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Ebola virus epidemic reaches capital of Uganda
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Last week's off the cuff remarks by European Central Bank (ECB) president Mario Draghi that the ECB would do "whatever it takes to preserve the euro" caught the other ECB governors by surprise, and has increased discord with representatives of several of the northern countries, including Germany, the Netherlands, Belgium and Finland. Draghi's remarks were not the result of any resolutions, and his plan to provide a roundabout way for the ECB to bail out a country by purchasing its debt is generating an increasing amount of hostility, confusion and controversy. Spiegel
Financial officials from the "troika" -- the European Commission (EC), European Central Bank (ECB), and the International Monetary fund (IMF) -- arrived in Greece last week to hammer out a deal to allow Greece to continue receiving bailout loans, so Greece won't have to return to the drachma currency. The IMF has already recently threatened to cut off Greece's bailout loans simply because Greece has failed, time after time, to meet its past austerity commitments. Greek and troika officials were supposed to have reached a new agreement on Monday, but they failed to do so. It's doubtful that anyone seriously believes any more that Greece has any hope of digging itself out of the hole it's in, which is why many people, especially the Germans don't want to waste any more money on Greece. Spiegel and Kathimerini
In the last few days, some 200,000 people have fled Syria's largest city, Aleppo, out of its population of 3 million, as a climactic battle develops between the Syrian army and the opposition Free Syrian Army. Many of them are fleeing to Turkey, whose border is just 30 miles (50 km) away. Greece has responded by adding 2000 border guards to its borders with Turkey out of fear of a potential influx of Syrian refugees. In addition, Greece is placing a total of 26 floating barges or barriers along the Evros River that separates the two countries. The Evros River is thought to be the main entry point for illegal immigrants trying to reach the European Union through Greece. Greece has already started an 8-mile razor-wire-topped 13-foot-tall fence along part of its border with Turkey. AP and Ria Novosti
The U.S. Postal Service will fail to make two legally required payments for future postal retirees' health benefits -- $5.5 billion due Wednesday, and another $5.6 billion due in September. The default will not affect day to day operations. AP
Uganda's president, Yoweri Museveni, has banned all physical contact between citizens of Uganda in a desperate attempt to stop the spread of an outbreak of the Ebola virus. Fourteen people have already died from the disease, which kills nine out of ten people who become infected. This is the fourth outbreak of Ebola in Uganda since 2000, when the disease killed 224 people. Ebola was first reported in 1976 in Congo and is named for the river where it was recognized. Telegraph
With al-Qaeda linked Islamist terrorists in control of northern Mali, Alassane Ouattara, the president of Ivory Coast, says that military intervention in Mali is "inevitable" within weeks. Ouattara is the head of ECOWAS (Economic Community of West African States), a regional bloc that has become increasingly alarmed by the Islamist takeover of northern Mali. According to Ouattara, about half the intervention force would be made up of soldiers from Mali itself, with the remainder from Niger, Nigeria and possibly Chad. France and the United States would be asked to provide "logistical help," which would include material support and combat aircraft. AP
(Comments: For reader comments, questions and discussion, see the 31-Jul-12 World View -- Greece closes border with Turkey over Syrian refugees thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(31-Jul-2012)
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Battle rages in Syria's largest city, Aleppo
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As sanctions on Iran continue to bite, officials are blaming the sudden countrywide near doubling of the price of chicken on "the psychological war waged by Iran's enemies. ... There are no shortages; rather these psychological wars lead to a false demand for goods in the country." This comes two weeks after Tehran's police chief criticized state-controlled television for broadcasting images of people eating chicken. He suggested such footage could spur the underprivileged to revolt against affluent Iranians. "Films are now the vitrine of the society, and some individuals witnessing this class gap might say, ‘We will take knives and take our rights from the rich.'" Radio Zamaneh and RFE/RL
There were varying reports on Sunday on the progress of the battle of Aleppo, the largest city in Syria, and Syria's commercial center. The Free Syrian Army (FSA) has taken control of the city in the past few days, and the Bashar al-Assad regime has no choice but to take it back. For four or five days, there have been predictions of a massive "mother of all battles" attack, but apparently that hasn't happened so far, although helicopter gunships have opened fire in some areas.
In previous regime assaults on Syrian cities, it was usually the Syrian army targeting unarmed civilians who had merely gone out after Friday prayers to protest and demonstrate against the al-Assad regime. The army would surround the town, blocking all exit roads with tanks, then send in tanks and helicopter gunships to destroy entire neighborhoods, and exterminate as many innocent civilians as possible.
The situation in Aleppo appears to be different. The regime isn't fighting unarmed local civilians any more, but FSA fighters from other regions who have become battle-hardened from other regime attacks. The FSA fighters don't have anything like the heavy weapons that the army has, but they do have more weapons than the used to, including rocket-propelled grenades (RPGs) that can disable a tank.
(Nobody is admitting where the weapons come from, but it's thought that regime weapons come from Russia and Iran, while FSA weapons come from Turkey, Saudi Arabia and Qatar.)
Aleppo's large size makes the regime's former strategy of blockading all roads impossible, and in fact there are reports that 200,000 refugees have fled their homes in Aleppo in the last two days.
Finally, this is also a generational Awakening era in Syria, and generations of people with still-vivid memories of the massive slaughter in 1982 do not want to see the same thing happen. This includes the people in the regime's army, who are being forced to slaughter their own people for no discernable reason. It's still generally believed that the regime will recapture Aleppo, but it won't be as easy as it's been in the past. CNN and VOA and BBC
The biggest conventional bomb ever developed is ready to wreak destruction upon the enemies of the US. Air Force Secretary Michael Donley said its record-breaking bunker-buster has become operational after years of testing. "If it needed to go today, we would be ready to do that,” said Donley. “We continue to do testing on the bomb to refine its capabilities, and that is ongoing. We also have the capability to go with existing configuration today." The weapon was built to attack the fortified nuclear facilities of Iran and North Korea. Russia Today
European officials will take their summer holidays in August. When they return, a number of crucial events, decisions and deadlines will be waiting:
None of measures does more than kick the can down the road a little while longer. Nonetheless, the pressure will be on Germany, with its own economy faltering, to agree to assume the debt of these other countries, something that the German public widely opposes. Reuters
(Comments: For reader comments, questions and discussion, see the 30-Jul-12 World View -- European officials take August breaks before September storm thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(30-Jul-2012)
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Syrian army massing for major assault on Aleppo
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This week we saw the spectacle of Gen-Xer U.S. Treasury Secretary Timothy Geithner say that he was aware in 2008 that traders were rigging Libor interest rates, and that he took the hard-hitting action of writing a memo about it. He blames UK financial authorities for reading his memo but not taking the action that he should have taken.
We've been writing for years about the refusal of Gen-Xer prosecutors to investigate and prosecute banksters who committed fraud and caused the financial crisis, and here we have one more example. The irony is that now Geithner himself is in trouble for being a good Gen-X soldier.
This week I had an interesting e-mail exchange with Gen-Xer Vox Day, who writes for World Net Daily, and is author of "The Return of the Great Depression." As with all such Boomer/Gen-X conversations, it wasn't particularly satisfying for either of us, but it did produce a number of insights.
Saying that "you have failed to understand something very significant with regards to the depths of Gen-X cynicism and fury," Day insisted that he and other Gen-Xers want to see Boomer financial managers "to go to jail, WE WANT THEM HANGED, DRAWN, AND QUARTERED."
As I responded, I've certainly heard this from Gen-Xers before, but that I don't believe that Gen-Xers really mean it. Sure, they'd like to see someone wave a magic wand and send the hated Boomers to jail, but that's not the way the world works. What I've seen is that Gen-Xers don't want the investigations to take place that would send the Boomers to jail because they would also implicate their Gen-X pals. The result is that no one goes to jail, and the evidence is overwhelming that this interpretation is true because, in fact, Gen-X prosecutors are not investigating banksters and making criminal referrals.
Day was kind enough to ask the Gen-X readers of his blog to tell whom they blame (Gen-Xers or Boomers) for the financial crisis. He was eminently fair in the way he posed the question, by quoting the following paragraph of mine in introducing the question:
"The evidence is overwhelming that Gen-Xers were the perpetrators of the crimes related to the financial crisis simply because it was only the Gen-X financial engineers who had the education and skills to create fraudulent residential mortgage backed collaterized debt obligations (RMB CDOs). And the evidence is overwhelming that they created and sold these fraudulent synthetic securities knowing full well that they were fraudulent. And the evidence is overwhelming that their Boomer bosses knew what was going on, but let it go on because they were making too much money. I've written about this evidence dozens of times."
I've written probably hundreds of times that Gen-Xers and Boomers have shared responsibility for the financial crisis, and this paragraph is a good summary. Gen-Xers provably must have been the perpetrators, because they were the experts on creating complex fraudulent securities, and their Boomer bosses would not even have understood how they worked. But it was also clear that there was massive fraud going on, and the Boomer bosses let it go on because they were making too much money. The Boomers and Gen-Xers had very different roles in the crisis, but they needed each other to make the crime work, just as a bank robber and the getaway car driver need each other to rob a bank the old-fashioned way.
Day's Gen-Xer audience overwhelmingly blamed the Boomer managers. Most people just answered with the single word "Boomer," but some added comments:
"Boomers are responsible, even if Xer's created the schemes, the Boomers could have stopped it, they had the authority and therefore the responsibility.The buck stops with the Boomer bosses, but it may well have started with the Gen X minions. Boomers and Jews are most accountable, and especially Jewish Boomers (can we call them say Joomers or something? it's almost like a neutron star of narcissism!) because they created the entire narcissistic cultural matrix in which these things became possible, even perhaps inevitable
Boomers as the bosses they are responsible by definition plus their collective decisions of the 70s and 80s to shut down the power grid expansion and legalize and then normalize fraud have left few options for the capable or ambitious.
Boomers. While Gen-X does have a share of blame, they have been taught via the mass media to worship the Boomers who saved them from the rigid conservatism of the "Greatest" generation. In many cases, they are following in their footsteps.
Boomers. They went from peace and free love to marketable securities and bad loans backed up by the blood, sweat, and tears of at least the next three generations without a thought or care.
Boomers are responsible by virtue of them being in charge. Mao Zedong never personally pulled a trigger, yet he is responsible for millions of deaths.
Boomers bar none. Who has been and still is in the majority of the leadership positions at banks, academia, the press, corporations and last but not least government? Boomer fucks that's who.
Given that most current CEOs and political leaders are boomers I believe the primary blame falls on them as they created the incentive system that led to this result."
There's an interesting historical comparison here, because this is exactly what's known as the "Nuremberg Defense," where the perpetrators of the Holocaust proclaimed their innocence, saying that they were only doing what their bosses wanted them to do. These defenses have been rejected in all cases based on the following "Nuremberg Principle":
"The fact that a person acted pursuant to order of his Government or of a superior does not relieve him from responsibility under international law, provided a moral choice was in fact possible to him."
But I think that Vox Day asked the wrong question. I knew that Gen-Xers would blame Boomers for the financial crisis. What I'd like to know is why Gen-Xer officials, like Timothy Geithner, refuse to investigate and prosecute suspected criminals. As I've written many times, the evidence that massive fraud was perpetrated by banksters in the 2004-2008 time frame and beyond is overwhelming, and yet there has not been a single investigation and criminal referral. When the S&L scandal occurred in the 1980s, there were thousands of criminal referrals. Even as late as 2000, the Enron scandal sent people to jail. But since the Gen-Xers reached middle management positions in the mid-2000s decade, prosecutors have adamantly refused to investigate and prosecute, even when it's obvious that massive fraud has occurred. I wish that Day had asked a question to get the bottom of that.
If the Boomers are really so guilty, then why are the Gen-Xers so goddam reluctant to investigate?
Actually, Day himself gave the reason in his e-mail message to me:
"The financial crisis is absolutely a Boomer affair. The reason GenX isn't concerned with playing the little regulatory game of the 1980s is because we believe the entire game is rigged, the prosecutions are fake, the punishments are wrist slaps, and the entire system has to be burned down in flames."
This is the Gen-X nihilism coming through. But his remark about the system being "rigged" allows me to make a connection.
I've written in the past about how Gen-Xers got the way they are. I trace Gen-X attitudes back to feminist policies, where they were raised in households where the only "father" was a string of men in their mothers' beds. They did not read feminist organization press releases, so they knew that their mothers were lying about domestic violence to drive their real fathers away and to get more money. As children, these Gen-Xers learned from the masters -- their mothers following feminist policies, destroying their families and their lives for money. Why not become a bankster criminal after being raised that way?
However, Day's remark about the system being "rigged" is that the divorce courts ARE rigged. As I've been writing since the early 1990s, feminist judges and social workers couldn't care less if the kids (Gen-Xers) were fed to a meat grinder, as long as they get their money. The whole divorce court system is rigged, and therefore Gen-Xers have concluded that all court systems are rigged.
When looked at that way, the Gen-Xer world view that led to the financial crisis makes perfect sense. If your mother lies to the court about phony violence claims to get more money, and drive your father away so she can have a string of men in her bed, and if the court supports her to get their own money, even though the judge and social workers know the mother is lying, then of course you'll want to grow up to be a bankster, instead of a fireman or policeman.
Day wrote back to me as follows:
"This is absolutely correct! And it's not merely the courts or those who grew up in broken homes. We know we have been lied to about the most basic things since kindergarten by our teachers and our mothers. I think you are correct to suggest that Gen-X is in silent, but permanent revolt against the feminism that ruled our lives in our youth. The Boomer is shocked by Libor and other frauds, whereas the Gen-Xer shrugs and wonders when the manipulation of the commodity and stock markets will finally come out. We know all the courts and agencies and international organizations are rigged."
Day added the following:
"Seriously, I don't know if you can even conceive of the amount of pure, white-hot hate that many Xers conceal inside themselves. I was at the Game Developer's Conference when the OK City bombing was reported, and a lady reporter, a late Boomer, was aghast when a huge cheer went up at the news. When she asked one of the game designers, a famous one whose games you would recognize, why everyone had cheered, he told her 'basically, we're all terrorists at heart.'"
I don't believe that Gen-Xers are really pleased that Oklahoma City bombing occurred, but the momentary "huge cheers" do reflect the feelings of "pure, white-hot hate" that Gen-Xers have toward Boomers.
Day's reference to schoolteachers reminds of my experience with my son's schoolteachers in the 1990s. It was evident to me that these teachers (mostly women) considered boys to be nothing more than defective girls. These were the days of "the year of the woman," when racists like CNN's Jeffrey Toobin attacked a black man like Clarence Thomas for once having asked someone out on a date, while feminists like Susan Estrich sold themselves out as women and rape victims to save Bill Clinton, after he'd been credibly accused of violent serial rape. It's really no wonder that Gen-Xers, growing up in this putrid political and social climate, grew up to become banksters and bankster apologists. Reuters and Vox Day
The Bashar al-Assad regime is massing its army around the city of Aleppo, the largest city in Syria, for a major military assault with the objective of wresting control from opposition rebels. Tanks and helicopter gunships are already flattening residential neighborhoods in prepartion for the onslaught. Many analysts consider this to be a crucial battle in the Syrian conflict. Reuters
(Comments: For reader comments, questions and discussion, see the 29-Jul-12 World View -- Geithner's testimony raises questions about his competence thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(29-Jul-2012)
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Investors go gaga as France, Germany vow to save the euro
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Vietnam's President Truong Tan Sang announced on Friday that Russia will set up a naval base for ship maintenance at its port of Cam Ranh. I would guess that this puts Russia squarely on the side of Vietnam in the South China Sea dispute. And with American support for the Philippines, there's plenty of room for military conflict. Russia has only one naval base outside of Russia - the one at Tartus, Syria -- so one can see why they're not anxious to lose it. According to Russia's naval chief, Vice Admiral Viktor Chirkov:
"We are indeed continuing work to ensure the stationing of Russian Navy forces outside the Russian Federation. As part of this work at the international level, we are discussing issues related to the creation of [ship] maintenance stations in Cuba, in the Seychelles and in Vietnam."
It was just a few months ago that I reported a story that China was considering a naval base in the Seychelles, off the eastern coast of Africa, though apparently nothing has come of that. As for a Russian base in Cuba: Blockade anyone? Ria Novosti and Voice of Russia and International Business Times
Update: The BBC is reporting that Chirkov is denying that he made this statement.
Although the issue of the Kurds in Syria is considered a sideshow by people in the West, it's clear that Turkey is becoming increasingly alarmed by the ability of the terrorist Turkistan Workers Party (PKK) to take advantage of the chaos of the Syrian war to build a base in Syria for launching terrorist attacks in Turkey. Turkey has been bombing PKK terrorist camps in northern Iraq for years, and may soon begin bombing PKK camps in northern Syria. Reuters
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A man had his palm bitten by a piranha fish in a river in southern China, alarming officials who realized that the South American flesh-eating fish had somehow reached China. So local officials decided to offer 1,000 yuan ($160) to the public for each piranha caught, in the hope of ridding the river of the fish. China's leading online trading platform, Taobao, began offering piranhas for express delivery at $1.80 per fish. Sooooooo, people began ordering piranhas online, and turning them in to collect that $160. Want China Times
Excited investors pushed stocks up again on Friday, after German Chancellor Angela Merkel and French President François Hollande vowed to do "everything" to save the euro, a day after European Central Bank (ECB) president Mario Draghi made the same vow:
"Germany and France are deeply committed to the integrity of the euro zone. They are determined to do everything to protect the euro zone."
