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Generational Dynamics Web Log for 26-Oct-2010
26-Oct-10 News -- Xenophobia in Framingham, Massachusetts

Web Log - October, 2010

26-Oct-10 News -- Xenophobia in Framingham, Massachusetts

U.S. Treasury sells bonds with negative yield for first time in history

Xenophobia in Framingham, Massachusetts

On Monday evening, I was moderator for a debate between three candidates running for the office of town representative from Framingham, Massachusetts, to the legislature on Beacon Hill.

I used to live in Framingham until last year, when I moved to Cambridge. It's an interesting town for several reasons, one of which is that it's still a town, and still has town meetings instead of a mayor. In fact, Framingham is the largest town in the United States.

Framingham is located about 25 miles west of Boston. It's the target of unending snobbery by the reporters at the major newspapers of the area, the Boston Globe and the Middlesex News, who consider the wealthier municipalities such as Wellesley and Wayland to have superior people. Still, Framingham is a great place to live, with great schools and great shopping.

You would think that the economy was the most important topic in the debate, but actually it wasn't. The questions that came in from Framingham residents were only tangentially related to the economy. People seem to have resigned themselves to a bad economy, and that there's nothing that any candidate can do about.

The issue that dominated the debate was immigration or, as I describe it frequently on this web site, xenophobia.

However, the target of the xenophobia was not Muslims or Roma Gypsies or Mexicans. The target is Brazilians, because Framingham has a large community of Brazilian immigrants, including a significant number of illegal immigrants.

As I was sitting there moderating, presenting the questions and listening to the answers, I was struck by how the debate going on in that little room between those three candidates was a microcosm for the debates going on in the entire world.

On a global basis, the first point to be made is that the xenophobia story is not just about Muslims. The issue everywhere is about immigrants of any kind.

The second point is that the issues are always the same -- immigrants take jobs, immigrants go on welfare, immigrants cause crime.

And of course, both sides have valid points. Immigrants complain of incessant discrimination, but many immigrants are also very contemptuous of the societies that they live in. In many cases, immigrants are so contemptuous of their hosts that they consider crime against their hosts to be completely acceptable. The local populations return the favor by increasingly being contemptuous of all the people in the immigrant community.

Some people may argue that Muslims ARE a special case because they attacked America on 9/11/2001. That's certainly true, but as far as I can tell, that attitude is much less true in Europe than it is in America. There's a lot of xenophobia in Europe directed at Muslims, but what people say is very similar to what they say about the Roma Gypsies, and sometimes even the Jews.

On the other hand, Europeans have a different view of terrorist acts. Europeans are well aware that home-grown groups, including the Irish Republic Army and Basque separatists, have also perpetrated terrorist acts.

For example, from the point of view of someone in Great Britain, at around the time that Muslims were committing the 9/11 attacks, the Irish Republican Army was the real danger. Here's a list of terrorist attacks in Great Britain since 2000, that I've taken from Wikipedia:

2000 1 June: Real IRA bomb explodes on Hammersmith Bridge, London

2000 20 September: Real IRA fired a RPG at the MI6 HQ in London SIS Building

2001 4 March: The Real IRA detonate a car bomb outside the BBC's main news centre in London. One London Underground worker suffered deep cuts to his eye from flying glass and some damage was caused to the front of the building.[14] (See 4 March 2001 BBC bombing)

2001 16 April: Hendon post office bombed by the Real IRA.

2001 6 May: The Real IRA detonate a bomb in a London postal sorting office. One person was injured.[15]

2001 3 August: A Real IRA Bomb in Britain explodes in Ealing, West London, injuring seven people.[16] (See 3 August 2001 Ealing bombing)

2001 4 November: Real IRA car bomb explodes in Birmingham[17]

2005 7 July: The 7 July 2005 London bombings conducted by four separate Islamist extremist suicide bombers, killing 56 people and injuring 700.

2007 January - February: The 2007 United Kingdom letter bombs

2007 30 June: 2007 Glasgow International Airport attack perpetrated by Islamist extremists.

2008 22 May: 22 May 2008 Exeter bombing by an Islamist extremist, injuring only the perpetrator.

Thus, someone in Great Britain might credibly argue that Islamist terrorists are less dangerous than IRA terrorists.

