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Russia says that a ground war is near
Tunisia's interim government issued a sharp rebuke to the Libyan regime of Muammar Gaddafi on Friday, after Gaddafi's forces crossed the border into Tunisia in pursuit of Libyan rebels, according to the AP.
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On Friday, 15 Libyan military vehicles, carrying troops armed with anti-aircraft guns and rocket launchers, crossed the Libyan border and reached the Tunisian town of in Dehiba (Dhuheiba) where many Libyan rebels were staying, with the intention of being out of reach of the Libyan army. When the military vehicles were spotted, angry Dehiba civilians set upon the Gaddafi troops, creating a "chaotic situation," according to the article. Finally the Tunisian army stopped "several members of Gadhafi's brigades, regrouping them and leading them back to Libyan territory," the Tunisian Defense Ministry said.
The population of Dehiba "feels great solidarity" with the Libyan rebels, and they "detest Qaddafi's soldiers, they have a horror of them," according to a Dehiba doctor quoted by CS Monitor.
The Tunisian Foreign Ministry summoned Libya's ambassador to convey its "most vigorous protests" for the "serious violations" at the Dehiba border area Thursday and Friday, a ministry statement said.
Tunisia itself is going through a regime change, and in fact was the first to experience an "Arab uprising" in January. Tunisia has pointedly remained neutral in the Libyan civil war, which is consistent with the fact that Tunisia is in a generational Awakening era. (See "24-Jan-11 News -- Police join the protesters in Tunisia.") Thus, there's very little or no chance that these border clashes will spiral into full scale war between the two countries.
The town of Misrata, in the western portion of Libya near Tripoli, has become the focus of fighting in the last week, as the war continues to settle into a stalemate.
Gaddafi's forces have been shelling Misrata, and on Friday threatened to prevent humanitarian aid to be delivered to Misrata by sea, according to the Washington Post. Gaddafi's forces are being accused of laying mines in Misrata's port. This is apparently a war crime, although shelling Misrata is not a war crime, just war.
Meanwhile Russia, whose strategy is to keep the stalemate in Libya going on as long as possible, in order to keep Nato forces pinned down, continued to apply pressure. Referring to a Nato plan to name a point of contact between Nato and the Libyan rebels in Benghazi, Viktor Litovkin, executive editor-in-chief of Russia's Independent Military Observer newspaper is certain about NATO`s true reason for naming a point contact in Benghazi, according to Voice of Russia:
"I see it as a step towards ground operation, no matter who will lead it. All these aides and experts are expected not just to teach the insurgents to fight Gaddafi but also explore Libyan territories to know where to dispatch troops and place weaponry."
The article points out that Nato has no clear goal in Libya, and that the Nato-led campaign in Libya is "a war without a goal."
(Comments: For reader comments, questions and discussion,
see the 30-Apr-11 News -- Libyan war spreads briefly into Tunisia
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Apr-2011)
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Iran seeks to renew diplomatic relations with Egypt
This morning's key headlines from GenerationalDynamics.com.
The United States slapped sanctions on Syria's intelligence agency and two relatives of President Bashar al-Assad on Friday. The sanctions include asset freezes and bans on U.S. business dealings. Reuters
European Union member states, meeting in Brussels, gave preliminary approval to European sanctions on Libya. When formalized, these would apply an arms embargo and a ban on equipment used for repression such as body armour, explosives or vehicles that carry weapons. Reuters
A senior cleric in Iran is warning President Mahmoud Ahmadinejad not to overestimate his power. "The president should know that the majority vote for him was not absolute but conditional on his obedience towards the orders by the supreme leadership." Like America in the 1960s and 1970s, Iran is in a generational Awakening era that triggered massive student-led riots beginning in 1969. Just as this "generation gap" split apart America's government at that time, finally leading to the resignation of President Richard Nixon, Iran's government appears to be experiencing the same kind of turmoil. Haaretz
Iran's foreign minister has announced its desire to renew diplomatic relations with Egypt, and is now waiting for the Egyptians to take a similar decisions. However, some officials in Egypt are hesitant, for fear that renewing relations with Iran might isolate Egypt from the other Arab countries; undermine its leading position in the region; compromise its sovereignty, as a result of Iranian interference; lead to "Shi'itization" and thus to sectarian schism; and compromise Egypt's interests in the Gulf. With the last concern in mind, Egyptian officials hurried to assure the Gulf states that Cairo had no intention of forming a strategic alliance with Tehran. Memri
Israel has threatened to use an "arsenal of measures" against the Palestinian territories, in retaliation for the plans for Fatah and Hamas to reconcile and form a unity government. Measures include withholding $800 million in taxes, and lifting the VIP status of Palestinian leaders, thus subjecting them to humiliating border checks. Telegraph
Senior Nato military officials in Afghanistan said that they are expecting Taliban-led insurgents to launch a series of major attacks across the country over the next week. This surge in attacks occurs every year around May 1. Reuters
Pakistan's military announced that it successful tested a nuclear-capable cruise missle with a range of over 200 miles. Times of India
As Russia grapples with fuel shortages in several regions, the government banned exports of refined petroleum products on Thursday. Moscow Times
(Comments: For reader comments, questions and discussion,
see the 30-Apr-11 News -- Libyan war spreads briefly into Tunisia
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Apr-2011)
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Skepticism over Fatah-Hamas reconciliation
Wednesday's announcement of a Fatah-Hamas reconciliation, and plans for a unity government, has thrown international Mideast politics into disarray -- or perhaps I should say "further disarray," because it's been in disarray for a long time. (See "28-Apr-11 News -- Palestinian factions announce surprise 'reconciliation' on path to statehood.")
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The West has been dealing with the Palestinian Authority (the governing body associated with Fatah) for years, and many countries list Hamas as a terrorist organization. Once the unity government is formed, these countries will then have to deal with a named terrorist organization, or not deal with the Palestinians at all.
Thus, German Foreign Minister Guido Westerwelle released a statement saying, "Hamas is not a dialogue partner for us because we don’t work with organizations that fight with violence against Israel’s right to exist." (Ynet)
The situation is even more complicated in the United States, where it's against the law to provide aid to organizations that have been designated as terrorist. The State Department was asked what would happen to the $400 million in funding promised for this year, and an e-mail message received by Reuters, did not directly answer the question:
"The current Palestinian government remains in place and our assistance programs continue. If a new Palestinian government is formed, we will assess it based on its policies at that time and will determine the implications for our assistance based on U.S. law."
In order for Hamas to be acceptable to the U.S. and other Western nations, it has to agree to the conditions set down by the Middle East Quartet (United Nations, Russian Federation, United States, European Union) several years ago: recognize the state of Israel; renounce violence; and honor past Israeli-Palestinian agreements. Hamas has said that it will not agree to any of these conditions.
A month ago, Haaretz was quoting Palestinian president Mahmoud Abbas's adviser as saying, "The Palestinians need American money, but if they use it as a way of pressuring us, we are ready to relinquish that aid."
On Wednesday, a Hamas spoken appearing on Al-Jazeera, quoted by Memri, went even farther, saying that the Quartet and its terms and conditions are obsolete:
"We know that one of the main issues that was in dispute was the fact that every government must have a political platform, and that if it has no political platform, the platform of the president becomes that of the Palestinian government. The Palestinian political platform was in dispute, due to the terms set by the Quartet."Now the Quartet has become obsolete, along with its terms, and it is not taken too much into consideration. The Quartet and its terms were not mentioned in these [reconciliation negotiations], even once."
However, other Palestinian officials appear to be scrambling to try to find a political formula that will keep Western aid and support continuing to the unity government. Mahmoud Abbas told reporters on Thursday that he would be the one conducting peace negotiations with Israel, according to Haaretz. I interpreted his remarks as trying to say that "it's a unity government, but really it's just me, so you can keep the aid flowing."
But senior Hamas figure Mahmoud Al-Zahhar seemed to be saying something different, in a statement to Al-Jazeera quoted by Memri:
"I should make it clear that the political platforms [of Fatah and Hamas] will remain different. The question is how to manage the platforms so that they do not conflict with one another... Our perspective is entirely different from that of Fatah. Fatah believes in negotiations, while we believe that negotiations with the Israeli enemy are in vain. We believe in armed struggle, in addition to responsible governing, as well as making the government's resources available to the resistance."
This statement would appear to make aid to the unity government impossible, since it explicitly says that "government's resources [will be made] available to the resistance." This appears to be a direct statement that aid to the unity government will go to the militants attacking Israel.
Hamas has a lot of supporters, especially in South America and in parts of Europe. In the media, Al-Jazeera is completely in the tank for Hamas. If the U.S. cuts off aids to the Palestinians, then perhaps these other supporters will fill the gap by providing their own money, thus allowing the Palestinians to eat their cake and have it too. However, many countries like to talk, talk, talk, especially when they can verbally attack the United States, but when it comes to putting their money where their mouth is, they aren't as ardent.
The common wisdom is that Fatah and Hamas will do everything possible to paper over differences, in order to get the United Nations General Assembly to create a Palestinian State by international mandate in September. But as Hamas's Mahmoud Al-Zahhar said above, "Our perspective is entirely different from that of Fatah." The prospect of losing American aid and Western support, and having to depend on the likes of Venezuela, is going to make it very difficult to paper over the very great differences between the two factions.
(Comments: For reader comments, questions and discussion,
see the 29-Apr-11 News -- Hamas declares Quartet 'obsolete', while West mulls aid cutoff to Palestinians
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Apr-2011)
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U.S. GDP growth falls sharply in Q1
This morning's key headlines from GenerationalDynamics.com.
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An explosion, the suspected work of a suicide bomber, took the lives of 14 people in a popular cafe in a cultural heritage site that draws a million tourists a year. The explosion took place in Marrakesh, a tourist city 220 miles south of the capital. 14 people were killed, making this the deadliest attack since 33 people were killed by 12 suicide bombers in Casablanca in 2003. No one has yet taken credit, but Al-Qaeda in the Islamic Maghreb (AQIM) is suspected. Agence France-Presse
AQIM is another terrorist group, like al-Qaeda on the Arabian Peninsula (AQAP) using the "Al-Qaeda" brand name. (See my 2007 article, "Algeria bombings are from new generation of young al-Qaeda terrorists.") Formerly called the "Salafist Group for Preaching and Combat (GSPC)," it changed its name to "Al Qaeda in the Islamic Maghreb" (Maghreb is the Arabic word for North Africa), and began much more visible terrorist activities, beginning with terrorist bombings in Algiers and Casablanca on April of 2007.
According to some reports, some protesters in Daraa, Syria, are now carrying anti-tank weapons, indicating that the country may be approaching full scale war, as has occurred in Libya. Debka
A new "Day of Rage" is planned for Friday, after midday prayers, probably the biggest ever. With the estimated death toll already exceeding 500, much more bloodshed is expected on Friday. Jerusalem Post
U.S. GDP growth fell to 1.8%annual rate in the first quarter of 2011, after a 3.1% fourth quarter rise. Economists blamed the slower growth on the weather, as well as on food and gas prices. Reuters
South Korean officials are bristling at comments made by Jimmy Carter as he and "Elders" travel to North Korea. (See "26-Apr-11 News -- Jimmy Carter's 'Elders' visit N. Korea, as S. Korea deploys multiple rocket launcher systems.") Carter said that the food crisis in North Korea was due to the lack of aid being donated, seemingly referring to South Korea, which stopped large-scale food aid to the North last May, after the North Korean attack on the South Korean ship Cheonan. JoongAng
(Comments: For reader comments, questions and discussion,
see the 29-Apr-11 News -- Hamas declares Quartet 'obsolete', while West mulls aid cutoff to Palestinians
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Apr-2011)
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U.S. may end relations with Palestinians if unity government includes Hamas
Following several weeks of secret Egypt-brokered meetings in Cairo and Damascus, Palestinian factions Fatah and Hamas announced on Wednesday that they have "reconciled" and that they will form a unity government, according to the Jerusalem Post.
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Hamas is the organization that has been governing the Gaza Strip since it defeated Fatah (the military wing of the Palestinian Authority in the West Bank) in a 2007 war. However, Hamas is losing control of Gaza, largely because of its own internal complexity, with various wings promoting anything from war with Israel to total peace and coexistence with Israel. (See "16-Apr-11 News -- Killing of Italian activist exposes splits among Gaza militants.")
Fatah negotiator Azzam al-Ahmed said that the two sides have reached agreement on all points of contention, including the make-up of the unity government, fixing a date for presidential and parliamentary elections and restructuring the PLO. Also, the two parties agreed to release each others jailed prisoners.
Hamas' leaders has opposed reconciliation with Fatah since the 2007 war, because they feared losing control of Gaza after they'd won a war to get it. But according to an analysis by YNet, Egypt may have made some concessions to Hamas to convince them to take the deal. Speculatively, the concession might have been to open the border between Gaza and Egypt at the Rafah crossing, so that people and goods can flow freely back and forth.
Fatah and Hamas are pushing the reconciliation process because it's an essential step in preparing for a hoped-for vote by the United Nations General Assembly in September to recognize a Palestinian state unilaterally.
Israel's Prime Minister Benjamin Netanyahu had already scheduled trips to European capitals soon, followed by an address to the U.S. Congress, to lobby against recognition of a Palestinian state, according to Israel National News.
Netanyahu, along with everyone in the West, was evidently caught by surprise by Wednesday's announcement, and he issued the following statement:
"The Palestinian Authority needs to choose between peace with Israel and peace with Hamas. Peace with both is impossible because Hamas aspires to destroy the State of Israel and says so openly. It fires missiles at our cities; it fires anti-tank rockets at our children.I think that the very idea of this reconciliation shows the weakness of the Palestinian Authority and causes one to wonder if Hamas will seize control of Judea and Samaria like it seized control of the Gaza Strip.
I hope that the Palestinian Authority chooses correctly, i.e. that it chooses peace with Israel. The choice is in its hands."
Israeli and United States officials on Wednesday did not directly answer questions about whether they would continue to talk to a unity government that contained Hamas, or whether the U.S. will continue to provide billions of dollars in aid to the Palestinian Authority, when unified with Hamas.
Several years ago, the Middle East Quartet (United Nations, Russian Federation, United States, European Union) set the following conditions for recognition of Hamas as a legitimate government:
Hamas has repeatedly said that it will not agree to any of these conditions.
The Generational Dynamics prediction is that the region is headed for a new war between Arabs and Jews, re-fighting the genocidal war that followed the partitioning of Palestine in 1948 and the creation of the state of Israel. The Arab uprisings in Tunisia, Egypt, Libya, Syria, Yemen and Bahrain are causing rapid changes to the Mideast that bring that war closer, and this new reconciliation, if it works, is just one more of those rapid changes. September is still a little more than four months away, but in the Mideast these days, that's an eternity.
(Comments: For reader comments, questions and discussion,
see the 28-Apr-11 News -- Palestinian factions announce surprise 'reconciliation' on path to statehood
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(28-Apr-2011)
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Syria's uprising causes Iran to lose credibility in the region
This morning's key headlines from GenerationalDynamics.com.
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Egyptians appear prepared to overturn the three-decade-old peace agreement with Israel, by a margin of 54% to 36%. Those with higher incomes or a college education are more likely than others to favor keeping the treaty. Pew Global Attitudes Project
Commentators in Arab countries are gloating at Iran's obvious discomfort over the uprising in Syria, insisting that it's a Zionist plot, after hailing and supporting the uprisings in Tunisia, Egypt, Yemen and Bahrain. A regime change in Syria could be a huge blow to Iran's ability to project power in the region and threaten Israel, since Syria serves as a political and military conduit for Iran's backing of Hizbollah and Hamas. "Iran and Hezbollah destroyed whatever credibility Iran has left, when Iran let down the people of Syria by considering the movement of the people there a conspiracy," says one Jordanian commentator. LA Times
Wednesday's announcement of a reconciliation between Fatah and Hamas (see main article), if successful, could help Israel in some optimistic scenarios. If Hamas is participating in a unity government, this would minimize the group's desire to renew the conflict on the Gaza front, and could reduce tensions in general. In the most optimistic scenario, the reconciliation may even improve the chances of a deal to return captive soldier Gilad Shalit. Haaretz
The Fatah-Hamas reconciliation, if successful, will lead to even more optimism in the West Bank, which is having an economic boom in anticipation of recognition of a Palestinian state. With five-star hotels and high-tech companies coming to the region, entrepreneurs are speculating that a Palestinian state could become one of the leading countries in the region. Spiegel
At an April 16 meeting, Pakistan's Prime Minister Yousuf Raza Gilani lobbied Afghan President Hamid Karzai against building a long-term relationship with the United States, saying that the Americans had failed them both. Instead, Karzai should look to Pakistan and China as allies. If true, this would be consistent with the Generational Dynamics expectation that China, Pakistan and the Sunni Muslim countries would be allied against India and the U.S. in the coming Clash of Civilizations world war. Afghanistan's tribes would be split, with the Pashtuns in the south siding with the Taliban, and the Shia Muslim tribes in the north siding with India. Asian News International (ANI)
However, Pakistan denied the reports. "Reports claiming Gilani-Karzai discussion abt Pakistan advising alignment away fm US are inaccurate," Pakistan's ambassador in Washington, Hussain Haqqani, wrote on his Twitter feed. Pakistan's Foreign Ministry spokesman said, "It is the most ridiculous report we have come across." Reuters
Now that President Obama has released his birth certificate, does that mean that the vitriolic name calling on both sides will end? Hardly. During America's two previous generational Crisis eras, when acrimony is always at its worst, Abraham Lincoln was deeply hated by many, and just google the words "FDR scandals" to see what happened in the 1930s. Democrats called George Bush an illegimate president from the day he took office, and they vitriolically mocked his Texas accent and Texas hat. His reelection only made them angrier, and they even released a movie, "The Death of a President (2006)," that described Bush's assassination. The Democratic primaries in 2008 were acrimonious, especially as Hillary Clinton and anyone who disagreed with Obama was labeled a racist. So expect the release of the birth certificate to make the "birthers" even angrier, expect the Republicans to continue to find reasons to say that Obama is an illegitimate president, and expect the Democrats to continue to imply that all Republicans, and all people who disagree with Obama, are automatically racist. CS Monitor
One of the most senior members of al-Qaeda held at Guantánamo prison took injections "to promote impotence," so more time could be spent on jihad – rather than being distracted by women." Telegraph
(Comments: For reader comments, questions and discussion,
see the 28-Apr-11 News -- Palestinian factions announce surprise 'reconciliation' on path to statehood
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(28-Apr-2011)
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US housing prices will continue to fall for years
US home prices fell 1.1% in the one month period from January to February, according to the Standard & Poor's Case-Shiller index for February. February's data shows that the price declines are accelerating, according to CNBC. Housing prices continue to perform much worse than economists expected.
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Home price declines vary in different cities across the country. The above graphs from blytic.com show housing prices from Las Vegas, which are typical for almost every city in the survey, with accelerating downward prices. The exception is Washington DC, which is shown on the right, and which is presumably benefiting from the largesse of federal politicians.
Karl Case and Robert Shiller, the authors of the index, were interviewed on Bloomberg TV on Tuesday. Here is my transcription of some excerpts:
CASE: We had a sharp decline [in housing prices] after the peak in 2006, but that ended with the housing tax credit [in 2009]. Then we had a pretty good rebound at that point, and that's now turned around and it's almost back to where it was. So in a sense , we've already had a second dip [in prices], and I think it's in large measure due to this incredible decline in households.If you look at the housing as a market as a whole, and you look at household formations as the demand side -- new households being formed, and coming to the market to the market with income -- and on the other side of the market, housing production. Housing production has been zero basically for the last 33 months. Housing starts are down around 500,000 -- we're not building any new houses.
But the vacancy rates are still going up, despite the fact that there's very little production. We've always been able to count on new households coming into the market, and they're not coming now.
SHILLER: There are numerous other factors that I see. The unemployment rate is at 8.8%; long term unemployment rate is 4%, which is quite high; it's hard to get financing; lenders say that they've raised the credit score that's required to get a mortgage; people are just worried, and holding. The household formation is one symptom of that.
CASE: [For things to change,] I think that households have to come back, and it may be that price has to go down more to bring them back. If you look at housing today, relative to what it was 3 years ago -- first of all, prices are down 30% -- no one imagined they'd go down that far. Rates are at all time record low.
So affordability is terrific relative to the last four years, but people aren't buying, because the sentiment has changed completely -- they know there's risk now.
This analysis doesn't even count the "shadow inventory" of 7 or 8 million homes that are in foreclosure or close to them. (See "'Shadow inventory' of unsold homes continues to grow.")
The last part of this interview really emphasizes the generational aspects of the housing crash. People have been burned and continue to be burned, and this will make them risk-averse for the rest of their lives.
The net of this is that housing prices are still falling, and will continue to fall for many years. Housing prices today are around their year 2000 price levels; my own estimate is that they'll fall to their levels in the late 1980s.
Meanwhile, China's housing bubble a year ago was large enough so that there's enough commercial real estate under construction to give every man, woman and child in the 1.4 billion population country a 5x5 cubicle. (See "5-Feb-10 News - China's nationalism and real estate bubble grow.") There are similar figures for residential housing.
The housing bubble continues to grow in China, where the price-to-income ratio has now reached a stratospheric 27:1, according to Financial Times (Access), putting homes out of reach for all but the wealthiest people.
It's almost impossible to get analysts to concede that China has a serious housing bubble, just as it was impossible in 2006 to get any mainstream economists or analysts to recognize a housing bubble in America.
But the article quotes one Hong Kong analyst who agrees that China's housing is in a huge bubble, but according to him, that's a GOOD thing. The reasoning is that since middle class Chinese can't afford a house, they'll have money left over that they can spend on more consumer goods, which is good for China. There seems to be just no end to the number and absurdity of excuses that mainstream analysts can provide to explain away bubbles -- until the bubble crashes, and then it's too late.
(Comments: For reader comments, questions and discussion,
see the 27-Apr-11 News -- US housing crash accelerates, while China's housing bubble continues to grow
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(27-Apr-2011)
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Russia offers 'mediation services' in the Libya Crisis
This morning's key headlines from GenerationalDynamics.com.
