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China blocks Bloomberg web site over story on Xi Jinping's vast wealth
This morning's key headlines from GenerationalDynamics.com.
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Just a few days ago, German Chancellor Angela Merkel said that there would be no "euro bonds" and no full debt sharing with other European countries "as long as I live."
However, Italian Prime Minister Mario Monti and Spanish Prime Minister and government President Mariano Rajoy threatened to create a crisis that would keep the meeting going all weekend.
As a result, Angela Merkel appears to have done a full 180 degree turn. The wondrous new "growth pact" or "fiscal pact" adopted on Friday at a meeting of eurozone leaders appears to do exactly what she just said she wouldn't do. As far as I can figure it out, here are the terms of the new agreement:
This is being called a "growth pact," but it will not create one iota of growth. It will simply permit profligate behavior to continue.
Friday's euphoric market reaction is based on the fact that all this new liquidity will enter the marketplace, and, as usual, it will enter the American stock and bond market, pushing stock prices up and bond yields down.
The can has been kicked down the road for a few extra weeks, making the problem worse than ever. Spiegel and UPI
Germany's Parliament quickly approved the growth/fiscal pact late Friday, by an overwhelming 2/3 vote in both the lower and upper houses (Bundestag and Bundesrat). However, many details of the pact still have to be worked out and negotiated, and those negotiations are expected to be complex and lengthy. We saw this happen last year -- a major bailout of Greece was announced with great fanfare, but the actual details of the agreement weren't worked out for months. Bloomberg and Spiegel
China has blocked the Bloomberg/Businessweek web site because of a lengthy article detailing the vast wealth of Xi Jinping, who is in line to become the next president of China. The article details family assets worth hundreds of millions of dollars. Chinese officials are sensitive to such revelations, because China has tens of thousands of "mass incidents" or riots each year, usually triggered resentment over Chinese Communist Party (CCP) members using their political power to accumulate wealth. The article points out that Xi's vast wealth contradicts his own statements about not being interested in money. Bloomberg and International Business Times
When the British refer to the "The City," they're talking about London. Geraint Anderson was a top investment banker in The City from 1996 to 2008, when he left and wrote a book called "CityBoy." On Friday morning on BBC, he described how things changed during the 12 years he was a banker:
"The City is full of greedy, clever, ruthless people who go into that job for that reason, which is to make a fast buck. And when a system is open to abuse, those traits allow those individuals to abuse it for their own ends, and in my 12 year career, I genuinely saw a real deterioration in ethics and morals in the City. I started getting asked quite openly and blatantly for inside information, for example. The fact of the matter is that these sort of events occurred all the time in the City, be it pump and dump, whereby you actually spread rumors that a company's about to be taken over and buy the shares, or bear raids, where you spread rumors that the company's about to go bankrupt, and sell short the shares. These are the things that people do all the time to make a fast buck."
Anderson is describing the generational change that I've been writing about for years, about the "deterioration in ethics and morals" that accompanied the rise of Gen-Xers to middle management positions, resulting in the financial crisis.
However, he makes another point that I haven't emphasized often enough -- namely that banking became a place that attracted "greedy, clever, ruthless" people. There probably are no more crooks in Generation-X than there are in other generations. But what does characterize Generation-X, and makes it different from Boomers and other generations, is that Gen-Xers refuse to condemn or investigate unethical or illegal behavior in almost everyone, making it possible for banking and politics to become the two homes of crooks who are looking for a place to defraud and extort people without fear of blame or prosecution.
The people of Europe these days are extremely anxious and scared, because they can sense that the financial system is collapsing and that all the politicians are lying. The Barclays Bank revelations of massive fraud by arrogant banksters has confirmed their worst fears, that there's nobody left to be trusted. This is all part of the generational change in attitudes that are taking place, and making any "growth pact" worthless. Increasingly, people today don't trust anyone, and so banks are not willing to lend, businesses are not willing to hire, and ordinary people are not willing to go further into debt. That's the generational change in attitudes and behaviors that's triggering the deflationary spiral and the worsening financial crisis. And to repeat what I've said many, many times: There is NO SOLUTION to this crisis. It can be postponed, which will only make it worse, but the worst cannot be prevented.
(Comments: For reader comments, questions and discussion,
see the 30-Jun-12 World View -- Germany and Angela Merkel cave in to Italy and Spain
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Jun-2012)
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Barclays Bank and the cockroach problem
This morning's key headlines from GenerationalDynamics.com.
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Turkey is sending troops, missile batteries and tanks to the border with Syria as a "security corridor," after Syria shot down a Turkish warplane last Friday. Military vehicles loaded with army personnel also carry low-altitude air defense systems and anti-aircraft guns. In the past, Syrian helicopters and tanks have approached the border with Turkey and even briefly crossed over with no response except perhaps a protest. Now the rules of engagement have changed, and any Syrian military vehicle even approaching Turkey's border may meet with military force. Turkey denies that it's planning an invasion of Syria, but this situation shows how quickly things can change and even spiral out of control. Telegraph and Hurriyet (Ankara)
The e-mail messages published in conjunction with the charges against Barclays Bank for market manipulation we reported yesterday show an incredible amount of arrogance and complete lack of ethics and morality by banksters. This is what we've been saying for years, as we've repeatedly castigated the Generation-X culture of fraud and extortion. Those people who have been reading the GenerationalDynamics.com web site for years, and have been following its advice, have saved themselves, their families, and their assets. You can look at all the financial bloggers, analysts, journalists and politicians, and none of them has told the truth as forcefully as my web site. The best you could get from anyone else was, "Unless President Bush/Obama does X, the country will be in trouble." These were all ideological, political statements, with little relationship to reality. This is the only web site that has reported developments in a non-political non-ideological way and has turned out to be completely correct.
Unfortunately, nothing's changed. We see the politicians in Europe lie every day. The reports on CNBC are so divorced from reality, they're hardly on this planet any more. It used to be that when they lied about stock valuations, there was a least a slight pause or a question. But no more. They say any crap they want, with no relation to the truth.
The "cockroach problem" says it all. There was such massive fraud at Barclays, that there must have been a lot more. If you see one cockroach, then you know that you have a house full of cockroaches, and you know that there are a lot more cockroaches where you can't see them.
We've written dozens of times about the continuing fraud by regulators and banksters, and about how the Obama administration adamantly refuses to investigate and charge banksters, even when the signs of fraud are perfectly obvious. Some people think that the Barclays fraud is something from the past, but as I've written many times, the fraud continues, and the financial crisis has barely begun.
Other banks are under suspicion for the same Libor fraud, and they're going to be investigated by the UK's Financial Services Authority (FSA). These include RBC, Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds, Rabobank, Bank of Tokyo-Mitsubishi, Norinchukin Bank, Royal Bank of Scotland, and West LB. Globe and Mail (Canada)
I want to quote from the speech that Britain's Finance Minister George Osborne gave to the House of Commons on Thursday, because it contains a lot of useful information. Before I begin, let me point out how sleazy even this speech is: Osborne tries to blame the Barclays fraud on the previous administration, when his administration is just as guilty. The occasional "[boos]" that appear in the transcript are times when the opposition boos him for being so sleazy. My transcription:
"Libor and eurobor are by far the most prevalent benchmark reference rates used in the euro US dollar and sterling interest rate derivative contracts. And the outstanding interest rate contracts alone are estimated to be worth 554 trillion US dollars. Yesterday the FSA published notice that Barclays had on numerous occasions acted inappropriately and breached principles 2, 3 and 5 of the FSA's principles for businesses. As a result, the fsa have imposed a financial penalty of 59.5 million pounds on Barclays. ...Barclays are not alone in this. The FSA is continuing to investigate the conduct of a number of other banks in relation to Libor. The FSA is continuing to commit significant resources to its investigations into potential attempts to manipulate libor, and the FSA is continuing to work with its counterparts overseas, and with the other authorities in the UK.
Investigations concern a number of institutions, based both in the UK and overseas. But it's already clear that the FSA's investigation demonstrates systemic failures of the heart of the financial system at the time. I want to thank Adair Turner and the team at the FSA for a very thorough piece of work, but it begs three vital questions.
First, how were such failures allowed to continue undetected and unchecked, particularly in the two years before the financial crisis, when the FSA is clear that the most serious breaches occurred, and the only motive was greed? [boos]"
Osborned was booed because the failures continued at least until 2010, according to the FSA, and are certainly continuing to this day.
So how could these failures go "undetected and unchecked"? I was writing about them, and others with a lot more financial services experience than I have were writing about them. But in the Gen-X culture of fraud and extortion, the politicians and regulators were committing fraud and extortion themselves, so they had no motivation to go after others.
"Second, what changes are needed to our regulatory system in the future to prevent such abuse from occurring again, and to make sure the authorities have every power they need to hold those responsible fully to account.And third, what further investigations are required into the activities at Barclays? What sanctions are available? And what questions must their chief executive answer.
First, the FSA report is a shocking indictment of the culture at banks like Barclays in the run-up to the financial crisis. The e-mail exchanges between derivative traders and the libor submitters read like an epitaph to an age of irresponsibility. [boos]
Through 2005, 2006, and early 2007, we see evidence of systematic greed at the expense of financial integrity and stability.
And they KNEW what they were doing. "Keep it a secret," one trader tells another in February 2007. "If you breathe a word of this, I'm not telling you anything else."
Once again, the FSA said that the crimes continued at least into 2010.
It's really sleazy of Osborne to blame this on other people. I understand that Osborne was Shadow Chancellor of the Exchequer while all this criminal activity was going on. Did Osborne do anything to stop it, or to call it to anyone's attention?
"Yet no one at Barclays prevents, and no in the tripartite regulatory knows anything about it, and the government of the day is literally clueless about what is going on. [boos]"
The government of today is also literally clueless.
But I wanted to quote this because of Osborne's description of the culture at Barclays. This was not one or two bad apples, but an entire culture of fraud and extortion in the entire bankster community. And the worst is far from over. And if you listen to any politician, blogger, journalist, analyst, or Nobel-prize-winning economist who tells you otherwise, then you're going to be in trouble.
A serious split is developing among European leaders over whom to blame for the deteriorating eurozone financial situation. France's President François Hollande is leading a rebellion against Germany and German Chancellor Angela Merkel, threatening to turn the Thursday/Friday "save the euro" summit into a rout. Hollande, backed by Italy's prime minister Mario Monti and Spain's premier Mariano Rajoy, is demanding that the ECB "print money" and use it to purchase French, Spanish and Italian bonds. These moves are extremely unpopular with the German people, who believe that the French, Spanish and Italian people are profligate. Germany is not alone. Their position is supported by Finland and the Netherlands. Somehow, the eurozone leaders will have to come up with a formula that each leader can take home and use to claim victory. That way, they can kick the can down the road a while longer. Bloomberg
(Comments: For reader comments, questions and discussion,
see the 29-Jun-12 World View -- Tensions escalate as Turkey's army masses on the border with Syria
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Jun-2012)
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Russia may be changing direction on Syria
This morning's key headlines from GenerationalDynamics.com.
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I heard an analyst say that the Thursday/Friday summit in Brussels will be the 15th "save the euro" summit since the crisis began. It should be noted that each one of these summits leads to a new solution, sometimes even a "shock and awe" solution or even a "nuclear solution," but it never works, and things soon are worse than ever. This is consistent with what I've been saying for years -- from the point of view of generational theory, there is NO SOLUTION to the crisis, so no matter what they do, things will continue to get worse.
Like many of the past summits, this one is being spun as Europe's last chance. Mario Monti, Italy's prime minister, said last week that Europe has only one week left to save the euro. The most dire warnings have come from the diametrically opposing views of France's new Socialist president François Hollande, and Germany's hard-nosed Chancellor Angela Merkel. As soon as Hollande became President of France, the first thing he did was lower the retirement age from 62 to 60. This was sticking his thumb in the eye of Merkel and Germany, where the retirement age is 67. Hollande wants "growth," which means continuing spending money and going further into debt (even though spending money so far has not produced any growth), and Merkel wants "austerity," which means reducing spending to cut debt (even though reducing spending so far has just caused a vicious downward spiral). Analysts have been expressing fears that the summit in Brussels would end in a bitter split, triggering a new crisis.
So Merkel traveled to Paris on Wednesday to meet with Hollande. They came out of the meeting smiling, having agreed to a fairly austere growth plan, which really doesn't do anything.
And so, it looks like the "Kick the Can Theory" will apply again to the 15th "save the euro" summit, and some way will be found to postpone the crisis for a few more weeks. Deutsche Welle and Spiegel
Britain's Barclays Bank will pay $453 million to settle charges of market manipulation. From 2005-2009, Barclays Bank was in a position to partially control an internationally used interest rate known as LIBOR (London interbank offered rate), calculated based on what it costs major banks to borrow money from each other. This figure is a cornerstone of the credit markets, since banks around the world use LIBOR as a basis to set mortgage rates, business loans, and so forth. As a favor to other bankers, Barclays bankers announced phony Libor rates, allowing these other banks to make millions of additional dollars. The investigation uncovered dozens of e-mail exchanges where, for example, a bottle of Bollinger was offered in exchange for setting the phony rate. Gee, what a shock. Who would ever think that banks would act this way? Independent
Barclay's CEO Bob Diamond will give up his multimillion dollar bonus this year, and will have to survive on his multimillion dollar base salary. This person is a crook, and he and others at Barclays should go to jail. Instead, they get a cosmetic slap on the wrist. Diamond, incidentally, went before Parliament in January 2011 to defend large bonuses. "Frankly," he said, "the biggest issue is how do we put some of the blame game behind us?"
What's really surprising about all this is that there was even an investigation. Gen-X banksters knowingly created tens of trillions of dollars in fraudulent synthetic securities, defrauded millions of investors by selling them as AAA rated, and lied about them to their Boomer bosses, who didn't ask any questions because they were making too much money. But the Obama Administration with Eric Holder is refusing to investigate and prosecute any of these crimes, allowing these people to continue to commit fraud. It's the most sickening thing I've seen in my life.
I don't know why Barclays was even investigated, but I assume it has something to do with being a British bank, so they don't contribute money to the reelection campaign. CBS News (Jan, 2011)
There's a chance that the statement that we reported yesterday by Syria's president Bashar al-Assad that Syria is in a "real war" might possibly have been the last straw for Russia's full-throated support for al-Assad. By talking about a "real war," al-Assad was laying the groundwork for an unchecked full-scale military attack on Sunni Arabs in Syria. As a result, Russia now appears willing to consider a plan to have al-Assad step down and live in exile in Moscow. He would be replaced some of his pro-Russian lieutenants, who would make sure that all of Russia's interests were protected. Kofi Annan, whose collection of peace plans are all in the garbage dump, is calling for an international meeting on Saturday to discuss the plan. Bloomberg
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According to a survey by the National Geographic Channel, over 36% of all Americans believe that UFOs exist, 17% believe they don't, and the rest aren't sure. Which presidential candidate could best handle an alien invastion? 65% say Barack Obama is better suited to handle an alien invasion than Mitt Romney. USA Today
(Comments: For reader comments, questions and discussion,
see the 28-Jun-12 World View -- Barclays Bank fined $453 million for manipulating markets
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(28-Jun-2012)
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Egan-Jones Ratings downgrades German debt another notch
This morning's key headlines from GenerationalDynamics.com.
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Tensions between Turkey and Syria escalated sharply on Tuesday, when Turkey's furious Prime Minister Recep Tayyip Erdogan threatened military retaliation against Syria along the border between the two countries:
"[It is now clear that Syrian President Bashar] al-Assad’s regime has become a clear and present danger to Turkey’s security.After this attack, we have entered into a new stage. The rules of engagement of the Turkish Armed Forces have changed. Any risk posed by Syria on the Turkish border, any military element that could pose a threat, will be considered a threat and treated as a military target.
