Originally Posted by Croakmore

Would this imply then that this:



(Monthly trade deficit, 2002-present. Source: WSJ)

relates to this?



If so, this would mean that we are withdrawing our home equity and sending it overseas. Not a bad place to send our children's inheritance.

--Croakmore

Well, we're building China's new techo-industrial infrastructure for them. And since we'll be one big happy globalized "Cosmopolis" there is no threat in that. Didn't you hear??

Dear Sean,

Originally Posted by Peter Gibbons

> Could you add more into your analysis about China, esp. the
> currency peg, and how that's affecting things in your view?

If ever the word "unraveling" could be applied to a country, it can
be applied to China.

One of the most incredible things that have been happening in China
the last few months are regional rebellions. I've put some of this
on my web site, so I'll summarize it here.

Imagine the following scene: It's a downtown area where people are
walking along, going about their business. Somebody accidentally
bumps into somebody. Words are exchanged. An argument ensues, and
then a fight. Within a few minutes, crowds are gathering, taking
sides, and fighting among themselves. Soon, the security police are
called in to restore order. Word spreads quickly, thanks to mobile
phones and text messaging. Within a few hours, there are 50,000
people pouring into the region, fighting each as well as the police,
and full-scale mass riot ensues.

Has anything like this happened here, even in the 60s? I can't think
of anything. But this kind of thing is happening with increasing
frequency, several times a month in China. In fact, public protests
have been skyrocketing, with tens of thousands recorded last year.



China has a history of secular rebellions - the huge White Lotus
rebellion in the 1790s and 1800s decade, the Taiping Rebellion in the
1850s and 60s that killed 15% of the population, and Mao's Long March
that launched the civil war between Mao and Chiang Kai-shek in the
1930s and 40s killed hundreds of millions.

So the increasing patterns of local protests and mass riots are
scaring the hell out of the CCP (Chinese Communist Party), since they
have enough of a historical sense to know that one of these mass
riots could spiral out of control into a full-scale war.
(Generational Dynamics predicts that this will indeed happen.)

The riots are an overt sign of a large collection of problems that
are plaguing China, and are getting worse almost on a continuous
basis:

• (*) China is addicted to a special kind of crack cocaine: A bubble
  economy that's been growing at almost 10% a year for 20 years. When
  that bubble bursts, after 20 years, it's going to be chaos.
  
  For a year or so, China has been trying to slow the economy down to a
  7% growth rate, and reach a "soft landing." They're using various
  methods to do this, such as restricting the number of loans.
  
  As you mentioned, the Chinese currency is pegged to a fixed rate
  versus the dollar. This means that as the Fed raises interest rates
  in America, interest rates also go up in China. So keeping the yuan
  pegged to the dollar is another tool in the attempt to slow down the
  economy gradually.
  
  It's a sad principle of economy that any change hurts someone. I
  learned this years ago: When gasoline prices skyrocketed to 50-60
  cents a gallon in the mid 70s, Texas thrived and the Northeast
  suffered a major recession. (In Texas, the bumper stickers read,
  "Freeze a Yankee.") Then, in the mid 1980s, when oil prices
  collapsed, the Northeast thrived and Texas suffered.
  
  In China, the entire country is tuned to the 10% growth rate. I
  don't believe that a "soft landing" is possible, but even if it is, I
  believe that any recession will cause severe social unrest, because
  of the problems in the following sections.
  
• (*) The entire social structure set up by Mao in the 1950s is
  completely unraveling. The idea is that the rural peasants would work
  the farms, and the city dwellers would work in the factories. The
  peasants were not permitted to move to the cities, but that was ok
  because the income was about the same.
  
  That's true no more. Large conglomerates and business enterprises
  have been buying up the individual farms converting them into large
  agribusinesses, just as happened in America following the Great
  Depression.
  
  In China, though, this has made it impossible for peasants to earn a
  living. The result is that there's been a huge migration of peasants
  to the cities in the hopes of finding a job. In many cases, the young
  migrants earn money in the cities and send it back to their families,
  who have no other source of income. Many of the girls work as
  prostitutes, except the ones who are lucky enough to become
  mistresses of wealthy government officials.
  
  This situation is not a trivial matter. The migrant floating labor
  population is estimated at 113 million, or more than a sixth of
  China's work force of 744 million people.
  
  There's no guarantee of finding a job, of course. Much of the work
  is menial and seasonal, and doesn't pay much.
  
• (*) In fact, girls can earn a great deal of money from prostitution
  because of the law of supply and demand. There's a huge imbalance of
  males over females, because of a "one child per family" policy
  instituted by China in the 1980s to curb population growth.
  
  Potential parents knew that without a son to support them, they would
  starve when they grew older. Thus, many parents used ultrasound to
  determine the sex of the unborn baby, and would abort a female.
  Infanticide of female babies also was common.
  
  So young men in poverty, without the money to attract a wife, will
  not create the families that would given them a stake in the
  established rule of law. These young men are thus free to
  participate fully in the anti-government rebellions that the
  CCP right fears so much.
  
• (*) Another large group of migrants consists of the tens of millions
  in the "miserable generation" of people that grew up in the 1950s and
  early 19670s. They grew under conditions of mass starvation and
  execution, thanks to Mao's "Great Leap Forward" policy, that created a
  family. Tens of millions of people died.
  
  When the Chinese "generational awakening" period began in the
  mid-1960s, it was because the kids in the "miserable generation" were
  beginning to make their political strength felt against Mao and his
  old guard. Mao's wanted to short-circuit the awakening by
  re-establishing the revolutionary spirit that had motivated him and
  his followers during the crisis civil war. (Of course, we know that
  it's impossible to do anything of the sort.) So in 1996 Mao
  initiated Great Cultural Revolution, to repair the situation, and
  formed the Red Guards to implement the assault on dissidents. The Red
  Guards, mostly younger students, soon brought the country to the verge
  of chaos; they fought pitched battles, carried out summary executions,
  drove thousands to suicide, and forced tens of thousands into labor
  camps, usually far from home. Intellectuals were sent to the
  countryside to learn the virtues of peasant life. Countless art and
  cultural treasures as well as books were destroyed, and universities
  were shut down. Insulting posters and other personal attacks, often
  motivated by blind revenge, were mounted against educators, experts in
  all fields, and other alleged proponents of "old thought" or "old
  culture," namely, anything pre-Maoist. Hundreds of thousands more
  deaths occurred under the Red Guards. [Stearns, p. 1024]
  
  Thus, the kids in the "miserable generation" got no education and
  developed no job skills.
  
