Generational Dynamics
	Forecasting America's Destiny ... and the World's
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Web Log - December, 2005

North Korea exporting women into slavery

10,000 to 15,000 North Koreans, mostly women, are working as slaves in Russia, Libya, Bulgaria, Saudi Arabia, Angola, and Czech Republic.

They perform a variety of jobs, from nursing to textile manufacturing to construction work, under the strict 24-hour a day supervison of North Korean security guards. After each day's work, they're herded back into dormitories.

Their earnings, around $260 per month, are automatically deposited directly into an account controlled by the North Korean government.

North Korea, a dictatorial Communist state, is one of the poorest nations in the world. The government gains hard currency from a variety of criminal enterprises including counterfeiting, drug trading, weapons sales, and now commerce in slavery.

President Kim has been getting increasingly erratic in recent years. Starting in 2003, Pyongyang has claimed that the U.S. was about to attack North Korea preemptively, and Kim has taken a number of hostile steps, including mobilizing for war, and developing nuclear weapons and long-range missiles. Early in 2005, North Korea began blocking all international communications, confiscating 20,000 cell phones and shutting down the internet for most citizens.

Even more bizarre, in September North Korea demanded an end to U.N. food aid. Evidently, Kim objected to U.N. inspectors doing hundreds of spot checks to make sure that the food is being distributed honestly. All of these steps further isolate the North Korean people from the rest of the world.

North Korea's statements and actions indicate that a preemptive attack by North Korea could occur at any time. The constant claims that the U.S. is planning a nuclear attack on North Korea prepares the population for a preemptive attack on South Korea or Japan; and the increasing isolation, which Kim is implementing in every way possible, permits military mobilization, including nuclear weapons development, to continue in secret.

A starving population is the most dangerous force in the world, especially during a generational crisis period, which is where North Korea is now on the generational timeline, since it can lead to a violent uprising and civil war. (During a generational awakening or unraveling period, it might lead only to rioting or low-level violence; but during a generational crisis period, a full-scale civil war is likely.) This makes North Korea, along with China, the two most dangerous nations in the world.

From the point of view of Generational Dynamics, North and South Korea are headed for a violent war of reunification, and the most likely scenario is that it will be launched preemptively by North Korea, led by North Korean President Kim Jong-il. This might happen next month, next year, or soon thereafter. (30-Dec-05) Permanent Link
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Tom Brokaw says that he's stocking food, water and medicines for a possible bird flu pandemic

Emphasizing the seriousness of the threat, Sunday's Meet the Press presented one of the clearest messages in the mainstream media for individuals to make some serious preparations. (Transcript)

"This virus has crossed the species barrier. It has infected humans," said Dr. Michael Ryan of the World Health Organization in the lead-in. "It's killing a high proportion of those human beings and we need to prepare for the possibility of a pandemic."

Ted Koppel, who anchored the "Nightline" show at ABC News for 21 years until his recent retirement, said that, when it comes to something like bird flu, "You have to alarm people because until people are sufficiently alarmed they're not going to listen to what has to happen."

Koppel added,

"Among the things we need to do, and it sounds horrific, to say it, is to put in a decent supply of food and water and whatever medicine is needed by a family in each American home now, before it's too late, so that if, and when, a flu hits an area, like, let's say, our area here in Washington, the people, especially older people, or people who have breathing problems, lung problems, people who have heart problems, can afford to stay home for two or three weeks, or longer."

Then there was the following conversation:

MR. BROKAW: Have you done that at your house?

MR. KOPPEL: No, in truth. Have you?

MR. BROKAW: We have.

MR. KOPPEL: Have you?

MR. BROKAW: Yeah.

MR. KOPPEL: Good for you.

MR. BROKAW: Well, we did it for a couple of reasons. Meredith -- we live in New York and we have a house outside of New York and Meredith said, "This is going to be our sanctuary. We have to be prepared in case something happens." And we did put in a small supply of food and water and ... other things to have on the ready.

As far as I know, Tom Brokaw, who anchored NBC's "Nightly News" for 39 years, is the first major media person to announce that he's made preparations so that he and his wife and family can spend an extended time at home, in case of a bird flu quarantine.

Now that the regular flu season has begun, and regular human flu is spreading in America, Asia and Europe, the chances of a mutation that will allow the highly pathenogenic H5N1 to spread from human to human are increasing.

That's because the way it will most likely happen is for a human being (or a pig) to get both the regular flu and H5N1 at the same time. At that time, the genes from the two forms of the virus can recombine to form an H5N1 virus that can move easily from human to human.

This might happen next week, next month, next year or after that.

If it happens this season, the most likely time would be during the Chinese and Vietnamese new year celebrations in January and February, when many people will be travelling, and more poultry would be transported, slaughtered and consumed.

Experts are encouraging people to prepare for an H5N1 pandemic by stocking up on food and water and currency and batteries for the entire household to live on for 2-3 months. This may cost a thousand dollars per person, but it's not wasted money since you can always eat the food later if no emergency occurs. Get canned or dried food that can last a long time in storage, and get a large container for storing water. Keep in mind that stored water becomes impure with time, so you'll also need some purifying tablets or bleach to kill bacteria in the water when the time comes. Finally, get whatever medicines you'll need to take care of yourself and your family for a long period of time. (27-Dec-05) Permanent Link
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A year after tsunami, children survivors still feel traumatized

And yet, on this Christmas day, the tsunami aftermath tells a story of hopefulness and renewal.

Merry Christmas!

"Imagine you're sitting with your father on a bicycle getting groceries in the market," says John Prewitt Diaz of the American Red Cross in New Delhi. "You see the wave, you try to go back to your house, but the wave is already covering the house. You'll never see your mother and brother again. These are the experiences that children had during the tsunami."

A year after the huge tsunami struck Southeast Asia, a UNICEF survey of 1633 children in four countries shows that most children who survived the tsunami still exhibit some signs of trauma. They lived in fear of another earthquake or tsunami, or they fear losing another loved one. One in five are not eating regularly. The majority feel lonely, but they're still able to describe themselves as happy and confident and are able to remain hopeful that the future holds promise for themselves and their families.

Adults are lonely too, and they have a special method for expressing their hopefulness about the future: There's a baby boom going on.

One young girl lost both her parents and al three siblings, when they were all washed away by the tsunami. Scared and alone, she married a man she hardly knew in a mass wedding in February and immediately became pregnant. "I'm the only person to survive, so I'm all alone," she says. "If I have a baby, I will have a friend."

Some older women are going to extremes. Some in their 40s are risking complications trying to get pregnant again, and some are trying to reverse sterilization procedures. One says, "I will wait for some time. If I am not pregnant again, I will kill myself."

Renewal

For these people as individuals, the loss, loneliness and desperation are traumatic.

But for the people as a society, it's a time of renewal. We can begin to see how a society renews itself after an enormous disaster, whether the disaster is a tsunami or a crisis war. (In Generational Dynamics, a crisis war is the worst, most genocidal kind of war.)

The tsunami was like a crisis war in terms of the amount of devastation it caused, particularly the loss of lives. But a tsunami lasts only one day, and a crisis war can last for months or years, and so a crisis war is much worse than a tsunami. Children growing up during a crisis war are surrounded by death, disease, poverty, starvation and homelessness for months or years at a time. They suffer a kind of "generational child abuse" and, like most abused children, they grow up into an entire generation of indecisive, nonconfrontational adults.

But even though the tsunami was much briefer than a crisis war, we're still seeing the same kinds of aftereffects, and we're seeing how a society renews itself after a disaster.

The children who survived will be affected by that experience every day for the rest of their lives, and will do everything in their power to protect themselves, their families and their communities from another tsunami.

When these children become adults, they'll insist on raising their own families safely far from the seaside. Those who become teachers will tell their students to do the same. Those who grow up to be architects or homebuilders will create buildings that can withstand tsunamis and will have "panic rooms" on the top, where people can run to escape a tsunami. Those that grow up to become political leaders will support laws that require "tsunami-safe buildings," as well as early warning systems. If a new tsunami occurs, there'll be few deaths since everyone will be prepared.