We urge the Syrian regime not to make a mistake and test Turkey’s determinacy and capacity. … Our rational response should not be perceived as weakness, our mild manners do not mean we are a tame lamb. … Everybody should know that Turkey’s wrath is as strong and devastating as its friendship is valuable.
Turkey will use its rights born out of international law with determination and take the necessary steps by determining the time, place and method by itself in the face of this unfairness. This is what I want to stress.
Our plane was targeted on purpose and in a hostile way and not as a result of a mistake. The attitude of the Syrian officials following the incident is the most concrete evidence that our jet was attacked on purpose. The harassing fire on our Casa-type plane during the search and rescue operations is the most palpable evidence of this intent."
As an example of the change in the rules of engagement, five Syrian helicopters recently violated Turkish airspace, and no action was taken. Under the new rules of engagement, some military action would be taken.
Turkey has begun deployment of a large number of military vehicles to the Syrian border, including 15 armored tanks, long-distance guns and other military vehicles.
The U.S. and Nato are standing behind Turkey. A Pentagon spokesman said, "The fact is that [the Turkish jet] was shot down. We believe it was a deliberate act. And the Syrian regime needs to answer for it." Hurriyet (Ankara) and Zaman (Istanbul)
For most of the Syria uprising, Damascus itself has been spared most of the violence. But that's changing as violence is increasing within Damascus and the nearby suburbs. According to one observer:
"Violent clashes are taking place around positions of the Republican Guard in Qudsaya and al-Hama, [8 km from Damascus]. This is the first time that the regime uses artillery in fighting so close to the capital.This development is important because it’s the heaviest fighting in the area and close to the heart of the capital."
In the past, Syria's president Bashar al-Assad has played down the strength of the opposition, but this is now changing:
"We are witnessing a real situation of war. ... When one is in a state of war, all our policies and capabilities must be used to secure victory."
Syria's official SANA news agency said that government forces clashed with “armed terrorist groups” in al-Hama. Al-Arabiya
The three major ratings agencies give German debt a AAA rating, but Egan-Jones Ratings, which has been most aggressive in downgrading eurozone debt, and has therefore been the most accurate, on Tuesday downgraded German debt to A+, which is four notches below AAA. The ratings agency said that Germany is owed €700 billion, of which half is uncollectable. Furthermore, the ratings agency said that in time Germany will have to give in and agree to "euro bonds," which will make Germany responsible for the debts of other eurozone nations. Market Watch and WSJ
Economists had been hoping that China would be the "engine" to keep the world economy humming, but it appears increasingly that China's economy is slowing down faster than expected. China's humongous real estate bubble has been collapsing for about nine months, and China's export markets are being harmed by slowdowns in Europe and North America. China's last major slowdown occurred in 2008, but China reacted with a massive stimulus program. China has already made it clear that it will not repeat the fiscal stimulus program, which caused strong inflationary pressures and exploded the real estate bubble. Reuters
(Comments: For reader comments, questions and discussion,
see the 27-Jun-12 World View -- Turkey's army on red alert, threatening retaliation against Syria
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(27-Jun-2012)
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Cyprus announces it will seek a European bailout
This morning's key headlines from GenerationalDynamics.com.
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A furious Cypriot president Demetris Christofias, a veteran communist, lambasted European officials as "a colonial force" for imposing austerity measures and neo-liberal policies, even as he announced that he was seeking a bailout to keep the country's banks from bankruptcy. He says that Cyprus deserves a bailout with no austerity measures because it's all Greece's fault:
"Cyprus is facing the prospect of entering [a rescue] mechanism not because of the fiscal state of the economy, but because of the need to recapitalise Cypriot banks which have important exposure to the Greek economy. In every downgrade of the Cypriot economy, the exposure of our banks to Greece is portrayed as the main cause. The economy of Cyprus continues to have healthy foundations despite the problems, distortions and inequalities accumulated over the years."
Cyprus will join Greece, Ireland, Spain and Portugal as countries that have requested bailouts. Christofias said that he will continue to pursue a loan from Russia or China, hoping that the terms will be less onerous. Guardian and Reuters
Spain formally requested a bailout of €100 billion to rescue its banks. Spain announced on June 9 that it would request a bailout, and made the request formal on Monday. The June 9 announcement said that there would be no austerity requirements attached to the bailout, but that was never a commitment by the European officials. It will now take several weeks to conclude an agreement on a bailout and related austerity requirements. Bloomberg
Turkey says that Syria will "not go unpunished" for downing a Turkish jet last Friday, but Turkey as "no intention" of going to war. However, Turkey's deputy foreign minister said, "Syria shot down our unarmed jet in a cold-blooded and hostile way in international airspace. International law is on our side." Turkey has invoked the Nato charter provision that says that an attack on one member is an attack on all, and Nato officials will meet in Brussels on Tuesday to receive Turkey's presentation. BBC and Al-Jazeera
Turkey has said that Syria will "not go unpunished," but the exact form of that punishment has not been specified. However, Turkey's vice Prime Minister Bulent Arinc on Monday said that Turkey is considering cutting electricity exports to Syria. Now Lebanon
Egypt is denying that President-elect Mohammed Morsi gave an interview to Iran's official Fars agency in which he said that wanted to expand ties with Iran to create a strategic "balance" in the region. "Mr. Morsi did not give any interview to Fars and everything that this agency has published is without foundation," said a Morsi spokesman. Egypt and Iran have had no formal ties wince 1980, following Iran’s Great Islamic Revolution and Egypt’s recognition of Israel. Al-Arabiya
Last week, a large boat rammed a Philippine fishing boat in the South China Sea, in the region near the Scarborough Shoal where the Philippines and China had a standoff last month. The ramming boat fled the scene, after 8 fishermen were thrown overboard. One has died, and four are missing. Philippine officials believe that a Chinese boat, possibly a Hong Kong boat, was the culprit, but Chinese officials are saying indignantly that no facts have been produced to support that accusation. VOA
(Comments: For reader comments, questions and discussion,
see the 26-Jun-12 World View -- Turkey says it has 'no intention' of going to war with Syria
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(26-Jun-2012)
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Mohamed Morsi becomes Egypt's first elected President in 7000 years
This morning's key headlines from GenerationalDynamics.com.
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Hundreds of thousands of jubilant Egyptians flocked to Cairo's Tahrir Square on Sunday to celebrate the victory of Mohamed Morsi as the country's first freely elected president in 7000 years of Egyptian civilization. Morsi won 51% of the 26 million votes. Morsi is a graduate of the University of Southern California and two of his children are American citizens. He is an expert on precision metal surfaces and has worked at NASA on the development of space shuttle engines.
In the somewhat emotional speech, he tried to allay the fears of all segments of society, particularly those who fear that the Muslim Brotherhood will turn Egypt into a violent, harshly Islamic state similar to Iran, and will abrogate Egypt's 1979 peace treaty with Israel:
"We will honor international treaties and agreements, and will create balanced international relations based on mutual interests and respect. We will protect our borders, and reject foreign meddling in our domestic affairs.Egypt is capable of defending itself against any foreign aggression, and will protect Egyptians anywhere in the world."
He specifically named both women and Coptic Christians as groups whose rights will be protected.
"I will be president for all Egyptians, those inside the country and abroad. The people are source of all powers, and it's time for unity to rebuild our country and achieve goals of the revolution. Together, Egyptians will create better and bright future for this nation."
Al-Ahram (Cairo) and Bikya Masr (Cairo)
One of the reasons that generational theory works is that most people have little or no knowledge of anything that happened before they were born, and they assume that the events of 20 or 30 years ago will automatically be repeated. Thus, I've had many discussions with people in the last 15 months who are almost certain that the rise of the Muslim Brotherhood means that Egypt will become another harshly conservative Islamic state like Iran, after the Great Islamic Revolution of 1979. Indeed, many of the statements coming from Iran itself seem to indicate that those leaders think that will happen as well.
The entire Mideast is experiencing enormous change and turmoil since the start of the "Arab Spring," and there's no way to be certain exactly how things will turn out. Egypt today is in a generational Crisis era, and Iran in 1979 was in a generational Crisis era, so that much is the same. But beyond that, Egypt today bears absolutely no resemblance at all to 1979 Iran:
The Muslim Brotherhood itself renounced violence in the 1970s, and the vast majority of Egyptians are under age thirty, meaning that they've never known a violent Brotherhood, and have no expectation that there'll be one. It's true that some of the senior leaders sometimes give speeches in Arabic expressing a desire for violence, but those are people from old generations whose time is past.
If you'd like to look for historic analogies to Egypt's current situation, a good place to start would be Turkey in the 1920s, following the collapse of the Ottoman Empire. Ataturk, the revered founder of modern Turkey, declared Turkey to be a secular state in 1924. Today, Turkey has an Islamist leadership, with conservative Islamists and secularists coexisting peacefully. Turkey is often mentioned as a possible model for Egypt today, and it's an example that they're certainly examining.
Generational Dynamics predicts that the entire Mideast region is headed for a massive war along the Sunni/Shia fault line, with Saudi Arabia leading the Sunni side and Iran leading the Shia side. However, even that fault line isn't 100% clear, as we've seen in the 2007 war between the Palestinian Authority (Fatah) and Hamas. As I've been writing for many years, my expectation is that in the coming Clash of Civilizations world war, the Sunni Muslim states will side with Pakistan and China, while Iran will side with India, Russia and the West, including Israel. What will Egypt do? That's not knowable at this time, but there's at least a 50% chance that Egypt will side with the West, and not with Saudi Arabia.
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Turkey has invoked Article 4 of the Nato charter, which calls for consultations with other Nato members after one Nato member has been attacked, since an attack on one member nation is considered to be an attack on all. According to a Turkish Foreign Ministry spokesman:
"It was an act of war. They shot down a plane over international waters and it is unacceptable."
Invocation of the Nato charter has been under consideration in Turkey for some time, because of the flood of Syrian refugees that have been pouring into Turkey. Ambassadors of Nato's 28 member states will meet in Brussels on Tuesday, to hear Turkey's presentation on the incident. The invocation of the Nato charter raises the possibility of military action against Syria, but there is little taste in Europe for that course of action. Washington Post
Turkey's Foreign Minister Ahmet Davutoglu presented detailed information on how the incident took place:
According to Davutoglu:
"Our plane was unarmed and was performing a solo flight. Its flight was not whatsoever in a hostile one.... The Syrians knew full well that it was a Turkish military plane and the nature of its mission."
However, analysts in other countries suspect that Turkey's jet was on a reconnaissance mission to Syria. Hurriyet (Ankara)
Three additional Syrian military pilots defected to Jordan on Sunday, bringing up the total number of defected Syrian pilots to seven. These include Hassan Marei Hamada, who landed his Meg21 plane in Jordan last week. The rate of armed forces defections in Syria is increasing. Al-Arabiya (Dubai)
Investors from all over Europe are investing in real estate in Germany, which they believe to be a safe haven for their money. Real estate prices rose 5.5% in 2011, and well over 10% in Berlin and other major cities. However, German officials insist that "this time it's different," and it's not a real estate bubble. According to top real estate brokers in Germany, Germany's real estate market will only continue to grow. Spiegel
With the 2014 Sochi Olympics quickly approaching, Russian officials have repeatedly said that economic development of the mostly Muslim North Caucasus provinces was among the highest priorities. But in fact, financial assistance to the North Caucasus has been cut sharply in the last year, for two reasons: It's been largely ineffective, and it's been politically damaging. On the one hand, Moscow likes pointing out how much the region depends on Russian support, but on the other hand, Moscow is increasingly afraid to provoke the Russian public’s wrath over the very same issue. Ethnic Russians increasingly view the North Caucasus as a foreign body inside the Russian Federation that receives undeservedly more assistance from the central government than other regions. Furthermore, Russia is highly dependent on oil prices that have been falling, recently, leaving the country extremely vulnerable to economic shocks. Jamestown
(Comments: For reader comments, questions and discussion,
see the 25-Jun-12 World View -- Turkey invokes Nato charter over Syria's downing of Turkish jet
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(25-Jun-2012)
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Syria's pilots may be intentionally missing civilian targets
This morning's key headlines from GenerationalDynamics.com.
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Greece's new coalition government is asking European leaders to grant a two-year delay on new austerity measures committed in return for the €130 billion bailout package. They are requesting no further reductions in wages or pensions, and no more taxes. Instead of the the €50bn of privatisations demanded by European officials, they're requesting public-private partnerships instead of outright sales. German chancellor Angela Merkel has made it clear that she has no intention of renegotiating the Greek package, which was agreed in February after weeks of talks – though Europe's leaders may fear the reaction of Greece's voters if they fail to offer them anything. Furthermore, Greece's negotiating position is weak, because they need a new bailout payment within the next few days. Guardian
Egypt's Supreme Presidential Electoral Commission is expected to announce the winner of last weekend's presidential runoff at 3 pm local time on Sunday. Informal estimates of the vote count indicate that the Muslim Brotherhood candidate Mohamed Morsi has gotten about one million votes more than his opponent, former fighter pilot and Hosni Mubarak appointee Ahmed Shafiq. It's widely believed that the Supreme Council of the Armed Forces (SCAF) is doing everything it can to prevent the Muslim Brotherhood from coming to power, but stories are coming out indicating that MB and SCAF are heavily engaged in negotiations to produce a "political deal" to prevent further turmoil after the announcement. The reports indicate that the compromise would involve the following:
If there is no deal, then it's expected that Ahmed Shafiq will become the president, and the entire parliament will be dissolved. It's expected that this will result in massive street protests. Al-Ahram (Cairo)
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Turkey says that the fighter jet shot down on Friday by Syria may have briefly violated Syria's airspace, but an official source is saying, "We have necessary information showing that the Turkish plane was shot at without any warning." According to another official,
"We are 100 percent right and the act of Syrian regime is against all dynamics of international law. All data about the incident confirms that."
Turkey will make a more detailed announcement on Sunday. Turkish Prime Minister Recep Tayyip Erdogan is calling a meeting of leaders of the main political parties on Sunday to discuss the incident. This is an unusual move, and suggests they may be discussing a military response. According to one source, "We are not considering a military action now, but we want to inform the opposition and we want to keep all options open." Hurriyet (Istanbul)
The Syrian military's use of tanks and helicopters has been remarkably ineffective in combat against rebel forces, a shortcoming so consistent that it raises the question of whether some pilots and troops may be intentionally missing when they target rebel positions. Most pilots are Sunni Muslims, and Sunni Muslim civilians have been the principal targets of the Bashar al-Assad regime. McClatchy
From the point of view of Generational Dynamics, this kind of development is expected. Syria is in a generational Awakening era, during which a crisis civil war is impossible, as I've written many times. The memories of the bloody, brutal, genocidal Syrian civil war, that climaxed in 1982 with the slaughter of thousands of people in a few days in Hama, are still fresh in everyone's minds, and there is absolutely no desire among the people risk a recurrence. Al-Assad's regime is trying to relive the glory days of 1982, but it hasn't been successful. At some point in the not to distant future, this conflict is simply going to fizzle, and the half-hearted involvement of the pilots described above, as well as the recent defection of an air force pilot, indicate that most people in Syria do not have their hearts in this fight.
