*** 9-Mar-13 World View -- China urges calm as North and South Korea trade military threats

This morning's key headlines from GenerationalDynamics.com

• China urges calm as North and South Korea trade military threats
• Venezuela has anti-American love fest at Chávez's funeral

****
**** China urges calm as North and South Korea trade military threats
****


Kim Jong-un inspects the troops on Friday

Following the U.N. Security Council approval of a resolution
condemning North Korea's missile and nuclear weapons tests, North
Korea has upped its vitriolic threats even further, and appears to be
taking steps to prepare for military action. North Korea has canceled
the 1953 armistice agreement, as well other non-aggression agreements
with North Korea. They threaten to turn Seoul and Washington into a
“sea of fire,” and exercising its “right to a nuclear pre-emptive
strike." Kim Jong-un is inspecting military installations near the
border and on the islets in the Yellow Sea. According to Kim,

<QUOTE>"All the service personnel of the ground, naval, air
and anti-air and strategic rocket forces are fully ready to fight
a Korean style all-out war."<END QUOTE>

South Korea responded in kind:

<QUOTE>"If North Korea provokes a nuclear war, it will vanish
from the earth by the will of South Korea and
humankind."<END QUOTE>

China has urged both sides to calm down, but calm seems a long way
off, right now. Dong-a Ilbo (Seoul) and Global Times (Beijing)

****
**** Venezuela has anti-American love fest at Chávez's funeral
****

Venezuela's acting president Nicolás Maduro broke into tears again at
Friday's funeral for Hugo Chávez, shouting:

<QUOTE>"Here we are, Comandante, your men, on their feet.
All your men and women ... loyal until beyond death."<END QUOTE>

Huge crowds traveled to Caracas from all over the country to see
Chávez's body, and to express their love and eternal devotion. A line
of people stretched 1 1/2 miles to see the body, but many were turned
away. But there will be plenty of time later to see it, as it will be
embalmed and enclosed in a crystal case, and left on display forever.

Cuba's preside Raul Castro and Iran's president Mahmoud Ahmadinejad
were there, receiving loud applause. Ahmadinejad said:

<QUOTE>"It is a great pain for us because we have lost a
friend. I feel like I have lost myself, but I am sure that he
still lives. Chávez will never die. His spirit and soul live on in
each of our hearts."<END QUOTE>

Rev. Jesse Jackson was there, and said, "We pray to God today that you
will heal the breach between the U.S. and Venezuela," Jackson said. He
later attended Maduro's swearing-in, and was hailed by the acting
president as "a good man from the United States."

Sean Penn was there, and like Ahmadinejad, Penn also lost a friend, as
he explained a day earlier:

<QUOTE>"Today the people of the United States lost a friend
it never knew it had. And poor people around the world lost a
champion. I lost a friend I was blessed to have. My thoughts are
with the family of President Chávez and the people of
Venezuela."<END QUOTE>

As we've discussed in previous days, Chávez, himself a mestizo (mixed
blood), has become a beloved hero to the mestizo citizens, about 60%
of the population, because he defeated the "pure" European descendant
élite.


Henrique Capriles on Friday (AP)

The fault line between the mestizos and the European descendants was
clear from the fact that the political opposition, led by Henrique
Capriles, did not attend the funeral at all, because they were told,
"better that you don't come." Capriles gave an hour-long televised
speech in which he called Maduro a bold-faced liar, nd accused him of
using Hugo Chávez's funeral to campaign for the presidency:

<QUOTE>"I tell you clearly, Nicolás [Maduro], I am not going
to speak of the times you lied to the country, shamelessly,"
Capriles said. "The people have not voted for you,
boy."<END QUOTE>

I don't know enough about the language and culture to be certain, but
I'm pretty sure that "boy" is an epithet referring indirectly to
Maduro as a dark-skinned mestizo. AP and Venezuelanalysis

KEYS: Generational Dynamics, United Nations, China, North Korea, South Korea,
Venezuela, Hugo Chávez, Nicolás Maduro, Henrique Capriles

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*** 10-Mar-13 World View -- U.S. embarrassed by results of Kenya's presidential election

This morning's key headlines from GenerationalDynamics.com

• Kenyatta is declared Kenya's controversial presidential election winner
• Kenyatta's criminal charges provide dilemma for Obama administration
• Violence continues in Egypt's canal city, Port Said
• Egypt's army on high alert in Sinai
• Report: Hizbullah has chemical weapons

****
**** Kenyatta is declared Kenya's controversial presidential election winner
****


Kenyatta supporters celebrate victory on Saturday (AFP)

Kenya's election commission on Saturday announced that last week the
deeply ethnically divided nation had elected Uhuru Kenyatta to be the
new president by a narrow margin. Everyone's mind is focus on the
fear of new violence similar to what happened after the December 27,
2007, elections, when inter-ethnic killings, rapes and amputations
triggered by dissatisfaction with election results killed thousands of
people. In his acceptance speech, Kenyatta said,

<QUOTE>"I would especially like to acknowledge the Kenyans
who lost their lives on the eve of the elections. They made the
ultimate sacrifice, laying down their lives, in the name of
democracy.

To the families of those who lost their loved ones- I offer my
sincere condolences and I assure you that I, and the people of
Kenya are standing with you in prayer.

The incidents that took the lives of our officers are a reminder
that security remains one of the biggest challenges to our
nation. It is unacceptable to see the lives of Kenyans lost so
senselessly.

As we move forward, I pledge to keep the issue of national
security high on our agenda."<END QUOTE>

However, Raila Odinga, the candidate who lost the election, is
not very happy with the results. In his speech, he listed
"massive irregularities" in the voting process. Billions of
dollars had been spent on new technology -- electronic voter identification
kits and electronic voter tallying systems -- that all failed completely,
forcing a count of the paper ballots, according to Odinga:

<QUOTE>"Two days after the vote, the electronic tallying
process was discarded and counting began afresh, manually. That
too turned out to be flawed exercise in which, among other things,
there was massive tampering with the IEBC voter
register. ...

Democracy is on trial in Kenya. It is clear that the process of
electing a new set of leaders has been thwarted by another tainted
election.""<END QUOTE>

Odinga's supporters believe that these failures were intentional
sabotage to give his opponent a victory. However, Odinga asked
his supporters to remain peaceful:

<QUOTE>"Any violence now could destroy this nation. ...

Let the Supreme Court determine whether the result announced by
the Independent Electoral and Boundaries Commission [IEBC] is
lawful. We are confident the court will restore the faith of
Kenyans in the democratic rule if law."<END QUOTE>

The Supreme Court will then have 14 days to hear the dispute and make
a ruling whether to call for a new election. Odinga has made it clear
that he expects to win a victory in court. Whichever way the court
decision goes, it's going to make a lot of people very angry.
Standard Media (Nairobi) and All Africa

****
**** Kenyatta's criminal charges provide dilemma for Obama administration
****

The fact that Kenya is Barack Obama's ancestral homeland only
complicates the diplomatic dilemma over the fact that winning
candidate Uhuru Kenyatta is under indictment by the International
Criminal Court (ICC) for crimes against humanity, stemming from his
alleged involvement in the bloodbath that occurred after the December
2007 elections. He's accused of organizing and funding the death
squads that killed more than 1200 people, and caused many atrocities.
Kenyatta's trial is scheduled to begin this summer, and many people
inside and outside of Kenya are wondering how he's going to be able to
govern the nation while he's standing trial in the Hague.

Western nations, including the United States, are going to be
reluctant to have ordinary diplomatic relations with a man who
allegedly committed such these atrocities. In fact, prior to the
election, the U.S. State Department’s top diplomat for Africa, Johnnie
Carson, issued a thinly veiled warning to Kenyans that "choices have
consequences."

This remark caused a huge outcry in Kenya, where the U.S. was accused
of trying to interfere in Kenya's election process.
As it turned out, Carson's remark proved to be a big benefit to
Kenyatta. He portrayed himself as a victim of both the ICC
and the United States, and was able to rally his supporters with
those charges. In many ways, the election turned into a
referendum on the ICC itself.

Kenya is extremely important to US interests, according to the Council
on Foreign Relations:

<QUOTE>"The fact that the U.S. Embassy in Nairobi is the
largest in all of sub-Saharan Africa reflects the country’s
centrality to a number of U.S. priorities. Kenya is a significant
counterterrorism partner and an important point of military and
humanitarian access in the region. Kenya has been a vital
diplomatic partner in efforts to bring stability to Sudan and
Somalia. The country is also a regional hub for U.S.,
international, and nongovernmental programs as well as the
linchpin for private sector activity in East Africa. Trouble in
Kenya can quickly infect neighboring countries, as the economic
spillover effects of the current crisis have already made
plain."<END QUOTE>

From the point of view of generational theory, Kenya's last
generational crisis war was the Mau-Mau rebellion that climaxed in
1956, and so a new round of violence has a moderate probability of
spiraling into a full-scale ethnic war. Toronto Star and Council on Foreign Relations (2008)

****
**** Violence continues in Egypt's canal city, Port Said
****

An Egyptian court on Saturday reaffirmed most of the death sentences
for 21 Port Said soccer fans, triggering off new rounds of violence in
Port Said and in Cairo.

Egypt's president Mohamed Morsi declared a state of emergency in Port
Said in January after days of violent anti-police riots followed the
sentencing by an Egyptian court of 21 people to death for
participating in a riot in Port Said on February 2 of last year, where
74 young people were killed, and over 1,000 injured at a football
(soccer) match. ( "27-Jan-13 World View -- Egypt in crisis after two days of violent clashes"
) Port Said residents claimed that the police had
sided with the supporters of the visiting Cairo team, and were furious
that the court had let the police go free. In this new ruling,
two senior police commanders were giving prison sentences.

On Saturday, angry crows targeted police offices and a police officers
club in both Port Said and Cairo. Evidence presented at the trial
showed that the police had locked the gates, allegedly to allow the
Cairo supporters to kill as many Port Said supporters as possible.