  Today, the people in this generation are are in their 40s and 50s, and
  they survive on state handouts or what they can scrounge from the
  underside of China's economy as older migrant workers. They raised
  their voices during the 1989 Tiananmen Square protest, but they were
  brutally crushed by the CCP.
  
  So their resentment took a different root: They became follows of a
  spiritual movement called the Falun Gong. Older people would get
  together to meditate and do exercises. Once again, Beijing became
  alarmed, and declared in 1999 that practicing the Falun Gong was
  illegal. Rumors have it that millions of Chinese have been jailed
  simply for doing the equivalent of Richard Simmons exercises.
  
  Nonetheless, the Falun Gong movement continues to grow and gain
  adherents. Their leaders believe it to be the modern version of the
  God-Worshipper's Society, a spiritual movement which launched the
  Taiping Rebellion, and was a form of Christianity combined with
  Buddhism.
  
  
  
  (China and its provinces (Source: The Economist))
  
• (*) Unemployment is low Shanghai and the other booming big cities in
  southeast China because they're export-oriented, but cities like
  Harbin in the northeast provinces (Liaoning, Jilin and Heilongjiang,
  the former Manchuria) have very high unemployment. This is the "rust
  belt," where large government-owned factories and chemical plants that
  thrived under Mao's programs in the 1950s have been increasingly
  stagnant since the 1980s. Millions older of workers are being laid
  off each year, mostly in the "miserable generation," so many of them
  will never find another job, as long as they live.
  
  Beijing has been pouring billions of dollars into the northeast for
  such things as job-training centers. If there's a recession, and
  money becomes scarce, then this aid will not be sustained. There's
  already a great deal of unrest in the northeast, and it could quickly
  increase.
  
• (*) Nominal unemployment is lower in the southeast because of the
  high concentration of migrant laborers, but income disparity is
  extremely high.
  
  Guangdong province has been a major beneficiary of the new economy,
  as it's one of the wealthiest provinces, earning about $2,000 per
  year per person, but is adjacent to Jiangxi and Guangxi provinces
  that earn only $100-200 per person per year. These enormous income
  disparities form a major engine of the social unrest.
  
  Guangdong is a historically significant region for riots. China's
  last two crisis civil wars both began in this region. The Taiping
  Rebellion began here in 1852, and Mao Zedong's Long March began here
  in 1934. In each case, the results were devastating for China. The
  rebellion spread north to Beijing and out into the midlands, killing
  tens to hundreds of millions of people each time. There have been
  recent mass riots in Guangdong, but they've been put down quickly by
  the security policy. If these mass riots grow and spread, deaths will
  once again reach the hundreds of millions.
  
• (*) China's relations with Taiwan are becoming increasingly hostile.
  China's 1989 Tiananmen Square massacre triggered Taiwan's 1990 Wild
  Lily student rebellion, whose purpose was to advocate Taiwan's
  nationhood and independence from China. One of the leaders of the
  Wild Lily rebellion, Chen Shui-bian, has been Taiwan's president since
  2000, and has announced plans to move towards independence, albeit
  slowly.
  
  In fact, Taiwan is just one of China's problem provinces. Two of its
  western provinces, Buddhist-dominated Tibet and Muslim-dominated
  Xinjiang, also have secessionist movements. In a way, the western
  provinces are even more important to China than Taiwan, since China
  must maintain hegemony in Central Asia for its own security.
  
  Thus, Chen's election and plans have infuriated the CCP, which can't
  afford to be weak on Taiwan without giving comfort to Tibet and
  Xinjiang, In fact, China's rhetoric took a great leap forward in
  December, when new statements said it was China's "sacred
  responsibility" to use Chinese armed forces "to stop the Taiwan
  independence forces from splitting the country,"
  
  My feeling is that the Taiwanese are biding their time right now,
  waiting for the right moment to declare independence. They've very
  well aware that any move in that direction today would bring an
  immediate invasion, so they're waiting until the right moment, when
  they have leverage.
  
  Such a moment could come if a new Chinese rebellion began to spiral
  out of control. Not only would Taiwan then move toward independence,
  but they even might be forced to choose sides, and thus to side with
  the rebellion against the CCP.
  
• (*) Documents leaked from North Korea indicate that they have been
  mobilizing for war since April, 2003, focusin on an attack from the
  U.S. But North Korea is believe to have several nuclear weapons and
  the missiles to deliver them, and Beijing knows that some of those
  missiles may be headed in their direction.
  
• (*) Food has been getting increasingly expensive in China. According
  to recent studies, industrial construction and erosion are eating up
  0.5% of China's farmland each year. China lost 2/3 of its farmland in
  40 years, but has 2.3 times as many people.
  
  (Using my standard benchmark measure of 0.96% annual increase in food
  production per acre of farmland, the above figures mean that the
  amount of food per capita is ((2 / 3) / 2.3) * (1.0096^40) = 42% of
  what it was 40 years earlier.)
  
  Or course China's food problems are consistent with what's happening in
  the rest of the world. A Washington Post analysis earlier this year
  indicated that food prices are skyrocketing around the world. This is
  happening because of what I call the "Malthus effect," which causes
  the population to grow faster than the food supply, except during
  major genocidal wars. Population growing faster than the food supply
  causes food to become relatively scarce, causing food prices to rise.
  China has particularly added to this problem in the couple of years,
  as it's been importing food to feed people in its overheated economy.
  
  This makes China's food problems are especially critical, when
  combined with the other problems. If there's a recession in China in
  2005, then China won't be able to import enough food to meet its
  shortfall, and migrant workers will be unable to get jobs and make
  money to send back to their families in rural areas. This is certain
  to foment further social unrest.