U.S. Secretary of State Hillary Clinton said that there are those in Iran that would like an attack to occur, in order to unify the country and legitimize the regime. She said that there's a vigorous debate going on within Iran's leadership:
"There are those who say look, these sanctions are really biting, we’re not making the kind of economic progress we should be making, we don’t give up that much by saying we’re not going to do a nuclear weaponAnd then frankly, there are those who are saying the best thing that could happen to us is be attacked by somebody, just bring it on, because that would unify us, it would legitimize the regime."
This is exactly the kind of thing that I've been saying for five or six years. (See "China 'betrays' Iran, as internal problems in both countries mount" from 2008.)
Like Syria, Iran is in a generational Awakening era, and the hardliners are trying to relive their glory days of the 1979 Great Islamic Revolution. At that time, an external threat unified the country under the charismatic Supreme Leader Ayatollah Ruhollah Khomeini. But in the last few years, that unity has fallen apart, as young students have led protests against the hardline survivors of the 1979 war. The hardliners would like to get that unity back again, and so they'd like to see a repeat of what happened in 1979. Unfortunately, they don't understand generational theory, so they don't understand that that kind of unity is impossible in an Awakening era. They also don't understand that even if that kind of external attack occurred, it's just as likely the young generation would blame Iran's leaders for provoking the attack, rather than the attackers. Haaretz
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(24-Jun-2012)
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US supercarrier leads joint military exercises with South Korea in Yellow Sea
This morning's key headlines from GenerationalDynamics.com.
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A furious Turkish Prime Minister Recep Tayyip Erdogan announced on Friday that Syria had shot down a war plane from Turkey's air force, and that Syria "had apologized" for it. After spending several hours in a security meeting in Istanbul, he did not repeat the "apology" part, but in the meantime Syria's military had issued a statement:
"Our air defences confronted a target that penetrated our air space over our territorial waters pre-afternoon on Friday and shot it down. It turned out to be a Turkish military plane."
According to Erdogan, the plane went down in the Mediterranean sea about 8 miles away from the Syrian town of Latakia.
Erdogan's statement said:
"Following the evaluation of data provided by our related institutions and the findings of the joint search and rescue efforts with Syria, it is understood that our plane was downed by Syria."
Erdogan added that after the appropriate investigations will be completed, Turkey "will determinedly take necessary steps" in response, without saying what they would be. Thers has been some talk that Turkey might invoke the Nato provision that an attack on one Nato country is an attack on all.
There are a number of unanswered questions:
Answers to these questions will determine what happens next. Zaman (Istanbul) and Al-Jazeera
This situation reminds me very much of the situation that followed the March 26, 2010, sinking of a South Korean ship by the North Koreans. ( "18-May-10 News -- Korean tensions grow prior to Cheonan announcement") There were strong demands by the South Korean public to retaliate against the North Koreans. South Korean President Lee Myung-Bak promised "clear and resolute measures" against the responsible parties, once investigations had been completed, but somehow it took a number of months for the investigations to be completed, and by that time, the South Korean public had cooled off.
Erdogan's statement appears to me to be similar. The Turkish public is demanding retaliation, but there are signs that Erdogan is going to stall until things cool down, and then no action will be taken.
Last year I proposed the "Kick the Can Theory" for the European financial crisis. It says that if you want to know what's going to happen, just assume that European leaders will look for a way to "kick the can down the road," meaning that they'll do the minimum possible to postpone the crisis a little longer, to prevent a current crisis without fixing the problem, so that the crisis will recur in worse form weeks or months later.
Well, the "Kick the Can Theory" applies to other geopolitical situations, including the Cheonan incident and this new Turkey/Syria incident. If the theory turns out to apply to this case, Erdogan will look for a way to do the minimum possible to kick the can down the road, which is exactly what he appears to be doing so far.
With all the talk about bailing out Greece, Spain and Italy, the situation in Cyprus has gotten little international attention. But Cyprus will go bankrupt by the end of next week, unless it receives €1.8 billion. And it will need €5 billion over the next two years. Cyprus is complaining that it's another victim of Greece's financial collapse, since Cyprus banks held a lot of Greek bonds. But apparently the story is more complicated than that. According to some news reports, Cyprus banks continued to heavily purchase Greek bonds during the last two years, when their interest rates were rising from 7% to 10% to 20% to 30% to 40% and more. Cyprus wanted to take advantage of the high interest rates, and they assumed that they wouldn't lose any money because the EU and the IMF would end up guaranteeing the bonds. But those who followed this situation are well aware that holders of Greek bonds ended up taking a 75% "haircut," losing 75% of their investment. So now Cyprus needs to be bailed out, but they're afraid to ask the EU for a bailout because they don't like the austerity measures that would be imposed. So Cyprus Finance Minister Vassos Shiarly has been trying to improve its bargaining position with the eurozone by asking Russia and China for loans, hoping to get better terms than the EU would require. According to government spokesman Stefanos Stefanou,
"We are in continuous contact and dialogue with the European partners and the EU’s institutions, and are working simultaneously in the direction of securing a bilateral loan from another country."
A nuclear-powered American aircraft carrier is in position off the west coast of South Korea leading the largest joint military exercises in history for South Korea and the U.S. About 10 warships and submarines, including the George Washington Carrier Striker Group; 8,000 personnel; and hundreds of combat aircraft from the allies are taking part in the three-day exercises beginning Saturday. In a typical rant, North Korea's government denounced the exercise as a "reckless provocation," that is "going against the trend of the times for regional peace and stability, including on the Korean Peninsula." Korea Times
When North Korea announced plans for a long-range ballistic missile, countries around the world, including China, warned them to call of the test, or they would be further isolated. The test occurred on April 13, and was a humiliating failure. ( "13-Apr-12 World View -- North Korean rocket launch a humiliating failure") It now appears that China is taking a much harder line towards North Korea, and the reason may be that Chinese public opinion is turning sharply against the country. Internet postings such as "Stop food aid and impose sanctions," are overwhelmingly critical of North Korea, and many use spiteful words. Relations became even worse last month when the North Koreans kidnapped Chinese fishermen and humiliated them. ( "18-May-12 World View -- Today's Schadenfreude: North Koreans kidnap 29 Chinese fishermen") The West has been depending on China to keep North Korea under control, but with a brand-new leader, the youthful Kim Jong-un, it appears that China has less influence on North Korea than ever, and relations are turning hostile. The Asahi Shimbum (Japan)
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(23-Jun-2012)
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Economic news on Thursday goes from bad to worse
This morning's key headlines from GenerationalDynamics.com.
Syrian President Bashar Assad Thursday night ordered his entire Air Force fleet of fighter bombers grounded, for fear that more pilots might defect after Col. Hasan Merhi al-Hamadeh defected to Jordan aboard a MiG-21. The MiG was near Lebanon's border when it suddenly pivoted at a sharp angle, headed toward Lebanon at a low altitude to evade radar and interception. The pilot made an emergency landing in Lebanon, got off the plane, shed his uniform and prayed. According to Syria's defense ministry:
"The pilot is considered a deserter and a traitor to his country, and to his military honor, and he will be sanctioned under military rules. Relevant contacts have been made with the authorities in Jordan in order to recover the jet on which the traitor pilot made his getaway."
Lebanon granted al-Hamadeh refugee status in Lebanon, and indicated that a decision on whether to return the plan to Syria would be made later. Daily Star (Beirut) and Debka
Robert Ford is still the US ambassador to Syria, even though he was pulled out of Syria four months ago for his own safety. Now he's using a Twitter account to encourage Syria's armed forces to defect, and to warn them they're at risk of being prosecuted for crimes against humanity:
"The officers and soldiers of the Syrian military have a choice to make. Do they want to expose themselves to criminal prosecution by supporting the barbaric actions of the Assad regime against the Syrian people?[The alternative is to] help secure the role of the professional military in a democratic Syria by supporting the Syrian people and their transition to an inclusive, tolerant and representative democracy that respects human rights and equal, fair treatment for all components of the Syrian nation."
News reports indicate that CIA operatives are working along the Turkey-Syria border help to funnel arms, including automatic rifles, rocket-propelled grenades and anti-tank weapons, to opposition groups seen as most friendly to the U.S. The White House told reporters that the U.S. does not provide "lethal aid" to Syria's opposition, but the arms themselves are most likely coming from Turkey, Saudi Arabia and Qatar. VOA
Thousands of protesters filled Tahrir Square in Egypt for what they promised would be an "open ended sit-in," demanding that the military undo its latest constitutional decree, giving them almost absolute power, and that Parliament be reinstated, as it's the only democratically elected institution in the government. Egypt's Supreme Presidential Electoral Commission announced on Wednesday that the final results of Sunday's presidential election will not be announced on Thursday, as previously scheduled, but will be postponed a few days. Many protesters believe that this is part of the army's plan to keep control of the government, and prevent the Muslim Brotherhood from gaining any political power. The army's candidate, former prime minister Ahmed Shafiq, is accusing the protesters of trying to blackmail the Electoral Commission by demanding that Mohamed Morsi, the Muslim Brotherhood candidate, be elected. Reuters
Ratings agency Moody's downgraded 15 of the world's biggest banks on Thursday. The announcement capped a day of bad economic news. Slowing manufacturing data in China, Europe and America indicate that the world is headed for a recession. Generational Dynamics predicts that the world is headed for a major financial crisis. Reuters and CS Monitor
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(22-Jun-2012)
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Federal Reserve extends 'Operation Twist' to end of year
This morning's key headlines from GenerationalDynamics.com.
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A long-simmering battle between Turkey's army and the terrorists from the Kurdistan Workers' Party (PKK) is flaring up into greater violence, after eight soldiers were killed in a terrorist attack on a military output in southeastern Turkey on Tuesday. In the early morning hours on Tuesday, a group of around 200 PKK terrorists attacked the Yesiltas Military Outpost with rocket launchers and rifles, killing eight soldiers and wounding 16 others. In subsequent clashes, troops killed at least 24 PKK terrorists. The terrorists were believed to have crossed the border from northern Iraq to carry out the attack and then retreated across the border. Turkish warplanes "effectively hit" PKK targets in northern Iraq. Several thousand PKK rebels are believed to be based in hideouts in northern Iraq. Zaman (Istanbul) and BBC
House Oversight and Government Reform Committee voted to hold Attorney General Eric Holder in Contempt of Congress on Wednesday, for many months of refusal to turn subpoenaed documents over to Congress. The vote followed an announcement that President Obama was invoking executive privilege. The issue was the congressional investigation of the "Fast and Furious" operation, where federal agents allowed Mexican drug cartels to take possession of tens of thousands of guns. The objective was to track the guns and arrest the people in the cartels, but the agents botched the whole operation, and the guns ended up killing people, including another federal agent.
The larger picture is that, once again, Attorney General Holder is adamantly hiding the perpetrators from prosecution. This is part of the same Generation-X culture of fraud and extortion that I've been writing about for years with regard to the financial crisis. Holder and Obama refuse to investigate and prosecute anyone in the financial industry, despite the fact that it's provable that widespread fraud was committed, leading to the financial crisis. I've heard Gen-Xers complain that the reason they don't want to send anyone to jail is because in the 1980s they became the most incarcerated generation in history. I don't know if that's true, but if it is, then it's because they committed the most crimes of any generation in history. When the Boomers were in charge, in the 1980s, if you committed a crime, you had a good chance of going to jail. Today if you commit a crime, then chances are you'll be free to go on committing crimes, with no fear of investigation, especially if your crimes provide campaign contributions to politicians. CS Monitor
The Federal Reserve's current bailout program, "Operation Twist," which was due to expire this month, will be extended until the end of the year, according to Fed chairman Ben Bernanke. Operation Twist is almost a stealth bailout program. The Fed sells short-term (1-3 years) Treasuries, and purchases an equivalent amount of long-term (10 year) Treasuries. The result is that the Fed's balance sheet is unchanged, and by purchasing 10-year Treasuries, their market price goes up and their yields (interest rates) go down, causing mortgage loan rates and certain other rates to go down. Bernanke is being heavily pressured to start a new full-scale quantitative easing program, where the Fed "prints" money and purchases toxic assets with it, but there is considerable public opposition to a new QE scheme. Operation Twist is not as expensive as full-scale QE, but it's the safest course in an election year. Bloomberg
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Antonis Samaras was sworn in as Prime Minister of Greece on Wednesday, after he formed a governing coalition with his New Democracy Party, combined with the PASOK party led by Evangelos Venizelos, and the Democratic Left party, led by Fotis Kouvelis. PASOK governed the country last year under George Papandreou, but their popularity plummeted because of their support of the EU bailout program and austerity measures. In this new governing coalition, PASOK and Democratic Left are willing to form a national unity government, but they will not provide any MPs for cabinet positions in the new government, because they don't want to get burned when the government has to implement a new round of austerity measures. Samaras has promised to renegotiate part of the austerity program. German Chancellor Angela Merkel has adamantly refused to budget, but Germany's Foreign Minister Guido Westerwelle has indicated that it might be possible to stretch out some of the dates. The "Kick the Can Theory" is alive and well. Kathimerini
Egypt's Supreme Presidential Electoral Commission announced on Wednesday that the final results of Sunday's presidential election will not be announced on Thursday, as previously scheduled, but will be postponed for a few days. Each of the candidates, former prime minister Ahmed Shafiq, and Mohamed Morsi, the head of the Muslim Brotherhood's political party, are claiming that he's won. Recent actions by the Supreme Council of the Armed Forces (SCAF) to assume complete legislative and budgetary control of the government have infuriated protesters, who filled Cairo's Tahrir Square for the last two days. The postponement of the election results announcement will add to suspicions that the army is stacking results in favor of their candidate, Shafiq, and if Shafiq wins, it's expected that there will be even larger crowds of protesters. Al-Ahram (Cairo)
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(21-Jun-2012)
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Israeli settlers conduct 'price tag' attack on West Bank mosque
This morning's key headlines from GenerationalDynamics.com.
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A Russian ship believed to be carrying helicopters and missiles for Syria was forced to turn back to Russia after the British insurance company Standard Club, canceled its insurance contract on the vessel, on the grounds that carrying weapons was a violation of the insurance contract. The insurer did so under pressure from U.S. and British government officials, since exporting arms to Syria violated EU sanctions. The MV Alaed picked up its cargo of Mi25 helicopters – known as "flying tanks" – from the Russian port of Kaliningrad, where they had been sent for servicing and repairs by Syria, which has owned them since the end of the Soviet era. Telegraph
According to a Russian analyst, Washington manipulated information about the Russian cargo vessel stopped near Scotland, misleading the media in order to pressure Russia, “probably to establish some kind of no-fly zone” over Syria.
"This really open pressure is combined with a propaganda campaign and data manipulations. ... But in fact these were just old helicopters repaired in Russia. And is far as we know, it was a very limited and cheap repair. The price was really low; Syria could not even afford to replace engines. So, you can’t even say that Russia upgraded these old Soviet helicopters or expanded their capabilities."
According to Russian news reports, two Russian warships, each capable of carrying 150 marines and a dozen tanks, are completing preparations to sail to Syria. They will be docking at the Syrian port of Tartus, which is Russia's only remaining naval base outside the former Soviet Union. According to the reports, the warships will not intervene in Syria, but will be used to evacuate Russian citizens and equipment in case the situation in Syria deteriorates further. AP
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At the G-20 summit on Tuesday, a Canadian reporter asked European Commission president Manuel Barroso why North Americans should "risk their assets to help Europe." Barroso replied:
"Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy. This crisis was not originated in Europe… seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."
Barroso is Portuguese, and Portugal had to be bailed out -- and will have to be bailed out again -- because the people lived beyond their means when he was Prime Minister. Portugal is next door to Spain, which had a gargantuan real estate bubble that's still a long way from fully collapsing. And elsewhere in Europe, Greece cooked the books and lied about it for years, and even Iceland was in trouble when the country was turned into a giant hedge fund.
