Lou Dobbs resigned from CNN tonight. I don’t care about his politics or your politics. This is a big deal because of what he said. It shows where this country is heading –
“Over the past six months, it's become increasingly clear that strong winds of change have begun buffeting this country and affecting all of us. And some leaders in media, politics and business have been urging me to go beyond the role here at CNN and to engage in constructive problem-solving, as well as to contribute positively to a better understanding of the great issues of our day.”
“I truly believe that the major issues of our time include the growth of our middle class, the creation of more jobs, health care, immigration policy, the environment, climate change, and our military involvement, of course, in Afghanistan and Iraq.
But each of those issues is in my opinion informed by our capacity to demonstrate strong resilience of our now weakened capitalist economy and demonstrate the political will to overcome the lack of true representation in Washington, D.C.”
“Unfortunately, these issues are now defined in the public arena by partisanship and ideology rather than by rigorous empirical thought and forthright analysis and discussion.”
We have entered the time in history where society destroys the old institutions that are no longer trusted, and creates new ones. It is a long, painful process. It’s our fourth as a country – the previous three being The Revolutionary War, The Civil War and World War II.
Neil Howe calls the period “The Fourth Turning”. He wrote a book about it and we are now living through it. He has a recent interview that touches on all of the stuff that Dobbs is talking about –
http://caseyresearch.com/pdfs/20090923_0909TheFourthTurning.pdf
“We occasionally have to clear away institutions, not only to make room for new ones, but also to create an atmosphere of new trust. That is what we no longer have today.
You were making that point earlier about how there is no social or political consensus. There is such complete dysfunction in the system now that we can’t make even modest incremental progress on any of the issues we face. In the Fourth Turning, we will solve those problems.”
“A Fourth Turning is an era when institutions are suddenly proven ineffectual or are torn down to build something entirely new. It is a time of enormous rebuilding of public, social, political, and economic life – usually in response to an urgent crisis or series of crises that seem to threaten our society’s very survival.”
The system is broken and everybody knows it. Big change is coming. I read this article today about a Columbia University professor who bunched a woman in the face over an argument about the merits of “white privilege”. Are you kidding me?
http://www.nypost.com/p/news/local/prof_busted_in_columbia_gal_punch_JmsXQ3NzaAt8uG6uUySGTN
Howe has this to say on the topic –
“(W)e see (Baby) Boomers as they grow older continue to rip into each other on these subjects more than anyone else. This is the generation of culture wars, and I’m convinced they will still be shouting at each other on radio talk shows into their 80s.”
It is indicative of the tone of conversation within the country right now. The leadership has lost its purpose. Everything is a war of rhetoric. They are there to serve us, yet nothing is getting fixed – and Rome is burning to the ground, while the bankers loot all the gold.
Every 20 years you get a generational shift, where a new generation takes over the culture as they reach adulthood – the Leave-It-To-Beaver (Silent) generation did as they were told and built the new great society mandated by the GI generation, The Baby Boom came of age during the Consciousness Revolution and rediscovered the individual and Generation X embraced Ronald Reagan and took risk and innovation to new heights.
Here are the timelines for those periods where each generation controlled the culture –
Silent 1946 -1966
Baby Boom 1966 – 1982
Generation X 1982 – 2000
Why is this important? Look at how these dates align with the Stock Market!
Rally followed by consolidation, as generations pass the mantel of leadership. As an investor, you need to think cyclically. Seasonally. Every 20 years, the clock turns. The seasons change and you have to change with them.
We have entered the period of societal deconstruction.
The youth define the era. The “Millennial Generation” is now in charge. According to Howe, “(w)e have found that, throughout American history, the generation entering young adulthood has always shaped our impression of where the country was headed.”
You need to understand who the Millennials are –
“Yes, the Fourth Turning will be an era in which government is increasingly important, but it will not be the kind of big government your readers associate with Boomer-driven liberal ideology.”
“These young people want to take charge, they trust big institutions and want big challenges to be solved with political and governmental activity.”
That is what struck me about Dobbs today. The country is begging for leadership that will set aside the political rhetoric and fix the problems we all know we have.
“Two-thirds of this generation voted for Barack Obama.” They want change. Obama isn’t following through, so his poll numbers are falling.
They want to build strong families and communities –
“When surveyed about what they want to do with their lives, Millennials say they want to be good neighbors, they want to be good citizens, they want to have balanced careers. A record number, according to the UCLA Freshman Survey, said they want to get married and have children.”