And that's not all. Just as America had a "Baby Boomer" generation after World War II, the tsunami-struck regions are also having a baby boom, led by mothers who feel lonely. These mothers will want to stay close to their children -- just as American mothers in the 1950s wanted to stay and home with their children.

The children of this new baby boom will form a new generation in a time of hope and optimism about the future. They'll quickly get sick and tired of hearing their parents talk about the "Great Tsunami of 2004." Their mothers will tell them to stay away from the sea shore, and they'll obey at first, but soon they'll see that the beaches are great, especially in the summer. As the population grows and real estate becomes more expensive, the children in this new generation will ignore the "tsunami-safe building" laws. If a new tsunami occurs at that time, these people will not be prepared, and the new tsunami will be as devastating as the tsunami of 2004.

This is cycle of life for a society. Individuals suffer, but their individual suffering renews and preserves the society as a whole, and makes it stronger.

We can see the same thing today in New Orleans. Under the slogan, "ReNew Orleans," the city is renewing and rebuilding itself. After the pain and loss and trauma inflicted by Hurricane Katrina, a whole "NewNew Orleans" is rising.

This cycle of destruction and renewal brings back a memory. When I was growing up in New Jersey in the 1950s, my mother commuted to New York City, where she worked. She had a love-hate relationship with New York, and she would often joke, "They ought to drop an atom bomb on New York and start all over."

Since she was joking I never really asked her what she meant, and I'll never know. But both my parents lost many family members in Europe in World War II, and she was probably thinking about something that happened in the war. Maybe she was thinking of Japanese cities that we had targeted with atom bombs, or maybe she was thinking of some city in Greece that had been devastated by the war, and now was rebuilding and renewing itself. She had the wisdom to know there are many disasters, but disasters always lead to rebirth and renewals.

People acquire wisdom through experiencing disasters. As a man gets older, and experiences more and more disasters, he gets wiser and wiser until he becomes a wise elder. At that point, he's wise enough to guide his children and other young people, so that they won't make the same mistakes he made, and suffer the same disasters. The same is true of an entire generation of people: As it becomes a generation of wise elders, it can guide the people in younger generations not to make the same mistakes. The elders can make sure that their children don't suffer the same disasters that they did.

The above paragraph sounds great, but it really contains an inherent contradiction: If the "generation of wise elders" guides the younger generation not to make the same mistakes, then the younger generations won't experience the same disasters, and so they won't become wise.

That's the way it works. It's like a dirty trick that our collective memories play on us. George Santayana's famous saying, "Those who cannot remember the past are condemned to repeat it" is usually quoted by someone who's about to brag that he remembers something that other people have forgotten. But the hard truth is that Santayana's saying is a joke, because when you're talking about generations of people then it's impossible to remember the past, with the result that new generations are always condemned to repeat the past.

So this brings us to the final conclusions of our little Christmas message. First, remember that death is part of life. Second, remember that disasters are disastrous for individuals, but lead to an aftermath of hope and rebirth for the survivors and for society as a whole.

And third, in moments of quiet contemplation on Christmas day, as you think of parents and other loved ones who are no longer with you, try to remember the things they used to say, and try to understand anew the wisdom behind those sayings. You might gain some wisdom for yourself that will be invaluable to you during the next few difficult years. (25-Dec-05) Permanent Link
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U.S. says threat of Christmas terror attacks in Indonesia is high

Maps and explosives obtained in a police raid on a terrorist's hideout last month show that Jemaah Islamiah is in the advanced stages of planning a new attack.

The threatened terrorist attacks, including kidnappings, shootings or suicide bombings, may target Westerners over the Christmas and New Year holidays.

Indonesia is the world's most populous Muslim nation. It's been hit by a series of terrorist bombings since 2002, the most recent one on the resort island of Bali in October, 2005. All of the them have been credited to Jemaah Islamiah, a terrorist group linked to al-Qaeda. Jemaah Islamiah also played a part in the planning for the 9/11 terrorist attacks. (25-Dec-05) Permanent Link
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Japanese minister calls Chinese a considerable military threat

Relations between China and Japan continue to increase in anger and hostility, as Japanese Foreign Minister Taro Aso said today that China's military build-up was an increasing threat.

China is "a neighbor with 1 billion people equipped with nuclear bombs and has expanded its military outlays by double digits for 17 years in a row, and it is unclear as to what this is being used for," Aso said. "We would not be saying that China is a threat if the content of its military expenses are clearly known...the lack of transparency fans distrust."

Relations between Japan and China have deteriorated rapidly in recent years, as both countries are bringing forth a younger generation of younger, more confrontative leaders.

Japanese Prime Minister Junichiro Koizumi's visit to the Yasukuni shrine has seriously inflamed Japan's relations with China and South Korea, at a time when a serious conflict is brewing over billions of dollars worth of oil and gas rights in the East China sea.

As I wrote last January, China's society is unraveling and headed for civil war, and China could choose to deflect this unrest into a conflict with Japan or even America.

The rapid spread of bird flu among birds in China has created an even more dangerous situation, as China has mobilized its 2.3 million man army to "fight bird flu." The mobilization of China's army cannot help but increase the tension with Japan.

Generational Dynamics predicts that we're headed for a new "clash of civilizations" world war, and you can see it happening in China and Japan. We're at a unique time in history, 60 years after the end of WW II, when all the countries that fought in that war are in generational crisis periods, because all the leaders and senior managers in these countries are from the generations born after WW II, and none of them have any personal memory of the horrors of that war. That war is going to begin next week, next month, next year, or soon after that, but it's coming. (22-Dec-05) Permanent Link
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Ariel Sharon in hospital apparently with minor stroke

In a single moment, the fragility of the entire Mideast peace process is exposed.

It's not yet known how serious the problem is, or whether Israeli Prime Minister Ariel Sharon will return to full strength and power after being taken to hospital with a minor stroke.

However, it's suddenly apparent to everyone that there's no one in Israeli politics that's even close to Sharon's stature.

Insofar as there's been any "Mideast peace process" in the last few years, it's been propelled mainly by Sharon's willingness to make unilateral decisions -- the decision to build the barrier surrounding Israel, the decision to evacuate the Gaza Strip, and his decision to abandon the Likud party that he co-founded in 1974, creating a "political earthquake" in Israel.

These decisions have been highly controversial and, as I've said before, I'm not passing judgment on whether they were good or bad decisions; but I am making the point that Sharon is one of the few world leaders left who is actually capable of making major decisions.

Just contrast Sharon with Palestinian President Mahmoud Abbas and his dysfunctional Palestinian government, or contrast it with the equally dysfunctional European Union or the American government, running on "cruise control."

This is what happens in a "generational crisis" period, which has engulfed most of the countries that fought in World War II, since 60 years have passed since that war. For decades, the generations of people who lived through the horrors of WW II have guided the world through international crises, avoiding land mines that could cause a new world war. But the "Baby Boomer" generation, born after the war with no personal memory, does not have the skills to avoid those land mines. For the past few years, this Boomer generation has been taking leadership positions in government, business, education and other organizations around the world, leading the world into increasing confrontation that will lead to a new "clash of civilizations" world war.

Ariel Sharon, born in 1928, and Yasser Arafat, born in 1929, hated each other but still cooperated with each other to prevent a new genocidal Mideast war like the one in the late 1940s. But now Arafat is gone, leaving Gaza and the West Bank to continue their descent into chaos, and Sharon's vulnerability is exposed.

If Sharon recovers, and if Sharon can demonstrate the energy to continue leading Israel, then things will return to where they were; but if Sharon is incapacitated, then Israel's government will degenerate into the same dysfunction as the Palestinian government.

