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Generational Dynamics Web Log for 8-Jul-2010
8-Jul-10 News -- Thailand chooses the path to civil war

Web Log - July, 2010

8-Jul-10 News -- Thailand chooses the path to civil war

United Arab Emirates ambassador advocates military strike on Iran

Thailand heads down the road to civil war

Thailand's government is extending its state of emergency for three more months, according to VOA. It was first imposed as government forces routed the "Red Shirt" protests that shut down Bangkok's business district in April and May. (See "24-May-10 News -- Les Misérables of Thailand at a turning point.")

According to a government spokesman, "There are still attempts to cause certain trouble or activities including sabotage. There are attempts to use certain media to push people to confront one another. Also attempts to the society in terms of causing widespread violence in certain ways. That is why the usage of the emergency decree is still needed in certain areas."

As we've reported at length in the past, this confrontation in Thailand pits two ethnic groups against each other. The army and government forces represent the Thai-Chinese fair-skinned elite market-dominant minority, while the red-shirted protestors represent the indigenous dark-skinned laborers, mostly migrants from the north and northeast.

The state of emergency applies mainly to areas of the country where the indigenous laborers live, in addition to Bangkok. This situation has infuriated the laboring class, and portends a great deal of trouble in the future.

When a country goes through a generational Awakening era, there's always a "generation gap" and generational conflict between the survivors of the previous crisis war and their children. At some point, the Awakening era climaxes in some major political confrontation. There are only two possible winners of this conflict: The old folks or the kids. In most cases, the kids win because the old folks grow older and die. But if the old folks win, then it's very bad news for the country.

For example, when America went through its Awakening era in the 1960s and 1970s, the kids won when the era climaxed with President Nixon's resignation. China's Awakening era climaxed with the 1989 Tiananmen Square massacre, where the old folks won, leading to a paranoid Beijing government that fears a civil war at any time.

When the old folks win, the "horizontal" generational conflict morphs into a "vertical" fault line conflict that pits two identity groups against one another, the élite market-dominant group versus the marginalized group. In China it's the China Communist Party élite versus the peasants, and in Thailand it's the Thai-Chinese élite versus the laborer class.

In situations like this, the Awakening era climax is followed by low-level violence that grows over a period of years, eventually leading to civil war in the next generational Crisis era. It now appears that, for Thailand, the die is cast.

Could Thailand have avoided this fate? Only if the red shirts had "won" the political confrontation, by forcing the resignation of the current government, resulting in new elections. However, the Thai-Chinese élite would never have tolerated that solution, since the new election would have brought the laborer class to power once again, as it had before with the election in 2001 of former Prime Minister Thaksin Shinawatra. But Thaksin and the people he represents are hated by the Thai-Chinese, and so the answer is "No, Thailand could not have avoided this fate."

UAE ambassador advocates military strike on Iran

Yousef al-Otaiba, the United Arab Emirates ambassador to the United States, advocated a military strike on Iran to stop its development of nuclear weapons, according to the Washington Times.

"I think it's a cost-benefit analysis. I think despite the large amount of trade we do with Iran, which is close to $12 billion … there will be consequences, there will be a backlash and there will be problems with people protesting and rioting and very unhappy that there is an outside force attacking a Muslim country; that is going to happen no matter what.

If you are asking me, 'Am I willing to live with that versus living with a nuclear Iran?,' my answer is still the same: 'We cannot live with a nuclear Iran.' I am willing to absorb what takes place at the expense of the security of the U.A.E."

Many officials from Arab states have expressed such sentiments in private, but al-Otaiba is the first high-level Arab official to make such a blunt statement publicly.

Wall Street soars on news of retail sales

Wall Street stocks soared 3% on Wednesday, on news that American consumers were spending money in shopping centers again.

The International Council of Shopping Centers announced that same store sales in June rose far more than expected, at the fastest rate in four years, according to Bloomberg.

Since 70% of US economy (GDP) is retail sales, this gave a shot of serotonin to investors, who pushed the stock market up over 3% on Wednesday.

However, Michael (Mish) Shedlock points to another story that also came out on Wednesday: US shopping mall vacancies increased in the second quarter by the greatest amount since 1991, according to Reuters.