Investors are interpreting "do everything" as an intention to allow the ECB to "print money" and use it to purchase Spanish and Italian debt, even though that's illegal under existing European Union treaties, and even though much of the German public is opposed to it.
It's now been about five years since Fed chairman Ben Bernanke's Great Historic Experiment was put into operation. "Bernanke's historic experiment takes center stage"
It was a truly remarkable time, because Bernanke was going to put his life's theory to the test -- that the Great Depression could have been avoided if only the Fed had lowered interest rates by a small amount. It was a truly historic moment, and five years later we know that the experiment was a total failure. The Fed lowered interest rates pretty much to zero, which is where they are now, and supplemented those steps with massive monetary and fiscal "money printing" policies. Similar actions were taken by the ECB, the Bank of England, the People's Bank of China, and other central banks. And the global economy is still slowing down. Ben Bernanke's Great Historic Experiment has been a failure.
On Thursday, Britain announced the worst recession in its history. On Friday, the U.S. Commerce Department showed that the U.S. economy is cooling quickly, at a time when "experts" and politicians wishfully had hoped that the recovery would be "self-sustaining." Germany is supposed to be the savior of Europe, but German newspapers are reporting an "uncomfortable and bitter truth": Profits, sales and earnings of Germany companies are also cooling.
Bernanke's Great Historic Experiment never had a chance because, as I wrote in 2007, it overlooks generational changes in the U.S. and the world population. If you don't believe this, Dear Reader, then ask yourself the following question: Would you go back into debt today the way you did in 2003-2007? Or are you saving your pennies, for fear of losing your job or your savings? Most people would agree to the second option, and that's the point. You can't have a "self-sustaining" recovery when people are cutting back. Friday's report that the economy is cooling is based on evidence that people are spending less than they used to. People have been badly burned, and they will never go back to their old ways for the rest of their lives. That's why it won't be until the 2020s that a "self-sustaining" recovery can begin. Reuters and Bloomberg and Spiegel
(Comments: For reader comments, questions and discussion, see the 28-Jul-12 World View -- Russia considering naval bases in Vietnam, Cuba, Seychelles thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(28-Jul-2012)
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Turkey threatens military retaliation against Syrian Kurds
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It was another one of those Alice in Wonderland days. Investors were popping champagne corks again on Thursday, when stock share values surged, thanks to the following statement by Mario Draghi, the head of the European Central Bank:
"To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate. Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough."
Readers will recall that Spain's 10-year bond yields (interest rates) have spiking as high as 7.5% on Monday, indicating a full-fledge bond panic in progress. So Draghi's remarks were intended to stop the panic. He was saying -- actually, he was hinting -- that the ECB would "print money" and use it to purchase massive amounts of Spanish bonds, increasing demand and prices, and pushing down yields (interest rates). The statement was an act of desperation, for two reasons. First, as we've already seen with Greece, big bailouts only make things worse when the fundamentals are unchanged, and they certainly would be in this case, since Spain would then be able to just keep borrowing more and more and spending more and more, without ever solving the problem. And second, the Germans are opposed to these massive bailouts, because they end up affecting the German taxpayer. The Germans also like to point out that it's illegal, according to the EU treaty, for the ECB to bail out any individual country. But let's face it, being illegal hasn't stopped any politician in Washington, Brussels or London from doing anything. At any rate, Draghi's announcement lowered Spain's 10-year bond yields to 6.93% on Thursday, still a crisis level. Bloomberg
Cuban President Raul Castro accused the United States on Thursday of seeking an overthrow of the Cuban government similar to Arab Spring countries. He charged that government opponents on Cuba, supported by the United States and other western countries, "were creating the conditions and aspiring to one day have happen here, what happened in Libya and what they want to happen in Syria." Castro was attending celebrations in Guantánamo, Cuba, to commemorate National Rebellion Day, which recalls the assault in 1953 on the Moncada and Carlos Manuel de Cespedes garrisons. On July 26, 1953, on the 100th birthday of national hero Jose Marti, the youth of the generation of the centenary, including Raul and Fidel Castro, attacked the barracks, and launched the Cuban revolution that brought Fidel Castro to power in 1961. Reuters and Prensa Latina (Cuba)
Syrian president Bashar al-Assad, fighting a growing rebel presence in the two largest cities, Damascus and Aleppo, has turned control of parts of northern Syria over to militant Kurds affiliated with the terrorist Kurdistan Workers' Party (PKK). Turkey's prime minister Recep Tayyip Erdogan reacted on Thursday:
"We will not let the terrorist group to set up camps [in northern Syria] and pose a threat to us. No one should attempt to provoke us. We will not bow to provocation but rather take whatever steps are necessary against terrorism."
Syrian Kurds have taken control of several towns near Turkey's border and raised PKK flags, apparently after Syrian forces were withdrawn to fight the rebel forces. McClatchy and Zaman (Istanbul)
Iran is suing Russia for $4 billion in the Court of Arbitration in Geneva for canceling a 2007 contract to sell five divisions of S-300 long-range anti-aircraft missile system worth an estimated $800 million to $1 billion. Russia canceled the contract after the UN Security Council approved sanctions on Iran on June 9, 2010. By threatening to win a $4 billion fine, Iran hopes to blackmail Russia into fulfilling the contract. It was President Dmitry Medvedev who imposed the ban in 2010, but President Vladimir Putin has been reversing some of Medvedev's policies and taking a harder line against the West. The missiles, which have both defensive and offensive capabilities, including the ability to carry a nuclear weapon, would definitely be a violation of the UN sanctions that Russia agreed to. Jamestown
A fleet of 10 Russian warships, plus escort vessels, has entered the Mediterranean Sea, carrying large numbers of Russian marines, raising concerns that the Russians are planning to intervene militarily in Syria, to protect their ally, Syria's president Bashar al-Assad. Russia's only Mediterranean port is Tartus, in Syria. However, Russia's naval chief, Vice Admiral Viktor Chirkov, said:
"The joint fleet flotilla will not enter the port of Tartus. It is carrying out military drills in the Mediterranean."
However Debka, which gets some things wrong, is quoting its intelligence sources as saying that the Russian fleet is standing ready to intervene if things start to go badly for al-Assad. The fleet could also serve as a bargaining chip in a deal to replace al-Assad with a new government that would remain pro-Russian. Monday's threats by the al-Assad regime to use its chemical weapons against "foreign adversaries" has substantially heightened tensions throughout the region, and it would not take much provocation at this point for someone to attack someone, possibly even by miscalculation. Ria Novosti (Moscow) and Debka
As I've been reporting for years, Iran's top leadership, led by Supreme Leader Ayatollah Ali Khamenei, are fervent believers in the Mahdaviat -- the Shia Muslim belief that the Mahdi (or "the 12'th Imam" or "the Hidden Imam") is coming to save mankind. This belief is roughly equivalent to the Christian belief in the second coming of Christ, or the Buddhist belief in the Maitreya -- that a new Buddha is to appear on earth, and will achieve complete enlightenment.(See my 2009 report, "Theological split in Iran widens as opposition protests continue" for details.) Now Debka is reporting that its intelligence sources are saying that Khamenei is predicting that the coming of the Mahdi is imminent, and that it's tied to the "divine achievement" of developing nuclear weapons capabilities:
"However, the inner circle of Supreme Leader Ayatollah Ali Khamenei and the Revolutionary Guard Corp’s top command refuse to bow to fear and urge diplomatic assertiveness as the only way to get Iran where it wants to go.In recent weeks, our sources report, Khamenei’s messengers have been going around parliament and quietly assuring lawmakers that “divine achievement” was very close and only a little more patience was required for enduring world sanctions.
Personnel at the Revolutionary Guards nuclear and missile units received the same assurance, and pep talks were given to raise morale in the army. The “Coming of the Mahdi” was at hand, they were told, a euphemism for completion of the nuclear fuel cycle, and soon “Islamic civilization would rule the world."
Apparently Khamenei isn't playing with a full deck. I don't know whether this makes him less dangerous or more dangerous. Debka
(Comments: For reader comments, questions and discussion, see the 27-Jul-12 World View -- Conflicting reports about fleet of Russian warships in Mediterranean thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(27-Jul-2012)
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New virus has Iran's nuclear plants playing AC/DC rock music
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I've had two major traffic accidents in my life. The first was in 1985. The second was two hours ago. The circumstances of both were roughly the same: I was traveling in the right-hand lane of Route 128 (an 8-lane highway outside Boston) on cruise control at 55 mph, the speed limit. Someone traveling 80-85 mph came up behind me, tried to swerve around me and failed. Surprisingly no one was injured in either accident, though the cars didn't do so well.
So, what is the correct "life's lesson" that I should be learning from these two similar experiences? That's it's a bad idea to travel at the speed limit? That it's better to travel at 80-85 mph myself, so that no one can catch up to me and swerve around me? I have no idea.
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Hamas leader Khaled Mashaal made a surprise visit to Ankara on Monday, meeting with Turkey's prime minister Recep Tayyip Erdogan. The principal subject of the meeting was the safety of the 500,000 or so Palestinians, mostly refugees, living in Syria. Hamas used to have its international headquarters in Damascus, and Mashaal and Erdogan both had a close relationship with Syria's Bashar al-Assad. However, al-Assad's brutal treatment of Sunni Arab civilians has caused both of them to split with al-Assad. Now, with dozens of Palestinians in Syria joining the opposition Free Syrian Army, the fear is that al-Assad will turn his army's mortars, missiles and machine guns on all Palestinians in Syria. Zaman (Istanbul)
From the point of view of Generational Dynamics, the Mideast is headed for a major regional sectarian war pitting Sunnis versus Shias. Hamas's alignment with Iran, Hizbollah and Syria's al-Assad never made any sense, because those are all Shias and Hamas is a Sunni organization. So Mashaal's split with al-Assad was going to come sooner or later anyway, but the meeting with Erdogan is consistent with Erdogan's desire to unite the Sunni Arabs under the influence of Turkey again, restoring some of the glory of the good old days under the old Ottoman empire. In the end, it's expected that Turkey, Saudi Arabia and the Arab states will be allied with Pakistan and China against India, Russia, Iran, Israel and the West.
The Syrian regime's confirmation on Monday that it has chemical weapons, and its threat to use them against "foreign adversaries," has brought strong reactions around the world. Syria's ally Russia has clearly told the Syrian government that it must abide by a 1925 international protocol barring the use of poison gases in warfare. Russia says that Syria signed the protocol in 1925. Saudi Arabia, which has supported the Syrian opposition, will lead a new Arab initiative to get the United Nations General Assembly to condemn Syria. Israel, which along with Saudi Arabia is considered by many analysts to have been the implied "foreign adversaries," is having a run on gas masks. The fear is that the chemical weapons will be transferred to the terrorist group Hizbollah, who will use them to attack Israel. Reuters and AFP and AFP
The web site of the F-Secure Security Labs says that they've received e-mail messages from scientists at Iran's Atomic Energy Organization saying that its computers have been infected by a new virus that causes several computers on the site to play the song "Thunderstruck" by AC/DC at full volume in the middle of the night. F-Secure says that it believes the e-mail correspondence is real, but concedes that it might be a hoax. Bloomberg
China is adopting an increasingly belligerent and warlike stance to its claims to complete sovereignty over the entire South China Sea, including regions that historically belonged to other countries. China's neighbors, especially Vietnam and the Philippines, are challenging China's claims, and China is blaming the United States, and its strategic Asia "pivot," for emboldening these countries to challenge China. According to one Chinese military official:
"China now faces a whole pack of aggressive neighbors headed by Vietnam and the Philippines and also a set of menacing challengers headed by the United States, forming their encirclement from outside the region. And, such a band of eager lackeys is exactly what the U.S. needs for its strategic return to Asia."
The fact that these countries are even daring to challenge China is an embarrassment to China's military, according to one Washington analyst:
"The South China Sea situation is certainly highly frustrating for Chinese military officers. If [China's People's Liberation Army] cannot even defend China's own territory at its doorstep, what capacity or legitimacy does it have to cruise around the world?"
(Comments: For reader comments, questions and discussion, see the 26-Jul-12 World View -- Turkey's Erdogan meets with Hamas leader in surprise visit thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(26-Jul-2012)
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Bond panic continues in Europe as Spanish yields surge
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The regime of Syria's president Bashar al-Assad suffered its third defection of a senior diplomat on Tuesday when the Syrian chargé d'affaires to Cyprus Lamia al-Hariri defected and arrived in Qatar. Syria's ambassador to Sweden defected in December, and the ambassador to Iraq defected two weeks ago. It's believed that other Syrian ambassadors, including the envoys to Germany, the Czech Republic, and Belarussia, have defected, but have not announced it publicly due to fears over government reprisals. Al-Jazeera
Syrian warplanes, believed to be Russian MiG bombers, bombed residential neighborhoods in Aleppo on Tuesday. This attack, the first of its kind since the protests began early last year, was a dramatic escalation of the attack on Syrian civilians, and was part of a coordinated assault by government forces that included heavy artillery shelling and rockets launched from military helicopters. The assault destroyed entire neighborhoods. The BBC World Service interviewed on resident who said, "Why doesn't Assad just use his chemical weapons and finish us off once and for all?" Washington Post
Spain's 10-year bond yields (interest rates) continued to surge into a higher crisis level on Tuesday, as an apparent bond panic gathers steam in Europe. Spain's 10-year bond yields spiked up to 7.5% on Monday, and surged higher to a record 7.64% on Tuesday. Germany's Finance Minister Wolfgang Schäuble, meeting with Spain's economy minister, blamed the markets for the bond panic:
"The current levels of interest rates on sovereign debt markets don’t correspond to the fundamentals of the Spanish economy."
Pressure is building on the European Central Bank (ECB) to "print money" and use it to purchase Spanish bonds, in order to bring down yields. Germany opposes such a move because it make Germany an indirect guarantor of the bonds. German officials are already bristling because Moody's put Germany's AAA rated debt on "negative watch" yesterday, indicated that Germany may be downgraded because of exposure to the euro crisis. Bloomberg
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In order to pursue its claims that the entire South China Sea is China's sovereign territory, to be controlled entirely by China, a gala ceremony marked the establishment of the city of Sansha in the middle of the South China Sea. The Chinese flag was hoisted, the national anthem was played, and there were military displays. Wang Chunyan, who works for the supermarket, says she likes living there. Huang Liangshan, a local fisherman, plans to open a small sea food restaurant. "It will make my fishing hauls sell better," he said. China has pretty much made it clear that any non-Chinese who insists on fishing in the South China Sea will be killed. Xinhua
Taiwan's military is poised to deploy 120 mm mortars and 40 mm guns on Taiping Island, part of the Spratly Island group. Taiwan claims sovereignty over Taiping Island, as well as all the Spratly Islands, challenging the sovereignty of China, the Philippines, Malaysia, Vietnam and Brunei. A recent visit to Taiping Island by a government official found that there was insufficient military weaponry on the island to provide for a sufficient defense. Focus Taiwan
(Comments: For reader comments, questions and discussion, see the 25-Jul-12 World View -- China establishes Sansha City in the South China Sea thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(25-Jul-2012)
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With American troops gone, al-Qaeda in Iraq launches widespread bombings
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Syria bragged on Monday that they had chemical and biological weapons, and that they might use them against foreign adversaries. According to Foreign Ministry spokesman Jihad Makdissi, such weapons would only be used for "foreign aggression":
"Any stocks of WMD or any unconventional weapons that the Syrian Arab Republic possesses would never, would never be used against civilians or against the Syrian people during this crisis at any circumstances, no matter how the crisis would evolve, no matter how."
In a later e-mail message, Makdissi appeared to back off slightly, using the words "if they exist":
"[Syria would] "never use chemical and biological weapons during the crisis... and that such weapons, if they exist, it is natural for them to be stored and secured."
As far as I know, Syria's Bashar al-Assad regime has used every possible weapon -- from handguns to helicopter gunships to missile-armed jets -- against unarmed civilians, and with al-Assad in a state of total desperation, it's not really credible that al-Assad would stop at using chemical or biological weapons against innocent Syrian civilians.
Makdissi did not spell out which countries would be targeted with chemical and biological weapons, but we may assume that he meant Saudi Arabia, Qatar, Israel and possibly Turkey. Reuters and al-Jazeera
At least 19 coordinated terrorist explosions and attacks in 13 cities and more than 40 locations across Iraq on Monday killed more than 100 people and injured 180. The attacks were aimed principally at military targets and Shia communities, and are thought to be the work of al-Qaeda in Iraq (AQI), a terrorist group that has been suppressed since the introduction of the military "surge" in 2007. However, AQI has promised a resurgence since the American withdrawal. In an audio message last week, an AQI leader warned, "We are starting a new stage. The first priority in this is releasing Muslim prisoners everywhere, and chasing and eliminating judges and investigators and their guards." According to one analyst, the attacks have "sparked fears that security forces will not be able to handle what appears to many people to be a resurgence of al-Qaeda" in the absence of US troops, who pulled out of the country at the end of last year. Al-Jazeera and Washington Post
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European officials can't handle more than one crisis at a time, and now they've got three at once. Greece is going to need a third bailout package, and it's not going to get it, as we reported yesterday. And ten-year bond yields (interest rates) for Italy rose to 6.34%. But the big shock on Monday was Spain. Last week, Spain's Valencia region said it was going to need bailout money from Madrid. That request has opened the floodgates, and it's now expected that 17 other heavily indebted regions of Spain are going to make similar requests. The result is that Spain's 10 year bond yields surged to a crisis level 7.5%, with a full-scale bond panic clearly in progress. Officials are saying that Spain doesn't need a bailout and that Germany and the IMF won't pay for another Greek bailout, but the "Kick the Can Theory" that I've proposed predicts that both will get their bailouts, one way or another, and the crisis will continue to get worse. Globe and Mail and Reuters
Philippine President Benigno Aquino reacted strongly to China's announcement that it would establish a prefecture-level government called Sansha city in the Spratly Islands, and that a military garrison will be deployed there to carry on military operations. In his annual state of the union address, he said,
"If someone entered your yard and told you he owned it, would you agree? Would it be right to give away that which is rightfully ours?"