Either way, this incident shows how fragile the entire Mideast peace process is, and how quickly a generational change can occur. (18-Dec-05) Permanent Link
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Tony Blair caves, and the EU reaches a budget agreement

"A big cloud has been lifted from Europe," says Germany Chancellor Angela Merkel, after British Prime Minister Tony Blair sacrificed more of the British rebate to gain an agreement on a budget for 2007-2013.

Tony Blair and Jacques Chirac meet at the EU summit in Brussels. (Source: Reuters)

The pressure on Blair was enormous. Essentially the discussion had been positioned so that Blair would bear almost the entire blame for a failure to break the deadlock, and for the resulting major crisis to the European Union project.

He didn't give up the entire rebate, as France, Poland and other EU members were demanding, but he also got little in return. French President Jacques Chirac conceded nothing in reducing the agricultural subsidy to France, but only agreed to a vague budget review by 2008. However, some of the newer states will have to give up some of the money they had expected to receive.

From the point of view of Generational Dynamics, this agreement is like a heat wave in New York in November -- it's a welcome relief, but it doesn't change the overall trend, and doesn't mean that winter isn't coming. Still, the compromise means that the "European Project" can continue, even though generational changes have made rejection of the proposed European constitution a foregone conclusion.

What now remains to be seen is the reaction of the British public, which is generally very suspicious of the European Project.

Generational Dynamics predicts that there'll be a new west European war, just as there have been west European wars at regular intervals for a millennium or more. Generational Dynamics doesn't predict who the belligerents will be, but trends for the last few years indicate that England and France will, once again, be at war. (17-Dec-05) Permanent Link
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Sudden generational shift puts Palestinian "Young Guard" threatening "Old Guard"

Younger generations in control in Palestine and Israel bring war closer.

Right on schedule, a significant generational change is taking place in the Palestinian Authority and its ruling political party, Fatah.

On the same day that the Palestinian militia group Hamas won two crucial municipal elections, far ahead of Fatah, the Fatah party itself has split in two, with a younger splinter group challenging the leadership, headed by Mahmoud Abbas, also known as Abu Mazen.

Yasser Arafat in 2000

Abbas was part of the "Old Guard," the group of Palestinian leaders surrounding Yasser Arafat, who founded Fatah and the Palestinian Authority in 1959, and was idolized by many Palestinians, until his death on November 14, 2004.

For many years, leaders in America and around the Western world were absolutely certain that peace would finally come to the Mideast if only Arafat weren't preventing it. When he died, these leaders heralded the new era of Mideast peace and tranquility, especially after Abbas took "bold steps" to bring peace, after being elected Palestinian Authority president.

From the point of view of Generational Dynamics, this was all the usual political nonsense. Ironically, as I explained several times, Arafat was perhaps a brutal, vicious terrorist, but he was a terrorist because it was the lesser of two evils, the other evil being a major regional war between Arabs and Jews.

It's one of the great ironies of history, though few people understand it, that Arafat and Israeli Prime Minister Ariel Sharon, two men who truly hated each other, actually worked together to prevent a major new war. The reason was that Arafat (born in 1929) and Sharon (born in 1928) had a very important shared experience: They both lived through the Arab-Jewish war of the 1940s, especially the extremely violent, genocidal war of 1948-49, that exploded after the United Nations partitioned Palestine, creating the state of Israel. Like any "generational crisis" war, that war was such a horror that both Arafat and Sharon were always willing to do anything to prevent another one. Thus, Arafat promoted terrorism, and Sharon has taken several controversial steps, including building the barrier surrounding Israel.

Based on this trend information from Generational Dynamics, I predicted two and one-half years ago that the Mideast Peace Roadmap would fail, and that the most likely time frame for a Mideast war would be within two years after the disappearance of Yasser Arafat. As of today, I have absolutely no reason to modify either of these predictions, even though I've been called "crazy" by people who simply have no real understanding of the power of generational changes.

Now the younger generations are taking over in both Palestine and Israel.

In the Gaza Strip, Abbas's Fatah has almost lost control completely to Hamas. When Arafat died, Western leaders were happily chirping that Abbas would bring Hamas under control, and would even disarm the militia group.

Instead Hamas, which is lead by a younger generation of Palestinians who have no personal memory of the 1940s genocidal wars, have little respect for Abbas and Fatah, is poised to win the Parliamentary elections to be held in January. It's Hamas that's going to bring Abbas under control.

(Incidentally, I've heard some pundits gleefully predict that when Hamas takes charge, they'll become domesticated and more responsible, and they'll negotiate peace with Israel. There's no limit to the nonsense that politicians believe.)

A similar "generational earthquake" has been taking place in Israel, as Ariel Sharon abandoned the Likud party, that he co-founded in 1974. He had to abandon it because it was being taken over by hard-liners from a younger generation. Similarly, Israel's Labor party has also been shaken to the core, thanks to the victory of a young man as party leader.

These changes are occurring right on schedule, as the generation of people who grew up during the genocidal 1940s wars are all disappearing (retiring or dying), all at once, leaving behind generations of people born after the war, with no personal memory of the war, and with contempt for the compromises and "sellouts" of the older generations.

If you're a regular reader of this web site, I hope that you're beginning to understand how deeply this generational change goes. If you don't believe it, just talk to somebody under age 25. Or go to a college, and talk to some college students. See how many youngsters you run into who have any grasp of how close the Mideast is to a major war, or how devastating a war with China would be. Actually, you may find it difficult to find very many who can even pick out China on a map.

It's the same everywhere in the world, including the Mideast. New generations are taking over, consisting of young people who have no fear of war, and are leading the world into new wars. Generational Dynamics predicts, with 100% certainty, that there will be a new genocidal war between Arabs and Israelis, and that it will encompass the entire Mideast. My own (slightly less certain) prediction is that American forces will still be in Iraq when this war begins, and that America will become fully engaged in this new Mideast war. (16-Dec-05) Permanent Link
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Once again, October trade deficit hits fresh monthly record high

Economists were surprised again by the unexpectedly high trade deficit.

Trade deficit, 2002-present. (Source: WSJ)

For two or more years, I've been hearing economists and pundits talk about a "self-correcting economy," which would cause the trade deficit to level off by itself. But that hasn't happened, and the adjoining graph, which is similar to graphs I've posted in the past, makes it clear that the imports continue to grow at a much faster rate than exports, and that the two rates show no signs at all of becoming equal. If anything, the distance between them is accelerating slightly.

The unexpected deterioration in the trade deficit was caused by sharply increased imports from China, Canada, the EU and Mexico, as well as oil purchases, while exports increased, but less than expected or hoped for.

The droll Treasury secretary, John W. Snow, blamed the trade deficit on slow growth in other countries. "If our major industrialized trading partners were growing faster, the U.S. wouldn't have such a large trade gap." (Of course, this reminds us that newly appointed Fed Chairman Ben Bernanke has blamed the astronomically high American public debt on a "global savings glut" in other countries.)

As I've been saying since 2002, America is entering a new 1930s style Great Depression, with a stock market crash to the Dow 3000-4000 range by the 2007 time frame. I certainly have no reason to change this prediction now, especially with public debt and the trade deficit continuing to grow uncontrollably and exponentially, so it may happen a lot sooner than expected. (15-Dec-05) Permanent Link
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European Union "make or break" summit begins today

It ought to be a great show in Brussels as anti-Blair acrimony continues unabated.

It seems to have settled down to this:

• British Prime Minister Tony Blair, who is just about to finish his six-month turn in the rotating EU Presidency, has agreed to a small reduction in the "rebate" that the EU pays to Britain every year in lieu of agricultural subsidies.
• France, Poland and other EU members are demanding that he agree to give up the rebate completely. He won't because he can't - it's domestically impossible.
• Blair will only give up more rebate if France and other countries give up some of their much larger agricultural subsidy. They won't.
• French President Jacques Chirac can't even think about agreeing to reduced agricultural subsidies after the recent violent mass riots in Paris.
• Blair and Chirac really hate each other.
• In fact, a lot of people in Europe seem to hate Blair these days - even more than they hate George Bush.

