there is a price protection law somewhere or restraint of trade is permitted, as of my inauguration day I will redress what I can by executive order and send to Congress and demand passage of bills to address the rest.
Finally, I will rationalize trade policy. The idea that we should embrace firms and nations that effectively enslave their population and pay them a $2/day wage while poisoning their air, water and land as a means of being “more competitive” is outrageous. As of my inauguration this will come to an end. The WTO can either recognize these practices for what they are or we will withdraw from it. America stands for fair competition and trade on a fair and even basis, not enslavement and poisoning the environment as a means of improving one’s competitive posture. This will serve to bring jobs home here to America, so that Americans are once again building the goods that Americans buy while earning an honest living doing so.
By restoring soundness to our capital markets and banking system we will make wealth accumulation via the formation of businesses and entrepreneurship the primary means by which people get ahead in America once again. This path forward is much more accessible to the ordinary American than trying to make money trading in a stock market rigged by Wall Street computers. In addition entrepreneurship and business formation always lift employment; jobs and the economy are what this race is and should be about.
The adjustment that will come from these policies in our economy will not be easy, but it is necessary. We face a choice — to allow our nation to be continually looted by a small cadre of bankers and Wall Street swindlers who promise Americans the moon and then repossess it from your hands, or to put a stop to these practices that have destroyed our competitiveness, grossly raised the price of housing, education and health care, led to rampant unemployment and now threaten to destroy the federal government’s and states ability to remain in operation.
In just a few short weeks you shall have to choose between bankers and Americans. Between Wall Street and Main Street. Between employment and the promise of a welfare check that will, in just a few more years, bounce. Between enslavement and freedom.
I know America will make the right choice.
As has been done hundreds of times before, we enter yet another election cycle to determine our civic leaders and reaffirm our principles as a Republic. This system is supposedly based on competition where one candidate squares off against another in a battle of ideas and the public is left to decide who will do the best job.
But what if there are no competitors?
That’s what I see right here in Okaloosa County. At least 13 local elections will be unopposed this year, including a state representative, the Clerk of Court, the Property Appraiser, and the Supervisor of elections.
Worse still, the Republican Party is the only one presenting candidates for Sheriff, Tax collector, Superintendent of Schools, and the County Commission seats. Although everyone can vote in a party primary if there are no other party candidates, the August primary races are, in effect, elections determined only by the Republican Party.
Of course, there are those who will say this serves the will of the people. The fact that the Republicans are so dominant means their ideas won out in the open marketplace. Our paradigm now is one party can serve all.
That is nonsense. Groupthink like that can only bring bad things for the Republic, and it only serves to stamp out the political competition that our county and our country need so desperately. As a former military man, I think of the quote by George Patton “When everyone is thinking the same thing, then nobody is thinking.”
Dominance by either the Republican or Democrat Party is the result of a series of barriers to political competition constructed by them over the last 150 years, each of which are not insurmountable but when taken together become formidable. Getting on the ballot can only be achieved now by great personal wealth or by organized political help, and laws place so many encumbrances on that organized political help that only the big two parties can routinely sustain them. This was a big reason why the local Tea Parties are organized as they are. Barriers also include laws that limit how much individuals can contribute to political action, and intricate Federal laws, such as the “Bipartisan” (not “Multipartisan”) McCain Feingold Act, that financially limits, and can thereby crush, a new political party for simply saying “Vote for Us!” Most importantly, the winner-take-all election laws, which dominate this country since the Civil War, automatically favor a two-party system. Taken together, these laws keep power in the hands of the established parties and discourage others.This is nothing new, and something most people intuitively know.
But it goes even farther. There are Justices of the Supreme Court who have openly said that part of their decision process is to maintain the two-party system in America, which is clearly not a part of our Constitution. Many individuals vote big party simply as a matter of tradition, perpetuating their dominance.
For all their strengths, The Tea Party, Occupy Wall Street, and the alphabet soup of other organizations, are not political competition. They are spectators in the crowd, or diners in a political restaurant whose menu is already chosen by the big parties. The only real competition comes from those willing to withstand all the official abuse, and put candidates on the ballot.
You pay a real price, daily, for these artificial limits on competition. Who speaks for those who want gambling in the City of Destin? Who speaks for those who want to prosecute the massive bank mortgage fraud that cost this County hundreds of thousands of dollars in taxes, and possibly hurt thousands of investors? Who will ever pit law enforcement against the blatantly illegal actions of the TSA in our very county? Who stands against the property tax which makes you a perpetual renter from the government? Who will end the government monopoly in education? Who is truly against Federal regulation of states? And who will be held accountable for County TDC employees run amok or for the financial disaster that is the Mid Bay Bridge? These are just to start.
Let’s face it; we are just going to get more of the same.
That’s what you get in a one-party system.
Pete Blome is a retired military officer and Chairman of the Libertarian Party of Okaloosa County.www.Libertarianpoc.org
This a three part series trying to make sense of the Crisis period we entered in 2008 from The Burning Platform.