Violence and instability have been increasing in Egypt since the
election of Muslim Brotherhood president Mohamed Morsi. There are
increasing fault lines between the government and the army, between
the police and the army, between the Islamists and secularists, and
between the Muslim Brotherhood party and the Salafist al-Nour party.
McClatchy

****
**** Egypt's army on high alert in Sinai
****

Egypt's military commands have ordered troops to be on "high alert,"
after receiving information about plots for terrorist attacks in
Sinai. Violence in the Sinai has increased substantially in the two
years since the Egyptian Revolution began, and Hosni Mubarak was
deposed. Islamist militants have been stepping up attacks on Egyptian
securities forces near the Gaza and Israeli borders. Egypt Independent

****
**** Report: Hizbullah has chemical weapons
****

According to Israeli intelligence researchers, Hizbullah is already
in possession of chemical weapons from Syria. However, Syria
is afraid to use them against Israel because it fears the backlash.
The greater fear is that they'll fall into the hands of al-Qaeda linked
terror groups, who have no particular fear of a backlash.

With instability growing throughout the Mideast, there's a fear
that a Mideast war is just around the corner, and that Syria's
chemical weapons play a substantial role.

According to Debka, which sometimes gets things wrong, is quoting its
military intelligence sources as saying that al-Qaeda linked Syrian
rebel militants have laid hands on sufficient chemical bombs, shells
and warheads - together with missiles and other launching systems - to
conduct strikes against seven targets: Assad government centers,
Turkey, Israel, Lebanon, Iraq and Lebanon.

According Debka's report, U.S. officials say the following:

• Al Qaeda's affiliates may also be setting their sights on US
  strategic and military targets in the region.
  
• They have transferred chemical weapons from Syria to armed Al
  Qaeda bands lurking just 40 kilometers from the Iraqi capital of
  Baghdad.
  
• Al Qaeda is funneling poison chemicals to its armed groups on
  Iraq's borders with Saudi Arabia and Kuwait for strikes against those
  countries.
  
• The trail of chemical weapons from Syria through Turkey has been
  picked up in Jordan, where they have reached Islamist groups fighting
  the monarchy. Some bands have infiltrated Amman, the capital, and
  await orders to go on the offensive; others have fanned out across
  northern Jordan and are poised to hit the US, British, French, Czech
  and Polish special forces deployed there.

Whether or not Debka is right about the fact that Syria's chemical
weapons have already been dispersed to al-Qaeda linked terrorist
groups, there's little doubt that the Mideast is becoming more and
more unstable by the day, and al-linked terrorist groups believe that
the way to turn the Mideast in a region of strict adherence to the
most radical form of the Sunni Muslim faith is to trigger an all-out
war in the region, leaving them behind to pick up the pieces and forge
a new Sunni Islamic revolutionary nation. Israel National News and Debka and Debka


KEYS: Generational Dynamics, Kenya, Uhuru Kenyatta,
Raila Odinga, International Criminal Court, ICC,
Mau-Mau rebellion, Egypt, Port Said, Cairo,
Mohamed Morsi, Muslim Brothrhood, Salafist al-Nour,
Sinai, Hizbullah, Lebanon, Syria, chemical weapons

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*** 11-Mar-13 World View -- Lahore Pakistan turns into a war zone between Muslims and Christians

This morning's key headlines from GenerationalDynamics.com

• Iran's Mahmoud Ahmadinejad under fire for hugging Hugo Chávez's mother
• U.S. rift with Afghanistan throws withdrawal strategy into doubt
• Withdrawal plans from Afghanistan's Wardak province in limbo
• Lahore Pakistan turns into a war zone between Muslims and Christians

****
**** Iran's Mahmoud Ahmadinejad under fire for hugging Hugo Chávez's mother
****


Ahmadinejad hugs Chávez's mother, Elena Frias, during funeral services on Friday (Reuters)

Iran's president Mahmoud Ahmadinejad has come under criticism in Iran
because he hugged Hugo Chávez's mother, Elena Frias, to console her at
Chávez's funeral on Friday. According to Islamic rules imposed by
Iran's hardline Great Islamic Revolution survivors, unrelated men and
women are not permitted to touch each other. Frias and Ahmadinejad
held hands. She appeared to be leaning on Ahmadinejad and crying. In
the bitter political climate of Iran, and the personal enmity between
Ahmadinejad and Iran's Supreme Leader, Ayatollah Ali Khamenei, a photo
of the embrace is taking on a life of its own.

The hug comes a couple of days after a number of controversial remarks
by Ahmadinejad in his eulogy of Chávez, where he said:

<QUOTE>"I have no doubt that he [Chávez] will return
alongside Jesus Christ and the Mahdi [the Hidden Imam] to
establish peace and justice in the world."<END QUOTE>

Ahmadinejad is a devout believer in the Mahdaviat -- the Shia Muslim
belief that the Mahdi (or "the 12'th Imam" or "the Hidden Imam") is
coming to save mankind. (See "28-Sep-12 World View -- At U.N., Abbas and Netanyahu are combative, while Ahmadinejad invokes the Mahdi"
) 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. In 2011,
Ahmadinejad used his belief in the Mahdi to justify disobeying the
supreme leader Ayatollah Ali Khamenei. In Iran, Ahmadinejad
frequently refers to the imminent return of the Hidden Imam for
political purposes. Doing so again has drawn criticism from Tehran
clerics. According to Ayatollah Khatami, "Logically, our president
should express his condolences. But I think it is not appropriate to
make it ideological." RFE/RL and RFE/RL

****
**** U.S. rift with Afghanistan throws withdrawal strategy into doubt
****

Both the Taliban and Afghanistan's president Hamid Karzai handed
U.S. Defense Secretary Chuck Hagel stinging rebukes in the latter's
first visit to Afghanistan, forcing the cancellation of a scheduled
news conference by Karzai and Hagel.

The Taliban have claimed responsibility for two coordinated suicide
bombings in the cities of Kabul and Khost on Saturday morning. A
Taliban spokesman said that the Kabul attack was "a message to Hagel,"
to show that insurgents could strike even in one of the most heavily
guarded parts of the capital, a neighborhood of government buildings
and military bases with numerous checkpoints and blast walls.

However, the bitterly angry Karzai blamed the suicide bombings on
America, in cooperation with the Taliban:

<QUOTE>"Taliban are every day in talks with America, but in
Kabul and Khost they set off bombs to show strength to America.
They were in the service of the United States. They were in the
service of the rhetoric of '2014'. It was meant to scare us, [to
show] if they [foreign forces] are not here, 'we will not leave
you alone'. ..

Senior leaders of the Taliban and the Americans are engaged in
talks in the Gulf state [of Qatar] on a daily basis."<END QUOTE>

I understand Karzai's convoluted logic to be the following: He's
saying that America and the Taliban have been meeting secretly and
conspiring against him (Karzai), and that the Taliban launched the
suicide bombings so that American troops would have a reason to remain
in Afghanistan beyond the planned withdrawal date next year.

Hagel denied collusion with the Taliban. The U.S. and NATO commander
in Afghanistan, General Joseph Dunford, said:

<QUOTE>"We have fought too hard over the past 12 years, we
have shed too much blood over the past 12 years, we have done too
much to help the Afghan security forces grow over the last 12
years to ever think that violence or instability would be to our
advantage. ...

I'll let others judge whether [Karzai's accusation] is
particularly helpful or not at the political level."<END QUOTE>

Reuters

****
**** Withdrawal plans from Afghanistan's Wardak province in limbo
****

Two weeks ago, we reported that an angry Hamid Karzai
had ordered that U.S. special forces immediately
end all operations in Wardak province, the province adjacent to the
capital city Kabul. The reason for the demands was that Afghan forces
under the command of the American special forces have been conducting
tortures and murders in the region. Today (Monday) is the deadline
for withdrawal, but the withdrawal is in limbo, suspended in
negotiations. The Wardak situation was to be discussed between Hagel
and Karzai, but the meeting was canceled.

President Obama initiated the "surge" into Afghanistan in 2009 with
the intent of duplicating the success of President Bush's "surge"
strategy into Iraq in 2007. However, as I've written several times in
the past, the generational situation in Afghanistan is very different
than in Iraq, and there are significant differences that will prevent
the surge strategy from working there. (See "2-Sep-12 World View -- U.S. decision on Haqqani Network will affect Pakistan relations"
)

The Taliban are Sunni Pashtun militants. Even if they are inclined
to live peacefully in Afghanistan after the Americans leave,
the Sunni Pashtun Taliban just across the border in Pakistan will
not let them.

From the point of view of Generational Dynamics, the biggest and
most important difference between Iraq and Afghanistan is that
Iraq's last generational crisis war was an external war (the Iran/Iraq
war, 1980-88), while Afghanistan's last generational crisis war was a bloody,
genocidal civil war (1991-96). That's why the "surge" could work in Iraq,
but not in Afghanistan: No negotiations will heal the animosity between
the Pashtuns and the Hazaras, who tortured, mutilated, raped and
killed each other less than 20 years ago.