So the stage is set for a replay of the vitriolic confrontation of June 17.

The "European project" is dead, especially thanks to the rejection of the European constitution by French and Dutch voters. And now it's looking more and more like the budget process for 2007 is almost dead.

Generational Dynamics predicts that there'll be a new European war, probably between France and England, just as there have been wars between France and England for centuries. We can see the anger and hatred building as the weeks and months go by.

So it ought to be a great show in Brussels for the next two days. (15-Dec-05) Permanent Link
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Over 5,000 whites riot against Muslims on Sydney beach

Australia joins many other countries that fought in WW II in becoming xenophobic.

Thousands of young white men, yelling racist chants, chased and attacked Australians of Middle Eastern appearance on Sydney beaches on Sunday. Among the racist chants were "kill the Lebs", "kill the wogs," "go home Lebby scum". and "we grew up here - you flew here."

The violence was triggered by a brawl last week when volunteer lifeguards were attacked by a Lebanese gang of youths. Once this incident occurred, people stirred up an anti-Lebanese campaign all week, using text messaging and talkback radio, calling for a revenge attack this weekend. This call for revenge appears to have worked.

Following the beach violence, gangs of youths of Middle Eastern descent conducted a series of revenge attacks, smashing and burning dozens of cars.

Aussie politicians unanimously condemned the violence, but didn't always agree on the causes. One politician expressed the sentiment of many when he said he was "disgusted by the offensive behaviour shown by hundreds of my fellow Australians."

But others pointed out that people on those beaches had frequently been harassed and intimidated by gangs with Middle Eastern backgrounds, and that the problem had been getting worse with no response from the police.

What immediately struck me about this situation was its apparent similarity to what happened in the Netherlands in November of last year. The country appeared to melting down completely, following the murder of filmmaker Theo van Gogh by a Muslim extremist. After that, arson attacks burned over a dozen mosques and Muslim schools, and the Dutch people have become increasingly anti-Muslim since then.

But this kind of xenophobia is hardly unique to Australia and the Netherlands. We've had non-Muslim versus Muslim race riots in France, Germany, England, Russia, India and Malaysia, just to name a few. And we've seen xenophobia between Japan on the one hand and Korea and China on the other hand send relations among these countries become the worst in decades.

We're a unique time in history, 60 years after the end of World War II, when all the countries that fought in the war are now being led by people born after the war, people who don't have personal memory of its horrors, and are unwilling to compromise to prevent another such war, making a new war certain.

Generational Dynamics cannot predict the attitudes and behaviors of any individual, since each individual is free to do what he or she wants. But Generational Dynamics does predict changes in the attitudes and behaviors or large masses of people, based on generational changes. Throughout history, whenever a genocidal crisis war is fought, the people who fight in that war consider it to be so horrible that they pledge never to let anything like it happen again; but when the people who were alive during that war all disappear (retire or die), all at once, about 55-60 years after the end of the war, then the nation enters a "crisis period." A crisis period is characterized by an increasing desire for confrontation and retribution, and sooner or later a miscalculation leads to a new crisis war.

The last crisis war for America and many other countries was World War II. All of these countries are now in, or are entering, a generational crisis period. That's why xenophobia is increasing, as is a desire for confrontation and retribution. Generational Dynamics predicts that xenophobia will continue to increase, and this will lead to a new "clash of civilizations" world war, and that this will happen sooner rather than later. (12-Dec-05) Permanent Link
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Chinese killing of Dongzhou protesters revives memories of Tiananmen Square massacre

Chinese armed security forces fired on villagers protesting land confiscation, killing many peasants

The protest occurred in Dongzhou, about 80 miles from Hong Kong. It began on Monday with 100-200 villagers, growing to over 10,000 protesters on Tuesday, after which 3,000 armed security forces responded with guns, killing some villagers. The incident might have been successfully covered up, except for the village's proximity to Hong Kong, where some press freedom still exists.

The severity of the incident is still in question. China was officially silent on the incident until Saturday, and then blamed "violent agitators" with "pipe bombs," forcing action by the security forces that killed only three people. However, interviews with numerous villagers tell a far more violent story. Villagers deny use of pipe bombs and other violent weapons, and say that about 20 dead bodies of villagers have been found, and that another 40 villagers are missing.

Regional mass riots in are increasingly common in China, with 74,000 riots occurring in 2004, according to Chinese officials. The specially trained Chinese security forces have become extremely skilled at using tear gas and truncheons to disperse these riots, but they've avoided using lethal weapons so far.

Thus, the current incident represents a significant increase in violence against protesters, especially because it revives memories of the 1989 Tiananmen Square massacre. That event, which was the climax of China's "generational awakening" period, shocked China and the entire world, and led to the rise of the Falun Gong protest movement and to the independence movement in Taiwan. Both of those movements will be newly electrified by the Dongzhou killings.

China is becoming increasingly unstable because Mao Zedong's social structure, set up in the 1950s and 1960s, is completely unraveling. Peasants were the backbone of Mao's Communist revolution, but afterwards he controlled them with harsh measures that led to the deaths of tens of millions of peasants in 1959 through Mao's "Great Leap Forward." Mao set up strict rules separating rural peasants from urban factory workers, and guaranteed rough parity in incomes. Today, however, peasants have fallen far behind city workers, with rural income about 1/3 of urban incomes. Today China has over 120 million itinerant workers, mostly poor peasants who get what work they can in the cities and send money back to their families.

This instability comes at a time of increasing problems for the Communist regime:

• Bird flu has been spreading rapidly among birds throughout China, with new regional outbreaks announced almost every day. China has mobilized its 2.3 million man army to "fight bird flu." Bird flu is substantially affecting rural households who raise most of the country’s poultry.
• China is suffering overcapacity in cement, aluminum, textiles and other goods, and is also constructing too many factories, buildings and resorts. China's bubble economy, which has been growing at 9-10% a year for two decades, seems finally ready to burst. This will result in deflation and recession, and severe unemployment among itinerant workers.

As a separate issue. China's relations with Japan have have been deteriorating sharply, leading to the possibility of a miscalculation on either side leading to war.

As I wrote last January, China's society is unraveling and headed for civil war. With the continually increasing social unrest, fed by bird flu problems, overcapacity and deflation, there are now signs that the unraveling of China's economy and society is gathering steam.

Into that mix, add the Dongzhou massacre and newly stirred memories of the Tiananmen Square massacre, and you have a situation that could boil over at any time. (11-Dec-05) Permanent Link
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Wall Street Journal's page one article on Bernanke contains the usual errors and omissions

Let me try and explain this a different way.

Yesterday's lengthy article on Ben S. Bernanke's research on the Great Depression explains why the man expected to replace Alan Greenspan as Fed Chairman believes that he has complete control of the economy.

We've recently called the youthful Bernanke the "man without agony," and that comes through loud and clear. He has his hand on the levers of control. He knows exactly why the 1930s Great Depression occurred (he's begun writing a book about it, called "Age of Delusion: How politicians and central bankers created the Great Depression"), and he knows exactly how to prevent any new Great Depression. Only someone from the Baby Boomer generation could be so arrogant.

As usual, his attitude conflicts with that of Greenspan who, born in 1926, grew up amid the horrors of the Depression, and is still VERY concerned about the fragility of the economy, as he indicated in a harsh doom and gloom speech on Friday. The WSJ article points out that Bernanke believes he's also much smarter than John Kenneth Galbraith, who was born in 1908 and wrote a seminal book on the Great Depression in 1955; Bernanke hopes to replace Galbraith's book with his own wisdom.

I'll write a detailed critique of Bernanke's research when I have more time, but today I'd just like to hit a couple of points, and try a different way to explain why Bernanke must be wrong, almost as a matter of mathematical necessity.

