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Egypt's salafists dominate Friday's rally in Tahrir Square
This morning's key headlines from GenerationalDynamics.com.
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Following the mass resignation of senior military officers that we reported yesterday, Turkish Prime Minister Recep Tayyip Erdogan vowed on Saturday to press ahead with plans for a new consitution. "I believe our biggest duty is to prepare a new constitution, democratic and liberal, without shortcomings and meeting the needs of today. Turkey cannot continue on its path with a constitution prepared in the extraordinary conditions of a period when democracy was shelved," said Erdogan, alluding to the time after a 1980 coup when the current charter was prepared. Zaman
The military has considered itself to be the protector of the secular Turkey, and successfully thrown out civilian governments through four coups d'état to prove it. However, a generational shift has made itself felt in the last ten years with the rise of the Justice and Development Party (AKP), led by Erdogan, and a corresponding rise of traditional conservative social values, although Erdogan eschews the label "Islamist." Instead of the military overthrowing the civil government, this time the government overthrew the military and firmly established civilian control of the military. However, there are sharp divisions between the secular and conservative, and they are just as divisive to Turkish politics as the split between the left and the right is to American politics. AP and Reuters
The National Transitional Council (NTC), which has just been recognized by the UK as the only legitimate government of Libya, is causing concern over the conflicting stories about the killing on Friday of Abdel Fatah Younes, a Gaddafi defector who had been serving as commander in chief of the rebel army. Some stories say that Younes had been arrested prior to the killing, while others say merely that the TNC had some questions for him. It's not known who did the killing, but a rebel faction is considered most likely. Another possibility is that Gaddafi's forces got to him, while Gaddafi has been blaming the assassination on al-Qaeda. Al-Jazeera
![Protest banner reads, 'The Quran is our constitution and the Sunnah [Islamic doctrine] is our path' (Ahram)](http://www.GenerationalDynamics.com/ww2010/g110730c.jpg "Protest banner reads, 'The Quran is our constitution and the Sunnah [Islamic doctrine] is our path' (Ahram)") |
Cairo's iconic Tahrir Square was packed with thousands of anti-government and anti-army protesters on Friday, but for the first time, the protests were dominated not by the liberal activists, but by salafist (Islamist) groups, called for setting up an Islamic state and enforcing Sharia law in Egypt. Salafists are ultraconservatives, close to Saudi Arabia's Wahhabi interpretation of Islam and more radical than the Brotherhood. They seek to emulate the austerity of Islam's early days and oppose a wide range of practices like intermingling of the sexes that they view as "un-Islamic". Many also reject all forms of Western cultural influence. However, although there were many salafist protesters, it's believed that they comprise only a small minority of the Egyptian population. Egyptian Gazette and Al-Ahram
Hundreds of thousands of Israelis took part in protests held in cities across the country on Saturday night. They were protesting the high cost of housing, food and raising children, as well as low salaries. They demanded government price controls, improved education, free education from birth, free university tuition, and quality healthcare for everyone. They also demanded better salaries and benefits for social workers, police and other public servants. Jerusalem Post
(Comments: For reader comments, questions and discussion,
see the 31-Jul-11 World View -- Major social change in Turkey
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(31-Jul-2011)
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Europe's economy continues to deteriorate
On a story posted at 6:04 am on Friday morning, the Washington Post said, "The consensus forecast of economists surveyed by Bloomberg is that GDP rose at a 1.8 percent annual rate in the second quarter [from april to June], about the same as the 1.9 percent rate of growth in the first quarter [from January to March]." Washington Post
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The Commerce Department released th GDP figures at 8:30 am on Friday, and they were stunningly worse than economists predicted, according to Reuters:
As we've seen many times before, economists were babbling in confusion. The article quotes one as saying, "The second quarter disappointed, but the first-quarter downward revision is more disturbing. It advances the pangs of concern. The debt ceiling nonsense is not going to help us. We're already in an economy that is subpar."
Gee, you think? This is like a weather forecaster who looks out the window and predicts that it's raining.
The reference to the "debt ceiling nonsense" is irrelevant. These figures have been plummeting since the end of last year, long before the debt ceiling became an issue.
Here's some commentary from the Consumer Metrics Institute (PDF):
"July 29, 2011: BEA Reports 1Q-2011 and "Great Recession" Far Worse Than We Were Previously ToldIncluded in the BEA's first ("Advance") estimate of second quarter 2011 GDP were significant downward revisions to previously published data, some of it dating back to 2003. Astonishingly, the BEA even substantially cut their annualized GDP growth rate for the quarter that they "finalized" just 35 days ago -- from an already disappointing 1.92% to only 0.36%, lopping over 81% off of the month-old published growth rate before the ink had completely dried on the "final" in their headline number. And as bad as the reduced 0.36% total annualized GDP growth was, the "Real Final Sales of Domestic Product" for the first quarter of 2011 was even lower, at a microscopic 0.04%.
And the revisions to the worst quarters of the "Great Recession" were even more depressing, with 4Q-2008 pushed down an additional 2.12% to an annualized "growth" rate of -8.90%. The first quarter of 2009 was similarly downgraded, dropping another 1.78% to a devilishly low -6.66% "growth" rate. And the cumulative decline from 4Q-2007 "peak" to 2Q-2009 "trough" in real GDP was revised downward nearly 50 basis points to -5.14%, now officially over halfway to the technical definition of a full fledged depression.
One of the consequences of the above revisions to history is that the BEA headline "Advance" estimate of second quarter GDP annualized growth rate (1.29%) is magically some 0.93% higher than the freshly re-minted growth rate for the first quarter. From a headline perspective, that makes for a far better report than the 0.63% drop from the previously published 1Q-2011 number -- since otherwise the new 2Q-2011 numbers would be showing an ongoing weakening of the economy."
Note that today's report has downward revisions going back several years. Economists had been talking about an improving economy this whole time, while people were losing their jobs and homes and wondering what the economists were talking about. Now, with all these downward revisions, we can see that the people were right and the economists were wrong.
I keep saying this, because it's important: Economists have NO IDEA what's going on.
I mean, this is really amazing. The economists in Washington produced figures for Q1 that were WILDLY more optimistic than they turned out to be, and they've been overly optimistic for YEARS. It's quite possible that the most recent figure of 1.3% is also wildly optimistic.
Macroeconomics models are completely static in time, and economists assume that the same macroeconomics model that worked in the 70s and 80s also work today, an assumption which is completely absurd on its face. As I've pointed out many times, economists have been consistently wrong about everything, at least since 1995. They didn't predict and can't explain the 1990s tech bubble, the real estate and credit bubbles, the financial crisis since 2007, where we are today, and what's coming next year.
Their predictions are no better than flipping a coin. In fact, since they've been predicting each month for several years that real estate prices had reached a bottom and that a V-shaped recovery would begin the next quarter, their predictions are MUCH WORSE than flipping a coin.
Generational Dynamics is to macroeconomics as macroeconomics is to microeconomics. Macroeconomics models aggregate microeconomics models over the entire population, and Generational Dynamics models aggregate macroeconomic models over time.
In brief: The 1990s tech bubble began when the generations of Great Depression survivors retired, all at once. The credit bubble began when Gen-Xers began moving into middle management positions. And today, the current generations of people have been burned and have become extremely risk averse, and will remain risk averse for the rest of their lives. There will not be any recovery until the 2020s.
Mainstream economists have no idea what they're talking about. Anyone who listens to them is going to get screwed.
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The economists in Europe are no better than economists in America. European economists have been using their 1980s macroeconomic models to predict that Europe would return to rapid growth and would wipe out any debt. But there's been no V-shaped recovery in Europe, either. Two-year bond yields (interest rates) for Italy and Spain continue to increase, while those for Greece are still well above 30%.
(Comments: For reader comments, questions and discussion,
see the 30-Jul-11 News -- Economists in shock over GDP report
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Jul-2011)
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China confronts its weakness in anti-submarine warfare
This morning's key headlines from GenerationalDynamics.com.
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Turkey's Chief of General Staff Isik Kosaner and the commanders of the air, navy and land forces have all resigned from their posts on Friday. The resignation of so many top commanders for the first time ever in Turkey signals a deep rift with the government, led by Prime Minister Recep Tayyip Erdogan of the Justice and Development Party (AKP, pronounced "ahk party"). Since coming to power in 2002, the AKP and the army have had a very difficult relationship that has been continually deteriorating. Ever since Ataturk founded Turkey in 1924, Turkey has been an ostentatiously secular country, abandoning its Ottoman Empire role as leader of the Muslim world. The AKP has sought to restore Turkey's Muslim identity, leading to policy clashes with the army. The army was accused of a coup plot in 2003, and again in 2007. This has led to the arrest of hundreds of army officers, finally leading to Friday's mass resignation. Hurriyet (Ankara)
The event triggering the mass resignation occurred on Friday morning, when an Istanbul court accepted an indictment saying that some military generals ordered their subordinates to create anti-government websites and disseminate propaganda against the AKP, as well as some religious communities in Turkey. The suspects are being accused of “attempting to overthrow the government” and of “leading and being a member of an armed terror organization.” They are also accused of cataloging military officers according to their religious or political beliefs, possibly for future reference. Fourteen officers on active duty, four retired military officers and a civilian public servant were accused in the indictment. Zaman (Istanbul)
As China continues to spend massively on military hardware, as it prepares for a near-future all-out war with the United States, Beijing is deploying its first aircraft carrier, and continues to upgrade its array of lethal anti-ship cruise missiles (ASCMs). However, Beijing is beginning to confront its weaknesses in anti-submarine warfare (ASW), and looking to fill the gap with unconventional operations, such as unmanned underwater vehicles, or even refitting fishery vehicles with an ASW helicopter, ASW torpedoes and a towed array sonar. Jamestown
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The assassination of Libyan rebel commander Abdel Fatah Younis, that we reported yesterday, is having broader ramifications. Libya's rebel Transitional National Council (TNC), which was just recognized by the UK as the only legitimate government of Libya, is composed of representatives of a number of tribes which have not always been friendly to one another. Younis is a member of the Obeidi tribe, and many of that tribe are now turning against the TNC. Independent
Investigative reporting by Washington Times' Eli Lake has uncovered a secret CIA report that Russia's military in Abkhazia is behind a spate of bombings across Georgia in September, including a 22-Sep-2010 bombing attempt on the U.S. Embassy in Tblisi. The U.S. administration has kept the charges quiet in order not to upset its new "reset" policy, seeking closer ties with Russia. Russian officials have denied the charges and accused Georgia of trying to foment a propaganda campaign. They also accused the Washington Times of trying to trigger a second propaganda wave. Russian involvement was discovered when a military official offered to help with the casualties of an explosion that had never occurred, as the bomb had been defused. Washington Times 7/21, 7/26 and 7/28, and Jamestown
Israel's diplomatic officials have reacted very positively to to a statement by France's Foreign Minister Alain Juppe saying that any solution to the Middle East conflict would need to recognize Israel as the nation-state for the Jewish people. The move seen as a signal to Palestinian Authority regarding language that the European Union might support in a UN resolution recognizing a Palestinian state. Jerusalem Post
New figures from the U.S. Treasury Department indicate that the government has a total operating cash balance of $73.768 billion, less than Apple Inc.'s own cash reserves of $75.876 billion. Apple Insider
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Nancy Pelosi on July 28, 2011: "What we’re trying to do is save the world from the Republican budget. We’re trying to save life on this planet as we know it today." PJ Tatler
Nancy Pelosi on July 28, 2008: "I’m trying to save the planet; I’m trying to save the planet. I will not have this debate trivialized by their excuse for their failed policy. I respect the office that I hold. And when you win the election, you win the majority, and what is the power of the speaker? To set the agenda, the power of recognition, and I am not giving the gavel away to anyone." Politico
(Comments: For reader comments, questions and discussion,
see the 30-Jul-11 News -- Economists in shock over GDP report
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Jul-2011)
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Are there any adults in the room?
European leaders have long expressed confidence that the US would find a resolution to its ongoing debt impasse. But now there is growing concern that it won't, according to Spiegel. German Finance Minister Wolfgang Schäuble says, "Everyone in the US should be aware of their responsibility for the global financial markets."
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Schäuble added a laugh line: "In the euro-zone we haven't managed to solve all of our problems. But we have at least taken an important step."
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As we've been reporting, the default of Greece's debt as certain, and contagion to Italy and Spain is also certain. It took only four days to show that the markets were unconvinced by last week's bailout, and Italy's bond yields are continuing their inexorable rise again.
The picture above shows German Chancellor Angela Merkel talking with German Finance Minister Wolfgang Schäuble talking in June about the bailout deal. At that time, the Germans were demanding that investors holding Greek bonds would have to be required to take a "haircut," losing some of the principal in their investment.
As the deal was finally announced last week, the "haircut" would be 21%, but it would be "voluntary." Investors, mostly banks, will swap their old, rotten Greek bonds for shiny new Greek bonds backed by the EU, and theoretically therefore immune to default, though when you do the math, the haircut will be much larger (see "24-Jul-11 World View -- Mauldin: Greece's bond 'haircuts' are at 75-80%").
In case you're wondering, all this "voluntary" bond swapping hasn't taken place yet. It's supposed to take place at the end of August. So there's nothing about last week's bailout plan that's been implemented yet, despite Schäuble's claim that Europe is solving its problems.
It's becoming increasingly accepted that America's AAA credit rating is soon going to be downgraded, irrespective of how the debate over the debt ceiling goes. This is because S&P Rating Service has announced that a downgrade will occur unless the government takes significant steps to reduce the debt to GDP ratio.
Fox News on Thursday evening reported on the paraphrased transcript of a conference call with S&P, in which the following was said:
QUESTION: "$4 trillion number has been circulating to stabilize the debt-GDP ratio. Where does this number come from?"S&P RATINGS SERVICE: "It came from Bowles-Simpson (deficit/debt commission) and was embraced by President Obama and Rep. Paul Ryan.
Actually, $4 trillion won't do the trick to stabilize debt to GDP, but would take you far along and signal seriousness. IMF says you need 7.5% of GDP to stabilize, we think it's a little more than that. Four trillion dollars would be a good down payment."
These figures weren't explained, but I believe that the $4 trillion is a 10-year figure, while the 7.5% is an annual figure. Thus, if the GDP is around $14 trillion per year, then 7.5% each year for 10 years would come to $10.5 trillion.
Now, it's pretty obvious that even the $4 trillion figure won't be reached, so S&P may have already committed itself to downgrading the U.S. credit rating.
The lowering of America's AAA credit rating is different from default. If an agreement is reached in the next few days to raise the debt ceiling, then default will have been averted. However, the credit rating can still be lowered because the U.S. is spending a lot more than it takes in.
There are parallels between the situations in Europe and America, with America about a year behind Europe in dealing with the problems. I believe that we can expect America to follow the European example in many ways, such as the following:
It's such as shame that Schäuble and the Europeans are losing patience with us. You just know how I hate to see that. But once a debt ceiling agreement is reached, then we can all go back to focusing on Europe's problems again, because as bad off as America is, the Europeans are in far worse trouble.
The vomit-inducing activities going on in Washington these days are causing people to wonder, "Are there any adults in the room?" with respect to the budget ceiling talks.
Long-time readers know that I've been critical of President Barack Obama not for his ideology but because of his youthfulness, and his Gen-Xer nihilism. Obama has been in way over his head ever since he became President, though he's learned a lot on the job. But no one seriously believes that he's shown leadership in the current crisis.
As I'm typing this, I'm watching the Gen-Xer Rand Paul, the Republican senator from Kentucky, explaining why he will absolutely, positively not vote for any bill that doesn't sharply reduce spending, irrespective of whether it forces the government into default.
Back in the 1980s, the Silent generation leaders in government could get together and reach a compromise to save social security. Today, with the Gen-Xers in charge, it's nihilism rather than compromise that's ruling.
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Cyprus President Demitris Christofias is refusing to step down, just hours after demanding the resignations of his entire cabinet. "The people have elected me, and I am accountable to those who have elected me," he said, after being asked if he would resign. Cyprus is near bankruptcy after Moody;'s downgrade of its debt, due to “fractious politics” and the fact that its huge banking system is heavily exposed to Greek bonds. Ambrose Evans-Pritchard and Famagusta Gazette
(Comments: For reader comments, questions and discussion,
see the 29-Jul-11 News -- Europeans losing patience with Washington gridlock
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Jul-2011)
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Chinese officials shocked by public anger at train accident
This morning's key headlines from GenerationalDynamics.com.
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In an event that some are calling a disaster for Libya's rebels, the commander of Libya's rebel army, Abdel Fatah Younis, was assassinated on Thursday. The assassination occurred several hours after the Transitional National Council (TNC) sought Younis for questioning about alleged ongoing ties to Libyan leader Muammar Gaddafi. The death of Younis creates a power vacuum within the army that may lead to infighting among the rebels. CNN
I often quote Debka reports because they have unique content based on intelligence sources not available elsewhere. A couple of weeks ago, I quoted them as saying that Nato had discontinued air strikes against Libya -- something that's evidently untrue. But they're right a lot more often than they're wrong. The following is from Debka's subscriber-only newsletter, sent to me by a subscriber.
There are signs that Syria's President Bashar al-Assad may be forced to step aside, in favor of his younger brother, Gen. Ali Maher Assad, commander of the Army's 4th Division and the Presidential Republican Guard. However, this is not good news for those supporting reform, as the younger brother has been leading the bloody massacres and mutilations that have targeted unarmed protesters since the anti-government protests began. Rather, it's a sign of infighting with the Assad family and the Alawite community, of which he's a member, and a decision to get rid of the incompetent Bashar, while keeping the presidency within the family. Debka
Iranian intelligence experts in Damascus have been disrupting the Syrian opposition movement's telephone and Internet links, used for communication with each other and with the outside world. To bridge the communications gap, the US and Saudi Arabia have in the last two weeks smuggled thousands of satellite phones into Syria and put them in the hands of opposition leaders. These satellite phones completely bypass the internet and phone system. This is the first time the Obama administration has stepped in with direct assistance for the Syrian opposition. Debka
The collision in China of two bullet trains that we reported a few days ago is causing Beijing to lose control of the journalistic message. News reporters and bloggers who formerly would never have seriously criticized the government are openly ridiculing and scorning particular government officials and ministries. If this continues, it will represent a major behavior change caused by the rising to power of the young post-Tiananmen Square massacre generation in China. Bloomberg
"The Department of State remains concerned about the continued threat of terrorist attacks, demonstrations, and other violent actions against U.S. citizens and interests overseas. The Department of State believes there is an enhanced potential for anti-American violence given the death of Osama Bin Laden in May 2011. Current information suggests that Al-Qa’ida and affiliated organizations continue to plan terrorist attacks against U.S. interests in multiple regions, including Europe, Asia, Africa, and the Middle East. These attacks may employ a wide variety of tactics including suicide operations, assassinations, kidnappings, hijackings, and bombings." U.S. State Department
(Comments: For reader comments, questions and discussion,
see the 29-Jul-11 News -- Europeans losing patience with Washington gridlock
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Jul-2011)
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A warning about gold
The culture of fraud and extortion is now consuming both sides of the Atlantic.
As I've written many times in the past, there is no solution to the Greece debt problem. It's not a matter of left- or right- wing ideology, or Sarkozy versus Merkel, or Socialism versus Capitalism, or Keynes versus von Mises versus Friedman. It's a matter of simple math, combined with the Generational Dynamics prediction that the hopes and prayers of a "V-shaped recovery" powered by a return to the credit bubble of the mid 2000s decade will not occur. A default is mathematically certain, and contagion to other countries is certain.
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Thus, every few months, the Europeans have announced a new final solution to the Greek debt problem, always based on some level of fraud and extortion, only to see the solution crash and burn in the weeks that followed.
The solution announced at last week's Euro Summit isn't even taking a few weeks. Less than a week later, it's clear not only that Greece is still going to default (sooner or later), but that Italy and Spain are still in the same vicious cycle, with surging bond yields (interest rates).
Here's how Euro Intelligence described the current situation:
"There is always a point towards the end of July when the eurozone news flow drops off sharply due to the summer holidays. We may have reached that point today. Even though the situation remains hopeless, it is no longer deemed to be serious.As bond yields rise back to the pre-summit levels, the congratulatory mood among officials has given way to more recriminations for who is to blame for the poor communication. FT Deutschland echoes the criticism of a diplomat who said that EU leaders created confusion after the summit by citing wildly different figures about the scale of the implied debt reduction. He gave as an example the statement by Mark Rutte, the Dutch PM, who suggested in his final press conference that the private sector component was part of the €109bn package. (There was also confusion about the extent to which the agreement would reduce the net debt of Greece.) There was also a lack of clarity as to how the IMF will participate in the programme. Christine Lagarde said the negative market reaction was due to the complexity of the agreement, and the fact that a lot of work has yet to be done to implement the decision. The newspaper noted that there is not even a scheduled meeting for the eurogroup, which is supposed to implement the agreement."
The fact is that the eurogroup's latest announcement is based on fraud and extortion. The fraud comes from misstating the figures (see "24-Jul-11 World View -- Mauldin: Greece's bond 'haircuts' are at 75-80%"), and the extortion comes from forcing major investors (mostly banks) to take "voluntary" haircuts on Greek bonds.
And let's recall that European politicians have lied over and over again, and Eurogroup chairman Jean-Claude Juncker was quoted as saying, "When it becomes serious, you have to lie," as we reported in May.
Blaming the renewed euro crisis on "poor communication" is absurd beyond belief (except that nothing is beyond belief these days). We've now extended to the limit the 2000s concept that fundamentals are irrelevant, and nothing matters except what you say and what you can extort.
I first became aware of this insanity in 2004, when I commented, with incredulity, how "[Ben] Bernanke apparently believes that the Fed can use verbal statements, even misleading verbal statements, to affect the economy -- stock prices, interest rates (bond prices), and so forth -- in the long run!" ( "Bernanke / The Fed congratulates itself - again - on its jawboning policy")
As this policy of defrauding investors and the public has increasingly failed to work, we've seen extortion applied to try to make it work. One of the worst offenders has been New York Insurance Superintendent Eric Dinallo who spent several months in 2008 helping the banks and "monoline" bond insurance companies to collude to commit fraud. And we've seen widespread fraud and extortion related to the "ObamaCare" health care bill, which I've said was a proposal of economic insanity, because it was just like President Nixon's wage-price controls.
And journalists on CNBC and Bloomberg TV have been defrauding viewers and investors consistently by quoting price/earnings ratios (also call valuations) based on fraudulent "operating earnings" (which exclude many expenses), rather than real earnings.
I had completely forgotten about an interview that I posted in February 2009 in the Generational Dynamics Forum, but never posted in the web log. Better late than never, here's the Bloomberg TV interview with Charles Minter, Director & Co-Portfolio Manager, Comstock Partners:
"We think it's just insane what Wall Street are looking at, and looking at operating earnings.It just makes no sense. Operating earnings exclude writeoffs.
The only way you get people coming on the air and talking about the market being fairly valued, or undervalued, or really cheap, is to look at operating earnings, which only came into existence in the late 1980s, and became more and more popular as everybody on Wall Street needed to use them, especially during the financial mania of the late 1990s, in order to justify the prices they were paying for the S&P 500.
They should have been using reported earnings, which are GAAP earnings, and we have a history of reported earnings going back for 90 years. We have no history of operating earnings."
The interview was conducted by Bloomberg TV anchor Matt Miller, and after that, he would question people about operating earnings versus real earnings. He stopped doing that after a few days, I assume because some advertiser threatened his job.
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At that time, someone pointed out to me that the Wall Street Journal was reporting P/E ratios in terms of operating earnings. I wrote a series of really nasty, mocking comments, and after two or three months, WSJ reversed itself. I don't know whether it was because of me or because of someone else, but WSJ's Price/Earnings page is publishing the S&P 500 P/E ratio based on "Trailing 12 months," which refers to real earnings during the last year, and which is the correct value to use. By the way, the current value, as of July 22, is 16.55, not the nonsense figures of 12 or 13 that you hear on CNBC or Bloomberg TV.
Analysts and journalists on CNBC and Bloomberg tv ALWAYS lie when they talk about price/earnings ratios (also called valuations), as I've discussed 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."