Just as today's US housing data is much worse than expected (see today's main article), euro zone government debt is much worse than expected, reaching new record levels. Debt in all 16 euro zone countries rose last year, lifting the bloc's average debt to 85.1% of GDP, up from 79.3% in 2009. Greece's debt ballooned to 142.8% of GDP, and Ireland's debt surged 30.6 percentage points to 96.2% of GDP. Greece and the Europeans are still stalling on the question of restructuring Greece's debt, which seems to become more and more of a crisis each hour. Bloomberg
The bloody assaults and massacres by Syria's government on its own people continue on a daily basis. However, Syria is now on target to become a member of the United Nations Human Rights Council if, as is quite possible, the U.N. General Assembly votes to put Syria there next month. CS Monitor
Pursuant to its strategy of bogging the U.S. and the West in a protracted stalemate situation in Libya, Russia is offering "mediation services." Russia is hurrying to do this out of fear that the West will escalate the military action and bring it to an decisive end. By offering to mediate, they can guarantee that no decisive action will be taken, and the military intervention will continue indefinitely. Jamestown
Kuwait has given Libya's opposition leadership $181 million to help pay state employees who have not been paid in months. The National (UAE)
Monday's jailbreak at the Kandahar prison in Afghanistan is particularly embarrassing to the Canadians because they spent at least $4 million upgrading the prison and training its staff after a previous jailbreak by the Taliban in 2008 that freed more than 800 inmates. Canadian Prime Minister Stephen Harper said, "Obviously we’re disappointed with this particular failure there. But, you know, this is a long learning experience and we’ll continue to plug away and continue to work with Afghan authorities to make progress on these issues." Globe and Mail
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The three-story green buildings you see are brand new temporary buildings. They've just been built across the street from Buckingham Palace, housing 22 glass-fronted TV studios. They're painted green so that they blend in with the trees. They blend in well, don't they? No word on how much it costs to rent one. AFP
Lacking the money to pay its operating expenses, Mountain View's SETI (Search for Extra-Terrestrial Intelligence) Institute is shutting down its array of radio dishes that scan the skies for signals from extraterrestrial civilizations. Mercury News
(Comments: For reader comments, questions and discussion,
see the 27-Apr-11 News -- US housing crash accelerates, while China's housing bubble continues to grow
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(27-Apr-2011)
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North Koreans may be preparing new provocation
The South Korean military has deployed multiple rocket launcher systems on two northwestern islands that are near the maritime boundary with North Korea, according to unnamed government sources of the Korea Herald. North Korea launched an artillery attack on one of the islands, Yeonpyeong Island, last November, killing four South Koreans including two civilians.
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In addition, the military plans to establish a special military command in June, which is dedicated to protecting the border islands from possible North Korean provocations including amphibious infiltrations by its special warfare troops.
If the North Koreans follow their usual pattern, then they'll issue a few days worth of hysterical accusations that the South Koreans and the Americans are warmongers, while saying that their own artillery attack on Yeonpyeong Island, as well as the sinking of the warship Cheonan last May, were fully justified.
In fact, and unnamed North Korean force is quoting a top army official as saying, "A tense situation is being created on the Korean Peninsula, where nobody knows when a war could break out," according to Chosun. This follows reports that leader Kim Jong-il has recently visited "Building No. 3," in order to plan future provocations with the agency in charge of armed provocations against the South.
This comes at a time when former President Jimmy Carter is leading a delegation of "The Elders" to North Korea, to encourage Pyongyang to engage in a meaningful dialogue with Seoul and to address the country’s food shortage, according to JoongAng.
"At a time when official dialogue with the Democratic People’s Republic of Korea appears to be at a standstill, we aim to see how we may be of assistance in reducing tensions and help the parties address key issues including denuclearization."
Another "Elder," former Finnish President Martti Ahtisaari, added, "Clearly there is a great level of mistrust and suspicion between North and South Korea. But the stakes are too high to allow this standoff to continue."
It's possible that the starving North Koreans might make some minor concession in order to food aid restarted, after it was discontinued last year because of the Cheonan sinking.
But beyond that, this effort is so completely unrealistic that it's hard to believe that anyone would seriously consider it, but it illustrates how deeply the attitudes of World War II survivors different from attitudes of those growing up after the war.
In addition to Jimmy Carter (born 1924), the members of "The Elders" are former President of Ireland Mary Robinson (born 1944), former Prime Minister of Norway Dr. Gro Brundtland (born 1939), and former President of Finland Martti Ahtisaari (born 1937). The Elders group was formed four years ago by Nelson Mandela (born 1918).
These people all lived through the World War II years of horror, and they've devoted their lives to [[the futile task of]] doing everything possible to keep anything like that from happening again. The Elders group are firmly in the "peace through conciliation" camp for keeping anything like that from happening again, while Presidents like John Kennedy and Ronald Reagan were much more in the "peace through strength" camp.
By contrast, the Boomers and Gen-Xers know absolutely nothing of the horrors of WW II, and so they are much more confrontational, and much more willing to cross red lines that risk war, than the GI and Silent generations that lived through the war.
This is also true of the North and South Koreans. Even though Kim Jong-il (born 1942) was a WW II survivor, almost all the middle and high level managers and commanders that report to him were born after WW II. The same kind of thing is true in South Korea, China, Japan, and other countries.
In this context, the South's permanent deployment of multiple rocket launcher systems has to be regarded as one more step in a confrontational direction. The North Korean army official who said, "A tense situation is being created on the Korean Peninsula, where nobody knows when a war could break out" is probably correct, but since a war will probably break out because of one of North Korea's provocations, they may know more than we do about when a war could break out.
(Comments: For reader comments, questions and discussion,
see the 26-Apr-11 News -- Jimmy Carter's 'Elders' visit N. Korea, as S. Korea deploys multiple rocket launcher systems
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(26-Apr-2011)
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Kandahar prison escape a 'disaster' for Afghanistan war plans
This morning's key headlines from GenerationalDynamics.com.
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Taliban Mujahideen militants, "with the help of Allah," broke into the supposedly secure Kandahar prison on early Monday morning and freed 541 Taliban prisoners, including 106 commanders. They accomplished this by renting a house near the prison and then digging a 360 meter tunnel to the prison over a 5 month period. It took four hours for the prisoners to flee through the tunnel, and no prison guards noticed anything going on during that period. Nation (Pakistan) from Taliban website
Afghan President Hamid Karzai is calling the prison escape a "disaster," especially because it frees some of the most dangerous Taliban commanders that have been captured in the last year. It raises doubts about Karzai's ability to govern Afghanistan, and puts into question plans to begin coalition withdrawal later this year. CS Monitor
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In an overwhelming coordinated assault on Daraa and other cities, thousands of Syria's army troops used tanks and live gunfire to attack unarmed protesters, killing at least 18. President Barack Obama is said to be considering financial sanctions on Syria, but so far there are no plans for Libya-style military intervention, even though the massacres in Daraa are now at the level that the "humanitarian" mission into Libya were intended to avoid. VOA
Arab media continues to express dismay that it is Western, not Arab, air power that is assisting the rebels. Arab governments point out that NATO nations have more equipment and experience with modern warfare. But Arab critics point out that Egypt, Saudi Arabia and the other Gulf states have over a thousand modern jet fighters between them, and plenty of smart bombs. Here is an opportunity to use all this stuff, in a good cause. But many Arabs insist that Arab air forces aren't ready, and some even mention what many fear; that Arab pilots will reveal that they really are not ready. Arabs don't want to risk Iran finding that out. Strategy Page
A new poll shows that Australians believe that the United States and China are on a course for war, and that their military pact with the U.S. would force Australia into the conflict. The poll also shows that they dislike China's policy of buying up Australia's farms, mines and real estate, and overwhelmingly believe that China could invade Australia in the future to secure land and resources. DPA
Nationalist right-wing populist parties are gaining votes in Finland, Denmark, Netherlands, Sweden and other European countries. In France, Marine Le Pen, daughter of National Front founder Jean-Marie Le Pen, is growing in popularity, and she is strongly opposed to the euro currency and the European Union. At the very least, these trends are putting the entire program to rescue the euro in jeopardy, because it has to be approved unanimously by the entire European Union. Spiegel
(Comments: For reader comments, questions and discussion,
see the 26-Apr-11 News -- Jimmy Carter's 'Elders' visit N. Korea, as S. Korea deploys multiple rocket launcher systems
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(26-Apr-2011)
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The inflation versus deflation debate
Global wheat prices are "on fire," according to Barrons, because of a relentless drought in Europe, Oklahoma and Texas. Wheat futures are now approaching $10 per bushel, up from around $4 just a few years ago, and the fear is that wheat prices will go even higher as the May harvest approaches.
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All of Texas is extremely dry, and since the beginning of October, barely one-tenth of an inch of rain has fallen on Midland, according to the Texas Tribune. It's hoped that the La Niña weather pattern that has contributed to the severe drought will be weak or gone by summer, but that will be too late for the next wheat harvest.
Europe is experiencing the worst drought for a century, with almost no rainfall in April, according to AFP. The wheat harvest is at risk, and there's fear of widespread, devastating wild fires.
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The world food price index is now larger than it was during the food crisis of 2008, when there were widespread food riots, especially in developing countries. However, the price of rice, a staple in many developing countries, has remained fairly stable, and so developing countries are not being as badly hit this time, according to an analysis by Carnegie’s International Economics Program appearing in Seeking Alpha.
Many politicians and mainstream analysts are pointing to the rise in oil and food prices as proof that the dollar is weakening and (hyper)inflation is setting in, even though the consumer price index (CPI) has remained low. The price rise in these commodities does not necessarily indicate inflation, especially since wages have remained flat. With wages flat, high food/fuel prices simply mean that consumers have less money to spend on other goods, pushing those prices down, canceling the rising prices on food and fuel.
As I wrote in 2004 (see "CPI data points to deflation trend"), a Law of Mean Reversion analysis on the CPI indicates that it will fall. I still expect the CPI to fall 30% in three years after the real financial crisis occurs, just as it rose 30% in three years from 1977-80.
The inflation versus deflation debated has been extremely animated in the Generational Dynamics forum for several years. It's worthwhile repeating here a few recent postings.
Member "richard5za," an investor in South Africa, expects a great deal of inflation in the U.S. dollar. He said that investors would soon begin to "flee from the dollar." I asked him what investors would flee the dollar into. He wrote,
"You would flee the dollar into what is called "inflation hedges" as we did in the 70s with pounds and rands etc to protect the value of our money. That was a period of little economic growth and quite high inflation, which came to be called stagflation.Real estate is a favourite inflation hedge especially that in prime positions; when all is settled at the end of the economic abberation, whether that is 5, 10 or 15 years, its still worth what it was in real terms. Zimbabwe had massive inflation, but using google go onto a website selling houses in Harare and you will see respectable dollar prices for the houses. The value has been retained for the owners across the period of inflation devastation.
Gold is another inflation hedge but can be risky; for instance in the early eighties when it was clear that the inflationary period was over, the gold price dropped sharply. Also some commodities and precious stones e.g. diamonds. ...
Rare antiques are another favourite - there's a world shortage and they'll get their value back in times of stability."
Richard explained further by telling some of his personal history:
"I finished all my studies in 1968 and secured employment with a successful British multinational group. In 1971 the "big boss" said to me "Boy, do you own a house?" I said "No, Sir"He said "Well, I think inflation may increase and I am strongly advising you to buy a house. If you need to borrow money for the deposit then the company will help you." "Thank you very much, Sir." So I bought a middle class house on 1000 sq m of ground.
In 1973 the "big boss" said to me "Richard (I had graduated from boy to Richard) I am very worried about inflation and I am organising for all management the opportunity to buy good quality antiques as an inflation hedge."
I bought the most magnificient 1695 long case clock (grandfather) It was a London maker and the case was exquisite. it was a business matter with business disciplines so when I sold it in 1987 for 12 times what I paid I told myself to be very grateful for the 14 years of wonderful stewardship."
Richard says that he made a great deal of money investing further in real estate, and also made money in stocks in the 1980s. He concluded,
"I was now very busy with my career, having become CEO, and my funds were being handled by a finacial advisor. In 2006 I retired (for the first time) and took over my personal finacial management again, and in 2007 I sold all my stocks except for 5% which I put into gold and gold miners. That amount has done well and doubled.So what I am trying to say is that it doesn't matter what the economic circumstances may be, you can flee what ever currency you want, put your money into hedges. commodities, property, whatever is the right decision for the circumstances."
From the point of view of Generational Dynamics analysis, this 1970s inflation hedging strategy wouldn't work today. I explained by telling my own 1970s story.
When I was working for Digital Equipment Corp. (may it rest in peace) in the 1970s, there was a girl who had an entry level job as a computer operator. After she'd been there a couple of years, she left DEC and went to Data General (RIP) with a good salary increase. After a few months, she left DG and went to Wang (RIP), with a good salary increase. After a few more months, she left Wang and came back to DEC. The net effect is that in the space of a year she had changed jobs three times and almost doubled her salary at DEC.
There were lots of stories of that kind in the 1970s. It was well known that anyone with good skills and willing to work hard could change jobs and get a good salary increase.
I don't agree with the "stagflation" characterization of the 1970s. There was plenty of inflation, and it's true that the stock market fell during the 1970s (which I believe is why people use the word 'stagnation'), but the economy was extremely vibrant in the 1970s. Everyone knew that people who had bought IBM or DEC or Xerox stocks had made out like bandits (to use a phrase I heard at the time) -- not because speculators had created a stock market bubble, but because these companies had scored some real technological achievements.
In the 1970s, almost every company was still "young". Almost every business had gone bankrupt in the 1930s, and the ones that hadn't had to totally restructure. By the 1970s, all of these businesses were at their peak of robustness and productivity. New products and technologies were coming out all the time. Skilled workers were in high demand, and even unskilled workers had no trouble getting a job. There were plenty of job openings, and not enough workers to fill them. As a result, salaries increased -- based on merit, not based on social skills -- resulting in inflation.
The other thing about the 1970s is that everyone was worried about a new stock market crash. You could walk into a bookstore and find several books on "How to survive the next Great Depression."
Now today, all of those indicators are flipped on their heads. Each job opening gets hundreds of applicants. If you change jobs, then you have to take a salary cut. Jobs in the last decade have fled overseas, seeking low salaries rather than high skills.
Today's businesses are no longer "young." This is something I haven't written about lately, but I used to call it the "crusty old bureaucracy" effect, using a phrase that I'd seen in a description of some company. Lots of employees do little or nothing but sit around. Salaries are increased based on longevity only, with little relationship to skills. There's little innovation going on, with something like the iPad providing a rare exception. Today we have REAL stagnation.
In the 1970s, people worried about a new Great Depression, because that's what they remembered from the 1930s. Today, people are worried about a new Great Inflation, because that's what they remember from the 1970s. A new Great Depression couldn't have occurred in the 1970s because the wrong generational constellation was in place, and a new Great Inflation can't occur today for the same reason.
Everything is in a bubble. Stocks have had historically high valuations since 1995. Real estate has been in a bubble internationally since 1995, and has only partially recovered. Gold's long-trend trend value is about $500/oz, but now it's in a bubble at three times its trend value.
So now assume a hypothetical scenario where there is 10% inflation, and you follow Richard's hedging strategy. You're talking about assets that are already in a bubble, and by the time that 10% inflation is reached (as if that's possible), the bubble would be much bigger. With huge amounts of liquidity flowing into gold, for example, the price would go from 3 times trend to 10 times trend.
And this is where you run into the logical contradiction. The inflation hedge assets are already in a bubble, the bubble would be growing even larger, investors would realize that these hedges are way overpriced, and many would stay in the "safe" dollar rather than risk a bursting bubble.
Of course you can always invest in real estate or gold, knowing that its price will eventually go up. But you could have invested in stocks in 1929, and you would have made money by the mid-1950s.
So now, to close the circle, the businesses with a "crusty old bureaucries" are going to be destroyed or forced to restructure, like similar businesses in the 1930s. With layoffs increasing and salaries decreasing, there's no chance of anything close to 10% inflation. Investors will not flee the dollar.
From the point of view of generational theory, what we're going through now is a generational financial crisis. At it's core, a generational crisis is based on widespread abuse of credit and securitization -- tulip certificates in Tulipomania (1637), South Sea shares in the 1721 South Sea bubble, "assignats" (credit based on lands confiscated from the clergy) in the bankruptcy of the French Monarchy in 1789, railway shares in the Panic of 1857, and stock shares and foreign bonds in 1929. Today we still have tens of trillions of dollars in toxic assets, in the form of CDOs, CDSs, and other synthetic securities.
So you can't have a generational financial crisis that leads to inflation. A generational crisis, at its core, is based on widespread abuse of credit, creating a huge bubble. When the bubble bursts, there must be deflation. It can't happen any other way, as far as I know.
(Comments: For reader comments, questions and discussion,
see the 25-Apr-11 News -- Skyrocketing food and fuel prices spur inflation fears
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(25-Apr-2011)
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Sen. Lindsey Graham recommends strong U.S. military action in Libya
This morning's key headlines from GenerationalDynamics.com.
Security forces in Northern Ireland have found three caches of weapons and bombmaking equipment in two days as police on both sides of the Irish border remain on high alert over a renewed dissident republican terror campaign. This comes as republicans commemorate the anniversary of the 1916 Rising against British Rule. Guardian
Appearing on TV Sunday morning, Sen. Lindsey Graham said:
"The military's strategy of taking U.S. air assets out of NATO I think was a big mistake. ...So my recommendation to NATO and the administration is to cut the head of the snake off, go to Tripoli, start bombing Gadhafi's inner circle, their compounds, their military headquarters in Tripoli.
The way to get Gadhafi to leave is have his inner circle break and turn on him. And that's going to take a sustained effort through an air campaign. I think the focus should now be to cut the head of the snake off. That's the quickest way to end this. ...
Let's get this guy gone and the way to get him out of Libya is to go after him militarily through the air. You don't need ground troops to do that."
Two missiles struck Muammar Gaddafi's compound early on Monday, badly damaging the buildings, and temporarily putting three television stations off the air. The blasts are the biggest to hit Tripoli so far. It's not known if there were casualties. BBC
When the Arab uprisings occurred in Tunisia and Egypt, Iran framed them as an "Islamic awakening," a renew of the Iran's own 1979 Great Islamic Revolution, the rise of a new "Islamic Middle East," and a great blow to the U.S. However, the uprising in Syria is a problem, since Syria is a strategic ally. Iran first blamed the Syria uprising on Israel and the U.S.; next they blamed it on Saudi Arabia and al-Jazeera; next it was the fault of Lebanon's prime minister Saad Hariri. Tehran is helping Syria deal with the uprising, and officials believe they must do so to avert the rise of anti-Iranian sentiment in the Arab region. Jamestown
Like Bahrain, Iraq before 2003 has a Shia majority population that was government by an oppressive Sunni ruling class. Since Saddam Hussein was toppled in 2003, the Shia majority has taken power in Iraq, and Baghdad has uneasy relations with its Sunni neighbors. The Shia majority in Iraq is increasingly sympathetic with the Shia uprising in Bahrain, and hundreds of Shia Iraqs rallied in Baghdad on Saturday to demand the immediate withdrawl of Saudi troops from Bahrain. Reuters
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Bahrain's Prince Salman bin Hamad Al-Khalifa declined his invitation next weekend's royal wedding in London, after public criticism because of Bahrain's violent crackdown on peaceful anti-government protesters. This comes after the Cambodian King Norodom Sihamoni declined to attend, saying that he had more important things to do. Daily Mail
Imran Khan, former cricket superstar and now a politician, led a sit-in over the weekend in Peshawar, blocking the major road used by Western forces to deliver supplies to land-locked Afghanistan. Khan is leading the political opposition to U.S. drone strikes. "If the government supports drone strikes, it should come clean and say so. If, on the other hand, it genuinely opposes them, then it should order the Pakistan Air Force to shoot them down." Independent
It's been a while since the February border clashes between Thailand and Cambodia. (See "17-Feb-11 News -- Thailand vs Cambodia border clash damages ancient Hindu temple.") But now the clashes have begun again have begun again, killing 10 shoulders and forcing thousands of civilians to evacuate the area. VOA
Turkey's citizens are increasingly willing to acknowledge that the killing of over a million Armenians during World War I was genocidal. Some are commemorating the start, when hundreds of Armenian professions in Istanbul were rounded up and sent to their deaths on April 24, 1915. Turkey has been under a great deal of international pressure to acknowledge the killings as genocide, and it's become a sensitive issue in the negotiations for Turkey to join the European Union. AP
(Comments: For reader comments, questions and discussion,
see the 25-Apr-11 News -- Skyrocketing food and fuel prices spur inflation fears
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(25-Apr-2011)
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Iraqi history is full of migrations.
In an event apparently designed to bring the Vatican into the 21st century, Pope Benedict XVI answered questions from Roman Catholic bloggers and Facebook users last week, according to the Telegraph.
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During the Q&A, a group of Christian students in Iraq told the Pope: “We Christians in Baghdad are persecuted like Jesus," and they asked for advice on emigration. The Pope urged Christians in Iraq "to resist the temptation to emigrate, which is very understandable in the conditions they are living in."
In fact, thousands of Christians have been emigrating from Iraq, to escape violence such as last October's massacre at a Our Lady of Salvation Church in Baghdad. As reported by Reuters, "Fifty-two hostages and police were killed when an attempt by Iraqi security forces to free more than 100 Catholics held in a Baghdad church by al Qaeda-linked gunmen turned into a bloodbath."
According to the Financial Times (Access), most Christians blame such as the fault of the Americans and British, because of the Iraq war:
"We are in a new era of persecution of Christians," says Rifa’t Bader, a Jordanian Catholic priest whose congregation is now mainly made up of refugees from jihadist savagery in Iraq. "We are victims of things we are not responsible for, whether the Israeli occupation [of Palestinian land] or American policy in the Middle East, especially [the occupation of] Iraq."Iraq is a case apart. Following the Anglo-American invasion of 2003, indigenous Assyrian Christians, mostly Chaldean, have endured a backlash that has reduced their numbers from close to 1m to about 400,000. One refugee in Amman, a 66-year-old chemistry professor who gives his name as Abu Sinan, says: "In my country, 1,400 years of co-existence and common endeavour with Muslims disintegrated in just five years." To Arab Christians around the region, this was a tragedy foretold.
