In conclusion the problem is not that the generations don't see the 4T crisis conditions. The situation is that xers and millies see the crisis approaching but aren't allowed too do anything it because of boomers, as a result the young tends to spend their spare time on frivolous activities because they are not permitted access to influence anything meaningful. While at best boomers are largely ignorant of the crisis while they spend their time gorging on all the resources. I say at best in the previous sentence because at worst the boomers do see the 4T as well but decided not only to not do anything about it but are actively obstructing attempts by the younger generations to move through reforms that would ameliorate the crisis. The only reason I can see for the boomers decision is ideological; the boomers fear the long-term societal effects of the proposed reforms presented by younger generations. As a result boomers actively decided to not permit any reform under the ideologically fueled belief that; although the 4T would be more severe as a result, the post-crisis societal effects would be more in tune with boomers ideological preferences (in the case of the boomer establishment - a world government set up by the exhausted nations).

*** 27-Dec-15 World View -- Reader comments on 'The Big Short' and the financial crisis

This morning's key headlines from GenerationalDynamics.com

• 'The Big Short' today versus 'The Three-Penny Opera' in pre-Hitler Germany
• Reader comments on 'The Big Short' and the financial crisis
• Readers' personal experiences with the financial crisis
• A parent of Generation-Xers describes his experiences
• Alan Greenspan recognized the bubble in 2005, but won't admit it

****
**** 'The Big Short' today versus 'The Three-Penny Opera' in pre-Hitler Germany
****


Poster for 1931 London production of Three-Penny Opera

In yesterday's article, " "'The Big Short' - an infuriating movie about the financial crisis"
," I reviewed the movie "The Big Short," based on
Michael Lewis's bestselling book "The Big Short: Inside the Doomsday
Machine," describing the financial crisis of the past decade.

As I wrote, the movie did not sugar-coat anything. It unequivocally
painted investment and mortgage bankers, financial managers and real
estate brokers as crooks and bastards, but they were only financially
rewarded by the Justice Department. It ended by making clear that the
same people are doing the same things today, and that the financial
crisis is far from over.

It seems pretty clear that the director David McKay had the objective
of making a political point: That people should be a lot more outraged
about what happened, with millions of people losing their jobs and
homes and going bankrupt, and that they should demand that some of
these crooks should be prosecuted rather than rewarded.

There's a historical analogy to this objective. Bertolt Brecht's 1928
play "The Three-Penny Opera" (music by Kurt Weill) had a similar
objective - to portray the corruption and criminality of the day in
order to provoke outrage and bring about change. (If you haven't
heard of the play, you may be familiar with its most popular song,
"Mack the Knife".)

In her book The Origins of Totalitarianism, Hannah Arendt
describes how that objective completely backfired:

<QUOTE>"Particularly significant in this respect was the
reception given Brecht's Dreigroschenoper [[Bertolt
Brecht's The Three-Penny Opera]] in pre-Hitler Germany.
The play presented gangsters as respectable businessmen and
respectable businessmen as gangsters. The irony was somewhat lost
when respectable businessmen in the audience considered this a
deep insight into the ways of the world and when the mob welcomed
it as an artistic sanction of gangsterism. The theme song in the
play, "Erst kommt das Fressen, dann kommt die Moral,"
[["First comes gluttony, then comes morality."]] was greeted with
frantic applause by exactly everybody, though for different
reasons. The mob applauded because it took the statement
literally; the bourgeoisie applauded because it had been fooled by
its own hypocrisy for so long that it had grown tired of the
tension and found deep wisdom in the expression of the banality by
which it lived; the élite applauded because the unveiling of
hypocrisy was such superior and wonderful fun. The effect of the
work was exactly the opposite of what Brecht had sought by it.
The bourgeoisie could no longer be shocked; it welcomed the
exposure of its hidden philosophy, whose popularity proved they
had been right all along, so that the only political result of
Brecht's "revolution" was to encourage everyone to discard the
uncomfortable mask of hypocrisy and to accept only the standards
of the mob."<END QUOTE>

Arendt's description, "The play presented gangsters as respectable
businessmen and respectable businessmen as gangsters" is what closely
ties the two dramas together. Corruption was massive in 1928 Berlin
and today's Washington. Both plays equated gangsters and businessmen
-- and also equated gangsters and politicians. But the Three-Penny
Opera simply amused and delighted those involved in the corruption,
and seemed to endorse it.

"The Big Short" portrays the delight that the bankers took in making
millions of dollars while making millions of people homeless. Some of
the characters even bragged about it. If the politicians and bankers
and journalists who watch the movie have the same sense of fun that
Arendt describes, then McKay's message will indeed have backfired.
Hannah Arendt, The Origins of Totalitarism and The Three-Penny Opera

****
**** Reader comments on 'The Big Short' and the financial crisis
****

After reading " yesterday's article,
many reader comments expressed outrage in political terms:

<QUOTE>"It's disgraceful that the people responsible for the
crash were never prosecuted. It is beyond belief."

"Makes me ashamed in every way."

"They will never be prosecuted....why????? Obama and his cronies
are all in on it and crooks..."

"All financial authority should be on notice that the public
institutions who rely on their "veracity" can and should demand
clarity and proof on a daily basis. Selling your ratings, is not
the same as giving your ratings."

"This is exactly why Trump and his adjustable rate mortgages on
over-priced New York real estate will be broke by the Presidential
Election and Trump will be on food stamps and New York Medicaid,
poor fool. Trumps so-called wealth is all on paper and Bloomberg
reports that New York real estate bubble is bursting and has
dropped every month since February 2015 with no end in sight."

"There is another aspect to the "big theft" that is usually left
out. The influx of Mexicans et al to build the houses in the
first place. We did not have the workers to build those houses to
bet against."

"Bush back in 2006 tried to get congress to do something and the
usual suspects in the Democrat party dismissed the fears! Thanks
community organizing leftists!"<END QUOTE>

****
**** Readers' personal experiences with the financial crisis
****

One person, a mortgage underwriter, described his own experiences:

<QUOTE>"Mr. Xenakis, a Belated Merry Christmas to you. Did
my own research back when I first came across your site, years
ago, and still sing your praises.

The problem with our entire society is the head in the sand/kill
the messenger mentality that is a cancer on reason and logic. I
don't like delivering bad news but in my profession I must on
occasion and am floored by some of the responses I get. Had one
that actually paid money for an attorney that she could have used
for ultimately getting approval- I am a mortgage underwriter- and
close. I told the parasite to get phuqed and call his congressman-
that's who it would have taken to get the lending laws changed
like he wanted them- and hung up.

There is an reactive, unconscious vindictiveness in people that I
had never encountered before. Just boggles the mind how
fundamentally unequipped people have become. I tried to call her
afterwards, just to try and explain how she had just blew up
everything and most likely lost even her earnest money, and still
all she could do is scream and threaten me. This was, for me
anyway, the most extreme and early example of the 'sense of false
entitlement'.

Keep your head up, keep in mind what my dear departed father used
to say; 'phuq 'em if they can't take a joke'. Works on about
anything, other than jokes. And don't get too worried about the
future, the Chinese are going to bow US into the stone ages. Might
I suggest some of the urban survival courses? Online, YouTube. If
nothing else you start seeing your neighborhood in a whole new
way."<END QUOTE>

A stockbroker of 30 years wrote to say that the warnings put forth in
"The Big Short" are frighteningly accurate:

<QUOTE>"John, may I first say that Generational Dynamics is
frightenly accurate. I have been a daily reader for approximately
10 years. I can say with certainty that you are correct in your
assessments. The future Gen Dyn predicts scares the hell out of
me. I too watched The Big Short on Christmas Day. I too see that
our financial system has not learned anything from the past. In
fact it is by far worse. I have been a stockbroker for the past 30
years. You may hate me and lump me in with the others but I have
always been honest in my career and honest with my clients. My
upper management of the firms I have been associated with over the
years are complete idiots. All they care about is shareholder
value and their bonus not the client's best interest. Over the
years I have seen these same upper management morons continue to
make millions and do nothing about the situation of product
layering. I agree that government has turned away from prosecution
of the fraud. I do think it is not a red vs blue political
issue. It is much bigger than that. It is the ultra wealthy vs the
rest of us. Two of my clients, one on the red team and one on the
blue team gifted money to their families again this year from
profits of their investments. Each are multi billionaires. They
give children, grandchildren, great grandchilren and various LLC's
and trust they control millions each year. Each contribute
millions to their red PAC and blue PAC which is now easier with
the Supreme Court ruling. My conclusions are based on what I
experience daily. Management in all brokerage firms are
idiots. Racism exists and is strong in the south. Most
importantly, the Ultra rich control government. God bless you and
anyone else who can see the truth. Prepare yourself for the future
Gen Dyn predicts."<END QUOTE>

Another person, a college professor, has also been reading my web site
since 2007 and says the reason that her students -- and many of their
professors -- didn't see what was coming at that time was that they
don't know how to think:

<QUOTE>"It's not that people can't see what's coming. It's
that they don't have critical thinking skills.

Some people are corrupt and taking advantage of other people, and
when people walk away with all the money, it's not accidental.

But I teach with some of the academics and I can tell you that
even people that I know that are straight couldn't see what I
could saw in 2007, and one of them was a finance professor.

Talking to the generation that's now in their 30s, they're
clueless. They have no sense of threat, they have no
understanding of what's coming at them."<END QUOTE>

A couple of people wanted to give me investment advice:

<QUOTE>"John, wish you a Merry Christmas and Happy New
Year. Although I don't agree with all of your predictions, I find
them insightful nonetheless. I hope that you invest based on your
analysis. For a little unsolicited advice, I was told once to
invest small sums for risky bets. I treat my political donations
the same way!!"

"Some of us are listening. Based on your advice, I liquidated half
of my Roth IRA last year. And sometime in January or February of
2016, I'm going to sell the other half of my shares. I'm doing
this because I am heeding your warning of the coming stock market
crash. Thank you for raising the alarm."

"I read your tirade today, wanted to give you some
reassurance. I’m just an average guy, but I’ve read your blog
every morning for years. I don’t take it as gospel, but I am more
inclined to believe it than pretty much any other internet
source. I can’t be the only one. Keep it up."

"John, thanks to you & Harry Dent I've been in cash equivalent
investments for years. And I plan to stay that way for a while.
In spite of our spats in the past, I still love your work
John."<END QUOTE>

****
**** A parent of Generation-Xers describes his experiences
****

One person (writing to a third person) tells what happened with his
own Generation-X children, something that other older parents may
enjoy reading:

<QUOTE>"As you know I've been reading John X., your friend's
newsletter now for years. He drew my interest originally when I
read him because his thinking was so close to mine; we largely
mirrored each other. I called my thinking generational churn. In
which in changing generations the newer generation in part forgot
or deliberately ignored what the previous generations tried to
pass on.

It happened between me and my children. They are Gen X and I saw
on a personal level what happened tho as it was happening I didn't
truly appreciate the process at the time.

They were called the "can do" generation. The generation that
would clean up the messes of previous generations. They were the
first truly electronic & digital generation. Influenced in a way
no prior generation had been. Weaned on gizmos and gadgets
unavailable to previous generations. They didn't have a
generational war previous generations had had so they were more
homogeneous than prior generations had been. United by all those
factors.

