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Cambodia arrests seven 'yellow shirt' nationalists from Thailand border
South and North Korea are both changing their military and diplomatic strategies with respect to one another, reflecting the changed realities in their relationship after the tumultuous events of 2010. The changes in both their strategies are described in a new white paper, "Proper Inter-Korean Relations, Preparing Together for Reunification," released by South Korea's Unification Ministry.
However, the strategy changes seem to differ in intent. The North Korean strategy changes appear to be preparations for war, while the South Korean strategy changes appear to me to be nearly desperate attempts to try almost anything to keep a war from occurring.
South Korea is changing its diplomatic rhetoric, according to an analysis by Hankyoreh Media Company. This can be seen from changes in the three major policy goals. In 2009, the three major policy goals were:
For the new report, the three major policy goals are:
The "desirable changes" that the South is going to induce in the North are these:
I read this list, and I'm immediately reminded of the phrase, "When pigs fly." At any rate, the report does not say how the South is going to induce these changes in the North.
The problem for the South is that it simply has no way to respond to the North's repeated military actions. If the South does nothing, it looks weak; if it responds militarily, then all out war is a likely possibility. So all the South can do is make meaningless diplomatic gestores and perform useless military exercises.
North Korea, on the other hand, is clearly preparing for war. They've increased their military strength on the border, substantially increasing the number of their special forces and their battle tank strength, according to the Korea Times. The reinforced special forces will be able to quickly inflitrate South Korea for assassinations and disrupting major facilities, presumably in preparation for full scale war.
In fact, North Korea is already preparing for a new attack on South Korea, according to a JoongAng story quoting Radio Free Asia.
According to the report, North Korea has been training its special forces for a surprise attack on South Korean's islands in the West Sea. The purpose of the exercises was to "break the will of the South Koreans who have been promising strong retaliation ever since the Yeonpyeong Island shelling."
"North Korea’s plan is to shell the islands with coastal artillery on a moonless night, render South Korean soldiers at military bases on the islands helpless, then take over the territory with soldiers landing on hovercrafts, the source said.The source added that the South Korean military wouldn’t be able to rescue the islands because they are so far from the mainland. Westernmost Baengnyeong Island is 191.4 kilometers (119 miles) from Incheon on the mainland.
North Korea also allegedly said that South Korean troops couldn’t easily retake the islands in fear of the North’s nuclear weapons, and U.S. troops in the South would be immobilized in such a hostage situation, the source said.
North Korea said the South would fail in its attempt to take back the islands because the North’s military far outnumbers the South’s in terms of manpower, the source said."
If these reports are true, then North Korea must be preparing for a war very soon. As I've said many times, it is not unusual in human history for one country to want to start a war, and to delude themselves into believing they can win it, and the North Koreans show all the signs of being in that state of self-delusion.
From the point of view of Generational Dynamics, both North and South Korea are well into generational Crisis eras and a major war of reunification is going to be fought. It may start as a small regional war, but will be one component of the larger Clash of Civilizations world war.
North Korea has broadcast its first western-made film on television. The film is a shortened version of Bend it like Beckham, a 2002 film about a soccer-mad teenage girl who outrages her traditional Indian family by idolising worldwide soccer star David Beckham and playing soccer in a local all-female team. Guardian
With the Mideast 'peace process' in a state of total collapse, all sides are taking shots at each other, since no one wants to be blamed for the collapse. In a televised interview on Thursday, Prime Minister Benjamin Netanyahu said that the Palestinians are responsible for the deadlock in peace negotiations while Israel is striving for peace. Haaretz
Cambodia has arrested seven members of Thailand's nationalist "Yellow Shirt" movement who were inspecting a disputed border area between the two countries. One of the Thais is a member of Thailand's parliament. Thailand's last crisis war was the spillover of Cambodia's "killing fields" civil war that climaxed in 1979. VOA
Yemen released 400 members of the Houthi northern rebels in an effort to end the insurgency. The Houthi rebels are Shia Muslims, and it's thought that Iran is providing support for the insurgency. The release was part of a peace deal brokered by Qatar. But Qatar has brokered several peace deals in the past, and they've all collapsed. Yemen and the Houthi rebels appear to be following a fairly standard path, alternating between war and peace treaty, eventually leading to an all out genocidal crisis war. Al Jazeera
A sophisticated virus called Geinimi (sic) has been attacking users of Android smart phones in China. Once installed, the virus sends location information, device identity and even stored contacts to an unknown server. The virus has not yet reached the U.S., but is expected to do so soon. PC Magazine
Eight reasons you wouldn’t really want to date a porn star. Reason #1: She will have award shows and film openings that you will have to go to. Guyism
(Comments: For reader comments, questions and discussion,
see the 31-Dec-10 News -- North and South Korea update their military strategies
thread of the Generational Dynamics forum. Comments may be
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(31-Dec-2010)
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U.S. revokes visa of Venezuelan ambassadador to Washington
A country with a moribund economy is joining a moribund currency.
That seems to be what will happen on January 1, when Estonia will give up its proud kroon currency and become a eurozone country.
The economy of Estonia shrunk by nearly 14% in 2009, and unemployment is at 17.5%, according to the Economist. On the other hand, Estonia's public debt, at 4% of GDP, will be the lowest of the eurozone.
Estonia joins the euro at a time when a lot of people are asking whether the euro is even going to survive.
An analysis in the Wall Street Journal (Access) says that the euroland has moved a Greek tragedy to a farce:
"What a euroyear it has been. The show opened with a Greek tragedy and is closing with, well, a eurofarce. Greece found out it can't pay its creditors, Ireland thought it could but it couldn't, Portugal and Spain think they can, but they can't. And the Eurocracy responded with a farcical promise to set up an unspecified structure to raise an unspecified sum to pay an unspecified portion of those bills. Germany permitting. ...The year saw the markets awaken to the fact that there are enduring differences between southern and northern Europe. No longer would countries running huge budget deficits be able to borrow on the same terms as Germany. No longer would income transfers to Spain be able to paper over that country's dependence on an unsustainable property boom, fueled by cajas ready to lend on the skimpiest proof that the loans would be repaid. And no longer would Portugal be able to persuade lenders to make credit available on reasonable terms despite the inability of its economy to eke out any discernible growth. In short, the party's over."
In this narrative, the "northern" countries include Germany, Austria and the Netherlands, which supposedly follow strict budget discipline. The "southern" countries are not all southern. They include the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain), as well as Belgium, and are supposedly profligate.
In 2010, there were major crises in Greece and Ireland, and crisis seemed close in Spain, Italy and Belgium. The crisis is measured in the interest rates (yields) that investors are demanding for the country's bonds. If a country has to borrow money at 10%, as was happening to Greece, and the economy cannot grow at 10%, then the country is headed for certain default, and that appears to be the case now for all the "profligate" countries. We've also seen left-wing riots and demonstrations, sometimes violent, across Europe in response to austerity programs.
Despite the continuing political, economic and financial instability of euroland, the euro will probably survive in 2011, but not necessarily, according to Wolfgang Münchau, in a Financial Times (Access) analysis.
"So how is the toxic interaction of high interest rates, high debts, and low competitiveness going to play out from 2011? I would expect Portugal to be the next country to fall under the umbrella of the EFSF. The European Central Bank has been the only large buyer of periphery bonds in the secondary markets, and is now putting pressure on the countries concerned to accept loans from the EFSF.What about Spain, Italy and Belgium? Spain should be solvent, but of course there always exists an interest rate/growth rate combination at which the solvency assumption breaks down. With 10-year yields no higher than 5.5 per cent, the approximate current level, I would expect Spain to go through a severe and long recession, possibly with further asset price falls. Productivity will probably remain low and unemployment high for the foreseeable future. But the country should remain solvent – miserable but solvent. If interest rates were to rise to over 6 or 7 per cent, perceptions of Spanish solvency may change.
The main risk for both Italy and Belgium is political. Italy’s banking system is relatively stable but a combination of high interest rates and continued low productivity growth could lead to a debt explosion. Without a stable government that can deliver reforms to boost productivity, it is hard to see how Italy can prosper in the eurozone in the long run. Italy is not a victim of the financial crisis and has so far managed well to stay off the radar screens of international investors. There is no guarantee that this will continue.
Belgium is sinking deeper and deeper into political chaos – and, unlike Italy, it also has a vulnerable banking sector. Belgium is not going to split, but that may not stop investors from panicking about the status of a federal debt that, like Italy’s, exceeds 100 per cent of annual gross domestic product. The underlying problem is that Belgium may not end up with a sufficiently strong central government to take the measures necessary to raise growth and consolidate public finances."
However, instead of Portugal, the next country experiencing a major crisis may be Italy, according to By Ambrose Evans-Pritchard in the Telegraph. "Italy's borrowing costs have jumped to the highest level since the financial crisis over two years ago, raising concerns that Europe's biggest debtor may slip from the eurozone's stable core into the high-risk group on the periphery."
From the point of view of Generational Dynamics, all of these analysts are overlooking the same thing. They all see the problems -- that these countries are headed for certain default that cannot in any way be avoided. And they imagine a scenario where economies become a little more sluggish, or problems grow a little worse.
What they never consider, beyond an occasional hint, is a full-scale panic, and it's full-scale panic that Generational Dynamics predicts MUST happen.
The U.S. State Dept. revoked the visa of the Venezuelan amabassador to Washington, in retaliation for the rejection, by Venezuela's president Hugo Chavez, of Larry Palmer, President Obama's choice of ambassador to Venezuela. Chavez had been angered by comments that Palmer made about Venezuela earlier this year. BBC
The United Arab Emirates' embassy announced that Canadians traveling to UAE will have to pay stiff visa fees of up to $1,000. The UAE move is in retaliation for Canada's failure to approve additional landing rights for UAE-based airlines in Canada. CTV
Late in 2005, a Danish newspaper published cartoons depicting the prophet Mohammed. In one of them, Mohammed is wearing a turban shaped like a bomb with its fuse lit. In another, Mohammed is telling suicide bombers to slow down, saying, "Stop, stop, we're running out of virgins." (See "Cartoon controversy explodes into worldwide confrontations between Muslims and Westerners.") This controversy has continued to reverberate in the Islamist community. On Thursday, authorities arrested fir people suspected of planning a bombing attack on the Danish newspaper that published the cartoons. VOA
Palestinian officials plan to go to the U.N. Security Council in early January to present a motion condemning Israeli settlements in the West Bank and demanding a complete halt to their construction. VOA
Israeli rabbi's wives have issued a statement, widely condemned as racist, calling on Jewish girls not to have any relationships with Arabs. "Don't date non-Jews, don't work in places where there are non-Jews, and don't perform national service together with non-Jews," the letter urges. The statement also calls for a boycott of a supermarket that employs Arab men and Jewish women. Earlier this month, a letter from dozens of municipal rabbis urged Jews not to rent or sell homes to non-Jews. Haaretz
Some 40,000 homes and businesses across Northern Ireland are without water after large sections of an aging water main network burst during the thaw following the province’s coldest weather for decades. The government of Scotland has taken pity and is sending bottled water. Financial Times (Access)
California's Governor-elect Jerry Brown is preparing to take office with a budget plan that will raise taxes and slash services, including university systems and welfare programs. LA Times
(Comments: For reader comments, questions and discussion,
see the 30-Dec-10 News -- A precarious Estonia joins the troubled euro zone
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Dec-2010)
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Russians are outraged over international reaction to Khodorkovsky conviction
The 1930s Great Depression continues to be replayed, as the hopes and dreams of analysts and politicians that the worst of the financial crisis is over continue to be dashed by new data.
The S&P/Case-Shiller index of property values fell 0.8% from October 2009, the biggest year-over-year decline since December 2009, and substantially more than the 0.2% drop predicted by economists, according to Bloomberg.
According to one analyst, "We’ll remain in negative territory for several more months. The housing market does remain weak and none of the recent data suggest a substantial pickup."
Most analysts agree that the economy will not begin to improve until either the real estate market substantially improves or the unemployment situation substantially improves, but there is no sign of improvement in either of these areas. Furthermore, Generational Dynamics predicts that both of them are still going to worsen substantially.
According to Charles Biderman, CEO of investment research firm TrimTabs Investment Research, Inc., the real estate market is crashing again, and there's no sign of an improvement in unemployment. The stock market is doing well only because money from quantitative easing (QE) is being used to prop up stock prices, and that money is scheduled to end soon.
Here's his interview on Bloomberg tv on Tuesday (my transcription):
"The real estate market is not [healing]. There's seven million homes on which the mortgages are not being paid, that's in addition to the 5 or 6 million homes currently in the foreclosure process, and that's at least a two year supply. So real estate is resuming a downward slide again.
Charles Biderman On the other hand, the trickle-down effect of the quantitative easing (QE) -- where the Fed is rigging the market, and saying, "Please buy assets - we're going to give you all the money - we'll buy all your bonds - take that money and buy assets" -- is apparently helping a little bit.
We are seeing a pickup in income tax collections, which suggests that more people are working.
On the other hand, some of that increase is probably due to early bonuses. A lot of bonuses were given earlier this year, we hear, because there was the uncertainty of the tax cuts, so bonuses were given this year instead of next year. We're not sure how much that is, if that's the cause of the pickup in [income tax] withholding. ...
There's no money [from individual investors] going into the market. Individuals keep selling. There's a huge shortfall individuals have. ... People are selling stock to pay bills. And that keeps on happening.
Hedge funds have gotten some inflows recently, but not a lot. Pension funds don't have new money to invest. So there's no money going into U.S. equities other than the U.S. government pumpting money in.
So as long as [the Fed] is going to keep rigging the market, they're paying us to be bullish.
[How long can this gon on?] That's a good question. The QE supposed to end in June. ... If the only buyer withdraws his support of the market, where's the money going to come from to keep prices at these very lofty levels? ...
[QE] is the only thing they've done that's worked to help the economy is rig the market. Nothing else they've done has worked to pick up incomes or help the economy. The real estate market is crashing again.
40% of all new jobs from '03 to '08 were as a result of real estate. And real estate has several years overhang, so there's not going to be any new jobs being created in the real estate market. So where's the new jobs gonna come from to employ all the recently unemployed? I don't see where the growth is going to come from."
As I've said many times, what we're seeing is a replay of the 1930s, where analysts and experts kept predicting that prosperity was just around the corner and that things would improve quickly. We've been hearing those things for three years now, and there's never any improvement, and it's for the same reasons as in the 1930s.
What happened is that there was an enormous tech bubble in the late 1990s, and then an enormous real estate bubble and an enormous credit bubble in the 2000s decade. The latter bubbles began bursting in 2007, but since they took over a decade to blow up, they're going to take over a decade to deflate. That's just the way it is.
I've been thinking recently of all the emotional stages I've gone through in the eight years since I started developing Generational Dynamics.
In 2002, I could see that the stock market was in a bubble, and I naďvely thought that all it would take would be an article or two for people to see what was going on and do something about it. I really have to laugh at how childishly naďve I was.
By 2003-2004, I was beginning to get really depressed, because I could see what was coming -- a huge financial crisis and a world war. There were many nights when I couldn't sleep.
By 2006-2007, I was becoming sickened and furious by what was going on. Sometimes I felt like vomiting when I realized how massive the level of fraud and corruption was.
Those were the days when people would question my sanity because I was talking about pervasive fraud being perpetrated by almost every financial and real estate firm in the world. At that time, the analysts were scoffing at the idea of a real estate bubble, and any talk of massive fraud was treated derisively.
At this point, I guess I'd have to say I'm in a state of benumbed shock. Everything I said in 2006-2007 turned out to be true, except that it was much worse than even I said it was. Today no one doubts that there was a real estate bubble, and no one doubts that there was massive fraud.
And today the same people in financial institutions are still defrauding investors in the same way. The only difference, as Biderman points out, is that individual investors are no longer willing to give their money to these crooks, and so the financial institutions have to make their money by taking advantage of the Fed's QE money to rig the stock market and continue to keep the bubble inflated. (See "Updating the 'real value' of the stock market.")
I had to laugh a few days ago when I saw the great Nouriel Roubini in a tv interview where he said the worst was over.
From the point of view of Generational Dynamics, the worst is far from over. The stock market has been overpriced by 150-200% since 1995, and by the Law of Mean Reversion, will have to fall below the Dow 3000 level and stay there for an equivalent length of time, about 15 years. And housing prices are also well above their long-term trend lines, so they also have much farther to fall, as today's Case-Shiller report suggests.
Once again, I have to warn web site readers to take whatever steps you can to protect yourselves. Treasure the time you have left, and use it to prepare yourself, your family, your community and your nation.
The following table is from the Bloomberg article referenced above:
The following table shows the historical price change
according to the S&P/Case-Shiller home price indices. Cities are
ranked by largest monthly gain using non seasonally adjusted
data.
===========================================================
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
===========================================================
US Composite-20 -1.32% -2.39% -0.80% -8.08% -24.70%
------------------------------------------------------------
Washington DC -0.20% -0.28% 3.65% 1.00% -17.97%
Las Vegas -0.21% 0.06% -3.57% -29.26% -51.61%
Denver -0.57% -1.65% -1.79% -1.90% -6.98%
Los Angeles -0.75% -1.26% 3.34% -3.21% -30.24%
Tampa -0.90% -2.19% -3.61% -18.27% -34.48%
Miami -1.11% -2.60% -3.39% -16.95% -41.06%
Phoenix -1.11% -3.93% -4.28% -21.61% -47.21%
Dallas -1.13% -3.83% -3.13% -3.68% -6.66%
Charlotte -1.14% -2.54% -4.19% -10.90% -14.87%
===========================================================
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
===========================================================
Boston -1.23% -2.82% -0.23% -3.03% -8.85%
Seattle -1.34% -2.66% -4.11% -16.03% -24.61%
Portland -1.48% -4.16% -5.15% -14.59% -23.20%
San Diego -1.50% -3.05% 2.97% 0.55% -26.28%
Cleveland -1.52% -4.76% -2.64% -6.03% -11.83%
New York -1.61% -1.99% -1.67% -9.58% -16.56%
San Francisco -1.91% -3.07% 2.23% -0.43% -31.28%
Minneapolis -1.91% -4.35% -2.80% -10.79% -25.18%
Chicago -1.99% -3.08% -6.48% -15.95% -25.04%
Detroit -2.45% -3.25% -5.52% -20.02% -36.33%
Atlanta -2.90% -6.11% -6.19% -13.77% -22.83%
===========================================================
Russia's Foreign Ministry is expressing outrage at the international reaction to the conviction of Mikhail Khodorkovsky that we reported yesterday. Journalists and politicians around the world are saying that the conviction was dictated by Vladimir Putin for political reasons. According to the Foreign Ministry, international "attempts to exert pressure on a [Russian] court are unacceptable." Itar-Tass
Turkey's foreign minister accused the Israeli government of not being sincerely interested in resolving current tensions. Relations all but collapsed after the flotilla incident last May, and now tensions are flaring again because of Israel's refusal to apologize for the deaths of 8 Turkish citizens. The ship on which the Turks died only returned to Istanbul on Sunday, and was greated by 10,000 people, who turned the welcome into an anti-Israeli demonstration. Generational Dynamics predicts that Israel and Turkey will be on opposite sides in the clash of civilizations world war. VOA
Egyptian security forces have discovered a large weapons storage facility, with weapons that include explosives and anti-aircraft missiles, in the Sinai desert, meant to be smuggled into the Gaza Strip. Palestinian News Network
(Comments: For reader comments, questions and discussion,
see the 29-Dec-10 News -- The real estate market is still crashing
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Dec-2010)
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Israel won't apologize for Turkish deaths in flotilla raid
Politicians and journalists around the world are questioning the integrity and fairness of Russia's judicial system after Mikhail Khodorkovsky, former CEO of the giant Yukos oil company and political opponent of Prime Minister Vladimir Putin, was found guilty of a embezzlement and money laundering, and having already spent almost eight years in jail on a similar charge.