Vietnam has also criticized the establishment of Sansha, calling it "serious violation" of Hanoi's sovereignty over the Paracel and Spratly chains, which it claims as part of Danang city and Khanh Hoa province respectively. VOA
(Comments: For reader comments, questions and discussion, see the 24-Jul-12 World View -- Syria threatens Saudis and Israelis with chemical weapons thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(24-Jul-2012)
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Food price surge expected after worst U.S. drought in 50 years
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The FAO Food Price Index has been declining since a major spike up in 2010, but that's about to change. This summer's drought, now covering more than half of the United States, is the most widespread since 1956, and is likely to get worse. Record-setting triple-digit temperatures have already occurred across the country. The National Weather Service counted 86 records last month, including 118 degrees in Norton, Kan., on June 28. Other record highs included 111 degrees in Yuma, Colo., 106 degrees in St. Louis, and 105 in Logan, W. Va. Between the extreme heat and the lack of rain, corn yield projections have been slashed, and will be slashed again in August. Corn prices have risen to historic highs, and beef prices have been surging as well, as corn makes up about 95% of cattle feed grains. Toledo (OH) Blade
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The world price of food has been growing steadily since 2002, as the effects of the 1960s "Green Revolution" have petered out, and population growth has been exceeding growth in food production. Food price shocks in 2008 sparked a wave of riots in 30 countries around the world, from Haiti to Bangladesh, and rising food prices helped trigger the Arab Spring uprisings in 2011. The American drought is now expected to trigger a new world food price shock. According to one analyst:
"Food riots are a real risk at this point. Wheat prices aren't up at the level they got to in 2008 but they are still very high and that will have an effect on those who are least able to pay higher prices for food."
Global corn prices have already shot up 40% since June to hit all-time highs, soy bean prices have jumped 30% to record levels, and wheat has surged 50%. Guardian and UN Food and Agriculture Organization (FAO)
According to reports from Germany's Der Spiegel, officials from the International Monetary Fund (IMF) are signaling that they will stop paying bailout money to Greece, because Greece has failed to meet its austerity commitments. Readers may recall that one of the conditions of the 130 billion euro bailout is that Greece must reduce its annual budget deficit from its current 160% of GDP to 120% of GDP by 2020. As I wrote in a lengthy analysis at the time ( "28-Oct-11 News -- Markets explode on crazy Rube Goldberg eurozone deal"), this demand was based on ridiculously impossible future economic assumptions that overlook the generational changes that are taking place. And now it's "already clear" that the "Troika" -- consisting of the European Commission (EC), European Central Bank (ECB), and the IMF -- will reach the conclusion, when it meets this week, that Greece's 120% commitment will not be met. It's already clear, for example, that the 3 billion euros that Greece was supposed to earn from asset sales this year will turn out to be only 300 million euros.
Greece has been begging EU officials to get it more time to implement its austerity commitments, and this was a big discussion in Greece's recent election that brought Antonis Samaras to office. But the Troika has decided that giving Greece more time would mean that it would be necessary to increase Greece's bailout package by an additional 10-50 billion euros. German officials this weekend torpedoed any possibility of renegotiating Greece's austerity agreement. "That won’t work -- that’s a Rubicon we can’t cross," said German foreign minister Guido Westerwelle.
The result is that Greece will go bankrupt next month, when it's due to make a 3.8 billion euro bond payment, and will be forced to leave the euro currency.
This discussion comes at a time when the euro crisis is rapidly building in Spain and Italy, with 10-year bond yields (interest rates) well above 7% and 6%, respectively, after officials in those countries announced that they won't be able to meet their own deficit commitments.
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 disaster without fixing the problem, so that the crisis will recur in worse form weeks or months later.
There's already a can-kicking solution being proposed for Greece next month. The Greek government will sell 3.8 billion euros in short-term government bonds known as T-bills, and sell them to Greek banks. The Greek banks would then deposit them with the ECB to be used as collateral for 3.8 billion euros of new ECB bailout money. Voilà! 3.8 billion euros created out of thin air! Problem solved! Der Spiegel -- Translation and Bloomberg
We've been reporting how yields (interest rates) for some bonds issued by Denmark and Germany have been falling and have actually gone negative, meaning that investors have to pay these countries to keep their money safe. This is a result of the euro crisis, and an analysis indicates that the euro crisis has thus earned Germany a windfall of about 100 billion euros, in all, with 10 billion euros saved in 2012 alone in reduced interest payments. Kathimerini
With Western sanctions on Iran causing rapid domestic inflation, Iran's parliamentary economic commission announced on Saturday that there will now be three official exchange rates of exchange for the U.S. dollar: 12,260 rials per dollar for "the import of basic goods," 15,000 rials per dollar for import of "capital and brokered goods," and the open market rate, currently 19,100 rials per dollar, for luxury goods, like toys and foreign cars. The new plan is drawing severe criticism from the Ahmadinejad administration. Radio Zamaneh
Vietnamese Catholic priests have sent a letter to President Nguyen Tan Dung protesting against what they said were violent local government backed attacks on a church in a northern Vietnam province which have angered Christians in the communist state. A non-Catholic mob, paid by government officials to participate, occupied the church on July 1 and smashed property, before church members called for help from fellow Catholics in nearby parishes, who came in groups and overwhelmed the attackers. Radio Free Asia
The Catholic Church has played a major role in Vietnam society for over two centuries, since the the Tay-Son rebellion, the most celebrated military event in Vietnamese history, united the north and south in 1789. The generational Awakening era that followed the Tay-Son rebellion changed Vietnam enormously, and became the high point of Vietnam's literary culture, thanks to the French, who also introduced the Catholic religion, converting hundreds of thousands from Confucianism and Buddhism. The Catholic religion was an important symbol in the 1950s, when Ho Chi Minh's violence forced over half a million Catholics to migrate from North to South. Vietnam's crisis civil war in the 1970s united the North and South again, but now the new attacks on the Catholic Church indicate that new, younger post-war generations are renewing the hostilities that occurred under Ho Chi Minh.
(Comments: For reader comments, questions and discussion, see the 23-Jul-12 World View -- IMF will end bailout for Greece, possibly forcing exit from euro currency thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(23-Jul-2012)
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Taiwan's weather bureau joins the fight for control of the South China Sea
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Damascus, the capital city of Syria, is in a tense calm after six days of intense fighting, centered around a bombing that killed four of Bashar al-Assad's inner circle. The army has deployed tanks and helicopter gunships to expel the rebel Free Syrian Army (FSA) from Damascus, but the uprising is spreading to other areas of Syria that were used to be relatively quiet. There's violence in Aleppo, which has been mostly quiet in the past because it is largely Alewite and Christian. In eastern Syria, the FSA has taken control of border checkpoints into Turkey and Iraq, cutting off trade to Damascus. The crossing into Erbil, Iraq, is especially significant because this is a crossing from the Kurdish regions of Syria. The Kurds have been supporters of al-Assad, but FSA control of this checkpoint could mean that the Kurds are turning against al-Assad. Al-Jazeera and Bloomberg
News reports from all over Syria indicate that there's been a significant change in the situation in Syria. It didn't begin with Wednesday's bombing. During the last few weeks, there have been signficant political and military defections, especially among the Sunni leaders who are necessary to give credibility to Bashar al-Assad. The bombing was a culmination of the defections, in the sense that it showed that the balance of power has changed, and that al-Assad has lost his iron grip on the country, and there may be almost no one left he can trust. Al-Assad himself is in hiding somewhere, while rumors are spreading that his wife and children are in Moscow.
Al-Assad's ethnic group, the Alawites, comprise 12% of the population, but the Alawite communities always felt secure because al-Assad had the country in an iron grip. That sense of security is gone now, as the majority Sunni community seems to be taking charge.
Syria is in a generational Awakening era because only one generation has passed since the bloody, genocidal civil war that climaxed with the slaughter of tens of thousands in 1982. An Awakening era is always a generational political battle between the survivors of that war and the young people growing up after that war. The Awakening era always ends with a climactic event that establishes the victor between these two generations, almost always the younger generation. America's last Awakening era was the 60s and 70s, climaxing in the resignation of President Richard Nixon.
Though we won't know for sure until it's all over, Wednesday's bombing has all the earmarks of an Awakening era climax. Al-Assad and his small Alawite majority had been ruling through fear, but now the fear of al-Assad is receding as if a curse had been lifted. It's possible that things will move very quickly now, and it's even possible that Syria's civil war will collapse within a month, with al-Assad gone and all sides forming a unity government. Today, right now, that's what appears to be going on, but we can't be sure that al-Assad won't be able to carry on for a while longer, thanks to the help from his pals in Russia, Iran and Hizbollah.
An Awakening era civil war is faced with very powerful generational forces to end in some sort of compromise. The Iraq war makes an interesting comparison. The event that triggered the Awakening era climax was the bombing of the al-Askariya Shrine in Samarra, Iraq, in February 2006 by al-Qaeda in Iraq. That triggered a Sunni-Shia civil war that might have ended much more quickly, had it not been for a great deal of outside support for al-Qaeda. We now know that Bashar al-Assad was actively helping al-Qaeda in Iraq, but we should not forget that powerful help of American news organizations, including the NY Times and NBC News, who coordinated their news cycles with al-Qaeda in Iraq to give them maximum help. These news organizations may be responsible for the deaths of thousands of additional people by prolonging the war. The powerful generational forces to end the war were countered by powerful forces supporting the war -- al-Qaeda, Syria and American news organizations.
Despite all that support given to al-Qaeda, the generational forces finally won out in 2007, when the civil war finally collapsed. See: "Iraqi Sunnis are turning against al-Qaeda in Iraq"
So now, returning to Syria, we have equally powerful generational forces driving toward a compromise, while we have Russia, Iran and Hizbollah providing weapons and support to al-Assad with the objective of keeping the war going. So we have two powerful forces driving the course of the war in opposite directions. The generational forces will win out, because the generational forces always win out, but the time frame is never certain. But right now, today, at this moment, if things keep going the way things are going, it looks like we might be close to a full Awakening era climax, and an end to the war. Reuters and Telegraph (London)
Taiwan has kept a relatively low profile in the ongoing military and political standoff over control of the South China Sea, but now Taiwan's Central Weather Bureau (CWB) is taking a stand. The CWB is modifying its web site to show weather conditions for the Spratly Islands as if they were part of Taiwan's sovereign territory. Taiwan's commercial relationship to the Spratlys is quite complex. Tension is already growing quickly following a military standoff between China and the Philippines last month, and now about 30 Chinese fishing vessels, escorted by armed Chinese warships, have arrived in the Spratlys for fishing. Taiwan's fishing industry is short of manpower, so Taiwan typically hires about 8,000 fishery migrant workers from the Philippines, and some of those Filipino fishermen may go to fish around the Spratly Islands in Taiwanese boats. There's no way that this will end well. Taipai Times
Taiwanese who are entering the United States can now list their country of citizenship as "Taiwan." Formerly, they had to list their country as "China (Taiwan)". Taipai Times
(Comments: For reader comments, questions and discussion, see the 22-Jul-12 World View -- Damascus bombing marks a significant change in Syria thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(22-Jul-2012)
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China to deploy a military garrison in South China Sea
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Wednesday's bombing in Damascus, Syria, has triggered a massive refugee crisis in neighboring countries, as tens of thousands of civilians flee to Lebanon, Jordan, Iraq and Turkey. As many as 30,000 have poured into Lebanon in the last two days alone, increasing sectarian animosity. Lebanon is wary of setting up refugee camps, since the "temporary" Palestinian refugee camps that they set up decades ago have turned into permanent slums. Turkey is already housing some 40,000 Syrian refugees in tent camps, but now thousands more are continuing to cross the border seeking safety. Armenia is also seeing an influx of ethnic Armenians who have lived in Syria for generations, but are now fleeing. BBC and Irish Times
Back in 2003, when I was first developing Generational Dynamics as a theory, I met with Professor Peter Turchin of University of Connecticut, who has done a great deal of work on Population Dynamics which is highly relevant to generational theory. Most academics that I've approached have simply blown me off, but Professor Turchin was kind enough not only to meet with me but even to listen to me and critique Generational Dynamics.
Professor Turchin rejected generational theory, and gave me the following counterexample: There was an extremely bloody crisis war around Rome in the decades of the 80s BC. Professor Turchin produced a study of "buried Roman coin hoards" during various time periods. People tend to bury their gold coins for safety during times of war, often they're forgotten until they're discovered by archaeologists years later. By looking at the dates stamped on the coins, it's possible to estimate when they were buried. The study showed that there were huge findings of coin hoards from the 80s BC war, and then again the 40s BC. This showed that the 80-year cycle was violated.
At that time, I didn't have an answer for him, since I was just getting started, but the solution became apparent later. During the 40s BC decade, there was great fear of a civil war, especially when Julius Caesar "crossed the Rubicon" in 49 BC, and then again when Caesar was assassinated in 44 BC. There was great FEAR of a civil war, so people buried their gold coins, but there was no ACTUAL civil war that lasted more than a brief period.
I believe that something similar is happening in Syria today. There was an extremely bloody civil war that climaxed in 1982 with huge bloody massacres across Syria, and people living today remember that. They FEAR that there's going to be a repeat, and so they're fleeing across the borders in great numbers. In actual fact, there's fighting in Damascus, but there's little fighting across the country, as far as I can tell, so the fear is unfounded. And, in fact, a crisis civil war is impossible during a generational Awakening era.
The bitter shouting that occurred in the United Nations Security Council on Thursday, when Russia and China vetoed a Western resolution that would call for sanctions if Syria did not pull its heavy weapons out of civilian neighborhoods echoed on Friday. The U.S. and Europe had threatened to refuse to renew the 300 man U.N. observer mission in Syria that was part of Kofi Annan's peace plan, on the grounds that they couldn't do anything anyway since it was too dangerous for them to venture from their barracks. Russia called that threat "blackmail" last week, so there was a sort of compromise on Friday. The observer mission would be extended, but only for another 30 days, to give it time to wind down for an "orderly withdrawal." Russia and China want to continue the observer mission, known as UNSMIS, indefinitely. Al-Jazeera
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The EuroGroup of euro area finance chiefs agreed to a bailout of 100 billion euros ($122 billion) for Spain's banks on Friday, but that had no apparent effect whatsoever on the Spain's problems, which are rapidly shooting up into full-fledged crisis levels. The yields (interest rates) on Spain's ten-year bonds jumped to a historic high of 7.27%, indicating that investors are betting that Spain's government is going to default. The adjoining graph shows an inexorable climb in bond yields that is very similar to what happened to Greece, at the time that European officials were saying that everything is OK and Greece had no problems. As we've said many times, there is NO SOLUTION to the euro crisis, and to Spain's crisis in particular. Investors were not impressed by Friday's huge bailout agreement with Spain because, at the same time, Spain's Valencia region said that it would need an 18 billion euro ($22.1 billion) bailout. Reuters
It looks like it's going to be a long, hot summer in Spain. Police fired rubber bullets to disperse crowds in cities across Spain, with more than 100,000 attending a rally in Madrid's main Puerta del Sol square. With Spain's unemployment rate at 25% Treasury Minister Cristobal Montoro said that "there is no money" to pay civil servant wages. He added, "It is time to call a spade a spade. Financing public services with more deficit and more debt will doom us." Telegraph (London)
China's central military authority will deploy a military garrison in the Spratly Islands, whose sovereignty is disputed. The garrison command will be responsible for managing the city's national defense mobilization, military reserves and carrying out military operations. China has been occupying the Spratly Islands pursuant to its claim to have full sovereignty over the entire South China Sea, including areas historically belonging to other countries. Xinhua
(Comments: For reader comments, questions and discussion, see the 21-Jul-12 World View -- Tens of thousands of Syrian refugees pour into neighboring countries thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(21-Jul-2012)
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Capital One fined $150 million for credit card fraud
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Syria's president Bashar al-Assad appeared briefly on state television on Thursday to swear in the new defense minister. Other than that, al-Assad has remained hidden in an undisclosed location, a day after a bomber penetrated his deepest security and killed three people in his inner circle. Violence increased in the capital city Damascus, with rebel forces attacked by army helicopter gunships, amid rumors that al-Assad is considering the use of chemical weapons. Syrian refugees have been pouring across the borders into Turkey and Lebanon, with 20,000 refugees crossing into Lebanon on Thursday alone. The main concern continues to be that the sectarian war within Syria will spread into a larger Sunni-Shia war in the region, pitting Iran and Hizbollah against Saudi Arabia and the Gulf states. Reuters
An acrimonious shouting match in the United Nations Security Council followed the veto, by Russia and China, of a new British-sponsored resolution to extend the observer mission of the Kofi Annan Syria peace plan. The plan, supported by the West, demanded that the Bashar al-Assad regime remove all heavy weapons from civilian residential areas or face sanctions. In vetoing the resolution, China's ambassador said Western nations were "arrogant and rigid." Russia's UN ambassador Vitaly Churkin said that the West sought to "fan the flames of extremists, including terrorist groups," and that the West now wanted "military intervention." America's UN ambassador Susan Rice appeared to indicate that the U.S. would go around the Security Council and take independent action:
"We will intensify our work with a diverse range of partners outside the Security Council to bring pressure to bear on the Assad regime and to deliver assistance to those in need.The Security Council has failed utterly in its most important task on the agenda this year."