The financial crisis was caused by Generation-Xers, in both Europe and North America, who knowingly created tens of trillions of dollars in fraudulent securities, and fraudulent sold them as AAA rated.
Like most politicians, Barroso is in a "stupendous level of self-delusion." Telegraph
Arsonists burned out a mosque in the West Bank early Tuesday morning, leaving behind spray-painted graffiti saying, "The war has just begin" and "You will pay the price" in Hebrew. The phrase "price tag" is frequently used by far-right Israeli settlers to denote revenge attacks against Palestinians or IDF soldiers in response to moves by the Israeli government to evacuate illegal West Bank outposts, or as retribution for attacks by Palestinians. The arson attack comes in the midst of a bitter political battle within Israel over Israeli-court ordered demolition of some West Bank settlements ruled illegal. Times of Israel and Israel National News
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(20-Jun-2012)
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Panic continues to grow in Europe
This morning's key headlines from GenerationalDynamics.com.
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On the 200th anniversary of the U.S. declaration of war on Britain and its colonies, representatives of the United States, Britain and Canada gathered at Fort McHenry to sign a "declaration of peace." The War of 1812 was the last conflict among the United States, Britain and Canada. The three nations were allies in both world wars, the Korean War and the Gulf War, and now fight side by side in Afghanistan. In a videotaped message, President Obama said the war gave the United States a sense of unity and independence, and made icons of the American flag and "The Star-Spangled Banner." Baltimore Sun
From the point of view of Generational Dynamics, the War of 1812 was an Awakening Era war for America (like the Vietnam War), brought about by a "generation gap" between the generations that survived the Revolutionary War and the younger generations that grew up afterwards.
The Revolutionary War was, after all, a civil war, since it was British versus British. It was a generational crisis war for the colonists, but not for the people of England -- which is why so many people in England were rooting for the colonists.
After the war ended, the survivors were determined that the British should not be provoked in any way, and that good relations should be maintained.
The heart of the generational conflict in America came with the Embargo Acts of 1806-08. These laws were intended to maintain neutrality between England and France (which were at war with each other), but they were repealed because they were extremely unpopular. In the meantime, the British abducted some 6,000 American sailors and forced them to serve in the Royal Navy.
This led to increased hostility between America and England, but there was a generational split. The older generations (survivors of the Revolutionary War) wanted to maintain strict neutrality with England, but the young "War Hawks" wanted to declare war, as many young people do. This resulted in the War of 1812, and the burning down of the White House in 1814. Francis Scott Key wrote the Star-Spangled Banner, which has become the national anthem.
Britain and America almost went to war again in the 1860s, when the British threatened to enter the American Civil War on the side of the South, but that was averted by hard diplomacy on the part of Abraham Lincoln, and the two countries have been at peace with each other since then. White House History
Reports in Russia's media say that the Pentagon is in talks with Central Asian states to leave behind military equipment, giving it to Kyrgyzstan, Tajikistan and Uzbekistan. The equipment would include armored vehicles, tank transporters, prime movers, tank trucks, special-purpose graders, bulldozers and water trucks. The objective would be to avoid the exorbitant costs of bringing the equipment home, after US and NATO forces pull out of Afghanistan in 2014. However, these three countries normally purchase arms from Russia, and so the Russians are very unhappy about this development. Eurasia Net
The people of Kyrgyzstan lived in relative peace until June, 2010, when an ethnic war broke out between ethnic Kyrgyz and Uzbeks, killing thousands, mostly Uzbeks. ( "14-Jun-10 News -- Kyrgyzstan civil war expands into genocide") Since then, the situation in southern Kyrgyzstan has changed enormously, with discrimination against Uzbeks increasing dramatically. Uzbeks can no longer run business or get jobs, and Uzbek imams have been dismissed and replaced by Kyrgyz imams. Mass arrests of politically active Uzbeks have been going on, leading to a backlash of radicalization. Hundreds of Uzbeks are now training in terrorist camps in Afghanistan and Pakistan. And now, the clashes between Uzbeks and Kyrgyz are spreading north, where there are also ethnic clashes between Kyrgyz and Russians. Tensions between Russians and Kyrgyz are especially dangerous for many reasons. First, Russians (12.5 percent of the republic’s population) are the second most numerous (after Uzbeks) ethnic minority in Kyrgyzstan. Secondly, Russia would inevitably involve itself in the conflict should a clash erupt between Kyrgyz and local Russians inside Kyrgyzstan. Jamestown
Antonis Samaras, leader of the New Democracy party that got the most votes in Sunday's election in Greece, appears close to forming a government. New Democracy by itself does not have a majority of the delegates in the legislature, but Samaras is apparently forming a coalition with two other parties, the Socialist PASOK party and the Democratic Left. What ties these three parties together is that they all support staying in the eurozone and accepting the bailout, even though it will require continued austerity measures. Other parties, led by Alexis Tsipras's hard left Syriza party, are advocating abandoning the austerity programs, even if it means leaving the eurozone. Kathimerini
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There was a brief sigh of relief in Europe when Antonis Samaras's New Democracy party got the most votes in Greece's election on Sunday, but the euphoria dissipated quickly when people realized that nothing had changed, and that Europe is still circling the drain. Spain's ten-year bond yields (interest rates) surged well into crisis territories at 7.16%, up from 6.8% on Friday. Spain's bonds are now in full-scale panic, and so a new bailout will have to be heading Spain's way very quickly. AFP
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(19-Jun-2012)
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Egypt's Bedouin tribesmen break with Muslim Brotherhood
This morning's key headlines from GenerationalDynamics.com.
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Europeans breathed a sigh of relief on Sunday. Greece's voters, as anxious and divided as ever, on Sunday, as they gave a plurality of votes to the right of center New Democracy party, led by Antonis Samaras, with about 30% of the vote. However, trailing very close behind was the Coalition of the Radical Left (Syriza), led by Alexis Tsipras, with 27% of the vote. Samaras's party will not have a majority in the legislature, so he'll have to form a governing coalition, which will be a problem. But just as significant is the fact that Samaras himself promised to renegotiate the austerity terms of the Greek bailout, though not as forcefully as Tsipras, but German Chancellor Angela Merkel has stated clearly that no renogotiation is possible. And as we've pointed out repeatedly, even in the best of circumstances, Greece will need another bailout within a couple of months or so. Kathimerini
Estimates are that turnout was only 15% of eligible voters in Sunday's presidential elections in Egypt, as voters showed their outrage at the choice of candidates -- Ahmed Shafiq, a military figure appointed by deposed dictator Hosni Mubarak, and Mohamed Morsi, the candidate of the Muslim Brotherhood. Official results will be announced in a few days, but it's not clear that it will make any difference. On Sunday, the Supreme Council of the Armed Forces (SCAF) issued a statement that they are taking control of the legistation and the budget, and that they will appoint the people who will draft a new constitution. There's a lot of despair in Egypt that goes well beyond their economic problems -- Mubarak's military dictatorship enforcers are back in charge, as if the "Arab Spring" had never happened. Al-Ahram (Cairo)
The Islamist parties -- the Muslim Brotherhood and the Salafist al-Nour party -- together claimed 75% of the seats in January's parliamentary elections in Egypt. This made the Bedouins, who live in the tribal lands of western Egypt, wearing long dresses, turbans, and sunburned complexions, very happy, because the Brotherhood politicians had promised to respect the Bedouins, unlike Mubarak. But in the five months that have passed until last week, when Egypt's Supreme Constitution Court dissolved the Parliament, Bedouins have become disillusioned with the Brotherhood who, they say, performed "shamefully" as parliamentarians:
"The Muslim Brotherhood wants to impose their ideology on tribal customs and traditions that ruled this part of the world for hundreds of years. They want to invade this community and erase our tribal character."
Thus, many Bedouins have switched allegiance, and supported Mubarak's crony, Ahmed Shafiq, in Sunday's presidential elections. McClatchy
France's parliamentary elections on Sunday gave Socialist Party president François Hollande a big victory. In combination with his ally, the communist Left Front party, Hollande has a free hand to implement his socialist agenda, which he claims will bring economic growth to France. Hollande has already lowered the retirement age from 62 to 60, and he's promised to increase public spending, with additional expenditures for the state school system, and fund the expenditures by raising taxes on France's highest earners. France 24
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Generational Dynamics interviews with Stephen K. Bannon and Warren E. Pollock
This morning's key headlines from GenerationalDynamics.com.
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On the eve of Greece's Sunday elections, German Chancellor Angela Merkel warned Greece that it cannot rengotiate its bailout agreement with the EU. She was clearly directing her remarks at far left candidate Alexis Tsipras when she said that Greece will not be allowed to dodge its austerity agreement and "lead everyone else through the arena by the nose ring." This comes two days after Tsipras said that Angela Merkel's Europe "belongs to the past." He promised that, starting Monday, "We guarantee the Europe of the future!" UK Press Association and Telegraph (London)
Two car bombs in Baghdad Iraq killed at least 26 people on Saturday, the last day of a week-long Shia Muslim religious observance. Al-Qaeda linked Sunni terrorists have been targeting Shia targets throughout the Mideast, and Iraq has been a focal point since the withdrawal of American forces in December. If you look back in history, as I did in my lengthy 2007 article, "Iraqi Sunnis are turning against al-Qaeda in Iraq", you find that Iraqis put nationalism ahead of religious differences, meaning that the Sunni versus Shia conflicts in Iraq are mostly driven by foreign fighters -- al-Qaeda Sunnis from Jordan and Saudi Arabia, and Shias from Iran. AP
The United Nations is suspending the observer mission in Syria, which was part of the Kofi Annan "Peace Plan." The peace plan was a failure from the moment it was announced, and only provided a useful cover for Syria, Iran and Russia to cooperate in killing innocent Sunni Arab protesters in Syria. None of the observers has yet been killed or badly wounded, but that could change at any time because of the continuing violence. VOA
In this 8 minute interview, we discussed last weekend's bailout of Spain, and how public debt is increasing worldwide. The Victory Sessions/Stephen K. Bannon and MP3 Podcast
Here's Warren E. Pollock's description of our 35 minute interview:
"Back to pragmatic analysis, John Xenakis and I compare and contrast conclusions based on Generational Theory against my findings using my methodology of trajectories. We talk about the generational aspects around the globe including the United States, Western Europe, Russia, Georgia, Turkey, Syria, Israel, and China. Major flash-points and trends are identified.Generational Dynamics is very important at this time in America's history because we've entered a new "crisis period." Ten years ago, all the nation's senior government, business and educational leaders and managers were from the generation that grew up during World War II, and experienced the trauma of seeing homelessness, starvation and death all around them, while they lived in fear of German and Japanese bombers. That risk-aversive generation dealt with problems using compromise and containment.
Today, those risk-aversive leaders are gone, retired or dead. Today's leaders are from the "Baby Boomer generation," born after World War II with no personal memory of that war. The people in this generation are not risk-aversive. The people in this generation are more likely to be risk-seeking, arrogant, hubristic, narcissistic, and self-assured. That's why America's attitudes have changed so much in the last ten years.
Once you understand Generational Dynamics, then you'll understand a very great deal about how the world works, and about America's future for the next thirty years."
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Mubarak's military cronies seem poised to rule Egypt
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Mainstream analysts were apocalyptic on Friday, which always surprises me, since usually they're giggly and optimistic, and they call me apocalyptic. Since last month's elections only produced a splintered party result, and no group of parties was able to get together to form a governing coalition, a new election will be held on Sunday. In the worst case scenario, the winner will be the Coalition of the Radical Left (SYRIZA), led by Alexis Tsipras, 38, and he will immediately repudiate the EU's austerity requirements, causing Greece to go bankrupt and leave the euro currency, triggering a world financial crisis. People in Greece are extremely anxious, especially old people with a memory of starvation in World War II, who are stockpiling food and money. People are withdrawaling a billion euros a day from Greek banks, fearful that their euros will be converted to drachmas worth much less. With Greece gone from euroland, Ireland, Portugal and Spain would soon follow, triggering a worldwide financial crisis. AP
Last year I proposed the "Kick the Can Theory," which says that if you want to know what's going to happen, just assume that European leaders will "kick the can down the road," meaning that they'll do the minimum possible to postpone the crisis a little longer, to prevent a current crisis without fixing the problem, so that the crisis will recur in worse form weeks or months later. Last month, I asked what would happen in Greece if the "Kick the Can Theory" holds in that case. I wrote that, "Whoever wins on June 17 will agree with Europe on some face-saving minor reduction in the austerity requirements, thus kicking the can down the road for a few weeks."
It's beginning to look like that's exactly what's going to happen. Alex Tsipras is no longer talking about throwing the austerity requirements out; he's talking about "renegotiating" them. And some EU officials are talking about softening the austerity requirements, perhaps by lengthening the amount of time required to implement them. So it looks like a crisis will be averted next week, and the can will have been kicked down the road once more.
As I've been saying for years, there is NO solution to this problem. There was a huge real estate and credit bubble that grew over a period of 12 years (1995-2007), and it's going to take that many years for the bubble to deflate. And by the Law of Mean Reversion, it will actually take a lot longer. Recall that after the stock market crash of 1929, the stock market didn't return to pre-crash levels until 1953. In the meantime, it's truly astonishing to see how powerful the "Kick the Can Theory" is in predicting what politicians are going to do -- in Europe and America. Spiegel
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Hizb Al-Tahrir, or the Islamic Party, is an international Islamist organization that has been proactively working for the re-establishment of a global Islamic caliphate, to be governed as per the teachings of the Koran. In recent years, it has called for military coups in Islamic countries. The group has branches in Uzbekistan, Turkmenistan, Afghanistan, Pakistan, Bangladesh, Indonesia, Malaysia, Tunisia, Egypt, Jordan, Lebanon, Turkey, Morocco, Palestinian territories, etc. In Islamic countries, it has sought to recruit top military officers to its ideological fold in the hope of carrying out a military coup to usher in an era of Islamic rule. In Pakistan, it has strived to bring about an Islamic revolution, hoping to transform Pakistan into an ideal Islamic state that could lead the Ummah (the global Muslim nation). In recent years, several top Pakistani Army officers were discovered to have links with Hizb Al-Tahrir Pakistan, and were suspended. The American branch is holding a major conference in the Chicago area on Sunday, "Revolution: Liberation by Revelation - Muslims Marching Toward Victory." The exact place will be announced at the last minute in order to discourage protesters. Memri and Hizb Al-Tahrir America
There are two ways to look at Thursday's rulings by Egypt's Supreme Judicial Court, dissolving the parliament and allowing a former Prime Minister appointed by deposed leader Hosni Mubarak to run for president in Sunday's election. One way of looking at it is to say that Egypt's court system is finally beginning to reassert itself, after being powerless for decades under dictatorial rule. The other way is to say that the court's judges, who had been appointed by Mubarak, are seeking to reinstate the army's power and to thwart the Egyptian Revolution. The latter is certainly what the young revolutionary liberals are saying. With the parliament dissolved, the Supreme Council of the Armed Forces (SCAF) is in charge of all functions of government. All the liberal candidates were defeated in the first round of the election. One is Ahmed Shafiq,a military figure appointed by Mubarak. The other is Mohamed Morsi, the candidate of the Muslim Brotherhood. So the discouraged liberals have to choose between a secular military man and an Islamist, leading many of them to conclude that their whole revolution has been a waste of time and blood. CS Monitor
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Spain unravels in bond panic
This morning's key headlines from GenerationalDynamics.com.