Riah Abu el-Assal, a Palestinian and former Anglican bishop of Jerusalem, says one month before the invasion he personally warned Tony Blair, British prime minister of the time, that "you will be responsible for emptying Iraq, the homeland of Abraham, of Christians." After almost 2,000 years, Iraqi Christians now openly contemplate extinction. Some of their prelates even counsel flight.
I'm always bemused by this sort of stuff, because it has absolutely no basis in history. Is it really true that, as Abu Sinan say, "In my country, 1,400 years of co-existence and common endeavour with Muslims disintegrated in just five years"?
When doing a Generational Dynamics analysis of something like this, a good starting place to look for answers to questions like these is to look back at a similar generational era. Iraq's last generational Crisis war was the Iran/Iraq war that climaxed in 1988, so Iraq is in a generational Awakening era today. So let's go back to the Awakening era that followed Iraq's previous crisis war, the Great Iraqi Revolution of 1920.
Here's a description from the Library of Congress history of Iraq that describes what happened in the 1930s and 1940s, with regard to the Assyrian Christians:
"On October 13, 1932, Iraq became a sovereign state, and it was admitted to the League of Nations. Iraq still was beset by a complex web of social, economic, ethnic, religious, and ideological conflicts, all of which retarded the process of state formation. The declaration of statehood and the imposition of fixed boundaries triggered an intense competition for power in the new entity. Sunnis and Shias, cities and tribes, shaykhs and tribesmen, Assyrians and Kurds, pan-Arabists and Iraqi nationalists--all fought vigorously for places in the emerging state structure. ...From the start, the relationship of the Iraqi government with the Assyrians was openly hostile. Britain had resettled 20,000 Assyrians in northern Iraq around Zakhu and Dahuk after Turkey violently quelled a British-inspired Assyrian rebellion in 1918. As a result, approximately three-fourths of the Assyrians who had sided with the British during World War I now found themselves citizens of Iraq. The Assyrians found this situation both objectionable and dangerous. Thousands of Assyrians had been incorporated into the Iraqi Levies, a British-paid and British-officered force separate from the regular Iraqi army. They had been encouraged by the British to consider themselves superior to the majority of Arab Iraqis by virtue of their profession of Christianity. The British also had used them for retaliatory operations against the Kurds, in whose lands most of the Assyrians had settled. Pro-British, they had been apprehensive of Iraqi independence.
The Assyrians had hoped to form a nation-state in a region of their own. When no unoccupied area sufficiently large could be found, the Assyrians continued to insist that, at the very least, their patriarch, the Mar Shamun, be given some temporal authority. This demand was flatly refused by both the British and the Iraqis."
And so, what Abu Sinan said about 1400 years of peaceful coexistence isn't really true. Actually, it bears no resemblance to the truth whatsoever. Actually, what appears in Financial Times is complete crap. Today's Iraqis are repeating the same sorts of things that their parents and grandparents told them about, and are exhibiting the same sort of venom and xenophobia that they learned as children.
By the way, this is one of those rare years when Western Easter and Orthodox Easter coincide. Happy Easter everyone!
(Comments: For reader comments, questions and discussion,
see the 24-Apr-11 News -- In Easter TV Q&A, Pope asks Iraqi Christians not to emigrate
thread of the Generational Dynamics forum. Comments may be
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(24-Apr-2011)
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Both sides in Libya conflict are being supplied with weapons
This morning's key headlines from GenerationalDynamics.com.
If you have a weak stomach, then you may wish to skip this one. On Good Friday, nearly two dozen Filipinos were nailed to crosses, with five-inch nails through their hands, in what they see as an extreme display of devotion to Jesus. One person quoted in the article says that because of his sacrifice and devotion, he hopes the Lord will "grant my wish to make me win big in 'jueteng' [lottery] this year." Reuters
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Friday's huge street protests in Syria led to over 90 killings from security forces using live ammunition and teargas on the protesters. Funerals were held for the victims on Saturday, and dozens more people were killed when security forces fired on the mourners during the funerals. BBC
While the U.S., Britain, France, Italy and Qatar are supplying arms and military equipment to the rebels in Libya, China, Russia, Ukraine, Belarus and Serbia are supplying military hardware to the pro-Gaddafi forces. Debka
Representatives of the government of Yemen president Ali Abdullah Saleh, as well as representatives of opposition parties, all say that they've agreed to a peace proposal that was presented to them on Thursday by the six nation Gulf Cooperation Council (GCC), led by Saudi Arabia. President Saleh will step down within 30 days, and in exchange, he, his family and his senior aides will be granted immunity from prosecution. VOA
Europe is emerging as a major political battleground over the plan for United Nations unilateral recognition of a Palestinian state in September. So far, France has come out strongly in favor of recognition, while Germany opposes it. Jerusalem Post
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Hindu gurus and some 200 scientists in India have examined ancient texts and compiled a list of 1,300 yoga moves and poses. India plans to patent the yoga moves, to prevent yoga teachers in the U.S. and Europe from patenting them on their own. Ria Novosti
The U.S. State Department frequently expresses concern over likely threats to Pakistani nuclear assets from militant groups. But according to a report prepared by the Pakistanis, "Pakistan has improved the technique of safeguarding its nuclear installations in the past five years so much so that Pakistan's command and control system [of its nuclear weapons] is now better than that of the U.S.." Memri
Former Irish Republican Army (IRA) militants in Ireland are stepping up terrorist attacks against police officers, and officials are fearful that they'll continue. Reuters
On Friday, the U.S. State Dept. updated its travel warning for Mexico to include parts of five additional states. U.S. State Dept.
(Comments: For reader comments, questions and discussion,
see the 24-Apr-11 News -- In Easter TV Q&A, Pope asks Iraqi Christians not to emigrate
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(24-Apr-2011)
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The Sri Lanka civil war was similar to other crisis wars
Next week, the United Nations will release a report accusing both sides in the Sri Lanka civil war of war crimes. The report is threatening to cause a breach between Sri Lanka's government and the U.N.
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The report says that the Tamil Tigers recruited children to its fighting forces, held civilians as human shields, used them as forced labor, and exposed them to danger by firing heavy weapons from nearby positions, according to the Guardian. It says that the government launched full-scale shellings of no-fire zones, including hospitals and food distribution lines.
The Sri Lanka civil war presented a valuable opportunity for me and Generational Dynamics, because I was able to track it and report on it, as it grew from low-level violence into a full-scale generational crisis war that finally climaxed in May, 2009, with the surrender of the Tamil Tigers. (See "Tamil Tigers surrender, ending the Sri Lanka crisis civil war.")
From the point of view of Generational Dynamics, the Sri Lanka war followed a familiar pattern for a civil war in a country in a generational Crisis era.
This war was fought between two ancient races: The Sinhalese (Buddhist) and the Tamils (Hindu). WW II was a crisis war for India and for Ceylon, the former name of Sri Lanka. There was relative peace on the island until 1976, when the Tamils began demanding a separate Tamil state, and formed a separatist group called the Liberation Tigers of Tamil Eelam (LTTE), or just "Tamil Tigers."
A non-crisis civil war began in 1983, and the low-level violence continued until a peace treaty was signed in 2002. As in most civil wars, peace agreements alternated with periods of conflict, with each period of conflict more violent than the previous one. In this case, the peace treaty started falling apart in 2005, and violence took a big surge upward in summer 2006. (See "While world watches Lebanon, Sri Lanka goes to war.")
Low-level violence becomes extremely wearing on a society, especially in this case where the Tamil Tigers were blowing up buses and perpetrating other terrorist acts. Once a society enters a generational Crisis era, the population loses all fear of all out war, and demands victory at all costs from its politicians. At that point, the war turns into a full-scale generational crisis war, as happened in January, 2008, when the government announced they would win the war by the end of the year. (See "Sri Lanka government declares all out war against Tamil Tiger rebels.")
This is the point where the war -- like any generational crisis war -- became increasingly genocidal. As I've written many times, Generational Dynamics doesn't use the strict legal definition of the word "genocidal." In generational theory, "genocidal" refers to any action that clearly gives little value to individual life. Generally this means that the society gives much higher political priority to scoring a victory in a battle than it gives to the goal of preserving individual lives, especially civilian lives.
Returning to the Sri Lanka civil war, in 2008 the Tamil Tigers used civilians as human shields, and therefore the government couldn't attack the Tigers without attacking civilians. These are the actions that are now being called "war crimes" by the United Nations, but they're at the core of every generational crisis war.
The genocidal actions get worse and worse, until a crisis war climax is reached.
As far as I know, every analyst in the world was predicting that once the Tamil Tigers were defeated, the civil war would continue as low-level violence. That prediction was completely wrong, as I wrote repeatedly as the climax was approaching. The correct analogy was the surrender of the Nazis and Japan in 1945, the climax of WW II. That's what happened in Sri Lanka. Just as there was a Marshall Plan after WW II, both sides called for reconciliation after the Sri Lanka war ended.
Once the climax occurs, the genocidal fury of each side turns into revulsion at their own actions during the war, and the survivors vow that they will devote their lives to guaranteeing that nothing so horrible will ever happen again. And the survivors keep that promise, as long as they're alive.
When I was in school in the 1950s, the whole concept of "war crimes" never made sense to me. The purpose of war, it seemed to me, was to kill as many of the enemy as you can, so how could anything be a greater crime than that? I've since learned that "war crime" is a term of political art, often having little to do with actual crimes.
It's easy to see why the Nazis were accused of war crimes for committing the Holocaust. But why weren't the Nazis also accused of war crimes for bombing London and other British cities?
It the Sri Lankan government is being accused of "full-scale shellings of no-fire zones" as a war crime, then surely the Nazi bombing of British cities was also a war crime. Why do we never hear that?
Well, actually, the reason is pretty obvious, isn't it. If the Nazi bombing of London was a war crime, then the Allied fire bombing of Dresden and Tokyo would also be a war crime, not to mention the nuking of two Japanese cities.
So I've personally come full circle, and the concept of "war crime" still doesn't make any sense to me, just as it didn't in the 1950s. The Tamil Tigers were internationally identified as terrorists, and they were blowing up buses and killing civilians, so of course the Sinhalese army was going to do anything it had to in order to stop them. If the Sri Lankan army was guilty of "war crimes," then the Allies were even more guilty of "war crimes" in WW II.
Thus, the UN report is infuriating the Sri Lankan government, as shown in this editorial in the Sri Lanka Daily News:
"[The UN is] dealing with a country that has decidedly defeated terrorism, which countries such as the UK and USA, and their allies are failing to achieve; despite all their fire and economic power, while also carrying out regular and brutal attacks on civilians whether by unmanned drones or helicopter gunships.What matters much more than the blatant hypocrisy of the UN Secretary General’s Office in this matter, when considering what’s happening just now in Bahrain and for so long at Guantanamo, is the deliberate use of the facilities and instruments of the United Nations, to serve the needs and interests of those who continue threaten the territorial integrity of a sovereign member state of the UN, and are acknowledged even by the UN as having held Tamil civilians as human shields leading to so much death and injury to them, using child soldiers till the very defeat of their terror, and spreading the cult of the suicide killer, as well as designing, producing and marketing the equipment of the suicide killer, as reported by the US State Department.
It is a tide of international deceit that is sweeping the Office of the [UN Secretary General] in New York, seeking to destroy the efforts at reconciliation and inclusive democracy in a country that is emerging from the ravages of a 30-year war against terror, where UN staffers, Western donors and the great missionaries of democracy were themselves working with and for the forces of terror."
The government has called for demonstrations against the U.N. in Colombo (Sri Lanka's capital), but from the point of view of Generational Dynamics, the politics of "war crimes" will have little effect on the reconciliation effort now occurring in the post-war (first turning) generational Recovery Era. (See "Basics of Generational Dynamics.")
What will happen, though, is that there will be a long-lasting political rift between the Sri Lankans and the United Nations, according to an analysis by the Institute for Peace and Conflict Studies (IPCS):
"In sum, the present regime under President Mahinda Rajapaksa is astutely pursuing a two-pronged strategy to achieve new foreign policy goals in the post-war period. First, it prefers to keep the Europeans and Americans out of Sri Lanka, who have been constantly criticizing the government for war crimes and human rights abuses. ...Second, it wants to keep China in to defend itself against such allegations and possible actions as its veto power in the UNSC provides a perfect balance against the Western human rights lobby in international forums. China therefore has emerged as an indispensable factor in Sri Lankan post-war foreign policy strategy vis-à-vis the West. For China, Sri Lanka is a big pearl in its string of pearl strategy though not in traditional military sense of building bases but in terms of building favorable (authoritarian) regimes for its own grand strategic interest in the region."
The Buddhist Sinhalese government of Sri Lanka is naturally more compatible with China than with mostly Hindu India, and so we can expect Sri Lanka to be a major strategic ally in the Indian Ocean during the Clash of Civilizations world war.
Update: A reader says that the reference to Buddhism in the last paragraph is overreaching. The Buddhist religion may play a part, but the final conclusion is really based on the previous analysis, and the fact that Sri Lanka is very important to China's "string of pearls" strategy in the Indian Ocean. War-weary Sri Lanka, in a generational Recovery Era, will do everything possible to avoid taking sides in a war between India and China, but China today is laying the groundwork to coerce Sri Lanka onto their side when the time comes. (Added 23-Apr-2011)
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John McCain calls for more American involvement in Libya war
This morning's key headlines from GenerationalDynamics.com.
On Friday, tens of thousands of Syrians poured into the streets after midday prayers in cities across the country and chanted anti-government slogans, "Freedom, freedom," and "God, Syria, freedom, that’s all." The government of President Bashar al-Assad had hoped that the announced ending of the 48 year old emergency rule law would soothe the protests, but this is a generational Awakening era for Syria, so that was never going to happen. At least 90 people were killed and dozens injured when Syrian security forces fired live bullets and teargas at the protesters. Al-Arabiya
In a major change of policy, President Barack Obama has personally condemned the violence against peaceful demonstrators in Syria, and named President Bashar al-Assad:
"The United States condemns in the strongest possible terms the use of force by the Syrian government against demonstrators. This outrageous use of violence to quell protests must come to an end now. ...Over the course of two months since protests in Syria began, the United States has repeatedly encouraged President Assad and the Syrian Government to implement meaningful reforms, but they refuse to respect the rights of the Syrian people or be responsive to their aspirations. ... We strongly oppose the Syrian government’s treatment of its citizens and we continue to oppose its continued destabilizing behavior more generally, including support for terrorism and terrorist groups."
Friday's escalation du jour in the Libyan military action was Senator John McCain's visit to Benghazi, and his calling on the U.S. government to recognize the rebel Transitional National Council as the country’s government and provide financial assistance and more military aid to the insurgents. This followed Thursday's announcement that America is now providing armed drones to the Nato coalition. McCain's statements put additional pressure on the Americans and Europeans to do more, and leads the way for ground action if the rebels experience a sudden reversal. Bloomberg
Israel's security agency Mossad issued a warning on Thursday night to travelling Israelis to be wary of a major terrorist attack on Jewish or Israeli targets that Hizbollah has already set in motioin at some undisclosed location. Debka
CNN is quoting a senior Pakistani intelligence official as saying that U.S. military personnel have abandoned a southern base said to be crucial for American drone operations in the northwestern tribal areas. The Pakistan public has been demanding an end to the drone strikes, and if confirmed, this departure from the base would be a significant result of those demands. CNN
There are still 47,000 American troops in Iraq, and under an agreement with Iraq made several years ago, they will be withdrawn by the end of this year, unless Iraq's government requests that they stay. Admiral Mike Mullen has warned Iraq that they have to decide within a few weeks whether they want to keep any U.S. troops past the end of 2011, and that otherwise, the U.S. would make some "irrevocable" logistics and operation decisions. Reuters
A small dog can die after eating a single chocolate Easter egg. The chemical in chocolate that gives humans a pleasant buzz – theobromine – has a highly toxic effect on dogs. Telegraph
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One of the busiest times for egg producers each year is just prior to Easter, but egg consumption has been decreasing since 2006, resulting in falling egg prices, at a time when other food prices have been surging. However, costs to produce eggs have been rising, and so egg producers have been losing money. Wall Street Journal (Access)
One in four Americans say that they believe that President Obama was not born in the United States. But a poll in 2006 found that one in three Americans said that President Bush had known about the 9/11 attacks, and did nothing about them or assisted in them. Similar findings in other polls: 40% of Americans suspect that officials in the federal government were directly responsible for the assassination of President Kennedy, and 38% say that the federal government is withholding proof of the existence of intelligent life from other planets. News Polls (2006)
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Here are ten ways for you to get into the spirit of the Royal Wedding. #7: Have tea time with souvenir tea bags. #1: Become a "CopyKate". VOA
New research shows that the happiest countries and U.S. states have the highest suicide rates. Thurs, Canada, the United States, Iceland, Ireland and Switzerland display relatively high happiness levels and yet also have high suicide rates. Within the U.S., Hawaii and Utah have high average life satisfaction, and among the highest suicide rates, while New York and New Jersey score low on both measures. Science Daily
(Comments: For reader comments, questions and discussion,
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(23-Apr-2011)
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Russia says that Europeans are violating the UN Security Council resolution
Russia'a Foreign Minister Sergei Lavrov said that the current plan for Britain and France to send military advisers to Libya was going beyond the UN Security Council mandate, and was dragging the world into a ground war of indefinite duration.
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At a news conference in Slovenia on Thursday, Lavrov said the following, according to Reuters:
"We are not happy about the latest events in Libya, which are pulling the international community into a conflict on the ground. This may have unpredictable consequences.We can remember how instructors were first sent to some other countries, and later soldiers were sent there and hundreds of people died on both sides."
In fact, Russian analysts are stating openly that the US/Nato ground invasion of Libya has all but begun, according to an analysis by Global Research. The article lists several reasons that Russian analysts give:
The mission creep du jour on Thursday is that Nato has signaled that it will add new military targets to its air strikes, and U.S. Defense Secretary Robert Gates disclosed that armed Predator drones began being used in Libya, according to CNN. Predator drones were used at the beginning of the operation, but they were unarmed.
When Russia abstained on the UN Security Council resolution authorizing the "humanitarian" military action in Libya, it was viewed as a diplomatic victory for the US and the West, since Russia didn't veto the resolution.
However, now that the military action is turning into a stalemate of indefinite duration, Russia is realizing a number of political objectives, including the ability to cripple Nato through United Nations politics, according to Jamestown.
Russia plans to demand that Nato restrict its activities to only the humanitarian acts allowed by the UN resolution, and then veto any attempt to expand the resolution in the Security Council, in order to guarantee a continued stalemate in Libya.
This will set a precedent that allows Russia to effectively control future activities of Nato, since only activities approved by the Security Council, and hence by Russia, could ever be permitted.
Moscow has a broader interest in seeing the US and NATO tied down in wars of choice and other protracted confrontations. These wars increase Russia’s leeway for action in ex-Soviet territories, which is Russia's top priority, according to the article. Furthermore, if Libya's oil exports are stopped, then Russia's own oil exports become more valuable.
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(22-Apr-2011)
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European nations are considering unilateral recognition of Palestinian state
This morning's key headlines from GenerationalDynamics.com.
Because of the impact of clashes between ethnic Russians and Muslims from the North Caucasus provinces in Russia's military, Moscow has cut the size of the draft quota by an order of magnitude for some of the North Caucasus republics, and is working to prevent them from being concentrated in any military unit. This policy change results in several problems. First, the military already is having trouble filling its ranks, so this will require the military to use even more force to draft ethnic Russians. Second, this will increase the already very high rate of unemployment in the Caucasus, resulting in even more young men turning to anti-Russian militancy. Third, the reduction of Muslims in the military will feed in the Islamist claim that Russia is a foreign occupier in the Caucasus. Paul Goble
After Monday's announcement that Standard & Poor's rating service had put U.S. debt on negative watch. Russian Prime Minister Vladimir Putin slammed expansionary U.S. monetary policy. "Look at their trade balance, their debt, and budget. They turn on the printing press and flood the entire dollar zone--in other words, the whole world--with government bonds. There is no way we will act this way anytime soon. We don't have the luxury of such hooliganism," he said. Wall Street Journal (Access)
French Ambassador Gerard Araud is quoted as saying, "Recognition of the state of Palestine is one of the options which France is considering, with its European partners, in a bid to relaunch the peace process." The White House opposes any unilateral declaration of a Palestinian statement, but is drafting a proposal based on four principles:
The Syrian army is deploying overnight in the city of Homs, in preparation for riots that follow when thousands of people pour out of mosques at the end of midday prayers on Friday. 21 protesters have been killed this week in Homs, and 220 protesters in all have been killed since the protests erupted on March 18. Reuters
Al-Qaeda hasn't fared very well in the Arab uprisings, and now Al-Qaeda on the Arabian Peninsula (AQAP) may be undone in its headquarters, Yemen, thanks to anti-government protests. Opposition to president Ali Abdullah Saleh is uniting Yemen, including the different tribes, the southern secessionists and the northern Houthi rebels. "We’ve learned to forgive each other so we can join together to drive out this devil and take our country back from the hands of corruption. Once our new Yemen begins, we will turn our weapons over to a government that we trust to protect us," says Nasser Al-Qadhi, a sheikh from the Morad tribe in Marib. Global Post
With fuel prices up over 5% in the last few months in China, a two-day strike in Shanghai turned violence as about 2,000 truck drives clashed with police. The drivers had blocked roads with their trucks and stopped working on Wednesday. Police arrested at least six people, and beat up people with batons. China has something like 100,000 anti-government mass incidents every year, by its own figures, and has a history of massive rebellions. Reuters
(Comments: For reader comments, questions and discussion,
see the 22-Apr-11 News -- Russia seeks to cripple Nato through Libya United Nations politics
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(22-Apr-2011)
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Mullen targets the Haqqani network of Taliban militia fighters
Admiral Michael Mullen, chairman of the Joint Chiefs of Staff, on a fencemending mission to Pakistan, accused Pakistan's Inter Services Intelligence (ISI) of aiding the Haqqani militants, in an interview with Dawn (Pakistan).
