=file wwlog2.txt =// Copyright (C) 2001-2011 by Xenakis Consulting Services Inc. =content ww2010.weblog.y2008 =content ww2010.weblog.y2009 =data x.x send wwlog2.txt xxxx del wwlog2.txt ren xxxx wwlog2.txt send wwlog2.txt xxxx dir xxxx del wwlog2_copy.txt dir xxxx ren wwlog2.txt wwlog2_copy.txt ren xxxx wwlog2.txt =eod =// &&2 e091228 In Iran's largest and most violent protests yet, nephew of opposition leader is killed =data ww2010.weblog.y2009.e091228.head In Iran's largest and most violent protests yet, nephew of opposition leader is killed =data ww2010.weblog.y2009.e091228.keys =data ww2010.weblog.y2009.e091228.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091228.date 28-Dec-2009 =data ww2010.weblog.y2009.e091228.txt1 Iranian police fired on protesters on Sunday, =data ww2010.weblog.y2009.e091228.txt2 <#stdurl http://www.nytimes.com/2009/12/28/world/middleeast/28iran.html?ref=global-home "killing ten people,"#> including the 35-year-old nephew of the opposition leader Mir-Hussein Moussavi. Moussavi was the principal opponent of Mahmoud Ahmadinejad in the June 12 presidential elections that many analysts have claimed were conducted fraudulently. Moussavi claims to have won the election. =inc ww2010.xr.related1 right iran 2 The hardline government's threats of violence against protesters may have reduced the volume of protests during the last few months but, as would be expected during a generational Awakening era, the protests have come back stronger than ever during the last week. Hundreds of thousands of protesters took over the streets of Tehran on Sunday, and similar protests occurred in cities across the country. However, two events have occurred recently that have given the protesters an "excuse" to come out in force and demonstrate: Iran's government is panicking over these demonstrations because they seem very similar to the the demonstrations that led to the massive violence Islamic Revolution in 1979. From the point of view of Generational Dynamics, a repeat of the 1979 revolution is completely impossible at this time. In 1979, Iran was in a generational Crisis era, so a crisis civil war was quite plausible. Today, Iran is in a generational Awakening era, and a crisis civil war is literally impossible. (See <#inc ww2010.weblog.ref e090623 ""A generational explanation of Iran's political crisis.""#>) I heard one commentator on television say something like, "I don't know where these protests are going. They seem to have no leader and no objective." That's exactly right. The riots and demonstrations are just like those by the Boomer generation in America in the 1960s, and the '68er demonstrations in Europe at the same time. That was the time of the West's generational Awakening era. When tens of thousands of young people went to San Francisco to take part in the <#inc ww2010.weblog.ref e070612b "1967 Summer of Love,"#> they had no leader and no objective either. They were mainly demonstrating against their own parents, and the austere rules imposed by the generations that survived World War II. Today's demonstrators in Iran are really demonstrating against the austere rules imposed by the generations that survived the Islamic revolution and the Iran/Iraq war of the 1980s. The death of Moussavi's nephew is certain to be considered a major event by the young demonstrations, infuriating them and causing enormous outrage. The hardline government is hoping that the demonstrations will fizzle, and they're using violence to try to stop them, but without success. From the point of view of Generational Dynamics, Iran's riots and demonstrations can be expected to continue for years, and will only end when some sort of climactic event occurs, equivalent to America's resignation of President Richard Nixon in 1974. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=120 "Iran"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091227 Yemen wars escalate rapidly, as US provides military support =data ww2010.weblog.y2009.e091227.head Yemen wars escalate rapidly, as US provides military support =data ww2010.weblog.y2009.e091227.keys =data ww2010.weblog.y2009.e091227.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091227.date 27-Dec-2009 =data ww2010.weblog.y2009.e091227.txt1 The Yemen connection to the attempted airplane bombing has thrust Yemen into the news. =data ww2010.weblog.y2009.e091227.txt2 The 23-year-old would-be bomber is from a prominent Nigerian family, but apparently received terrorist training and the bomb ingredients from Al-Qaeda in the Arabian Peninsula (AQAP), headquartered in Yemen. This has caused various news anchors, bloggers and politicians to have to learn how to spell "Yemen" and to realize the growing al-Qaeda presence there. <#inc ww2010.pic yemen3.gif right "" "Yemen. Shia Houthi rebels are fighting the Saudi army in northern Yemen, while al-Qaeda is gaining control in southern Yemen. (Source: CIA Fact Book / Economist)"#> However, there's far more important news coming from Yemen, and it's about two wars that have been escalating rapidly since I first wrote about them in September. (See <#inc ww2010.weblog.ref e090913 ""Escalating civil war in Yemen threatens to pull in Iran, Saudi Arabia and U.S.""#>) In northern Yemen, the war was originally a rebellion by the Houthi ethnic group against the Yemen government. Since September, it's spilled over into a border war between Houthis and Saudi Arabia. Analysts were shocked this week when Saudi Arabia disclosed that <#stdurl http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/editorial/2009/December/editorial_December49.xml§ion=editorial&col= "it has lost 73 of its soldiers"#> in its clashes with Yemen’s Houthi rebels. Saudi Arabia's air force has been crossing the border into Yemen, with the Yemenis' consent, and striking at Houthi rebel bases. A Saudi air strike last Sunday on a north Yemen town reportedly <#stdurl http://www.csmonitor.com/World/terrorism-security/2009/1221/Saudi-air-strike-kills-Yemen-rebels-as-US-drawn-into-fight "killed dozens of people,"#> including civilians. The US is thought to be providing intelligence information for the strikes. In southern Yemen, the war is against al-Qaeda terrorists. Yemen's government in Sana'a is increasingly losing control of the country, and al-Qaeda groups are using Yemen as headquarters for AQAP, with a stronghold in the south. AQAP has been staging terrorist attacks throughout the country in order to destabilize the government. Yemen has been conducting air strikes against al-Qaeda bases. The NY Times <#stdurl http://www.nytimes.com/2009/12/19/world/middleeast/19yemen.html "reports"#> that the "United States provided firepower, intelligence and other support to the government of Yemen." The "other support" is thought to include American special forces soldiers and attacks by American cruise missiles. According to <#stdurl http://www.centcom.mil/en/countries/aor/yemen/ "a statement"#> by General David Petraeus statement in April:
"Yemen stands out from its neighbors on the Arab Peninsula. The inability of the Yemeni government to secure and exercise control over all of its territory offers terrorist and insurgent groups in the region, particularly Al Qaeda, a safe haven in which to plan, organize, and support terrorist operations. It is important that this problem be addressed, and CENTCOM is working to do that. Were extremist cells in Yemen to grow, Yemen’s strategic location would facilitate terrorist freedom of movement in the region and allow terrorist organizations to threaten Yemen’s neighbors, especially Saudi Arabia and the other Gulf States. In view of this, we are expanding our security cooperation efforts with Yemen to help build the nation’s security, counter-insurgency, and counter-terror capabilities."