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Russia's military press are mentioning the 76th Pskov airborne division, the 15th army brigade from Samara, as well as GRU special forces from the South Military District (SMD - the Caucasus) manned by servicemen from Chechnya and the Black Sea marine brigade as being among the units preparing for expeditionary engagements outside Russia’s borders. It's possible that they're preparing for ground action in Syria, but it's more likely that they're preparing for a summer war in the Caucasus, as we've been reporting. Russia has been occupying, and threatening to annex, substantial regions within Georgia, and is bitterly critical of discussions leading to Georgia becoming a member of Nato. Jamestown
In a related matter, Russia's Army General Nikolai Makarov spoke to a Finnish audience in Helsinki, Finland, and stunned his audience by announcing that a possible Finnish entry into NATO “would constitute a military threat against Russia” and that “closer military cooperation between Finland and NATO” is also a “concern.” Makarov warned Finland to cease military exercises “in the East” (near Russia’s border). He also presented a PowerPoint slide with a map of NATO’s ballistic missile defense plans in Europe that the Finns interpreted as depicting their nation and the Baltic republics inside Russia’s sphere of influence. The presentation contained a map that split Finland in two, with the eastern part in Russia's sphere of influence, and the Western part in Europe. This division distantly brings to mind the secret protocol to the Molotov-Ribbentrop Pact between the Soviet Union and Nazi Germany, where the two big powers agreed to incorporate Finland and the Baltic countries into the Soviet Union’s sphere of interest. According to a researcher who attended the event, "The way the map was drawn wasn’t a complete coincidence. I wasn’t the only one who was slightly flabbergasted." Helsinki Times
Three major elections will be held this weekend. Elections in Greece may determine whether Greece remains in the eurozone. François Hollande won the presidency of France as a Socialist Party candidate, but he'll need for his party to do well in this weekend's parliamentary election, in order to give him the votes to implement his socialist agenda. Egypt has a presidential election this weekend, but the political scene is in turmoil, as a court has caused the parliament to be dissolved. CNN
Egypt's Supreme Constitutional Court on Thursday invalidated a law denying political rights to former aides of deposed President Hosni Mubarak, thus allowing Ahmed Shafiq in Egypt's election for president this weekend. Shafiq is expected to defeat his opponent, Mohamed Morsi, running under the banner of the Muslim Brotherhood. But the real stunning court decision on Thursday was that a third of the seats in parliament were invalid, resulting in the dissolution of parliament. These decisions have enraged young protesters in the "April 6 Movement," who are calling the two court decisions a "coup," because both of the decisions give additional powers to military rulers, thus empowering the "Mubarak status quo." Egypt is entering a period of extreme political chaos, with the election of a new president this weekend, but with no parliament, a recipe for return to dictatorship. On Islam (Cairo)
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I've written about bond panics before, particularly last year in Greece, but those panics were stopped by massive bailouts. Spain is now experiencing a bond panic, and the difference is that Spain has already gotten its bailout. On Thursday, the yield (interest rates) demanded by investors in Spain's 10-year bonds soared briefly above 7% on Thursday, before settling at 6.91%, a record. 7% is considered a crisis level, as it's the point where Greece, Ireland and Portugal had to receive bailouts. AP
In recent weeks, German officials have focused a significant amount of attention on the country's Salafists, members of a fundamentalist strain of Islam who are suspected of having close ties to Islamist extremists. On Thursday, they made their move, raiding Salafist facilities in seven German states and banning one of the most important Salafist groups in the country, the Millatu Ibrahim. In addition, two other Salafist groups have now been placed under investigation in the hopes of finding enough evidence to be able to ban them as well. Salafists have been in the headlines all spring, initially because of their drive to attract new members by handing out free Korans in major German cities. One of the groups heavily involved in that effort, known as "Die Wahre Religion" or "The True Religion," is among those now under investigation. The founder of Die Wahre Religion, Abou Nagie, has long been under observation by German officials due to his "support for martyrdom and the jihad in the sense of using violence to 'defend' Islam." Spiegel
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Greece's bank withdrawals accelerate as Sunday's elections approach
This morning's key headlines from GenerationalDynamics.com.
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Wednesday was the deadliest day in Iraq since the withdrawal of U.S. forces in December, after a series of 16 coordinated terrorist bombings in multiple cities of Iraq killed at least 65 people and wounded hundreds. Sectarian violence in Iraq fell sharply following President George Bush's "surge" in 2007, and it has been falling ever since -- until December. Within two days of the American withdrawl, Shia Prime Minister Nouri al-Maliki accused Sunni Vice President Tariq al-Hashemi of running death squads. Al-Hashemi fled the Baghdad before he could be arrested, but since then, the level of political conflict and the level of sectarian violence have both been increasing again. AP
Tuesday's statement by Secretary of State Hillary Clinton that the U.S. was "concerned about the latest information we have that there are attack helicopters on the way from Russia to Syria ... which will escalate the conflict quite dramatically" has infuriated the Russians.
On Wednesday, Russia's Foreign Minister Sergei Lavrov, said that Russia was supplying "anti-air defence systems" to Damascus in a deal that "in no way violates international laws."
"That contrasts with what the United States is doing with the opposition, which is providing arms to the Syrian opposition which are being used against the Syrian government."
Russia backed off slightly from this statement, but not before the White House issued a denial: "We do not and have not supplied weapons to the Syrian opposition. You know our position on that and we have made it very clear." AFP
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The threat of a renewal of war between Azerbaijan and Armenia became increasingly possible following an escalation in border clashes between the two countries since they ended their war with a cease-fire agreement in 1994. The truce left unsettled the region of Nagorno-Karabakh -- an Armenian enclave in the middle of Azerbaijan's territory, and tensions have been rising again. As we've reported in the past, Russia is anticipating a war between Azerbaijan and Iran as early as this summer. ( "8-Mar-12 World View -- Russia preparing for a Caucasus war involving Iran")
For that reason, Russia has been substantially reinforcing its military forces in the Caucasus. Russian forces invaded Georgia in 2008, and they are still occupying South Ossetia and Abkhazia -- Georgian provinces that Russia has hinted that it would like to annex to Russia. Russia is also occupying a portion of Georgia's southern Samtskhe-Javakheti province in the Akhalkalaki military base. Jamestown
Withdrawals from Greece's banks have been increasing each day for the last couple of weeks, in anticipation of bank runs after Sunday's elections. Greeks have been withdrawing €600-900 million per day, presumably stashing the money in their mattresses. According to senior banker, "As we approach the last few days before the elections I expect deposit withdrawals to rise further. And I wouldn't be surprised if by Friday we saw outflows of €1 billion to €1.5 billion." Capital (Athens) / WSJ
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United Nations calls the Syria conflict a 'civil war'
This morning's key headlines from GenerationalDynamics.com.
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Secretary of State Hillary Clinton said the U.S. was "concerned about the latest information we have that there are attack helicopters on the way from Russia to Syria." The use of the helicopter gunships by Syria's Bashar al-Assad regime to slaughter innocent Sunni Arabs represents a dangerous new turn in the conflict. Attack helicopters are heavily armored and can carry machine guns, rockets, missiles or other weapons capable of firing at ground targets. Russia claims that the military equipment they're sending to Syria can't be used against civilians, so I guess al-Assad will save them in case Damascus is attacked by Martians. AP
United Nations peacekeeping chief Herve Ladsous said on Tuesday that the Syria conflict is now a "civil war." You can anything you want a "civil war," but from the point of view of Generational Dynamics, a crisis civil war is impossible in Syria at this time, because Syria is in a generational Awakening era. Long-time readers will remember the farcical nature of politicians, journalists and analysts who didn't have the vaguest idea what was going on calling the Iraq war a civil war. The pivotal moment came in November, 2006, when NBC news announced, for the sleaziest ideological reasons, that the Iraq war was a 'civil war.' (See "News as theatre: NBC announces it will call Iraq war a 'civil war'") Iraq was also in a generational Awakening era, and what was really ironic about that whole ridiculous NBC announcement was that it just preceded President George Bush's "surge," leading to a rapid collapse in sectarian violence. (See "Brookings Institution does a full reversal on Iraq war") So, when a politician like Herve Ladsous calls something a "civil war," then it's going to be for ideological reasons, and it will probably have little to do with what's actually going on. Bloomberg
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The eurozone gave every appearance of rapid deterioration on Tuesday, as Spain's bond yields (interest rates) soared past record levels, while Italy's bond yields approached record levels. Spain's 10-year bond yield reached 6.71%, meaning that investors are demanding 6.71% interest to loan Spain money for 10 years. An increase in Spain's bond yields means that investors are betting that Spain will default. Bond yields above 6% are considered highly dangerous and unsustainable, and bond yields above 7% are considered a full-blown crisis -- and Spain's yields are close to 7%. As for Italy, 10-year bond yields reached 6.3% on Tuesday, settling at 6.17% by the end of the day. Italy's Prime Minister Mario Monti said Italy doesn't need a bailout, something worth a hearty laugh. For comparison purposes, America's 10-year Treasury yields reached a historic low of 1.67% on Tuesday, indicating that investors are pouring their money into U.S. Treasuries for safety. Globe and Mail
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Europe in chaos two days after bailout of Spain announced
This morning's key headlines from GenerationalDynamics.com.
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United Nations observers watched as tanks and helicopter gunships attacked unarmed civilians in the city of Homs. In a new development, the regime of Syria's president Bashar al-Assad is using unmanned drones to identify targets for shelling. It's thought that the drones were supplied by Iran. Metro (London)
Debka, which has gotten several things wrong lately, is quoting its intelligence sources as saying that President Barack Obama has ordered the U.S. Navy and Air Force to accelerate preparations for a limited air offensive against the Bashar al-Assad regime, and imposition of no-fly zones over Syria. The objective would be to knock out Assad’s central regime and military command centers, and restrict Syria's army and air force. However, Washington is not sure how Moscow would react aside from sharp condemnations. Debka
When the €100 billion bailout of Spain was announced on Saturday, with no austerity strings attacked, European officials hoped that the markets would be "calmed," but instead there was enormous chaos on Monday. Stocks surged early in the day, but fell sharply as investors realized that the bailout was barely worth the paper it was written on. The yields (interest rates) on Spain's government bonds went up to 6.5%, indicating that investors are increasingly betting that Spain is going to default (like Greece). Italy is next in line, as its bond yields went up to an unsustainable 6%. Reuters and Irish Times
Politicians in Greece are planning to renegotiate the terms of the EU bailout, after EU announced that Spain will receive a €100 billion no-strings bailout. The far left Syriza party has already claimed that Europe was bluffing when it announced they would stop bailing out Greece if Greece didn't meet its austerity commitments, and they've already said that they'll abandon those commitments if they win in Sunday's election. According to a statement on Monday from a Syriza spokesman, "Developments in Spain fully vindicate us in our reading of the crisis: This is a deep structural crisis of the eurozone itself." In Ireland, opposition candidates are demanding that the government negotiate a better bailout deal, to gain the same concessions that Spain got. Kathimerini and Irish Examiner
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Ilias Kasidiaris, the spokesman for the neo-Naza Chrysi Avgi (Golden Dawn) political party, who slugged two women on nationwide TV during a political debate last week has finally come out of hiding to face arrest. However, he's suing the two women for unprovoked verbal abuses, and is also accusing the television station of abuse of power. Kathimerini
The supply route through Pakistan to the Nato forces in Afghanistan has been closed since a drone strike last November accidentally killed 21 Pakistan soldiers. Pakistan and the U.S. have been negotiating the terms for reopening the supply routes, but those attempts were abandoned on Monday, when it became clear that no progress would be made. The Pakistanis are furious about a remark made last week by U.S. Defense Secretary Leon Panetta:
"It’s an increasing concern that this safe haven exists and that there are those like the Haqqanis who are making use of that to attack our forces. We are reaching the limits of our patience here. For that reason, it’s extremely important that Pakistan take action to prevent this kind of safe haven.We have made that very clear time and time again, and we will continue to do that. But as I said, we are reaching the limits of our patience."
Even worse, Panetta mocked the Pakistanis over how easily they were fooled in the U.S. commando raid that killed Osama bin Laden -- a joke that was told in front of an audience of Indians in Delhi. CNN and CBS/AP and The News (Pakistan)
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Hezbollah leader Nasrallah's defiant threat to Syrian kidnappers backfires
This morning's key headlines from GenerationalDynamics.com.
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An important side show of the crisis in Syria is now entering its third week. A busload of Shia Lebanese citizens were kidnapped in Syria on May 22, as they traveled back to Lebanon from a religious pilgrimage to Iran. Hezbollah leader Sayyed Hassan Nasrallah, who is normally the one fomenting terrorist acts, is now reeling from the effects of this terrorist attack, which has him as a target. The kidnappers are demanding that Nasrallah apologize for his support of Bashar al-Assad, whose regime is exterminating village after village of Sunni Arabs. Nasrallah, who represents Shia Muslim terrorists, and has close ties with Iran, has threatened war against the kidnappers. There were signs that the hostages would be released this weekend, but Nasrallah's recent speech, in which he defiantly said that the kidnapping would not sway his full support of al-Assad, has "complicated" the negotiations. The Syrian rebels who abducted the Lebanese said that they would release them were they ordered to do so by a new parliament of a "new civil state" in Syria. Daily Star (Beirut)
On Sunday, Spain's prime minister Mariano Rajoy said that Saturday's bailout announcement was a "victory" for both Spain and Europe, and that, "It was the credibility of the euro that won." So Spain is going to get a €100 billion bailout, apparently with no onerous austerity requirements. But nothing has changed in Spain, so Spain will need another bailout before long. And if Spain can get a bailout with no austerity strings attached, then why can't Greece, Ireland and Portugal? First in line will be Greece, holding an election on June 17, where the leading candidate, Alex Tsipras, is promising to end the harsh austerity program, and who claims that the EU is bluffing when they say they won't bail out Greece any more. It looks to me like Tsipras is right.
Several years ago, someone was mocking me, saying that I've set myself up so that I could never be wrong. "You've predicted a financial crisis, but you just keep saying that it hasn't happened yet." My response was this: The amount of public debt has been increasing exponentially for years, and if it ever starts leveling off and decreasing, then you can declare me wrong.
Since I made that remark, the level of public debt has increased many times over. Look what's just happened in Spain. Spain's debts were incurred by the individual banks, who have hundreds of billions of toxic foreclosure loans on their books that will never be repaid because Spain's humongous real estate bubble is rapidly collapsing.
So Spain's debts belong to the individual banks, but the bailout gives €100 billion to Spain, which it will use to bail out the banks, leaving the debt on the books of Spain, rather than the banks. What we've been seeing in country after country in euroland is that private debt is being taken on by the euro nations.
And now, everyone's blaming the Germans for standing in the way of "euro bonds." What euro bonds would do is move the debt from the books of the individual nations to the euro zone as a whole, so that all 17 euro nations would be jointly responsible for the individual debts of the individual nations, and those debts were previously held by private institutions (banks).
The same thing has happened in the United States, with a series of fiscal and monetary programs that bailed out states like California and Illinois, as well as huge banks on Wall Street. And now the lastest bailout program, known as "Operation Twist," is scheduled to come to an end this month, leading analyst firms to demand an extension, or a new round of quantitative easing.
This continuing exponential growth of public debt is remarkable for three reasons. First, it's remarkable that it's happening at all.
