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Generational Dynamics Web Log for 7-Nov-2011
7-Nov-11 World View -- Congressional 'Super Committee' faces same problems as Greece and Italy

Web Log - November, 2011

7-Nov-11 World View -- Congressional 'Super Committee' faces same problems as Greece and Italy

China's 'good neighbor' policy failing, as neighbors turn against China

This morning's key headlines from GenerationalDynamics.com.

* Muslim hajj pilgrims perform devil stoning ritual
* Italy and Greece governments close to collapse over euro crisis
* Congressional 'Super Committee' faces same problems as Greece and Italy
* Applying the 'Kick the Can Principle' to the supercommittee
* China's 'good neighbor' policy failing, as neighbors turn against China

Muslim hajj pilgrims perform devil stoning ritual

Millions of Muslim pilgrims stone the devil in the hajj

Millions of Muslim pilgrims stone the devil in the hajj

Chanting "God is great," some 2.5 million Muslims on Sunday stoned pillars representing the devil in a symbolic rejection of temptation on the second day of their annual hajj pilgrimage. Vast crowds cast pebbles as they flowed past the three pillars. The ritual will be repeated for two more days, with participants eventually throwing stones at all three pillars. It is one of the most dangerous stages of the hajj, with the press of people around the pillars creating the risk of a stampede. Hundreds were killed in 2004 and 2005, before Saudi authorities built the current complex to reduce the stampede danger. AP

Italy and Greece governments close to collapse over euro crisis

Greek Prime Minister George Papandreou will probably step down in the next day or two, as a result of an agreement to form a unity coalition government to pass the austerity measures required by European officials to get the next €8 billion bailout payment. Italy's Prime Minister Silvio Berlusconi has been humiliated by a European demand that the IMF monitor Italy's finances, indicating the Berlusconi is untrusted. Berlusconi is facing massive opposition to proposed austerity measures, and his waning political support may force him to step down. The Australian

Congressional 'Super Committee' faces same problems as Greece and Italy

Greece, Portugal, Ireland, Spain and Italy have been facing enormous political problems in trying to cut public debt, whether by raising taxes, by laying off government workers, or by cutting government benefits. Indeed, as the huge credit bubble of the mid-2000s continues to collapse, leaving less money in the world every day, almost every country in the world is facing severe debt problems. America is no different, and the Congressional "super-committee" is the solution that's supposed to save us. The supercommittee is reported to be deadlocked, but a letter to the supercommittee from a group of 100 Republic and Democratic party representatives calls for all options to be laid on the table. The Democrats want to raise taxes substantially, while the Republicans want to cut benefits substantially. They need to reach agreement within a week to give Congress time to pass the agreement by the November 23 deadline, or face a "sequestration option" with huge automatic cuts to entitlements and defense. Fox News

Applying the 'Kick the Can Principle' to the supercommittee

Recently, I proposed a theory that there are certain generational script elements that the world is following, and that can't be violated. ( "4-Nov-11 World View -- Greece buckles to European demands and cancels referendum") The script that's being followed is very similar to the 1930s.

What I'm now calling the "Kick the Can Principle" is this: In this generational Crisis era, if you want to forecast what's going to happen in the future, then forecast the solution that kicks the can down the road. That is, no major decision can ever be made, except to make a decision to postpone making a decision.

We've seen the Kick the Can Principle hold true time after time for at least two years in Europe. Whenever a decision must be made, the solution is always to just increase public debt, which postpones the problem to an unforeseeable future date when the debt must be repaid.

The reason that the Kick the Can Principle works is that it's applied to problems which have no solution. If the European fiscal crisis had a solution, they would have found it by now. But none exists.

Similarly, there is no solution the U.S. debt problem. And I don't mean that there's no solution unless the President does A or the Republicans do B or the Democrats do C. I mean: There's no solution at all. For all objects X, if X is a solution, then X does not exist. Or, if X exists, then X is not a solution. No solution exists.

In particular, the following are not possible solutions:

Substantially raising taxes on the rich, or anyone else.
Substantially cutting government benefits or employment.
Substantially cutting the defense budget.

Now, you may say that any of these are POSSIBLE. And I say, No, not one is possible, because not one could pass Congress. That is, they're POLITICALLY impossible, in this generational era. That's one of the things that make this era unique - at least since the 1930s.

So, what's going to happen with the supercommittee, if we apply the Kick the Can Principle?

Well, they probably won't reach an agreement, but even if they do, then Congress will not pass it by November 23. Thus, the sequestration option will come into effect, but it will be postponed.

There's a debate going on over whether unemployment benefits should be further increased. This would, of course, increase the public debt even further, but the Kick the Can Principle says that there's a good chance that it will be passed.

As for Greece and Italy, the Kick the Can Principle says that both countries will be bailed out for as long as possible, and it will end only when there's a full scale global financial panic and collapse.

China's 'good neighbor' policy failing, as neighbors turn against China

Burma's recent decision to halt the Myitsone dam joint project with China, and a recent murder of 13 Chinese sailors on the Mekong river, as well as territorial disputes in the South China Sea with Vietnam and the Philippines, point to how China's relations with its regional allies have been deteriorating. This comes at a time when China humiliated itself over its policy in Libya. Many Chinese were disquieted by their government's decision to evacuate China's citizens from Libya, and would have preferred a bolder effort to protect the countries' commercial assets there. Similarly, the Chinese government's later, and quite sudden, about-face in recognising the rebel Transitional National Council as Libya's government aroused considerable sneering at home. After all, China spent valuable political capital to oppose Nato's airstrikes at the beginning of the intervention, only to end up backing the forces that Nato helped bring to power. Centre for International and Strategic Studies, Peking University

(Comments: For reader comments, questions and discussion, see the 7-Nov-11 World View -- Congressional 'Super Committee' faces same problems as Greece and Italy thread of the Generational Dynamics forum. Comments may be posted anonymously.) (7-Nov-2011) Permanent Link
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Generational Dynamics Web Log for 7-Nov-2011 7-Nov-11 World View -- Congressional 'Super Committee' faces same problems as Greece and Italy

Muslim hajj pilgrims perform devil stoning ritual

Italy and Greece governments close to collapse over euro crisis

Congressional 'Super Committee' faces same problems as Greece and Italy

Applying the 'Kick the Can Principle' to the supercommittee

China's 'good neighbor' policy failing, as neighbors turn against China

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Generational Dynamics Web Log for 7-Nov-2011
7-Nov-11 World View -- Congressional 'Super Committee' faces same problems as Greece and Italy