It appears increasingly to me that Hamid Karzai, who is a Pashtun
himself, is in total denial about what's going to happen to him and to
Afghanistan after the Americans pull out. Inter Press Services News Agency

****
**** Lahore Pakistan turns into a war zone between Muslims and Christians
****

Police arrested 27 Christians in Lahore, Pakistan, on Sunday, after
mobs of Christian demonstrators battled police with stones, burnt
tires, and smashed car windows. The Christians were protesting a
horrific incident on Saturday, when hundreds of Muslims ransacked a
Christian neighborhood in Lahore, and torched dozens of home, after
hearing a report that a Christian man had committed blasphemy against
Mohammed. Blasphemy has become the touchstone for generational
attitudes and clashes in Pakistan that triggers the same kind of fury
and violence that the Nazis had for the Jews. (See "3-Sep-12 World View -- Pakistan girl to be freed after bizarre twist in blasphemy case"
from
September of last year.) On Saturday, the mob was armed with hammers
and steel rods and broke into Christian houses, ransacked two churches
and burned Bibles and crosses. Accusations of blasphemy in Pakistan
can prompt huge crowds to take the law into their own hands. Once an
accusation is made it's extremely difficult to get it reversed, partly
because law enforcement officials do not want to be seen as being soft
on blasphemers. Speaking out against the blasphemy laws can put
people in danger. Two prominent politicians were assassinated in 2011
for urging reform of the law. The killer of one of the politicians was
hailed as a hero, and lawyers at his legal appearances showered him
with rose petals. Independent (London) and The News International (Pakistan)


KEYS: Generational Dynamics, Iran, Mahmoud Ahmadinejad,
Hugo Chávez, Venezuela, Elena Frias, Ayatollah Ali Khamenei,
Mahdi, Hidden Imam, Afghanistan, Hamid Karzai,
Chuck Hagel, Taliban, Kabul, Khost, Wardak province,
Joseph Dunford, Iraq, Lahore, Pakistan

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*** 12-Mar-13 World View -- Stock market share prices may be going parabolic

This morning's key headlines from GenerationalDynamics.com

• Stock market share prices may be going parabolic
• Facebook users reveal a great deal of personal information about themselves
• Chávez's death may cost Russia tens of billions of dollars
• International Criminal Courts drops charges against Kenya official

****
**** Stock market share prices may be going parabolic
****


New York Stock Exchange

Long-time readers are aware that on a dozen or so occasions, I've
transcribed the words of several of the most prestigious financiers
appearing CNBC and Bloomberg TV, and pointed to specific lies. (See
"8-Feb-13 World View -- Libor-rigging scandal and lying on Wall Street"
from last
month.)

In most cases, the lies are about the S&P 500 price/earnings ratio,
also called "valuations." In order to encourage investors to buy
more stocks, they openly lie about stock valuations, often claiming
that stock valuations are at historic lows, whereas in fact they've
been at historic highs continuously since 1995. By the Law of
Mean Reversion, stock prices are going to fall to below Dow 3000,
and stay there well into the 2020s.

The Wall Street Journal addressed this situation on Monday:

<QUOTE>"Stock Market's Rosy View of Earnings ...

That earnings came in a few percentage points higher than analysts
had expected also isn't as impressive as it seems. In a typical
quarter, more than 60% of companies "beat" the consensus, a ratio
of about 3 to 1 over those that "miss."

What may be more significant is the guidance that some companies
gave about the current quarter. According to Thomson Reuters, the
ratio of negative guidance to positive was an unusually high 4.1
to 1. As a result, earnings growth for the first quarter is
expected at just 1.4%. That would be the second-weakest
performance since 2009.

Earnings can be volatile, even for the entire market. That is why
revenue deserves more attention than it sometimes gets—and it
provides scant reassurance.

After falling slightly in the third quarter, the S&P 500's revenue
grew by an estimated 3.7% in the fourth quarter and is expected to
grow by just 1% in the first quarter. The implication is that much
of recent earnings growth relies on expanding profit margins.
Those already are above historical averages, though. The S&P 500's
price multiple of trailing 12-month earnings is nearly 18. That
multiple would rise into the low-20s if margins reverted to past
form.

Investors seem unconcerned, but they are paying prices today that
assume a lot more great quarters."<END QUOTE>

In other words:

• Fourth quarter earnings were slighly higher than expected.
• Even fourth quarter earnings are low by historical standards.
• First quarter earnings are expected to be substantially lower.
• The S&P 500 P/E ratio is almost 18, far higher than the historical
  average of 14, indicating that stocks are far overpriced.
• First quarter earnings will push the P/E ratio into the low 20s,
  the astronomical levels that preceded the stock market crisis of
  2008.
• Investors appear to be totally oblivious to what's
  happening.

The recent rise in Wall Street prices is extremely alarming, because
they've been rising rapidly since the December fiscal cliff and
sequester crisis was postponed, apparently convincing investors that
anyone who expressed any concern was completely full of crap. The
rise may even be accelerating to parabolic levels, indicating that the
hard crash, which must occur sooner or later, may be close. WSJ

****
**** Facebook users reveal a great deal of personal information about themselves
****

Researchers at Cambridge University's Psychometrics Centre, have
developed computer algorithms that gather a great deal of personal and
information from Facebook "likes" from people's profiles, including
the following:

• 95% right distinguishing African-American from Caucasian.
• 85% accurate distinguishing Republican from Democrat.
• 88% accurate determining male sexuality
• 65-73% for relationship status and substance abuse.
• 60% for whether parents separated.

A lot of the data is inferred. For example, the algorithms infer
whether the person is gay from his "likes" for music and TV shows.
Cambridge University

****
**** Chávez's death may cost Russia tens of billions of dollars
****

The death of Venezuelan President Hugo Chávez has put into jeopardy
tens of billions of dollars in contracts that Russians had signed with
the purpose of giving financial support to socialist anti-American
leader Chávez. Chávez was personally behind all the major projects
with Russia in energy, transportation, weapons purchases and banking.
But now Russian officials fear that the new president will turn to
China for military and technical cooperation, or even the United
States for other investments. Venezuela is deeply in debt to Russia,
and with Chávez gone, much of that debt may have to be written off.
The first signs of trouble have already occurred: Although Russian
president Vladimir Putin called Chávez a "big friend of Russia," Putin
only sent a low-level delegation to Chávez's funeral, headed by a
businessman, Igor Sechin. And on his way to the funeral, Sechin
stopped in Houston, Texas, in order to convince U.S. investors to
financially back Russia's energy firm Rosneft. What irks Putin most,
however, was Chávez’s natural ability to connect with his electorate,
while no amount of political "technologies" could check the alienation
of Russia’s scandalously corrupt elites from the "masses." Moscow Times and =40580&tx_ttnews[backPid]=7&cHash=b8a1e952c2a53365a9affcb9c49fc204]Jamestown

****
**** International Criminal Courts drops charges against Kenya official
****

As we reported last month,
dozens
of Kenya witnesses who were expected to testify against Kenyan leaders
being charged with crimes against humanity have been disappearing and
are presumed dead. Three Kenya officials, including the
president-elect Uhuru Kenyatta, are expected to go to trial this
summer at the International Criminal Court (ICC) in the Hague. The
charges stem from the bloodbath that occurred after the December 2007
elections, where death squads that killed more than 1200 people, and
caused many atrocities, including torture, rapes, mutilations, and
murder. But now the ICC has dropped charges against one of the
officials, retired Public Service head Francis Muthaura, saying that
key witnesses had either been killed, died or bribed or were too
afraid to testify. The prosecutor also accused Kenya of being
uncooperative, refusing to provide required witnesses and documents.
It's not known whether the charges against Kenyatta will have to
be dropped as well.

The ICC charges appear to have done Kenya a favor by reducing the
chances of a new ethnic bloodbath following the current elections.
Ethnic battles in Kenya stem from conflicts over land, as populations
for different ethnic groups continually grow and occupy each other's
farmland and grazing fields, and land is usually the biggest issue in
elections. But in this election, the land issue was in second place
behind the ICC charges issue. The ICC charges polarized the
traditional supporters of each candidate, but the middle ground swung
over to Kenyatta's side, since many Kenyans view the ICC as favoring
the West and biased against Africans. The Nation (Kenya) and Daily Monitor (Uganda)


KEYS: Generational Dynamics, stock market, earnings,
Law of Mean Reversion, Facebook, Hugo Chávez,
Venezuela, Russia, Vladimir Putin, Igor Sechin, Rosneft,
Kenya, International Criminal Court, ICC,
Francis Muthaura, Uhuru Kenyatta

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*** 13-Mar-13 World View -- American businesses debate cyber counter-attack on China

This morning's key headlines from GenerationalDynamics.com

• Britain may supply weapons to anti-government rebels in Syria
• American businesses debate cyber counter-attack on China
• Administration says cyber defense impacted by sequestration
• Venezuela to investigate America's 'cancer poisoning' of Chávez

****
**** Britain may supply weapons to anti-government rebels in Syria
****


David Cameron

Britain's prime minister David Cameron said on Tuesday that he might
break with the rest of the European Union and supply weapons to
anti-regime rebels in Syria. This is coming in response to continuing
atrocities by the regime of Syria's president Bashar al-Assad,
targeting innocent women and children in their homes, beds and
schools, using weapons supplied by the Russians and the Iranians. All
27 member states of the European Union have agreed to an arms embargo
with respect to Syria, but Britain recently pushed for an won an
agreement to amend the embargo to supply non-lethal equipment such as
body armor and armored vehicles. But now Cameron wants to go farther,
and hopes that Britain and the other EU members will agree. "But if
we can't, then it's not out of the question we might have to do things
in our own way. It's possible." The Germans oppose such a move, for
fear that it would spread conflict in the region. Reuters

****
**** American businesses debate cyber counter-attack on China
****

For years, everybody "knew" that it was Chinese hackers that were
hacking into the networks of thousands of American companies and
stealing information. But the Chinese just kept denying culpability,
and no one could say for sure that the Chinese government was
involved. That changed last month with the report published last
month by Mandiant. (See "20-Feb-13 World View -- New report reveals massive cyber war attack by China's army"
) That report provides forensic proof
that China's People's Liberation Army (PLA) has been systematically
conduction cyberwar against American government and corporate
organizations. In particular, the PLA's "Unit 61398," working out of
a building in Shanghai, gains control of a company's network, retains
control in stealth mode, and downloads all the data in the network
over a period of months, sometimes terabytes of data.

The state of Georgia decided to counter-attack when it discovered that
the networks of its ministries, parliament and banks had been
compromised, and had downloaded many files. They tricked the hackers
into downloading a poisoned filed that installed malware on the
hackers' computers. The Georgia researchers then were able to
download data from ther hackers' computers, and prove that they were
from that the attack came from Russian security agencies.