“Human history seems logical in afterthought but a mystery in forethought. Writers of history have a way of describing interwar societies as coursing from postwar to prewar as though people alive at the time knew when that transition occurred.” – Strauss & Howe - The Fourth Turning
Watching pompous politicians, egotistical economists, arrogant investment geniuses, clueless media pundits, and self- proclaimed experts on the Great Depression predict an economic recovery and a return to normalcy would be amusing if it wasn’t so pathetic. Their lack of historical perspective does a huge disservice to the American people, as their failure to grasp the cyclical nature of history results in a broad misunderstanding of the Crisis the country is facing. The ruling class and opinion leaders are dominated by linear thinkers that believe the world progresses in a straight line. Despite all evidence of history clearly moving through cycles that repeat every eighty to one hundred years (a long human life), the present generations are always surprised by these turnings in history. I can guarantee you this country will not truly experience an economic recovery or progress for another fifteen to twenty years. If you think the last four years have been bad, you ain’t seen nothing yet.
Hope is not an option. There is too much debt, too little cash-flow, too many promises, too many lies, too little common sense, too much mass delusion, too much corruption, too little trust, too much hate, too many weapons in the hands of too many crazies, and too few visionary leaders to not create an epic worldwide implosion. Too bad. We’ve experienced horrific Crisis periods three times in the last 250 years and winter has arrived again exactly as forecasted by Strauss & Howe in 1997. The linear thinkers will continue to predict a recovery that never arrives. We have awful trials and tribulations, dreadful sacrifices of blood and treasure, and grim choices awaiting our country over the next fifteen years. Linear thinkers will scoff at such a statement as they irrationally view the world as a never ending forward progression towards a glorious future. History proves them wrong. We stand here in the year 2012 with no good options, only less worse options. Decades of foolishness, debt accumulation, and a materialistic feeding frenzy of delusion have left the world broke and out of options. And still our leaders accelerate the debt accumulation, while encouraging the masses to carry-on as if nothing has changed since 2008. Sadly, millions of lemmings want to believe they will not drown in the sea of un-payable commitments. Truth is a scarce resource on the planet today.
“Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed.” – Friedrich Nietzsche
Entire populations taking comfort in their illusions transcends centuries. This is because all humans are driven by their emotions and react to events and danger in a predictable manner depending on their stage of life. Strauss & Howe in their 1997 opus – The Fourth Turning – utilized decades of studying generational dynamics to anticipate when our next Crisis would arrive and what core elements would precipitate it:
“The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II.” – Strauss & Howe - The Fourth Turning
The American people are mentally ensnared by their decades of indoctrination from propagandists in government and on Wall Street, spoon fed to them by the corporate mainstream media. Many are afflicted with the diseases of normalcy bias and cognitive dissonance. Normalcy bias refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. The American people are mentally incapable of accepting the facts of our impending economic collapse. They somehow are able to convince themselves these facts as normal:
- We’ve increased our national debt by $5.6 trillion in the last three and a half years. It took from 1789 until 2000, two hundred and eleven years, to accumulate the first $5.6 trillion of debt.
- Our average annual deficit from 2000 through 2008 was $190 billion. Our average annual deficits since 2008 have been $1.3 trillion. Our deficits never exceeded 4% of GDP prior to 2008, but now they exceed 9%.
- The national debt will reach $20 trillion by 2015 and if interest rates normalized to the same level they were in 2007 (5%), annual interest expense would be $1 trillion, or 45% of current tax revenue.
- There are 242 million working age Americans and 100 million of them are not working. But don’t concern yourself. The Federal government reports that only 13 million of these people are actually unemployed. The other 87 million are just kicking back and living off their accumulated riches.
- The economic recovery has been so great that the 7.5 million people added to the Food Stamp rolls since the recession officially ended in December 2009 isn’t really an indication of severe stress among the 99%. Only 46.5 million Americans (15% of the population) need food stamps to survive.
- The unfunded liabilities of Medicare, Medicaid and Social Security exceed $100 trillion and cannot possibly be honored, leaving future generations to fend for themselves.
- Our leaders have fought two undeclared wars of choice since 2001 that have resulted in 6,400 unnecessary soldier deaths, 47,500 badly wounded, $1.3 trillion of borrowed treasure, with unfunded liabilities of at least $2 trillion more, and we are itching for more of the same with our coming war with Iran. A bankrupt empire still trying to police the world is the ultimate act of hubris.
- After causing a worldwide financial collapse in 2008 with their extreme risk taking, tangibly fraudulent mortgage schemes, and reckless pillaging of their clients and the American people, Wall Street used their complete systematic capture of our political and economic system to shift $8 trillion of toxic debt from their books onto the backs of American taxpayers. They have since become even more flagrant in their disregard for human decency by using the hundreds of billions in free money funneled to them by Ben Bernanke to take even bigger risks and pay themselves grander bonuses. Total unregulated derivatives (real WMD) outstanding now exceed $700 trillion.
- Since 2001 the Federal government has used fear to assume unprecedented and unconstitutional powers over the citizens of this country. They can now use surveillance to monitor your phones calls, emails, and websites visited, without warrants. You can be imprisoned without charges for as long as the government decides you are a threat. TSA agents molest little old ladies and children trying to fly on airplanes. The President can take over the entire economy through presidential decree. Predator spy drones can eliminate suspected terrorists whenever a general gives the command. An order for 30,000 spy drones to be flying over U.S. cities should make you feel safe. The $2 billion NSA Utah Data Gathering Center (code name Stellar Wind) will be able to intercept and store every electronic signal on the planet by 2013. Sacrificing liberty for perceived safety and security isn’t working out too well for the American people.