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The Haqqani network is a Pashtun militia headed by Jalaluddin Haqqani, who was a leader fighting against Soviet forces in Afghanistan in the 1980s, according to Global Security. At that time, America's enemy was the Russians, not the Taliban, and so the CIA provided substantial assistance, by way of Pakistan's ISI, to Haqqani. After 9/11, Haqqani's militia, with a power base in Pakistan's border region of North Waziristan, became one of the Taliban's strongest factions, and was closely linked with al-Qaeda.
Now in his 70s, Haqqani has turned effective leadership over to his son Sirajuddin, according to Reuters. The Haqqani network been responsible for numerous attacks on American and coalition forces, and group draws most of its resources from Pakistan and Gulf Arab networks as well as its close ties to al-Qaeda.
In July, 2008, a CIA assessment found links between the Haqqani network and Pakistan's ISI. Thus, according to Mullen,
"It's fairly well known that the ISI has a longstanding relationship with the Haqqani network. Haqqani is supporting, funding, training fighters that are killing Americans and killing coalition partners. And I have a sacred obligation to do all I can to make sure that doesn't happen."
The U.S. has been pushing Pakistan to take on the Haqqani network and suspected al-Qaeda sanctuaries in North Waziristan, according to an analyst quoted by Al-Jazeera, but the Pakistani government has refused, citing a lack of resources.
(Comments: For reader comments, questions and discussion,
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(21-Apr-2011)
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Israel intellectuals and artists back Palestinian state
This morning's key headlines from GenerationalDynamics.com.
Bond yields (interest rates) continue to surge to MasterCard levels in a number of euroland countries, furthering the euro currency crisis, and putting the euro project into danger. Greek 2-year bond yields surged to 22.02%, and 10-year bond yields to 14.8%, both of them the highest yields since the birth of the euro. Portugal's rose to 10.58% and 9.28%, respectively. By comparison, German bonds are at 1.83% and 3.3%, respectively. Bloomberg
As Greece's bond yield surge, more and more analysts are predicting a Greek debt restructuring, a form of default that would force investors to take a 30-50% "haircut," losing that much of the principal they invested. European banks could handle the 100 billion or so euros that they would lose from the haircut, but the bigger danger is that the process would set a precedent, and would force them to mark to market all their other toxic assets. In 2008, regulators told American and European banks to keep toxic assets on their books at nominal values, essentially continuing to defraud investors. Reuters
Dozens of Israeli intellectuals and artists have signed a petition calling for a Palestinian state based on 1967 borders and an end to the occupation. They plan to sign the petition on Thursday in front of the building where the state of Israel was proclaimed in May 1948. BBC
Israel's Housing Minister Ariel Attias is accusing Prime Minister Benjamin Netanyahu of "surrendering" to U.S. President Barack Obama, and implementing a de facto settlement freeze in Jerusalem. Netanyahu's office denies the charges. Israel National News
The US Dept. of Treasury has designated the Bank of East Land as a major conduit for facilitating North Korea’s illegal arms trafficking." Activities include money laundering, the counterfeiting of goods and currency, bulk cash smuggling, and narcotics trafficking. This kind of designation has infuriated the North Koreans in the past. U.S. Treasury
A deal on the Yemen crisis brokered by the six member Gulf Cooperation Council (GCC) and backed by the U.S. and U.K. is close to being agreed on. The deal would have president Ali Abdullah Saleh step down, the principle demand of the protesters. Al-Jazeera
In Homs, Syria, large numbers of protesters took to the streets and chanted demands for "the downfall of the regime," defying security forces again on Wednesday. In Syria's second city, Aleppo, security forces beat several university students and arrested 37. Reuters
U.S. multinational corporation have cut their work forces in the U.S. by 2.9 million during the 200s, while increasing employment overseas by 2.4 million, according to the Commerce Department. The multinationals say that the reason is that their customers are increasingly overseas. Wall Street Journal (Access)
In 2005, the United Nations issued a dramatic warning that climate change would create 50 million climate refugees by 2010, fleeing the effects of climate change. The refugees never materialized, embarrassing the UN. When this story was reported last week, the UN removed from from its web site the map showing the places that were most at risk. Gavin Atkins
In 2007, articles in the Congressional Quarterly and the London Times showed that Washington and London analysts and "experts" on Iraq were ignorant of even the simplest facts about Iraq. (See "Guess what? British politicians and journalists are just as ignorant as Americans.") What most analysts (left or right, Republican or Democrat) was ideological and completely nonsense. Now a Saudi Arabian Navy commodore is saying the same thing about analysts commenting on the Arab uprisings. He says that American analysts in Bahrain have had no idea what's going on, don't speak Arabic, and sometimes don't even know that there's a country called Oman. Some analyses of Saudi Arabia are so ridiculous they're laughable. Arab News.
Chess is being added as a compulsory subject in primary schools in Armenia to strengthen children's intellectual development, and to "create a solid basis for the country to become a chess superpower." Australian
A new study shows swearing triggers not only an emotional response, but also a physical, relieving pain. Telegraph
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(21-Apr-2011)
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Iran's government splits over how to take advantage of Arab uprisings
The riots and demonstrations that consumed Manama, the capital of Bahrain, a few weeks ago have quieted down, but Bahraini officials are still arresting dozens of Shia professionals, including lawyers and doctors. Bahrain citizens who are students at universities and colleges in Britain are having their funding canceled and are ordered to return home immediately if they took part in peaceful protests, according to the Guardian.
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Furthermore, the six-nation Gulf Cooperation Council (GCC), including Saudi Arabia, Kuwait and UAE, sent troops to Bahrain on March 15 to suppress the riots, and those troops are there to stay, at least until the "external threat" is gone. The Gulf News quotes Bahrain's Foreign Minister Shaikh Khalid bin Ahmed Al Khalifa as saying:
"There are no Saudi forces, there are GCC forces and they will leave when they are done with any external threat. ...The external threat is a regional one. The external threat is a complete misunderstanding between the GCC and Iran. This is a threat.
I am not pointing fingers here, but what we are seeing from Iran, on Bahrain, on Saudi Arabia, on Kuwait, the occupation of the islands of the UAE, doesn't make the situation a positive one. It keeps it a constant threat, and an ongoing one."
Bahrain has a Sunni Muslim government, although the country's population is 2/3 Shia Muslim. Iran has a Shia Muslim government and population, and has historically claimed to have sovereignty over Bahrain.
Bahrain has been destroying Shia mosques in Iran, according to Iran's state-run Press TV. The Imam Jawad mosque (pictured above), was destroyed, as well as several other Shia mosques.
However, Iran's claim is getting no sympathy from Saudi Arabia's King Abdullah, who has pledged unwavering support for Bahrain, according to Gulf News. "The security of Bahrain and Saudi Arabia is indivisible - being two bodies with one soul," he said.
In fact, Saudi Arabia has threatened to take measures that might include withdrawing the Saudi diplomatic mission from Iran. This comes after Iranians protested in front of a Saudi embassy, and threw stones, breaking some windows, according to Reuters. "We hope that these continuous violations will not lead us to take other positions," said the Saudi foreign minister.
Furthermore, Iran has been taking advantage of the turmoil caused by the Arab uprisings to step up arms smugglings to its proxies in the region, including Hizbollah in Lebanon and Hamas in Gaza, according to UPI. When Hosni Mubarak was still in power in Egypt, he attempted to block Iran's arms shipments from reaching Hamas, but since he stepped down, arms trafficking has become easier.
An analysis by Debka, indicates that tensions are growing so high between the GCC, led by Saudi Arabia, and Iran that armed clashes between the two countries are a possibility. Iran may have to engage in some kind of military action, or lose credibility with the Shia communities in Saudi Arabia, Kuwait and UAE.
Like many countries with interests in the Mideast, Iran has been schizophrenic about the uprisings in various Mideast countries. When the uprisings began in Tunisia and Egypt, Iran congratulated itself as being the inspiration for those uprisings, and encouraged them. However, Iran has not been so sympathetic with the uprisings in Syria, and reportedly has supplied weapons to the Syrian government to smash the uprisings. And, of course, Iran has said nothing about the violent behavior of its own security forces in response to the protests to the alleged fixing of the June, 2009, re-election of Mahmoud Ahmadinejad as president.
However, exactly what tangible action Iran should take in the face of popular unrest in Bahrain and elsewhere in the Arab world is causing a war of words in Tehran, according to Jamestown. The public debate is largely along the political fault line that divides the Ahmadinejad government from reformist parliamentarians and those aligned with the Green opposition movement. Domestic political rivalries are preventing Iran's government from developing an effective strategy, and are only generating anger and threats from the GCC states.
(Comments: For reader comments, questions and discussion,
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(20-Apr-2011)
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Britain and France sending military advisers to Libya
This morning's key headlines from GenerationalDynamics.com.
Britain and France will send military teams to join the rebels in Benghazi, Libya, to provide advice, logistics and intelligence training. British Foreign Secretary William Hague insists that this is not an escalation, and is compliant with the UN enabling resolution, even though it forbids foreign occupation forces, since the military teams will not be involved in any fighting. However, Libya's foreign minister said that the plan would prolong fighting, and once again called for a ceasefire. BBC.
Security forces in Yemen have killed at least four people and wounded hundreds more after opening fire on demonstrations on Tuesday. The six-nation Gulf Security Council has offered to mediate, but the protesters refuse to consider any mediation until president Ali Abdullah Saleh steps down. Uprisings are going on all around the Mideast, but a sign of the seriousness of the one in Yemen is that the United Nations Security Council is meeting to discuss this particular crisis. Al-Jazeera
Syria's government says that it is close to lifting its draconian emergency rule law, instituted 48 years ago, thus fulfilling the promise made last week by president Bashar al-Assad in his nationwide television address. However, there was a fresh massacre on Tuesday, as security forces opened live fire against protesters in Homs, Syria's third largest city. Syria is in a generational Awakening era (like America in the 1960s-70s), and al-Assad's concession will only infuriate the young demonstraters further. Guardian
Last September, Cuba surprised the world by announcing the end of Cuba's communist economy. (See "16-Sep-10 News -- Cuba's seismic shift has global implications.") On Sunday, the first Communist Party Congress in 25 years ended, with promises of nearly 200 economic reforms aimed at boosting Cuba's freefalling economy. However, reform promises were not kept in previous party congresses. Miami Herald
Donald Trump's potential run for president in 2012 is widely considered to be a joke, and for all I know, it is. But he is surging in public opinion polls, and from the point of view of Generational Dynamics, the significance of his candidacy is that he's highly nationalistic. Highly nationalistic candidates do poorly in most eras, but in a generational Crisis era, anxious, xenophobic voters often turn to nationalistic candidates in a big way. This has happened in many European countries, most recently Finland. "The world is just destroying our country. These other countries are just sapping our strength. OPEC is sapping our strength. Let the other countries worry about themselves," said Trump. VOA
(Comments: For reader comments, questions and discussion,
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(20-Apr-2011)
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Standard & Poor's puts U.S. government debt on negative watch
Markets experienced several shocks on Monday. China raised its banking reserve requirements, Greece was rumored to be close to a default, Moody's downgraded Ireland's debt to junk status, and S&P put U.S. government debt on negative watch.
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The People’s Bank of China increased the amount of money that lenders are required to set aside as reserves, according to the Taipai Times. This effectively restricts the amount of money that Chinese banks can lend, making it harder to get credit. Many analysts believe that China will be the engine that returns the world economy to growth, and the reserve requirement change puts that theory into doubt.
As we've been reporting for weeks (months, really), investor confidence in Greece's ability to avoid debt default has been plummeting, and it reached new depths over the weekend, as reports surfaced that German Chancellor Angela Merkel appeared to be preparing the Germany public for a Greek default, according to the Guardian. This follows Moody's downgrade on Friday of Ireland's debt to junk status, according to the Telegraph.
Other shocking news from Europe included the strong showing of the nationalistic "True Finns" party in Finland's elections on Sunday, according to the Associated Press. The True Finns are strongly opposed to bailouts. This victory throws the EU's entire bailout program into doubt, since all eurozone countries unanimously have to approve any bailout package.
But the biggest shock on Monday was the threat, by Standard & Poor's' ratings service, to downgrade U.S. debt from its current AAA rating, according to Reuters. According to S&P:
"Because the U.S. has, relative to its AAA peers, what we consider to be very large budget deficits and rising government indebtedness, and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable."
For the rest of Monday, analysts and politicians were stumbling over themselves to downplay the change. White House economist Austan Goolsbee called it a "political judgment" that "we don't agree with." Other analysts said that it was a good thing, because it serves as a wake-up call to Washington, which will cause all problems to be solved.
I have no way of knowing whether politics was part of the S&P decision, but I do know that every downgrade draws similar statements from politicians. European politicians have been harshly critical of downgrades of Greek, Irish and Portuguese debt, sometimes threatening to create a "European ratings agency" that presumably wouldn't apply such downgrades to European countries.
A number of television analysts repeatedly expressed surprise on Monday that the dollar currency strengthened against the euro and some other currencies.
A strengthening of the dollar is consistent with the global deflationary spiral. In a deflationary environment, prices stay low (or fall), making currency more valuable. As the world's reserve currency, the US dollar is much less susceptible to inflationary pressure, and U.S. debt default is not necessarily related to the strength of the dollar. In other words, the U.S. may well be on its way to default, but that doesn't necessarily affect the strength of the dollar currency, which has almost become an international currency.
There is no solution to the financial crisis. I sometimes use the analogy of a tsunami launched decades ago. You know that it's coming, and politicians will demand that bucket brigades be set up on the beach, but it can't be stopped. All you can do, as an individual, is run for higher ground -- and that will mean different things to different people, depending on their circumstances. As I've said many times, treasure the time you have left, and use it to prepare yourself, your family, your community and your nation.
I need to review a couple of things.
In the 2004-2007 period, a few people (like me) were saying that we're in the middle of a huge real estate and credit bubble. But mainstream financial analysts, economists and journalists ridiculed that idea, saying, "Housing prices can't go down -- people have to live somewhere," and "Banks won't foreclose -- it's not in their interest to do so" and "These housing construction firms know what they're doing, and they wouldn't be building houses if it were just a bubble." But today, it's become common wisdom that there was a housing bubble in the 2004-2007 period. These "experts" have done a 180-degree U-turn.
A big part of the credit bubble was fraud by bankers who created fraudulent mortgage-backed synthetic securities, and sold them to investors as AAA investments. Today, we know that these securities were based on mathematically impossible assumptions, and that the financial engineers who created them must have known what they were doing. (See "Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud.")
Analysts and journalists on CNBC and Bloomberg tv ALWAYS lie when they talk about price/earnings ratios (also called valuations). (See "5-Oct-10 News -- Goldman Sachs's Cohen gives price/earnings fantasy" and "24-Aug-10 News -- Ariel's Bobrinskoy gives price/earnings fantasy.")
Mainstream economists have been consistently wrong at least for 15 years. As I've said many times, they didn't predict and can't explain the tech bubble of the late 1990s, or the credit and real estate bubble of 2000s. They didn't predict and can't explain the financial crisis since 2007. They've incorrectly predicted economic growth, rising unemployment, and rising inflation almost every day for three years, and they've been wrong almost every time, or at best no more accurate than the flip of a coin. They have no idea whatsoever what the economy will look like next year.
Thus, we have to return to these fundamentals: As I wrote in 2007 (see "Understanding deflation: Why there's less money in the world today than a month ago"), there is less and less money in the world every day, thanks to deleveraging, and the collapse of the huge credit bubble.
The reason that debt levels keep going up in most countries is that there's less money available in the world to pay off debts. The reason that bond yields (interest rates) keep going up is that there's less money, and by the law of supply and demand, the price of money (as measured by interest rates) keeps going up.
Politicians, analysts and journalists who talk about (hyper)inflation are engaging in exactly the same kind of wishful thinking that they did when they were saying that there's no real estate bubble. They're all hoping that hyperinflation will occur, because that will dissolve debts and will boost stock prices. But hyperinflation is impossible with less and less money in the world every day.
A couple of weeks ago, a member of the Generational Dynamics forum called my attention to a posting by Mark D. Cook, called "Bernanke versus the World":
"The world clearly has a firm chasm between global perception by other capitalistic economies and Bernanke’s cavalier approach to the U.S. economy. Clearly, Mr. B. has no fear or respect for inflation. ... Bernanke feels his role is to ignore inflation and intervene socialistically to create artificially unstable environments. ...Personality is at the core of this power move by Bernanke. ... Bernanke has a very stubborn nature. The more he is questioned the more stubborn resolve he possesses. This will always put a person behind the curve. He will not go into a neutral state of tempering the QE2 or his monetary policy quick enough. That would require him to eat crow. His nature prohibits him from acknowledging humility, let alone the remote possibility his approach has long term devastating effects. ...
Won’t some entity, A.K.A. Congress, introduce a new word to Bernanke and explain its meaning? That word is inflation. Americans will ponder this as they pay $4.00 for gasoline, guess Bernanke does not buy gasoline but instead has a full tank of ego."
I have to laugh at this silly rant. He ridicules Bernanke for being stubborn, and implies that anyone who doesn't believe in his inflation religion must be a socialist.
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Bernanke has been wrong about a number of things in the last decade. He believed that a so-called "fiat currency" could never suffer deflation, but this has been disproven by Japan's experience. He believed that verbal statements by the Fed could control inflation and deflation. (See "Bernanke / Federal Reserve congratulates itself on jawboning policy.") He blamed America's debt on a "global savings glut in other countries." And he believed that the Great Depression could have been cured in 1930 by a very simple fix of lowering interest rates, and this has been mostly disproven by his own experience as Fed chairman since 2007.
However, it's not clear that he's been "wrong" for the last three years. He's been doing what he had to do, and saying what he had to say. There's nothing he could have done differently at any point, because of political pressure.
After all I've disagreed with Ben Bernanke, it's majorly ironic that it sometimes seems the only person in the world who agrees with me that we're not headed for inflation is Ben Bernanke. I was listening to some commentators ridiculing him a while ago. "His problem is that he doesn't have to drive to work every day -- if he did, then he'd know that there's inflation going on." That's what Mark Cook is saying as well. I guess that must be my problem too, since I don't drive to work every day either.
I've frequently wondered whether Bernanke really understands that we're headed for a crash and deflationary spiral, and just isn't able to say so, for fear of being blamed for triggering a crash. I guess my personal appraisal of this situation is that if Bernanke is willing to stand up to so much heat from people like Mark Cook, then he must know a lot more about what's going on than people give him credit for. He may yet rescue his historical reputation.
So it isn't "Bernanke versus the World" as Cook says. It's "Bernanke and Xenakis versus the World." Whew! What irony!
(Comments: For reader comments, questions and discussion,
see the 19-Apr-11 News -- Deflationary spiral approaches crisis levels in U.S. and Europe
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(19-Apr-2011)
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Chinese organized crime grows substantially in Russia
This morning's key headlines from GenerationalDynamics.com.
Muammar Gaddafi's forces are pounding the port city of Misrata with salvoes of rockets and artillery, including cluster bombs. Up to 1,000 people are thought to have died there, 80% of them civilians, including children. The logical solution is for Nato to provide "close air support" to the rebels, requiring "boots on the ground" in the form of special forces as forward air controllers to direct air strikes. However, technically this would require another United Nations Security Council resolution. Irish Times
Axel Poniatowski, chairman of France's foreign affairs committee, agrees, saying that Gaddafi plans to destroy Misrata, and will succeed without boots on the ground. He says that French commandos should be deployed on the ground in Libya to help guide air strikes. BBC.
One of the proposals to help the Libyan rebels is to unfreeze Libyan assets that were frozen last month to keep them out of reach of Muammar Gaddafi, and make the assets available to the rebels. The U.S. is holding $34 billion in frozen assets, and billions more are held by European countries. However, any attempt to unfreeze those assets and make them available to the rebels would run into significant legal delays from Gaddafi supporters, and Gaddafi might even win in court. Reuters
Palestinian Authority president Mahmoud Abbas reaffirmed his plans to seek recognition from the United Nations for an independent Palestinian state in September. According to Abbas, the attempt might be blocked in the U.N. Security Council by a U.S. veto, but approval by the U.N. General Assembly would be legally binding. Bloomberg
Over the last several years, the number and brazenness of ethnically based Chinese criminal groups in Russia have grown substantially, to the point where Beijing-Moscow ties are threatened. Much of the crime involves "complete financial schemes and technical cleverness, the use of contemporary Internet technology, electronic payment systems, and a deep knowledge of financial monitoring and exchange procedures." Paul Goble
The head of Germany's domestic intelligence agency reports that the number of violent neo-Nazis increased by 600 to 5,600 in 2010. Spiegel
A survey of 1500 Russians found that younger people are less tolerant of people of other nationalities than their parents and other older people. 33% of young people said that they felt "anger" toward non-Russians, and 43% support a ban on immigration. These figures are lower for older generations. These findings are consistent with the Generational Dynamics principle that survivors of a generational crisis war reject xenophobia, and devote their lives to preventing any such horrible war of happening to their children, while each generation born after the war (Boomers and Gen-Xers in the case of the West) are increasingly xenophobic. Paul Goble
(Comments: For reader comments, questions and discussion,
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(19-Apr-2011)
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A sign of increasing Muslim-Orthodox xenophobia
Russia's Chief Mufti, Talgat Tadzhuddin, has requested that the Russian National Emblem be modified to include both a Muslim crescent and a Christian Orthodox cross.
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"Our ancestry has lived here for ages. We have united into one state by Divine will. So our neighbor is like a brother," says Tadzhuddin, according to Ria Novosti.
Muslims in Russia have long complained about the emblem, which dates back to Czarist times and is thought to contain Christian symbols, according to RFERL in a 2005 article. The current coat of arms was adopted in November 1993, and represents a double-headed eagle with three cross-tipped crowns. A shield on its breast features a horseman slaying a dragon, a figure many identify as St. George.
