Generational Dynamics: Forecasting America's Destiny Generational
 Forecasting America's Destiny ... and the World's


Generational Dynamics Web Log for 3-Nov-2010
3-Nov-10 News -- The political realignment continues

Web Log - November, 2010

3-Nov-10 News -- The political realignment continues

Chaos in Europe: Will Turkeys vote for Christmas?

Big Republican 'wave' signals more realignment to come

At the time that I'm writing this, on Tuesday evening, it appears that the Republicans will score a massive political victory over the Democrats in the midterm elections.

I'm reminded of what happened two years ago, when the Democrats scored an even more massive victory over the Republicans.

After Barack Obama had been elected, I mentioned that the political bickering was going to get worse. A couple of people said, "That can't be right. The Democrats are in charge of the White House and both houses of Congress. Why should there be bickering?"

And yet, the conflict and paralysis in Washington have only gotten worse. Each side puts spin on it to blame the other side, but the bottom line is conflict.

As I started pointing out many, many years ago, this conflict is generational, not political. The survivors of World War II, the GI Generation and the Silent Generation, did great things -- they created the United Nations, World Bank, Green Revolution, World Health Organization, International Monetary Fund, and so forth. They created these organizations and managed them for decades with one purpose in mind: That their children and grandchildren would never have to go through anything so horrible as the Great Depression or World War II.

These organizations would make sure that everyone would be fed, everyone would be healthy, poverty would be eliminated, and conflicts would be settled without war.

Throughout their lives, the people in those generations worked together, even when they were on opposite political sides, to protect America and the world from the excesses and xenophobia that led to the Great Depression and World War II.

As late as the 1980s, the Republicans and the Democrats cooperated with each other to change the Social Security system to make it a sounder system. After that, they cooperated again to specify new rules to control the budget deficit. And in 1996, Democratic President Bill Clinton, saying that "the era of big government is over," cooperated with the Republican congress to eliminate the welfare entitlement.

No one would ever think that any of this is possible today. People talk about a "negotiating process," but that's a joke. Nobody wants to compromise, even with people of his own party. Politicians are becoming more extreme. "The center cannot hold," to quote an old phrase, and "the center is collapsing."

The Republicans are experiencing euphoria right now, but cold reality is going to hit them soon. People will soon discover that nothing's changed, and that there are still no solutions. The economy is going to worsen, xenophobia is going to become more apparent, and tensions will increase around the world. And now the Republicans will have to take part of the responsibility.

Some pundits are saying that the Tea Party will become less relevant after this election. This assumes that the political realignment is over, but it's far from over. What's more likely is that the Tea Party itself will split into bitterly conflicting factions.

From the point of view of Generational Dynamics, we're in the "post unraveling" phase of the Crisis era, a time when the stale ideas of the previous Awakening era (the 1960s) are still in play, even though they're not working any more.

The true crisis will begin with the "regeneracy," one or more events that are so horrible that they regenerate civic unity again, for the first time since the end of the last crisis war (WW II). These might include a major global financial crisis, a major terrorist attack on American soil, or a major military defeat abroad -- probably all three of these, leading to a "Clash of Civilizations" world war.

When the existence of the nation is truly in peril, as it will be again soon, that's the time the people will finally put aside their outdated ideas and their bitter quarrels, and will unite again for survival.

And, assuming that the nation survives the crisis, the political realignment will be complete when the crisis reaches a climax, and the nation enters a Recovery era.

Chaos in Europe: Will Turkeys vote for Christmas?

Although American investors don't yet seem to have noticed, Europe is rapidly speeding toward a major new crisis.

The news on Tuesday is that investors are dumping Irish and Greek bonds, and pushing yields (interest rates) on those bonds to record highs, according to MarketWatch. Yields on Ireland's 10-year bonds are up to 7.17%, and are up to 10.67% on Greece's 10-year bonds. You'll recall that these are the yields that led to the euro crisis last spring, resulting in the May bailout. It's increasingly clear that the bailout didn't work.