Anyone with an ounce of critical thinking skill would conclude our current situation is far from normal. We’ve become a cognitive dissonant nation. We convince ourselves the best way to solve a debt problem is to create more debt. We believe we are made safer by attacking foreign countries. We have convinced ourselves it makes sense for Too Big to Fail Wall Street banks that create systematic financial risk to get even bigger, after their fraudulent frenzy of greed virtually crashed our economic system. We actually believe the two party political system offers us a choice, when both parties genuflect to Wall Street, gratify corporate special interests, fight never ending wars, and spend money they don’t have. We choose to believe government statistics that claim inflation is running at 3%, when our everyday reality attests it to be 10%. We trust the Federal Reserve to maintain price stability even though their policies have resulted in a 97% depreciation in the U.S. dollar since 1913. We believe the future will be bright, even though 60% of workers have less than $25,000 in total savings.
In the ultimate example of cognitive dissonance the majority of Americans scorned and ridiculed the young people being beaten, maced and arrested for protesting the rampant criminality of the Wall Street 1%ers while supporting a billionaire banker bailout, 0% interest rates that punish senior citizens and savers while encouraging further debt accumulation, and not be outraged that not one criminal banker has gone to jail. They somehow are able to observe the data in the table below and still believe that America offers equal opportunity to everyone.
Americans have thus far been unable to deal with the reality of our desperate circumstances. They remind me of people who see the ocean recede from the shoreline and curiously venture out where the sea had flowed to pick up trinkets and pretty shells with no sense of what is truly happening. The deadly 20 foot high tsunami headed their way will be a complete shock when they are swept away in a torrent of bad debt and worthless currencies. We are about to enter phase two of this Fourth Turning Crisis still in denial and terribly unprepared for the frightful trials that await our nation. It’s not as if it hasn’t happened before, just like clockwork. William Strauss and Neil Howe were able to document turnings in Anglo-American history dating back to the 15th century. The life cycles of human beings and the moods of generations at different stages of their lives are consistent across time, resulting in predictable responses to events during a particular time frame. Fourth Turnings are a time of Crisis, danger and vulnerability. The Crisis periods in modern history are as follows:
- War of the Roses (1459 – 1487), Late Medieval Saeculum
- Armada Crisis (1569 – 1594), Reformation Saeculum
- Glorious Revolution (1675 – 1704), New World Saeculum
- American Revolution (1773 – 1794), Revolutionary Saeculum
- Civil War (1860 – 1865), Civil War Saeculum
- Great Depression & World War II (1929 – 1946), Great Power Saeculum
- Millenial Crisis (2008 – ????), Millenial Saeculum
Using a seasonal analogy, the Crisis is the wintry bitter dark era, where deadly blizzards rage and the citizens are pushed to the brink. In retrospect the three previous American Crisis periods seem easy to predict, but one year prior to their onset NO ONE could have predicted the epic sacrifices and horrific casualties of war to follow. In 1772 there were few people expecting America to declare independence and fight an eight year war for independence. In 1859 virtually no one expected the election of Abraham Lincoln as president and an ensuing war that would kill 700,000 American men. In 1928 no one imagined the stock market losing 89% of its value, an eleven year depression, and a world war resulting in over 60 million deaths. History is only logical in afterthought. The mystery of forethought is where we find ourselves today.
In a recent article, Neil Howe provided insight into why he believes the current Fourth Turning began in 2008, sixty-two years since the end of the Depression/WWII Crisis, which was sixty-four years after the Civil War Crisis, which was sixty-six years after the American Revolution Crisis:
“I believe the catalyst occurred in 2008. The year 2008 marked the onset of the most serious U.S. economic crisis since the Great Depression. It also marked the election of Barack Obama, which could yet turn out to be a pivotal realignment date in U.S. political history. In fact, if I had to give the catalyst a month, I would say September of 2008. The global Dow was in free fall. Banks were failing. Money markets froze shut. Business owners held their breath.” – Neil Howe – Dating the Fourth Turning
Howe uses the term catalyst to describe the trigger or event that initiates the Crisis. Strauss and Howe determined that a Crisis progresses through four stages during its life cycle, as described below:
- A Crisis era begins with a catalyst – a startling event (or sequence of events) that produces a sudden shift in mood.
- Once catalyzed, a society achieves a regeneracy – a new counter-entropy that reunifies and reenergizes civic life.
- The regenerated society propels toward a climax – a crucial moment that confirms the death of the old order and birth of the new.
- The climax culminates in a resolution – a triumphant or tragic conclusion that separates the winners from losers, resolves the big public questions, and establishes the new order.
We have countless valleys to cross and mountains to ascend before reaching our ultimate destination. There are no guarantees the outcomes will be positive or that the nation as we know it will even exist. It is certain that in twenty years the social order of this country will not resemble what exists today. The transformation could be positive or negative, depending upon whether we make the right choices during this Crisis.
“The nation could be ruined, its democracy destroyed, and millions of people scattered or killed. Or America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis; all they suggest is the timing and dimension.” – Strauss & Howe - The Fourth Turning
This is Part Two of a three part series trying to make sense of the Crisis period we entered in 2008.