A lot of U.S. companies would like to get similar revenge against
Chinese hackers. They're tired of having to spend billions of dollars
trying to protect their networks, and still the Chinese hackers get
away scot free, available to hack into other companies' networks and
steal data. And there's a new phrase coming into vogue -- "hacking
back" -- which means hacking into an attacker's network either to
steal data or to do actual damage.

However, there are two problems with a hackback strategy:

• It's generally against the law to hack into someone
  else's computer, even in self-defense.
  
• The Obama administration opposes any aggressive counter-strategy
  against China, because it would complicate relations with
  China.

The Mandiant report has hardened attitudes on this issue. The Chinese
will continue to express indignant outrage, as they do whenever
they're questioned about their rapidly increasing military
belligerence anywhere, but they'll also continue and even escalate
cyberattacks on Western governments and companies. NPR and Georgia Government Data Exchange Agency (PDF) and Steptoe Cyberblog

****
**** Administration says cyber defense impacted by sequestration
****

Cyberwar has entered the sequestration debate arena.

Attempts to protect America against cyberattacks is being compromised
by sequestration, according to Senate testimony on Tuesday by
National Intelligence Director James Clapper.

<QUOTE>"Our cyber efforts will be impacted. This is an area
where, you all know, we need to keep ahead of rapid technology
advances to maintain and increase access to adversaries, as well
as provide warning of a cyber attack against the
U.S."<END QUOTE>

However, others say that President Barack Obama in August 2011
rejected a series of tough actions against China, including
counter-cyber attacks and economic sanctions, for Beijing’s aggressive
campaign of cyber espionage against the U.S. government and private
businesses networks.

In other news, the pigs running Washington have almost reached a point
of total chaos and incoherence. I just hope we survive. VOA and Free Beacon

****
**** Venezuela to investigate America's 'cancer poisoning' of Chávez
****

Venezuela's acting president Nicolás Maduro announced on Tuesday that
foreign scientists will be invited to join a government commission to
investigate with America "poisoned" Hugo Chávez, causing him to
develop cancer and die from it.

<QUOTE> "We will seek the truth. We have the intuition that
our commander Chávez was poisoned by dark forces that wanted him
out of the way."<END QUOTE>

The accusation has been derided by critics of the government, who say
that it's a typical Chávez-style conspiracy theory intended to feed
fears of "imperialist" threats. Al-Jazeera


KEYS: Generational Dynamics, Britain, David Cameron, Syria, Bashar al-Assad,
Mandiant, China, People's Liberation Army, Unit 61398,
Georgia, Russia, hacking back, James Clapper, sequestration,
Venezuela, Nicolás Maduro, Hugo Chávez

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"Hacking back" as deterrence? However, we still need to disconnect infrastructure from the Internet-we are at the wrong end of an asymmetric vulnerability.

I find it odd saying this, but I have to support Ahmadinejad-comforting the bereaved seems wholesome to me. I guess this is a reminder of profound cultural differences.

There is the metaphor of the Internet as a city. However, the openness invites attack/exploitation. Perhaps in the future the Internet will be described as a series of disconnected castles; the moat will feature crocodiles, the wall guarded.

*** 14-Mar-13 World View -- Xi Jinping envisions 'China's Dream' - world economic and military domination

This morning's key headlines from GenerationalDynamics.com

• Saudi Arabia is running out of swordsmen to behead people
• Terrorists disguised as cricketers kill 5 Indian soldiers in Kashmir
• Xi Jinping envisions 'China's Dream' - world economic and military domination

****
**** Saudi Arabia is running out of swordsmen to behead people
****


Saudi Swordman prepares to behead convict (Al-Ahram)

Saudi Arabia is considering the abolishment of beheading for capital
punishment in favor of firing squads, because there are shortages of
government swordsmen to do the job. Rape, murder, apostasy, armed
robbery and drug trafficking are all punishable by death under Saudi
law. About 70 people were put to death by beheading in 2012. There
has been worldwide outrage of Saudi Arabia's beheading program, and it
reached a peak last week after the beheading of a girl who, in 2005,
at age 17, came to Saudi Arabia as a maid, and plotted and killed an
infant by suffocating him to death one week later. Al-Ahram (Cairo)

****
**** Terrorists disguised as cricketers kill 5 Indian soldiers in Kashmir
****

Two terrorists disguised as cricket players got out of a car, walked
across a playground for a school adjacent to a paramilitary camp in
the India-governed side of Kashmir, shot dead a sentry, and fired
grenades indiscriminately, killing 5 soldiers and wounding three
civilians. The two terrorists were killed by Indian soldiers.
Kashmir was the epicenter of the massive genocidal war that followed
Partition, the partitioning of the Indian subcontinent into India and
Pakistan in 1947. Pakistan and India each control a portion of
Kashmir, with the two sides separated by a border called the "Line of
Control" (LoC). Kashmir has been the site of repeated clashes between
Pakistan and India since 1947, and may well be the epicenter of the
next massive genocidal war between the two countries. India blamed
the Pakistan terrorist group Lashkar-e-Toiba (LeT) for Wednesday's
attack, but Pakistan rejected the charge that any Pakistanis were
involved in the attack. Hizbul Mujahideen, an Indian Islamist
terrorist group, has claimed responsibility for the attack. Times of India and Pakistan Observer

****
**** Xi Jinping envisions 'China's Dream' - world economic and military domination
****

The generational change in China's leadership, as 59-year-old Xi
Jinping takes over as president from 70-year-old Hu Jintao on
Thursday, marks a historic change in attitudes at the top. Hu
Jintao, it seemed to me, fit the profile of a survivor of the last
crisis war (like our Silent Generation) by seeking to mediate
disputes. Having grown up during Mao's bloody Communist Revolution,
he understands how dangerous it is to provoke another war, and doesn't
want to see anything like that happen again.

Xi Jinping never suffered the horrors of Mao's war, and doesn't
understand the dangers. He's launched a series of "The China Dream"
speeches, in which he calls for China to shed its past as a secondary
player, and become the world's top military and economic power.
He's visiting Chinese military bases and telling the troops
to be ready for war at any time. He's personally taking charge
of policy in the East and South China Seas, and has vowed that
China will take every step necessary to gain control of these
regions, including areas that have been owned by other countries
for centuries.

So now we have a President in Beijing who says that there's no problem
with preparing rapidly for war against the United States, and we have
a President in Washington who whose stated intention on Wednesday is
to have the government spend as many trillions of dollars as possible.
These two world leaders are racing to see who can be the first to
create a catastrophe. It'll be interesting to see who wins, I guess.
WSJ and China Daily


KEYS: Generational Dynamics, Saudi Arabia, beheadings, India, Pakistan,
Kashmir, Lashkar-e-Toiba, LeT, Hizbul Mujahideen,
China Dream, Xi Jinping, China

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*** 15-Mar-13 World View -- Pope Francis may side with Argentina in Falklands dispute with Britain

This morning's key headlines from GenerationalDynamics.com

• Pope Francis may side with Argentina in Falklands dispute with Britain
• Venezuela's Maduro says that Chávez picked the Pope
• Venezuela won't be embalming Chávez, after all
• As Egypt deteriorates, what will the army do?

****
**** Pope Francis may side with Argentina in Falklands dispute with Britain
****


Kirchner and Bergoglio shake hands in this 2008 photo. (AP)

Argentina's President Cristina Fernández de Kirchner never got along
very well with Jorge Mario Bergoglio when he was the Buenos Aires
Archbishop. They clashed in 2010 when Bergoglio opposed Kirchner's
bill to allow gay marriages, saying:

<QUOTE>"[The gay marriage bill is a] plan to destroy God’s
plan. This is no mere legislative bill. It is a move by the
father of lies to confuse and deceive the children of God. If
approved, this law would be a real and dire anthropological
throwback."<END QUOTE>

Kirchner said Bergoglio’s comments were "really reminiscent of the
times of the Inquisition."

But that was just the latest skirmish in a long-running battle with
the government to re-litigate alleged repression and torture by the
Catholic Church during the military government from 1976-83.

However, now that Bergoglio has become Pope Francis, Kirchner is
changing her attitude towards him, asking him to intervene in the
disagreement between the UK and Argentina over the Falkland/Malvines
islands. His frequently stated views in the past are that the islands
belong to Argentina. In a memorial mass last year marking 30 years
since the 1982 war between the two countries over the islands, he
said:

<QUOTE>"We come to pray for those who have fallen, sons of
the homeland who set out to defend their mother, the homeland, to
claim the country that is theirs and they were
usurped."<END QUOTE>

However, it's expected that Pope Francis will completely avoid the
issue. It was Pope Alexander VI who divided the New World between
Portugal and Spain in the 15th century, but there are no recent
precedents for a pope becoming involved in a territorial dispute and
experts believe it is unlikely he would wish – or have the time – to
become embroiled in the matter. NBC Latino and Buenos Aires Herald and Guardian (London)

****
**** Venezuela's Maduro says that Chávez picked the Pope
****

Venezuela's acting president, Nicolás Maduro, is suggesting that Hugo
Chávez may have had a hand in the selection of Jorge Mario Bergoglio
of Argentina as the new Pope. According to Maduro:

<QUOTE>"We know that our commander ascended to the heights
and is face-to-face with Christ. Something influenced the choice
of a South American pope, someone new arrived at Christ's side and
said to him: 'Well, it seems to us South America's time has
come.'"

