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Generational Dynamics Web Log for 17-May-2015
17-May-15 World View -- Outrage grows over sting video of Lebanon MP planning terrorism

Web Log - May, 2015

17-May-15 World View -- Outrage grows over sting video of Lebanon MP planning terrorism

Stock market bubble accelerates explosion as economy falters

This morning's key headlines from GenerationalDynamics.com

Outrage grows over sting video of Lebanon MP planning terrorism
Stock market bubble accelerates explosion as economy falters

Outrage grows over sting video of Lebanon MP planning terrorism

Screen grab of sting video showing Michel Samaha's admission of terrorist plans

Screen grab of sting video showing Michel Samaha's admission of terrorist plans

Lebanon's people were shocked on Thursday evening when TV channels broadcast a video of a sting operation that trapped a Lebanon former MP (Member of Parliament) importing explosives from Bashar al-Assad's regime in Syria with the intention of killing Lebanon's MPs and religious figures who were politically opposed to Iran-backed Hezbollah terrorism and support for Bashar al-Assad's war.

In 2012, undercover police informant Milad Kfoury secretly videotaped conversations with pro-Hezbollah MP Michel Samaha. In those conversations, Samaha said "you can get rid of" lawmakers and other political opponents. In the third videotape, Samaha actually delivers the bomb-making explosives to Kfoury, and he assures Kfoury that the only two people who know about this are Bashar al-Assad and his security chief Ali Mamlouk.

Samaha has been under arrest since August 2012 over allegations that he and Mamlouk planned to assassinate a string of political and religious figures in Lebanon. Samaha confessed after he learned of the video, but the video was not shown to the public until Thursday.

The Samaha conviction is reminding people of the assassination of Rafiq Hariri ten years ago. (See "Massive Beirut explosion killing Rafiq Hariri puts Lebanon into state of shock" from 2005.) The outrage from the Hariri assassination was so great that Syrian troops who had been occupying Lebanon were forced to leave the country. Since then, there have numerous assassinations by bomb and gunfire, allegedly by Hezbollah and Syria, to eliminate Syria's political opponents and to torpedo any investigates that might show al-Assad and Hezbollah complicity in the Hariri assassination.

Lebanon's people are well aware of this, and so shock turned to anger when it was learned that Samaha received a light sentence, 4-1/2 years, and that because of time served, and because a Lebanese judicial year is equal to nine months, he'll be released in December of this year. Anti-Hezbollah politicians have condemned the light sentence, saying that it would effectively "legalize assassination and bombings." However, a pro-Hezbollah MP defended the light sentence, characterizing objections to it as "an unprecedented assault on the judiciary and on justice."

The Hariri assassination shocked and angered Lebanon enough to force major changes. It remains to be seen what long-term effect the conviction of Samaha will have. Daily Star (Lebanon) and Daily Star and Daily Star

Stock market bubble accelerates explosion as economy falters

S&P 500 Price/Earnings ratio at astronomically high 21.47 on May 15 (WSJ)

S&P 500 Price/Earnings ratio at astronomically high 21.47 on May 15 (WSJ)

It's been only three weeks since I reported that the S&P 500 Price/Earnings ratio (stock valuation index) was at an astronomically high 20.98, indicating a huge stock market bubble. It was at 18 a year ago, and in the last three weeks it's shot up to 21.47, the Wall Street Journal on Friday, May 15.

At the same time, numerous economic indicators -- manufacturing activity, consumer confidence, retail sales, industrial production and GDP -- are all much softer tham mainstream economists were predicting. When those indicators are combined with poor economic performance in Europe, Japan and China, and a worldwide deflationary trend, there is plenty of evidence of a likely global economic slowdown.

People frequently ask me whether Generational Dynamics can predict when the stock market bubble is going to burst, and a panic will occur. That cannot be predicted and, if it could, I would be rich. In fact, economists still don't even know for sure what triggered the panic and stock market crash of 1929, or why it didn't happen earlier or later.

During the 2004-2007 time frame, it was obvious that there was a real estate bubble, and I begged a number of people not to buy homes, generally to no avail. Now I beg people to stay out of the stock market, with equal lack of success. It's heartbreaking to me to see this happen.

The P/E index is well over 21 and is surging, indicating a rapidly growing stock market bubble. The historical average is 14, and as recently as 1982 it was around 6. It is an absolute guarantee that it will fall to around 5-6 again, pushing the Dow Jones Industrial Average to below 3000, far below the current index value of over 18,000.

Anything might trigger a stock market panic. It might be something as simple as a speech, or it might be an exogenous event, such as a major international crisis. With almost the entire Mideast in flames, with Russia invading and annexing pieces of Ukraine, with China invading and annexing pieces of the South China Sea, something major could occur at any time.

So, as I have in the past, I strongly urge readers to keep their assets in cash. In the deflationary environment of today, that's the best bet. Seeking Alpha and Reuters

(Comments: For reader comments, questions and discussion, see the 17-May-15 World View -- Outrage grows over sting video of Lebanon MP planning terrorism thread of the Generational Dynamics forum. Comments may be posted anonymously.) (17-May-2015) Permanent Link
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Generational Dynamics Web Log for 17-May-2015 17-May-15 World View -- Outrage grows over sting video of Lebanon MP planning terrorism

Outrage grows over sting video of Lebanon MP planning terrorism

Stock market bubble accelerates explosion as economy falters

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Generational Dynamics Web Log for 17-May-2015
17-May-15 World View -- Outrage grows over sting video of Lebanon MP planning terrorism