From Prophet to Profit(less)
I have mentioned the 1997 book The Fourth Turning (recommended by reader Matt S.) in regards to long cycles of human behavior/history. The authors also describe the characteristics of four repeating generational types.
Within this cycle of four generations, the 76-million strong Baby Boomers (roughly those between the ages of 43 and 61, e.g. born 1946-1964) are Prophets. Raised in an era of Awakening, which in our case was the 1960s/early 1970s, Prophet generations are (according to the authors) stridently anti-institution, taken with religious/spiritual beliefs and hence judgmental, argumentative and hypocritical.
Does anyone else think they've nailed "our" generation to a T?
Recall that "Jesus Freaks" of the late 60s/early 70s launched what is now recognized as a massive revival of a multi-layered pentecostal Christianity, and the intense interest in Eastern/Asian religions and spiritual practices which continues to this day began in that same timeframe.
Also note that the "hosts" (as in hosting a disease) of talk shock/stupidity/crudity radio and TV are all Boomers who love to pass judgment on all lesser mortals with vituperative glee and love to shout down any opposing views.
Although there may be more hypocritical generations in American history, none come to mind.
Here we have a "religious" generation seeking inner salvation--who now builds palatial mega-churches.
Here we have a generation energized by the first Earth Day in 1970--who bought inefficient, wasteful SUVs and McMansions in the millions.
Here we have a generation who sought to tear down/reform institutions--who now "game the retirement system" of those same institutions to draw 30 years of salary and generous benefits after working a mere 20 years.
Here we have a generation who sought to stop a grinding overseas adventure war sold on noble premises--who have stood by and let their children be ground up in the thousands by their clueless political leaders.
Here we have a generation who sought to reform an out-of-touch "back room" political culture-- who elect do-nothing Congresses who avoid big, critical issues (the war, Medicare, Social Security, budget deficit, etc.) in favor of tweaking procedures and funding special interests.
Here we have a generation who is self-righteous about their causes--but who live more opulently and self-indulgently than any previous generation.
Here we have a generation who claimed to "care"--who are delighted to saddle their children and grandchildren with trillions in new debt.
Here we have a generation who embraced a "back to the land" philosophy of self-sustainability in their youth--who now throw away vast quantities of food as if it were trash and spend hundreds of dollars on a single meal of "fine dining".
I could go on, but you get the idea. But unfortunately for the Boomers--and fortunately for their grandchildren--the axe is about to fall on their Crystal Palace of debt and self-indulgence.
For it falls to the Boomers to lead, and make the necessary sacrifices, to get the nation through the next Fourth Turning, the period of cultural and financial crisis looming just ahead.
If we take the Biblical measure of "seven fat and seven lean years," it's clear we've enjoyed three series of fat years in a row, starting with the Great Bull Market in 1982 and leading up to the present. The recession of 1990-91 was a modest affair, and so younger people have no memory of the crushing unemployment of the 1980-82 recession or the fear and loathing of the 1973-74 recession/gas crisis.
It doesn't take much imagination to suspect that we might be in for a "double" (14 years of decline, malaise and financial crises) after luxuriating in a "triple" of good fortune. Given the gargantuan debts of the public and private sector, and the other structural problems covered here over the past two years, it doesn't take much to discern the causes of the coming "long crisis:" debt implosion, currency devaluation, inflation, credit tightening, housing, credit, bond and stock market busts, Medicare ballooning to unaffordability, pension-fund bankruptcies, rising crime, rising interest rates, rising energy costs and the usual mix of geopolitical tensions which could erupt into regional conflagrations.
The Boomers will not choose to forego their pensions and Medicare benefits: that decision has already been made by demographics and by our short-sighted, ballooning deficits/current consumption of future earnings.
Although this may sound absurd if you base your predictions on the past 25 years of global prosperity, I predict that virtually every pension fund, public and private, in the U.S. will be bankrupt within 15 years. And by bankrupt I don't mean drained of all assets--I mean every fund will be unable to meet its obligations: their liabilities will far exceed their assets.
I also predict that the rosy predictions offered by soothsayers that Medicare will be funded through 2030 with no real problems will be revealed as wishful thinking bordering on the fraudulent. As tax revenues shrink, and as the interest on the National Debt rises along with interest rates, Medicare will topple under its own weight within 5-6 years.
In 15 years, nurses and doctors will be making housecalls (again) and we'll be paying them in cash. If you need an operation, you'll go to an offshore hospital or to a local stripped-down clinic; either way, you'll be paying cash.
People will finally be able to lose weight because food will be too expensive to waste.
Overseas tourism will be reserved for the few with that much surplus cash (or gold which can be turned into cash).
The Dow Jones Industrial Average will hit 3,000 (a loss of 77%) and gold will be $3,000 /ounce. Please note that in 1981, the Dow was 800 and gold was $800/ounce. It happened before, and will happen again.
All of this sounds like nonsense if you extrapolate the present into the future. But the seeds of a major transition/period of crisis have been sown for years; soon, the first shoots will rise out of the complacent ground and we will be able to discern the future we will have to reap.
Before you dismiss this entirely, read this essay from Financial Sense which was recommended to me by John B. and U. Doran:
HEADWATERS OF DISASTER Allow me to quote:
Here in 2007, the bets have been made and the losses are coming. America has yet to wake up. It will. Be prepared. It’s going to get ugly.
Frequent contributor Jed H. offered his first Haiku ever on the Black Swan theme:
I'm sending a link below RE: subprime woes at Bear Stearns worsening !! I have NEVER Written HAIKU, but Here Goes:
House of Cards Quaking
Foundation Cracks & Sinking
Three BLACK SWANS Circle
Bear Stearns Blocks Withdrawals From Third Hedge Fund
Great first Haiku, Jed! As a special treat, I reprint here a photo of an actual black swan taken by longtime correspondent Ben Z:
And regarding yesterday's entry on poor quality appliances, we get a Wall Street Journal followup:
Energy-Efficient Devices Flood Market, but Some Owners Find Results Fall Short of Promises
Hmm, why are we not surprised?
Supplementing the entry this week on the "long war," frequent contributor/essayist Protagoras wrote:
"I would also recommend A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East , Fromkin’s book on how Iraq and the region got in the mess they are in, particularly the formation of Iraq in the rubble of the Ottoman Empire, and its creation by the British, how they also tried 'democracy' and failed . . . "
Knowledgeable reader ATRM added this note:
"Having read three of these books, I would highly recommend all of them: "
Imperial Hubris: Why the West Is Losing the War on Terror by Michael Scheuer, State of Denial: Bush at War, Part III by Bob Woodward and Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War by Michael Isikoff and David Corn.
Another Michael Scheuer book with favorable reviews is Through Our Enemies' Eyes: Osama bin Laden, Radical Islam, and the Future of America
And lastly, here is a haiku I wrote after mulling over the "long war":
The rank bloom of war
our winter of discontent
fear, fear, fear, fear, fear
Friday, August 03, 2007
From Prophet to Profit(less)
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