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Thus, Tadzhuddin's request is his attempt to have the emblem represent both of Russia's two major religions equally. According to the CIA Fact Book, Russia's people are 15-20% Orthodox and 10-15% Muslim, with a large non-practicing population, resulting from the Soviet legacy of atheism.
However, Muhammedgali Khuzin, the head of the executive committee of the Russian Association of Islamic Consensus, and another mufti (expert in Muslim law), opposes the idea of modifying the emblem, saying that it would lead to accusations of ecumenism and would increase xenophobia, according to Vestnik Kavkaza (Moscow).
Tadzhuddin is requesting that the crowns on the heads of the double-headed eagle be replaced by the Muslim crescent and the Orthodox cross, respectively, "capped by the crown in the middle," according to Interfax Religion.
The article quotes Orthodox Christian Archpriest Vsevolod Chaplin as saying,
"The Russian state emblem has a history of many centuries and it has stood the test of time. It has not been supplanted by Soviet symbols, which are falling into oblivion at an enormous speed, while the symbols, historically justified, are again finding their due place in Russia's life."
At the same time, Chaplin criticized Mufti Tadzhuddin as backing polygamy, quoting Tadzhuddin as saying, "Four lawfully-wedded wives are better than 40 mistresses. Russian men have 40 mistresses, each."
That would be a good trick. I doubt that any man could survive long with 40 mistresses.
In Malaysia in 1984, Islamic Family Law listed five conditions to be followed by a Muslim wanting more than one wife, according to Pravda. The conditions, some of which were subsequently modified, are:
In today's politically correct society, it's easy to forget that polygamy serves a valuable social purpose at times in history when war had killed off many men, leaving many women without partners. In those situations, the only way for most women to receive protection is through polygamous marriages.
This is exactly the situation that obtained in the Arabian peninsula for centuries, where war was a way of life. Many of Mohammed's wives were widows, and there is evidence that many of his marriages were specifically for the protection of the women.
According to the article,
"What do women think of the issue of polygamy? Of course, there are women who are willing to share their husband with other women. There are cases where Russian ladies were not the only wives of Muslims husbands and even converted to Islam. They explained their choice by the fact that all Russian young men were drunks and there were no normal Russian men left, while polygamous marriage, even with an older man of a different confession, gave them hopes to experience a happy family life and raise children."
Vladimir Zhirinovsky, the colorful leader of one of Russia's opposition parties, has repeatedly called for legalization of polygamy in Russia. In 2000 he introduced a bill that allowed men to have up to four wives, with mandatory consent of all existing spouses. The proposal was rejected.
So it seems that both proposals will continue to be rejected. There will be no sanctioned polygamy (though there may still be Russian men with 40 mistresses), and there will be no change to the Russian national emblem.
What will happen is that there will be increasing tension at ecumenical levels between Muslims and Russian Orthodox Christians, and there will be increasing mutual xenophobia and violence between Muslims and Christians at civil levels.
(Comments: For reader comments, questions and discussion,
see the 18-Apr-11 News -- Russia's Muslims vs Christians on the National Emblem and on polygamy
thread of the Generational Dynamics forum. Comments may be
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(18-Apr-2011)
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Cuba's Bay of Pigs Generation Celebrates 50 Years
This morning's key headlines from GenerationalDynamics.com.
On Monday, India released 39 Pakistani prisoners who had allegedly been fishing in India's territorial waters in the Arabian Sea. Pakistan released 89 Indian prisoners who had been caught fishing in India's territorial waters in the Arabian Sea. One fisherman had been imprisoned by Pakistan for 23 years. Dawn
April 17 is the 50th anniversary of the Bay of Pigs invasion, when the forces of Fidel Castro and Che Guevara defeated a small army of 1,500 CIA-trained Cuban exiles. Cuba's current leader, Raul Castro, is celebrating by holding the first Cuban Communist Party Congress in 14 years. Time
Syrian officials had hoped that President Bashar al-Assad's 'conciliatory' speech to the nation on Sunday would be enough to calm the protests. But the fury of protesters only seemed to increase on Sunday -- nor surprising during a generational Awakening era. Syria's security forces fired on protesters with live bullets, injuring two people. Reuters
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That Greece will have to restructure its debt (a form of default) is now almost a foregone conclusion, as evidenced by the continued rise of bond yields on Friday. Last year's bailout allowed Greece to make a few loan payments, but it only increased the size of Greece's debt. The restructuring will have political consequences, since the politicians all told their citizens that they wouldn't lose money. The bailout comprised direct loans from 15 eurozone countries. A restructuring could well mean losses for those 15 lenders, which would be deeply resented in Germany, Finland, the Netherlands and other strong countries whose voters were wary of the bailouts to begin with. Wall Street Journal (Access)
The "True Finns" party, which opposes EU bailouts for any European country, won an upset victory in Finland elections on Sunday, throwing the EU bailout negotiations into disarray. Finland worked its own way through a 1990s recession, triggered by a banking meltdown that coincided with an export slump as the Soviet Union collapsed. Finns feel that the Greeks, the Irish and the Portuguese should do the same. Bloomberg
Italy, which has been dealing with a flood of 20,000 Tunisian migrants pouring into Italy following the uprising in Tunisia, has followed through on its threat to provide travel visas to the migrants, allowing them to travel freely around Europe. Most of them speak French, and so most of them want to go to France, so Italy's actions have infuriated French officials. So French border guards and riot police have been stopping migrants from Italy, and sending them back. All train services from Italy have been canceled. Telegraph
Global finance chiefs, at the weekend meeting of the International Monetary Fund, disagreed as to who was most to blame for the financial crisis. U.S. Treasury Secretary Timothy F. Geithner blamed China and other developing nations for allowing their currencies to become too strong. Brazil Finance Minister Guido Mantega blamed loose monetary policies in the U.S., and other rich nations. (This reminds of 2005, when Fed Chairman-to-be Ben Bernanke blamed America's debt on a "global savings glut.") Bloomberg
Turkey plans to try again to break Israel's blockade of Gaza by launching an aid flotilla after their June 12 elections. Israel is stepping up diplomatic efforts to derail the plan. The National (UAE)
This "birther" issue has become incredibly crazy, with charges and counter-charges all over the map. There's only one set of facts that make sense to me. As I wrote last year in this report, a New York Times article from 2008 says that President Barack Obama was a Muslim at birth, and later chose to become Christian. So the only thing that makes sense to me is that Obama was born in Hawaii, as he's said, but that his birth certificate gives Muslim as his religion, as Donald Trump has suggested. That would explain why Obama does not wish to release his birth certificate. This is the only set of facts that explain the craziness for me. NY Times
News you can use: According to a new survey by a dating web site, Coldplay music fans are least likely to have sex on a first date. Fans of Adele, Lady Gaga, Katy Perry, Kings Of Leon are also very unlikely to have sex on the first date. Fans of Nirvana, Metallica, Linkin Park, Kanye West, Gorillaz are most likely to be willing to have sex on the first date. NME Magazine
(Comments: For reader comments, questions and discussion,
see the 18-Apr-11 News -- Russia's Muslims vs Christians on the National Emblem and on polygamy
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(18-Apr-2011)
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Activists are demanding that Assad step down completely
After one month of atrocities and bloody suppression of protests under his orders, killing over 200 people, President Bashar al-Assad took a more conciliatory tone in a televised speech to the nation on Saturday, according to CNN.
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Al-Assad said the following:
"We (will) lift the state of emergency contrary to the opinion of many others who think this might lead to imbalance in the state of security. I disagree with this, and I think this will consolidate the security of the country. ...We have to distinguish between reform and chaos. The Syrian people are civilized people. They don't like chaos, they don't like instability. ...
This period we pass through, the blood that has been shed in Syria, has been painful for all Syrians. We are saddened by the death of any person who has been sacrificed."
However, according to Day Press (Damascus), he warned that new laws in the works would not be lenient towards what he called "sabotage". Presumably this leaves the door open to further violence against protesters.
From the point of view of Generational Dynamics, Syria is in a generational Awakening era, since its last generational crisis war was the Lebanese civil war. In Syria, the climax was the 1982 massacre of tens of thousands of civilians in Hama by Syria's army, under the orders of the current president's father.
Although there's talk in the press that Syria's violence might spiral into a civil war, that's impossible during a generational Awakening era, since there are too many survivors of the last crisis war still alive, and they've dedicated their lives to making sure that nothing so horrible happens again.
America's last generational Awakening era occurred in the 1960s and 1970s, and climaxed in the resignation of President Richard Nixon. This provides a clue to what's going to happen in Syria. Saturday's announcement of reforms will not satisfy the protesters, who will continue to demand that Assad step down, and the opposition will grow until it does, even if it takes several years.
It's a basic principle of Generational Dynamics that even in a dictatorship, major policies are determined by masses of people, entire generations of people, and not by politicians. In Syria, we're seeing that in action, as dictator Assad is forced by young protesters to back down.
It's worth pointing out that Iran is in the same situation, in a generational Awakening era, with young protesters who are generally pro-Western. The hardline government has been using violence to try to permanently end the protests, but the protests will go in different forms for some time, probably until the hardline regime of crisis war survivors is replaced.
(Comments: For reader comments, questions and discussion,
see the 17-Apr-11 News -- Syria's president Assad adopts conciliatory tone to nation
thread of the Generational Dynamics forum. Comments may be
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(17-Apr-2011)
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Yemen women complain president is degrading them
Today's key headlines from GenerationalDynamics.com.
A month ago, when the Libya campaign began, it was expected to end quickly, and the United States, which was already involved in two wars in Muslim nations, was to be involved for only a few days. But now Nato is in charge, but the Libyan action appears to be stalemated, and Nato is running short of precision laser-guided bombs and other munitions. The US has significant stockpiles of laser-guided missiles, but they don't fit on British- and French-made planes. The result is that there are increasing demands for the US to return to fully active participation in the air campaign. Washington Post
Hamas Prime Minister Ismail Haniyeh urged Palestinians to support a deal to release Israeli Soldier Gilad Shalit, held in a Palestinian since he was captured in 2006, in exchange for Israel's release of hundreds of Palestinian prisoners in Israeli jails, including 300 top militants and political leaders. Ma'an News
It's been over a year since North Korea's attack on the South Korean warship Cheonan, killing 46 sailors. The Cheonan attack was a wake-up call to the South's military to improve combat preparedness and security awareness. The military is introducing spy drones and stealth fighters, and drastically strengthening the fire power of 650,000 member military. It's been several months since the last North Korean military provocation, so it may be time for a new one. Yonhap
Thousands of Yemeni women protested in Sanaa, the capital of Yemen, on Saturday, saying that President Ali Abdullah Saleh should be punished for being a misogynist. This follows his remarks on Friday that women who were participating in anti-government protests alongside men were violating Islamic principles that men and women should not mix. He advised women to stay at home. CNN
(Comments: For reader comments, questions and discussion,
see the 17-Apr-11 News -- Syria's president Assad adopts conciliatory tone to nation
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(17-Apr-2011)
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Terrorist acts put Hamas-Fatah reconciliation in danger
Vittorio Arrigoni, an Italian pro-Palestinian activist who has been living in Gaza for three years, was abducted and killed on Thursday. A Salafist militant group called Al-Tawhid and Al-Jihad took credit, according to VOA. They offered to spare Arrigoni's life only if Hamas would release all Salafists in prison in Gaza, but then killed him a few hours later.
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There is widespread Palestinian condemnation of the killing, according to the Palestine News Network, which quotes a Hamas spokesman as saying, "This is a clear attempt to create chaos in Gaza and to destroy the strong relations between the Palestinian people and their friends all over the world."
Palestinian Authority president Mahmoud Abbas (Abu Mazen) described the murder as an absurd and shameful crime, according to Agenzia Giornalistica Italia (AGI). He added, "This shameful crime goes against all the values of our people who are fighting for freedom and independence." Arrigoni has been working to end the Israeli blockade of Gaza.
Salafi beliefs are similar to the Wahhabi sect beliefs of al-Qaeda, and in both cases these beliefs have been reinterpreted to support terrorist and violent acts in support of the most extreme and radical forms of Islam.
Hamas is the organization that has been governing the Gaza Strip since it defeated Fatah (the military wing of the Palestinian Authority in the West Bank) in a 2007 war, according to an analysis by Haaretz. However, Hamas is losing control of Gaza, largely because of its own internal complexity, with various wings promoting anything from war with Israel to total peace and coexistence with Israel.
The result is that more militant Gaza groups are asserting their independence from Hamas.
Today the Palestinian Authority is focused on one major goal: To get the United Nations, in September, to recognize a Palestinian state by international mandate, base on pre-1967 borders.
A prerequisite to that goal is for Hamas and Fatah to reconcile, and the Palestinian Authority, in cooperation with the Egyptians, are pressing hard to accomplish that. However, different militant wings in Gaza have been sabotaging that effort, and it seems likely that the murder of Vittorio Arrigoni has the same motivation.
(Comments: For reader comments, questions and discussion,
see the 16-Apr-11 News -- Killing of Italian activist exposes splits among Gaza militants
thread of the Generational Dynamics forum. Comments may be
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(16-Apr-2011)
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Saudis sign nuclear cooperation pact with China
"World View" is an experiment, putting what used to be called "Additional links" into a separate posting.
Muammar Gaddafi's forces in Libya have been using cluster bombs on residential areas of the rebel-held city of Misrata, according to accusations by human rights groups. Cluster bombs are banned by more than 100 countries. BBC
The Israeli air force (IAF) attached two Hamas military bases on Friday overnight, with no reported casualties. The strikes were in response to Grad rockets fired from Gaza into southern Israel earlier on Friday. Jerusalem Post
Saudi Arabia announced plans to sign a nuclear cooperation agreement with China. Saudi Arabia and the U.S. have had a very public cooling in relations, and this new agreement puts the Saudis closer to China's camp, along with Pakistan. This development is consistent with the expectation that China, Pakistan and the Sunni Muslim countries will be opposed to America, India and Russia in the coming Clash of Civilizations world war. Arab News
Russia’s tandem rulers -- President Dmitry Medvedev and former president and current Prime Minister Vladimir Putin -- are increasingly at odds as the 2012 election approaches. Jamestown
The number of financial newsletter writers who were bearish plunged dramatically within one week, according to a survey released on April 5. This flood in the bullish direction is the biggest since the survey began in 2003. Bears are now just 15.7% of those surveyed, down from 23.1% a week earlier. This happened despite a deluge of recent bad news -- Mideast turmoil, Irish bailout, and fears of a municipal bond crisis. If you want to understand why analysts in the 1930s kept saying that prosperity was just around the corner, even though stock prices kept falling, then just look at this survey. CNBC.
U.S. authorities scored a major victory against a major cyber crime ring. A computer virus, known as Coreflood, has infected more than 2 million PCS, enslaving them as "zombies" into a "botnet" that allowed foreign criminals to take control of the infected computers and steal funds via fraudulent banking and wire transactions. Once US officials took control of the botnet, they were able to command the zombies to stop sending stolen passwords and financial data. However, the foreign criminals are probably a Russian crime ring, and they have not been caught. Reuters.
If you've never had a chat with Eliza, you should go here and try her out. Eliza was a computer program written in 1967, and although it was extremely primitive, it still fooled some people into thinking that they were communicating with a real person. Today's "chatbots" are far more sophisticated, and they're being used as "social bots." A computerized social bot can take on multiple personalities and post messages on many Facebook accounts, for commercial or political purposes. The Atlantic.
(Comments: For reader comments, questions and discussion,
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thread of the Generational Dynamics forum. Comments may be
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(16-Apr-2011)
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A Greek default could have serious consequences.
Talk of restructuring Greece's debt (a form of default) has been increasing since two days ago when, as we reported, German Finance Minister Wolfgang Schaeuble broke the politicians' code of silence and said that debt restructuring would probably be necessary.
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The yield (interest rates) on Greece's 10 year bonds rose to a euro lifetime high of 13.61% on Thursday and, surprisingly, the yield on Greece's 2-year bond hit 18.4%, up almost a full percentage point on the day, according to Reuters. These interest rates are displayed on the graph above.
The reason that this is surprising is because normally short-term bonds yield lower interest rates than longer-term bonds. If I'm going to lend you money for 10 years, I'll usually want to charge you a higher interest rate than if I'm only going to lend you money for 2 years.
However, the situation with Greece is, shall we say, all screwed up.
The talk is that Greece is going to give bond investors a 50% "haircut," meaning that if they invested $100,000 in bonds, then they'll lose $50,000. The reason that yields for 2-5 year bonds are much higher than the yields for 10 year bonds is because the rumors are that the greatest part of the haircut will be focused on the 2-5 year bonds, according to the article.
Since last year's bailout of Greece, it's been obvious to anyone who could count that the bailout would only be enough to make a few debt payments, after which Greece would be in as much trouble as before. Politicians have a practice of lying about problems until an actual crisis forces them to admit the truth, and then they say, "Who saw that coming?"
Thus, Olli Rehn, Europe's Economic and Monetary Affairs Commissioner, said the following on Thursday, according to Reuters:
"I am aware of the public debate and recent public statements as regards debt sustainability in Greece. We do not see debt restructuring as an option. Instead we are engaged in a revised and updated debt sustainabilty analysis, which we will do with the IMF and present in due course."
Ooooooooooooooooooooooh. He's going to do a revised and updated debt sustainabilty analysis. Gosh, I didn't know that he was going to do a new debt sustainabilty analysis. Well, that changes everything, doesn't it.
Meanwhile, back in Washington, everything you hear coming from Washington is bullshit. I mean total crap. They're arguing over nothing.
It's as if you had $100,000 in credit card debt, with $20,000 per year interest payments, and you argued with your wife whether next year you were only going to charge an extra $49,000 on your credit card, rather than $50,000 more. Nobody in Washington is saying anything about the existing debt and interest payments; all they're talking about is a tiny bit more or less ADDED ON to the existing debt. It's bad enough that it's happening, but we have to listen to politicians in Washington posture with one another and give us lectures that are total crap.
One of the most bizarre stories that we hear all the time is that there was a federal budget surplus in the last 1990s because of clever agreements by Bill Clinton and the Republican Congress, and that the big federal deficit in the last decade was from the Afghan/Iraq wars and the Bush tax cuts. (See, for example, my 2007 article, "Alan Greenspan blames the Republicans for the financial crisis.")
That makes absolutely no sense whatsoever. Everyone seems to believe this, even though it couldn't possibly be true, since the deficit began to increase in 2000, but the wars didn't begin until 2002, and the tax cuts didn't begin until 2003.
Here's a graph that appeared on the Calculated Risk blog in 2005, showing government income and outlays, but not including Social Security:
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This graph shows that the huge deficit, which was supposedly caused by the Iraq war, actually began in 2000, the last year of the Clinton administration, with the Nasdaq crash. The outlays caused by the Iraq war were not particularly large by the standards of the preceding three decades. What mattered was the collapse of tax revenues, starting in 2000.
In fact, tax revenues depend on the state of the economy, and have almost nothing to do with anything else. Tax revenues went up in 2006 because of the credit bubble, and in 2009 they crashed dramatically. (See "US tax revenues fall sharply, the most since 1932.")
And there have been some news stories recently hinting that tax revenues are again falling. If that's true, then deficits this year will be much higher than politicians are predicting.
And then there's the health care bill.
As I've written several times, most recently in "1-Oct-10 News -- McDonald's threatens end to worker health benefits," until last year, by far the dumbest and most destructive economic policy enacted in Washington in my lifetime was the imposition, by President Richard Nixon's administration, of wage-price controls, to counter the national "emergency" represented by an inflation rate of about 4.5%. The controls program was an utter disaster. The inflation rate spiked up during the period of wage-price controls. It caused numerous shortages and mini-calamities, and did enormous damage until it was ended three years later.
The health care bill, which is wage-price controls for doctors, hospitals and health services, is in the process of doing even greater damage to the American economy. I've heard one commentator after another complain that businesses, especially small businesses, don't understand the health care bill, don't know how to comply with it, are afraid to hire people because it might obligate them to enormous health care costs. Many commentators have pointed out that it was to the benefit of many small businesses to drop health care coverage altogether, and pay a fine of $2000 per employee, rather than pay the ill-defined cost of health care. None of this matters, though, to the politicians in Washington, in this case the Democrats.
It's the same on Wall Street. They literally ALWAYS lie on CNBC and Bloomberg TV when they talk about price/earnings ratios (also called valuations). I've written about this before, even naming names in "5-Oct-10 News -- Goldman Sachs's Cohen gives price/earnings fantasy" and "24-Aug-10 News -- Ariel's Bobrinskoy gives price/earnings fantasy." Are these people crooks or simply incompetent? I report, you decide.
So what happens now? Maybe the Republicans and Democrats can get together and do a revised and updated debt sustainabilty analysis. That should fix everything.
Jerks.
And over in Europe, the situation in Greece has the potential of being a major crisis, even bigger than the crisis that followed the Lehman Brothers bank collapse in 2008. If Greece imposes a 50% "haircut," then banks around Europe will lose a great deal of money, and investors will assume that Ireland, Portugal and Spain will default as well. Things are moving more quickly now.
(Comments: For reader comments, questions and discussion,
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thread of the Generational Dynamics forum. Comments may be
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(15-Apr-2011)
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Air strikes by U.S. fighter jets continue in Libya
With Palestinian efforts going full steam ahead to get United Nations recognition of a Palestinian state in September, the Obama administration is attempting to refocus world attention on a negotiated agreement between Israel and the Palestinians, according to NPR.
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Secretary of State Hillary Clinton was supposed to have attended a meeting of the Middle East Quartet (United Nations, Russian Federation, United States, European Union), which issued a statement in September, 2010, calling for recognition of a Palestinian state based on pre-1967 borders by September, 2011.
However, Clinton stayed away from the meeting, and instead announced that President Barack Obama would be giving a speech soon on the Mideast and North Africa, and to relaunch the "peace process." Speaking to the U.S.-Islamic World Forum, she indicated that U.N. recognition would be inappropriate in the current climate, where the entire region is consumed by uprisings:
"The status quo between Palestinians and Israelis is no more sustainable than the political systems that have crumbled in recent months. Neither Israel’s future as a Jewish democratic state or the legitimate aspirations of Palestinians can be secured without a negotiated two-state solution. And while it is a truism that only the parties themselves can make the hard choices necessary for peace, there is no substitute for continued active American leadership. And the president and I are committed to that."