According to Shedlock:

"Not only is it easy to beat record low comparisons of a year ago, same store sales are rising in part because stores are closing like mad.

Circuit City closed its entire chain in bankruptcy, thus some of those sales went to Best Buy, some other places, and some sales simply vanished.

More importantly, states have been reporting declining sales tax collections for the entire year.

Admittedly state tax collection numbers are frequently delayed by a couple months, but that still does not jive with overly bullish comments about sales over the first five months of the year from the International Council of Shopping Centers."

All of this indicates that Wednesday's rally will be short-lived, according to Shedlock.

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.")

'ClimateGate' researchers exonerated of fraud

A comprehensive review of the hacked e-mail messages that led to the "ClimateGate" scandal and accusations of data manipulation by climate researchers has exonerated the researchers. Phil Jones, who had lost hs job as head of the Climatic Research Unit of University of East Anglia was reinstated, according to the Telegraph.

The researchers were criticized for failing to be open about their methodologies, and for some inconsequential examples of data manipulation, but the larger charges were found to be untrue.

I'll admit that I'm surprised by the exoneration, but it doesn't change my opinion of the climate change debate, because I wrote most of my criticisms before the hacked e-mail messages even came to light.

My criticism was never that it was a scientific fraud. My criticism was that it was a financial fraud. (See "Politicians are gloomy about reaching climate deal in Copenhagen.")

Even if you assume that everything that the science researchers say is true -- that the climate is warming and that human beings are at fault -- that still doesn't change the fact that the proposals to cure the problem will accomplish nothing, except to waste a lot of money on bankers and politicians.

In 2007, I wrote "UN Climate Change conference appears to be ending in farce," referring to a conference in Bali that attracted hundreds of climate change advocates who generated vast amounts of carbon emissions taking jet planes and sitting in air conditioned meeting rooms, when they weren't out on the beach.

In that report, I highlighted one Generation-X banker, Louis Redshaw, Head of Environment Markets, Barclays Capital, who was hoping to make millions of dollars. The scheme was to set up financial derivatives / structured securities based on carbon credits in the same way that other bankers had set up structured securities based on residential mortgages.

According to one banker that I quoted, "I think this is likely to get bigger than the interest-rate-swaps market within 10 to 15 years, particularly once America joins in."

So the bankers would make huge amounts of money defrauding investors, just as they had made huge amounts of money defrauding investors with mortgage-backed securities.

And with all that money floating in the pockets of politicians and bankers, there isn't a single credible proposal for actually reducing the climate change threat -- assuming that everything the climate change researchers say is true.

Additional links

Ban Ki-Moon burns in effigy in Sri Lanka <font size=-2>(Source: BBC)</font>

Ban Ki-Moon burns in effigy in Sri Lanka (Source: BBC)

An acrimonious feud is growing between Sri Lanka and the United Nations, after UN Secretary-General Ban Ki-Moon appointed an international panel to investigate war crimes during the recent civil war. In the picture above Ban Ki-Moon burns in effigy. BBC

A suicide bomber, assumed to be from al-Qaeda in Iraq, targeted a crowd of Shia pilgrims near Baghdad, killing 35 and wounding over 100. BBC

Israeli defense officials are now concerned that sophisticated military technology that Israel sold to Turkey in the past will now make its way into the hands of Syria and Iran. Media Line

Egyptian President Hosni Mubarak is believed to have cancer of the esophagus. Debka

France's president Nicolas Sarkozy is involved in a major financial scandal, accused of receiving illegal political contributions from Liliane Bettencourt, who owns the L'Oreal cosmetics firm. Washington Post

For the first time since 1993, the Indian army was on the streets of Kashmir as a show of force to help the local police quell the violence of the last four weeks. The Hindu

Pakistan's President Asif Ali Zardari meet on Wednesday with leaders of a dozen Chinese corporations specializing in the defence, petroleum, banking, industrial and construction sectors, to encourage Chinese investments in Pakistan. Daily Times

Send an e-mail message to your future self. Future Me

(Comments: For reader comments, questions and discussion, see the 8-Jul-10 News -- Thailand chooses the path to civil war thread of the Generational Dynamics forum. Comments may be posted anonymously.) (8-Jul-2010) Permanent Link
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