Dear Matt,

Originally Posted by MichaelEaston

> 5th Turnings

> According to GD, when the crisis in the 4th turning doesn't
> materialize or doesn't climax, the nation then enters a 5th
> turning, where the danger of a crisis remains. Let's see, what are
> some qualities...

> We know there are increased suicide bombings from Muslim
> countries. This means increased self-sacrifice during a time of
> relative "peace." Suicide bombers only make up a small proportion
> of the population, but still, this indicates a higher amount of
> fanaticism. There is also a quasi-1st turning alignment: Nomads in
> elderhood, Heroes in mid-life, young adult Artists, and child
> Prophets. However, there is a difference: Without an end to the
> crisis, the generations don't fit into the Fourth Turning diagonal
> model:

>

> I suppose that there is a possibility of the feeling of an upbeat
> 1T as Nomads and Heroes control society; but in a 5T the danger
> lurks, and any sense of the 1T should be false. How will a society
> react to problems? It's hard to tell. At this moment (in my
> opinion, of course) our 5T countries are: Ireland, Mexico,
> portions of West Africa, Turkey, portions of eastern Europe,
> Russia, Morocco, Greece, Saudi Arabia, and possibly South Africa.

> Justin '77 concludes that the Russian people have reacted to
> recent incidents in a calm and collected manner, and the "evil
> empire" overtones we continually hear in the West simply don't
> reflect the true situation.

> What conclusions can we draw? What reactions should we expect?
> There has been very little research on this matter, so it's
> difficult to analyze.

> Just thinking off the top of my head...

I prefer to use the form of the diagram that starts with the crisis
era:



The important point is that the greyed boxes could be anything, and
will be different if the crisis war begins in the 3rd turning or the
5th turning. In any event, the crisis war unifies the generations,
no matter what archetypes were in existence prior to the beginning of
the crisis war.

Artists are always Artists because they always suffer the
"generational child abuse" that gives them their characteristic
behaviors.

The first turning is an "Austerity era" for the greyed boxes, and a
"High era" for the white boxes.

And what this diagram shows is that if a crisis war begins in a
turning other than the 4th turning, it takes only two generations for
the full generational constellation to re-assert itself again.

However, this diagram doesn't show what happens to the generations
as the nation enters a 5th turning, where no crisis war has begun
during the 4th turning.

The generations from top to bottom are:

1. Nomads. I would guess that Nomads are more active in a 5th
   turning crisis war than Prophets in a 4th turning crisis war, but I
   don't know any way to test that.
   
2. Would-be Heroes. I believe that it's the interactions between
   levels #2 and #3 that create the forces leading to such things as
   suicide bombers. The Heroes were ready to fight a war 20 years
   earlier, and now have come to terms with their frustrations. They're
   still unhappy about various injustices, but they've accepted the fact
   that nothing's going to happen.
   
3. Would-be Artists. Now here's the exciting part. The would-be
   Artists absorb their parents' frustration, and become susceptible to
   "prophets" who convince them to commit altruistic suicide as suicide
   bombers. I've called them "Super-Nomads." The difference between
   20-year-olds in the 4th and 5th turnings is that they die with or
   without, respectively, their parents' blessing.
   
4. Artists. Kids who grow up during a crisis war are always
   Artists.

That's a good first estimate of the generational constellation during
a 5th turning.

Sincerely,

John

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

Burma / Myanmar

My analysis:

Crisis war: 1727-1752: Various rebellions against the Toungoo
throne at Ava. Climax when the Ava throne fell in in 1752, after a
siege by a combined army of different ethnic groups, ending the
Toungoo dynasty.

Crisis war: First Burmese War, 1824-26. British victory,
Britain annexes the southern portion of Burma to become part of
British India.

Awakening war: Second Burmese War, 1852-53. Britain annexed
additional territory.

Crisis war: Third Burmese War + civil war, 1886-1891. The war
with Britain itself ended with a quick Burmese surrender to Britain,
but violent civil war among various ethnic groups continued until
1891.

Awakening: 1920 - A generational split between old and young
(presumably between Artists and Prophets) members of the Young Men's
Buddhist Association. Younger members rename the organization the
General Council of Burmese Associations, dedicated to
anti-colonialism.

Unraveling war: World War II. Occupation by Japan.

1948: Independence of the Union of Burma.

Note: Aung San, commander of the Burma Independence Army, is
considered to be the founding father of Burma. He was assassinated
six months before final independence.