Khodorkovsky and his business partner Platon Lebedev are accused of stealing 218 million tonnes of oil and of laundering $7.5 billion in revenues, according to Tass.
According to the story, there is evidence that Kremlin security officials have pressured the judge in the case to return the guilty verdict. The security officials are from the Federal Security Service (FSB), the descendant of the feared Soviet KGB, in which Putin was an important official.
Secretary of State Hillary Clinton said the conviction "raises serious questions about selective prosecution — and about the rule of law being overshadowed by political considerations," according to Politico.
Clinton added, "This and similar cases have a negative impact on Russia’s reputation for fulfilling its international human rights obligations and improving its investment climate. We welcome President Medvedev’s modernization plans, but their fulfillment requires the development of a climate where due process and judicial independence are respected."
Khodorkovsky was once the wealthiest man in Russia. However, in 2003, he began funding political opponents of Vladimir Putin. The Kremlin took a number of steps in rapid succession -- jailing Khodorkovsky and nationalizing Yukos Oil Company.
Khodorkovsky's first jail sentence will end next year, but now the new conviction will extend his imprisonment for several more years -- at least past the 2012 elections. Vladimir Putin has indeed exacted a grim revenge.
In 2004, I actually followed the Yukos story closely, and wrote on it frequently.
It was in July, 2004, when I wrote "I wish we knew more about Putin's plans for Yukos," where I expressed my confusion about what Putin was doing. By the end of the year, Yukos had been dismantled and nationalized by means of the vilest series of steps imaginable.
On Monday I listened to numerous BBC analysts and read a number of news stories, and I don't believe I heard or read a single one that believes that this new conviction of Khodorkovsky is anything but raw political vengeance on the part of Putin.
Many commentators said that foreign investors are very reluctant to invest in Russia because of corruption and government interference in business, and that the new conviction of Khodorkovsky will make them even more reluctant. According to a Financial Post (Canada) analysis:
"In the years since Mr. Khodorkovsky’s arrest, a flurry of other cases of corporate bullying by the Russian government have also served to reinforce Russia’s poor investment image.Many still remember BP PLC’s nearly decade-long clash with the Russian government over production targets, which ended in 2008 when the company abruptly left the country. Energy giant Royal Dutch Shell ran afoul of the Kremlin a few years earlier, and was eventually forced to cede its stake in two oil and gas fields in 2006. Even Swedish retailer Ikea hasn’t been immune from Russia’s bureaucratic quagmire. In 2007, the company was suddenly blocked by authorities from opening a massive store in the city of Samara. The project was accused of violating building codes and still isn’t open.
The result has been a lingering perception that the Russian government dictates business in the country. On Monday, German Foreign Minister Guido Westerwelle reinforced that idea by characterizing Mr. Khodorkovsky’s new conviction as "a step back."
The Khodorkovsky situation seems to have revealed a small rift between Putin and his protege, President Dmitry Medvedev.
During a recent television interview, Putin said that Khodorkovsky was a robber who had been found guilty of fraud and theft by a court and "should sit in prison." However, in his own television interview, Other Russia quotes Medvedev as saying, "As president I can say: neither the president nor any other person in state service has the right to express their position up to the moment the verdict is handed down."
Prime Minister Benjamin Netanyahu said that Israel will not apologize to Turkey for the deaths of 8 Turkish citizens in the spring Gaza flotilla raid. Turkey had demanded an apology as a condition for restoring diplomatic relations. Netanyahu said he was willing to express sorrow for the deaths, but that the Israeli soldiers were acting in self-defense. Haaretz
Rhetoric on the Korean peninsula continued to harden on Monday, when South Korean President Lee Myung-bak said, "We have now been awakened to the realisation that war can be prevented and peace assured only when such provocations are met with a strong response. Fear of war is never helpful in preventing war." The North Koreans have been using extremely belligerent language for years, but the South's language has always been reasonably conciliatory, so the new language is a major change in direction. The South has also said that it plans additional military drills and exercises this week. These exercises have infuriated the North in the past. Telegraph
A grass root initiative is growing in Germany to get rid of the euro currency and return to the deutsche mark. According to one activist, "Why should we help rescue the Greeks from their sham bankruptcy? Ever since Odysseus, the world has known that the Greeks are the biggest rascals of all time. How is it even possible -- unless it was premeditated -- for this highly popular tourist destination to go bankrupt?" Spiegel
Trading in pork bellies used to be the popular image of the activities on the Chicago Mercantile Exchange. Pork belly trading was featured in the 1983 Eddie Murphy movie "Trading Places." But now, trading in the pork belly, a slab of frozen meat from which bacon is cut, has become almost nonexistent, and the CME is looking for ways to rejuvenate the pork belly market. Wall Street Journal (Access)
Historically, Tajikistan has been a Sunni Muslim country, even though the people speak a Persian language. However, during the last year, a flood of missionaries from Iran have been converting Sunni Muslims to Shia Muslims. According to one analyst, "It is sufficient to note that a year or two ago, Shiites were on the order of 11 percent of all Muslims of Tajikistan. Today this number has more than tripled to 33.4 percent." Paul Goble
(Comments: For reader comments, questions and discussion,
see the 28-Dec-10 News -- Russia's Putin exacts grim revenge against wealthy political opponent
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(28-Dec-2010)
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Jeopardy! broadcast is scheduled for February 14-16
In 2005, the Department of Defense announced the Future Combat System program. (See "Army's 'Future Combat System' calls for autonomous robot soldiers by 2014.")
The plan was that a network of intelligent battlefield robots, including aircraft, ground vehicles, and units that look like toy trucks, would replace the duties of ordinary soldiers, and would have the ability to kill. However, at least initially, the robots would not be making autonomous decisions to kill, and humans would have to approve any killing.
Other countries took up the concept. The above is the scariest video you've ever seen. It's a 2007 promotional video for heavily armed robot sentries being considered by the South Koreans to guard the North Korean border. The robot would have the ability to detect intruders, give verbal warnings, interpret voiced responses, and fire if necessary.
The project was canceled in 2008, after a a year-long pilot showed that the robots were "unfit for combat," according to Global Security. However, Stars and Stripes reports that a new generation of the robots are now being tested along the North Korean border.
In 2009, development of DoD's Future Combat Systems was terminated because it was substantially over budget and wasn't showing results. Some of the individual components, including unattended ground sensors, were spun off and are still under development.
This is the way artificial intelligence has gone since its inception. In the 1950s, it was promised that computer algorithms would be developed that would make a computer the world chess champion within ten years. By 1970, computer chess could only play as well as a mediocre human player.
It's only in the last few years that IBM's Deep Blue computer could credibly claim to be world champion. Is that because IBM's scientists finally developed those clever algorithms that were promised in the 1950s? Hardly. In fact, IBM's winning computers used pretty much exactly the same algorithms (the so-called Minimax Algorithm) that was used in the 1960s.
The only major change from the 1960s is that today's computers are much faster and more powerful. A 1960s computer could look ahead only three chess moves; today's computers can look ahead almost ten moves in the same amount of time.
Artificial intelligence experts used to refer to solutions that depended on the power of computers by the pejorative term "brute force solutions." But as AI has failed in one objective after another, it turns out that brute force is the only game in town.
And now there's a new game in town that IBM's computers are going to challenge.
IBM's Watson computer will play the game of Jeopardy! against former game champions in matches to be aired on February 14-16, according to IBM.
In this game, the host gives a clue in the form of an answer to a question, and three contestants compete to give the quickest response in the form of a question. The game is filled with language tricks and riddles and double meanings, and so this match will be quite significant: It will be a major test of AI problem known as "natural language processing." For the first time, a computer will be required to quickly recognize and analyze arbitrary English language sentences, and respond to them appropriately, with no restrictions.
A NY Times article in June explained how Watson had been trained.
During the three years of Watson's development, the computer was fed tens of millions of documents, including "books, reference material, any sort of dictionary, thesauri, folksonomies, taxonomies, encyclopedias, any kind of reference material you can imagine getting your hands on or licensing. Novels, bibles, plays."
The computer didn't just store this material. It first did "natural language processing" on the material. This is an artificial intelligence technique that interprets an ordinary English language sentence correctly. Then, it did statistical analyses on the material and created a database of concepts and connections. For example, it would determine that the name "Sherlock Holmes" appeared frequently in the same sentence as phrases like "deerstalker hat" and "Professor Moriarty" and "opium," but never appeared in the same sentence with, say, "Super Bowl." Using this kind of database, Watson can examine the words in a Jeopardy clue, look up connections in its database, and hopefully come up with the correct response in the few seconds alloted.
This kind of computer solution is possible today only because computers have continued to become more and more powerful. Although you can call Watson an "idiot savant" solution to a problem, it's really a quite significant step in the development of computers with human and superhuman intelligence. And if all goes as hoped on February 14-16, then it will have been accomplished several years earlier than I had expected.
And that means that it's a very significant step on the road to the Singularity, the point in time when computers will be more intelligent and more creative than humans. At that point there will be a sharp bend in the technology curve, since super-intelligent computers will be able to develop new technologies exponentially faster than humans, including technologies to make themselves faster.
My personal epiphany on this subject came in 2004 when, as the result of an online discussion, I informally developed the software architecture that would be used in the first generation of super-intelligent computers. (See Generational Dynamics: The Singularity for a summary of the architecture.) Going through that process made the Singularity real to me, and I could see how it was likely to unfold.
The algorithm that I developed cannot be implemented on today's computers, because today's computers aren't fast and powerful enough. But computer power has been growing exponentially for many decades, doubling every 18 months, with no end in sight.
When will the Singularity occur? Various experts have suggested dates anywhere from 2020 to 2060. My own estimate is that computers will be powerful enough to fully implement the architecture that I developed by the early 2020s, and that the Singularity will occur around 2030. However, if the Jeopardy! challenge proceeds as planned, then it may turn out the 2030 date will have to be moved closer by a few years.
Even if you still believe, as many do, that the Singularity will never occur because the human brain has some magical powers that no computer could ever have, or whatever, it's still undeniable that computer power is doubling every 18 months, and that this will affect all our lives, as individuals, as a nation, and as a planet. Every domestic and foreign policy is affected.
For example, by the 2020s, we'll have everything from intelligent computer plumbers to intelligent computer nursemaids. The problem of skyrocketing health care costs will be resolved not by a government program but by offloading the vast majority of every day medical functions to intelligent robots. Robots will also be used regularly for warfare in that time frame.
As an example of international policy, consider "climate change." Climate experts are predicting that the seas will rise by a few inches by 2100, but that prediction is as ridiculous as a 1910 prediction that the world would be covered by horse droppings by 2000. Technology is moving too quickly for any such prediction to be relevant.
New computer technologies will solve resolve any climate change issues in the 2020s in ways that today cannot be predicted. And if the Singularity occurs by 2030, as I expect, then the entire climate change debate is total nonsense.
When the "climategate" scandal broke last year, I did a search of the hacked East Anglian e-mail messages for the word "Singularity," and it doesn't appear once. So you have all these brilliant scientists working to predict climate change, and you would think that at least one of them would have asked the question of one another: "Hey, what about the Singularity?" But apparently it was never asked once. It must have been forbidden subject, since it conflicts with their own claims.
The Jeopardy! challenge, if it's successful, will be a major step forward for computer intelligence and the Singularity. Policymakers around the world should be factoring it into their plans. Military planners around the world are certainly doing so, and we should see the results within a few years.
(Comments: For reader comments, questions and discussion,
see the 27-Dec-10 News -- IBM vs Jeopardy! brings robotic warfare and the Singularity closer
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(27-Dec-2010)
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North Korean soldiers give bizarre TV interview
The Pakistani people are constantly being told that the Taliban terrorists have been defeated, and that terrorism is coming to an end, but there continue to be terrorist attacks almost every week, and sometimes several times a week.
Many of them are "small," in that "only" a few people are killed, but Saturday's terrorist attack in the tribal areas of northwest Pakistan was one of the worst and most dangerous in some time.
A female suicide bomber, wearning a burqa, approached a checkpoint where there were hundreds of people, many of whom had been homeless for months because of terrorism and floods, waiting to receive food from the World Food Program (WFP).
She threw grenades at police in order to get past the checkpoint, then she ran into the crowd of hundreds of people and exploded her suicide vest, according to The News (Pakistan). 43 people were killed, and a hundred more were injured.
The Pakistan Taliban militant group, Tehrik-e-Taliban Pakistan (TTP), claimed responsibility for the attack, claiming that the target was people from the Salarzai tribe who, he alleged, had been siding with the government against Taliban terrorists.
Security analysts are saying that the use of a woman as a suicide bomber is a change of tactics that would turn into a dangerous trend if militants used more female bombers, according to Dawn. Over 250 suicide attacks have been carried out since 2006, but this is the first time a female suicide bomber has been used. Some militant groups have claimed to be training squads of female bombers.
The use of female suicide bombers complicates security arrangements because a burga can easily hide a bomb vest, and so it's impossible to differentiate between a bomber and an ordinary woman.
From the point of view of Generational Dynamics, Pakistan and India are headed for a genocidal ethnic and religious war, refighting the war between Muslims and Hindus that followed Partition, the 1947 partitioning of the Indian subcontinent into Pakistan and India. The increase in Taliban terrorist bombings in Pakistan appears to be part of the scenario leading to that war.
North Korea is still facing widespread international condemnation for killing four South Korean citizens by means of artillery shells directed at Yeonpyeong Island on November 23.
In an effort to justify the attack to the North Korean people, the soldiers who took part in the artillery attack took part in a bizarre, bellicose TV appearance on Saturday.
Here's an al-Jazeera video describing the North Korean tv show:
As the two year anniversary of the Israeli war with Hamas in Gaza approaches, Hamas leaders are saying that they are willing to maintain the ceasefire agreement with Israel. However, they warned that they're prepared for a new war if Israel starts one. They also accused Mahmoud Abbas and the Palestinian Authority of forging a "devilish alliance" with Israel to target Palestinians in the West Bank. Jerusalem Post
Palestinian President Mahmoud Abbas said that there would be no Israelis in a Palestinian state. He announced on Saturday that when a Palestinian state is established, "We won't agree to the presence of one Israeli in it." He was commenting on unconfirmed reports suggesting that Israeli West Bank security forces might be part of a a Palestinian government. Jerusalem Post
Relations between Israel and Turkey have been frozen since the incident last spring when Israeli forces confronted a naval flotilla attempting to break the Gaza blockade, resulting in the deaths of nine Turkish citizens. Several weeks ago there had been talk of a reconciliation agreement between Israel and Turkey, where Israel would apologize to Turkey and provide compensation for the famlies of the Turkish citizens who died. However, negotiations over the reconciliation agreement have stalled because of opposition by Israeli Foreign Minister Avigdor Lieberman and Defense Minister Ehud Barak, both of whom oppose an Israeli apology. Haaretz
Yemen is embarking on a major new initiative in its war on terror against Al-Qaeda on the Arabian Peninsula (AQAP), headquartered in Yemen. The new initiative will receive support from the U.S., the U.K. and Saudi Arabia. CNN
(Comments: For reader comments, questions and discussion,
see the 26-Dec-10 News -- Female suicide bomber kills 43 people in Pakistan
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(26-Dec-2010)
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An almost-forgotten event in an almost-forgotten war.
One of the most remarkable occurrences in modern warfare occurred just a few months after World War I had begun.
On December 24, 1914, the German and British soldiers laid down their arms, crossed into the "No Man's Land" separating their trenches. They sang Christmas carols, played games, and shared jokes and beer with one another. They also used the time to buy their dead.
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According to firstworldwar.com, hundreds and perhaps thousands of men on the Western Front experienced the informal truce. The war had begun only months earlier, and there was probably more curiosity than hatred between British and German troops. Once the soldiers began receiving Christmas presents from home, the mood in many areas became more festive than warlike.
This story illustrates how different World War I was from World War II.
From the point of view of Generational Dynamics, World War II was a generational crisis war for Western Europe, but World War I was a non-crisis war. (World War I was a generational crisis war for Eastern Europe, Russia and the Mideast.)
Can you imagine Hitler's German troops and Churchill's English troops singing Christmas carols and playing games at the beginning of World War II? That would have been impossible.
World War I is now an almost completely forgotten war in America, except for its name. Because of the similarity of names between World Wars I and II, and because Americans fought Germans in both wars, most Americans between that WW I and WW II were similar to one another.
Today there are few people, even among historians (as I've discovered), who have any idea what the Great War (WW I) was about. Most people seem to believe that WW I was the same as WW II -- some pre-Hitler Hitler-type decided to invade France and started a world war.
In fact, World War I was much more similar to our Vietnam war than it was to World War II.
World War I was very politically divisive for both America and Germany. America actually remained neutral between England and Germany for several years, and only entered the war in 1917, to much political dissent. To this day, many historians still consider America's entry in WW I to have been unwise. In a 2004 survey of historians' views on the "greatest" and "least great" presidents, the two presidents voted the "most controversial" were Bill Clinton and Woodrow Wilson. Wilson was considered controversial because he was the President who entered America into World War I, despite enormous political opposition. I have personally interviewed older men who are still absolutely furious at Wilson for getting America into that war.
Antiwar writings began appearing in both Britain and Germany. In England in 1917, Wilfred Owen, a 24-year-old soldier, wrote "Anthem for Doomed Youth":
What passing-bells for these who die as cattle?
Only the monstrous anger of the guns.
Only the stuttering rifles' rapid rattle
Can patter out their hasty orisons.
No mockeries for them; no prayers nor bells,
Nor any voice of mourning save the choirs,—
The shrill, demented choirs of wailing shells;
And bugles calling for them from sad shires.
What candles may be held to speed them all?
Not in the hands of boys, but in their eyes
Shall shine the holy glimmers of goodbyes.
The pallor of girls' brows shall be their pall;
Their flowers the tenderness of patient minds,
And each slow dusk a drawing-down of blinds.
Ironically, Owen died in 1918 in the same week that WW I ended. The "Doomed Youth" that he described have become known as the Lost Generation, in the same generational archetype as today's Generation-X. (See "Politicians commemorate Battle of the Somme, July 1, 1916.")
World War I was just as politically divisive for Germany. Germany did not start WW I, as many people naďvely believe. WW I started in the Balkans and spread to Russia. Germany was "accidentally" forced into the war because of a long-standing treaty with Austria which obligated Germany to invade France because France was an ally of Russia. England was pulled into the war because of a previous agreement with France.
By 1918, the German people were sick of the war, and when the Americans joined the war, that was the last straw for the German people, who forced their country's leaders to capitulate. Germany's incredible capitulation, long before it was necessary, occurred because the German people were so politically angered by the war. Essentially, Germany capitulated in WW I for exactly the same reason that America capitulated in the Vietnam War -- because of enormous political opposition back home during a "generational Awakening" era.
