Tag Archives: Great Depression

The Fourth Turning

Posted by on June 9, 2013 Comments Off

The Fourth Turning is an amazingly prescient book Neil Howe wrote with the late William Strauss in 1997. The work, which describes generational archetypes and the cyclical patterns created by these archetypes, has been an eye-opener to anyone able to entertain the notion that history may repeat itself. At the time the book was published, the Boston Globe stated, “If Howe and Strauss are right, they will take their place among the great American prophets.” Read this visionary interview published in The Casey Report, and see for yourself.

DAVID GALLAND:
Could you provide us a quick introduction to generational research?

Into the Fourth Turning: An Interview With Neil Howe

More about the Fourth Turning

“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

Strauss & Howe wrote these words in 1997. They had predicted the arrival of another Crisis in this time frame in their previous book Generations, written in 1990. This wasn’t guesswork on their part. They understood the dynamics of how generations interact and how the mood of the country shifts every twenty or so years based upon the generational alignment that occurs as predictably as the turning of the seasons. The last generation that lived through the entire previous Crisis from 1929 through 1946 has virtually died off. This always signals the onset of the next Fourth Turning. The housing bubble and its ultimate implosion created the spark for the current Crisis that began in September 2008, with the near meltdown of the worldwide financial system. Just as the stock market crash of 1929, the election of Lincoln in 1860, and the Boston Tea Party in 1773 catalyzed a dramatic mood change in the country, the Wall Street created financial collapse in 2008 has ushered in a twenty year period of agony, suffering, war and ultimately the annihilation of the existing social order.

Guest Post: Will A Prophet Assume Command? | Zero Hedge

Related articles: Fourth Turning

Is Wall Street Still “Untouchable”? | The Untouchables | FRONTLINE | PBS

Posted by on May 22, 2013 Comments Off

This fall will mark the five-year anniversary of Lehman Brothers filing for bankruptcy, sparking the biggest financial crisis since the Great Depression. When the anniversary hits, many legal experts agree, any chance federal prosecutors will have had to hold Wall Street accountable will have come and gone with the passing of the statute of limitations.

So is Wall Street breathing a sigh of relief?

In The Untouchables, which re-airs tonight on FRONTLINE (check local listings), correspondent Martin Smith examines why not one major Wall Street executive has been prosecuted for fraud tied to the sale of bad mortgages.

Many of the same issues examined in the film will take center stage tomorrow during a hearing of a House Financial Services Subcommittee. Among the questions expected to come up is which outside experts the Justice Department consults with when considering whether to prosecute large financial institutions.

That question first drew the attention of lawmakers shortly after the The Untouchables premiered. A week after the film, Senators Sherrod Brown (D-Ohio) and Chuck Grassley (R-Iowa) sent a letter to Attorney General Eric Holder asking whether the “too big to fail” status of some banks undermines the government’s ability to prosecute wrongdoing.

The letter cited remarks made in the above excerpt from the film by Lanny Breuer, the former head of the Justice Department’s criminal division. Breuer told FRONTLINE:

Is Wall Street Still “Untouchable”? | The Untouchables | FRONTLINE | PBS

Watch The Untouchables on PBS. See more from FRONTLINE.

UBS: Stocks Could Plummet 42% From Here, Our Studies Are ’100% Accurate Going Back To The 1800s’

Posted by on January 17, 2013 Comments Off

From KingWorldNews.com:

Peter Lee: We are about to enter this convergence period, and we suspect in the second half of this year and into 2014 we will see a great deal of major movements in these financial markets.  The charts below go back to the Great Depression when we had an 85% drop in the S&P.
…
The most recent test was the March 2009 low at 666 on the S&P.  At that time the trendline was up into the low 600s, at 620, 630.  So we were within striking distance during that panic.  This 1942 trendline should be somewhere in the 850 area or above by 2014 (this would represent a horrendous drop of roughly 42% on the S&P).
…
Eric King:  “Either way we are in for one hell of a rough ride for equities.”

Lee: “We’re not done yet.  Everyone thinks that we’re nearing the end of the bear market, or structural sideways trading market.  We suspect we probably have another 5 to 8 years of this.  No one wants to hear this call because investors have already been frustrated by the last 13 years.

We have run a number of internal studies dating back to 1800, and the track record has been 100% accurate.  Every single time we have overextended market to the upside, we see a ‘mean reversion’ back to normal levels.  Again, this is 100% accurate going back to the 1800s.”