The so-called "peace process" has been dead as a doornail for some time. The Palestinians blame the collapse of the peace process on the refusal of the Israelis to stop building housing settlements in east Jerusalem, and the Israelis refuse to stop building the settlements until a peace agreement is reached.
Clinton's speech was well received, according to the Arab News, and Muslim leaders at the meeting said that they want Washington to take a more active role in seeking enduring solutions to the Middle East problems.
Speaking personally, I find this development astonishing. It's like a broken record, where the same words are used over and over. As I've written many times, starting in 2003, when President George Bush announced his "Mideast Roadmap to Peace," a Mideast peace is impossible, since Arabs and Jews will be refighting the genocidal 1948 war that followed the partitioning of Palestine and the creation of the state of Israel.
There have been three wars since then -- the war between Israelis and Hizbollah, fought largely on Lebanon's soil in 2006; the war between Palestinian factions Hamas and Fatah in Gaza in 2008, that led to Hamas control of Gaza; and Operation Cast Lead, the war between Israel and Hamas in Gaza early in 2009.
So now, apparently President Obama is going to be putting forth a new "Roadmap to Peace," which I assume will sound very much like the old one. At the same time, tension is growing on the border between Gaza and Israel. (See "9-Apr-11 News -- Gaza violence escalates after anti-tank missile strikes school bus.") The realities on the ground are likely to be much more important than anything that the politicians do.
For today's entertainment, here's a video of Czech president Vaclav Klaus stealing an expensive pen during an official ceremony in Chile. This video has gone viral.
More than 5,000 Czechs have signed up to a Facebook campaign to mail pens to the president, according to Associated Press.
Air strikes in Libya by U.S. fighter jets were supposed to have ended when the U.S. turned command of Libya operations over to Nato on April 4. But now it turns out that U.S. fighter jets have continued to conduct strikes on Libya's air defenses. Reuters
Sunni Muslims and Shia Muslims used to get along pretty well in Bahrain, but the uprising and subsequent violent crackdown by security police has created an increasingly bitter sectarian divide between the two. Time
Public unrest in Iran is increasing over the 10-fold increase in the price of natural gas since December, President Mahmoud Ahmadinejad cut off state subsidies. In addition to natural gas, prices have risen on fuel, electricity and bread. Washington Post
Hillary Clinton got angry when she was sitting on an airplane next to someone from the U.S. Agency for International Development (USAID) who was using an iPad. It seems that USAID workers are allowed to have iPads, while people in the State Department are not. Fierce Government IT
If it takes you a month to learn a new skill, and your friend wants to learn the same skill, then it will probably take him a month also. But that's not true of intelligent robots: If one takes a month to learn a new skill, it can simply upload the skill to another robot in a few seconds. That's the idea behind RoboEarth, which is an online database of knowledge and skills that robots can exchange with one another. The project is sponsed by the European Union's Cognitive Systems and Robotics Initiative. RoboEarth
(Comments: For reader comments, questions and discussion,
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Tony Blair to endorse a Palestinian state
A meeting between CIA Director Leon Panetta and Pakistan's Inter Services Intelligence (ISI) head Lt. Gen. Ahmad Shuja Pasha in Washington was cut short on Monday, apparently over disagreements about joint US-Pakistan cooperation on the war on terror within Pakistan itself.
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Pasha has demanded a sharp reduction in the number of US Special Forces operatives in Pakistan, as well as a halt to drone strikes against militants, according to RFERL. However, Reuters quotes a senior Pakistani intelligence official as saying that the demands might be more about appearances than genuine pique, since many Pakistanis object to foreign troops on Pakistani soil.
These demands come after a major scandal involving Raymond Davis, an America CIA security contractor. On January 27, 2011, he shot and killed two Pakistani motorcyclists while waiting for a traffic light in Lahore. He said that they had been following him, and that they were intending to kill him.
The Pakistanis wanted to prosecute Davis for murder, but the Obama administration demanded that he be returned to the U.S. under diplomatic immunity. Finally, he was released to the U.S., after the relatives of the two victims received $2.3 million in "blood money," according to CNN.
The Raymond Davis affair has frightened and infuriated the Pakistanis for two reasons. First, the public had been demanding a trial, and many believe that Davis has gotten away with the murder of two Pakistanis.
And second, the existence of one covert CIA operative on Pakistani soil indicates that there may be many more of them, spying on Pakistan for the United States. Pakistan's nuclear capability is very sensitive, since many Pakistanis believe that American policy is to some how destroy Pakistan's nuclear capability, according to the Express Tribune (Pakistan).
Then on March 17, a missile strike from a US drone killed 39 people, including civilians, according to AFP, once again infuriating the Pakistani public.
The last straw came last week. The White House issued a bi-annual report on terrorism, harshly condemning Pakistan. The report says that Pakistan has "no clear path" to defeating the Taliban and al-Qaeda along Pakistan's border with Afghanistan, according to VOA. The White House report accuses Pakistan of not following through when targeting militant strongholds. The report claims the Pakistani military takes territory ,but falls short of completely securing the area, creating a power vacuum that allows the insurgents to return when the army moves out.
The result is the US-Pakistani relations are facing the biggest crisis since 9/11, according to the Guardian. Pakistan's foreign secretary, Salman Bashir, is quoted as saying, "We will not accept the stigmatising of Pakistan. We need to re-examine the fundamentals of our relationship with the United States to get greater clarity. There has been a pause. Now we must start again."
The article quotes Rehman Malik, Pakistan's interior minister, as saying that Americans should stop blaming others for their difficulties in Afghanistan, where the situation has worsened in the last year.
Pakistan and the United States are bound together in a deadly embrace. The U.S. needs Pakistan as an ally on the war on terror. Pakistan's economy has been devasted by the financial crisis and by massive floods last year, and Pakistan depends on the U.S. as its largest aid-giver.
From the point of view of Generational Dynamics, Pakistan and India are headed for a major ethnic and religious war, refighting the genocidal war between Muslims and Hindus that followed Partition, the 1947 partitioning of the Indian subcontinent into Pakistan and India. Since India is a close ally of the United States and Russia, and Pakistan is a close ally of China and Saudi Arabia, the war between Pakistan and India will be a significant component of the coming Clash of Civilizations world war.
Deposed president Laurent Gbagbo was arrested on Monday and taken into custody in Ivory Coast. Alassane Ouattara had been declared the winner of last November's presidential election, but Gbagbo refused to step down. (See "7-Mar-11 News -- Escalating violence in Ivory Coast leads to enlarged U.N. peacekeeping force.")
According to a report that I heard on al-Jazeera on Monday, the arrest was actually accomplished by French armed forces. But credit for the arrest was given to Ouattara's "Republican Forces," so that Ouattara wouldn't be called a tool of France.
Gbagbo has been taken to an undisclosed location, and is under the protection of the United Nations, according to Bloomberg. Since the arrest, there has been gunfire and looting. Some of the fighting appears to be Gbagbo's militias firing on Ouattara's troops, dashing hopes of a quick peace.
The hope is now that with United Nations humanitarian aid, the violence will tamp down, and there will be peace in the land.
From the point of view of Generational Dynamics, that's not what's going to happen. When a country goes through a civil war, there are aften peace agreements and periods of relative calm separating periods of violence, with each violent period worse than the previous one. The war doesn't end until there's a massive genocidal climax that's so horrible that all the survivors vow that they'll never let anything like it happen again.
I dicussed these concepts frequently in the context of the Sri Lanka civil war. (See "Tamil Tigers surrender, ending the Sri Lanka crisis civil war.") As I described, the climax is comparable to the surrender of the Germans and Japanese in 1945, following slaughter on the beaches of Normandy and the firebombing and nuking of German and Japanese cities.
Gbagbo's arrest is nowhere close to a crisis war climax. There's still a great deal of genocidal energy remaining in both sides of the Ivory Coast civil war, and we can expect violence to continue until a real climax is reached.
The momentum for the unilateral declaration of a Palestinian state will take a major step forward, when Mideast peace envoy and former British prime minister Tony Blair endorses a Palestinian state, in a report to Brussels. Australian
As we've reported, relations between the U.S. and Saudi Arabia have worsened precipitously because of the Obama adminstration's rapid abandonment of long-time ally Hosni Mubarak of Egypt, and after the administration criticized the deployment of Saudi troops to quell the Bahrain uprising. On Tuesday, a personal letter from President Obama was sent to Saudi Arabia’s King Abdullah, in an attempt to repair the relationship. Washington Post
As we've reported in past days, France is closing its border to Italy to keep thousands of Tunisian migrants who flee to Italy from crossing the border into France. Alessandra Mussolini, the granddaughter of Benito Mussolini, is furiously criticizing Carla Bruni-Sarkozy, the wife of French president Nicolas Sarkozy, for not talking her husband into keeping the borders open. (One can just imagine that conversation. Carla to Nicolas: "I won't have sex with you unless you open the borders to Italy.") Telegraph
Reviews of the best computer software for learning a foreign language, RocketLanguages, Rosetta Stone, Tell Me More, and others. PC Magazine
(Comments: For reader comments, questions and discussion,
see the 13-Apr-11 News -- White House report on terror strains US-Pakistan relations to breaking point
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Libya's rebels reject African Union cease fire plan
Germany is already at odds with the "Club Med" nations, since Greece, Portugal, Spain and Italy are considered to be profligate spenders requiring bailouts, in contrast to the disciplined savers in Germany. And the anger is growing anyway, because it's becoming increasingly clear that Greece needs a new bailout (see below), and the Germans are absolutely bitterly opposed to giving them another euro.
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Now there's a new bitter dispute over immigrants from northern Africa. Some 25,000 people, mostly from Tunisia, have arrived on the Italian island of Lampedusa, usually in overloaded fishing boats. Recently, migrants from Libya have been arriving as well. Their purpose is to gain entrance to Italy and the European Union to seek jobs, according to Reuters. The problem has overwhelmed Italy's resources, and so the Italians requested help from the EU and from neighboring countries.
When the EU refused, Italy decided to use a "dirty trick," according to Der Spiegel. Under the EU treaties, Italy is allowed to issue travel visas to visitors, allowing them to travel freely around large parts of Europe. And so Italy plans to issue 25,000 travel visas to the 25,000 migrants
This has infuriated the Germans, the French, and other EU neighbors.
France feels particularly vulnerable, since it already has a large Tunisian community, and many of the migrants will be trying to join their relatives. Thus, France has already announced that it will shut down its border with Italy, according to EurActiv. The French authorities are already sending back some migrants who try to cross its border from Italy.
The German interior minister simply said that the migrants are "Italy's problem," according to The Local (Germany). "Italy must sort out its refugee problem itself," he said.
To that, Roberto Maroni, Italy's interior minister, said on Monday that his country had to "consider if it is still worth being part of the EU," according to EU Observer. "It's fine when Italy contributes to euro bail-outs, to wars, but on this very specific issue of helping us out, EU states are absolutely not willing to show solidarity."
It's fun to watch this war of words, but this is clearly a battle that's only going to grow, since the surge of migrants from north Africa is only going to grow.
Ever since Greece was given a $158 billion bailout last May, it's been perfectly obvious to anyone who can count that the bailout would allow Greece to postpone default by making some debt payments, but would not solve any structural problems, and that default was going to come anyway.
Still, the norm today among politicians, analysts and journalists is to lie, and so the official word by all European officials has always been that Greece's austerity program would allow it to escape default.
So it was a surprise when German Finance Minister Wolfgang Schaeuble broke the code of silence this weekend, and suggested that Greece might need another bailout, or else it would have to restructure its debt (which is equivalent to a default). According to Bloomberg, Schaeuble's statement conflicts with official assertions that Greece is on the right track.
However, Reuters reports that officials within the Greek government are increasingly talking about the best ways to default. Options include delaying payments or reducing interest payments.
However, any kind of default by Greece could cause a chain reaction. Many countries' banks are heavily invested in Greek bonds, and so a Greek default would risk pushing banks in other countries into bankruptcy.
And all this comes at a time when Portugal has requested a $114 billion bailout, after spending months saying that no bailout would ever be needed. (See "7-Apr-11 News -- Portugal requests bailout after disastrous bond auction.")
And it also comes at a time when the people of Iceland voted to reject an agreement to repay €4 billion, as we reported yesterday. According to EuroIntelligence, "This is the second No vote on the Icesave scheme, and has met with severe disappointment by British and Dutch ministers. For us in the eurozone, the interesting question is whether the popular uprising in Iceland might be replicated in the eurozone, especially in Ireland, where a majority of the population wants the bank bondholders to share the costs."
Like the migrant problem, the debt problem is only going to grow, and positions are hardening all around.
From the point of view of Generational Dynamics, Europe is due for another major war. People who find this statement surprising should recall that Europe has had wars regularly for millennia, the latest one having ended only a short 66 years ago. When the Treaty of Rome was signed in 1957, it was with the intention of creating a "European project" that would guarantee that there would never be another European war. But as the the migrant problem grows and the debt problem grows, we can see that nothing has really changed, and that Europe is experiencing the same problems that it always has. All that's needed is for something to light the fuse.
The African Union presented a cease fire plan on Monday and proclaimed that Libyan leader Muammar Gaddafi had accepted it. But when the AU officials traveled to Benghazi to sell the plan to the rebels, it was soundly rejected, because it didn't require Gaddafi to step down immediately.
The Telegraph quotes Anders Fogh Rasmussen, the Nato secretary general, as saying that three conditions must be met: "It must be credible, including an effective protection of the civilian population. It must be supervised and controlled effectively. Finally, it must facilitate a political process aiming to implement the necessary political reforms to satisfy the legitimate demands of the Libyan population."
So the situation is this: Gaddafi will never voluntarily step down, and the rebels will never agree to a ceasefire until Gaddafi steps down. There doesn't seem to be an end in sight.
For today's entertainment, we have a mind-blowing video by someone who shot a photo every two miles or so between take-off in San Francisco and landing in Paris. Part of the show is some shots of the Northern Lights.
(Comments: For reader comments, questions and discussion,
see the 12-Apr-11 News -- Italy fights EU over Tunisian migrants
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Europe's financial crisis grows
On Saturday, Icelanders voted 60% to 40% in favor of rejecting a negotiated agreement to repay the UK and Dutch governments for losses incurred by citizens of those countries who had invested in Iceland's "Icesave" program, according to Bloomberg.
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Many Europeans, especially in Britain and Netherlands, had deposited their savings into Iceland's bank in an "Icesave" program that provided interest rates of well over 10%. When Iceland defaulted, these depositors lost their money, and Iceland was forced to agree to reimburse the depositors.
During the halcyon days of the credit bubble, Iceland was playing games with the international currency carry trade
In February, 2006, there was a major international currency crisis triggered by Iceland's policies. I wrote about this at the time in "Sudden collapse of Iceland krona portends bursting of 'carry trade' bubble." The crisis occurred in conjunction with an announcement by Fitch Ratings that it was revising the outlook for Iceland's banks from "stable" to "negative." According to Fitch, the new ratings "[took] into account Iceland's macro-prudential risks, including rising inflation, rapid credit growth, buoyant asset prices, a steep current account deficit and escalating external indebtedness
And so, I knew that Iceland's banks were in trouble. Fitch Ratings knew that Iceland's banks were in trouble. That's why this whole situation is so pathetic.
Gordon Brown had been Britain's Chancellor of the Exchequer from 1997 to 2007, which supposedly meant that he was an expert in international finance. Then he became Prime Minister in June, 2007. So when Iceland's carry trade bubble collapsed late in 2008, Brown feigned surprise, saying that he had no idea that would happen -- even though Fitch Ratings knew, and I knew and had written about it several times. In fact, Gordon Brown may have been the only person who didn't know.
It was clear that the British and Dutch governments were going to screw Iceland as much as they could. In my August 2009 report, "Iceland begs for mercy as Europe turns the screws," I listed several of the indignities that Iceland was suffering:
Britain, the Netherlands and the EU claimed that they have no responsibility in Iceland's default, but that claim is laughable, since by their own laws, they were just as responsible as Iceland's government.
After months of acrimonious negotiations, Iceland's Parliament approved a bill to pay $5.3 billion to the governments of Britain and the Netherlands. This is the equivalent of $16,400 for each man, woman and child in Iceland, and represents half of Iceland's annual GDP.
When the agreement was put to a vote in March 2010, it was rejected by the voters, with 94% voting against it.
The agreement was renegotiated to lower the amount owed, and a new referendum was scheduled. That was the referendum held on Saturday, where 60% of the voters rejected the agreement.
Now the UK and Netherlands are going to take the issue to court. The court with jurisdiction is the European Free Trade Association’s Surveillance Authority. But apparently this court's decisions are not binding on Iceland.
This is all coming at a time when the EU is bailing out banks in Ireland and Portugal, and possibly in Spain. The EU itself itself is going increasingly into debt, as is the United States. Screwing Iceland is only a sideshow.
(Comments: For reader comments, questions and discussion,
see the 11-Apr-11 News -- Tiny Iceland rejects demands of the European Union bullies
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(11-Apr-2011)
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Pakistani military mercenaries aiding Bahrain government
On March 17, when the United Nations Security Council passed the resolution authorizing military action against Libya, the vote was 10-0, with five abstentions: China, Russia, Brazil, Germany and India. (See "18-Mar-11 News -- UN declares war after Gaddafi threatens 'moment of truth.'")
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Germany received special criticism for failing to stand by its European partners.
Former German foreign minister Joschka Fischer "Germany has lost its credibility in the United Nations and in the Middle East," and called the vote "a farce" and a "scandalous mistake," according to the Guardian.
Dietmar Ossenberg, a German war reporter, said he was ashamed to be congratulated by Gaddafi's henchmen. "It's embarrassing to get a pat on the back from Gaddafi's supporters saying 'Germany good.'"
Germany's foreign minister, Guido Westerwelle, had wanted to vote against the UN resolution, rather than merely abstain, but was persuaded against it by his boss, German Chancellor Angela Merkel.
Well, the naming and shaming of Germany has apparently taken its toll.
On Thursday, Guido Westerwelle said that Germany would be willing to put actual German troops on the ground in Libya, to provide humanitarian assistance. Der Spiegel quotes him as saying that if the U.N. made a request for such assistance, "then of course we wouldn't shirk our responsibility."
It's so much fun to watch mission creep in action. A few days ago, Germany was still opposed to the entire intervention, and the use of troops on the ground was specifically excluded. Now, in a stunning reversal, we may see German troops on the ground in Libya.
That's not all. Germany had removed its navy warships from the Mediterranean so as not to risk getting involved in the Libya effort, but now Deutsche Welle reports that this decision may be reversed, allowing Germany navy ships to participate in EU aid efforts.
However, Westerwelle and Merkel are being accused of flip-flopping by the opposition, according to the article. Of greater concern is the fact that sending armed troops to perform humanitarian tasks while in a war zone is almost a contradiction.
This situation reminds me of an incident that occurred during the 2004 presidential campaign. So-called peace activist Jesse Jackson had been harshly critical of President Bush for sending troops to Iraq.
So I was shocked when I turned on the TV to CNN one morning, and heard Jackson condeming President Bush for the Iraq war, but then calling on Bush to lead a worldwide effort to send troops to prevent further deaths in Darfur. He said, "If we can have troops in Korea, in Nato, there should be nothing shameful about defending life in Africa." (See "Jesse Jackson calls for sending American troops to Darfur.")
So, apparently it wasn't ok to have troops in Iraq, according to Jackson, but it was perfectly ok to send troops into the middle of a bloody civil war in Africa.
That's why I've concluded is that, except for a few nut cases like Cindy Sheehan, there's really nobody who's opposed to war. It seems that everyone loves SOME wars and hates others.
So now Guido Westerwelle, who didn't want anything to do with Libya just a couple of weeks ago, finds it perfectly OK to send German troops into Libya.
So one more line in the sand has been crossed. I wonder what new escalation will happen next week?
We're reported in the past that Pakistan is getting more and more heavily involved in supporting governments on the Arabian peninsula facing uprisings. According to the South Asia Analysis Group (SAAG), Pakistan's army is recruiting two divisions on standby alert for immediate deployment to Saudi Arabia, if there's an outbreak of political upheaval in that country. In addition, Pakistan is recruiting retired soldiers for service in the Bahrain National Guard, to protect the Sunni monarchy. These recruitments are being restricted to Sunni Muslims only; Shias are not being recruited.
A recent editorial in Pakistan's Express Tribune expresses alarm at the number of Pakistani mercenaries in Bahrain:
"With Bahrain in the midst of a violent uprising, many Pakistanis are being targeted by protesters who see them as collaborators of the unpopular regime. Most of the Pakistanis targeted are labourers or other civilians in low-paying jobs. Although the Pakistan Embassy in Bahrain is providing shelter to about 40 Pakistani families, the vast majority are helpless and defenceless.Much of the blame has to be directed at the Pakistan government. Even before the uprising broke out, many Pakistanis were serving in the Bahraini police force. Since the troubles began, Bahrain has been recruiting mercenaries from Pakistan to bolster its police and armed forces. We have allowed them to do so unhindered. Bahrainis are understandably enraged that foreigners are being employed to oppress them and so are lashing out at all Pakistanis. The government needs to immediately ban any more Pakistanis from being recruited in Bahrain’s security forces. Additionally, it is the job of the embassy and the government to make sure its citizens are safe in a foreign country. As soon as the situation turned ugly, all Pakistanis should have been evacuated from Bahrain, just as the US had done with its citizens in Egypt and other Middle Eastern countries that are in the throes of revolution.
By allowing mercenaries to serve the Bahraini monarchy, Pakistan has dangerously taken sides in what may turn out to be a geopolitical, ethnic nightmare. The population of Bahrain is overwhelmingly Shia while the ruling family is Sunni. Iran is naturally supporting the protesters while Saudi Arabia is on the side of the king. Thanks to the mercenaries, the impression will now stick that Pakistan is on the anti-Iran side. This will only hurt relations with Iran, with whom we hope to reach a deal on a gas pipeline. It is time to put potential new alliances on par with existing ones. The government needs to cite its own law-and-order problems at home and a desire to remain neutral in a delicate part of the world. Above all, its foremost priority should be to safely bring home Pakistani citizens."