As I've said many times, from the point of view of Generational Dynamics, xenophobia of all kinds is increasing around the world, as the survivors of World War II disappear.

The generations of survivors of WW II remembered how xenophobia in the 1930s led to the greatest world war in history, and they vowed to spend their lives preventing anything like that happening again. But now those people are gone. Xenophobia in all forms is increasing around the world, and it's going to lead to another world war.

U.S. Treasury sells bonds with negative yield for first time in history

For the first time in history, bonds issued by the U.S. Treasury were in such heavy demand that purchasers push the bond price up high enough so that the yield (interest rate) was negative, at -0.55%, according to Bloomberg.

Imagine that you have a few million dollars sitting around, that you'd like to put somewhere safe. You could invest in stocks, but stocks are too risky. You could deposit it in the bank, but the FDIC only insures $200,000 or so. You could put the money into your mattress, but you'd be afraid of being robbed.

The best solution would be to purchase Treasury bonds. Normally, you would expect to receive interest payments, but not the bonds that were sold on Monday. In that case, you have to pay the Treasury interest for taking your money.

Admittedly, it's more complicated than that. These are TIPS bonds -- Treasury Inflation-Protected Securities -- which means that the bonds will pay more in case of inflation in the years to come. Thus, investors are willing to accept negative interest rates in the hope that inflation rates will be high.

However, as I've been saying for eight years now, that's a false hope. The economy is in a deflationary spiral, and the hyperinflation that investors are hoping for will not occur.

Interest rates have been close to zero for most of those eight years, and pundits have been predicting (hyper)inflation for most of those eight years. For these pundits, hyperinflation is like prosperity: They're both right around the corner.

Negative yields are a sign of a continuing deflationary spiral. A negative interest rate means that investors are willing to pay to keep their assets in cash, which means that they expect cash to become more valuable, which is what deflation means.

Additional links

Both houses of France's parliament are expected this week to pass the final form of pension reform legislation that will raise the retirement age from 60 to 62. Public sector union workers who have virtually shut down France's refineries for the last few weeks are now returning to work, and three of the twelve refineries are now reopening. In addition, the port of Marseille has been blocked for weeks, and leaving dozens of oil tankers anchored in the harbor waiting to dock. The blockade has now been lifted, and the oil tankers are beginning to unload their cargoes. France 24

A new dispute has broken out between the Israelis and the Palestinians. Over the weekend, Israeli Prime Minister Benjamin Netanyahu warned the Palestinians not to take unilateral states to achieve statehood by going directly to the United Nations to request an international mandate. Netanyahu's warning has pissed off the Palestinians, who say that Israelis should not lecture the Palestinians, in view of their record. Meanwhile, the peace talks are still on hold, since September 26 when the moratorium on West Bank settlements expired. It's believed that the Obama administration is operating behind the scenes in an attempt to bring about a compromise, and get the big peace deal in the sky. VOA

Another Sufi shrine has been attacked by Sunni Islamist terrorists in Pakistan, this time in central Pakistan in the province of Punjab. Al-Qaeda linked terrorists have been attacking Shia and Sufi shrines for months. Daily Times (Pakistan)

Joint military operations between the U.S. and South Korea, with exercises planned for the Yellow Sea this month, have been postponed. According to the South Koreans, the exercises were delayed in order not to antagonize the Chinese and North Koreans, prior to the G20 summit in Seoul on November 11-12. But the Pentagon denies this, and says the delay is caused by scheduling snags. Reuters

China's recent decision to suspend export of rare earth minerals has spurred Japan and India to expand their bilateral ties in research, development and recycling of rare earth minerals and metals. This is an interesting development, because it supports the view that in the coming Clash of Civilizations world war, India and Japan will be allied against China. The Hindu

(Comments: For reader comments, questions and discussion, see the 26-Oct-10 News -- Xenophobia in Framingham, Massachusetts thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-Oct-2010) Permanent Link
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Generational Dynamics Web Log for 26-Oct-2010 26-Oct-10 News -- Xenophobia in Framingham, Massachusetts

Xenophobia in Framingham, Massachusetts

U.S. Treasury sells bonds with negative yield for first time in history

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Generational Dynamics Web Log for 26-Oct-2010
26-Oct-10 News -- Xenophobia in Framingham, Massachusetts