You can't tell them a damn thing because they have all the
answers. Imbibed at the common cafeteria they all grew up on. A
centralized common source connected by the electronic and digital
grid of an increasingly centralized educational, entertainment,
news, corporate, political, and governmental complex.

They knew they were right because the people influencing them told
them they were right. They are in their later 30's to very early
50's & they still play with toys. Their president is known for
dealing with crisis by playing golf.

As a parent of that generation I thought I was a good parent. I
didn't fully appreciate how all these forces were and would
overwhelm the lessons I tried to pass on."<END QUOTE>

Finally, here's a quote from someone from a person on the
Millennial/Generation-X cusp who blames it all on Boomers:

<QUOTE>"Tyrannical boomers shove money-grubbing ideology down
our throats saying that the purpose of life is to accumulate
wealth. Boomers saw the potential of Xers and millies decades ago,
and decided to tyrannically suppress them so that the country
would continue in the direction of a wealth based and feelings
based society. Even though doing so violated first Xers and the
Millies rights. Xers and Millies can clearly see the patheticness
of the current generations of leaders and see the competent
governance in their national rivals, Russia and China, now the
boomer elite wants to end any possibility of reform by shoving
Bush and Hillary down our throats. What's with the boomer love
affair with weaklings? Trump is advocating a completely different
form of government than what has traditionally existed in this
country."<END QUOTE>

This is why we refer to "the nihilism, destructiveness and
self-destructiveness of Generation-X."

****
**** Alan Greenspan recognized the bubble in 2005, but won't admit it
****

I forgot to add this to yesterday's article. Alan Greenspan went
through an amazing flip-flop in 2004-5, when he was Fed Chairman, as I
wrote about in several articles at the times:

• (October 2004).
  Greenspan
  says there's a housing bubble, but it's OK because it means that
  people have more money to spend.
  
• (November 2004).
  Greenspan
  said that he and the Fed decided in the late 1990s that they couldn't
  stop the tech bubble, but they could handle the aftermath, which they
  were doing now.
  
• (February 2005). Beginning
  a spectacular reversal of opinion, Greenspan said: "The dramatic
  advances over the past decade in virtually all measures of
  globalisation have resulted in an international economic environment
  with little relevant historical precedent."
  
• (August 2005).
  Greenspan
  expresses alarm at the real state and stock market bubbles: "Thus,
  this vast increase in the market value of asset claims is in part the
  indirect result of investors accepting lower compensation for
  risk. ... Any onset of increased investor caution elevates risk
  premiums and, as a consequence, lowers asset values and promotes the
  liquidation of the debt that supported higher asset prices. This is
  the reason that history has not dealt kindly with the aftermath of
  protracted periods of low risk premiums."

I traced this reversal of opinion by reading and reporting on
Greenspan's speeches. Those speeches are still on the Federal Reserve
web site, for anyone who wishes to confirm this. But, strangely
enough, Greenspan has never admitted, to my knowledge, that he
recognized the asset bubbles in 2005, and no one else, to my
knowledge, has ever reported on his reversal of opinion. Alan Greenspan speech (26-August-2005)


KEYS: Generational Dynamics, The Big Short, Bertolt Brecht, Kurt Weill,
The Three-Penny Opera, Michael Lewis, Dave McKay, Mack the Knife,
Hannah Arendt, The Origins of Totalitarianism, Alan Greenspan

Permanent web link to this article
Receive daily World View columns by e-mail

Originally Posted by John J. Xenakis

I forgot to add this to yesterday's article. Alan Greenspan went
through an amazing flip-flop in 2004-5, when he was Fed Chairman, as I
wrote about in several articles at the times:

• (October 2004).
  Greenspan
  says there's a housing bubble, but it's OK because it means that
  people have more money to spend.
  
• (November 2004).
  Greenspan
  said that he and the Fed decided in the late 1990s that they couldn't
  stop the tech bubble, but they could handle the aftermath, which they
  were doing now.
  
• (February 2005). Beginning
  a spectacular reversal of opinion, Greenspan said: "The dramatic
  advances over the past decade in virtually all measures of
  globalisation have resulted in an international economic environment
  with little relevant historical precedent."
  
• (August 2005).
  Greenspan
  expresses alarm at the real state and stock market bubbles: "Thus,
  this vast increase in the market value of asset claims is in part the
  indirect result of investors accepting lower compensation for
  risk. ... Any onset of increased investor caution elevates risk
  premiums and, as a consequence, lowers asset values and promotes the
  liquidation of the debt that supported higher asset prices. This is
  the reason that history has not dealt kindly with the aftermath of
  protracted periods of low risk premiums."

I traced this reversal of opinion by reading and reporting on
Greenspan's speeches. Those speeches are still on the Federal Reserve
web site, for anyone who wishes to confirm this. But, strangely
enough, Greenspan has never admitted, to my knowledge, that he
recognized the asset bubbles in 2005, and no one else, to my
knowledge, has ever reported on his reversal of opinion. Alan Greenspan speech (26-August-2005)


KEYS: Generational Dynamics, The Big Short, Bertolt Brecht, Kurt Weill,
The Three-Penny Opera, Michael Lewis, Dave McKay, Mack the Knife,
Hannah Arendt, The Origins of Totalitarianism, Alan Greenspan

Permanent web link to this article
Receive daily World View columns by e-mail

Here you outright lie regards to the housing bubble. When in fact the housing bubble was seen as a significant irregularity as early as 2005. Here you act as if the people believed there was no bubble as late as summer 2008 only discovering its existence when it burst in September 2008. Greenspan saw the bubble by summer 2005, and this has been acknowledged in by numerous sources even back then. Greenspan's mistake was to decide to let the bubble run its course.

http://www.economist.com/node/5381959

https://en.wikipedia.org/wiki/Alan_Greenspan

As for the government incompetence boomers have controlled the government and they have controlled it for the past 25 years or so. The policies that are currently in place are policies boomers want and have wanted. Tyrannical boomers are the one's who are causing the crisis because the average boomer for the most part do not look up current events and what our government and other nations governments policies are. Tyrannical boomer's don't want the invest in the US either. It is boomers who largely block fundamental reform because to do would require drawing funds from boomers assets which they have sworn the won't permit. As for boomers accepting the lessons of the of the pre-boomer generations that was far from the case it was boomers who tuned out so they can seek pleasure at everyone else's expense. Boomers do not want to see Xers and Millies triumph through the Crisis and many very much desire that the bleed the young white to move them out of they way so boomers can brainwash the kids who in school age right now. Xers and Millies will win the 4T, our brave soldiers who are mostly from GenX and GenY, An imperial America will emerge that implements strong government and a strong boomers.

Also Currently our government spends generationally primarily on Boomers and Silents. How do expect America to prosper if the boomer-led government spends primarily on its past rather than on its future? (This question is meant to be responded to)

Originally Posted by Cynic Hero '86

Here (Xenakis) outright lie(s about the nature of) the housing bubble. When in fact the housing bubble was seen as a significant irregularity as early as 2005. Here (Xenakis) act(s) as if the people believed there was no bubble as late as summer 2008 only discovering its existence when it burst in September 2008. Greenspan saw the bubble by summer 2005, and this has been acknowledged in by numerous sources even back then. Greenspan's mistake was to decide to let the bubble run its course.

http://www.economist.com/node/5381959

https://en.wikipedia.org/wiki/Alan_Greenspan

Unfortunately I lack documentation of my insight from ten years ago, but I recall an article in Business Week that left no doubt of the pervasive corruption within the financial industry in its commitment to the real estate bubble. Financiers had been bundling non-performing loans to sell to unwary investors who accepted inflated ratings of the value of the loans. To be sure, some hedging of debt (let us say debt from California with debt from the American Midwest and the American South) makes some sense in the event of regional disasters. But this was to take loan amounts that personal incomes could not justify, often as shown with late payments.

Loans rated AAA were really C... and you can only imagine the scatological condition of some of the rest.

...One possible interpretation is that the George W. Bush administration chose to replace one bubble (the Enron/dot.com fiasco) with something even bigger and better. The problem was that it wasn't better. Speculative booms devour capital that could go into more productive activities, and (worse) commit practically all new investment to that activity.

Bankers were using borrowers to invest in real estate that (at first) could be resold for a profit in the event of a default. Eventually there were too many defaults. By 2005 people were trying to save their semblance of prosperity by investing even more into the bad loans... and that ensures an even bigger failure.

Adjusted even for the slight inflation of the Double-Zero decade, stock valuations never fully recovered from the Enron/dot.com bust at the peak of the financial fraud speculation.

Originally Posted by Cynic Hero '86

> Here you outright lie regards to the housing bubble. When in fact
> the housing bubble was seen as a significant irregularity as early
> as 2005. Here you act as if the people believed there was no
> bubble as late as summer 2008 only discovering its existence when
> it burst in September 2008. Greenspan saw the bubble by summer
> 2005, and this has been acknowledged in by numerous sources even
> back then. Greenspan's mistake was to decide to let the bubble run
> its course.

> http://www.economist.com/node/5381959

> https://en.wikipedia.org/wiki/Alan_Greenspan

As usual, everything you write is bizarre and totally out of touch
with reality. Apparently you took one sentence out of context and
made claims without even bothering to read what comes just before and
just after the sentence you quoted, stuff that contradicts your
claims.

You say that Greenspan saw the bubble by summer 2005. If you look
five paragraphs up, you'll see that Greenspan publicly acknowledged
the housing bubble even earlier, in October 2004.

This is why pretty much everything you write is almost complete
gibberish.

The housing bubble was recognized by very few people in the 2005-2006
time frame. I quoted some of them on my web site at the time, as part
of trying to prove to people that there was a housing bubble going on
and that they shouldn't buy houses. But people didn't listen anyway.
The housing bubble only became generally recognized by mainstream
economists around 2009, at which time they said, "Oh my, I guess there
must have been a housing bubble back then." They claim that it's
impossible to see a bubble when you're in the middle of one in order
to cover up their own stupidity in not seeing the housing bubble
earlier five years earlier.

I hadn't seen that Economist article before, but it's very
interesting. I think it's the only mainstream article I've seen that
recognizes that Greenspan saw the housing bubble in 2005. Perhaps the
Economist author had read by web site.

But the Economist articles makes two major mistakes. First, they
claim that the deflationary trend was temporary, when I've been saying
since 2003 that it's permanent -- and I've been repeatedly right and
mainstream economists have been repeatedly wrong. Second, they say
that the housing bubble was caused by the Fed's low interest rates,
and that's provably false, even though it's repeated all the time.

So, it's time for you to go back to Trumpeting incoherent nonsense
about Boomers.

Originally Posted by John J. Xenakis

But the Economist articles makes two major mistakes. First, they
claim that the deflationary trend was temporary, when I've been saying
since 2003 that it's permanent -- and I've been repeatedly right and
mainstream economists have been repeatedly wrong. Second, they say
that the housing bubble was caused by the Fed's low interest rates,
and that's provably false, even though it's repeated all the time.

So, it's time for you to go back to Trumpeting incoherent nonsense
about Boomers.

The article was from January 2006 before the financial crisis. The subprime mortages crisis was still in its infancy at that point.

Originally Posted by pbrower2a

> Unfortunately I lack documentation of my insight from ten years
> ago, but I recall an article in Business Week that left no doubt
> of the pervasive corruption within the financial industry in its
> commitment to the real estate bubble.