Just as no solution exists for Europe's debt problems, it's also true that no solution exists for America's debt problems. America is in a continuing deflationary spiral, there will be no V-shaped recovery, and a default is 100% certain, now or later.
Politicians on both sides are committing fraud on a continuing basis, making claims that change on an hourly basis. Extortion takes the form of, "Do it my way, or we'll have a new Great Depression." Democrats blame the problems on the Tea Party "terrorists," while Republicans blame the Obama administration "socialists."
In fact, we're headed for a new Great Depression, no matter what happens in Washington. I suspect that many of the politicians already realize this, and all they're doing now is posturing so that someone else will be blamed -- which is exactly what the Europeans have been doing for well over a year.
As for the current deficit ceiling battle, my expectation is that they'll do exactly what the Europeans have been doing. They'll come to some stopgap agreement that "kicks the can down the road," and they congratulate themselves for being so clever, while they blame the other side. When things start unraveling again, then the whole process will be repeated.
There's a very interesting war being conducted by Washington politicians on Moody's, S&P and Fitch, the three major bond ratings services.
Let's first recall that the Europeans have been conducting a war on the same ratings agencies ever since they began downgrading the debt of Greece, Ireland and Portugal, over a year ago. American politicians really didn't care about the ratings agencies then, until they started talking about downgrading U.S. debt.
Ratings agency officials were grilled on Wednesday for the House Financial Services committee, according to CNN.
The argument being used against ratings agencies is: "The ratings agencies gave AAA ratings to securities that turned out to be toxic. They were completely wrong in retrospect. So why should anyone believe them now?"
As I've said many times, the circumstantial evidence is that ratings agencies purposely accepted fat fees from Citibank and other banks to give AAA ratings to mortgage-backed synthetic securities that they new to be defective, because they were making so much money doing so.
Nonetheless, it's hypocritical to blame the messenger now.
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I've warned web site readers about investing in gold a number of times in the past, and now is a good time to repeat those warnings. The adjoining chart appears in a Motley Fool article from last year. As it shows, the long-term trend price of gold is about $500 per ounce. Gold is currently around $1600 per ounce, and applying the Law of Mean Reversion to the current bubble, its price is going to fall well below $500. This means that anyone investing in gold right now is expected to lose a great deal of money.
The Fed and a number of economists are saying that the economy is slowing down right now. The same is happening in Europe and China. This will result in a fall in all commodities prices, forcing commodities dealers to sell their gold to pay for their losses in other commodities. This could happen next month or next year, but it's coming, and it will mean a collapse of the gold bubble.
Moody's Investors Service has announced that if the U.S. government debt loses its AAA rating, then there are five states that will also lose their AAA ratings: Maryland, New Mexico, South Carolina, Tennessee and Virginia. Moody's placed the group of five under watch because of their relatively large exposure to federal funding – from Medicaid payments to government contracts and the like. And any deal to raise the debt ceiling will likely include spending cuts. Fortune
Standard & Poor's on Wednesday cut Greece's sovereign credit rating further into junk territory, saying the European Union's proposed debt restructuring would put the country into "selective default". Reuters
(Comments: For reader comments, questions and discussion,
see the 28-Jul-11 News -- Washington follows Brussels in fraud and extortion
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(28-Jul-2011)
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India swoons over Pakistan's hot new Foreign Minister
This morning's key headlines from GenerationalDynamics.com.
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In her first visit to India, Pakistan's hot new Foreign Minister Hina Rabbani Khar has drawn a flurry of flattering headlines. "Pak Puts On Its Best Face," said The Times of India. The Mail Today tabloid said:
"The 34-year-old minister scored full marks on the fashion front when she was spotted at the Delhi airport in a monotone outfit of blue -- the colour of the season.Tasteful accessories -- Roberto Cavalli sunglasses, oversized Hermes Birkin bag and classic pearl jewellery -- added a hint of glamour to her look."
One blogger tweeted, "She continues to dominate all Delhi chatter." Another, referring to the monsoon season, wrote, "Even the Delhi skies are drooling." Pakistan and India are bitter enemies, so it will be interesting to see how long the honeymoon lasts. AFP
Britain's foreign minister William Hague announced that the UK has officially recognized the National Transitional Council (NTC), Libya's rebel government, as "the sole governmental authority in Libya," and has demanded that Libya's diplomats leave the country within 48 hours. Also, Britain is planning to unfreeze $150 million in frozen Libyan oil assets for the NTC. (The U.S. pays about 75% of Nato's operating costs, or about $2-3 million per day.) Associated Press
Libya's deputy foreign minister said, "We consider this is irresponsible, illegal and in violation of British and international laws." Russia has criticized such moves as following a "policy of isolation" and going beyond the UN's mandate and taking sides in a civil war." Al-Jazeera
The Taliban have claimed responsibility for yet one more high-profile assassination of a Western ally in the Afghanistan war. Ghulam Haider Hamidi, the mayor of Kandahar, was killed by a suicide bomber who set off explosives concealed in his turban. Hamidi, 65, had earned a good reputation for his campaign against corruption, embezzlement, and plots by rival tribes. Washington Post
Syrian activists have been holding massive anti-government demonstrations every week, when worshippers poured out of mosques after midday prayers. But that may change next week, when Islam's holy month, Ramadan, begins. Activists plan to take advantage of an additional daily prayer recited every day during Ramadan to expand the weekly protests to daily protests. Bloomberg
The International Space Station (ISS) will be de-orbited and sunk in the Pacific Ocean after 2020. "We will be forced to sink the ISS. We cannot leave it in orbit as it is a very complicated and a heavy object. There must be no space waste from it. We have agreed with our partners that the ISS would function roughly until 2020," according to the deputy head of Russia's space agency. Ria Novosti
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(28-Jul-2011)
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Spain, Italy bond panic resumes, as bailout euphoria fades
This morning's key headlines from GenerationalDynamics.com.
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Taiwan sent two F-16 fighters to intercept Chinese Sukhoi-27 jets purusing a U.S. reconnaissance plane into Taiwanese airspace on Monday. The two Chinese jets quickly turned around, rather than risk a collision such as occurred in 2001, killing the Chinese pilot. In that incident, the U.S. crew were detained for 11 days in a major diplomatic row. Telegraph
China's state-run news agency says that the blame for the incident lies with the U.S. for "such provocative flights, which can and will cause grave damage to relations between the two countries." Chen Bingde, the General Chief-of-Staff of the People's Liberation Army, has criticized the US naval drills in the South China Sea and attempted arms sale to Taiwan, and also urged the US to reduce or halt its military surveillance near China's coast. Xinhua
Gaza's Hamas government Tuesday executed a Palestinian father and son convicted of spying for Israel. Hamas officials said the men had confessed to providing Israeli forces with intelligence that helped them track down Palestinians including Hamas's chief Abdel-Aziz al-Rantissi, who was killed in a 2004 air strike on his car. The larger significance of the move was that the executions were done in defiance of Palestinian Authority (PA) president Mahmoud Abbas who, according to law, is required to approve such executions. Hamas and the PA were supposed to create a unity government, but that effort has fallen apart, and the executions are emblematic of the continuing split. Reuters
The Palestinian Authority (PA) has made a "final decision" to pursue United Nations recognition of a Palestinian state at the opening of the U.N. General Assembly in late September. The PA ambassador announced a “march to legislation” at the UN, saying his government “can’t wait any longer for the government of Israel to negotiate with us in good faith.” Still to be decided: Whether to go before the Security Council first, hoping that the U.S. will reverse its decision to veto any request for statehood, or to go to the General Assembly first. Bloomberg
Iran has decided to unambiguously side with the Bashar al-Assad regime in Syria, in a split with Turkey. Turkey has been pressuring Assad to adopt reforms and give legitimacy to the Syrian opposition, while Turkish Prime Minister Recep Tayyip Erdogan has been appalled by Assad's savage violence and massacres of civilians, compounded by the 16,000 Syrians that have fled into refugee camps in Turkey. Iran and Turkey have been allied over Palestinian issues, but Iran is becoming concerned about Turkey's influence with the Arabs. Iran has also been courting Iraq, and so Turkey has to contend with an Iran-Iraq-Syria alliance. Asia Times
On the Arab side, Saudi Arabia has been courting a relationship with Jordan. On Tuesday, press reports indicated that Saudi Arabia has granted $1 billion in aid to Jordan, to support its economy and cover its budget deficit. Bloomberg
Saudi Arabia has begun facing three major new challenges. The first is Iran. The second is the collapse of moderate Arab regimes, especially in Egypt, in the course of the "Arab Spring." And third is the growing threat posed by Al-Qaeda and other terrorists. Saudi Arabia is adopting a new strategy: they're pouring billions of dollars into buying off protests and opposing al-Qaeda; they're building new alliances with Pakistan, China and India, after the break with Washington; and they've invited Jordan to become a member of the Gulf Cooperation Council (GCC), despite opposition from some other members. Al-Bawaba
Relief from last week's grand bailout of Greece appears to have been short-lived, as Europe's financial situation continues to unravel. Spain's short-term cost of borrowing hit three-year highs on Tuesday, while yields on Italy's six month bonds hit their highest since November 2008. Five days after a euro zone summit agreed to a second Greek rescue, Spanish and Italian bond yields are back to the levels seen in the days before the deal was struck. Reuters
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Israel considers revoking the 1993 Oslo accords
This morning's key headlines from GenerationalDynamics.com.
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Israel's National Security Council is discussing the option of revoking the 1993 Oslo Accords agreement between Israel and the Palestine Liberation Organization (PLO), that established the framework for relations between the two governments, and created the Palestinian Authority (PA). The move would be in retaliation for the Mahmoud Abbas's plan to have the United Nations recognize the state of Palestine, based on pre-1967 borders. Haaretz
Israel is virulently opposed to Mahmoud Abbas's plan because recognition of Palestinian statehood by the UN General Assembly would enhance the Palestinians options, including allowing them to take Israel to the International Criminal Court (ICC) in The Hague on charges of war crimes. However, Palestinian statehood, ICC charges, and revoking the Oslo Accords would only be symbolic, and would not change life on the ground. Al-Arabiya
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Looking at the graph on the right, you might think that things have returned to normal for Greece, with 2 year bond yields (interest rates) plummeting. But then you realize that they've plummeted to a still astronomically high 28.1%.
Moody's Investors Service announced on Monday that it was once again downgrading Greece's sovereign debt rating, to just a single notch above default. In doing so, Moody's warned that last week's bailout of Greece, whose main purpose was to prevent "contagion" of the crisis to Italy and Spain, was actually increasing, rather than decreasing, the danger that Europe's debt crisis could spread to Italy and Spain. Moody's said that by agreeing to write down the value of their Greek government bonds by 21%, a precedent had been set that left investors open to further "haircuts" on the sovereign debt of other countries. Independent
In fact, although bond yields fell sharply on Friday, just after the bailout was announced, they've started to creep up again for Italy and Spain. Telegraph
As a side effect of the bailout, American money market funds are no longer willing to loan money to European banks, including those in Italy and Spain, for fear of losing the loan money in a default. Financial Times (Access)
Bulgaria is putting on hold its plans to adopt the euro as its currency. "We want to wait and see how the remaining questions for the euro zone itself are resolved," according to the country's finance minister. Bloomberg
The companies that manufactured China's high-speed bullet trains had hoped to sell into markets in North America and Europe, but because of the weekend crash that we reported yesterday, "Their chances of selling high-speed trains are zero." Bloomberg
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A top diplomat from North Korea visited the United States this week to discuss the possibility of renewing stalled nuclear talks in return for money. However, the U.S. and South Korea reaffirmed their previous statements that the North Koreans must take concrete steps to demonstrate that it is serious. In return for disabling its nuclear program, which has already produced up to 10 atomic bombs, the North would receive economic aid, diplomatic recognition from the United States and a formal treaty to end the Korean War. Reuters
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(26-Jul-2011)
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China public furious at government incompetence in train disaster
This morning's key headlines from GenerationalDynamics.com.
Washington politicians predicted that Asian stock markets would crash if a debt ceiling agreement was not reached by Sunday afternoon. But no agreement was reached and as of this writing on Sunday evening, Asian stock markets have fallen 0.8%, but have not crashed. From the point of view of Generational Dynamics, a panic and crash will occur when it's least expected. Bloomberg
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China's government run news service says that "substandard construction and lax safety supervision" have threatened people's lives in some regions of the country, in an article on Saturday's disastrous bullet-train accident, killing at least 35 people, and injured 200. One high-speed train rear-ended another train that had lost power and stalled, after allegedly being hit by lightning, on a bridge near the city of Wenzhou in Zhejiang province. Four coaches from one of the trains was fell off the bridge. Xinhua
China's bloggers are expressing fury, as stories of the details of the accident come out.
"Specifically, one train (D3115) was struck by lightning and lost power. Stopped on the track, it was then impacted by the train behind it (D301) on the same track. The trains were apparently not in communication with each other because despite operating on the same tracks, they were administered by two different railway bureaus. D3115 was administered by the Shanghai Railway Bureau, and D301 by the Nanchang Railway Bureau."
Not only is this massively incompetent, but furthermore, lightning strikes are a common occurrence, and they should not have stopped the train. Bullet trains in France and Japan have a much better safety record. "If nothing else, I suppose this accident in China will once and for all dispel the rumors that China copied their high-speed train from Japan’s." China Geeks
Thanks to Greece's debt crisis, and the need to privatize and sell off assets, China sees a good opportunity to invest in Greece. Kathimerini
Operatives of Pakistan's military spy agency, the Inter-Services Intelligence (ISI) agency, working in the U.S., have been posing as FBI agents to stalk and intimidate Pakistani journalists, scholars and others living here. Boston Globe
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Thousands of Spain's "Indignant" protesters have been braving 100+ degree temperatures and walking across the country on foot for weeks, before arriving in Madrid on Sunday. They're protesting unemployment and the economic crisis. AFP
The UN report on the "Freedom Flotilla" that was intended to break Israel's sea blockade of Gaza but instead ended up in a military confrontation with Israel that cost the lives of nine Turkish activists, is being delayed again. The report had been delayed twice before, and was scheduled for release on Wednesday, before this latest postponement. The postponement was requested by Israel to give them more time to negotiate with Turkey over the apology that Turkey's Prime Minister Recep Tayyip Erdogan has demanded, to normalize relations between the two countries. Israel's nationalistic Foreign Minister Avigdor Lieberman had previously threatened to walk out of the coalition government led by Prime Minister Benjamin Netanyahu, but on Sunday Lieberman backed off from that threat. Haaretz
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(25-Jul-2011)
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Who's to blame for right-wing violence?
Norwegians thought they were immune to this kind of violence. Norway is the land of peace and tranquility. They are the peace brokers, involved in conflict resolution, proud of their country and of doing good around the world, according to the Telegraph. Oslo is the home of the Nobel Peace Prize committee that lectures the rest of the world on right and wrong.
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32-year-old Anders Behring Breivik of Oslo, a self-described right-wing fundamentalist Christian anti-immigration activist, has been apprehended for the horrendous acts. First, A huge bomb blast targeting Oslo's main government building caused damage for blocks away. Then Breivik traveled to Utoya island, where there was a summer camp. He spent 90 minutes shooting young teenagers, killing 82 of them.
The terrorist acts are thought to be targeted at the Labor Party. The Prime Minister is from the Labor Party, though he wasn't in his office at the time of the blast. And the summer camp was sponsored by the Labor Party for kids who aspired to be politicians.
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"Everyone thought that he was a Muslim, a Pakistani, or someone with dark skin," says an Oslo teen quoted by CS Monitor, "but he was Norwegian and he did this to his own people." A woman said, "It’s just unbelievable that such a thing can happen here in Norway."
Right-wing violence was supposed to be under control. There has been right-wing violence in the past, but it was generally limited to property damage and knife violence. The entire country has had about 40 murders per year. No one ever dreamed of an al-Qaeda style mass killing.
The horrendous terrorist acts are raising questions about the police, according to AP. Why did it take 90 minutes for police to stop the massacre on Utoya? Norwegian police aren't armed normally, so when the local police arrived, they immediately concluded that they couldn't do anything, since they were unarmed. They called in a SWAT team, who had to drive to the scene, and then find a boat, because their helicopter wasn't on standby. That's what took 90 minutes to arrive.
Some people are blaming the terrorist attacks on the rise of right-wing populist parties in several countries. Breivik himself was an active member of the anti-immigration Progress Party, the second largest group in Norway's politics, according to the Telegraph.
The "far right" anti-immigrant Swedish Democrats sprang from nowhere to a sizable number of votes last year. (See "21-Sep-10 News -- Sweden shocked at anti-immigrant victories.") And just recently, Denmark implemented permanent border checks on its borders with Germany and Sweden. ( "6-Jul-11 News -- Denmark's border controls called a 'European crisis'")
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Of course, the leaders of these movements have nothing to do with the kind of violence perpetrated by Breivik, but in today's political climate of universal ideological hatred, politicians on the left will not hesitate to score political points by making such accusations.
Even without such direct accusations, there are more nuanced indirect accusations: That these rising right-wing parties are creating a social atmosphere and environment that encourages right-wing extremists like Breivik.
From the point of view of Generational Dynamics, there is a correlation between the rise of right-wing parties and the rise of right-wing violence, but it's not a causal relationship.
The common cause is that during the last decade, the survivors of WW II have all but disappeared, pushing the world deeper into a generational Crisis era. And what characterizes all generational Crisis eras is an increase in nationalism and xenophobia. These factors encourage the rise of right-wing violence, just as increasing financial crises encourage the rise of left-wing violence. Ideologues on the left and right may eschew violence, but they encourage mutual hatred.
We'll now have to watch to see the effect of this massacre in Norway. Left-wing violence is increasing anyway, as labor unions and socialists react to the forced austerity plans. It's possible that the Norway massacre will be a one-time event, or it may encourage more right-wing violence, especially targeting the waves of Muslim immigrants from Turkey and north Africa. The terrorist attack in Norway may cause horrendous outcomes that go beyond even the death and destruction that occurred on Friday.
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(24-Jul-2011)
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High-speed bullet train falls off bridge in China, killing 22
This morning's key headlines from GenerationalDynamics.com.
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At least 22 people were confirmed dead, and more than 100 people have been sent to hospital, after two coaches of a bullet train fell off a bridge in east China's Zhejiang Province late Saturday. The accident comes a day after China announced an investigation into a third senior railways ministry official. Officials at the Ministry of Transportation and Railways have been accused of corruption in the building of the train infrastructure, siphoning off millions of dollars while taking shortcuts and using low-quality materials in construction. Xinhua and Reuters
The Bank of Ireland has suffered a "credit event," after refusing to buy back €2.6 billion of subordinated debt earlier this month, according to the International Swaps and Derivatives Association (ISDA). The ISDA has set July 28 for an auction to settle credit default swaps (CDSs) that insured the defaulting bonds. Reuters
EU officials and bankers plan to conduct their "voluntary" swap of privately-held Greek bonds for AAA rated longer maturity bonds at the end of August. The strategy will be to do the swap across Europe all at once, so that Greece will be in "selective default" or "restricted default" only for a few days. The private sector investors, mostly banks, will take a 21% "haircut," thus contributing €37 billion to the bailout. (What could possibly go wrong with a clever strategy like that?) Reuters
The official statement from European officials on the most recent bailout of Greece requires the banks to "voluntarily" take a relatively benign 21% loss of their principal in Greek bonds. But the 21% computation is based on faulty assumptions, and if you do the math with realistic assumptions, then the "haircut" will be more like 75-80%. This is the sixth time in 18 months that European leaders have announced a definitive solution to the euro crisis, and this is the sixth time that the claims are fraudulent. And it won't be just Greece -- the same haircuts will be demanded by Ireland and Portugal, causing Greece's problems to spread throughout Europe. John Mauldin
With the euro zone facing an extremely serious crisis, reports are surfacing that the Soros Fund Management’s $25.5 billion Quantum Endowment Fund has "pulled back" and moved to a 75% cash position. The fund has already lost over 6% this year. Barrons
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Syrian authorities blamed sabotage by opposition protesters for the derailment of a train on Saturday, The train was carrying 480 passengers and five crew members, and was traveling to Damascus. The driver was killed instantly. Officials said the saboteurs ripped up a section of the tracks, causing the train to derail and the front carriage to catch fire in the crash. Gulf News
Thousands of pro-reform protesters calling for the "downfall" of the country's ruling military council were marching toward the military headquarters on Saturday, when they were attacked with knives and sticks and petrol bombs by groups of pro-army protesters. 213 people were injured. Al-Jazeera
Venezuela's president Hugo Chávez will receive his second round of chemotherapy in Cuba, after receiving two operations last month, one for a pelvic abscess and another to remove a cancerous tumor. Reuters
Ramadan this year will run from August 1 to August 30. For the last two months, speculators have been hoarding food items that consumer more during Ramadan, including sugar and cooking oil, pushing prices up. The News (Karachi)
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Fitch gives Greece's bond a temporary 'selective default' rating
This morning's key headlines from GenerationalDynamics.com.
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A meticulously planned terrorist attack on Norway, the worst atrocity since World War II, killed at least 17 people. First, a bomb blew up at the center of Oslo, near the government's headquarters, although Prime Minister Jens Stoltenberg was not in the building at the time. Then, hours later, a gunman posing as a policeman rampaged through Utoya, an island 20 miles away, firing at teenagers in a youth camp organized by the ruling Labor party. At least 20 people were seen lying dead in the water. Independent
Because of the complexity of the attack, it's believed that the gunman was part of a larger group attacking Norway's government. The shooter is in custody, and it's been confirmed that he's Norwegian. Authorities are leaning towards suspecting right-wing extremists rather than an Islamist group. Telegraph
Memos from 2009, published by Wikileaks, reveal that US authorities thought that Norway's security service was "in over its head," and that the country was in denial about terrorism. Norwegians felt that their country felt "immune" from terrorism, and "that terrorism happens elsewhere, not in peaceful Norway." Telegraph
Analysts in Europe and around the world are popping the champagne corks and making bubbly statements about the wonderful bailout of Greece that ministers in Brussels agreed to on Thursday. The IMF and European taxpayes will be shelling out €109 billion, while private bondholders, mostly banks, will "voluntarily" contribute another €50 billion. Fitch Ratings said that the deal represented "an important and positive step towards securing financial stability." However, as expected, Fitch slapped a “restricted default” status on Athens, and warned of a “potential precedent” for Ireland and Portugal. Fitch also promised that the default rating might be only temporary, and that it could be lifted, once its bonds have been exchanged under the EU’s rescue plan. Irish Times
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An interesting analysis, comparing the current financial crisis with Europe's financial crisis following the 1929 Wall Street crash, concludes that the current crisis will "give Germany the empire it’s always dreamed of," because Germany will dominate the "fiscal union" being created, making the governments of the peripheral countries increasingly irrelevant. Telegraph
It's Friday again, and up to a million people poured out of mosques after midday prayers and filled the streets with anti-government protests, defying numerous atrocities by the security forces of president Bashar al-Assad. At least four people were killed, while thousands have been killed since the protests began. Daily Star (Beirut)
In what some are calling a "seismic shift," the half million Palestinians living in Syria are turning against the Syrian regime and joining the anti-government protesters. Palestinians are furious as details have emerged of the regime's role in pushing Palestinian protesters into a deadly confrontation with Israel last month. ( "7-Jun-11 World View -- Syria implicated in 'Naksa day' deaths") The confrontation is widely condemned as a move by the Syrian regime to divert attention from its own brutal crackdown. "We will not accept to be a bargaining chip for the Syrian regime," says one Palestinian refugee living in a refugee camp in Syria. Global Post
Russia’s Deputy Foreign Minister, Mikhail Bogdanov, tells a reporter:
"The Libyan leader has come to the conclusion that it’s high time that he should step down and leave his top-level post. The Libyan representatives arriving from Tripoli, say that a principled decision has already been taken to the effect that Muammar Gaddafi will take part neither in the political talks on settling the crisis nor on the restructuring of the State of Libya."