She's right that it's very hard to justify the existence of the U.N. Security Council these days. The United States has been "policeman of the world" since President Truman announced the Truman Doctrine in 1947, and it's almost always been up to the United States to take action to bring peace.
The British ambassador, Mark Lyall Grant, said, "The United Kingdom is appalled at the veto of Russia and China. The effect of their actions is to protect a brutal regime. They have chosen to put their national interests ahead of the lives of millions of Syrians." France's ambassador Gerard Araud said, "It is clear that Russia only aims to give more time to the Syrian regime to crush the opposition. Refusing Annan the means of pressure that he asked for is to threaten his mission." Middle East Online
Federal regulators order Capital One Financial Corp. to reimburse $150 million to more than 2 million consumers who were fraudulently sold products they didn't need when they called to activate their credit cards. For example, they sold "payment-protection plans," which cover up to 12 months of minimum payments if they lose their jobs or become disabled. But they sold them to people who were already unemployed or disabled, and after the consumers paid a hefty fee, they were told that they were ineligible for the "protection." Market Watch
This reminds me of a scam that I reported in 2009. The Senate Commerce Committee discovered the scam works as follows: You make a credit card purchase online from Priceline or other retailers. At the end of the transaction, you're offered a "reward" of some kind, a coupon worth a few dollars. You click the fine print, and it turns out that you've agreed to let the retailer charge your credit card $10-20 per month. According to the Senate reports, the online retailers were fully aware that they were defrauding consumers, but they didn't care because they were making so much money -- $1.4 billion from millions of customers.
Here's the list of online retailers that the Senate found committed this fraud:
1-800-FLOWERS.com Hotwire Priceline.com
AirTran Holdings Intelius Redcats USA
Classmates.com FTD Shutterfly
Continental Airlines Orbitz Worldwide US Airways Group
Movietickets.com Pizza Hut Vistaprint USA
Fandango
As I keep saying, the global financial crisis is far from over, because the same banksters are in the same jobs finding new ways to defraud people. These people graduated with masters degrees in "financial engineering" in the 1990s, and became world experts in creating highly complex synthetic financial instruments with which to commit fraud. Today, few people would be willing to purchase a fraudulent residential mortgage-back collateralized debt obligation (RMB CDO), so these same people are now using other techniques to defraud people. In the meantime, Eric Holder's Justice Department adamantly refuses to investigate and prosecute banksters who commit even the most obvious fraud.
In the Capital One case, the company is fined some portion of the amount of their illegal gains. The actual people who perpetrated the fraud still keep their 6-7 digit salaries and bonuses, when they should be going to jail.
Israeli officials maintained Thursday that Iran was behind a suicide bombing in Bulgaria that killed five Israeli tourists, and vowed revenge, at least covertly. Iran has accused Israel of being responsible for the killing of two Iranian scientists last year, and the New York Times has published classified information revealing that the Stuxnet virus, which attacked centrifuges in Iran's nuclear reactors, was launched by the United States and Israel. Iran is denying that it caused the Bulgaria bombing, but it's possible that it did so because of a desire for revenge. Washington Post
(Comments: For reader comments, questions and discussion, see the 20-Jul-12 World View -- Israel promises retaliation against Iran for Bulgaria bombing thread of the Generational Dynamics forum. Comments may be
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(20-Jul-2012)
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Investors hoping for a catastrophe
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Even Bashar al-Assad's own sister, Bushra, lost her husband on Wednesday in a massive explosion that killed much of al-Assad's inner circle, including al-Assad's Defense Minister and several other high-level government officials. The rebel Free Syrian Army claimed responsibility for the bombing, but it's thought that the perpetrator must have been a close insider, possibly a bodyguard who was supposed to be protecting the inner circle. According to one analyst:
"The fact that [the attack] happened near where the president lives is significant. It seems it is a very serious explosion and we are not sure if it’s a suicide bomber in a car, or if it’s one of the bodyguards, or one of the insiders who blew himself up as a high-level meeting was taking place with a number of ministers and high level security official attending it."
As of Thursday morning, Syria's president Bashar al-Assad has not been since the attack, though it's not believed that he was a casualty. Al Jazeera and Reuters
246 Syrians, including a general, five colonels, four majors, two captains, one lieutenant, soldiers and their families defected and fled to Turkey on Wednesday. Most of the civilians were women and children, and were sent to refugee camps. Zaman (Istanbul)
It's been quite a spectacle. For the past 16 months, more and more Syrians have turned against the government. President Bashar al-Assad has responded with more and more violence with bigger and more deadly weapons, but it's always backfired. There have been many defections from al-Assad's regime, but they've mostly been Sunnis who were sick of seeing innocent citizens slaughtered. But now we might expect to see more defections who simply want to desert a sinking ship. Al-Assad's regime has become more isolated within Syria, as shown dramatically by Wednesday's bombings.
But he's also become more isolated internationally. Russia is increasingly embarrassed by being joined at the hip with a man who seems to grow stupider every day. Iran and Hizbollah aren't embarrassed to be supporting al-Assad, of course, since they rather enjoy seeing him exterminate Sunnis. But they're embarrassed by the fact that no matter how much help they give him, he's still losing control, which makes them lose credibility.
It's pretty clear now to everyone (except perhaps al-Assad himself) that he will not be able to crush the opposition, which is what his father Hafez did in 1982. But 1982 was a generational Crisis era, and today is a generational Awakening era for Syria, and the rules are different, although al-Assad himself seems oblivious to that fact.
It's widely thought that al-Assad is a wounded animal who will attempt to strike back at the opposition with a new level of violence in order to "prove" that he's still in control. But what will he do after that fails? Wednesday's bombing was so devastating that al-Assad has lost almost all credibility, and is now looks weak and pathetic.
U.S. Defense Secretary Leon Panetta said on Wednesday that Syria's war is "spinning out of control," but that's not true. Syria is in a generational Awakening era, so "spinning out of control" is not an option. If he's careful, al-Assad might be able to hang on to power for a while longer, but it's more likely that he's going to be careless because he's desperate. And when he makes another careless mistake or two, even he may decide that the time has come to flee to Tehran or Moscow with his super-hot wife Asma, and enjoy the good life, and let the civil war fizzle. Globe and Mail
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So it was surprising to see David Bloom, global head of currency strategy at HSBC Holdings, on television on Wednesday morning explaining why investors were hoping for a catastrophe. I've been writing about this "bad news is good new" phenomenon since 2007, but Bloom said it better than I have. He spoke in a tongue-in-cheek manner, but his remarks were an entirely accurate reflection of Wall Street attitudes, and another illustration of how disconnected Wall Street is from reality:
"What we want is not bad news but terrible news, because terrible news means that the Federal Reserve does more QE (Quantitative Easing), and the more QE we have, the more of the drug we have in financial markets to prop us up.So the markets aren't happy because things are, as you describe, slowing down. They want them to be a little more disastrous, so they can get better. That sounds ironic and strange, but that's just how the markets are working at the moment.
And the reason that people are so hopeful is that there's a U.S. election coming up, and they're worried that the Fed doesn't want to be political, so they'll act sooner rather than later.
[Q: You're right about the markets - everybody wants more QE. But there are questions out there about the previous rounds of QE or fiscal packages, whether they worked or not. In fact, another expert once said that if it was a drug, then the FDA would actually make it illegal.]
Yeah, but the thing about a drug is that you never want one less, you always want more, and more just gives you the same, it doesn't give you a higher high. And so the markets are just fixated on this. We got from the bank of England what we wanted -- we saw today there was a 7-2 vote for billions more. And we want the same from the Fed. So we've had the ECB cutting rates to zero, China cutting rates, the Bank of England stepping in, we want the Fed, we want the big boy in town to start printing as well. That's what the markets are desperate for."
And so, Dear Reader, I know how patriotic you are, so I want you to do your part. Go lose your home and your job and your savings, and go live under a bridge, so that the economy can get well again. It's your patriotic duty!
(Comments: For reader comments, questions and discussion, see the 19-Jul-12 World View -- Syria bombing strikes stunning blow at Bashar al-Assad thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(19-Jul-2012)
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Hillary Clinton appears to give Iran an ultimatum over nuclear weapons
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A new criminal banking investigation is so bad that it's comparable in criminality to the Libor scandal. HSBC is the largest bank in Europe, and one of the largest in the world, with 7,200 offices in 80 countries, and 2011 profits of $22 billion. The U.S. affiliate, HBUS, has 470 branches across the country, with 4 million customers. HBUS provides thousands of banks with "U.S. dollar services," which mean services to move funds and exchange currencies around the world.
The Senate Subcommittee On Investigations, led by Silent Generation Democrat Carl Levin, has been investigating HSBC as a "test case" for money-laundering violations, and the range of criminal acts is breathtaking, including the following:
David Bagley, the head of compliance, testified before the Senate on Tuesday and announced that he was stepping down. He tried to spin the crimes as innocent mistakes and "lax controls," but there's no way that these actions were not intentional. This is the same as in the case of Barclays, where the released e-mail messages reveal a criminal culture of people willing to screw anyone for their own gain. According to Levin,
"The culture at HSBC was pervasively polluted for a long time."
The Senate report also blames regulators for failing to investigate the obvious crimes going on. As I've written many times, Gen-X regulators have not only refused to investigate and prosecute even the most obvious financial crimes, they actually cooperate with banksters in continuing to defraud the public. One of the worst offenders was New York Insurance Superintendent Eric Dinallo who spent several months in 2008 helping the banks and "monoline" bond insurance companies to collude to commit fraud.
Since HSBC is just a test case, it's very likely that other banks committed similar crimes. U.S. Senate and Sky News
On February 9, 2007, I wrote about how mortgage-backed securities were collapsing in value because of bad subprime mortgage loans. ( "Rapid collapse of ABX index indicates that investors may be starting to panic.") Most pundits talk about the financial crisis beginning in 2008, but readers of my web site were aware that the crisis was already in full swing in February, 2007, with the collapse of the housing bubble.
That article was triggered by a press release from Household Finance Corp., a venerable old American consumer credit firm that HSBC acquired in 2003, renamed HSBC Finance Corp. The press release said that they expected to have $1.75 billion in unanticipated bad debts, because so many people were defaulting on their subprime mortgages. Another major institution, New Century Financial Corporation, made a similar announcement at the same time.
Here's an excerpt from the press release that's almost hilarious to read today:
"The impact of slowing house price growth is being reflected in accelerated delinquency trends across the US sub-prime mortgage market, particularly in the more recent loans, as the absence of equity appreciation is reducing refinancing options. Slower prepayment speeds are also highlighting the likely impact on delinquency of higher contractual payment obligations as adjustable rate mortgages reset over the next few years from their original lower rates."
In other words, the housing bubble was bursting because of "accelerated delinquency trends," and a lot of people were delinquent or defaulting.
What's significant about all this in retrospect is that we now know:
In July, 2007, Citigroup’s chief executive, Charles O. Prince, said that he's still going full steam ahead with credit and leveraged deals. He said, "As long as the music is playing, you’ve got to get up and dance. We’re still dancing." Now we know that by "dancing," he meant that he was going to defraud as many people as possible while the music was still playing.
I've been writing for years about the overwhelming circumstantial evidence showing that crimes were committed by banksters in the early 2000s that led to the global financial disaster, which is far from over. And I've been repeatedly astonished that the regulators, led by Attorney General Eric Holder, adamantly refuse to investigate and prosecute these crimes, even when it's screamingly obvious that serious crimes have been committed.
So I have to ask the same question that I asked in the case of Barclays and the Libor scandal: Why are these crimes being investigated and prosecuted now? What's changed?
And I come back to the same answer for HSBC as I did for Barclays. It's no coincidence that they're both British banks, and that the criminal activities were investigated by Americans. Eric Holder and other Washington politicians of both parties will not investigate Citibank or Bank of America because the politicians receive huge campaign contributions from these banks. But since HSBC and Barclays are British banks, it's far less likely that there's a campaign contribution connection. British regulators would never have investigated British banks on their own, until they were forced to do so by the Americans. But you can be sure that British regulators will get their revenge before too much longer.
During the 16 months of fighting in Syria, the capital city Damascus has largely escaped the violence. But now a spokesman of the Free Syrian Army is saying that thousands of fighters have converged on Damascus for a final battle to "liberate Damascus." The forces of the Bashar al-Assad regime are using helicopter gunships to repel the rebels, but rebels are making unconfirmed claims that they's shot down an army helicopter on Tuesday with anti-aircraft weapons. Israel's army intelligence chief says that al-Assad is moving troops from the Golan Heights front line with Israel and redeploying them to Damascus. As this fighting has proceeded, a Turkish official said a Syrian brigadier general and several other military defectors were among 1,280 Syrians to have fled to Turkey overnight. Reuters
Now is a good time to repeat that Syria is in a generational Awakening era, and so a crisis civil war is impossible at this time. If I were to guess, I would say that the most likely scenario is that at some point al-Assad will be forced to step down, and then the civil war will fizzle, despite analysts' predictions that it will continue even if al-Assad leaves. That could be one possible outcome of the current battle in Damascus. Once the civil war fizzles, U.N. envoy Kofi Annan can claim to have brought peace to the Mideast.
Israel's government has increasingly been in crisis over military draft exemptions for ultra-Orthodox Jews and Israeli Arabs, as we reported two weeks ago. On Tuesday, Israel's government appeared close to collapse, after the Kadima party withdrew from the government coalition of prime minister Benjamin Netanyahu over a disagreement about the drafting of ultra-Orthodox Jews. Netanyahu submitted a compromise proposal on Tuesday, that was rejected by Kadima as "complete rubbish," leading to the breach. Attempts to create a new governing coalition are under way, but so far have not been successful. Haaretz
At a press conference in Israel on Monday evening, U.S. Secretary of State Hillary Clinton said that everyone prefers a diplomatic solution to the Iran crisis, but:
"We will use all elements of American power to prevent Iran from obtaining a nuclear weapon."
This was part of a prepared statement, and it appears to be an ultimatum. Until now, the Obama administration has never explicitly said that the U.S. would use military power to prevent Iran from obtaining a nuclear weapon. Jerusalem Post
(Comments: For reader comments, questions and discussion, see the 18-Jul-12 World View -- HSBC Holdings admits to criminal money-laundering thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(18-Jul-2012)
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Russia accuses the West of 'blackmail' on Syria
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The former chief operating officer of Barclays Bank received a dramatic drilling on Monday in front of the British Parliament's Treasury Select Committee. Under close questioning, Jerry del Missier said that he had given instructions to Barclays' money market traders to manipulate interest rates in 2008, after he interpreted a message from the Bank of England as an instruction to do so. The Bank of England, as well as del Missier's boss Bob Diamond, have said there was no such instruction. (See "4-Jul-12 World View -- Barclays interest rate manipulation prompts desperate finger-pointing by British officials") During the hearing, del Missier was asked several times whether he believed that these rate-fixing actions were legal or illegal. He refused to answer, saying that the actions were perfectly OK, given the context of the time. The Libor fixing scandal is drawing increased attention as more banks are investigated, because Libor is the benchmark interest rate used in the pricing of some 1/3 of $1 quadrillion in financial instruments worldwide, so even a small change in the Libor rate can affect trillion of dollars in securities. Bloomberg
Russian Foreign Minister Sergei Lavrov accused the West of "blackmail" in the United Nations Security Council. Security Council authorization for Kofi Annan's "Syria peace plan" observer mission, which has only increased violence in Syria because it provides an excuse for the Bashar al-Assad regime to exterminate even more innocent Sunni Arab civilians, expires on July 20. The British text for a new resolution extends the observer mission, but it also authorizes "Chapter 7" military enforcement, which Russia refuses to endorse. According to Lavrov,
"To our great regret, there are elements of blackmail. We are being told that if you do not agree to passing the resolution under Chapter 7 of the U.N. Charter, then we shall refuse to extend the mandate of the monitoring mission.We consider it to be an absolutely counterproductive and dangerous approach, since it is unacceptable to use monitors as bargaining chips."