UBS’s Lee On S&P 500 1942 Trendline – Business Insider

Michael Barone: History suggests that era of entitlements is nearly over | WashingtonExaminer.com

Posted by on January 15, 2013 Comments Off

The author notes a 76-year repeating cycle in America with the most current cycle nearing an end. Generally, there is a build up of tension that gets released after 76 years, and the cycle starts all over again after a crash. So there are real reasons for these cycles – not just an alignment of the stars.

1. The American Revolution
2. Civil War
3. Great Depression plus World War II

Notice how these cycles always seem to end in war.

Two historians in the Fourth Turning noted an 80 to 100 year repeating cycle. Each phase lasts 20 years. The last phase is called the crisis phase. According to the two historians who wrote the Fourth Turning in 1997, we would enter a crisis phase in 2005. It would last until 2025.

The original arrangements in each 76-year period became unworkable and unraveled toward its end. Eighteenth-century Americans rejected the Colonial status quo and launched a revolution, then established a constitutional republic.

Nineteenth-century Americans went to war over expansion of slavery. Early-20th-century Americans grappled with the collapse of the private-sector economy in the Depression of the 1930s.

We are seeing something like this again today. The welfare state arrangements that once seemed solid are on the path to unsustainability.

Entitlement programs — Social Security, Medicare, Medicaid — are threatening to gobble up the whole government and much of the private sector, as well.

Lifetime employment by one big company represented by one big union is a thing of the past. People who counted on corporate or public-sector pensions are seeing them default.

Looking back, we are as far away in time today from victory in World War II in 1945 as Americans were at the time of the Dred Scott decision from the First Inaugural.

We are as far away in time today from passage of the Social Security in 1935 as Americans then were from the launching of post-Civil War Reconstruction.

Nevertheless our current president and most politicians of his party seem determined to continue the current welfare state arrangements — historian Walter Russell Mead calls this the blue-state model — into the indefinite future.

Some leaders of the other party are advancing ideas for adapting a system that worked reasonably well in an industrial age dominated by seemingly eternal big units into something that can prove workable in an information age experiencing continual change and upheaval wrought by innovations in the market economy.

The current 76-year period is nearing its end. What will come next?

Michael Barone: History suggests that era of entitlements is nearly over | WashingtonExaminer.com

Pearl Harbor’s greatest lesson | Fox News

Posted by on December 7, 2012 Comments Off

The greatest lesson of Pearl Harbor is that the unthinkable can suddenly become thinkable. Better to be prepared than sorry. 9/11 reminds us of this lesson.

From the article:

Perhaps the greatest lesson of Pearl Harbor is that nothing is impossible for the American people. 

The most amazing transformation in American history may be the 1,366 days between December 7, 1941, and September 2, 1945—and the speed with which the Axis powers were reduced to ruin once the United States entered the Second World War. During this time, the tremendous outpouring of America’s industrial strength in ships, planes, tanks, and other armaments was exceeded only by the bravery and determination of the nation’s men and women. 

They were a “can-do” generation who did not take “no” for an answer. They did not put off until tomorrow what needed to be done today. We should remember their resolve, honor their commitment, and seek to emulate their example. They truly were the greatest generation.

Pearl Harbor’s greatest lesson | Fox News

Why did Pearl Harbor happen?

The attack on Pearl Harbor was a preventive or pre-emptive strike to keep the U.S. Pacific Fleet from influencing the war the Empire of Japan was planning to wage in Southeast Asia. The American empire was perceived to be in decline by the Japanese because of the Great Depression. Japan itself was rising rapidly. An attack was thought to keep out the US.

Do you notice the similarity between China today and the Japan that attacked Pearl Harbor?

The Attack on Pearl Harbor

The attack on Pearl Harbor (or Hawaii Operation, Operation Z, as it was called by the Japanese Imperial General Headquarters) was an unannounced military strike conducted by the Japanese navy against the United States’ naval base at Pearl Harbor, Hawaii, on the morning of Sunday, December 7, 1941 (Hawaiian time, December 8 by Japan Standard Time), later resulting in the United States becoming militarily involved in World War II. It was intended as a preventive action to keep the U.S. Pacific Fleet from influencing the war the Empire of Japan was planning to wage in Southeast Asia against Britain, the Netherlands, and the United States. The attack consisted of two aerial attack waves totaling 353 aircraft, launched from six Japanese aircraft carriers.