China reasserted its claims to all the islands in the South China Sea, even islands historically belonging to other countries, as it lodged a protest over the recent visit of several Filipino politicians and military personnel to Pagasa Island, one of the Spratly Islands in the South China Sea. TV stations across China covered the visit heavily, including the singing of the Philippine national anthem and flag raising in the island. Minda News (Mindanao)
After five days of political and ethnic violence earlier this month that resulting in the deaths of 98 people and 150 wounded ( "10-Jul-11 World View -- Karachi Pakistan crawls back to life"), a new gunbattle broke out in Karachi on Friday morning. The office and house of a political activist were torched while 20 people, including three women, were injuried in areas of conflict. At least 15 people were killed in the day of protests, that took the police several hours to bring under control. The News (Pakistan)
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East Africa famine - a catastrophe in the making
This morning's key headlines from GenerationalDynamics.com.
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After the worst drought since 1950, with no precipitation at all in the last two rainy systems, countries in east Africa (Somalia, Ethiopia, Kenya, Djibouti, and Uganda) are facing a humanitarian catastrophe, with some 12 million people already facing starvation, and with that number being only the beginning. A new rainy season is set to begin in autumn, but after the last two years, there's no guarantee that there'll be any precipitation this time either. According to one analyst, "The population has grown significantly, production has sunk dramatically, the climate is changing and many areas used for agriculture have been lost to the nomads. The land, he says, can simply no longer feed the population." Spiegel
European leaders announced a €109 billion ($157 billion) bailout plan for Greece, going beyond last year's bailout of €120 billion. As demanded by the Germans, the plan provides a way for investors, mostly big banks, with Greek bonds in their portfolios, to "voluntarily" take a haircut of around 20%, by exchanging Greek bonds for guaranteed euro bonds. “It is a voluntary approach by the private sector, and it is therefore a solution with the markets, not against them,” said European Commission President Jose Manuel Barroso. “We now have a program and a package of decisions which create a sustainable path for Greece, a sustainable debt management for Greece, and this in the end will mean not only the funding of a program but will also mean the lightening of the burden on the Greek people,” said Georgios Papandreou, the Greek prime minister. Market Watch and Institute of International Finance Inc.
No one has come out and said that Greece is going to default on bondholders who don’t exchange their bonds; instead, there’s just a lot of arm-twisting of big banks to do all this “voluntarily.” Since this is clearly a coercive deal, the credit ratings agencies will give Greece's bonds a default rating. Felix Salmon/Reuters
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Nobody really cares any longer about whether Greece defaults or not. Greece, Portugal and Ireland account for just 6% of the euro's problems. The real fear is "contagion," with the panic spreading to Spain and Italy, which account for 23%, and would require a €2 trillion bailout fund. One analyst said that this will be the day that the EU lost control of the system, because the bailout won't stop contagion. Bond yields (interest rates), which are the rates that a country has to pay to borrow money, have been going up in Spain and Italy, and there's little expectation that Thursday's action is going to stop that spiral. What does it mean for things to go out of control? It would mean a run on banks, with people withdrawing their money from unsafe banks and putting it under their mattresses or into other "safe" banks. (Recall that we've already seen major bank panics in 2007 -- in California's Countrywide Bank, and in Britain's Northern Rock.) Greeks are already moving their funds from Greek banks to Swiss banks. (Bloomberg TV)
An escalation of the Greek crisis would affect far more than Italy and Spain. Romania, Bulgaria, and other central/east European and Baltic countries which have benefited from the European credit bubble could be devastated by a slowing European economy. FT Beyond Brics
Standard & Poor’s reiterated that the U.S. may lose its AAA credit rating as soon as August. The rating may be lowered to the AA+ range with a negative outlook next month even if an agreement to raise the debt ceiling in time to avert a potential default without a “credible” plan to lower deficits, S&P said in a report. The chance of a downgrade in the next three months is 50%. Bloomberg
The security forces of Syria's president Bashar al-Assad are perpetrating a major military assault on densely populated neighborhoods of Syria's third largest city, Homs. Starting with gunfire at worshippers in a mosque early on Thursday morning, the army used tank shells and machine guns, shooting randomly at people in the streets. People who were dead or injured were left lying the streets, because no could pick them up without being slaughtered by gunfire. Al-Jazeera
Syria is getting closer to economic collapse since the unrest began. According to recent reports, business and trade are down 50 percent, unemployment has doubled, food and electricity shortages are escalating, $20 billion has already left the country, banks fear a run on their assets and the government is printing pounds at a furious pace, which risks a rapid devaluation of the national currency. Global Post
Libya has become a new source of smuggled weaponry for Palestinians in the Gaza Strip. The arms are being supplied to Gaza by Bedouins, originating from rebel-held territories in eastern Libya. Reuters
Discussions about a negotiated end to the humanitarian kinetic military action in Libya are exploring the possibility, possibly endored by the U.S., France and other countries, that Muammar al-Gaddafi can stay in Libya, and avoid prosecution by the International Criminal Court, provided that he steps down and agrees to a political transition to the rebel National Transitional Council. Guardian
Israel's Minister of Strategic Affairs Moshe Yaalon told foreign reporters on Thursday that he's been holding talks with Turkish officials, but Israel is not ready to apologize for the deaths of nine Turkish activisits on last year's "Freedom Flotilla." However, he hinted that there are disputes within the cabinet, and that Israel's position could still change. AP
Russian military officials hope that a ground-breaking agreement between Russia and Switzerland will boost Russia's mountain warfare capabilities, for use in the North Caucasus region as the 2014 Olympics games in Sochi approach. Russian officers, non-commissioned officers (NCOs) and soldiers will be trained in each country by the Swiss armed forces, focusing on enhancing the capabilities of Russia’s mountain warfare units. The Russians also hope that the deal will jump-start the military's fight against massive corruption. Jamestown
Yes, Dear Reader, the headline is not a joke. Western nations, including the U.S., want the UN Security Council to adopt climate change as an international security matter, and to fund an international "green helmet" climate peacekeeping force. The issue was deadlocked by Russian objections, leading US ambassador Susan Rice to say, "This is more than disappointing. It's pathetic. It's shortsighted, and frankly it's a dereliction of duty." But the Russian envoy said, "We believe that involving the security council in a regular review of the issue of climate change will not bring any added value whatsoever and will merely lead to further increased politicisation of this issue and increased disagreements between countries." Guardian
The Pentagon is bracing for spending cuts far deeper than what it was expecting just a few weeks ago, including the possible elimination of an aircraft carrier group and other weapons programs, as an increasing number of lawmakers float proposals for slashing the once-sacrosanct defense budget. Washington Post
The Pentagon's Defense Advanced Research Projects Agency (DARPA) has made a broad announcement seeking proposals for a "meme tracker," to be used as a battlefield tool. The meme tracker would allow the tracking of cultural items through blogs, social networking sites and media-sharing technology like YouTube. "The effective use of social media has the potential to help the Armed Forces better understand the environment in which it operates and to allow more agile use of information in support of operations," the research solicitation says. Fierce Government IT
The Sydney Opera House, a world famous landmark in Sydney, Australia, appears on the cover of the latest edition of Inspire, an English-language terrorist magazine published by Al-Qaeda on the Arabian Peninsula (AQAP), raising security concerns. Telegraph
First reason: The French were heavily weighted down by up to 50 kg of heavy armor, on a plowed field where it had been raining for two weeks, giving them a big disadvantage against the lightly attired British archers. The French lost at the Battle of Agincourt in 1415, but they got their revenge in 1429 in the Siege of Orléans, under Joan of Arc. Telegraph
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A South Carolina couple who dropped their Walmart receipt on the floor of their apartment discovered three days later that the receipt has changed and was displaying an image of Jesus. [It doesn't look like Jesus to me; it looks like Jimmy Durante.] KDRV (Denver)
(Comments: For reader comments, questions and discussion,
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(22-Jul-2011)
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Bitter Turkey/Greece divide over Cyprus threatens Turkey-EU relations
This morning's key headlines from GenerationalDynamics.com.
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After seven hours of talks that ran late into Wednesday night between German Chancellor Angela Merkel and French President Nicolas Sarkozy, meeting and dining in Berlin, the two governments have reached a common position on a new bailout of Greece. Details were not revealed, except that it would include a contribution by Europe's banking sector. Presumably Greece will not be forced to default, and so the plan will kick the can down the road. Reuters
For the "contribution by Europe's banking sector," the favorite plan now seems to be a bank levy, imposed in such a way that it would raise the desired €30 billion over three years. This bank levy will be completely separate from the bailout of Greece, so it will not count as default. However, the entire plan may be unworkable. It cannot be implemented eurozone-wide, but has to be done country-by-country. It would require all eurozone countries to pass new tax legislation, while it would be impossible to target taxes on specific banks holding Greek bonds. Euro Intelligence
Merkel and Sarkozy find each other "mutually unbearable" but they manage to get along despite disagreeing on a number of major issues. Last month, in a report of Sarkozy's visit to Berlin to discuss the Greek crisis, Der Spiegel wrote: "The welcome will once again appear very cordial -- Nicolas Sarkozy and Angela Merkel will also work the cameras this time around -- a kiss on the left cheek, a peck on the right one, smiles and waving. Behind closed doors, the atmosphere will be less amicable." Guardian
I almost can't stand to hear anybody in Washington talk about the national debt situation since it either gives me a headache or makes me want to vomit. Everything being said is simply posturing for next year's elections. There's nothing being said by anyone that's worth a piece of crap. Everyone understands that taxes will not be raised and spending will not be cut, except in trivial ways. The only thing that the politicians care about is who's going to be blamed. The U.S. is about a year behind the EU in facing the debt crisis, and the only possible outcome by August 2 will be to kick the can down the road, and the only way that can be done is by raising the debt ceiling, but bury the action in some law that promises to take some action next year, or whatever. Washington Post
Syria warned French and U.S. ambassadors that they risked expulsion if they breach a travel ban and travel more than 25 kilometers outside the capital city Damascus. U.S. Ambassador Robert Ford and France's ambassador to Syria, Eric Chevallier, traveled to the city of Hama on July 8, and gave support to the anti-government demonstrators, infuriating the Syrian government. Daily Star (Lebanon)
Turkish Prime Minister Recep Tayyip Erdogan is so appalled by the savage violence and wholesale massacres by Syrian security forces against peaceful demonstrators, compounded by more than 12,000 Syrians fleeing into refugee camps in Turkey, that Turkey might still invade Syria if the situation deteriorates further. Calgary Herald
The Mediterranean island of Cyprus has been bitterly divided since 1974, since a 1974 war that split the island, with Turkish Cypriots occupying the northern 1/3 of the island, and Greek Cypriots occupying the southern 2/3. The EU recognizes only the Greek government in Nicosia as legitimate, and it is a member of the EU. It is now the turn of Cyprus to assume the rotating presidency of the EU, and Turkish Prime Minister Recep Tayyip Erdogan has threatened to freeze relations with the European Union if this takes place in 2012 as scheduled. Zaman
German conservatives are welcoming Erdogan's threats to freeze Turkish relations with the EU, claiming that the threats only serve to further disqualify Turkey's plans to join the European union. Spiegel
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Turkey's Prime Minister Recep Tayyip Erdogan has concluded that Turkey's foreign-policy approach of recent years, which sought to address international problems like the Cyprus conflict with "goodwill," had failed to produce tangible results, and so Erdogan has started to follow a tougher line. Thus, Erdogan is demanding that Israel apologize for the deaths of nine Turkish activists in the "Freedom Flotilla" to Gaza on July 27 of last year, and is demanding that Israel issue its apology before July 27 of this year, the date on which the United Nations is expected to publish a report on the raid. If Israel does not apologize, then Erdogan will enter Gaza from Egypt, breaking the Israeli blockade of Gaza. The National (UAE)
Borders, the second largest U.S. bookstore chain, will close its doors for good. 400 bookstores will close, costing 11,000 jobs. Reuters
(Comments: For reader comments, questions and discussion,
see the 21-Jul-11 World View -- Merkel and Sarkozy agree on plan for Greece
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(21-Jul-2011)
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The media industry is not much different from the banking industry
Surely the most spectacular moment in the hearings on Tuesday occurred when Robert Murdoch's young 42 year old wife, Wendi Deng, got up and slugged an intruder throwing a paper plate full of shaving foam at her husband, according to the Daily Mail.
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I have no way of knowing whether either Rupert Murdoch or his son James lied during the dramatic hearing on Tuesday, but I do know that Murdoch's testimony is completely consistent with the the culture of fraud and extortion that I've been describing for many years on my web site, among politicians, and in the financial and computer industries. (For the latter, see "Boomers and Gen-Xers: Dumbing down IT.")
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The statement by Murdoch that most struck home, in my opinion, occurred when he was asked if he planned to resign, quoted by AP. Now, you can say that his answer is self-serving, but whether he had any other motives, I felt he was genuinely shocked and angry at what had happened, and his response describes a lot of what's been going on in the last decade:
"I feel that people I trusted, I'm not saying who, I don't know at what level, have let me down. And I think they behaved disgracefully, betrayed the company and me, and it's for them to pay. I think that frankly, I'm the best person to clean this up."
This is exactly what happened in the financial industries, where those tens of trillions of dollars of toxic assets still in banks' portfolios didn't just come from nowhere. They were created by Gen-Xers who poured out of colleges in the 1990s with masters degrees in financial engineering. Those people knowingly created these fraudulent securities, and sold them to investors knowing that they were defrauding the investors.
Their greedy, incompetent Boomer bosses went along with this, because they were making so much money by defrauding investors. The extortion came in when the bosses started asking too many questions; then the perpetrators threatened to go to another firm or create other problems. (See "BlogWatch: Yves Smith at 'Naked Capitalism' adopts generational model of financial crisis.")
These tens of trillions of dollars of fraudulent securities did not just come from the tooth fairy. Almost every major financial institution in the world was involved as perpetrator, and that could only happen generationally. That doesn't mean that every Boomer and Gen-Xer is a crook; quite the contrary, most people are decent, honest people. But it's amazing how much the culture has changed since the 1990s, when the Silent generation was still in charge. In today's culture, unlike earlier decades, people who are willing to commit fraud and extortion are able to get away with it, and have a big advantage over people who are decent, honest, competent and professional.
The Rupert Murdoch scandal exploded into world headlines only in the last couple of weeks, after it was revealed by the Guardian that reporters from Murdoch's News of the World newspaper had hacked into the cell phone account of a missing 13 year old schoolgirl, Milly Dowler, after she had been abducted in 2002. The reporters actually listened to Milly's phone messages and deleted some of them, to keep other reporters from getting the scoop. Milly's distraught parents, not knowing whether she was alive or dead, discovered that the messages had been deleted, and assumed that Milly must have deleted them herself, meaning that she was still alive. Her decomposed body was found in the woods several months later.
At Tuesday's hearing, Rebekah Brooks, the editor of the paper at that time, described her reaction when she read the Guardian article two weeks ago, as quoted by BBC:
"The idea that Milly Dowler's phone was accessed by someone being paid by the News of the World, or even worse authorised by someone at the News of the World, is as abhorrent to me as it is to everyone in this room. ...I don't know anyone in their right mind who would authorise, know, sanction, approval, anyone listening to the voicemails of Milly Dowler in those circumstances. I just don't know anyone who would think it was the right and proper thing to do at this time or at any time."
Once again, I don't know what additional motives Brooks might have had in making this statement, but her anger and disgust is very credible to me, because there are two kinds of people in the world. There are people who think that there's nothing particularly wrong with hacking into the cell phone messages of an abducted 13 year old girl, and there are people who think that no one in his right mind would do so, or who would go ballistic at learning about someone else doing it. I'm firmly in the second of these two categories, and I can easily believe that Brooks was also in the second category.
What's different about our culture now that's different from the 1970s, 80s and 90s is that today there are a lot more people in the first category. For these people, decency, honesty, competence and professionalism count for nothing.
We know that the culture of fraud and extortion permeates the entire financial industry, as well as the politicians in Washington and Brussels. We know that it also exists in the computer industry, and now we also know that it exists in the media.
This is not surprising. What WOULD be surprising is if anyone could name an industry which was not permeated by fraud and extortion in the last few years.
(Comments: For reader comments, questions and discussion,
see the 20-Jul-11 News -- Rupert Murdoch hearings show generational split
thread of the Generational Dynamics forum. Comments may be
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(20-Jul-2011)
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China's aggressive naval buildup threatens conflict
This morning's key headlines from GenerationalDynamics.com.
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Germany's panel of economy advisers is urging a default on Greece's debt, with a "haircut" on existing bonds of around 50%. This comes on a day when yields (interest rates) on Greek 2 year bonds surged from 36% to 39%, as Europe's bond panic continues. However, European Central Bank (ECB) President Jean-Claude Trichet is bitterly opposed to allowing Greece to default, saying that it would be catastrophic for the European banking system. Reuters
The tension and suspense are increasing, as the world waits for the European summit on Thursday to decide on the next bailout of Greece, and whether to let Greece default or to kick the can down the road once again. French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet in Berlin on Wednesday to prepare for the summit. The two will dine together in Berlin before traveling to Brussels on Thursday morning. AFP
Only one ship escaped Greece's grounding of all the ships in the "Freedom Flotilla II." The French yacht Dignite-Al Karame attempted to reach Gaza on Tuesday, but was intercepted by Israeli naval commandos. The commandos took control of the vessel quickly and faced no resistance from the passengers. They offered the passengers refreshments, and took them into custody. Haaretz
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China's "string of pearls" consists of port and airfield construction projects, diplomatic ties and force modernization. These "pearls" range from the coast of mainland China to the recently upgraded military facilities on Hainan Island, China's southernmost territory. They extend through the South China Sea to the Strait of Malacca, over to the Indian Ocean and along the coast of the Arabian Sea and Persian Gulf. They include an airstrip on Woody Island in the Paracel archipelago east of Vietnam. A container shipping facility in Chittagong, Bangladesh, a deep-water port in Sittwe, Myanmar, and a potential naval base in Gwadar, Pakistan are also "pearls", all of them representing Chinese geopolitical influence or military presence. Until recently, China lacked the technical and industrial capacity to build a modern navy. Starting from the 1990s, China kicked off its naval modernization effort by acquiring a range of new weapons including anti-ship ballistic missiles (ASBMs), submarines and surface ships. China is also developing the world's first anti-ship ballistic missile, a system specifically designed to defeat US carrier strike groups. Asia Times
China is criticizing a plan by Philippine legislators to make a special visit to the Spratly islands in the South China Sea, in order to assert the country's claim to the islands, in opposition to China's claims. There are six nations claiming the islands. China has said the planned trip by the lawmakers could damage bilateral ties. BBC
The House Foreign Affairs Committee will consider a bill that would condition further aid to the Palestinian Authority on its recognition of Israel as a Jewish state. Even if passed by the committee, the bill has little chance of becoming law. Jerusalem Post
(Comments: For reader comments, questions and discussion,
see the 20-Jul-11 News -- Rupert Murdoch hearings show generational split
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(20-Jul-2011)
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Cliffhanger: Will Greece default on its debt this week?
Over the weekend, Der Spiegel quoted former German Chancellor as saying of the current Chancellor, Angela Merkel: "Die macht mir mein Europa kaputt!" -- "She is destroying my Europe."
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When the English language version of the Spiegel article appeared on Monday, Kohl is quoted as saying the comment is "totally fabricated," because the fault lies not with Merkel, but with Merkel's predecessor, Gerhard Schröder. In other words, Kohl's Europe was still being destroyed, but it's just not Merkel who's doing the destroying.
Kohl's back-pedaling is unlikely to convince many people. The same article accuses Merkel of having a "dangerous lack of passion for Europe": "To her, Europe isn't a question of war and peace but of euros and cents. Her policy so far has consisted of cheerless repair work, of plugging holes and putting out fires."
Such is the difference between Boomers like Merkel (born 1954) and Silents like Kohl (born 1930). Kohl lived through the Great Depression, and then saw his country go to war led by what many believe is the most evil man in history, Adolf Hitler.
I last used the highly emotional picture at the beginning of this article was in "13-May-11 News -- Europe's immigration crisis strikes at heart of European Union." The moment in 1984 was the pinnacle of Kohl's lifetime, putting behind the bitter, genocidal wars between Germany and France, and creating a European project that would guarantee that nothing so horrible would ever happen again.
Kohl unfortunately has had the bad luck (one might say) of living too long -- long enough to see his life's achievement, HIS Europe, disintegrating right before his eyes over immigration and financial crises.
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What's now clear to anyone is that Europe is in the throes of a full-scale financial panic -- not a stock market panic (though that's coming), but a bond panic. In the PIIGS countries (Portugal, Ireland, Italy, Greece, Spain), bond prices are falling like a stone, pushing yields (interest rates) up to 36% for Greece, and above 20% for Portugal.
And readers with a good memory may recall that the last time I talked about a full-scale panic was over a year ago, in "27-Apr-10 News -- Greece's bonds are hammered, with yields at 13%." But that involved only Greece. This involve large sections of Europe. And it's 20%, not 13%.
The crisis worsens measurably every day. As I recently told a friend who asked me about the Greece crisis: "Worse than yesterday, better than tomorrow."
There's no solution to the problem, and everyone is looking for someone else to blame. A lot of people are claiming that the entire European project ("Kohl's Europe") was flawed, and those criticisms were undoubtedly in Kohl's mind when he first blamed Merkel, and then Schröder.
The European ministers are scheduled to meet on Thursday, and the disagreements are bitter. There are numerous proposals, according to the Guardian, but they can all be boiled down into two choices:
I've always assumed that the "haircut" in a Greek default would be about 50-70%, meaning that investors would lose 50-70% of the amount the invested in the first place. But one rating firm, Egan-Jones Ratings, claims that the haircut will be much higher.
The manager, Sean Egan, was profiled in Barrons (Access) over the weekend, and he appeared on both CNBC and Bloomberg TV on Monday.
According to Egan, the haircuts will approach 90%, in his CNBC interview (my transcription):
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"In fact, that's what's not accepted in the market yet. As of six months ago, people said there's no way an EU country could default. Now a lot of people fall into that, and so the next question is, what is the loss, given that default going to occur. We think it's going to be about 90% in the case of Greece, and about 70% in Ireland and Portugal."
Egan claims that he's more accurate than Moody's and the other ratings agencies, because they're compensated by the banks who issue securities and have a conflict of interest, while his firm is compensated by investors who have disparate interests. His claims are backed up in the Barron's article by saying that he's been much more accurate in the past than the others.
I've heard several analysts obliquely hint that the Fed would be the institution that bails out Europe:
Question: "The ECB is going to be the final lender for Europe, but they don't have enough money. That's makes us the lender of last resort. And I don't know who bails us out. You think the fed is the lender of last resort to Europe. How does that even work?EGAN: "It's working right now. in a couple of different ways. one is the swap lines, and I broaden it from just the Fed to the US government because you have the IMF support, you have the swap lines, and then you have some back stopping of the CDSs. And you don't really know about that, because that market is not completely transparent. Really, the US government is the only one that can move quickly, and then enforce to solve this problem."
A little additional explanation: The "swap lines" refer to having the Fed purchase European bonds, as it did to bail out Wall Street banks in the past. In fact, these swap lines have been in use for a while. The IMF support refers to the 25% contribution that the U.S. makes to any IMF bailout. And backstopping CDSs (credit default swaps) is very murky, but it was a big deal in the bailout of AIG.
Egan-Jones lowered the U.S. government debt rating one notch below AAA over the weekend, and explained the decision as follows:
Question: "Will the government have a default or delay a bond payment on August 3?"EGAN: "It's possible, but that's a red herring. The bigger issue in our opinion is adjusting the debt to gdp [ratio]. There are basically three problem in the US: One is that the debt to gdp is 100% or so, compared to Canada, which is a true AAA, they're at about 35%. Second you have a dysfunctional government - you could view it that way, and I'll explain it in a second. Third, you have the Baby Boomers who are retiring, and that increases all the retirement payments.
On the dysfunctional part, we have three undeclared wars that have cost $3 trillion. The US government's debt has gone from $8 trillion to $14 trillion over the past 5 or 6 years. 3 of that is undeclared wars, 2 of these is from the debt crisis that hasn't been addressed. We haven't solved, or even addressed, what got us into this difficulty to start with.
We cut the US government debt rating over the weekend. We were the first to put a negative watch on March 1, and now we cut US government debt."
Egan didn't make the connection between the U.S. bailing out Europe and the need to decrease the U.S. debt to GDP ratio.
There's actually some genuine suspense this week. There's this meeting in Brussels on Thursday. It's possible that the meeting will be canceled because of the bitter disagreements, but it's also possible that one of the two solutions previously described will be agreed on.