Crisis war: 1948-1958: Civil war among ethnic groups, with
intervention by Chinese. Climax in 1958 when the army took over
power, and turned power over to a civilian government.

The army overthrew the civilian government in 1962, and has remained
in power since then.

Awakening climax: On 8/8/88, hundreds of thousands of students
in the "88 generation," joined by monks and civilians, marched against
the military government. Soldiers opened fire on demonstrators with
machine guns, resulting in thousands of casualties.

Note: Aung San Suu Kyi, daughter of Aung San, participated in
the 1988 demonstrations, calling for democratic government. In 1989,
she was placed under house arrest without charge or trial. In 1991,
she won the Nobel Peace prize.

Today: As the 20th anniversary of 1988 massacre approaches,
there are massive new demonstrations in Burma, led by monks and nuns,
but now joined many ordinary citizens. The tension in Rangoon is
great, and the military government is evidently trying to decide
whether to let things be, hoping the demonstrations will fizzle, or
repeat the violent reprisals of 1988. Since this is an unraveling
era, it would seem that the demonstrations will indeed fizzle, unless
the army overreacts.

Note: Aung San Suu Kyi is still under house arrest, and is
considered a goddess by today's demonstrators.

Note: It's worthwhile remembering now that the Unraveling Era
demonstrations that occurred in Venezuela in May have now fizzled
out.
** Students riot against Hugo Chavez in Venezuela
http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e070530#e070530

Sincerely,

John

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

Originally Posted by John J. Xenakis

Burma / Myanmar

-snip-

Thanks so much for this analysis! I didn't have much information on the country, and I noted that this (along with Thailand) was the most confusing. It seems to make more sense now.

Once again, thanks!

Originally Posted by John J. Xenakis

Dear Pat,



It's an "upward crash."

Sincerely,

John

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

Yeah, and pigs are flying in swarms through the streets of NYC. Dream on.

A posting by James Sinclair at itulip.com on the expected failure of derivatives. The date is early 2005. His observation, written in an open letter to Greenspan, imo...derivatives are a fools game that will collapse the economy and the dollar. Prescient?! Wow.

The Derivative Conundrum
Author: Jim Sinclair

I have constructed the following open letter to Chairman Greenspan.

Dear Chairman Greenspan:

Understanding the mechanics of over-the-counter derivatives is a unique talent. In order to fully grasp what the OTC derivative risk is all about, experience as an owner and risk taker of an arbitrage company is the best prerequisite. Because of this, even a member of the Federal Reserve Board cannot be expected to have all the facts at hand.

Your recent expression of concern over the growth of what you refer to as the “derivative market” is well placed even though you restricted your commentary to a certain group of OTC derivatives and renewed your opinion that NO regulation of these specific performance financial vehicles is required.

You refer to the OTC derivative market which is a significant stretch for the word “market.” I can with authority and experience state that this market is not simply illiquid it simply does not exist.

As a result, there is no one standing ready as a market maker to produce bids and offers as is common to the basic structure of an active equity market. There is not even a computer system linking traders able to match bids and offers.

The non existence of the OTC derivative market is a direct result of the fact that there is no standard form of OTC derivative contracts on more than 95% of the OTC derivatives outstanding. Without standardization, such a December gold contract on the Comex, whereby maturation and specifics of delivery are specified and common, no market can exist.

Your expressed fear is that a mass exit from a certain generic type of OTC derivative could cause a problem is not in a practical sense correct. This is because there is no exit door at all. These instruments are made or unmade by negotiations with an entity that offers its services to so do. In order to close a commitment, an entity holding that commitment must have an entity calling itself a derivative dealer find some fool to take the other side. The chances of that happening in a mass exit situation are non existent unless the holder is willing to take a terrific loss because it will not appear in a fall until the bottom or in a rise until the top. Expressed differently, if an entity is in danger of bankruptcy in OTC derivatives, it is going to experience bankruptcy because there is no exit door.