“Although they are going to use government aggressively and use community aggressively, they are going to do it for purposes that will seem surprisingly bland and conventional to older people.”
Sounds to me like innovation and risk taking are gone. Maybe that is what stocks have been pricing in for the last nine years…
They are the chosen ones –
“Millennials will emerge as the special generation. Everyone will want to sacrifice for their needs. And if Millennials face a real emergency and if their future is at risk -- particularly if they are actually getting shot at or are in harm’s way – there’s no way Boomers will be able to preserve their benefits. Not if preserving those benefits is seen as endangering the future of this special Millennial Generation of young adults.
Consequently, I think that in this Fourth Turning, we’ll see a re-tilting of the budget and our entire political policy away from the old and back to the young. This always happens during a Fourth Turning. Our policy biases move back towards the family, towards investing in the future, and towards institutional arrangements that are good for young people.”
The entire Social Contract is going to be re-written. All the pensions and healthcare plans that the Baby Boom has promised itself will be gone or extremely altered. You will need to have the capacity to self-finance everything. That means working longer and saving more. This is about survival. If you aren’t thinking this way yet, you are nuts.
“In the economy, we think there is going to be a period of very rapid structural change. Certain sectors are going to grow. We are going to see much more investment in security, in infrastructure, and in education, to the extent that we can afford it. And a lot of those things are going to be pushed by government.
But in the private sector we will see a push towards middle class – middle-class consumption, middle-class needs, and middle-class values. The rich and the poor will not fare as well. The rich obviously will be a target, given that, particularly for the populous minded, they represent a threat to the community. The poor will also no longer be catered to as much. But rebuilding the middle class will be an incredibly important part of the Millennial Generation’s political agenda.”
Protectionism will increase. The Dollar will fall to make it economically possible to rebuild the manufacturing Middle Class.
“Older generations, both conservative and liberal, tend to define Millennials based on their own established set of values and ideologies. They don’t stop to see that this generation is coming with a whole new agenda that cuts across these categories.
It might help to think of the Millennials as capitalists, but they want capitalism with a public purpose. Through regulation, incentives, and social engineering, they want the markets to be orchestrated toward some end that we all want. But they do not want to stop markets with pointless regulations. That is not where this generation is coming from.”
I think of Google as the ultimate Millennial company, where the Billionaire founders use their personal fortunes to invent things that make society better. They don’t want to profit from these endeavors. This is great for the average guy who doesn’t want to pay for something, but is kills the margins for the for-profit businesses competing in the same space.
The invention and innovation has taken place. We are now at the stage of picking the winners –
“We pick the winners that can make all of our lives better, the innovations that every family should have, or which we are going to build under every street in America. In Fourth Turnings, society picks winners, and we use those winners to build new infrastructures. That may be another point to keep in mind as investors and businessmen.
The Civil War and its immediate aftermath was the final flourishing of the greatest railroad projects this country ever saw. And out of the American Revolution came the toll roads and the great canals. World War II brought about the roads and the interstate highway system and so forth. We create infrastructure projects in Fourth Turnings, and we organize the institutions that keep those projects going throughout the subsequent First Turning, the Post-Crisis era. And we expect to see this again in the years ahead.
We are beginning to see it already with Obama and his large-scale vision, whatever you think about it, for digitalizing medical records, and installing Internet across America, and building high-speed trains. I think the idea of having public goals and creating big things again resonates very well with Millennials in particular.”
You can’t be investing in the future like you have been the last 20 years. The game is changing. The markets are already picking out the new Dow 30. Google? Apple? Microsoft? Cisco? It sounds like Solar and Fiber Optics are going to rock. We’ll see how it shakes out.
When I saw Dodd speak today, it triggered my thoughts on these subjects. His words were carefully chosen. They were chosen to reflect that he and a group of big players (like the boys at CNN) understand that a new message has to conveyed and a new civil tone has to take over our politics.
I think the real message out of Dodd today is that there are many significant issues that need to be addressed and fixed and if you can’t put away your partisan rhetoric for the betterment of the country, then you are going to get run over.
Massive change is coming. It is going to be ugly. It is normally accompanied by deflation and massive inflation. You will need to stay on your toes and protect your own interests while society tries to use your personal wealth to finance this change.
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