Will Greece be allowed to default this week, or will they find a way to kick the can down the road? It's a genuine cliffhanger, worthy of a major suspense movie.
It would actually be enjoyable to watch this spectacle, if it weren't for the fact we're all part of the movie, and we're all going to get screwed. As I've said before, we're really watching a horror movie that we're part of, but the doors of the theatre are locked, and we can't get out.
(Comments: For reader comments, questions and discussion,
see the 19-Jul-11 News -- Europe unravels in panic, as Fed considers a European bailout
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(19-Jul-2011)
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Russia asks U.S. to cancel Cold War anti-Communism law
This morning's key headlines from GenerationalDynamics.com.
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The US State Department has confirmed that US officials have held face to face talks with representatives of Muammar al-Gaddafi, but denies that the talks were negotiations. The US said that the only purpose of the meeting was to reiterate its demand that Gaddafi step down. BBC
Libyan leader Muammar al-Gaddafi scorned Nato's demands in a booming voice, and said that he would die for the Libyan people:
"They said Al Gaddafi will go to Honolulu. This is funny: to leave the graves of my ancestors and my people? Are you serious? ... [I will] Never leave this land sprinkled with the blood of my ancestors who fought Italian and British colonialists.These rats have taken our people hostage in Benghazi, Misurata and the western mountains, using them as human shields. Five million armed Libyans will march on them and liberate the occupied towns as soon as the order is given.
"After we gave our children as martyrs, we can't backtrack, or surrender or give up or move an inch. Rest assured in your tombs, our martyrs, we will not betray you ever."
Russia's foreign minister Sergei Lavrov criticized the U.S. and other Western nations that have recognized the rebel National Transitional Council as Libya's government, saying that they were taking sides in a civil war. Reuters
Public Law 86-90, signed into law in 1959 by U.S. President Dwight Eisenhower, states that "since 1918 the imperialistic and aggressive policies of Russian communism have resulted in the creation of a vast empire which poses a dire threat to the security of the United States and of all the free people of the world." Moscow criticized the U.S. for retaining this law. "It has long been clear that provisions of this law do not correspond to modern reality," the Foreign Ministry said, adding that the document goes against the "positive trend" in the development of Russian-U.S. relations. Ria Novosti
The War of 1812 was a minor non-crisis war for the United States (although the White House burned down, and Francis Scott Key wrote the Star Spangled Banner during the war), but it was a major war for Canada, establishing it as a separate country, apart from the United States. Nonetheless, Canadian officials are worried about how Canada should commemorate the 200th anniversary of the war, in which Canada repelled an invasion by the United States, who is now Canada's closest ally and most valued trading partner. Globe & Mail
Somali refugees are flooding camps in Ethiopia and Kenya at a rate of more than 3,000 new arrivals per day. Several seasons of drought has killed livestock and dried up crops in Somalia. Aid agencies can't get into Somalia because of the war. The next rains are not expected until October, and harvests are many months away. Millions of people are at risk of malnutrition and starvation. Catholic Online
The bad news from the war in Afghanistan just keeps piling on. Jan Mohammed Khan, a senior adviser to president Hamid Karzi, was shot dead in his home on Sunday. The killing occurred less than a week after Karzai's half-brother, another powerful government official, was murdered by his own bodyguard. The Taliban claimed responsibility for the attack, saying that they were targeting "traitors in their houses." Bloomberg
The Israeli housing ministry said Monday it is inviting developers to bid for the construction of 336 housing units in two Jewish settlements in the West Bank. Palestinian President Mahmoud Abbas has refused to negotiate with Israel while it builds West Bank settlements. VOA
While most of the ships in "Freedom Flotilla II" are grounded in Greece, prevented from leaving to challenge Israel's blockage of Gaza, the French yacht Dignite-Al Karame set sail for Gaza on Sunday, after previously declaring that its destination was Alexandria, Egypt. Israeli defense sources said that the French yacht, which has 10 activists and 3 crew members on board, will be prevented from reaching Gaza. The Israel Defense Forces know that an al-Jazeera crew is on the boat and will make an effort not to provide the Palestinians with pictures of "Israeli aggression." Haaretz
(Comments: For reader comments, questions and discussion,
see the 19-Jul-11 News -- Europe unravels in panic, as Fed considers a European bailout
thread of the Generational Dynamics forum. Comments may be
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(19-Jul-2011)
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Thursday's European summit meeting a 'Moment of Destiny'
This morning's key headlines from GenerationalDynamics.com.
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The U.S. and Vietnam launched a series of joint naval exercises on Friday. The exercises, which are confined to noncombat training, fall short of the kinds of advanced military exercises that occur between the U.S. and longer-term allies in the region, such as the Philippines and Australia. The U.S. strategy is a response to China's recent military aggressiveness, and includes an expansion of training exercises in other parts of the region to include newer participants, such as Cambodia and Malaysia, in some programs, as well as the deployment of new hardware, including littoral combat ships in Singapore. Wall Street Journal (Access).
Vietnamese police arrested at least 10 people, among 50 who were approaching the Chinese embassy in Hanoi. They were demonstrating against China over the tensions in the South China Sea. AFP
Contrary to the desires of the peace-loving Chinese, there have been a spate of escalations of military tensions with China's neighbors in the East China Sea and South China Sea. The saber-rattling provocateurs include Japan, Vietnam, and Philippines. The situation is made worse by U.S. meddling. Treating China as a threat and containing it in the South China Sea issue would be a bad judgment benefiting neither country's interests. If Washington continues to go along the wrong direction, it should prepare for the severe consequences. China Daily
European leaders will meet in Brussels on Thursday for an emergency summit to agree on another large bailout package for Greece. One unnamed diplomat says, "There are times in history when it really matters. This is one of those times. The people working on a comprehensive package feel the weight of their responsibility." Unfortunately, many people realize that none of the proposals being made is going to be enough. Furthermore, there are two major obstacles to even those proposals: First, no one believes that Greece is going to rid itself of vast amounts of waste and corruption; and second, taxpayers in Germany and other core eurozone countries don't want to bail out Greece again. Kathimerini
The recent meeting in Washington of the Mideast Quartet (the US, Russia, the EU and the UN) ended without the usual statement calling on the Palestinians and Israelis to resume peace talks, suggesting that there's a serious rift among the members. Jordan Times
Nation of Islaml Leader Louis Farrakhan supports Libyan Leader Muammar al-Gaddafi, and threatens Europe and America: "You will be drowned in your own blood." Memri
Ivermectin, a cheap common drug that's already being used to fight other parasites in Africa, could dramatically decrease the incidence of malaria, which kills almost 800,000 people each year. All Africa
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Jane Fonda was scheduled to appear on the home shopping TV QVC network QVC on Saturday to promote her new book, "Prime Time," but her appearance was canceled at the last minute. On her web site, Fonda claims that the network received a flood of angry calls regarding her Vietnam war activism. "I am, to say the least, deeply disappointed that QVC caved to this kind of insane pressure by some well funded and organized political extremist groups," Fonda wrote. (See "Jane Fonda's half-hearted selective apology") In 1972, Fonda posed for photos showing her sitting atop a Viet Cong anti-aircraft gun that was targeting American soldiers. When the Vietnam war ended, Fonda enthusiastically supported the Communist-led bloodbath in Cambodia that killed millions of people, because she would never criticize the actions of any Socialist government. Reuters
Researchers have found that two species of wild blueberries native to the tropical regions of Central and South America -- the New World tropics, or Neotropics -- contain two to four times more antioxidants than the blueberries sold in U.S. market "We consider these two species of neotropical blueberries to be extreme superfruits with great potential to benefit human health." Eurasia Review
(Comments: For reader comments, questions and discussion,
see the 18-Jul-11 World View -- US/Vietnam naval exercises
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(18-Jul-2011)
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Syria increasing arms shipments to Hizbollah in Lebanon
The "National Salvation Congress," a Saturday meeting of representatives of the opposition to the regime of Syria's president Bashar al-Assad, failed to form a shadow government, because of factional differences.
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Friday saw the biggest anti-government demonstrations since the protests began, where tens of thousands of people took to the streets in Damascus for the first time. Assad's security forces massacred civilians with live ammunition and teargas, killing 32.
On Saturday, tens of thousands of young Syrians shouting "We want freedom" carried caskets of some of the protesters murdered the previous. Five people were killed on Saturday, according to Al-Jazeera.
Despite these large protests of young Syrians, there is little unifying the different opposition factions meeting in Istanbul. A Kurdish representative to the conference says that Kurdish participants pulled out of the conference because participants would not recognize the "ethnic rights of Kurds," according to VOA.
Furthermore, plans to hold a simultaneous conference in Damascus, connected to Istanbul via Skype, had to be canceled when Syrian security forces got wind of the location where preparations were being made, and smashed into the meeting hall of Friday, killing 19 people, according to Wall Street Journal (Access).
The conference leaders were also disappointed that US Secretary of State Hillary Clinton, who was in Istanbul meeting with Turkish officials, made no effort to meet with the Syrian opposition, who were just down the street, according to the Washington Post.
Clinton merely gave lukewarm encouragement:
"We’re encouraged by what we see the Syrian people are doing for themselves. This is not anything the United States or any other country is doing. It’s what the Syrian people are doing, trying to form an opposition that can provide a pathway, hopefully in peaceful cooperation with the government, to a better future."
It appears quite possible that the "Arab Springtime" in Syria, like those in Libya and even Yemen, are in a stalemate. The earlier dreams that all three countries would quickly remove their dictatorial governments and replace them with democracies seem increasingly distant.
Even if Assad is forced to step down, there are many possible scenarios, with a democracy being the most optimistic and possibly unrealistic, according to an analysis in the Asia Times. According to the article, analysts are describing a fragmented and opaque opposition, a growing sense of fear, frustration and foreign meddling, and they slam the notion that a democratic transition can happen quickly and following a revolutionary model. "Other scenarios-in-the-making include an increasingly more heated geostrategic game over Syria between Turkey, Iran and by extension the United States and other involved countries. This seems to be the most worrisome development, since such intrigues are traditionally quick to descend on important crisis-stricken countries. As many past experiences and bloody civil wars have taught, this bodes nothing good to Syria and the Levant. Libya is again a contemporary example of the onset of this pattern."
From the point of view of Generational Dynamics, a bloody civil war is impossible in Syria at this time, since Syria is in a generational Awakening era, only a little more than a generation past their last bloody civil war. If a conflict breaks out, it will fizzle quickly.
However, a more significant danger is that Syria can "infect" neighboring countries, causing violence there.
Since the Arab protests began in January, Syria has stepped up the shipments of arms to Hizbollah in Lebanon, according to Ynet.
The arms shipments include sophisticated ballistic missiles developed with the help of experts from Iran and North Korea. Using financial support from Iran, the flow of weapons entering the Bekaa Valley from Syria has accelerated since March. The weapons include advanced Scud D surface-to-surface missiles, which can carry a one-ton warhead and have a range of 700km – placing all of Israel, Jordan and a large part of Turkey within Hizbollah's range and therefore at risk.
(Comments: For reader comments, questions and discussion,
see the 17-Jul-11 News -- Syrian opposition movement falters even as protests grow
thread of the Generational Dynamics forum. Comments may be
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(17-Jul-2011)
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Construction boom in Gaza since fall of Mubarak regime
This morning's key headlines from GenerationalDynamics.com.
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China accused the United States on Sunday of "grossly" interfering in its internal affairs and seriously damaging relations after President Barack Obama met exiled Tibetan spiritual leader the Dalai Lama at the White House on Saturday. According to China's Foreign Ministry:
"This action is a gross interference in China's internal affairs, hurts the feelings of the Chinese people and damages Sino-U.S. relations. The Dalai Lama has for a long time used the banner of religion to engage in anti-China splittist activities. We demand the United States conscientiously handle China's principled and just stance, immediately take steps to remove the baneful impact, stop interfering in China's internal affairs and stop abetting in and supporting 'Tibet independence' anti-China splittist forces."
Having been unable to identify the perpetrators of last weeks triple bombing terrorist attacks in Mumbai, investigators are now considering a disquieting possibility: that terror is being outsourced to local criminal gangs, as a kind of business deal. For a few thousand rupees [a couple of hundred dollars], you can get a criminal with no particular skills to place a bomb for you. Times of India
Since the fall of the Hosni Mubarak regime in Egypt, there's been a construction boom in Gaza, where more than 14,000 new construction jobs have been created so far this year. The reason for the change is that it's now easier to smuggle construction materials through the tunnels from Egypt, where the Mubarak regime had made it almost impossible. The Israeli blockade of Gaza restricts construction materials, because they could be used to build military bunkers. Al-Jazeera
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Germany's Werkstatt Deutschland has reversed a decision to award Russian Prime Minister Vladimir Putin the prestigious Quadriga prize. The organization had planned to give Putin the Quadriga Award as a "role model for enlightenment, dedication and the public good" and for his contribution to Russia's "stability through the interaction between prosperity, economics and identity," as well as to the reliability of German-Russian ties. The decision was reversed because of "massive criticism" from the media and politicians. Former Soviet leader Mikhail Gorbachev and former Czech president Vaclav Havel have won the award in the past. Ria Novosti and AP
Ironically, Greece's Prime Minister George Papandreou won the award last year for the "Power of Veracity," in recognition of Papandreou revealing the "truth" about the state of Greece’s public finances. Inside Greece
Austrians felt a mixture of clashing emotions as Otto von Habsburg was buried at 98. The funeral ends the Habsburg dynasty that ruled central Europe for over six centuries. His father, Charles, was the last Habsburg to ascend the imperial throne in 1916; two years later, the empire broke apart after defeat in the first World War and the last kaiser relinquished the throne without formally abdicating. The lavish funeral honored "Otto of Austria, former Crown Prince of Austria-Hungary, Prince Royal of Hungary, Croatia and Bohemia, of Dalmatia, Croatia, Slavonia, Galicia, Lodomeria and Illyria; Grand Duke of Tuscany and Cracow; Duke of Lorraine, Salzburg, Styria, Carinthia, Carniola and Bukowina; Grand Prince of Transylvania, Margrave of Moravia; Duke of Upper and Lower Silesia, Modena, Parma, Piacenza and Guastalla, of Osweicim and Zator, of Teschen, Friaul, Dubrovnik and Zadar; Princely Count of Habsburg and Tyrol, of Kyburg, Gorizia and Gradisca; Prince of Trento and Brixen; Margrave of Upper and Lower Lusatia and Istria: Count of Hohenems, Feldkirch, Bregenz, Sonnenburg; Lord of Trieste, Kotor and Windic March; Grand Voivod of the Voivodship of Serbia." Irish Times
It used to be that comic books made you stupid. Then it was television that made you stupid. Now it's the internet, especially Google, that's making you stupid, since you don't have to try to remember anything if you know you can just google it any time you want. PC Magazine
(Comments: For reader comments, questions and discussion,
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(17-Jul-2011)
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Defense Dept. victimized by massive cyber attack
This morning's key headlines from GenerationalDynamics.com.
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It's been another chaotic week for the European Union finance ministers, as the debt crisis has measurably worsened every day. Greece has received bailout money to last them until September, and there was supposed to be an EU summit on Friday to discuss the terms of the next bailout, but the meeting was cancelled because of bitter disputes over the terms of the next bailout. Desperate EU officials had hoped to keep the crisis contained to Greece, Ireland and Portugal, but now it's spreading rapidly to Italy and Spain, whose bond yields (interest rates) have been skyrocketing. On Friday, EU president Herman Van Rompuy called an emergency summit meeting for Thursday. "Our agenda will be the financial stability of the euro area as a whole and the future financing of the Greek program," he tweeted. "I have asked for the preparatory work to be brought forward inter alia by the finance ministries." Irish Times and Wall Street Journal (Access)
Ever since the financial crisis began, it's been strictly forbidden to utter the D-word in Greece, even though it was mathematically unavoidable. Now, for the first time, Greece's cabinet met to discuss how the government would manage a "selective default" on its debt, after being repeatedly told (lied to) by politicians saying that it would never happen. Prime Minister George Papandreou told his ministers that they have to be properly briefed on the meaning and implications of a selective default. However, Papandreou's finance minister lied again, saying, "If some people choose to translate irresponsibly, in populist terms and for petty political reasons the term ‘selective default,’ I respond by stressing that it is not the same as a credit event, nor default or bankruptcy but a temporary rating of Greek bonds." This is a lie because it certainly WILL BE a credit event. Kathimerini
More than 100,000 people have joined a Greek Facebook page "Tax the Church," urging the state to harness "the huge fortune of churches" to reduce Greece's budget deficit. The Church angrily denies accusations it doesn’t pay its fair share. "This is a lie. We pay more land tax than ordinary businesses and we pay 20 percent of our rental income in tax," said a Church spokesman. Kathimerini
In March, a cyber attack on a defense company’s network captured 24,000 files containing Defense Department information. Stolen documents include plans for the wars in Iraq and Afghanistan, secret information about American satellites, and plans for a new fighter plane. An unnamed foreign intelligence, probably China or Russia, had access to the data for months before it was detected. There are thousands of attempted attacks on DoD's 15,000 computer networks every day, and several of them have been successful. Dept. of Defense and Information Week
Department Of Defense Strategy For Operating In Cyberspace, July, 2011 (PDF)
In some of the hugest anti-government demonstrations since the protests began, tens of thousands of people took to the streets in Damascus for the first time. Vengeful Syrian security forces of president Bashar al-Assad massacred civilians with live ammunition and teargas, killing 32. Reuters
A report from the United Nations International Atomic Energy Agency (IAEA) indicates that Syria is engaging in nuclear activities, in violation of its nonproliferation obligations. Hurriyet (Istanbul)
Secretary of State Hillary Clinton announced that that the U.S. is recognizing the Libyan opposition as the country's "legitimate governing authority": "The United States views the Gaddafi regime as no longer having any legitimate authority in Libya. And so I am announcing today that, until an interim authority is in place, the United States will recognize the TNC [Transitional National Council] as the legitimate governing authority for Libya, and we will deal with it on that basis. The TNC has offered important assurances today, including the promise to pursue a process of democratic reform that is inclusive both geographically and politically." The announcement is more than symbolic. Legally, it means that billions of dollars in frozen Libyan assets can be made available to the TNC. BBC
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Venezuelan President Hugo Chávez will travel to Cuba this weekend for chemotherapy treatment. "I am going to continue with the road to recuperation… This second phase will begin in the coming days with the application of chemotherapy. Now I must fulfill the treatment plan designed by the doctors, in order to recover my health." The exact details on Chavez’ cancer operation, including the location of the tumor extracted and subsequent medical reports have not been made public. Havana Times
Yemen officials are denying a report that president Ali Abdullah Saleh will be returning to Yemen as early as this weekend. "The doctors will decide on the president's return," according to an official. Saleh has been in a Saudi hospital since he was injured in a June 3 bombing attack. There are still thousands of people each day protesting to demand that Saleh step down. Reuters
The United Nations reports that 1,462 Afghan civilians were killed mostly by insurgents, between January and June of this year, up 15% from last year, painting a picture of deteriorating safety across the country. The grim figures contrast with the relatively upbeat security assessments presented recently by senior U.S. military officials as an American troop drawdown gets underway. LA Times
(Comments: For reader comments, questions and discussion,
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S&P may downgrade U.S. debt even if a debt ceiling agreement is reached
This morning's key headlines from GenerationalDynamics.com.
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President Barack Obama will support the mediation attempt by Russia's president Dmitry Medvedev to end the Libya conflict by mediation, provided that Muammar Gaddafi steps aside:
"President Obama spoke with Russian President Medvedev today to discuss a range of bilateral and international issues and to express his condolences on the tragic sinking of the MS Bulgaria. President Obama thanked President Medvedev for Russia's efforts at mediation in Libya, emphasizing that the United States is prepared to support negotiations that lead to a democratic transition in Libya as long as Gaddafi steps aside."
The statement doesn't mention whether there are any other conditions, such as requiring Gaddafi to leave Libya, or preventing Gaddafi's son Saif al-Islam from stepping as the new leader, fronting for Muammar. AFP
Though unannounced, Nato discontinued air strikes on Saturday, July 9, essentially because 15,000 flight missions and 6,000 bombardments of Qaddafi targets had failed to achieve their object: removing Gaddafi from power. Thus, Obama's acceptance of Medvedev as mediator means that the military action in Libya is pretty much over, on terms acceptable to Gaddafi. Debka
A year before Russia's presidential election, in which he may be running against Vladimir Putin, president Dmitry Medvedev is being marginalized by domestic challenges, including manmade disasters. The sinking on July 10 of the MS Bulgaria riverboat on the Volga River, killing 105, and the June 21 crash of a plane, killing 47, are both being blamed on massive negligence and corruption that's stretching all the way to the Kremlin and President Medvedev. Jamestown
Standard & Poor's ratings service put the U.S. debt on negative watch on Thursday evening, and said that there's a 50% chance that it might lower U.S.'s credit rating soon, if a deal on raising the government's debt ceiling is not agreed soon. The S&P statement added, "[Even if] an agreement is reached, we do not believe that it likely will stabilize the U.S.' debt dynamics," and we "would expect to lower the long-term 'AAA' rating, affirm the 'A-1+' short-term rating, and assign a negative outlook on the long-term rating." Reuters
Although doing so is illegal, Pakistan's Islamic charity Jamaat-ud-Dawa (JuD) has stepped up its overt anti-Indian and anti-Western rhetoric. The JuD is believed to act as a front organization for the Lashkar-e-Taiba terrorist group, responsible for the horrific 2008 assault on Mumbai. Following the death of Osama bin Laden, hundreds of JuD activists descended into the streets of Pakistan’s main cities, including Karachi and Lahore, to offer special “funerary prayers in absentia” and to pronounce Bin Laden a martyr. Later, JuD activisits joined other Islamist terror groups to organize a rally in Karachi in support of the government of Saudi Arabia against “conspiracies” hatched by the United States and its allies. Jamestown
The Arab League, meeting in Doha, Qatar, will ask the United Nations to recognize a Palestinian state on pre-1967 lines. Palestinian Authority president Mahmoud Abbas is planning to visit a number of EU countries in the coming days to try to persuade them to support the statehood bid at the UN. Jerusalem Post
Police investigating the multiple terrorist attacks in Mumbai on Wednesday, killing 18 people and injuring over 100, are not yet blaming Lashkar-e-Toiba or other Pakistani terrorist groups. The use of ammonium nitrate-based explosive and shrapnel, to cause maximum casualties from the improvised explosive devices (IEDs) is more typical of the Indian Mujahideen (IM), an Islamist terrorist group within India itself. Hindustan Times
Quote without comment:
"[C]an we just enjoy Obama for a moment? Before the policy choices have to be weighed and the hard decisions have to be made, can we just take a month or two to contemplate him the way we might contemplate a painting by Vermeer or a guitar lick by the early-seventies Rolling Stones or a Peyton Manning pass or any other astounding, ecstatic human achievement? Because twenty years from now, we're going to look back on this time as a glorious idyll in American politics, with a confident, intelligent, fascinating president riding the surge of his prodigious talents from triumph to triumph. Whatever happens this fall or next, the summer of 2011 is the summer of Obama." -- Stephen Marche
(Comments: For reader comments, questions and discussion,
see the 15-Jul-11 World View -- War in Libya may be near an end
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posted anonymously.)
(15-Jul-2011)
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China contributes to arming Pakistan
From the point of view of generational theory, a crisis era turns into a crisis war between two countries following a series of shocks and surprises, with each side crossing some kind of "red line," and the other side making an even stronger response in retaliation.
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The latest shock in the U.S.-Pakistan relationship is the revelation that the CIA recruited a Pakistani doctor to run a vaccination program in the area around Osama bin Laden's suspected home, in order to gather DNA evidence from bin Laden family members, according to CNN. The CIA wanted to be completely certain that bin Laden was actually in the house before the military operation that killed him. Two women who appeared to be nurses visited homes and offered free vaccinations for hepatitis B.
Rashee Jooma, former spokesman for Pakistan’s Ministry of Health, criticized the CIA operation, telling CNN, "This was an irresponsible act by the CIA. This will harm the cause [of the Global Campaign to Eradicate Polio].
There have been several other shocks to Pakistan just in the last couple of weeks. American Admiral Mike Mullen publicly accused Pakistan's Inter-Services Intelligence (ISI) spy agency of murdering a journalist, and of regularly using torture and murder.