Regarding the opinion that there is no need for regulation, you might consider the following:

1. OTC derivatives are not transparent.
2. SEC reporting requirements do nothing to provide for transparency of derivatives held by reporting companies.
3. Exchange reporting requirements do nothing to provide for transparency of OTC derivatives held by member companies.
4. OTC derivatives are not listed on any major exchange.
5. OTC derivatives are akin to special performance contracts unfunded and floating within the system as special performance financial obligations which are totally dependent on the balance sheet and liquidity of the party to the agreement that is the loser. This is a fact because unlike the listed derivatives called futures and options there is no clearinghouse guarantee for the performance of the obligation. That means that there is no true accounting or payment by the loser to the winner on any time basis via a clearinghouse. Therefore, the loss builds up to a crescendo until the only option is a complete bailout or bankruptcy.
6. Because there is no open market for these items, evaluation of OTC derivatives is simply a computer calculation made using assumptions of conditions prevailing at an assumed future period. To make these assumptions correctly is quite rare and in fact is almost non existent. If you had that knowledge you would be recruited by the Federal Reserve and in time have the honor of being a governor unless you preferred simply to corner the world’s supply of money.
7. The majority of entities doing the largest business in OTC derivatives are subsidiaries whose parent is usually a well known and internationally respected investment firm or bank. There is no requirement under law for such a parent to guarantee the subsidiary as it pertains to trade debts. There is no way to know the financial condition of these subsidiaries or the degree to which they have extended themselves on these instruments. The reason for that is that these subsidiaries are primarily domiciled in areas where capital requirements for these transactions do not exist..

The following data was reported by the Bank for International Settlements in its 2004 review of derivative activity:

OTC derivatives market activity

Turnover data

Global daily turnover in foreign exchange and interest rate derivatives contracts, including traditional instruments such as outright forwards and foreign exchange swaps, rose by an estimated 74%, to $2.4 trillion, between April 2001 and April 2004. At constant exchange rates the increase is 51%, still considerably higher than the 10% growth recorded in the previous survey.

Daily activity grew in both OTC segments, ie interest rate and currency-related derivatives, up by 110% and 51% to $1,025 billion and $1,292 billion respectively. Over the same period activity in exchange-traded derivatives rose by 114%, to $4.7 trillion. Given that exchange-traded derivatives are composed, for the vast majority, of interest rate related products, the expansion recorded in the two markets, OTC and exchanges, has been comparable.

The growth of business in exchange rate derivatives parallels the 57% expansion in turnover in traditional foreign exchange markets. Higher demand in both the traditional and derivatives segments reflects the greater role of such products as an alternative investment class to equity and fixed income products, as well as the larger role of hedge funds and asset managers. In the interest rate segment, changes in hedging and trading practices in the US market helped boost activity. Business in interest rate derivatives may also have been favoured by an exceptional rise in volatility, especially in the US market.

Trading increased at especially high rates between reporting banks and other financial institutions, mainly hedge funds and insurance companies. Expansion was also strong for activity with non-financial customers, ie firms. London and New York remain the two largest marketplaces.

More...

Conclusion

Therefore I offer the conclusion that OTC derivatives - not exchange listed derivatives with clearing house guarantees - are the greatest risk to the US economy, the world economy, and the US dollar.

This problem will start to show itself the minute that there is a significant change in either the equities market or the market assumptions now in place concerning interest rates.

As far as regulations are concerned, they will come more than likely as a product of a debacle - not before it. In a practical sense, having regulators focusing on this area of financial instruments would cause that debacle when they came to realize what I have defined to you in this letter.

Furthermore, any new laws concerning bankruptcy as they pertain to the entities that present themselves as OTC derivative dealers would favor those dealers and not the system itself. The possibility that legislators understand the mechanics of derivatives is simply not possible in my opinion.

Respectfully,

James E. Sinclair
April 11, 2005
http://www.itulip.com/forums/archive....php?t-85.html

Originally Posted by sean '90

Yeah, and pigs are flying in swarms through the streets of NYC. Dream on.

John, you actually can't argue with him. He's completely impenetrable. For anything he writes, God is on his side. We petty mortals must stand aside.

I posted at Mish or Calculated Risk the fact there was a trading gap in spot gold at 724.50 and above. It was today filled.

Gaps don't stay open unless there's a serious runaway, breakaway or exhaustion. This is good. Gold is now free to do what it will. The direction is obvious.

Longer term, the argued deflation will have an effect if the deflation is broad and deep enough. As of now, gold is the anti-fiat.

The US, especially its economic spokesmen, BB & Paulson, continue to treat the current derivatives/real estate in-process collapses as if they were inconveniences, but minor. Failure by those officials to tell the truth when in a socio-economic situation causing exceptional anxiety in J6P will lead to the rejection of current leaders when the reality turns further negative. Cite Burma today; the monks and thus the people won't listen to the scary army at this time. It bodes poorly that BB and Paulson said the subprime situation was contained. The response is condemnation, loss of trust, and rapid disinvolvement with the USD. Much more intense consequences will follow in the next cycle of dishonesty and fear.