I don't know what article you're referring to, but if it described a
real estate bubble then it was probably from around 2009.

Another possibility is that you read something that I wrote. When you
joined this forum in 2006, I was constantly writing in this forum
about the housing bubble, and constantly being blown off by others in
this forum.

Originally Posted by pbrower2a

> One possible interpretation is that the George W. Bush
> administration chose to replace one bubble (the Enron/dot.com
> fiasco) with something even bigger and better.

It's impossible for a politician to cause or prevent a housing bubble.

Originally Posted by John J. Xenakis

I don't know what article you're referring to, but if it described a
real estate bubble then it was probably from around 2009.

Why do you assume that articles that describe a real-estate bubble have to be from 2009?

Originally Posted by Cynic Hero '86

> The article was from January 2006 before the financial crisis. The
> subprime mortages crisis was still in its infancy at that
> point.

No, you're wrong. The housing bubble was in full swing well before
2006. In fact, I sold my condo in fall 2005 because I knew there was
a housing bubble and got a good price for it. As soon as I sold it,
the condo market in Massachusetts started crashing, so I sold
literally at the top of the condo bubble.

The sale of subprime mortgages peaked, I believe, in 2005. Then the
sale of subprime-based CDOs peaked, I believe, in 2007.

The term "financial crisis" generally refers not to the housing
bubble, but to the implosion of the housing bubble that began in 2007.

Why don't you go out and see "The Big Short"? It does a pretty good
job of explaining what happened, and the time frame.

Originally Posted by John J. Xenakis

No, you're wrong. The housing bubble was in full swing well before
2006. In fact, I sold my condo in fall 2005 because I knew there was
a housing bubble and got a good price for it. As soon as I sold it,
the condo market in Massachusetts started crashing, so I sold
literally at the top of the condo bubble.

The sale of subprime mortgages peaked, I believe, in 2005. Then the
sale of subprime-based CDOs peaked, I believe, in 2007.

The term "financial crisis" generally refers not to the housing
bubble, but to the implosion of the housing bubble that began in 2007.

Why don't you go out and see "The Big Short"? It does a pretty good
job of explaining what happened, and the time frame.

You gave the impression that people only recognized real-estate was a bubble when it imploded in September/October 2008. But the economy was in acute stress since September 2007 if I remember correctly and economists as early as 2005 were saying real-estate and housing was a bubble.

Originally Posted by Cynic Hero '86

> You gave the impression that people only recognized real-estate
> was a bubble when it imploded in September/October 2008. But the
> economy was in acute stress since September 2007 if I remember
> correctly and economists as early as 2005 were saying real-estate
> and housing was a bubble.

Of course there were economists who recognized the housing bubble long
before 2007. Whenever I wrote about the housing bubble, starting in
2004, I quoted anyone that I could find.

A good example is Bill McBride on his Calculated Risk Blog.
http://www.calculatedriskblog.com/

That blog goes back to January 2005, and he was constantly talking
about the housing bubble.

The thing is this: The housing bubble was as plain as the nose on your
face. It was almost impossible not to see it. It's just like Bernie
Madoff's Ponzi scheme. It was literally impossible to miss it, except
by people who wanted to miss it.

Here's an article that I wrote in July 2007:

** As global economy continues to deteriorate, most people are oblivious
** http://www.generationaldynamics.com/...08.htm#e070708

At that time, things were really falling apart. I was watching CNBC
every day, and they were like in a fantasy world where nothing was
wrong. In this article I addressed the question about why noboby
wanted to talk about what was going on.

By the way, no one wanted to listen to me in this forum either.

Originally Posted by John J. Xenakis

I don't know what article you're referring to, but if it described a
real estate bubble then it was probably from around 2009.

Another possibility is that you read something that I wrote. When you
joined this forum in 2006, I was constantly writing in this forum
about the housing bubble, and constantly being blown off by others in
this forum.

I remember the article because few articles that I have ever read relating to finance and economics had ever had such a visceral effect about something strictly monetary in contrast to the objects of business. (OK, drug trafficking and human trafficking are even worse, but such involves the objects of trafficking). This was not about a lapse in engineering of a gas tank.

One of the big players was Lehman Brothers, an investment banker. Investment brokers exist to set up gigantic amounts of equity in stocks and bonds to allow the formation of giant businesses (let us say an auto manufacturer) or the building of giant projects (let us say another crossing of Chesapeake Bay). Retail banking is the right way to finance personal housing or apartment complexes; using an investment banker for that purpose is like using a piece of irreplaceable chinaware as a hammer. Finance of housing has typically gone through banks and thrift associations.

I could recognize then that the American economy, then making comparatively slight investments in plant and equipment and having only two active giant projects of large-scale construction (the Hoover Dam bypass bridge and Boston's Big Dig) with nothing as an obvious sequel. The American economy was headed for a big crash, most likely after the completion of those projects. The housing bubble was a replay of the story set in Sinclair Lewis' Babbitt of about eighty years earlier. In most decades after the 1920s Babbitt made no sense because it was no longer topical; in the Double-Zero Decade a tale about a man who sold housing on credit to people who couldn't really afford the houses described was extremely topical.

Eighty years -- just about enough time for people to become receptive to the idea that the great and tempting blunders of eighty years earlier weren't so bad after all because the last people with coherent memories of the consequences of the great and tempting blunders are no longer around to warn us. Eighty years? That is enough time for the small children, the most promising of whom might be reading a newspaper at age 5 or so (that's about a genius level) go through adolescence, productive adulthood, and an extended era of cultural, commercial, or political leadership -- again, mostly people at or near the genius level of intellect. Eighty years dovetails nicely with the generational cycle for that very reason.

So what did 2007 have in common with 1929? The difference in time need not be precisely 80 years.

It's impossible for a politician to cause or prevent a housing bubble.

Dubya was not the only culprit. He had plenty of political allies, people who preferred weak and ineffective government that enables bubbles that first look lucrative -- so lucrative that they crowd out other activities (like investments in plant and equipment that really create jobs and create competition for workers that drives up wages and allows working people to be able to buy high-ticket items in a healthy economy). The American Right wanted to keep labor cheap in part by consigning as many people as possible to retailing, food service, and farm labor -- activities unsuited to union organization -- as possible. Economic inequality intensified, making a bubble even more dangerous.

I digress here: good business is good not only for the operator but also employees and customers. If it hurts employees and customers it eventually guts the general basis for prosperity because it runs out of potential victims. After WWII the consensus was that people moving from urban tenements to the suburbs would have better lives for themselves and their children. That assessment has proved right. The one good use of housing funds in the Double-Zero decade was to move people from urban ghettos with few economic opportunities to the suburbs where the jobs were -- and better lives. As with the great mass movement of WWII veterans from the tenements to suburban tract housing, such succeeded.

So where did the defaults come from? People buying too much house for their means. Imagine this absurd scenario:

A loan officer from Huckster Bank and Trust has gotten Mr. and Mrs. Juan Rodriguez (I use a Spanish name because Mexican-Americans were disproportionately the victims of the hustle; they are the people who make the biggest sacrifices for their economic level to buy into housing) to talk about leaving the barrio of East L.A. for the rapidly-developing Inland Empire. The loan officer tells Mr. Rodriguez that he does not qualify for a loan for a modest tract house that costs $200K -- but that he can get a loan for $750K. The loan officer says that Mr. and Mrs. Rodriguez might be able to sell the house for a profit after a short time -- after all, the Good Lord isn't creating any more real estate, and the next land after the Inland Empire is the Mojave Desert. A hint: you don't want to live in Palm Springs unless you are filthy rich.

So why does the couple qualify for the loan for $750K? Because in the event of the default, the banker can repossess the house and sell it again for a profit -- and at the least rake in a plethora of lending fees. That was when the bubble had barely started. That worked for a few cycles of lending and repossession. Then the bubble ran out of potential victims -- and burst.

So why did the housing boom of the late 1940s work? Because the people buying tract houses were meeting mortgage payments instead of going to night clubs, seeing movies, dining out. Most people spend their money one way or the other, and if one lives in a cramped apartment one is likely to find an excuse for a "night on the town".

OK -- I had no idea of how to adapt to a doomed economy except to avoid investing in it. After I read that article on the ratings scandal for 'bundled' loans I came to the realization that a 1929-style crash was a certainty.

You may have seen the same thing from a different angle.

Originally Posted by pbrower2a

> One of the big players was Lehman Brothers, an investment
> banker.

If you read an article criticizing Lehman brothers, it must have
been after August 2008 when Lehman collapsed.

If, however, you really read an article on that subject in 2006, then
the author of that article would have to have been extremely
prescient, and worth following in the future.

Originally Posted by pbrower2a

> Dubya was not the only culprit. He had plenty of political allies,
> people who preferred weak and ineffective government that enables
> bubbles that first look lucrative -- so lucrative that they crowd
> out other activities (like investments in plant and equipment that
> really create jobs and create competition for workers that drives
> up wages and allows working people to be able to buy high-ticket
> items in a healthy economy). The American Right wanted to keep
> labor cheap in part by consigning as many people as possible to
> retailing, food service, and farm labor -- activities unsuited to
> union organization -- as possible. Economic inequality
> intensified, making a bubble even more dangerous.

Oh c'mon. Barney Frank was particularly sleazy in boosting the
housing bubble. Leading Democrats, including Senator Chris Dodd,
Senate Majority Leader Harry Reid, and House Speaker Nancy Pelosi, all
received large campaign contributions from Fannie and Freddie.

Democrats in general were far more sleazy about subprime
mortgages. Their claim was that subprime mortgages helped
poor and blacks and single mothers get homes, and so subprime
mortgages were wonderful. Never let it be said that a
Democrat let reality get in the way of buying votes.

I assume you must agree that subprime mortgages were good and
wonderful, since you would never want to criticize anything that
helped the poor and blacks and single mothers get homes. After all,
for liberals, nothing else matters. Right?

** The outlook for 2009
** http://www.generationaldynamics.com/...look090105.htm

Originally Posted by John J. Xenakis

If you read an article criticizing Lehman brothers, it must have
been after August 2008 when Lehman collapsed.

If, however, you really read an article on that subject in 2006, then
the author of that article would have to have been extremely
prescient, and worth following in the future.

2005. The only way in which to make money off a crash is to short-sell, a consummately-successful strategy if one already has assets to put at risk. But one must time the panic well.

Oh c'mon. Barney Frank was particularly sleazy in boosting the
housing bubble. Leading Democrats, including Senator Chris Dodd,
Senate Majority Leader Harry Reid, and House Speaker Nancy Pelosi, all
received large campaign contributions from Fannie and Freddie.

Democrats in general were far more sleazy about subprime
mortgages. Their claim was that subprime mortgages helped
poor and blacks and single mothers get homes, and so subprime
mortgages were wonderful. Never let it be said that a
Democrat let reality get in the way of buying votes.

The subprime lenders squeezed Fannie and Freddie into near-bankruptcy that they could stave only by jumping into the sewer with the predatory lenders. The lending that got poor people from the ghetto and barrio to the suburbs (where the jobs and better schools are) worked. Such lending wasn't so predatory. The more predatory lending became increasingly like a Ponzi scheme. By 2006 people were lending money just to protect asset values. In 2007 that began to fail.

I assume you must agree that subprime mortgages were good and
wonderful, since you would never want to criticize anything that
helped the poor and blacks and single mothers get homes. After all,
for liberals, nothing else matters. Right?