The previous shock to Pakistan was last week's announcement that the Obama administration decided to suspend $800 million in military assistance to the country.
According to the International Business Times, Pakistan just shrugged off the loss of aid. An expert on Pakistan's military said that the amount was not "substantial enough to immediately change policy," but that Pakistan's military might move closer to the militants. "If the partnership frays. Pakistan is no longer seen as fighting America's war. You can negotiate with militant groups then."
However, that view seems to have changed rather quickly.
Ahmad Shuja Pasha, head of Pakistan’s ISI, made a surprise visit to Washington on Wednesday, according to CS Monitor, to patch up the rapidly deteriorating relationship between the two countries.
Prime minister Yusuf Raza Gilani expressed "concerns" on Wednesday about how the cuts would affect the country's fight with extremism. "It is our own war, but we are fighting this war for the entire world."
Whether these last-minutes statements will make much difference at this point is highly doubtful. It will be interesting to see if the Obama administration restores the $800 million in aid and, if so, how Pakistan's public reacts to what would be the widespread perception that Pakistan's government is selling its soul.
If you look around the world today, there are two areas where a crisis seems imminent. One area is the European financial crisis, which substantially worsens every day. I honestly don't think that they can get through the summer without a major crisis but but who knows -- maybe they'll figure out a way to "kick the can down the road" once more.
The other area is Pakistan, where a series of shocks and surprises have caused the US-Pakistan to fall like a rock. Both the European and Pakistan situations could explode any day.
There appear to be no such shocks and surprises in the relationship between Pakistan and China.
On Tuesday, the Pakistan Navy began construction in Karachi shipyard of a missile boat that will be equipped with anti-surface missiles, automatic guns and weapons systems. These and other vessels are being built with the cooperation of China, according to The Nation (Pakistan).
China is the single largest arms supplier to Pakistan, according to the International Business Times. As the US-Pakistan relationship deteriorates, and suspicions are increasing, China will support Pakistan and at the same time as it enlarge its sphere of influence in the Asian Pacific region.
Pakistan's relationship with China has continued to grow closer, as we've been describing for years. Within the last couple of years, China has substantially increased its claims related to border issues with India, and has unambiguously taken Pakistan's side against India over the claims to the disputed areas of Kashmir and Jammu.
From the point of view of Generational Dynamics, it's expected that Pakistan will be allied with China and India will be allied with the United States in the coming Clash of Civilizations world war.
(Comments: For reader comments, questions and discussion,
see the 14-Jul-11 News -- Pakistan turns to China as US-Pakistan relations collapse
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(14-Jul-2011)
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Greece moving towards default
This morning's key headlines from GenerationalDynamics.com.
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At least 21 people were killed and more than 140 were injured in three coordinated bomb blasts set off by terrorists near the Diamond Market at Opera House, Zaveri Bazar and Dadar (Kabutarkhana) in Mumbai, India's financial capital, during rush hour on Wednesday evening. The Pakistani terrorist group Lashkar-e-Toiba will almost certainly be suspected for this attack, as it was blamed for the horrendous 2008 terrorist attack on Mumbai. (See "India's Prime Minister Singh formally accuses Pakistan re Mumbai terrorist attacks.") However, the new attack was caused by high-intensity improvised explosive devices (IEDs), and police suspect the involvement of the Indian Mujaheedin. Net Indian
The latest terrorist attack occurred on July 13, 2011. Previous terrorist attacks occurred in May 13 2008, July 26 2008, September 13 2008, November 26 2008, and February 13 2010. The dates can't be a coincidence, though agencies have not been able to crack the reason why 13 and 26 are the chosen days. Times of India
Fitch Ratings Wednesday dropped Greece three notches to triple-C and said default "is a real possibility." In fact, there's been a sharp shift in opinion, and it's now widely expected that Greece will default. One reason is that the markets turned sharply negative on Italy in the last few days. Second, Greece appears close to the limit of how much pain it will endure to close its budget gap. Wall Street Journal (Access)
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A day after the Obama administration sharply escalated the pressure on Syria's president Bashar al-Assad by saying that he had "lost legtimacy" to govern Syria, the Arab League said Wednesday that Washington had overstepped its bounds by making those remarks. "This issue is exclusively decided by the people," said Arab League Chief Nabil Elaraby, and added that Syria was a "main factor of balance and stability in the region." AP
when British Prime Minister David Cameron and French President Nicolas Sarkozy announced their new Anglo-French defence pact at the end of last year, it was meant to herald a new era of cross channel cooperation on a whole range of military issues. However, France has always gone its own way during the Libya military action, and now France may be undermining the entire effort by "passing messages" to Muammar Gaddafi. Telegraph
(Comments: For reader comments, questions and discussion,
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(14-Jul-2011)
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EU approves 'Selective Default' for Greece
European Union officials continue to be in a panic, after the Greek "contagion" spread to Italy this week. After Greece, Ireland and Portugal were forced in the last year to beg for bailouts just to survive, it now appears that the same thing is happening to Italy.
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Italy's national debt is at 120% of GDP, the second highest in the euro zone after Greece, according to Der Spiegel. In recent months, Standard & Poor's and Moody's ratings services have issued warnings about Italy's debt rating, because of weak economic growth, low productivity, and a rigid labor market.
And now, on Tuesday, Ireland joined Portugal and Greece as the third euro zone nation to have its credit rating reduced to junk status by Moody's Investors Service, according to Bloomberg. Moody's said that it was probable that Ireland will need additional official financing and that investors will be forced to share in the losses (which would be a default for Irish debt).
European officials have been making one ridiculous proposal after another these past few months, including proposals to force investors to take "voluntary" haircuts on Greek debt. The utter absurdity of this has been hard to miss, and the ratings agencies are just saying so.
So now EU officials are desperately turning to the one action that they have left: They're declaring war on ratings agencies!!
EU Justice Commissioner Viviane Reding has demanded the "destruction" of the ratings agencies, according to Frankfurter Allgemeine Sonntagszeitung. "I see two possible solutions: either get the G-20 to smash the cartel of the three U.S. ratings agencies, or establish independent ratings agencies in Europe and Asia. It should not be that a cartel of three American companies decide the fate of the entire world's economies."
In a speech on Monday, EU Internal Market Commissioner Michel Barnier said that the EU Commission in the future should no longer consider the ratings agencies in judging euro-debt countries such as Greece going through international bailouts.
Last week, Germany's finance minister described the "big three" credit rating agencies as an oligopoly that needed to be broken, according to Deutsche Welle.
German Chancellor Angela Merkel said, "It seems strange that there is not a single rating agency coming from Europe. It shows there may be some bias in the markets when it comes to the evaluation of the specific issues of Europe. It is important that the troika [EU, IMF and European Central Bank] do not allow their ability to make judgments to be taken away. I trust above all the judgment of these three institutions."
I really have to laugh at this last statement. These three institutions have lied repeatedly in the last year, so I assume that when she says she trusts their judgment, she must mean that she trusts them to continue lying.
Many of these lies are directly related to last year's €110 billion bailout of Greece. They kept saying that this would be enough, even though it was obvious to me and other people that it was mathematically impossible for that to be enough.
And now, Greece needs another €120 billion bailout, because a default would be disastrous, according to the ECB. Germany, the Netherlands, Austria and Finland are saying ABSOLUTELY NOT -- unless investors share in the bailout, which means a "selective default" for Greece.
There was a meeting of the Eurogroup finance ministers on Tuesday, and here's what Dutch Finance Minister Jan Kees de Jager said, according to Reuters:
"We have managed to break the knot, a very difficult knot, of a contradictory statement that you are saying that you want substantial private sector involvement and on the other hand you want to avoid a selective default.Obviously this was a contradiction. So we have broken this knot and now we can do the work in the next few weeks. The (Eurogroup) working group can prepare. It has a broader mandate, several options.
[A 'selective default' for Greek debt] is not excluded any more. Obviously the ECB has stated in the statement that it did stick to its position, but the 17 ministers did not exclude it any more so we have more options, a broader scope to work with."
A knot?
I don't know, Dear Reader. I write about these things as if I'm talking about real people discussing real things, rather than what appear to be cartoon politicians saying cartoon things. I almost don't know what's real and what isn't any more with these people.
A couple of weeks ago, a Greek default was both unthinkable and unavoidable. Today, it's thinkable and unavoidable.
The ratings agencies have already stated that even a "selective default" will trigger a default rating, with all its consequences.
So it now looks like the Europeans are going to call the ratings agencies' bluff. It now appears that the EU is going to "permit" Greece to have a selective default, and the ratings agencies will then be challenged to carry out their threat, and take the blame for any adverse consequences.
Europe's financial system is a mess, and America's is close behind.
(Comments: For reader comments, questions and discussion,
see the 13-Jul-11 News -- EU attacks ratings agencies, and moves towards 'selective defaults'
thread of the Generational Dynamics forum. Comments may be
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(13-Jul-2011)
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UN Security Council condemns Syria for embassy attacks
This morning's key headlines from GenerationalDynamics.com.
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The most powerful political figure in Afghanistan's Kandahar province, Ahmad Wali Karzai, half-brother of Afghanistan's President Hamid Karzai, was assassinated in his home on Tuesday, apparently by his own bodyguard. Kandahar is a hotbed of Taliban activity, and the assassination throwing into (further) question the American withdrawal strategy. VOA
"The members of the Security Council condemn in the strongest terms the attacks against embassies in Damascus, which have resulted in damage to embassy premises and injuries to diplomatic personnel. The members of the Security Council recall the fundamental principle of the inviolability of diplomatic missions and the obligations on host Governments, including under the 1961 Vienna Convention on Diplomatic Relations, to take all appropriate steps to protect embassy premises. In this context, the members of the Security Council call on the Syrian authorities to protect diplomatic property and personnel." United Nations
Syria's U.N. Ambassador, Bashar Ja'afari, accused the United States and France on Tuesday of distorting and exaggerating facts about the embassy attacks. He said that Syria had sought to protect the embassies and that some demonstrators involved in Monday's events had been arrested and would be brought to justice. Reuters
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Turkey's Foreign Minister Ahmet Davutoglu met with Iran's President Mahmoud Ahmadinejad in Tehran on Monday to discuss Syria. "Syria is a close friend of both Iran and Turkey, which has close relations with the two countries. It is important for us that there are no more civilian deaths and that the country starts work on reforms as soon as possible," Davutoglu said. Zaman (Istanbul)
Becoming increasingly impatient with the slow progress in the humanitarian kinetic military activity whose current object is to drive Muammar Gaddafi from power, France is initiating discussions with Gaddafi about ending the military action with Gaddafi still in power. If this position becomes official, then it would result in a major split within Nato. Telegraph
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Tensions rise between Syria and America
Hundreds of supporters of Syrian president Bashar al-Assad attacked the U.S. Embassy in Damascus on Monday, spray-painting walls with obscenities. Graffiti referring to American ambassador Robert Ford said, "Ford get out now. The people want to kick out the dog," according to Associated Press.
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Syria's government is absolutely furious because Ambassador Ford, along with France's ambassador to Syria, Eric Chevallier, visited the city of Hama on Friday, to show solidarity with the protesters. It's believed that their presence encouraged the enormous turnout of protesters. ( "10-Jul-11 News -- Iran and Turkey struggle over future of Syria")
According to State Dept. spokesman Victoria Nuland, the "thugs" went over the walls, climbed on the roof, and broke windows. "My understanding is that we had U.S. Marines around the facility, and when they made it clear that they were prepared to defend our facility, the mob went back over the walls the same way it had come."
Nuland left open the option that the U.S. would send additional Marines to Damascus to protect the Embassy.
It's suspected, but not known, that the attack was arranged by the Assad regime. However, the State Department says that the Assad regime "encouraged" the attack and was "slow to respond" when the Embassy requested help, according to CS Monitor.
US Secretary of State Hillary Clinton made one of the harshest statements yet to come out of the Administration, according to AFP:
"President Assad is not indispensable and we have absolutely nothing invested in him... remaining in power. From our perspective, he has lost legitimacy. Our goal is to see that the will of the Syrian people for a democratic transformation occurs."
If I'm not mistaken, this is the first time that the Administration has specifically called for an end to the Assad regime, as opposed to just encouraging him to reform.
France's embassy in Damascus was also attacked on Monday. The French Foreign Ministry issued this statement, quoted by Al-Jazeera:
"For the second time in two days, the French embassy in Damascus, at the same time as the US embassy, was targeted for attacks and vandalism by well-organised groups, in view of Syrian security forces....A battering ram was used to try to break down the doors of our diplomatic mission, windows were broken, intrusions were made inside the embassy, three sentries were injured, and the ambassador's car was destroyed. We call on the Syrian authorities... to respect the Vienna convention on diplomatic relations."
An attack on a country's embassy is equivalent to an attack on the country. With Turkey's troops on the border, ready to invade, and with tensions growing in Damascus itself, the possibility of military conflict is growing by the day.
(Comments: For reader comments, questions and discussion,
see the 12-Jul-11 News -- Syrian protesters attack US and French embassies in Damascus
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China criticizes South China Sea drills in Mike Mullen's visit
This morning's key headlines from GenerationalDynamics.com.
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In recent weeks, the United States has conducted joint naval exercises in or near the South China Sea with other countries, including the Philippines, Vietnam, Japan and Australia. As Admiral Mike Mullen, chairman of US Joint Chiefs of Staff was visiting Beijing, his Chinese counterpart, General Chen Bingde, chief of the general staff of the People's Liberation Army, spoke at a news conference criticizing the naval exercises. "On various occasions, the US has expressed that it does not intend to intervene in South China Sea disputes. The US is actually sending out the opposite signal. We have observed the latest joint exercises between the US and other countries, for example, the Philippines and Vietnam." Chen also criticized the U.S. for spending too much money on the military. China Daily
Eurogroup finance ministers meeting in Brussels on Monday to discuss the debt crisis in Italy and Greece, as yields (interest rates) on Spain's 10-year bonds smashed through the 6% barrier, yields on Italy's 10-year bonds jumped 44 basis points to 5.7% and yields on Greece's 2 year bonds rose to 31.1%. German Chancellor Angela Merkel called for more "frugality" in Italy. Increasingly, officials are coming to the conclusion that Greece will default (something that the European Central Bank still bitterly opposes, since they stand to lose the most), and now the talk has gone from avoiding default to reducing the impact of a default. Telegraph
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As Eurogroup ministers discuss the next bailout of Greece, which will be dependent on Greece implementing austerity measures and meeting revenue targets, it now turns out that Greece is likely to miss its 2011 revenue targets by an enormous 3 billion euros. One reason is that Greek tax collectors have only three months to find 800,000 taxpayers who are newly liable to pay taxes under the austerity rules. Even worse, the recession is likely to be worse than expected. Kathimerini summarized by EuroIntelligence
President Barack Obama told the Republicans on Monday that it's time to "pull off the Band-Aid" and "eat our peas," as his way of saying the same thing that everyone's been saying for months - that the debt ceiling negotiations are running out of time, and the country either will or will not suffer a catastrophe if agreement is not reached by August 2. The Republicans are saying that raising taxes will just money to the government that will just be pissed away, and they're right about that. The Democrats are saying that cutting spending will devastate old and poor people, and they're right about that as well. Same as in Europe, a way will be found to "kick the can down the road," until a major crisis forces taxes to be raised AND spending to be cut. CNN
On Monday, China's Shanghai Zhenhua Heavy Industry Co Ltd in Shanghai finished the final four pieces of of fabricated steel for the San Francisco-Oakland Bay Bridge, under a contract valued at more than $350 million. It's part of a $7.2 billion project to replace the Bay Bridge that was destroyed in the 1989 San Francisco earthquake. The pieces will be assembled in San Francisco. China Daily
The Mideast Quartet, which consists of the United States, the United Nations, the European Union and Russia, met in Washington on Monday with the objective of restarting the Mideast peace process. However, Both Israeli and Palestinian officials have decided that there's no common ground to restart the peace talks, and the Palestinians are more determined than ever to pursue the recognition of an independent Palestinian state at the United Nations in September. Haaretz
"Oresteia," composed by my late cousin Iannis Xenakis, was performed at the Istanbul Music Festival on June 21, 2010. The oratorio is sung in three acts with "electrifying" choral work. It's based on the trilogy of Greek tragedies that celebrate the birth of democracy out of destruction in ancient Greece. The Istanbul venue for the performance has historic significance because it was Istanbul's first Christian (Orthodox) Church, which the Ottoman Turks turned into a weapons storage facility shortly after they conquered Constantinople in 1453. (See "Works by Iannis Xenakis gain wider prominence and recognition")
(Comments: For reader comments, questions and discussion,
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(12-Jul-2011)
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Dutch court rules that Netherlands is responsible for Srebrenica deaths
Hundreds of people lined Sarajevo's main street on Saturday, as trucks bearing 613 coffins carrying victims' remains pass through to Srebrenica, where the victims of Europe's worst massacre since World War II will be buried, according to AP. The 613 sets of remains, found in mass graves and identified through DNA tests, will be buried at a memorial center near Srebrenica on Monday — the 16th anniversary of the massacre in which more than 8,000 Bosnian men and boys were killed.
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At least 8,300 Bosniak (Bosnian Muslim) men and boys who had sought safe haven at the U.N.-protected enclave at Srebrenica were killed by Orthodox Christian Serbs under the leadership of General Ratko Mladic. ( "27-May-11 News -- Europe cheers the capture of Ratko Mladic, the butcher of Srebrenica")
Thousands of people will gather in Srebrenica on Monday to mark the 16th anniversary of the massacre.
When the three-year war ended in 1995, it was hoped that time would heal the wounds, but that has not happened. To the contrary, Bosnia is now mired in its worst crisis since the end of the war, according to an analysis by the Irish Times.
Although everyone seems to agree that the Bosniaks suffered the most from the war, Serb activists are claiming that they are getting no recognition or support over the atrocities that were perpetrated on them. More than 500 Serb civilians are thought to have been held in the Tarcin silo and about 24 were killed, some from beatings and disease but more from gun and shell fire while doing forced labor for their Bosniak captors. The silo was one of scores of camps in which Bosniaks and Croats held Serbs, but only a handful of people have been charged with crimes committed in them. "What happened in these concentration camps is not recognized and we get no help from Bosnia or the international community," says one Serb activist.
Meanwhile the small Croat community is becoming increasingly radical in demanding more power to protect its interests. Croatian nationalists are demanding that Croats have their own governmental entity, so that they can run their own affairs without being dominated by the Bosniaks.
According to the analysis, violence is not imminent in Bosnia. While nearly everyone agrees that good personal relations among Muslims, Serbs and Croats are not only possible but common, most people also believe that their interests will be protected only by leaders of their own ethnicity.
From the point of view of Generational Dynamics, what we're seeing is a transition from a post-war Recovery era into a new Awakening era. The Recovery era immediately follows the end of the war, and the survivors set up austere rules and institutions to guarantee that no such war will ever happen again. The Awakening era begins 15-20 years later, when the kids growing up after the war begin to make their voices heard, and they reject the rules and the compromises imposed by their parents at the end of the war.
What we're seeing now is young activists making demands that their parents are too risk-averse to pursue. Bosniaks are continuing to commemorate the massacre, while Serb and Croat activists are beginning to make demands.
The expected pattern is what happens starting 15-20 after most crisis civil wars: political differences become more confrontational, and start to become violent; there are alternating periods of violence and peace, with each new period of violence worse than the last; until finally, decades later, there's a new civil war.
In a completely unexpected decision, a Dutch appeals court ruled last week that the deaths of three Muslim men in the Srebrenica massacre were the responsibility of the Netherlands. At the time of the massacre, Dutch U.N. troops were in a peacekeeping operation, in charge of what was designated a U.N. safe haven during the Bosnian war. However, when the Serbs demanded that the Muslim prisoners be turned over, the Dutch peacekeepers complied, and the Muslims were massacred. This may be the first time that a state has been held accountable for a peacekeeping operation that went wrong. VOA
In July 2009, and again in April 2011, Iraqi forces attacked and massacred Iranian Resistance forces living in Ashraf, a city about 40 miles north of Baghdad. Following the above ruling by the Dutch appeals court, Iranian Resistance activists are accusing the U.S. of being more responsible for the massacre at Ashraf than the Dutch were for the massacre at Srebrenica. NCR-IRAN
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Gen-Xers become the 'divorce generation' against their will
This morning's key headlines from GenerationalDynamics.com.
 |
A sharp spike in Italy's bond yields (interest rates) on Friday, combined with the fact that Italy has the highest sovereign debt ratio relative to its economy in the euro zone after Greece, is raising crisis level concerns among European officials. They will hold an emergency meeting on Monday morning to discuss Italy. This emergency meeting will will precede a previously scheduled gathering of the euro zone's 17 finance ministers to discuss a new 120 billion euro bailout of Greece. (By the way, what's happening in Brussels is exactly the same thing that's happening in Washington in discussions over America's astronomical debt levels. After this weekend, officials in Brussels and Washington are back to square one on all of these issues.) Reuters
Back in 2006, after the war between Hizbollah and Israel in Lebanon, Hizbollah leader Nassan Nasrallah declared it to be a "divine victory." Hizbollah was widely respected in the Mideast at that time, but since then the respect has worn thin for several reasons. First, a Special Tribunal is about to release a report indicting four Hizbollah officials in connection with the February 2005 assassination of beloved former Lebanese premier Rafiq Hariri. Second, in 2009, Hizbollah's chief financier was arrested in a Bernie Madoff-like Ponzi Scheme. And lately, Hizbollah has become the region's strongest backer of the Syrian regime that's massacring Sunni Muslims. Australian
China and the Philippines have issued a joint statement in Beijing on Friday pledging to work together to avoid a military conflict in the South China Sea. Both China and the Philippines are claiming sovereignty over the Spratly Islands. VOA
The Obama Administration confirmed on Sunday that it's withholding $800 million in military aid to Pakistan, about 1/3 of the the usual annual U.S. security aid to Pakistan. The reduction in aid is in retaliation for the request from Pakistan's military for a "significant cutback" of U.S. military trainers in Pakistan. U.S. and Pakistan relations have been deteriorating in free fall since January, with the arrest of a CIA contractor. Dawn (Pakistan)
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Many Generation-Xers led wretched childhoods of divorced parents, feeling that every divorce, in its way, is a re-enactment of "Medea": the wailing, murderously bereft mother; the cold father protecting his pristine, new family; the children: dead. Gen-Xers vow that they'll never get divorced, never inflict divorce on their own children, but it doesn't necessarily work out that way. Wall Street Journal (Access)
The Mideast Quartet, which consists of the United States, the United Nations, the European Union and Russia, will meet in Washington on Monday to figure out a way to revive the Mideast Peace Process, and forestall a Palestinian request to the United Nations for a unilateral declaration of a Palestinian state. The Quartet is expected to issue an international peace plan calling for negotiations based on the pre-1967 borders. Haaretz
In a televised interview on Saturday, Venezuela's president Hugo Chavez announced that China will provide Venezuela with another $4 billion loadn. Chavez is recovering from prostate cancer and Venezuela suffers energy shortages and rolling blackouts despite claiming to have the globe's biggest oil reserves. AP
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(11-Jul-2011)
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Iran and Turkey have conflicting objectives
The Bashar al-Assad regime in Syria is fuming because the U.S. amabassador to Syria, Robert Ford, visited the city of Hama on Friday, and was joined by France's ambassador to Syria, Eric Chevallier, according to Reuters. The two of them showed solidarity with the protesters, and probably contributed to an even larger turnout.
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U.S. State Department spokesman Victoria Nuland said that the purpose of the visit was "to make absolutely clear with his physical presence that we stand with those Syrians who are expressing their right to speak for change. We are greatly concerned about the situation in Hama."
Syria's state-run Syria Arab News Agency (SANA) said that the provocative act "reminds of the colonialism methods," and that "This behavior is an interference in Syria's internal affairs, instigates riots and violence and contradicts all claims of the United States on supporting the world security and stability, the political solutions, dialogue and reform."
The visits by Ford and Chevallier to Hama were more than just provocative gestures of solidarity with the protesters. They are part of a joint effort underway Barack Obama, France's president Nicolas Sarkozy and Turkey's PM Recep Tayyip Erdogan to resolve the Syrian conflict as peacefully as possible, by pressuring Assad to negotiate with the opposition, according to Debka.