After the war, the young German soldier Erich Maria Remarque wrote Im Westen Nichts Neues (All Quiet on the Western Front), depicting the heroic soldiers as becoming a "lost generation," following a completely pointless war.
By contrast, WW II was a crisis war for Germany (as well as England and America). That war was no "accident." Hitler planned his attack on France and England for years in advance, in secret, and Hitler kept on fighting long after it was clear that Germany would lose.
As I described in 2008 in "The gathering storm in the Caucasus," today's international situation is much more similar to the prelude to WW I than to WW II.
World War II could almost have been anticipated by someone watching the murderous Adolf Hitler. But there was no figure like Hitler in WW I, which was triggered almost by a random event. When Austrian Archduke Franz Ferdinand was assassinated by a Serb high school student, the war in Eastern Europe was triggered. Germany was as shocked by the war as anyone, and had no desire to invade France, but was forced to by a treaty with Austria.
Today, once again, there's no figure like Hitler on the scene, and any war will be a shock to everyone. But, as in the prelude to WW I, nationalistic urges and xenophobia today are rising, and there's a huge network of interlocking treaties.
The U.S. alone has mutual defense treaties with Japan, South Korea, Taiwan, Australia and New Zealand (ANZUS treaty), Israel, Europe, Iceland, and others. When these treaties were signed, after WW II, their purpose was to prevent another world war by making it too expensive for anyone to attack a country aligned with the United States.
Now, 65 years later in a new generational Crisis era, all those treaties are having the opposite effect. Few people seriously believe that any alliance with the U.S. will prevent North Korea from invading South Korea, or that such an alliance will prevent China from attacking the the disputed Senkaku Islands (called the Diaoyu Islands by the Chinese) that are currently administered by the Japanese.
Instead, the alliances with the U.S. almost guarantee that wars in many regions that might have remained regional will, instead, turn into a world war. (See my 2004 article, "Six most dangerous regions in world.")
And so, even without a new Hitler figure, a world war could be triggered today by any of a number of random events, even by a high school student who manages to assassinate some world leader. Any event like that could spiral into a regional war and then into a world war, as happened in 1914.
So, the Christmas truce of 1914 is a unique, sentimental story to think about in this holiday season, as we realize with sadness that there'll be no Christmas truces in the "clash of civilizations" world war that's just around the corner.
(Comments: For reader comments, questions and discussion,
see the Remembering the 1914 Christmas Truce
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(25-Dec-2010)
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Racist violence threatens Russia's world cup plans
South Korea staged a huge show of military force on Thursday, just south of the demilitarized zone (DMZ) that separates North and South Korea.
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South Korean army troops fired shells from howitzers and tanks, while attack helicopters and jets dropped bombs, in a military exercise to repel a mock North Korean invasion, according to Chosun.
The drills occurred exactly one month after the North Koreans shelled Yeonpyeong Island, killing four South Koreans.
South Korea never responded militarily to those attacks, but now the Korea Herald reports that South Korean President Lee Myung-bak is saying that in such situations, counterattacks are necessary for peace:
"I thought patience would bring peace to this land but I was wrong.I realize that tough actions enable us to keep peace, deter provocations and prevent war.
Pyongyang [North Korea] believes its provocations can divide South Korea. Strong national unity and powerful responses will allow us to deter the North from aggression."
In response, North Korea's Minister of the People's Armed Forces Kim Yong-chun hinted at a nuclear attack on South Korea, according to Chosun:
"Our revolutionary armed forces are fully ready to start a sacred war based on the nuclear deterrent at a time we deem necessary.If the U.S. imperialists and their followers should ignite an all-out war, our revolutionary armed forces will annihilate the aggressors and their strongholds, to remove the root of war and achieve the historic cause of the fatherland's reunification.
[South Korea] launched a military provocation by firing artillery shells consecutively during an exercise for an aggressive war in the West Sea. This shows that the enemy's aggressive plan aimed at igniting a second Korean War has now entered a practical stage.
[The North] will not hesitate to strike [if the enemy] invades even 0.001mm of its sky, land and sea."
China's state-run Global Post blamed the South Koreans for the dangerous situation, but also conceded that the North had overreacted:
"Without letting the world breathe a sigh of relief after North Korea showed restraint following South Korea's artillery drill on Monday, the South moved on with an even larger display of military exercises.The North's firing back in November that left four South Koreans dead was an overreaction but the South's continuous bombast is putting it at a disadvantage that will draw international criticism.
The Korean leaders, military and think tanks appear to be trapped in their triumph after their Monday live-fire drill near the North Korean border. Many believe that if they try to be nice, Pyongyang will never stop; and if they play tough, the other side will back off.
But the two Koreas are not street hoodlums, nor bullies in the schoolyard."
However, the same article also makes clear whose side China is on:
"But when the South loses its temper and insists on provocative military maneuvers along the border, China will not be siding with the South. The international community should also be clear about the situation, as it needs to pull the South back from the edge of the cliff."
Positions continue to harden on all sides, which is the normal trend during a generational Crisis era.
Racist violence among Russian soccer fans, targeting Muslim migrants from the Caucasus provinces, is threatening Russia's plans to hold the soccer World Cup in Moscow in 2018. Time
Two small bombs exploded on Thursday in the Swiss and Chilean embassies in Rome. Two people were injured. no one has taken credit, but it's believed that the bombs were linked to Italian left-wing anarchists, and to to anti-austerity protests in Italy and Greece. CS Monitor
In the three months since the end of the moratorium on settlement construction in the West Bank, there has been a settlement-building boom, and plans for thousands more Israeli settlers to live in numerous West Bank reasons. There are 2,000 housing units being built now, with 13,000 more in the pipeline. NY Times
A rift between the Vatican and the government of China is growing after the Vatican accused the Chinese government of using violence against Catholic Bishops, priests and lay faithful in China, to coerce the church into following government policies. Catholic Online
A new form of computerized stock trading is increasing. Computer programs read and interpret news reports, editorials, company web sites, blog posts and even Twitter feeds, and use information in algorithms that instantaneously buy and sell securities. NY Times
(Comments: For reader comments, questions and discussion,
see the 24-Dec-10 News -- North Korea threatens 'sacred war based on nuclear deterrent'
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(24-Dec-2010)
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South Koreans' sentiments toward North Korea changing
On Sunday, 10,000 red-shirted protesters from the United Front for Democracy against Dictatorship (UDD) crowded into a major intersection in central Bangkok, according to Bangkok Post.
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They were commemorating the 91 protesters that were killed and hundreds injured in the protests of last May that ended when the Thai army ran tanks through their barricades and assaulted them with live ammunition, and after the most radical elements of the protestors retaliated by burning down shopping centers and the stock exchange. (See "24-May-10 News -- Les Miserables of Thailand at a turning point.")
Sunday's protests were peaceful, a change from the defiance of last spring's protests, and the Thai government felt that the security police were sufficiently in control to end the harsh state of emergency that had been in effect for 8 months, and to release some of the hundreds of protesters who had been arrested, according to Reuters.
From the point of view of Generational Dynamics, none of this political chaos is particularly surprising. This is a generational Awakening era in Thailand, like America and Europe in the 1960s. And, like America and Europe in the 1960s, there is a "generation gap" separating political views of young and old, causing massive street protests.
However, there is absolutely no chance of a civil war, as some people fear. A civil war cannot occur during a generational Awakening era or, if one begins, it will fizzle quickly. We've seen this in other Awakening era countries that I've reported on over the last few years, including Lebanon, Iraq and Iran.
Thailand's Awakening era confrontation pits two ethnic groups against each other. Businesses in Bangkok are dominated by fair-skinned Thai-Chinese élites in a market-dominant minority.
The "red shirt" protestors represent the vast majority, the poor dark-skinned laborers, mainly from farms in Thailand's northeast, but who have migrated to Bangkok in recent years, where they take low-paying jobs as servants.
The rural group won a political victory in 2001, when Thaksin Shinawatra, born in the north of Thailand, became Prime Minister, but was deposed by a military coup in 2006, after a financial scandal. The coup is thought to have been sponsored by the élites who were looking for a reason to restore power to the Thai-Chinese group.
However, the political power of the rural groups did not end until 2008, when a massive protest by "yellow-shirted" protestors caused the government to collapse.
So the yellow-shirt protestors, representing the élite, had their victory in 2008, and the red-shirt protestors, representing the rural groups, attempted to exact their revenge last spring. However, that attempt ended in disastrous defeat, whose consequences will be felt for years.
With much of the world in a generational Crisis era, it's natural to talk a lot about war, but Thailand is in a generational Awakening era, when a civil war is impossible, or if one starts (as happened in 2006 in Iraq) it fizzles quickly.
In many ways, there's a special delight in studying Awakening eras, those spectacular times of new ideas and new revolutions that appear midway between two crisis wars. Important Awakening eras in world history include the golden age of ancient Greece, the ministry of Jesus Christ, and the life of Mohammed and birth of Islam. (See Generational Dynamics: Great Awakenings in World History.)
While Crisis wars pit two sides militarily against one another along a "vertical" fault line along ethnic or geographical differences, an Awakening era conflict is a political battle fought along a "horizontal" fault line separating the generations who survived the previous crisis war from the generation growing up after the war.
The older generations, the survivors of the previous crisis war, devote their lives to doing everything possible to guarantee that no such war will ever occur again, and they create oppresive institutions and impose austere social rules to enforce that guarantee.
The younger generations rebel agains those austere rules, creating a "generation gap" and a political conflict. The younger generation usually wins that conflict as, for example, when the younger generation forced the resignation of President Richard Nixon in 1974. The younger generation almost always "wins" that conflict since, after all, the older generations die first.
However, it's very dangerous for a country if the older generation "wins" the Awakening era conflict, and that's what has happened in Thailand. In this case, the generational conflict turns into an ethnic fault line conflict that leads to continued violence and to civil war decades later. We already saw that last spring.
For those interested in a literary treatment, a good example is Victor Hugo's great novel, Les Misérables, describing the failed uprising of students that occurred in Paris in 1832. This uprising occurred toward the end of the generational Awakening era in France, following the French Revolution. It led to the bloody Paris Commune civil war in 1871.
Likewise, the recent violent protests in Bangkok occurred towards the end of a generational Awakening era, following Thailand's last crisis war, the spillover from the "killing fields" civil war of Cambodia that ended in 1979.
In the spirit of the holiday season, we'll play a little music for you -- the video of Michael Ball in Les Misérables, singing "Empty Chairs at Empty Tables," describing the tremendous sadness his character feels, surrounded by the ghosts of the students who were killed in the 1832 uprising in Paris:
The tremendous sadness of this song must convey exactly how the red shirt protestors of Thailand feel today, having had all their hopes and dreams destroyed, and having gained nothing.
It's worth taking a moment to look at the mathematics of the situation. The size of the Thai laboring class is about three times the size of the Thai-Chinese élite class. This means that the laboring class is going to win elections, and it also means that wealth is going to be transferred from the élites to the laborers. This is going to make the élites unhappy, and they'll find ways to maintain power by force.
That in fact is what the government has already done, and what they'll continue to do. Indeed, an editorial in the Bangkok Post points out that ending the state of emergency did nothing to improve democracy and freedom of speech for the protesters.
The red-shirts will not stand for this situation. Sunday's protest was peaceful and sad. But the sadness will turn to anger, and don't be surprised to see more violent confrontations between the red shirts and the Thai army in 2011 and beyond.
A couple of days ago we reported on China's choice for "Character of the Year."
China's netizens voted for "zhang" as "Character of the Year." Zhang is the Chinese character used to describe a rapid price rise, indicating that people are dissatisfied with inflation and soaring house prices, according to Sify. Zhang was followed in popularity by characters meaning resentment, gray, demolish and death, respectively. These choices indicate a great deal of dissatisfaction with many aspects of life in China.
The German Language Society has chosen Wutbürger, or “enraged citizen,” as the most important German word of 2010, reflecting the street protests of the year, according to Local (Germany). Runners up included protest words "Stuttgart 21" and schottern, Sarrazin-Gen, referring to the controversy over immigrants, and two internet words, Cyberkrieg and Wikileaks.
Merriam-Webster's word of the year was "austerity," according to the Washington Post. Runners-up were pragmatic, moratorium, socialism, bigot, and doppleganger.
North Korea's November 23 artillery attack on Yeonpyeong Island, killing four South Koreans, has sharply changed the sentiment of many South Koreans. The previous sentiment of hope for peace and cooperation between North and South Korea has been lost. CNN
The number of foreclosures fell in the third quarter because of challenges to mortgage paperwork created during the frenzy of the real estate bubble. (See "22-Oct-10 News -- Foreclosure mess turns into a major crisis.") More and more delinquent homeowners are challenging the bank's standing to foreclose because of deficient paperwork, and more and more judges are taking the side of the delinquent homeowners. However, the number of delinquent mortgages is still increasing, and this paperwork problem only delays the inevitable foreclosure. USA Today
The iconic image of the Baby Boom generation during the 1960s Awakening era is of an exuberant, long-haired, rebellious young adult. However, the Boomers have become the glumest and most pessimistic generation, about their own lives and the lives of their children. Pew Research
Indonesia is the largest Muslim country in the world, and Muslims in Indonesia are a lot more moderate than Muslims in the Middle East. This is because Indonesian Muslims have sought knowledge and inspiration from Middle East Muslims, but they've adapted the teaching to their local culture. S.Rajaratnam School of International Studies (RSIS)
With xenophobia between ethnic Russians and North Caucasus Muslims growing to dangerous levels, Russian officials are talking about the possibility of letting some of the Caucasus provinces become independent republics. It's claimed that this would have numerous advantages, including the reduction of xenophobia and violence between Muslims and ethnic Russians, but from the point of view of Generational Dynamics, this change would not have any real effect. Eurasia Review
As the euro crisis deepens, many Europeans are turning against Germany, blaming the crisis on Chancellor Angela Merkel's rigid course, and accusing her of betraying the European project. Spiegel
(Comments: For reader comments, questions and discussion,
see the 23-Dec-10 News -- Thailand lifts state of emergency, but clamps down in other ways
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(23-Dec-2010)
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South Korea to hold large live-fire drills on Thursday
They say that history doesn't repeat itself, but sometimes it rhymes, and that's apparently what's happening in Belarus.
Alexander Lukashenko has been President of Belarus since 1994, through several elections. On Sunday a new election was held, and Lukashenko received about 80% of the vote, only slightly less than the 83% of the vote that he got in the 2006 elections, according to VOA.
However, the United States and the Europeans are calling the election invalid. Hundreds of opponents of Lukashenko were beaten and arrested, including opposition candidates, and there was violence against journalists. The votes were counted by officials reporting to Lukashenko, and polling organization were forbidden from conducting exit polls that might have validated or invalidated the election results.
Belarus has a brutal 20th century history. After World War I, Belarus was split into two regions, one part of Josef Stalin's Soviet Union and one controlled by Poland. Both regions were brutalized in the 1930s by respective Russification and Polonization campaigns, which sought to suppress the Belarus language and culture with the language and culture of the two captors. Particularly brutal was Stalin's Great Purge in the late 1930s, where thousands of people whom Stalin imagined to be his enemies were tortured, imprisoned and executed.
This period, in the days leading up to World War II, is what I'm saying is similar to what's happening today, in the days leading up to the Clash of Civilizations world war. Lukashenko is no Stalin, but he's using the same techniques that Stalin used, and the justification is the same: to provide stability.
However, Belarus is in a generational Crisis era, and stability may not last, any more than it did in WW II. Violence and rioting have occurred since the election, although it's been sharply curtailed by a violent KGB crackdown.
Here's an ITN Video of the events of the last couple of days in Minsk, the capital of Belarus:
South Korea has announced that it will hold its largest ever winter live-fire drills on Thursday, an an area adjacent to the North Korean border. N. Korea had threatened "catastrophe" if Monday's live-fire drills were held, but backed off from attacking when S. Korea held them anyway. These new, larger live-fire drills are sure to provoke, if not military action, then at least a series of hysterical accusations. CNN
Violence in the Gaza strip on both the Israeli and Palestinian sides is increasing. The Palestinians are using more powerful Russian-made missiles, and Israel's air force had th e most extensive aerial bombardment since the war in Gaza two years ago. Jerusalem Post
(Comments: For reader comments, questions and discussion,
see the 22-Dec-10 News -- Post-election violence threatens to destabilize Belarus
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(22-Dec-2010)
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North Korea backs down from threats of retaliation
China's premier Wen Jiaboa has just completed a three day visit with officials in Islamabad, Pakistan. According to Xinhua, they had an "in-depth exchange of views on further strengthening and deepening the China-Pakistan all-weather strategic partnership of cooperation,", in a "cordial and friendly atmosphere."
Pakistan still hasn't really recovered from the worst floods in the country's history, when one-fourth of the country was under water in July and August, causing loss of property and life, and creating a huge financial burden.
In their meetings, Wen promised $200 million in flood-related aid to Pakistan, and also announced an additional $400 million in concessional credits to lessen the financial burden, according to Pakistan's Daily Times.
Wen also spent three days in Delhi meeting with Indian officials, but the tone was decidedly different.
In the past year, China has taken an increasingly confrontational position with regard to the regions of Jammu and Kashmir and Jammu (J&K). The disputed J&K region is divided by a "line of control" (LoC) into two portions, controlled by India and Pakistan, respectively. Previously, China was neutral with regard to the sovereignty of J&K, treating the Indian controlled portions of J&K the same as the Pakistani controlled portions. But in the last year, China has been refusing to fully recognize Indian passports of citizens of Indian controlled J&K, while fully recognizing Pakistani passports.
Thus, it was noticed that in the communiqué that was issued following Wen's visit to Delhi, there was no mention of India's concurrence with the "one China policy," according to Sify. This policy affirms that Tibet and Taiwan are part of China.
The one China policy has been mentioned in previous India-China joint statements, so its omission here is causing speculation that India is getting revenge for China's change in position on J&K. One Indian China expect is quoted as saying, "The omission is glaring. Clearly, there was some breakdown. It looks like we have made it clear that unless China accepts Kashmir as part of India, India will not repeat that Taiwan and Tibet are part of China in future joint statements."
 |
Another subtle change in China's policies has been noticed in an analysis by Bahukutumbi Raman.
He noticed that in the last year, China's press reports have been referring to a "2000 kilometer long border" between China and India. India has always referred to the border as being 3500 km long, and China only began challenging that about a year ago.
The above map shows what's going on. If you agree with the LoC that gives one portion of J&K to India, then the entire border between India and China is 3500 km. But if you assume that all of J&K is part of Pakistan, then the entire border is only 2000 km long.
Kashmir and Jammu were a major site of the genocidal war between Hindus and Muslims after Partition in 1947 (when the India subcontinent was partitioned into Pakistan and India). After the war, Kashmir and Jammu were split into Pakistani-controlled and India-controlled regions, separated by a "line of control" (LoC). Since then, Pakistan and India have fought two non-crisis wars over the region, and it's been a continuing source of unrest, terrorist attacks, and violence.
From the point of view of Generational Dynamics, India and Pakistan will be re-fighting the war that followed partition. As time goes on, we see that China is increasingly taking Pakistan's side, while the U.S. (and, incidentally, Russia) are more sympathetic to India's side. This will decide part of the lineup in the approaching Clash of Civilizations world war.