As I've described many times, al-Qaeda's aim is to duplicate the success of Iran's 1979 (Shia) Islamic Revolution in a Sunni Muslim country. They've attempted this in Iraq, Somalia, Algeria, Afghanistan, Pakistan, Uzbekistan and elsewhere, and now Yemen. So far they've been unsuccessful, but they'll keep trying in different countries until they're successful. The growing American military presence in Yemen means that there is one more country, in addition to Iraq, Afghanistan, and Somalia, where American forces and al-Qaeda-linked Islamist forces are fighting one another. The potential for a major escalation is substantial. From the point of view of Generational Dynamics, the world is headed for a "clash of civilizations" world war, pitting China and Sunni Islam forces against the West. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=168 "Yemen"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091225 At the end of a dark year, Merry Christmas and Happy New Year to all =data ww2010.weblog.y2009.e091225.head At the end of a dark year, Merry Christmas and Happy New Year to all =data ww2010.weblog.y2009.e091225.keys =data ww2010.weblog.y2009.e091225.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091225.date 25-Dec-2009 =data ww2010.weblog.y2009.e091225.txt1 It's been an incredible year, hasn't it? =data ww2010.weblog.y2009.e091225.txt2 In my own way, I lead a fairly ascetic life. During the day I develop computer software in the ancient language of C++, and in my remaining time I work on this web site. My obsession is nearly total. While I'm at work, writing C++ code, I have my headphones on, and I'm listening to the BBC or Bloomberg TV. At night, if I wake up at 4 am and can't get back to sleep, I turn on the BBC. At other times, I watch CNN, Fox News, CNBC, or MSNBC. I've also cut and pasted some 50,000 articles that I have filed on my hard disk. My obsession is a GOOD thing (I keep telling myself), because it makes me know everything that's going on in the world, and makes it possible to write all the articles I post on this web site. This has been true for seven years, since I started this web site in 2002. Each day, or as often as I have time for, I look at the world through the prism of generational theory and write articles for this web site reporting on what I find. But this year has been different from the previous six. The world went off the rails this year. I used to get up in the morning and wonder if I was crazy or the world was crazy, but that conundrum has been resolved at least partially. The question of whether I'm crazy is still open, but there's absolutely no doubt at all that the world has gone mad. Let's take a look at some of the events of the last year: I've been expecting something like this for years, because the same thing happened after the 1929 crash, and I've written about it many times, but it's still a shock how pervasive it's become. I frequently mention <#stdurl http://www.nakedcapitalism.com/ "Yves Smith's Naked Capitalism blog,"#> because her blog has become a kind of "ground zero" for describing many of the criminal activities going on in the financial world. Smith calls people like me (without actually acknowledging me or this web site) "alarmists," but she's now confirming all the things that she used to consider alarmist. She even refers to bankers as "banksters." The fraud and extortion have made writing for this web site more difficult, because what's going on is so far from reality. If the P/E ratio index is around 18, as it has been in previous years, then I can talk about how it's been above the historical average of 14 since 1995, and by the Law of Mean Reversion will have to fall equally far below 14 for the same amount of time. But what can you say when the P/E ratio index is around 100? How can you say anything that anyone sane can relate to? Many things that happened last year were crazy in another sense, because they're just "business as usual." Some other events of note in the last year: the Gaza war between Israel and Hamas; the escalation of the Afghanistan war and the increasing instability of Pakistan; and in the last few days, we're learning that U.S. forces are getting involved in the border war between Saudi Arabia versus the Iran-backed Houthis in Yemen. There's also been the climactic end to the Sri Lanka crisis civil war, and the growing riots and demonstrations in Iran. There are tens of thousands of people who read this web site regularly, according to the web site logs. The logs also tell me that there are plenty of people from universities, government and businesses, though of course I have no idea who they are. I still have to joke that this web site is like a porn site: there are a lot of people reading it, but almost no one wants to admit it. I'd love to get some feedback from academics or government officials, but apparently few of them want to admit associating with the gloomiest person in the world, who writes for the gloomiest web site in the world. The <#stdurl http://generationaldynamics.com/forum "Generational Dynamics forum"#> has had mixed success. There isn't a great deal of traffic, although the discussion that occurs is very intelligent. For me personally, the forum has actually been very successful. I try to answer most of the e-mail questions and comments that I receive from web site readers, but at the end of 2008 and the beginning of 2009, the volume of e-mail queries was getting out of hand, and I couldn't respond to all of them. Furthermore, many people were asking me the same questions, usually something along the lines of "How can I protect my assets?" So I started referring people to the forum, especially the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread. That's been pretty successful, as the number of e-mail queries has leveled off and is under control again, even as the traffic to the web site has increased. Still, I would like the forum to be more useful to people, and if there's anything I can do (such as rearranging topics or categories, or something like that), I would be happy to do so. Feel free to write to me with suggestions, or post them in the forum itself. I would like to simply wish everyone a Merry Christmas and Happy New Year, but it's not that simple. I'm a believer in trends, and the trend for the world is to become increasingly dysfunctional in the seven years since I started this web site. There's something really dark going on. The stock market surge, the Copenhagen summit, the health care bill -- none of these things makes any sense at all. The investors, journalists and politicians whose behavior is responsible for these things are not that stupid. They may act like idiots, but they aren't idiots. Sherlock Holmes said, "When you have eliminated the impossible, whatever remains, however improbable, must be the truth." So these people are acting like idiots, but the "impossible" is that they actually ARE idiots. So we can eliminate that. Therefore, they must be acting like idiots on purpose, knowing the consequences, but having some venal personal motives. What are those motives? Usually money and political power, accompanied by total contempt for the people they're screwing. There are actually plenty of examples of this. I'll start with a couple of examples from China. Chinese food producers <#inc ww2010.weblog.ref e081117 "poisoned millions of Chinese children"#> by bulking up their food products with melamine, to give the appearance of greater protein content. Chinese real estate firms are continuing to <#inc ww2010.weblog.ref e091222 "build empty cities and empty skyscrapers,"#> creating a real estate bubble that's doing enormous harm to ordinary Chinese citizens. In America and Europe, we have supposedly reputable companies like Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines <#inc ww2010.weblog.ref e091124 "scamming their customers online"#> and making billions of dollars doing it. And of course the entire financial disaster was perpetrated by people defrauding other people for their own gain. In particular, the "toxic assets" were being created and sold by people who, by 2006-2007, knew that they were toxic, but redoubled their efforts to sell them before the party ended. Today, banks like Citibank and Bank of America are still extorting their own customers by charging phony fees and 30% interest rates, in order to pay themselves million dollar bonuses. Why is all of this happening? I know that one of the least popular things I can talk about on this web site is <#inc ww2010.weblog.ref e080121c ""The nihilism and self-destructiveness of Generation X,""#> but with Gen-Xers increasingly in control of government and business organizations, there's really no other direction to go in. Most people in every generation, including Gen-Xers, are decent, hard-working people, but what we have today are a small group of cynical Gen-Xers who really ARE nihilistic, and who have the skills to drive out the hard-working people. This is "the bad driving out the good." The mechanism for doing this became clear from <#inc ww2010.weblog.ref e091214 "the hacked climate change e-mail messages"#> that were revealed prior to the Copenhagen conference. In a word, these e-mail messages show that climate change science is junk science. And even if the polar icecaps ARE melting, these e-mail messages still show that climate change science is junk science. But instead of acknowledging that it's junk science, all the politicians, journalists and "scientists" acted like idiots, and went to Copenhagen, where the whole scene collapsed into farce. But what's most interesting, and deserves a lot more study, is that the hacked e-mails showed how climate change advocates used the peer review process to systematically exclude anyone with dissenting views. The advocates were skillful in gaining control of climate research journals and then making sure that skeptics were ignored and never acknowledged. And if a skeptic published his research elsewhere, then the advocates would say that the research wasn't "peer reviewed." That shows one way that "the bad drives out the good" in climate change. In financial institutions, anyone who wants to conduct business honestly is fired, driven out, or threatened. Last June, Yves Smith described exactly how <#inc ww2010.weblog.ref e090607b "middle level employees are effectively able to extort management"#> into continuing fraudulent activities and getting themselves overpaid. The disintegration of the Copenhagen climate change conference is interesting, because it's a microcosm of what's happening in the world. The nihilism and self-destructiveness of these Gen-Xers in power is threatening the entire world with the same kind of disintegration, through worse financial crises and world war. But other than that, Dear Readers, let me wish you a Merry Christmas and a Happy New Year. And I hope that this web site is helping you to prepare for what's coming. If it does, then it's serving its purpose. Let's close this essay with a little Christmas music. I wrote about the song <#inc ww2010.weblog.ref e081225 ""Have yourself a merry little Christmas""#> last year. I think I like this song because it fits my mood as the gloomiest person in the world. Here's <#stdurl http://www.youtube.com/watch?v=5g4lY8Y3eoo "the video"#> of Judy Garland singing this song in the 1944 movie "Meet Me in St. Louis":
Merry Christmas and Happy New Year, everyone, and thank you for your support in the last year. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=13&t=183 "Merry Christmas and Happy New Year 2010"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091224 CalculatedRisk: Expect a big drop in existing home sales in December =data ww2010.weblog.y2009.e091224.head CalculatedRisk: Expect a big drop in existing home sales in December =data ww2010.weblog.y2009.e091224.keys =data ww2010.weblog.y2009.e091224.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091224.date 24-Dec-2009 =data ww2010.weblog.y2009.e091224.txt1 New home sales fell unexpectedly in November, =data ww2010.weblog.y2009.e091224.txt2 when analysts had <#stdurl http://www.bloomberg.com/apps/news?pid=20601068&sid=agmcAlhIHujg "expected them to increase."#> The CalculatedRisk blog has <#stdurl http://www.calculatedriskblog.com/2009/12/new-home-sales-decrease-sharply-in.html "an interesting analysis"#> of the relationship between new and existing home sales. <#inc ww2010.pic g091223.gif center "" "New and existing home sales (Source: Calculated Risk)"#> This graph shows that new home sales (red line) and existing home sales (blue line) followed similar growth paths until the real estate bubble burst in 2006 and they started to diverge. New home sales were supposed to increase in November, according to the analysts, but as you can see from the graph, they took another downward spike. Since 2006, existing home sales have been doing better than new home sales (relatively speaking) because new home builders couldn't compete with the low prices of all the foreclosed properties (existing homes), according to CalculatedRisk.
"The recent increase in the ratio was partially due to the timing of the first time homebuyer tax credit (before the extension) - and partially because the tax credit spurred existing home sales more than new home sales. On timing issues: New home sales are counted when the contract is signed, and usually before construction begins. So to close before the original Dec 1st deadline, the contract had to be signed early this Summer. Existing home sales are counted when escrow closes. And the recent surge in existing home sales was primarily due to buyers rushing to beat the tax credit. November will probably remain the record high since existing home sales will decline sharply in December."