The pressure is with more than just words, according to the article. Turkey's army is on the border, ready to march into Syria at any time. If Assad's regime initiates a massacre in Hama, then Turkish troops would enter Syria and carve out an 800-square kilometer buffer zone between the Syrian, Iraqi and Turkish borders and the Mediterranean. This enclave would provide a sanctuary for Syrian refugees and opposition leaders.
Prior to the Arab uprising, Syria was playing an important role in Mideast policies of both Turkey and Iran.
Turkey's strategy has been to maintain cordial "no problem" relationships with all the Arab states, in order to regain some of the hegemony of the Ottoman Empire. The uprising has jeopardized Turkey's relationship with the entire Arab world. Most of the people expect Erdogan to stand up to Assad and bring down his regime if he continues to massacre his own people, but Erdogan isn't really ready to do anything like that.
Iran's strategy has been to use Syria and Hizbollah in Lebanon to fight the west, especially Israel. Without Assad, Iran would find it much more difficult to provide arms to either Hizbollah or Hamas.
Thus, Iran and Turkey have basically conflicting objectives for Syria, according to Middle East Online. If Assad's regime survives, then Turkey will have immense problems with Arabs. If Assad's regime falls, then Iran will become isolated.
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Greece receives 3.2 billion euros from IMF
This morning's key headlines from GenerationalDynamics.com.
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After five days of political and ethnic violence that resulted in the deaths of 98 people and 150 wounded, police and paramilitary forces claimed on Saturday evening that they've taken control of the port city of Karachi, the largest city in Pakistan. Police on Friday were ordered to shoot on sight any gunmen, but Amnesty International said, "By granting security forces the power to ‘shoot on sight’ the Pakistani government is effectively declaring Karachi a war zone." The Nation (Pakistan)
The International Monetary Fund (IMF) has approved a 3.2 billion euro ($4.6 billion) payment under a joint loan with the European Union. Last week, the EU had unblocked 8.7 billion euros for Greece. The purpose of the payments is to allow Greece to pay its debts through September, and to buy time so that the EU can figure out how to continue to bail out Greece for years to come. Bloomberg
In the next phase of the "Welcome to Palestine" campaign, Pro-Palestinian activists have been arriving in Jerusalem for a week of protests in the West Bank. The protests will start in the Aida refugee camp north of Bethlehem on Sunday, and end in Jerusalem on Friday. Israel has detained or otherwise prevented hundreds of activists from reaching the West Bank, but activists say that 50 to 100 have made it through. Jerusalem Post
Thailand's newly elected prime minister Yingluck Shinawatra was accused of buying votes with noodles during a campaign stop prior to the election. The Election Commission is considering a formal investigation of the vote-buying-with-noodles incident. A spokesman for Yingluck says that the act was not premeditated because a noodle vendor was already cooking when Yingluck arrived and asked if she could help. The Election Commission will take up the matter on Tuesday. In 2008, Prime Minister Samak Sundaravej, an ally of Yingluck's brother Thaksin, was thrown out of office because for many years he had hosted a televised cooking show. When you're talking about Thailand, you just can't make this stuff up. Bangkok Post
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Generational crisis era transitions
On Friday, the Bureau of Labor Statistics (BLS) reported that the U.S. economy created a net of only 18,000 new jobs in June. This was far lower than the 100,000 to 150,000 or more that mainstream economists had been predicting. Even worse, the May jobs report was adjusted sharply downwards.
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There was a lot more bad news. The unemployment rate rose to 9.2%. One-third of the unemployed have been unemployed for over a year. Almost half have been unemployed for over 6 months.
Although one month's figures usually don't mean anything, I get the impression is that this report is having a seminal effect on mainstream economists.
I was watching CNBC on Friday morning as the jobs report came out, and I saw several mainstream economists first make gleeful, optimistic predictions, and then go into a state of shock where they could barely say anything but gibberish.
These are the people who have been promising "a V-shaped recovery next quarter" every quarter for three years. For the last few months, I've been hearing that "we're only in a soft patch," and the huge V-shaped recovery would take off in the last half of the year.
Now what I heard them saying is that the recovery won't occur until next year. I guess we're going to have to listen to predictions of a V-shaped recovery in January for next six months.
Mainstream economists have gone through one of these transitions every 3-6 months for the past few years. Every time they have to change their projections, as they've had to now, they say, "Nothing like this ever happened before." What they mean when they say that is "Nothing like this has happened since the end of World War II." As we've been saying for years, what's happening today is comparable only to the 1930s, the last period with the same generational configuration.
The same problem is happening in Europe, where the exponentially growing debt crisis in Greece, Ireland, Portugal and Iceland have caused officials to put forth one crazy proposal after another. The saying "kick the can down the road" is supposed to mean "buy some time until the V-shaped recovery kicks in, and the debt crisis takes care of itself." This is what's always happened since the end of World War II.
What they don't understand is that nothing that's happened since the end of WW II is applicable today. The generational configuration matches the 1930s, and that's the only relevant comparison period to look at.
When I was in school in the 1950s, my teachers all talked about how economists and experts in the 1930s kept predicting that conditions were about to improve, and they never did. I never understood how the experts could be so wrong, but now that the same thing is happening again, I can see what's going on. It just proves that so-called "experts" are just as vulnerable to wishful thinking and ignoring the fundamentals as the dumbest love-struck teenager.
A year ago, in June, 2010, the White House believed that the economy was about to pick up, and Ron Sims, Deputy Secretary of Housing and Urban Development, posted the following, entitled A Summer of Recovery:
"With tens of thousands of projects funded and millions of Americans on the job today, it’s hard to believe that it’s only been 16 months since President Obama signed the American Recovery and Reinvestment Act. And with so many jobs saved and created already, you might think that the Recovery Act’s greatest impact is behind us.But it’s not.
As the summer heats up, it is becoming clear that it could quite possibly be the most active season yet when it comes to recovering our economy. There are Recovery Act-funded projects breaking ground across the country that are creating quality jobs for Americans and economic growth for businesses, large and small.
This summer is sure to be a Summer of Economic Recovery."
Boy, talk about sounding like a love-struck teenager!
People have accumulated long lists of dumb-sounding statements by 1930s experts, starting with President Herbert Hoover's "Prosperity is just around the corner."
Now, conservatives are beginning to accumulate long lists of dumb-sounding statements by President Obama. Here's a cartoon from National Review Online:
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There's a very interesting way of looking at this situation from the point of view of generational theory.
America has had two generational crisis wars since it's founding -- the Civil War and World War II.
When a country goes through a generational crisis war, in many ways it comes out of the war a new country, a different country, sometimes with an entirely new character.
When America came out of the civil war, America decided that freedom was the ultimate ideal -- freedom for individuals and freedom for businesses in a laissez-fair economy.
By the 1930s, America was deciding that freedom, when carried to an extreme, was a mistake, especially for businesses. President Hoover was blamed for being unwilling to understand that businesses could not simply do anything they wanted, and he was blamed for giving businesses freedom in return for votes. The conclusion of the American people, as embodied in President Roosevelt's New Deal, was that freedom had to be tempered with reasonable regulations and government intervention to control excesses and to protect poor people.
Now, in the 2000s, there appears to be a gathering American opinion that regulation and government intervention have gone too far. This new attitude is being expressed in such remarks as "Obama is anti-business" or "Obama is a socialist." The Administration's heavy-handed regulatory framework, especially the health care law and various pro-union initiatives, are leading to accusations that Obama is harming the economy, and making it impossible for businesses to hire new people. Just as Hoover was accused of favoring businesses for their money and votes, Obama is being accused of favoring labor unions for their money and votes.
When looked at this way, it seems likely that America will have a different character after it's gone through this crisis, and that character will conclude that government intervention has gone too far. It remains to be seen how the new character of America will be defined.
(Comments: For reader comments, questions and discussion,
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(9-Jul-2011)
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Last space shuttle takes off
This morning's key headlines from GenerationalDynamics.com.
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Despite a bloody, brutal assault on the city of Hama by Syrian security forces earlier this week, half a million protesters were undeterred, and filled the streets of Hama on Friday, demanding the fall of the regime of president Bashar al-Assad. Many feared a bloody new massacre by security forces on Friday, but the arrival of the U.S. ambassador to Syria, Robert Ford, later joined by the French ambassador, Eric Chevallier, inhibited the Syrian regime. VOA
The Syrian regime has reacted with fury at the U.S. involvement with the protests in Hama, by sending its ambassador to the center of the anti-government protests there, and showing solidarity with the protesters. The presence of Ford, along with his French counterpart, Eric Chevallier, encouraged an even higher turn-out at Friday's demonstration and infuriated the Assad regime. Syria's foreign ministry said it was "proof" that America was instigating events in Syria, and "disturbing internal security and stability." Telegraph
U.S. chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, publicly accused Pakistan's security agency of murdering journalist Syed Saleem Shahzad, who dared to probe the Islamabad government’s murky dealings. Speaking at the Pentagon Press Association, he said that the torture and murder were "sanctioned by the government," and he said that the killing was part of a pattern. He added that Pakistan was continuing "to, quite frankly, spiral in the wrong direction." Globe and Mail
For the last time ever, astronauts used the space shuttle on Friday to slip the surly bonds of earth to touch the face of God. For the first time in two generations, there is no schedule for a resumption of human spaceflight in an American spacecraft after Atlantis completes its massive restocking mission to the International Space Station. From now on, all astronauts going to the International Space Station will have to travel in Russian space ships. Houston Chronicle
Speaking in an audio message on state TV, Muammar Gaddafi threatened and lashed out at Nato. Shouting loudly, Gaddafi said, "The enemies of the masses will fall under the feet of the masses, under the marching of the masses. The collaborators and traitors will fall — east and west — and NATO will fall under the feet of the Libyan masses, under the feet of the free Libyan people!" AP
Friday's "March of the Million", as protesters are calling the new uprising, flooded Cairo's Tahrir Square with pro-democracy protesters, demanding immediate reforms and swifter prosecution of former officials from the toppled government of Hosni Mubarak. Al-Jazeera
As of Saturday, July 9, the world has a new country, South Sudan. According to a statement by the government of Sudan, "The Republic of the Sudan has officially announced its recognition of the secession of the republic of south Sudan as sovereign state as of today Saturday according to existing borderline between south and north Sudan of 1956 acknowledged prior to the signing of the Comprehensive Peace Agreement (CPA)." Sudan Vision
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Brazil's halts corn exports after frost cuts harvest
In 2005, someone asked me: "John, when can you ever be wrong? You've said that there's going to be a financial crisis, but when it doesn't occur, you just say that it hasn't happened yet. So when can you ever be wrong?"
My response was: "Public debt has been increasing exponentially. If it starts to level off and fall significantly, then you can say that I'm wrong."
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Well, here it is 2011, and public debt is still increasing exponentially. There has been what many pundits call "the worst financial crisis since the Great Depression." I would say that with public debt continuing to rise, the worst financial crisis is going to get far worse.
Things like public debt can be compared to a person's blood pressure, often called a "silent killer." When a person's blood pressure goes up to 250/150, you can't be sure he'll die right away, but there's a good chance that he'll die pretty soon.
So today we're going to update three of these "blood pressure" type indicators.
On Thursday, the UN Food and Agriculture Organization (FAO) announced that the global food price index, already at historic highs, increased 1% from May to June, and is 39% higher than in June 2010. The price of grains fell slightly, but the price of sugar increased sharply, thanks to decreased production in Brazil, the world's largest sugar producer, according to Bloomberg.
Around the world there are "megacities," each containing tens of millions of people living in shacks or abandoned warehouses, with no access to farmland. Families in poverty in those cities often survive by foraging in large garbage dumps for scraps of food left over by people who can afford to buy food. As population continues to increase, these megacities multiply. These problems have gotten many times worse in the last two centuries because medical discoveries have lowered the infant and child mortality rate from 40-50% to 1-2%, leading to huge masses of young men needing to feed their families, and ready to fight wars. That's why 20th century wars killed many times more people than 19th century wars.
Prices have been rising fairly steadily since 2000, after the Green Revolution petered out in the 1990s. When the price of food goes up, more and more people are pushed into these poverty categories.
Food prices are another "high blood pressure" type measure. If food prices even leveled off and started significantly falling, it would mean that something important has changed. As long as food prices continue to increase, the world can only be headed toward war.
European politicians are ABSOLUTELY FURIOUS at Moody's Investor Service's decision, announced on Tuesday, to cut Portugal's credit rating to below investment grade. Even worse, Moody's gave as one reason for the downgrade the dysfunction of European politicians.
Moody's announcement cause an enormous spike in Portugal's government debt bond yields (interest rates), and a smaller spike in Greece's bond yields:
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Yields for 10 year and 2 year bonds increased 3% and 4.5% respectively, to 12.9% and an astonishing 17.5%.
Even without these spikes, it's been clear for months that Portugal's bond yields are headed to "credit card rates," just a few months behind Greece's bond yields doing the same thing.
This spike was caused, in my opinion, because more people are beginning to understand that the "French plan" that we've been describing, that requires investors to take a "voluntary" loss of money, is completely phony and always has been.
I heard one analyst on Bloomberg TV on Thursday, with no one else contradicting him, say that the whole plan was a joke, and that it was purposely made as complicated as possible by the Europeans to hide the fact that it's a joke. This is what we've been saying for a while, of course, but what's different now is that this opinion is becoming mainstream. Investors understand this, and that's why they're pushing Portugal's bond yields to the same astronomical levels as Greece's.
Nonetheless, European politicians are furious, and hinting at some kind of retaliation. Deutsche Welle quoted German Chancellor Angela Merkel as saying,
"It seems strange that there is not a single rating agency coming from Europe. It shows there may be some bias in the markets when it comes to the evaluation of the specific issues of Europe. It is important that the troika (EU, IMF and European Central Bank) do not allow their ability to make judgments to be taken away. I trust above all the judgment of these three institutions."
Like food prices, high bond yields are another "high blood pressure" type measure. Bond yields on all the PIIGS countries (Portugal, Ireland, Italy, Greece, Spain) have been increasing, and unless they start to level off and fall significantly, then it's a sign of an impending global financial crisis.
A number of web site readers of my recent article, "6-Jul-11 News -- Denmark's border controls called a 'European crisis,'" indicated that they consider Denmark's decision fully correct and justified.
I personally take no position on whether Denmark's actions were "good" or "bad," and almost anything is good for some people and bad for others, just as high food prices are presumably good for farmers.
I simply point out that the worldwide increase in xenophobia is just one more "high blood pressure" measure that's been increasing steadily and significantly since the 1990s, and whether it's "good" or "bad," it still means that we're headed for a world war, and that depresses me.
From the point of view of Generational Dynamics, what these three "high blood pressure" indicators have in common is that they've all been increasing substantially since the generations of World War II survivors all disappeared (retired or died) in the 1990s.
Stein's law was formulated, in various wordings, by the late economist Herb Stein. It's usually stated as follws:
Stein's Law: If something cannot go on forever, then it won't.
Each of these three indicators -- food prices, bond yields, xenophobia -- is increasing, and the increases cannot go on forever. It remains to be seen exactly what scenario will stop them.
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French politician Marine Le Pen is attracting new voters to the National Front, the right-wing populist party founded by her father, by railing against immigration and globalization. With France's elections a year away, Le Pen is already polling ahead of President Nicolas Sarkozy. Spiegel
Excessive frost has already reduced Brazil's corn crop by 30%, and now a new cold snap is expected to lower it still further. This will present problems for Brazil's livestock farmers in finding sufficent feed, and it will be a difficult year ahead for chicken and hog producers as well. The result is that all corn exports have come to a halt. AgriMoney
(Comments: For reader comments, questions and discussion,
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Israel's airport gears up for 'Welcome to Palestine' activists
This morning's key headlines from GenerationalDynamics.com.
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Israel braced on Thursday for the anticipated arrival of hundreds of pro-Palestinian activists at Ben Gurion airport in Tel Aviv, by boosting the police presence. The activists are planning to participate in what they say is a peaceful event dubbed “Welcome to Palestine,” designed to highlight conditions in the Israeli-occupied West Bank. Washington Post
The United Nations on Thursday agreed to postpone until July 27 publication of a report on the confrontation between Israel's armed forces and last year's "Freedom Flotilla." The confrontation, which occurred on May 31, 2010, resulted in the deaths of nine Turkish pro-Palestinian activists. The document reportedly will say that Israeli forces acted lawfully, though using disproportionate force, and is expected to criticize Turkey's support for the seaborne provocation. Israel has said it would agree to a softening of the report's criticisms of Turkey in return for a normalization of relations between the two countries. Washington Times
As American troops make preparations to leave Iraq by the end of the year, Iran is stepping up its support for Shia militants, supplying them with more sophisticated weapons. According to Admiral Mike Mullen, Iran had made a decision to curtail its support for Shia factions in 2008, but has now increased its activity in Iraq, sending in lethal arms that were being used against American forces. "Iran is very directly supporting extremist troops which are killing our troops," he said on Thursday. AFP
Nato forces attacked Libya's oil facilities for the first time in this humanitarian kinetic military action, in an attempt to starve Muammar Gaddafi's army of fuel. The airstrikes were on the complex at Brega, one of the countries' biggest petrochemical complexes and port for export, and currently under control of the Gaddafi regime forces. The bombing, however, could be seen as a risky strategy for Nato, which has insisted that its forces are avoiding targeting infrastructure. Independent
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Yemen's President Ali Abdullah Saleh, his face burned and his hands covered with bandages, made a startling appearance on TV on Thursday, for the first time since he was wounded in a bomb attack on June 3 in his palace in Yemen's capital, Sanaa. Saleh, who was hospitalised in Saudi Arabia after the June 3 attack, said he had undergone "more than eight successful operations." He appeared to be "defeated in some way" and "a more conciliatory figure." He indicated that he would remain as president, and that he welcomed power sharing as long as it was within the country's constitutional framework. Al-Jazeera
There were 34 more people mowed down in ethnic violence in Karachi, Pakistan, on Thursday, in an escalation that has taken the lives of 70 people in three days. Scores of people have received gunshot wounds inside their houses. While law enforcement agencies seem “toothless”, citizens prefer to stay at home for fear of further armed attacks. Daily Times
In documents obtained by the Washington Post, Abdul Qadeer Khan (AQ Khan), the founder of Pakistan's nuclear program, says that North Korea bribed senior Pakistan military officers in the late 1990s, paying over $3 million to smuggle sensitive nuclear technology into North Korea. A Pakistani general named in the documents strongly denied on Thursday the report, while Pakistan's foreign office called the story "preposterous." Washington Post and Dawn (Pakistan)
(Comments: For reader comments, questions and discussion,
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Protests in Karachi, Pakistan, over US gay rights event
President Barack Obama's recent announcement of an unexpectedly rapid drawdown of American troops in Afghanistan is producing a bitter reaction in Pakistan to the effect that America makes promises but, once again, is ignoring its promises and abandoning its allies, and that the Obama administration is acting for political purposes, and following narrow parochial interests.
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The Pakistan public generally blames America for the numerous terrorist attacks from al-Qaeda and the Taliban that Pakistan has suffered since 9/11. Here's a typical view from Pakistan Observer:
"Pakistan is suffering the most in ongoing war on terror which is raging for over a decade and may go on for many more years. It is up against local militants of various hues funded, equipped trained and guided by foreign agencies based in Afghanistan. Bomb attacks and suicide attacks have become a routine. 30,000 civilians and 5000 security personnel have died in terror attacks. 9,000 security forces have received serious injuries while combating militancy. Afghan and NATO troops indulging in border violations and NATO jets frequently violate airspace and at times bomb security border posts. US Marines had undertaken a heli-borne raid in Angoor Adda in September 2009. Drone strike rate has accelerated from 2009 onwards and has reached a crescendo and hundreds of innocent people have died. ...Presence of US troops is bound to keep insurgency simmering which in turn will keep the region unstable. Pakistan is the most affected country since it will be up against several hostile forces. It will also have to contend with huge CIA network harboring ill designs against Pakistan. With large Indian presence of India in Afghanistan and continued patronage of US military, RAW [India's intelligence agency] will continue with its covert war against Pakistan. Karzai must understand that Pakistan and not USA will act as the proverbial straw to save him from drowning."
The concern is that now that the Americans have come to Afghanistan and destabilized the country, they'll leave the country in much the same way that the Americans pulled out of Vietnam -- leaving behind a massive civil war. An analysis published by a Jordanian official and translated by Memri says that the American withdrawal will turn Afghanistan into one big terrorist camp:
"But if the American forces indeed withdraw... when [Afghanistan] is still in this tragic state, with the Taliban able to reach any target it wants and Al-Qaeda still in existence and able to hit any target it wants, whether in [Afghanistan] or elsewhere – the situation is bound to return to what it was [before the Americans came]. And in this situation, we will surely see a recurrence of the tragedies that occurred following [America's] first withdrawal in the early 1990s, only in a more catastrophic form."
These concerns have been fed by increases in cross-border attacks between Afghanistan and Pakistan. On Wednesday, hundreds of militants crossed from Afghanistan and attacked several border villages in Pakistan, triggering shootouts with local militias that killed at least five people, according to AP.
On Tuesday, at least 150 militants came from Pakistan and overran three border checkpoints in eastern Afghanistan near the border, killing at least 12 Afghan border policemen.
These acts are increasing tensions between Afghanistan and Pakistan. Afganistan is accusing Pakistan of intentionally firing rockets into Afghanistan, firing at militants. The accusations have been denied.
As tensions grow between Afghanistan and Pakistan, relations between the U.S. and Pakistan are in free fall. The U.S. has sharply reduced military aid to Pakistan, and the Pakistanis have thrown the Americans out of an airbase on Pakistani soil.
The concern is that Pakistan could, once and for all, cut off the land route used by American forces to bring food, fuel and equipment from Karachi harbor to Afghanistan. There was, in fact, a brief cutoff in September.
For that reason, the U.S. military is rapidly expanding its aerial and Central Asian supply routes to the war in Afghanistan, according to the Washington Post. The map at the beginning of this report shows the new routes.
From the point of view of Generational Dynamics, the Afghan counterinsurgency never had a chance of succeeding, largely because of the Pakistan connection. (See "30-Jun-11 News -- Terrorist bombing of Kabul hotel shows power of Haqqani network.") And anyway, in the end, the war in Afghanistan will be less important than the coming nuclear war between Pakistan and India.
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About 100 demonstrators in Karachi on Monday protested to denounce a gay rights event hosted last month by the U.S. embassy, calling the meeting "an assault on Pakistan's Islamic culture." According to one Islamic leader, "We condemn the American conspiracy to encourage bisexualism in our country. They have destroyed us physically, imposed the so-called war on terrorism on us and now they have unleashed cultural terrorism on us. This meeting shows cruel America has unleashed a storm of immoral values on our great Islamic values, which we'll resist at all costs." AFP
Some parliamentarians are carrying guns into Afghanistan's parliament, after a special election court disqualified 62 lawmakers in the 349-seat parliament. One Tuesday, two female members of parliament got into a brawl (sorry, no pics). Pajhwok Afghan News and CNN
(Comments: For reader comments, questions and discussion,
see the 7-Jul-11 News -- Meltdown in US-Pakistan relations forces Afghan war changes
thread of the Generational Dynamics forum. Comments may be
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(7-Jul-2011)
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Distrust between China and India growing at an alarming rate
This morning's key headlines from GenerationalDynamics.com.
