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Web Log - December, 2006

Coordinated bombings across Bangkok cancel New Year's Eve celebrations

New Year's celebrations are usually pretty big in Thailand, but they were canceled for thousands of party goers when bombs exploded shortly before midnight. Two people were killed, and 34 were injured.

Locations of nine bombs in Bangkok, Thailand (Source: BBC)

It's a good thing they were cancelled, because additional bombs went off shortly afterward, and would have killed many more people.

Thailand is primarily Buddhist, but the southern portion of the country, bordering Malaysia, is Muslim. An Islamist insurgency began in the south in 2004, and repeated terrorist attacks have killed thousands.

However, no one has claimed responsibility for Sunday's Bangkok bombing, and it is not certain that Islamists are responsible.

Thailand is currently run by a military government that took forced Prime Minister Thaksin Shinawatra from office in September, following a financial scandal. The bombings may have been perpetrated by opponents of the new military government. (31-Dec-06) Permanent Link
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Financial analysts gush at stock market's meteoric rise

Meanwhile, more sober commentators worry about credit derivatives

The meteoric rise of the stock market this year, especially during the last six months, has led to pundits' predictions of similar rises next year, continuing into the future.

Jack Bouroudijian of Brewer Investment Group gushes over stock market (Source: CNBC)

Here's what Jack Bouroudijian of the Brewer Investment Group said on Friday morning on CNBC:

"This has been a wonderful six months for the market. And the worst thing about it is that we underperformed the rest of the world. So it's really of question of whether we're at the beginning of a multi-year run in equities. I guess that's the big debate. When you've got these superstar fund managers like the Bill Millers of the world, that are underperforming that are still unbelievers out there, that makes me even more bullish than I am. And we see all this data coming out and this is absolutely everything that you want."

The mention of Bill Miller refers to the fact that his Legg Mason Value Trust Fund has done less well than the overall stock market for only the first time in 16 years.

Apparently Bouroudijian believes that since a "superstar" like Miller didn't do as well as expected, it means that the market can go even higher. His reasoning is a little obscure, but here's what he apparently means: Miller wasn't clever enough to beat the market in 2006. Therefore, if he and people like him had just been a little more clever, then they would have beaten the market and pushed it up even higher. Now they've learned their lessons, and next year they'll be even more clever, and so the market will continue to go up.

I have to tell you, dear reader, that I just never cease to be absolutely, totally astounded by these statements. This guy probably makes a few million dollars a year in salary, and probably just received another few million in year-end bonuses. And yet, his gushing is one of the stupidest statements I've ever heard. Though really I should hedge this last sentence by saying that I can't be sure, since I've been hearing so many incredibly stupid statements by high-paid financial consultants. It's almost beyond belief.

Randall Dodd, director of the Financial Policy Forum (Source: CNBC)

Shortly after Bouroudijian spoke, another financial pundit, Randall Dodd, director of The Financial Policy Forum, came on to CNBC and gave a much more sober assessment of the marketplace.

The discussion centered on risks that might affect the stock market next year. CNBC economics expert Steve Liesman asked Dodd: "If we're going to have some kind of meltdown or crisis next year, how does it happen, where would you be looking for to be the source of it?"

Dodd answered as follows:

"I don't want to be alarming, I'm just trying to raise people awareness about these issues. I would look at the credit derivatives market. We've had some problems in clearing and settlement of those contracts. We've had problems with people trading more credit derivatives than there is underlying debt. And right now there's one big issue we have to look at -- it's that a lot of our major banks and broker dealers are moving their credit risk off their books and into hedge funds. So you have financial institutions with capital requirements reducing the amount of capital they use by moving that credit risk into hedge funds which have no capital requirements and often use very high leverage to manage their credit risk of selling credit protection through this credit derivatives market."

The reason for Dodd's obscure language is that he doesn't want "to be alarming." This kind of obfuscation was also a speciality of Alan Greenspan.

Dodd is referring to derivatives in general and credit derivatives in particular, as used by hedge funds. This is an issue that I discussed in detail last month, and for those financial analysts who are still capable of rational thought, this is where most of them expect a meltdown to be triggered.

What Dodd is describing is some of the elements that make the current financial market into a pyramid scheme. If you look at the the Wikipedia article on pyramid schemes, you can see that it lists a number of different types, and gives the following list of "key identifiers" of a pyramid scheme:

• "A highly excited sales pitch (sometimes including props and/or promos)."

  Well, just take a look at Jack Bouroudijian's gushing statement above.

  It's worth remembering that investment advisors have a major conflict of interest that biases their view on the stock market. If they say that things look bad, then people won't make investments, and the investment advisor won't make a commission; by hyping the stock market, they encourage more investments, and their commissions are much higher. Don't ever think that these people are neutral, unbiased observers; their entire income depends on hyping, and lying if necessary.

  (Incidentally, I personally have nothing on the line except my own credibility. I sold my home and moved into an apartment just before the real estate bubble burst, and my financial situation will not be materially affected by whether I'm right or wrong. However, almost all investment advisors have a big financial stake in hyping.)

• "Little to no information offered about the company unless an investor purchases the products and becomes a participant."

  As Dodd points out in his statement above, hedge funds have no capital requirements, and in fact are not regulated at all. Hedge fund managers are generally very secretive, and of the 10,000 or so known hedge funds, 8,000 are registered in the Cayman Islands where they don't have any regulatory requirements.

• "Vaguely phrased promises of limitless income potential."

  Once again, that's what Bouroudijian says. Other financial pundits predict even higher results.

  The worst and most irresponsible is Harry S. Dent, who has predicted that the market would go up to Dow 35000-40000 by 2008, though he's partially tempered those predictions recently to 20000 by 2009.

  But the promises of limitless income potential are abounding in today's stock market.

• "No product, or a product being sold at a price ridiculously in excess of its real market value. As with the company, the product is vaguely described."

  What's the "real market value" of a share of stock? Today's investment advisors don't recognize any such "real value." To them, a share of stock has no intrinsic value, but is valued at whatever someone is willing to pay. That explains Bouroudijian's idiotic remark about Bill Miller.

  Up until the 1980s, when the last generation of people who lived through the Great Depression were still around, investors did worry about real market value, and the only valid measure is the Price/Earnings ratio (P/E ratio).

  At the present time, the stock market is overpriced by a factor of about 240%, with price/earnings ratios around 20 or higher since 1995. A fall in P/E ratios to below 10 is long overdue. Note that the P/E ratio index has fallen below 10 several times in the 20th century, most recently in 1982, so this is a common occurrence.

  But none of this matters to giddy investors. If you went to the market and bought a dozen eggs for $1.50 one week, and then they cost $3.00 the next week, you'd wonder what the hell was going on. But when stock markets go up like that, idiot investors only cheer.

• "An income stream that chiefly depends on the commissions earned by enrolling new members or the purchase by members of products for their own use rather than sales to customers who are not participants in the scheme."

  This is exactly the case for investment advisors. They earn money on sales commissions, so they're highly biased to claim the stock market will rise.

• "A tendency for only the early investors/joiners to make any real income."

  True. If you purchased your stocks prior to 1995, the beginning of the stock market bubble, then you may be OK.

• "Assurances that it is perfectly legal to participate."

  Yes, this particular pyramid scheme is legal.

You should understand that you could start your own hedge fund and make a great deal of money. You borrow $100 million, and purchase $100 million in shares of other hedge funds, and put them all into a pool, and register in the Cayman Islands, and call your company MyHedge. Then create 200 shares of your pool, so that there are now 200 MyHedge shares available. Keep 100 shares for yourself, and use your magnificent sales skills to sell the other 100 shares to investors for $1 million each. You've now already made back the $100 million you borrowed, and you still own 100 shares of your pool, which have a market value of another $100 million (since that's what investors paid -- 100 shares at $1 million per share). Now remember those $100 million in shares from other hedge funds that you purchased? Well, if you invested prudently, then those hedge funds will increase in value -- let's say to $300 million. Now the 200 outstanding MyHedge shares are worth $300 million -- $150 million for you and $150 million for your investors. Then you can use your magnificent publicity skills to convince investors that MyHedge shares are worth a lot more. Your investors will start selling them to other investors for more money -- let's say $3 million per share.

So now your 100 shares are worth $300 million (market value), and your investors' 100 shares are worth $300 million (market value), for a total of $600 million, even though the value of the underlying hedge funds is only $300 million, inflated from $100 million.

So you started out by borrowing $100 million, which you've already paid back. But you have a market value of $300 million, and your investors have a market value of $300 million.

So you've made $600 million for yourself and your investors. But more than that, you've "made money." I mean that literally. It's as if you had a printing press. You created $600 million of new money that didn't exist before. Of course you have that money in the form of MyHedge shares, but that's no problem: Just sell them to other investors and get cash.

That's what's been going on. Here's a summary of the financial marketplace for the last decade or so:

• You start with real, actual companies, and their "real value." Today, that's about $30 trillion for all companies.
• Then you have the stock market, which contains shares of real actual companies. The total of all stock market shares is around $65 trillion.
• Next, you have investment funds. These are funds that purchase stock market shares, put them into a pool, and sell shares to investors.

  In the 1920s, these were called "investment trusts," and because of huge abuses leading to the 1929 crash, investment trusts were heavily regulated in the 1930s. Today they go by various names, usually ending in the word "Fund," such as the "Legg Mason Value Trust Fund" that we mentioned earlier. These funds are normally considered to be good guys.

• Next you have "funds of funds." These funds purchase shares in other funds, pool them, and sell shares in the pool. Some of these are regulated.
• Then you have "hedge funds," which are funds containing shares of almost anything else. They're almost completely unregulated, especially when they're registered in the Cayman Islands.

  As of June 2006, all hedge funds together are worth $370 trillion, up from $300 trillion at the beginning of the year.

That's what's going on in today's world economy. The hedge fund industry has "made money" -- literally, as if they had a printing press.

We end up with this table:

    Item                          Value ($ trillion)
    ----------------------------- ------------------
    All public firms-"real value"   30
    All stock market shares         65
    All hedge fund shares          370 (June, up from 300 in Jan)

[[Correction: "All hedge fund shares" should have read "all credit derivative securities."]] (Correction made on 13-Nov-2007)

Where did all that money come from? It came from exactly the kind of trading that I described above with your MyHedge shares. You have hedge funds based on hedge funds based on hedge funds based on hedge funds, and all with little or no intrinsic value. Every time they trade shares with each other at higher prices, the total market share goes up, so the "value" of all hedge funds keeps going up.

Now go back and read some more about pyramid schemes. Just type the words "pyramid scheme" into a search engine and read about it. You'll see that the current financial markets are, quite literally, nothing more than a huge, worldwide pyramid scheme.

This worldwide pyramid scheme is "making money" and injecting it into the system. It "made" $70 trillion just between January and June of 2006 alone.

Now, where do credit derivatives fit into all this?

Recall from the MyHedge example that you had to start out by borrowing $1 million. Why would a bank lend you $1 million? Because they can "protect" themselves using credit derivatives.

As we've explained in detail several weeks ago, credit derivatives are a kind of insurance against loan defaults. So banks can loan money to investors and then purchase credit derivatives to protect themselves against the borrower-investors' defaults.

In "normal" times, banks are required to keep a certain amount of money -- so-called "capital requirements" -- in their vaults at all times, as a cushion against such things as loan defaults. But banks and other financial institutions aren't doing that any more, according to Randall Dodd. Let's repeat one sentence from the lengthy quote above:

"So you have financial institutions with capital requirements reducing the amount of capital they use by moving that credit risk into hedge funds which have no capital requirements and often use very high leverage to manage their credit risk of selling credit protection through this credit derivatives market."

According to Dodd, banks no longer have that financial cushion. Instead of keeping, say, $10 million in their vaults as a cushion against emergencies, they've simply spent $1 million to purchase credit derivative hedge funds as "insurance" against emergencies, leaving the other $9 million free to loan out. By spending $1 million instead of keeping $10 million, they've "used very high leverage to manage their credit risk," in Dodd's words.

So credit derivatives turn out to be the grease that keep keeps the hedge fund markets churning. Anyone can create a new hedge fund, a new kind of financial derivative, a new kind of financial derivative hedge fund, and mistakes can be papered over by borrowing more money from banks that "protect" themselves by purchasing credit derivatives. These new hedge funds create new shares that are sold back and forth among other hedge funds, increasing their market value each time (though they have little or no intrinsic value), essentially "making money" in the form of this manufactured market values.

Let's take a moment and go back to the simpler times of the 1950s. I was in school then, and my teachers always talked about the Great Depression. They talked about how greedy people were in the 1920s. They said that people were so greedy that even if they were rich, they'd borrow more and more money so that they could make even more money.

My teachers often referred to the greatest evil of them all: margin. A greedy investor could buy stocks and pay only 10% of the purchase price. The 10% was called "margin," and the other 90% was borrowed. My teachers emphasized how evil this was, that some greedy rich person would pay only 10% of the price of a share of stock in order to make more money.

I can almost still hear one of my teachers saying: "Thank God! They've made it illegal to buy stocks on that margin like that! Those greedy investors will have to pay for the stocks they buy, so we'll never have a Great Depression again!"

That generation of teachers is long gone now. Fast forward a couple of generations to today, when the Fed Chairman Ben Bernanke is also a teacher, a Professor of Economics at Princeton University, and he's not worried about anything. As I explained in "Ben S. Bernanke: The man without agony," Bernanke doesn't believe in bubbles. When speaking about America's astronomical and exponential growing debt to other countries in March, 2005, Bernanke blamed America's debt on "global savings glut" in other countries.

That's the difference between teachers in the bad old 1950s, teachers who had actually lived through the horror of the Great Depression, and teachers in the 2000s, who think we're too smart today to ever let it happen again. This is Generational Dynamics in action.

But I wonder what my 1950s teachers would say if they could see what's going on today. Talk about greed!

Remember in the MyHedge example that I gave above, you get your $1 million back right away? That should give you a clue that hedge fund managers always make sure of one thing: That they make their money up front. Hedge funds are pretty much completely unregulated, so each hedge fund manager gets to write his own regulations. And you can be sure that his own regulations say that he gets his money up front, and all the people who invest in his hedge fund take all the risk. My 1950s teachers would consider these hedge fund managers to be out and out criminals.

In fact, there are a lot of people in the financial community today whom my 1950s teachers would consider as out and out criminals. Take stock brokers and financial managers who say that the stock market can only go up, or even the most irresponsible ones, like Harry Dent, who said (until recently) that the market would be at Dow 35000 by 2008. Or how about mainstream economists, like Bernanke, who doesn't believe in bubbles. How about financial journalists and pundits, at the Wall Street Journal and CNBC and other media, publishing false and misleading information, especially phony price/earnings ratio computations, that dupes millions of ordinary people to make unwise investments.

I never really paid much attention to the stock market bubble until one day, shortly after 9/11, when the stock market was down around Dow 8000, I opened the Boston Globe one day and on the first page of the business section, there was a headline "Nowhere to go but up," and a graph of the Dow back to the 1920s. I took one look at that graph and said to myself, "Omigod we're going to have a stock market crash like 1929." The reason was because, generally speaking, financial series must grow at steady exponential growth rates, no slower, no faster, and any variation must be corrected by "mean reversion." Since the stock market had grown "too fast" since 1995, a 1929-type crash and subsequent 1930s-style Great Depression cannot be avoided. Since then, I've done a lot more analytic work and supported this conclusion in many different ways.

I don't expect the average man on the street to understand all these things, or even the average investor. But I do expect major financial analysts, professors of economics, financial journalists and pundits to understand them.