And second, it's remarkable that it has no limit. Prior to 2008, a government program costing more than $10 or $20 billion was considered very expensive. Now we think nothing of a few hundred billion, or a trillion or two. I hear nuts like Krugman say that it's OK to go into debt by another $5-10 trillion. Well, what's the limit? After that, will it be $20 trillion? Then $100 trillion? Then a quadrillion? Has anyone in Krugman's camp set any limit whatsoever?
And the third remarkable thing is that it's been useless. None of these programs has had the desired effect of causing "growth," by which is meant recreating the housing and credit bubbles of the last decade. This is the generational insight. People today are not like people in the 1990s. They're like people in the 1930s. They're risk averse, and they don't trust government or Wall Street because they're very well aware that people like Krugman are liars.
So, the bailout of Spain buys a little more time, and moves more private debt onto the public's books. Sooner or later, Germany will have to succumb to the pressure and agree to eurobonds, and then the debt will have moved from the 17 individual nations to the eurozone as a whole. Then the next step will be pressure on Britain (a non-euro country) to agree to an EU-wide bond, which means that all 27 EU countries will be responsible for the debts of Spain's banks. Under those circumstances, why should anyone practice austerity? Guardian and Reuters
Hosni Mubarak, who ruled Egypt for thirty years until he was deposed last year by the Arab Spring, may be close to death, though officials are saying that the 85 year old former leader is not dying. Mubarak has been in Tora Prison Hospital since June 2, after having been sentenced to life imprisonment for his role in the killing of peaceful demonstrators during the early days of the January 25 Revolution. According to one prison official, "He is an old and ailing man; he is certainly very depressed to have ended this way, but life and death are in the hands of God." Al-Ahram (Cairo)
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Myanmar’s president on Sunday night declared a state of emergency in a western state where sectarian tensions between Buddhists and Muslims have unleashed deadly violence. He warned that if the situation spun out of control, it could jeopardise the democratic reforms he has been instituting since taking office last year. A state of emergency effectively allows the military to take over administrative functions for Rakhine State, a coastal region that borders Bangladesh.
From the point of view of Generational Dynamics, this is an ominous development. Burma gained independence in 1948, but then had a bloody civil war among different ethnic groups, reaching a climax in 1958. In October, 2007, Burma's army overreacted to demonstrations by protesters, led by Buddhist monks. Hundreds of activists and citizens were shot dead or burned alive in government crematoriums. Thousands of monks were rounded up and detained. Some were found floating face down in rivers. ( "Burma: Growing demonstrations by the '88 Generation' raise fears of new slaughter" and "Burma (Myanmar) demonstrations fizzle after violent government response" )
The bloody 2007 violence was typical of a country in the decades following a crisis civil war. The survivors of such a war justify bloody suppression of protests as necessary to prevent a new civil war. This suppression leads to a new crisis civil war decades later, when the survivors of the previous civil war are gone.
Much to my surprise, a new government came to power last year, with a conciliatory approach, freeing the well-known political prisoner Aung San Suu Kyi and signing a peace agreement with the Karen ethnic group.
If this new violence between Buddhists and Muslims grows, it will be a problem by itself. But the broader problem is that it will stir new anxieties among the aging generation of survivors of the last crisis civil war, and justify a new round of violent political suppressions. AP and BBC
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Spain asks Europe for €100 billion bailout for banks
This morning's key headlines from GenerationalDynamics.com.
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Foreign Minister Sergei Lavrov on Saturday reaffirmed Russia's intention to continue blocking United Nations Security Council resolutions to resolve to Syrian crisis by launching a military campaign similar to those that were waged by the West in Iraq and Libya. Lavrov implied that the Kofi Annan plan has failed so far because of sabotage by the West:
"The hopeful signs that started to emerge after the unanimous adoption of this plan on April 12th have apparently come into conflict with the designs of those whose real goal is more and more trouble. These folk need trouble in order to use it as a justification of foreign military intervention in Syria. This is why Kofi Annan’s peace plan has started to stall. Russia wants to change this by improving coordination among foreign countries that can influence the Syrian situation. Unfortunately, it is not yet clear whether the current diplomatic disarray over Syria is the result of inadequate coordination or of a deliberate strategy aimed at torpedoing Annan’s plan."
Lavrov endorsed Kofi Annan's new peace plan ( "7-Jun-12 World View -- Kofi Annan tries Syria 'Peace Plan' number 2"), which involves putting together a "contact group" of Western and Arab nations, plus Russia, China, Turkey and Iran, to hold endless committee meetings to discuss what to do next. Voice of Russia
The idea that Iran's Supreme Leader, Ayatollah Ali Khamenei, would agree to cooperate with The Great Satan (the United States) in a plan to get Syria's Bashar al-Assad to step down is so preposterous and absurd that no one could possibly consider it to be more than a joke -- or a ploy to give al-Assad more time to exterminate as many innocent Sunni Arabs as he likes. That's why reports that peace plan #2 was actually proposed by President Obama's administration and given to Annan as part of the President's "lead from behind" strategy indicates an enormous amount of dysfunction somewhere. One possibility is that the Obama administration is so out of touch with reality that it actually believes this plan might work, but I tend to discount this possibility mainly because Secretary of State Hillary Clinton really does know what's going on in the world, in my opinion. The other possibility is that these reports were leaked to discredit the Obama administration, and it's quite possible that the Russians did that. At any rate, Russia has endorsed the plan, and has made it clear that they're going to sabotage it, at the same time as they blame the West for sabotaging it. In the meantime, the al-Assad regime will going on exterminating one Sunni Muslim village after another. Debka
After insisting for months, and continuing into recent days, and even on Saturday morning, officials in Spain's government, led by Prime Minister Mariano Rajoy, insisted vehemently that Spain would not need or a request a bailout. So imagine everyone's shock and surprise when, on Saturday afternoon, Spain's Economy Minister Luis De Guindos announced that Spain had requested a €100 billion bailout during a three hour conference call with other European officials. De Guindos claimed that the bailout was "not a bailout but a loan," provided to Spain under very favorable terms, and without requiring the severe austerity measures that Greece has had to implement. Of course, the bailouts to Greece, Ireland and Portugal were also loans, but what's a little detail or two. The €100 billion will most assuredly not be enough. Spain's banks are hobbled with more than €180 billion in failing real estate loans, following the collapse of Spain's humongous real estate bubble. And there are several hundred more billion euros of bad regional debt in Spain.
Once again, I have to point out that Prime Minister Rajoy and other Spanish government officials have been openly lying for days, and possibly weeks. And once again I have to point out that lying is the norm in Washington, on Wall Street, in Brussels, and elsewhere. It really astonishes me to see, over and over again, open, full-throated lying, and NOBODY CARES. This is part of the same Generation-X culture whose prosecutors refuse to investigate and charge the banksters who knowingly created tens of trillions of dollars in fraudulent assets, and sold them as AAA rated, thus causing the financial crisis, and who are still in the same jobs, still committing fraud. Bloomberg
(Comments: For reader comments, questions and discussion,
see the 10-Jun-12 World View -- Russia blames the West for failure of Kofi Annan's peace plan in Syria
thread of the Generational Dynamics forum. Comments may be
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(10-Jun-2012)
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Northeastern India gripped by 'spider terror' panic
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Spain's senior officials, led by Prime Minister Mariano Rajoy, have been issuing statements for weeks, each one more vehement than the last, that Spain will absolutely, positively NOT ask for a bailout. These statements continued all through the day on Friday, as rumors swirled that Spain was about to ask for a bailout over the weekend. But leaks emanating from unnamed EU officials in Brussels and Berlin are saying that an announcement will be made on Saturday afternoon that Spain is seeking a bailout. The amount of the bailout has yet to be determined, but the IMF has estimated that Spain's banks alone will require a €40-90 billion bailout just to recapitalize them. Other estimates that include government debt and writing down toxic assets are in the range of €300-400 billion. Spain has to rush, since it's thought that the EU has to reach a decision before Greece's June 17 election, which might trigger a market panic. Reuters
Wall Street stocks ended their best week of 2012, following one of the worst weeks in a while. The manic-depressive behavior of Wall Street investors has absolutely nothing to to do with the value of stocks or the choice of the best investments. Wall Street is totally disconnected from the real world or any form of reality these days. This week's surge in stock prices occurred because the economic news has been so bad all week that investors are convinced that the Fed and the European Central Bank (ECB) are going to "print" trillions more money, pouring it into the banking system, after which it will drift into the stock market. The fact that bad economic news causes investors to buy stocks is a major feature of today's Wall Street culture of fraud and extortion. Reuters
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Mark Grant, Southwest Securities Managing Director, was interviewed on CNBC on Friday morning, and said the following (my transcript):
"When Europe talks about debt to GDP ratios, they don't include any contingent liabilities, which is derivatives, which is sovereign guaranteed bank bonds, sovereign guaranteed state bonds, or regional debt.So if you look at it -- and this is just addition - this is not magic or Mark Grant's opinion -- you take all the debt say, of this little teeny country of Greece, It's $1.3 trillion dollars. The debt to GDP ratio of Greece is 453%. If you include all of their obligations, then you begin to understand why this is such a huge problem."
Grant then turned to commentary about Spain:
"The numbers don't add up for Spain. They don't have enough money to bail out the regional debt and bail out the banks at the same time, and it's all going to add up. The EU can step in, but they only have so much money to step in with. So you can wander over the cliff here at any point in time in the next 60-90 days."
It's unusual to hear someone on CNBC who isn't saying that everything is great, since a negative outlook spooks their advertisers. One of the anchors tried to coax Grant into saying that we're not going to go over the edge of the cliff, even though we're at the edge. Grant replied: "There's a lot of danger when you're standing on the edge of the cliff."
Israel's Prime Minister Benjamin Netanyahu and Housing Minister Ariel Atias announced plans to build an additional 851 housing units for Jewish settlers in the West Bank. The announcement followed the defeat in the Knesset (legislature) of a bill, sponsored by pro-settlement Jewish activists, to legalize existing West Bank settlements that Israel's High Court had declared illegal. The announced plans to build 851 new settlements was immediately greeted by condemnation from Washington and London as undermining the "peace process." Haaretz
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A large and hairy, tarantula-like spider species has created panic in Assam, a state in northeastern India, after reports of fatal attack on humans, cause panic-stricken people have resorted to killing spiders by the dozens. The panic spread across the state after media reports of the death of two people, allegedly from spider bites. According to entomologist Ratul Rajkhowa:
"The reports of death of two persons due to spider attack are not authentic. No one has confirmed that they died of spider venom. Such venomous spiders do not exist in Assam. The widespread media reports have created panic among the people and they have resorted to killing spiders wherever they are found. Spiders are a very important component of our ecosystem and eradication of such a component by large scale killing will lead to multi-headed ecological problems."
(Comments: For reader comments, questions and discussion,
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(9-Jun-2012)
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Leon Panetta: U.S. is 'running out of patience' with Pakistan
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Ilias Kasidiaris, the spokesman for the far right neo-Nazi Chrysi Avgi (Golden Dawn) political party physically attacked TWO women representing far left Communist parties. During a heated political argument televised to the entire nation, Kasidiaris first threw water from his water glass at Rena Dourou, representing the radical far left Syriza party. That infuriated Liana Kanelli of the Communist Party (KKE), who stood up to confront him. He then slapped and punched her three times. Kasidiaris was locked in a room to wait for the police, but he broke down the door and escaped. As of this writing he's still at large, and the police have issued a warrant for his arrest. Kathimerini
Alexis Tsipras, leader of Greece's far left Syriza party, said on Thursday that his party would not fire any civil servants if it comes to power, ending the cooperation that Greece has embarked on with the European Commission’s Task Force. The previous administration agreed with the European Union to reduce the number of civil servants it employs by 150,000 by 2015, and his opponent, Antonis Samaras, leader of the conservative New Democracy party, has promised to abide by that agreement. According to Tsipras:
"Using the [EU-IMF] memorandum as their playbook, New Democracy wants to fire 150,000 civil servants by 2015 but will not address the public sector being bureaucratic and dysfunctional. Firings would limit its basic operations. ... We do not need any task force to tell us what to do.The chronic weakness of our public administration is mainly due to the plundering of the public sector by governments that imposed party politics and patron-client relations."
EU officials have made it clear that Greece will not continue to receive bailout payments if Tsipras wins and goes through with his threat to stop the austerity requirements. Tsipras claims that EU officials are bluffing.
Greece's unemployment rate continues to increase, rising to 21.9% in April. The unemployment rate among young people (15-24) rose to 52.8%. Kathimerini
America's increasingly hostile relationship with Pakistan became even worse on Thursday, when U.S. Defense Secretary Leon Panetta refused to end drone strikes on Pakistani terrority, as demanded by may Pakistani officials. Panetta referred to the Haqqani network terrorists' "safe haven" in the tribal areas of Pakistan:
"It’s an increasing concern that this safe haven exists and that there are those like the Haqqanis who are making use of that to attack our forces. We are reaching the limits of our patience here. For that reason, it’s extremely important that Pakistan take action to prevent this kind of safe haven.We have made that very clear time and time again, and we will continue to do that. But as I said, we are reaching the limits of our patience."
Panetta did not indicate what action would be taken when the U.S. finally reaches the limits of its patience. The News (Pakistan)
Former United Nations secretary-general appeared to have aged 15 years in the last two months, as he told the U.N. General Assembly on Thursday:
""I must be frank and confirm that the plan is not being implemented.[I want to express] horror and condemnation at the fact that a new massacre of tens of civilians including children and women was perpetrated. Those responsible for perpetrating these crimes must be held to account. We cannot allow mass killing to become part of everyday reality in Syria. ...
We must find the will and the common ground to act — and act as one. Individual actions or interventions will not resolve the crisis. As we demand compliance with international law and the six-point plan, it must be made clear that there will be consequences if compliance is not forthcoming."
Annan was referring to news of a new massacre, similar to last week's massacre in Houla. The new massacre was in a village called Al-Kubeir (or al-Qubair), near Hama.
However, the harshest words came from current U.N. secretary-general Ban Ki-moon, who said that the new massacre was "shocking and sickening":
"The trail of blood leads back to those responsible. Any regime or leader that tolerates such killing of innocents has lost its fundamental humanity."
Ban said that the killings indicated a patter of crimes against humanity, subject to international humanitarian law and possible war crimes prosecution. Now Lebanon / AFP
A number of commentators are saying that Syria is already in the grip of a sectarian conflict between the Alawites and the Sunni Muslims. Syria's president Bashar al-Assad is a member of the Alawite group which is considered to be an offshoot of Shia Muslim. Thus, Iran and Hezbollah are supporting al-Assad and the Alawites, and Saudi Arabia and Qatar are supporting the Sunnis.
Kofi Annan remarked on Thursday that he had met with al-Assad in Damascus nine days ago, and urged him to make a strategic decision to change his path. "Clearly, all parties must cease violence, but equally clearly, the first responsibility is with the government." However, since that meeting nine days ago, two massacres have occurred, and the violence has increased.
The pattern in both massacres was the same: The inhabitants of a Sunni village or hamlet is "softened up" by shelling by the Syrian regular army, and then the Alawite gangs of "Shabiha" criminals and thugs come in and go house to house, slaughtering the everyone, including women and children.
The BBC analyst that I heard on Thursday suggested that these massacres are being driven not by al-Assad but by the Alawite Shabih thugs. Arab Sunnis are 65% of the population of Syria, but they're being ruled by an Alawite minority, and they're sick and tired of being under the boot of the minority. So the Alawites are afraid of losing their privileged position if al-Assad is forced to step down, and so they're driving the massacres in the hope of creating enough confusion that al-Assad will be able to stay on. The Alawites are the real power now, according to this analyst, and they're the ones calling in army strikes and sending in thugs to slaughter Sunnis. Thus, the departure of al-Assad would make no difference at all.