It's not surprising that existing home sales have been doing well, because of the foreclosed homes flooding the market. As you can see from the above graph, new home sales took a slight upward blip a couple of months ago. Pollyannaish journalists and analysts took this as a sign that the housing crisis had bottomed, and that the worst was over. But as we discussed in <#hreftext ww2010.i.housing091221 ""'Shadow inventory' of unsold homes continues to grow,""#> millions of additional distressed homes are expected to come on the market in 2010. This will trigger a sharp decrease in the market prices of homes, and may even result in panicked selling. These are trends that analysts at CNBC, the Wall Street Journal, and other media ignore. Steve Lieseman on CNBC was genuinely stunned on Tuesday morning, when the news came in that <#stdurl http://www.bloomberg.com/apps/news?pid=20601103&sid=aVeAMaVRygoM "revised Q3 GDP growth was 2.2%."#> There were actually 10-20 seconds of total silence as Lieseman stared at the report, trying to figure out what was going on. The financial community almost universally believes that the worst is over, and that GDP growth will reach 4% in either Q4 or Q1. As a consequence, they believe that the economy will start ADDING jobs by Q2, while they've been losing jobs for two years now. These beliefs are based entirely on unrealistic hopes. As another example, corporate earnings have been falling for over two years now, and analysts believe that they HAVE to start increasing, simply because too much time has passed. For example, here's what appeared earlier this week on <#stdurl http://www.cnbc.com/id/15839135/site/14081545/ "CNBC Earnings Central:"#>
"EARNINGS STATS: BY THE NUMBERS As of Monday, December 21st: The blended earnings growth rate for the S&P 500 for Q3 2009, combining actual numbers for companies that have reported, and estimates for companies yet to report is currently -14.1% versus an estimated earnings growth for Q4 2009 of 196.1%. Of the 498 S&P 500 companies who have reported Q3, 79% beat estimates, 7% were in-line, and 14% were below estimates. As of October 1st, the earnings growth rate was at -24.7%. (Data provided by Thomson Reuters)"
If you read the above carefully, you'll see that analysts expect earnings growth of 196.1% in Q4. After earnings growth has been negative for many quarters, this is truly an incredible belief, and it shows what ridiculous views mainstream analysts are holding. All my life I've been reading about how foolish people were after the 1929 crash. Herbert Hoover said that "Prosperity is just around the corner." All kinds of analysts predicted that the market had bottomed and would start going up again. That whole story has always been something of a joke, ever since I first encountered it when I was in school in the 1950s. But now we see it playing out again. It's absolutely astounding to see this joke replayed before our eyes. A couple of days ago, I posted <#inc ww2010.weblog.ref e091222 "a story on China's real estate bubble."#> As incredible as what's happening in America, China's real estate bubble is so cuckoo as to be worthy of a cartoon rather than real life. I know I keep saying this, but the insanity keeps getting worse every day. How can journalists, analysts and politicians be more insane every day than they were the day before? (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091222 Skyrocketing real estate prices in China alarm officials =data ww2010.weblog.y2009.e091222.head Skyrocketing real estate prices in China alarm officials =data ww2010.weblog.y2009.e091222.keys =data ww2010.weblog.y2009.e091222.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091222.date 22-Dec-2009 =data ww2010.weblog.y2009.e091222.txt1 Chinese home prices rose 5.7% in November from a year earlier, =data ww2010.weblog.y2009.e091222.txt2 according to China's National Bureau of Statistics (NBS). Having just posted a new article, <#hreftext ww2010.i.housing091221 ""'Shadow inventory' of unsold homes continues to grow,""#> indicating that the housing crisis in America is far from over, it's worthwhile taking a look at the even worse real estate crisis in China. <#inc ww2010.pic g091221a.jpg right "" "Housing prices in China are rising rapidly (Source: Xinhua)"#> China's growth rate in home prices was 2.2 percentage points higher than that of October, according to <#stdurl http://www.chinadaily.com.cn/bizchina/2009-12/10/content_9155970.htm "the NBS report."#> Alarmed Beijing officials are <#stdurl http://www.bloomberg.com/apps/news?pid=20601080&sid=atSvIp7t0kwo "imposing new regulations"#> in an attempt to slow down the rapid bubble growth. "We’re at the start of an all-out crackdown on the property market," according to one Shanghai analyst. "The current speed of gains in property prices cannot be sustained. Local governments may also work out their own policies targeting house prices." Announcement of this crackdown panicked investors this week in the Shanghai stock market, especially in stocks related to real estate. =inc ww2010.h2 ponzi "A giant Ponzi scheme" According to former Morgan Stanley Chief Asia Economist Andy Xie, Chinese stocks and properties are <#stdurl http://www.my1510.cn/article.php?id=e3fc777cdd24720a "50-100% overvalued,"#> fueled by bank lending and inflation fear:
"Chinese asset markets have become a giant Ponzi scheme. The prices are supported by appreciation expectation. As more people and liquidity are sucked in, the resulting surging prices validate the expectation, which prompts more people to join the party. This sort of bubble ends when there isn’t enough liquidity to feed the beast."
The <#stdurl http://www.chinadaily.com.cn/china/2009-11/04/content_8911064.htm "asset bubble"#> is being caused by China's massive stimulus program. The stimulus program was intended to create jobs and increase consumption, but instead, state-run banks have channeled the money into real estate projects for their own benefit. The new landowners are being called "Land Kings," and they have little respect among the Chinese people. <#inc ww2010.pic g091221b.jpg center "" "Chinese cartoons on real estate bubble (Source: Xinhua)"#> As stimulus money pours into real estate properties, the property bubble gets larger and larger, making home prices too expensive for ordinary citizens, even as many homes and apartment buildings lay empty. This is one of the most incredible features of China's real estate bubble, and something that's different from America's recent real estate bubble. There's no property tax in China, and so there's <#stdurl http://chovanec.wordpress.com/2009/12/18/china-goes-wrong-way-on-property-taxes/ "no cost to buying real estate and holding it indefinitely,"#> according to Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing. So "land kings" have been able to use stimulus money or cheap bank loans to purchase properties and hold them, expecting to sell them later at big profits. According to Chovanec,
"The way I read these figures is that an immense amount of new housing is being purchased and accumulated (in a vacant condition) off-market. Nobody has any idea what it is actually worth because there is little urgency to offer it, to end users, on the secondary market and actually see it priced based on their demand. If investors were at least trying to “flip,” we might find out, but they’re not, and so prices for new residences (especially on the high-priced luxury end) continue to rise without anything to bring them back down to earth."
This has led to remarkable situations. The <#stdurl http://english.aljazeera.net/news/asia-pacific/2009/11/2009111061722672521.html "following video"#> describes "China's empty city - Ordos." The entire city was built by real estate developers using other people's money, and there are no people living there:
In America, the real estate bubble took the form of financial institutions creating and selling mortgage-backed securities that later turned out to be worthless "toxic assets." In China, the real estate bubble takes the form of financial institutions building and buying unwanted real estate with other people's money. The details are different, but the core patterns are the same: Financial institutions defrauding the public and paying themselves huge salaries, fees, commissions, bonuses and bribes. =inc ww2010.h2 comm "Commercial property in China" China's residential real estate problem is bad, but if anything, the commercial real estate problems are even worse. According to <#stdurl http://www.chinadaily.com.cn/bizchina/2009-10/09/content_8772934.htm "a lengthy Xinhua analysis,"#> China's commercial real estate boom occurred in 2003-2007:
"China's rapid economic expansion over the past decade turned the country into the place to be for multinational companies. To accommodate the influx of international businesses, developers took out loans, land was cleared and construction sites and cranes dotted the skyline of every major city. ... But when the financial crisis hit, many multinationals pulled their offices and employees out of China or moved to less expensive spaces, while the hordes of shoppers that retailers were expecting to flood the malls tightened their purse strings. Now, major cities throughout the country are home to empty skyscrapers and shopping malls that are virtually empty, apart from store clerks and security guards. Meanwhile, construction continues."
The result is that the vacancy rate in big cities like Beijing and Shanghai is approaching 50%. Even when the buildings and shopping centers are occupied, owners are forced to give special deals, such as one year free rent on a five-year contract. Thus, effective rents have crashed by 40-50% in the last year, even though nominal rents have remained almost the same. According to international real estate executive Jack Rodman, there are two reasons that explain why developers have been keeping leasing prices at the old rates:
"One, they are under no pressure from banks to repay their loans, ergo no motivation to lease at today's current rates. And two, writing a lease at half the rent that supports the valuation … could trigger a writedown, incurring losses for the banks. (Meanwhile, there) has been a lack of transparency and reliability, and a lack of veracity in market information that the brokerage community made available to owners, developers and tenants."