But what's happened in the last five years is so overwhelming that it can barely be grasped by the human mind. An ordinary 1990s stock market bubble, as bad as it was, has been turned, with the connivance of economic experts, journalists, professors, investors, central bankers, pundits and politicians, into a worldwide bubble of incredibly fastastic proportions that's so huge and so obvious that every expert should see it. Or maybe it's like the whole planet earth has turned from being an ordinary planet into a huge bubble planet, so that it's impossible to see what's going on any more.

Do you remember what happened in 2001 after the Nasdaq crash and the Enron scandal? People wanted to put CEOs in jail -- ALL CEOs, even perfectly honest ones. People were going crazy. Well, it's going to happen again.

The Enron scandal is one historical example, but a better example might be the bankruptcy of the French Monarchy in 1789 that led to the French Revolution. In the Reign of Terror that followed, any person who was an aristocrat, a relative of an aristocrat, a friend of an aristocrat, a servant of an aristocrat, or even had a resemblance to an aristocrat, would be tried and quickly convicted and sentenced to the guillotine.

So as we enter 2007, I have some advice for the economics experts, journalists, professors, investors, central bankers, pundits and politicians that have been telling us that everything is OK and getting better: You'd better have your underground bunker picked out, because people are going to be coming after you, and the guillotine is going to seem mild compared to the punishment that they're going to want to inflict on you. (30-Dec-06) Permanent Link
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Will Saddam become a Sunni martyr?

Saturday is the Eid Al-Adha (Feast of Sacrifice), the most important feast of the Muslim calendar. It lasts for four days and commemorates Abraham's willingness to obey God by sacrificing his son Ishmael to God. In the Old Testament story (which actually refers to Ishmael's brother Isaac), God relents and allows Abraham to sacrifice a ram instead of his son.

Saddam Hussein

As I write this, just after noon ET on Friday, it's late evening in Baghdad. If Saddam is hanged after Saturday sunrise, then the Sunnis may claim that his hanging is related to Abraham's sacrifice, which might have a symbolic significance.

On the other hand, if Saddam is hanged in the next few hours, before sunrise, then there would be no apparent symbolism.

The world is waiting ... (29-Dec-06) Permanent Link
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Hundreds of Iraqis apply to be Saddam's hangman

Word is that Saddam will be hanged within a couple of days.

If you're Iraqi, then you'd better hurry if you want to be Saddam's hangman.

Iraqi officials are saying that hundreds of Iraqis have applied to act as Saddam's hangman.

It's easy work, and apparently very satisfying.

You have to wear a black hood, which has openings for your eyes.

When Saddam arrives, he'll have a hood over his head, with no holes. You lower the noose around Saddam's head. Then you just push a lever. A metal trap door screeches open, and Saddam drops 15 feet through the trap door. He'll die immediately.

There's no word on how much the job pays.

Both CNN International and BBC are reporting that Saddam may hang by Sunday, two days from now. (29-Dec-06) Permanent Link
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McKinsey's Predictions: Ten Trends of 2006

How accurate were their predictions for the past year?

A year ago, McKinsey Quarterly Magazine published an article on the "Ten Trends for 2006." The article is authored by Ian Davis, managing director of McKinsey & Company and Elizabeth Stephenson is a McKinsey consultant.

Now, they've re-published the same article, adding in links to other relevant articles in 2006.

Apparently they would like people to evaluate their predictions, and I'll be happy to do that. As readers know, I've claimed that, for the last three years, this web site is the best predictive web site in the world, and I've challenged everyone to find one with a better record. None exists.

So let's take a look at McKinsey's predictions, and comment on them:

1. "Macroeconomic Trends: Centers of economic activity will shift profoundly, not just globally, but also regionally. As a consequence of economic liberalization, technological advances, capital market developments, and demographic shifts, the world has embarked on a massive realignment of economic activity. ... The story is not simply the march to Asia. Shifts within regions are as significant as those occurring across regions. The United States will still account for the largest share of absolute economic growth in the next two decades."

   This is a fine prediction because it doesn't say anything except that things will change. Here's what they don't mention: That public debt and the balance of trade deficit continue to increase exponentially at unsustainable levels, that the stock market bubble continues to grow dangerously, and that the housing bubble is bursting. You don't have to be a rocket science to see that any financial shock could launch the entire world into a major financial crisis.

   Generational Dynamics has predicted since 2002 that we're entering a new 1930s style Great Depression, with a stock market crash to the Dow 3000-4000 range, probably by the 2006-2007 time frame. What we're waiting for is a major generational panic. I estimated that the probably was 50% that it would occur in 2006, and obviously that didn't happen. Thus, I would estimate that the probability is higher than 60-70% that it will occur in 2007.

2. "Public-sector activities will balloon, making productivity gains essential. The unprecedented aging of populations across the developed world will call for new levels of efficiency and creativity from the public sector. Without clear productivity gains, the pension and health care burden will drive taxes to stifling proportions."

   This one is bizarre. They understand that local and state governments are going bankrupt because of pension plans for aging populations, but they incorrectly predict that something will be done to fix the problem, and that the fix will involve productivity gains in the public sector. I don't think the public sector labor unions would like that idea, even if it were feasible.

   At any rate, nothing has gotten done, and nothing will get done. The McKinsey people are probably Boomers, and, like all Boomers, they don't have any idea how to do anything except argue, and wait for someone else to solve their problems. What they don't understand is that the generations of people who actually DO know how to get things done (the G.I. and Silent generations that survived World War II) are gone now. Boomers will do nothing until a financial crisis forces them to unite and actually get things done.

3. "The consumer landscape will change and expand significantly. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household income..."

   Once again, we have a "prediction" that says nothing except that population is growing and kids grow older.

4. "Social and environmental trends: Technological connectivity will transform the way people live and interact. The technology revolution has been just that. Yet we are at the early, not mature, stage of this revolution. Individuals, public sectors, and businesses are learning how to make the best use of IT in designing processes and in developing and accessing knowledge."

   Whew, that's hard-hitting. Umm, except that I've been hearing that prediction, or a variation, for decades. There's nothing particularly special about this recent technology developments, except that they're trend extensions of computer technologies that were developed long ago.

5. "The battlefield for talent will shift. Ongoing shifts in labor and talent will be far more profound than the widely observed migration of jobs to low-wage countries. The shift to knowledge-intensive industries highlights the importance and scarcity of well-trained talent."

   The reminds of the Y2K problem, which was caused by 1970s COBOL computer programs that used only two digits (e.g., 78 for 1978) to represent years. A failure was going to occur in computer software around the world as soon as it was necessary to represent the date 2000. Information Technology departments became acutely aware of this problem in the mid-1990s, and started spending hundreds of millions of dollars to remediate their software.

   At that time India became major international consultants. An American corporation would hire Indian consultants to help them with the remediation effort. Since everyone had to work on the same mainframe computer, the Americans would use the computer during the day, and the Indians would use the same computer via satellite link during the night (which of course was daytime in India). This was one of the most amazing projects in history. By the time January 1, 2000, almost every single computer program in the world was properly remediated. This project was so successful that some idiots actually believe that there was never a problem to begin with; believe me, there was.

   At any rate, that would have been the time to predict that "ongoing shifts in labor in talent will be far more profound than the widely observed migration of jobs to low-wage countries." Today, that's not a prediction; it's ten year old news.

6. "The role and behavior of big business will come under increasingly sharp scrutiny. As businesses expand their global reach, and as the economic demands on the environment intensify, the level of societal suspicion about big business is likely to increase."

   Now, this is an interesting prediction. Nothing like this prediction has happened or is likely to happen as things stand. But once the stock market panic occurs, there will be an enormous effort to identify scapegoats, and many corporate executives will go to jail.

7. "Demand for natural resources will grow, as will the strain on the environment. As economic growth accelerates—particularly in emerging markets—we are using natural resources at unprecedented rates. ... In China, for example, demand for copper, steel, and aluminum has nearly tripled in the past decade."

   This is true, of course, but it was old news when the prediction was made.

Finally, we have identified a third set of trends: business and industry trends, which are driving change at the company level.

8. "Business and industry trends: New global industry structures are emerging. In response to changing market regulation and the advent of new technologies, nontraditional business models are flourishing, often coexisting in the same market and sector space."

   This was big news in the 1980s when personal computers flattened the corporate management tree from 8 levels to 3 levels. Or it was big news in the 1990s when ERP (Enterprise Resource Management) system revolutionized relations between manufacturing, marketing, vendors and distributons. Today it's not so new.

9. "Management will go from art to science. Bigger, more complex companies demand new tools to run and manage them. Indeed, improved technology and statistical-control tools have given rise to new management approaches that make even mega-institutions viable. Long gone is the day of the "gut instinct" management style. Today's business leaders are adopting algorithmic decision-making techniques and using highly sophisticated software to run their organizations. Scientific management is moving from a skill that creates competitive advantage to an ante that gives companies the right to play the game."

   This is science fiction. There's no such thing.

10. "Ubiquitous access to information is changing the economics of knowledge. Knowledge is increasingly available and, at the same time, increasingly specialized. The most obvious manifestation of this trend is the rise of search engines (such as Google), which make an almost infinite amount of information available instantaneously. Access to knowledge has become almost universal. Yet the transformation is much more profound than simply broad access."

    Once again, there's nothing new here. Google's been around for almost ten years now.

So these are fun predictions, but they don't really say much, and they miss the world war and financial crisis that are coming.

As I've said before, this is the only web site in the world that tells you what's going on in the world, and what's coming. (29-Dec-06) Permanent Link
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Forgotten news stories of 2006

Some important stories have been ignored.

Top news interest stories of 2006 (Source: Pew Research)

A recent report by Pew Research lists the most popular (most closely followed) news stories of 2006, and follows up by listing stories that were ignored. We found the list of ignored stories much more interesting.

The most popular stories were as you'd expect: Stories about Iraq, gas prices, midterm elections. Even some international stories made the list -- British officials stopping a terrorist plot to blow up planes flying to the U.S., Iran's and North Korea's nuclear programs, and the Lebanon war between Israel and Hizbollah.

Here are some of the stories that the Pew reports lists as "The Dogs that Didn't Bark" in 2006:

• An Unread Report. For months, Democrats and Republicans alike were hoping that Jim Baker's Iraq Study Group (ISG) report would provide a solution to the Iraq problem, but Pew found that only half of Americans even paid any attention when the report finally came out. Since the report's publication, plans appear to be coalescing for a "troop surge" into Iraq, and everyone is waiting for President Bush's announcement in January.
• Immigration Indifference. Pew found that attitudes towards immigration peaked in May, around the time of the mass Latino demonstrations, protesting the immigration bill, and there's been little interest since then.

  This is going to change. Most Americans are completely oblivious to the turmoil that continues to grip Mexico. In most of Latin America, the fault line is between generally poor indigenous ("AmerIndian") people and generally better off European descendants. In Mexico, the new president Felipe Calderón represents the descendants of the Spanish and French invaders, and Andrés Manuel López Obrador is the would-be Pancho Villa of the new century, representing the Mayans in the south and Aztecs and Commancheros in the north. In addition, there are large out-of-control drug cartels operating out of Nuevo Laredo and Tijuana.

  This turmoil is spilling over into the U.S., and from the point of view of Generational Dynamics, immigration is almost always a major political issue in countries in "generational crisis" eras. This is certainly true today in almost every country in Europe, for example. Expect to see immigration become a more important issue next year.

• No Terrorism Panic. Pew found that Americans are very complacent about possible future terrorist attacks, even in the face of terrorism and terrorist plots in other countries.

  This is not surprising. Americans were similarly unconcerned when the British were fighting Hitler in WW II, thinking that America's physical isolation, surrounded by two major oceans, guaranteed that they would be safe. The Pearl Harbor attack destroyed that view.

  From the point of view of Generational Dynamics, Americans today are anxious and worried, but seemingly unconcerned about terrorism. A major new terrorist attack on American soil will turn the anxiety to panic, quite possibly leading to war very quickly.

• Death in Darfur. Despite huge publicity by rock stars, the U.N., and humanitarian groups of atrocities and genocide in the civil war in Darfur, only 13% of Americans have followed the news on the subject, in each of the last three years.
• Other issues: Gay Marriage, Abramoff scandal, fall of gas prices, and Katie Couric as CBS News anchor were also all yawners for Americans.

Finally, here are two major issues that are more important than any of the above issues, but aren't mentioned in the Pew Report:

• Palestine's descent into chaos. Americans paid attention to the Lebanon war between Israelis and Hizbollah, but are oblivious as to what else is happening in the Mideast. The Palestinians are unable to form a viable government, and a civil war is a real possibility. Furthermore, with Iran supplying funding, training and weapons, the Palestinians are planning war with Israel.

  Americans are fairly oblivious to this threat, and have become even more so since this past summer's Lebanon war, since they automatically assume that a war in the Israel/Palestinian region would not affect America much, an assumption that's unlikely to remain true.

• China's massive militarization. In 2006, China continued its massive development of sophisticated weapons systems, including amphibious vehicles for the capture of Taiwan and submarine-based nuclear weapons for direct war with America. Americans are totally oblivious to this threat.

For the last week, the story that's gotten wall to wall coverage on all the news networks is about rape allegations against members of a college lacrosse team. It reminds me of the summer of 2001, when the major news story was about the affair between California congressman Gary Condit and Washington DC intern Chandra Levy, after the latter disappeared. The Condit story filled some 90% of the news for months, until 9:50 am, September 11, 2001. (27-Dec-06) Permanent Link
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Merry Christmas!

As you gather together with your family (if you can) to celebrate the holiday, whether you're Christian or not, it's a good time to feel grateful for the time you have together, in an increasingly darkening world.

The classic movie "Meet Me in St. Louis" is set in the year 1900, but it was released in 1944, and at times reflects much of the sadness of families torn apart by World War II. This was particularly true in the song, "Have Yourself a Merry Little Christmas," in the original lyrics, as sung by Judy Garland in the movie:

"Once again as in olden days
Happy golden days of yore.
Faithful friends who were dear to us
Will be near to us once more.

Someday soon we all will be together
If the Fates allow.
Until then we'll have to muddle through somehow.
So have yourself a merry little Christmas now."

As I've said before, treasure the time you have left, and use the time to prepare yourself, your family, your community and your nation.

And, once again, Merry Christmas! (25-Dec-06) Permanent Link
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Ethiopia launches air war against Somali Islamists

On Sunday, in a significant escalation of the war in Somalia, Ethiopian bombers have attacked positions in Somalia held by the Islamic Courts Union (ICU), the Islamist group that has taken control of most of southern Somalia in recent months.

Related Articles Somalia Ethiopia launches air war against Somali Islamists: On Sunday, in a significant escalation of the war in Somalia,... (24-Dec-06) War begins between Somalia Islamists and Ethiopia: Let's catch up on all the wars we've been following.... (21-Dec-06) Deadline passes with immediate war threat receding in Somalia: International officials are breathing a sigh of relief... (19-Dec-06) Somalia's radical Islamists threaten Ethiopia with war within a week: They demand the withdrawal of thousands of Ethiopian troops.... (13-Dec-06) UN: 11 countries are pouring weapons into Somalia, as it prepares for war: Iran has provided 250 anti-aircraft missiles, while Syria, Libya, Sudan, Egypt, Eritrea, Djibouti and Saudi Arabia... (10-Nov-06) Somalia and Ethiopia close to full-scale war, according to leaked UN report: Thousands of refugees are fleeing Ethiopia into Kenya to escape war... (28-Oct-06) The Somalia connection -- The 7/21 London subway bombers were from east Africa: All four suspects are now in custody after an international manhunt... (1-Aug-05)

In a Sunday televised address to his people, Ethiopian Prime Minister Meles Zenawi, said: "Ethiopian defence forces were forced to enter into war to the protect the sovereignty of the nation and to blunt repeated attacks by Islamic Courts terrorists and anti-Ethiopian elements they are supporting. Our defence forces will leave as soon as they end their mission."