China is almost a textbook case of a genocidal civil war waiting to
happen. It could be triggered in any of three ways: (a) A collapse
of the 20 year old financial bubble; (b) A regional mass riot
spiraling out of control; or (c) Any "major incident of Taiwan
independence."

Any one of these three triggers would soon trigger the other two.
Generational Dynamics predicts that all three will occur in the next
few years.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

Dear Richard,

Originally Posted by Croakmore

Would this imply then that this:



(Monthly trade deficit, 2002-present. Source: WSJ)

relates to this?



If so, this would mean that we are withdrawing our home equity and sending it overseas. Not a bad place to send our children's inheritance.

--Croakmore

Thanks for pairing these two up. They really make it clear what's
going on.

I wanted to track down the source of the "strippers" graph, and I
found it:

Originally Posted by Northern Trust

> http://www.ntrs.com/library/econ_research/weekly/us/

> October 01, 2004 Investment Implications of the Inevitable
> Rebalancing of the US Economy Or Making Lemonade Out of Lemon
> http://www.ntrs.com/library/econ_res...s/pc100104.pdf
> The graph is on page 22 of the PDF file.

This pdf file is a great resource, since it has a couple of dozen
other graphs about public debt, including several on the housing
bubble. The last two pages (slides) in the PDF file read as follows:

Originally Posted by Northern Trust

> p. 30:
> BUT DON?T WORRY ABOUT THIS RISK CASE
> BECAUSE ALAN GREENSPAN HAS ASSURED US
> THAT THERE IS NO HOUSING MARKET BUBBLE

> p. 31:
> HAVE A NICE DAY

Here's another graph that you might find interesting:



(Total credit market debt (Source: PIMCO))

And here's one more graph that relates the 1920s bubble and aftermath
with the 1990s bubble and aftermath:



(S&P 500 Index and S&P 500 P/E rations, comparing 1920s aftermath
with 1990s aftermath.)

If you put all these graphs together, you can see that something is
terribly wrong. We're in an astronomically high credit bubble, and
any of a number of national or worldwide events could burst the
bubble and trigger a financial crisis.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

To all:

I've had a change of thinking in the last year in the nature of the
coming financial crisis. I alluded to this change of thinking last
week when I wrote that the stock market might lose 50-75% of its
value, possibly in a single day.

This change has been bubbling in my mind for many months, but what
really firmed it up was the tsunami disaster in the Indian Ocean, for
reasons that will soon be clear.

Early in 2002, when I was trying to figure out TFT, I concluded that
TFT implied that we would have to be entering a new 1930s style
depression. At that time, I speculated that the path of the
depression would be similar to the 1930s:



Notice that stock prices fell gradually from 1929 to 1933. I've been
assuming that something similar would happen now, following the 2000
Nasdaq crash.

However, the path has been quite different:



The above graph shows the explosive bubble that began in 1995
followed roughly the same upward path as the 1920s bubble. But the
downward paths have different. A lot of the reason for this is the
near-zero interest rate policy that the Fed has followed; this
prevented massive bankruptcies and homelessness in 2000 and 2001, but
it transformed the stock market bubble into a more unstable credit
bubble.

So what's going to happen when the bubble bursts?

Lately, I've come to understand that there are many, many investors
who know that something is wrong with the stock market, but believe
that they can get out in time. Mike Alexander was successful in
getting out of the stock market in 1999, and feels certain that he
can repeat that record.

Many other investors lost money in the 2000 Nasdaq crash, but they're
now certain that they'll be "smarter" the next time around, and get
out fast when they see the warning signs.

As I said, there aren't just a few people who believe this. I have
the very strong impression that most investors today have that
attitude. They want to take advantage of new stock market highs, but
they believe that they learned their lessons in 2000, and they know
how to recognize the warning signs early enough to get out.

This leads to an obvious apparent logical contradiction. We know
that "getting out in time" is a zero-sum game, and that only a few
people will actually succeed at doing that. Therefore we know that
most of the people who believe they can get out in time will not be
able to do so. It therefore follows that the next collapse won't
take four years, but will occur so quickly that almost all investors
will be unable to react in time.

Thus, I see two possible scenarios:

• (*) A fast one-day crash in which the stock market loses 50-75% of
  its value in one day; or
  
• (*) A two-stage crash. The first stage will be a one-day fall
  into the Dow 7000 range. The market will stabilize there briefly,
  because the stock market fell to that range in 2002, and people are
  familiar with that level. The second stage will be a continuing fall
  into the Dow 3000 range. The second stage might take some time,
  depending on how many investors bring themselves to believe that the
  stock market can't possibly continue falling.

Either way, we're going to return to the bankruptcies and the
homelessness of the 1930s.

The depressed economy will be with us for a long time, since we'll be
seeing a "reverse bubble" effect. That is, people in the 1990s were
irrationally exuberant in making unwise investment decisions, while
people after the next crisis will be irrationally subdued, and will
be overly cautious in making new investment decisions.

Expect a severely depressed economy until the 2015-2020, when the new
biotechnology revolution will begin to take hold. However, keep in
mind that we'll also be in the middle of a "clash of civilizations"
world war, a war that will be much worse than WW II, and it's not
clear whether the financial crisis or the war crisis will kill more
people.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

John,

Fascinating, if depressing, analysis all 'round. Thanks!

Mike and I have been tossing around the ol' "Are we 3T or 4T?" deal as usual. I am "3T", he is "4T".

One (of a few reasons) why I'm 3T is what I call the lack of a "dooziness factor", DF, involved in the Phony Fourth (2001-?). To my mind, the opening cascade of at least the past four 4T's in our line have involved truly incredible events: See 1929-33, 1859-61, 1773-76, 1675-77.

Now, Mike and others have pointed out that dooziness is not necessarily a prerequisite. Check out Britain in the 19th century. Or it is at least not necessary for the openers. This argument cannot be ignored.

But for the time being I'm going with likelihood of DF being involved because A) it is common in our specific saecular line and B) there is just too much systemic vulnerability around for a 4T mood shift to not trigger something fantastic (negatively speaking).

To me, the Phony Fourth just smacks of an inherently, yet intensely, 3T reaction that happens to be occurring toward the end of said turning, thus having serious 4T hints.