Paradoxically that worked far better than the mortgage loans designed for the failure of the borrowers (liar loans). I found that surprising at the time.

A late 3T is a time of political, economic, and cultural sleaze that makes the 4T so dangerous and nasty.

** The outlook for 2009
** http://www.generationaldynamics.com/...look090105.htm

I read it. Except for the prediction of failure of Barack Obama you were just about right. The difference between the Crash of 2008 and the Crash of 1930 (1929 and 2007 were the unjustifiable peaks of the economy) is that Obama backed the banks, and Hoover didn't. The bank runs of 1931 and 1932 tore even harder at an already-reeling economy.

Originally Posted by pbrower2a

> I read it. Except for the prediction of failure of Barack Obama
> you were just about right. The difference between the Crash of
> 2008 and the Crash of 1930 (1929 and 2007 were the unjustifiable
> peaks of the economy) is that Obama backed the banks, and Hoover
> didn't. The bank runs of 1931 and 1932 tore even harder at an
> already-reeling economy.

The thing I would add is that bailing out the banks doesn't solve the
problem. As I ceaselessly point out, the same people are in the same
jobs, finding other ways to defraud people. The banks have only
gotten bigger, and the massive corruption has become even more
massive. (Not if but) When the next banking crisis occurs, it will be
exponentially worse than it would have been if the banks hadn't been
bailed out.

Originally Posted by John J. Xenakis

*** 27-Dec-15 World View -- Reader comments on 'The Big Short' and the financial crisis

This morning's key headlines from GenerationalDynamics.com

• 'The Big Short' today versus 'The Three-Penny Opera' in pre-Hitler Germany
• Reader comments on 'The Big Short' and the financial crisis
• Readers' personal experiences with the financial crisis
• A parent of Generation-Xers describes his experiences
• Alan Greenspan recognized the bubble in 2005, but won't admit it

****
**** 'The Big Short' today versus 'The Three-Penny Opera' in pre-Hitler Germany
****


Poster for 1931 London production of Three-Penny Opera

In yesterday's article, " "'The Big Short' - an infuriating movie about the financial crisis"
," I reviewed the movie "The Big Short," based on
Michael Lewis's bestselling book "The Big Short: Inside the Doomsday
Machine," describing the financial crisis of the past decade.

As I wrote, the movie did not sugar-coat anything. It unequivocally
painted investment and mortgage bankers, financial managers and real
estate brokers as crooks and bastards, but they were only financially
rewarded by the Justice Department. It ended by making clear that the
same people are doing the same things today, and that the financial
crisis is far from over.

It seems pretty clear that the director David McKay had the objective
of making a political point: That people should be a lot more outraged
about what happened, with millions of people losing their jobs and
homes and going bankrupt, and that they should demand that some of
these crooks should be prosecuted rather than rewarded.

There's a historical analogy to this objective. Bertolt Brecht's 1928
play "The Three-Penny Opera" (music by Kurt Weill) had a similar
objective - to portray the corruption and criminality of the day in
order to provoke outrage and bring about change. (If you haven't
heard of the play, you may be familiar with its most popular song,
"Mack the Knife".)

In her book The Origins of Totalitarianism, Hannah Arendt
describes how that objective completely backfired:

<QUOTE>"Particularly significant in this respect was the
reception given Brecht's Dreigroschenoper [[Bertolt
Brecht's The Three-Penny Opera]] in pre-Hitler Germany.
The play presented gangsters as respectable businessmen and
respectable businessmen as gangsters. The irony was somewhat lost
when respectable businessmen in the audience considered this a
deep insight into the ways of the world and when the mob welcomed
it as an artistic sanction of gangsterism. The theme song in the
play, "Erst kommt das Fressen, dann kommt die Moral,"
[["First comes gluttony, then comes morality."]] was greeted with
frantic applause by exactly everybody, though for different
reasons. The mob applauded because it took the statement
literally; the bourgeoisie applauded because it had been fooled by
its own hypocrisy for so long that it had grown tired of the
tension and found deep wisdom in the expression of the banality by
which it lived; the élite applauded because the unveiling of
hypocrisy was such superior and wonderful fun. The effect of the
work was exactly the opposite of what Brecht had sought by it.
The bourgeoisie could no longer be shocked; it welcomed the
exposure of its hidden philosophy, whose popularity proved they
had been right all along, so that the only political result of
Brecht's "revolution" was to encourage everyone to discard the
uncomfortable mask of hypocrisy and to accept only the standards
of the mob."<END QUOTE>

Arendt's description, "The play presented gangsters as respectable
businessmen and respectable businessmen as gangsters" is what closely
ties the two dramas together. Corruption was massive in 1928 Berlin
and today's Washington. Both plays equated gangsters and businessmen
-- and also equated gangsters and politicians. But the Three-Penny
Opera simply amused and delighted those involved in the corruption,
and seemed to endorse it.

"The Big Short" portrays the delight that the bankers took in making
millions of dollars while making millions of people homeless. Some of
the characters even bragged about it. If the politicians and bankers
and journalists who watch the movie have the same sense of fun that
Arendt describes, then McKay's message will indeed have backfired.
Hannah Arendt, The Origins of Totalitarism and The Three-Penny Opera

****
**** Reader comments on 'The Big Short' and the financial crisis
****

After reading " yesterday's article,
many reader comments expressed outrage in political terms:

<QUOTE>"It's disgraceful that the people responsible for the
crash were never prosecuted. It is beyond belief."

"Makes me ashamed in every way."

"They will never be prosecuted....why????? Obama and his cronies
are all in on it and crooks..."

"All financial authority should be on notice that the public
institutions who rely on their "veracity" can and should demand
clarity and proof on a daily basis. Selling your ratings, is not
the same as giving your ratings."

"This is exactly why Trump and his adjustable rate mortgages on
over-priced New York real estate will be broke by the Presidential
Election and Trump will be on food stamps and New York Medicaid,
poor fool. Trumps so-called wealth is all on paper and Bloomberg
reports that New York real estate bubble is bursting and has
dropped every month since February 2015 with no end in sight."

"There is another aspect to the "big theft" that is usually left
out. The influx of Mexicans et al to build the houses in the
first place. We did not have the workers to build those houses to
bet against."

"Bush back in 2006 tried to get congress to do something and the
usual suspects in the Democrat party dismissed the fears! Thanks
community organizing leftists!"<END QUOTE>

****
**** Readers' personal experiences with the financial crisis
****

One person, a mortgage underwriter, described his own experiences:

<QUOTE>"Mr. Xenakis, a Belated Merry Christmas to you. Did
my own research back when I first came across your site, years
ago, and still sing your praises.

The problem with our entire society is the head in the sand/kill
the messenger mentality that is a cancer on reason and logic. I
don't like delivering bad news but in my profession I must on
occasion and am floored by some of the responses I get. Had one
that actually paid money for an attorney that she could have used
for ultimately getting approval- I am a mortgage underwriter- and
close. I told the parasite to get phuqed and call his congressman-
that's who it would have taken to get the lending laws changed
like he wanted them- and hung up.

There is an reactive, unconscious vindictiveness in people that I
had never encountered before. Just boggles the mind how
fundamentally unequipped people have become. I tried to call her
afterwards, just to try and explain how she had just blew up
everything and most likely lost even her earnest money, and still
all she could do is scream and threaten me. This was, for me
anyway, the most extreme and early example of the 'sense of false
entitlement'.

Keep your head up, keep in mind what my dear departed father used
to say; 'phuq 'em if they can't take a joke'. Works on about
anything, other than jokes. And don't get too worried about the
future, the Chinese are going to bow US into the stone ages. Might
I suggest some of the urban survival courses? Online, YouTube. If
nothing else you start seeing your neighborhood in a whole new
way."<END QUOTE>

A stockbroker of 30 years wrote to say that the warnings put forth in
"The Big Short" are frighteningly accurate:

<QUOTE>"John, may I first say that Generational Dynamics is
frightenly accurate. I have been a daily reader for approximately
10 years. I can say with certainty that you are correct in your
assessments. The future Gen Dyn predicts scares the hell out of
me. I too watched The Big Short on Christmas Day. I too see that
our financial system has not learned anything from the past. In
fact it is by far worse. I have been a stockbroker for the past 30
years. You may hate me and lump me in with the others but I have
always been honest in my career and honest with my clients. My
upper management of the firms I have been associated with over the
years are complete idiots. All they care about is shareholder
value and their bonus not the client's best interest. Over the
years I have seen these same upper management morons continue to
make millions and do nothing about the situation of product
layering. I agree that government has turned away from prosecution
of the fraud. I do think it is not a red vs blue political
issue. It is much bigger than that. It is the ultra wealthy vs the
rest of us. Two of my clients, one on the red team and one on the
blue team gifted money to their families again this year from
profits of their investments. Each are multi billionaires. They
give children, grandchildren, great grandchilren and various LLC's
and trust they control millions each year. Each contribute
millions to their red PAC and blue PAC which is now easier with
the Supreme Court ruling. My conclusions are based on what I
experience daily. Management in all brokerage firms are
idiots. Racism exists and is strong in the south. Most
importantly, the Ultra rich control government. God bless you and
anyone else who can see the truth. Prepare yourself for the future
Gen Dyn predicts."<END QUOTE>

Another person, a college professor, has also been reading my web site
since 2007 and says the reason that her students -- and many of their
professors -- didn't see what was coming at that time was that they
don't know how to think:

<QUOTE>"It's not that people can't see what's coming. It's
that they don't have critical thinking skills.

Some people are corrupt and taking advantage of other people, and
when people walk away with all the money, it's not accidental.

But I teach with some of the academics and I can tell you that
even people that I know that are straight couldn't see what I
could saw in 2007, and one of them was a finance professor.

Talking to the generation that's now in their 30s, they're
clueless. They have no sense of threat, they have no
understanding of what's coming at them."<END QUOTE>

A couple of people wanted to give me investment advice:

<QUOTE>"John, wish you a Merry Christmas and Happy New
Year. Although I don't agree with all of your predictions, I find
them insightful nonetheless. I hope that you invest based on your
analysis. For a little unsolicited advice, I was told once to
invest small sums for risky bets. I treat my political donations
the same way!!"

"Some of us are listening. Based on your advice, I liquidated half
of my Roth IRA last year. And sometime in January or February of
2016, I'm going to sell the other half of my shares. I'm doing
this because I am heeding your warning of the coming stock market
crash. Thank you for raising the alarm."

"I read your tirade today, wanted to give you some
reassurance. I’m just an average guy, but I’ve read your blog
every morning for years. I don’t take it as gospel, but I am more
inclined to believe it than pretty much any other internet
source. I can’t be the only one. Keep it up."

"John, thanks to you & Harry Dent I've been in cash equivalent
investments for years. And I plan to stay that way for a while.
In spite of our spats in the past, I still love your work
John."<END QUOTE>

****
**** A parent of Generation-Xers describes his experiences
****

One person (writing to a third person) tells what happened with his
own Generation-X children, something that other older parents may
enjoy reading:

<QUOTE>"As you know I've been reading John X., your friend's
newsletter now for years. He drew my interest originally when I
read him because his thinking was so close to mine; we largely
mirrored each other. I called my thinking generational churn. In
which in changing generations the newer generation in part forgot
or deliberately ignored what the previous generations tried to
pass on.