The Crisis of Globalization | The National Interest

Posted by on October 18, 2012 Comments Off

Entitled in print “Bye-bye, globalization,” the piece argues that the world has reached the end of a marvelously heady time. The era of globalization, says Smick, is now “cracking up.” He adds ominously: “And there appears to be no new model to replace it.”

Here at The National Interest, we remain always attuned to arguments that major changes are coming to the national political order and the prevailing global order. Some months back, we produced a special magazine issue under the rubric “Crisis of the Old Order.” We argued that the Old Order, a remarkably stable and bounteous time fashioned through the crucibles of the Great Depression and World War II, was crumbling. The status quo, we said, could not hold, and a new order would have to emerge to replace the old.

The only question, we suggested, was how much disruption, economic travail and bloodshed would attend the transition from the old order to the new. On the question of economic travail, Smick seems to be saying it will be substantial.

…

…

The result is likely to be rising geopolitical tensions, …

Commentary: The Crisis of Globalization | The National Interest

What will replace the globalization model? – The Washington Post

The risk stems from something more fundamental: The globalization model of the past 30 years is cracking up. And there appears to be no new model to replace it.

Since April, an ugly economic world has turned uglier. The annual growth rate of total global exports has collapsed. Exports were a crucial engine in powering the U.S. economy out of the worst of the recession in the second half of 2009 and remain important for growth.

What will replace the globalization model? – The Washington Post

Special Issue: Crisis of the Old Order
[The link below is for the full article, but it is not at the National Interest. Since the article is a premium article, I had to track down a free version.]

The postwar global system also is under serious strain. America is still the world’s preeminent power and will remain so for a considerable time. But the era when the world generally accepted American dominance is coming to an end. Challenges to U.S. preeminence are emerging from a host of quarters, and they will gather force in coming years and decades. The rise of China is the most obvious development signaling this new era, and prospects for tensions between Beijing and Washington are on the rise. But other regional powers are stirring in various areas of the globe – Turkey, Brazil, Russia and India. Meanwhile, the Middle East has taken a bold new direction that almost inevitably will render it less receptive to American blandishments and influence. And Europe faces perhaps its most harrowing challenge of the postwar era. With the euro threatened by debt problems and tensions mounting between northern European nations and their southern counterparts, some analysts wonder about the sustainability of the European Union itself.

About This Issue – The National Interest

Here we see the world order and the globalization model are headed for big changes. It is not going to be smooth sailing. One should expect surprises and shocks.

China’s Wen says global crisis worsening – Businessweek

Posted by on August 30, 2012 Comments Off

“The impact of the global financial crisis and the European sovereign debt crisis on the world is continuously deepening,” Wen said during a meeting with Merkel.

“As important economies and strategic partners, China and Germany should make consistent efforts on promoting the confidence of the international community, joining together in dealing with challenges and creating a better tomorrow.”

China’s Wen says global crisis worsening – Businessweek

And the crisis will continue to deepen. And it will continue to get worse. And it will not be solved. And this is what happens when a system wants to collapse, but you don’t let it.

Bad thinking, bad decisions and corruption permeate all throughout the world. So it is not a financial matter. It is not a matter of bad economics. It is a matter of bad everything. And the only way to clean up this mess is just to let the collapse happen. Yes, there will be the gnashing of teeth, but when the dust settles the sky will be clear and the way forward will be up.

Welcome to the Great Depression redux.

Derivatives Could Make a Chinese Collapse Much Worse | ValueWalk

Posted by on July 16, 2012 Comments Off

The 2008 Financial Crisis nearly destroyed the world financial system and consequently the global economy. As the U.S. housing market collapsed numerous institutions struggled to cover bad bets they made via the derivatives market. Massive insurer American International Group, Inc. (NYSE:AIG) had to be bailed out by the US government. Lehman Brothers went bankrupt. Bear Stearns was forced into a fire sale to JPMorgan Chase & Co. (NYSE:JPM), and numerous other banks faced derivatives related crises. Only massive efforts by the United States government & others staved off what could have been another global Great Depression. We must now ask if the worst derivative related problems have passed or if the 2008 Financial Crisis was merely a prelude of things to come.

Derivatives Could Make a Chinese Collapse Much Worse | ValueWalk

Please remember this:

The foundation of derivatives is the Normal distribution. The Normal distribution assumes everybody acts independently. In a crisis people do not act independently. In a crisis derivatives will blow up.