But as seemingly transformational as some of Bush's policies have been, they are no more so those of Wilson's time, and the underlying mood structure does not, to me, seemed to have changed. The reinflation of the credit bubble in a new and more grotesque form is a prime example.

I was only peripherally aware of China's recent rioting (thanks to my almost daily viewing of Drudge). Do you have more on that in terms of links and additional reading so we can keep an eye on it?

Dear Sean,

Originally Posted by Peter Gibbons

> Mike and I have been tossing around the ol' "Are we 3T or 4T?"
> deal as usual. I am "3T", he is "4T".

> One (of a few reasons) why I'm 3T is what I call the lack of a
> "dooziness factor", DF, involved in the Phony Fourth (2001-?). To
> my mind, the opening cascade of at least the past four 4T's in our
> line have involved truly incredible events: See 1929-33, 1859-61,
> 1773-76, 1675-77.

Although I've taken part in these discussions, and I'm strongly on
the side of 4T, I've reached the point where I don't think it makes a
damn bit of difference whether you call this 3T or 4T. The only
thing that really matters is when the actual crisis war begins. As
you know, I've identified over 100 crisis wars throughout history,
but I certainly make no claim to have identified the start of 100
crisis periods, and I'm not sure I could, even if I read every
history book in the world.

Do we even know what a 4T period is? We obviously don't, and that's
why there's no agreement. I don't agree with previous 4T periods
either. For example, I say the Revolutionary War 4T began in 1772,
when a major British banking crisis pushed most New England
businesses into bankruptcy. I see the Boston Tea Party as a
follow-on event.

So you come back to the point of - who cares? In the end, it matters
only that the Revolutionary War was fought, and that's all that's
needed to establish the generational cycles throughout history.

Incidentally, awakening periods are even fuzzier. I think I know
what "awakening events" are -- a generation gap, riots, unrest, a
political conflict culminating in a mostly bloodless "internal
revolution" which establishes either the prophets or the heroes as
winners. But others would define it in some extremely vague way
involving spiritual change, something that I would disagree with.

This is a point that I've made before. So we all agree that 2T, 3T
and 4T all "exist," because S&H said they exist, but we have totally
different conceptions of them. It's as if S&H said that oranges
exist, but I think an apple is an orange, and you think a pear is an
orange. We'd agree that oranges exist, but we don't realize that
we're talking about completely different things.

That's why arguing about whether this is a 3T or 4T is so fruitless
(ha ha). It's a waste of time to have that argument, unless we start
with the definitions. I, for one, have not been able to come up
those definitions. I've been able to come up with an ironclad
definition of what a "crisis war" is, but everything else is
guesswork and taste.

Originally Posted by Peter Gibbons

> But as seemingly transformational as some of Bush's policies have
> been, they are no more so those of Wilson's time, and the
> underlying mood structure does not, to me, seemed to have changed.
> The reinflation of the credit bubble in a new and more grotesque
> form is a prime example.

See, here's why our views are so diametrically different. From my
point of view, Bush's policies are completely irrelevant. Everything
that's been going on has been coming from great masses of people, not
from a few politicians. So as soon as you start talking about Bush's
policies, my eyes glaze over, and I start thinking, "Why is he
changing the subject?"

Originally Posted by Peter Gibbons

> I was only peripherally aware of China's recent rioting (thanks to
> my almost daily viewing of Drudge). Do you have more on that in
> terms of links and additional reading so we can keep an eye on
> it?

I haven't found any regular source - just news stories that I run
across as I'm looking for information for my web site. This is one
of the many things that America is totally oblivious to, and the
rioting isn't even covered much in the foreign press.

Furthermore, I've never seen anything that puts things together the
way my article does. That is, there might be one article on income
disparities and another article on Taiwan, and another article on
Xinjiang, but no one "dares" to put everything together into a
complete picture the way my article does. As Ambrose Bierce said,
"War is nature's way of teaching geography to Americans."

Here are some Chinese and Taiwanese links you might want to check
out:

China - Xinhuanet - English
http://www.xinhuanet.com/english/index.htm

China - People's Daily
http://english.people.com.cn/

China - China Broadcast - CRI Online
http://en.chinabroadcast.cn/engnews/index.htm

Taiwan -Taipei Times
http://www.taipeitimes.com

Taiwan - eTaiwanNews.com
http://www.etaiwannews.com/

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

Originally Posted by John J. Xenakis

Dear Sean,

Originally Posted by Peter Gibbons

> Mike and I have been tossing around the ol' "Are we 3T or 4T?"
> deal as usual. I am "3T", he is "4T".

> One (of a few reasons) why I'm 3T is what I call the lack of a
> "dooziness factor", DF, involved in the Phony Fourth (2001-?). To
> my mind, the opening cascade of at least the past four 4T's in our
> line have involved truly incredible events: See 1929-33, 1859-61,
> 1773-76, 1675-77.

Although I've taken part in these discussions, and I'm strongly on
the side of 4T, I've reached the point where I don't think it makes a
damn bit of difference whether you call this 3T or 4T. The only
thing that really matters is when the actual crisis war begins. As
you know, I've identified over 100 crisis wars throughout history,
but I certainly make no claim to have identified the start of 100
crisis periods, and I'm not sure I could, even if I read every
history book in the world.

Do we even know what a 4T period is? We obviously don't, and that's
why there's no agreement. I don't agree with previous 4T periods
either. For example, I say the Revolutionary War 4T began in 1772,
when a major British banking crisis pushed most New England
businesses into bankruptcy. I see the Boston Tea Party as a
follow-on event.

So you come back to the point of - who cares? In the end, it matters
only that the Revolutionary War was fought, and that's all that's
needed to establish the generational cycles throughout history.

I can see how many of our discussions could be viewed as esoteric or worse, but one of the reasons I feel we are here is to discuss such matters. So if S&H say Dec. 1773 for the start of a 4T "catalyst phase", let's talk about it. Some will agree. Some will not.

Originally Posted by John J. Xenakis

Incidentally, awakening periods are even fuzzier. I think I know
what "awakening events" are -- a generation gap, riots, unrest, a
political conflict culminating in a mostly bloodless "internal
revolution" which establishes either the prophets or the heroes as
winners. But others would define it in some extremely vague way
involving spiritual change, something that I would disagree with.