It happened between me and my children. They are Gen X and I saw
on a personal level what happened tho as it was happening I didn't
truly appreciate the process at the time.

They were called the "can do" generation. The generation that
would clean up the messes of previous generations. They were the
first truly electronic & digital generation. Influenced in a way
no prior generation had been. Weaned on gizmos and gadgets
unavailable to previous generations. They didn't have a
generational war previous generations had had so they were more
homogeneous than prior generations had been. United by all those
factors.

You can't tell them a damn thing because they have all the
answers. Imbibed at the common cafeteria they all grew up on. A
centralized common source connected by the electronic and digital
grid of an increasingly centralized educational, entertainment,
news, corporate, political, and governmental complex.

They knew they were right because the people influencing them told
them they were right. They are in their later 30's to very early
50's & they still play with toys. Their president is known for
dealing with crisis by playing golf.

As a parent of that generation I thought I was a good parent. I
didn't fully appreciate how all these forces were and would
overwhelm the lessons I tried to pass on."<END QUOTE>

Finally, here's a quote from someone from a person on the
Millennial/Generation-X cusp who blames it all on Boomers:

<QUOTE>"Tyrannical boomers shove money-grubbing ideology down
our throats saying that the purpose of life is to accumulate
wealth. Boomers saw the potential of Xers and millies decades ago,
and decided to tyrannically suppress them so that the country
would continue in the direction of a wealth based and feelings
based society. Even though doing so violated first Xers and the
Millies rights. Xers and Millies can clearly see the patheticness
of the current generations of leaders and see the competent
governance in their national rivals, Russia and China, now the
boomer elite wants to end any possibility of reform by shoving
Bush and Hillary down our throats. What's with the boomer love
affair with weaklings? Trump is advocating a completely different
form of government than what has traditionally existed in this
country."<END QUOTE>

This is why we refer to "the nihilism, destructiveness and
self-destructiveness of Generation-X."

****
**** Alan Greenspan recognized the bubble in 2005, but won't admit it
****

I forgot to add this to yesterday's article. Alan Greenspan went
through an amazing flip-flop in 2004-5, when he was Fed Chairman, as I
wrote about in several articles at the times:

• (October 2004).
  Greenspan
  says there's a housing bubble, but it's OK because it means that
  people have more money to spend.
• (November 2004).
  Greenspan
  said that he and the Fed decided in the late 1990s that they couldn't
  stop the tech bubble, but they could handle the aftermath, which they
  were doing now.
• (February 2005). Beginning
  a spectacular reversal of opinion, Greenspan said: "The dramatic
  advances over the past decade in virtually all measures of
  globalisation have resulted in an international economic environment
  with little relevant historical precedent."
• (August 2005).
  Greenspan
  expresses alarm at the real state and stock market bubbles: "Thus,
  this vast increase in the market value of asset claims is in part the
  indirect result of investors accepting lower compensation for
  risk. ... Any onset of increased investor caution elevates risk
  premiums and, as a consequence, lowers asset values and promotes the
  liquidation of the debt that supported higher asset prices. This is
  the reason that history has not dealt kindly with the aftermath of
  protracted periods of low risk premiums."

I traced this reversal of opinion by reading and reporting on
Greenspan's speeches. Those speeches are still on the Federal Reserve
web site, for anyone who wishes to confirm this. But, strangely
enough, Greenspan has never admitted, to my knowledge, that he
recognized the asset bubbles in 2005, and no one else, to my
knowledge, has ever reported on his reversal of opinion. Alan Greenspan speech (26-August-2005)


KEYS: Generational Dynamics, The Big Short, Bertolt Brecht, Kurt Weill,
The Three-Penny Opera, Michael Lewis, Dave McKay, Mack the Knife,
Hannah Arendt, The Origins of Totalitarianism, Alan Greenspan

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What you said about the ThreePenny Opera was hugely interesting. I looked it up and found that that was where the character "Mac the Knife" in the hit single came from.
Of course when the Nazis took power, the ThreePenny Opera was banned and it's creators, Weill and Bertold Brecht had to leave Germany. The Nazis came up with a substitute narrative which they made into a movie, the anti-semitic "Jude Suss" see https://en.wikipedia.org/wiki/Jud_S%...281940_film%29

*** 28-Dec-15 World View -- Japan says that armed Chinese ship infiltrates its territorial waters

This morning's key headlines from GenerationalDynamics.com

• Japan says that armed Chinese ship infiltrates its territorial waters
• Japan aggressively expands its military defense of the Senkaku Islands

****
**** Japan says that armed Chinese ship infiltrates its territorial waters
****


Chinese coast guard patrol boats

According to Japan's coast guard, an armed Chinese coast guard vessel
entered Japanese waters off the disputed Senkaku Islands for the first
time on Saturday. That ship and two others had been sailing in the
area since Tuesday. The Japanese government protested to the Chinese
embassy in Tokyo and to China’s Ministry of Foreign Affairs in
Beijing.

China's sovereignty claims over islands in the South China Sea have
been in the news a lot this year, but China also is in a simmering
dispute with Japan over the issue of sovereignty over the Senkaku
Islands (called the Diaoyu Islands by the Chinese) in the East China
Sea. In 2005, the dispute became so bitter that military action was
being threatened on both sides. (See "China and Japan head for military confrontation over disputed islands."
)

In November 2013, China escalated the confrontation by announcing the
creation of an "East China Sea Air Defense Identification Zone"
(ADIZ), claiming
administrative responsibility for the entire East China Sea region,
including the Senkaku/Diaoyu islands that have historically belonged
to Japan.

China has been annexing regions in the South China Sea belonging to
Vietnam and the Philippines without interference from the United
States. But the situation in the East China Sea is potentially very
different. The US and Japan have a Treaty of Mutual Cooperation and
Security, signed on January 19, 1960. It commits the United States to
help defend Japan if Japan came under attack, and it provides bases
and ports for U.S. armed forces in Japan.

So the question arises whether the US would intervene militarily if
China attempted to take the Senkaku Islands by military force, as it's
done in the South China Sea. In 2014, it was widely noted that the
Obama administration was failing to clarify that commitment, despite
several opportunities to do so.

Then, in April 2014, President Obama visited Japan and said that the US would defend the Senkaku Islands
:

<QUOTE>"At the same time, the United States is going to deal
directly and candidly with China on issues where we have
differences, such as human rights. I’ve also told [China's]
President Xi [Jinping] that all our nations have an interest in
dealing constructively with maritime issues, including in the East
China Sea. Disputes need to be resolved through dialogue and
diplomacy, not intimidation and coercion. The policy of the United
States is clear -- the Senkaku Islands are administered by Japan
and therefore fall within the scope of Article 5 of the U.S. --
Japan Treaty of Mutual Cooperation and Security. And we oppose any
unilateral attempts to undermine Japan’s administration of these
islands."<END QUOTE>

China frequently runs patrols in territorial waters of the Senkaku
Islands, but this is the first time that an armed Chinese vessel has
entered waters claimed by Japan. Japan Times and Shanghaiist

****
**** Japan aggressively expands its military defense of the Senkaku Islands
****

Japan has announced an aggressive new military policy to defend the
Senkaku Islands from Chinese incursions. Japan is preparing to deploy
thousands of troops and build anti-aircraft and anti-ship missile
batteries on 200 islands in the East China Sea located roughly 870
miles from the Japanese mainland toward Taiwan.

The announced follows adoption by the Japanese of new "collective
defense" laws, partially departing from the pacifism that Japan
adopted in its constitution after World War II. The old self-defense
clause of the constitution permits military action only when Japan
itself is being attacked. The new laws reinterpret the self-defense
clause to include "collective self-defense," which would permit
military action under some circumstances when an ally (such as the
United States) is attacked. I discussed the meaning of "collective
self-defense" in detail last year in "5-May-14 World View -- Japan debates 'collective self-defense' to protect America and Japan"
.

Along with the collective defense laws, the Obama administration has
been encouraging Japan to take greater responsibility for its own
defense, in view of China's growing military aggressiveness, reducing
its dependency on the United States military. This announcement
appears to be in response to the administration's request.

Chinese ships sailing from their eastern seaboard will be forced to
pass through this string of islands with its seamless barrier of
Japanese missile batteries to reach the Western Pacific, access to
which is vital to Beijing both as a supply line to the rest of the
world's oceans and for the projection of its naval power. Prime
Minister Shinzo Abe's broader goal is a strategy to dominate the sea
and air surrounding the remote islands. Reuters and International Business Times


KEYS: Generational Dynamics, Japan, Shinzo Abe,
Senkaku Islands, collective self-defense, China, Diaoyu,
Treaty of Mutual Cooperation and Security

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I have to admit -- I saw Star Wars VII instead. It was spectacular!

I saw no no indication of The Big Short playing nearby... but yes, I think we agree on the cause of the financial panic of 2008. By 2005 there was nothing to stop it. The only wise course of action was to sell off anything that one could sell when the going was still good, and not have any regrets as the last phases of the speculative boom drive prices into the stratosphere.

Big Business and the politicians that it supports are as corrupt as ever in America. Those not corrupt get defeated in marginal races now.

...I might want to leave America for some cheaper place to live (Latin America? Eastern Europe? I am still good with languages) if the Republicans get the Presidency and hold the Senate.

Und der Haifisch, der hat Zähne,
Und die trägt er im Gesicht.
Und Macheath, der hat ein Messer,
Doch das Messer sieht man nicht.

Oh the shark has horrid teeth, dear
and he keeps them neatly white
But Macheath has a sharp dagger
and his dagger's cause for flight

(my loose translation). "Dagger" fits the meter of Messer far better than does "knife".

*** 29-Dec-15 World View -- Artificial Intelligence breakthroughs in 2015, the Singularity by 2030

This morning's key headlines from GenerationalDynamics.com

• 2015 - A breakthrough year for Artificial Intelligence
• The debate about preventing the Singularity
• Artificial Intelligence and Climate Change
• Proof that the Singularity will occur by 2030

****
**** 2015 - A breakthrough year for Artificial Intelligence
****


Female humanoid robot. Do you think she'd go out on a date with you if you ask her nicely? (Japan's National Institute of Advanced Industrial Science and Technology)

Many analysts consider 2015 to have been a breakthrough year
for Artificial Intelligence (AI), not because of any
single achievement, but because of achievements across the
board in so many different areas.

Companies like Google, Facebook and Microsoft are now operating their
own AI labs. In areas such as image recognition, computer vision,
face recognition, voice recognition and natural language processing,
there are a wealth of new products (think of Siri or OK Google) that
are becoming increasingly reliable and increasingly available.

Several companies are testing self-driving cars, and they're expected
to be available commercially by 2020. Robots in the military are
becoming more common, from robots on wheels to pilotless drone
warplanes. All of these robots still require constant human
intervention and control, but they're slowly migrating away from human
control to algorithmically based decision making and control. Robot
form factors are improving, with some robots looking almost human.

In 2011, I wrote how the news that IBM's Watson supercomputer bests human champions on Jeopardy!

advances AI significantly, because it shows how, within a few years,
computers will be able to "read" everything on the internet and learn
from it. Today, IBM has Watson-based applications in multiple
industries, from retail to healthcare. IBM also has a program to
allow developers to incorporate Watson into mobile phone apps.
Bloomberg and World Future Society and IBM

****
**** The debate about preventing the Singularity
****

The development of technology leading to the Singularity cannot be
stopped. Even if the United States passed a law, or the United
Nations passed a resolution, that would not stop China, India, Europe
and other countries from continuing this technological development.