Catalyst of Change
“As late as December 1773, November 1859, and October 1929, the American people had no idea how close it was. Then sudden sparks (the Boston Tea Party, John Brown’s raid and execution, Black Tuesday) transformed the public mood, swiftly and permanently. Over the next two decades or so, society convulsed. Emergencies required massive sacrifices from a citizenry that responded by putting community ahead of self. Leaders led, and people trusted them. As a new social contract was created, people overcame challenges once thought to be insurmountable – and used the Crisis to elevate themselves and their nation to higher plane of civilization.” – Strauss & Howe - The Fourth Turning
Anyone who hasn’t sensed a mood change in this country since the 2008 financial meltdown is either ignorant or in denial. Millions of Americans fall into one of these categories, but many people realize something has changed – and not for the better. The sense of pure financial panic that existed during September and October of 2008 had not been seen since the dark days of 1929. Our leaders used the initial terror and fear to ram through TARP and stimulus packages that rewarded the perpetrators of the financial collapse rather than helping the middle class who lost 8 million jobs, destroyed by Wall Street criminality. The stock market plunged by 57% from its 2007 high by March 2009. What has happened since September 2008 has set the stage for the next downward leg in this Crisis. The rich and powerful have pulled out all the stops and saved themselves at the expense of the many. Despite overwhelming proof of unabashed mortgage fraud, rating agency bribery, document forgery on a grand scale and insider trading based on non-public information, the brazen audacity of Wall Street oligarchs is reminiscent of the late stages of the Roman Empire.
The actions of the governing elite have provoked the darkening mood creeping across the land. The rise of the Tea Party in 2009 was fueled by anger over the bank bailouts, out of control federal spending and ever increasing taxes. The anger spilled over into town hall meetings, as Congressmen felt the wrath of public dissatisfaction. The fury propelled Tea Party Republicans to being elected in large numbers in 2010. But the movement was hijacked by the Republican establishment and defanged. As 2011 progressed, with Wall Street continuing to pillage the American middle class, the Occupy Movement spread to cities across America and around the world. The movement, led by Millenials, claims that mega-corporations and Wall Street manipulate the world in an unbalanced way that disproportionately benefits a super wealthy minority and is undermining democracy. They have shone a light upon the fact the 1% has used their wealth and power to plunder the national treasury, while impoverishing the 99%. The audacity of the 1% was on display for all to see when former Goldman Sachs CEO and former U.S. Senator Jon Corzine absconded with $1.2 billion of his customers’ money and continues to hide it in the vaults of his fellow robber baron Jamie Dimon at J.P. Morgan. To this day, no one has been jailed for this heist or any of the thousands of other crimes committed by the Wall Street titans. These psychopaths will not be satisfied until nothing remains of our country but a barren desert.
“They have plundered the world, stripping naked the land in their hunger… they are driven by greed, if their enemy be rich; by ambition, if poor… They ravage, they slaughter, they seize by false pretenses, and all of this they hail as the construction of empire. And when in their wake nothing remains but a desert, they call that peace.” – Tacitus, The Agricola and the Germania
A few weeks ago I watched The Grapes of Wrath movie for the first time in many years. The novel was written by John Steinbeck during the last Fourth Turning. It is as powerful today as it was in the 1941. It perfectly captures the mood of the country during the Great Depression. The message of the working class being exploited and manipulated by wealthy landowners resounds today. The Joads only sought an opportunity for a job, their own land, simple human dignity, and the chance for a better future. Wall Street has replaced the wealthy landowners as the exploiters of the working class. Steinbeck saw the Federal Government as a solution during the 1930s, but they are a major part of the problem today, as politicians have been captured by corporate and special interests. Their solutions do not benefit the average middle class American.
The feelings about our government and political system is reflected in Suzanne Collins’ Hunger Games novel, which captures the vein of government brutality, oppression of the working class, excessive wealth inequality, and the vapid shallowness of our American Idol culture. The Hunger Games was written in 2008 and the movie version has become a worldwide sensation. The immense divide between the wealthy ruling class, living an obscenely decadent lifestyle, and the exploited working class on the verge of starvation, is portrayed in a cruelly sadistic manner. The fact that it is appealing to Millenials and all generations says much about the changing of attitudes in the last four years. Hunger Games will be viewed as the modern day Grapes of Wrath by future generations.
There is no denying the darkening disposition of the country, except by those whose job it is to deny the reality of our deteriorating situation. Those whose power and wealth are dependent upon a citizenry being kept in the dark and convinced the way out of this mess is to resume spending borrowed money, have pulled out all the stops since the initial catalyst for this Fourth Turning struck with its full fury in 2008. The frantic efforts by those in power to prop up the status quo were predictable. If our leaders had dealt with the initial crisis in a realistic manner, many wealthy powerful men would have gone broke. They have been able to temporarily fend off a full-fledged catastrophe as predicted by Strauss & Howe:
“At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where, during the Unraveling, America will have neglected, denied, or delayed needed action. Anger at “mistakes we made” will translate into calls for action, regardless of the heightened public risk. It is unlikely that the catalyst will worsen into a full-fledged catastrophe, since the nation will probably find a way to avert the initial danger and stabilize the situation for a while. Yet even if dire consequences are temporarily averted, America will have entered the Fourth Turning.”