As the Obama administration's deadline for withdrawal of forces from Afghanistan approaches, the U.S. military is pushing for an expanded campaign of Special Operations ground raids across the border into Pakistan’s tribal areas. This can only end badly. NY Times
South Korean and U.S. military forces are remaining on high alert after North Korea backed down from threats of retaliation for South Korea's live fire artillery drills near Yeonpyong Island on Monday. North Korea had deployed multiple rocket launchers on its shore near Yeonpyeong Island, and had threatened an "unpredicted self-defense counterattack" to the South Korean drills, that could lead to "potential disaster." However, later reports indicated that some of these weapons were fakes. Yonhap
Some analysts believe that the North Koreans are just playing a waiting game. They backed off from retaliation on Monday, but it's possible that they'll still retaliate, perhaps during the holiday season when everyone is relaxed. VOA
Israeli warplanes attacked sites in Gaza on Monday night, wounding two Palestinian militants. The raids came after Palestinian militants fired mortar shells into southern Israel. AFP
(Comments: For reader comments, questions and discussion,
see the 21-Dec-10 News -- China seals friendship with Pakistan, but stresses problems with India
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(21-Dec-2010)
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Mahmoud Abbas hosts meeting with Israeli politicians
South Korean and U.S. military forces are standing by on high alert, according to Chosun, as South Korea goes ahead with live fire artillery drills near Yeonpyong Island in the next few hours and days. Chosun also reports that North Korea has deployed multiple rocket launchers on its shore near Yeonpyeong Island, after threatening an "unpredicted self-defense counterattack" to the South Korean drills, that could lead to "potential disaster."
Attempts by Russia and China at the United Nations Security Council to pressure South Korea to halt the exercises collapsed, when an 8˝ hour meeting on Sunday ended with severe disagreements among the members, according to Reuters.
U.S. envoy Susan Rice said that the "vast majority" of the 15 council members were "insisting on a clear-cut condemnation of the November 23 attack" by North Korea. "There was not unanimity on that point," she said.
Rice was referring to North Korean artillery shelling of Yeonpyeong Island on November 23, killing four South Koreans, including two civilians. China has publicly refused to condemn North Korea's actions, and has referred to the November 23 incident as an "exchange of fire."
There's a widespread belief that Korea is close to war. We should know by Christmas.
With the Mideast "peace process" at a standstill, Palestinian Authority president Mahmoud Abbas hosted a rare two-hour meeting with about 60 Israeli politicians, public figures and activists at his headquarters here on Sunday, in an effort to reach out to the Israeli public. Most of the people invited were from Israeli's leftist "peace camp." NY Times
Top tricks to sell your home if all else fails. Market Watch
China's netizens voted for "zhang" as "Character of the Year." Zhang is the Chinese character used to describe a rapid price rise, indicating that people are dissatisfied with inflation and soaring house prices. Zhang was followed in popularity by characters meaning resentment, gray, demolish and death, respectively. These choices indicate a great deal of dissatisfaction with many aspects of life in China. Sify
(Comments: For reader comments, questions and discussion,
see the 20-Dec-10 News -- All forces on high alert on Korean peninsula
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(20-Dec-2010)
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It's time to update the Conflict Risk Graphic
| Conflict risk level for next 6-12 months as of: 11-Aug-2008 | ||||
|---|---|---|---|---|
| W. Europe | 1 | Arab Israeli | 3 | |
| Russia Caucasus | 3 | Kashmir | 3 | |
| China | 2 | North Korea | 2 | |
| Financial | 3 | Swine/Bird flu | 3 | |
| ||||
Several web site readers have complained to me that the Conflict Risk Graphic on the home page of this web site is sadly out of date, showing Korea at level 2, when it clearly should be at level 3.
Unfortunately they're right, as I haven't updated the graphic in a couple of years. So I'll update it in the next couple of weeks.
For each of the six regions named in the graphic, the risk level is supposed to reflect the level of risk that a war will occur in that region in the next six months. The six regions were chosen because, unlike other regions of the world, any local war in one of the six regions is likely to escalate into a world war within a few months.
I'd like to solicit opinions from any web site readers who wish to offer them.
With Europe plummeting into financial crisis, should its risk level be changed from 1 to 2?
Have things calmed down enough in the Kashmir region to lower its risk level from 3 to 2?
Let me know what you think.
Two Chinese fishermen were missing and another in critical condition after their trawler capsized after colliding with a South Korean Coast Guard boat Saturday. Four S. Korean coast guard officers were also injured.
According to the Korea Times news account, the Chinese fishing boat was illegally poaching in South Korean waters, and illegal Chinese fishing is "rampant." The deaths occurred when the fishing boat rammed the coast guard ship, after which the Chinese fishermen attacked the Korean officers with iron pipes and clubs, according to South Korean officials.
This incident occurred late on Saturday, and China has not yet formally reacted to it, but at the very least it will increase tensions on the Korean peninsula.
In a similar incident in September, a Chinese fishing boat rammed a Japanese naval vessal in waters near islands under Japanese jurisdiction but claimed as sovereign territory by the Chinese. When the Japanese arrested the shipping boat captain, China became extremely belligerent and nationalistic, greatly increasing tensions between China and Japan. (See "29-Sep-10 News -- The eclipsing of China's Hu Jintao and Wen Jiaboa.")
The disputed islands are called the Senkaku Islands by the Japanese, and the Diaoyu Islands by the Chinese. The U.S. has confirmed that it's bound by a 1960 treaty with Japan to defend Japan militarily if China attacks the disputed islands.
It'll be interesting to see whether the Chinese make a big deal of this new incident at Sunday's U.N. Security Council meeting.
Because of bad weather, South Korea has postponed the live fire artillery exercises near Yeonpyeong Island until Monday or Tuesday, according to the Associated Press.
The live fire drills were originally scheduled for Saturday, and are considered routine naval exercises. However, the North Koreans have threatened military retaliation if they take place. The North Koreans give last month's live fire exercises as a reason for artillery attacks on civilians on November 23 on Yeonpyeong Island.
At the urging of Russia, the United Nations Security Council will meet at 11 am ET on Sunday to discuss the critical situation on the Korean peninsula. According to CNN, Russia wanted to have the meeting on Saturday, and blames the United States for the one day delay, saying, "We assume that nothing will happen in the interim that would bring about further aggravation."
In a statement on Saturday, China said it is deeply worried about the situation on the Korean Peninsula, which is extremely precarious, highly complicated and sensitive, according to Xinhua.
China interprets the November 23 incident as an exchange of artillery fire between the North and South that resulted in the death of four S. Korean citizens. China quotes the North Koreans as urging the South to cancel the next planned live fire exercise, saying that North Korea would deliver a second and third "unpredicted self-defense counterattack" that would be bigger and more powerful than the previous one to defend its territorial waters.
Five Palestinian militants were killed by an Israeli air strike into the Gaza Strip as they were preparing to launch rockets into Israeli territory. The militants were from Islamic Jihad and Popular Resistance Committees. Al-Jazeera
Iran's citizens can expect a big rise in the price of petrol (gasoline) as the government ends the huge subsidy on petrol. Subsidies allowed Iranians to fuel their cars for just 10 cents per liter. Tehran Times
Arab states and the Palestinian Authority are drafting a statement asking the U.N. Security Council to denounce Israeli building of settlements in the West Bank and East Jerusalem. Israelis fear that the security counsil resolution will denounce Israel, and that the Obama administration will not rush to exercise its veto against the resolution. Haaretz
There will be a total eclipse of the moon, visible throughout North and Central America, on Monday night and Tuesday morning. LA Times
(Comments: For reader comments, questions and discussion,
see the 19-Dec-10 News -- China/S. Korean naval confrontation kills Chinese fishermen as Korea tension escalates
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(19-Dec-2010)
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Moody's cuts Ireland's credit ratings by 5 notches
North Korea warned late Friday of new artillery strikes on Yeonpyeong Island, according to Korea Times. This island was the target of North Korea's artillery shells last month, killing two South Korean civilians and two marines. This attack has shocked South Koreans out of complacency.
The new threat comes as South Korea is planning naval live fire exercises in South Korean waters near Yeonpyeong Island. North Korea blamed similar exercises last month for its artillery attack on civilians.
In Friday's statement, the North's military said, "We will mercilessly respond to the exercise with rounds of self-defensive attacks. The intensity and range of the firepower will create a more serious situation than one on November 23," referring to the date of the previous incident.
Earlier in the day, North Korea threatened a major nuclear war with the South, according to Yonhap. In that statement, the North Koreans said, "If war breaks out, it will lead to nuclear warfare and not be limited to the Korean Peninsula."
China and Russia both asked South Korea to cancel the live fire drills, rather than risk provoking another confrontation. However, South Korea's people are becoming increasingly nationalistic, following the North's previous attacks, and further conciliatory moves by the South will be widely viewed as weakness.
A U.S. State Department spokesman said that the exercise posed no threat to North Korea, according to AFP. "A country has every right to train and exercise its military in its own self-defense. North Korea should not use any future legitimate training exercises as a justification to undertake further provocative action."
As I've said several times in the past, it seems increasingly likely that the North Korean leaders are looking for an opportunity to start a war, and they may even believe that they can quickly win, because nobody will want to fight back for long. This assumption was made by the Japanese when the bombed Pearl Harbor and by the American South when they fired on Fort Sumter. This may be a safe assumption for many decades, but once a country enters a generational Crisis era, the assumption no longer holds.
Japan's new National Defense Program Guideline, announced on Friday, outlines defense policy for the next ten years, according to the Japan Times.
The new guidelines points to a Japan that's considerably more militaristic than the country has been since the end of World War II. However, it indicates less focus than in the past on Japan's former Cold War foe, Russia.
The guideline's strongest language for threats from China and North Korea, and lays out "dynamic defense capabilities" that will allow greater flexibility in responding to threats from these two countries. This is a major policy shift from the traditional basic defense force concept, which allows Japan to posess only the minimum necessary forces, according to the Japan Times.
The guideline says that North Korea's recent military activities, including its nuclear weapons program, are "an urgent and grave destabilizing factor" in regional security.
The guideline describes China's military rise and other actions as a "matter of concern for the region and the international community."
China Foreign Ministry immediately blasted Japan's new defense policy as "irresponsible," according to the Xinhua, saying that China had no intention of threatening anybody. "A certain country has no right to act as a representative of the international community and make irresponsible remarks on China's development," she said.
As I've said a number of times in the past, it's becoming clearer how countries will line up in the approaching Clash of Civilizations world war: China, North Korea, Pakistan and the Sunni Muslim countries will be allied against the U.S., South Korea, Japan, India, Russia, Israel and Iran.
Moody's cut Ireland's credit ratings by an enormous five notches on Friday, reflecting widespread market belief that, at some point, Ireland will default on its debt. The yield (interest rate) demanded by investors on Ireland's 10-year bonds rose to an astronomical 8.7%. However, there is little danger of default until the middle of next year, because of an EU bailout plan. The EU is unhappy with Moody's decision, and is exploring new ways to control ratings agencies. Reuters
German Chancellor Angela Merkel has succeeded in beating off attempts to force German taxpayers to bail out PIIGS (Portugal, Ireland, Italy, Greece, Spain) countries, or other countries, that are threatening to default on their debt. At an EU financial summit, the leaders promised to do everything necessary to save the euro, but in the final result nothing has changed because every country still has veto power over future bailouts. Euro Intelligence
As the new flu season begins, there have been a surge of H1N1 swine flu cases in Britain. 15 patients have died, and over 100 patients are in intensive care. There has been no swine flu pandemic in the last couple of years, but a pandemic is still a possibility. Independent
 |
India's greatest internal threat is thought to be from the Maoist (Naxalite) terrorists that occupy rural areas in the "Red Corridor," stretching along the entire southeast of the country. (See "19-May-10 News -- Maoist terrorism puts India on high alert.") Now the Maoists are expanding their terror networks by expanding into big cities, including Calcutta (Kolkata) and Delhi. Institute of Peace & Conflict Studies (IPCS)
With the Israeli-Palestinian peace talks completely stalled, several Latin American countries have proposed unilaterally recognizing a Palestinian state along pre-1967 borders. On Wednesday, the House of Representatives in Washington approved a measure condemning unilateral measures to declare or recognise a Palestinian state. The Palestinian Authority on Friday said it regretted the House of Representatives decision. In a statement, chief Palestinian negotiator Saeb Erakat said, "We have devoted ourselves to negotiations for nearly two decades and today we are trapped in a framework that thus far has not yet lifted the occupation. AFP.
Pakistan is rejecting criticism by the US that Pakistan hasn't done enough to help with the Afghanistan war. Earlier this week, President Obama said that progress has not come fast enough, and said, "So we will continue to insist to Pakistani leaders that terrorist safe havens within their borders must be dealt with." Pakistan's interior minister Rehman Malik dismissed criticism, saying, "If you see the statistics in terms of the casualties and injuries, it is Pakistan which has suffered the most in the world. We have done a lot. We are suffering in terms of our economy and obviously it is affecting our common man in the country." VOA
According to an unconfirmed Wikileaks allegation: With a "neo-Ottoman" nationalistic resurgence taking place in Turkey, Turkey was prepared to go to war with Russia over the Muslim Adjara region of Georgia if necessary, during the 2008 war between Russia and Georgia. Eurasia Review
After the massive neo-Nazi riots targeting Caucasian Muslims in Moscow the last few days, Moscow's Muslims are fearful of further violence. AFP
Although it's common wisdom that alcohol is a major cause of unnecessary death among Russian men, new research is producing surprising results on the extent of reckless drinking in Russia and its impact on heart disease. Eurasia Review
Six reasons why you should google your address. Wallet Pop
The Swiss investment bank UBS has issued a 43 page dress code specifying in minute detail what men and women can and cannot wear. Women are to wear flesh-coloured underwear, and avoid flashy jewelry and colored artificial nails. Men are to choose ties with patterns that "match the bone structure of the face." Daily Mail
(Comments: For reader comments, questions and discussion,
see the 18-Dec-10 News -- North Korea threatens new artillery strikes on Yeonpyeong Island
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(18-Dec-2010)
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South Korea plans artillery exercises in waters near Yeonpyeong island
A year ago, Walter Shimoon, who had secret information about Apple's iPhone and iPad plans because his company supplied parts to Apple, was talking to a hedge fund manager, according to CNN.
He described to the hedge fund manager what features the next iPhone would have, and he said that Apple has a code name for something new. "It's totally ... It's a new category altogether... It doesn't have a camera, what I figured out. So I speculated that it's probably a reader. ... Something like that. Um, let me tell you, it's a very secretive program ... It's called K, K48. That's the internal name. So, you can get, at Apple you can get fired for saying K48." The iPad -- code named K48 -- was unveiled four months later.
Shimoon was an employee of Flextronics, which supplies camera and battery parts to Apple. He knew what Apple was planning, but he would have signed a non-disclosure agreement forbidding him to talk about what he knows. But when an "expert network" company, Primary Global Research, reached out to him and offered to pay him a large sum of money to reveal Apple's plans to a hedge fund, he decided to ignore his non-disclosure agreement.
The expert network company brought the two parties together. Shimoon would speak to the hedge fund manager. Shimoon would receive a large sum of money, and the hedge fund would use the inside information to gain a big advantage trading in Apple and competing stocks.
Unfortunately for Shimoon and the the expert network company, the hedge fund manager was a cooperating witness, and the phone conversation was being recorded. So now, Shimoon and an employee of Primary Global Research are among a number of people who were arrested on Wednesday, charged with conspiring to provide inside information to hedge funds and other investors.
An 'expert network' scam involves three parties:
Many people believe that this is a victimless crime. All three of these parties make money, and nobody loses any money.
But that isn't true. If a hedge fund gains by using insider knowledge, then some other (unknown) investors loses.
What we're seeing is the fulfillment of something that I've been talking about for six or seven years.
Massive fraud occurred during the real estate and credit bubbles because there was so much money around that no one was paying attention. But once the financial crisis began to bite, regulators went back and looked at what happened.
This is the same thing that happened in the 1930s. There was a great deal of embezzlement leading up to the last generational financial crisis. I've posted this passage several years ago, and it's worth posting it again. John Kenneth Galbraith described what happened -- and what will happen again -- in his 1954 book, The Great Crash - 1929, as follows:
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in -- or more precisely not in -- the country's businesses and banks. This inventory -- it should perhaps be called the bezzle -- amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.The stock market boom and the ensuing crash caused a traumatic exaggeration of these normal relationships. To the normal needs for money, for home, family and dissipation, was added, during the boom, the new and overwhelming requirement for funds to play the market or to meet margin calls. Money was exceptionally plentiful. People were also exceptionally trusting. A bank president who was himself trusting Kreuger, Hopson, and Insull was obviously unlikely to suspect his lifelong friend the cashier. In the late twenties the bezzle grew apace.
Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to universal trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed.
After the first week or so of the crash, reports of defaulting employees were a daily occurrence. They were far more common than the suicides. On some days comparatively brief accounts occupied a column or more in the Times. The amounts were large and small, and they were reported from far and wide. ...
Each week during the autumn more such unfortunates were reveled in their misery. Most of them were small men who had taken a flier in the market and then become more deeply involved. Later they had more impressive companions. It was the crash, and the subsequent ruthless contraction of values which, in the end, exposed the speculation by Kreuger, Hopson, and Insull with the moey of other people. Should the American economy ever achieve permanent full employment and prosperity, firms should look well to their auditors. One of the uses of depression is the exposure of what auditors fail to find. Bagehot once observed: "Every great crisis reveals the excessive speculations of many houses which no one before suspected." [pp. 132-35]
Galbraith's point was that there were many criminal activities going on before the 1929 crash, but nobody cared, as long as everyone was making money. But once the crash occurred, any irregularity was viewed with suspicion and led to an investigation. These investigations turned up many cases of embezzlement -- people who had "temporarily borrowed" money that wasn't theirs to invest in the stock market, and then got caught in the crash.
Once the crash occurred, crime continued into the 1930s, including investor fraud and insider trading. The same thing is happening today.
One financial pundit reacted to Wednesday's insider trading charges by writing the following for Fortune:
"It's the same conclusion one can draw from Bethany McLean and Joe Nocera's excellent new book about the mortgage crisis, All the Devils Are Here: the real surprise isn't that there's a new scam being run, but that there are so many willing participants. For those of us who try to give people the benefit of the doubt—even those who choose to work on Wall Street—this is nothing but demoralizing news."
As I've pointed out many times, the credit bubble in the mid 2000s decade involved massive fraud perpetrated by almost every financial institution in the world. The same people are still working in these organizations, still committing crimes on a massive scale. These criminal prosecutions have barely begun.
Starting on Friday, South Korea is planning new artillery exercises in waters near Yeonpyeong island. Similar exercises last month caused the North Koreans to shell and kill civilians on Yeonpyeong island. VOA
The euro crisis is still worsening. Spain had an incomplete bond sale on Wednesday because yields (interest rates) demanded by investors surged to 5.5% on 10 year bonds. It was below 5% in November. Bloomberg
At an EU financial summit in Brussels on Thursday, Germany led the way, supported by the Netherlands and Finland, to vetoing any substantial attempt to make Germany pay any money to bail out debtor EU nations. Economist
A new whaling season is about to begin, and once again there will be a big showdown between Japanese whaling ships and fanatical anti-whaling militants. Diplomat
In Germany, as in other countries, volunteers write back each year to tens of thousands of children who write to Santa Clause. But unlike the US and France, Father Christmas in Germany does not respond to e-mail requests. Spiegel
(Comments: For reader comments, questions and discussion,
see the 17-Dec-10 News -- Insider trading charges target 'expert networks'
thread of the Generational Dynamics forum. Comments may be
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(17-Dec-2010)
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Violent unions shut down Greece
Moscow police detained more than 1,000 people in Moscow and other Russian cities, after internet postings threatened new ethnic violence on Wednesday evening. Most of the detainees were ethnic Russian football (soccer) fans, although a few migrants from the Caucasus region were also detained, according to the Associated Press. The Russian detainees were carrying guns, knives and metal bars, and were shouting racist slogans and raising their hands in Nazi salutes.
