False Dawn 1999/2000: Mass Denial

1999 and early 2000 will be remembered as one of hubristic euphoria; the ultimate calm before the storm, or, the eye of the storm.

Recognizing this "sheeple" phenomenon of mass delusion, and the cyclical swing to and from pessimism is a fascinating pursuit. Throughout history the mood of any given population repeatedly shifts in unison, often with abrupt turning points. It is the reward of social historians and futurists to first capture and identify this sentiment after objective observation, then through worldly events and other forces, cycles or evidence, determine when the next shift in mood will occur.

On the long cycle front Howe & Strauss, in their book The Fourth Turning , identified the era of unraveling (characterized by deep pessimism & social breakdown) that America has witnessed for two decades will soon be consolidated into a period of crisis and upheaval where the nation's current mindset of superficial well-being led by greed and booming economy is swept away.

The limitations of such long-term projections is determining, with any degree of accuracy, the precise year such a turning really begins. Fortunately there are shorter cycles that can be found within the larger saeculum.

Using recent history as an example, we observed a brief period from 1983 to 1985 where the national mood of America shifted from one of deep pessimism (Remember down-beat 1980 when the consensus forecasters expected oil to run out and inflation to skyrocket? Disinflation and cheap petrol became the reality.) to that of a pseudo re-birth coinciding with President Reagan's "Morning in America." The prevailing mood for the remainder of the eighties was that of a hollow optimism with an underlying sense of a foreboding future as the nation's fundamentals worsened (fiscal, trade deficits, relative social/economic decline...the unraveling)

The last hurrah of this epoch (in a sense it is not over yet, merely interupted) was the 1991 gulf war and the burst of patriotism it produced. The following prolonged economic decline and recession plunged the national mood into another period of general despair that lasted until roughly 1994/1995. Economists and forecasters at the time were making all sorts of dire predictions, such as $500+ billion budget deficits and government bankruptcy by 1996 etc. It turned out, of course, that these extrapolations--based on the status quo consensus of the time--were once again dead wrong. Remember how Japan was supposed to take over the world? It is now near collapse and is running government deficits equal to 10% of GDP!

1994 marked the turning point into another short-term turning point in public sentiment--though few recognized it at the time. Since then economy has grown at a brisk pace, the stock market tripled and deficits became surpluses. The previous consensus forecasts were wrong. These conditions have accelerated to that of hubris, which we are now in. There have been short-lived times within this period when bursts of pessimism reigned. The Asian crisis began in the fall of 1997 whence the Dow crashed 500 points and confidence (temporarily) receded. While the crisis continued to worsen overseas, the US economy continued to advance when yet another short-lived grim mood took hold in the fall of 1998 and stocks dropped 19%. However, the bubble wasn't ready to burst yet; there was still more momentum to carry through 1999 when it rebounded sharply to its recent July 1999 record high of over 11,500. The concerns of 1998 have been all but forgotten--but will eventually resume .

Coinciding, and indeed interrelating with these sentiment shifts inherent within a rising (or falling) market is the public's reaction and level of concern with y2k. Aided by feel-good happy-talk propaganda issued by corporate and government elite, most of the public (the sheeple) had decided that there was nothing to worry about. "It's under control."

Before the summer of 1998 y2k and associated interest was mostly relegated to a small minority on the internet. It then began to filter to the mainstream press with exponentially rising concern and awareness reaching a crescendo in January 1999. What happened was quite confusing indeed...y2k suddenly dissapeared from the media and public consciousness almost entirely. A panic cannot be sustained...nor can complacency.

As in previous eras, the mainstream is foolishly extrapolating present conditions and trends into the future which, as time will tell to prove not only wrong, but recklessly way off base. This was illustrated by the concensus opinions of those in y2k circles that y2k would surely be a serious disaster. We were wrong of course, but for a good reason .

The Clinton administration is presently predicting never-ending budget surplusses until 2010 amounting to over a trillion dollars. These projections assume the current boom and business cycle (already a record-breaking 9 years) will continue with absolutely no set-backs such as a recession!

The status quo consensus (that is, those in authority) are also projecting a such nonsense as "DOW 36,000" that will surely prove wrong. Even respected economist Ed Yardeni (and mainstream, until he took up y2k) who had predicted a recession in 2000 is making the mistake of extrapolating current trends: He figures the so-called "New Economy" will resume unchanged after a sharp recession with the Dow climbing to 15,000 by 2005.

With all due respect to Mr Ed, such forecasts disregard and conflict with what various well-identified short and long cycles and forces, all seemingly merging together in the early 2000's, tell us what our fate and destiny will be (irregardless of y2k).

It is likely this apathy of 1999/2000 will continue into this spring and summer at which point greed will be replaced by fear as a motivating consumer sentiment. Probably into a panic. These forces-- a bursting bubble along with and before a looming disaster--essentially guarantees a dramatic, possibly unprecedented shift in psychology: from one of complacency and euphorically high expectations to one of complete societal panic that will feed upon itself, ultimately leading to major recession/depression. Perhaps there was something we could have done to avoid such a situation. It's now too late... .

"Owing to past neglect, in the face of plainest warnings, we have now entered upon a period of danger. The era of procrastination, of half measures, of delays is coming to a close. In it's place we are entering a period of consequences; we can not avoid this period, we are in it now. Unless this house resolves to find out the truth for itself, it will have committed an act of abdication of duty without parallel." Winston Churchill, Testimony to the House of Commons, Debate on National Defense Posture (12 November 1936)

It will be in this up-and-coming "global war" period when the nuclear weapons question will also be answered. Whether this resolution is achieved peacefully remains to be seen. The odds are, of course, such that they will be used.

To the casual observer--particularly the average American who has never experienced the trauma of depression or global war--such dark visions are difficult to comprehend or emotionally accept. Even more so when taken in the context of our current era of prosperity and general optimism. Unfortunately, we are now passed the point of no return; the journey has begun.

One can take consolance in the inevitable return of stability after the up-coming times of trauma consolidates into resolution beyond 2010 or 2015... Such evolution from birth, maturity, decay , death then rebirth of humans, societies and nations is not only natural and (in a sense) desirable, but unavoidable. How we emerge from these crises ultimately depends on how we prepared for and reacted to its consequences within the larger framework of human destiny.

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