Why Doesn’t The Stock Market Reflect The Imminent Global Depression? – Business Insider

Posted by on June 20, 2012 Comments Off

We seem to be heading towards an economic downturn equivalent to the Great Depression of the 1930s.

This isn’t a secret. The synthesis below is derived from: Lawrence Summers, Nouriel Roubini, Simon Johnson, Niall Ferguson, and Paul Krugman to name just a few. This crisis is not happening quickly.

It’s more of a slow-motion train wreck—Greece’s crisis started in 2009. But that leaves a puzzle—why is the American stock market not reacting to obvious warning signs?

Why Doesn’t The Stock Market Reflect The Imminent Global Depression? – Business Insider

Philippines Accuses China Of Fanning South China Sea Tensions – WSJ.com

Posted by on May 24, 2012 Comments Off

The Philippines accused China of further ratcheting up tensions in a disputed portion of the South China Sea after it said dozens of Chinese vessels had been deployed there in recent days, despite a fishing moratorium.

The Philippine Department of Foreign Affairs said on Wednesday it had expressed “grave concern” this week to the Chinese Embassy after a dramatic increase in the number of Chinese vessels around the Scarborough Shoal in the past few days.

Philippines Accuses China Of Fanning South China Sea Tensions – WSJ.com

This conflict could risk dragging in the US. The Philippines is counting on its treaty with the US should things start heating up too much. So far the current conflict with China hasn’t shown signs of cooling much.

It’s not unreasonable to project that the South China Sea area might very well turn into a direct conflict between China and the US. Any such conflict would quickly escalate into a full-blown nuclear war. Since the US is perceived to be in decline by the Chinese, they are more willing to take on the US.

If a country thinks there is a good likelihood that a direct conflict leading to war may happen within a few years, then it might decide to launch a pre-emptive strike out-of-the-blue to attain a more favorable outcome. This strategy will ensure the survival of the regime, it’s military and at least a few million citizens. The alternative is to do nothing then later plunge headlong into war where the survival of any group, like the regime, is at risk.

This is a scenario that Japan found itself in right before it attacked at Pearl Harbor. The US was perceived to be in decline at that time as well due to the Great Depression. The attack was to preclude interference in its plans for Asia. World War I started because Germany perceived that the military build-up in Russia and France represented a serious danger a few years down the road. Better to attack before this build-up was complete.

Generally the decline of the US, no fear of nuclear war and the gutting of its nuclear arsenal represent a complete change in the defensive posture of the US. And there are constant calls to reduce its nuclear arsenal even further. The thinking that kept the US safe since the end of World War II is gone.

The forest is old. The summer is hot and dry. We only have to wait for a spark, but then it will be too late to escape. Perhaps it would be a good idea to start getting ready for nuclear war. Or even leave the US. When you finally figure out that you are in real trouble, then it will be too late.

Philippines Looks to US Treaty in China Dispute

The treaty between Manila and Washington makes no explicit mention of the South China Sea. But the Philippines’ Foreign Ministry is circulating letters it received from U.S. officials in 1979 and 1999 as evidence the treaty extends to its territorial claims in the South China Sea. Those include the shoal as well as some of the Spratly Islands, which are claimed by several countries.

U.S. Secretary of State Hillary Clinton last year said the United States “will honor its treaty obligations to the Philippines” but would not speak about how America would respond to – as she put it – “hypothetical events” such as a Chinese attack on Filipino forces in the uninhabited Spratlys.

Philippines Looks to US Treaty in China Dispute

BBC News – As China rises, America responds

And Luo Yuan, a senior officer at the People’s Liberation Army’s Academy of Military Sciences, told the paper that while neither the United States or China desire to start a war, “if China’s core interests such as its sovereignty, national security and unity are intruded on, a military conflict will be unavoidable”.

That’s tough talk, but it’s exactly the sort of aggressive tone which is alarming China’s neighbours and making them more receptive to America’s overtures.

BBC News – As China rises, America responds

South China Sea disputes could lead to war in Asia: think tank

Risks are growing that incidents at sea involving China could lead to war in Asia, an Australian policy think tank warned on Tuesday.

Concentrated on the South and East China seas, the risk-taking behavior of the Chinese military, resource needs, and greater assertiveness, raised the possibility of armed conflict that could draw in the United States and other powers, the Lowy Institute said in a report.

South China Sea disputes could lead to war in Asia: think tank