More generically, it could be described, and is by S&H, as an attack on, and change of, value regimes (as opposed to social order in a 4T).

Originally Posted by John J. Xenakis

This is a point that I've made before. So we all agree that 2T, 3T
and 4T all "exist," because S&H said they exist, but we have totally
different conceptions of them. It's as if S&H said that oranges
exist, but I think an apple is an orange, and you think a pear is an
orange. We'd agree that oranges exist, but we don't realize that
we're talking about completely different things.

I think it is more like many of us are arguing over the shade of orange, and some us are arguing over the type of fruit. I see you as more of the latter since your interpretation of cyclical history is quite unorthodox from an S&H perspective. Not necessarily wrong, mind you. Just different.

It is Eric Meece's interpretation of S&H that is wrong because he is claiming to be in line with them when he is not.

Originally Posted by John J. Xenakis

That's why arguing about whether this is a 3T or 4T is so fruitless
(ha ha). It's a waste of time to have that argument, unless we start
with the definitions. I, for one, have not been able to come up
those definitions. I've been able to come up with an ironclad
definition of what a "crisis war" is, but everything else is
guesswork and taste.

I think S&H did a pretty good job defining all of these things, and that we here have done a good job over the years refining them (regardless of whether or not S&H agree or care).

Originally Posted by John J. Xenakis

Originally Posted by Peter Gibbons

> But as seemingly transformational as some of Bush's policies have
> been, they are no more so those of Wilson's time, and the
> underlying mood structure does not, to me, seemed to have changed.
> The reinflation of the credit bubble in a new and more grotesque
> form is a prime example.

See, here's why our views are so diametrically different. From my
point of view, Bush's policies are completely irrelevant. Everything
that's been going on has been coming from great masses of people, not
from a few politicians. So as soon as you start talking about Bush's
policies, my eyes glaze over, and I start thinking, "Why is he
changing the subject?"

I am not changing the subject. I disagree with you that policies are irrelevant. So yes, in that sense "diametrically" is right. I don't think the policies or the mood or the conditions yet reflect a 4T as S&H define it and as many of us here have refined it. But as your postings so frighteningly make clear, that's all about to change. :shock:

Originally Posted by John J. Xenakis

Originally Posted by Peter Gibbons

> I was only peripherally aware of China's recent rioting (thanks to
> my almost daily viewing of Drudge). Do you have more on that in
> terms of links and additional reading so we can keep an eye on
> it?

I haven't found any regular source - just news stories that I run
across as I'm looking for information for my web site. This is one
of the many things that America is totally oblivious to, and the
rioting isn't even covered much in the foreign press.

Furthermore, I've never seen anything that puts things together the
way my article does. That is, there might be one article on income
disparities and another article on Taiwan, and another article on
Xinjiang, but no one "dares" to put everything together into a
complete picture the way my article does. As Ambrose Bierce said,
"War is nature's way of teaching geography to Americans."

Here are some Chinese and Taiwanese links you might want to check
out:

China - Xinhuanet - English
http://www.xinhuanet.com/english/index.htm

China - People's Daily
http://english.people.com.cn/

China - China Broadcast - CRI Online
http://en.chinabroadcast.cn/engnews/index.htm

Taiwan -Taipei Times
http://www.taipeitimes.com

Taiwan - eTaiwanNews.com
http://www.etaiwannews.com/

Sincerely,

John

Thanks as always, John.

John,

I, too, think your words on China are well worth reading. I'll discuss them with my Russian friend, who of course sees a different side of China than most Americans. I'm guessing she will mostly agree with your interpretation. Would you suppose that an American Crisis (of the T4T variety) could generate enough economic shock in China to set off its eventual implosion?

--Croakmore

Seems to me that the post made about China has many parallels with what has happened in the US since the 1950's. There is depression both in rural and inner city areas with a more or less seemingly permanent underclass. Only difference is that so far, for some reason, we haven't had near the social unrest that they have and that often accompanies widening gaps between rich and poor. It seems as if Americans today are to "frozen" to engage in much unrest. Would today's America even have the stomach to stage an event similar to the Boston Tea Party?

Dear Sean,

Originally Posted by Peter Gibbons

> I can see how many of our discussions could be viewed as esoteric
> or worse, but one of the reasons I feel we are here is to discuss
> such matters. So if S&H say Dec. 1773 for the start of a 4T
> "catalyst phase", let's talk about it. Some will agree. Some will
> not.

I'm not against discussing it. I've discussed this stuff in detail.
But I just don't think it matters, and it appears to me that we're
talking about different things. If we're going to discuss it, at
least let's try to get a firm definition of what a 4T is.

Originally Posted by Peter Gibbons

> More generically, it could be described, and is by S&H, as an
> attack on, and change of, value regimes (as opposed to social
> order in a 4T).

OK, let's run it up the flagpole and see who salutes.

Let's see. The recent presidential election, according to pundits,
was a battle over "moral values." So I guess we're in an awakening
now. It probably all started in 1998 with the impeachment of
President Clinton, based on moral values.

Indeed, we can now see that an entire value regime is under attack.
On one side is the "liberal" view, which promotes gay marriage,
monetary support for single mothers, and unfettered abortion rights,
and on the other side is the "conservative" view, strongly supported
by the Christian right, with restrictions on gay marriage, monetary
restrictions on free sex, and a reverence for the life of unborn
babies.

It's pretty clear to me that there's a big attack going on against
the previous values regime, and that things are changing.

So, according to your definition. we're in the middle of an awakening
that began in 1998 (or thereabouts).

The problem is that it's not enough to describe what an awakening
"is"; you also have to tell what an awakening "isn't". Attacks on
value regimes go on all the time, and value regimes change all the
time, to a greater or less extent.

How big an attack does it have to be, in order to be an awakening?
How much does the value regime have to change?

And just what is a "value regime" anyway? Is it a bunch of people?
Politicians? Books?

I struggled for many months trying to get the definition of a "crisis
war" right, suffering under Mike Alexander's relentless grilling,
until I finally got it right. And I consider the attempt to create
an equally rigorous definition of an awakening to be next to
impossible.