He (Chávez) may also call a constitutional assembly in Heaven at
any moment to change the (Catholic) church on Earth so the people,
the pure people of Christ, may govern the world."<END QUOTE>

Last week, Maduro announced an investigation
into charges that "imperial forces," particularly
from the United States, conspired to kill Chávez by injecting him with
something that gave him cancer. Reuters

****
**** Venezuela won't be embalming Chávez, after all
****


An employee adjusts the embalmed body of Nicolai Lenin (Vladimir Ilyich Ulyanov) (AFP)

Venezuela's acting president, Nicolás Maduro, said that it is highly
unlikely that the body of Hugo Chávez will be embalmed, after all.
The bodies of dictators Lenin, Ho Chi Minh and Mao Zedong were all
embalmed, and are on permanent display for posterity. But Maduro said
that the decision to embalm Chávez's body was not made in time, and
now it probably can no longer be embalmed. BBC

****
**** As Egypt deteriorates, what will the army do?
****

Egypt is getting out of control: The police are on strike in a number
of cities, the civil disobedience in Port Said is in its fourth week,
hooligans are attacking and ransacking public buildings, and angry
youth are clashing with anti-riot police on daily basis. The
government has been unable to end chronic fuel shortages while large
parts of Sinai suffer from lawlessness. The economy is on the brink
of collapse and the stock market has been losing billions of pounds
every day. The economy is suffering and negotiations with the IMF
over a $4.8 billion loan are faltering. Everyday there is death and
mayhem somewhere in the country. And now a high court has ordered the
suspension of parliamentary elections, throwing government processes
into total chaos. The time may be coming close when the army will
take over. Arab News


KEYS: Generational Dynamics, Argentina, Cristina Fernández de Kirchner,
Jorge Mario Bergoglio, Pope Francis, Pope Alexander VI,
Venezuela, Nicolás Maduro, Hugo Chávez, Egypt, Port Said,
Sinai, IMF

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*** 16-Mar-13 World View -- U.S. will deploy missile interceptors on West Coast

This morning's key headlines from GenerationalDynamics.com

• JPMorgan execs forced to admit investor fraud in 'Whale Trades'
• London traders versus New York management
• Misconduct skyrockets in published scientific papers
• U.S. will deploy missile interceptors on West Coast
• EU split on whether to supply arms to Syria's rebels

****
**** JPMorgan execs forced to admit investor fraud in 'Whale Trades'
****


Ina Drew, former JPMorgan Chase Chief Investment Officer

The Senate's Permanent Subcommittee on Investigations grilled the
JPMorgan Chase execs on Friday. Most Senate committee hearings are
nothing but photo ops for the Senators who sit there and give campaign
speeches for the folks back home, but this hearing was different.
Only two Senators asked the questions -- Republican Senator John
McCain and Democratic Senator Carl Levin -- both from the Silent
Generation of World War II survivors, the generation that still has
ethics and morals.

The charges are that JPMorgan's London office lost $6.2 billion,
and then the NY headquarters lied to investors about it. Here
are some of the things that I heard:

• JPMorgan's London Gen-X traders (with PhDs) repeatedly
  violated the bank's VAR (Value at Risk) rules and models, because they
  thought they were smarter than anyone else.
  
• When they started to get into trouble, the traders actually
  changed the VAR financial models with the purpose of hiding or
  minimizing their losses.
  
• JPMorgan stopped sending reports to the regulatory agency (the
  Office of the Comptroller of the Currency or OCC) in order to hide
  problems that arose. The reports were required by law, but JPMorgan
  didn't bother, and the OCC didn't do anything about it.
  
• JPMorgan's New York Boomer managers claimed to be just poor little
  victims being led like lambs to slaughter, and had no idea what was
  going on, despite their multi-million dollar salaries.
  
• In a conference call on April 13, 2012, the NY managers, including
  CEO Jamie Dimon, openly lied to investors, when he said he had known
  nothing about it. In fact, he knew about and authorized the changes
  in the models as early as January 2012.

Carl Levin really did a sensational job of grilling the execs,
especially former CFO Doug Braunstein, and forcing him to admit
contradictions that showed he had lied. Levin had really done his
homework, studying all the detailed evidence in advance, and quickly
trapped Braunstein time and time again in contradictions or
half-truths. This is something the Gen-X prosecutors don't do, not
because they're incapable, but because they refuse to investigate and
prosecute other Gen-Xers.

In one particularly hilarious moment, McCain asked Braunstein whether
anyone had been punished. Braunstein indignantly said that people had
been fired. Those were traders -- were the managers punished? Yes,
they had their salaries cut. Was your salary cut? Errrr, yes, by
50%. How much is that in dollars? Errr, well, my salary used to be
$10 million, now it's only $5 million. McCain displayed an expression
of revulsion.

****
**** London traders versus New York management
****

The humiliation of Braunstein was fun, but the most pathetic
finger-pointing came from Ina Drew, former Chief Investment Officer
(CIO). She started her testimony by whining about how tough her job
was to run a large organization, while she was also a mother and took
care of her kids. Levin asked her about the new VAR financial models
that the London traders used to hid their losses. The new models were
designed by Patrick Hagan, and they wasn't tested or questioned by the
tradrers. Here's my transcription:

<QUOTE>LEVIN: :"The VAR model - the new one - depended on
analyzing a daily stream of new trading data. Instead of
constructing an automated data base, that automatically would feed
the trading data into a VAR model, Mr. [Patrick] Hagan, the model
designer, PhD, was stuck with having to manually enter the trading
data every night, using spreadsheets that had calculation and
formula errors. In other words, the new key VAR model, for the
CIO's $350 billion portfolio, including the synthetic credit
portfolio, was being run manually, using error prone spreadsheets
with operational flaws.

Ms. Drew, why did the bank model review that approved the VAR say
-- why did they approve the VAR, knowing that there were problems,
and then allow it to operate in such a shoddy fashion?"

DREW: "It's very disappointing. I have no idea. the risk modeling
group is an independent group staffed by very well trained and
educated PhDs, who run the models, and certainly very
disapppointed that it was not reviewed properly, and delivered to
me in poor form."

LEVIN: "Did Mr. Hagan work for your group?"

DREW: "He did, in London."<END QUOTE>

Ina Drew kept using that high-pitched voice that women use all the
time when they want to paint themselves as innocent victims of some
man. So it's well to remember that this was a top-level manager
heading a big organization, making millions of dollars in salary. She
was no innocent victim, despite her estrogen-based whining.

What we're seeing here is exactly the same pattern that I've described
and documented many times as causing the financial crisis:

• The Gen-Xers, with Masters degrees or PhDs in financial
  engineering, think they're smarter than everyone else in the world,
  especially their bosses, who they think are contemptible. They
  think that this gives them the right to defraud anyone they want.
  This is something I've seen several times in the computer industry,
  and reported on many times in the financial services industry.
  The is the Generation-X culture.
  
• The Boomer bosses pretend that they don't know what's going on,
  even though the financial results they're getting are often
  mathematically impossible unless fraud is occurring, and even though
  the Boomer bosses make multi-million dollar salaries and are paid to
  know. These bosses either did know, and they're lying, or they should
  have known, and looked in the other direction. (See "Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud"
  from 2010.)

I've been reporting on this pattern for years. For example, this is
what happened the Libor fraud cases at Barclays, RBS and other banks.
Or perhaps, Dear Reader, you happened to see the report on 60 Minutes
a couple of weeks ago, where a Framingham, Mass., pharmaceutical
supply house ignored government regulations, and shipped medical
products that sickened and killed hundreds of people from meningitis.

The situation at JPMorgan Chase did not occur 8 years ago. It
occurred last year, in 2012. What we see again is what I call the
"Metastasis of Corruption," where the illegal activities begin with a
few Gen-Xers, and then spread to wherever there's money or political
power, like a cancer that spreads to wherever there's rich tissue.
This is why I keep telling you, Dear Reader, that the same people are
in the same jobs, or in Washington or on Wall Street, still finding
new ways to defraud you, so wrapped up in their own lies that they're
no longer even capable of distinguishing truth from fiction. Bloomberg and Senate Investigation Committee and CBS 60 Minutes

****
**** Misconduct skyrockets in published scientific papers
****

In another example of surging fraud, a study of 2,047 papers that had
been published in biomedical journals and later retracted, the
researchers found that the retractions were not due to simple errors,
but in 67% of the cases were due to misconduct -- fraud, suspected
fraud, duplicate publication, and plagiarism. The number of
retractions began to skyrocket in 2005, which is exactly the same time
that corruption and fraud in financial institutions began to
skyrocket.

Once again, I've seen this kind of fraud and corruption personally in
the computer industry, and I've reported on in financial services and
in media and in Washington many, many times. Nothing like this was
true in the 1990s, but today there is literally no aspect of life in
America anymore that isn't polluted with fraud and corruption. The
only "good news" is that the same thing is true in China, and probably
worse. Proceedings of National Academy of Sciences and newswise.com

****
**** U.S. will deploy missile interceptors on West Coast
****

Because of threats by North Korea and Iran to attack the United States
with long-range missiles, the Dept. of Defense announced on Friday
that the U.S. will deploy additional ground-based missile interceptors
(GMIs) on the West Coast. In response to a criticism that such
interceptors have not been proven to work, Secretary of Defense Chuck
Hagel said:

<QUOTE>"We certainly will not go forward with the additional
14 interceptors until we are sure that we have the complete
confidence that we will need. But the American people should be
assured that our interceptors are effective."<END QUOTE>

The deployment will be completed by 2017. An early warning system
will also be deployed in Japan.

I'm going to guess (or perhaps hope) that these interceptors will also
be effective against the greater threat of Chinese missiles. Washington Post

****
**** EU split on whether to supply arms to Syria's rebels
****

France and Britain are advocating an end to the European Union embargo
on arms to Syria, and supplying arms to the anti-regime rebels. The
proposal generated heated discussion over fears that any arms supplied
to the rebels would fall into the hand of al-Qaeda linked terrorists.
If no agreement can be reached by the EU, then France and Britain may
supply arms on their own. BBC


KEYS: Generational Dynamics, JPMorgan Chase, John McCain, Carl Levin,
Doug Braunstein, Ina Drew, North Korea, Iran, China,
Chuck Hagel, European Union, France, Britain, Syria

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*** 17-Mar-13 World View -- Cyprus bailout threatens international bank runs

****
**** Cyprus bailout threatens international bank runs
****


Bank of Cyprus

Shocked and angry residents of Cyprus on Saturday morning rushed to
their banks and ATMs to withdraw their savings, but it was too late.
The ones who had been lucky enough or smart enough or frightened
enough to have withdrawn their money earlier in the week lost nothing,
but the ones who believed the Cypriot and European politicians who
said that all bank deposits are safe were screwed.