Moreover, the commercial real estate building craze has not ended, as new stimulus money and near-zero interest rates continue to fuel additional development projects that are not needed. This has led to an absolutely incredible scam where farmers have started <#stdurl http://www.chinahush.com/2009/12/18/chinese-farmers-are-growing-houses-instead-of-growing-food/ ""growing houses""#> instead of growing food. The scam works as follows: When there are rumors of a new development project, the farmers in the region quickly get together and build numerous houses on their farm land. These are not real houses, in the sense that anyone could live in them, but they're houses nonetheless. For example, they may be nothing more than bricks held together by glue. Then, if and when the development project begins, the houses have to be torn town to make way for the development. Beijing's policy is to reimburse owners when a new real estate project causes people to loses their homes. So the farmers make back double their money. Of course, if the rumored development project never actually occurs, then the farmers lose their money. =inc ww2010.h2 dysfunction "Dysfunctional China" I seem to keep using the word "dysfunctional" these days, whenever I talk about almost anything having to do with finance or politics, whether in the US or Europe. But it's going to be hard for any other country to beat the dysfunction that's apparent today in China's real estate market. It's not uncommon for observers to compare China's real estate market today to Japan's real estate market just before its huge stock market crash in 1990. At the height of Japan's real estate bubble, the nominal value of the real estate in Tokyo alone was greater than the value of all the real estate in the United States. Once the crash began, Japan's real estate prices continued falling for almost two decades. (See <#inc ww2010.weblog.ref e070220 ""Japan's real estate crash may finally end after 16 years.""#>) China <#stdurl http://www.nytimes.com/2009/11/29/business/economy/29view.html?_r=1 "is showing the same signs,"#> according to the NY Times:
"[Government subsidies] have spurred excess capacity and created a dangerous political dynamic in which these investments have to be propped up at all cost. China has been building factories and production capacity in virtually every sector of its economy, but it’s not clear that the latest round of investments will be profitable anytime soon. Automobiles, steel, semiconductors, cement, aluminum and real estate all show signs of too much capacity. In Shanghai, the central business district appears to have high vacancy rates, yet building continues."
In America, the public is becoming increasingly furious with Citibank, Bank of America, and other bankers, who have defrauded the public with "toxic assets," and who are now raising interest rates to 30% and imposing phony fees on credit card customers in order to have the money to pay themselves million dollar bonuses. In China, this discontent goes far deeper. I started reporting on this phenomenon in 2004. (See <#inc ww2010.weblog.ref e041226 ""Up to 50,000 workers riot and clash with police in southeast China.""#>) If there were even one incident of this type in the United States, it would be international news. But there are tens of thousands of these "mass incidents" in China each year. And this doesn't count the recent unrest in Tibet and among the Uighurs in Xinjiang province. These incidents represent an extremely high level of social unrest, and according to <#stdurl http://news.bbc.co.uk/2/hi/asia-pacific/8425119.stm "an analysis by a Chinese think-tank,"#> the level of social unrest is higher than ever. According to the report, deep resentment has been accumulating over the past few decades against unfairness and power abuses by government officials at various levels. From the point of view of Generational Dynamics, a Chinese civil war is certain. As I wrote in 2005 in <#hreftext ww2010.i.china050116 ""China approaches Civil War,""#> China has a long history of massive internal rebellions and civil wars, creating bloodbaths that have slaughtered tens of millions of people in a short period of time. These include the White Lotus rebellion that began in 1795, the Taiping rebellion that began in 1852, and the Communist Revolution that began with Mao Zedong's genocidal Long March in 1934. The current real estate bubble and "asset Ponzi scheme" is a financial crisis waiting to happen. China is desperately trying to use stimulus money to prevent a panic. These attempts have postponed the panic, but the development of the "Land Kings" shows that the stimulus money is only making things worse. And the size of the bubble is so huge that a panic will be a catastrophe for China's social fabric. From the point of view of Generational Dynamics, China is now about due for its next massive internal rebellion and civil war, and is headed for civil war with absolute certainty. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=76 "China"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091220 Study: Men think their dancing improves with age =data ww2010.weblog.y2009.e091220.head Study: Men think their dancing improves with age =data ww2010.weblog.y2009.e091220.keys =data ww2010.weblog.y2009.e091220.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091220.date 20-Dec-2009 =data ww2010.weblog.y2009.e091220.txt1 This study is oblivious to generational issues. =data ww2010.weblog.y2009.e091220.txt2 This study purports to show that men become better dancers (or think they do) suddenly at age 65. The research was conducted in 2008-09 by Dr Peter Lovatt at the University of Hertfordshire. Here's <#stdurl http://www.herts.ac.uk/news-and-events/latest-news/The-psychology-of-dance.cfm "the description:"#>
"The Dance Style Questionnaire was completed by almost 14,000 people and the results show that although up to the age of 16, men lack confidence in their dance moves, after that their dance confidence rises steadily with men over the age of 65 having higher ratings than men between the ages of 55 and 60."
This study has gotten quite a bit of publicity in the UK. Here's how <#stdurl http://www.telegraph.co.uk/science/science-news/6817134/Dad-dancing-may-be-the-result-of-evolution-scientists-claim.html "it was described"#> in The Telegraph:
"The cringeworthy "dad dancing" witnessed at wedding receptions every weekend may be an unconscious way in which ageing males repel the attention of young women, leaving the field clear for men at their sexual peak. "The message their dancing sends out is 'stay away, I'm not fertile'," said Dr Peter Lovatt, a psychologist at the University of Hertfordshire who has compared the dancing styles and confidence levels of nearly 14,000 people. His research has backed up scientific studies showing a connection between dancing, hormones and sexual selection. Men between the ages of 35 and 60 typically attempt complex moves with limited co-ordination – an observation that will be obvious to anyone who saw George W Bush shake his stuff with a troupe of West African performers in 2007. Dr Lovatt pointed to research showing that women could gauge the testosterone levels of their dance partners by the style and energy of their moves, and suggested that "dad dancing" may be a way of warning women of child-bearing age that they might be better off looking elsewhere. "It would seem completely unsurprising to me that since middle-aged men have passed their natural reproductive age, and probably have a family already, evolution would act to ensure they are no longer attractive to 18-year-old girls," Dr Lovatt said. "It's like an apple that is going brown – you want a fresh green one instead.""
The problem with all this is that Dr. Lovatt finds that everything changes once a man gets past age 60. He's a disaster on the dance floor from ages 35 to 60, according to Lovatt, but suddenly gets much better at age 65. He attempts various pseudo-psychological explanations for this phenomenon, but misses the most obvious explanation. Age 65 is almost exactly the boundary that separates the Silent generation from the Boomer generation. The Silent generation grew up during the Great Depression and WW II and, more importantly, the time of <#hreftext ww2010.i.bigband "the Big Band Era."#> During the 1930s and 1940s, millions of unemployed musicians formed bands and played music in dance halls around the country. Dancing was the favorite pastime to escape from the worries and anxieties of joblessness and the war. Couples developed very complex and very romantic dance steps from the Fox Trot to Swing. By the 1950s, complex dance steps were passé. Counterculture Boomer music was rock 'n' roll, and complex dance steps were out. Dancing consisted of moving your legs back and forth in a simple repetition that never varied. So now Dr. Lovatt is finding that men who grew up in the 1930s-40s are great dancers, while those who grew up in the 1950s-60s are lousy dancers, and he's completely oblivious to these generational differences. As I keep saying on this web site, journalists, analysts, academics and politicians are apparently incapable of grasping even the simplest generational explanations for things, no matter how obvious. Dr. Lovatt has appeared on numerous talk shows, demonstrating good and bad dance styles. For some "news you can use," here's <#stdurl http://www.youtube.com/watch?v=SOI79MMMzWk "a video"#> of Dr. Lovatt's appearance on Graham Norton Show:
(Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=9&t=167 "Music and Generations"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091219 Climate change: A 'meaningful and unprecedented' breakthrough agreement in Copenhagen =data ww2010.weblog.y2009.e091219.head Climate change: A "meaningful and unprecedented" breakthrough agreement in Copenhagen =data ww2010.weblog.y2009.e091219.keys =data ww2010.weblog.y2009.e091219.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091219.date 19-Dec-2009 =data ww2010.weblog.y2009.e091219.txt1 Here's the text of the agreement, =data ww2010.weblog.y2009.e091219.txt2 as <#stdurl http://www.nytimes.com/2009/12/19/science/earth/19climate.html "announced"#> by the Obama administration on Friday evening:
"We entered this negotiation at a time when there were significant differences between countries. Developed and developing countries have now agreed to listing their national actions and commitments, a finance mechanism, to set a mitigation target of two degrees Celsius and to provide information on the implementation of their actions through national communications, with provisions for international consultations and analysis under clearly defined guidelines."