But they have solved nothing. In fact, they have exacerbated the problem areas of debt, civic decay and global disorder with their “solutions”. Our leaders have added $5.6 trillion to the National Debt; the Federal Reserve tripled their balance sheet by taking on $2 trillion of Wall Street toxic debt; the Federal Government assumed trillions in new debt by taking over Fannie Mae, Freddie Mac and Sallie Mae; and real GDP went up by a mere $103 billion (.8%) between the 4th quarter of 2007 and the 4th quarter of 2011. Rescuing the 99% was never the focus of their solutions. It was to save the bankers and wealthy investors (1%) who took the world destroying risks and should have borne the losses of their risk taking. The oligarchs have been wildly successful in this effort. The stock market has doubled from its lows. Borrowing at 0% from the Federal Reserve has done wonders for banker bonuses. Global disorder increases by the day, as politicians and bankers force austerity on their citizens, while continuing to harvest billions in profits and bonuses still waging wars of choice, further enriching the peddlers of debt and the peddlers of death (military industrial complex).
The Great Depression lasted from 1929 until 1940. The GDP of the country actually grew by 80% between 1933 and 1940. The stock market soared by 100% from the 1932 low to its 1933 high. It then soared another 100% from 1934 through 1937. Despite these fabulous economic statistics and investment riches scooped up by the 2.5% of the population that owned stocks, they still call this time period the Great Depression. With unemployment ranging from 15% to 25% during this entire time frame, the common man suffered greatly. There was no recovery for the 99%.
The net worth of the 99% is highly dependent on the value of their homes and their ability to increase their annual wages. Home prices have fallen 34% from their peak and continue to fall, recently reaching 2002 levels. Real median weekly earnings are lower than they were in 2003 and have fallen 3% since the economy supposedly entered its recovery in December 2009. Gas prices have doubled since early 2009. The 1% rejoices as they treat oil as an investment in their diversified portfolio. The 99% suffer as the average household is spending $2,500 per year more to fill up their vehicles. Food prices are up 15% to 25% in the last three years, even using the manifestly manipulated BLS figures.
It is essential for those in power to utilize their mainstream media propaganda machines, massaging of economic information and Ben Bernanke’s printing press to give the appearance of recovery to the masses. In the last three months the hyperbole and extreme spin from the corporate mainstream media has become exceedingly robust. It smells of desperation. Even as the media touts a recovery and Obama peddles drivel about millions of new jobs, Bernanke keeps the throttle of quantitative easing and zero interest rates wide open. Their actions are not consistent with their rhetoric. People who had jobs as accountants making $55,000 per year in 2007 are now stocking fertilizer in the garden center at Lowes making $20,000, with no benefits. This is the face of the jobs recovery. Only a corporate media doing the bidding of their masters could possibly rejoice at the February data showing consumers spending at a rate 450% higher than their income gains as a sign of recovery. There is a concerted effort to revive the auto market by the Federal Government (Ally Financial) and the Wall Street banks by employing exceptionally loose credit standards for auto loans and leases that are reminiscent of the subprime mortgage debacle. I’m sure it will turn out better this time. The downward spiral of trust is accelerating as predicted by Strauss & Howe:
“As the Crisis catalyzes, these fears will rush to the surface, jagged and exposed. Distrustful of some things, individuals will feel that their survival requires them to distrust more things. This behavior could cascade into a sudden downward spiral, an implosion of societal trust.”
The downward spiral of societal trust is well founded. The monied interests have captured the political process. The regulated have captured the regulators. Wall Street has always controlled the Federal Reserve. Corporations and the wealthiest among us select the politicians that will best serve their interests. The governing elite of psychopathic bankers, corrupt politicians, and powerful mega-corporations create crises, then save us from the crises they created, while accumulating more control, wealth and power. This perpetual swindle has been going on for decades and has reached its zenith as it did during the last Fourth Turning. Income inequality has reached the extreme levels last seen in the 1930s. The capitalism storyline has grown old and tired. Complete systematic capture is the reason for those at the top reaping all the benefits of our dysfunctional economic system.
The rampant mortgage fraud, the robo-signing crimes, trillions of shadowy derivatives, unfunded government pensions, unfunded Medicare and Social Security promises, and the bald-faced looting of customer accounts at MF Global have brought about a realization among those capable of critical thought that this Crisis is growing worse by the day. Strauss & Howe clearly understood the factors that would lead to this deficit of trust:
“But as the Crisis mood congeals, people will come to the jarring realization that they have grown helplessly dependent on a teetering edifice of anonymous transactions and paper guarantees. Many Americans won’t know where their savings are, who their employer is, what their pension is, or how their government works. The era will have left the financial world arbitraged and tentacled: Debtors won’t know who holds their notes, homeowners who owns their mortgages, and shareholders who runs their equities – and vice versa.”
Here we stand, three and a half years since the catalyst of this Crisis. What event or events will produce the regeneracy stage of this Fourth Turning and when can we expect its arrival? I’ll try to make some educated guesses in Part Three of this series.
This is Part Three of a three part series trying to make sense of the Crisis period we entered in 2008.
“Soon after the catalyst, a national election will produce a sweeping political realignment, as one faction or coalition capitalizes on a new public demand for decisive action. Republicans, Democrats, or perhaps a new party will decisively win the long partisan tug of war. This new regime will enthrone itself for the duration of the Crisis. Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Where leaders had once been inclined to alleviate societal pressures, they will now aggravate them to command the nation’s attention. The regeneracy will be solidly under way.” – Strauss & Howe – The Fourth Turning
The 2008 election happened in the midst of the catalyst events. A sweeping political realignment did not occur. In fact, the 2010 mid-term elections produced a result which has essentially gridlocked the political process in Washington D.C. The reunification and reenergizing of society has yet to occur. Neil Howe in his recent article pondered the question of regeneracy:
“We may like to imagine that there is a definable day and hour when America, faced by growing danger and adversity, explicitly decides to patch over its differences, band together, and build something new. But maybe what really happens is that everyone feels so numb that they let somebody in charge just go ahead and do whatever he’s got to do. I’m thinking of how America felt during the bleak years of FDR’s first term, or during Lincoln’s assumption of vast war powers after his repeated initial defeats on the battlefield.