And that's the point I'm making. The reason that we can't agree
whether now is a 3T or 4T is because we just don't agree on what a 3T
or 4T is, and we don't have any way to develop a common basis.

In Generational Dynamics, I actually have come up with a definition.
Since I know what I crisis war is, I base everything on that. An
awakening is the period that begins 15-20 years after the end of the
last crisis war, when college-age kids rebel against their parents
over the austere rules and compromises that were imposed after the
crisis war. That's my definition of "awakening"; simple, practical,
easy to measure.

That's the closest thing I've seen to a rigorous definition, and even
it's a little squishy because of the 15-20 years part, and the "rebel
against" part. But it's the best I've seen.

So if you have a better definition, I'm genuinely interested in
hearing about it, but I don't think S&H gave one, and I don't think
anyone else has either.

Now if we move on to the definition of a 3T, and the algorithm for
determining the boundary between a 3T and 4T, I'm frankly going
completely on feelings, and I believe everyone else is as well. (I
don't know what dooziness is, by the way, or why it makes a
difference.)

I really don't have a problem discussing these definitions, but I
note that we've been discussing them in this thread for close to a
year, and in other threads for years before.

Originally Posted by Peter Gibbons

> I think it is more like many of us are arguing over the shade of
> orange, and some us are arguing over the type of fruit. I see you
> as more of the latter since your interpretation of cyclical
> history is quite unorthodox from an S&H perspective. Not
> necessarily wrong, mind you. Just different.

I don't look at it that way. Generational Dynamics is build on S&H's
work. S&H's discovery of the generational paradigm was brilliant,
but not complete. They were way too restrictive in believing that it
only applied to a few modern nations. And they made major errors in
analyzing the 1600s because they didn't understand that timelines
need to be localized. I've overcome these problems by making some
corrections and building on their theory so as to extend it to all
places and times throughout history. This is really good news for
all of us, because it confirms the brilliance of their groundbreaking
work. However, I have found myself alternating between being upset
and bemused that so many people in this forum react to this success
by treating me like the devil incarnate.

Actually I'm pretty excited these days. I believe it was Tim Walker
who suggested finding a "unified field theory" for patterns in
history, and I now believe that I've succeeded. In the last few
months I've developed a comprehensive theory that encompasses
generational patterns, Kondratiev cycles, long waves, long cycles,
war cycles and financial cycles. Furthermore, I'm now able to define
precisely what it's possible to predict and what can never be
predicted (and I now have an over 2-year track record on my web
site). My big breakthrough came when I applied the mathematics of
Chaos Theory and Complex Systems Theory. I've created an abstract
model of the world through time, and I've shown how different views
of the model produce different results. A fractal is a graphical
representation of the attractor space of a chaotic complex system,
and it looks the same from every view. But the complex system model
that I've defined exhibits chaos in one view, a generational pattern
in another view, long waves or long cycles in another view, and so
forth. The result is that the abstract model explains everything, and
so is the "unified field theory." I haven't posted anything about
this yet, because I'm still sorting out some details and writing a
lengthy description for my new book, but I'm very excited for obvious
reasons. So, returning to the original point, I don't look at what
I've done as "unorthodox"; I look at it as a derivative of S&H's work
that shows what a remarkable insight they had in the first place, and
S&H have developed the basic foundation for the solution to a problem
that's been puzzling historians for over a century.

Originally Posted by Peter Gibbons

> I think S&H did a pretty good job defining all of these things,
> and that we here have done a good job over the years refining them
> (regardless of whether or not S&H agree or care).

I haven't seen any of those definitions or refinements. All of seen
disagreements. Are there any two people on this forum who agree on
anything?

Originally Posted by Peter Gibbons

> I am not changing the subject. I disagree with you that policies
> are irrelevant. So yes, in that sense "diametrically" is right. I
> don't think the policies or the mood or the conditions yet
> reflect a 4T as S&H define it and as many of us here have refined
> it. But as your postings so frighteningly make clear, that's all
> about to change. Shocked

Can you give me an example of a presidential policy that's made any
difference whatsoever? (If you're going to say the war in Iraq, I
would point out that both parties were committed to the war until
after it was over.)

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

Dear Richard,

Originally Posted by Croakmore

> I, too, think your words on China are well worth reading. I'll
> discuss them with my Russian friend, who of course sees a
> different side of China than most Americans. I'm guessing she will
> mostly agree with your interpretation. Would you suppose that an
> American Crisis (of the T4T variety) could generate enough
> economic shock in China to set off its eventual implosion?

Yes, please do. I'm always very interested in hearing foreign points
of view. I try to get them as often as possible.

With regard to your question, it's impossible to predict the order in
which events will happen, but I consider the most likely scenario to
be the other way around. That is, the bubble bursts in China and
starts a civil war, or a regional rebellion gets out of hand and
causes the bubble to burst. Either way, it triggers an American
stock market tsunami. In the meantime, the Taiwanese will be dragged
into the Chinese rebellion in one way or another, and that will bring
out armed forces into the war.

Incidentally, a bird flu pandemic is a real danger in 2005, and that
could be the trigger for a Chinese civil war.

I've identified the "six most dangerous regions of the world," so
chosen because a regional war in any one of them will bring us into
the war and expand to a world war. Based on crisis wars of the past,
and the amount of time between crisis wars, I've calculated that
there is a 21% probability that one of these six regions will have a
regional war in 2005. If there's no such war in 2005, then the
probability will be slightly higher in 2006. And so forth.

Incidentally, you may have heard in the news this week that Kori
Annan is flacking a report on worldwide hunger and poverty that calls
for the "rich countries" (i.e., America) to spend huge amounts of
money to fix hunger and poverty around the world.

If you ignore that self-serving crap and look at the actual 353 page
report, it turns out that it contains a fascinating collection of
information on research into the causes of wars, and the probability
of a civil war under certain conditions. Here's a sample:



These figures are almost identical to my own findings, based on
Generational Dynamics, which is quite an exciting result. I'm going
to be studying the report in detail and I'll post something soon.
http://unmp.forumone.com/index.html

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

Dear Brian,

Originally Posted by Brian Beecher

> Seems to me that the post made about China has many parallels with
> what has happened in the US since the 1950's. There is depression
> both in rural and inner city areas with a more or less seemingly
> permanent underclass. Only difference is that so far, for some
> reason, we haven't had near the social unrest that they have and
> that often accompanies widening gaps between rich and poor. It
> seems as if Americans today are to "frozen" to engage in much
> unrest. Would today's America even have the stomach to stage an
> event similar to the Boston Tea Party?