Horn of Africa

In return, Islamic Courts hardliners are calling on foreign Muslims to take up a Jihad against Ethiopia.

Islamist Yusuf Mohamed Siad Inda'ade said, "Let them fight in Somalia and wage jihad and, God willing, attack Addis Ababa [the capital of Ethiopia]. We told the world to stop this problem. We told them to do something before it becomes a blazing fire that would engulf the region."

Ethiopian's mortal enemy, Eritrea, has already sent soldiers and weapons to Somalia. Numerous countries have been pouring weapons into the region, according to a U.N. report, and the fear is that the war will spread into a major regional war. (24-Dec-06) Permanent Link
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Channel Tunnel is planned target of al-Qaeda terrorist attack

According to information from French and American intelligence, obtained by "The Observer," there is a "sky high" terrorist threat to the Channel Tunnel to cause "maximum carnage" during the holiday season.

"It's a far graver threat in terms of civilians than either the Cold War or the Second World War," according to Sir Ian Blair, the head of London's Metropolitan Police. The attack may come as early as Christmas day.

Young British-born Pakistanis, the same group that perpetrated the July 7, 2005, London subway bombings under direction of radical clerics in Pakistan, are thought to be the intended perpetrators of the new plan.

The problem for law enforcement officials is that such a terrorist attack is hard to prevent, even if you know it's coming. Christmas Eve is the time of highest traffic for the year, and it may not be possible to check every car or the luggage of every train passenger.

The "Chunnel," or Channel Tunnel is 31 miles long. It runs under the English Channel and connects England to France, carrying both train and automobile traffic. It's the largest underwater train tunnel in the world. (24-Dec-06) Permanent Link
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How Israel panicked in pursuing the summer war with Hizbollah

The contrast between Israel and Hizbollah couldn't be greater.

The summer war in Lebanon provided an exceptional opportunity to do further theoretical development in Generational Dynamics in the context of a brief, transparent war.

Of particular interest was the sharp contrast in "fighting styles" between the two belligerents, based on the fact that they were in completely different generational eras.

The war began after Hizbollah abducted two Israeli soldiers on the southern Lebanon border, resulting in an Israeli response, and a Hizbollah counter-response:

• Israel is in a generational Crisis era. They fought it as an "existential" war, and with a great deal of fury and passion and panic. At first Israel was planning to use air power alone; then they started calling up reservists, turning it into a ground war. The size of the ground war kept increasing, as Israel had to change course and bring up more reservists. After the U.N. passed the ceasefire resolution, Israel increased the ground war still further to gain as much ground as possible before the ceasefire took effect.
• Lebanon is in a generational Awakening era, and therefore so are the terrorists of Hizbollah. They fought the war, as I described in my analysis as the war was starting, as "a war from the comfort of home." They sent thousands of missiles into Israel, launching from sites near their own homes. Hizbollah approached the war in a cool, methodical manner, implementing plans that had been in place for years, in contrast to Israel's "hot," panicky war style.

  Note that if Hizbollah had adopted Israel's war style, then the terrorists would have crossed the border to attack and kill Israeli families in their homes.

What's amazing is how faithfully both belligerents followed their generational scripts in their fighting styles. And the perception of most people is that Hizbollah won the war. This means that Hizbollah's "cool," methodical fighting style won over Israel's "hot," furious fighting style.

But now a new analysis of the war, based on the findings of a military investigation committee, indicates that Israel was even more panicky and wild than was previously thought.

According to an article by Uri Avnery, journalist and former Knesset member:

• After Hizbollah abducted the soldiers, Israel rushed into war within four hours.
• There was no clear objective. According to Avnery, the Israelis named one aim after another, often mutually conflicting, including the following:
  • The release of the two captured soldiers;
  • The destruction of Hizbollah;
  • The elimination of the arsenal of missiles in southern Lebanon;
  • Pushing Hizbollah away from the border.

• There was no plan to achieve any of these objectives. According to Avnery, no plan could have achieved all of these objectives anyway.
• Some of the aims -- the destruction of Hizbollah or the elimination of the missiles -- were impossible anyway.
• Contingency plans that had been prepared in advance were ignored, and the war was conducted by improvisation.
• When it finally became evident that air power alone was not accomplishing anything, troops were sent into Lebanon in a haphazard way, with no plans and no timetables. As a results, the ground operations were completely ineffective.
• "It is a picture of utter confusion," according to Avnery: "improvised operations, an anarchic command structure, misunderstanding of orders, orders that were issued, canceled, and issued again, General Staff officers giving orders directly to subordinate commanders bypassing the chain of command."

This is exactly what happens to a population when it enters a Generational Crisis era, when the survivors of the previous Crisis War have almost all disappeared. The post-war generations have lost their parents, and they've also lost the only people in their lives who know what's going on in the world. As a result, when something goes wrong in a Crisis Era, the people get anxious, and eventually panicky.

That's the difference between a crisis and non-crisis war. In the 1991 Gulf War (a non-crisis war), we had a specific objective (eject Iraq from Kuwait), we went in with a plan, and when we reached that goal we stopped, resisting the temptation to go after Saddam Hussein. The 2003 Gulf War occurred early enough in the Crisis Era so that there was still plenty of clear planning, but many people would now claim that the planning was insufficient. And now Americans are showing signs of the same kind of panic that the Israelis showed: There's talk of sending tens of thousands more soldiers into Iraq without a completely clear and attainable objective.

Avnery points out that, thanks to generational changes, today's military leaders are much less capable than those who won Israel's "Six Day War," fought in 1967: "In today's army, there is no officer on active service who remembers the Israel Defense Forces from before the occupation - the army that grew up in the "small" Israel within the Green Line, which defeated five Arab armies in six days, commanded by the brilliant General Staff under Yitzhak Rabin. All the commanders of the Second Lebanon War started their career when it was already an occupation army. The last military success of the Israeli army was achieved early in the occupation period, a generation ago, in the Yom Kippur war."

Of course, the officers who fought the 1967 war were the survivors of the 1940s crisis war fought with the Arabs when Palestine was partitioned and Israel was created.

Remarkably, and unusually, Avnery is making a Generational Dynamics point: That once the survivors of the previous crisis war are gone, the new leaders are far more uncertain, far more anxious, and far less competent. As I've said many times, America's Boomer generation literally has no skills (except technical skills). The previous generation of Americans defeated the Nazis and beat the Depression, then set up structures like the United Nations, World Bank, and World Health Organization to manage the world, and then ran them for decades. The new generation of Boomers not only can't form such organizations, they can't even run them.

A similar show of generational incompetence occurred prior to our last crisis war, World War II. At that time, we were totally unprepared for the attack on Pearl Harbor.

We had plenty of aircraft to defend ourselves, but they remained on the ground, huddled together for warmth, while their pilots were lounging in bed with their girlfriends. We had plenty of anti-aircraft weaponry on the ships docked in Pearl Harbor, but the sailors who were supposed to be manning them were down in the game room arguing over who'd scored the last point. We even had radar. There was an experimental radar installation on Pearl that actually spotted the Japanese aircraft long before they arrived, but no one actually believed that it was possible, so the sightings were ignored. Thanks to this generational incompetence, the Japanese destroyed almost the entire Pacific fleet in a few hours, before we even had a clue what was going on.

Donald Rumsfeld, who was born in 1932 and remembers well from his childhood how shocked everyone was about Pearl, is gone now, replaced by Robert Gates, a fine man but a Boomer, because the Boomer politicians and journalists in Washington wanted someone as incompetent as they are running the Department of Defense.

Earlier this week I heard a pundit on TV -- I think he must have been a conservative, and he was certainly a Boomer -- complaining that the Iraq war shows that America is losing its will to fight a war, and that if there's a terrorist attack or some other setback, Americans still won't have the will to fight back.

Boy is that wrong. These guys have no idea at all what's going to happen.

Say there's another major terrorist attack on American soil. Americans will be absolutely furious and demand revenge. Far from being unwilling to fight, their anxiety will turn to panic, and we'll be at war before you can say Jack Robinson.

Not possible, you say? Well, that's what happened in Israel this past summer, isn't it? They panicked and they were at war, without a plan, in four hours. And it was about as close to a disaster as can be without actually being a disaster. And to this day, the abducted soldiers still haven't been returned to Israel.

That's what a generational crisis war is all about. It started out pretty bad for America in the last world war, but in the end we won anyway. Let's watch and see how it works out for the next world war. (23-Dec-06) Permanent Link
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London braces for a new terrorist attack over the holidays

According to ABC News investigative reporter Brian Ross, British intelligence and law enforcement officials are seeking 18 suicide bombers involved in at least six ongoing plots that have been in the planning stages for at least three years.

The report appears on Brian Ross's online blog on ABCNews.com. Investigative reporter Richard Esposito is co-author of the report.

"It will be a miracle if there isn't a terror attack over the holidays in London," according to a senior American law enforcement official familiar with the British intelligence report.

Just as in the case of the July 7, 2005, London subway bombing, the plots are being directed by radical clerics in Pakistan, directing the activities second and third generation Pakistanis living in England.

This is consistent with the speech given last month by Dame Eliza Manningham-Buller, the Director-General of MI5:

"And, chillingly, we see the results here. Young teenagers are being groomed to be suicide bombers. We are aware of numerous plots to kill people and to damage our economy. What do I mean by numerous? Five? Ten? No, nearer....... thirty that we know of. These plots often have links back to Al-Qaida in Pakistan and through those links Al-Qaida gives guidance and training to its largely British foot soldiers here on an extensive and growing scale. And it is not just the UK of course. Other countries also face a new terrorist threat: from Spain to France to Canada and Germany."

As we explained at that time, this fits into a specific generational model identified by Generational Dynamics that explains the motivation and development of the young generation of "Heroes" that perform these kinds of terrorist acts.

In this case, there's an emotional link between the young British Pakistanis (who consider themselves to be "Heroes"), with the radical al-Qaeda clerics running the madrassas in Pakistan serving the role of "Prophets." In this model, the "Prophets" direct the activities of the young "Heroes," starting with these terrorist acts and eventually leading them into war. (21-Dec-06) Permanent Link
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War begins between Somalia Islamists and Ethiopia

Let's catch up on all the wars we've been following.

A low-level war began in Somalia on Wednesday between the forces controlled by the Islamists and the forces controlled by the "official" government, along with supporting troops provided by Ethiopia.

So far, it's only low-level violence, but there is great concern that other nations will join in the fighting, causing the war to spiral into a major regional war.

European envoy Louis Michel heads peace meeting, while fighting with rockets and heavy weapons continues just a few miles away. (Source: BBC)

As the fighting progressed, Louis Michel, a European envoy, flew into Somalia and got both sides to agree to "talk," while the fighting continues. Whether Michel will pull a truce of the hat has to be seen, but if he does, then it's doubtful that the truce will last long.

Let's take a look at the current status of some other wars we've been following:

• Sri Lanka. This low-level civil war resumed last year, when the 2002 peace agreement collapsed, and now appears to be escalating into a full-fledged crisis civil war.

  From the point of view of Generational Dynamics, the way to recognize this kind of escalation is to identify a gradual increase in genocidal acts -- which means that civilian lives have less and less value. The Sri Lanka government is using its air force to drive Tamil civilians out of rebel-held areas, and the rebels, who have perpetrated a number of terrorist acts already, recently abducted hundreds of children.

  With the level of genocidal violence gradually increasing, the escalation of this war into full-scale genocidal civil war is coming into sight.

• Gaza. During the last week, Hamas and Fatah have signed three peace agreements, the latest on Tuesday, and each has failed. As of Wednesday, there were still violent gunfights throughout Gaza. This war is reaching the point where a new trigger could cause it to spiral out of control. From the point of view of Generational Dynamics, the region is headed for a full-scale war between Arabs and Jews, and a Palestinian civil war could be the next step on the road to that war.

  A recent Zogby poll shows that Arab hostility toward the United States has deepened in the last year. The poll, which was conducted in five Arab countries, shows that the major reason is America's Israeli/Palestinian policy, with the Iraq situation well behind in importance.

  You'll recall that last month I said that I said that George Stephanopoulos looked like an idiot because Jordan's King Abdullah had to tell him five times that the Israeli/Palestine situation was far more important than Iraq, but Stephanopoulous and his politican guests and journalist pundits were all totally clueless. The Zogby poll proves my point.

• Darfur. Humanitarian organizations around the world are bemoaning the fact that no troops have been sent in to stop the massive genocide currently going on in Darfur, but as I've said repeatedly on this web site, this is a crisis civil war, and it can't be stopped any more than a tsunami can be stopped. The world will have to wait until it's run its course.
• Lebanon. At the beginning of this month, Hizbollah started staging massive anti-government protests, and those protests have continued, as have smaller counter-demonstrations by pro-government people. Pundits were predicting full scale civil war for Lebanon but, as regular readers of this web site know, Lebanon is in a generational Awakening era, and a civil war is impossible. However, a bloodless political coup is a possibility, although so far the anti-government protests have not had much effect besides blocking traffic.
• Iraq. Wednesday's news from Iraq was that 40 people were killed by two separate incidents of suicide car bombing. This "proved" to the idiot MSNBC reporter that Iraq was in a civil war, even though the terrorists driving the cars were almost certainly not Iraqis and the bombings were almost certainly sponsored by al-Qaeda, which makes the suicide bombings terrorist attacks, like the attacks on 9/11.

  On CNN International today, I heard one pundit, Ken Pollack of the Brookings Institute, say this: "Iraq is in a dangerous state, and it's headed for a Bosnia or Lebanon state of all-out civil war."

  Now this is exactly what Generational Dynamics tells is impossible. Iraq is in a generational Awakening era, just one generation past the genocidal Iran/Iraq war of the 1980s. Now, you can call anything a civil war if you want, and if you want to call terrorist acts by non-Iraqis a civil war, then you can do it. But it is ABSOLUTELY IMPOSSIBLE for Iraq to spiral into a state of all-out civil war like Bosnia in the 1990s or Lebanon in the 1980s. It has never happened in history, during a generational Awakening era, and cannot happen now.

  This is why journalists, pundits and politicians keep getting their predictions wrong. You'd think that Ken Pollack was some sort of expert, but he has NO IDEA what's going on. He simply made that "fact" up, because he and all these other journalists and pundits make ideological predictions, and they have as much chance of getting them right as if they flipped a coin. As I wrote a few days ago, Thomas Friedman and other pundits have gotten one prediction wrong after another. Generational Dynamics is the only methodology which has produced correct predictions, and this is the only web site in the world that tells you what's going on in the world, and what's going to happen.

Of the wars that I discussed above, the Somalia and Gaza wars are the most dangerous, with the Sri Lanka war close behind. If a full-fledged crisis war begins in any of these regions, then a spread to other regions will not be far behind. On the other hand, Darfur is already in a massive, full-fledged civil war, but it hasn't affected other regions outside of Africa. (21-Dec-06) Permanent Link
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Deadline passes with immediate war threat receding in Somalia

International officials are breathing a sigh of relief as the radical Islamists' one-week threat deadline to Ethiopia - remove all your troops or face Jihadist war -- passed on Tuesday, with the Islamists appearing to back down. They now say that they would not attack first, but would only fight a defensive war.