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Fighting is still going on in Libya. Rebels captured the town of al-Qawalish in western Libya from Gaddafi supporters after a six hour battle. The rebels hope to cut off the road to Tripoli that carries Gaddafi's supplies. Al-Jazeera
The plan put forth as the "French plan" to bail out Greece is being called "illusory" by the Dutch finance minister because no investor will volutarily share in the costs of a bailout, and any involuntary sharing would push Greece into "selected default." Prices on credit default swaps (CDSs) for Portugal's government debt skyrocketed on Wednesday, indicating that investors expect Portugal to follow the same insolvency path as Greece. Guardian
At the global level, the rhetoric between India and China is all about cooperation, and indeed the two sides have worked together on climate change, global trade negotiations and demanding a restructuring of global financial institutions in view of the global economy’s shifting center of gravity. But at the bilateral level, tensions are mounting, and the potential for military conflict is high, especially over boundary issues. Foreign Policy Research Institute (FPRI)
Prime Minister Salam Fayyad announced on Wednesday that a severe financial crisis faced by the Palestinian Authority will force the government to pay its civil servants only half of their salaries. The crisis is coming about because international donors, many of them Arab, are failing to meet their commitments to the PA. PA Secretary-General Yasser Abed Rabbo said that the Palestinians were surprised by the Arab countries’ failure to assist them. "The situation has become very complicated for the Palestinian Authority because of the failure of the Arab countries to fulfill their financial promises. This is regretful." Jerusalem Post
Unauthorized ordination of a Catholic bishop in China will result in "automatic excommunication" of that bishop. Seven previously ordained bishops participated in the new ordination, and it's under debate whether they should be excommunicated as well for participating. These seven bishops have clearly violated Vatican law, but there are mitigating circumstances, for example, "when the individual committing the offence of ordaining or being ordained, is constrained to do so through great fear, even if this is only relative, or through necessity or great trouble." Vatican Insider
There are 50,000 American troops stationed in Japan. There are more in South Korea. They're all there to keep the peace. People all over the world have benefited from U.S. military presence that has provided stability that has rarely been seen in history. President Obama wants to pull back from those overseas commitments, and use the money to rebuild our own nation, here at home. But there is no one else in the world that can replace America's unique leadership in providing world security. Time
Analysts have been predicting a "V-shaped recovery" for three years, and in particular they've been predicting that the credit freeze that began in 2007 would finally begin to thaw in 2011. Instead, borrowing has only gotten worse. Large companies are successful in securing large bank loans, but loans to small businesses plummeted 10% below their already low levels last year. Wall Street Journal (Access)
Here's a weird fact. People called Dennis are disproportionately likely to become dentists, and people called Lawrence are more likely to become lawyers. Guardian
(Comments: For reader comments, questions and discussion,
see the 7-Jul-11 News -- Meltdown in US-Pakistan relations forces Afghan war changes
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(7-Jul-2011)
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Anti-immigrant xenophobia growing around the world
Denmark began on Tuesday to station 50 new customs agents on the country's borders with Germany and Sweden, to implement the new "permanent border control" law that the parliament had passed on Friday by a single vote (90 to 89). The will perform spot checks on vehicles arriving from neighboring countries, according to the Copenhagen Post.
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The new law was demanded by the right-wing populist Danish People’s Party (DPP) and, according to DPP leader Pia Kjærsgaard, designed to keep out “criminals from Eastern Europe and illegal economic migrants," according to CS Monitor.
As we wrote when the law was being considered (see "13-May-11 News -- Europe's immigration crisis strikes at heart of European Union"), this situation is considered to be a major crisis for Europe. The law appears to violate a 1995 agreement called the "Schengen Agreement," signed by the EU nations, guaranteeing an "open border" policy among EU nations. The agreement to permit free travel between EU countries for the first time in history was considered to be of historical importance, and now that it's being rolled back, there's fear that the entire European project is being rolled back.
A German politician is infuriating Danes by suggesting that retaliate against Denmark for the law by boycotting Denmark in their vacation plans, according to Spiegel:
"If Denmark reintroduces border controls during the vacation season, I can only advise people to turn around and go on vacation in Austria or Poland. Freedom of travel is one of Europe's most visible achievements. Those who assail it ... are carving away at the European idea."
Danish officials say that the purpose of the new law is to fight organized crime, human trafficking and the drugs trade, and so it does not contradict EU law. Danish customs officer Orla Olesen said: "Illegal immigrants aren't our highest priority. The human-smuggler at the wheel with four immigrants is as interesting to us as a drunk driver, but of course we also then intervene."
According to an analysis in Spiegel, right-wing nationalism is growing in Europe, and it's possible that "Europe is crumbling":
"But something has changed fundamentally since the 1990s. Europe's nations are no longer ruled by dyed-in-the-wool champions of the European project like Helmut Kohl, François Mitterand or Felipe Gonzales, but by cool and calculating politicians like Angela Merkel or political egocentrics such as Nicolas Sarkozy. The main difference between these politicians and the right-wing populists is in ther methods: Whereas the populists openly proclaim their desire to exit the EU, the others are eliminating the political union bit by bit."
From the point of view of Generational Dynamics, this is exactly what happens in a generational Crisis era. The survivors of the previous crisis war (WW II) understand the dangers of xenophobia that lead to discrimination and harsh immigration laws. That's why the Schengen agreement was so important to WW II survivors like like Helmut Kohl, François Mitterand or Felipe Gonzales. As the survivors of the previous crisis war retire and die off, the younger generations become more xenophobic again, and that leads to a new crisis war.
Europe isn't the only place that this kind of anti-immigrant xenophobia is growing. According to an analysis last October in CS Monitor, countries around the world are pursuing tough immigration polices on a scale rarely seen in history. The article points to increasing anti-immigrant policies of one kind or another in Sweden, France, Britain, Netherlands and other countries.
According to the article, the most vociferous immigration debate anywhere is in America on the border with Mexico:
"The first reason is that the actual number of undocumented workers relative to the population is much higher [in the US] than in most European countries," says Jonathan Chaloff, an analyst with the international migration division of the Paris-based Organization for Economic Cooperation and Development (OECD). "The second reason is that the economic downturn has made it more of an issue. In European countries with large undocumented populations, there is a relatively high employment rate among the undocumented, and no perception of competition with natives, while in the US there's a perception that the undocumented are not employed or are unfairly competing."
The article also points out that: Just as Americans want Mexicans out, Mexicans, who might be tolerant of their country as a passageway north to the United States, have no patience with the undocumented Guatemalans and Hondurans increasingly falling short of their destinations.
Denmark's new border controls are just one sign that anti-immigrant xenophobia is growing around the world, and it will continue to grow until it is resolved by a world war.
(Comments: For reader comments, questions and discussion,
see the 6-Jul-11 News -- Denmark's border controls called a 'European crisis'
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(6-Jul-2011)
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Iran's Bahrain defeat is a seminal event in Sunni/Shia relations
This morning's key headlines from GenerationalDynamics.com.
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Another potential problem for the EU's plans to bail out Greece arose on Tuesday as Germany's Constitutional Court began hearings on the legality of Germany's involvement in bailouts for Greece and other eurozone countries. The critics are arguing that Germany's involvement in the debt rescue plan violates the German Constitution by undercutting parliament's rights to review and determine the national budget. An adverse ruling would mean that any further bailouts would require approval by Germany's parliament, which is unlikely, given the German public's growing hostility to the "profligate Greeks." AFP
Moody's Investors Service cut Portugal's credit rating to below investment grade on Tuesday, and said that there may be further ratings downgrades. One reason given for the move is the "contagion" from the Greek crisis. Bloomberg
When anti-government protests began in Bahrain, Saudi Arabia send troops into Bahrain and, in doing so, was able to force Bahrain to remain under Sunni rule, despite its majority Shia population. In fact, Saudi Arabia was extremely aggressive in its anti-Iran rhetoric, while Iran handled the situation with great passivity. This is just one of several recent events that expose Iran's weaknesses. These include the uprisings in Syria, and post-revolutionary Egypt's refusal to renew relations with Iran. Memri
For decades, Germany has refused to sell battle tanks to Saudi Arabia and other Arab states because of its historical obligation towards Israel and its policy of prohibiting the sale of weapons to crisis regions. But now the government has approved the sale of up to 200 advanced "Leopard" tanks to Saudi Arabia, outraging opposition parties in Berlin. Spiegel
The expected assault on Hama by Syria's security forces reached maximum impact on Tuesday, as security forces cut off electricity and water and shot people indiscriminately in the streets. When tanks and armored vehicles approached the edges of the city early on Tuesday, hundreds of youths blocked roads leading to residential neighborhoods with garbage containers, wood and metal to try to prevent a possible advance. By evening, security forces had broken through the roadblocks, and are conducting arrests. Al-Jazeera
Anne Sinclair, Dominique Strauss-Kahn's wife, is hinting that she might exact revenge against "those who spit in our face." The statement was texted to friends shortly after DSK was freed from house arrest because her rape accuser, Nafissatou Diallo, had been found to have lied repeatedly. Sinclair has continued to express her love for him, even after he's apologized for past indiscretions. "Dominique is her passion, her family, her life," according to one observer. NY Daily News
An extremely severe drought has created millions of refugees, as they travel to find food and water. The humanitarian agency ActionAid is appealing for nearly $2.5 million for its relief operations in Kenya and elsewhere in East Africa. VOA
(Comments: For reader comments, questions and discussion,
see the 6-Jul-11 News -- Denmark's border controls called a 'European crisis'
thread of the Generational Dynamics forum. Comments may be
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(6-Jul-2011)
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An immovable object meets an irresistible force
Standard & Poor's rating service on Monday said that the bailout proposal by French banks (the so-called French Model) would prompt a "selective default" rating on Greek debt, according to Bloomberg, effectively sinking the plan. (We're not talking about the 3-month bailout that we reported yesterday. We're talking about the follow-on 120 billion euro bailout, to cover Greece's debt payments through the end of 2013.)
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The S&P statement should hardly be a surprise to anyone. As I've written in the past, the assumptions of the French Model are inherently contradictory. The Europeans don't want taxpayers to bear the entire cost of the bailout. So they want investors to share in the bailout. But they don't want to force investors to share in the bailout, since that would force a default on Greece's debt. So they want the sharing to be "voluntary." But no investor would "voluntarily" lose money, so the whole idea is contradictory and impossible.
A European financial analyst that I heard on al-Jazeera on Monday said that the Europeans are absolutely furious that the S&P is torpedoing the European plan. "What right do Americans have to overrule the European government?" was being asked by unnamed European officials, along with unspecified threats against S&P.
None of the analysts I heard on any channel claimed that the rating statement was wrong. There was simply anger that S&P had told the truth. Thus, the unspecified threats amount the extortion to force S&P to commit fraud. Extortion and fraud are the norm today, especially in Europe.
S&P has good reason to be honest about its rating of the French Model. In the years up to 2007, Citibank, JP Morgan and other investment banks created and sold extremely complex CDOs and other synthetic securities that are mathematically provable as fraudulent. Nonetheless, S&P was bribed and extorted by the investment banks to give them AAA ratings, thus committing fraud. Extortion and fraud have been the norm for a number of years now.
But having committed fraud for so many years, and being blamed for a major part of the financial crisis, S&P now is not going to be too eager to commit fraud again, especially with the intense scrutiny going on today.
One of the most widely respected European analysts is Wolfgang Münchau, associate editor of the Financial Times. In a weekend column (Access), Münchau made a blistering attack on the French plan.
He accuses the European politicians of purposely making the French plan as complex as possible -- as complex as a CDO -- in order "to obfuscate facts and circumvent rules." He summarizes the plan, and says:
"If this was any other field of human activity, you would go to jail if you accepted, let alone made such an indecent offer. ... All there is, is this dirty little con-trick. The complexity of the scheme is due to the need to persuade the rating agencies not to attach a default rating to Greek bonds.The rollover agreement represents, from an economic point of view, nothing but a collateralised bond. It subordinates all other bondholders. The rating agencies would normally not hesitate to attach a default rating to Greek government debt.
So the solution is to create a complex structure, and claim that it is technically not a collateralised bond, but something that defies definition.
Just why the Greeks would want to accept such a ruinous deal is not clear to me. ...
We have learnt from the financial crisis that one should not place too much faith in financial vehicles with three-letter acronyms. But that is what we are doing with this European equivalent of a late-period subprime mortgage CDO.
We are not just “kicking” any old “can down the road” any more. This is a can of explosives."
Münchau wrote this column before the S&P downgrade, and as he suggested, "rating agencies [did] not hesitate to attach a default rating to Greek government debt."
In order to get its 3-month bailout on Sunday, Greece's parliament had to approve harsh austerity measures, including the privatization of state-owned companies on a massive scale, requiring employees of these companies to lose their jobs or to take substantial pay cuts.
Nobody believes that Greece will do this on their own, and so the EU is threatening to 'massively limit' Greece's sovereignty, as we reported yesterday. The mechanism would be an external agency modeled on Germany's 'Treuhand agency' that sold off 14,000 East German firms between 1990 and 1994.
It is delusional to think that Greece's public sector labor unions will tolerate this without a great deal of violence. As one web site reader succinctly put it yesterday, "Greece will be happy to keep taking the money, but they have absolutely no desire (let alone ability) to pay any of it back. And if people think the Greeks are going to sit idly while Germany, the same people who invaded them during World War II, takes away their sovereignty from them, they're delusional."
The stakes are very high in Europe, and no one cares about anyone but himself. Fraud and extortion are the norm, and no one is safe.
On the one hand, you have the public sector labor unions, who are going to be asked to accept more and more job losses and salary cuts.
On the other hand, you have the donor countries - Germany, Finland, Slovakia and the Netherlands - who are going to be asked to give more and more to the debtor countries.
They'll try to "kick the can down the road" as much as they can, but already they're running out of options.
One of the great questions of philosophy is: What happens when an irresistible force meets an immovable object? We may be about to find out.
(Comments: For reader comments, questions and discussion,
see the 5-Jul-11 News -- EU bailout plan for Greece collapses, as fraud and extortion continue
thread of the Generational Dynamics forum. Comments may be
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(5-Jul-2011)
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China postpones sea trial of new aircraft carrier
This morning's key headlines from GenerationalDynamics.com.
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Well, apparently he fooled everyone. When Hugo Chávez gave his televised speech from Cuba on Thursday evening, looking sick as a pig and saying that he had cancer, it was apparently all theatre. On Monday morning he returned to Venezuela, a little thinner, but looking relatively OK. He indicated that he has a long battle ahead to fully recover. His Interior Minister added, "But that doesn't mean that the revolutionary government's actions will slacken." Reuters
Turkey seized control of Libyan bank assets Monday, one day after recognizing Libya's opposition in Benghazi as the country's legitimate government, in moves that effectively severed remaining ties to Col. Muammar Gaddafi. Wall Street Journal (Access)
As expected, Syria's tanks, troops and bulldozers on Monday swept into the city of Hama, beginning an assault on the city is known for having massacred civilians in 1982. At least three people were killed on Monday, including a 12-year-old boy, and dozens injured. LA Times
Hundreds of people gathered in downtown Chicago to support the anti-government movement in Syria and urge protesters there to continue their uprising against President Bashar Assad. Chicago Tribune
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China has postponed the sea trial of the Varyag aircraft carrier, originally purchased from Ukraine, and under refurbishment at the Port of Dalian. The official reason for the delay is mechanical problems, but it's also possible that tensions in the South China Sea played a part. Defence Web (S. Africa)
Conventional wisdom on China’s carrier plan suggests that the Chinese leadership did not put enough planning in personnel development, and therefore will face a lot of difficulties in operating a carrier group. A review of the training programs developed to cultivate the commanders for its aircraft carriers suggest an ambitious, meticulous and long-term strategy, however. Jamestown
(Comments: For reader comments, questions and discussion,
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(5-Jul-2011)
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America and the World in Recovery
Pete Schweizer has asked me, for Independence Day, to write something upbeat and optimistic. This is not an easy task for me, given that I'm the gloomiest person in the world.
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But in fact, I AM upbeat and optimistic about the 2020s. So, instead of talking about Independence Day 2011, let's go a decade into the future, to July 4, 2021, and look at the world then. This is speculative, but it's grounded in generational theory.
Let's start with some optimistic assumptions. We have no way of predicting whether America will survive the coming world war and world financial meltdown. So let's assume that America survives, and let's go even farther -- let's assume that America "wins" (whatever that means) the world war.
July 4, 2021, will be a day of jubilation for Americans. We will have beaten the financial crisis and we will have, once again, defeated an enemy that wanted to destroy us. Once again, we will have proven American exceptionalism. There will be joyous parades of war veterans, as the country as a whole cheers, along with President Doe who welcomes the veterans back home and thanks them.
But, as President Doe says, there's much work to be done. Hundreds of cities around the nation and around the world contain large "dead zones," where radioactive contamination makes them unliveable. Bridges, trains, and other infrastructure have been destroyed, making delivery of food to some populations almost impossible.
With over 2 billion people having been killed by disease, famine and war, there will be a new Green Revolution, to make sure that no one ever starves again.
These are all job opportunities. Unlike the 2000s decade, when the economy was contracting and growth was impossible, in the 2020s there are plenty of jobs, and the economy is exploding with growth. America establishes a new Marshall Plan, and sets out to rebuild America and the world.
During the war, super-intelligent robots will be used to kill people. At first, they will be under direct control of humans, but by the end of the war, there will be thousands of these robots making their own "shoot to kill" decisions, based on software algorithms programmed in to them.
By July 4, 2021, these robots will be repurposed for Recovery. They'll be able to remediate radioactive waste sites that would be deadly for a human. They'll be able to do many of the tedious, repetitious chores involved in anything from rebuilding a home to harvesting crops.
Special attention will be given to medical care. Returning veterans will be fitted with "intelligent prosthetics" that work better than their former limbs. Sick people will have "intelligent nursemaids" available for 24 hours a day. A lot more medical care will be possible in the home, essentially providing each family with a full-time doctor/nurse at home.
It's quite possible that President Obama will get the credit for universal health care. The current "Obamacare" plan is economically disastrous, and will not be implemented, as I've previously described. However, once the war ends, the health care issue will be revived. Universal health care will finally be possible, thanks to the new technology described in the last paragraph. The result may (or may not) be credited to Obama or his successor.
Issues that fill the news today will have become irrelevant. New technology will resolve the climate change issue, for example.
The dollar, by virtue of its position as the world's major reserve currency, will most likely still be the strongest currency in the world. Other currencies likely to do well are the pound sterling and the yen. Many other currencies, including the euro and the yuan, will most likely be ravaged by hyperinflation.
After falling for almost 15 years, housing prices will start to rise again. The stock market, having crashed to Dow 2000, will finally start its long recovery.
Europe will have been torn apart by the war, and will decide to apply "lessons learned" from the first attempt at a European Union. They'll try again, and this time the EU will be much more cohesive, possibly very similar to the United States.
There will be an NUN -- a New United Nations, with a new organizational structure. The NUN will attempt to resolve the issues revolving around the world's most dangerous regions, and the results will depend on who wins in each region.
Thus, whether Israel will survive as a Jewish state will depend not only on whether it survives the war, but also whether the world blames the Jews or the Arabs for the problems of the Mideast. The future of Kashmir/Jammu and the future of Taiwan will be decided, based on the political sensibilities of the time, and the aftermath of the nuclear war between India and Pakistan.
In regions around the world, the NUN will redraw country boundaries with only one objective in mind: To guarantee peace for as long as possible.
The bickering and divisiveness of the 2000s decade will be gone, and the country will be fully unified for the first time since the end of World War II. As in the 1950s, women who earlier had faced starvation and homelessness, possibly becoming refugees when nuclear missiles attack their home towns, will consider staying at home and taking care of the kids to be a gift from heaven.
Something like the Great Band Era will return. Your iPad of the 2020s will carry in its memory every musical recording ever made, and so live music will become the most valuable form of entertainment. Even though new movies will be available on home entertainment centers, movie theatres will still be around for dates, or just to get out of the house.
However, the villains of the country and the world will be clearly and unambiguously identified, as in the Nazis of WW II. In business, the bankers seem to dig themselves deeper and deeper every day towards being the most hated group in the world.
The 2020s will be a jubilant time for America, but the 2030s will present new challenges. In particular, that will be the time of the Singularity -- the point in time when computers become more intelligent than humans and start improving themselves rapidly. The Singularity may be the greatest boon to humanity, or the greatest disaster. It could go either way, and there's no way to predict.
Happy Independence Day, everyone!
(Comments: For reader comments, questions and discussion,
see the 4-Jul-11 News -- Independence Day, 2021
thread of the Generational Dynamics forum. Comments may be
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EU threatens to 'massively limit' Greece's sovereignty
This morning's key headlines from GenerationalDynamics.com.
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Yingluck Shinawatra led her Pheu Thai ("For Thais") to a decisive victory in Sunday's elections, making it all but certain that she will be the next prime minister of Thailand, and Thailand's first female prime minister. ( "Thailand's Yingluck promises to use 'femininity' to resolve disputes") She ran a brilliant marketing campaign, with every step scripted by advisors, especially her older brother, Thaksin, living in self-imposed exile in Dubai. Now the only problem left is for her to deal with Thailand's growing ethnic conflicts, Thailand's growing public debt, and the army that overthrew Thaksin in a coup just five years ago. Bangkok Post
Because the Greek parliament approved a harsh austerity plan on Wednesday, European finance ministers authorized an 8.7 billion euro loan payment to Greece by mid-July, just in time for Greece to pay some very sizeable bills that will be coming due. Another 3.1 billion euros will be provided by the IMF. The money will be enough to get Greece through September. In the meantime, the EU will be trying to figure out to approve an additional 110 billion euro bailout to get Greece through 2013, even though everyone "knows" that Greece will never pay the money back. However, before that happens, Greece will have to start implementing its harsh austerity plan, including privatization of public utilities. Bloomberg
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Now that Greece has theoretically approved the austerity measures, the EU is pressuring Greece to implement them as quickly as possible. German Finance Minister Wolfgang Schäuble said that Greece must not lose momentum in pushing through crucial reforms:
"The next step must be tackled decisively - the measures passed in Athens have to be quickly implemented. The privatizations, for example, have to be started without delay."
But the statement that's infuriating Greece's public sector unions is the one by Jean-Claude Juncker, chairman of the Eurogroup finance ministers, saying that Greece must accept severe restrictions on its sovereignty:
"The sovereignty of Greece will be massively limited. For the forthcoming wave of privatizations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the eurozone."
This is the European version of "I'm from the government, and I'm here to help you." Germany's "Treuhand Agency" sold off 14,000 East German firms between 1990 and 1994, after the Berlin Wall fell and East and West Germany were reunited. Kathimerini and Reuters
Army tanks are being deployed around the city of Hama, which saw a huge protest Friday against President Bashar al-Assad. People are being arrested and shot in preparation for the assault. Security forces killed at least 60 protesters in the city a month ago, by firing on crowds of demonstrators. Hama was the site of a huge massacre by security forces of Assad's father. Turkey has warned Assad against repeating "another Hama." Telegraph
Sharia compliant banks are not permitted to pay or charge interest ("riba"), because it's forbidden under Islamic law. But Islamic banking (or "participation banking") uses different mechanisms. For examples, money from customers' savings accounts is invested in real estate or industry, and profit and loss is shared with the customer. Instead of a car loan, the bank buys the car and sells it to the customer in installments. Currently, 5% of deposits, assets and loans in Turkey are held by participation banks, and that figure is expected to grow. Southeast Europe Times
Prime Minister Recep Tayyip Erdogan's victory in June 12 elections makes him Turkey's most powerful leader since Kemal Ataturk, the founder of Turkey. Erdogan's style has been described as authoritarian, with a vindictive streak. However, Turkey faces serious problem. One is the portential war on his border with Syria. Another is skyrocketing public debt and unemployment -- 9.5% unemployment rate, 19.3% for Turkish youth. Foreign Policy Research Institute
Turkey has now completely reversed its position from when the Nato military intervention into Libya began. At that time, Nato opposed the military action, and was supporting Libyan leader Muammar Gaddafi. But on Sunday, Turkey's Foreign Minister Ahmet Davutoglu recognized the rebel Transitional National Council as the legitimate representative of the Libyan people. Davutoglu also said that Turkey will provide another $200 million in aid, adding to the $100 million fund previously announced. VOA
Israeli and Palestinian security forces are taking precautions to avoid an outbreak of violence after an expected U.N. vote for Palestinian independence in September. AP
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Researchers at the University of Paris Ouest Nanterre La Défense have discovered that wild, untrained pigeons can recognize individual people's faces, and are not fooled by a change of clothes. They theorize that this recognition ability may have come about over the long period of association with humans, from early domestication to many years of living in cities. Live Science
For techies: Stuxnet is the virus that targeted an Iranian nuclear processing station, and destroyed about 1,000 centrifuges used in uranium separation. This article describes how Stuxnet works, and how it was discovered. Read Write Web
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Leading the struggle for socialism
When Venezuelan president Hugo Chavez, in Cuba for an operation, gave a pre-recorded TV address on Thursday evening to announce that he had cancer, said that he was fine, and that he was still running the country as a long-distance president. In a phone call on Friday, he was so optimistic that he said that his illness would "strengthen" him, according to Bloomberg.
