Most of my adult life has been spent during the current Unraveling. In 1984 I was twenty-one years old and about to enter the workforce. The country was recovering from the worst recession in decades and the turmoil of the 1970's was subsiding. Ronald Reagan (GI Generation) won re-election with a 49 state to 1 landslide victory over Walter Mondale using his Morning in America campaign slogan. Reagan's tax cuts, interest rates starting a two decade decline and increased military spending combined to juice the economy. Reagan's policies were the final dagger in the side of communism. The Soviet Union collapsed and the Berlin Wall fell. What many thought was the end of history, with democracy and capitalism victors, turned out to be a fleeting high. The initial signs of Unraveling were seen during Reagan administration. The Space Shuttle Challenger exploded, leading to questions of competence at NASA. The Iran-Contra scandal derailed the Reagan agenda as he showed signs of mental decline. The American military retreated from Lebanon after 220 Marines were killed in a terrorist attack. The stock market crashed, losing 508 points in one day, a 23% decline. The movie Wall Street with its amoral cynical view of the world captured the darkening mood of the country.
The first George Bush administration was marked by the Gulf War, which planted the poisonous seeds for our future War on Terror, and the recession which cost George Bush a 2nd term. The unraveling could clearly be seen in the 1992 Presidential election, as Ross Perot won the most votes as a 3rd Party candidate since 1912. During the Clinton administration the country continued to fragment, became more divisive, and cynical. Politics became gridlocked, which resulted in reduced government spending. A laissez-faire attitude was promoted by Alan Greenspan and Robert Rubin for the financial markets. This led to the Dot.com bubble and its eventual collapse. Trust in financial, government, and religious institutions continued to erode. The Oklahoma City bombing and the Columbine high school slaughter convinced many that something was very wrong with our culture. A distrustful alienation had solidified into an overwhelming gloom.
The Unraveling picked up speed during George W. Bush's administration. The stock market continued to implode, the economy entered recession and half the country felt that George Bush was not a legitimate President. Then the country was shaken to its core by the 9/11 attack. For a brief time, the country rallied around the flag and fully supported the invasion of Afghanistan. This appeared to be the trigger for the next American Crisis. Instead, it resulted in an acceleration of the Unraveling. A true trigger for a Crisis period will rally the entire population (Fort Sumter, Pearl Harbor). The disastrous invasion of Iraq, horrific financial management of the economy by Alan Greenspan, individualistic greed and hubris of Wall Street, blatant corruption in Washington D.C., and complete lack of regulation by governmental agencies led to the collapse of the global economy in 2008. Decisive public action regarding $56 trillion of unfunded social liabilities, soaring public and private debt, and non-existent energy policy has been deferred for decades. Now there is no doubt that this paralysis and inaction will lead us into the next Crisis. The majority of Americans feel we are not on the right track, because we're not. The coming catastrophe will truly test the mettle of our country.
Generation X Assuming Command
We yearn for civic character but satisfy ourselves with symbolic gestures and celebrity circuses. We perceive no greatness in our leaders, a new meanness in ourselves. Small wonder that each new election brings a new jolt, its aftermath a new disappointment. Not long ago, America was more than the sum of its parts. Now, it is less. Around World War II, we were proud as a people but modest as individuals. Fewer than two people in ten said yes when asked, Are you a very important person? Today, more than six in ten say yes. Where we once thought ourselves collectively strong, we now regard ourselves as individually entitled. Yet even while we exalt our own personal growth, we realize that millions of self-actualized persons don't add up to an actualized society.
Strauss & Howe The Fourth Turning
Barack Obama became the 1st Generation Xer to be elected President of the United States. His background is a classic Nomad story. He has lived the life of a wanderer, living all over the globe, a child of divorce, fatherless, raised by grandparents, and a free agent in his career. Generation X grew up as abandoned children and alienated young adults. Generation X leaders will be pragmatic, savvy and practical. Obama has proven thus far to be pragmatic and able to get his agenda initiated. Previous Nomad leaders who proved to be highly competent doers during a time of Crisis include Dwight D. Eisenhower, George Patton, and Harry Truman. You may not agree with Obama's plans or policies, but it is clear to anyone that he is an intelligent, pragmatic man that will institute dramatic change in the policies of the United States.
It is very likely that Barack Obama will lead the country into the next Crisis. He will not lead us out of the Crisis, as it is unlikely to subside until 2025. As the Unraveling transitions into Crisis the apathy reflected in historic low voter turnout will reverse itself as Americans become mobilized by the Crisis. The economy always undergoes wrenching transformations during a Crisis. The U.S. economy will likely be racked by panic, depression, inflation and war. We have witnessed a preliminary financial panic, but the real panic will be much more traumatic. The separateness and blame witnessed during the Unraveling will transform into gathering and family togetherness. McMansions will become useful as three generations will more frequently live under one roof. Immigration will decline as the population will fear outsiders and place strict restrictions on foreigners entering the country. During the coming crisis, our culture will likely be cleansed, censored, and harnessed for the public good. The current ongoing financial debacle will ultimately contribute to the Crisis causing trigger of a worldwide oil shortage.
Peak Oil + Green Energy = Crisis
"But I guess it just reminds me that as a society, we don't have the ability to actually come to grips with a crisis until it hits us in the face. I am discouraged enough now to think that we're going to have to have a really nasty shock before we wake people up. The most optimistic estimate for the average depletion rate of the world's currently producing oilfields is between 4% and 5% annually, or about four million barrels per day at our current rate of production. That means that each year we must find enough new oil to first replace those four million barrels of lost daily production before we even add enough to meet new demand. This is all the more worrisome because world oil discovery of new reserves has been slowing since the mid-20th century."
Matt Simmons
Matt Simmons has been a lone voice in the wilderness warning Americans about the impending crisis that will be caused by Peak Oil. His prediction of a worldwide peak in crude oil production at 73 million barrels per day in 2005 has proved correct. Worldwide total liquids production peaked at 86 million barrels in 2008. All of the easy oil and gas in the world has been found. Additional supplies will be found deep below the ocean, in challenging arctic regions, in tar sands, and shale. It will be dramatically more expensive to extract oil from these sources. Oil discoveries have been in a steady decline since the 1970's.
The United States has been dependent on 600 million barrels of oil from Mexico every year. By 2012 Mexico will become a net importer of oil, so 600 million barrels of oil will need to be replaced. Iran's oil production is in decline as capital investment has been ignored for years. Russia's production has peaked. Saudi Arabia continues to lie about its ability to ramp up production. Their oil fields are 40 years old and in terminal decline. By 2012, the world will only be able to produce 80 million barrels per day. There is no doubt that demand in 2012 will be higher than today's 85 million barrels per day as China, India and other developing countries continue to grow. Even a Wall Street economist could predict what will happen to prices.
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