The regeneracy cannot always be identified with a single news event. But it does have to mark the beginning of a growth in centralized authority and decisive leadership at a time of great peril and urgency. Typically, the catalyst itself doesn’t lead directly to a regeneracy. There has to be a second or third blow, something that seems a lot more perilous than just the election of third-party candidate (Civil War catalyst) or a very bad month in the stock market (Great Power catalyst). We are still due for such a moment. We have not yet reached our regeneracy. When it happens, I strongly suspect it will be in response to an adverse financial event. It may also happen in response to a geopolitical event. It may well happen over the next year or two.” – Neil Howe – Dating the Fourth Turning
Regeneracy occurred within five years of the outset of the three previous Crisis periods in U.S. history. The historic year of 1776 saw the colonies come together and declare independence from Great Britain. Group solidarity and willingness to die for their cause launched an eight year war and ultimately the formation of a new republic. The Civil War regeneracy occurred after the Union debacle at Bull Run in 1861. The Washington aristocrats had treated the battle like a show, where they could bring a picnic lunch and be entertained by an entertaining skirmish between two armies. After the resounding bloody defeat Abraham Lincoln assumed dictatorial like powers over the North and ordered the immediate enlistment of a half a million soldiers. He assumed unprecedented powers of taxation, forced conscription, suspension of due process and showed a willingness to administer maximum destruction to his foes. This would be no picnic in the park, as 700,000 men died in the next three years. The regeneracy during the Great Depression/WWII Crisis occurred in 1933 with the election of Franklin Roosevelt. He immediately declared a bank holiday and confiscated all the gold in the country. In a flurry of executive orders and bills sent to Congress he rammed through his New Deal, assuming new and broader powers for the Federal government and Executive branch.
Based on these examples in American history it is clear we have not entered the regeneracy stage of this Crisis. Also based on history, it is likely to occur by the end of 2013. A second blow to our nation and our psyches is the only thing that could possibly bring together a deeply divided nation. The country was struck by a category 3 hurricane in 2008. We have been in the eye of the hurricane for the last two years and have grown complacent. The eye will pass over us in the next year and we will again be buffeted by hurricane force winds – except the hurricane has strengthened to a category 5 as the “solutions” to the storm will make part two far worse. Those with a libertarian mindset are not likely to be happy with the Federal government and President taking on even greater powers in the coming years. The usurpation of more control over the citizens of this country in the last decade has been one of the major reasons for the ratcheting down of trust in our leaders. The upcoming presidential election will likely create the dynamic that propels the country into its regeneracy. If the next downward blow can be averted before the election, the country will end up with four more years of Obama. If the Crisis suddenly worsens before November, Romney assumes the mantle of Prophet Leader in January 2013.
I agree with Neil Howe that the country’s reaction to an adverse financial event will be the likely regeneracy moment. The explosive mixture of the five D’s will provide the spark for the next phase: Debt; Derivatives; Default; Devaluation; and ultimately Depression. There is no way to deny the $15.6 trillion of debt this country has accumulated, with $10 trillion of it added since 2000. The debt ceiling of $16.4 trillion will be breached in October 2012 at the current rate of extreme spending. This should set up an interesting dynamic just prior to the November elections. A replay of the August 2011 showdown could be disastrous for Obama if the stock market were to crater again.
We are accumulating debt at a rate of $3.7 billion per day, or $154 million per hour. No politician of either party, other than Ron Paul, has any plan to even moderate the spending, let alone make actual cuts. The CBO projections rolled out by these congressional weasels aren’t worth the paper they are printed on. The National Debt is on track to surpass $20 trillion in 2015 and $25 trillion by 2018. And this is before the Medicare and Social Security costs blast into orbit in 2020. Kicking the can down the road works until math catches up with you. It is insane to believe we can dig ourselves out of this debt induced mess with more debt, but empires tend to act insanely in their death throes.
“In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.” – Friedrich Nietzsche
Strauss & Howe made preparation recommendations back in 1997 that would have lessened the impact of this Crisis, but they fell on deaf ears. Their common sense suggestions included:
- Work to elevate moral and cultural standards. Toddlers with Tiaras and The Kardashians were not an elevation.
- Shed and simplify the federal government by cutting back sharply on its size and scope.
- All levels of government should prune legal, regulatory and professional thickets.
- Politicians should define our challenges bluntly and stress duties over rights.
- Require community teamwork to solve local problems without federal government intervention.
- Treat children as the nation’s highest priority.
- Tell future elders they will need to be more self-sufficient, save more, and expect fewer entitlements.
- Shift government pension plans from defined benefit plans to defined contribution plans.
- Begin to trim Medicare, Medicaid and Social Security benefits.
- Raise the national savings rate, reduce consumption and work towards federal budget surpluses.
- Expect the worst, conserve our forces, and be prepared for an epic struggle down the road.