Actually, there are many differences. America's income disparity is
far smaller than China's. A poor person in America would be a rich
person in China. Unemployment is under 6%. There''s no big migrant
population. Few people share your view of a "seemingly permanent
underclass," and we have no "miserable generation." There are major
political disagreements, but the country is united in the face of its
enemies and the terrorists.

There's only one region of America that I consider vulnerable to a
regional rebellion, and that's the southwest. The reason is because
Mexico is overdue for a secular new Mexican Revolution, and when that
occurs, it will engulf the southwest. Most people don't realize that
1/3 of the California population is Mexican, and there's a huge
income disparity between the Mexicans and the Americans.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

Originally Posted by John J. Xenakis

...My big breakthrough came when I applied the mathematics of Chaos Theory and Complex Systems Theory...

John, I'm not very familiar with Generational Dynamics, so my question may be naive, but what "Complex Systems Theory" are you referring to? Do you mean that which Stuart Kauffman developed at the Sante Fe Institute? Being something of a math modeler myself, I must ask if any theory of complexity has proven its predictive worth in the social sciences. Complexity, as you know, has largely alluded the life sciences, and that's too bad, because it ought to be able to predict something important about evolution. The only complexity models I know of that are applied usefully in biology involve Information Theory (Shannon & Weaver), and they are mostly useless for predicting anything, only for interpreting such abstract things as "average mutual information," "ascendancy," and "redundancy." There are of course "resilience and stability" models of C. S. Holling (or Lotka-Volterra models) involving oscillations and trajectories, and the "dissipative structure" models of Ilya Prigogene incorporating Onsager's "reciprocity" relations in a thermodynamic context. Others, too, have been tried with large measures of dissappointment.

After having tried to use many of these so-called complexity models in biology, I have filed them away in my "perplexity" folder. Should I be less hard-headed about this? I seem to get more satisfaction out of good ol' Newtonian models.

But I admire your work. Please keep it up.

--Croakmore

The idea of a seemingly permanent underclass was not authored by me. I had read it in numerous books and studies. I'm sure, however, that you can tell from many of my posts that I think much more like a Silent than a Boomer.

Years ago I had a very strange conversation with a grad student from Mexico. His view was that the southwestern U.S.A. belongs to Mexico, and that we are occupying the land illegally.

Originally Posted by Tim Walker

Years ago I had a very strange conversation with a grad student from Mexico. His view was that the southwestern U.S.A. belongs to Mexico, and that we are occupying the land illegally.

Someone once claimed to me (in the wake of September 11th) that the United States had never participated in a war of aggression. I reminded him that between buying out Texas after their war for independence, and the Mexican War, that the United States had conquered half of Mexico.

He claimed that Mexico had never really occupied any of the territory we wound up taking over, that it was basically ours for the taking.

Originally Posted by JTaber 1972

Originally Posted by Tim Walker

Years ago I had a very strange conversation with a grad student from Mexico. His view was that the southwestern U.S.A. belongs to Mexico, and that we are occupying the land illegally.

Someone once claimed to me (in the wake of September 11th) that the United States had never participated in a war of aggression. I reminded him that between buying out Texas after their war for independence, and the Mexican War, that the United States had conquered half of Mexico.

He claimed that Mexico had never really occupied any of the territory we wound up taking over, that it was basically ours for the taking.

Ask if that also applies to the Indian Nations. I'm pretty sure they wanted to keep their land in use as they saw fit. 'We' saw it being used 'poorly', so 'we' took it.

Since my first ancestor arrived in the US in the early 1910s, I use 'we' advisedly.

Originally Posted by Marx & Lennon

Originally Posted by JTaber 1972

Originally Posted by Tim Walker

Years ago I had a very strange conversation with a grad student from Mexico. His view was that the southwestern U.S.A. belongs to Mexico, and that we are occupying the land illegally.

Someone once claimed to me (in the wake of September 11th) that the United States had never participated in a war of aggression. I reminded him that between buying out Texas after their war for independence, and the Mexican War, that the United States had conquered half of Mexico.

He claimed that Mexico had never really occupied any of the territory we wound up taking over, that it was basically ours for the taking.

Ask if that also applies to the Indian Nations. I'm pretty sure they wanted to keep their land in use as they saw fit. 'We' saw it being used 'poorly', so 'we' took it.

Since my first ancestor arrived in the US in the early 1910s, I use 'we' advisedly.

I haven't spoken to this person in a few years (since I changed states) but as part of the conversation, someone else did bring up the Indian nations.

Now that I think about it, I see that precedent being followed for our present venture in Iraq and beyond. 'We' have a duty to intervene since 'our' way of life is superior, etc.

Dear Richard,

Originally Posted by Croakmore

> John, I'm not very familiar with Generational Dynamics, so my
> question may be naive, but what "Complex Systems Theory" are you
> referring to? Do you mean that which Stuart Kauffman developed at
> the Sante Fe Institute? Being something of a math modeler myself,
> I must ask if any theory of complexity has proven its predictive
> worth in the social sciences. Complexity, as you know, has largely
> eluded the life sciences, and that's too bad, because it ought to
> be able to predict something important about evolution. The only
> complexity models I know of that are applied usefully in biology
> involve Information Theory (Shannon & Weaver), and they are mostly
> useless for predicting anything, only for interpreting such
> abstract things as "average mutual information," "ascendancy," and
> "redundancy." There are of course "resilience and stability"
> models of C. S. Holling (or Lotka-Volterra models) involving
> oscillations and trajectories, and the "dissipative structure"
> models of Ilya Prigogene incorporating Onsager's "reciprocity"
> relations in a thermodynamic context. Others, too, have been tried
> with large measures of dissappointment.