The move comes admidst a sharp increase in xenophobia between mostly Orthodox Christian ethnic Russians and mostly Muslim ethnic groups from the North Caucasus (Russia's southern provinces). These two groups have fought regular generational crisis wars over the centuries, and so this rise of xenophobia at this time is not a surprise.
Tension is very high in Moscow after the worst ethnic violence in years occurred last Saturday.
Early last week, Russian football (soccer) fan Yegor Svirido was shot dead in a fight between football fans and migrants. A 26 year old man, Aslan Cherkessov, 26, from the North Caucasus republic of Kabardino-Balkaria, was accused of the murder and arrested. A violent race riot broke out on Saturday during a memorial rally in Moscow for Svirido, involving 5000-7000 ethnic Russians. People with a "non-Slavic appearance," especially dark-skinner migrants, were targets of attack.
Saturday's riot occurred around the Kievsky train station, a region popular with street merchants from the Caucasus. Every day since Saturday, Moscow police have been forced to shut down a portion of central Moscow around the train station, for fear of a revival of the violence. Wednesday evening's activities were the most substantial, involving 3,000 policemen and 1,000 arrests.
At the same time, other regions have been affected as well. Riot police arrested about 100 people each in St. Petersburg and in Samara, Volga region, according to Moscow News.
The ethnic Russian uprising has very serious consequences for Russia, according to an analysis by the Jamestown Foundation. Any hope of integrating the Caucasus population more closely into the Russian population is now completely out of the question. The popularity of the anti-migrant xenophobia is so great that the Russian government will be forced to adopt some of the ethnic Russian nationalist agenda, and that will anger the North Caucasians.
Conspiracy theories are mushrooming as well. Prime Minister Vladimir Putin became extremely popular because of his firm handling of the war in the Caucasus province of Chechnya a decade ago. One theory says that Putin is provoking the xenophobic crisis because he will benefit from it politically, making it easier to replace Dmitry Medvedev as president in 2012.
However, it's not possible that Putin or any politician caused this. This is caused by deep hatred coming from young generations of kids with no sense of history, and no sense of the likely consequences.
However, the violence wasn't spontaneous. It was incited by racist postings by bloggers and commenters, mainly on the largest football fan sites. According to an analysis by Global Voices, the main beneficiary was fanat1k.ru, a "fanatic" web site that drew some 1500 comments, most plainly racist, and with neo-Nazi connections. When one user suggested moderation, he was called Russophobic or stupid.
Administrators of popular social network sites in Russia are being asked by law enforcement officials to deal with the surge in violence by remove content that incites inter-ethnic strife and to close accounts of offenders, according to Ria Novosti (Translation).
From the point of view of Generational Dynamics, all forms of xenophobia are increasing around the world today, for the first time since the 1930s. Non-Muslim xenophobia towards Muslims has advanced quite far in Russia, but it's also increasing in America (see "American xenophobia on the Left and on the Right"), in Europe, and even in Israel (see Hatred in Israel). As in Russia, some of this anti-Muslim xenophobia has neo-Nazi links.
In other arenas, we see xenophobia increasing between Japan and China, North and South Korea, and Pakistan and India. These attitudes will only deepen as the world financial crisis continues to deepen.
As the world approaches a "Clash of Civilizations" world war, it's becoming clearer how the countries of the world will line up: China, North Korea, Pakistan and the Sunni Muslim countries will be allied against the U.S., Japan, India, Russia, Israel and Iran.
This war will be a crisis deeper than the world has ever seen. The founding fathers of generational theory, William Strauss and Neil Howe, described how such a crisis climaxes, in their book, The Fourth Turning:
"The Crisis climax is human history's equivalent to nature's raging typhoon, the kind that sucks all surrounding matter into a single swirl of ferocious energy. Anything not lashed down goes flying; anything standing in the way gets flattened. Normally occurring late in the [Crisis era], the climax gathers energy from an accumulation of unmet needs, unpaid bills, and unresolved problems. It then spends that energy on an upheaval whose direction and dimension were beyond comprehension during the prior Unraveling era. The climax shakes a society to its roots, transforms its institutions, redirects its purposes, and marks its people (and its generations) for life. The climax can end in triumph, or tragedy, or some combination of both. Whatever the event and whatever the outcome, a society passes through a great gate of history, fundamentally altering the course of civilization.Soon thereafter, this great gate is sealed by the Crisis resolution, when victors are rewarded and enemies punished; when empires or nations are forged or destroyed; when treaties are signed and boundaries redrawn; and when peace is accepted, troops repatriated, and life begun anew.
One large chapter of history ends, and another starts. In a very real sense, one society dies -- and another is born."
Russia has been through several such rebirths over the centuries, including historic transitions from paganism to Orthodox Christianity to atheistic Communism. As we watch the events in Russia today, we can see that some kind of new crisis and rebirth is coming, and we can only imagine what Russia will be like when the crisis is resolved.
The following video shows Saturday's riots in Moscow, with ethnic Russians clashing with police. Towards the end, there are scenes of a Caucasian who was beaten.
A terrorist attack on the Imam Hussein mosque in southeastern Iran during a major Shia religious ceremony killed 33 people, and wounded 83 others. The Pakistani-based Sunni terrorist group Jundullah claimed responsibility. Press TV
Tens of thousands of workers marched through Athens on Wednesday in a nationwide general strike to protest austerity measures. The Greek finance ministry was set ablaze as furious protestors threw chunks of concrete, bottles and molotov cocktails in pitched battles of street fighting with police, who responded with tear gas. Peaceful demonstrations took place in Spain and France. EU Observer
There's a lot of talk about the death of the euro on the eve of a major EU summit meeting in Brussels to discuss the growing financial crisis. German Chancellor Angela Merkel remained at the center of the financial story as she continued to oppose the "euro bond" concept that would allow the central bank to issue bonds backed by all eurozone countries. Moody's issued a warning to Spain that its debt might downgraded, and Spain's bond yields reached new highs. NY Times
As the possibility of an invasion by North Korea becomes more likely, South Koreans are taking part in civil defense drills for the first time since 1992. On Wednesday, sirens sounded and fighter jets buzzed Seoul to simulate a North korean attack, as people scrambled for air raid shelters. Bloomberg
A White House review of US operations in Afghanistan, to be announced on Thursday, shows deep divisions among U.S. agencies, with intelligence agencies far more pessimistic than military organizations about success in the war. Reuters
(Comments: For reader comments, questions and discussion,
see the 16-Dec-10 News -- Moscow police arrest hundreds to head off ethnic violence
thread of the Generational Dynamics forum. Comments may be
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Moscow is braced for new ultra-nationalist race riots
A clear-cut division, an ideological axis, is forming among the the countries of northeast Asia, because North Korea is complicating relations between the U.S. and China, according to an editorial in South Korea's JoongAng Daily.
South Korea, the U.S. and Japan are on one side, while China backing North Korea are on the other.
A lynchpin of the new arrangement is the sudden decision by Japan to substantially strengthen its armed forces. That decision was spurred by a several events in the past year -- the North Korean attack on the South Korean warship Cheonan last spring, the North Korean artillery shelling of the South Korean Yeonpyeong Island, and China's overreaction to Japan's arresting of a Chinese fishing boat captain in the summer. In addition, China became extremely aggressive in 2010, claiming sovereignty over a huge swaths of international waters in the South China Sea and East China Sea.
Japan's era of postwar pacifism is coming to an end, according to an analysis in the Guardian. In the next few days, Japan will announce a new National Defense Program involving sophisticated new weaponry, mobile rapid-response units and closer security alliances with friendly countries.
It will include a "dynamic defence capability" specifically tasked with deterring Chinese incursions around Japan's disputed southern islands. Defensive alliances will be with the US, Australia, India and even South Korea, stressing military integration and interoperability.
These moves are engendering a great deal of anxiety in the South Koreans. Japan colonized Korea for the first half of the last century, and Japan's military used Korean "comfort women" during World War II. After the war, Japan became a purely defensive country, depending on America's military umbrella for its protection.
But now, as the survivors of WW II have disappeared and memories are fading, the U.S. is encouraging Japan to take more responsibility for its own defense, and Japan is becoming more militaristic again.
Although Japan and South Korea are closely aligned against the dual threats posed by China and North Korea, Japan's colonization of Korea still stirs passion, according to an analysis in the LA Times. One South Korean military analyst is quoted as saying, "Many Koreans still recall the brutality of Japanese colonization, so it's still not possible to talk of better military ties with Tokyo. We will not accept any military involvement with Japan, no matter what the outside threat."
And yet, military involvement between Japan and South Korea is one of the new proposals. In particular, Japanese Prime Minister Naoto Kan raised hackles when he said, "We need to carefully proceed in consultations with South Korea about whether they would let in aircraft from Japan's Self-Defense Forces." The idea of Japanese aircraft over South Korean airspace is anathema to the South Koreans.
While Japan's government appears to be increasingly assertive in dealing with external threats, South Korea's government gives the appearance of being increasingly chaotic.
Just at the time that South Korea needs a coherent military strategy to deal with the threat from the North, the Army Chief of Staff was forced to resign on Tuesday, because of charges of corruption in a real estate deal, according to Arirang.
The South Koreans simply have not come to terms with the two North Korean military attacks this year. The look weak because they didn't respond, but if they respond they'll start a major war. Amid the chaos and anxiety in South Korea is the understanding that if North Korea stages another military attack, then they may have no choice but full-scale war.
Moscow is braced for new ultra-nationalist race riots on Wednesday. RFERL
A poll shows that 69% of Palestinians support signing a peace treaty with Israel, and that Hamas is losing support in favor of Fatah. Palestine News Network
Revelations by Wikileaks show that Middle Eastern states, including Saudi Arabia, Qatar and United Arab Emirates, do not crack down on terrorist activities in their own countries, for fear that it would lead to reprisal attacks and greater domestic instability, and that they have financial links that fund terrorist activities in India. This supports the expectation, that I've described in the past, that in the coming Clash of Civilizations world war, China will be allied with Pakistan and the Sunni Muslim states, while America will be allied with Japan, South Korea, India and Iran. Institute of Peace & Conflict Studies (IPCS)
The Stuxnet computer worm is still crippling Iran's nuclear program. It appears increasingly likely that Iran was the target of the virus, and it's apparently been very successful. Stuxnet is so out of control that it may take another year for the Iranians to eliminate it. Fox News
China is taking advantage of Europe's debt problems to greatly expand its influence on Europe, with large-scale investments and purchases of government bonds issued by highly-indebted states. Spiegel
The Obama administration has concluded that North Korea's nuclear technology is significantly more advanced than Iran's. NY Times
Germany and France appear to be backing down from their previous opposition to a Europe-wide "fiscal union." The proposal will be debated at an EU summity on Thursday and Friday. EurActive
In Ciudad Juarez, Mexico, just across the border from El Paso, Texas, the death toll from drug-related violence for 2010 has just surpassed 3000. Associated Press
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Russia expresses 'deep concern' over North Korea's nuclear development
Russian riot police were forced to shut down a section of central Moscow on Monday evening, to head off a threatened new racial riot.
The move was made because of a tip-off that ethnic Russian football (soccer) fans were planning to face off with migrants, mainly from the Muslim North Caucasus region, according to Ria Novosti.
Early last week, football fan Yegor Svirido was shot dead in a fight between football fans and migrants. A 26 year old man, Aslan Cherkessov, 26, from the North Caucasus republic of Kabardino-Balkaria, was accused of the murder and arrested.
A massive race riot broke out on Saturday during a memorial rally for Svirido, involving 5000-7000 ethnic Russians. 30 people were injured. According to the VOA account:
"On Monday, Russians looked in shock at the images of last weekend's violence in downtown Moscow: hundreds of young men raising their right arms in stiff-armed Nazi salutes against the red brick walls of the Kremlin; young men in black hoods attacking riot police with chunks of ice, burning flares, glass bottles and steel rods; five young men from Caucasus, blood streaming down their faces, cowering behind policemen who rescued them from nationalist attackers."
President Dmitry Medvedev said on Monday that the perpetrators would be punished, and that "everything is under control," according to Reuters. Medvedev said the following:
"Actions aimed at inciting racial, ethnic or religious hatred and enmity are particularly dangerous: They threaten the state's stability. The latest events in Moscow -- the pogroms, the attacks on people -- must be prosecuted as crimes and those responsible, punished."
In his Twitter feed, he added, "In Moscow and Russia, everything is under control. We will deal with everyone who stirred up trouble. Have no doubt!"
Actually, analysts have plenty of doubt, as xenophobia and violence by ethnic Russias against people of "non-Slavic appearance" from Central Asia and the Caucasus has been increasing.
Historically, the Caucasus region is one of the most violent on earth, because of the interethnic wars, and because it's one of the major regions (along with the Crimea and the Balkans) where fault line wars have been fought between the Muslim civilization and the Orthodox Christian civilization. The great forces that have lead to these wars over the centuries appear to be rising again.
Here's something I heard from an analyst on Bloomberg tv on Monday morning:
"This is the time of year everyone's brushing up their forecasts, what they expect for next year.And WOW, are people waxing optimistic! I mean, you have everyone talking about what a great year 2011 is going to be.
In fact Goldman Sachs said it's going to be a superb backdrop for equities. You have the average forecast up 11% for 2011. If we were to hit that, that would be three years in a row of gains. That hasn't happened in a decade. So people are feeling very, very good about stocks these days."
What she forgot to mention is that what happened a decade ago is the collapse of the dot-com bubble after three years of bubble growth in the stock market. These analysts are supposed to be experts, but it never occurs to them that if there was a big bubble a decade ago, then there might be a big bubble today.
I'm still amazed that throughout 2004-2007, all we heard on CNBC and read in WSJ was that there was no housing bubble. Today, everybody talks about the housing bubble in 2004-2007. These experts on CNBC have no idea what's going on until it's too late.
On Monday evening, on Fox News, Bill O'Reilly said the following:
"I say this: When Republicans take control of the House in January, they should put forth immediately legislation that cuts federal spending by 25% over the next three years.It's simple. The Feds have to stop spending so much money. If the Republican party leads the way in containing Federal spending, the folks will notice, and the unemployment extension will not mean very much down the road.
Again, the country needs a 25% federal spending cut over the next three years. 8 and 1/3 each year. It's gonna be painful but it has to be done. Of course many Democrats will oppose that, perhaps including President Obama.
That will set the stage for the election of 2012. But for now, we need this tax compromise, so pass it."
Can anyone imagine the Congress doing anything like this? This is based on the same fantasy as the previous comment -- that there'll be a huge recovery next year, and so there'll be plenty of money sloshing around, and no problem cutting federal spending by 25%.
Today on TV I also heard a couple of analysts talk about an impending banking crisis in Europe, and another analyst talk about China's bubble bursting. But these are just voices in the wilderness. And anyway, so what? Those things are happening in other countries, and have nothing to do with us.
Russia's foreign minister has expressed "deep concern" about North Korea's ability to enrich uranium and produce nuclear weapons. AFP.
America's unsuccessful attempt to bribe the Israelis by promising a squadron of fighter planes in return for a 90 day extension of the West Bank settlement freeze shows how out of touch with reality all sides in the Mideast are, according to columnist Thomas Friedman. His advice is that the U.S. should pull out of the negotiations, and let the Israelis and Palestinians figure it out themselves. As I recall, that's the conclusion that President Bush reached, but he was then criticized for not being a leader in the Mideast. NY Times
(Comments: For reader comments, questions and discussion,
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Japan rebuilding military to focus on China and North Korea
A suicide bomber shouted something in Arabic and blew himself up in Stockholm, Sweden, on Saturday, according to the Stockholm News.
There were two explosions, and investigations showed that an unexploded backpack was full of nails. Terrorists often pack nails with explosives in bombings in order to increase the number of casualties.
Although the suicide bombing occurred in the middle of a busy shopping street in central Stockholm, only two bystanders suffered minor injuries. The only person who was killed was the suicide bomber himself.
The news reports do not indicate whether the failure to kill other people was intentional or accidental, or whether the police even know. Under the assumption that it was intentional, this is something that we've seen before.
I've quoted this before. According to a July, 2007, study by the Jamestown Foundation entitled "The Taliban Fedayeen: The World's Worst Suicide Bombers?":
"An analysis of the attacks carried out in the last two years reveals a curious fact. In 43% of the bombings conducted last year and in 26 of the 57 bombings traced in this study up to June 15, the only death caused by the bombing was that of the bomber himself. Astoundingly, approximately 90 suicide bombers in this two year period succeeded in killing only themselves. This number exceeds 100 when you factor in those who succeeded in killing only one person in addition to themselves. There was one period in the spring of 2006 (February 20 to June 21) when a stunning 26 of the 36 suicide bombers in Afghanistan (72%) only killed themselves. This puts the kill average for Afghan suicide bombers far below that of suicide bombers in other theaters of action in the area (Israel, Chechnya, Iraq and the Kurdish areas of Turkey). Such unusual bomber-to-victim death statistics are, of course, heartening for both coalition troops—who have described the Afghan suicide bombers as "amateurs"—and the Afghan people—who are usually the victims of the clumsy bombings.These statistics also represent a uniquely Afghan phenomenon that warrants investigation."
Afghanistan is in a generational Recovery era, having gone through a massive crisis civil war in the 1990s, and so there's little desire among the survivors for further killing.
The same kind of thing has occurred in the Iraq war. Iraq is in a generational Awakening, and Iraqis have refused to become suicide bombers, forcing al-Qaeda in Iraq to import suicide bombers from Saudi Arabia and other countries in a generational Crisis era. (See the 2007 article, "Iraqi Sunnis are turning against al-Qaeda in Iraq.")
There are many possible reasons why the Stockholm suicide bomber failed to kill anyone but himself. He may have been incompetent, or he may have miscalculated. But it's also possible that he grew up during the Afghan civil war of the 1990s or the Iran/Iraq war of the 1980s and has no desire to inflict on other people the kind of horrific violence that he saw as a child.
Update: Late news is that the suicide bomber has been identified as Taimur Abdulwahab al-Abdaly, a 29 year old who was born in Baghdad, and left Iraq in 1992, according to the Telegraph. He grew up traumatized and surrounded by bloody violence in the Iran/Iraq war, and it's quite possible that, at the last minute, he simply didn't want to inflict that trauma on other people, even the infidels.
