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Why 95% of Traders Fail

The Fourth Turning – Economic and Social Skies Over the United States Darkening

Politics / US Politics Sep 01, 2010 - 01:32 AM GMT

By: James_Quinn

Politics

Best Financial Markets Analysis ArticleWilliam Strauss and Neil Howe published The Fourth Turning in 1997. This was before the internet bubble, before the housing bubble, before 9/11, before the two wars in the Middle East, and before the financial collapse of 2008. They made a strong case for their generational theory of history. Everything that has happened since 1997 supports their theory. We are currently in the early stages of the Fourth Turning.


In the last two chapters of their book, they describe the possibilities during a Fourth Turning. In the last section of the book they provide guidance on how to prepare responsibly for a Fourth Turning. Without preparation, the Fourth Turning is much worse. Below is a description of Fourth Turning possibilities, the preparations that were recommended by Strauss & Howe, and my assessment of how prepared we are as a country.

“What will America be like as it exits the Fourth Turning?

History offers no guarantees. Obviously, things could go horribly wrong – the possibilities ranging from a nuclear exchange to uncurable plagues, from terrorist anarchy to high tech dictatorship. We should not assume that Providence will always exempt our nation from the irreversible tragedies that have overtaken so many others: not just temporary hardship, but debasement and total ruin. Since Vietnam, many Americans suppose they know what it means to lose a war. Losing in the next Fourth Turning, however, could mean something incomparably worse. It could mean a lasting defeat from which our national innocence – and perhaps even our nation – might never recover.

If America plunges into an era of depression or violence which by then has not lifted, we will likely look back on the 1990s as the decade when we valued all the wrong things and made all the wrong choices.”

“However sober we must be about the dark possibilities of Crisis, the record of prior Fourth Turnings gives cause for optimism. With five of the past six Crises. it is hard to imagine more uplifting finales. Even after the Civil War, the American faith in progress returned with a new robustness. As a people, we have always done best when challenged. The New World still stands as a beacon of hope and virtue for the Old, and we have every reason to believe this can contine.

By the middle 2020s, the archetypal constellation will change, as each generation begins entering a new phase of life. If the Crisis ends badly, very old Boomers could be truly despised. Generation X might provide the demagogues, authoritarians, even the tribal warlords who try to pick up the pieces.

History is seasonal, but its outcomes are not foreordained. Much will depend on how tall we stand in the trials to come. But there is more to do than just wait for that time to come. The course of our national and personal destinies will depend in large measure on what we do now, as a society and as individuals, to prepare.”


Preparations Needed (1997 – 2006)

In their chapter on preparations for the Fourth Turning, Strauss and Howe essentially tell Americans to grow up. Give up the bad habits that had become part of our life during the Unraveling. We needed to prepare as if a blizzard was headed our way.

“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impossible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.”

Their suggested preparations as a country and as individuals were:

America’s Recommended Preparations

  • Prepare values: Forge the consensus and uplift the culture, but don’t expect near-term results.
  • Prepare institutions: Clear the debris and find out what works, but don’t try to building anything big.
  • Prepare politics: Define challenges bluntly and stress duties over rights, but don’t attempts reforms that can’t now be accomplished.
  • Prepare society: Require community teamwork to solve local problems, but don’t try this on a national scale.
  • Prepare youth: Treat childrenas the nation’s highest priority, but don’t do their work for them.
  • Prepare elders: Tell future elders they will need to be more self-sufficient, but don’t attempt deep cuts in benefits to current elders.
  • Prepare the economy: Correct fundamentals, but don’t try to fine tune current performance.
  • Prepare the defense: Expect the worst and prepare to mobilize, but don’t precommit to any one response.

How America Prepared

No consensus on values was forged. The culture became more decadent and materialistic between 1997 and 2006. Get rich quick became the rallying cry. Institutions became larger and more unwieldy. Federal and state governments doubled in size between 1997 and 2006. They became addicted to tax revenue from the Internet and housing booms. They enacted thousands of new rules, regulations and laws. The debris has not been cleared. The country failed miserably in preparing politics. Blunt truthfulness about our national problems was needed from our leaders. Public purpose and collective duties should have been preached by our leaders. Instead, personal rights and entitlements were promised to every constituent. Corrupt politicians in Washington DC have fed the slide into cynicism, apathy and malaise with their false rhetoric and spineless inability to own up to the truth about the financial obligations that cannot be honored.