I would reckon we went 0 for 11 on the preparation front. We took the exact opposite course in most cases. Each generation has their own crosses to bear. No one will escape the bitter gale force winds of this Crisis. Strauss and Howe must have had a crystal ball looking fifteen years into the future when they made this supposition:
“The Boomers’ old age will loom, exposing the thinness in private savings and the unsustainability of public promises. The 13ers will reach their make or break peak earning years, realizing at last that they can’t all be lucky exceptions to their stagnating average income. Millenials will come of age facing debts, tax burdens, and two tier wage structures that older generations will now declare intolerable.”
Thus far the older generations have refused to yield. They demand promises made be promises kept. The Boomers did not save enough to sustain themselves during their retirement. Many are entirely reliant upon Social Security and Medicare as their only savings and health insurance. Generation X is caught between aging parents and indebted jobless children. The Millenials are saddled with $1 trillion of student loan debt and few decent job opportunities. In prior Fourth Turnings the Prophet generation led and the Hero generation followed, doing the heavy lifting. This dynamic is yet to be realized during this Crisis. Maybe the regeneracy event will create this dynamic.
That event will likely be triggered by another debt crisis. Rogoff and Reinhart studied 44 countries over 200 years and concluded that once government debt exceeded 90% of GDP economic growth slowed and the likelihood of disaster rose dramatically.
“Those who remain unconvinced that rising debt levels pose a risk to growth should ask themselves why, historically, levels of debt of more than 90% of GDP are relatively rare and those exceeding 120% are extremely rare. Is it because generations of politicians failed to realize that they could have kept spending without risk? Or, more likely, is it because at some point, even advanced economies hit a ceiling where the pressure of rising borrowing costs forces policy makers to increase tax rates and cut government spending, sometimes precipitously, and sometimes in conjunction with inflation and financial repression (which is also a tax)? Historical experience and early examination of new data suggest the need to be cautious about surrendering to “this-time-is-different” syndrome and decreeing that surging government debt isn’t as significant a problem in the present as it was in the past.”
On this date the U.S. debt to GDP ratio is 102%. Our debt accumulation is on automatic pilot and the national GDP is incapable of growing above 3%. Anyone with the most basic math skills (this excludes Wall Street economists, CNBC bimbo anchors, and Bernanke) can determine the ratio will pass 120% in 2015. This doesn’t even include the Fannie, Freddie, and Student Loan debt that are guaranteed by the Federal government, along with trillions of unfunded social program liabilities and state and local debts. In reality the true debt obligations of this country exceed 500% of GDP, as no politician plans to willingly renege on Medicare and Social Security promises made to voters who would boot them if they voted to cut these entitlements.
The linear thinking deniers of reality (Krugman) will use Japan as their example of a country whose debt ratio is above 200%, without disastrous consequences. I guess a 22 year recession is not considered disastrous. Japan has been able to fund themselves internally because their citizens had a 15% savings rate in and they have run gigantic trade surpluses for decades. That game is over and they will hit the wall in the near future. The savings rate in the U.S. is 3.7% and we run $550 billion trade deficits, or 3.7% of GDP. The United States has no advantages other than the U.S. dollar currently being regarded as the worldwide reserve currency. We are hanging our hat on being the best looking horse in the glue factory.
The cracks in the façade are already painfully visible. The U.S. ran a $1.4 trillion deficit in 2009; $1.3 trillion in 2010; and $1.3 trillion in 2011. In the chart below you can see foreigners’ appetite for U.S. debt since 2007 has plunged. Maybe it has something to do with getting a negative real return by investing in U.S. Treasuries paying 2%. Maybe it has something to do with Ben Bernanke attempting to inflate away our debt burden. Maybe it has something to do with Congress and the President accelerating spending and creating massive deficits for as far as the eye can see. Maybe they are losing trust and confidence in the American Empire.
In the last three years we have run $4 trillion in deficits and foreigners have only funded $1.4 trillion of that debt. That means someone else had to buy $2.6 trillion of our long term Treasuries. Some of it was funded by little old ladies and pension funds that are setting themselves up for enormous losses. The vast swath was purchased by Ben Bernanke with his QE for eternity programs. As foreigners rationally reduce their Treasury holdings and we continue to run $1.3 trillion deficits, Bernanke must keep buying the debt. This cycle will continue until we reach our Minsky Moment, then Strauss & Howe’s forecast will be realized:
“This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on.” - Strauss & Howe – The Fourth Turning
Who will buy our debt in the coming months and years? Europe is saturated with debt and doesn’t have the means to purchase our debt. Japan is a train wreck waiting to happen. China’s customers aren’t buying their crap, so their economic miracle is about to go in reverse. The Federal Reserve cannot buy $1 trillion of Treasury bonds per year forever without creating more speculative bubbles and raging inflation in the things people need to live. The Minsky Moment will be the point when the U.S. Treasury begins having funding problems due to the spiraling debt incurred in financing perpetual government deficits. At this point no buyer will be found to bid at 2% to 3% yields for U.S. Treasuries; consequently, a major sell-off will ensue leading to a sudden and precipitous collapse in market clearing asset prices and a sharp drop in market liquidity. In layman terms that means – the shit will hit the fan. The Federal Reserve and Treasury will be caught in their own web of lies. The only way to attract buyers will be to dramatically increase interest rates. Doing this in a country up to its eyeballs in debt will be suicide. We will abruptly know how it feels to be Greek.