If you don't understand this, there's a good reason: This is almost total gibberish. The wording is intentionally garbled because it's utter nonsense. However, if you sort through the purposely obscure phrases, you get the following: This agreement was reached between the United States and four other countries -- China, India, Brazil and South Africa. Other countries were excluded from the negotiations, infuriating some of them. We can all be grateful that the entire conference ended in failure and farce. (See <#inc ww2010.weblog.ref e091214 ""Climate Change conference in Copenhagen is all about getting green -- money.""#>) This is the best possible outcome for a conference that was absurd from the beginning. Just when I think that Washington and Wall Street can't become any more insane and dysfunctional, they surprise me and become even worse. I don't know how they manage to do it. I <#inc ww2010.weblog.ref e091218 "wrote yesterday"#> that President Obama would not be blamed for this failure essentially because he's a member of the political élite and because he's not President Bush and not a Republican. However, Obama went way out on a limb for this conference. He totally committed his own credibility to a successful outcome. He's going to receive plenty of blame from his political opposition. (And there was an ironic finish to the day, when President Obama had to leave the global warming conference early because of a snowstorm and frigid cold weather in Washington.) It's worth stepping back a moment and seeing the big picture here. President Obama has had one foreign policy disaster after another -- in Iran, in Pakistan, in the Mideast. Domestically, he's bet his presidency on this health care bill. If it doesn't pass, it will be a political disaster for him. If it does pass, it will be an even bigger political disaster for him. But there is one decision that appears to have bolstered his confidence: His decision to <#inc ww2010.weblog.ref e091206 "send 22,000 additional troops"#> to Afghanistan, after sending 30,000 troops earlier this year. My point is this: President Obama is failing at anything and everything that requires him to get consensus from other politicians, whether it's politicians in the Senate, or leaders of other countries negotiating climate change. Obama gives a good speech, but he's been a total failure as a negotiator, either domestically or internationally. But the decision to escalate the war in Afghanistan required no consensus and no negotiation. It was his decision to make. I've written many times for several years about how one country after another has experienced governmental paralysis. This is typical of a generational Crisis era, a time when all the survivors of the previous crisis war (WW II in this case) are all gone, and politicians are reduced to bickering. But there's one thing that country leaders can usually do on their own: Start or escalate a war. This is especially true in a generational Crisis era, when the population is quick to take offense at a foreign enemy. We're about to enter a new decade with the world increasingly insane and dysfunctional. 2010 is sure to be a year full of surprises. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=9&t=178 "Climate Change"#> and the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?t=61 "President Barack Obama"#> threads of the Generational Dynamics forum.) =eod =// &&2 e091218 Climate change conference winds down with search for villains =data ww2010.weblog.y2009.e091218.head Climate change conference winds down with search for villains =data ww2010.weblog.y2009.e091218.keys =data ww2010.weblog.y2009.e091218.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091218.date 18-Dec-2009 =data ww2010.weblog.y2009.e091218.txt1 After eight years of blaming Bush, the world may blame China this time. =data ww2010.weblog.y2009.e091218.txt2 The week at Copenhagen has been an incredible spectacle, with everyone looking to the US and Europe to provide money to everyone else. There are 130 "developing countries" who are demanding American technology and $200 billion per year, supposedly to help them implement global warming technologies, but always with the implication that the developed nations owe "reparations" to the developing nations because we've been so evil in emitting carbon. And of course they want this money with absolutely no strings attached. What's funny about this is that almost no one believes that these developing countries will spend this money on global warming. Imagine giving a few billion dollars to the likes of Robert Mugabe of Zimbabwe, the guy who regularly starves and slaughters his own people, especially those of the ethnic tribes other than his own. Probably the darkest humor of the week was over the question of China receiving a chunk of that $200 billion, since they're a "developing country." Presumably, we would borrow the money from China and pay it back to them to do global warming technology. The suggestion that the US has to fund China has angered the US negotiators. Supposedly, the Chinese have said in back channels that they wouldn't accept US money even if it was offered, but they don't want to say so publicly because that would jeopardize their status as a "developing country." The Copenhagen conference is a microcosm of all the dysfunction in the world today. In Washington we have a proposed health care bill that's <#inc ww2010.weblog.ref e090725 "economic insanity,"#> and in Copenhagen we have a climate change conference that's <#inc ww2010.weblog.ref e091214 "an absurd and loony money grab."#> We should be watching these things on the Cartoon Network, rather than on CNN and Fox News. The Copenhagen conference has gone from one chaotic disaster to another. There were arguments about money, and arguments about who will and will not be required to reduce carbon emissions. Things got so bad that the President of the Copenhagen Summit, Danish minister Connie Hedegaard, <#stdurl http://www.allheadlinenews.com/articles/7017292344?U.N.%20Climate%20Conference%20President%20Resigns%20Amidst%20Stalled%20Talks,%20Protester%20Arrests "resigned in disgust."#> There has been only one question left: Who's going to be blamed? Western leaders have been scrambling to cover their asses. In the face of one chaotic disaster after another in Copenhagen, Gordon Brown and Barack Obama have been expressing confidence that an agreement will be signed before the conference ends. French President Nicolas Sarkozy said that it will be catastrophic if there's no agreement. =inc ww2010.xr.related1 right climate 3 President George Bush has been blamed for the failure of the Kyoto agreement of 1997. That agreement was sponsored by then-VP Al Gore, but the agreement was rejected in the US Senate by a vote of 97 to 0 -- i.e., unanimously. The should mean that Bill Clinton and Al Gore should be blamed for the failure of the Kyoto agreement, but what's happened instead is that President Bush was blamed. If George Bush were still President, then he would be burned in effigy around the world for the failure of the Copenhagen conference. Barack Obama can't be blamed, because he's a member of the élite. If a Republican wins the White House in 2012, then that person will be blamed for the failure of the Copenhagen conference. But who will be blamed in the meantime? My guess is that it will be China: None of this is new. These disagreements have been well known for weeks, if not months, and yet the politicians keep play-acting, as if what they're doing makes any sense whatsoever, each hoping that the other guy will get the blame. It's worth repeating a point that I've made many times before. The survivors of World War II were united in their desire to prevent any such war from ever occurring again. They created the United Nations, World Health Organization, International Monetary Fund, World Bank, the Rockefeller Foundation (Green Revolution), and other international organizations not only to prevent a new world war, but also to end poverty and starvation and to improve health. Those organizations are all failing now, as the generations of WW II survivors disappear. Even worse, the current generations of Boomers and Gen-Xers are incapable of accomplishing anything except to argue. The insanity and dysfunction of national and world political leaders is increasingly being reflected in polls. President Obama's approval rating has been in free fall. This week, a <#stdurl http://online.wsj.com/article/SB126100346902694549.html "new WSJ/NBC poll"#> finds that 41% of Americans have a positive opinion about the "Tea Party movement," compared to 35% for the Democratic party, and 28% for the Republican party. A <#stdurl http://pewresearch.org/pubs/1444/obamas-challenge-december-approval-conservative-shift "new Pew Research poll"#> shows that Americans are moving rapidly to the right on a variety of issues, including gun control, abortion rights, and global warming. What we're seeing is something that I'm sure I'll be writing about a lot in the new year: A major political realignment is in the offing. This is something that happened in America's last two Crisis eras -- the Civil War era and the World War II era, and it's happening again today. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=9&t=178 "Climate Change"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091214 Climate Change conference in Copenhagen is all about getting green -- money =data ww2010.weblog.y2009.e091214.head Climate Change conference in Copenhagen is all about getting green -- money =data ww2010.weblog.y2009.e091214.keys =data ww2010.weblog.y2009.e091214.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091214.date 14-Dec-2009 =data ww2010.weblog.y2009.e091214.txt1 The banks are not the only pigs at the trough. =data ww2010.weblog.y2009.e091214.txt2 The big scandal at the Copenhagen climate change conference last week was that the "Danish text" was <#stdurl http://www.guardian.co.uk/environment/2009/dec/08/copenhagen-climate-summit-disarray-danish-text "leaked to The Guardian newspaper"#> on Wednesday. =inc ww2010.xr.related1 right climate 3 The Danish text is a 200-page document created by a small group of negotiators from the U.K, the U.S., and Denmark, hoping to create a compromise agreement, lest the entire conference end in chaos. According to The Guardian, it will: Well, there was chaos anyway. The "developing nations," including China and nations in Africa and South America, were outraged by the Danish text because it didn't satisfy the following demands: Lumumba Di-Aping, the Sudanese chairman of the developing nations, <#stdurl http://www.chinadaily.com.cn/china/2009copenhagenclimate/2009-12/10/content_9150985.htm "was especially outraged."#> "The text robs developing countries of their just and equitable and fair share of the atmospheric space. It tries to treat rich and poor countries as equal," he said. "We will not walk out of the talks at this late hour, because we will not allow the failure of Copenhagen. But we will not sign an inequitable deal; we will not accept a deal that condemns 80 percent of the world population to further suffering and injustice." The "rich" nations responded by offering a $10 billion "fast start" fund, with more to be offered later. What happened next is summarized in this <#stdurl http://www.alternet.org/environment/144533/big_news_from_copenhagen%3A_radical_cuts_urged%2C_deal_in_jeopardy_/ "analysis by AlterNet:"#>
"Todd Stern, the Obama administration's chief climate negotiator, said Thursday that he "categorically reject[s]" the suggestion that rich industrial countries owe compensation to the victims of climate change. Stern acknowledged that the emissions of rich nations over the past two hundred years of industrialization had caused global warming, telling a press conference, "We absolutely recognize our historic role in putting emissions in the atmosphere." But, Stern added, "the sense of guilt or culpability or reparations--I just categorically reject that." Stern's statement put him at odds not only with international law but with America's European allies. European Union leaders announced in Brussels today that their governments would provide 7.2 billion Euros over the next three years to help poor nations adapt to sea level rise, drought and other intensifying impacts of climate change. The EU's offer was in keeping with the provisions of the UN Framework Convention on Climate Change--the climate treaty President George H.W. Bush signed at the Earth Summit in 1992 and which the Copenhagen negotiations are seeking to extend. Nevertheless, it was quickly rejected by developing nations and aid agencies as grossly inadequate. "We have talked about $100 billion a year," ambassador Lima told The Nation, citing an estimate the World Bank has made for climate change adaptation by poor nations. "Now we are hearing about $10 billion for three years." "Worst of all, this money is not even new," Tim Gore, the climate adviser to Oxfam EU, told the BBC. "It's made up of a recycling of past promises and payments that have already been made.""