In fact, it wouldn't even stop the United States development. A
university scientist who's working on a better self-driving car is not
going to stop development because that technology might be used in the
Singularity. The Singularity is coming, whether anyone likes it or
not.

That hasn't prevented a debate on how to save the world from AI. Elon
Musk, the founder of electric car company Tesla Motors, has been one
of the leaders in making that argument. He's formed a non-profit
artificial intelligence research company call OpenAI. This company
will develop AI technology as open source, available for anyone in the
world to download. Google and Facebook are also open-sourcing some of
their AI technology. According to Musk's partner, Sam Altman:
“Developing and enabling and enriching with technology protects
people. Doing this is the best way to protect all of us.”

If Musk and the others really believe that open-sourcing will protect
the world from the domination of super-intelligent computers, then
they're living in a total fantasy. The concept is supposed to be that
with many people around the world working on AI software, they'll
check each other and prevent the development of software that will
dominate humans. The whole concept is so absurd, it's hard to know
where to start. Probably the best thing is to simply point out that
making AI technology available to anyone gives everyone a head start.
A jihadist in Karachi or a military scientist in Shanghai will be able
to download the OpenAI technology and build on it to create
intelligent robots that can conduct terrorist attacks or war.

In fact, the Information Technology & Innovation Foundation has
nominated Elon Musk for the 2015 Luddite of the Year.

In 2015, the US Department of Energy awarded $200 million for the next
generation supercomputer. It will be commissioned in 2018, with a
performance of 180 petaflops (thousand trillion operations per second)
of processing power. We're already beyond the processing power of the
human brain, which is estimated to be 38 petaflops. Computer power is
doubling every 18 months. This is known as Moore's Law, formulated by
Gordon E. Moore, co-founder of the Intel in 1965. Moore's Law has
been valid for 50 years, through several technologies, and is expected
to continue.

It's the doubling of computing power every 18 months that makes it all
but certain that the Singularity will occur by 2030, whether we like
it or not. Wired and Washington Post and Defense One and Government Executive and Information Technology and Innovation Foundation (ITIF) and
US Department of Energy

****
**** Artificial Intelligence and Climate Change
****

Politicians and climate change activists like to say that the
claims about climate change have been endorsed by 95% of all
the scientists in the world. This claim is a total fraud, because
it confuses two things.

First, we have the claims by scientists that the earth is warming
because of human activity. Arguably, that HAS been proven by
scientists. But that's all.

The second part is predictions about the future, which are mostly
total crap, and certainly not science. In fact, climate change
scientists have been making predictions for 25 years, and they've
almost completely turned out to be wrong. The truth is that
scientists who claim to know what the earth's temperature will be in
2100 can't even predict what the weather will be next month.

During my lifetime, I've seen any number of hysterical environment
disaster predictions. My favorite was the prediction in 1970 by far
left-wing Ramparts Magazine that predicted that the oceans were
becoming so polluted that by 1980 the world's oceans would be covered
by a layer of algae. It didn't happen.

One way to know that the climate change activists are wrong is that
these climate change scientists never mention the Singularity or
future technology. There is a very powerful historical precedent that they all ignore.
In the late
1800s, streets in large cities were full of horses (think of a traffic
jam in any large city, with horses instead of cars). These horses
were producing huge volumes of urine, manure, flies and carcasses --
not to mention cruelty to horses. By 1900, there was 1,200 metric
tons of horse manure per day. There were international conferences
(like today's climate change conferences) that accomplished nothing.
But within 20 years, the problem took care of itself because of new
technology - the automobile.

History shows that new technology, including new AI technologies, will
solve the "climate change" problem, and that politicians will have
absolutely nothing to do with it, except to take the credit when
something works, and to blame someone else otherwise. Daily Caller and From Horse Power to Horsepower and The Great Horse Manure Crisis of 1894 and Great Moments in Failed Predictions

****
**** Proof that the Singularity will occur by 2030
****

The Singularity is the point in time when computers will be more
intelligent, more able, and more creative than humans. Ten years ago,
in 2005, I wrote an article called "The Singularity," in which I
forecast that the Singularity would occur around 2030. Today, I see
no reason to change that forecast.

There is now an updated version of that article available: "Artificial Intelligence and the Singularity by 2030". The contents are as follows:

• Justification of the 2030 date for the Singularity. This
  includes a description of the "super-intelligent computer" algorithm,
  which is the algorithm that will be used by humans to implement the
  first computers that are more intelligent than humans.
  
• A proof, based on reasonable assumptions, that any intelligent
  species on any planet in the universe will develop in a way that's
  similar to the development of humans, including following the same
  Generational Dynamics cycles as humans.
  
• Some speculation about what will happen after the Singularity, not
  only to humans, but also to other intelligent life in the
  universe.

For those interest in computer software algorithms, the article
contains the Intelligent Computer (IC) algorithm in the article is
as follows:

• Intelligence isn't some magical, mystical force. It's
  actually the ability to find new ways to combine previous experiences
  in new ways. A new discovery is made by combining old discoveries in
  new ways, in the same way that jigsaw puzzle pieces can be put
  together.
  
• A computer can do the same thing by combining "knowledge bits"
  (KBs) in new ways, to learn new things, in the same way that jigsaw
  puzzle pieces can be combined. Computers can do this much faster than
  humans can.
  
• Decisions can be made by using the same "minimax algorithm" that's
  used to implement games like chess.
  
• This algorithm would work today, except that computers aren't yet
  fast enough. The speed of computers doubles every 18 months, and by
  2030 computers will be fast enough to implement this IC
  algorithm.

The article also contains a proof (under reasonable assumptions) that
every intelligent species in the universe must follow the same
Generational Dynamics cycles as humans is outlined as follows:

• For any species (including humans) to survive, the population
  growth rate must be greater than the food supply growth rate. This is
  what I call "The Malthus Effect," based on the 1798 book by Thomas
  Roberts Malthus, Essay on Population.
  
• Therefore, for any species, there must be cyclical periods of
  extermination. This can be accomplished in several ways, such as war,
  predator, famine or disease. But one way or another, it has to
  happen.
  
• Non-intelligent species will simply starve and die quietly when
  there's insufficient food. But intelligent species will form identity
  groups and hold riots and protests, and eventually go to war. These
  will be the cyclic crisis wars of extermination specified by
  Generational Dynamics, and every intelligent species in the universe
  will have them.

This article is available online at this location: "Artificial Intelligence and the Singularity by 2030".


KEYS: Generational Dynamics, artificial intelligence, singularity,
Thomas Roberts Malthus, Malthus Effect, Google, Facebook, Microsoft,
natural language processing, big data, image recognition,
self-driving cars, IBM's Watson, Elon Musk, Tesla Motors, Sam Altman,
OpenAI, Information Technology & Innovation Foundation, ITIF

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*** 30-Dec-15 World View -- Central Americans reach agreement on letting Cuban migrants reach the US

This morning's key headlines from GenerationalDynamics.com

• Central Americans reach agreement on letting Cuban migrants reach the US
• ISIS may be linked to massive suicide bombing in northwest Pakistan

****
**** Central Americans reach agreement on letting Cuban migrants reach the US
****


Route used by Cuban migrants before Nicaragua closed the border: Plane flight to Ecuador, then on foot overland to the US

A meeting of the Central American Integration System (SICA), a
political and economic organization for Central American countries,
has reached agreement to help thousands of Cuban migrants, stranded in
Costa Rica, to reach the United States. The migrants were stranded in
Costa Rica after Nicaragua closed the border, refusing to let the
migrants pass through.

US law has "wet foot, dry foot" policy with respect to Cuban migrants
traveling by boat from Cuba to Florida. According to the 1966 Cuban
Adjustment Act, if the US Coast Guard intercepts them before reaching
Florida ("wet foot"), then they can be sent back to Cuba. But once
they set foot on American soil ("dry foot"), then they are allowed to
stay and can apply for asylum after a year.

However, Cuban migrants have found an alternate route that takes
advantage of the "wet foot, dry foot" policy -- by traveling overland
through Central America, through Mexico, then to the United States to
apply for asylum.

Cubans who take this alternate route begin by flying to Ecuador, which
had no visa requirements for Cubans entering the country. From there
they travel on foot overland through Colombia, Panama and Costa Rica
to the Nicaraguan border. They then continue on foot through
Nicaragua and north, eventually reaching Mexico and then the United
States. Once they reach the US, they can apply for asylum.

Few Cuban migrants attempted this route in the past, but the numbers
sharply increased since December 2014, when the Obama administration
announced the restoration of diplomatic relations,
for the first time since the Cuban Revolution
of 1960 and the Bay of Pigs invasion of 1961.

Since the restoration of diplomatic relations, many Cubans feared that
the US would end the "wet foot, dry foot" policy, and that they would
be just all the other Latin American migrants, treated as illegal
immigrants when they enter the US. So Cubans have been rushing to
beat any possible change, and the number of migrants has gone as high
as 1,000 per week in recent months.

Since Nicaragua closed its border in mid-November, the migrants have
been stranded in Costa Rica. There are now as many as 8,000 Cuban
migrants stranded in Costa Rica. SICA has had several meetings since
then, asking Nicaragua to provide a "humanitarian corridor" through
which the migrants can travel north.

Pope Francis has called for a quick solution:

<QUOTE>"I invite the countries of the region to renew with
generosity all necessary efforts in order to find a rapid solution
to this humanitarian drama."<END QUOTE>

Nicaragua has refused to allow any "humanitarian corridor." It's
believed that the reason is that Nicaragua is a close ally of Cuba,
and Cuban authorities have been demanding that the US end the "wet
foot, dry foot" policy which has allowed so many Cubans to leave for
the United States. A couple of weeks ago, Nicaragua withdrew from
SICA membership, rather then be pressured.

So in its Monday meeting, SICA came up with a kind of "plan B": The
migrants will be put in a plane and flown from Costa Rica to El
Salvador, where they will then be ferried toward Mexico by bus.

There are still some hitches that have to be worked out. It's not
known who will pay for this transportation, and Mexico, which is not a
member of SICA, has to sign off on the plan. A pilot program will
begin as early as next week, when 250 Cuban migrants will be flown
from Costa Rica to El Salvador.

When word spreads that a deal has been reached to bypass Nicaragua,
it's fear that there will be a new surge of Cuban migrants trying to
take advantage of the new opening. Prensa Latina and Reuters and BBC


****
**** ISIS may be linked to massive suicide bombing in northwest Pakistan
****

A suicide bomber on Tuesday blew himself up outside a government
building in Mardan in northwest Pakistan, near Peshawar. 26 people
were killand and dozens wounded. The casualties would have been much
higher, but a security guard stopped the suicide bomber from reaching
a crowd of 400 people queued up to get papers.

Terrorist group Jamaat ul-Ahrar (JuA, Assembly of Freedom) has claimed
responsibility for the bombing. JuA has long been one of the
terrorist groups under the umbrella group Tehrik-e-Taliban Pakistan
(TTP). JuA split off from TTP in the middle of 2014 in a disagreement
caused by TTPs plans to hold peace talks with Pakistan's government.
JuA has rejoined TTP this year, but has also declared allegiance to
the so-called Islamic State (IS or ISIS or ISIL or Daesh), which would
make Tuesday's bombing the first major terrorist attack linked to ISIS
in Pakistan.

