The future of the USA - 2012-2016 (Part 3) - The breakdown of the US socio-political fabric

- Excerpt GEAB N°60 (December 16, 2011) -

The future of the USA - 2012-2016 (Part 3) - The breakdown of the US socio-political fabric
The breakdown of the United States’ socio-economic and socio-political tissue is a phenomenon that started some forty years ago. In previous GEAB issues, we emphasized the importance of the breakdown of the 1970s turning point in the US dynamic: end of the fixed link between the Dollar and gold, defeat in the Vietnam War, "impeachment" of President Nixon, the last period of great inventions / US scientific adventures (the conquest of space, Internet...), etc...

Comparison of the development of US investments in equipment and software and employment growth (1960-2011) - Source: ZeroHedge, 11/2011
Comparison of the development of US investments in equipment and software and employment growth (1960-2011) - Source: ZeroHedge, 11/2011
One particular aspect seems strategically important and crucial to the coming period: the collapse of the education system (1). In simple terms, LEAP/E2020 estimates that the change in the 1970s to an education system based on student assessment via multiple choice questions, from primary school to university, has generated a far-reaching and lasting weakening of the education of US generations under the age of 40 today. At the same time, it has accentuated the establishment of a two-speed education system, alienating the country's social elite from the middle class even further, because of the rising costs of access to quality education. Finally, the all-out marketing (2), combined with online or home education, has dealt a fatal blow to any consistency or general requirement for quality in the US education system (3).

In general, without being responsible for the situation, those less than forty years old in the United States are much less well educated and less socially integrated (4) than their elders. This has consequences, of course, on their "employability", their ability to act in a world where globalization is everywhere and requires varied knowledge (such as languages, history and geography, for example), their ability to relay, in practice, talk of the country’s re-industrialization, or the need to address the country’s scientific (5) and technological challenges (6), even the country’s military capabilities (7).

It also generates a decline in the quality of democratic life and political discourse because the citizen is less able to distinguish between lies and truth, between information and spin, between competence and demagoguery (8).The Republican primaries for the 2012 presidential election is a case study on the subject as Marc Pitzke outlined in the Spiegel of 01/12/2011 with the headline about the competing candidates: “a club of liars, demagogues and ignorants”. It is unlikely that such a "club" would have constituted the candidates for the primary of one of the two parties thirty or forty years ago. The breakdown of the country’s democratic and political fabric is well under way, particularly because of this generational "dumbing-down of education" started in the 1970s.

This development, coupled with the very unequal impact of the current depression which, like any crisis, affects the weakest the most rapidly, increases the fragmentation of the United States’ population’s identity. The illusion that the election of a black president in the United States would help the integration of African-Americans was quickly dissipated. And instead, the crisis shows that Blacks and Latinos are most affected (9). If African-Americans seem to be starting a return to their "historical territories" in the South of the country (10), Latinos in turn continue to take control of the entire South-West of the United States. In this area, there is now a real war, brought by drug traffickers. On both sides of the US-Mexico border, killing, corruption, trafficking is growing, strengthening each other’s identity reflexes, and pushing for the adoption of increasingly severe laws against illegal immigrants.

The decrease in the number of available jobs thus generates a real war for "jobs" between different communities. If the socio-political fabric is breaking up, it’s also due to the collapse in the quality of the country's infrastructure (11): bridges, roads, railways, airports, dikes, dams, nuclear power plants, pipelines... need more than USD 2 trillion just to be repaired (without any new investment) (12). But everyone knows that such funding is impossible to get from a locked-down Congress and from a high deficit budget. This isn’t new either, but as with anything, the passage of time doesn’t help, quite the contrary.

Sale of new one family homes in the US (1960-2011) (in thousands) - Sources: FRED / US Dept of Commerce, 11/2011
Sale of new one family homes in the US (1960-2011) (in thousands) - Sources: FRED / US Dept of Commerce, 11/2011
Since 2006 LEAP/E2020 has highlighted this dire infrastructure situation and its very serious medium-term consequences for the country’s economy and social fabric. Six years have passed and in 2016 it will be ten years: long enough for bridges in poor condition to collapse or leaking pipelines to eventually explode. People tend to get used to the poor state of things thinking, little by little, that it's their normal state... until the day they break completely. As regards infrastructure, we believe that the period 2012-2016 will see such a development.

Inter-community tensions, breakdown of social cohesion, political demagoguery, massive "dumbing-down of education", lack of jobs, rapid rise in poverty (13),... it all leads to a very predictable development that marked the 2011 "Black Friday; sales: the pictures not only showed the whole world an aberrant level of violence on what’s supposed to be a day of sales (dead, gun shots, fist fights, riots...) (14) , but Black Friday 2011 is especially remarkable for a product that has experienced the largest increase in sales compared to 2010 (+32% (15)): firearms.