China is playing its own role as one of the so-called "developing nations," making its own demands. Here's what Chinese Vice Foreign Minister He Yafei <#stdurl http://online.wsj.com/article/SB126073495028689701.html "said on Friday:"#>
"Developed countries should, in line with the principles of common but different responsibility, undertake substantial mid-term reduction commitments or targets. They have to fulfill their obligation -- to provide funds to the developing countries, to provide technologies to the developing countries, to help developing countries in capacity building. The priority for developing countries is still the reduction of poverty. It's still economic development. Whatever the outcome, we do wish Copenhagen will have a very good outcome, whatever it is, it should not be done at the expense of the rights to development by developing countries. History is a mirror. History is the basis on which we can move ahead, looking in the future. What is the history of climate change? I think this is why we're here in Copenhagen. For developed countries, they have to face the history squarely. The obligations for developed countries to live up to their commitments in emission reduction and the provision of funds and technology transfer, is an obligation they have undertaken under international instruments. This is the departure point for any international cooperation in climate change."
So it's all about money for these guys. =inc ww2010.h2 deriv "Carbon credits and financial derivatives" In 2007, I wrote <#inc ww2010.weblog.ref e071214b ""UN Climate Change conference appears to be ending in farce,""#> referring to a conference in Bali that attracted hundreds of climate change advocates who generated vast amounts of carbon emissions taking jet planes and sitting in air conditioned meeting rooms, when they weren't out on the beach. In that report, I highlighted one Generation-X banker, Louis Redshaw, Head of Environment Markets, Barclays Capital, who was hoping to make millions of dollars. The scheme was to set up financial derivatives / structured securities based on carbon credits in the same way that other bankers had set up structured securities based on residential mortgages. According to one banker that I quoted, "I think this is likely to get bigger than the interest-rate-swaps market within 10 to 15 years, particularly once America joins in." Well, this is still the hope and dream of every investment banker today. Well, here's <#stdurl http://www.bloomberg.com/apps/news?pid=20601086&sid=aXRBOxU5KT5M "a recent story"#> about what JP Morgan is doing:
"The banks are preparing to do with carbon what they’ve done before: design and market derivatives contracts that will help client companies hedge their price risk over the long term. They’re also ready to sell carbon-related financial products to outside investors. Masters says banks must be allowed to lead the way if a mandatory carbon-trading system is going to help save the planet at the lowest possible cost. And derivatives related to carbon must be part of the mix, she says. Derivatives are securities whose value is derived from the value of an underlying commodity -- in this case, CO2 and other greenhouse gases. “This requires a massive redirection of capital,” Masters says. “You can’t have a successful climate policy without the heavy, heavy involvement of financial institutions.”"
This is so sickening that I can barely type because of how much it infuriates and disgusts me. =inc ww2010.h2 sleaze "Climate research and sleaze" The whole "climate change" movement has reeked with sleaze for years, and it's very similar to the sleaze that's permeated the financial industry. So even if some (or all) of the climate change claims are true, they're so buried in sleaze that they're almost irrelevant. You have people like Al Gore living in expensive mansions and driving expensive cars. You have climate researchers jetting around to places like Bali and Copenhagen, when they could be meeting via videoconferencing, saving huge amounts of carbon. These people obviously don't believe a word they're saying about climate change, but feel that they can get away with anything they want. In November, thousands of <#stdurl http://www.nytimes.com/2009/11/21/science/earth/21climate.html?scp=3&sq=anglia&st=cse "e-mail messages were hacked"#> from the web server at East Anglia University. The messages are begin in 1996 and continue until October of this year. This place has been at the heart of the climate "science" that supposedly proves the climate change claims. The hacked e-mail messages showed a pattern of deception and fraud by these "scientists." The scientists urge one another to smooth over data and hide unfavorable data; to enforce a unified view; and to blackball scientists with opposing views. If you'd like to read the hacked e-mail messages yourself, go to <#stdurl http://www.eastangliaemails.com#> . Nothing in the hacked e-mail messages surprises me. These are the same kinds of people that you find at financial institutions selling worthless mortgage-backed securities to investors. Phil Jones, who is director of East Anglia's Climate Research Unit, was forced to step down after some of his e-mail messages revealed egregious violations of scientific honesty. He was <#stdurl http://online.wsj.com/article/SB10001424052748703939404574566124250205490.html?mod=WSJ_hp_mostpop_read "the recipient"#> or co-recipient of some $19 million in grants between 2000 and 2006. So of course he's going to sell a bill of goods to anyone who'll listen, just as the investment bankers did. They're all of the same mold. They're all pigs at the trough, anxious to scoop up their fat grants, not caring who else gets screwed. =inc ww2010.h2 sing "Climate change and the Singularity" In addition to all the general sleaze surrounding climate change, there's another reason why I know in my gut that the climate change scientists are lying, having to do with the Singularity. I <#inc ww2010.weblog.ref e091112 "mentioned"#> this reason recently, but now I would like to discuss it some more. The Singularity is the point in time, around 2030, when computers will become more intelligent than humans, and will be able to improve themselves, so that they'll soon far surpass humans in intelligence. The approach of the Singularity is far more certain than the climate change claims. Computers have been doubling in power every 18 months for decades, and that trend is certain to continue. Several years ago, I designed a software architecture that would use this computer power to create a computer capable of doing everything that a human can, and much more, and much faster. (See <#hreftext ww2010.i.robot040709 ""I, Robot is science fiction, but intelligent computers will soon be science fact.""#> and <#hreftext ww2010.book2.next "Chapter 7 - The Singularity"#> in the book Generational Dynamics for Historians for more information on all of this.) So I personally know with certainty that the Singularity is coming, because I've laid out how it will occur. And I'm certainly not alone in that. There are thousands of scientists and engineers who have gone through the process of understanding how the Singularity will come about. Ray Kurzweil has popularized this understanding through his book, The Singularity is Near, and has a forthcoming movie that can be previewed at <#stdurl http://singularity.com/#> So the approach of the Singularity is not in any reasonable doubt at all. There is only a debate about the date. My estimate is 2030, but other estimates range from 2020 to 2040. So when climate scientists start talking about rising sea levels in 2050 and 2075, it's total nonsense. There is absolutely no way to know anything about what will happen after the Singularity occurs. But it's much worse than that. Here you have hundreds of brilliant climate change scientists, and apparently not a single one has considered the possibility that everything they're doing is meaningless with the Singularity coming. I did a search of the <#stdurl http://www.eastangliaemails.com "hacked East Anglian e-mail messages"#> for the word "Singularity," and it doesn't appear once. You would think that these brilliant scientists would have at least asked the question of one another: "Hey, what about the Singularity?" But apparently it was never asked once. It must have been forbidden subject, since it conflicts with their own claims. But let's suppose that you consider the claims of the Singularity to be "too gloomy," or you think that a computer can never think like a human because it doesn't have a human soul, or something like that. Even so, the world is on the verge of a cornucopia of new computer technology that will change the world. In the next ten years, computers will increasingly be able to make human-like decisions in limited areas, and perform tasks that require judgment far beyond what computers can do today. I discussed this in my <#inc ww2010.weblog.ref e090725 "July article"#> on the health care proposal. For example, within a few years we'll have computerized robots that can take care of a sick person in the home or hospital. They can monitor the patient 24 hours per day, take your temperature, dispense pills, give shots and provide meals. They will have computer vision and hearing, and will be able to respond to simple patient requests like, "Please bring me a glass of water." If something happens that they can't handle, they will wirelessly call for a real live human nurse or doctor. This is the kind of health care technology that can barely be imagined today, yet it's really only a decade or so away. The same computer technology will provide solutions to global warming that can barely be imagined today. For example, perhaps there will be intelligent battery driven vehicles that can navigate traffic with no driver, and so will replace the need for most cars. What all of this means is that nothing that the climate change advocates are saying has any meaning whatsoever. And the fact that these scientists aren't even discussing it means to me that they're purposely avoiding the subject because it conflicts with their agenda. So we'll all be watching what happens at the climate change conference in Copenhagen next week. With so much sleaze and with so many people grasping for their handouts, all we can do is hope that nothing happens. =inc ww2010.h2 kaye "Danny Kaye and Wonderful Copenhagen" Let's close this article with some music from an earlier, simpler time. Here's <#stdurl http://youtube.com/watch?v=eEwdroXuL8A "a video"#> of the song "Wonderful wonderful Copenhagen" from Danny Kaye's 1953 movie, "Hans Christian Andersen":
(Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=9&t=178 "Climate Change"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091212 Obama's Nobel Prize speech defends a 'just war' in Afghanistan =data ww2010.weblog.y2009.e091212.head Obama's Nobel Prize speech defends a "just war" in Afghanistan =data ww2010.weblog.y2009.e091212.keys =data ww2010.weblog.y2009.e091212.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091212.date 12-Dec-2009 =data ww2010.weblog.y2009.e091212.txt1 This is President Obama's most significant speech since the election. =data ww2010.weblog.y2009.e091212.txt2 People <#stdurl http://www.csmonitor.com/USA/Politics/2009/1210/left-and-right-pundits-applaud-obama-nobel-peace-prize-speech "on the left and right"#> are applauding Thursday's speech, both for its rhetorical eloquence and for its thoughtful content. Much of <#stdurl http://www.whitehouse.gov/the-press-office/remarks-president-acceptance-nobel-peace-prize "the 40 minute speech"#> was pure politics. But there were portions of the speech that are relevant to Generational Dynamics theory. Here are some excerpts:
"Now these questions are not new. War, in one form or another, appeared with the first man. At the dawn of history, its morality was not questioned; it was simply a fact, like drought or disease -- the manner in which tribes and then civilizations sought power and settled their differences."