Horn of Africa

The situation is still extremely tense, however. The threat was issued a week ago, and tens of thousands of Islamist and Ethiopian troops still face each other, separated by only a few miles.

The region is considered strategically very important by both the West and by al-Qaeda, because of it's proximity to the Mideast. A UN report says that 11 countries are pouring weapons into the region, and eyewitnesses say that military forces of both countries are prepared for war. However, al-Qaeda influence is still thought to be fairly low. (19-Dec-06) Permanent Link
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Japan comes closer to renouncing its postwar pacifism

Japan stirs fears of increased militarism by upgrading its Defense Agency to a full ministry, after legislative action on Friday.

In addition, the bill calls for increased patriotism by asking teachers to instill thinking among students "respecting tradition and culture and loving the nation and homeland."

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After a series of brutal crisis civil wars in the 1860s, culminating in the 1868 Meiji Restoration that changed its 250 year old form of government, Japan became increasingly militaristic and imperialistic. The motivation at that time was simple: If the Europeans could succeed in empire-building through colonization, then so could the Japanese.

By the time Japan transitioned from its "generational unraveling" era in the 1920s into a "generational crisis" era in the 1930s, the relatively benign concept of win-win colonization had transformed into a philosophy of full-fledged militaristic conquest, leading to the attack on Pearl Harbor and World War II.

Just as the 1860s crisis war transformed Japan from an isolationist country to an imperialistic country, the 1940s crisis war transformed it again, this time to a pacifist country, governed by a 1947 U.S.-drafted Constitution that forbids Japan from military action except in self-defense.

Integral to that decision was a mutual defense treaty with the U.S. that says that, essentially, Japan doesn't need armed forces because the U.S. will protect the country if necessary.

Now that Japan is, once again, entering a new "generational crisis" era, its pacifism is unraveling. Generational changes are turning leadership positions over to Japanese born after World War II, with the result that the leadership is increasingly confrontational with Japan and Korea, just as China and Korea are increasingly confrontational with Japan. This generational change extends to Japan's new Prime Minister Shinzo Abe, born in 1954, who is considerably more hawkish than Junichiro Koizumi, the man he succeeded earlier this year.

The calls for increased patriotism and military readiness, sponsored and promoted by PM Abe, are infuriating his pacifist political opponents, who claim that Japan is returning to its prewar imperialism, including the the state-sponsored indoctrination of children.

China and Korea haven't yet responded to the new law, since there's still a "honeymoon period" with the new Prime Minister, and because China and Japan are now cooperating on the issue of North Korea nuclear weapons. But expect that to change in the months to come.

From the point of view of Generational Dynamics, Japan and China are heading for war with 100% certainty. As the generation of people who grew up during the war and have personal memory of the horrors of World War II all retire or die, the younger generations will increasingly reject compromise and containment of problems, and adopt solutions involving confrontation. (18-Dec-06) Permanent Link
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Tehran becomes the "men's nose job center of the world."

According to a report by the BBC, plastic surgery is becoming a huge business in Iran.

Iranian magazines stuffed with advertisements for cosmetic surgery. (Source: BBC) "You might have thought a country ruled by religious precepts would frown on plastic surgery as an unnecessary vanity," says the report. "Not so. These Iranian magazines are stuffed with advertisements for cosmetic surgery. And it's mostly the new rich involved in business who go for it." According to the BBC report, "It's become a fashion for middle-aged men chasing younger women, and an amusement for wealthy young men with nothing better to do."

Advertisement for nose job in Iranian magazine. (Source: BBC) The report quotes a Tehran plastic surgeon as saying: "You don't see men with nose jobs in London or in Paris -- Tehran is the world's center for men with nose jobs."

(17-Dec-06) Permanent Link
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Likely result of the midterm elections: War in Iraq may escalate with "troop surge"

Is this what you expected or voted for?

Elections are always fascinating because they allow us to clearly gauge public mood changes, and large public mood changes almost always reflect generational changes.

In the case of our midterm elections, the young college-age "Generation Y" or "Millennial Generation," as they're currently called, spoke for the first time.

We're now beginning to see the likely results of the recent election: Tens of thousands more American troops will be pouring into Iraq. In fact, the first movement of new troops will begin early in January.

Is this what you expected just a few weeks ago, when you voted in the election? Did you think that you were voting for a Vietnam-style withdrawal? If you did, you're not getting what you expected.

But if you've been a regular reader of this web site, then you're getting exactly what you expected. As I've been saying for years, there's no "anti-war movement" in America today. In fact, America is in a "generational crisis" era today and so will be getting increasingly confrontational, just the opposite of what happened during the 1960s Vietnam War era, which was a "generational Awakening" era.

We're now beginning to get a better picture of what the new college-age generation want: They want the Iraq war problem solved, but they don't want America to lose the war.

There's only way to satisfy (or appear to satisfy) that demand: Send in more troops. And that's what's happening. That's the kind of thing that always happens, in every country, during a "generational crisis" period, when the new college-age "Hero" generation begins to be heard. They're much more confrontational than their Boomer and Xer parents, they have no fear of war, and they're prepared to become the new "greatest generation" in the coming "clash of civilizations" world war, like the generation of Heroes that won World War II.

As I've said before, these Heroes are our young darlings. When the time comes and the nation is facing its greatest danger, these Heroes will go off to war fearlessly and do their duty. Without any thought for themselves, they'll go proudly and valiantly into battle, and they won't even be sad about it. It's their parents in the Xer and Boomer generations who'll be standing on the shore in tears, waving goodbye as their ships disappear over the horizon, knowing that we'll never see many of them again, but also knowing that there's no choice.

Let's go back to October, a month before the elections, and recall what pundits were saying at that time would happen if the Democrats won: The anti-war movement will grow, the Democrats will pass laws restricting spending on the Iraq war, in order to force the Administration to end the war, and the Democrats will investigate every nook and cranny of the Bush administration.

Almost without exception (and I think I can even remove the "almost"), every pundit I heard made this kind of prediction. It was a prediction that we would see a repeat of what happened in 1973-74, when Congress and massive anti-war demonstrations forced President Nixon to withdraw American forces from Vietnam and then used its investigative power to force President Nixon to resign from office.

But the Iraq war is nothing like the Vietnam war. We'll have to see what happens in January, but I expect no significant opposition to the plan to increase American troop strength in Iraq -- escalating the war, rather than ending it.

The reason is simple, and it's the reason I've given: The college-age Millennial generation wants the Iraq problem to be solved, but will not tolerate a Vietnam-like defeat. The option that Bush appears to be taking is the only one remaining: Pour more soldiers into Iraq in order to get something that passes for victory.

This is once again a situation where the pundits have been uniformly wrong, and this web site has been absolutely right, based on Generational Dynamics forecasting.

This web site has correctly predicted what would happen in Iraq in August, 2003, what would happen in the Mideast in May, 2003, what would happen in Darfur in June, 2004, and what would happen to the "anti-war movement" in February, 2003. There have been no Generational Dynamics predictions that have turned out to be wrong.

I've repeatedly challenged anyone to find any web site anywhere in the world with a predictive success record anywhere close to this web site's record. There is none.

Consider New York Times foreign affairs columnist Tom Friedman. Friedman is considered by many to be the best and most knowledgeable Middle East pundit in America. He's written several books, he's considered a top expert, and his predictions are treated with enormous respect.

And yet, as this web page on fair.org shows, Friedman has made one error after another. His predictions have simply been wrong.

Now, you can read Mr. Friedman's columns. Some of them may make you happy, others may make you angry. But whether you're happy or angry, what he tells you is happening is quite likely to be wrong.

You can read the columns on this web site. You probably won't feel either happy or angry after reading one of these columns; most likely you'll feel anxious. The predictions will often be complex and counter-intuitive. But they'll be right, time after time after time.

If you want to know what's going on in the world, and what's going to happen, this is the only web site that will tell you.

I set up this web site in 2002, and I started making predictions seriously in 2003. I specifically decided that all predictions would remain on the web site, so that I can never get away with "selective memory bias" in recalling what I predicted in the past.

Enough time has passed now that I can responsibly claim that the Generational Dynamics forecasting methodology is working. It has to be used carefully, it requires some knowledge of mathematical concepts, and it permits only certain types of predictions, not permitting others (for "chaotic" events, in the sense of Chaos Theory). But when it makes a prediction, the prediction is correct.

Conflict risk level for next 6-12 months as of: 9-Feb-2006
W. Europe	1	Arab Israeli	3
Russia Caucasus	2	Kashmir	2
China	2	North Korea	2
Financial	3	Bird flu	3
Key: 1=Low risk 2=Med 3=High 4=Active

Unfortunately, as regular readers of this web site know, the news isn't good. It's now been 61 years since the end of World War II, which means that almost all the people in the generations who lived through WW II, and remember the panic and horror that everyone felt, are now gone.

They've left behind the Baby Boomer generation, people who have no idea how to get things done, but only how to argue with and mow down other people who actually do know how to get things done. That's why countries around the world that fought in WW II, including America, are paralyzed and frozen by constant bickering and arguing, and why it's the young Millennial Generation, the new Hero Generation, that's really making the decisions, and making their voices felt through polling or elections. And that's why we're sending tens of thousands more troops into Iraq, and why we're headed for a new world war, a "clash of civilizations" world war. In America, Europe, Gaza, Israel, China and Japan, it's the young people who are leading their countries to being increasingly confrontational, and why this new world war is no longer very far off. (17-Dec-06) Permanent Link
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In desperation gamble, Mahmoud Abbas calls for new Palestinian elections

Hoping to end political deadlock and head off a Palestinian civil war, Palestinian President Mahmoud Abbas responded to the incendiary events of the last few days by announcing his intention to call for new Presidential and Parliamentary elections, in a speech in Ramallah. The U.S. government welcomes this call.

What's the purpose of this call? Because of the desperate hope that Fatah will win both the Presidential and Parliamentary elections, creating a government that will recognize Israel and receive Western aid again.

President Abbas is supported by Western nations, including the U.S. and Europe, and heads Fatah. Hamas, considered a terrorist organization by Western nations, surprised everyone by winning the legislative elections in January. Western nations reacted by cutting off hundreds of millions of dollars in aid to the Palestinians, unless Hamas renounces violence and recognizes the existence of Israel, things that will happen when pigs fly.

Now that political differences between Fatah and Hamas have grown into escalating violence, and civil war seems near, Abbas is taking a desperate gamble that Fatah will be the big political winner.

I don't predict elections, since election results are chaotic events (in the sense of Chaos Theory), and so election results can be affected by even tiny, minor surprises.

But having said that, it's most likely that Hamas will win both sets of elections. Young, radical Palestinians, especially in the Gaza strip, are increasingly in control of what happens, much more so than in the near two years since Abbas won the last Presidential election. These young people aren't in love with Hamas, whom they consider to be too moderate, but they certainly won't vote for the old dinosaur Abbas.

Thus, the desperation call for elections is only likely to increase the militancy of the Palestians, and hasten the route to civil war. In fact, Hamas has already said that the call for elections is a coup, and threatened immediate further violence.

On Saturday evening, several hours after Abbas' speech, tens of thousands of supporters of Fatah and Hamas, respectively, demonstrated and clashed with one another, wounding five residents in the city of Rafah in Gaza.

Generational Dynamics predicts that the Mideast is headed for a new genocidal war, replaying the crisis war between Arabs and Jews of the 1940s. As I wrote in 2003, the disappearance of Yasser Arafat and Ariel Sharon would signal a generational change that would lead to a major conflagration within a few years, engulfing the entire region. This prediction has been trending true, and it now appears that a Palestinian civil war may be the first step on the road to that major regional crisis war. (16-Dec-06) Permanent Link
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Will Mohammed Dahlan trigger a Palestinian civil war?

Hamas blames the young Fatah terrorist for the near-assassination of Prime Minister Haniyeh.

Tension is boiling between Fatah, the moderate militia group under the control of Palestinian President Mahmoud Abbas, and Hamas, the radical militia group whose political arm won the legislative elections earlier this year.

On Monday, three boys aged 6-9, sons of a Fatah leader, were shot dead by gunmen.

Palestinian Prime Minister Ismail Haniyeh at Hamas rally, yells, "We joined this movement to become martyrs, not ministers!" (Source: BBC)

On Thursday, the Palestinian Prime Minister, Ismail Haniyeh, was attacked by gunmen as his motorcade crossed from Egypt into Gaza. The gunmen killed Haniyeh's bodyguard and wounded his son, but Haniyeh was unhurt.

At a massive celebration on Friday, celebrating the 19th anniversary of the founding of Hamas, Haniyeh blamed Mohammed Dahlan for the attempted murder. In his fiery speech, he defiantly yelled, "We joined this movement to become martyrs, not ministers!" to a large, enthusiastic crowd. He was referring the willingness of all Hamas members to become suicide bombers against Israel.

Massive crowds at Hamas rally. (Source: CNN)

Born in 1961, Mohammed Dahlan was the youngest of the top leaders in Yasser Arafat's Fatah, and much more radical and militant. He's been the face of Palestinian terrorism many times, and has expressed the goal of war with Israel.

Now, with the Fatah and Hamas power struggle deepening and violence increasing for many months, he may well be behind an effort an effort to trigger a civil war among the Palestinians, expecting it soon to draw in Israel as a combatant. We should know within a few days.

Clashes between Fatah and Hamas in West Bank town of Ramallah. (Source: New York Times)

However, with Dahlan was the perpetrator or not, the assassination attempt has triggered full-scale clashes between Fatah and Hamas in Gaza City and in the West Bank town of Ramallah.

Alarmed Egyptian officials are trying to mediate a deal between Fatah and Hamas, but that attempt has actually been going on for months, and success is not expected now.

Generational Dynamics predicts that the Mideast is headed for a new genocidal war, replaying the crisis war between Arabs and Jews of the 1940s. As I wrote in 2003, the disappearance of Yasser Arafat and Ariel Sharon would signal a generational change that would lead to a major conflagration within a few years, engulfing the entire region. This prediction has been trending true, and it now appears that a Palestinian civil war may be the first step on the road to that major regional crisis war. (16-Dec-06) Permanent Link
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Bird flu spread off to a slow start this year

Was last year's rapid worldwide spread a one-time incident?

Last season, bird flu spread rapidly from Vietnam and eastern China, moving west through Asia, then to Europe, the Mideast and Africa. It reached birds in 30 new countries in the first four months of 2006 alone.

It was expected to reach North America during the spring migration, but apparently it hasn't.

So far there's no sign of a human pandemic. In mid-2006, the virus mutated in Indonesia enough to permit human to human transmission through skin contact, but the mutations that would permit easy transmission through the air, thus causing a pandemic, have not yet occurred.

On the other hand, South Korea, which hasn't seen a bird flu outbreak since 2003, now has a major new outbreak on its hands, and is culling (killing) hundreds of thousands of quails and chickens.

Now some some experts are wondering, "Where did it go?"

Unfortunately, the danger is far from over. Perhaps its spread has been slowed by what has been a mild winter so far. Perhaps we've just been lucky. But there's no reason to believe that the danger has disappeared or even lessened. The outbreaks in South Korea show that.

Perhaps there'll be a pause of a few months or even a year. Or a human pandemic may start next week. It's impossible to predict.

Winter will arrive next week, and with it the cold weather that can cause a rapid spread again. The bitter January and February weather, when Vietnam and China have large new year's celebrations that spur large migrations of chickens, are the most dangerous times of the year.