According to an analysis by the Middle East Media Research Institute (MEMRI), mercenaries are being recruited by the Fauji Foundation, which was set up in 1954 to help Pakistani ex-servicemen and their families:
In March 2011, the Overseas Employment Services (OES) of the Fauji Foundation placed advertisements in Urdu-language Pakistani newspapers to "immediately" recruit Pakistani youth for the Bahrain National Guard. On such advertisement specified recruitments for the following job categories: "officers (majors), Pakistan Military Academy drill instructors, anti-riot instructors, security guards, and military police as well as cooks and mess waiters…" A Pakistani newspaper report noted: "The requirement for anti-riot instructors was NCOs (non-commissioned officers) from the Sindh Rangers or officers of an equivalent rank from the Elite Police Force."
The report concludes that the Fauji Foundation is playing the lead role of recruiting security men from Pakistan to confront the protesters in Bahrain.
The flow of Pakistani military mercenaries into the Arabian Peninsula is consistent with the expectation that China, Pakistan and the Sunni Muslim countries will be opposed to America, India and Russia in the coming Clash of Civilizations world war.
(Comments: For reader comments, questions and discussion,
see the 10-Apr-11 News -- In dramatic reversal, Germany agrees to supply ground troops to Libya
thread of the Generational Dynamics forum. Comments may be
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Debka: Breach between U.S. and Saudi Arabia deepens
The chances of a new Israeli war with Gaza are much higher today, a day after a Kornet anti-tank missile launched from Gaza struck a school bus southen Israel, injuring the driver and critically injuring a 16 year old boy. Hamas claimed responsibility.
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In the past, militants in Gaza have been launching into southern Israel Qassam missiles, which are simple home-made missles with no guidance system. These missiles landed pretty much at random locations, and only occasionally harmed someone.
What makes the school bus attack different is that the Kornet missile does have a guidance system, and it was apparently deliberately aimed at a location where the bus would be parked. The missile attack was followed by numerous rocket and mortar attacks.
This attack has infuriated the Israelis. President Shimon Peres said that "Gaza has become a terrorist state," according to a statement by Israel's Ministry of Foreign Affairs. Israeli Prime Minister Benjamin Netanyahu said the attack on children "crossed a line" and warned that "whoever tries to harm and murder children will pay with their life," according to the Associated Press.
The Israel Defense Forces (IDF) stepped up their air attacks on Gaza on Friday, killing nine Palestinians, including some civilians, according to Reuters. Israel promised to teach Hamas a lesson for the attack on the school bus on Thursday.
The violence is increasing to levels not seen since Cast Lead, the three-week war between Israel and Gaza that ended in early 2009. It is widely feared that a new "Cast Lead II" war is quickly approaching. Each side claims that it doesn't want war, but each side has to respond to the attacks by the other side, and full scale war may be the result. Hizbollah would join Hamas in a war against Israel, and has a 20,000 missile arsenal ready to be used, according to a Wikileaks cable quoted by the Jerusalem Post.
Because of the widespread international hostility directed at Israel, it's possible that Hamas sees increased violence with Israel as a no-lose proposition, since Israel will be blamed, no matter what happens.
The violence occurs at the same time that a diplomatic track is being pursued by the Palestinians to gain U.N. recognition of a Palestinian state by September. The Palestinians have completely given up on the "Mideast peace process," which has been dead as a doornail for some time anyway, and they blame Israel's policy of building settlements in east Jerusalem for the collapse of the peace process.
Thus, they've been taking a number of steps to prepare for statehood. The plan took a big step forward this week, when the International Monetary Fund (IMF) issued a report praising Palestinian fiscal reform, and declaring that Palestinian financial institutions are ready for statehood, according to Ma'an News.
An even more important issue is reconciliation between Hamas and Fatah, a requirement for a Palestinian state.
Arab League Secretary General Amr Moussa announced Wednesday that he will help Palestinian President Mahmoud Abbas and that the Arab League will help mediate a reconciliation, according to Al-Arabiya.
According to an analysis by Debka, Egypt would help with reconciliation as follows:
"[T]he new Egyptian leaders are willing to help negotiate Hamas' reconciliation with Mahmoud Abbas' Fatah on the following basis: Hamas would accept the two-state solution of the Palestinian-Israeli conflict but Egypt would not press for the second part of the formula endorsed by Washington and Israeli Prime Minister Netanyahu, namely that "the two states live alongside each other in peace and security."This amended formula would leave Hamas and the other radical Palestinian organizations free to continue their violent campaign of "resistance" against Israel while making peace with the rival Fatah and gaining a Palestinian state on the West Bank.
These days, Hamas is sure it is on a win-win course and has little to fear from stepping up its war on Israel until it gets what it wants."
This would be an ambitious path for Hamas, but it's far from clear that it can be achieved. A spokesman for Hamas is quoted by the Jerusalem Post as saying that Palestinian president Mahmoud Abbas does not actually want reconciliation. According to an analysis by Mideast Monitor, Abbas wants to quickly reach agreement on a timetable for holding parliamentary and presidential elections, while Hamas is reluctant to risk its control of Gaza.
The same factors that drove Hamas and Fatah to war in 2007 still exist, and it's just as likely as the two factions will have another war as reconcile.
And it's not clear what the outcome will be if the United Nations is asked to create a Palestinian state which may immediately be at war with Israel.
September is still a very long way off. In the meantime, violence between Israel and Gaza is increasing, and there may be a war long before the United Nations has an opportunity to vote on any proposal.
According to an analysis in the Debka subscriber-only newsletter, forwarded to me by a subscriber, the recent visit by US Defense Secretary Robert Gates to Saudi Arabia's King Abdullah failed in its attempt to improve Saudi-US relations.
What triggered the visit was word that the Saudis were cancelling a $60 billion order for American military hardware, and that they plan to shop elsewhere for lower prices, possibly from China or Russia.
Relations between King Abdullah and President Barack Obama have been cold ever since Obama turned his back on former Egyptian president Hosni Mubarak. Abdullah was furious that Obama had thrown Mubarak under the bus so quickly, and has not forgiven him yet.
According to the newsletter:
"Abdullah was harshly critical of the US presidential advisers' counsel to the White House to withhold endorsement from Saudi military intervention in Bahrain.As long as Washington hopes to topple the Bahraini and Saudi kingdoms by promoting pro-democracy revolutions on the Egyptian pattern, why would you expect the Persian Gulf rulers to support America and treat it as an ally? he asked the US defense secretary. ...
King Abdullah explained that once he had realized the Obama administration had no intention of acting in consideration of the security interests of the Saudi and Gulf nations, he resolved to take their affairs into his own hands. He said he now feels free to do what he thinks necessary to advance those interests without resorting to - or even consulting with - Washington.
Gates confirmed that the US did have "evidence" of Iranian meddling in the turmoil besetting Bahrain and other Middle Eastern countries, refuting the Obama administration's public statements denying Iran was a primary factor. But this admission most probably came too late. Abdullah has set his course on a new policy that distances the kingdom from the United States. Even though Gates disagrees with Obama on the Middle East - and especially on military intervention in Libya - the Saudi monarch knows that his time is almost up at the Pentagon."
These events are consistent with the expectation that China, Pakistan and the Sunni Muslim countries will be opposed to America, India and Russia in the coming Clash of Civilizations world war.
There was another mass demonstration by tens of thousands of protesters in Tahrir Square in Cairo, Egypt, on Friday, after midday prayers, demanding that ousted president Hosni Mubarak and his family be put on trial for alleged corruption. About 2,000 protesters broke away from the mass demonstration and marched to the Israeli Embassey to protest Israeli air strikes on the Gaza Strip. AP
Now that Portugal has asked for a bailout, its troubles are far from over. European Union finance ministers will approve the bailout, but only if Portugal's political parties agree to a package of severe austerity measures and reforms. The austerity measures to be demanded are much harsher than those proposed last month by prime minister Jose Socrates, but his milder measures were rejected, leading to a collapse of the government. Portugal has new elections planned for June, and it's far from clear that the candidates will be able to agree to accept the EU's harsh austerity measures in the middle of an election. Independent
In 2008, China experienced a food disaster almost beyond comprehension. Chinese manufacturers of milk products added a chemical call melamine to their products. Melamine is poison, but it gives the appearance of high protein levels to government food quality inspectors. (See "A generational view of China's growing melamine food disaster.") Now there's a new scandal, where three children have died from drinking tainted milk with nitrates, once again to give the appearance of high protein levels. VOA
Japan's nuclear crisis is a boon for South Korea's high tech companies. Japan's position as supplier of devices such as memory chips or LCD screens has been put into question by the nuclear disaster, and South Korean firms are planning to take up the slack. CS Monitor
Thousands of migrants have been fleeing Tunisia and landing in Italy, hoping to relocate to Europe. France is preparing to shut down its border with Italy, in order to prevent the migrants from entering France. EurActiv
It was another bloody Friday in Syria. Anti-government protests broke out in several locations across the country. Witnesses said that Syrian security forces killed at least 17 protesters. VOA
(Comments: For reader comments, questions and discussion,
see the 9-Apr-11 News -- Gaza violence escalates after anti-tank missile strikes school bus
thread of the Generational Dynamics forum. Comments may be
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(9-Apr-2011)
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IMF says that Palestinians are ready for statehood
For reasons that are unknown to me, the traffic to this web site is suddenly up 30% in the last couple of days.
Whatever the reason, let me welcome the new visitors. If you have any questions, send me a comment and I'll get back to you, though it may take a while. Also, feel free to post in the Generational Dynamics forum, where the discussion in the Financial Topics thread is particularly heated and informative.
A telephone poll of a random sample of 615 Egyptians, conducted from March 9-20, indicates that there's very little reason for the West to be concerned about Egypt becoming a hardline Muslim country. In particular, there's absolutely nothing that supports any concerns that Egypt will become "another Iran."
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The poll by the New York based International Peace Institute surveys attitudes of Egyptians as they approach elections in the fall. Generally, Egyptians are optimistic, and believe that the country is moving in the right direction. We're going to look at the responses to two questions.
Q4. In your view, what is the biggest problem facing Egypt?
Economy / Inflation/ unemployment/ poverty/oil price/ homelessness ............................................. 35% Demonstrations / strikes/ unrest/ riots / govt has no control ...................................... 17% Corruption / bribery / dishonest officials ................... 8% Women’s rights and freedoms compromised ...................... 7% Crimes/ violence/ insecurity ................................. 5% Formation of new government/ absence of democracy/ elections ................................................ 5% Terrorism/ no peace/ insurgency .............................. 3% Social justice / Growing inequality in society ............... 2% Freedom / free speech ........................................ 2% Water ........................................................ 1% Schools / Bad education/ educated people emigrate ............ 1% Rule of law/ injustice/ frauds/ judiciary not independent .... 1% Healthcare ................................................... 1% Relations with Israel/Palestine/Israeli-Palestinian relations/peace process .................................. 0% Roads/ transportation ........................................ 0% Other ........................................................ 7% Don’t know /refused .......................................... 6%
This is interesting because this list of problems is not much different from a list produced by people in Europe or America. The economy and terrorism are high on the list of concerns, and relations with Israel and the Palestinians are so far down the list, they're almost irrelevant.
As I reported several days ago, Egypt's youth uprising has split the Muslim Brotherhood along generational lines. But as we described, even in that case, the major issue dividing the generations is not Israel, but corruption and honesty in government, number 3 on the above list. (See "4-Apr-11 News -- Egypt's 'Save the Revolution' movement splits Muslim Brotherhood.")
Q17. If the Presidential election was held today, who would you vote for?
Amr Moussa ...................... 37% Marshal Mohamed Tantawi ......... 16% Ahmed Zewail .................... 12% Essam Sharaf .................... 7% Omar Suleiman ................... 5% Wael Ghoneim .................... 2% Mohammed el Baradei ............. 2% Ayman Nour ...................... 1% Other ........................... 0% Won’t vote ...................... 0% Refused ......................... 5% Don’t know ...................... 14%
The poll is led by Amr Moussa, the secretary-general of the Arab League. The photo of Moussa at the top is from Al-Arabiya, at a time several weeks ago, when the Arab League was voting unanimously to support the American and European intervention in Libya.
In early March, when Moussa declared his candidacy for Egypt's presidency, he declared his vision to rebuild Egypt into a fully functioning democracy. According to Al-Ahram:
"In both meetings, held in the shadow of the attacks on Copts in the village of Soul, and in the Cairo district of Manshiyat Nasser, Moussa, who asked participants to address him as "Citizen" Amr Moussa, rather than as Secretary General, warned against the dangers of counter-revolution. As he pointed out also in an official statement on Thursday, Moussa asserted that these incidents were not spontaneous eruptions, but rather deliberate, well-planned attempts at subversion and counter-revolution instigated and waged by the “remnants of the old regime”.In substantiating this assertion, Moussa pointed to the spirit of tolerance and unity shown by millions of protesters during the revolution, with Muslims and Christians praying alongside one another, and with Coptic youth creating human shields to protect Muslims as they conducted their prayers. He referred further to the fact that “the Jewish synagogue in Adly street, a few minutes walk from Tahrir, and along which waves of protesters would pass daily on their to the square, was not touched, despite the total absence of any police protection around it.”
For Moussa, this was evidence of the new spirit generated by the revolution, which stood in marked contrast to the attempts at sectarian and religious incitement, which were hallmarks of the old regime."
The election is still far off, and Moussa may have won the poll simply because he's the most well-known, as secretary-general of the Arab League.
I've been watching Egypt, just like everyone else, to see if there are any signs that Egypt is going to turn into another Iran, or if Egypt is going to fall under the control of a radical Muslim group like al-Qaeda. As it's turned out, it's been very difficult to find any sign of a trend in that direction, beyond an occasional isolated incident of some kind.
A couple of months ago, I compared Egypt today to Iran in 1979, at the time of the Great Islamic Revolution. It's worthwhile summarizing the differences briefly
Iran in 1979 was in a generational Crisis era, and Egypt today is in a generational Crisis era, so that much is the same. But there are also significant differences that I've written about before at length.
Egypt has no historic fault line between monarchy and clerics, as in Iran, and there's no charismatic clerical leader like Iran's Ayatollah Ruhollah Khomeini. Egypt lacks any strong radical Muslim presence, which Iran had, and the Muslim Brotherhood in Egypt has long ago renounced violence. There's no sign of a civil war, which the Great Islamic Revolution was. The crowds in Tehran yelled "Death to America." If the crowds in Tahrir Square massively started yelling "Death to Israel," then I'd have to change my opinion, but there's been no sign of that. Quite the contrary, I get the feeling that the leaders of all the political parties are going out of their way to reassure everyone that the Egyptian revolution will most definitely NOT be another Iran, and the poll results support that view.
The Generational Dynamics prediction is that the region is headed for a new war between Arabs and Jews, re-fighting the genocidal war that followed the partitioning of Palestine in 1948 and the creation of the state of Israel. As part of that war, we can expect to see conflicts between Sunni and Shia Muslims, and between Palestinian factions. But right now, based on all the information available today, it seems more likely that the Egyptians will be fighting WITH us, rather than AGAINST us.
The following video is well worth two minutes of your time. A Japanese company is selling cell phones made of wood, and to illustrate the concept, the company built a giant wooden xylophone in the forest. As the wooden ball rolls down the xylophone, it plays Bach. Truly amazing.
Egypt's foreign minister is applauding the actions by Saudi Arabia and the Gulf Cooperation Council (GCC) to to send troops to Bahrain to stop the Shia protests against the Sunni government. The statement accuses Iran of trying to destabilize Bahrain. According to the statement, "The stability and Arabhood of the Arab Gulf countries is a red line against which Egypt rejects any trespass." Al Bawaba
A survey of 1,564 villages in 17 provinces of China reveals that 60% of farmers have had their land confiscated by the government, and that they were unsatisfied with the compensation that they received. According to the report, "Illegal land confiscation has become the biggest threat to Chinese farmers’ land rights and conflicts related to land have become a threat to the stability of China’s rural society." South Asia Analysis Group (SAAG)
Turkey is centrally located, with geographic links with the Mediterranean, Mesopotamia, the Southern Caucasus and the Black Sea. This is enabling Turkey to take a leading role in relations between Europeans and Muslims. ISN (Zurich)
The Palestinians have completely given up on the Mideast peace process, and instead are focusing on a September goal of asking the United Nations to declare, by international mandate, a Palestinian state on pre-1967 borders. The plan took a big step forward this week, as the International Monetary Fund (IMF) issued a report praising Palestinian fiscal reform, and declaring that Palestinian financial institutions are ready for statehood. Ma'an News
Sex selection by parents in India has reduced the gender ratio substantially, to 914 girls aged 0-6 for every 1000 boys. There are also severaly skewed gender ratios in China, Vietnam Taiwan, Pakistan and Afghanistan. Even Indian emigrants to the United States exhibit similarly imbalanced birth sex ratios. World Politics Review
There was a huge political battle last year over France's attempt to return much of its Roma Gypsy population from their countries of origin. (See "15-Sep-10 News -- Europe bitterly attacks France on Roma Gypsy expulsions.") Now the European Commission has made it a top priority that all Roma children should go to school, especially in countries where Roma live in significant numbers – Romania, Bulgaria, Spain, Hungary, Slovakia, France and Greece. EurActiv
Is Japan hiding a nuclear weapons program inside its nuclear power plants? New America Media
Al-Qaeda on the Arabian Peninsula (AQAP) has been promoting the idea of jihadist attackers performing terrorist attacks on their own, without having to make contact with al-Qaeda trainers or to coordinate with others. For example, a homemade bomb can be made from chemicals found in the home -- peroxide and acetone or chlorine and brake fluid. By watching out for neighbors using these and other dangerous chemicals, you can help identify these lone wolf jihadists before they do any damage. Stratfor
(Comments: For reader comments, questions and discussion,
see the 8-Apr-11 News -- Egypt poll: Arab League's Amr Moussa in lead for presidency
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(8-Apr-2011)
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Spain will be the new target of 'the markets'
Sorry for the delay in posting this -- the need for sleep ruled.
As late as Wednesday morning, Portugal's finance ministry was saying that the country can meet all its financing needs without any aid from the European Union, and that there were no plans to ask for a bailout, according to the Wall Street Journal (Access).
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However, several hours later, Portugal's prime minister José Sócrates announced that Portugal would ask for a bailout. Portugal thus becomes the third eurozone country, after Greece and Ireland, to require rescue. Socrates is quoted by the Associated Press as follows:
"I want to inform the Portuguese that the government decided today to ask ... for financial help, to ensure financing for our country, for our financial system and for our economy ...This is an especially grave moment for our country ... and things will only get worse if nothing's done."
Portugal, which needed no aid whatsoever in the morning, suddenly needed €80 billion ($114.4 billion) by the end of the day. That must have been one hell of a three-martini lunch.
The immediate problem is that Portugal's government is obligated to repay a €4.5 billion loan that falls due later this month, and must make a €7 billion loan payment in June.
So Portugal tried to borrow €1 billion on Wednesday, by selling 12-month Treasury bills. The bills were all sold, but investors demanded yields (interest rates) of almost 6% -- an astronomical amount for 12-month bills. By comparison, yields on America's 12-month bills were at 0.28% on Wednesday, and yields on Germany's 12-month bills were at 1.32%.
Portugal's Treasury yields have been rising steadily for over a year, as we reported last week. Yields on Portugal's 10-year bonds were at 8.54% on Wednesday. (See "1-Apr-11 News -- Portugal's and Ireland's bond yields soar, but VIX remains low.")
There was really never any doubt that Portugal would need to be bailed out at some point. What's only remarkable is the lies and deception of the politicians who said that a bailout could be avoided. Or maybe that's not remarkable either, since lying and deception are the norms for politicians today, in Lisbon as in Washington and other capitals.
The following is a translation from an editorial titled "Who's next?" in El País (Madrid) in reaction to Portugal's announcement:
"The cold war between governments and financial markets continues, and markets continue to claim victims [in the form of high yields]: Greece 12.5%. Ireland, 8.9%. Portugal, 8.3%. Those are the three numbers of fear in Europe: the countries have been forced to seek assistance from the EU and the IMF. This is interest paid on public debt [bond yields] to 10 years: the best thermometer of fear in the markets that a default will occur is that investors are charging high interest rates. There is a fourth number, 5.2%: it is what Spain pays, which for months was identified as the next in the list. Italy and Belgium are not far from [Spain's situation].The 10-year Spanish bond has an interest of 5.2% compared to the 8.3% for the Portuguese bond.
But Spain has, for the moment, distanced itself from the last fire in the markets that has swept Portugal away, thanks to the reforms undertaken since it has gotten out of the crisis (although the recovery is still fraught with danger) but also thanks to other intangibles. Spain is too big to fail; too big to be rescued. So it's likely that an attack on Spanish debt would be actually a threat to the whole euro: Spain is the boundary between the cold war and a full-scale conflict against the euro and against the European project.
And yet, the numbers -- and the [models], which to economists are equally or more important than numbers -- identify Spain as the next domino in the fiscal crisis. Athens asked for rescue in May, and immediately markets targeted Ireland. Dublin came six months later, in November. And Portugal was also unable to avoid the same self-fulfilling prophecy: it was next on the list and has been forced to ask for help just five months later. "Portugal has resisted because the bailouts did not work for Greece and Ireland, whose debt is still under pressure. But neither Portugal's reforms nor its crisis management has been suitable," said Angel Ubide, researcher at the Peterson Institute in Washington.
The problem is that Portugal worked as a shield for Spain. In the short term, pressure could resume on Spanish debt, although in recent weeks before the rescue we haven't seen any kind of infection. "The links between the Spanish and the Portuguese economy require think that the prospects for Spain are not independent of happens to Portugal. Still, markets will continue to differentiate between large and small countries: it is not as predictable contagion in the early stages of crisis," according to a note from Barclays Capital."