Linear thinkers like Krugman and most of the mainstream media opinion leaders can’t fathom the possibility of a complete collapse of our economic system. Most of their little models and economic data points don’t even go back to the last Fourth Turning period. They make projections about a housing recovery based on historical data that starts in 1962. Housing sales linger at historical lows with mortgage rates at 4%. The entire housing market would cave in if mortgage rates reached 6%, where they were in 2008. The forty year average mortgage rate has been 9%. Everything about our economic system is abnormal. Even reversion to the mean would be disastrous. The Minsky Moment headed our way will not be a single uncorrelated event. The entire financial world is hopelessly entangled by the $700 trillion of derivatives that ensure mass destruction if one of the dominoes falls. This is the reason an otherwise inconsequential country like Greece had to be “saved”.
Everyone knows Greece, Portugal, Spain and Italy are broke. One or more will eventually default on their debt. It is highly likely that a butterfly will flap its wings in Europe and cause a hurricane in the U.S. The default will spark a worldwide contagion as trust in a system of false promises disintegrates. China’s already crumbling real estate market will implode. As interest rates soar and stock markets plunge, global tensions will intensify. Continued oil supply constraints will be the cherry on top. Based on historical precedent, this is likely to strike before 2014 arrives. The wealth destruction and pain will be so intense a regeneracy will be at hand. Our very survival will feel at stake.
“Eventually, all of America’s lesser problems will combine into one giant problem. The very survival of the society will feel at stake, as leaders lead and people follow. The emergent society may be something better, a nation that sustains its Framers’ visions with a robust new pride. Or it may be something unspeakably worse. The Fourth Turning will be a time of glory or ruin.” - Strauss & Howe – The Fourth Turning
And here is the rub for those who argue for less government intervention in our lives. Which leaders will lead and who will follow? The actual events do not matter as much as how the people react to the events. Fourth Turnings are always chaotic and tumultuous. In the frenzied period during the next leg down, people will demand order. They will call for the government to do something. Obama or Romney will use the fear and uncertainty to assume more power over our lives. Executive orders, new legislation, and another stripping of our liberties will be attempted. How the generational cohorts react to these deeds will determine what happens next. There are 97 million Millenials, 83 million Generation X and 73 million Boomers. The Boomers hold most of the positions of power, but their credibility as leaders has been damaged by their actions over the last two decades.
How the Millenials react to Boomer commands will determine the course of this Fourth Turning. The great devaluation will provide our leaders the opportunity to address the structural imbalances that haunt our nation. They could force Wall Street bankers, shareholders and bondholders assume their losses. They could rewrite the social contract with all generations, balancing the needs of elders with the futures of our youth. They could dramatically scale back the military industrial complex. They could completely scrap the ridiculous tax code and shift from taxing income to taxing consumption. They could revamp our political system and remove money from the political process. They could choose to balance budgets and reduce the size of government. They could ask for proportional sacrifice from everyone in order to keep this ship from sinking. If you believe this will happen, I have nice home near an Iranian nuclear power plant I’d like to sell you.
The regeneracy does not mean the actions taken by our leaders will be wise, well thought out, rational or beneficial to all people. Many believe the actions taken by Abraham Lincoln and Franklin Roosevelt during the previous Fourth Turning Crisis periods were detrimental, foolish, and enhanced the power of the state at the expense of liberty for the people. The leader when the regeneracy events strike is more likely to respond with more government control as the solution. He will invoke executive orders giving government control over important industries and crucial institutions. The government politician leaders will pick the winners and losers, with their cronies and contributors winning again. Dissent will not be acceptable. The NDAA will be invoked to imprison those who disagree with the mandates handed down by those in power. Congress would pass SOPA and lock down the internet and shutdown any websites they consider dangerous to their central authority. Lastly, with the biggest and baddest military machine on earth, the leader will attempt to rally the masses and distract them from our dire economic situation by seeking an external threat to confront. It just so happens that China is also in the midst of their own Fourth Turning. History has shown that armed confrontation is likely around the climax of the Crisis:
“History offers even more sobering warnings: Armed confrontation usually occurs around the climax of Crisis. If there is confrontation, it is likely to lead to war. This could be any kind of war – class war, sectional war, war against global anarchists or terrorists, or superpower war. If there is war, it is likely to culminate in total war, fought until the losing side has been rendered nil – its will broken, territory taken, and leaders captured.” - Strauss & Howe – The Fourth Turning
No one knows the exact events that will mark this Crisis period in our history. But there is no turning back. We’ve entered the Winter season and the beautiful calm days of autumn are long past. Nothing but turmoil, bitterness and sacrifice lie ahead. We entered this Winter of our discontent unprepared like the grasshopper in the fable. This has insured this Crisis will be far worse than it needed to be. The grasshoppers want solutions and easy answers to problems created over decades of ignorance, sloth, greed and stupidity. It’s too late. There are no easy answers and the solutions are all painful and bitter. This is not some theoretical exercise. This is the reality of our situation. I have three teenage sons and their futures depend on the outcome of this Crisis. I will do whatever it takes to support them. I will not allow them to be cannon fodder in some war for oil in the Middle East. If their future requires me to oppose a tyrannical government, so be it. If their future requires me to give up my Social Security and Medicare security blanket, so be it. If I have to die so they may live, so be it. There are no guarantees in this life. We get about 80 years on this planet to make a difference. The choices we make in the next few years will matter. Are you ready? I am.
“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.” - Strauss & Howe – The Fourth Turning