I never really liked the idea of a Puritan Flip. I'm wary of solely event-based actions changing generations around. True, the society had to kind of be built from the ground up, but this is not too different from mid-cycle societies who continued on the same path when most of their infrastructure was destroyed. Furthermore, most of the migrations to colonial American came after 1620. Were that many people simply generationally absorbed into the existing setup, assuming there was a "flip?"

Is it possible that there was no "Puritan Flip" at all and the long mid-cycle period just included a fifth turning? Does the narrative make sense this way?

Originally Posted by MichaelEaston

I never really liked the idea of a Puritan Flip. I'm wary of solely event-based actions changing generations around. True, the society had to kind of be built from the ground up, but this is not too different from mid-cycle societies who continued on the same path when most of their infrastructure was destroyed. Furthermore, most of the migrations to colonial American came after 1620. Were that many people simply generationally absorbed into the existing setup, assuming there was a "flip?"

Is it possible that there was no "Puritan Flip" at all and the long mid-cycle period just included a fifth turning? Does the narrative make sense this way?

Or maybe turnings were longer before 1820?

Originally Posted by Odin

Or maybe turnings were longer before 1820?

Before I continue,

if I throw out a few examples of shorter than normal (45-55 year mid-cycle) or normal (55-65 year mid-cycle) periods that occurred before this magical switch, how would you respond?

Originally Posted by MichaelEaston

Before I continue,

if I throw out a few examples of shorter than normal (45-55 year mid-cycle) or normal (55-65 year mid-cycle) periods that occurred before this magical switch, how would you respond?

I would have to look at the history of the country myself before I could make any judgments.

Oh, and I was looking through the old threads and there is an old poster named David McGuiness that supposedly has a 700-page book that talks about 100-year saeculae over thousands of years. I've looked for the book on Amazon and Barnes&Noble.com and can't find it.

Originally Posted by Odin

I would have to look at the history of the country myself before I could make any judgments.

I'll start out with a couple off the top of my head.

Ottoman Empire Crisis: Spanning the Battle of Kosovo (1389) through the "breakup" of the Ottoman Empire/Timur Invasion (1402)

Ottoman Empire Crisis: Fall of Constantinople (1453)

and

Ancient Greece Crisis: Persian Wars (through Marathon -- 490 BC)

Ancient Greece Crisis: Peloponnesian War (start 431)

I've done a pretty complete study of the former -- you of the latter. Although I know a fair bit about Ancient Greece.

Well, what do you think?

Originally Posted by Odin

Oh, and I was looking through the old threads and there is an old poster named David McGuiness that supposedly has a 700-page book that talks about 100-year saeculae over thousands of years. I've looked for the book on Amazon and Barnes&Noble.com and can't find it.

The book doesn't exist except as a printout of the posts from the original forums by Mike Alexander. You'll have to ask him for a copy. Otherwise, you'll have to read his second book, in which he has a table with McGuiness's turnings.* Either that, or try your hand at the Wayback Machine to see if you can find the relevant pages from before July 2001, when the first version of the new forums became the default.

* Full Disclosure--I was a proofreader for Mike's second through fourth books.

Originally Posted by MichaelEaston

John, you actually can't argue with him. He's completely impenetrable. For anything he writes, God is on his side. We petty mortals must stand aside.

How can you "crash upward". It violates the laws of the universe.

Originally Posted by MichaelEaston

I'll start out with a couple off the top of my head.

Ottoman Empire Crisis: Spanning the Battle of Kosovo (1389) through the "breakup" of the Ottoman Empire/Timur Invasion (1402)

Ottoman Empire Crisis: Fall of Constantinople (1453)

and

Ancient Greece Crisis: Persian Wars (through Marathon -- 490 BC)

Ancient Greece Crisis: Peloponnesian War (start 431)

I've done a pretty complete study of the former -- you of the latter. Although I know a fair bit about Ancient Greece.

Well, what do you think?

I'll look check things out when I can, probably this weekend (have a Biochemistry test tomorrow I need to study for tonight!)

Originally Posted by sean '90

How can you "crash upward". It violates the laws of the universe.

He was trying to say "investors are stupid" is a witty way.

Originally Posted by sean '90

How can you "crash upward". It violates the laws of the universe.