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Chavez didn't say what kind of cancer he had, or at what stage, but doctors consulted by the Miami Herald agree that from the few details Chávez shared, he most likely has colon cancer and could face treatment for the next eight to nine months.
“What struck me is that at one point during his announcement, he misspoke and said ‘evolution’ instead of ‘evaluation.’ He corrected himself, but it was odd that in a video that was so staged — complete with props of the Venezuelan flag and a painting of Simon Bolivar — they did not do a retake,” said Douglas Leon, president of the Venezuelan Medical Federation. “What does that say? To me, it says he can only stand up for about 20 minutes, and they couldn’t let him stand for the time it would take to do it over.”
The shock announcement has put Venezuelan politics into turmoil as the 2012 presidential election approaches. If and when Chavez returns to Venezuela, the country will be in considerably worse shape than it was when he left it, according to Financial Times (Access). With Chavez convalescing, there are serious problems that are likely to fall by the wayside -- a housing shortage, violence in overcrowded prisons, and electrical blackouts across the country.
Venezuela's politics is largely dependent on Chavez's personality and personal relationships, and those relationships will suffer if Chavez is forced to leave office.
China, for example, signed a huge oil deal with Venezuela in 2009, according to the BBC.
But the greatest effect of the disappearance of Chavez, if it occurs, would be on Cuba itself. When Chavez came to power in 1999, Cuba's economy was in tatters, after losing the East bloc support it depended on for three decades, according to AFP.
Cuba's cooperation with Venezuela generates about $6 billion a year for Cuba, its top source of income. Venezuela is invovled in Cuban projects big and small, in oil, fiber optic cable, food supplies, technology, transportation and tourism.
Venezuela provides 100,000 barrles of oil per day to Cuba, for little or no cost, and in return, Cuba sends almost 40,000 teachers and doctors to Venezuela - who don't always get paid.
The relationship between Venezuela and Cuba is not seen by Chavez as a purely commercial one. Chavez sees himself in the role of defeating capitalism and bringing back socialism, after the breakup of the Soviet Union. According to VenezuelAnalysis:
"The most advanced political struggles in the world today are taking place in Latin America, specifically in Cuba and Venezuela where forces representing the working class have conquered state power, broken with imperialism and continue to consolidate their own revolutions and assist the leftward advance across the continent.Socialists should wholly identify with the leadership of the Cuban revolution, with Fidel Castro in particular, and with Hugo Chávez in Venezuela which are leaderships that seek to represent the interests of the working class and oppressed worldwide.
First upturn in world politics for 30 years
The advance of the class struggle in Latin America over the past decade was the first indication of an up-turn in the world political situation after the 1990s period of retreat following the destruction of the Soviet Union, the advance of capitalism into Eastern Europe and in Latin America including the defeat of the Nicaraguan revolution."
I always feel that statements like these are really pathetic because, putting on my mathematician's hat, it's easy to prove from the mathematics of complexity theory that socialism becomes mathematically impossible as population increases. You can prove that enforcement of socialist policies eventually requires the entire population to become bureaucrats, so that there is no new production. That's why countries like Cuba and North Korea, and Eastern Europe before the collapse of the Soviet Union, were stuck in the 1950s. It's literally mathematically impossible for socialism to work.
That's also why China gave up pure socialism several decades ago. It's also why Cuba itself is changing policies and will permit the buying and selling of homes and automobiles as personal property before the end of 2011, according to Ahora (Cuba).
But Chavez isn't being defeated by the mathematics of complexity theory. Chavez is being defeated by cancer, the great leveler of socialists and capitalists alike. Unless the Cubans find a way to completely cure him, Chavez's dream of leading the world into a new, glorious era of socialism is not going to occur.
(Comments: For reader comments, questions and discussion,
see the 3-Jul-11 News -- From Cuba to China, people worry about demise of Venezuela's Chavez
thread of the Generational Dynamics forum. Comments may be
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(3-Jul-2011)
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Kim Jong-il's brother under house arrest in North Korea
This morning's key headlines from GenerationalDynamics.com.
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A growing strategic relationship between President Obama and Turkey's Prime Minister Recep Tayyip Erdogan is a major factor in the near collapse of "Freedom Flotilla II," the plan by pro-Palestinian activists to send 1500 activists on 10 ships to Gaza, to break Israel's naval blockade. Another factor is the growing strategic relationship between Israel and Greece, brought together by the common tensions with Turkey. The result, today, is a new US-Turkish alliance, along with Israel and Greece, that will oppose the Palestinians' plan for UN recognition of a Palestinian state in December. Debka
China's president Hu Jintao gave a speech on Friday to mark the 90th anniversary of the Communist party. Speaking to thousands of party officials at the Great Hall of the People in Beijing, Hu urged the party to fight corruption and create what he described as a clean government. He warned that acts of corruption by party members who hold political office could cause the public to lose trust. VOA
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You can't make this stuff up. Kim Pyong-il, the half-brother of North Korean dictator Kim Jong-il, has been held in house arrest since he returned in May from Poland, where he serves as ambassador. His crime? He looks too much like his father, the revered Kim Il-sung, who founded North Korea. The problem, it seems, is that the heir-apparent to dictatorship throne is Kim Jong-il's son, Kim Jong-un, and Kim Jong-un is himself cultivating the appearance of his grandfather. Chosun
North Korea's state-run Central News Agency (KCNA) and Associated Press signed a series of pacts that will allow AP to base text and photo jouranlists in the North Korean capital, Pyongyang. North Korea has no diplomatic relations with the U.S. Yonhap
With Yemen's president Ali Abdullah Saleh still being treated in a Saudi Arabia hospital for injuries incurred in a June 3 assassination attempt, both government and opposition forces are vying for the allegiance of the nation's tribal grouping. Al-Qaeda on the Arabian Peninsula (AQAP) is trying to take advantage of the political chaos by stepping up its armed activities, and by the publication of a new book urging Yemen's tribes to join the jihad movement and AQAP. Jamestown
(Comments: For reader comments, questions and discussion,
see the 3-Jul-11 News -- From Cuba to China, people worry about demise of Venezuela's Chavez
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(3-Jul-2011)
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The sad case of Susan Estrich
Dominique Strauss-Kahn (DSK) was released from jail on his own recognizance on Friday, after being jailed and confined for six weeks, thanks to sexual assault charges by a chambermaid. However, now the prosecutor, Cyrus Vance, is indicating that the accuser, a Guinean woman named Nafissatou Diallo, has lied repeatedly, and has even fabricated previous assault claims.
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Until recently, Strauss-Kahn was worldwide head of the International Monetary Fund (IMF) and the leading challenger to run against Nicolas Sarkozy in next year's presidential election in France. The sexual assault allegations, which now appear to be have been fabricated, have cost him his job and probably his political career as well.
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The case is reminiscent of the "Duke Lacrosse rape case." In 2006, a black woman claimed that several members of the Duke College lacrosse team had raped her. District attorney Mike Nifong kept pursuing criminal charges against the team, for months after he knew for a fact that the alleged attack had never occurred. (See "Collapse of Duke rape case represents cultural change")
Strauss-Kahn prosecutor Cyrus Vance might have been tempted to try the same thing, rather than defy his feminist masters and let a man falsely accused of rape go free. But he's certainly aware that Nifong ended up being disbarred for his behavior, and Vance may have felt that he had to do the right thing just to save his own skin.
Research by the Innocence Project has shown that some 5-7% of all rape accusations are fabricated.
Women who make false accusations of rape often have a motive of revenge, but not always. Historically, the most well-known false accusations of rape occurred in the 70 years following the Civil War. A white woman would accuse a black male of raping her, and the black male would be lynched, and that would be that.
Diallo's motive was probably not a high-tech lynching of Strauss-Kahn, but more likely pure money. The prosecutor Vance said that a day after the alleged rape, Diallo spoke to a drug dealer in prison for advice on maximizing her monetary gain. The conversation had been recorded.
Diallo may have been dreaming of a reaching a multi-million dollar settlement with Strauss-Kahn and living the easy life. Diallo's lawyer, Kenneth Thompson, was certainly looking for his share of that settlement. He was obviously furious at losing all that money as he ranted on the courthouse steps on Friday that Vance was afraid to prosecute the case.
Diallo is reportedly planning to come forward soon and tell her story to the world.
The story that Diallo told never made sense to me. According to Diallo, she wasn't supposed to clean a suite while the guest was still in it, but she entered because she thought it was empty. By that logic, she should have left the suite as soon as she heard any noise. But her story is that nude Strauss-Kahn opened the bathroom door, rushed over to her, threw her on the floor and raped her. I'm sorry, I don't buy it, not unless he was drunk or on drugs. Strauss-Kahn has a reputation as a womanizer, but no reputation for violence.
Strauss-Kahn says that any sex that occurred was consensual, and that's credible to me -- not because a pretty, young girl would be attracted to an elderly Strauss-Kahn, but because he may well have paid her. So you can blame Strauss-Kahn for stupidity, but the rape claims are not credible to me.
They should have lacked credibility to Vance as well. On the one hand, you have a single girl, a mother, who was highly motivated to make money any way she could, and on the other hand you have a world leader about to leave for the airport for a meeting next day in Berlin on saving the euro. And oh, by the way, he decided to beat the shit out of some girl before heading out. Based on the facts that were available at the time, the preponderance of evidence has always been on Strauss-Kahn's side, not on Diallo's.
Barring some incriminating revelation, it now appears that the charges against Strauss-Kahn will soon be dropped, probably at his next court appearance on July 18. In France, the question on everyone's lips is: Will he now run for President as the Socialist Party candidate against Nicolas Sarkozy?
In order for that to happen, he would have to apply to run in the primary by July 13. Members of the Socialist Party are feeling "intense relief" at the news of his release, and are considering extending the July 13 deadline for him, according to Le Monde (rough translation):
"The surprise release of Dominique Strauss-Kahn, following a brief court hearing ... has provoked many reactions with the Socialist Party to the idea, suggested by some, of an incredible return to politics next year in the presidential election.François Hollande has said he had "no reservations against the idea to postpone the closing date for applications", originally scheduled July 13, after the release on parole of Dominique Strauss-Kahn. If DSK was cleared at the next hearing, July 18, this would allow it "to have the freedom to make a decision" in relation to the primary, said Mr. Holland, in "late July or even late August."
Less enthusiastic about changing the calendar, Arnaud Montebourg, himself a candidate for the Socialist primary, believes instead that the terms and timing of the primary "have, as is, no reason to change" .
"The release of Dominique Strauss-Kahn on his own recognizance is important news for him, his wife, Anne Sinclair , and his family. [...] The Socialists, for their part, must continue to chart their route to the victory of the left in 2012 to build all of New France."
However, most commentators are saying that Strauss-Kahn's political career has been irrevocably damaged, and that the most that he might hope for is to be finance minister in the cabinet of the next Socialist Party president.
On the other hand, there's been a lot of sympathy for Strauss-Kahn in France ever since this incident occurred. The French were appalled at the humiliating treatment he was given before he was even given a trial, let alone found guilty. A poll showed most French people thought that the whole thing was a setup, and now that he's been released, that view appears to have been confirmed.
For feminists, rape isn't about women -- it's about money and power. That was never so apparent as in the sad case of Democratic Party strategist Susan Estrich.
In 1988, Estrich became national campaign chairman for Mike Dukakis' presidential bid. A year earlier, she had written a book called "Real Rape," where she described in highly personal terms how she had been raped in 1974. Through the 80s, Estrich devoted her life to being a rape victim advocate, and was devoted to their cause under the claim that no woman would ever lie about being raped.
I wrote a lot about gender issues in the 1990s, and read Estrich's book, and frankly found it impressive. I'm not saying that I ever bought into the whole feminist package about rape, but I did wonder if it was more of a problem than I had previously assumed.
Then in 1996 along came Paula Jones and her charges of sexual harassment at President Bill Clinton. Estrich became Clinton's principal defender, saying that even if Clinton was a harasser, defending him was the greater good, because Clinton is pro-woman. "You believe in principle. I believe in politics," she was quoted as saying to someone who disagreed with her.
(By the way, VP Al Gore was quoted as saying, "Most people are getting sick and tired of women coming out of nowhere and making unsupported sexual charges.")
Then along came Juanita Broaddrick, who credibly charged Clinton with having raped her. And who did I see on TV? There was Susan Estrich, the author of the book I had read, saying that maybe Juanita Broaddrick was lying about having been assaulted and raped, and women do indeed lie about being raped. And we really shouldn't take Juanita Broaddrick too seriously. I was ready to throw up. Here was someone, Susan Estrich, whom I liked and whose opinion I relied on, someone who was credible and likable, and who had impressed me with her story. And there she was, literally selling herself out to the Democratic party establishment. Other feminists did exactly the same thing. Later news stories indicated that the National Organization for Women (NOW) was paid off by the Clinton administration to keep quiet about the rape charges.
I quite honestly don't see how Susan Estrich can live with herself. She completely sold herself out as a woman and as a rape victim, and she sold out possibly thousands more women who had been raped and looked to her as a role model.
We might ask how many additional rapes have occurred because of Estrich's sellout? Apparently only Republicans can be rapists because they're "anti-woman," but Democrats can freely rape anyone they want, because they're "pro-woman," and the greater good is letting their rapes go unpunished. I guess that's why it's fun to be a Democrat. Or maybe Estrich was lying when she said she was raped in 1974. Who knows? Which story makes the most money?
Dominique Strauss-Kahn may be a Socialist, but he's obviously not a Democrat, since he was charged with rape. If he were an ordinary Republican without a lot of money, Cyrus Vance would have let him rot in jail forever, even if he knew that Diallo was lying. The only reason that Strauss-Kahn is getting past these charges is because he's wealthy enough (or, more accurately, his wife Anne Sinclair is wealthy enough) to hire high-priced lawyers and investigative teams.
(Comments: For reader comments, questions and discussion,
see the 2-Jul-11 News -- France's politics in turmoil from collapse of Strauss-Kahn rape case
thread of the Generational Dynamics forum. Comments may be
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(2-Jul-2011)
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Netherlands predicts problems if Libyan action not over by September
This morning's key headlines from GenerationalDynamics.com.
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The brutal acts of killing, torture and mutilation of peaceful protesters by Bashar al-Assad's security forces have not stopped more and more protests from occurring, especially after midday prayers on Fridays. On this Friday, possibly the biggest outpouring in over three months of angry protests occurred, as hundreds of thousands took to the streets in towns across Syria to demand an end of Assad's abuses. Two deaths were repored in Damascus, but the number of deaths in other cities could not be ascertained. Syrian activists say that more than 1,300 have been killed since the beginning, and at least 10,000 have been arrested. RFE/RL
Speaking at a meeting of the Community of Democracies in the Baltic state of Lithuania, US Secretary of State Hillary Clinton said:
" It doesn't appear that is coherent and consistent message coming from Syria. We know what they have to do, they must begin a genuine transition to democracy and allowing one meeting of the opposition in Damascus is not sufficient action toward achieving that goal. So I am disheartened by the recent reports of continued violence on the borders and in Aleppo, where demonstrators have been beaten, attacked with knives by government organized groups and security forces.It is absolutely clear, that Syrian Government is running out of time. There isn't any question about that. They are either going to allow a serious political process, that will include peaceful protests take place throughout Syria and engage a productive dialogue with members of the opposition and civil society, or they going continue to see increasingly organized resistance. We regret the loss of life and we regret the violence, but this choice is up to the Syrian Government. Right now we are looking for action, not words and we haven't seen enough of that."
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Foreign Minister Ahmet Davutoglu will go to Benghazi on Saturday to hold talks with Libya's rebel National Transitional Council (NTC), to prepare to protect Turkey's interests in Libyan if, at some point in the future, Libyan leader Muammar Gaddafi is overthrown and the humanitarian kinetic military action ends. Davutoglu sees the NTC as “a legal and credible representative” of the Libyan people, but he does not see it as the sole representative. Zaman
The Dutch defence minister Hans Hillen warned NATO allies on Wednesday against "mission creep" in Libya:
"I hope we will be finished by the end of September. If it's not finished by then, I think the debate will get higher and higher -- 'why didn't we finish until now', and 'what is the problem exactly', and 'why does everybody say give us three more weeks, three more months?'And then in November they say, 'well, just a couple of months' -- that's mission creep."
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A World on Fire: An Epic History of Two Nations Divided, by Amanda Foreman, shows how the American Civil War was not just a vicious struggle between the Unionist North and Confederate South but "neutral" Britain too. Telegraph
Iran has warned that it will stop shipments of crude oil to India in August, unless Indian refiners pay the $2 billion that they already owe to Iran. However, Traders and industry executives say that Iran won't really stop oil exports to India, because Iran will have difficulty finding another market that doesn't conflict with the West's sanctions. Wall Street Journal (Access)
Relations between France and its former colony, Algeria, have been strained for a number of years, although they cooperate in security cooperation related to the growing role of al-Qaeda in the Islamic Maghreb (AQIM) in Africa's Sahel. However, the rapprochement on that issue is being overshadowed by friction over the question of Libya and its future. France is demanding that Muammar Gaddafi step down, while Algeria wants to reach a political solution to the stalemate, based on the position taken by the African Union. Jamestown
Several ships in "Freedom Flotilla II," with plans to break Israel's blockade of Gaza, are being kept from leaving port in Greece by Greek coast guard officials. One ship, the Audacity of Hope, populated by U.S. activists, made a secretive attempt to leave port on Friday, but coast guard officials forced them to return to port. Canadian Press
(Comments: For reader comments, questions and discussion,
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The Royal Thai Army claims that it is neutral in Sunday's election
Thailand will hold an election on Sunday, and Yingluck Shinawatra, the leader of the Puea Thai ("For Thais") party has been gaining in the polls. The question on everyone's mind in Bangkok these days is this: If Puea Thai decisively wins the election, and Yingluck becomes Prime Minister, will the army stage a coup?
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Yingluck is the sister of Thaksin Shinawatra. Thaksin or his allies have won every Thai election in the past decade. Thaksin won landslide victoriess in 2001 and 2005, but was ousted in 2006 by a coup. Each time that an ally became Prime Minister, opposition leaders have found a way to force the winner from office, in one case because he had been the host of a televised cooking show. ( "Thailand government collapses, ending crippling riots from class war")
It's widely believed that the army hates Thaksin, and the problem appears to be what a Reuters analysis describes as "Thaksinomics."
Thaksinomics is basically a spending program that pumps billions of dollars into Thailand's rural economy, theoretically to stimulate consumption and create a Keynesian multiplier effect, according to the article. But critics say that it's simply pork-barrel politics, and that its promised results are unproven. Furthermore, the critics point out that household debt as a percentage of income is above 57%, but was below 50% in 2001.
There's plenty of racism involved. The "rural economy" refers to mostly to the the dark-skinned indigenous Thai-Thai majority laboring class, for whom Thaksin is a hero, and the spending is opposed by the élite fair-skinned market dominant minority Thai-Chinese class. ( "26-May-11 News -- Thailand election portends more ethnic clashes")
The Royal Thai Army is widely believed to be taking sides and trying to discredit Puea Thai. The Commander-in-Chief Prayuth Chan-ocha has occasionally made veiled threats of an army coup if Yingluck wins. However, on Thursday, Thailand's army chief sought to allay fears of a coup d'état, according to Reuters. He said that the military's stance on the election was strictly neutral, but that he would protect 83-year-old King Bhumibol Adulyadej from anyone showing disrepect to him, which is against the law.
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According to a BBC profile, has two degrees in politics - undergraduate from the northern city of Chiang Mai, her family's powerbase, and masters from Kentucky State University in the US. Until now, she has pursued a corporate career, with little experience in politics.
But she says she will use her attributes as a woman to promote national reconciliation:
I am ready to fight according to the rules and I ask for the opportunity to prove myself. I ask for your trust as you used to trust my brother. I will utilise my femininity to work fully for our country."
I can hardly wait to see how that works out.
(Comments: For reader comments, questions and discussion,
see the 1-Jul-11 News -- Thailand's Yingluck promises to use 'femininity' to resolve disputes
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Greece finds no buyers in 'fire sale' of national assets
This morning's key headlines from GenerationalDynamics.com.
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The U.S. is delaying the release of $500 million in the Coalition Support Fund (CSF) to Pakistan, and is threatening to cut off Pakistan's civil and military aid, apparently in retaliation for the crackdown against the "Central Investigation Agency (CIA)" network. Tribune (Pakistan)
Pakistan has order U.S. personnel to vacate Shamsi airbase, in a remote area of Western Pakistan. The airbase has been used for years to launch drone air strikes on militants in Pakistan's tribal areas. The Shamsi air base was closed apparently in retaliation for an American reduction in coalition support funds. Guardian
A Turkey's foreign ministry spokesman on Thursday denied a report appearing in a Kuwaiti newspaper that Turkish officials had told several Western countries that Turkey might launch a military operation in Syria's north to overthrow President Assad's regime. The spokesman said that the allegations "do not represent the truth whatsoever and it was obviously based on false reporting." Zaman
Villagers in Syria's Idlib province saw helicopters sweeping in, dropping commandoes into the area from ropes Thursday morning. The commandoes opened fire and killed at least two civilians as the military advanced through a series of villages. Tanks and helicopters also bombarded ancient Byzantine ruins in Al Bara. Al Bara is the site of a famous "dead city," a destination for tourists fascinated by fifth-century Byzantine churches, monasteries, and an iconic, fully intact pyramid-shaped burial chamber. CNN
A Kuwaiti newspaper reports that Israel has warned Syrian President Bashar Al-Assad that if he will be targeted if he tries to start a war with Israel, to take the glare off his brutal suppression of the uprising in his country. Israel has not commented on the report. Israel National News
Hoping to raise 50 billion euros, representatives in Greece's government were at Claridge's hotel in Athens to drum up international investors' interest in a "fire sale" of its national assets. Up for sale are 39 airports, 850 ports, railways, motorways, sewage works, a couple of energy companies, banks, defence groups, thousands of acres of land for development, casinos and Greece's national lottery. Investors came and looked, but did not buy, put off by bureaucracy, strong unions, corruption and a lack of transparency. Said one investor, "Even in the good times Greece is not a country that attracts investment. Foreign investors don't want to invest in a country where there is no flexibility in hiring and firing people. You don't want to invest in a country in which you wake up and a new law has been passed which totally undermines and destroys the value of the investment you've just made." Guardian
The level of violence between far-right and far-left groups in Berlin has been escalating. Last weekend, five different arson attacks were reported against left-wing organizations in Berlin. The wave of arson was apparently motivated by revenge, following several attacks within the past week on far-right politicians on the streets of Berlin, with weapons ranging from water balloons to glass bottles. Spiegel
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A new report from Symantec says that global spam is at its lowest levels since 2008. However, the report indicates that quantity has been replaced by quality. Known as "whale phishing," each spam attack is usually targeted to a specific individual or small group of individuals that the virus creator has thoroughly investigated. The targeted individual thinks that he knows the sender and clicks on the wrong thing, causing his entire computer network to become infected. Read Write Web
France was on the defensive on Thursday, after Russia's Foreign Minister Sergei Lavrov accused France of violating UN mandates by dropping tons of weapons to Libyan rebels:
"We are awaiting a response. If this is confirmed, it would be a brazen violation of UN Security Council Resolution 1970."
That resolution, passed in February, prohibited states from providing any kind of arms to Libya. According to some reports, the drops included anti-tank missiles and light armoured vehicles, but France is denying this. France's ambassador to the United Nations said that the delivery of these arms to rebels was not in breach of resolution 1970 because they were "self-defence weapons" for the civilian populations in rebel-held areas because they were "under threat." Expatica France
Appearing on television on Thursday night from Cuba, Venezuelan president Hugo Chávez said that he's had an operation that removed a cancerous growth. He said that the first operation, to cure the pelvic abscess, had revealed the presence of cancer. There was no information on when and where Chavez's message was recorded, nor did he say how long he would remain in Cuba. Associated Press
(Comments: For reader comments, questions and discussion,
see the 1-Jul-11 News -- Thailand's Yingluck promises to use 'femininity' to resolve disputes
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(1-Jul-2011)
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