What could such a phenomenon be the sign of in a country that already has more than 200 million firearms in circulation? LEAP/E2020 believes that this is one more sign that the American public is preparing for the worst, and preparing for it more and more (16). In terms of collective psychology, there are self-sustaining phenomena. The fear of a development in the crisis towards violence is also fuelled by budget cuts in the police and the feeling that the increase in the number of poor will constitute a growing threat to the wealthy (17).

We have already discussed the social impact that will generate the new series of bank failures in 2012. Thus, from 2013, we believe that uncontrolled violence will break out because of all the constraints set out in this anticipation. Incidentally, that will be one of the arguments used to search for a "savior" able to restore law and order: a general-sheriff.

Finally, we won’t examine the geopolitical situation of the United States for this period here. We have already, in GEAB N°59, anticipated the US military withdrawal from continental Europe for 2017, adding more analyses on the progression of US military presence in the world. Remember that we do not anticipate a major conflict initiated by the United States for the period in question. In fact, the country no longer has the political, fiscal, diplomatic, and soon military means, to embark on such an adventure. As we do not expect direct aggression against the United States from another country, this option seems irrelevant to us for anticipating the events of the 2012-2016 period.

This will not prevent "clashes", sometimes violent, taking place between the United States and countries like Iran (18), China, Russia... but they will likely be infra-conflicting in nature (software and hardware attacks, spying, sabotage...). The current attempt by the Obama administration to trigger a mini Cold War with China (19) will fail for two reasons:

. it is only meant for an electoral aim of giving credibility to Obama’s stature as a statesman a year from the elections (20)
. it’s the fact of a penniless country who “threatens his banker” (a banker who is better armed), which can’t go very far.

Comparison between Venezuelan oil exports to the US and China (MBD) - Source: Wall Street Journal, 11/2011
Comparison between Venezuelan oil exports to the US and China (MBD) - Source: Wall Street Journal, 11/2011
Last but not least, we consider that 2013/2015 will be a period that is likely to see the constitutional order of the United States upset by events. Internal tensions in the country, outside pressures and the degree of distrust even hatred of the different communities between each other (ethnic, social, religious...) will make the unfolding of the process created more than two hundred years by the country’s Founding Fathers all the more difficult. Like the United Kingdom and France, the United States’ political structure and institutional system are amongst the oldest in operation. Far from being a term guarantee it is, in a time of great historical transition, rather a major handicap, as the bearer of obsolescence (21).

Moreover, for about two years, the debate on the country's Constitution in the United States has opened. It was previously a taboo subject: the Constitution, the sacred text, was not questionable unless being an "anti-American". Today, whether to return to the spirit of the founders or the letter of the text, both considered lost (an argument particularly of the TP), or conversely to adapt it to the twenty first century (a more leftist argument, an OWS trend), the debate exists. And in private conversations, this topic, unthinkable only three or four years ago, is authorized.

In the medium and long term, it’s a good thing to allow the country to evolve and adapt (22), but in the short term, it reflects the growing confusion of public opinion and the always increasingly dangerous fragility of the ruling elite. This combination is traditionally conducive to a calling into question of the institutional order, once there are severe shocks to the collective psyche. And, as we anticipate, it’s not shocks we’re going to be short of in the next five years; in an ungovernable and insolvent country.


(1) Source: NPR, 16/03/2010

(2) Degree quality is not reliably controlled. Source: New York Times, 22/11/2011

(3) As for the "elite universities" and the perennial argument that they are the best in the world, we refer to our 2007 anticipation published in GEAB N°18: "The value of international academic degrees: What choices to make today to have an international degree which is still valid in ten to twenty years?;. Four years later, this analysis seems to have gained even more credibility. And it ties in with other studies like that published on 26/10/2011 by the excellent website criseusa under the heading: "The crisis and higher education in the United States: Misconceptions about the parsimony of intelligence in the United States".

(4) This aspect covers two things: those of less advantaged backgrounds, which now includes most of the middle class, have met with increasing difficulties in finding places for their children at the best universities. This phenomenon is, of course, strongly reinforced by the crisis which has seen registration fee increase and income fall. This reduces the social diversity of the country's future elite. And conversely, the country is deprived of multiple skills by breaking this social ladder that is education. The United States is not the only Western country to be met with such developments. But, along with the United Kingdom, it’s the only one to be as hard hit by this trend and for as long.

(5) Another illustration of it is the rise in strength of creationism.