This situation has caused political chaos in Europe similar to the political chaos in the U.S. A lot of the conflict centers around the European Financial Stability Facility (EFSF) that was set up after the bailout of Greece to provide funds to any future euro country in trouble.

According to EuroIntelligence:

"EU leaders trigger another bond market crisis

EU leaders have concluded another agreement, and once again the bond markets panic. We have been warning readers of a gulf between the German position on future crisis resolution in the eurozone and that of other EU member states, and that the fundamental conflicts of the first half of this year remain unresolved. The summit only agreed some minimum parameters for Herman van Rompuy’s next task force, but the difference of the positions on the crisis resolution mechanism remain extreme. Germany wants a bail-in mechanism to replace the EFSF, as a result of which European bond spreads have risen again. Investors understand that the German proposal will dramatically increase the probability of future sovereign default in the eurozone. The EFSF is not a solution to a crisis resolution, it is merely a temporary arrangement. ...

(This whole chain of events shows clearly that EU leaders continue to underestimate the complexities of a monetary union. The structure is simply not capable of handling default, while simultaneously ruling out bailout and exit. The resistance to the German plans in the European Council remains severe, and we simply cannot see Greece, Ireland, Spain, or Portugal agreeing to a crisis resolution mechanism, whose main effect would be to drive up their bond rates. It would be like turkeys voting for Christmas. Expect this to run well into next year. In fact, we would not be surprised if this debate were to continue right until the expiry of the EFSF in 2013.)"

I would expect to see a crisis arise well before 2013.

In fact, it may well be there's panic-selling going on right now with Greek and Irish bonds, just as there was a panic last spring. If that situation repeats itself, then it's not clear whether the Europeans will find a way to agree on additional bailouts -- especially since the Germans will, once again, be asked to carry most of the load, something that they'll refuse to do.

Additional links

Although India has suffered numerous terrorist attacks in recent years, they've been perpetrated by home-grown jihadist or Hindutva terrorists, or by Pakistani militia (Lashkars), but not by al-Qaeda. But now, al-Qaeda is intent on spreading into India, in order to exploit differences between Pakistan and India, especially in Kashmir. Jamestown Foundation

A wave of multiple parcel bombings targeting embassies in Athens has forced Greek authorities to halt all shipments of mail and packages. Police have declined to name their suspected perpetrators, other than it is likely a local anarchist group unconnected to mail bombs from Yemen. Anarchist and Communist groups have been increasingly active in Greece in the wake of the severe austerity program that's been implemented as a condition of last May's bailout. CS Monitor

French President Nicolas Sarkozy and British Prime Minister David Cameron signed new treaties on defense cooperation. "Today we open a new chapter in a long history of co-operation on defence and security between Britain and France," said Cameron. The plan is that they'll use each others aircraft carriers for training and military operations, and share resources and facilities for nuclear testing and use of transport aircraft. Call me skeptical. These two countries have been bitter enemies at least since 1066, fighting the Hundred Years War, the War of the Spanish Succession and Napoleonic Wars, and others, and a lot of those old feelings are still around. BBC

The Mideast peace "process" is frozen, Israel is building new settlements in East Jerusalem, and the Palestinians are sitting around, wondering what to do next. We've mentioned all the possibilities before: appeal to the U.N. for an international mandate to create a Palestinian state; dissolve the Palestinian Authority, and force Israel to provide security in the West Bank. There's also the proposal floating around where the Palestinian state would include East Jerusalem, but the Israelis would lease back some of the land for 40-80 years. Once again we have chaos and paralysis, which is the theme of today's posting. Jewish Week

(Comments: For reader comments, questions and discussion, see the 3-Nov-10 News -- The political realignment continues thread of the Generational Dynamics forum. Comments may be posted anonymously.) (3-Nov-2010) Permanent Link
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