It's thought that JuA perpetrated Tuesday's attack because it's the
one year anniversary of the horrific Taliban attack on a Peshawar army school,
killing over 130
schoolchildren, for which JuA is also responsible.

Pakistan's people over the years have exhibited an accepting attitude
towards the Taliban, even when they conducted terror attacks on
Pakistani soil. A lot of this acceptance occurs because many of the
attacks were on Shias, whom most Pakistanis don't care about, and many
other attacks were against targets in India and Afghanistan of
Indians, whom many Pakistanis hate.

However, last year's Peshawar attack targeted innocent dozens of
innocent army schoolchildren, and was so devastating, that many minds
were changed. Pakistan's military stepped up attacks on Taliban
targets in Pakistan's tribal areas, and also began hangings for
convicted terrorists. This has infuriated the Taliban, and it's
feared that Tuesday's terrorist attack was part of a growing spiral of
revenge. The News (Pakistan) and Dawn (Pakistan) and VOA


KEYS: Generational Dynamics, Cuba, Ecuador, Costa Rica, Nicaragua,
Central American Integration System, SICA, Florida, El Salvador,
Wet foot - dry foot, Colombia, Panama, Mexico, Pope Francis,
Pakistan, Mardan, Peshawar, Tehrik-e-Taliban, TTP, Pakistan Taliban,
Jamaat-ul-Ahrar, JuA, Assembly of Freedom,
Islamic State / of Iraq and Syria/Sham/the Levant, IS, ISIS, ISIL, Daesh

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*** 31-Dec-15 World View -- Puerto Rico avoids default with partial bond repayment

This morning's key headlines from GenerationalDynamics.com

• Puerto Rico avoids default with partial bond repayment
• Central Africa Republic votes for new president and legislature

****
**** Puerto Rico avoids default with partial bond repayment
****


San Juan at night

Puerto Rico's Governor Alejandro Garcia Padilla announced at a press
conference in San Juan on Wednesday a series of financial maneuvers to
avoid default in January, when more than $1 billion in bond payments
are due.

Over $100 million in cash reserves that had been set aside to pay
other debts will be part of a $357 million payment of interest due on
Puerto Rico's general obligation debt, thus avoiding default.

However, two payments, also due on January 1, will not be paid. One
is a $35.9 million payment on debt issued by the Puerto Rico
Infrastructure Financing Authority, and the other is a $1.4 million
payment on Public Finance Corp. bonds.

According to a spokesman for the US Treasury Dept.:

<QUOTE>"Today’s announcement that Puerto Rico will miss
additional payments demonstrates the gravity of the Commonwealth’s
fiscal crisis and the need for Congress to act now. Puerto Rico
is at a dead end, shifting funds from one creditor to pay another
and diverting money from already-depleted pension funds to pay
both current bills and debt service."<END QUOTE>

The Treasury Department, the Obama administration, and Puerto Rican
officials are pressuring Congress to to pass legislation enabling the
commonwealth to seek Chapter 9 protection from creditors or create a
financial control board that would have enough authority to coerce
recalcitrant bondholders to join a restructuring plan. The word
"recalcitrant," which is used in news reports describing this proposed
legislation, indicates why bondholders strongly oppose this plan.
Republicans also oppose the plan, fearing that it would force the
bondholders to bail out Puerto Rico, and would allow the commonwealth
to continue its practice of unlimited debt and spending that gave rise
to the current situation in the first place.

As we wrote two weeks ago ( "20-Dec-15 World View -- Puerto Rico negotiates restructuring after Congress fails to allow Chapter 9 bankruptcy"
), a Puerto
Rican default would have widespread negative impact on ordinary
American investors, because of the massive size of the investments in
401k's and ordinary investment funds.

House Speaker Paul Ryan has refused to push the bankruptcy
legislation, but has promised to create a legislative package by the
end of March to deal with Puerto Rico's financial problems. If this
is accomplished, then it will be done just in time to avoid a full
default in May, which otherwise is all but certain. Bloomberg and Washington Post

****
**** Central Africa Republic votes for new president and legislature
****

International officials are hoping and praying that Wednesday's
presidential and legislative elections in Central African Republic
(CAR) will turn the page for the country, end the violence, and bring
happiness to all.

In other words, the hope is that Christians whose villages were burned
to the ground by Muslim militias, and Muslims whose families were
raped, murdered and dismembered by Christian militias, will all put
aside any desire for revenge, and all that will be required is that
the new government take office.

Many people are particularly hopeful because there were long lines to
vote in the capital city Bangui, but no violence. Interim President
Catherine Samba-Panza was very pleased:

<QUOTE>"Many thought this day, this vote would not be
possible for security and organizational reasons. But, you see, we
all are voting in dignity and peace and I am proud."<END QUOTE>

Aisha Laraba Abdullahi, the African Union's commissioner for political
affairs added" “With the election held today, we are confident that
the transition in the Central African Republic is coming to an end,
and that this would usher in peace and stability and prosperity to the
Central African Republic."

However, as we wrote three weeks ago,
when a new constitution was adopted, the elections may
actually worsen Muslim-Christian violence. Either the Muslim side or
the Christian side is going to come out ahead, and the other side may
not tolerate it.

There will be plenty of excuses for either side to pursue renewed
violence. There were a number of irregularities in Wednesday's
elections. There were some errors in printing the ballots, and
ballots didn't arrive in time in some parts of the country.

Indeed, CAR is a huge country, and the capital city Bangui is only a
tiny dot on the map of the country. All the news reports so far about
a violence-free election came from Bangui, where thousands of African
Union and United Nations peacekeepers have been brought in to make
sure nothing happens. By contrast, there are no peacekeepers in vast
regions of the country, some warlords (both Muslim and Christian) have
declared that they won't abide by the election, no matter what the
result. Out of a population of five million, there are about one
million who have been driven from their homes, and many of those will
have had no chance to vote. There have been reports of continuing
violence between Muslims and Christians in some parts of the country.

The vote count is expected to take several days, and the presidential
vote is expected to go to a run-off on January 31.

As I've written in detail several times in the past ( "2-Oct-15 World View -- Violence resurges in Central African Republic crisis war"
), CAR is deep
into a generation Crisis era and in the middle of a generational
crisis war. A new constitution and a new election are not going to
stop the huge generational forces that are pushing the Muslims and
Christians into this war of mutual extermination. The war will not
end until it's run its course, and apparently still has a long way to
go. AFP and VOA and Reuters


KEYS: Generational Dynamics, Puerto Rico, Alejandro Garcia Padilla,
Infrastructure Financing Authority, Public Finance Corp.,
Central Africa Republic, Catherine Samba-Panza,
African Union, Aisha Laraba Abdullahi

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*** 1-Jan-16 World View -- 2016 and the 'dramatic multiplication of conflicts in the world'

This morning's key headlines from GenerationalDynamics.com

• Angela Merkel urges Germans to see refugees as an 'opportunity'
• UN refugee czar Guterres calls for mandatory funding for refugees
• The 'dramatic multiplication of conflicts in the world'
• The Outlook for 2016

****
**** Angela Merkel urges Germans to see refugees as an 'opportunity'
****


Time Magazine's Woman of the Year, Angela Merkel, gives her New Year's Eve speech (Reuters)

Over one million refugees have arrived in Germany seeking asylum in
2015, and it seems likely that there will be another million in 2016.
Many people blame the flood of refugees on the welcoming remarks of
Germany's Chancellor Angela Merkel earlier this year. Merkel has been
increasingly criticized, even by people in her own party, and her poll
ratings have fallen.

In her New Year's Eve speech to the nation, Merkel stood firm and
responded to her critics, calling the influx of refugees an
"opportunity":

<QUOTE>"Next year is about one thing in particular: our
cohesion. It is important we don't allow ourselves to be divided
- not into generations, not into social groups, and not into those
that are already here and those that are new citizens. ...

It is crucial not to follow those who, with coldness or even
hatred in their hearts, lay a sole claim to what it means to be
German and seek to exclude others.

Our values, our traditions, our sense of justice, our language,
our laws, our rules, [apply] to all who wish to live here.

[The efforts put in to cope with the challenges would be worth it
in the end because] countries have always benefitted from
successful immigration, both economically and socially. ...

I am convinced that, handled properly, today's great task
presented by the influx and the integration of so many people is
an opportunity for tomorrow."<END QUOTE>

Her reference to "those who, with coldness or even hatred in their
hearts," referred to Pegida, an anti-immigration party considered by
many to be xenophobic, but which has been rising in the polls.
Deutsche Welle and Expatica Germany

****
**** UN refugee czar Guterres calls for mandatory funding for refugees
****

After ten years, December 31 is the last day in office for UN High
Commissioner for Refugees (UNHCR) Antonio Guterres. In an interview
with the BBC, Guterres had a great deal of criticism for the European
Union and for other nations, who were not responding to appeals for
money to provide food and help for refugees.

I take note of the fact that although the audio portion of the
interview is available on the BBC web site, there is no transcript
available, and even the BBC news stories that quote Guterres only
quote two or three sentences. Since I've become an exceptionally
jaded and cynical person, I can't help but wonder if the BBC is
playing down the interview because what Guterres said was so
fantastical.

At any rate, what follows is my transcription of excerpts from the
interview. He starts with harsh criticisms of the European Union,
especially those countries that try to make themselves look as bad as
possible, so that refugees will want to go to other countries:

<QUOTE>"For the first time in meaningful numbers, refugees
and other migrants came to Europe, and Europe was totally
unprepared for that. But not only was Europe unprepared then,
it's still unprepared today. And it was unable to get its act
together, and the divisions in Europe do not allow for a European
response. to this situation.

The first thing one needs to look at is what the reality is, not
what the perceptions are. We reached one million people that have
crossed the Mediterranean. But we are talking of the European
Union of more than 500 million people.

So we have less than two refugees per thousand people in the
European Union. Now if you go to Lebanon, we have one refugee for
each 3 or 4 Lebanese. So it is clear that this problem could have
been managed, but to be managed it would be necessary to have all
European countries assume a common responsibility. First of all,
doing their best to address the root causes, doing their best to
contribute to the peace in Syria or of other crises.

But at the same time recognizing that many will come, preparing
that arrival with adequate reception conditions at entry points,
making sure that people at entry points could be welcomed, could
be given shelter. This would require an important investment if
proper reception conditions would be in place. And a fair
distribution of people by plane in normal circumstances to all
European countries, this crisis would have been perfectly managed.

Now, what we are seeing is that countries are trying to solve the
problem by themselves, trying basically to avoid refugees to come
into their borders, and to go into the neighbors' one. And some
countries that are trying to have a regime that is a little bit
worse than the neighbor's regime, to make sure that the refugees
go into the neighbors, and not their own country."<END QUOTE>

From the point of view of Generational Dynamics, Guterres is wishing
for a return to the 1990s, a time when people were wealthier and the
mood was egalitarian. Today, in this generational Crisis era, people
in America and Europe are sharply divided politically, and nationalism
and xenophobia are rising.

Guterres was asked whether he was receiving all the money necessary
for his work, and he said that countries have been contributing only
about 50% of the needed amounts.