(6) The fall in scientific and technical education in favour of finance, law or management is thus going in the opposite direction to official speeches.

(7) We have seen in Iraq what a company (and its officers) without knowledge of a country’s culture or the complexity of a foreign society could do. The result is that the Americans leave Iraq being perceived primarily as occupiers and not liberators, thus forcing the complete departure of US troops. And the mismanagement of the Iraqi adventure leaves lasting negative marks throughout the Middle East, a region of strategic importance to Washington. Source: Washington Post, 12/12/2011

(8) As Andy Xie wrote in an excellent article in Caixin of 09/12/2011, for decades the US system has strengthened undue privilege at the expense of the general good.

(9) Source: New York Times, 28/11/2011

(10) Source: New York Times, 24/03/2011

(11) Education is also an infrastructure in fact.

(12) Source: Greenbiz, 19/05/2011

(13) Source: New York Times, 18/11/2011

(14) Source: MSNBC, 25/11/2011

(15) And it’s still possible that this figure will reach +50% because many sales were not taken into account pending validation of their status by the competent authority. Source: USAToday, 01/12/2011

(16) Firearms sales are on the increase since the beginning of the crisis.

(17) It also fuels, with the scarcity of jobs, a growing exodus of Americans overseas. Sources: CNBC, 06/12/2011; RT, 08/12./2011

(18) In 2016, the United States have been driven to review their unconditional alliance with Israel. First, because the TP and OWS agree on this point, wishing to drastically reduce the military budget and refusing overseas interventionism and, secondly, because the end of the Dollar monopoly over the price of raw materials, of which oil will make the cost of this unconditional alliance too high for Washington.

(19) Sources: William Pfaff, 22/11/2011; People's Daily, 01/12/2011

(20) The name of the future President of the United States is of little importance because he will be a lame President and, de facto, a simple transition against a backdrop of chaos. The competing personalities illustrate the situation: Obama in which everyone, including his supporters, has seen the lack of stature and political will, Mitt Romney of whom even the Republicans (especially the TP) don’t know quite know what think and Newt Gingrich is a complete demagogue without any conviction. The three are, in any case, the reflection of the powers in place in Wall Street and Washington, chosen because they are controllable... therefore irrelevant in a time of serious crisis. Sources: Reason, 12/09/2011

(21) We see how the UK is in the process of falling apart, in hitting the emerging continental sovereign which is Euroland with full force: a coalition on the verge of breaking-up and especially stepped up threats of separatism by the Scottish and Welsh leaders (sources Scottish TV, 12/12/2011, Wales Online, 07/12/2011). And, as regards France, our team fully shares the anticipations of Franck Biancheri in the French version of his book "The World Crisis: The Path to the World afterwards; (the relevant thirty or so pages do not appear in the versions published in other languages). He anticipates a major crisis in the French institutional system by 2020 at the latest if the state is not able to "break its Parisian centralism" and to be "polycentric" using the country’s regional cities. A growing majority of French people no longer recognize in the Parisian elite in increasingly weak actual power (due to European integration) the legitimacy to decide what France is and what the French want, all at an increasingly unbearable cost. Here also, the model inherited from the Revolution and Empire (late eighteenth century like the United States Constitution) is coming to an end under the attacks of a world that the crisis is changing at high speed.

(22) Our team, mainly European, has taken the liberty of suggesting the courses of constitutional development in the Recommendations section, particularly because, in recent months, a large number of American subscribers have asked us to do so.

Mardi 10 Avril 2012
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GEAB N°90 - Contents

- Published on December 15, 2014 -

Global systemic crisis 2015 – Oil, currencies, finance, societies, the Middle East : Massive storm in the Western port!

. « Global systemic crisis: the end of the West we have known since 1945 »
. The oil crisis is systemic because it is linked to the end of the all-oil era
. The US in one hell of a state
. Europe post-Ukraine: lots of questions
. Three missions for the new Europe: resolve the Ukrainian crisis, put Euro-Russian relations back on the right path, avoid a European QE
. Middle East: traditional alliances’ big waltz
. Saudi Arabia, Iran: the allies change sides
. And Western « values » in all this
Read the public announcement

2015 – new phase of the crisis: the oil systemic crisis

. The impact of speculation
. Price War
. Systemic oil crisis and finance
. Systemic oil crisis and geopolitics

Investments, trends and recommendations

. Oil: beware!
. Energy intensive industries like airline companies
. Renewable energy: the good and the bad
. 2015: Euro & Yen rebound
. Gold: still safe

Evaluation of our anticipations for 2014
(from GEAB N° 81 in January 2014): a 69% success rate