From the point of view of Generational Dynamics, what we're seeing in Syria is very similar to scenarios we've seen in Iraq and Thailand. Like Syria, Iraq and Thailand are in generational Awakening eras (like America in the 60s).
In Thailand, the fair-skinned "yellow shirt" Thai-Chinese élites were the ruling minority, while the vast majority of the population were the poor "red shirt" dark-skinned laborers. In Iraq under Saddam Hussein, the Sunni minority was ruling the Shia majority. What happened in both Thailand and Iraq was that the ruling minority used brutal tactics to keep the majority under control, but the majority reasserted itself. Furthermore, this was done without a crisis civil war -- crisis civil wars never occur in generational Awakening eras.
The same thing is now happening in Syria, with the Sunni majority reasserting itself against the Alawite minority. Many people, including Kofi Annan, are talking about a huge civil war in Syria, but that can't happen in a generational Awakening era. However, the problem always was and always will be that this is not just a conflict within Syria; it's a proxy conflict between Iran and other Shias versus Saudi Arabia and other Sunnis. And the inevitable danger is not for a civil war in Syria, but that this will be the trigger for a great Shia vs Sunni war engulfing the entire region. Irish Times
(Comments: For reader comments, questions and discussion,
see the 8-Jun-12 World View -- Ban Ki-Moon accuses Syria's al-Assad of crimes against humanity
thread of the Generational Dynamics forum. Comments may be
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(8-Jun-2012)
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Eurozone officials haggle over how to bail out Spain
This morning's key headlines from GenerationalDynamics.com.
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Kofi Annan's six-point "peace plan" for Syria, announced in six weeks ago, has been a disaster for Syria, and arguably has actually increased the violence. It provided a figleaf for Syria's president Bashar al-Assad to actually perpetrate increasingly brutal violence while saying that he supports the peace plan, and for Russia, China and Iran to continue to provide political support and weapons to allow Assad to continue to his extermination policies. Particularly after last week's horrific slaughter in Houla, the figleaf has dissolved, and it's clear to pretty much everyone that the Annan plan is at best worthless.
Annan's new proposal is for the creation of a "contact group" of of nations:
The main objective of Annan's new proposal is to get Russia to commit to the idea of forcing al-Assad to step down. Russia has, in fact, hinted that they would not object to al-Assad stepping down, provided that Russia's commercial interests are protected in whatever new regime takes its place.
However, it's very unlikely that Iran will cooperate with this plan. Iran has been vigorously supporting al-Assad's violence for reasons that go well beyond commercial interests -- Iran, Hizbollah and Assad are the main Shia belligerents in the growing Shia versus Sunni conflict in the Mideast. Reuters
U.S. Secretary of State Hillary Clinton was cool to the idea of bringing Iran into the discussions over a peace plan for Syria:
"It's a little hard to imagine inviting a country that is stage managing the Assad regime's assault on its people."
The new Kofi Annan peace plan would give Iran new political prominence, at a time when there are serious disagreements over Iran's nuclear enrichment programs. However, this comes at a time when Russia's president Vladimir Putin says that he wants to act as mediator between the U.S. and Iran. AFP and Moscow Times
Syrian activists said Wednesday pro-government militia and security forces killed at least 78 people, including women and children, in the central province of Hama. They said some of those killed in the villages of al-Kubeir and Maazarif were stabbed to death and at least 12 bodies were burned. The Bashar al-Assad regime followed its standard pattern: Gangs of "Shabiha" criminals and thugs armed with guns and knives carry out the attack after regular Syrian troops shell the area. VOA
France's new Socialist Party president François Hollande is reversing one of the austerity measures passed by his predecessor, Nicolas Sarkozy. Hollande issued a decree lowering the retirement age from 62 to 60, allowing some workers to retire at age 60 on a full pension. Sarkozy's administration had raised the retirement age from 60 to 62 after France faced worldwide ridicule for allowing people at age 60 to retire with a full pension in the midst of a financial crisis. One of Hollande's campaign promises was to promote economic growth, but it's hard for me at least to see how letting people retire at age 60 with a full pension promotes growth. Expatica France/AFP
As we reported last week, U.S. officials confirmed authorship of Stuxnet computer virus that attacked Iran's nuclear enrichment program. Both Democrats and Republicans have been condemning this security leak, since it's an admission of an act of cyber-warfare, and it invites a retaliatory attack. Republicans were particularly critical, especially John McCain, accusing the President Obama's administration of purposely leaking the information in order to strengthen his foreign policy credentials in an election year. Whatever the reason, this official confirmation is a potential disaster. The Hill
The Moody's credit rating agency downgraded the credit ratings of six German banks because of "the increased risk of further shocks emanating from the euro area debt crisis, in combination with the banks’ limited loss-absorption capacity." Germany’s largest bank, Deutsche Bank, is still being reviewed by Moody’s and could also have its rating cut. According to Moody's, these German banks have only a small cushion of equity to withstand shocks -- such as might occur if Greece leaves the eurozone. Telegraph
Although Spain's politicians are insisting that Spain has no intention of requesting an EU bailout, few people doubt that Spain banks will, in fact, require a bailout very soon. The haggling going on behind the scenes is over how the bailout is to take place. Normally, Spain would receive a bailout, and would use the money to recapitalize its banks, but Spain does not want to do that, since the debt would be Spain's books, and the bailout would come with annoying austerity demands. Instead, Spain wants the bailout money to go directly to the banks. German officials are opposed to this for obvious reasons -- an individual bank could declare bankruptcy at any time and avoid repaying the debt, something that's much more difficult for a nation. Independent
(Comments: For reader comments, questions and discussion,
see the 7-Jun-12 World View -- Kofi Annan tries Syria 'Peace Plan' number 2
thread of the Generational Dynamics forum. Comments may be
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(7-Jun-2012)
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Cyprus seeks EU bailout, and prices fall in Greece
This morning's key headlines from GenerationalDynamics.com.
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An American drone strike has killed Abu Yahya al-Libi, al-Qaeda's second in command, according to American officials who say that this is a major blow to al-Qaeda in Pakistan. Al-Libi was a jihadist theologian who rose to prominence in 2005 when he escaped US custody in Afghanistan, becoming a major motivational figure for Al-Qaeda, masterminding its propaganda machine. "Al-Libi is a key motivator in the global jihadi movement and his messages convey a clear threat to US persons or property worldwide," according to the U.S. State Dept. AFP
Pakistan's Foreign Affairs Ministry called U.S. Chargé d’Affairs Ambassador Richard Hoaglands to lodge a protest against drone attacks, saying that the drone strikes are unlawful, against international law and a violation of Pakistan’s sovereignty. According to Pakistan:
"Parliament had emphatically stated that they [drone strikes] were unacceptable. Drone strikes represented a clear red-line for Pakistan"
Hoaglands also received a protest, following the seizure of illegal weapons being carried by American diplomats in Peshawar. Daily Times (Islamabad)
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Cyprus is ready to join Greece, Portugal and Ireland in asking the European Union for a bailout, according to central banker Panicos Demetriades. The country's second largest lender, Cyprus Popular Bank, needs €1.8 billion by June 30 to avoid bankruptcy. "Clearly, the closer you get to the deadline, the less unlikely (asking for EU bailout money) becomes," he said. His remarks echo those of President Dimitris Christofias, who said last week, "I don't take as a given that we will negotiate entry to a support mechanism, (but) I don't want to absolutely exclude it." Cyprus's financial troubles are tied to Greece. The Cyprus Popular Bank invested heavily in Greek bonds that have now lost 75% of the value, and the bank also had branches in Greece that loaned money to Greeks, and those loans are now turning sour. Famagusta Gazette (Cyprus)
Products sold in Greece's supermarkets in the last two months have seen their prices drop to levels last seen in May 2010, despite rises in taxes and prices raw materials and fuel. Despite consecutive rises in value-added tax (VAT) over the last couple of years, shelf prices have only risen by a marginal 0.61 percent since 2010. When VAT is excluded, April 2012 prices were 3.42 percent lower than in January 2010. Kathimerini
The army of Syria's president Bashar al-Assad is following in Latakia a pattern similar to what preceded the recent horrific massacre in Houla that killed 108 people, half of them children. Syrian forces bombarded the Sunni-dominated protest hub with helicopter gunships, tanks and gunfire on Tuesday, destroying half the homes in the residential neighborhood. If the Houla pattern continues, then Assad will send in his gangs of "Shabiha" thugs to go from house to house, and exterminate all the Sunni men, women and children. Daily Star (Beirut)
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This is one of those stories that leave you with your mouth open in astonishment. When Bart Jansen's cat Orville was killed by a car, the Dutch artist found an unusual way to pay respect to his beloved pet. He turned the cat into a helicopter by fitting rotors to each of the four paws. Spiegel
(Comments: For reader comments, questions and discussion,
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(6-Jun-2012)
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Jerome Kerviel appeals prison term for Societe Generale fraud
This morning's key headlines from GenerationalDynamics.com.
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There's only one place in China where mentioning the June 4, 1989, Tiananmen Square massacre doesn't get you arrested -- and that's Hong Kong. Hong Kong was a British colony until 1997, and as part of the deal of turning HK back to China, China was forced to agree to allow free speech in Hong Kong. On Monday, tens of thousands attended a Victoria Park candlelight vigil, chanting, "Don't forget to remember." Hong Kong Standard
This is really hilarious. On Monday, the Shanghai Composite Index fell 64.89 points, and China's paranoid internet censors blocked reporting of it. Why? Because it looks like 6/4/89, which is the date of China's Tiananmen Square massacre. It's an incredible coincidence that it occurred on Monday -- exactly 23 years after the massacre. And here's another coincidence: The index opened on Monday at 2346.98 -- the last four digits being 89.64 backwards. This has led to all sorts of conspiracy theories in China about stock market manipulation. There may be more to come on this story. Hong Kong Standard
Last week's horrific massacre in Houla, Syria, killing 108 people, half of them children, has focused attention on how the regime of Syria's president Bashar al-Assad perpetrated the massacre, and in particular, the role of the "Shabiha," a population of thousands of thugs and murderers. The term "shabiha" initially referred to shadowy gangs of smugglers around the seaside city of Latakia, the home of the Assad clan, in the 1970s. The ruling Assad family has used the gangs to engage in criminal activities for decades, paying them with government funds and providing them immunity from prosecution. The Shabiha are used as part 3 of a murderous pattern that has occurred repeatedly since Syria's demonstrations began, early last year:
The Shabiha are criminals and day laborers, mostly Alawites, but also Kurds with the PKK terrorist group, members of Sunni clans from Aleppo loyal to the regime, and some Christians. The Shabiha are the shadow force of a regime that no longer trusts its own army, but instead has created a monster that is taking on a life of its own. VOA and Spiegel
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Thousands of banksters defrauded the public of trillions of dollars, and none of them are being investigated or prosecuted. But in 2008, regulators found the perfect scapegoat: Jérôme Kerviel, a young employee Société Générale (SocGen), a rogue trader who lost money -- not for investors -- but for the bank itself. ( "Historic Société Générale fraud shocks world financial system" from 2008.) SocGen's managers claimed they had no idea what he was doing, but like all good bank managers, they made a point of not asking questions as long as they were making money, even illegally. On Monday, Kerviel appeared in court to appeal his sentence. The court is going to review all the evidence, and Kerviel hopes to put SocGen on trial rather than himself. At any rate, it's always good to know that the person who caused the financial crisis has been identified, and is no longer at large. Reuters
JP Morgan has estimated that Spain will need a bailout costing as much as €350 billion, but Spain's prime minister Mariano Rajoy has repeatedly said that Spain won't need a rescue for itself or for its banks. We've seen this game played in Greece, Ireland and Portugal -- national leaders swear that no bailout is needed or will be accepted, and they vehemently stick to that pledge up until the very second when the bailout is announced. This type of outright fraud is typical of politicians these days, as well as bankers. The difference this time is that Germany's Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble are in favor of forcing Spain to accept bailout money. The reason, as far as I can tell, is that they believe that the reason that the euro currency is in so much trouble these days is because nobody believes that Rajoy is telling the truth, and so investors are losing faith not only in Spain, but in the entire eurozone. You can tell that the world is coming to an end if it's really true that investors no longer believe the crap coming out of politicians' mouths. Spiegel and Bloomberg
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U.S. and NATO equipment will have a guaranteed route out of Afghanistan after an agreement with Central Asian countries allowing the alliance to completely cut out the shorter Pakistani access routes NATO has used for years. A deal had been struck with Uzbekistan, Kyrgyzstan and Kazakhstan to allow the alliance's equipment to be moved through their territories. A deal already set with Russia will allow the equipment to be moved directly though land into Europe, and to air bases to fly the U.S. equipment home. .The deal with the Central Asian countries seems to indicate a deal with Pakistan may not happen or will be indefinitely delayed. CNN
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see the 5-Jun-12 World View -- U.S. and Nato secure guaranteed route out of Afghanistan
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(5-Jun-2012)
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China warns U.S. to 'choose words carefully' on Asia pivot
This morning's key headlines from GenerationalDynamics.com.
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In a speech in Singapore on Saturday, U.S. Defense Secretary Leon E. Panetta provided further details of America's planned "pivot" from Europe to Asia that was announced last year, including a Marine Corp troop and aircraft deployment to northern Australia. By 2020,the United States will have 60 percent of its naval forces in the Pacific and 40 percent in the Atlantic, in contrast to the current 50-50 split. The strategic shift to Asia will use traditional allegiances and new budding partnerships with countries such as Vietnam and India, to offset China’s rising military power and assertiveness. According to Panetta:
"The United States has key treaty alliances with Japan, South Korea, Australia, Philippines and Thailand. We have key partners in India, Singapore, Indonesia, and other nations. And we are working hard to develop and build stronger relations with China."
Panetta addressed concerns about the U.S.-China relationship:
"I know that many in the region and across the world are closely watching the United States-China relationship. Some view the increased emphasis by the United States on the Asia-Pacific region as some kind of challenge to China. I reject that view entirely. Our effort to renew and intensify our involvement in Asia is fully compatible -- fully compatible -- with the development and growth of China. Indeed, increased U.S. involvement in this region will benefit China as it advances our shared security and prosperity for the future. ...China also has a critical role to play in advancing security and prosperity by respecting the rules-based order that has served the region for six decades. The United States welcomes the rise of a strong and prosperous and successful China that plays a greater role in global affairs."
This last paragraph contains a zinger. This is an allusion to China's policy in the South China Sea, where China is refusing to respect any "rule-based order," and is demanding complete ownership and control over the entire region. China even wants to forbid American ships from entering the South China Sea without its permission, even though it's one of the most heavily trafficked bodies of water in the world.
Panetta expanded his criticism of China as follows:
"On that note, we are obviously paying close attention to the situation in Scarborough Shoal in the South China Sea. The U.S. position is clear and consistent: we call for restraint and for diplomatic resolution; we oppose provocation; we oppose coercion; and we oppose the use of force. We do not take sides when it comes to competing territorial claims, but we do want this dispute resolved peacefully and in a manner consistent with international law. We have made our views known and very clear to our close treaty ally, the Philippines, and we have made those views clear to China and to other countries in the region.As a Pacific power, the United States has a national interest in freedom of navigation, in unimpeded economic development and commerce, and in a respect for the rule of law. Our alliances, our partnerships, and our enduring presence in this region all serve to support these important goals."