From the point of view of Generational Dynamics, war has always been a necessity because population keeps growing faster than the availability of resources such as land, food and water. If there isn't enough food for everyone to survive, if a man can't feed his family, then there will be war. That's still true today. The easiest way to look at a war is to compare it to a natural disaster, such as a hurricane or earthquake. Looked at that way, a war is not "good" or "bad" or "good" or "evil." Mankind as a species could not have survived without sex, and equally could not have survived without genocidal war. Both are part of our DNA.
"And over time, as codes of law sought to control violence within groups, so did philosophers and clerics and statesmen seek to regulate the destructive power of war. The concept of a "just war" emerged, suggesting that war is justified only when certain conditions were met: if it is waged as a last resort or in self-defense; if the force used is proportional; and if, whenever possible, civilians are spared from violence."
As a kid this concept puzzled me. If you're trying to kill the enemy, how can one way of killing them be any more "just" than another? What's interesting about Obama's definition of a "just war" is roughly the same as a non-crisis war in generational theory. However, every nation goes through a generational Crisis era every 70-90 years or so, and that almost always means a crisis war. And a crisis war is fought with what I like to call increasing "genocidal fury." At these times, the people fighting the war believe that the very existence of their nation and their way of life is at stake, and that's when the value of any life, civilian or otherwise, becomes less important than the need to preserve the nation.
"Of course, we know that for most of history, this concept of "just war" was rarely observed. The capacity of human beings to think up new ways to kill one another proved inexhaustible, as did our capacity to exempt from mercy those who look different or pray to a different God. Wars between armies gave way to wars between nations -- total wars in which the distinction between combatant and civilian became blurred. In the span of 30 years, such carnage would twice engulf this continent. And while it's hard to conceive of a cause more just than the defeat of the Third Reich and the Axis powers, World War II was a conflict in which the total number of civilians who died exceeded the number of soldiers who perished."
Actually, most wars are "just wars," because there are more non-crisis wars than crisis wars.
"In the wake of such destruction, and with the advent of the nuclear age, it became clear to victor and vanquished alike that the world needed institutions to prevent another world war. And so, a quarter century after the United States Senate rejected the League of Nations -- an idea for which Woodrow Wilson received this prize -- America led the world in constructing an architecture to keep the peace: a Marshall Plan and a United Nations, mechanisms to govern the waging of war, treaties to protect human rights, prevent genocide, restrict the most dangerous weapons. In many ways, these efforts succeeded. Yes, terrible wars have been fought, and atrocities committed. But there has been no Third World War. The Cold War ended with jubilant crowds dismantling a wall. Commerce has stitched much of the world together. Billions have been lifted from poverty. The ideals of liberty and self-determination, equality and the rule of law have haltingly advanced. We are the heirs of the fortitude and foresight of generations past, and it is a legacy for which my own country is rightfully proud. And yet, a decade into a new century, this old architecture is buckling under the weight of new threats. The world may no longer shudder at the prospect of war between two nuclear superpowers, but proliferation may increase the risk of catastrophe. Terrorism has long been a tactic, but modern technology allows a few small men with outsized rage to murder innocents on a horrific scale."
This is a concept that I've discussed many times. After World War II ended, the survivors were determined that nothing so horrible should ever happen again. So they set up institutions and programs -- the United Nations, the World Bank, the International Monetary Fund, the World Health Organization, the Green Revolution -- whose purpose was to protect the world from repeating the horrors of WW II. But the generations that grew up after the war ended -- the Boomers, the Gen-Xers, the Millennials -- did not experience WW II and could not grasp its horrors. They took society's survival for granted, and individual rights became more important that society's survival. As a result, all of these institutions and programs have been unraveling for decades.
"Moreover, wars between nations have increasingly given way to wars within nations. The resurgence of ethnic or sectarian conflicts; the growth of secessionist movements, insurgencies, and failed states -- all these things have increasingly trapped civilians in unending chaos. In today's wars, many more civilians are killed than soldiers; the seeds of future conflict are sown, economies are wrecked, civil societies torn asunder, refugees amassed, children scarred."
This is out of touch with reality. Every crisis civil war is in this category. That includes America's Civil War. There have been many such civil wars since WW II, such as the Communist Revolution in China, the war between the Muslims and Hindus on the Indian subcontinent, the Vietnam War, the Cambodian killing fields, the Rwanda genocide, and many others. There's nothing new about such wars.
"I do not bring with me today a definitive solution to the problems of war. What I do know is that meeting these challenges will require the same vision, hard work, and persistence of those men and women who acted so boldly decades ago. And it will require us to think in new ways about the notions of just war and the imperatives of a just peace. ..."
It's good to think in new ways, I suppose, but it's a mistake to think that anything will change. Obama doesn't have a solution because no solution exists. A belief that war can be ended is dangerous because it means you'll become less vigilant and more easily defeated by an enemy.
"I make this statement mindful of what Martin Luther King Jr. said in this same ceremony years ago: "Violence never brings permanent peace. It solves no social problem: it merely creates new and more complicated ones.""
Of course violence never brings permanent peace. Nothing can bring permanent peace. This statement makes as much sense as saying, "Peanut butter never brings permanent peace."
"But as a head of state sworn to protect and defend my nation, I cannot be guided by their examples alone. I face the world as it is, and cannot stand idle in the face of threats to the American people. For make no mistake: Evil does exist in the world. A non-violent movement could not have halted Hitler's armies. Negotiations cannot convince al Qaeda's leaders to lay down their arms. To say that force may sometimes be necessary is not a call to cynicism -- it is a recognition of history; the imperfections of man and the limits of reason. ..."
This is a powerful statement. It's defused the anger on the right from people who said that Obama was a ditherer in foreign policy, and it's defused the anger on the left directed at Obama for escalating the war in Afghanistan. But the statement is fundamentally flawed. Whether someone is "evil" depends on your political point of view. That is, any war can become a just war simply by declaring the enemy "evil." That's what al-Qaeda does when they say that Americans are evil because they're infidels. Another example: Few people would disagree that Saddam Hussein was evil, and therefore, by Obama's own logic, the war in Iraq was justified. Basically, the concept of "evil" as a justification for war is meaningless. That's why I like to say that wars are like natural disasters. Nobody would say that an earthquake was "evil." It just is what it is.
"But the world must remember that it was not simply international institutions -- not just treaties and declarations -- that brought stability to a post-World War II world. Whatever mistakes we have made, the plain fact is this: The United States of America has helped underwrite global security for more than six decades with the blood of our citizens and the strength of our arms. The service and sacrifice of our men and women in uniform has promoted peace and prosperity from Germany to Korea, and enabled democracy to take hold in places like the Balkans. We have borne this burden not because we seek to impose our will. We have done so out of enlightened self-interest -- because we seek a better future for our children and grandchildren, and we believe that their lives will be better if others' children and grandchildren can live in freedom and prosperity. ..."
This is basically the justification for America as "policemen of the world." (See my 2006 article, <#hreftext ww2010.i.awakening060919 "President George Bush talks about a "Third Awakening," but he has his history wrong."#>) Obama's statement could just as easily have come from President Bush in justifying his "neo-conservative" philosophy, which also is historically wrong.
"To begin with, I believe that all nations -- strong and weak alike -- must adhere to standards that govern the use of force. I -- like any head of state -- reserve the right to act unilaterally if necessary to defend my nation. Nevertheless, I am convinced that adhering to standards, international standards, strengthens those who do, and isolates and weakens those who don't."