Since World War II, Japan has avoided rebuilding its military, and instead has depended on the United States military to provide an umbrella of protection. However, Japan's military is about to release a new set of guidelines that will increase Japan's military capabilities, with particularly emphasis on threats posed by North Korea and China. Washington Post
After last week's collapse of the Obama administrations Mideast peace plan, U.S. Secretary of State Hillary Clinton is ordering Israelis and Palestinians to stop “demonizing” each other and to make “real progress” on their disagreements in the next few months. Bloomberg
Russia's President Dmitry Medvedev called for tough action against the thousands of football (soccer) fan rioters who clashed with police in Moscow on Saturday. The riots were triggered by the death of an ethnic Russian in a fight with men from ethnic minorities from the North Caucasus republic of Kabardino-Balkaria. Members of the North Caucasus's numerous ethnic minorities are afraid of further reprisals from ethnic Russians. Ria Novosti
Ethnic riots continued in Moscow on Sunday. Associated Press
Bankers and brokers hoping to make millions of dollars from carbon dioxide derivative securities had their hopes dashed on Saturday when then the climate change conference in Cancun ended without mandating the use of the "global carbon market." Reuters
Italy's Prime Minister Silvio Berlusconi has survived numerous sex and money scandals, including alleged liaisons with girls under 20 years old. But part of his ruling coalition has turned against him, and he's facing a vote of no confidence on Tuesday. Reuters
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Bolivia nationalizes pension funds, lowers retirement age to 58
The Reuters report on Saturday's close of the climate talks in Cancun is "Climate Talks End With Modest Deal and Standing Ovation."
Actually, the "modest deal" was pretty much totally meaningless. The main element of the deal was the establishment of a $100 billion "Green Climate Fund," and everyone is supposed to donate money to this fund. I've reported on others of these funds, including disaster funds and funds for Africa, and they're all pretty much a joke. The $100 billion figure gets the headline, and then the fund is forgotten the next day.
But no matter. "Cancún has done its job," said UN climate chief Christiana Figueres. "The beacon of hope has been reignited and faith in the multilateral climate change process to deliver results has been restored."
And the delegates gave themselves a standing ovation for doing such a brilliant job.
Delegates from 139 nations signed the climate agreement, but not Bolivia. Bolivian President Evo Morales was the most theatrical of the politicians attending the Cancun conference, according to the Guardian. His entourage includes 15 colourfully dressed, bowler-hatted indigenous Aymara, an admiral in gold braid, teams of advisers and white-coated bodyguards, Mayan priests and ambassadors.
According to Morales, "It's easy for people in an air-conditioned room to continue with the policies of destruction of Mother Earth. We need instead to put ourselves in the shoes of families in Bolivia and worldwide that lack water and food and suffer misery and hunger. People here in Cancún have no idea what it is like to be a victim of climate change."
Whether accidentally or by plan, there was other big news from Bolivia this weekend. Morales has just signed a law nationalizing Bolivia's pension funds, and lowers the retirement age from 65 to 58, according to the BBC.
This is the reversal of a previous change. Bolivia privatized pension funds 13 years ago after a state-run system collapsed. Whether in Cancun or Bolivia, the inmates are running the asylum.
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Al-Qaeda changes strategy in Yemen
Violence in Haiti continued for a fourth day, fueled by extreme poverty, racial divisions, devastation from January's earthquake, and spreading cholera.
The violence was triggered on Tuesday by the announcement of election results that eliminated Michel Martelly, a popular carnival artist, from the runoff election to be held in January, according to the Guardian.
It's widely believed that vote-rigging was used to eliminate the popular Martelly, in favor of two other candidates who are considered to be closer to the establishment.
Haiti's population consists of two major groups -- the dark-skinned "noirs" or blacks, the descendants of slaves imported from Africa by the French colonizers in the 1700s, and the light-skinned "mulattoes," resulting from intermixing of French and slave bloods. The mulattoes are a market-dominant minority: under 5% of the population, but controlling over 50% of the nation's wealth. The two winning candidates are perceived to favor the mulatto élites, while Martelly is thought to favor the noirs.
With Haiti deep into a generational Crisis era, it's quite possible that the current violence will spiral into full scale civil war. That has been prevented so far, however, by the presence of U.N. peacekeeping forces and by massive international food aid.
The spread of cholera appears to have leveled off on Friday, but experts are saying that an intensive vaccination program must be instituted to control the deadly disease, according to Reuters.
A lot of popular anger has been leveled at the U.N. peacekeeping forces for apparently introducing the cholera into Haiti for the first time in decades. A new report, published in the New England Journal of Medicine, seems to confirm those accusations, according to the LA Times. According to the report, the cholera strain in Haiti is one which has previously been seen only in Asia, where it's a particularly virulent strain that has displaced the milder forms of cholera in that region. It's now believed likely that the cholera strain was introduced into Haiti by peacekeeping forces from Nepal or another Asian country.
Haiti is expected to dominate a meeting to be held on Monday of North American foreign ministers, according to the Toronto Star.
Of particular concern is that fact that billions of dollars in aid money has been contributed to Haiti, but people are still living in tent cities, indicating that the money is being wasted on corruption, and is not reaching the people who need it. Senator Patrick Leahy, who chairs the senate committee responsible for funding foreign aid, is calling for a freeze on US aid to Haiti's government, according to AFP. Leahy also wants to deny travel visas to government officials, until a fair election outcome has been shown.
Meanwhile, with the violence increasing, the U.S. has reissued a travel warning recommending all U.S. citizens reconsider nonessential trips to Haiti, according to AP. Canada has closed its embassy until further notice.
Al-Qaeda has failed for years in its objective to drive the United States forces out of the Middle East, but now al-Qaeda on the Arabian Peninsula (AQAP), headquartered in Yemen, is trying the reverse. In the new strategy, AQAP will "harness America's manic need to act" by continuously provoking America to meddle into Yemen's domestic affairs. They expect that this will alienate Yemen's government from its people, thus setting the stage for a domestic al-Qaeda coup. International Relations and Security Network (ISN)
New poll shows that Afghanistan public opinion is turning sharply against US forces. Global Post
On Thursday, Pakistani newspapers carried stories about Wikileaks revelations that American officials were accusing India of genocide in Kashmir and of supporting Islamist terrorists. However, an investigation shows that the Pakistani newspapers were duped, as the leaked cables were faked. Guardian
France's president Nicolas Sarkozy and Germany's chancellor Angela Merkel joined forces on Friday to oppose the "euro bond" proposal that we reported on yesterday. However, both leaders said that they were committed to "do everything to guarantee financial stability in the euro zone." NY Times
China's policy of "neutrality" in the armed confrontations between North and South Korea has resulted in damage to China's strategic interests: both Koreas have put their armed forces under top-level alert, the US 7th Fleet has been mobilized just outside of China's territorial waters, Japan's government is on alert, and everyone perceives China as favoring North Korea. However, China is afraid of confronting North Korea, for fear of destabilizing the country. S.Rajaratnam School of International Studies (RSIS)
Taiwan has begun mass production of a long-range cruise missile that could reach mainland Chinese cities. WSJ (Access)
China's inflation surged to a 20 month high of 5.1% in Novemeber, thanks to massive amounts of stimulus money pushing up food prices. Associated Press
China plans to shift its monetary policy stance from relatively loose to 'prudent' next year. China Securities Journal
This week's debates between the administration and congress over taxes makes is clear that the US deficit is going to continue to skyrocket, no matter which side "wins," increasing the likelihood that the US will default at some point. This is causing a selloff of US Treasury bonds, causing yields (interest rates) to rise. This will make it even harder to get credit, and more expensive to get a home mortgage. WSJ (Access)
Pretty women are far less likely than plain women to get a job interview, according to a study. The reason, according to the study, is jealousy, since most most candidate screeners are women. Executive Health
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Israel and Turkey hashing out final details of Israel's apology
As the European financial crisis continues to grow, it's complicated by personal animosities between the politicians in two major camps.
Luxembourg's Jean-Claude Juncker, who heads the euro-group of finance ministers, is the leader of the camp who want Europe to join together into a big "fiscal union." This would make all the eurozone countries at least partially liable for all other countries' debts. Juncker has put forth a "euro-bond" proposal to implement this. The proposal would allow the EU to issue bonds that all countries would guarantee.
Juncker's main opponent, both personally and politically, is German Chancellor Angela Merkel, who does not want Germany to end up being forced to bail everyone else out, which is how the "fiscal union" concept is being interpreted by the German people. Merkel rejected the euro-bond proposal, and Juncker accused her of doing so without even looking at it. Merkel has proposed letting countries default, if forced to by too much debt.
This disagreement has poisoned Europe, according to an analysis in Der Spiegel (Translation). "It is a paradoxical situation - the euro currency, which is actually supposed to bind Europeans together, is increasingly splitting the continent apart."
The result of this poisoned atmosphere is that the formerly strong German financial markets have suddenly started weakening in the last couple of weeks, as measured by bond yields, according to Reuters.
German debt has long been considered the safest in Europe, and this has been reflected in very low yields (interest rates) on German bonds. But German 10-year bonds have been selling off rapidly in the last couple of weeks, pushing yields up substantially.
Here are some euro crisis graphics from Reuters:
 |
The top graph shows the annual debt and the gross debt for each country. Luxembourg looks pretty good, while Greece and Ireland look particularly bad.
The bottom graph is interesting from the point of view of the current Washington debate over taxes. Ireland has been successful in attracting industry because of their very low corporate tax rate -- 12.5% -- and they've fighting like mad against demands to raise it in return for a bailout. The USA, on the other hand, has one of the highest corporate tax rates in the world. Not great for a country that's supposed to have so attractive to entrepreneurs.
2010 has been a big year for mortgage defaults and foreclosures, and Zillow Inc. has determined that U.S. home values have fallen by a total of $1.7 trillion dollars this year, according to Bloomberg.
The housing bubble was the most visible factor in creating the huge credit bubble of the mid-2000s decade, and is now the most visible factor in removing money from the economy.
Israel and Turkey are hashing out the final details of the exact phrasing to be used in Israel's apology for its raid on the Gaza-bound flotilla last spring, resulting in the deaths of nine Turkish citizens. Israel is likely to offer hundreds of thousands of dollars in compensation to the families of the victims. Haaretz
In three weeks there will be the two-year anniversary of Operation Cast Lead, the war between Israel and Hamas in the Gaza strip. Many analysts have been concerned all year that a renewal of that war could begin at any time, but an analysis by the Israeli Defense Forces (IDF) indicates that the Hamas military has been deterred by the result of the last war, but that Hamas has obtained advanced weapons systems in preparation for the next war. Jerusalem Post
Five myths exposed by Wikileaks. They include: the myth of Islamic solidarity, the myth of US solidarity with India, the myth of genuine Chinese friendship with India. Bahukutumbi Raman.
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Palestinians seek an 'end game,' after Mideast peace process collapses
As we reported yesterday, the Mideast peace process has collapsed after the Obama administration has admitted that its entire strategy had failed. The administration had put a great deal of its prestige into a plan to bring the Israelis and Palestinians together to agree to a two-nation peace plan, and the effort is now at a dead end.
Egypt's Foreign Minister Ahmed Aboul Gheit says that the discussions should now shift to an "end game for a Palestinian settlement," according to Haaretz. "The Americans have been informing all of us that their efforts did not succeed," he said. "They wanted to reach a moratorium on settlement activities with Israel. That came to an end now."
Palestinian Authority president Mahmoud Abbas plans to meet with Egyptian president Hosni Mubarak in Cairo on Thursday, and then go to an emergency meeting of the Arab League next week, according to the Jerusalem Post.
The main purpose of these meetings will be to decide whether to ask the United Nations Security Council for an international mandate to create a Palestinian state along the pre-1967 borders of Israel.
This option has been gathering support in recent weeks, as several Latin American states have taken steps to recognize just this solution, as we reported yesterday.
It's hard to know how far this proposal will go. It's been pretty obvious for months that neither the Palestinians nor the Israelis want any sort of "peace process" to go forward, but simply want to avoid being blamed for any failure. But this proposal for a unilateral declaration could take on a life of its own.
From the point of view of Generational Dynamics, nothing has changed in the Mideast since I made my first major prediction on this subject in 2003. (See "Mideast Roadmap - Will it bring peace?") The Arabs and the Jews will be re-fighting the bloody war that took place after the partitioning of Palestine in 1948 and the creation of the state of Israel -- by United Nations mandate. Any unilateral declaration of a Palestinian state on pre-1967 borders would create extremely tense stalemate that could lead quickly to war.
The announcement of election results favoring the party of president Rene Preval has given the appearance of a stolen election in Haiti and triggered widespread violence on Wednesday, according to the Montreal Gazette.
For a number of years, Haiti has been one of the poorest countries on earth, with many neighborhoods strewn knee high in garbage, and the squalid stagnation got much worse after the catastrophic earthquake on January 12 of this year.
And now, cholera has spread to every part of the country, according to the LA Times. More than 91,000 people have gotten sick, and over 2,000 have been killed. In some cases, death occurred within two hours of falling ill from the disease.
In the past few years, I've reported on violence in Kenya, Iran, Iraq, Lebanon, Thailand and Burma (Myanmar). In each of those cases, I was able to predict that the violence would fizzle out because these countries were in generational Recovery, Awakening or Unraveling eras.
But no such prediction can be made of Haiti, which is well into a generational Crisis era. The violence in Haiti could easily spiral into full scale civil war, and frankly the only thing stopping it is the presence of U.N. peacekeeping forces, and injections of massive international aid.
 |
Earlier this year, a confrontation was growing with China on one side, and with the US, Vietnam and other Asian countries on the other side. (See "24-Jul-10 News -- US confronts China on South China Sea claims.") Widespread opposition by countries in the region have caused China to step back a bit. China's position hasn't fundamentally changed, but lately the Chinese seem to be a bit more "open-minded." Rajaratnam School of International Studies (RSIS).
North Korea has released a report defending the its artillery attack on Yeonpyeong island last month, killing four people, including two civilians. The North Koreans do not recognize the Northern Limit Line (NLL) that separates North Korean and South Korean sea waters, and claim that Yeonpyeong Island is actually North Korean territory. I guess they're saying that therefore they can kill as many civilians on the island as they want. Reuters
A suicide bomber struck a market in northwest Pakistan on Wednesday, killing more than 10 people. VOA
Pakistan is developing a close alliance with Sri Lanka, now that the Sri Lankan civil war with the Tamil Tiger rebels has ended. Pakistan has accused India of fomenting the Tamil Tiger rebellion, and now sees Sri Lanka as a counter-balance to India in Asian politics. Sri Lanka, Pakistan and China all have close ties with one another, and would be expected to be allied with one another in the "Clash of Civilizations" world war. Bahukutumbi Raman.
A new Russian law on the restitution of religious property was largely written to benefit the Russian Orthodox Church, whose property was confiscated and destroyed during the Bolshevik Revolution. However, under the terms of the law, Russia's Muslims are also going to demand return of properties confiscated from them in the past. These demands will stir anger and xenophobia among ethnic Russians. Paul Goble
About 50 European Muslim and Jewish faith leaders met in Brussels on Monday to urge better protection of religious minorities in Europe and to establish closer ties. European Jewish Press
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A bitter, angry Obama turns away from nihilism
In a stark admission of failure, the Obama administration has abandoned its strategy for reaching a Mideast peace agreement, according to VOA.
The Obama administration will no longer try to persuade Israel to renew the moratorium on building West Bank settlements. The previous moratorium ended on September 26, and the Obama administration has been applying enormous pressure to the Israelis to extend it. At one point, the administration offered to provide Israel with a squadron of fighter planes if only Israel would agree to a further 90-day moratorium. However, it's been clear that Israel's government would collapse if Prime Minister Benjaamin Netanyahu tried to impose a new moratorium under any circumstances.
The administration claims that it's now going to try other approaches to reaching a peace treaty, but it's hard to see where they're going to go next after this complete failure.
Another question is: What are the Palestinians and the Arab League going to do now?
Will Palestinian Authority president Mahmoud Abbas go through with his threat to resign, and to dissolve the Palestinian Authority?
Will the Arab League as the United Nations Security Council for an international mandate declaring a state of Palestine on the pre-1967 borders? And if so, will the U.S. veto it, or let it pass?
The international political pressure to unilaterally declare a Palestinian state is growing, according to The National (UAE). Several Latin American states, including Argentina, Uruguay, Brazil, Costa Rica, Cuba, Nicaragua and Venezuela, have all recognized a Palestinian state based on the pre-1967 borders.
However, an analysis by China's state-sponsored Xinhua news service says both Israeli and Palestinian analysts say that "the move was mostly symbolic and would have little practical effect on either Israeli or Palestinian policy."
I'm not so sure. This is the kind of issue that can catch fire and spread. We say what happened last spring with the "Gaza flotilla incident," when condemnation of Israel spread rapidly to many countries, especially in Europe. The same thing could happen with this issue. This issue could go either way.
I first wrote about Barack Obama in 2007, in "Barack Obama to Boomers: Drop dead!" In that article, I quoted Obama as expressing his contempt for Boomers. This was when Obama and the loony left were doing everything in their power to cause America to lose and be humiliated in Iraq. In the end, it was the loony left that was humiliated, after the success of President Bush's "surge" strategy.
Nonetheless, Obama has adopted almost everything the loony left has proposed, the loonier the better. He was going to heal the world as soon as he took office. He would be guided by facts, not like President Bush, who was guided by ideology and ignored facts. He would cure global warming, close Guantanamo, become friendly with Iran and North Korea, bring a two-state solution to Palestinians and Israelis, beat the Taliban and al-Qaeda, reflate the real estate and stock market bubbles and, of course, provide universal health care. He's failed at all of these objectives (except possibly the objective of reflating the stock market bubble). And his party suffered a humiliating electoral defeat in November.
As we described above, Obama suffered another major foreign policy disaster on Tuesday, when it was forced to abandon the effort to pressure Israel to renew its West Bank settlement freeze.
I've listened to many of Obama's speeches, during his campaign, and after he took office, and he never failed to express contempt, in one way or another for accomplishments of earlier generations. Whether it was in Iraq or on Wall Street, or in policies like health care, other people's ideas were crap, and he knew better than anyone.
On Tuesday, for the first time, Obama threw aside the nihilism of the loony left, and began to act more presidential. He was obviously angry when he spoke, and was obviously saying things that he didn't want to say, but he said them because he had to. Here's a portion of the transcript:
"I know there’s some people in my own party and in the other party who would rather prolong this battle, even if we can't reach a compromise. But I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession.I'm not willing to see 2 million Americans who stand to lose their unemployment insurance at the end of this month be put in a situation where they might lose their home or their car or suffer some additional economic catastrophe.
So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. The American people didn’t send us here to wage symbolic battles or win symbolic victories. They would much rather have the comfort of knowing that when they open their first paycheck on January of 2011, it won’t be smaller than it was before, all because Washington decided they preferred to have a fight and failed to act.
Make no mistake: Allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family. And that could cost our economy well over a million jobs."
As I said, I've heard many speeches by Obama, but I've never heard him talk this way. If you put aside the bitter, angry tone, this kind of compromise is much closer to the way a President of the United States should be acting.
Obama seemed to be bitter and angry at everyone, but he seemed particularly angry at the loony left, who have been rancorously criticizing him for daring to reach a compromise.
There's one more point to be made. During the question and answer session, Obama referred to a certain recovery in the coming year. He apparently believes that there will be a recovery next year with absolute certainty.
There's a huge asset bubble in the stock market, and people are confusing that with economic growth. From the point of view of Generational Dynamics, nothing has changed.