Some obvious errors

One of Bernanke's biggest and most often repeated errors is his naďve comparison of the 1987 stock market crash with the 1929 crash. Here's a quote from a 2001 article:

"One often-heard hypothesis is that the Great Depression was caused by wild speculation on Wall Street, which provoked the stock market crash. But though stock prices may have been unrealistically high in 1929, there is little evidence to suggest that the fall in stock prices was a major cause of the Depression. A similar crash in October 1987, when stock prices fell a record 23 percent in 1 day -- an event comparable in severity to the crash of October 1929 -- did not slow the economy significantly."

He mentions that "stock prices may have been unrealistically high in 1929" as if it were a minor thing, but in 1929 stock prices were more than double book value of the underlying companies -- something we'll explain more below -- but in 1987, stocks were AT book value. So the stock market rebounded quickly from the 1987 crash, because the stock market was solid. Thus, the 1987 crash was not a "similar crash" to 1929, since the market was completely different. Today, the market is again priced at more than twice book value.

And that's the problem -- that Bernanke doesn't even acknowledge any of the problems today. The nation's public debt is at 1930s levels and is still increasing rapidly. This concerns Greenspan, but why not Bernanke?

There's an even more subtle issue: Bernanke has no explanation for why the 1990s stock market bubble occurred, but he doesn't believe that the Fed had any way of controlling it. He doesn't even mention today's real estate bubble, but believes that no bubble can be controlled; attempting to "prick market bubbles" causes stock market crashes, he "would argue."

Also, like Greenspan, Bernanke has no explanation for why the 1990s stock market bubble started in 1995. Why not 1990 or 2000? What was important about 1995? That's a question that no one and no theory has the answer to, except for just one: Generational Dynamics. The stock market bubble began in 1995 because that was EXACTLY the time that all the top financial managers, who had been very risk-averse from having grown up during the Great Depression, all disappeared (retired or died) all at once, and were replaced by a new generation of risk-seeking top financial managers with NO personal memory of the Great Depression. The new risk-seeking managers created the bubble, and today still continue to be oblivious to the danger.

The point is that Bernanke could not stop or even explain the most recent bubbles. But he's so arrogant, he believes that he'll have no trouble containing the aftermath when the bubble finally bursts. If he can't explain or stop a bubble, how can he possibly believe that he can stop a Depression? It's absolutely bizarre.

One more conundrum: Bernanke certainly doesn't believe he understands the psychology that caused such a large bubbles in the 1920s and 1990s. (Once again, Generational Dynamics is the only theory with an explanation.) Then he can't possibly believe that he understands the psychology that caused the crash and depression of the 1930s. Then how can he possibly know that whatever prescription he uses will defeat that psychology?

If anything, it's obvious that nothing will work. If a bubble is caused by psychological exuberance, then a depression is caused by psychological hopelessness. After a guy loses a big chunk of his overpriced assets, it'll take more than a drop in the Fed funding rate to get him interested again.

The value of stock

Let me try a different approach to showing why people like Bernanke are not just wrong, but mathematically wrong.

Here's a question: Suppose I wanted to sell you 100 shares of stock in Worldwide Widget Corp. You're not allowed to know the prices of any other stocks, but you can ask me any questions you want about the company. How would you arrive at the value of the 100 shares of stock?

If you're just in love with Worldwide Widget Corp., then you might value your stock based on that love. That's how you might buy a work of art. There's no way to value a work of art, except to go by your guts and feelings. That's the way you might arrive at a value of this stock. The value you pick is just a number in the air, with no solid reasoning behind it.

But suppose you don't want to treat it like a work of art; you don't particularly love or hate Worldwide Widget, and you just want to make money. The stock purchase is an investment, so you want to do an actual analysis that provides the actual investment value of the 100 shares of stock. What methodology do you use?

It turns out that there's another kind of investment where exactly this kind of analysis is done all the time: Investment real estate. Suppose you want to purchase an apartment building with 100 apartments, with the intention of making money. How do you decide what price you're willing to pay for the apartment building? This is called real estate appraisal.

Real estate investors will tell you that there are two common ways to appraise investment property, with the following GREATLY simplified explanations:

• You compute how much money the apartment building will earn each year from rent collection, assuming a reasonable vacancy rate; you compute how money you'll have to pay each year for expenses and upkeep for the apartment building. You subtract the two to get annual cash flow. You divide that by the annual interest rate you expect to earn, say 7%. The result is the appraised value of the building.
• You find out the replacement value of the building, the cost of building an equivalent new apartment building. The replacement value can, in certain circumstances, be the appraised value of the building.

A good investor doesn't allow himself to be swayed by emotion in computing these figures. You're not buying a work of art or having a love affair with the building; you just want to make money, nothing else. So you use real numbers, not wishful thinking numbers.

Wall Street Historical Price/earnings ratio for S&P 500

But that's nothing like how stocks are bought today. The prices of stock today are just numbers in mid air; they have no solid underpinning. No one even pays attention to whether they're overpriced. Investors buy when the price of oil goes down, and sell when the Fed Open Market Committee minutes come out.

But in fact the two methods for real estate appraisal work just as well for stock purchases:

• You determine the annual cash flow to be earned from the stock. You can do this in several ways, usually from earnings or dividends or revenue. Once you determine the annual cash flow, you divide by the annual interest rate you expect to earn, say 7%, which corresponds to a Price/Earning ratio of about 14 (since 100/7 = 14.3). But stock market P/E ratios have been historically high for over ten years, as the above graph shows. Note that they were extremely high in 1929, but they were about average in 1987, something which, for reasons that are totally beyond me, Bernanke and others don't grasp.
• You determine the book value of the underlying company, Worldwide Widget Corp., and you use that as the value of the outstanding stock shares. As I've discussed many times, both I and other analysts have computed, the "true value" or book value of the stock market today to be around Dow 4500, which means that the market is overvalued by a factor of more than two -- at about the level as just before the 1929 stock market crash. In 1987, by the way, the stock market price was just about exactly at book value, again something that Bernanke and others don't grasp, for reasons that escape me.

If you're under 40 years old, you may be shocked and surprised to learn that investors were using exactly these methods for decades, until the early 1990s. That's why the 1987 crash did so little harm to the stock market -- the stock market's position was solid, because senior investors had grown up during the depression and knew how to make solid investment decisions.

When that generation retired, a new generation of senior investors took over. These were people with who bought stocks like works of art, based on feeling good. These investors made one crazy investment decision after another, and created a huge market bubble.

Dow Jones Industrial Average -- 1896 to 1940 -- with book value shown as thin curve

Bernanke believes that the Fed can just wiggle the interest rate a little, and thereby defy the mathematically certain historical patterns that say that stock market prices will fall. He will not because he cannot. All he can hope to do is extend the bubble a little longer, as the Fed has been doing since 2002.

Stocks will fall. And not only will they fall to the solid market levels -- with an average P/E ratio and a book value price -- but they'll overshoot those values and fall by much more. In 1929-1933, the stock market fell by 90%. Something like that is going to happen again, and it's laughable to think that it can be stopped. (8-Dec-05) Permanent Link
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Blair's EU 2007 budget proposal leaves Europe is poised for new bruising battle in Brussels on Dec 16-17

Will the European Union survive into 2007? That's the question that may be answered as ministers prepare for a new attempt to settle on an EU budget for the years 2007-2013. The current budget agreement expires at the end of 2006.

Furious EU President, Luxembourg Prime Minister Jean-Claude Juncker on June 18 (Source: BBC)

The last attempt at a budget agreement, on June 17, failed in an acrimonious confrontation between UK Prime Minister Tony Blair and French President Jacques Chirac, with the furious EU President Jean-Claude Juncker siding with Chirac. (Sorry to keep posting that same picture of Juncker, but I just love it.)

Blair is refusing to give up its annual €5 billion rebate (€ = euros), negotiated by Margaret Thatcher in the 1980s, unless the agricultural subsidy that gives France an annual €12 billion is also reduced. Chirac and other countries are refusing.

Last week there were press reports that Tony Blair was caving on the rebate, getting nothing in return, as a result of extreme pressure from several EU countries. If the press reports had been right, it could have been politically disastrous for Blair, since many Brits feel that they're paying way too much to the EU as it is.