What are you talking about?

When he says an upward crash, he probably means that hysteria is driving the market upwards (as opposed to its regular definition, pointing the other way). It really isn't all that amazing or universe defying.

Originally Posted by Odin

I'll look check things out when I can, probably this weekend (have a Biochemistry test tomorrow I need to study for tonight!)

Great, I look forward to it.

I'll probably get out part one of the Seljuk/Ottoman narrative over the next day, and part two a few days after that, so I'll make my case at that time.

Originally Posted by MichaelEaston

What are you talking about?

When he says an upward crash, he probably means that hysteria is driving the market upwards (as opposed to its regular definition). It really isn't all that amazing or universe defying.

But how is a rising stock market a crash?

Originally Posted by sean '90

But how is a rising stock market a crash?

I really don't know how to explain it any better than I just did. Sorry.

Dear Sean,

Originally Posted by sean '90

> But how is a rising stock market a crash?

How about something like this for an analogy?

"The helicopter always takes off from inside the hangar, but on
Wednesday it went up too quickly and crashed into the ceiling."

Sincerely,

John

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

Originally Posted by John J. Xenakis

Dear Sean,



How about something like this for an analogy?

"The helicopter always takes off from inside the hangar, but on
Wednesday it went up too quickly and crashed into the ceiling."

Sincerely,

John

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

That put a wonderful image in my head. <sarcasm>

Last word copyrighted to Marx & Lennon.

John posted, " Actually, the Fed's ½% interest rate reduction last week evidently continues to have a powerful effect in reducting general investor anxiety and panic. I wouldn't have expected it to be so effective, but investor anxiety appears to have dropped to almost nothing. I don't know anyone who believes that the interest rate reduction has any significant REAL effect on the global economy, but it is having, for the time being, a significant EMOTIONAL effect."

I disagree. There is a sense of fear which causes people to freeze, to defer taking an action...the deer in the headlights experience.

I've pointed out there's a clear chart pattern that shows a reversal based on a DSI pattern (this idea belongs to Dennis and always has an inside day within a few days after the reversal bar. In this pattern, the reversal either doesn't pan out and there are other patterns that emerge, or there's an oft-times catastrophic failure. That's what I've been posting at Mish's saying is happening now. We're seeing indecision after making the reversal.
That is what's happened. Fear was stemmed for a moment. But it's well set in the minds of the public. And when an event which is perceived as catastrophic or foreboding arises in the near term future, the public will react with full recollection of their recent fear. It comes pouring back on them. That's why I am now expecting a catastrophic decline in the DJIA within a few weeks 2-6, if the pattern of indecision continues. Indecision is a narrow trading range, between a top of a "new" high of maybe 50-100 points above the recent high, and a low of around 13500. I wait to see the sentiment as defined by the pricing materialize.

I can't predict this will happen, but if the pattern continues as it's doing now, it will happen. I only read what evolves; I don't force a reality that I want on the reality that evolves.

The public is fearful yet hopeful. It's not about to surrender its survival. Survival depends on being at this point in time irrational in one's expectation that the economic terminations occurring are nothing more then temporary and that alternative work will arise quite quickly to fill the gap.

In the external world, the next FedRes pricing round, in a few weeks, is being considered at best only in shallow terms. As the consequences of the first rate cut become clearer, the public will become frightened to see the FedRes consider and allow the market to anticipate and price in the next rate cut. I'll guess that will be the fear that will cause the public to run away from the equity market because it's expected to be much worse and in a way that can be described as indeterminate...non-specific anxiety.

I'll take a betting position if this pattern evolves, rather large for me, in the down direction, again, if this pattern continues to evolve...about 1 to 2 weeks from now. I'm waiting because the pattern is not yet high probability. When it is, I believe it will have a consequence, and I want what I think will be a windfall from this consequence.

The public continues to refuse to raise this issue as primary. They're in denial; yet they hear the news and know there's something going on that's negative. This is so what Greenspan so very late in his life admits and what you John have been talking about.

But the public knows darned well it did not receive a get out of jail card, free.


Haven

I have a question of you guys. I believe the DJIA will collapse or begin to collapse within 2 to 4 weeks based on a chart pattern.

Based on what I am saying, gold will scream up and stocks will fall down. Assuming this is true, do you see in your views of society, prospective reasons, wherein you project or explore future alternative outcomes that will now, prospectively, rather then historically, explain why or that this will occur?