As I've said before, you and your family should prepare immediately for a possible pandemic. If human to human transmission became public next week on Monday, then by Tuesday all the shelves in grocery stores would be bare. If you stock up on food now, then you'll be sure to have what you need. Even if you think that you can beat the crowds to the grocery store, you should still stock up in advance. If you get your canned food after the panic begins, then you're depriving somebody else of food. But if you stock up in advance, then the shelves will be restocked, and you won't deprive someone else of food.

I once again strongly urge my readers to prepare for an H5N1 pandemic or for any kind of emergency (think of hurricane Katrina) 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. (14-Dec-06) Permanent Link
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Somalia's radical Islamists threaten Ethiopia with war within a week

They demand the withdrawal of thousands of Ethiopian troops.

Horn of Africa

As we described in October, Somalia and Ethiopia are close to full-scale war, after a takeover of Somalia by the radical Islamic Courts Union (ICU). From the point of view of Generational Dynamics, the highly strategic Horn of Africa will play an important role in the coming "clash of civilizations" world war.

Now, Somalia's radical Islamists are promising war within a week, unless Ethiopia withdraws 20-30,000 troops protecting the old government.

Ethiopia denies the existence of these troops. However, a UN report says that 11 countries are pouring weapons into the region, and eyewitnesses say that military forces of both countries are massing and preparing for war. (13-Dec-06) Permanent Link
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Iran's President Mahmoud Ahmadinejad holds two-day Holocaust denial conference

He says that Israel "will soon be wiped out."

Iranian President Mahmoud Ahmadinejad (the short one on the right) shakes hands with former Ku Klux Klan Imperial Wizard David Duke

It's drawn holocaust skeptics, deniers and kooks from around the world to Tehran, and it's drawn outrage as well. The conference program for the "Holocaust: Global Vision" conference lists dozens of sessions and speakers.

An incredulous Tony Blair called the conference "shocking beyond belief," and said, "To go and invite the former head of the Ku Klux Klan to a conference in Tehran which disputes the millions of people who died in the Holocaust. ... What further evidence do you need that this regime is extreme?"

Actually, I don't think Tony Blair is the intended audience. This conference on holocaust denial is exactly the right thing to do for a country planning a war to annihilate Israel.

At the closing session, Iranian President Mahmoud Ahmadinejad said, "Just as the Soviet Union was wiped out and today does not exist, so will the Zionist regime soon be wiped out."

These statements are directed at Arabs, primarily Palestinians, who consider Ahmadinejad to be something of a folk hero. They're also directed to the Hizbollah and Hamas organizations, to whom he's supplying training, missiles and other weapons in preparation for a new war with Israel in the next few months.

Iran itself is in a "generational awakening" era, since only one generation has passed since the genocidal Iran/Iraq war. This means that the people of the country will not want to fight in any wars at this time, but this will not stop Ahmadinejad from fighting a proxy war through the Hizbollah and Hamas. The steady stream of messages about "wiping Israel off the map" and denying the holocaust prepare the Iranian people for the war to come.

As has happened almost every day since the death of Yasser Arafat, things continue to get worse on the Gaza Strip. On Monday, three boys, aged 6-9, where shot dead by gunmen as they were being dropped off at school. The boys were the sons of a Fatah leader; Hamas has been blamed for the shooting, but they deny it. But there are plenty of other "minor" Palestinian militia groups that might have done it.

Generational Dynamics predicts that the Mideast is headed for a new genocidal war, replaying the crisis war between Arabs and Jews of the 1940s. As I wrote in 2003, the disappearance of Yasser Arafat and Ariel Sharon would signal a generational change that would lead to a major conflagration within a few years. That generational change is now occurring rapidly. (13-Dec-06) Permanent Link
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Kofi Annan visits the Truman Library to bad-mouth America again

Ironically, President Truman would consider him a fool.

In his last speech as Secretary-General of the United Nations, Kofi Annan chastised the United States and President Bush.

Annan went to the Truman Library to honor President Harry S. Truman, who was the guiding force in the creation of the United Nations in 1947.

"And states need to play by the rules towards each other, as well as towards their own citizens," said Annan, in a rebuke to the United States. "That can sometimes be inconvenient, but ultimately what matters is not inconvenience. It is doing the right thing. No state can make its own actions legitimate in the eyes of others. When power, especially military force, is used, the world will consider it legitimate only when convinced that it is being used for the right purpose – for broadly shared aims – in accordance with broadly accepted norms."

And, in a personal rebuke to President Bush, Annan said: "And in order to function more effectively, the system still cries out for far-sighted American leadership, in the Truman tradition."

What Annan is evidently not aware of is the Truman Doctrine, which was formulated to guarantee that there would never be another war like World War II.

In 1947, a crisis between Turkey and Greece led President Truman the formulate the "Truman Doctrine," which essentially made America the Policemen of the World. Here's an excerpt from President Truman's speech to a joint session of Congress:

"We have considered how the United Nations might assist in [the Turkey / Greece] crisis. But the situation is an urgent one, requiring immediate action, and the United Nations and its related organizations are not in a position to extend help of the kind that is required. ... As in the case of Greece, if Turkey is to have the assistance it needs, the United States must supply it. We are the only country able to provide that help. ...

The peoples of a number of countries of the world have recently had totalitarian regimes forced upon them against their will. The Government of the United States has made frequent protests against coercion and intimidation in violation of the Yalta agreement in Poland, Rumania, and Bulgaria. I must also state that in a number of other countries there have been similar developments.

At the present moment in world history nearly every nation must choose between alternative ways of life. The choice is too often not a free one. One way of life is based upon the will of the majority, and is distinguished by free institutions, representative government, free elections, guarantees of individual liberty, freedom of speech and religion, and freedom from political oppression. The second way of life is based upon the will of a minority forcibly imposed upon the majority. It relies upon terror and oppression, a controlled press and radio, fixed elections, and the suppression of personal freedoms.

I believe that it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.

I believe that we must assist free peoples to work out their own destinies in their own way.

I believe that our help should be primarily through economic and financial aid which is essential to economic stability and orderly political processes.

The world is not static, and the status quo is not sacred. But we cannot allow changes in the status quo in violation of the Charter of the United Nations by such methods as coercion, or by such subterfuges as political infiltration. In helping free and independent nations to maintain their freedom, the United States will be giving effect to the principles of the Charter of the United Nations."

President Truman made the additional point that, no matter much it cost the United States to provide this help, the cost would be far less than the cost of World War II.

This has been a major principle guiding American foreign policy since President Truman enunciated it. It provided the justification for Truman's intervention in the Korean War, for President Kennedy's intervention in the Vietnam War. In fact, President Kennedy launched TWO pre-emptive wars against Cuba -- the first, based on faulty CIA intelligence, led to the "Bay of Pigs disaster," and the second, the blockade of Cuba, risked nuclear war with the Soviet union.

These are exactly the same principles that President Bush followed in the Iraq intervention. That's why President Truman would consider Kofi Annan to be a fool.

In another ironic twist, Annan chided the U.S. and other world powers for not intervening in the Darfur civil war.

Annan said: "And when I look at the murder, rape and starvation to which the people of Darfur are being subjected, I fear that we have not got far beyond 'lip service.' The lesson here is that high-sounding doctrines like the 'responsibility to protect' will remain pure rhetoric unless and until those with the power to intervene effectively – by exerting political, economic or, in the last resort, military muscle – are prepared to take the lead."

In other words, in the same speech in which criticizes America for intervening in Iraq, he also criticizes America for not intervening in Darfur.

And if we did intervene in Darfur, and things started to go wrong, what would Annan say then? He'd be rebuking us again, this time for intervening in Darfur.

As I said, Kofi Annan is a fool. (12-Dec-06) Permanent Link
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Political pundits are all over the map in Iraq predictions

Everyone starts from the same place: "The situation in Iraq is grave and deteriorating," which is the first sentence of the Iraq Study Group (ISG) report, issued this past week by a committee headed by Jim Baker and Lee Hamilton.

However, from that point on, all the pundits go off in wildly different directions in terms of predictions and recommendations for the future of Iraq.

Andrew Sullivan is a liberal pundit who first aggressively supported the war in Iraq, but has taken the mainstream liberal position that Bush mishandled the war.

His article is titled "The Gathering Storm," [] using the phrase that Winston Churchill used to characterize the late 1930s.

He makes a novel comparison between the situation in the Mideast and the so-called European religious wars of the 1500-1600s:

"My own darkest fear is that the Middle East is at the beginning of its own period that Europe experienced in the sixteenth and seventeenth centuries: a massive, sectarian, regional bloodbath. I hope this won't happen. I hope to be proven wrong again. But I fear the process is already underway. ...

The major powers in the Middle East, in other words, are on the verge of behaving like the major powers in Europe centuries ago: they will act as expressions of national interest but also of sectarian theology. And they will fight a terrible war before they agree on a chastened peace.

The difference between now and the sixteenth and seventeenth centuries in Europe is that this regional war within a divided monotheism will take place in a time of vastly greater technological capacity for destruction. So the consequences of such a war may be far more ominous than the massacres, burnings and civil wars that beset Europe in the past."

Sullivan misses the point that there have been lots of major wars since the 1600s -- the Crimean War, World War I, World War II, for example -- which were also fought at least partially along religious and sectarian lines, with the warring religions including Western Christianity, Orthodox Christianity, Islam and Judaism, as well as sects thereof.

In fact, the 1990s Bosnian war was a "massive, sectarian, regional bloodbath," and that was only a few years ago, with the Orthodox Serbs butchering the Catholic Croatians and the Muslim Bosnians.

But when a pundit is making an ideological point, historical facts don't matter much.

Anyway, what's Sullivan's cure? Here's what he says:

"The best hope for Iraq is perhaps a temporary surge in U.S. troops to make one last effort at some effort at a relatively peaceful de facto partition, before the near-inevitable U.S. withdrawal and subsequent involvement of Saudis and Egyptians in support of the Sunnis and the Iranians on the side of the Shia. (At this point, I'd be relieved if we can save the Kurds.)"

Now, this is really all messed up. The Iraqis won't agree to this partition, for one thing. But the main problem is that "the gathering storm" is not taking place in Iraq; it's taking place in Lebanon and Gaza, as the young militants in the "Young Guard" gear up for total war against Israel, with the help of Iran and Syria.

Well, so much for that. Now let's turn to conservative columnist Pat Buchanan. Like every other pundit, Buchanan believes that we're reliving the Vietnam War, and this has caused him to make one error after another in his punditry in the last few years. He worked for President Nixon as a speechwriter, and he suffered through the time when widespread anti-war riots and demonstrations forced America to withdraw its forces from Vietnam, leading to America's defeat.

Buchanan has repeatedly predicted that soon college students would begin rioting and protesting against the Iraq war, and that we would be forced to withdraw from Iraq in the same way, leading to America's defeat. (Like other journalists and pundits, Buchanan has no idea why college students haven't protested against the Iraq war, and why there's been no effective antiwar movement.)

But even though Buchanan has been repeatedly wrong, he keeps going down the same path.

His article, entitled "Withdraw to victory?" [], says that the ISG report does exactly what he's been predicting -- it forces a withdrawal from Iraq and a defeat for America:

"Yet the brutal honesty of the Baker-Hamilton commission about the situation in Iraq is accompanied by recommendations that are almost utopian in their unreality. ...

What is its principal recommendation? That the United States begin to pull all its forces out of combat and out of Iraq by early 2008, and turn the war over to the Iraqi army and police.

But if 150,000 U.S. Marines and Army troops have failed in four years to defeat al-Qaida, the Sunni insurgency, the Mahdi Army, the sectarian militias and the criminal elements of Iraq, how is the Iraqi army going to succeed?

Are we to believe that rag-tag army is going to win a war the finest army on earth has all but lost?"

He ends with a very downbeat prediction:

"When U.S. combat forces leave, Iraq is going to be lost to those who ran us out. Our friends there are going to endure what our abandoned friends in Vietnam and Cambodia endured. The forces of Islamic radicalism will be emboldened to take down our remaining allies in the Middle East. Our days as a superpower will be over."

To me, this comes across as being close to an obsession with his Vietnam experience. What Buchanan and a lot of other people don't understand is that America today bears no resemblance to the 1970s Vietnam days -- except to aging Boomers who lived through that time.

Although the kind of withdrawal that Buchanan talks about is a remote possibility, I see little chance that it will be called for, despite the hysteria we've been seeing in Washington the last week. We've now had two major generational changes since the 1970s, and today's young people will not tolerate a defeat in Iraq like the ones that their Boomer parents lived through in the 1970s.

To see this further, let's take a look at a third column, this one by liberal Susan Estrich. The title tells it all: "President Bush: State of Denial About Iraq." It's a fairly standard Democratic party criticism by typical people in Washington who know nothing of what's going on in the world:

"Denial is the first stage in dealing with death. The president still has to get through anger, bargaining, and depression before he reaches acceptance.

And there is no sign that he is listening to anyone.

He didn’t listen to the voters, who gave him a thumping because of Iraq. So much for democracy.

He isn’t listening to his own new defense secretary, who has testified that his Iraq policy isn’t working and won’t work. So much for his own advisers.

And he certainly isn’t listening to the Iraq Study Group, which most people have characterized as the last, best hope, or at least the best cover, for a change of policy. So much for blue ribbon bipartisanship.

What will it take to get through to this president? ...

And as long as he is in a state of denial, the country is bound to be in a state of war that we cannot win. It will be a long two years until the next election, and George W. Bush’s attitude all but ensures that we will spend it debating the war in Iraq. Exactly."

Estrich criticizes the President, but doesn't offer any proposals to withdraw the troops. The other liberal, Andrew Sullivan, proposes a short-term increase in troops.

If there are any proposals to do a "Vietnam-style" withdrawal, I haven't seen them.

Perhaps the statement that best captures the mood of Washington is Trent Lott's statement on Sunday's Meet the Press: "I agree a little bit with everybody. I agree with some of what the commission has said. I agree with Senator McCain that we should have some surge capability, which Jim Baker just referred to to get Baghdad a little bit better under control, I do think diplomacy is a good idea ... [As for more troops,] it would depend on the cirumstances - is it surge capability to try to deal with an immediate potential problem but just recognizing that more troops in the long term is probably not the answer we're looking for."

So there you have it. Nobody has any idea what to do.

From the point of view of Generational Dynamics, this is the kind of generational paralysis that we're seeing around the world in countries that fought in World War II and are now entering a generational crisis period.

George Bush said he was "the decider," and he's going to make some specific proposals soon, but he isn't the decider. The real deciders are the new generation of young voters.

As I described when discussing the young militants in Gaza, the "old men" in Hamas and the government are irrelevant to the real decision-makers.

The same is true in America. The young generation of voters already sent one message in the recent midterm elections, but we're still waiting to see what the next message will be.

It's impossible to predict what that message will be, except in one regard: It will not be an anti-war message like the one sent by the young generation of the 1960s (the Boomers). Instead, it will be a message to take whatever steps are necessary, even war, to solve the problem.

What's the problem? That will depend on breaking events. A new terrorist act will trigger one message, or a new war in Lebanon or Gaza will trigger a different message.

From the point of view of Generational Dynamics, the Boomer generation is becoming more and more irrelevant every day. The Generation-Xers don't know what to do either, but they're angry at the Boomers for getting nothing done.

It's the young generation, the Millennial generation or Generation Y, that will decide what we do next, through their voice and their votes. Until we know what that message is, the nation will continue in a state of confusion and paralysis. (11-Dec-06) Permanent Link
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Women's groups protest rape as a weapon of war in Darfur

As the civil war in Darfur continues to grow more violent, and even spreads to neighboring countries Chad and Central African Republic, worldwide demonstrations were held on Sunday to protest violence against women in Darfur.