In the wee hours of the night, the Eurogroup of eurozone finance
ministers agreed to bail out Cyprus, after a year of negotiations.
Cyprus needed a 17 billion euro bailout loan for its banking system,
but the Eurogroup was only willing to come up with about 10 billion
euros, so the difference had to be made up by penalizing depositors:
9.9% on deposits above 100,000 euros, and 6.75% on smaller deposits.

There were harsh disagreements in the euro zone whether Cyprus should
be bailed out at all. The problem is that Cyprus's banks have been
used as vehicles for laundering billions of dollars by Russian
oligarchs who don't want to pay Russia's taxes. Thus, bailing out
Cyprus's banks would be bailing out Russia's oligarchs. Many MPs in
Germany's Bundestag refused to consider a bailout. The final
settlement punishes ordinary Cyprus citizens as well as the Russian
oligarchs.

The fear is that now that a precedent has been set, the same method
will be used with other countries, including Spain, Portugal and
Greece. It might be used again in Cyprus, if another bailout is
needed. Politicians are insisting that this was a one-time situation
that will never happen again, but those are the same politicians that
promised that depositors' life savings would be protected. They're
also the same politicians that said that each bailout of Greece and
each new austerity plan in the last three years would be the last.

Could the same thing happen in the United States? Think back over the
last six years, and think about all the "things that could never
happen here" that now have happened. And we have a President whose
announced intention last week is to spend as many trillions of dollars
as he can.

There actually have been bank panics in recent times. In 2007, there
was a bank run in California, and another bank run in Britain. (See
"Anxious investors mob Countrywide Bank to withdraw their deposits."
and "Panic appears to be spreading in Britain, as depositors mob Northern Rock"
from 2007.)

In those cases, politicians quelled the growing panic by announcing
that all bank deposits would be safe, and then by following up with
policies. Since then, North Americans and Europeans have felt
confident that their life savings were safe, and there haven't
been any major bank runs since 2007.

Politicians here and in Europe are now going to be scrambling to make
new promises and pronouncements that everyone's bank deposits are
safe. It remains to be seen whether those promises will be believed.
Guardian (London) and Kathimerini


KEYS: Generational Dynamics, Cyprus

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Originally Posted by John J. Xenakis

*** 17-Mar-13 World View -- Cyprus bailout threatens international bank runs

****
**** Cyprus bailout threatens international bank runs
****


Bank of Cyprus

Shocked and angry residents of Cyprus on Saturday morning rushed to
their banks and ATMs to withdraw their savings, but it was too late.
The ones who had been lucky enough or smart enough or frightened
enough to have withdrawn their money earlier in the week lost nothing,
but the ones who believed the Cypriot and European politicians who
said that all bank deposits are safe were screwed.

In the wee hours of the night, the Eurogroup of eurozone finance
ministers agreed to bail out Cyprus, after a year of negotiations.
Cyprus needed a 17 billion euro bailout loan for its banking system,
but the Eurogroup was only willing to come up with about 10 billion
euros, so the difference had to be made up by penalizing depositors:
9.9% on deposits above 100,000 euros, and 6.75% on smaller deposits.

There were harsh disagreements in the euro zone whether Cyprus should
be bailed out at all. The problem is that Cyprus's banks have been
used as vehicles for laundering billions of dollars by Russian
oligarchs who don't want to pay Russia's taxes. Thus, bailing out
Cyprus's banks would be bailing out Russia's oligarchs. Many MPs in
Germany's Bundestag refused to consider a bailout. The final
settlement punishes ordinary Cyprus citizens as well as the Russian
oligarchs.

The fear is that now that a precedent has been set, the same method
will be used with other countries, including Spain, Portugal and
Greece. It might be used again in Cyprus, if another bailout is
needed. Politicians are insisting that this was a one-time situation
that will never happen again, but those are the same politicians that
promised that depositors' life savings would be protected. They're
also the same politicians that said that each bailout of Greece and
each new austerity plan in the last three years would be the last.

Could the same thing happen in the United States? Think back over the
last six years, and think about all the "things that could never
happen here" that now have happened. And we have a President whose
announced intention last week is to spend as many trillions of dollars
as he can.

There actually have been bank panics in recent times. In 2007, there
was a bank run in California, and another bank run in Britain. (See
"Anxious investors mob Countrywide Bank to withdraw their deposits."
and "Panic appears to be spreading in Britain, as depositors mob Northern Rock"
from 2007.)

In those cases, politicians quelled the growing panic by announcing
that all bank deposits would be safe, and then by following up with
policies. Since then, North Americans and Europeans have felt
confident that their life savings were safe, and there haven't
been any major bank runs since 2007.

Politicians here and in Europe are now going to be scrambling to make
new promises and pronouncements that everyone's bank deposits are
safe. It remains to be seen whether those promises will be believed.
Guardian (London) and Kathimerini


KEYS: Generational Dynamics, Cyprus

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This is a disaster. I have a friend who withdrew all her money and keeps all her money in a box in her home. I thought she was a little nuts for doing this, but maybe she's not.

*** 18-Mar-13 World View -- Germany and Russia get blamed for the Cyprus crisis

This morning's key headlines from GenerationalDynamics.com

• Cyprus president pleads for nation to accept bailout terms
• Germany and Russia get blamed for the Cyprus crisis
• Israel's government turns hardline pro-settlement on eve of Obama's visit

****
**** Cyprus president pleads for nation to accept bailout terms
****


Cyprus President Nicos Anastasiades

It's now become clear that European financial negotiators vastly
underestimated the widespread furious public reaction to the terms of
the bailout of Cyprus's banks that we reported
yesterday.

Cyprus President Nicos Anastasiades went on nationwide television on
Sunday and called it the greatest crisis since the 1974 war with
Turkey. It was just a month ago that Anastasiades won the election to
the presidency, and one of his promises was that bank deposits would
be completely safe. Now he has to explain that he has no choice but
to renege on that promise or face collapse of the banking system and
the economy:

<QUOTE>"The first option would have led to a disorderly
default as a result of the decision by the European Central Bank
for the immediate stop of the emergency liquidity assistance to
the two major Cypriot banks.

The second is the option of a very difficult but controlled and
manageable situation that will eventually lead to the
stabilization of the economy and to a rebound."<END QUOTE>

Perhaps the biggest shock of all to the public is that small savings
accounts were reduced by 6.7%. Accounts with totals up to 100,000 euros
are supposed to fully insured in many countries in the euro zone,
including Cyprus, just accounts in American banks are supposed to be
insured up to $250,000, but now the safety deposit insurance
throughout Europe has been thrown into question, as it's clear that a
government can revoke the insurance on a moment's notice.

Monday is a long-scheduled bank holiday in Cyprus, and the Parliament
will debate on Monday whether to even accept the bailout on those
terms. If not, then Cyprus' banking system will collapse, unless
some other solution can be found.

Banks will be closed on Monday, and are scheduled to reopen on
Tuesday. It's expected that when the banks reopen, there will bank
runs that will deplete all the banks of cash. For that reason, Cyprus
is considering keeping the banks closed on Tuesday as well. Cyprus Mail and Kathimerini and Cyprus Central Bank

****
**** Germany and Russia get blamed for the Cyprus crisis
****

Opposition political parties are blaming the European Union,
especially Germany, for "vindictive and neo-colonial" practices that
led to the current crisis. According to the leader of the communist
AKEL party: "They are attempting to impose their political options on
Cyprus, leading out country and people to conditions that are similar
to those in other countries of the European south."

Russians are unhappy at being made scapegoats for the Cyprus crisis.
A lot of what happened can be attributed to German animosity towards
Russia, particularly the fact that German officials refused to bail
out Russian oligarchs who had "dirty money" in Cyprus banks.
However, not all Russian money is "dirty," as there are plenty
of legitimate businesses, especially in the energy industry, that
have put money into Cyprus.

Some Russian businessmen are in a panic. Russian businesses and
individuals have deposited tens of billions of dollars in Cyprus
banks, and they are going to lose 10% of those deposits when the banks
reopen. For that reason, some Europeans are hoping that Cyprus will
reject the bailout, and get another bailout from Russia. Cyprus Mail and AFP

****
**** Israel's government turns hardline pro-settlement on eve of Obama's visit
****

After six weeks of tough negotiations, following the election where he
didn't do as well as he had hoped, Israel's prime minister Benjamin
Netanyahu has assembled a new governing coalition, just two days
before President Barack Obama is scheduled to visit. However, much to
Obama's likely chagrin, most of the key positions in the government
will be filled by pro-settlement hardliners. In particular, the
housing ministry has been given to Uri Ariel, an ultra-nationalist
settler in the Jewish Home party, which completely opposes a
Palestinian state. Even the new Defense Minister, Moshe “Boogie”
Yaalon, is a military veteran and staunch rightwinger known for his
support of the Jewish settler movement. Israel's aggressive
settlement policy has been a major source of world criticism for
Israel, and has substantially heightened tensions with the
Palestinians. President Obama has urged Israel to halt West Bank
settlement building. Arab News / AFP and Jerusalem Post


KEYS: Generational Dynamics, Cyprus, Nicos Anastasiades,
European Union, Germany, Russia,
Israel, Benjamin Netanyahu, Uri Ariel, Moshe Yaalon

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Originally Posted by Gianthogweed

This is a disaster. I have a friend who withdrew all her money and keeps all her money in a box in her home. I thought she was a little nuts for doing this, but maybe she's not.