The press reports were only tangentially true. In a complex proposal put forward to the EU ministers on Monday, Blair has offered to reduce the rebate by 12-15% and allow France to retain its full agricultural subsidy in 2007 -- provided that the agricultural subsidy for 2008 and beyond is open for debate, and provided that development aid to new member states, especially Poland, Bulgaria and Romania, is also reduced.

Tony Blair is in a very unusual political position: He's scheduled to hold office for several years more, but he's already announced that he will not run again. This gives him some political freedom within his own country to make this kind of offer.

But the repercussions were swift nonetheless. A spokesman for the opposition Conservative party said, “Mr Blair has spent the last few days rushing around Eastern Europe trying to find a friend. Now, at the last minute, he has come up with these ill-considered and damaging proposals to surrender part of Britain’s rebate whilst getting nothing in return.”

But that's nothing compared to the heat he's getting from the Europeans.

The budget proposal was immediately labeled "unacceptable" by the EU and by several member countries. France and Poland led the assault. The French foreign minister said, "These proposals do not seem to be of a nature to lead to the agreement for which we all wish." The Polish prime minister said, "The proposal is not based on solidarity. In this form it is unacceptable." And the European commission president said, "This proposal amounts to a budget for a 'mini-Europe', not the strong Europe we need."

As we've previously said, we're at a unique time in history, 60 years after the end of World War II, when all the countries that fought in the war are now being led by people born after the war, don't have personal memory of its horrors, and are unwilling to compromise to prevent another such war, making failure of the "European project" a foregone conclusion.

So there's a great deal at stake in the next two weeks or so. Positions are very hard, and it's difficult to see how much each side can back down. Germany has expressed interest in mediating the negotiating, so perhaps some compromise will be worked -- perhaps for just the year 2007, with the hope that tempers will cool, so that an agreement can be worked out a year from now for 2008 and beyond.

However, what few people understand is that tempers are not going to cool, because the generational changes that are in place are an irreversible trend. A year from now, the French, the British, the Poles and all the others will be even more adamantly locked into their positions, so a long term agreement at that time will be impossible.

Generational Dynamics predicts that there'll be a new west European war, just as there have been west European wars at regular intervals for a millennium or more. Generational Dynamics doesn't predict who the belligerents will be, but trends for the last few years indicate that England and France will, once again, be at war. (6-Dec-05) Permanent Link
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Alan Greenspan gives another harsh doom and gloom speech

Saying that "the consequences for the U.S. economy of doing nothing could be severe," Fed Chairman Alan Greenspan spoke to the Federal Reserve Bank of Philadelphia Policy Forum on Friday.

He expressed the fear that "we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver. If existing promises need to be changed, those changes should be made sooner rather than later."

Greenspan specified a first step to changing things:

"[The] necessary choices will be especially difficult to implement without the restoration of procedural restraints on the budget-making process. For about a decade, the rules laid out in the Budget Enforcement Act of 1990 and in the later modifications and extensions of the act helped the Congress establish a better fiscal balance. However, the brief emergence of surpluses in the late 1990s eroded the will to adhere to these rules of restraint. ... By the end of the decade, many of the rules that helped constrain budgetary decisionmaking earlier in the 1990s--in particular, the limits on discretionary spending and the PAYGO requirements--were being violated with increasing frequency; finally, in 2002, they were allowed to expire.

Reinstating a structure like the one formerly provided by the Budget Enforcement Act of 1990 would signal a renewed commitment to fiscal restraint and help restore discipline to the annual budgeting process."

What Greenspan is describing here is a typical "generational unraveling." Congress passed the Budget Enforcement Act when it was being led by people from the generation that had grown up during the Great Depression, who understood its horrors, and who were willing to put politics aside to accomplish something important. But as the people in that generation disappeared (retired or died) during the 1990s, the Budget Enforcement Act "unraveled" -- its provisions were increasingly violated and it was allowed to expire. That's the kind of thing that ALWAYS happens during generational unraveling periods.

To put this in context, I've written about this Budget Enforcement Act a couple of times without naming it. Here's what I wrote in conjunction with the plan for the Federal Government to pay two million dollars per family in aid for hurricane Katrina victims:

"When I was growing up in the 1950s, my school teachers talked about the Great Depression all the time, because they had suffered through it. Those teachers must be spinning in their graves over the appalling things that are happening now, as a matter of course.

In the 1980s, the Republicans and the Democrats cooperated with each other to change the Social Security system to make it a sounder system. After that, they cooperated again to specify new rules to control the budget deficit. And in 1996, Democratic President Bill Clinton cooperated with the Republican congress to eliminate the welfare entitlement.

Today, cooperation is impossible, except to spend money and more money and more money. Controlling anything is impossible."

The point I was making then, and am making again now, is that budget control is IMPOSSIBLE. Reinstatement of the Budget Enforcement Act is IMPOSSIBLE.

People sometimes write to me to complain when I use words like "IMPOSSIBLE." One person wrote, "Politics is the art of the possible. How could passing a law be impossible?"

The answer is that you need the right people to do anything. You can't build a bridge unless you have people with the skills to build a bridge. You can't pass a budget enforcement act unless you have the people with the skills to put politics aside to make difficult budget decisions. And the people with those skills are gone; the Baby Boomer generation born after WW II is in charge now, and they don't have the skills to put politics aside for anything, as anyone can see by watching any newscast.

So when Greenspan tells us to reinstate the Budget Enforcement Act, he's asking for what is literally impossible. The Budget Enforcement Act will NOT be reinstated.

Greenspan adds:

"I do not mean to suggest that the nation's budget problems will be solved simply by adopting a new set of budgeting rules. The fundamental fiscal issue is the need to make difficult choices among budget priorities, and this need is becoming ever more pressing in light of the unprecedented number of individuals approaching retirement age. For example, future Congresses and Presidents will have to weigh the benefits of continued access, on current terms, to advances in medical technology against other fiscal initiatives."

Once again, Greenspan is asking the impossible. Today's leaders are unable to "make difficult choices among budget priorities." History tells us that once a generational unraveling has occurred, difficult choices will not be made -- until a new huge financial and war crisis occurs.

Greenspan also spoke of the danger to the Social Security system from the retiring Baby Boomer generation. As we mentioned above, Republicans and Democrats put politics aside in the 1980s to make the Social Security system sounder, but look what happened, according to Greenspan:

"Unfortunately, the current Social Security system has not proven a reliable vehicle for such saving. Indeed, although the trust funds have been running annual surpluses since the mid-1980s, one can credibly argue that they have served primarily to facilitate larger deficits in the rest of the budget and therefore have added little or nothing to national saving."

In other words, by making Social Security sounder, the 1980s leaders only permitted 2000s leaders to raid the Social Security system for more money to spend. So the Social Security changes of the 1980s have also unraveled.

Greenspan's speech makes for very gloomy reading. Ben S. Bernanke, Greenspan's youthful replacement as Fed Chairman, is a man without agony, as we've written before. But Greenspan, born in 1926, is more and more able to see what's coming, and he feels a great deal of agony.

Greenspan concludes:

"Crafting a budget strategy that meets the nation's longer-run needs will become more difficult the more we delay. The one certainty is that the resolution of the nation's unprecedented demographic challenge will require hard choices that will determine the future performance of the economy. No changes will be easy, as they all will involve setting priorities and, in the main, lowering claims on resources.

"It falls to our elected representatives to determine how best to address the competing claims on our limited resources. In doing so, they will need to consider not only the distributional effects of policy changes but also the broader economic effects on labor supply, retirement behavior, and private saving. In the end, the consequences for the U.S. economy of doing nothing could be severe. But the benefits of taking sound, timely action could extend many decades into the future."

Once again, Greenspan makes IMPOSSIBLE demands: making "hard choies," "setting priorities," and "lowering claims on resources."