One woman, protesting outside of Downing Street in London, said: "Rape is not an inevitable part of war. It can be stopped if military leaders, governments and the international community make clear that it will be punished as severely as any other war crime."

This is silly. Military leaders no more worry about vague future threats of war crime trials than ordinary consumers worry about future bills when they overspend on their credit cards.

Rape IS an inevitable part of war -- at least of generational crisis wars. "To the victor go the spoils," is the old saying, and when you're winning a war you get to kill the men and rape the women.

Actually, women aren't the only sexual violence victims. In her book, World on Fire, here's how author Amy Chua describes the Bosnian war: "In the Serbian concentration camps of the early 1990s, the women prisoners were raped over and over, many times a day, often with broken bottles, often together with their daughters. The men, if they were lucky, were beaten to death as their Serbian guards sang national anthems; if they were not so fortunate, they were castrated or, at gunpoint, forced to castrate their fellow prisoners, sometimes with their own teeth. In all, thousands were tortured and executed." So women aren't unique when it comes to genocidal sexual torture.

The Darfur problem first began to get worldwide attention in 2004, shortly after the 10-year commemoration of the 1994 Rwanda genocide. At that time there were big get-togethers of high-level officials from the U.N. and from various countries, making official pronouncements that the violence must stop. At the commemoration, U.N. Secretary General Kofi Annan promised "Never again." I wrote at the time that the U.N. is completely irrelevant to the Darfur genocide, and that it would not be stopped until it's run its course.

My prediction that the U.N. would be able to do nothing to stop the Darfur genocide has been shown to be completely true, one of the many predictions on this web site that have been shown to be true.

And this was not a guess; it was based on solid generational principles. A non-crisis war can be stopped -- by the use of peacekeepers, or by negotiations with politicians. That's because non-crisis wars come from the politicians, not from the people.

But generational crisis wars come from the people, from whole generations of people, from masses of people, and masses of people cannot be stopped. Negotiating with a political leader to stop a crisis war won't do any good for more than a short while because the political leader is not in control of the situation.

In Leo Tolstoy's monumental work War and Peace, which describes Napoleon's invasion of Russia, I love Tolstoy's response to historians who claim that the battle of Borodino was lost because Napoleon had a cold:

"The French soldiers went to kill and be killed at the battle of Borodino, not because of Napoleon's orders but by their own volition. The whole army - French, Italian, German, Polish, and Dutch - hungry, ragged, and weary of the campaign, felt at the sight of an army blocking their road to Moscow that the wine was drawn and must be drunk. Had Napoleon then forbidden them to fight the Russians, they would have killed him and have proceeded to fight the Russians because it was inevitable. ...

And it was not Napoleon who directed the course of the battle, for none of his orders was executed and during the battle, he did not know what was going on before him. So the way in which these people killed one another was not decided by Napoleon's will but occurred independently of him, in accord with the will of hundreds of thousands of people who took part in the common action. It only seemed to Napoleon that it all took place by his will. And so the question whether he had or had not a cold has no more historic interest than the cold of the least of the transport soldiers."

Tolstoy's point that the battle of Borodino could not be stopped by Napoleon because it was "the will of hundreds of thousands of people who took part in the common action" is relevant today in discussing Darfur because the Darfur genocide -- including the rapes, mutilation and torture -- is the will of millions of people who are taking part in the common action. That's why I said in 2004 that it would not be stopped until it's run its course, and that's why I say the same thing today.

I often get the feeling that Americans (and other Westerners) have a certain prejudice that comes over them when talking about things like the Darfur genocide.

I get this feeling when people talk about the civil war in Darfur, or other massive African wars, that they believe that this kind of wanton slaughter is the ordinary way of life of those "uncivilized" black tribes doing what they do naturally -- killing each other all the time.

I get the same feeling when I hear people talking about those "AY-rabs," that wanton slaughter of each other is their way of life, and that it's therefore to be expected in Iraq and elsewhere in the Mideast.

And yet, Americans and Westerners don't look at WW II in the same way. Americans consider WW II to be some sort of anomaly, a unique situation created by one madman that can't and won't be repeated. Once again this is a prejudice, the mirror image of the prejudice about Arabs and Africans that I just described.

Of course none of that can be supported. The Western world is just as "uncivilized" as the Arabs and Africans are, and they're just as prone to "wanton slaughter" as the other two groups. But the reason for the widespread prejudices is just a matter of timing: Lebanon and Iraq had their genocidal crisis wars in the 1980s, at a time when the West was relatively at peace, so it only SEEMS that we're more civilized than they are. Similarly, the Rwanda and Darfur crisis wars have come in the last 15 years, once again at a time of peace in the West. (The prejudice also ignores the the Bosnian crisis war, which took place in Europe, but that's another prejudice.)

Once we get past these prejudices, and realize that we're all uncivilized people who wantonly slaughter each other, then it's easier to see the generational patterns in history.

This would be good to remember as we continue to approach the "clash of civilizations" world war which, as Generational Dynamics predicts, is not too far off. (11-Dec-06) Permanent Link
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China says that increasing numbers of "major mass incidents" threaten government

Lauding the Chinese Communist Party's "courage to confront realities," the official government commentary says that "The prevention and proper handling of mass incidents is a major test for the [CCP's] governing ability."

This has been an increasing worry for the CCP. In January of this year, China's prime minister warned that the country was becoming increasingly unstable, thanks to a "historic error" caused by corruption in local governments -- where local governments simply confiscate local peasants' lands for their own purposes, without properly compensating the peasants.

However, China's People's National Congress failed to pass a law protecting peasants' rights. The People's National Congress is paralyzed by ideological disputes. This is exactly what happens to a country when it enters a generational crisis era. It's the same kind of ideological paralysis we're seeing in Washington today over the situation in Iraq.

The situation is getting so bad that dissident news sources from China are reporting that membership in the CCP has fallen so sharply since the 1989 Tiananmen Square massacre that "CCP officials are panicking."

The CCP officials should be panicking. These kinds of mass riots are hardly new to China. The real (and unavoidable) danger is that these regional mass riots will merge into a nationwide rebellion, like the White Lotus Rebellion (1795-1805), the Taiping Rebellion (1852-62), and Mao's Long March and Civil War (1934-49). The last two civil wars killed tens of millions of people, and the next one is expected to continue the pattern.

The new government commentary says, "China is harmonious and stable in general, but it is undergoing profound changes in social and economic structures with many destabilizing factors." What Chinese officials don't understand, but that readers of this web site do understand, is that those "profound changes" are caused by generational changes. The generation of people who fought in the 1940s civil war are quickly disappearing, replaced in the population by young people whose only knowledge of the CCP was the 1989 massacre.

According to the new government commentary,

"China's booming economic development has largely improved people's living standard, but in the meantime the gaps between the rich and poor, urban and rural have been widened.

Against this background, major mass incidents have been increasing and having wider impact. Among these incidents, some economic disputes had been politicized, and violent confrontation has increased so much that any inappropriate dealing would cause bloodshed.

Meanwhile, hostile forces inside and outside China are trying all means to intervene and take advantage of mass incidents to instigate and create turbulence.

The Party should put priority to solving the problems and difficulties of laid-off workers, land-lost farmers, emigrants from the Three Gorges Dam area, migrant workers, and the poor in both urban and rural areas."

Note the remark about "hostile forces" trying to "intervene and take advantage of mass incidents." This is a warning to all dissidents, especially followers of the Falun Gong. This spiritual movement was formed after the Tiananmen Square massacre, and drew millions of adherents. Older people would get together to meditate and do exercises. Beijing became alarmed, and declared in 1999 that practicing the Falun Gong was illegal. Millions of Chinese have been jailed simply for doing the equivalent of Richard Simmons exercises. The reference to "hostile forces" renews that threat.

From the point of view of Generational Dynamics, China is becoming increasingly unstable and is approaching a massive civil war as its bubble economy unravels, along with the rigid social structure originally set up by Mao Zedong in the 1950s and 60s. Today, there are over 100 million migrant workers (15-20% of the entire workforce), mostly peasants who have lost their farms to corrupt land deals by CCP officials, who take any jobs they can find in the cities and send money back to their families in vast poverty-stricken rural areas. Exactly what event will trigger this civil war cannot be predicted, but it could happen next week, next year or after, but will probably happen sooner rather than later. (10-Dec-06) Permanent Link
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Interviews with young Gazans spotlight road to war

For these young fighters, attacking Israel is an end, rather than a means to a political end.

The interviews appeared in an article in the Boston Globe last week.

It's so rare for the mainstream media to report on any generational issue, no matter how obvious and important it is, that I was startled to see this article.

According to the article,

"Interviews with the militants reveal a bleak insight, casting doubt on the prospects for peace as autonomous militant groups show complete disregard for political action, and their way of thinking increasingly dominates their factions' leadership.

"For 12 years we have been in peace negotiations, we have given up many things, but achieved nothing," said Abu Ali, 20, who said he was a fighter in the Al Aqsa Martyrs' Brigades, ostensibly the most moderate militant faction because of its link to Fatah, which recognizes Israel.

"We don't believe in a political solution, because Israel will never respect it," Abu Ali said. "So we are forced to seek a military solution, even though Israel is stronger. There will be no peace" in the Palestinian territories, he said."

The young militants expressed a range of views. A relatively mild view is that they use violence "to erect a balance of fear with the Israelis." A more extreme view is that "The Jews will not leave the land unless they are killed."

This is what people don't understand, and it's a major finding of Generational Dynamics research: That these major genocidal crisis wars that I'm always talking about are not started by adults most of the time; instead, they're started by a young generation of militants.

As the article says, "their way of thinking increasingly dominates their factions' leadership."

We can now identify three distinct generational groups within the Palestinians, especially within Gaza:

• The Old Guard. These are people born before 1949, including Yasser Arafat and Mahmoud Abbas. Having lived through and survived the genocidal 1940s war between Jews and Arabs, they've made it their life goal to keep any such war from occurring again. They negotiated the 1994 Oslo peace agreement with Israel. Arafat died in 2004, and Abbas is now 71. This generation has all but disappeared.
• Hamas Generation. Born in the decades following the 1940s war, they have no personal memory of its horrors. Hamas was formed in the early 1980s. It began the first Intifada, starting in 1989. They agreed to a ceasefire when the Oslo agreement was signed, but refused to honor the agreement or recognize Israel. Today, they're more and more the generation in charge, as the Old Guard generation disappears. They use violence against Israel for political ends.
• The Young Guard. This is the generation of young militants described above. Born since 1980, they consider violence against Israelis as an end in itself, and many (or perhaps most) are committed to the destruction of Israel.

According to a 2002 article in Foreign Affairs magazine, "Yasser Arafat has been neither an orchestrator nor a spectator of the second intifada; he has been its target. A young guard of Palestinian nationalists, angry at both Israel and the corrupt Palestinian Authority, lies behind the violence. Arafat must reform his government and secure a credible peace process -- before it's too late."

I love the phrase "before it's too late." Journalists and politicians use it all the time as a cliché. Well, the government was never reformed, so now presumably "it's too late."

Furthermore, as I've pointed out many times, the median age of the Gaza population is 15.8, so it's pretty much the Young Guard generation that's running Gaza.

The Boston Globe article summarizes their attitude toward Hamas as follows: "While the political leadership of Hamas and the other groups occasionally lays out terms for negotiating with Israel, such as the release of Palestinian prisoners or the cessation of attacks, the young fighters say they see politics as a dead end, an old man's game."

This is one of the very few mainstream media articles I've read that show any insight into this situation, although it doesn't draw the obvious conclusions: That there's no point in negotiating with either Abbas or Hamas, since anything that these old men do or agree to is irrelevant to the young militants.

Some people appear to believe that as the young militants grow older, they'll "mellow." According to Generational Dynamics research, that will not happen. As they grow older they'll retain the same attitude. This means that the number of "moderates" goes down every day, and the number of "militants" increases every day.

Generational Dynamics predicts that the Mideast is headed for a new genocidal war, replaying the crisis war between Arabs and Jews of the 1940s. As I wrote in 2003, the disappearance of Yasser Arafat and Ariel Sharon would signal a generational change that would lead to a major conflagration within a few years.

This prediction has been trending true with a vengeance. After Yasser Arafat died, there was a period of a few weeks, culminating in the election of Mahmoud Abbas as Palestinian President, when things appeared to be getting "hopeful." But since January, 2005, hardly a single day has passed when the situation hasn't gotten measurably worse. Israel's unilateral withdrawal from Gaza and the Palestinian legislative elections were events that were supposed to bring peace and freedom; instead, they were disastrous in just about every way possible. Generational Dynamics predicts that this descent into chaos will continue, irrespective of any of the 79 proposals in the Iraq Study Group report. (10-Dec-06) Permanent Link
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Can we "Flip Syria" and solve all the Mideast problems?

Even by Washington standards, Wednesday was possibly the most bizarre day on record.

Journalist David Gergen was heard on CNN saying this on Wednesday: "This is the best moment we've had in over three years."

His remark reflects the giddy mood throughout Washington, as Robert Gates was confirmed to replace Donald Rumsfeld as Secretary of Defense, and the Iraq Study Group released its report.

I frequently heard the word "atmospherics." This refers to how much better things are today than they used to be. The evil monsters, George Bush and Don Rumsfeld, have been slain. Well, George Bush has been only partially slain, but if he doesn't shape up fast, he'll be fully slain by Christmas.

The new "atmospherics" are great. It's because Bob Gates says "We're not winning the war, we're not losing the war, but the present policy isn't working." Why, that sentence alone prompted a "great atmospherics" remark from, of all people, Senator Ted Kennedy during the confirmation hearings.

And Gates promised he'd confer with the Senators. Well, gawrsch, that's just what they were hoping to hear! It's a swell world now, isn't it. And that was just Tuesday.

By Wednesday, when the new Iraq Study Group report was released, the mood of atmospherics had gone from giddiness to daffiness.

The report has 79 recommendations. (For a PDF of the report, go to http://www.bakerinstitute.org/Pubs/iraqstudygroup_findings.pdf.)

It says that there are no easy solutions. It says that we can't withdraw troops precipitously, or we'll create a calamity. It says we shouldn't stay there too long. So we're going to withdraw troops slowly, maybe by 2008. And we'll embed more American soldiers within Iraqi units so that we can train them better. It says we may win or we may lose, cause we don't know.

Thus have we slain the evil Rumsfeld monster and his and Bush's evil "stay the course" policy, and replaced them with a brand new, wonderful, exciting policy to be administered by the wonderful, accommodating Bob Gates.

Well, famous "anti-war" Democrat John Murtha, who wants all the troops pulled out of Iraq immediately and moved to Okinawa, did say, "Hey wait a minute. This is no different from the old policy!" But who cares about that.

Murtha is a hero of the Democratic Party, one of the great monster-slayers. But he's got to get with the program. We don't worry about details any more. We're all into "atmospherics."

To repeat what David Gergen said, "This is the best moment we've had in over three years."

And indeed it is. No one could ever hope to top this, even in a TV situation comedy.

There was one recommendation in the report that would represent a major change to existing policy, and that's the suggestion that we "talk to Iran and Syria," and get them to help us, which they'll be only too glad to do, of course.

Actually, Jim Baker said that he doesn't have that much hope for Iran, but he did think we could "flip Syria" over to our side. Here's how he explained it in an interview with Fox News Channel's Brit Hume:

"If we could flip Syria away from Iran and toward their Sunni neighbors with which they used to have good relations, and towards the United States, we could cure Israel's Hizbollah problem and furthermore we could get the Syrians -- I'm convinced we could do this -- get the Syrians to convince Hamas to accept Israel's right to exist and that would give Israel a negotiating partner for the Palestinian track."