The BBC reporter asked him which countries disappointed him, because
they could afford to pay more. He was obviously looking for criticism
of the US or Britain, but Guterres surprised him:

<QUOTE>"Everybody, to a certain extent. There is a number of
countries that are now emerging as new relevant economies in the
world that are not also coming with their expectable share of
responsibility of the new emerging economies. I would hope that
they would be able to increase their contributions
too."<END QUOTE>

So Guterres was apparently criticizing China, not the US, which was
certainly a surprise to me.

Guterres things it's strange that the "global public good" is funded
by voluntary contributions, and he's looking for ways to make the
contributions mandatory - a "system such that every country in the
world has to contribute in way that is predictable and is fair."

From the point of view of Generational Dynamics, the most interesting
part of the interview was the end, where he described a world
spiraling down into total chaos:

<QUOTE>"It's important to be aware that we are just looking
at just one of the symptoms of a deeper problem, and a central
question is, the reason why [the refugees] are fleeing. It's this
dramatic multiplication of conflicts in the world. It's the fact
the international community has lost much of its capacity to avoid
conflicts, to prevent conflicts, and then to timely solve them.
And this what leads in my opinion to have a "surge" in diplomacy
for peace.

Ten years ago, we had about 38 million people displaced by
conflict in the world. Now we have about 60 million people.

According to the numbers of the first semester of this year,
things are still getting worse in 2016. 5% more people displaced,
80% more individuals by requesting help. And worse than that, ten
years ago, we were helping one million people go back home every
year. Now in the last year, we only helped 130,000 people go back
home, which means we are having more and more people forced to
flee, and less and less people being able to find a solution for
their plight.

We are like a nurse that provides an aspririn to a patient. we
are able to alleviate the pain, but we don't solve the problem.
That is the political dimension of the humanitarian crisis.
Humanitarians need to be impartial, neutral, to abide by
humanitarian principles, not to be political. But we need to be
humble enough to recognize that there is no humanitarian solution
for this problems. The solution is political."<END QUOTE>

His desire to have "a 'surge' in diplomacy for peace" is somewhat
amusing. Of course he's contrasting to the American troop "surges" in
Iraq and Afghanistan, and suggesting that diplomats should surge as
well. This is something that might have been possible in the 1990s,
but is completely impossible in today's generational Crisis era.
BBC and United Nations

****
**** The 'dramatic multiplication of conflicts in the world'
****

A couple of sentences from Guterres' interview are worth repeating:
"It's this dramatic multiplication of conflicts in the world. It's
the fact the international community has lost much of its capacity to
avoid conflicts, to prevent conflicts, and then to timely solve them."

He couldn't have chosen better or more accurate words to describe what
happens in a generational Crisis era. Guterres pointed out that the
number of refugees in the world now exceeds 60 million, but in the
last year his agency was able to help only 300,000 of them, a much
worse ratio than ten years ago.

For most countries, the current generational Crisis era began around
2003, 58 years after the climax of World War II, a time when the
retirement of the survivors of WW II accelerated and caused them to
lose almost all influence over the rising generation, Generation-X.

I happen to have in my archives a Boston Globe article from August 29,
2004, that says that the number of war deaths has been decreasing
substantially:

<QUOTE>"[T]he number killed in battle has fallen to its
lowest point in the post-World War II period, dipping below 20,000
a year by one measure. Peacemaking missions, meantime, are growing
in number.

"International engagement is blossoming," said American scholar
Monty G. Marshall. "There's been an enormous amount of activity to
try to end these conflicts."

For months the battle reports and casualty tolls from Iraq and
Afghanistan have put war in the headlines, but Swedish and
Canadian non-governmental groups tracking armed conflict globally
find a general decline in numbers from peaks in the 1990s.

The authoritative Stockholm International Peace Research
Institute, in a 2004 Yearbook report obtained by The Associated
Press in advance of publication, says 19 major armed conflicts
were under way worldwide in 2003, a sharp drop from 33 wars
counted in 1991.

The Canadian organization Project Ploughshares, using broader
criteria to define armed conflict, says in its new annual report
that the number of conflicts declined to 36 in 2003, from a peak
of 44 in 1995."<END QUOTE>

So as most of the world ended its generational Unraveling era, when
the last of the WW II survivors were in charge, and entered a
generational Crisis era, things changed.

Since then, we've had four or five wars among the group consisting of
Israel, Hezbollah, the Palestine Liberation Organization, and Gaza.
We've had a huge surge of Muslims killing Muslims through the Mideast,
in Libya, Egypt, Yemen, Syria and Iraq, following the "Arab
Awakening." That includes President Obama's new Iraq war, following
the rise of the so-called Islamic State (IS or ISIS or ISIL or Daesh).
Russia invaded Ukraine and annexed Ukraine's Crimea, the first such
peacetime action in Europe since Adolf Hitler's Nazi army had invaded,
occupied and annexed a portion of Austria (the Anschluss) on March 12,
1938.

There's also the "surge" in Afghanistan, and African wars in Mali,
Central African Republic, and South Sudan. We'd also have to count
the slaughter of Muslims by Buddhists in Myanmar (Burma). And while
the world seemed very prosperous ten years ago (the middle of the real
estate and credit bubble), we've had to endure a financial crisis
after the bubbles imploded.

****
**** The Outlook for 2016
****

Will there be any more conflicts in 2016? Almost certainly. Let's
take a look at the current situation:

• TV financial analysts have been talking all week that 2015 was
  the year of the global financial slowdown, led by China. Of course,
  these analysts almost always say that growth will begin again next
  year, but indications are that the downward trend will continue, and
  may accelerate into a full scale financial panic and crash.
  
• Russia's recent military intervention in Syria has been a major
  game-changer, and has substantially increased tensions in the Mideast.
  Turkey and Russia may be at war in 2016. Tensions between Iran and
  Saudi Arabia are increasingly boiling, largely because of Iran's
  nuclear deal with the West. A sectarian Sunni vs Shia war could break
  out in 2016.
  
• Young Palestinians in the West Bank have launched a new kind of
  terrorism against Israelis, using knives to kill in public places.
  There are also been some violence by young Israelis against
  Palestinians, in the form of "price tag attacks." Israel and the
  Palestinians were last in a major war in 2014, but that could change
  anytime.
  
• China is becoming militarily aggressive in the East and South
  China Seas, using military power to annex regions historically
  belonging to other countries, once again following the example of
  Adolf Hitler. Any one of China's neighbors, including Vietnam,
  Philippines or Japan, could have a military confrontation with China
  that could spiral into war. China also could make its long-awaited
  move against Taiwan.
  
• The last possibility is something unexpected, something that
  nobody could foresee, but ends up in war anyway.

The thing that makes a generational Crisis era unlike other eras is
that, with rising nationalism and xenophobia, something that might be
considered trivial at other times could be a cause for war now. In
1914, a Serb, Gavrilo Princip, shot and killed Archduke Franz
Ferdinand, the heir to the Austro-Hungarian empire, and his pregnant
wife Sophie. Assassinations were not uncommon in the world, then or
now, but to most of the world's complete astonishment, this
assassination triggered World War I.

A similar thing could happen 2016, in any region of the world.

Happy New Year!


KEYS: Generational Dynamics, Germany, Angela Merkel,
Antonio Guterres, UN High Commissioner for Refugees, UNHCR,
European Union, Lebanon,
Stockholm International Peace Research Institute, Project Ploughshares,
Serbia, Croatia, Gavrilo Princip

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*** 2-Jan-16 World View -- In bizarre gaffe, Erdogan compares Turkey's government to Hitler's Germany

This morning's key headlines from GenerationalDynamics.com

• India imposes men-only driving restrictions in Delhi to curb pollution
• In bizarre gaffe, Erdogan compares Turkey's government to Hitler's Germany

****
**** India imposes men-only driving restrictions in Delhi to curb pollution
****


Cars and autorickshaws move through New Delhi, India, Thursday, Dec. 24, 2015. (AP)

With pollution levels in the capital city Delhi some of the highest in
the world, India is imposing an even-odd system to limit the number of
cars in Delhi. For the next two weeks, only cars with odd-numbered
license plates will be allowed on the roads on odd-numbered dates,
with only even-numbered plates on other days.

However, the restrictions apply only to men. Women are free to come
and go in Delhi on every day, irrespective of license plate. I'm
guessing that the reason for this exemption is to do nothing to
prevent women from coming to Delhi to shop. But a woman with an adult
male in her car is still subject to the restrictions.

Politicians, judges and VIPs will also be free from restriction.

Motorcycles and motor scooters will also be free from restriction,
even though they're extremely heavy polluters.

Pollution in Delhi in 2015 was significantly worse in 2015 than in
2014 For example, the pollution level was "severe" in Delhi for 73% of
the days in November 2015, versus 53% in November 2014. New car sales
are soaring in India, with 1,400 extra cars taking to the capital's
streets every day.

After the two-week pilot project is complete, Indian officials will
evaluate the result to determine whether a permanent restriction
should be ordered. BBC and The Hindu and AFP

****
**** In bizarre gaffe, Erdogan compares Turkey's government to Hitler's Germany
****

Turkey's president Recep Tayyip Erdogan has been strongly advocating a
constitutional change that would take some power away from the
parliament and give it to the president, creating a much stronger
presidential system. Erdogan has indicated that this constitutional
change will be a major political objective for him in 2016.

A reporter on Thursday asked Erdogan whether a presidential system
could be adopted while keeping the country's unitary structure. His
response:

<QUOTE>"There is no such thing as 'no presidential system in
unitary states.' There are examples of this around the
world. There are examples in the past, too. When you look at
Hitler's Germany, you can see it there. You can see later examples
in other countries as well. What is important is that a
presidential system should not disturb the people in its
implementation. If you provide justice, there will be no problem
because what people want and expect is justice."<END QUOTE>

The comparison of Turkey to Hitler's Germany has caused quite
a bit of outrage, especially among Erdogan's opposition, but still
one wonders what the heck he was talking about.

A "unitary system" is one in which all power is held by the
central government, and none by the states or provinces that make
up the nation. Here are internet definitions of the three
systems:

• Federal System: Power is shared by a powerful central
  government and states or provinces that are given considerable
  self-rule, usually through their own legislatures. Examples: The
  United States, Australia, the Federal Republic of Germany.
  
• Unitary System: One central government controls weaker
  states. Power is not shared between states, counties, or provinces.
  Examples: China, United Kingdom (although Scotland has been granted
  self-rule).
  
• Confederal System: Weak or loose organization of states agrees to
  follow a powerful central government. nations can choose to follow or
  not follow the lead of the weak central government. Examples: The
  Commonwealth of Independent States (CIS), formerly known as the Soviet
  Union. Also, Switzerland's canton system and the Confederate States of
  America (1861-1865)

Other web sites list many other countries with a unitary system:
France, Spain, Italy, many more European countries, as well as many
countries in Africa, Asia, and South America.

So Erdogan had plenty of examples to choose from, without going to
Hitler's Germany. He issued a statement saying that the news stories
have distorted his message, that he was saying that Hitler's Germany
was a unitary system that went from a parliamentary to a presidential
system the wrong way, and that Turkey should do it the right way.
Zaman (Istanbul) and Reuters and Skyline College
and Lewis Historical Society



KEYS: Generational Dynamics, India, Delhi,
Turkey, Recep Tayyip Erdogan, Adolf Hitler, Germany,
unitary system, federal system, confederal system

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