It's a good time to recall the wisdom of Sherlock Holmes:

"When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth." - Sherlock Holmes in The Adventure of The Blanched Soldier (1926)

So now that we've eliminated the impossible, things like "setting priorities," what's left? Greenspan says that "the consequences for the U.S. economy of doing nothing could be severe," and there's only one thing that Greenspan can mean: A replay of the 1930s Great Depression that Greenspan himself spent his childhood enduring. (4-Dec-05) Permanent Link
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Indian MP says that bird flu is a 'scam' to sell 'Tamil-flu'

This sounds like a joke, but unfortunately it isn't.

Speaking to an environmental group, Maneka Gandhi, a member of India's Parliament, said that "bird flu does not exist." She called it a "scam" to sell the medicine she called "Tamil-flu."

Maneka Gandhi

She was probably thinking of the the flu treatment drug Tamiflu, manufactured by Swiss pharmaceutical firm Roche Holding AG. There has been a worldwide frenzy to obtain doses of Tamiflu for bird flu, even though it's doubtful that Tamiflu will provide much help for a bird flu victim.

She may also have been thinking of the Tamil Tigers, a violent terrorist group operating in Sri Lanka near the border with India.

So Ms. Gandhi, who is a good enough looking chick to have a fan web site, evidently thinks that the bird flu "scam" was created by Tamil Tiger terrorists in order to sell the medicine Tamil-flu.

Ms. Gandhi is an animal activist, and may also believe that bird flu is a hoax because it gives animal-haters an excuse to kill birds. (3-Dec-05) Permanent Link
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Belgians shocked to learn that suicide bomber is Belgian woman

Her parents try to make sense of the life of their daughter, 38 year old Muriel Degauque.

Working class couple Jean and Liliane Degauque hadn't been able to make contact with their daughter for a month, but immediately feared the worst when they heard the Tuesday evening news about a native Belgian female suicide bomber in Iraq, they immediately suspected the worst.

Muriel Degauque - "Here's the Kamikaze Belgian woman killed in Iraq" (Source: La Derničre Heure)

The details are available in a an article in the Thursday's La Derničre Heure.

Muriel Degauque grew up in southern Belgian as a normal Christian girl, though she was a disaffected Generation X teenager occasionally on drugs, and was somewhat estranged from her parents.

A boyfriend, Belgian-born Moroccan Issam Goris, converted her to Islam in 2001, and they married in 2002. They spent time in Morocco, and she started wearing burkas, covering her body entirely, except for the eyes. She became "more Muslim than a Muslim," according to her parents.

Both Muriel and her husband died on the same day, November 9, in separate suicide bomber attacks. He was shot before he had a chance to detonate his bomb. She detonated her bomb, and killed either just herself or six people, according to conflicting reports.

From the point of view of Generational Dynamics, this situation is very interesting and instructive, because it can be combined with information about the London subway bombers of July 7 to obtain interesting new theoretical results in generational theory.

One thing we've known for a long time is that societies and nations change during "generational crisis" periods. A generational crisis period occurs about 50-60 years after the end of the previous crisis war, when the people who grew up during the previous crisis war and have personal memories of its horrors all disappear (retire or die), all at once, leaving behind a new generation of leaders with no personal memory of the last crisis war. At that time, the national mood changes dramatically, so that problems are dealt with by confrontation and retribution, rather than by confrontation and containment as they were prior to the crisis period.

America's last crisis war was World War II. We're at a unique time in history today because 60 years have passed since the end of WW II, and almost all the nations that fought in WW II have entered a generational crisis period. Generational Dynamics makes predictions about the attitudes and behaviors of large masses of people, and currently predicts that the world will be fighting a new "clash of civilizations" world war, sooner rather than later.

Generational Dynamics cannot predict the attitudes and behaviors of any individual, since each individual is free to do what he or she wants. But we're seeing that suicide bombers only come from societies that have entered generational crisis periods, and not before. This indicates that the generational crisis period changes society so that it makes the creation of suicide bombers possible.

I've also begun exploring the correlation between crisis wars and suicide bombers in my article on Robert Pape's study of suicide bombers, published in the new book Dying to Win. Putting his research together with Generational Dynamics, we find that suicide bombers are most likely to come from countries in generational crisis periods where the land is occupied by another country. They justify their terrorist acts as "altruistic suicide," believing that they're helping the people of their country.

So what we saw with the July 7 London subway bombers is that were the children of immigrants from a Muslim portion of Kashmir, a region in dispute between Muslim Pakistan and Hindu and Sikh India. The bombers attacked England because it's an ally of India.

However, Pape's research also found, among the Mideast countries he examined, most suicide bombers come from Saudi Arabia and Morocco. These two countries that have had exceptionally long times pass since their last crisis wars. Saudi Arabia's last crisis war was the Ibn Saud conquest, ending in 1925, and Morocco's was the Rif War, ending in 1927.

The new Belgian situation is exciting because it further confirms these newly discovered correlations. The husband, Issam Goris, was a second generation Moroccan, born in Belgium. The suicide bombing occurred in Iraq, which radical Islamists consider as occuppied by Americans. Muriel Degauque, of course, was raised as a Christian in Belgian, but became a Muslim suicide bomber under the influence of her radical husband. So we can see that this kind of "altruistic suicide" can be adopted not only by the children of immigrants but also by their wives.

The foundational work on generational theory was done by historians William Strauss and Neil Howe, who studied what's happened in previous Anglo-American crisis periods, and published their findings in two books, Generations and The Fourth Turning. Their generational theory forms the basis of Generational Dynamics.

In their theory, a nation cycles through four periods, or "turnings," each roughly 20 years long. The "fourth turning" is what we've been calling the generational crisis period.

Thanks to the new research that we've developed, based on Pape's work, we're able to paint a much better picture of what happens to a nation when it enters a generational crisis period; in particular, we're getting an answer to the following question: What happens when te fourth turning (generational crisis period) goes by without any crisis period?

We developed some of this new theoretical material in the article a few days ago on Ariel Sharon's political "earthquake" in Israel.

As we discussed, a country that goes into a generational crisis period goes into a kind of "cruise control" before the crisis war begins. During this "cruise control" period, little gets actually accomplished, except a lot of political bickering. Of course, once the crisis war begins, the country unites and pursues the war for its own survival.

But what happens if there IS no crisis war? Then what we're finding is that the country appears to enter a "supplementary crisis era" or "fifth turning," a period which is as distinctly different from a fourth turning as a fourth turning is from previous eras.

In brief, the picture that appears to be forming is as follows: During the fourth turning, the middle-aged and older generations (Generation X and Boomers in America today) get nothing done except bicker and argue. The young adult generation, which would normally be the new Hero generation fighting in the crisis war, matures into middle age as placid and content people who are, shall we say, "not looking for trouble." However their children, who normally would have grown up during the crisis war, reach adulthood having incorporating their parents' frustrations and smoothed-over hatreds. They turn into a distinctly new type of generation that I call "Super-Nomads." They feel a great deal of anger and little appreciation for the value of life. Thus, during this new "fifth turning," they adopt strategies like suicide bombings, but they also keep their intentions hidden from their parents, who would oppose them.

This is a new theoretical development in Generational Dynamics, and more research needs to be done on it. However, it provides the answer to one more question that people sometimes ask me: Suppose a country just gets through the generational crisis period without a war, something that, according to my research, happens about 10% of the time. Can they go on without a crisis war forever?

The answer appears to be no. Once a generational crisis period begins, the younger generations become increasingly angry and vengeful, and hold human life to have less and less value. With that kind of anger and hatred becoming increasingly pervasive, a new crisis war cannot be prevented.