According to Hume, once they were off-camera, Baker held up his index finger and said, "Flip Syria! Flip Syria! Flip Syria!"

It's just been a grand day.

Well, let's see. Syria despises Israel. Syria is actively aiding Hizbollah and Hamas in their planned war with Israel, likely to occur within the next six months or so.

And yet, Baker thinks the Syrians are going to see the error of their ways, and suddenly side with us.

Well, I hope George Bush sends him over there to take a shot at it. It'll be fun to watch, anyway.

But I could hardly believe my ears when he said, "Get the Syrians to convince Hamas to accept Israel's right to exist."

Now, we've already told Hamas that they can get hundreds of millions of dollars in aid, if only they'll just recognize Israel's right to exist. Instead, Hamas is importing weapons as fast as possible through the porous border between Gaza and Egypt, preparing to join Hizbollah in the next assault.

Furthermore, as I've pointed out many times, Gaza is run by children. The median age of the Gaza population is 15.8, so it'll be kids making the decisions. And those kids couldn't be convinced to recognize Israel if a thousand Syrias asked them to.

One more thing. What are we going to give Syria as an inducement to "flip"? We're going to give them the Golan Heights, the region adjacent to Syria that Israel won in the 1967 war and currently controls. Israel won't object to this because they're not invited to the negotiations that we'll supposedly be holding with Syria. The Israelis can learn about what happens by reading the newspapers. (Paragraph added on 7-Dec)

Yes, folks, David Gergen said, "This is the best moment we've had in over three years." But maybe he's wrong. This may be the best moment we've ever, ever, EVER had.

This is the way our country is going, folks. When I was a kid in the 50s watching Disneyland on TV, hosted by the real Walt Disney, my favorite land was Fantasyland, because that's where all the fun was, where the best atmospherics were.

When I grew up, I thought I had given up Walt and Fantasyland.

Little did I know at that time that I would one day start this web site, and that I would be writing about our own little Fantasyland, right here in good old Washington DC. (7-Dec-06) Permanent Link
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Deep Fritz computer beats world chess champion Kramnik, 4-2.

The world champion fought hard but was clearly outplayed overall in the six-game match.

Kramnik vs Deep Fritz 10 - final scoreboard

Human world chess champion Vladimir Kramnik played remarkably well, often playing deeply intuitive and positional moves that frustrated Deep Fritz's attempt to defeat him on a purely tactical basis. Indeed, he may have had a winning position in game 2, but played an incredible blunder that permitted mate in one.

Games 1, 3, 4 and 5 were all hard-fought drawn games.

Human world chess champion Vladimir Kramnik (Source: SourceBase.com)

In Game 6, Kramnik went all out to try to win a game. As Black, he played the Sicilian Defense, an opening that provides lots of opportunities for a Black win, but is loaded with highly dangerous tactical opportunities for both sides.

Frederic Friedel, spokesman for technical team that developed the Deep Fritz software, gave a prediction early in the game during the online real-time commentary led by Grandmaster Yassir Seirawan.

He said (paraphrasing), "I'm going to make a prediction of what's going to happen -- not what I want to happen, but what will happen. Kramnik will play an even game with the computer, but sooner or later he's going to become aggressive and try to win. If he does that then he'll make a mistake, and Fritz will take the game."

In an ordinary human versus human game, it's quite common for both sides to make tactical errors, and the advantage often passes back and forth between the two players. But "it's very hard to win against Fritz," according to Friedel. "To win the game, you have to beat Fritz on every move in the opening, in the middle game, and in the end game. Just one slip, and Fritz will win."

That's pretty much what happened in this match. Kramnik's sophisticated powerful positional and intuitive play constantly kept Deep Fritz at bay, even gaining a small advantage in three of the games. But in the last game, wanting to win at least one game, he took a big risk and played a complex tactical opening. He made a couple of mistakes in the middle game, and Fritz was able to capitalize on those mistakes, finally exchanging Queens and transitioning into a clearly won endgame for Fritz.

Friedel made a couple of other comments of great interest.

He runs the ChessBase web site, which permits people around the world to play chess online with each other. He said that they've developed "secret" technology that allows them to detect whether a player is using a home computer to play his games on ChessBase. This technology watches several of the player's games and, if repeated use of a computer is detected, then the user is banished from the system.

The current version of the computer software is Deep Fritz 10, with many sophisticated enhancements to earlier versions of the Fritz chess program. Earlier versions of the software were a lot weaker chess programs than the current version.

However, Friedel pointed out that even earlier versions of Fritz are very strong today. "Fritz 3 was a weak chess player when it came out, but it's a very strong player today because computers have become so much more powerful."

This emphasizes the point that I made last week that the sophistication of the computer software is much less important than the speed of the computer. With an older computer, Fritz 3 may only have had time to look ahead 5 or 6 moves, but with newer, faster computers, it might look ahead 10-12 moves, making it a much more powerful chess player, even though the software algorithms are the same.

According to Friedel, chess software running on a slower computer almost always plays the same moves as on a much faster computer, but there will be perhaps 2 or 3 moves in the whole game where the software plays a different move on a faster computer -- and those 2 or 3 moves make all the difference between winning and losing.

This remark shows the way how computers and humans can play in the future. It had been thought that once computers got to be better than humans, then they would quickly become so much better that there would be no point in a human ever trying to play against a computer again. But this problem can be easily fixed by "handicapping" the computer, and giving it less time to "think." In the match just completed, each side had two hours to make 40 moves, averaging 2½ minutes per move, and with this timing the computer was able to defeat the world champion.

Next time, we could allow the human champion to have two hours to make 40 moves, but limit the computer to only one hour for 40 moves. The would presumably weaken the computer's play enough to make it an even match.

For many years, I've heard people say that a computer would never beat the best human chess players, because computers don't have "intuition." The current victory puts that argument to rest, especially because Kramnik is considered to be the best "intuitive" player in the world.

This match also pretty much puts to rest the argument that "a computer will never be as intelligent as a human being, because the human mind has potentially infinite capabilities."

Actually, the human mind has nowhere near infinite capabilities. A human being getting through the day has only a few choices to make at each point: "Do I drive to work, or take the bus?" A soldier in a war also has only few choices: "Do I shoot at one of those enemy soldiers -- and if so, which one? -- or do I retreat?"

Computer chess software today uses the same "minimax algorithm" that the first computer chess program used in the 1960s. This algorithm says, "I can make moves A, B, C or D. What will my opponent do in each case? If I do B then will my opponent do X, Y or Z? In each case, I want to MAXIMIZE my chances, and MINIMIZE my opponents' chances." This analysis can continue to any depth, depending on the time available.

A super-intelligent computer will be able to "think" using a similar minimax algorithm. "What will happen if I do A, B, C or D? If I do B, then either X, Y or Z will happen. What do I do next in each case?"

Of course there are more choices to make during a day than the number of moves in a chess position, but not infinitely more. Computers double in computational power every 18 months, and by 2010 or shortly thereafter, computers will be more powerful than the human brain.

By 2020, we'll have intelligent robots doing chores that humans don't want to do -- cleaning up waste sites, 24-hour nursemaids, and so forth. Within a few more years, intelligent robots will also be doing scientific research to develop improved versions of themselves, so that intelligent robots will eventually be far more intelligent than human beings. The point in time where intelligent robots are essentially in control of their own destiny is called "The Singularity," because there will be a bend in the exponential growth technology curve. There is no way to have any idea what's going to happen to the world after that point.

The development of a world champion chess playing computer lights the pathway that will lead to those events. (6-Dec-06) Permanent Link
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Hans Redeker predicts "hard landing" recession to hit early in 2007

In the most negative mainstream media economic forecast I've seen, Hans Guenter Redeker has predicted a serious recession in the United States early in 2007. Redeker is Global Head of Foreign Exchange Strategy at BNP Paribas, the largest European banking group. He made his comments this morning on CNN International.

Hans Guenter Redeker (Source: Bloomberg video)

Mainstream economists recently have been predicting a slowdown in growth or, at worst, a "soft landing," meaning a recession so small we'd hardly feel it. Even normally upbeat economists lowered their forecasts over the weekend, following a report last Friday from the Institute for Supply Management (ISM) indicating an unexpected shrinking of manufacturing in the U.S. The fall in manufacturing is attributed to the secondary effects of the housing market collapse, as related industries (furniture, appliances, etc.) are also affected.

However, Redeker predicts that the effects of the housing market collapse are worse than most economists are predicting. He indicated that the effects may start to become evident on Friday when the November employment report comes out.

Euro to Dollar exchange rate for last year

The value of dollar against the euro has fallen sharply in the last year, as shown in the adjoining graph (which shows that the value of euro against the dollar has been rising). This fall in the dollar, which Redeker says has been expected for a while, has been accelerating in the last few weeks. Redeker says that BNP Paribas' forecast is that the dollar will continue to fall, to $1.35 per euro in the first quarter, and to $1.40 per euro in the second quarter.

Redeker is also deviating far from mainstream Fed forecasts. He's predicting that the Fed will lower interest rates very rapidly next year, totaling a 2.5% reduction by the end of 2007. He says that for the first time in years, interest rates in Europe may be higher than those in America.

From the point of view of Generational Dynamics, the piece missing from all this is the piece whose timing can't be explicitly predicted: A generational panic and stock market crash.

Major international financial panics have occurred throughout history at regular 70-80 year intervals. The major financial crises since the 1600s have been identified as follows: Tulipomania bubble (1637), South Sea Bubble (1721), French Monarchy bankruptcy (1789), Hamburg Crisis of 1857 (Panic of 1857), and 1929 Wall Street crash.

At the present time, the stock market is overpriced by a factor of about 240%, and with price/earnings ratios around 20 or higher since 1995, a panic is long overdue. Such a panic is expected to lead to a fall to the Dow 3000 range, with the price/earnings ratio index falling well below 10. Note that the P/E ratio index has fallen below 10 several times in the 20th century, most recently in 1982, so this is a common occurrence.

The world is changing very, very rapidly right now. As I'm writing this, the Iraq Study Group report is being released. Despite the giddy expectations that politicians and journalists have for this report, it apparently has no great solutions, and doesn't call for any scheduled withdrawal. This is no surprise to any regular readers of this web site, but there may be a strong public reaction when it sinks in that we're still "trapped in Iraq." Public opinion is changing rapidly these days, moving in the direction of becoming increasingly confrontational, and a "hard landing" recession can only accelerate the confrontational mood even more. (6-Dec-06) Permanent Link
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China says that its economy is "sound and stable"

But dissident newspaper "Epoch Times" says China's economy and Communist Party are crumbling.

Not only is China's economy "sound and stable," according to official Chinese publications, but the one problem it has had -- overheated growth during the last few years -- has been "reined in" by China's "macro economy regulation [that] has been timely, effective, and without drastic fluctuations."

"The macro economic regulation policies will continue and remain stable in the fourth quarter and the near future to build a solid foundation for economic development next year," said Zhu Hongren, a senior official with the National Development and Reform Commission, as reported in a story in China Daily, an official government English-language news publication.

On this web site I normally reference only the most widely distributed mainstream media sources, in order to maintain the highest possible level of credibility.

However, that's a problem with China, a society that's almost completely opaque to the outside world, and whose news publications and even Internet postings are tightly controlled by the government, which is in turn controlled by the Chinese Communist Party (CCP), the only legal political party.

China's mainstream news publications are thus all required to present the most positive possible picture of China's society and economy. Thus, we only learn about massive regional rebellions when news leaks out from dissident sources, and China has even had a long record of refusing to release full data on health emergencies, including dangerous diseases like SARS and bird flu.

The situation has actually been getting worse recently, if that's possible. The 2008 Olympic games will be played in Beijing, and the CCP has been going overboard to project a favorable image of a modern country as 2008 approaches.

Outside of China, the best known dissident paper The Epoch Times, which claims to have 1.4 million readers. The paper was originally launched in May 2000 as part of the Falun Gong dissident movement which, itself, was launched after the 1989 Tiananmen Square massacre, where thousands of college students demonstrating against CCP policies were massacred. Since then it's become an international "human rights" newspaper, emphasizing China.

Fallout from Tiananmen Square massacre

The Tiananmen Square massacre has been almost forgotten in America, and has been "erased from history" by the CCP, as much as it can, but it's China's most significant and far-reaching cultural event for many decades, and it spawned the massive Falun Gong dissident movement in China. Since it's illegal to form another political party in China, Falun Gong can almost be considered a dissident political party. Of course belonging to the Falun Gong movement is also illegal in China -- and harshly punishable.

On Taiwan, there was a parallel development. Although Taiwan freely permits opposition political parties, the Kuomintang Party (KMT) had won every election since it was formed by nationalist group fleeing China after losing the civil war with Mao Zedong. However, the Tiananmen Square massacre spawned in 1990 the student-led Wild Lily rebellion, favoring Taiwanese independence from China, and led to the formation of the Democratic Progressive Party (DPP), which has been in power since it won in 2000.

So the Tiananmen Square massacre of 1989 has led to powerful dissident movements in both China and Taiwan, as well as to dissident sources of information, including the Epoch Times. These occurred as a reaction to the massacre but also because of major generational changes: By the 1990s, the generation of people who fought the 1940s civil war in China were mostly gone, replaced by younger generations of people who, as usual, are far more assertive and risk-seeking, and are uninterested in the "old men's parties," China's CCP and Taiwan's KMT.

Panic over loss of CCP membership

So when Epoch Times publishes publishes an article claiming that CCP officials are panicking over loss of membership, the claim is consistent with generational theory and is quite credible. After all, the Chinese are very well aware that Russian Communism collapsed in 1991, and they fear the same thing in China.

The article quotes published figures showing a dramatic loss of CCP membership in the 1985-91 time frame, which makes sense after the Tiananmen Square massacre. It claims that membership has continued to fall since then, and that also makes sense, thanks to generational changes. The loss of CCP membership in China parallels loss of KMT membership in Taiwan, and also parallels loss of membership of "older generation" American organizations, such as labor unions and feminist enterprises, during recent decades.

The dismal state of the economy is the subject of another article, where the paper quotes government sources that indicate that unemployment is very high and becoming increasingly serious.

According to the article, China's Minister of Labour and Social Security, Tian Chengping, "said that the severity of China's unemployment problems and the complexity of the situation have not been experienced by any other country... [T]he grim situation is the result of a severe imbalance between supply and demand and an outdated labour market structure. The rapid influx of workers from rural areas to urban centers worsened the situation in cities that were already bulging with unemployed workers."

These claims are quite credible. It's well known that well over a hundred million peasants have flooded into the cities as itinerant workers looking for factory work, to make money to send back to their poverty-stricken families on the farm. China has been aggressively eliminating state-owned enterprises in recent years, and the article points out that this has caused a great deal more unemployment. In addition, the number of unemployed university graduates is at least 5-6 million.

The optimistic view of the economy

The dire unemployment state in China contrasts not only to the "sound and stable" description given by government-controlled media, but also contrasts with the extremely optimistic views held by Chinese leaders, according to an analysis by Stephen S. Roach, Chief Economist at Morgan Stanley.

In his recent trips to China, Roach found that the Chinese are not facing up to the dangers that global problems would present to China's "seemingly Teflon-like economy."