The issue is becoming even more heated, as there are some unconfirmed reports that al-Assad is planning to begin using chemical weapons. Meanwhile, the UN's wandering Gypsy, Kofi Annan, will visit Moscow on Tuesday for some reason or other. Reuters and AFP
The question is still unresolved whether the European Commission lied when officials said that the 100 billion euro bailout of Spain's banks had to be guaranteed by Spain's government, in case the banks can't repay the bailout loans. The first announcement was that German Chancellor Angela Merkel had caved into pressure from Spain and Italy, and had agreed that Spain would NOT have to guarantee the loans. Then came reports that the European Commission had lied, and that Spain WOULD have to guarantee the loans. Now Merkel is saying that she did NOT cave in to the demands of Spain and Italy, and that it hadn't yet been decided whether the bank loans would have to be guaranteed by Spain. Spiegel
(Comments: For reader comments, questions and discussion, see the 17-Jul-12 World View -- Barclay's COO admits having rigged Libor, thought it was OK thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(17-Jul-2012)
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Foreclosed properties 'shadow inventory' shows housing crash far from over
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Madonna is facing criminal prosecution in France after depicting, in her sell-out concert in Paris on Saturday, Marine Le Pen, leader of the far right National Front party, with a Nazi Swastika on her forehead. Marine Le Pen is the daughter of Jean-Marie Le Pen, who led the National Front party until last year, when Marine took over. Jean-Marie is a Holocaust denier and a convicted racist and anti-Semite, but was nonetheless very popular in the 2002 presidential election. Marine has toned down the party's extremist views, but still pledges to limit Muslim immigration. Madonna is currently dating Brahim Zaibat, a Frenchman with North African Muslim immigrant ancestry. Daily Mail (London)
Anyone who watches television knows that financial pundits have been announcing the bottom of the real estate bust every month since 2007, when the housing bubble burst. Now, according to reports by two analytic firms, RealtyTrac and CoreLogic, real estate prices have much farther to fall because banks have been holding 90% of foreclosed properties off the market. Even worse, banks holding these properties are committing financial fraud, since their financial statements value these homes at their housing bubble prices, rather than their current values. This huge "shadow inventory" of houses is going to depress housing prices for years to come. Furthermore, with hundreds of thousands of homeowners delinquent in their mortgage payments, this shadow inventory may grow significantly. In case of a panic, many of these houses may be dumped on the market at the same time. AOL Real Estate and Naked Capitalism
Royal Bank of Scotland Group Plc, UBS AG, Lloyds Banking Group Plc and Deutsche Bank AG are among the lenders regulators in Europe, Asia and the U.S. are investigating in the Libor scandal. Libor (London Interbank Offered Rate) is a benchmark interest rate for financial products valued at $360 trillion (over 1/3 of $1 quadrillion) worldwide. Barclays Bank has already settled, paying a fine of $448 million, which is tiny compared to the possible consequences. Bloomberg
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There's a conflict in the South China Sea that pits China against Vietnam, the Philippines, and other countries, and there's a conflict in the East China Sea that pits China against Japan in a dispute over the group of islands known as Senkaku in Japanese and Diaoyu in Chinese. Japan last week lodged two separate complaints against China, after Chinese vessels approached the islands, but Japan is saying the recall is for consultations only, and not related to the complaints. AFP
A Chinese frigate ran aground on the Half Moon Shoal in Philippine waters, prompting Manila to send two vessels and reconnaissance aircraft to the area. There could have been a major standoff, but China sent a rescue team and refloated the boat, sending it home. Reuters
During the Iraq war, airheads in the loony left like Nancy Pelosi and the staff of the New York Times were claiming that there was no such thing as "Al-Qaeda in Iraq," when in fact anybody who bothered to learn even the most basic things about what was going on knew that Al-Qaeda in Iraq not only existed, but was responsible for triggering most of the sectarian violence. From 2007: "Iraqi Sunnis are turning against al-Qaeda in Iraq"
Now Nawaf al-Fares, Syria's ambassador to Iraq who defected two days ago, is confirming how the regime of Bashar al-Assad worked closely with al-Qaeda in Iraq:
"The Syrian regime felt threatened and felt that it, too, might fall. So they had an agreement with al Qaeda to keep the road open to Iraq. The militants started coming from all over the world through Syria, under the eyes of the Syrian secret police, which are directly responsible for the killing of thousands of Iraqis in Iraq as well as Americans and coalition forces.The secret police were encouraging enthusiastic young people in Syria to go for jihad in Iraq and join al Qaeda. Bashar al-Assad and his security forces are directly responsible for the killing of thousands and thousands of Iraqis and coalition forces, because he gave al Qaeda everything it needed. He trained and provided shelter and he built safe havens for them to hide in."
So Bashar al-Assad was working with al-Qaeda to do everything in his power to bring about the defeat and humiliation of the United States in Iraq. In that sense, Bashar al-Assad was no different from American organizations like the New York Times and NBC News, which were ALSO doing everything in their power to bring about the defeat and humiliation of the United States in Iraq. This continues to the present time, as illustrated by the fact that the New York Times recently revealed the U.S. participation in the development of Stuxnet. In my opinion, the actions of organizations like the NY Times and NBC News have been on the edge of treason. CNN
The International Committee of the Red Cross (ICRC) made a symbolic change in classification by declaring that the war in Syria is a "civil war," according to its own definition. This reclassification means that people who order or commit attacks on civilians including murder, torture and rape, or use disproportionate force against civilian areas, can be charged with war crimes in violation of international humanitarian law. Reuters
(Comments: For reader comments, questions and discussion, see the 16-Jul-12 World View -- Syrian defector confirms stories about 'Al-Qaeda in Iraq' thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(16-Jul-2012)
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Hollande's women troubles overshadow France's Bastille Day
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France's president François Hollande marked July 14 Bastille Day celebrations on Saturday with a pledges to fight industrial layoffs and keep the two women in his life from fighting with each other. The Socialist candidate is refusing to accept an announcement by money-losing French car make Peugeot that it would lay off 8,000 workers in France, and he promised public spending to support French-made cars. Hollande is also asking his partner, Valérie Trierweiler, to end an open feud with his former partner, Ségolène Royal. The spat became public in June, when a tweet from Trierweiler supported Royal's opponent in an election, which Royal then lost. Trierweiler stole François Hollande away from Royal, his previous partner of 30 years and the mother of his four children. Hollande's oldest son has said he and his siblings want no further contact with Trierweiler. France 24 and Reuters
I've checked my own files, and I have about two dozen stories on file from 2008 that talk about investigations of illegal fixing of the Libor rate. Apparently Timothy F. Geithner, currently the Treasury Secretary but then at the New York Fed, was aware that illegal Libor-fixing was going on. And yet, nothing was done, and the criminal activity was allowed to go on as usual.
This is just one more example of the massive change to our culture since the 1990s. In the 1980s, when the Boomers were in charge, if you committed a crime, then you went to jail. In the 2000s, with the Gen-Xers in charge, if you commit a crime, then regulators refuse to investigate and prosecute, and you're allowed to continue illegal activities. This is the major characteristic that distinguishes Generation-X from the Boomers -- not that there are more crooks in Generation-X, but that Gen-Xers refuse to blame or prosecute other Gen-Xers, even for obvious, major crimes. Thus there have been no prosecutions of the banksters who caused the financial crisis.
As I explained in "The Legacy of World War I and the Holocaust", this is also the same behavior that led to the 1930s Holocaust. Germany's Lost Generation (the generational predecessor of today's Generation-X) hated the previous Missionary Generation (which was identified with the Jews) just as much as today's Gen-Xers hate the previous Boomer Generation, resulting in world catastrophes in both cases. Bloomberg (2012) and Bloomberg (2008)
"Greece is collapsing, the Iranians are getting aggressive, and Rome is in disarray. Welcome back to 430 BC." -- British comic John Cleese
The ancient Chinese saying goes, "The tree craves calm but the wind keeps blowing." The wind, in this case, is the United States, and the Obama administration's "pivot," announced last year, of its armed forces from Europe/Atlantic to Asia/Pacific. U.S. Secretary of State Hillary Clinton meddled in the South China Sea issue through her whirlwind tour of China's neighbors -- Afghanistan, Japan, Mongolia, Vietnam, Laos and Cambodia -- to promote "strategic pressure" on China and "diplomatic encirclement" by its neighbors. Though China always exercises restraint and insists on diplomatic solutions to the disputes, Clinton has encouraged China's neighbors to keep challenging China.
Washington must understand that returning to Asia by way of militarily flexing its muscle, and diplomatically intervening in bilateral disputes is wrong and short-sighted. It is wrong because it is favoring confrontation instead of cooperation, which does not contribute to Asia's development and also goes against U.S. long-term interests. Americans should do more to promote regional and win-win cooperation rather than mess up peace and development in the Asia-Pacific region. Xinhua
(Comments: For reader comments, questions and discussion, see the 15-Jul-12 World View -- China accuses U.S. of 'diplomatic encirclement' in Asia thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(15-Jul-2012)
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Anti-Sunni rant given by Shia cleric
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An Al-Jazeera vessel sent to the Scarborough Shoal in the South China Sea to do a story on China's aggression in the region was threatened with a military attack by a Chinese warship if it did not leave the Scarborough Shoal region immediately. The al-Jazeera ship captain did as he was ordered. The incident appeared in a segment aired on Al-Jazeera's online televised newscast, and will appear soon in a full-length documentary, but has not yet appeared in a story on its web site. According to the segment, China is sending a flotilla of 30 well-armed fishing vessels to fish in the Scarborough Shoal, which is off the coast of the Philippines, and has historically been part of Philippines territory. The flotilla is being sent as the meeting in Phnom Penh of ASEAN (Association of Southeast Asian Nations) ends in bitter division over China's claims to the entire South China Sea, including many areas historically belonging to other countries. At the ASEAN meeting, China's message was that other countries shouldn't make trouble, but should maintain harmonious relations with China. Apparently, when China tells you not to "make trouble," it means that you should do exactly as demanded or they'll kill you. Al-Jazeera
As we reported yesterday, France is considering sending the military to northern Mali, where Ansar al-Dine, a wealthy, well-armed terrorist group linked to Al-Qaeda in the Islamic Maghreb (AQIM) has taken control, and can use the region as a base to launch terrorist attacks against France. On Friday, Canada's Foreign Affairs Minister John Baird said:
"Let me be clear that Canada is not contemplating a military mission in Mali.We support the significant international diplomatic efforts to help restore democracy, led by the Economic Community of West African States, and we certainly stand ready to support the organization once its needs are identified.
We have done a significant amount of work with the Economic Community of West African States in the past and we certainly stand ready to support them in the future."
The United States, France and the UN Security Council have agreed to provide logistical support for such an operation. On Friday, U.S. President Barack Obama authorized the release of up to $10-million for emergency relief efforts in northern Mali. Globe and Mail (Ottawa)
On June 16, Saudi Arabia's Crown Prince Nayef bin Abdul-Aziz al Saud died. Born in 1933, he was perhaps the most ruthless of the leaders in governing al-Saud family. In an address posted on the internet, a Shia cleric, Sheikh Nimr Baqer Al-Nimr, rejoiced in the death of Nayef. I found his rant to be interesting because it illustrates the vitriolic hatred between Sunnis and Shias in the Mideast. The following are some excerpts:
"Where is [Crown Prince] Nayef's army now? Will it protect him from the Angel of Death? Where are his intelligence agencies? Where are his officers? Can they protect him from the Angel of Death? He will be eaten by worms and suffer the torments of Hell in his grave. ...Imam Hussein said: 'No shedder of blood shall enter Paradise.' Will Nayef enter Paradise? Some say: 'Don't talk ill of Nayef because he's dead.' Are you stupid?
Don't you see that the Koran says: 'On that day shall the believers rejoice'? Why shouldn't we be happy at the death of the man who imprisoned and killed our children? This is the man who spread fear and terror, so why shouldn't we rejoice?
Allah be praised! May He take their lives, one after the other – the Saud, Khalifa, and Al-Assad dynasties.
The sons of Abd Al-'Aziz will rule this land until Judgment Day – that's what Nayef declared. Let's see how he rules it... Let him rule it from the grave. It is a reckless, tyrannical regime.
Who is the Saud clan? They are killing our brothers in Bahrain. If any good can become of them, let them liberate Palestine from the Zionists, rather than [bully] half a million Bahrainis – good defenseless people.
The [Saud clan] says that they are the 'lions of the Sunna.' You, the lions of the Sunna? Pffff... Nonsense. They said: 'We are the lions of the Sunna facing Iran.' Don't make me laugh. You? Facing Iran? The day Saddam entered Kuwait, you all fled and brought the U.S. to defend you."
Al-Nimr references Bahrain, where the Shia majority population is being ruled ruthlessly by a small Sunni leadership, supported by Saudi Arabia's army. The violence between Shias and Sunnis has spread into eastern Saudi Arabia in recent weeks, and is being inflamed further by the sectarian violence in Syria. Telegraph and Memri
The regime of Syrian president Bashar al-Assad has been trying to blame Thursday's horrific massacre on mysterious groups of gunmen. Over 200 people were killed in the village of Taramseh, near Homa. However, nobody seems to be accepting al-Assad's story line. UN Secretary-General Ban Ki-moon said, "I condemn, in the strongest possible terms, the indiscriminate use of heavy artillery and shelling of populated areas, including by firing from helicopters." Kofi Annan, who runs around from country to country trying to sell one of his Syria "peace plans," said that he was "shocked and appalled" by reports of regime violence. (If I'm not mistaken, Annan always just says he's "shocked and appalled.") US Secretary of State Hillary Clinton said that the use of artillery, tanks and helicopters, provide "indisputable evidence that the regime deliberately murdered innocent civilians." None of this makes any difference, however, since al-Assad's strategy of extermination and atrocity is fully supported by the Russians. Reuters
(Comments: For reader comments, questions and discussion, see the 14-Jul-12 World View -- China makes armed threat on al-Jazeera ship in South China Sea thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(14-Jul-2012)
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Italy's bond rating cut because of deteriorating economic outlook
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In a significant change in policy, France is now considering Western military intervention in Mali. The change was triggered by the spread in northern Mali of Ansar al-Dine (Defenders of Faith), a terrorist group linked to Al-Qaeda in the Islamic Maghreb (AQIM). Mali's government in Bamako in southern Mali has been in complete chaos for several months, following a coup, allowing the Tuareg ethnic group to take control of northern Mali earlier this year. However, since then, the Tuaregs have been displaced by Ansar al-Dine militant terrorists.
To a great extent, this is all a consequence of last year's war in Libya. The Tuaregs were the principal defenders of Libyan leader Muammar Gaddafi, and when he lost, the well-trained Tuareg fighters returned and took control of northern Mali. Then the Islamists moved in and displaced the Tuaregs, and they are extremely well armed, thanks to large stores of sophisticated weapons that fell into their hands following the collapse of Libya's government.
According to France's foreign minister Laurent Fabius:
"It's a serious situation because it is the first time terrorists have taken root in important cities and could be in a situation to implant themselves in an entire country. They have a lot of money, heavy weapons, they are ready to die and their main enemy is France. You have this risk ... and threat that what is happening in northern Mali can happen in other areas."
What Fabius is referring to is not only the spread of violence throughout the Maghreb (northern Africa), but also the use of northern Mali as a base for launching terrorist attacks on France and the rest of Europe. Telegraph
In one of Syria's bloodiest days, Syrian government troops and pro-regime military have massacred over 200 people, mostly civilians, in a village near Hama. According to one activist, "We have reports of more than 220 killed. So far, we have 20 victims recorded with names and 60 bodies at a mosque. There are more bodies in the fields, bodies in the rivers and in houses … people were trying to flee from the time the shelling started and whole families were killed trying to escape." Guardian
There's really bad news about Europe's economy almost every day, and Thursday's bad news was that Moody's Investors Service cut Italy's bond rating by two notches, citing a deteriorating economic outlook:
"Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets. Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding."
Moody’s also cited "increasingly fragile market confidence, contagion risk emanating from Greece and Spain and signs of an eroding non-domestic investor base." Greece, Spain, Ireland and Portugal have all had bailouts approved, and Cyprus is under consideration. A need for a bailout of Italy would send the euro crisis-o-meter several notches higher. Bloomberg
China is continuing its military buildup in the South China Sea, and is now in the process of creating a city and a legislative body in one of the Spratly Islands. China has been occupying the Spratly Islands pursuant to its claim to have full sovereignty over the entire South China Sea, including areas historically belonging to other countries. On Thursday, a meeting in Phnom Penh of ASEAN (Association of Southeast Asian Nations) ended in disarray as China refused even to negotiate the terms and code of conduct for its military occupation of the entire South China Sea. At the ASEAN meeting, the U.S., represented by Secretary of State Hillary Clinton, sided with Vietnam and the Philippines in opposing China's occupation of the entire region, while Cambodia appeared to be siding with China. The Philippine representative denounced “pressure, duplicity, intimidation” from China and warned that tensions “could further escalate into physical hostilities that no one wants.” Global Times (Beijing) and Bloomberg
(Comments: For reader comments, questions and discussion, see the 13-Jul-12 World View -- France expects the West to deploy military forces in Mali thread of the Generational Dynamics forum. Comments may be
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(13-Jul-2012)
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13,500 troops and six surface-to-air missiles will guard London Olympics
This morning's key headlines from GenerationalDynamics.com
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Nawaf al-Fares, the Syria's ambassador to Iraq, is the latest high profile defection from the Bashar al-Assad regime. Like Army General Manaf Mustafa Tlass, who defected last week, al-Fares is a high-ranking Sunni Muslim who has been in the government's inner circle since the time of the current president's father, Hafez al-Assad. Both defectors could no longer tolerate al-Assad's maiming, torturing, and slaughtering innocent Sunni Arabs. Al-Jazeera
We've been reporting negative yields (interest rates) for bonds for Denmark, Germany and France. And now, U.S. 10-year Treasury bonds are at historically low yields. On Wednesday, demand was at a record high, and the Treasury sold $21 billion of 10-year bonds at a yield of 1.459%. On June 1, they touched an all-time record low of 1.44%. Bloomberg
A couple of people have asked me why anyone would invest money at negative interest rates -- meaning that you'd be paying interest on the money you invest. If all you have are a few thousand dollars, you can stuff it in your mattress, for 0% interest. But suppose you have $1 million to invest? You can't put it in your mattress. You could buy art or real estate, and some people do that. But many people want to keep their money liquid, and so have to put it in the bank. They can put it into a Spanish bank and get 7% interest, or into a Greek bank and get 25% interest, but if you do that, you may lose a great deal of money. (Recall that investors in Greek bonds were forced to take a 74% "haircut," meaning that they lost 74% of their investment.) With the global economy in a growing deflationary spiral, cash is becoming more valuable, and many asset prices are falling. So your best choice may be the safest choice, and that's to invest in bonds of a country that you feel is likely to keep your money safe. And if it costs you a few pennies interest to keep your money safe, you're glad to spend it.