Another question still to be answered is: Why is it possible for a society or nation to get through a crisis period without a crisis war? For now we can only guess by looking at some examples: Saudi Arabia avoided a crisis civil war in the 1970-80s because of its massive oil revenue; Morocco avoided a crisis war in the 1970-80s because a guerilla war with the Polisario in Western Sahara didn't spiral out of control (though we don't know why it didn't); and the American colonies should have had a Revolutionary War in the 1750s, but it was postponed to 1776 because of the French and Indian Wars. (2-Dec-05) Permanent Link
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New Spielberg movie Memoirs of a Geisha infuriates both China and Japan

As if Japan-China relations aren't bad enough (see previous item below), Steven Spielberg's "Memoirs of a Geisha," which had its world premiere in Tokyo on Tuesday, is infuriating Japanese because none of the three lead actresses are Japanese; two of them are Chinese and another is an ethnic Chinese from Malaysia. This is despite the fact most of the characters are Japanese. The movie is scheduled to open in America on December 9.

Ziyi Zhang in Memoirs of a Geisha (Source: IMDB)

The word Geisha means "artist" in Japanese. Geisha are professional hostesses who entertain guests through various performing arts in tea houses called O-chaya. They are trained in a number of traditional skills such as Japanese ancient dance, singing, playing instruments such as the Shamisen, flower arrangement, wearing kimo no, tea ceremony, calligraphy, conversation, alcohol serving manners and more. Geisha continue to study and perfect these skills throughout their careers as geisha.

According to imdb.com, the plot for the movie is as follows: In 1929 an impoverished nine-year-old named Chiyo from a fishing village is sold to a geisha house in Kyoto's Gion district and subjected to cruel treatment from the owners and the head geisha Hatsumomo. Her stunning beauty attracts the vindictive jealousy of Hatsumomo, until she is rescued by and taken under the wing of Hatsumomo's bitter rival, Mameha. Under Mameha's mentorship, Chiyo becomes the geisha named Sayuri, trained in all the artistic and social skills a geisha must master in order to survive in her society. As a renowned geisha she enters a society of wealth, privilege, and political intrigue. As World War II looms Japan and the geisha's world are forever changed by the onslaught of history.

Chinese are outraged over the film for a different reason: The film's star, Zhang Ziyi, China's best-known actress, is depicted in the movie as having sexual relations with a Japanese man.

With relations between Japan and China deteriorating, and the Chinese people becoming increasing infuriated at the Japanese, it's hard to say what effect this kind of movie will have. (1-Dec-05) Permanent Link
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Slowing China economy may become deflationary due to overcapacity

Economic problems are growing against the backdrop of continually deteriorating relations with Japan

China's bubble economy, which has been growing at 9-10% a year for two decades, may finally be ready to deflate - both literally and figuratively.

According Morgan Stanley economist Andy Xie, China is suffering overcapacity in cement, aluminum, textiles and other goods, and is also constructing too many factories, buildings and resorts.

Overcapacity means an oversupply of goods to sell, which would mean a fall in prices, resulting in deflation. Deflation would "cut economic growth, cut off foreign direct investment and would destabilize Asia," according to Columbina University economics professor Robert Mundell.

Generational Dynamics predicts that this is exactly the kind of result to be expected from China's bubble economy.

Adding to China's woes is the rapid spread of bird flu in China, with reports of a new outbreak of bird flu around the country almost every day. China has recently mobilized its 2.3 million man army to fight bird flu.

All of this is occurring at the same time that China's relations with Japan continue to deteriorate rapidly.

South Korea and China will cancel planned meetings of their leaders with Japan's Prime Minister Junichiro Koizumi. Koizumi, Chinese President Hu Jintao, and South Korean President Roh Moo Hyun will all be attending a major summit of Asean nations in mid-December. Koizumi was to have met with each of the other two. Those meetings will be canceled, though a three-way meeting is still considered possible.

Japan's relations with both countries have have been deteriorating sharply ever since Koizumi visited the Yasukuni shrine in October. The Tokyo shrine honors 2.3 million war dead, including some who have been declared World War II war criminals. These visits infuriate the Chinese and Japanese, who claim that the shrine ignores Japanese atrocities including mass murder and the use of Korean and Chinese women as "comfort women" for Japanese soldiers.

Things have been boiling over all year, with anti-Japanese riots in China last Spring and a dispute over oil and gas rights in the East China sea.

Koizumi says that he doesn't understand the criticism of his visits to the shrine. "I visit the shrine as an individual who is against the occurrence of another war and to pay respect to the sacrifices of those who died in war," he says. "So I do not understand why I am criticized for this."

It seems to me that he has a point. Why should South Korea and China stay so infuriated for months over what is essentially a religious service. This is something that China and South Korea could get past, if they wanted to. So I guess they don't want to.

As I wrote last January, China's society is unraveling and headed for civil war. With the country's overcapacity and deflation, there are now signs that the unraveling of China's economy and society is gathering steam.

Every country must have a recession sooner or later, but that would be especially harsh on China, with its 150 million migrant workers dependent on the bubble economy for survival. There are already tens of thousands of regional rebellions in the country every year, and a significant rise in unemployment could lead to rapid destabilization.

I'm a suspicious kind of guy, and my thoughts keep getting drawn back to the mobilization of China's 2.3 million man army. It would surprise me if those 2.3 million soldiers weren't training to do more than kill chickens. (1-Dec-05) Permanent Link
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President Bush's speech lays out plan for disengagement from Iraq war

Both sides showed little understanding of what's going on in Iraq yesterday, as President Bush gave gave a major speech outlining his Iraq war strategy.

President Bush made it clear that he would not approve of withdrawing from Iraq until the insurgency was defeated:

"Some are calling for a deadline for withdrawal. Many advocating an artificial timetable for withdrawing our troops are sincere -- but I believe they're sincerely wrong. ... Pulling our troops out before they've achieved their purpose is not a plan for victory. ... Setting an artificial deadline to withdraw would send a message across the world that America is a weak and an unreliable ally. Setting an artificial deadline to withdraw would send a signal to our enemies -- that if they wait long enough, America will cut and run and abandon its friends. And setting an artificial deadline to withdraw would vindicate the terrorists' tactics of beheadings and suicide bombings and mass murder -- and invite new attacks on America. To all who wear the uniform, I make you this pledge: America will not run in the face of car bombers and assassins so long as I am your Commander-in-Chief."

Senator Joe Biden (Democrat, Delaware), interviewed on CNN, said that we "stirred up a hornet's nest," since it was the war that created the insurgency, and that the insurgency would start to disappear as the American troops withdrew.

From the point of view of Generational Dynamics, both views are flawed for the same reason.

Generational Dynamics predicts a major regional war between Jews and Arabs in Israel/Palestine, and another major regional war over the Kashmir region.

It's the long-standing conflicts over the Palestine and Kashmir regions that are driving the insurgency, not just in Iraq but also in countries throughout the region.

American interests have been targeted by an ever-increasing level of Islamist terrorism since the 1980s, with 9/11 being the peak attack so far. In fact, Islamist terrorist insurgency groups are active in Indonesia, Malaysia, Thailand, Bangladesh, Kashmir, Afghanistan, Chechnya, Dagestan, Ingushetia, Iraq, Saudi Arabia, Lebanon, West Bank, Gaza, Egypt, Morocco, and other countries. Almost none of these have anything to do with Iraq, and they wouldn't go away if we pulled out of Iraq tomorrow.

Was the 2003 invasion of Iraq a mistake? I've said before that I don't believe we'll know for ten years or so. Generational Dynamics predicts that we're heading for a "clash of civilizations" world war, it will be years before we know whether the invasion of Iraq helps us or hurts us in that war.

(Incidentally, French Prime Minister Dominique de Villepin, one of the world's most anti-American political leaders, told CNN yesterday that a badly planned withdrawal could cause chaos in Iraq, "which of course would be disastrous for the whole region." He wants America to coordinate the withdrawal wth France and the international community.)

At any rate, it seems clear that American forces will remain in Iraq until the larger war begins. Like everything else these days in American policies, the Iraq war will be running on "cruise control," and will serve useful purpose for political game-playing for both political parties, until some major terrorist attack or other shock forces us off cruise control into war. (1-Dec-05) Permanent Link
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