Washington Post and U.S. Department of Defense
China was not convinced by Panetta's assertions that the Asia "pivot" wasn't targeting China, according to an article in the state-run media:
"Although the US has insisted that its strategic shift to the region is not targeted at China, experts said Washington's deeds, including its plan to highlight the South China Sea issue ..., exposed its true intentions.They also reminded US officials to choose their words carefully to avoid denting Beijing's trust."
The article concludes:
"The US is not only attempting to consolidate ties with traditional allies but is also expanding its influence to new partners, Shi Yinhong, an expert on international relations with Renmin University of China, said."Although Washington denies its strategic shift is aimed at any one country, it is obvious that China is one of its concerns ... The shift shows that the US is taking strategic precautions against China,'' Shi said.
The strategic shift indicates that the US has concentrated more of its focus on China, said Liu Hui, an expert on American studies with the Chinese Academy of Social Sciences."
Monday is the 23rd anniversary of the start of China's Tiananmen Square massacre, where China's military massacred thousands of unarmed students who were demonstrating peacefully in Beijing's Tiananmen Square. In China it's still forbidden to talk about the massacre, but it caused profound changes. In China, it triggered the Falun Gong protest movement, which has also been violently suppressed. In Taiwan, it triggered the Wild Lily rebellion, which led to the activist movement demanding Taiwan's nationhood and independence from China. On Sunday, the U.S. State Dept. called on China to release all prisoners who are still being held for their participation in the 1989 demonstrations, and to provide a full accounting of all those killed, detained or missing during the violent suppression of the demonstrations. VOA
With several hundred special forces already deployed in Yemen, the U.S. is being drawn militarily more and more into Yemen, despite the recent assertion by Defense Secretary Leon Panetta that there was "no prospect" of "boots on the ground" in Yemen. Yemen is the headquarters of Al-Qaeda on the Arabian Peninsula (AQAP), currently the most dangerous al-Qaeda affiliate to the United States. Growing numbers of special forces advisers are now training Yemen's military, while financial and humanitarian aid from Western and Gulf states has increased sharply. At last week's "Friends of Yemen" meeting in Riyadh, foreign powers pledged some $4 billion to the country. Britain said the country was at a "critical moment". Yemen
(Comments: For reader comments, questions and discussion,
see the 4-Jun-12 World View -- U.S. military presence increases in Yemen
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(4-Jun-2012)
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Increasing crime by 'Chinese Mafias' in Latin America
This morning's key headlines from GenerationalDynamics.com.
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Thousands of protesters filled Cairo's Tahrir Square on Saturday night and Sunday morning, protesting the sentence handed out to deposed president Hosni Mubarak. Mubarak got a life sentence for failing to stop the killing of some 900 protesters last year in Tahrir Square. But protesters chanted: "A farce, a farce, this trial is a farce" and "The people want execution of the murderer." Mubarak's ex-security chief Habib el-Adly was also convicted, and also received a life sentence. But Mubarak, his sons, and el-Adly were all found innocent of corruption. The corruption charges were related to the purchase by the Mubaraks of five villas built by a family friend, Hussein Salem, a fraction of their price and Mubarak's decree to allow a Salem company to export natural gas to Israel. AP
With the June 16-17 presidential runoff election just a couple of weeks away, the two candidates were quick to comment on the Mubarak verdict. One candidate is Ahmed Shafiq, Mubarak's longtime friend and last prime minister, who said that the verdict showed that no one was above the law in Egypt. His opponent is Mohamed Morsi from the Freedom and Justice Party (FJP), the political arm of the Muslim Brotherhood. The FJP issued a statement saying that the group was "shocked and dismayed" by the "ridiculous" sentences. The FJP said they would re-try the defendants, and they promised to cooperate with all revolutionary and political players for "the completion of the revolution, retribution for slain and injured protesters and the dismantlement of the former regime, which still weighs heavily on the shoulders of the Egyptian people and desperately wants to stage a comeback so as to take revenge on the revolution." Al-Ahram
Fights with assault rifles, machine guns, grenades and mortar bombs between have been escalating in residential neighborhoods of Tripoli, in northern Lebanon, near the Syrian border. The sectarian battles are between Alawite supporters and Sunni opponents of Syria's president Bashar al-Assad. The latest round began on Saturday, and by Sunday morning, 12 people had been killed and 49 were wounded. Almost all international figures are expressing the fear that the Syrian conflict will spread to a broader sectarian Sunni versus Shia war throughout the region. However, interestingly enough, different parties draw different conclusions from that fear. The West takes the position that something has to be done to stop the further violence in Syria. Al-Assad's allies, Russia, Iran and China, take the position that any outside interference would only make things worse. Daily Star (Lebanon)
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The Arab League, meeting in Doha, Qatar, on Saturday, demanded stronger United Nations measures against the Syrian regime. So far, Kofi Annan's "peace plan" has only made the violence in Syria worse, as it provided a fig leaf Syria's president Bashar al-Assad to say that he was implementing the peace plan, while at the same time he conducted massive genocidal slaughter and torture of innocent civilians. Nabil al-Arabi, secretary-general of the Arab League, said:
"We request Mr Annan to set a timeframe for his mission because it is unacceptable that massacres and bloodshed continue while the mission is ongoing indefinitely."
In fact, nobody has the stomach to take any action in Syria, and al-Assad knows that he can continue his policy of extermination as long as he pleases, with the active support of his allies in Iran, Russia and China. Gulf Times
Because Chinese communities have historically been reluctant to report problems among their own members to non-Chinese authorities, the substantial increase in Latin American crime by "Chinese Mafias" has remained largely unnoticed. Currently, smuggling of persons from Asia through Latin America to Canada and the United States is the largest visible transnational criminal linkage between the two regions. It is highly lucrative for the groups involved, generating $70,000 or more per smuggled person for the criminal organizers. Other kinds of criminal activity include: extortion of Chinese communities in Latin America by groups with ties to China; trafficking in persons from China, through Latin America, to ultimately smuggle Chinese into the United States or Canada; trafficking in narcotics and precursor chemicals; trafficking in contraband goods; and money laundering. China-Latin America criminal ties are likely to become greater with the expanding commerce and investment between the two regions. Jamestown
The Kaliningrad amphibious assault landing ship from Russia’s Baltic Fleet has set sail for the Baltic Sea to take part in the BALTOPS 2012 naval drills on June 1-16. The Kaliningrad will join over 20 surface ships and some 20 aircraft from Nato countries in a variety of training missions, including anti-submarine warfare, sea rescue and counter-terrorism. Warships from Russia’s Baltic Fleet previously took part in BALTOPS exercises 19 times. Ria Novosti (Moscow)
(Comments: For reader comments, questions and discussion,
see the 3-Jun-12 World View -- Egypt's Muslim Brotherhood is 'shocked and dismayed' by Mubarak verdict
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(3-Jun-2012)
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Disastrous global financial news continues to pour out
This morning's key headlines from GenerationalDynamics.com.
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The drama continues as Hezbollah leader Sayyed Hassan Nasrallah, who is normally the one fomenting terrorist acts, is now threatening war over a terrorist act targeting him. Last week, a busload of Shia Lebanese citizens were kidnapped in Syria, as they traveled back to Lebanon from a religious pilgrimage to Iran.
Nasrallah called for the release of Lebanese Shia pilgrims held in Syria in a televised speech on Friday, in which he threatened war:
"The pilgrims should be returned to their families.If your problem is with Hezbollah ... or a political party in Lebanon and its position on the events in Syria leave innocent people aside and solve your problem with us.
If you have a problem with me there are many ways [in which] we can solve it and on many levels, if you want war we can solve it with war, if you want peace then we can solve it in peace."
A previously unknown armed group calling itself the "Syrian Revolutionaries - Aleppo Province" claims to have perpetrated the kidnapping. Al-Jazeera
There are unconfirmed reports that Syria's rebels are holding a second group of hostages, Five top-ranking Hezbollah officers, including Nasrallah's nephew. According to the reports, the group was ambushed 15 kilometers west of Damascus after they left the Syrian military base of Al-Hame, 4 kilometers from the Syrian capital. It is there that Hezbollah maintains its heavy Scud D long-range missiles, as well as its Fajr, Zelzal and Fateh 110 rockets. Debka
The United Nations Human Rights Council voted overwhelmingly on Friday to condemn Syria over the Houla massacre last weekend. Of the 47 states meeting at an emergency session in Geneva, 41 voted in favor of the resolution, which was put forward by Qatar, Turkey and the U.S. China, Cuba and Russia voted against it, and there were two abstentions. The resolution calls for a U.N. investigation to identify the perpetrators and gather evidence for criminal prosecution for war crimes. This could mean that, at some point, Syria's president Bashar al-Assad could be accused of and tried for war crimes. Since Russia and Iran have been supplying weapons to Syria, it's even possible that Russia's president Vladimir Putin and Iran's Supreme Leader Ayatollah Ali Khamenei will also be accused of war crimes, following the precedent set recently by the international war crime conviction of Charles Taylor for selling weapons to rebels who committed genocidal acts in the Sierra Leone civil war. Al-Jazeera
Egypt's deposed leader Hosni Mubarak has faced criminal charges of corruption and complicity in the deaths of hundreds of protesters during the revolution last year that ousted him. Now the trial is coming to an end, and a verdict is expected on Saturday. Whichever way it goes, it's liable to generate more anger and riots. The young secular liberals who led the revolution already feel that the revolution has been compromised, since the runoff election for president, to be held on June 16-17, will be between Mohammed Morsi of the Muslim Brotherhood's Freedom and Justice Party and Ahmed Shafiq, Mubarak's last prime minister. NPR
Friday's disastrous U.S. jobs reports has sent economists into shock, since they never saw it coming. But it was only one part of the bad financial news on Friday. China's factory output is barely growing and European manufacturing is falling deeper into malaise. As one economist said, "It was just three months ago that we thought that the economy was firing on all cylinders." However, as I've reported for several years, Generational Dynamics predicts that the global economy is headed for a major deflationary spiral and financial crisis. The stock market will fall below the Dow 3000 level, and remain there until the 2020s. This is mathematically certain, and no politician can stop it. CNBC/Reuters
U.S. officials have confirmed what has long been suspected -- that the Stuxnet virus that destroyed 1,000 of Iran's 5,000 nuclear enrichment centrifuges in 2010 was in fact the work of the United States and Israel government agencies. It's expected that this admission that a major act of cyber-warfare was launched from the U.S. will encourage other governments to launch counter-attacks of their own. Forbes
(Comments: For reader comments, questions and discussion,
see the 2-Jun-12 World View -- U.S. officials confirm authorship of Stuxnet computer virus
thread of the Generational Dynamics forum. Comments may be
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(2-Jun-2012)
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Syria rebels demand apology from Hezbollah's Nasrallah
This morning's key headlines from GenerationalDynamics.com.
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In a speech on Wednesday, U.S. Secretary of State Hillary Clinton warned that unless unchecked, the violence in Syria could lead to a civil war or develop into a proxy war between Iran and the Gulf Arabs.
"The continued slaughter of innocent people, both by the military and by militias supported by the government and increasingly by the opposition ... could morph into a civil war in a country that would be riven by sectarian divides, which then could morph into a proxy war in the region.Remember you have Iran deeply embedded in Syria – their military are coaching the Syrian military. The Quds Force, which is a branch of the military, is helping them set up these sectarian militias. We know it actually could get much worse than it is."
She said that the Russians "are telling me they don't want to see a civil war. I have been telling them their policy is going to help contribute to a civil war." Telegraph
While Clinton's remarks directed at Russia were made publicly, in the background there is an effort by the Obama administration to convince Russia to cooperate in a military effort to prevent al-Qaeda from gaining control of al-Assad's collection of weapons of mass destruction (WMDs). According to intelligence sources quoted by Debka, the WMDs kept in large barrels or kegs in six underground bunkers, holding Sarin (GB), Tabun (GA) and VX nerve gases, some four kinds of mustard gas and anthrax. Three of the six locations are situated in heavily embattled areas between the Syrian army and rebels, and al-Qaeda elements are penetrating these areas with a view to seizing some of the WMD stores. President Obama hopes to convince Russia's president Vladimir Putin to agree to insert 5,000 international monitors into Syria to protect the WMDs, and if Putin agrees, then it's hoped that al-Assad will agree. Obama has also signaled Russia that if Putin does not agree to the plan, then the U.S. may bypass the U.N. Security Council and take unilateral military action to protect the WMDs. Debka
Yesterday we reported that 10-year government bonds from Spain are yielding 6.6%, which means that if you're willing to lend money to Spain for ten years, then Spain will pay you 6.6% interest -- assuming that Spain doesn't go bankrupt, in which case you'll lose all your money. A high bond yield means that investors are betting that a government will default. On Thursday, U.S. Treasury bond yields fell to a historic low -- 1.58% -- down from Wednesday's record low 1.62%. Investors are fearing a fall in American and European stock markets, and are putting their money at record levels into U.S. Treasuries. CNN
A lot of attention is given to protecting desktop computers and data center servers from cyber-attack, but a third category of computer, those used for supervisory control and data acquisition (SCADA) are almost completely unprotected. These are the computers that are used by utilities, transportation, logistics, manufacturing and pharmaceuticals, and are critical to our lives and the security of the nation. The potential for destruction through a cyber-attack was illustrated in 2010 when the Stuxnet computer virus was launched to attack Iran's nuclear facilities. It took control of the centrifuges and spun them so rapidly that they were disabled. SCADA computer networks are often years or even decades old, because they've been working reliably and nobody wants to touch them -- even to upgrade the software or to provide additional protections from cyber-attack. SCADA networks are the most unprotected networks of all and now cyber-criminals have them in their sights. If they get access, the consequences for many organizations, their customers and perhaps the population at large, could be extremely damaging. Security Week - Part 1 and Part 2
News stories have been reporting a new malware attack called "Flame," a highly complex computer virus. The news stories have variously said that it's attacked Iran's major oil terminals and computers in the Mideast, suggesting that Flame was launched by Israel. However, while there have been 189 infected computers found in Iran, there are also 100 in Israel and the Palestinian territories, and 30 in Sudan and Syria. These figures are extremely low when compared with other viruses. Flame is not destructive, like Stuxnet. Instead, it appears to be an espionage tool -- collecting keystrokes, making screenshots, and sending the data back to the mother computer. Flame even searches for nearby Bluetooth devices -- cameras and microphones -- and turns them on so that your actions can be overheard and recorded. Deutsche Welle
Practically everything about the Syria situation is absolutely dreadful, so if one tiny aspect is amusing, it's worth pointing out. Last week, a busload of Shia Lebanese citizens were kidnapped in Syria, as they traveled back to Lebanon from a religious pilgrimage to Iran. A previously unknown armed group calling itself the "Syrian Revolutionaries - Aleppo Province" claims to have perpetrated the kidnapping, and they're demanding an apology from Hezbollah chief Sheik Sayyed Hassan Nasrallah in exchange for releasing the kidnap victims:
"The kidnapped Lebanese are being looked after by us and are in good health. Negotiations for their release are possible as soon as Nasrallah apologises ... Our problem is not with any particular community but with those who assist in the suppression of the uprising."
Hezbollah and Iran are the principal allies of Syria's president Bashar al-Assad. Nasrallah is a terrorist who is always going on Lebanese television giving speeches fomenting violence against Israel and demanding apologies from various Western countries. Now the shoe is on the other foot, and it's Nasrallah that's calling for calm, and it's a different group of terrorists that are demanding an apology from him. Al-Jazeera
(Comments: For reader comments, questions and discussion,
see the 1-Jun-12 World View -- Obama weighs plans to prevent al-Qaeda grabbing Syria's WMDs
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(1-Jun-2012)
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