An Afghan Taliban commander, and a former Guantánamo inmate, used very strong language in an interview to distance the Taliban from al-Qaeda:
"At least 70 per cent of the Taliban are angry at al-Qaeda. Our people consider al-Qaeda to be a plague that was sent down to us by the heavens. Some even concluded that al-Qaeda are actually the spies of America. Originally, the Taliban were naive and ignorant of politics and welcomed al-Qaeda into their homes. But al-Qaeda abused our hospitality. It was in Guantanamo that I realised how disloyal the al-Qaeda people were... To tell the truth, I was relieved at the death of Osama. Through his policies, he destroyed Afghanistan. If he really believed in jihad he should have gone to Saudi Arabia and done jihad there, rather than wrecking our country."
He discussed his assertion that the Taliban cannot win the war in Afghanistan, even after Nato leaves in 2013:
"The Taliban capturing Kabul is a very distant prospect. Any Taliban leader expecting to be able to capture Kabul is making a grave mistake. Nevertheless, the leadership also knows that it cannot afford to acknowledge this weakness. To do so would undermine the morale of Taliban personnel. The leadership knows the truth – that they cannot prevail over the power they confront."
To put all this into perspective from the point of view of Generational Dynamics, you have to start from the fact that there was a devastating civil war in the country from 1991-96, which slaughtered masses of people and destroyed much of the country's infrastructure. Afghanistan is just now entering a generational Awakening era. There are plenty of people around who survived the civil war, and were traumatized by it for life, and will do anything possible to keep it from happening again.
So the Taliban commander's words are absolutely true. Nobody has the energy to fight another civil war, and so the Taliban cannot capture Kabul. All al-Qaeda is doing for the Taliban is bringing war back to Afghanistan, which they don't want, and that's why al-Qaeda is "a plague." He adds that the only other real power in Afghanistan, besides the Americans, is the Northern Alliance, a Tajik-led coalition that fought against the Taliban in the 1990s civil war.
The problem with the commander's claims is something that I've written about many times -- the connection with Pakistan. The Taliban are ethnic Pashtuns, and the Pashtuns occupy a long region that extends across the border, through Pakistan's "tribal area," into northwestern Pakistan. And the Pakistanis, including the Pakistani Pashtuns, are in a generational Crisis era, and are quite ready for a war.
Thus you have the Pakistan Taliban, Tehrik-e-Taliban Pakistan (TTP). Although they're also Pashtuns, and they also call themselves Taliban, they are in very different place in terms of attitudes and behaviors from the Afghanistan Taliban. News stories have repeatedly said that TTP is closely linked with al-Qaeda, and that TTP is committed to attacking Americans and Nato in Afghanistan.
There cannot be another crisis civil war in Afghanistan, so soon after the last one. But my expectation is that something just as bad (or worse) is going to happen: Afghanistan will be the site of a proxy war between Pakistan and India, with Iran and the U.S. aiding India, and with China aiding Pakistan. Guardian and New Statesman
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Britain's armed forces are adding 3,500 troops to the contingent that will be guarding the London 2012 Olympics games, bringing the total to 13,500, with another 3,000 to be available if necessary. Last week, it was confirmed that surface-to-air missiles would be located at six sites around the capital - each capable of downing a rogue aircraft streaking towards Olympic venues packed with spectators. Residents of the area had objected to having surface to air missiles on the roofs of their apartment blocks, claiming that the missiles would make their homes a target (ya think?), but last week Britain's High Court rejected their bid to stop the missiles. Armed Puma helicopters carrying teams of crack snipers will also be on standby to thwart suicide bombers. Daily Mail
(Comments: For reader comments, questions and discussion, see the 12-Jul-12 World View -- Taliban commander in Afghanistan calls al-Qaeda a 'plague'
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John Kenneth Galbraith and Embezzlement
This morning's key headlines from GenerationalDynamics.com
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Like Cain, the homeless wanderer of the Old Testament, Kofi Annan travels from country to country, trying to find a home for one hopeless "Syria Peace Plan" after another, but always failing. According to Annan, after speaking to Iran's Foreign Minister Ali Akbar Salehi:
"Iran has a role to play. And my presence here explains that I believe in that. I have received encouragement and cooperation with the minister and the [Iranian] government."
As one commentator has pointed out, Annan was UN's director of peacekeeping operations in 1994, and did nothing with respect to the Rwandan genocide except talk. When the Darfur genocide broke out in 2003, Annan was U.N. Secretary-General, but did nothing but talk. With regard to the current situation in Syria, Annan says one inane thing after another. As I've pointed out many times, he's actually responsible increasing the violence in Syria, because his inanities provide a cover for Syria's Bashar al-Assad regime, with the full cooperation and enthusiatic support of Iran and Russia, to massacre, maim, and slaughter innocent Sunni Arabs.
Now Annan is in Iran, saying he's received "encouragement and cooperation" from the government. I mean really, is this guy for real? But it's good news for al-Assad, who can continue his extermination policy another day, with the world's attention focused not on him, but on the moronic statements of Kofi Annan. Daily Star (Beirut) and Jerusalem Post
Because of a quadrupling in size in recent weeks of the stream of refugees from Syria and pouring into Jordan, Jordan has opened a new refugee camp, and is preparing two new camps, if they become necessary. Jordan has been reluctant to open refugee camps for Syrians, for fear of incurring the wrath of Bashar al-Assad, and up till now has used housing compounds in border communities. But with the flow of refugees growing into a flood, the pressure has increased. AP and Jordan Times
As we've been reporting, residents of northern Lebanon are fleeing their villages "in a state of panic and fear" because of artillery shells being fired from Syria, killing people. As a result, Lebanon is sending troop reinforcements to the border with Syria, and expects the operation to take 7-10 days to complete. Hurriyet (Turkey)
The EuroGroup of eurozone finance ministers, working into the wee hours of Tuesday morning, approved a package of up to €100 billion for Spanish banks, with €30 billion of urgent funding approved for the end of the month. Yesterday we referenced a Reuters article that quoted an European Commission official who said that even though the bailout money was being loaned to Spain's banks, the government of Spain would have to provide a "sovereign guarantee" that the money would be repaid, effectively putting the loan on Spain's books. However, on Tuesday, Eurogroup chairman Jean-Claude Juncker, who is not always known for his veracity, denied that there was any sovereign guarantee requirement. So this question is still open. The new bailout is supposed to give Spain's economy a chance to grow, but with Spain's huge real estate bubble having years of collapse ahead, the economy will not grow. Telegraph
Some $200 million dollars in customer funds cannot be found among the assets of futures brokerage Peregrine Financial Group Inc., according to an investigation that was triggered when the firm's found, Russell Wasendorf Sr., attempted suicide. According to the investigation, Peregrine "may have falsified bank records." Bloomberg
As these stories keep pouring out, one after the other, of fraud and embezzlement, I'd like to repeat something that I first quoted in 2007. Here, John Kenneth Galbraith described what happened -- and what will happen again -- in his 1954 book, The Great Crash - 1929, as follows:
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in -- or more precisely not in -- the country's businesses and banks. This inventory -- it should perhaps be called the bezzle -- amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.The stock market boom and the ensuing crash caused a traumatic exaggeration of these normal relationships. To the normal needs for money, for home, family and dissipation, was added, during the boom, the new and overwhelming requirement for funds to play the market or to meet margin calls. Money was exceptionally plentiful. People were also exceptionally trusting. A bank president who was himself trusting Kreuger, Hopson, and Insull was obviously unlikely to suspect his lifelong friend the cashier. In the late twenties the bezzle grew apace.
Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to universal trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed.
After the first week or so of the crash, reports of defaulting employees were a daily occurrence. They were far more common than the suicides. On some days comparatively brief accounts occupied a column or more in the Times. The amounts were large and small, and they were reported from far and wide. ...
Each week during the autumn more such unfortunates were reveled in their misery. Most of them were small men who had taken a flier in the market and then become more deeply involved. Later they had more impressive companions. It was the crash, and the subsequent ruthless contraction of values which, in the end, exposed the speculation by Kreuger, Hopson, and Insull with the moey of other people. Should the American economy ever achieve permanent full employment and prosperity, firms should look well to their auditors. One of the uses of depression is the exposure of what auditors fail to find. Bagehot once observed: "Every great crisis reveals the excessive speculations of many houses which no one before suspected." [pp. 132-35]
Galbraith's point was that there were many criminal activities going on before the 1929 crash, but nobody cared, as long as everyone was making money. But once the crash occurred, any irregularity was viewed with suspicion and led to an investigation. These investigations turned up many cases of embezzlement -- people who had "temporarily borrowed" money that wasn't theirs to invest in the stock market, and then got caught in the crash.
That's exactly what's happening today, and it's far from over.
(Comments: For reader comments, questions and discussion, see the 11-Jul-12 World View -- Lebanon sends troop reinforcements to the border with Syria
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Russia says it will suspend 'new arms shipments' to Syria
This morning's key headlines from GenerationalDynamics.com
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Russia has been continually embarrassed for its support of the regime of Syria's president Bashar al-Assad, which has been maiming, slaughtering and exterminating innocent Sunni Arabs. To show what good guys they are after all, Russia has announced that they will not deliver any new types of weapons or sign any military contracts with Syria until the situation there stabilizes. However, Russia is leaving open the possibility of continuing to deliver weapons under old contracts. In particular, Russia will deliver a group of Mi-25 attack helicopter gunships to Syria on time. Ria Novosti and Ria Novosti
For years, I've reported on numerous lies by European officials with reference to the euro crisis. Last year, European officials told one lie after another with respect to the various bailouts of Greece, and once when EU officials were caught in a series of major lies about Greece a couple of months ago, Eurogroup chairman Jean-Claude Juncker was quoted as saying, "When it becomes serious, you have to lie," as I reported at the time.
So I guess it's becoming "serious" again, because the European Commission told some outrageous lies coming out of the June 28-29 meeting of the eurozone leaders. In "30-Jun-12 World View -- Germany and Angela Merkel cave in to Italy and Spain", I summarized the agreements, including the much touted agreement that the European Stability Mechanism (ESM) bailout fund would be authorized to lend bailout money to Spain's banks, so that the debt will not appear on the books of Spain itself.
Well, apparently this was a full-throated lie by the European Commission (EC). It turns out that countries will need to provide guarantees in return for the bank aid that the ESM gives to the country's banks. According to one euro zone official:
"There is some degree of mystification going on here ... in the broader public who think that under current rules the ESM could all of a sudden end up owning [the Spanish bank] Bankia with the full risk of Bankia on the balance sheet of the ESM. This is very much not the case."
EuroIntelligence notes that the EC is trying to blame "the broader public" for this lie:
"It is preposterous to argue that the fault lies with the broader public as he suggests. It was a deliberate misrepresentation of a policy by the European Council. If this official is right, it means that the ESM will not ever inject capital into the banks. Now it all makes sense why we don't need a treaty change. If you don't change the policy, you don't need to change the treaty."
This means that Germany and Angela Merkel didn't cave in after all, as had been reported at the time. The culture of fraud and extortion is alive and well. Reuters and Euro Intelligence
Last week, we reported that Denmark's central bank is "paying" a negative interest rate on certificates of deposit, which means that it costs you something to store your money in Denmark's banks for safekeeping. On Monday, short-term debt offered by Germany and France had negative yields -- -0.034% yield for 6-month bills from Germany, and -0.006% yield for 24-week bills from France. Meanwhile, 10-year bond yields for Italy and Spain have been surging. The yield was 6.1% for Italy, which is considered unsustainable, while it was 7.1% for Spain, considered a major crisis level. Reuters
A meeting of the Eurogroup in Brussels is showing no sympathy for Greece's hope to get an agreement to delay new austerity measures. Because Greece is so far behind on its previous commitments, a Greek government spokesman said that they would not be seeking an immediate renogtiation of the bailout terms:
"At the moment, we are way off our targets. We cannot negotiate because to do so you need to give and take. The clear impression we got at the recent EU leaders’ summit was that there are some who are looking for an excuse to push us out of the euro. But most people are telling us that if we prove we are moving in the right direction, there will be room to negotiate."
Luxembourg's finance minister agreed:
"We have to see how realistic the things are that we want from Greece. I think we can accommodate Greece, but Greece must also know that it’s not a one-way street. Greece has to enact a series of reforms that we have demanded; we will need to hear the Greek minister about this."
(Comments: For reader comments, questions and discussion, see the 10-Jul-12 World View -- European Council deliberately lied about its bailout policy for Spain
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Greece to announce privatizations and asset sales
This morning's key headlines from GenerationalDynamics.com.
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At Israel's founding in 1948, about 400 exemplary seminary students were exempted from military service to pursue full-time, subsidized biblical studies. Today that number has grown to about 100,000 full-time Torah learners of draft age, making up about 10% of Israel's eligible draftees in what many people are calling a welfare program. Ultra-orthodox Jews defend their exemptions by claiming that their prayers are necessary for the survival of Israel. Arab Israelis have also been exempted, and they defend their exemptions by claiming that they are treated as second-class citizens in Israel. But now a political crisis has been triggered when Israel's High Court struck down the so-called Tal Law, which provides for national service exemptions for ultra-Orthodox Jews and Arab Israelis. The government has appointed a committee to draft a new law, but it will to deal with competing demands from secularists and nationalists who want everyone drafted, and ultra-Orthodox and Arab activists who want to keep their special exemptions. AP and AFP
Several attempts by Russian military officials to include military conscripts from Russia's mostly Muslim southern (North Caucasus) provinces have been prevented by mutual xenophobia between ethnic Russians and North Caucasians. Conscripts from Chechnya have been drafted for military units in Chechnya itself, but plans to draft Chechens into the main Russian military have been blocked by scandals and a backlash by ethnic Russians, including mothers concerned about the possible persecution of their children by Russian officers who had fought in Chechnya. Some indigenous North Caucasian groups are still being drafted, but that's expected to end as well. Russia is having serious problems keeping its army staffed because Russia’s demographic growth faces rapid decline. On the other hand, since indigenous Caucasians are not being drafted, the manpower pool for the insurgents is increasing. Jamestown
Relations between China and Vietnam continue to deteriorate quickly over competing claims to the South China Sea. China has been building up its military pursuant to its claim to have full sovereignty over the entire South China Sea, including areas historically belonging to other countries. Vietnamese government officials permitted hundreds of protesters to march through the center of Hanoi on Sunday, waving banners and changing "Paracels-Vietnam, Spratlys-Vietnam," referring the two major island groups in the South China Sea, referred to as Xisha and Nansha, respectively, by the Chinese. Bangkok Post
A report indicates that China has told South Korea that it will not allow the unification of North and South Korea under a democratic government. North Korea will remain under Chinese "influence." If necessary China will send in troops to set up a North Korean government that will faithfully follow orders from China. In an effort to dampen some of the anger in South Korea, the United States, and Japan, China would maintain North Korea as a separate entity, and not a new province of China. China wants no misunderstanding about who "owns" North Korea. Strategy Page
In an attempt to get eurozone agreement on postponing painful new austerity measures, Greece's new government, led by Antonis Samaras, will announce as many as 28 privatizations to a Eurogroup meeting of eurozone finance ministers on Monday. The expected proposed privatizations include the state natural gas, water and betting companies, as well as regional airports and ports, valued at tens of billions of euros. However, Alexis Tsipras, head of the left-wing opposition party Syriza, criticized the privatization agenda, saying, "The prime minister’s policy statement was nothing more than a ‘for sale sign’ put on Greece. The government will have to account for its actions, the looting of public goods." Kathimerini and Kathimerini
Kofi Annan has admitted something that's been obvious almost from day one -- that his six-point "peace plan" for Syria has failed. Indeed, as we've said repeatedly, the plan may actually have increased the violence, as it never did anything more than provide a fig leaf behind which Syria's president Bashar al-Assad could stand while continuing full-scale slaughter of innocent Sunni Arabs, with the enthusiastic support of Russia and Iran. Annan visited Damascus on Sunday to talk with Assad, for whatever reason. Day Press News (Syria)
There have been numerous stories that the world would end on December 21, 2012, based on predictions by the Maya civilization centuries ago. However, a recent analysis of the Mayan calendar shows that those who infer a prediction of the end of the world later this year have confused the calendars of two different civilizations -- the Aztecs and the Mayans. The conclusion is that the world will NOT end on December 21 of this year, after all. Scientific American
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Wikileaks poised to embarrass the Syrian regime and its American supporters
This morning's key headlines from GenerationalDynamics.com.