"With visible signs of the boom literally everywhere you turn and an IPO-led stock market surging its way back toward the highs of early 2001, the mood remains as ebullient as ever," says Roach. "While the latest monthly data are flashing signs of a slowdown, you would never know that in meeting with key decision-makers in Beijing. The Chinese seem to be paying lip-service to the rebalancing imperatives that I and other macro types continue to stress...."

This is an interesting statement in view of what Roach wrote in May of this year, when he suddenly turned "optimistic on the world economy." Why? Because "the world is finally taking its medicine -- or at least considering the possibility of doing so." In other words, central banks for the first time were talking about taking the steps to correct global imbalances.

I mocked this change of heart, pointing out that talking is different from doing. At any rate, Roach now seems to have fully recovered from his momentary state of denial, as he says that "The Chinese seem to be paying lip-service to the rebalancing imperatives...." In other words, they've been talking, but not taking action.

The most serious of the global imbalances to which Roach refers are exports from China to America. Exports account for a huge 35% of China's economy, "making it, by far, the most externally dependent major economy in the world today," and America is China's largest export market. A reduction in those exports would deal a severe blow to China's economy, with severe implications for unemployment.

He points to two major dangers to the Chinese economy that are "American-made":

• The high risk of Washington-led trade protectionism, supposedly to protect American jobs. "China doesn’t fully grasp the significance of the coming political power change [resulting from the recent Congressional election] and the deeply-rooted bipartisan anti-China sentiment that pervades both houses of the US Congress." This protectionism will be considered extremely offensive to the Chinese, and will, of course, reduce the level of exports.

  It's worth remembering that in 1930, a year after the 1929 stock market crash, Congress passed the Smoot-Hawley Tariff act against the advice of almost all economists. This act shut down Japan's silk exports to America, infuriating them and triggering a series of events that led to the bombing of Pearl Harbor in 1941.

• The second danger is a sharp slowdown in the American economy, as is being predicted by more and more mainstream economists. There are a number of reasons a downturn is considered increasingly certain: A big decline in the housing market, a big downward revision to personal income in the third quarter, and a major collapse in capital spending activity in October. This slowdown would strike at the heart of China's exports to America.

Roach concludes: "China’s performance has been so impressive for so long that I sense a growing tendency to take the boom for granted. Reflecting this belief, I am starting to detect an important shift in the Chinese mood, with long-entrenched feelings of self-doubt now giving way to a new-found confidence. There’s nothing wrong with confidence -- it can be a critical element of any successful economic development strategy. But confidence must be on solid ground to fuel sustainable growth. Lacking in support from internal private consumption, the Chinese confidence factor is increasingly dependent on a powerful export-led growth dynamic and associated gains in fixed investment -- both very much tied to the open-ended expansion of China’s outward-looking export production platform. This could turn into a surprisingly precarious situation. What happens if the narrow underpinnings of China’s growth strategy are undermined by the twin surprises of Washington-led protectionism and a sudden deterioration in the US economy? Beijing is unprepared for either of those possibilities -- as is, I’m afraid, the rest of the world."

In other words, China's leaders are totally in a "state of denial."

Generational splits in China

People are always very startled when I tell them that we're heading for a major war with China, but from the point of view of Generational Dynamics, all the pieces are falling into place.

According to Epoch Times, the CCP is so concerned about loss of membership that it's going all out on a public relations campaign.

The Central Committee of the CCP are requiring all Chinese officials at or above the county level to watch a movie scripted by a friend of Chinese President Hu Jintao. Entitled "Peace with Sword in Hand: The Historical Lesson from the Collapse of the Soviet Union Communist Party," the movie purports to draw lessons from the collapse of Communism in Russia, in order to prevent a similar crisis in China.

The movie criticizes Russia's discarding of the teaching of Josef Stalin who, as we know, joins Hitler and Mao as the three bloodiest tyrants of the 20th century, causing the deaths of tens or hundreds of millions of people.

However, the movie praises Stalin, and concludes that the reason for the collapse of Russian Communism came from loss of control in ideology, causing changes in "the opinion of their carefully educated elites. These elites, along with some institutional and economy management officials, some gray economic powers as well as crime forces became gravediggers for [Russian Communism]."

The movie's conclusion, based on the ideology that "USA-led global capitalism would finally be replaced by CCP-led global socialism" in the 21st century, the ultimate goal is to "liberate the entire human race." The CCP has stated repeatedly that in order to achieve "global socialism" and "control the world," the only means is to resort to "military power."

This sentiment is very similar to the one in a North Korean billboard whose picture I posted a few months ago:

Prominent billboard in Pyongyang, North Korea, 2003. The right-most frame shows a North Korean spearing an American with a bayonet.

North Korea is a country on the verge of starvation, for which they blame the United States, and so the attitude towards Americans is absolutely lethal. Kim Jong-il encourages that attitude so that angry citizens won't blame his government.

The Chinese people's attitudes aren't yet as lethal as the Koreans, but the Chinese elite are preparing them.

Meanwhile an internal conflict is building within China itself. Leading it are people from China's "Miserable Generation," the post-war generation (arrogant and narcissistic, like our Boomers) that starved in the 1950s because of Mao's "Great Leap Forward," and got no education in the 1960s because of Mao's "Great Cultural Revolution." These people form the heart of the Falun Gong dissident movement, supported by the college-age generation of itinerant kids who are struggling to make a buck .. I mean a Yuan, to send back to their starving families on the farm.

Arrayed against them are the wealthy CCP elites and their relatives and friends who own the property and have the privileged jobs.

This is exactly the kind of generational mix that leads to crisis wars, especially when combined with China's aggressive militarization program of the last ten years. A financial problem will quickly exacerbate China's economic problems, with massive unemployment and poverty, especially rural poverty. The CCP will work to turn the widespread fury against Japan and America. China's declaration of war against America will be met with widespread happiness and jubilation.

What, you didn't know? When these wars start, the immediate reaction among the people is anticipatory celebrations of victory, and pleasure at the coming humiliation of the hated enemy, as described by historian Wolfgang Schivelbusch. It's only at the first major battlefield loss that the public begins to feel a complete crushing of self-confidence, followed by almost complete paralysis, in the words of historian Carl von Clausewitz.

These kinds of hysterical reactions are what makes the difference between generational crisis wars, and ordinary non-crisis wars such as the Iraq and Afghan wars. The Chinese, the Koreans, the Japanese and Americans will all go through this roller coaster ride of from jubilation to panic and paralysis, and this pure visceral emotion is what makes crisis wars far worse than anyone who hasn't live through one can ever imagine. (6-Dec-06) Permanent Link
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A letter to CNN's "Reliable Sources"

On Sunday's show, host Howard Kurtz requested e-mail comments on the "civil war" question.

The show is supposed to be a "critical look at the media."

Here's the e-mail message I sent:

From: John J. Xenakis 
To: Howard Kurtz 
Subject: The "civil war" question

Dear Mr. Kurtz,

I take strong exception to the conclusions reached by your Sunday
discussion on the "civil war" question.

Your reporter listed "facts that cannot be denied" about the war in
Iraq, but her selected "facts" were carefully chosen.

Let's look at some "facts that can't be denied" that she and you
ignored:

(*) The Thanksgiving day attack on Sadr City with 5 car bombs has
    nothing to do with a civil war; it was a terrorist attack,
    conducted by suicide bombers who weren't even Iraqis.  It's
    similar to the 9/11 attacks on our WTC, and that wasn't a civil
    war either.

    Why didn't you ask about that "fact that can't be denied"?

(*) After the attack, al-Sadr gave a press conference in which he
    blamed al-Qaeda, not the Sunnis.  If there's a civil war going
    on, why didn't he blame the Sunnis?  Another fact that you
    ignore.

(*) A couple of days later, al-Sadr announced that for two months
    he's been working with Sunni leaders to create a "national front"
    government bloc with Sunnis, Shiites and Christians, to challenge
    the Maliki government politically.

    If there were a real civil war going on, that kind activity would
    be impossible.  You can't simultaneously be killing people and
    forming an alliance with them.

    That's another "fact that can't be denied" that you ignored.

(*) You quoted Michael Ware as saying, "If this isn't a civil
    war, then I'd hate to see a real civil war."  What, is this guy a
    moron? There's a civil war going on today in Darfur.  Does this
    guy have any idea what's going on in the world?

    Why haven't you used the REAL civil in Darfur to challenge your
    guests?  Or how about the REAL civil war in Rwanda in 1994?

(*) NBC's "civil war" announcement was not just "grandstanding,"
    as your guest cravenly described it. NBC's admitted intention was
    to create a "Walter Cronkite moment" by giving a political
    advantage to America's enemy, to cause support for the war to
    "erode," so that America will lose the war, as it lost the Vietnam
    war.

    NBC didn't have to make a big announcement, but they did
    admittedly to harm America.  Why didn't you ask the NBC
    representative why they want America to lose the war?

    You don't think that's fair?  Well why not, when all of your
    guests repeatedly question the motives of the Administration in
    the most offensive way possible?  Why don't you ever question the
    motives of your guests?

(*) A related matter: On 11/26, Jordan's King Abdullah had to
    lecture George Stephanopoulos on the importance of the critical
    Israeli/Palestinian problem.  Abdullah had to repeat it five
    times, and still Stephanopoulos didn't have a clue what he was
    saying. Later, Stephanopoulos smirked and joked about what
    Abdullah had said. To me, Stephanopoulos looked like an idiot, and
    I'm sure he did to King Abdullah as well.

    Why don't you cover that debacle on your program?

These are all questions and "facts that can't be denied," but you and
your guests are so steeped in ideology that you don't ask anything
that's the slightest bit confrontational.  You're not there to be
critical of journalists; you're there to condone and excuse even the
most opprobrious behavior of journalists.

You and your reporters are very quick to identify "facts" that
support your ideology, and quick to ignore those that don't.

If you'd like more details on the above matters, I invite you to read
my web site, where more details are given, and links are provided to
the mainstream media news sources:

Al-Sadr and Sunni alliance:
http://www.generationaldynamics.com/cgi-bin/D.PL?d=ww2010.weblog&i=e061201#e061201

NBC Announcement:
http://www.generationaldynamics.com/cgi-bin/D.PL?d=ww2010.weblog&i=e061129#e061129

King Abdullah and Stephanopoulos:
http://www.generationaldynamics.com/cgi-bin/D.PL?d=ww2010.weblog&i=e061126#e061126

I took a lot of time to write this message, and it's a valid
criticism of your program and of journalists in general.  I would
appreciate a response.

Sincerely,

John J. Xenakis

I requested a response, but I won't be holding my breath.

As a separate matter, United Nations Secretary-General Kofi says that Iraq is "worse than a civil war," in an interview that the BBC can't stop talking about.

So what does that mean? Is Iraq worse than the civil war going on in Darfur, where hundreds of thousands of people have been killed, and millions have been displaced, starved and raped?

Is it worse than the civil war in 1994 in Rwanda, where one ethnic group rose up and killed a million of their neighbors of another ethnic group?

Is it worse than the 1970s "killing fields" civil war in Cambodia, where the Communist Khmer Rouge forced millions of people out of the city into labor camps, where they were starved, tortured and killed?

Ironically, Annan did talk about the Darfur genocide in another part of the interview, conveniently neglecting to compare that civil war to the so-called "worse than civil war" in Iraq.

All these examples show how far-gone today's journalists and politicians are in the sewer of ideology. Nothing makes any difference except for politics. From the point of view of Generational Dynamics, this is lead-up to every major crisis war. When the major "clash of civilizations" world war begins, a lot of this idological nonsense will stop. (4-Dec-06) Permanent Link
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Lebanon: Hizbollah calls for massive protests on Friday to bring down government.

Moqtada al-Sadr tries to do the same in Iraq

Hezbollah leader Hassan Nasrallah, on television Thursday calling for demonstrations in Beirut on Friday (Source: CNN)

Hassan Nasrallah, the leader of Hezbollah, gave a televised speech on Thursday: "We appeal to all Lebanese, from every region and political movement, to take part in a peaceful and civilised demonstration on Friday to rid us of an incapable government that has failed in its mission." Street action is to begin at 3 pm (1300 GMT, 9 am ET) in central Beirut.

I'm watching CNN International as I'm typing this, and they're giving it cataclysmic coverage.

I'm a lot more sanguine about this than many people are. After the recent assassination of Lebanese Minister cabinet minister Pierre Gemayel, many people fear that this kind of action could lead to a civil war, as Jordan's King Abdullah warned last weekend.

However, dear reader, if you've been reading this web site for a while, then you know very well that a civil war in Lebanon is impossible at this time because Lebanon is in a generational Awakening era, just one generation past the bloody civil war of the 1980s.

In fact, this kind of political chaos is typical of generational Awakening eras in any country.

Look what happened during the 1960s, America's last generational Awakening era. It began in August 1963, when Martin Luther King led a march on Washington in which over 200,000 people participated. Later, President Kennedy was assassinated, and so was King. There were numerous demonstrations and riots throughout the country. There were "long, hot summers," led by the Black Panthers, and there were bombings and declarations of war against the government, led by the Weather Underground. President Lyndon Johnson was driven from office, and the climax was when President Richard Nixon was forced to resign.

The same thing is going on in Lebanon right now, and it doesn't mean a massive civil war, or a "failed state," as some pundits are calling it. It's just political turmoil of a kind that always happens in generational Awakening eras. If it leads to a new government in Lebanon, that's not necessarily a disaster.

Shiite cleric Moqtada al-Sadr at a press conference on Thursday (Source: CNN)

For the same reason, I'm not particularly worried about the latest announcement by Iraqi Shiite cleric Moqtada al-Sadr to form an alliance with Sunnis and Christians, and replace the government. Iraq is also in a generational Awakening era, and a new government would be like the forced resignation of President Nixon in 1974 America. In fact, it might bring together Sunni and Shiite factions that are now part of the insurgency and reduce the level of violence.

You know, there's a part of the Iraqi story that I never hear about, even though it must be there -- like the Sherlock Holmes' story about "The dog that didn't bark." Why haven't the Iraqi people themselves found a way to end all this violence? None of the suicide bombers are Iraqis, but they're supported by criminal organizations within Iraq itself that are killing Iraqis.

Well, perhaps this proposal by al Sadr is the way. Come to think of it, it took several years for the FBI to bring down Al Capone, and several decades to decimate the Mafia, so maybe this proposal is the process by which it will happen in Iraq.

So, as I said, I wouldn't actually be that concerned if al Sadr ended up leading a new government in Iraq.

But that's not to say that all is well.

The core problem in the Mideast is still the Israeli/Palestinian problem, and the Palestinians and Israelis are in a generational Crisis era, heading soon for a major genocidal war.

Thus the latest news -- that Palestinian President Mahmoud Abbas (Abu Mazen) has given up trying to form a "unity government" of Fatah and Hamas, and may himself be planning to resign as President -- is considerably more ominous.

Any governmental change among the Palestinians will give additional government control to Hamas and to the radical Palestinian kids, especially in Gaza where the the median age is 15.8, and the kids with guns and missiles are running things.

Furthermore, new governments in Lebanon and Iraq, while perhaps not a problem by themselves, would probably be closer to Iran. Currently, the governments in Lebanon and Iraq are considered to be U.S. allies; new governments, especially a Hizbollah-based government in Lebanon, would not be.

From the point of view of Generational Dynamics, none of this really matters. Generational Dynamics predicts that the Mideast is headed for a major genocidal war between Israelis and Arabs that will engulf the entire region. As usual, Generational Dynamics tells us where we're going, but not how we're getting there. If new governments in Iraq and Lebanon are part of the scenario, then all we can do is watch and wait. (1-Dec-06) Permanent Link
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