19 countries have announced that they will not attend the Nobel Peace prize ceremony for the award to the imprisoned Chinese dissident Liu Xiaobo. The 19 countries are: China, Russia, Kazakhstan, Colombia, Tunisia, Saudi Arabia, Pakistan, Serbia, Iraq , Iran, Vietnam, Afghanistan, Venezuela, the Philippines, Egypt, Sudan, Ukraine, Cuba and Morocco. This is a very interesting list because in some cases it indicates which side certain countries will choose in the Clash of Civilizations world war. NY Times
China is rejecting a barrage of US criticism that China is enabling North Korea's aggression, and helping North Korea develop nuclear weapons. VOA
Much of India is on alert today, after a terrorist blast killed a two year old girl and injured 21 others on Tuesday evening at a holy Hindu shrine in the city of Varanasi in northern India. The Islamist terrorist group Indian Mujahideen has claimed responsibility for the attack, and has threatened additional attacks. The Hindu
Late Tuesday evening, Ireland's parliament passed the first votes on the austerity budget that must be enacted for Ireland to receive EU bailout. However, the budget process still has a long way to go, and passage of the budget is not a done deal. Bloomberg
Those who wish to watch high definition prime time shows on their 50-inch television sets, but don't want to pay for a cable service, can do so by getting the modern equivalent of rabbit ears antenna, and pull free tv signals over the air. NY Times
(Comments: For reader comments, questions and discussion,
see the 8-Dec-10 News -- Obama administration ends effort to pressure Israel on settlements
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(8-Dec-2010)
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Will China bail out Europe?
South Korea, the U.S. and Japan are publicly stepping up their cooperation in confronting and condemning North Korea and, by implication, are criticizing China for not doing more to bring North Korea under control.
At a meeting in Washington on Monday with foreign ministers from Japan and South Korea, Secretary of State Hillary Clinton said the following:
"We all agree that North Korea’s provocative and belligerent behavior jeopardizes peace and stability in Asia. We are deeply concerned by its unprovoked attack on the island of Yeonpyeong, resulting in the loss of South Korean lives. On behalf of the American people, I would like to convey our sympathies to the victims and their families. Our thoughts and prayers are with you. We want the people of South Korea to know that we are standing shoulder-to-shoulder with you, and we are deeply committed to your defense.The minister and I share the view that the attack by the North Koreans violates the Armistice Agreement of 1953; that North Korea’s provocative and belligerent behavior threatens us all, and that it will be met with solidarity from all three countries.
The attack is the latest in a series of North Korean provocations. It has disclosed a uranium enrichment program that violates UN Security Council Resolutions 1718 and 1874, as well as North Korea’s commitments under the September 2005 Joint Statement of the Six-Party Talks. And the sinking of the Cheonan, killing 46 South Korean sailors, deepened North Korea’s international isolation."
This is the strongest statement of mutual cooperation between the three countries made so far. Furthermore, it implies complete rejection of any claims by the North Koreans that they weren't responsible for the sinking of the South Korean warship Cheonan several months ago.
Clinton added:
"The U.S. treaty alliances with Japan and the Republic of Korea have been the foundation for peace and stability in Asia for decades, and the Japan-South Korea partnership helps form a triangle of stability and cooperation. The ministers and I reaffirmed our steadfast commitments under our respective defense treaties."
Reaffirming the commitments in these defense treaties means that the United States military will defend South Korea if North Korea attacks.
It was just a few weeks ago, in September, that Clinton reaffirmed America's commitments under a 1960 treaty with Japan to defend Japan if China attacks the disputed Senkaku Islands (called the Diaoyu Islands by the Chinese) that are currently administered by the Japanese.
The purpose of all of these post-WW II treaties was to prevent a new Asian war from breaking out. The theory has always been that Taiwan, South Korea and Japan will not be attacked by China (or Russia) if it is known in advance that the consequences of such an attack would be war with the United States.
However, as all of these countries enter generational Crisis eras, the things that used to work don't work any more. Nationalism and xenophobia are increasing in all of these countries, and North Korea is becoming more desperate because it can't feed its people.
North Korea has been making increasingly shrill war threats in the last few days. They haven't yet responded directly to Hillary Clinton's latest remarks, probably because they were asleep when she made them, but a sharp response should be coming soon.
Harvard professor Niall Ferguson was interviewed on CNN on Sunday. He was saying that Europe is going to be facing major new crises in the weeks to come, and that the Germans are not going to want to "write checks" to the countries on the periphery of Europe (e.g., Greece, Ireland, Portugal). Here's part of what he said:
ZAKARIA: "No, no. I understand. But, I mean -- so play this out for me. You have these -- you have -- what is happening right now is this is becoming much more expensive for the Irish, for the Spaniards to borrow. What happens? If the Germans refuse to write these new checks, does the euro collapse?"FERGUSON: "But it doesn't even need to be the Germans. Remember, you have to get collective agreement on -- on a bailout. We saw that in the case of Greece, and it's quite possible to imagine that more than one country would balk at the idea of another great big commitment. All these governments, after all, have rather large deficits to start with, so making it even larger is not very appealing.
So what's the alternative? If there isn't going to be another super large bailout, much larger than the Irish one, it eventually boils down to this -- does the European Central Bank turn on the printing press and engage in its own version of quantitative easing, too? In other words, does it go head to head with the Fed in trying to print its way out of the problem?
Now, if that can't happen and there can't be a kind of classic bailout by taxpayers, then there really is no other European solution in view. It therefore requires either the United States, once again, to step up as it did in the teeth of the crisis.
Or let's not forget our friends in Beijing because there's a wonderful opportunity here for China to diversify its vast international reserve at rather a good price. And I'm looking closely to see whether there's going to be a deus ex machine from China to try to bail out the Europeans when it becomes clear that the Europeans can't bail themselves out."
When I wrote about "The bubble that broke the world," I said that when the financial crisis really struck the United States at its worst, then China might bail out the United States to try to save itself, just as the U.S. bailed out Germany to try to save itself in 1932.
I guess I should have suggested not that China might try to bail out the U.S., but that China might try to bail out Europe.
A weekend proposal to issue "euro bonds" -- bonds that would be guaranteed by all the countries of Europe -- has been shot down. The idea behind the proposal was that instead of having Greece, Ireland, Spain, Portugal, etc., issue its own bonds, there would be one bond issued by the entire EU. The proposal was heavily promoted by Jean-Claude Juncker, the head of the European group of finance ministers. But German Chancellor Angela Merkel rejected the idea, saying that the EU treaty does not allow for euro bonds. All of these Europe-wide financial proposals have one element in common: They all would require Germany, as the country with the largest economy, to "write checks" to bail out other countries, and so all of these proposals are being rejected by Germany. Deutsche-Welle
Many American states are worse off than European countries. States like Illinois, California, New Jersey and New York have been delaying payments to vendors, stopped making payments to workers' retirement accounts, and delayed tax refunds. Some states are releasing prisoners early to cut expenses. Layoffs of police and teachers are becoming more common. Federal stimulus money has prevented state bankruptcies so far, but that money will run out next summer, and things are expected to reach crisis levels next year. NY Times
China used to buy a lot of weapons systems from Russia, but now China clones Russian weapon systems and sells them to other countries. WSJ (Access)
The crisis in relations between Turkey and Israel may be nearing an end, as Israel is close to signing an agreement with Turkey where Israel apologizes for the Gaza flotilla incident of several months ago, and arranges to pay compensation for the people killed or injured. Haaretz
(Comments: For reader comments, questions and discussion,
see the 7-Dec-10 News -- US and Japan condemn North Korea
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(7-Dec-2010)
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North Korea makes hysterical war threat
A couple of my BigPeace readers have asked for further details about the Generational Dynamics methodology for analyzing history, and relating historical events to today's world.
To illustrate the methodology, I selected the Mongol invasion of China in the 1200s. This analysis shows that China in the 2000s is similar in many ways to China in 1200s.
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A complete generational analysis of the Mongol empire would require researching many sources, including original Mongolian texts written in the 1200s. However, for this simple illustration we'll analyze an article from just one source, Peter N. Stearns' The Encyclopedia of World History, 6th edition (2001). We'll only quote excerpts here. You can read the entire article in the Generational Dynamics forum, where you'll also find other source documents.
The Mongol Empire lasted approximately 150 years, defined by three generational crisis wars.
According to Stearns, in the 1190s, "The Mongols in central Asia formed a new empire under Temujin (1167-1227), who rapidly expanded the empire by use of strategy and his military machine, employing discipline, extraordinary mobility (especially on horseback), espionage, terror, and superior siege material. [In 1206,] Temujin was proclaimed [Genghis Khan] ('ruler of the world') at the Mongolian capital of Karakorum."
From the point of view of generational theory, the Mongol invasion was a crisis war that climaxed in 1206, a date that is imprinted on Chinese memory. There are some people who claim that obscure wars that occurred centuries ago are irrelevant today, and yet today's American politics is peppered with references to 1776 and the Revolutionary War.
The date 1206 represents a cataclysmic victory of the Mongols over the Han Chinese. However, it took a second crisis war, decades later, to complete the achievement.
Stearns says that in 1273, "After four and a half years of desperate and brilliant fighting, the last two strongholds of the Song against the Mongols, Xiangyang and Fanchengboth walled cities in modern Hubei Province fell. Explosives were used by both sides as weaponry in the fighting, perhaps for the first time in history. Hangzhou was captured in 1276, Guangzhou the following year. The Song fleet carrying the last pretender to the throne was destroyed in 1279."
The Mongols' destruction of the last vestiges of the Song Dynasty in this second crisis war completed the Mongol humiliation of the Han Chinese.
Between those two wars, how well did the Mongols govern the Han? Stearns' article provides enough information for a useful generational analysis of how the country was governed by the Mongols in that roughly 70 year period.
The period following a crisis war is a Recovery era whose purpose is to guarantee that there won't be another war. According to Stearns, the Mongols set up an agricultural tax system and, "[In military affairs,] there was a four-tiered system for bureaucratic preference: Mongols came first, followed by non-Chinese ethnicities, northern Chinese, and finally southern Chinese. The same quotas applied to examination candidates, and since some 75 percent of the population was southern Chinese, the Chinese were greatly disfavored." (Paragraph corrected - 7-Dec)
This four-tier system is an example of the kind of austere institutions that the survivors of any crisis war set up to guarantee that the war is over. After the Communist Revolution, Mao Zedong set up the Great Leap Forward in 1958 to make communism permanent.
When Mao set up his Recovery era institutions in the 1950s, he may have looked back to what the Mongols did.
According to Stearns, "The population of China was hit hard by the Mongol invasions and wars. The depopulation of the north and migrations to the south were so great that during the Yuan, at least 75 percent of the Chinese population lived in the south."
When something like this appears in a historical account, it's likely that the Malthus effect (the fact that population grows faster than the food supply) has been playing a large part.
Here's a graph of the population of China that I picked up from work by Prof. Peter Turchin of Univ. of Connecticut:
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You can see from this graph that China has suffered a number of extremely dramatic population collapses over the centuries, including the one that we're talking about here in the 1200s.
Stearns says, "Agriculture remained central to the national economy during the Yuan. The introduction of sorghum helped revitalize and repopulate northern China. The Mongols seized land for their own use such as in support of their armed forces and often forced Chinese peasants into servitude on that land. Imperial inspectors annually examined crops and the food supply with a view to purchasing when stocks were ample, for storage against famine."
These are the kinds of things that Mao also did in the 1950s. However, he apparently didn't do it as well as the Mongols did, since the Great Leap Forward killed tens of millions of Chinese through starvation and execution, and ended up discrediting communism.
The threat of famine and starvation has been constant through centuries of Chinese history. One of the great thinkers on this subject was Hong Liang-ji (1746-1809), a Chinese Malthus, who noticed that China's population doubled every thirty years:
"As peace has existed for a long time, the population has increased five times from thirty years ago, ten times from sixty years ago. If compared with a hundred years ago or more, it has increased more than twenty times.If a man marry and make three children, and those children also marry, the family will be eight. If each child marries and makes three grandsons, and they also marry, the family will be more than twenty, although some of them will pass away. Thus the family will be more than fifty or sixty persons including the next generations. ..."
On the other hand, the increase of social wealth such as cultivated land and houses is very slow. So population increase exceeds by a great degree that of land and houses. "Therefore land and houses are always inadequate, households and population are always surplus."
China is facing this issue today, as it desperately tries to increase food production and imports to feed a growing population and to stave off rebellion. It's a contest they can't win.
About 20 years after the climax of the Mongol invasion, the first generation of post-war kids came of age and made their opinions heard. This is the generational Awakening era, the time of a political "generation gap," when the kids rebel against the austere measures set up by the war survivors. Throughout history, great ideas, especially religious movements, are launched during Awakening eras, and become either established or extinguished by later crisis wars.
Stearns' article hints at a blossoming of religion and the arts, but the most interesting part says that in the 1250s, the Mongol leaders "opened a series of debates at court between Buddhists and Daoists, with Confucians in attendance. In the end, Daoism lost out, and it even suffered some repression."
This is absolutely fascinating, and something I'd want to know a great deal more about, because this is occurring during the generational Unravelling era, where new fault lines would be developing, leading to the next crisis war. I would expect to see the complex four-tier system start to unravel during this period. It wouldn't surprise me at all if further research revealed that the religious debates were triggered by an incident around 1250 similar to the 1989 Tienanmen Square massacre, which led to Beijing's violent repression of the Falun Gong in modern China.
At this point I have to repeat that this illustration is a bare-bones skeletal generational analysis, based on only a single brief source. A full-scale generational analysis would require many additional sources, particularly including the original Mongol script documents written at the time.
The generational history provides a lot of information that an "ordinary" history does not. Many historical accounts are little more than lists of dates and tribes and kings and battles. Generational Dynamics respects all that information, but provides a context that tells you much more -- the "soul" of a civilization, an idea of what's really going on, and how the past relates to the present.
I've done hundreds of these kinds of analyses, but I've barely scratched the surface. There are easily tens of thousands more of them to be done. It will take an army of graduate students to do them over the next 20 years. Anyone interested in doing original historical research is invited to contact me. Also contact me if you're interested in funding a project to create a "Generational Dynamics World Model," with powerful predictive capabilities for commercial and government applications.
As previously described, there was a new crisis war in 1273, destroying the rest of the Song Dynasty in the south. The Mongols governed the Han for decades to come, until the next crisis war, according to Stearns:
"The MING DYNASTY was founded by ZHU YUANZHANG (b. 1328, r. 1368-98), who reigned as Taizu, the second time a peasant had risen all the way to emperor. Owing to poverty, Taizu had become a Buddhist monk, but later he turned to rebellion against the Mongols, leading a huge band of followers in south China to conquer the north, the first time the country was reunited through conquest from the south (the only other time was by the Chinese Communists)."
Zhu conquered Nanjing in 1356. The Han-led Ming Dynasty ruled until 1644, when it was replaced by the Qing Dynasty, governed by Manchus. The Manchus governed until 1912, when the Republic of China was created, and that lasted until the People's Republic of China was formed in 1949.
The xenophobia between Mongol and Han Chinese is still a powerful force today. This has become apparent with the popularity of a 2004 book called "Wolf Totem" by Han Chinese author Lu Jiamin that has become extremely popular and has polarized Han-Mongol relations, according to an analysis by La Trobe professor James Leibold.
The argument is that the Han race is docile, insular and sheep-like, while Chinese civilization has been propelled forward over the last 5000 years by the "regular, re-invigorating 'blood infusions' from the dynamic, martial, and democratic wolf spirit" of the Mongols, Manchus and other ethnic minorities. Han commentators call these concepts racist and fascist, and they've sparked nationalist Han anger towards an "enemy within."
So the Mongol invasion may have occurred 800 years ago but the same issues -- religion, famine and xenophobia -- are just as important today as they were then.
War threats from North Korea are becoming increasingly shrill. Sunday's threat, as reported by Yonhap, was as follows:
"The political situation on the Korean Peninsula is reaching an uncontrollable level due to provocative, frantic moves by the puppet group. Should a full-scale war break out between the North and the South, this will have grave influence on peace and security on the peninsula and elsewhere in the region. ...Nobody can predict how the situation will deteriorate in the future. The U.S. and South Korean puppets should not act rashly, mindful of possible consequences of their military provocations."
The North was specifically objecting to the joint military exercises that the South is conducting with the United States.
In separate news, a survey shows that South Koreans' xenophobia towards the North is increasing dramatically, according to JoongAng.
(Comments: For reader comments, questions and discussion,
see the 6-Dec-10 News -- Mongol invasion of China in 1206 has impact today
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(6-Dec-2010)
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Tajikistan cracks down on Muslim political parties
As we've reported a number of times in the last few months, 75 year old Palestinian president Mahmoud Abbas frequently expresses the desire to resign and retire. However, the consequences of his retirement would be dramatic, as it would mean the dissolution of the Palestinian Authority. (See "11-Oct-10 News -- Resignation of Abbas would trigger big changes in Mideast.")
Now Abbas has renewed his threat to dissolve the Palestinian Authority, according to VOA.
The Palestinian Authority is responsible for governing and policing the West Bank. Without the PA, the West Bank would have to be policed by either the Israelis or by a United Nations peacekeeping force. In either case, the chances of local violence would be extremely high.
In a television interview on Friday, Abbas said that he could not continue as president of an authority that does not exist, explaining that the authority does not exist because of the Israeli occupiers.
It's hard to know how seriously to take Abbas' threat, since he repeats it so often. He's under enormous pressure from the United States and probably also by the Arab League to remain where he is, rather than creating a vacuum that could be filled by a new war.
Still, threatening to resign is the only real leverage he has to use against the Israelis.
Abbas's statement came a day after Israel decided to push forward with plans for 625 new homes in east Jerusalem, according to the Jerusalem Post. Ever since the 10-month moratorium on building new West Bank settlements expired on September 26,
From the point of view of Generational Dynamics, nothing has changed in the Mideast since I made my first major prediction on this subject in 2003. (See "Mideast Roadmap - Will it bring peace?") There is no chance of a lasting peace deal because Arabs and Jews will be re-fighting the genocidal war that they fought in 1948, after the partitioning of Palestine and the creation of the state of Israel. I assume that all the politicians involved already understand this, but that they're all just saying things to avoid being blamed for what happens.
As we've reported recently, the Islamic Movement of Uzbekistan (IMU) has been reviving as the most virulent Islamist terrorist group in the world, second only to al-Qaeda, and the IMU has been specifically targeting Tajikistan, a nearly failed state, with extreme poverty, a breeding ground for Islamist terrorist sentiments. Now the government of Tajikistan is cracking down, and trying to disband the Islamic Party of Rebirth in Tajikistan, a political opposition party supposedly violating the country's religious laws. However, this crackdown may encourage Islamist extremism in Tajikistan, and will also encourage terrorists to migrate northward into Russia. Eurasia Review
After last week's WikiLeaks releases of previously secret documents made clear the contempt that Arab leaders have for Iran, and the fear they have for Iran's nuclear weapons program, Iran has been struggling to reassure the Arab states that they have nothing to fear. That's what Iran's Foreign Minister Manouchehr Mottaki told a Gulf security conference on Saturday -- that a more powerful Iran is nothing to fear. He said Iran's power in the region is their power, too. I would be very surprised if any Arab leaders bought that line. VOA
Someone is covertly attacking Iran's nuclear program. There's the Stuxnet virus that has shut down uranium enrichment, and there are the terrorist murders of two top nuclear scientists in Tehran. Nobody is claiming credit for these attacks, but it's increasingly suspected that Israel's Mossad is behind them. Guardian
(Comments: For reader comments, questions and discussion,
see the 5-Dec-10 News -- Abbas renews threat to dissolve Palestinian Authority
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(5-Dec-2010)
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Jobs shock fails to dampen investors' bubbly holiday spirit
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Kim Kwan-jin, who is a 61-year-old Boomer who will become South Korea's Defense Minister, says he will not show the same weakness as his predecessor. Kim Tae-young was fired last week because he didn't react strongly enough to the recent North Korean artillery attacks on Yeonpyeong Island, killing civilians for the first time since the 1950s Korean War. JoongAng quotes Kim Kwan-jin as saying:
"We would definitely use the Air Force to strike back.Rules of engagement are valid as guidelines to prevent accidental clashes from escalating. However, when [a country is suddenly] attacked, that’s a matter of self-defense. The enemy must be punished thoroughly until the source of hostility is eliminated.
