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Generational Dynamics Web Log for 5-Jun-2010
5-Jun-10 News -- Markets fall on jobs and Hungary news

Web Log - June, 2010

5-Jun-10 News -- Markets fall on jobs and Hungary news

A new humanitarian aid ship is approaching Gaza

Hungary's economy close to default, according to government official

The financial world was shocked to hear on Friday from a spokesman for the Prime Minister: "It’s clear that the economy is in a very grave situation. I don’t think it’s an exaggeration at all [to talk about a default]."

According to Bloomberg, the comments raised concern throughout Europe.

However, another Hungarian official, from the opposition party, said later that Hungary is "in no way near default," and that the previous statement was "part of short-term political tactics."

Jobs report frightens investors, causing markets to fall

Every month for years, financial pundits on CNBC and in the Wall Street Journal have been talking about an imminent recovery and a surge in new job creation. Those hopes have been growing in the last few months, as job creating appeared to be slowly trending upward.

Thus, the pundits were expecting to see that an explosion upward occurred in the figures for May, and that at least 100,000 to 150,000 new jobs had been created.

The jobs report, announced on Friday morning at 8:30 am ET, said that 431,000 jobs were created in May, and that seemed like a very spectacular figure.

However, it next turned out that of those 431,000 jobs, all but 43,000 were temporary workers hired to collect census information, and that those jobs would disappear very soon. And the 43,000 figure was much lower than analysts had predicted.

This news, combined with the worries about Hungary, caused markets in Europe and America to fall over 3% on Friday, according to Associated Press.

This plunge is consistent with trends predicted by Generational Dynamics.

As I've said many times, from the point of view of Generational Dynamics, the situation hasn't changed. The stock market has been historically overpriced by substantial amounts since 1995, and by the Law of Mean Reversion, will have to fall sharply and stay down there for a comparable length of time (15 years). This is a mathematical certainty. (See "How to compute the 'real value' of the stock market.")

A new 'humanitarian aid' ship, the Rachel Corrie, approaches Gaza

It's now generally agreed by observers that Israel fell into a well-laid trap earlier this week when it entered a violent confrontation with the "Freedom Flotilla," and met with so-called "peace activists" who were fully prepared to die as martyrs in order to collect their 72 virgins.

It even turns out that Hamas doesn't even want the humanitarian aid that was offered, according to Der Spiegel, which says that humanitarian aid is always a "political game" in Gaza. When humanitarian aid comes in, the Hamas elite take the goods and keep it for themselves. Other humanitarian aid is rejected completely because the donations are "bad for business," competing with goods that other Palestinians are trying to sell.

Now another humanitarian aid ship is headed for Gaza, and is expected to try to break the naval blockade sometime this weekend. The ship is the "Rachel Corrie," named after another peace activist. In 2003, Corrie stood in front of an Israeli bulldozer to prevent it from demolishing a Palestinian home, but unfortunately, she didn't bother to make sure that the bulldozer driver could see her, and so she got killed.

According to the LA Times, the Rachel Corrie is carrying 21 people and 1,200 tons of aid, hopefully aid that Hamas is willing to accept.

Israel has said that they will stop the ship from reaching Gaza, and that it will be diverted to the Israeli port of Ashdod.

Both the Israeli side and the pro-Palestinian activist side have learned their lessons from what happened last week, and hopefully will avoid violence this time.

However, there are more aid flotillas coming, and there is a great deal of international pressure on Israel to end the naval blockade of Gaza. It will be interesting to see how this situation develops over the summer.

Additional links

Burma (Myanmar) is attempting to develop nuclear weapons and long-range missiles, according to information provided by a Myanmar army defector. Myanmar News

Russian Prime Minister Vladimir Putin is proposing legislation that would allow Russia's intelligence service for 15 days, without having to get permission of the courts (or anyone else). Spiegel

(Comments: For reader comments, questions and discussion, see the 5-Jun-10 News -- Markets fall on jobs and Hungary news thread of the Generational Dynamics forum. Comments may be posted anonymously.) (5-Jun-2010) Permanent Link
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