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WikiLeaks announced on Thursday that it would publish material from 2.4 million Syrian e-mail messages, many of them from official government accounts. The messages would be published gradually, over a period of months. The first batch of e-mail messages contains communications between the Syrian government and its New York/London based PR firm Brown Lloyd James (BLJ). In the messages the firm BLJ advises the Bashar al-Assad regime how to use public relations to create an appearance of reform while continuing to assault, torture, maim and exterminate innocent Sunni Arab protesters. However, BLJ asserts that they were attempting to convince the Assad regime to stop the violence. AP and Ynet
Local farm residents in northern Lebanon are fleeing their villages "in a state of panic and fear" after three people, including a young boy, were killed in their homes by artillery shells fired from across the border in Syria. Fighting has been increasing along the Syria-Lebanon border, and it's widely feared that the fighting in Syria will spread to the region as a whole. BBC
China is announcing that a team of four China Marine Surveillance ships have arrived at the Spratly Islands in the South china Sea, in order to "protect China's territory." The Chinese refer to them as the Nansha Islands. The ships appear to be combat ready, as they've already threatened and driven away a Vietnamese vessel "trying to pass through Chinese territory at high speed." It's just one example of how the Chinese are protecting their "sovereignty" in South China sea, and "to enforce law and order within China’s territorial waters." China's military buildup is in preparation for a war to enforce its claim to have full sovereignty over the entire South China Sea, including areas historically belonging to other countries. Xinhua
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As part of China's military escalation in the South China Sea, China is establishing a prefecture-level city called Sansha City near the Spratly Islands to govern the entire region. A Philippines official says that the move is a "virtual annexation" of the West Philippine Sea and sets the stage for the occupation of the country’s territories. As another issue, China agreed to withdraw its boats from the Scarborough Shoal lagoon, where China and the Philippines had a military standoff two months ago. However, China did not honor its own agreement, and is stationing 23 boats and ships inside the lagoon. Philippines Star
China is also claiming sovereignty over islands in the East China Sea. The islands, known as Senkaku by the Japanese and Diaoyu by the Chinese, are claimed by Japan. Japan's Prime Minister Yoshihiko Noda said on Saturday that he's considering a plan to nationalize the islands to strengthen Japan's control over them. Saying that the islands that are "undisputedly part of Japan's inherent territory by historical evidence and international law," he proposed purchasing them from their private Japanese owners, a move that's certain to raise nationalistic fervor in China. AP
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Furious Hillary Clinton blasts Russia and China over Syria
This morning's key headlines from GenerationalDynamics.com.
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Last week I referred to the reaction to the Barclays interest-fixing investigation as a "mini-panic" because of the rapid changes in public opinion. Of course five years ago, bankers could do no wrong, even though they were often openly committing fraud. But even two weeks ago, it seemed that no bankster would ever be investigated for anything, even where there was evidence of massive fraud, because Generation-X regulators in Washington and elsewhere adamantly refused to investigate and prosecute, since banks are huge political contributors. As far as I can tell, the fuse was lit on Barclays because the prosecutors were initially American and the bank is British, so no political contributions were a factor. And public attitudes, especially in Britain, have changed in just a few days from seething fury to open outrage.
Now authorities in the United States, Europe, Japan and Canada are opening investigations into almost every major bank in the world. In particular, Britain's Serious Fraud Office (SFO) is expected to be investigating several American banks, including Citigroup, JPMorgan Chase and Bank of America, while Germany's BaFin regulator has initiated a "special investigation" into Deutsche Bank.
As I've said many times, the hatred directed at bankers lasted decades after the 1930s, and the same thing will happen again after this crisis. Reuters
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Finland has already threatened to block many of the eurozone's plans for the European Central Bank (ECB) to print money to purchase Spanish and Italian bonds, but now they're taking their objections one step further by threatening to become the first country to leave the eurozone. According to Finland's finance minister, Jutta Urpilainen:
"Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland. Finland will not hang itself to the euro at any cost and we are prepared for all scenarios.Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms."
As far as I know, there are no states that are considering seceding from the United States this time. Telegraph
Many people believe that interest rates cannot go below zero, but in fact 0% interest is nothing more than a psychological barrier. In a deflationary spiral, where money becomes more valuable and there are few safe investments. a person with a lot of money is willing to pay a small interest rate to someone who he feels will keep the money safe. The European Central Bank (ECB) cut its main interest rate to a record low 0.75% on Thursday, the lowest rate ever. The Danmarks Nationalbank responded by cutting its own interest rate on Certificates of Deposit to a negative value: -0.20%. Danmarks Nationalbank (PDF) and Irish Times
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There was a summit last Friday of euro zone leaders, and it was supposed to fix the euro crisis and "restore confidence" to the markets. The summit caused the briefest and tiniest blips of improvement, but one week later Spain is back in full crisis mode, with 10-year bond yields (interest rates) at around the unsustainable 7% mark, and likely to go up farther. As I keep saying, almost every day now, there is NO SOLUTION to the euro crisis. No solution exists. At some point, there will be a full-scale panic, leading to a worldwide financial crisis. Make sure that you and your family are prepared. IberoSphere
There was a "Friends of the Syrian People" meeting in Paris on Friday, attended by delegates from 100 countries. Russia and China, which have continued to support Syrian president Bashar al-Assad, did not send any representatives to the meeting. Many meeting members were extremely critical of Russia, including U.S. Secretary of State Hillary Clinton, who said the following in a very angry tone of voice:
"We also think it is imperative to go back to the Security Council and demand implementation of Kofi Annan’s plan, including the Geneva communique that Russia and China have already agreed to. So we now have them on record supporting a transition. And we should go back and ask for a resolution in the Security Council that imposes real and immediate consequences for non-compliance, including sanctions under Chapter VII.Now what can every nation and group represented here do? I ask you to reach out to Russia and China and to not only urge, but demand that they get off the sidelines and begin to support the legitimate aspirations of the Syrian people. It is frankly not enough just to come to the Friends of the Syrian People, because I will tell you very frankly, I don’t think Russia and China believe they are paying any price at all – nothing at all – for standing up on behalf of the Assad regime. The only way that will change is if every nation represented here directly and urgently makes it clear that Russia and China will pay a price, because they are holding up progress – blockading it – that is no longer tolerable.
Syria’s currency and foreign reserves have collapsed. Sanctions on oil alone have deprived Assad of billions of dollars in lost revenues, and his ability to finance his war grows more difficult by the day. What’s keeping him afloat is money from Iran and assistance from Russia and the failure of countries represented here to tighten and enforce sanctions. You cannot call for transition on the one hand and give the regime a free pass on sanctions on the other. So we need to push for even stronger implementation at the working group meeting next to be held in Doha on sanctions."
It is unusual for a U.S. diplomat to make such a blistering attack on another country. U.S. Department of State
The Mexican government is preparing to import up to 132,000 tons of eggs to prevent a surge in prices as a consequence of a bird-flu outbreak in the west. Nearly a million birds have died or had to be slaughtered as a result of the epidemic, although they represent only 1.7% of the country's egg-producing poultry. Fox News Latino
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Iran's government embarrassed by poll on nuclear enrichment
This morning's key headlines from GenerationalDynamics.com.
In blow to Assad, top-level Syrian army general defects to Turkey
The defection of Syria's General Manaf Mustafa Tlass is being called a major blow to Syrian president Bashar al-Assad, because the Tlass family have been close confidants of al-Assad and his father for decades. Tlass was the leading Sunni Muslim in al-Assad's mostly Alawite military. He gave credibility to the regime, but when he advocated negotiating with the (mostly Sunni) opposition, he was pushed aside by the Alawites who favored a path of bloody extermination. It appears that Tlass has had enough. Joshua Landis and Washington Post Iran's government embarrassed by poll on nuclear enrichmentThe government of Iran has been embarrassed by, of all things, a poll by a state television news channel that unexpectedly revealed that 63% of Iranians favor curbing uranium enrichment, if it would mean an end to increasingly draconian western sanctions. Furthermore, only 20% supported closing the Strait of Hormuz, which senior Iranian officials have been threatening. The poll is consistent with what I've been saying for years -- Iran is in a generational Awakening era, just one generation past the the 1979 Great Islamic Revolution, followed by the Iran/Iraq war that climaxed in 1987. The generations of survivors of those wars are hardline Islamists, while the generations that grew up after the war are rebelling against their parents' generation, just as college students rebelled against their own parents during America's last generational Awakening era, in the 1960s. The National (UAE)
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Massive food crisis is growing in Africa's Sahel region
Even under "normal" conditions, almost 250,000 children die from malnutrition and starvation in Africa's Sahel region each year. But new factors are making the situation far worse. There has been low rainfall, small crop yields and high food prices and all of this is made even worse by the ongoing conflict in Mali, where 320,000 people have been forced to flee their homes because of al-Qaeda linked terrorist groups. The result is that some 18 million people are facing food shortages this year. Council on Foreign Relations and CNN Philippines goes on spending spree for rapid military buildupChina's rising assertiveness to claims over the contested Spratly Islands and everything else in the South China Sea has spurred the Philippines to spend $12 billion for a five-year modernization program of its 125,000-strong Armed Forces of the Philippines (AFP). It's unlikely that the Philippines will ever be able to successfully confront China militarily, and the new defense buildup signals an impending arms race in the volatile region around the South China Sea. To kick off the acquisitions, the AFP has sealed deals to buy eight brand-new Sokol multi-purpose attack helicopters from Swidnik of Poland, four of which have already been delivered. Asia Times
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(Comments: For reader comments, questions and discussion,
see the 6-Jul-12 World View -- In blow to Assad, top-level Syrian army general defects to Turkey
thread of the Generational Dynamics forum. Comments may be
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(6-Jul-2012)
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Israel calls claims that it poisoned Yasser Arafat 'baseless'
This morning's key headlines from GenerationalDynamics.com.
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Bob Diamond, the former CEO of Barclays who received a £20 million salary last year and is still in line for multi-million pound bonuses, appeared before the British Parliament's Treasury Select Committee and recieved a stream of furious questions from MPs who obviously did not believe him. He dodged and weaved on questions, particularly on the question of whether the Bank of England had encouraged Barclays to manipulate interest rates in 2008, and then again on whether the Bank of England forced him to step down two days ago. He called all the MPs by their first names, which apparently really pissed them off. One Scottish MP, John Mann, said that he was receiving many angry e-mail messages from his constituents, and asked harshly:
"Can you remind me the three founding principles of the Quakers who founded Barclays?[Pause] Honesty. Integrity. Plain dealing. That’s the ethos of the bank you’ve just spent two hours telling us is doing so well - in fact so well that I wonder why you’ve not received an extra bonus rather than the sack.
You’re the man in charge. But you’re accepting all the good things and the bonuses [and] the people working for you are fiddling the system, potentially going to prison... give me a suggestion of how you’re going to show contrition to those staff and customers who are wondering whether to take their money out of this rotten, thieving bank?"
Diamond remained stone-faced. He denied that he'd done anything wrong, and blamed other banks besides Barclays.
Another MP asked angrily whether Bob Diamond was complicit or incompetent. That question was left unanswered. Telegraph and Daily Mail and CNN
On Wednesday I watched an interview session on CNBC Europe, and listened to other analysts on BBC and elsewhere. It is astonishing how the mainframe media, with Gen-X anchors, were almost desperate to find a way to excuse this massive fraud.
The most vomit-worthy was the female who said that the people at Barclays knew that there was a financial crisis going on, and those good folks were just trying to save the world. There are two things wrong with this excuse. First, according to investigation, the interest fixing collusion began around 2005, during the middle of the huge credit and real estate bubbles, when there was no financial crisis. And second, even in 2008 the evidence shows that these good folks were simply lining their pockets, and couldn't have cared less about saving the world.
I've previously expressed amazement that Barclays was being prosecuted at all, since Generation-X prosecutors in the Obama administration have adamantly refused to investigate and prosecute any of the banksters who caused the financial crisis, especially because these financial institutions provide astronomical campaign contributions to both parties. Some of the discussions I've heard have shed some light on this issue.
Barclays is, of course, a British bank, but the Brits were doing nothing to investigate the interest-fixing crimes, probably because Barclays contributed money to those politicians. In fact, this investigate was driven by the Commodities Futures Trading Commission (CFTC) in Chicago, and later joined by the Department of Justice, and finally by the British Financial Services Authority.
I don't know whether the obvious conclusion is true or not, but if it is true, then the irony is enormous: The Americans led the investigation and prosecution of Barclays because Washington had no financial gain from protecting them. Britain was pulled, kicking and screaming, into the investigation, and now the British politicians are doing everything possible to cover their own asses.
We can be fairly certain that the Brits will return the favor. The Brits will extend the investigation to Citigroup, JPMorgan Chase and Bank of America. So this is far from over.
The Pakistan government's decision to reopen Nato supply routes was welcomed on Wednesday by countries around the world, especially the West. China in particular in gushing with praise for the decision:
"We highly appreciate Pakistan’s position on NATO supply to Afghanistan. Pakistan has rendered great contribution and sacrifices in its efforts to combat terrorism. This courageous role is also acknowledged by the international community."
He added that the Pakistan-China strategic partnership was based on the principle of mutual respect, and that any efforts to harm the relationship or create mistrust would be useless. Daily Times (Islamabad)
The outlawed Tehrik-e-Taliban Pakistan (TTP - Pakistan Taliban) is threatening to launch terrorist attacks against Nato supply trucks that pass through Pakistan's territory to Afghanistan. A TTP spokesman said he was "shocked to hear that Pakistan has opened the Nato supply lines," and said that "We will not allow Pakistan's routes to be used for the supply of lethal arms that could later be used against the people of Afghanistan." I guess the Taliban wants to reserve the killing of innocent people to themselves. Times of India
A nine-month investigation by scientists at the Institut de Radiophysique in Lausanne, Switzerland, found that Yasser Arafat's personal belongs, his clothes, his toothbrush, his hat, contain elevated levels of polonium-210, leading to the suspicion that Arafat was poisoned when he died in 2004. Polonium-210 poisoning became famous in 2006, when it turned out that Alexander Litvinenko, a former Russian spy, was poisoned. Since polonium is extremely rare and expensive, it was thought that only a government could have poisoned Litvinenko, and suspicion fell upon Russia, though that's never been confirmed. Now Arafat's body is going to be exhumed for a more extensive examination, and if polonium poisoning is confirmed, then suspicion will once again fall on a government, this time Israel. An Israeli official has called the suspicions "baseless." Haaretz
A team of researchers led by Professor Todd Humphreys at the University of Texas at Austin's Radionavigation Laboratory were able to hijack and take control of a standard commercially available unmanned drone, of a kind which are expected to be used commonly throughout the United States by 2015. The plans are for police, power companies, and even FedEx to be using thousands of these drones. The researchers showed that "GPS spoofing" equipment, costing about $1,000, could be used by a terrorist or a foreign enemy to take control of these drones and turn them into missiles. Military drones are not similarly vulnerable, because they use encrypted GPS signals. Fox News and PC Magazine
(Comments: For reader comments, questions and discussion,
see the 5-Jul-12 World View -- Fury at Barclays and Bob Diamond seems to grow
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(5-Jul-2012)
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Pakistan reopens supply routes to Afghanistan after apology
This morning's key headlines from GenerationalDynamics.com.
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As long-time readers know, Generational Dynamics predicts that the world is facing deepening and accelerating economic slump that will cause a major global financial crisis triggered by a world wide financial panic. Well, on Tuesday we saw what I would call a "mini-panic," since behaviors and attitudes began to change extremely rapidly.
It's becoming clear that the public, particularly the people in the British public, are absolutely off-the-wall furious at what happened at Barclays Bank. One expression that I heard repeated several times was if an ordinary person shoplifts a sandwich to feed his family, then he goes to jail, while if the banksters at Barclays defraud millions of investors, then they go scot free, and still pay themselves six and seven digit salaries.
A particular target of contempt and scorn was Barclays CEO Bob Diamond, who finally resigned on Tuesday, after insisting that for the good of the bank and the world that he would not resign, infuriating even Barclays employees. Diamond admitted that, under his watch, numerous Barclays employees manipulated interest rates in order to pad their own bank accounts at the expense of others. Diamond, who paid himself £20 million last year, went before Parliament last year to defend large bonuses. "Frankly," he said, "the biggest issue is how do we put some of the blame game behind us?" CS Monitor
However -- and this is where it gets exciting -- on Tuesday he indicated that Barclays was ordered to manipulate interest rates by the Bank of England. Barclays produced an internal memo from October 2008 indicating that Paul Tucker of the BoE was getting phone calls from "senior" British government officials demanding to know why LIBOR interest rates were being set so high. Barclays takes the position that Paul Tucker was directing them to manipulate interest rates. Telegraph
The Bank of England got their revenge on Tuesday. Reports indicate that Sir Mervyn King, head of BoE, took steps to force Diamond's resignation. Daily Mail
Is it possible that Bank of England DID direct Barclays and other banks to manipulate interest rates in 2008? Of course it is. The politicians and the regulators were just as bad as the banksters and, as I've pointed out many times, the key characteristic that differentiates Generation-X from other generations is a refusal to investigate, accuse and prosecute even obvious examples of crime.
In 2008, I posted an article saying:
"Libor -- the London Interbank Offering Rate -- is an international bank to bank lending interest rates. Libor is determined each day by the British Bankers Association (BBA) by doing a daily survey of banks, asking them what interest rates they're charging each other.A scandal broke out last week, when it was thought that banks were lying to the BBA about what interest rates they were paying. They were apparently understating the interest rates, in order to avoid embarrassment. If this was true, it would mean that the Libor rate was no longer credible.
