Friday 7 July 2017

Are we in the third or fourth turning?
Here is an interview with Neil Howe. He thinks the fourth turning started in 2008, Im not sure it has started yet I think we are in the unravelling third turning still which started, in my view in 1997. However we are seeing signs of the Fourth Turning with challenges to the institutional framework and new leaders such as Trump, Sanders etc rising to prominence.
So his four stage cycle theory in my view is:
1st, High, 1946-1971(?) 25yrs, exiting the last fourth turning (1914-1945), post war boom institutional framework was ended by Nixon closing gold window
2nd, Awakening, 1971-1997? 26yrs, cultural changes, ending cold var and Vietnam etc, transition from post war boom via a wage inflation cycle in the 70s and then reform in 80s. Ended with the 97 crisis since which we have had increasingly desperate central bank policies
3rd Unravelling, 97-08 or 97 to a few years from now, ie so far we are 20 years into the third turning. Central banks have been relied on to pump up asset bubbles to support structural imbalances. Entered into the major war predicted in the 4th turning, I think its the war on radical Islam. 2008 and policy response was part of the unravelling, Howe thinks the 2008 crisis was the start of the 4th turning. Given the imbalances are still growing I dont see how we are in the 4th turning yet, the entire policy response since 2008 was about pushing back the crisis, but in the last 12 months the reform leaders associated with the 4th turning have been getting elected. Overall I think the start of the 4th turning will be triggered by a US recession in turn probably triggered by Fed hiking cycle which is still in its early phases.
4th Crisis, the previous institutions breakdown in crisis and a new leader emerges to reform them and create new institutions. Howe argues we are already 9 years into the fourth turning since 2008.
The precursors of this are manifested by Brexit, Trump, Sanders, Le Pen, Grillo, Tsipras, Farage etc etc. The Fed is now hiking which will destabilise the debt bubble. I think the defeat of ISIS in the Levant will see them transplant themselves from a fairly small regional group into a pan continental group across the sahara region which will be the major, drawn out war that we are drawn into.

The 4th turning theory also has a lot more social and cultural predictions based around generation attitudes to society and culture.

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