The tone of this editorial is quite remarkable. It never says anything remotely close to the truth -- that with 20% unemployment, and the crashing of a huge real estate bubble, Spain has no hope of paying off its debts without default.
The editorial simply blames "the markets." If only it weren't for those darn markets, the editorial implies, then we could continue going into debt forever.
Everybody knows not only that Spain will require rescue, but also that Spain is so big that a rescue will not be possible. According to the timetable described by the El País editorial, this crisis should occur in about six months.
The same debate is going on in Washington, as a possible government shutdown looms. One side is saying that we can keep spending as before. The other side is saying that it we cut a little here and there, then we can keep spending as before, and we'll have the darn problem solved by 2050, or by 2099 at the latest.
But the mathematics tells a different story. Before this crisis is over, Medicare, Medicaid, unemployment, food stamps, and other government social programs, will all be ended or effectively ended, since it will be impossible to pay for them any more, especially since all the nation's resources will be needed for fighting an existential war.
(Comments: For reader comments, questions and discussion,
see the 7-Apr-11 News -- Portugal requests bailout after disastrous bond auction
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(7-Apr-2011)
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State Dept. 'deeply concerned' about Jewish settlement plans
On March 9, al-Jazeera broadcast a show that interviewed several Bahraini protesters. Since then, all those interviewed have been arrested, or beaten or are in hiding, according to al-Jazeera. That shows how thorough Barain's security forces have been.
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Since the protests began on February 14, several dozen protesters have been killed, hundreds have been arrested, and thousands have been injured. Almost all of the protesters have been Shia Muslims. Bahrain is governed by Sunni tribal leaders, although the population of Bahrain is 2/3 Shia. (See "18-Feb-11 News -- Bahrain's government chooses the massacre scenario.")
The uprising escalated substantially on March 14, when the Gulf Cooperation Council (GCC) intervened, and a thousand Saudi troops arrived to help quell protests. (See "15-Mar-11 News -- Bahrain uprising becomes explosive as Saudi troops arrive.")
On Tuesday, Bahraini official deported two journalists working for the opposition's main newspaper, according to AP. A government spokesman said that the paper was running fabricated news reports" and "false pictures."
Today, the protest movement is in tatters, according to The National (UAE). Many of its leaders and activists are in prison, and the protesters are subject to harsh emergency laws.
The Saudi population is 15% Shia, and the Saudi rulers have said that they will not tolerate a Shia coup in Bahrain, since it might spill over into Saudi Arabia. Iran is thought to be encouraging exactly that kind of outcome.
Pakistan is taking an interest in the situation, according to the South Asia Analysis Group (SAAG). Pakistan's army is recruiting two divisions on standby alert for immediate deployment to Saudi Arabia, if there's an outbreak of political upheaval in that country. In addition, Pakistan is recruiting retired soldiers for service in the Bahrain National Guard, to protect the Sunni monarchy. These recruitments are being restricted to Sunni Muslims only; Shias are not being recruited.
Genrational Dynamics predicts that the region is headed for a war between Sunni and Shia Muslims. Historically, Hindus have been aligned with Shia Muslims, so it's expected that India will ally with Iran, Russia and the West, while Pakistan will ally with China and the Sunni Muslim countries, in the coming Clash of Civilizations world war.
The Jerusalem Planning and Building Committee discussed plans to construct 942 new housing units in east Jerusalem. The U.S. State Department issued a statement saying, "the United States is deeply concerned by continuing Israeli actions with respect to settlement construction." It added, "not only are continued Israeli settlements illegitimate, Israel’s actions run counter to efforts to resume direct negotiations." Haaretz
In Yemen, anti-riot police used batons to attack protesters among 40,000 people marching in Sanaa, the capital. In Sanaa and Taiz, at least six more people were killed and hundreds were indjured from live gunshot wounds. CNN
Former International Atomic Energy Agency chief Mohamed ElBaradei, who is now running for president in Egypt, said that if he's elected president then, "if Israel attacked Gaza we would declare war against the Zionist regime." YNet
A Russian news agency reports that "more than one million Slavs" in Ukraine have converted to Islam since 1991, a figure that almost certainly is an exaggeration. approximately one in 30 Ukrainian residents is Muslim, while the figure is one in five for Russia. Paul Goble
Although Russia has separatist movements in the Caucasus provinces, the biggest separatist threat is from the residents of Siberia. "Siberians do not even want money from the state. They can take care of themselves if they are given the opportunity to conduct free economic activity," according to one Siberian activist. Paul Goble
According to a recent accounting, Somali pirates are now holding 56 foreign vessels and two barges, along with at least 886 hostages. Eurasia Review
You can build your own nuclear reactor at home How to build a nuclear reactor at home - from scratch. Your best bet? Use beta-decaying isotopes. Svarychevski Michail Aleksandrovich
(Comments: For reader comments, questions and discussion,
see the 6-Apr-11 News -- Bahrain protest movement appears to have been crushed
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(6-Apr-2011)
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France's troops and aircraft enter Ivory Coast conflict
In a sharp about-face of policy, the Obama administration is backing away from President Ali Abdullah Saleh of Yemen, America's long-time ally in the war against terror. The administration had fully supported Saleh until news leaked out this weekend, confirmed on Monday, that the administration was calling for Saleh to step down, according to AFP.
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The White House is hoping that Saleh's replacement will continue to work with the U.S. in fighting al-Qaeda. Al-Qaeda on the Arabian Peninsula (AQAP) is headquartered in Yemen, and is training militants for terrorist acts in Europe and North America.
White House spokesman Jay Carney said the following:
"We are obviously concerned that in this period of political unrest that Al-Qaeda and other groups will attempt to take advantage of that power vacuum. That is one of the reasons why we urge political dialogue to take place and a timetable for this transition that President Saleh has talked about to be begun.We believe we can and will work with the government of Yemen on these important matters. We are not focused on one individual."
The change in policy comes when the bloodbath in Yemen has substantially worsened in the last few days. Tens of thousands of protesters have been demanding for weeks that Saleh step down. Since the start of the protests, gangs of Saleh supporters had attacked unarmed demonstrators with truncheons, sticks and guns. Over the weekend, security forces used round after round live fire, killing at least 12 protesters and injuring hundreds, according to the Yemen Post,
It's far from clear that Yemen's government will continue to exist if Saleh steps down. Saleh's great strength is in manipulating and holding together the powerful tribal confederations, and tribal conflict may follow his departure.
Pakistan's army is recruiting two divisions on standby alert for immediate deployment to Saudi Arabia, if there's an outbreak of political upheaval in that country. In addition, Pakistan is recruiting retired soldiers for service in the Bahrain National Guard, to protect the Sunni monarchy. These recruitments are being restricted to Sunni Muslims only; Shias are not being recruited. This development is consistent with the expectation that China, Pakistan and the Sunni Muslim countries will be opposed to America, India and Russia in the coming Clash of Civilizations world war. South Asia Analysis Group (SAAG)
French troops and aircraft are entering the conflict in Ivory Coast, as it escalates into full scale civil war. France is now heavily involved in two African wars -- in Libya and Ivory Coast. VOA
Western military advisers are becoming visible in Benghazi, Libya. Independent
In a surprise, Italy's government has officially recognized Libya's rebels, as represented by the Libyan National Transitional Council, as the only legitimate representative of the nation. Italy is the third nation, after France and Qatar, to recognize the rebel government. Italy has a lot at stake in Libya, so the decision must have been very closely calculated. On the one hand, Italy fears a flood of refugees leaving Libya and arriving on Italy's shores, hoping to live in Europe. On the other hand, Italy is Libya's former colonial power, and has substantial economic ties in the country. CS Monitor
According to one anti-American blogger, the principal motivation behind the West's military action in Libya is to deprive China of its economic engagement with Africa, in preparation for war with China. The author says that the West used the same strategy in the 1930s, preparing for war with Japan. Paul Craig Roberts
The International Monetary Fund (IMF) has been pushing Greece behind the scenes to restructure its debt, which would be a form of default. The IMF has decided that the austerity measures and EU bailout are not enough to escape default, something that many people have been saying for a long time. The IMF is reluctant to make its position public, because doing so would increase pressure on Portugal, which will probably be the next country requiring an EU bailout. Spiegel
Hillary Clinton has become the most popular and trusted figure in the Obama administration, with a favorable rating higher than President Obama, Vice President Biden, or Secretary of Defense Gates. She was a polarizing figure during the Clinton administration, but her work as Secretary of State around the world has won her admirers. CS Monitor
How to avoid identity theft scammers during the tax season. CBS News
The easiest way to get a girlfriend is to already have one. So if you need a girlfriend to post cute messages on your Facebook site, you can get a virtual girlfriend from CloudGirlfriend.com soon. The service will employ real women. Technology Review
(Comments: For reader comments, questions and discussion,
see the 5-Apr-11 News -- Yemen's government appears near collapse, as Obama administration turns its back
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(5-Apr-2011)
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Over 100,000 protesters returned to Tahrir Square on Friday
An estimated 100,000 protesters demanding to "Save the Revolution" demonstrated in Tahrir Square in Cairo, Egypt, on Friday, according to Ahram. The protesters have called for another rally next Friday.
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There had been no large scale demonstrations ever since the armed forces emptied the square on March 9, and it had been widely assumed that the revolution had fizzled out, but Friday's huge crowds proved that assumption wrong.
The reborn revolution fervor was triggered by a return to some of the abuses that had been common during the presidency of Hosni Mubarak, whom the January uprising forced to resign.
Several people have come forward to say that they were detained and tortured by the military that had assumed power when Mubarak resigned, according to Global Post. Even Mubarak's own National Democratic Party (NDP), widely criticized for corruption, is regrouping for a return to political prominence.
Of greater concern to some young people is the potential rise in power of the Muslim Brotherhood and other Islamist political parties.
The median age of Egyptians is 24, so most Egyptians are young, and have grown up in a secular Egypt with a Muslim Brotherhood that gave up violence decades ago. Young Egyptians wish to retain their secular freedoms, and to continue to coexist with Coptic Christians and other religious groups.
The result has been a serious generational rift within the Muslim Brotherhood. On Saturday, two key leaders of the Brotherhood resigned, with the intention of joining a new political party, the Hahda Party, according to Al-Masry Al-Youm. This party will be conservative, but it will uphold the freedom of its members, and will represent a strong competitor to the Brotherhood, because it will draw large numbers of Brotherhood youth.
In fact, the Brotherhood has been facing a rift since the Revolution began in January, according to an analysis by Ahram.
Within a few days of the overthrow of Mubarak, a Facebook event called "Brotherhood Youth Revolution" was established, calling on the Muslim Brotherhood Youth to overthrow it leaders and senior members.
The rift grew when Mubarak's police and thugs were attacking the protesters in Tahrir Square. The leaders and senior members of the Brotherhood sided with the military, but the decision to back down was rejected by the Brotherhood youth. The result was a deadly battle of Tahrir Square that killed several dozen demonstrators.
Young Egyptians are sick of the corruption and abuse of the Mubarak regime, and they want to see it replaced. But they've lived their entire lives enjoying a secular society, at peace with Israel and the West. (See "14-Feb-11 News -- Reader question about the Egypt and the Muslim Brotherhood.") My expectation is that there will be no significant changes to these policies.
Youth groups have listed five demands for the military and the interim government, according to Bikya Masr:
Even older Islamists are realizing that the young people in Egypt have completely different attitudes, according to a man quoted by the LA Times:
"Today's young grew up freer than we did. They did not develop the same rage that inspired us. Even the Islamic movement is seeing things differently. It's trying to speak to our current times. Before, we thought you could remove the infidel ruler only through force. Today, we see we can do it through peaceful protest and the ballot box."
Young Egyptians today have as little desire to return to the harsh practices and attitudes of the Muslim Brotherhood of the 1950s and 1960s, any more than today's young Americans or Europeans would like to return to the attitudes and behaviors of the 1950s.
However, Egyptian society, especially the Muslim Brotherhood, is going through a kind of societal identity crisis along generational lines. The young people always win these generational battles since, after all, the old people die off. We should begin to see the early resolutions to some of these disputes when elections are held later this year.
(Comments: For reader comments, questions and discussion,
see the 4-Apr-11 News -- Egypt's 'Save the Revolution' movement splits Muslim Brotherhood
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(4-Apr-2011)
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Is Russia still preparing to fight World War II?
If you're a guy looking for a wife, you might wish to consider a trip to Russia. Preliminary results of the 2010 census show that Russia's population is 142.9 million, 2.2 million less than in 2002. Furthermore, only 46.3% are male, while 53.7% are female, according to the Moscow Times.
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The growing gender imbalance is due primarily to "the high incidence of premature death among men." A Moscow expert quoted by RFERL explains the plunging population as follows:
"The demographic process today -- and I mean the decline in population -- is fantastically powerful, and it is connected not only with the allocation or nonallocation of budget resources, but also with the problem of culture. We have become a hedonistic consumer culture and, as is always the case in these situations, the birthrate is in decline. This is also happening in Europe and, to a lesser extent, the United States."
You can tell this guy is a politician, if he believes that government misallocation of resources is causing a massive decline in birthrate.
From the point of view of Generational Dynamics, what we're seeing is actually the flip side of the postwar "baby boom." During the generational Crisis era of the 1930s and 1940s, and again in today's generational Crisis era, couples are extremely anxious about finances, terrorism, xenophobia, and war, and are marginally less willing to bring a new baby into the world. This is particularly true in Russia, which has gone through one crisis after another since the collapse of the Soviet Union in 1991. Once the approaching world war has run its course, then there'll be a new postwar baby boom, and the cycle will repeat.
A big reason for the the high incidence of premature death among men is alcoholism is widespread alcholism, according to BCM (Moscow).
Prime Minister Vladimir Putin has spoken out on alcoholism, and is recommending a package of measures to combat it. "You know my attitude to the alcoholization of the population: we have, of course, to fight that. But there is no simple, linear solutions," he said.
Both alcoholism and the population decline are taking their toll on Russia's army.
Russia requires an annual conscription of about 555,000, according to ISN (Zurich). There will be 11.6 million men of conscription age, from 18 to 27 years, in Russia this year, which should be plenty. However, when you deduct those found to be unfit for service, those with a college exemption, and those dodging the draft, there are only 1.7 million men left. That's not all. 70% of those drafted are 18 years old. Only 855,000 men will turn 18 in 2011, 34.5% fewer than in 2002.
In fact, the draft has become so unpopular that some 200,000 younr Russians avoided military service in the fall of 2010, according to Paul Goble. Moscow can only save the situation by provinding a massive infusion of new funds for the armed forces.
In particular, one proposal is to pay soldiers an amount equal to half the amount given to mothers to encourage having children. That would be something like $6,000 for each soldier, for a year of service. If that step is not taken, then Moscow will have to find a way to use more force to push people into the military.
The sophistication of America's military intervention in Libya has exposed even more serious problems with Russia's army, according to Chief of General Staff Army-General Nikolai Makarov, quoted by Jamestown. Makarov is saying that Russia still has a World War II army:
"Last week Serdyukov’s first deputy, the Chief of General Staff Army-General Nikolai Makarov gave a much more somber assessment of the present state of the Russian military addressing the annual session of the Russian Military Science Academy – an influential semi-official think tank. Makarov complained that Russian military analysts continue to base international military balances on gross inventories of tanks, guns, jets and infantry manpower, while Western information technologies of data distribution, command and control are largely ignored. The war with Iraq in 1991 should have awakened, according to Makarov, the Russian military to new ways of conducting warfare, but it did not. Makarov contended there were some 11,200 generals and officers with military science degrees serving in Russia’s military academies continuing to research World War II (The Great Patriotic War) tactics that are practically useless today (VPK, March 30).Twenty years since 1991 have been wasted, stated Makarov. The Russian military continued to prepare mass armies armed with outdated weapons. Makarov commended the US-led coalition’s use of modern intelligence-gathering, command and control systems and precision-guided weapons against the Russian-armed forces of Colonel Gaddafi, while Russian forces do not have such capabilities or an understanding of how to use them. Makarov complained that General Staff officers were forced to hastily put together military reforms plans without any help from Russia’s numerous active service military theoreticians and were often blundering by using “trial and error methods.” To effectively meet new threats Russia needs new ideas, weapons and soldiers (VPK, March 30)."
All of these issues point to increasingly serious problems in Russia's armed forces.
(Comments: For reader comments, questions and discussion,
see the 3-Apr-11 News -- Russia's army crippled by alcoholism and grim census results
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(3-Apr-2011)
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Gaddafi rejects call for cease fire
US officials have confirmed that American war planes, ground-attack aircraft and Tomahawk cruise missiles will be pulled out the Libya operation, starting this weekend. In addition, US naval ships and submarines are being withdrawn from the seas off Libya according to AFP.
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These steps are being taken, now that NATO took command of the entire coalition effort on Thursday.
The US will continue to play a supporting role - providing planes for mid-air refueling, jamming and surveillance. However, air support for the rebels will have to be provided by the remaining coalistion forces, including Qatar, UAE, Sweden, Britain, and France.
In Libya on Friday, rebels called for a ceasefire, after they were driven back by Gaddafi's forces for the third day in a row. Gaddafi's forces have rejected the ceasefire request, according to the Telegraph.
There's an opinion column that asks the question, "Will Libya become Obama’s Iraq?", in Friday's Washington Post.
That's the wrong question. The right question is, "Will Libya become Obama's Vietnam?"
As I wrote several days ago, from the point of view of Generational Dynamics, the Iraq war could never have been "another Vietnam," because the Vietnam was in a generational Crisis era during that war, while Iraq was in a generational Awakening era during the Iraq war. (See "31-Mar-11 News -- US deepens involvement in Libya, as rebels suffer decisive reversal.")
Libya is in a generation Crisis era, meaning that, as in Vietnam, the old ethnic civil wars of the past are going to be repeated, and the U.S. can neither cause nor prevent a new crisis civil war. All the U.S. can do is get caught in the middle, as happened in Vietnam.
The talk of a ceasefire offers a thin reed of hope that the U.S. might be able to extract itself. Every crisis civil war always begins with peace agreements alternating with periods of violence, until finally both sides tire of peace agreements and the real slaughter begins.
Libya currently appears to be headed towards a stalemate. If that can be translated into a peace agreement, then the U.S. and the West can extricate itself. Once we're out, the Libyans can then go ahead and massacre each other, which is what's going to happen anyway, whether we're there or not.
This proposal is all fantasy, of course. The people of the U.S., France and Britain have become highly nationalistic about the Libyan uprising. (Though, as many people are pointing out, not about the Syrian, Bahrani or Yemeni uprisings, nor the Ivory Coast war.) So we're not about to let Gaddafi get the upper hand against the rebels.
However, the most interesting news today is the withdrawal of America's war planes, missiles and ships from the battle. This will substantially reduce the firepower available to Nato and the rebels. There are powerful nationalistic forces at play in America today, and it will be interesting to see whether those nationalistic attitudes end up overriding the decision to keep America in a supporting role for long.
(Comments: For reader comments, questions and discussion,
see the 2-Apr-11 News -- US pulls its planes and missiles, as Libya war appears stalemated
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(2-Apr-2011)
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Oblivious investors continue to push stock prices up
The euro crisis increased on Thursday, as yields (interest rates) demanded by investors to lend money to Portugal or Ireland through 10-year bond purchases soared to new highs. Higher yields on government bonds indicate that investors believe that the country is more likely to default.
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Portugal announced that its budget deficit for the year 2010 was considerably higher than officials had previously predicted, or committed to, according to the Telegraph.
This was just the latest blow to Portugal's government, just one week after Portugal's Prime Minister Jose Socrates was forced to resign, because the parliament rejected his austerity plan. The parliament was dissolved on Thursday, and new elections are scheduled for June 5. The news pushed Portugal's 10-year bond yields to an astronomical 8.6%. (By contrast, yields on US 10-year Treasuries are around 3.4%.)
Ireland's government announced that it must spend $34 billion more to bail out its banks, according to the Daily Mail. This lifts the cost of staving off a financial collapse to almost $100 billion. Ireland's 10-year bond yield exceeded 10% for the first time, even though Ireland was already bailed out last year.
However, none of this disastrous news had any noticeable effect on bubbleheaded, oblivious Wall Street investors, where stock prices rose another 0.6%.
Several commentators have been pointing out that the Volatility Index, or VIX, has been extremely low recently. The VIX indicates how nervous traders are that stock prices might fall. A high VIX means that traders are using hedge funds to hedge their stock purchases, while a low VIX means that traders feel safe just owning stock, without any hedging.
The following graph from FT Alphaville shows the VIX since early 2008:
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The VIX spiked on three occasions since then:
The VIX spike was lower each time, indicating that traders are increasingly oblivious to risk.
I remember back in 2006-7 when I kept writing about airheaded investors pushing the stock market up to bubble heights. When the economic news was good, the stock market went up because the news was good. When the economic news was bad, it meant that the Fed would have to lower interest rates again, so it was really good news, and the stock market would go up again.
Today, the situation is much worse because investors are just totally oblivious to what's going on. Each time a crisis is averted by some government action that simply postpones (and worsens) the problems, more investors conclude that there'll never be a problem that can't be postponed, and that the market will go up forever.
A strategy note by Macro Economic Advisors (PDF) says that "we think the market is substantially mispricing the degree of uncertainty that has materialized over the recent time period. We believe risk appetite is vulnerable."
The note provides "The Octagon of Uncertainty" to portray the various risks:
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The risks include:
It's truly incredible to see this going on.
From the point of view of Generational Dynamics, the real financial crisis has not yet occurred. I've been truly impressed by the ability of governments and central banks to always find a way to avoid dealing with any problem with some band-aid that works for a few months.
But any one of the items in the Octagon of Uncertainty could trigger a panic that would shock the financial system and cause a collapse within a few hours -- too fast for a new band-aid to be applied. It might happen tomorrow, or next week, or next month, or maybe next year, but it's absolutely certain to happen.
(Comments: For reader comments, questions and discussion,
see the 1-Apr-11 News -- Portugal's and Ireland's bond yields soar, but VIX remains low
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(1-Apr-2011)
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