Yeah, baby. Bank runs, coming to a nation state near you. Got gold?

Originally Posted by John J. Xenakis

However, not all Russian money is "dirty," as there are plenty
of legitimate businesses, especially in the energy industry, that
have put money into Cyprus.

Easily-falsifiable, that. There are no legitimate businesses in the Russian energy industry. And what legitimate businesses there are in Russia left Cyprus years ago for other more civilized banking climes (generally, Iceland and Latvia -- though there are SE Asian countries starting to be used as well). The only Russian money left in Cypriot banks is stolen-from-the-federal-budget funds.

Originally Posted by Ragnarök_62

Yeah, baby. Bank runs, coming to a nation state near you. Got gold?

Nice of those "advanced Europeans" to show us how to quickly and efficiently seize private property eh?

I think a more appropriate question might be got ammo? Of course citizens of Cyprus probably don't or won't have that luxury (certainly not after the government cleans out their accounts) so perhaps an even more appropriate question would be got molotov?

I suppose its good to see the plan out in the open for all to see (not that many will notice). The next few days promise to be interesting for the few paying attention.

Originally Posted by Justin '77

Easily-falsifiable, that. There are no legitimate businesses in the Russian energy industry. And what legitimate businesses there are in Russia left Cyprus years ago for other more civilized banking climes (generally, Iceland and Latvia -- though there are SE Asian countries starting to be used as well). The only Russian money left in Cypriot banks is stolen-from-the-federal-budget funds.

I wonder who the Cyprus government fears more; the European Union uber-bankers or the Russian mob?

I'm not sure that crossing either one is preferable.

Originally Posted by Copperfield

Nice of those "advanced Europeans" to show us how to quickly and efficiently seize private property eh?

And this is something new? Argentina is back at it again with their preferred method , inflating the hell out of their currency, (roughly every 30 years or so.) But hey! At least they're consistent!

I think a more appropriate question might be got ammo?]

Ammo is a fungible asset, (like gold) which is independent of the banking system. I mean, Ammo companies can't keep up and neither can Wally World's efficient supply chain. The ammo biz is also quite predictable.
A. Some nut job uses guns/ammo to <insert weird act here>
B. Media hype ensues.
C. Assorted politicians make this an "issue".
D. People go out and hoard ammo because of distrust of politicians.
E. Distrust of politicians is because they are not like mutual funds. For them, past performance does guarantee future results.
F. Eric M. will be dumbfounded by items A-E.

The US is doing precisely what Europe is doing, but in a different manner:
A. Blast out propaganda that houses are "assets".
B. Produce loans to pluck dollars from new "house owners".
C. Slice and dice the resultant junk mortgages and pawn them off on suuu...ck...ers , erm um investors. Most = taxpayers <- Fannie Mae/Freddie Mac/HUD, and a shitload of other stuff at the Federal level for the common good of "house ownership" is for everyone.
D Item B can't pay so item C's investments go south. Banks make money from both ends via "churn" (B = "closing costs") (C="advisory fees")
B. defaults and taxpayers are the ones who are stuck.

Next: Bernanke Panky
A. QE^infinity = pluck feathers from bond investors via negative real yields.
B. Levitate stock market via intermediaries (banks) in an attempt to suck in "dumb money" so "smart money" (CEO's,investment banks,other big shots") can perform pump and dumps.

Of course citizens of Cyprus probably don't or won't have that luxury (certainly not after the government cleans out their accounts) so perhaps an even more appropriate question would be got molotov?

Gee, those things look cool! Now, this has me wondering about this thing I did as a kid. I accidentally found out gasoline will sort of dissolve styrofoam. So's I gathered up a bunch of styrofoam, put it in a Crisco can and tossed in the gasoline and made something that looked like putty. Then... I sez to myself, syrofoam unto itself burns and makes lots of pretty black smoke. Now I have this putty shit that's part styrofoam and gasoline. I wonders to meself, hmmm... what would happen if I sparked this stuff? Now, I spark it and this shit's really cool when burning. I gets the pretty black styrofoam smoke and nice pretty big huge fire from gasoline. To top it off, putty gets real gooey and spreads all over the place. So maybe pissed off Greeks can go make new improved Molotovs by use of styrofoam/gasoline combos. Then they'd get great big gasoline fires and make big messes via lots of black smoke like tire fires and big gooey messy burning styrofoam puddles. I don't think styrofoam procurement would be hard. They'd just need to raid some coffee shop or something.

NB. It was my job as a kid to go spark stuff. When I'd go visit my aunts in a small town outside of Amarillo, they'd have to use burn barrels. In exchange for foodies, it was my job to burn the trash. This was fine because everyone knows little boys like to make fires. It was also my job when we moved to the country to instead of "take out the trash", but burn it in our burn barrel. Finally, one of my aunts had an old yucky used tire which is a fire hazard if not gotten rid of in the windy Texas panhandle. She was unable to spark it and make it go away. She said that if I could spark it and make it go away, then I'd get some goodies. So's I gathered up some grass, a bit of wood and stuffed said tire with that. This combo of stuff was sufficient to spark the tire and make it go away. I got rewarded with goodies and lots of pretty black tire smoke. AND, it was also my job to spark dad's brush piles. If it rained or something, dad was unable to spark them, but I could. I could also make all wood in brush piles go bye-bye via special arrangement of sticks/limbs in brush piles. You see, arranging brush piles such that all of the wood goes bye-bye is an art unto itself.

I suppose its good to see the plan out in the open for all to see (not that many will notice). The next few days promise to be interesting for the few paying attention.

Hmmm.... Might be worth a flier of buying some S&P put options. There'll be a tug of war between Bernanke Panky and Europe going to shit. The question will be whether market participants will cease licking Bernanke's ass long enough to see the shitstorm over in Europe. This sort of stuff is why I can't tell for sure what the stock market will do.

Originally Posted by Justin '77

Easily-falsifiable, that. There are no legitimate businesses in the Russian energy industry. And what legitimate businesses there are in Russia left Cyprus years ago for other more civilized banking climes (generally, Iceland and Latvia -- though there are SE Asian countries starting to be used as well). The only Russian money left in Cypriot banks is stolen-from-the-federal-budget funds.

Question: (No snark intended). How is this different than the US model? The way I see it is that there are 2 whores (US government, Russian government) and 2 johns ( energy sectors in both countries). In both cases, they're fucking like rabbits in a virtual cheap hotel room. So, is there a pimp involved in one case, but not the other? Or perhaps, one of the whores is pregnant from one of the johns. Are there STD's involved in one or both cases? How about fucking in exchange for drugs? Then there's this outlier. One set is not a (john whore) , but some sort of platonic relationship that just looks weird.

Originally Posted by Copperfield

Nice of those "advanced Europeans" to show us how to quickly and efficiently seize private property eh?

I think a more appropriate question might be got ammo? Of course citizens of Cyprus probably don't or won't have that luxury (certainly not after the government cleans out their accounts) so perhaps an even more appropriate question would be got molotov?

I suppose its good to see the plan out in the open for all to see (not that many will notice). The next few days promise to be interesting for the few paying attention.

I'll wager that the Cypriots tell the EU Commission to shove it, and they (the commission) back down. The alternatives are abject poverty for a large percentage (majority?) of Cypriots or the end of the Euro. Doing nothing is the ideal can-kicking option, and the one they'll choose.

Originally Posted by Ragnarök_62

And this is something new? Argentina is back at it again with their preferred method , inflating the hell out of their currency, (roughly every 30 years or so.) But hey! At least they're consistent!

New? Oh goodness no. Government thievery is as old as, well, government. It's interesting in the sense that for governments who claim so very much to be invested in democracy, capitalism, property and equal rights to be so blatant in their theft and violation of the previously-mentioned, it usually means the end of the silly traditional spoken mythologies and a rapid approach of some real serious business. They aren't even trying to hide behind the usual bullshit. In short, the European Union is telling the peasants to call their bluff if they dare. The question is; do they dare?

You might recall this video during the early days of the Occupy Wall Street protests where several elites sipped champaign on a balcony as they watched the orderly mob below. They clearly weren't the least bit worried about the squealing and as it turned out those elites were 100% correct. They had absolutely nothing to worry about from that crowd.

The whole Cyprus property confiscation has that same air about it. "We are going to take your shit. What are you going to do about it?" It's clear that the European Union is betting the answer will be not much or nothing at all. They might be right. If so, it's a pretty successful bench test. If not then it's just Cyprus.

Originally Posted by Ragnarök_62

Gee, those things look cool! Now, this has me wondering about this thing I did as a kid. I accidentally found out gasoline will sort of dissolve styrofoam. So's I gathered up a bunch of styrofoam, put it in a Crisco can and tossed in the gasoline and made something that looked like putty. Then... I sez to myself, syrofoam unto itself burns and makes lots of pretty black smoke. Now I have this putty shit that's part styrofoam and gasoline. I wonders to meself, hmmm... what would happen if I sparked this stuff? Now, I spark it and this shit's really cool when burning. I gets the pretty black styrofoam smoke and nice pretty big huge fire from gasoline. To top it off, putty gets real gooey and spreads all over the place. So maybe pissed off Greeks can go make new improved Molotovs by use of styrofoam/gasoline combos. Then they'd get great big gasoline fires and make big messes via lots of black smoke like tire fires and big gooey messy burning styrofoam puddles. I don't think styrofoam procurement would be hard. They'd just need to raid some coffee shop or something.