> After having tried to use many of these so-called complexity
> models in biology, I have filed them away in my "perplexity"
> folder. Should I be less hard-headed about this? I seem to get
> more satisfaction out of good ol' Newtonian models.

My problem with the phrase "complexity theory" is that's the name of
another branch of mathematics, the one that deals with the complexity
of computer algorithms. So to avoid confusion I prefer to use
"Complex Systems theory," because it deals with complex systems.
However, I'm probably fighting a losing battle.

I agree with you about social sciences. At one point I did a search
for some interesting "real-life" examples of chaos theory and complex
systems, and I couldn't find any.

But the reason that this particular model is succeeding is not
because of chaos theory, but because the generational paradigm works.
After all, you can construct an abstract model that does anything you
want, but the model isn't of much use unless the model is "true" in
the real world.

Day to day political events are completely chaotic. A political
forecast of almost any kind has less longevity than a weather
forecast, and acts of politicians have little or no impact in the
long run. And yet, despite the wild randomness of day to day
political events, they form the patterns that S&H identified --
crisis, austerity (high), awakening, unraveling, then crisis again,
and on and on. To my knowledge, no such pattern has ever been
discerned in any social sciences area, which is why complexity models
in social sciences are pretty useless. In fact, it's even possible
that there are some social sciences patterns that also reduce to
generational patterns.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

Re: "America's Manifest Destiny" & promotion abroad of American creed

Concievably the U.S.A. might become distracted from the above. For example, a new 4T in Mexico, the Hispanic fault line in California, a military occupation of Haiti, etc.

Dear Brian,

Originally Posted by Brian Beecher

> The idea of a seemingly permanent underclass was not authored by
> me. I had read it in numerous books and studies. I'm sure,
> however, that you can tell from many of my posts that I think much
> more like a Silent than a Boomer.

I should have caught that. Thanks for the clarification.

Sincerely,

John

Originally Posted by Tim Walker

> Re: "America's Manifest Destiny" & promotion abroad of American
> creed

> Concievably the U.S.A. might become distracted from the above. For
> example, a new 4T in Mexico, the Hispanic fault line in
> California, a military occupation of Haiti, etc.

It was very eerie to me personally that the theme of Bush's inaugural
address appeared to be taken from the back cover of my book. Bush
has fully adopted the concept of America's manifest destiny to be the
country that spreads freedom and democracy around the world.

In my book, I compare America's Golden Age, since 1945, to the Golden
Age of Spain, in the 1500s. In that case, Spain believed that its
manifest destiny was to spread the Catholic religion around the known
world, and defeat the forces favoring Protestants and Muslims.

When the crisis war came, Spain was full of hubris and overextended
itself by sending the huge Invincible Armada to conquer England, and
came to grief as a result.

Today, most of America is full of hubris: Republicans believe that
we're so powerful that we can beat everyone, and while Democrats
believe that we're so powerful that we don't need to beat anyone.

Right now, the question of an exit strategy from Iraq is a big issue
in the news. My expectation today is that we'll be in Iraq until the
new "clash of civilizations" world war is over.

If that's true, then the Iraq will lead into the world war, and later
historians will therefore consider it to be part of the world war.
Therefore, according to this reason, the new world war has already
begun. S&H describe what will happen next - as the war builds to a
"raging typhoon" climax, and we risk all our armed forces and our
entire country and way of life on winning the war. What will be our
"Invincible Armada" attack that will put the country in danger? We
can only wait to see.

It's possible that some local conflict -- e.g., a new Mexican
Revolution -- might distract us. But it won't distract us for long,
because both Democrats and Republicans believe that we're so powerful
that we can defeat anyone if we had to.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

After 38 deaths from bird flu,
Thailand declares state of emergency

A World Health Organization (WHO) alert says that a worldwide pandemic
of the bird flu "may be imminent."

Officials at WHO are increasingly concerned that the deadly virus, so
far confined almost exclusively to chickens and ducks, may mutate
into a form that can be passed from human to human.

With new bird flu deaths occurring in Vietnam and Thailand, Thailand
has declared a state of emergency. So far, people infected with the
bird flu stand a 75% chance of dying, but those infections were
contracted from direct contact with chickens and ducks.

If some human being contracts both bird flu and ordinary human flu at
the same time, that would probably be enough to create a bird flu
virus that could be transmitted from human to human. Such a virus
would probably have a lower death rate, but even if the death rate
lowers to 10%, a worldwide pandemic would still kill hundreds of
millions of people. The 1918 worldwide Spanish flu epidemic killed 40
million people.

The bird flu virus is clearly mutating, according to WHO officials. It
now appears capable of infecting additional animals (tigers and cats),
and it's become "hardier," able to survive longer in the environment.

Another issue is that infected ducks don't show any symptoms, but
during migrations they can spread the virus through their droppings.

Because there are so many different ways now that the virus can
mutate, WHO officials believe that a worldwide pandemic is
increasingly likely. A particularly plausible time is next month,
during Vietnam's lunar new year (Tet) celebrations, when many people
will be travelling, and more poultry is transported, slaughtered and
consumed.

In response to a question from a reader of my web site, a potential
bird flu pandemic has no major connection with Generational Dynamics,
but I'm covering it on the web site because most people are ignorant
of what's going on, and the media is doing little to publicize it.
However, there is one indirect connection: A bird flu pandemic might
trigger a major worldwide financial crisis, and might trigger a major
civil war in China.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com

We need Nomads in power.

Golden Ages are often the byproduct of the 'Universal Empire Phase' of a civilization's development, which for America (and the West in general) I see as running from roughly 1945-50 to around 1965-70. At such a time, it takes only a small nudge (like any one of the events of the last 2T) to turn golden ripeness into the brown of decay.

If our behavior seems hubristic at present, keep in mind that in the late Roman Empire, the Constantinian Dynasty harbored designs of conquering Persia. Constantine himself was only prevented from initiating that project by his death in 337, while Julian the Apostate died in 363, in combat (or from assassination) while actually attempting it. That seems pretty hubristic to me, as well. In fact, I believe that 'hubris' could actually be a cover for panic at the (conscious or subconscious) realization that civilizational decay has indeed set in, for Classical Civilization back then, for Western Civilization in our own time.