Up until now, North Korea has made provocations in ways that were difficult to foresee, and the provocations are getting larger in scale as they occur. There is a possibility that they will attack [again] in an unexpected way. Including the five western border islands, I believe our entire country is a possible target for provocations. Attacks can be focused in one area, or they can happen at once in different regions. Preparations will be made for all possibilities."
These remarks come at a time when the North Koreans are strengthening their military in preparation for another attack.
South Korea's government has been thrown into chaos by the North Korean attack, according to the BBC.
If they don't retaliate for North Korean attacks, they look like fools; if they do retaliate, they risk full scale war.
So far, the South Korean public appears to have been almost completely oblivious to the danger from the North. But the mood of the public is changing, as people are beginning to talk about such questions as where they would go in the case of full scale war.
As I've said many times, my belief is that the North Koreans would welcome a full scale war, which means that trying to compromise with they or accommodate them is useless. This is not a radical concept, as many societies and countries throughout history have welcomed war, thinking that nothing could be as bad as their lives now. Once the war starts, they learn to their shock and horror how very wrong they were.
Friday's disastrous jobs report failed to dampen investors' bubbly enthusiasm on Friday, as the stock market continued to rise.
Employers added 39,000 jobs during the month of November, when analysts had predicted 150,000 to 200,000. The unemployment rate rose to 9.8%, according to Associated Press. Analysts on TV were devastated, and many said that their hopes of a quick recovery had been ruined. Some of them, who had been very optimistic just yesterday, were predicting a "double dip" recession now.
But, as usual, that didn't affect the stock market on its rising binge.
This amazes me because it's just like 2006 and 2007. At that time, I was writing that the stock market was in a huge and growing bubble, and I kept expressing astonishment that it could keep going up when price/earnings ratios were so high, and are still high. (See "Updating the 'real value' of the stock market.") The Law of Mean Reversion still applies today, just as it did before.
Is it all going to happen again? Will the Dow Industrials index reach 14,000 before it collapses again?
S&P Ratings Service has warned Greece that it may further downgrade the country's bonds, which it already rates as junk. Reuters. The reason is that new interpretations by the EU of its bailout agreement imply that bond purchases by the European Central Bank (ECB) are senior to bond purchases by ordinary investors. This means that if Greece defaults, then the ECB loans will be paid first, before the investors' loans. The same considerations apply to the other countries that have been or will be bailed out. Euro Intelligence
Israeli Jew xenophobia toward Israeli Arabs is growing. A poll finds that 33% of Israeli Jews think Israeli Arabs should be placed in internment camps in the event of war, and 53% support encouraging Arabs to emigrate. Hardline Israeli foreign minister Avigdor Lieberman blames Arab leaders for the rising racism among Israeli Jews. Haaretz
A Jew who takes pride in Israel discovers that there were major atrocities on both sides of the 1948 Arab/Israeli war. This is consistent with the Generational Dynamics view of a generational crisis war. Palestine Note
Last year's UN climate talks in Copenhagen collapsed in humiliation, and the same thing may happen with this year's talks in Cancun. A group of Latin American, Arab and African countries are threatening to walk out if the "rich countries" did not commit to emissions cuts. Guardian
Asia is in a tailspin because 2010 has seen such aggressive hostility by the Chinese toward any country that takes steps contrary to China's foreign policy. South Asia Analysis Group
(Comments: For reader comments, questions and discussion,
see the 4-Dec-10 News -- South Korea threatens military action against North Korea
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(4-Dec-2010)
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Americans are oblivious to foreign policy issues
The Wikileaks story is very strange on many levels.
The founder, Julian Assange, appears to believe that he's somehow going to change history and change the world, by exposing tens of thousands of previously secret documents. Based on the interviews I've seen, he almost seems to have a kind of god complex.
Born in Australia in 1971, Assange is a Generation-Xer who seems to embrace the full nihilism of his generation.
In this, he's very much like President Barack Obama, as we've written in the past. President Obama was evidently convinced that he would take office on January 20, 2009, and change the world by January 21. He would accomplish this because he was "guided by facts," unlike President Bush, who was "guided by ideology and ignored facts." Instead, he's brought about a health care plan that's economy insanity, and he's made numerous blunders in international politics.
Assange exhibits the same kind of nihilism and destructiveness. He's willing to destroy international relationships by exposing secrets, even though doing so may get someone killed or might trigger a war. But his view is that he knows better than anyone else in the world, and that take advantage of this opportunity that's been given him in any way he pleases.
He's almost certain to be frustrated. He's already one of the most hated people in the world, and has to speak from secret locations because he's being sought by the police.
But more than that, the release of these documents is not going to change history in any way that he intends.
As I've said hundreds of times on this web site, the great events of history can be neither caused nor prevented by politicians. They're like tsunamis that have been launched decades before. Nothing can stop them, so all you can do is run for higher ground and hope for the best.
Just as no politician's act can have a predictable effect, the Wikileaks release will have no predictable effect. Any effect will be "chaotic," in the same way that the flapping of a butterfly's wing in China may or may not cause a hurricane in North America.
Let's take an example. One of the first things that popped into my mind when I first heard the Wikileaks story is this: Suppose that some previously secret document reveals that the Taiwan government has a secret ongoing program that appears to be leading to Taiwanese independence in a year or two. Suddenly, the paranoid and increasingly nationalistic Chinese Communist Party (CCP) in Beijing may see this document and decide they have to take immediate military action against Taiwan. This would lead to war with the United States, as well.
Now, in that hypothetical situation, depending on how it all played out, it's possible that the media would end up actually blaming Wikileaks for causing the war. However, from the point of view of Generational Dynamics, a war with China over Taiwan is going to occur anyway, so the Wikileaks release could not possibly have CAUSED the war. All that can be claimed is that it TRIGGERED the war that would occur anyway.
That's the fascinating aspect about the Wikileaks release for generational theory. How will the document release slow down or speed up events that are going to occur anyway? How will the release change scenarios and timings? How will the release change history's interpretation of today's events?
Long-time readers are aware that we're headed for a new "Clash of Civilizations" world war, and I've said many times that this war will pit America, Japan, India and Russia against China, Pakistan, and the Sunni Muslim countries.
Iran has always been a fascinating part of this lineup, because everyone seems to believe that Iran will end up being our enemy, with President Mahmoud Ahmadinejad in the same category as Hitler.
But as I've been pointing out for years, Iran is in a generational Awakening era, with young people who are generally pro-American and pro-Western, and who generally have no particular desire to push Israel into the sea. This is a fairly typical "generation gap" that occurs during generational Awakening eras. Furthermore, the Shia Muslim Persians in Iran have historically been bitter, violent enemies of the Sunni Mulsim ArabsMy expectation is that, when forced to make a choice in the Clash of Civilizations world war, Iran will choose to ally with the America and Israel.
What's been fascinating about the Wikileaks release is how the documents release an enormous amount of contempt that Arab leaders have for Iran. According to an analysis of the documents by Spiegel, Arab leaders are in favor of Israeli military action against Iran's nuclear facilities, and that "no one hates the mullah-controlled country as much as the Arab leaders."
None of this is particularly surprising to anyone. I've reported things of this sort in the past, but they've always been at the level of rumors. The Wikileaks documents show that the rumors are true.
Another analysis, appearing in the Palestinian Ma'an news service, says that Jordan's leaders are opposed to any breakthrough in diplomatic relations between the U.S. and Iran. Any such dialog could spark a rift between between Arab states, according to Stephen Beecroft, the U.S. ambassador to Jordan:
"[S]uch engagement would reward regional hardliners while undermining Arab moderates, without convincing Iran to cease its support for terrorism, end its nuclear program or drop its hegemonic aspirations.The metaphor most commonly deployed by Jordanian officials when discussing Iran is of an octopus whose tentacles reach out insidiously to manipulate, foment, and undermine the best laid plans of the West and regional moderates.
Iran's tentacles include its allies Qatar and Syria, Hezbollah in Lebanon, Hamas in the Palestinian territories, an Iraqi government sometimes seen as supplicant to Tehran, and Shia communities throughout the region."
The one part of this analysis with which I would take exception is identifying Hamas as an ally of Iran. Hamas is a Sunni Islamist terrorist organization, allied with Egypt's Muslim Brotherhood. Hamas has been receiving funding and weapons from Iran, but I doubt that Hamas leaders feel anything but contempt for Iran.
But apart from that, we can see the outlines of a possible scenario that will lead to the war that must occur. In this scenario, the Awakening era protests in Iran bring the younger generation into power, leading to an alliance with the West. This would undermine Arab moderates, who would lose politically to the Arab Sunni Islamist extremists. This would set the stage for a Sunni/Shia war.
This is just one of many possible scenarios, of course, but it shows how the Wikileaks release can influence events in the Mideast and around the world.
A web site reader has called my attention to the following very astute video, well worth 4 minutes of your time (contains explicit language):
Americans are almost completely oblivious and unconcerned about any foreign policy issues. This corresponds to the general observation that many young people can't find China on a map. Pew Research
The 86-year-old King Abdullah of Saudi Arabia is recuperating from back surgery in a New York Hospital, and has started physical therapy. He's been a moderate leader and a staunch ally of the west, and there's no clear successor when he dies. Business Week
Egypt says that neither Fatah nor Hamas really want a Mideast peace agreement, according to Wikileaks documents. Ma'an
Since Korea’s deadly attack on Yeonpyeong Island, killing several South Koreans, China has been under pressure to rein in the North Koreans, and prevent further provocations. China has proposed a resumption of the old 6-way talks, but those have been rejected by the the U.S. and South Korea, since it would appear to be rewarding North Korea for their attack. The South Koreans are becoming increasingly frustrated with the Chinese, who seem more interested in diverting attention away from the North Korean actions. The South Koreans are particularly angry at the Chinese for apparently sabotaging a United Nations investigation of the attack. JoongAng
(Comments: For reader comments, questions and discussion,
see the 3-Dec-10 News -- Iran/Arab relations roiled by Wikileaks memos
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(3-Dec-2010)
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South Koreans puzzled why investors don't worry about war
In the past few days, we've described the increasing investor panic that has driven bond yields (interest rates) for several European countries to historically high levels, indicating increasing investor belief that those countries are going to reach financial default. High yields mean that countries that borrow money have to pay very high interest rates.
It's not just countries that are affected. European corporations that wish to borrow money by issuing bonds are even worse off, according to the Financial Times (Access).
"Borrowing costs for most companies and banks in Europe have jumped but issuers from countries on the eurozone’s periphery have suffered most," according to the article. "Analysts and bankers said that, in effect, bond markets had mostly shut for these issuers."
Bond yields improved slightly on Wednesday on the rumor that the European Central Bank (ECB) was going to propose a massive new bailout program on Thursday, on the order of 1-2 trillion euros. Under the proposal, the ECB would purchase the country bonds and possibly also the corporate bonds at lower-than-market interest rates, effectively transferring the debt risk from the individual countries and corporations to the European Union itself.
It's not at all certain that the proposal will be accepted. Similar programs by the American Federal Reserve bank could be enacted with much less difficulty because of the highly centralized American government. But the European Union is still a loosely confederated group of countries.
"The knives are out," says a Euro Intelligence analysis, which says that Spain is accusing Germany and France for destabilizing the euro, and Ireland is blaming the ECB for pushing Ireland into an unnecessarily unfavorable bailout situation. As for the rumored ECB bond purchase program,
"Germany would go ballistic. Considering Axel Weber’s publically announced opposition to the puny bond purchase programme, which so far added up to a mere €60bn, it is hard to predict how Germany would react to a breach of European law, not to speak of German constitutional law. The loss of confidence in the euro and its institutions would be complete. This is another of those brilliant 'solutions' that backfire within a short time after their announcements."
However, Europe is running out of time, according to a Reuters analysis. According to one analyst, "The politicians in Europe as a group, and perhaps an orchestrated group, keep putting out the message that everything is fine when it is obviously not. There reaches a point, which arrived [on Tuesday] in my opinion, when the investment community's faith was breached one too many times and now people are fleeing the scene."
An interesting article in the Korea Times asks why the KOSPI index of South Korean stocks is doing so well, even though North Korea is threatening war:
"Moral hazard of market analysts on North Korean threat possibleAn ominous indifference is spreading in the financial market toward the military conflict with North Korea.
Some think that there is widespread public apathy toward security, particularly the risk of Korean War II, just like the American investors had been complacent before the bubbly subprime mortgage market.
Since Tuesday [November 23], stock prices have fallen, but the movement was so marginal that it is difficult to believe the escalating military tension out on Yeonpyeong Island had particularly any impact on the market. ...
People in the stock and bond market think that they have learned enough from previous experience that there will never be a full-scale war on the Korean peninsula. But this complacency can be dangerous, says a high-ranking official at the Ministry of Strategy and Finance.
“It seems that the people in the financial market are thinking (North Korea) is crying wolf,” he told The Korea Times on Friday. “That raises worries about what will happen to the market if the wolves really come down, though, of course, that should not happen in reality.”"
An important concept underlying Generational Dynamics is that younger generations ignore dangers that they're too young to have experienced in the past. Thus, they believe "that there will never be a full-scale war on the Korean peninsula."
Quite the opposite appears to be true. North Korea has been speeding up and escalating its provocations, several of which are explicit acts of war. North Korea is an increasingly desperate starving nation, and the evidence appears to indicate that the North Koreans want to provoke a war. One of these days, they'll succeed.
(Comments: For reader comments, questions and discussion,
see the 2-Dec-10 News -- Europe tries to save itself with massive new bailout program thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(2-Dec-2010)
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The euro and the League of Nations
Last week (see "27-Nov-10 News -- Europe is torn apart as financial crisis hits Spain"), we showed you graphs of bond yields (interest rates) for four of the PIIGS countries -- Portugal, Ireland, Greece and Spain.
Now, here are the graphs for Italy and Belgium:
 |
These interest rates are still around only 4-5%, not the 9-12% rates we were talking about for the other countries. But you can see from the graphs that they're rising parabolically, and that's causing EU officials to become nervous and panicky.
Ambrose Evans-Pritchard, writing in the Telegraph, compares the situation to World War II, and says that only one solution remains: Create a "total fiscal union to all members of the eurozone before everything falls apart, and to be enshrined in EU treaty law forever."
Under this proposal, "All debts of Greece, Cyprus, Italy, Spain, Portugal, and Ireland will be fused immediately with German debt; a single treasury will control spending, and issue euro-bonds for all Euroland."
According to an analysis in the Independent, investor panic "appears to be gathering pace." The article notes that, "Markets were also beginning to price in a second Greek crisis, as they digested the news that the payback by Athens of the €110bn in loans granted in May would be extended from 2015 to 2024." A bailout of Spain would "probably bring the EU/IMF €770bn rescue fund to breaking-point. Italy, the third largest economy in the euro area, really would be 'too big to save.'"
Ever since the credit crunch begain in August, 2007, central bankers and fiscal authorities have used one monetary easing trick after another to head off panic. In 2007, it was only necessary for the Fed to lower the Fed funds interest rate by 1/2%. Each crisis since then has been bigger than the previous one, and each monetary easing trick has had to be bigger than the previous one. This year's biggest was the EU's €770bn ($1 trillion) shock and awe rescue fund that accompanied the bailout of Greece in May.
So what's next? Europe's financial markets are in full-scale panic. Will Germany and France decide to recommend the "total fiscal union" of all eurozone members? I really don't think the German people would stand any of that, but it's hard to predict politics.
At any rate, things are moving quickly now, and we should see something, one way or another, within a short while.
In a column entitled, "The Euro has no Clothes," appearing in the NY Times, Roger Cohen made a rather astute comparison between the euro currency and the League of Nations.
"Is the euro to the early 21st century what the League of Nations was to the early 20th: a fine idea that became a political orphan and was condemned to unravel?As Ireland follows Greece in the great bailout domino game, and Portugal and Spain loom, the euro can no longer take its survival for granted just because its collapse would be unthinkable.
Both the League of Nations and the euro were conceived for worlds that vanished. The League emerged in 1919 from the ashes of World War I with the aim of preventing another war. But its idealism was an early victim of Hitler’s violent nationalism. Changed forces in Europe could not be checked by its covenant.
Jacques Delors’s “Report on Economic and Monetary Union,” laying out the path to a single euro currency, was presented in early 1989 just as all changed utterly.
Within months, the Berlin Wall fell, Germany was reunited, the Soviet empire imploded and Yalta’s imprisoned European nations were freed. ...
Yes, the League of Nations collapsed, but it did lead to the United Nations. The euro may also unravel but the idea is too good not to return in force. Between the League and the U.N. lay catastrophe. From here to euro 2.0 is not going to be pretty."
From the point of view of Generational Dynamics, the League of Nations and the euro currency were both created at roughly the same time in the generational cycle: during an Unraveling era just preceding a crisis era and a world war.
As I've pointed out many times, the survivors of World War II created the United Nations, the World Health Organization, the International Monetary Fund, the World Bank, the Rockefeller Foundation (Green Revolution), and other international organizations not only to prevent a new world war, but also to end poverty and starvation and to improve health. This happened as World War II ended, and could not have happened at any other time. That's the way the world works.
There are many big projects floating around these days -- the European Union, the euro currency, universal health care are examples. All of these projects are doomed to failure, like the League of Nations, and will be destroyed by the approaching world war. But once the war ends, all of them will be resurrected and implemented by the survivors.
As we've described many times, a major fantasy of Iran's hardline leaders, including president Mahmoud Ahmadinejad, is that they will gain hegemony over the entire Arabian peninsula, and govern the Muslim world in the same way that the Ottoman Empire governed prior to its destruction. We've pointed out that this fantasy can never be realized because the Sunni Arab population will never agree to be governed by the Shia Persian Iranians. Now leaked confidential memos from the Wikileaks dump have demonstrated the contempt that Arab states have for Iran, including some that urge the US to attack and destroy Iran's nuclear facilities. LA Times
China is denying that it has any control over North Korea, and contradicts claims by Americans that China "is not behaving as a responsible world power." For example, Chinese Premier Wen Jiabao said that China opposes any military provocation on the Korean Peninsula, and called for the utmost restraint from all relevant parties and joint efforts by the international community to ease tensions. The real problem is the joint military drills by South Korea and the United States, which they hope will deter North Korea, but instead will just further anger the North Koreans, and press them to take more aggressive countermeasures. Xinhua
(Comments: For reader comments, questions and discussion,
see the 1-Dec-10 News -- Europe's financial crisis spreads to Italy and Belgium thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(1-Dec-2010)
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