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 Forecasting America's Destiny ... and the World's


Generational Dynamics Web Log for 17-Feb-2014
17-Feb-14 World View -- Egypt's terrorism escalates with attack on tourist bus

Web Log - February, 2014

17-Feb-14 World View -- Egypt's terrorism escalates with attack on tourist bus

The 'New Frugality' versus the 'New Criminality'

This morning's key headlines from

Egypt's terrorism escalates with attack on tourist bus

Smoke rises from tourist bus on Sunday (Reuters)
Smoke rises from tourist bus on Sunday (Reuters)

A terrorist bomb exploded on a bus carrying 33 tourists in Egypt on Sunday. The explosion killed the Egyptian bus driver and three South Korean tourists. The attack took place in the Red Sea resort town of Taba, in south Sinai, just before the bus was about to cross over into Israel.

No one has yet claimed credit for the attack, but it's suspected that the perpetrators are the al-Qaeda linked Sinai terrorist group Ansar Jerusalem (Ansar Bayt al Maqdis or Champions of Jerusalem), which has claimed credit for several major terrorist bombings in the past.

Terrorist attacks have been increasing since the army coup that ousted president Mohamed Morsi on July 3 of last year, with Ansar Jerusalem claiming credit for many of them, but up till now the targets have been security targets and personnel. This is the first terrorist attack since 2008 on tourists. Tourist visits to Red Sea resorts are an important source of income for Egypt, and it's feared that Sunday's attack begins a new escalation designed to destroy Egypt's economy. Al-Ahram (Cairo) and Reuters

The 'New Frugality' versus the 'New Criminality'

Neil Howe who, along with the late William Strauss, founded generational theory in the 1980s, says in Forbes that analysts in the national media are wrong to blame the decline in labor force participation on the aging population, since the Boomer generation is actually increasing its labor force participation, and is the only generation currently to be doing so.

He suggests another explanation: That Generation-X has a new social mood, an enduring "New Frugality," of spending less, working less, and buying cheaper. According to Howe:

"Xers also prefer to do things for themselves. They donít trust others to get the job done right and consider paying others for services they could perform themselves inefficient. Why buy something new when you could employ crafty DIY tactics for half the price? Why pay nannies to look after your kids while you work to be able to afford their services? And why work law firm hours at todayís high marginal tax rates, when youíll just have to give more of your money back?"

He adds that since mainstream analysts' assumptions are wrong, their conclusions are wrong as well:

"Pundits keep offering theories about when America will return to pre-recession spending, GDP growth, and employment rates. But if Xers continue to work and spend according to a New Frugality ethos, these milestones will remain elusive."

Howe's point is that, because of generational factors, the global financial crisis is far from over, and the economic growth that politicians are counting on is not going to happen. This is a point that I too have been making for years, and it's backed up by the Velocity of Money chart that I posted last month:

Velocity of Money, 1959-2013 (St. Louis Fed)
Velocity of Money, 1959-2013 (St. Louis Fed)

The velocity of money has been cratering since the financial crisis began in 2007, and it means that people aren't spending money. This is propelling the economy into a deflationary spiral.

However, there's another side to the "New Frugality," and that's the "New Criminality."

It's easy to forget how much criminality there's been in the last decade, since the Gen-Xers came to power. There was the creation and sale of trillions of dollars in fraudulent mortgage-backed securities by thousands of bankers -- not a single one of which has gone to jail.

Analysts on CNBC lie constantly about stock valuations. There isn't even a pause any more. The lying is just part of the culture. That's criminal activity if anyone cared. (See, for example, "14-Apr-12 World View -- Wharton School's Jeremy Siegel is lying about stock valuations" from last year.)

Then there's the Gen-Xer-in-chief in Washington. Does anyone, even his supporters, believe a word he says any more? And it doesn't matter. As I've said, if President Obama picked up a gun and shot and killed Michele, then the NY Times and NBC News would blame it on the Republicans.

Probably nothing is worse right now than Obamacare. Each day, it destroys another part of the economy, just as Bashar al-Assad's barrel bombs destroy innocent people's neighborhoods in Syria. But it doesn't matter to Obama.

This is the standard Nomad archetype/Generation-X nihilistic paradigm: Destroy everything so that you can start over with a blank slate, also sometimes stated as "You have to break a few eggs to make an omelet." The Gen-Xer-in-chief believes that if enough of the medical insurance industry is destroyed, then Obamacare will survive, and his name will go down in history for government medical insurance. (See "The nihilism and self-destructiveness of Generation X" from 2008.)

All of these are examples of massive criminality that's been going on in the past decade, which would have been completely unthinkable a decade earlier, when the people of the Silent generation were in charge.

The "New Criminality" is the mirror image of Howe's "New Frugality." If CNBC analysts lie with impunity about stock valuations, and Obama lies with impunity about Obamacare, then it's impossible to trust anyone, and you have to do everything for yourself, which is what Howe says about Gen-Xers. I know that's the way I feel, and I'm not a Gen-Xer. Forbes

(Comments: For reader comments, questions and discussion, see the 17-Feb-14 World View -- Egypt's terrorism escalates with attack on tourist bus thread of the Generational Dynamics forum. Comments may be posted anonymously.) (17-Feb-2014) Permanent Link
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