NB. It was my job as a kid to go spark stuff. When I'd go visit my aunts in a small town outside of Amarillo, they'd have to use burn barrels. In exchange for foodies, it was my job to burn the trash. This was fine because everyone knows little boys like to make fires. It was also my job when we moved to the country to instead of "take out the trash", but burn it in our burn barrel. Finally, one of my aunts had an old yucky used tire which is a fire hazard if not gotten rid of in the windy Texas panhandle. She was unable to spark it and make it go away. She said that if I could spark it and make it go away, then I'd get some goodies. So's I gathered up some grass, a bit of wood and stuffed said tire with that. This combo of stuff was sufficient to spark the tire and make it go away. I got rewarded with goodies and lots of pretty black tire smoke. AND, it was also my job to spark dad's brush piles. If it rained or something, dad was unable to spark them, but I could. I could also make all wood in brush piles go bye-bye via special arrangement of sticks/limbs in brush piles. You see, arranging brush piles such that all of the wood goes bye-bye is an art unto itself.

Ah, you got the mixture wrong. You went too high tech. Mini-Rags should have tried O.J. concentrate or dish soap instead.

Originally Posted by Ragnarök_62

Hmmm.... Might be worth a flier of buying some S&P put options. There'll be a tug of war between Bernanke Panky and Europe going to shit. The question will be whether market participants will cease licking Bernanke's ass long enough to see the shitstorm over in Europe. This sort of stuff is why I can't tell for sure what the stock market will do.

See the above missive on the Occupy Wall Street/Wall Street relationship. I expect long-term ostrich-mode will continue indefinitely (with the usual mild, short-term panics if there are riots in faraway places) at least until such time as the smoke is close enough to smell.

Originally Posted by Marx & Lennon

I'll wager that the Cypriots tell the EU Commission to shove it, and they (the commission) back down. The alternatives are abject poverty for a large percentage (majority?) of Cypriots or the end of the Euro. Doing nothing is the ideal can-kicking option, and the one they'll choose.

Cyprus gets poverty and servitude either way. I mean it's not like the politicians and bankers won't get their money in the end.

*** 19-Mar-13 World View -- Cyprus banks remain closed as bailout crisis continues

This morning's key headlines from GenerationalDynamics.com

• Cyprus banks remain closed as bailout crisis continues
• Russia calls the Cyprus bailout 'Armed robbery by Brussels'
• The Cyprus bailout and the 'Kick the Can Theory'
• For the first time, a major Chinese company goes bankrupt
• Syria's conflict may be spreading into Lebanon

****
**** Cyprus banks remain closed as bailout crisis continues
****

Cyprus' bailout crisis deepened on Monday, as the Parliament
put off for the second day a vote on whether to accept the
European bailout terms. The terms are that the European
Central Bank would supply a 10 billion euro loan, but require
that Cyprus come up with 5.8 billion euros by "taxing" its
savings bank depositors 6.7% for accounts under 100,000 euros,
and 9.9% for larger accounts.

Cyprus has announced that its banks will remained closed at
least until Thursday, in order to prevent bank runs while
the government tries to resolve the crisis.

A vote is now scheduled for Tuesday evening. If the bailout
terms are rejected, then the ECB will cut off all liquidity
to Cyprus, forcing it to leave the euro currency, according
to a number of analysts.

The bailout terms have caused worldwide anxiety over the banking
system. Reading various comments on blogs and in media interviews,
I've read and heard things like the following:

• "I've withdrawn every penny from my bank account. I just
  don't trust them."
  
• "People who have saved their entire lives are now learning
  that the government can take their money at any time."
  
• "The people who spent all their money are OK. The people who
  saved money are being hurt."
  
• "If they can do it here in Cyprus, they can do it anywhere."
  
• "Deposit insurance is worthless, everywhere in the world."
  
• "Lock and load. Stock up on canned goods, and be ready
  to defend yourself when the government shows up."

[*] "The government can now track every penny you have in every
account in the world. This gives them the power to confiscate
it at any time."
[*] "If there's a financial crisis in the United States, the
government will do the same it did in 1933, when it confiscated
everyone's gold and closed the banks."[/list]

There has been pressure on the Europeans to soften the terms, but on
Monday they told Cyprus that the terms hadn't changed, but they
suggested that it's not necessary to raise the 5.8 billion euros from
small bank depositors.

According to one report I heard, there is a proposal to increase the
tax on accounts above 500,000 euros to 15%, and to remove the tax from
accounts under 100,000 euros. Bloomberg

****
**** Russia calls the Cyprus bailout 'Armed robbery by Brussels'
****

Russia's president Vladimir Putin is calling the bailout plan "unfair,
professional and dangerous." Prime minister Dmitry Medvedev said the
decision was strange and controversial, and that it "looks like a
forfeiture of other people’s money." According to various reports,
Russian banks and private individuals have some $30-40 billion
in Cyprus banks, and so they will lose $3-4 billion -- assuming
that the tax isn't is raised to 15% as some have proposed.

If the tax on Russian depositors is increased to 15%, it will
cause a real crisis in Russia, according to some commentators.

Another commentator suggested that a more dangerous scenario
for Russia would be if Cyprus enacts a moratorium on loan
repayments to Russia. This would cost Russia tens of billions
of dollars.

There are various unconfirmed reports floating around that the
Russians were tipped off in advance of the bailout plan, and that
Putin and some of his advisors transferred funds out of the Cyprus in
the days before the announcement. Once again, these reports are
unconfirmed. Russia Today
and Russia Today and Business Insider

****
**** The Cyprus bailout and the 'Kick the Can Theory'
****

Long-time will recall that several years ago I proposed the
"Kick the Can Theory" with regard to the financial debt crisis
in Greece. The theory said that the Europeans will never take
any action until the very last minutes, and then they'll only
"kick the can down the road," meaning that they'll do the
minimum necessary to solve the immediate problem, leaving the
underlying causes unchanged, only to get worse. Thus, each
crisis would be worse than the last one.

The Kick the Can Theory has been correct every time with respect
to the Greek crisis, but it seemed that the Europeans violate
the rules when it came to the Cyprus bailout.

The "pure" kick the can decision would have been for the ECB
to loan the entire bailout amount to Cyprus, so that no
depositors would be hurt. However, the Germans and others
objected to this, because they didn't want to bail out
Russian oligarchs.

So the ECB refused the "pure" kick the can decision, and so
Cyprus had to come up with billions of euros.

Contrary to initial assumptions, it wasn't the Europeans or the
Germans who insisted that Cyprus "tax" small savings accounts. It was
the Cyprus government that made that decision. Cyprus was left to
find a can-kicking solution on its own -- either tax small depositors
or tax the Russians. Either way, they were going to be blamed. They
tried to take a middle road and tax both, but now they're getting
dumped on from both sides.

The experience this weekend shows what happens when the Kick
the Can Theory is violated. There was no way to "kick the
can down the road," since the Europeans have reached the
end of their patience in bailing countries out.

There are now crisis talks going on across Europe to find a
can-kicking solution.

One possibility is that Russia may bail Cyprus out in return
for exclusive contracts to Cyprus's rich offshore oil and
natural gas fields.

Another possibility, already suggested, is that small depositors
would be protected, and the entire burden would be on large
depositors, including Russians and other foreign depositors.

Another possibility, also already mentioned, is that the ECB
back-pedal and agree to provide the entire 17 billion euro bailout
loan. This would deal a fatal blow to austerity drives in Greece,
Italy, Spain and other countries.

Another possibility is that Cyprus can leave the eurozone, and
return to its old currency, the pound, which was their currency
until the adopted the euro in 2008.

Each of these solutions has serious obstacles. What's interesting is
that the Europeans are "running out of road," in the sense that you
can only kick the can down the road so far.

The next 24-48 hours are crucial, and a compromise of some sort
will be reached. However, that won't end the crisis. Europe
has crossed a red line, and everyone from widows and orphans
to oligarchs are now fully aware that their bank accounts are
not safe.

As I've written many times, Europe is trending into a deflationary
spiral, and Generational Dynamics predicts that there will be a major
global panic and financial crisis, worse than the panic and crash of
1929, and it will be triggered by something. Perhaps the Cyprus
decision will be the trigger, perhaps something else will. But the
Cyprus decision has already raised anxiety among savers around the
world, and moved the world one step closer to full scale panic.

****
**** For the first time, a major Chinese company goes bankrupt
****

A major Chinese company, the world's biggest maker of solar panels, is
declaring technical bankruptcy and going into default, after failing
on Friday to repay $541 million in debt repayments. The company,
Suntech Power Holdings Co. Ltd. (STP), had been supported by China's
state organizations. As I've said in the past, as bad as America's
economy is, China's is much worse, with huge ghost cities and massive
air and water pollution. Bloomberg and Zero Hedge

****
**** Syria's conflict may be spreading into Lebanon
****

Jets and helicopters from the regime of Syria's president Bashar
al-Assad fired rockets into targets inside Lebanon on Monday. The
al-Assad regime has threatened to take war into Lebanon, targeting
"concentrations of armed gangs inside Lebanese territory in order to
prevent them from crossing into Syrian territory." The Mideast as a
whole continues step by step to become destabilized, and the Syrian
conflict continues to turn into a regional war between Sunni and Shia
Muslims. Daily Star (Lebanon)


KEYS: Generational Dynamics, Cyprus, Russia, Vladimir Putin,
Dmitry Medvedev, Kick the Can Theory, China,
Suntech Power Holdings Co., Syria, Lebanon,
Bashar al-Assad

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Originally Posted by Ragnarök_62

Question: (No snark intended). How is this different than the US model?

The difference, as far as I can see it, is that you'd be hard-pressed to find a single Russian who doesn't consider the level of corruption in his country as both common knowledge and a easily-foreseeable consequence of the ruling class following its own interests. In the US, on the other hand, the vast majority both believe that corruption is an outlier rather than the rule, and that the people themselves have the power to exercise their sovereignty via the means their rulers permit them -- they think that The People in the Amurrican System are the rulers (if, at the moment, being temporarily interfered with in their ability to actually, you know, rule..).

Hands-down, the one thing America does better than anyone else in the world is propaganda. That's why big foreign companies are so very keen to use our marketing outfits.