Society has not prepared for the Fourth Turning by stressing teamwork, civic duty, and self sacrifice for the betterment of our country. Local communities have not improved schools, housing, or transportation. People have continued to group themselves along party lines. The Millennial generation who will do the heavy lifting during this Fourth Turning have not been raised to understand how important their efforts will be needed in the next 15 years. We have not educated them properly and they have not been made to understand their importance. The elderly have not become more self sufficient. They have become more dependent. More entitlements have been passed for the elderly, making our fiscal picture much worse than it was in 1997. The elderly are prepared to wage a generational war for their goodies. 

The preparation of our economy for the Fourth Turning has been a complete and utter disaster. We needed to raise the national savings rate in preparation for the difficult times ahead. Instead it went to 0%. We needed to reduce debt. We doubled it. We needed to balance the budget. The deficits are beyond comprehension. We needed to under consume. We consumed at hyper speed levels. Lastly, we needed to prepare for the inevitable major war that always accompanies a Fourth Turning. We needed to conserve our resources and build up our forces for the coming test. Instead, we wasted trillions of dollars and thousands of lives on worthless wars of choice in the Middle East. Our military is stretched to the breaking point. We are completely unprepared for a new major conflict.    

Individual Preparations

  • Rectify: Return to classic virtues.
  • Converge: Heed emerging comunity norms.
  • Bond: Build personal relationships of all kinds.
  • Gather: Prepare yourself (and your children) for teamwork.
  • Root: Look to your family for support.
  • Brace: Gird for the weakening or collapse of public support mechanisms
  • Hedge: Diversify everything you do.

How Individuals Prepared 

Only you would know whether you are prepared for the Fourth Turning. Can you be counted on by your neighbors? Do you have a reputation as a person of honor and integrity? Are you a good citizen? Lone wolves will not fare well during a Fourth Turning. Team, brand and standard will be new catchwords. Appearances will matter. Society will deal justice in a brutal way. You need to know people who can help you. Personal relationships will be crucial. Face to face interaction with neighbors, fellow workers, the public, and the police will determine whether you are a good guy or bad guy. 

People who work well in teams will more successfully navigate the Crisis. Children will need to be taught to excel in groups. They are likely to be indoctrinated by the government when danger rises. Your family members will be essential to your survival. Being a loner will not bode well for you during the Fourth Turning. Young and old will likely occupy the same household as other supports will disappear. Government benefits are likely to be dramatically cut. Dependence on authority should not be assumed. You will need to protect your wealth. Healthcare services could be limited. Being physically fit will be important. Being a generalist that can do many things well will make you more valuable during the Crisis. Having less debt will allow you more flexibility. The USD is likely to be devalued, so hedging your bets will be important. If the financial markets crash, will you survive? 

As a country, we were completely unprepared for the onset of the current Fourth Turning. We were warned in 1997. We had time to prepare. Instead, we did the exact opposite of what needed to be done. We pressed the accelerator to the floor. Our actions have ensured that this Fourth Turning will be more deadly and brutal than it needed to be. Considering the two previous Fourth Turnings were Depression/WWII and the Civil War, the next 15 years will be grim. As Strauss & Howe point out, this test cannot be avoided: 

“Don’t think you can escape the Fourth Turning the way you might today distance yourself from news, national politics, or even taxes you don’t feel like paying. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted. The Fourth Turning necessitates the death and rebirth of the social order. It is the ultimate rite of passage for an entire people, requiring a liminal state of sheer chaos whose nature and duration no one can predict in advance.” 

The economic news worsens by the day. Worldwide tensions grow. There are fingers of instability throughout the system. All it will take is a grain of sand falling on the wrong part of the pile to initiate an avalanche of pain and suffering. Our Archduke Ferdinand moment awaits. 

“Thus might the next Fourth Turning end in apocalypse – or glory. 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.

A Fourth Turning harnesses the seasons of life to bring about a renewal in the seasons of time. In so doing, it provides passage through the great discontinuities of history and closes the full circle of the saeculum. The Fourth Turning is when the Spirit of America reappears, rousing courage and fortitude from the people. History is seasonal, but its outcomes are not foreordained. Much will depend on how tall we stand in the trials to come.”  

Join me at www.TheBurningPlatform.com to discuss truth and the future of our country.

By James Quinn

quinnadvisors@comcast.net

James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager.

These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer.

© 2010 Copyright James Quinn - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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