On Wednesday of last week, the BBA announced that it would investigate whether banks were distorting the Libor rate, and would punish any offenders. As soon as that announcement was made, the Libor rate spiked up to new highs."
Obviously the BBA didn't investigate very hard, because that was the time that most of the manipulation was going on.
In 2008, I was writing about how Gen-X regulators and prosecutors were actually encouraging continued fraud. One of the worst offenders was New York Insurance Superintendent Eric Dinallo who spent several months in 2008 helping the banks and "monoline" bond insurance companies to collude to commit fraud. What Dinallo did was just as disastrous as what Barclays did, and the consequences will be fully realized. So there's little doubt in my mind that the Bank of England was knowledgeable about and encouraged Barclays' interest rate manipulations.
How serious is the damage done by Barclays? Long-time readers will recall that I've occasionally referred to the huge body of synthetic credit derivatives sitting in portfolios around the world. The total nominal value of these credit derivatives has been between $750 trillion and one quadrillion dollars for the last few years. Most of these synthetic securities are "interest rate swaps," which are a form of insurance against changes in interest rates. For example, if you're borrowing money at an interest rate keyed to Libor, then you might pay a bank for an interest rate swap which keeps your debt costs under control if Libor goes up.
Well, if Libor has been manipulated, then a lot of people are going to wonder if they should be suing somebody else, because the insurance policy didn't pay off when it should have, or because it did pay off when it shouldn't have. If even just 1% of these interest rate swaps are in question, that's $5-10 trillion dollars. And it could be much more than 1%.
So this is a very big deal, and could generate huge amounts of litigation, amounting to trillions or tens of trillions of dollars. So the fury that the British public is aiming at banksters is quite real and quite justified.
It's worth retelling the following story again. When I was growing up in the 1950s, I was aware that my parents and school teachers all hated bankers, often quite vitriolically. I never understood this, since bankers seemed to me to be quite reasonable people, or at least no worse than anyone else. But I've been puzzled for decades about where that hatred came from. Of course, in the last three years the reasons have become abundantly clear. The arrogant culture of fraud and extortion that banksters are in today is exactly the same as the culture that existed in the 1930s, when banksters were doing the same sorts of things, and paying themselves huge salaries. The hatred that grew in the 1930s continued for decades thereafter, as will today's hatred directed at banksters.
For years, I've been telling readers of my web site to follow decent, honest lives, and protect themselves and their families from the coming financial catastrophe. The Barclays situation shows you why. Just reading the e-mail messages that have been released, it's clear that the Barclays banksters thought that they could do anything they wanted, screw anyone they liked, and since they were smarter than anyone else, they could get away with anything. But sooner or later these things catch up with you. In the end, honesty is the best policy, no matter how hard it is sometimes to follow that policy.
Britain's prime minister David Cameron has announced emergency immigration controls in the event of the failure of the euro. The controls were apparently directed at Greeks who might flee their country and seek work in Britain:
"We obviously have contingency plans for all sorts of eventualities – that is the right thing to do for any government.The legal position is that if there are extraordinary stresses and strains it is possible to take action to restrict migratory flows, but obviously we hope that doesn't happen.
I would be prepared to do whatever it takes to keep our country safe, to keep our banking system strong, to keep our economy robust. At the end of the day as prime minister that is your foremost duty."
The opposition has accused Cameron's government of stoking racial tensions. Telegraph
Pakistan has reopened the Nato supply routes to Afghanistan, after U.S. Secretary of State issued a carefully worded apology for the accidental killing of 25 Pakistani soldiers last November in an unmanned drone missile attack. The exact wording of Clinton's statement, including the word "sorry", was apparently negotiated for some time:
"This morning, I spoke by telephone with Pakistani Foreign Minister Hina Rabbani Khar.I once again reiterated our deepest regrets for the tragic incident in Salala last November. I offered our sincere condolences to the families of the Pakistani soldiers who lost their lives. Foreign Minister Khar and I acknowledged the mistakes that resulted in the loss of Pakistani military lives. We are sorry for the losses suffered by the Pakistani military. We are committed to working closely with Pakistan and Afghanistan to prevent this from ever happening again. ...
The Foreign Minister and I were reminded that our troops – Pakistani and American – are in a fight against a common enemy. We are both sorry for losses suffered by both our countries in this fight against terrorists. We have enhanced our counter-terrorism cooperation against terrorists that threaten Pakistan and the United States, with the goal of defeating Al-Qaida in the region.
In addition, I am pleased that Foreign Minister Khar has informed me that the ground supply lines (GLOC) into Afghanistan are opening. Pakistan will continue not to charge any transit fee in the larger interest of peace and security in Afghanistan and the region. This is a tangible demonstration of Pakistan’s support for a secure, peaceful, and prosperous Afghanistan and our shared objectives in the region."
The word "sorry" actually appears twice -- once saying "we are sorry," and next saying "We are both sorry." The careful wording is intended to head off nationalistic criticism in both countries.
Incidentally, I don't believe I've seen the acronym GLOC before, standing for "Ground Lines of Communication." Several news stories referred to the GLOC and the GLOCs, so this is apparently the new word of the day. U.S. Dept. of State
Pakistan and the United States will now resume talks stalled at various levels for the last seven months. Pakistan reaffirmed its commitment to the elimination of terrorism. It agreed that future drone flights will be based on mutual intelligence. Pakistan had previously threatened to charge a transit fee of $5,000 per truck, but Tuesday agreed to charge no transit fee. However, Pakistan will continue to receive foreign aid from the Coalition Support Fund (CSF), in the amount of $2-4 billion. According to one Pakistani minister, "Today the US showed softness in its stance and accepted our principled stance over the issue. We appreciate this decision which is not anyone’s victory or defeat." The News (Islamabad)
(Comments: For reader comments, questions and discussion,
see the 4-Jul-12 World View -- Barclays interest rate manipulation prompts desperate finger-pointing by British officials
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(4-Jul-2012)
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Hong Kong's growing hostility to mainland China evident from Hu Jintao's visit
This morning's key headlines from GenerationalDynamics.com.
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As we reported yesterday, China's president Hu Jintao visited Hong Kong on Sunday to celebrate the 15th anniversary of the handover of Hong Kong by Britain to China. Reports indicate that, far from being a happy celebration, the events sharpened the anger of Hong Kong residents against the mainland:
In China's last generational crisis civil war, Mao's Communist Revolution that climaxed in 1949, those who were able to escape to Formosa (Taiwan) did so by passing through Hong Kong. It's likely that Hong Kong will again play a pivotal role in China's next crisis civil war. Asia Sentinel
NATO Secretary-General Anders Fogh Rasmussen said that he was not concerned that Turkey's military buildup on the border with Syria would lead to a larger military confrontation. He said, "I find it quite normal that Turkey takes necessary steps to protect its population and its territory." One of Turkey's objectives in the military buildup is the protection of Syrians crossing the border into Turkey as refugees. In total, 293 Syrians fled across the border from Syria into Turkey on Monday. They included 85 Syrian military officers, including one general, one colonel, and other officers who fled with their families on Monday night. There are now more than 35,000 Syrian refugees living in camps on the Turkish side of their border. Zaman (Istanbul) and Zaman
Saturday's international meeting on the crisis in Syria was a total failure, as we reported two days ago. But Russia's Foreign Minister Sergei Lavrov says that he's "delighted" at the outcome of the crisis talks, because it accomplished nothing, and was a complete waste of time. Day-Press News (Syria)
The 17-nation eurozone is continuing its fiscal crisis and deflationary spiral, as the jobless rate rose to 11.1% in May, the highest since 1995, when they first began tracking it. Spain's unemployment rate rose to 24.6%. Bloomberg
Manufacturing activity in June shrank for the first time in three years, with new orders particularly hard hit. Manufacturing activity in Europe and China is falling as well, with the second quarter being the worst for the eurozone in three years. Market Watch
China, the worlds biggest exporter, showed the steepest decline in overseas orders since the global financial crisis of several years ago. At the same time, South Korea cut its estimate for exports, underscoring the deepening slump throughout Asia. The U.S., Europe and China are now locked together in a downward spiral, as slowdowns in each region feed into slowdowns in other regions. Political pressure is growing for more "money printing" in all three regions, but it may be, by the Law of Diminishing Returns, that new stimulus measures will have little or no effect. Generational Dynamics predicts that, at some point, this recessionary plunge will trigger a full-scale panic and major global crisis. Bloomberg
Joerg Asmusse of the executive board of the European Central Bank (ECB) says that Greece must fulfill the targets of its austerity and reform program "100 percent" to stay in the eurozone. Greek officials had hoped to get some relief from the austerity measures, but this statement appears to slam the door. He added that Greece wouldn't even be given more time to comply, saying that any extension would lead to a need for more external financial help -- "that means that the other 16 eurozone states and the IMF would then have to provide more financing." AP
Part of last week's eurozone financial agreement was to allow the European Central Bank and bailout fund purchase bonds from Spain and Italy on the open market, in order to push down the yields (interest rates). The lower interest rates would allow Spain and Italy to go deeper into debt. However, under the eurozone treaties, those bond purchases would require unanimous consent of all 17 euro countries. Finland has announced it will block the bond purchases, and the Netherlands has indicated that it might block them as well. Reuters
(Comments: For reader comments, questions and discussion,
see the 3-Jul-12 World View -- Worldwide economic slump deepens and accelerates
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(3-Jul-2012)
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Turkey scrambles jets as Syrian helicopters approach border
This morning's key headlines from GenerationalDynamics.com.
Al-Qaeda linked terrorists destroy historic shrines in Timbuktu, Mali
In Timbuktu, Mali, Ansar Dine (Defenders of Faith), an al-Qaeda linked terrorist group, are using shovels, hoes and chisels to destroy Sufi Muslim shrines and mosques that were built centuries ago. Horrified residents could only watch, since the terrorists are armed. Timbuktu and the rest of northern Mali was captured by Tuareg rebels earlier this year, and declared as the independent state of Azawad. However, the Ansar Dine terrorists followed the Tuareg rebels, and took control of Timbuktu and other large cities in northern Mali. Timbuktu has a rich world history. Founded between the 5th and 11th centuries by Tuareg desert nomads, Timbuktu became a meeting point between north, south and west Africa and a melting pot of black Africans, Berber, Arab and Tuareg desert nomads. The trade of gold, salt, ivory and books made it the richest region in west Africa and it attracted scholars, engineers and architects from around Africa, growing into a major centre of Islamic culture by the 14th century. Timbuktu is home to nearly 100,000 ancient manuscripts, some dating to the 12th century, preserved in family homes and private libraries under the care of religious scholars. It's feared that the Ansar Dine terrorists will move on to destroy all the ancient manuscripts and buildings. The attacks are reminiscent of Taliban terrorists blowing up the giant Buddhas of the Bamiyan valley in Afghanistan -- an ancient Buddhist shrine on the Silk Road and a world heritage site -- in 2001 after branding them un-Islamic. AFP
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Turkey angrily denies WSJ report on Syria's attack on Turkish jet
Turkish officials are angrily rejecting a report in the Wall Street Journal, citing unnamed U.S. defense officials who claim that the Turkish jet plane shot down last week by Syrian forces was in Syrian airspace at the time it was shot down, close to the Syrian border. Turkey's prime minister Recep Tayyip Erdogan accused the paper of "cowardice," and demanded to know who the unnamed sources are. Hurriyet (Ankara) Turkey suspends dialog with EU as presidency passes to Greek CyprusTurkey will suspend all dialog with the EU presidency for the next six months, as Greek Cypriot leader Dimitris Christofias takes his turn in the rotating EU presidency. Turkey’s Foreign Minister Ahmet Davutoglu said when Greek Cyprus assumes the presidency, Turkey would continue to collaborate with the EU but would not attend any event that Greek Cyprus presides over. Zaman (Istanbul) Turkey scrambles jets as Syrian helicopters approach borderFour Turkish F-16 warplanes took off on Saturday from Incirlik airbase after Syrian helicopters flew 6.5km closer to the border than is normal. There were three incidents but there had been no violation of Turkish airspace. Relations are extremely tense on the border between Turkey and Syria, after Syria downed a Turkish jet last month. AFP Cyprus's financial bailout request taints its role in EU presidencyCyprus takes over the rotating European Union presidency for the next six months, just days after it became the fifth eurozone country to request a financial bailout. In Germany, a business group linked with Chancellor Angela Merkel’s conservative party says it is unacceptable that a country seeking a bailout should lead the E.U. And several hundred Turkish Cypriots demonstrated this past week, arguing the Nicosia government ignores the rights of the Turkish minority. VOA
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On July 1, 1997, Hong Kong ended its 99 years as a British colony, and came under rule by China. On Sunday, there were carefully controlled celebrations with visiting Chinese president Hu Jintao. Hong Kong residents have enjoyed much greater freedom, including freedom of speech and freedom to protest, than mainland Chinese, but that the same time, Hong Kong residents have expressed growing contempt for the mainland. Hu Jintao expressed confidence in Hong Kong, but in a veiled threat, he added, "While we recognise Hong Kong's achievements 15 years after the handover, we must also be conscious of the deep disagreements and problems in Hong Kong society," Guardian
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Military authorities in China are considering establishing a military presence in the Spratly Islands, known in China as the Nansha Islands. China is taking the step pursuant to its claim to have full sovereignty over the entire South China Sea, including areas historically belonging to other countries. In Vietnam, hundreds of protesters gathered in Hanoi and Saigon to protest China's claims of sovereignty in the South China Sea. Xinhua and VOA
Orbitz is steering Mac users to pricier hotels than PC users, based on spending habits discovered by one of the site's algorithms. "What we have found is ... that Mac users are 40% more likely to book four- or five-star hotels than PC users," according to an Orbitz spokesman. "That lines up with (the fact that) Mac users are typically more willing to spend more money on higher-end computers." In 2009, the Senate Commerce Committee found that Orbitz is one of 15 online e-commerce sites that are scamming users. "How Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines are scamming you online"
(Comments: For reader comments, questions and discussion,
see the 2-Jul-12 World View -- Vietnamese protest China's plans for military command in South China Sea
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(2-Jul-2012)
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What were you doing on Saturday at 23:59:60?
This morning's key headlines from GenerationalDynamics.com.
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There were wild celebrations on Saturday as Mohamed Morsi took the oath of office as the first freely elected president of Egypt in 7000 years. However, practically everything else about the day was filled with controversy. Morsi had wanted to take the oath of office in front of the People's Assembly, the parliament that was elected in January, but the High Constitutional Court (HCC) dissolved the parliament two weeks ago on a technicality; so he took the oath of office in front of the HCC. In his acceptance speech, Morsi acknowledged Field Marshal Hussein Tantawi and the Supreme Council of the Armed Forces (SCAF), which has been ruling the country since the overthrow of Hosni Mubarak. He thanked them for protecting the country, but he also told them to step down and let the civilians rule the country.
Mosni is a member of the Muslim Brotherhood, which is extremely popular among the people, especially in rural areas, but is a bitter political enemy of the army and SCAF. I've seen no signs of anything remotely like a civil war, as some analysts have been predicting, but there will certainly be a bitter political war. In anticipation of Morsi's victory, SCAF has already passed a constitutional decree that limits the president's powers and gives SCAF veto power over many of the decisions of the president. Al-Ahram (Cairo) and Reuters
For years, Muslims worldwide have been discouraged from visiting Jerusalem, to show solidarity with Palestinians, and to protest Israeli control over the city. But this year, Palestinian Authority president Mahmoud Abbas has broken with tradition and urged Muslims to visit Jerusalem, arguing that denying Muslim tourism has made it easier for Israelis to build settlements in east Jerusalem. Jerusalem has been a major flash point for numerous major wars throughout history, and is considered among the holiest of cities by Jews, Muslims, and Orthodox Christians. The National (UAE)
Headline: 'World Powers Agree on Syria Transition'
Just as the Europeans announce one failing bailout plan after another, Kofi Annan seems to have an unending supply of failing peace plans for Syria. The one announced on Saturday is so bizarre, you would think that the participants would be embarrassed to be part of it. And yet, there he was in Geneva, alongside representatives from the U.S., Russia, China, and other countries, proposing this plan:
The last item is, of course, a joke, but no more of a joke than the rest of it. Nobody is going to stop fighting. Neither al-Assad nor the opposition will agree to this transitional council. Al-Assad knows that he's winning in his battle to exterminate as many innocent Sunni Arab civilians as possible, thanks to the help and support of the leaders of Russia and China, who also have no objection to exterminating innocent protesters in their own countries. VOA
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As everybody knows, the earth doesn't go around the sun in exactly 365 days. It actually takes a little longer than that, which is why every fourth year is a leap year. Well, not EVERY fourth year -- the year 1900 wasn't a leap year, for example. But even with all these adjustments, more minor adjustments are needed. In 1972, the first "leap second" was introduced, and for the first time there was a minute that was 61 seconds long. There have been 24 leap seconds since then. There was one in 2008, and the most recent one was Saturday night just before midnight. 23:59:58 was three seconds to midnight. 23:59:59 was two seconds to midnight. 23:59:60 was one second to midnight. And finally, the clock ticked over to 00:00:00, which was midnight. I hope you used the time well. Time Service Dept., U.S. Naval Observatory
(Comments: For reader comments, questions and discussion,
see the 1-Jul-12 World View -- Muslims worldwide urged to visit Jerusalem as tourists
thread of the Generational Dynamics forum. Comments may be
posted anonymously.)
(1-Jul-2012)
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