This sounds nice, but there's no evidence to support it. There's no doubt that President Obama's speech was brilliant and eloquent, a tour de force. What bothers me about it is the same as what bothered me about his campaign speeches: I'm afraid that he believes what he's saying. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?t=61 "President Barack Obama"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091209 Iran fails to smash student protests, as the Dubai crisis batters its economy =data ww2010.weblog.y2009.e091209.head Iran fails to smash student protests, as the Dubai crisis batters its economy =data ww2010.weblog.y2009.e091209.keys =data ww2010.weblog.y2009.e091209.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091209.date 9-Dec-2009 =data ww2010.weblog.y2009.e091209.txt1 Huge peaceful student protests in cities across Iran were met with violence =data ww2010.weblog.y2009.e091209.txt2 on Monday, as <#stdurl http://www.nytimes.com/2009/12/08/world/middleeast/08iran.html "police and tens of thousands of Basij militia"#> used teargas, beatings and arrests in a fruitless effort to stop the protests. There were also unconfirmed reports of gunfire. Iran's government had partially shut down internet and mobile phone connections on Monday, but videos of the clashes were posted anyway to YouTube, Twitter and opposition Web sites. Ironically, December 7 has been the day when anti-American rallies have been held in the past, commemorating the deaths of three students during an anti-government protest in 1953, protesting Iran's pro-American policies at that time. What all of these protests have in common is that they're targeted against the Iranian government of the day. These continuing anti-government student protests are typical manifestations of the "generation gap" that takes place in any country's generational Awakening era. This generation gap occurs between the generations that survive a generational Crisis war (in this case, the 1979 Islamic Revolution and the Iran/Iraq war) and the generations that grow up after the war ends. (See <#inc ww2010.weblog.ref e091109 ""Theological split in Iran widens as opposition protests continue.""#>) =inc ww2010.h2 dubai "Dubai financial crisis affects Iran" The recent financial meltdown in the Dubai emirate of the United Arab Emirates (U.A.E.) comes at the worst possible time for Iran's President Mahmoud Ahmadinejad, and for the hardline Iran government. Just as Iran's government is facing its greatest internal domestic threat from student protests, the Dubai crisis threatens Iran's economy and its external import/export regime. Iran is heavily invested in Dubai, and it appears that <#stdurl http://www.asianjournal.com/dateline-usa/15-dateline-usa/3802-dubai-seeks-debt-restructuring.html "Iran has purchased 30%"#> (tens of billions of dollars) of Dubai's real estate currently in financial distress. Dubai's real estate values have already fallen 50% since January, and so Iran is poised to suffer large, significant losses. Even more important to Iran is Dubai's strategic importance. Iran has been under trade sanctions first imposed by President Bill Clinton's administration in 1996, and later increased in President George Bush's administration and by the United Nations. In the past couple of months, Iran has really been sticking it to the international community by announcing aggressive new nuclear development programs, with the result that, led by President Obama's administration, the UN is considering even greater sanctions. Dubai has served Iran by providing a conduit by which Iran could bypass the sanctions. Dubai is a major exporter to Iran and a major re-exporter of Iranian goods. The trade between Iran and Dubai is one of the <#stdurl http://www.businessinsider.com/the-geopolitics-of-the-dubai-debt-crisis-its-iran-vs-the-united-states-2009-11 "principal sources of Tehran's confidence"#> that it can survive US-led sanctions. Iran has been <#stdurl http://www.washingtoninstitute.org/templateC05.php?CID=3147 "receiving high-tech equipment"#> for its missile and nuclear programs via Dubai, and most of Iran's gasoline imports also come via bunkering facilities in Dubai, according to the Washington Institute for Near East Policy. Unlike its neighbor Abu Dhabi, Dubai has little oil revenue, and has sought to generate income through ultra-extravagent real estate development and credit abuse that exceeds even the West in debauchery and depravity. They got away with building up some $100 billion in debt because investors have always assumed that Abu Dhabi would continue to bail out Dubai whenever necessary. However, Abu Dhabi is allied with Saudi Arabia and the West, and is apparently going to hold back any bailout of Dubai unless Dubai stops allowing Iran to bypass the trade sanctions. According to <#stdurl http://debka.com/headline.php?hid=6400 "reporting by Debka,"#> Abu Dhabi will provide $50 billion in bailout money in return for control of Dubai's ports and the imposition of strict fiscal and monetary laws and regulations. Thus, the Dubai financial crisis has the potential to cause some significant power shifts in the Persian Gulf region, especially with respect to the escalating power struggle between Iran and Saudi Arabia. (See October article, <#inc ww2010.weblog.ref e091022 ""Furious Iran blames Pakistan, US and Britain for Sunday's terrorist attacks,""#> and September article, <#inc ww2010.weblog.ref e090913 ""Escalating civil war in Yemen threatens to pull in Iran, Saudi Arabia and U.S.""#> =inc ww2010.h2 wild "A dangerous wild card" Tehran has been riding high for a few years. Suddenly, in the space of a few months, Tehran is being backed into a corner. The student protests are a serious existential threat to Iran's hardline government -- something that couldn't even be imagined before June. And now, in the last month, with the government under domestic attack, the Dubai crisis has dramatically weakened Iran internationally and financially. As I've <#inc ww2010.weblog.ref e070702 "said in the past,"#> Iran is a very dangerous wild card in international politics. Ahmadinejad has plans to gain hegemony over the entire Mideast, including the Arabian peninsula. To that end, he's been funding Hizbollah in Lebanon, and terrorist Palestinian groups, including Hamas, and the Houthi rebels in Yemen. The Tehran government may be getting increasingly desperate, like a trapped animal. We've already seen how they've jailed and slaughtered their own students for peaceful protests, perpetrating violence that's gone considerably farther than I had expected. Still, the student protests seem only to be growing, as would be expected in a generational Awakening era. The real danger is that Tehran will now desperately strike out internationally in some way. For example, they might carry out their oft-repeated threats to use mines and missiles to block the Strait of Hormuz, causing an international oil crisis. One possible sign of this is a <#stdurl http://www.foxnews.com/story/0,2933,579640,00.html?test=latestnews "recent rant by Mahmoud Ahmadinejad"#> in a speech last week. The Iranian President accused America and the West of devising plans to prevent the coming of the Hidden Imam. (See <#inc ww2010.weblog.ref e091109 ""Theological split in Iran widens as opposition protests continue.""#>) Ahmadinejad's bizarre rant may be a sign that he's cracking up, or it may be a sign that he's laying the groundwork for some kind of religious justification for creating a new crisis. One thing seems pretty certain -- that Iran's government in its current form cannot survive against this growing internal political opposition. A civil war something like the 1979 Islamic Revolution is, of course, impossible during a generational Awakening era, but the level of political and generational conflict will increase for years. And as I've said many times (see, for example, <#inc ww2010.weblog.ref e080405 ""China 'betrays' Iran, as internal problems in both countries mount""#>), when all is said and done, I expect Iran to be on the side of America and the West, including Israel, when forced to make a choice in the coming Clash of Civilizations world war. It's possible that Iran is close to the next major step in that scenario. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=120 "Iran"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091206 People are shocked! shocked! at Obama's war plan in Afghanistan. =data ww2010.weblog.y2009.e091206.head People are shocked! shocked! at Obama's war plan in Afghanistan. =data ww2010.weblog.y2009.e091206.keys =data ww2010.weblog.y2009.e091206.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091206.date 6-Dec-2009 =data ww2010.weblog.y2009.e091206.txt1 Too bad they didn't listen to Obama's campaign speeches. =data ww2010.weblog.y2009.e091206.txt2 In <#stdurl http://www.whitehouse.gov/the-press-office/remarks-president-address-nation-way-forward-afghanistan-and-pakistan "his speech"#> last week on Tuesday, President Barack Obama announced that he will direct the armed forces to send 30,000 more American troops to Afghanistan. This is Obama's second major escalation of the Afghan war since he took office in January, having ordered the deployment of 22,000 additional troops earlier this year. It will bring the U.S. forces in Afghanistan to more than 100,000 troops, and more than half of them will have been deployed by President Obama. My friends who voted for Obama are suddenly completely disillusioned. "I'm beginning to have serious doubts about Obama," said one of them darkly. During the election campaign, Obama supporters, suffering from Bush Derangement Syndrome, were drooling with erotic pleasure almost every time he opened his mouth. It's too bad that they were so engulfed with passion that they didn't bother to listen to what he actually said. During the election campaign, Obama could say anything he wanted, as long as he criticized President Bush. He would receive wildly enthusiastic cheers from his supporters no matter what the content of his speech. As I wrote in July, 2008, in <#inc ww2010.weblog.ref e080725 ""Barack Obama in Berlin calls for greater European militarism,""#> it was clear that the people, in America and Europe, who were wildly cheering Obama had absolutely no idea what he was talking about. They were cheering a fantasy Obama, not the real Obama standing before them. As I wrote about the Berlin speech, I quoted the following excerpt:
"This is the moment when we must defeat terror and dry up the well of extremism that supports it. This threat is real and we cannot shrink from our responsibility to combat it. If we could create NATO to face down the Soviet Union, we can join in a new and global partnership to dismantle the networks that have struck in Madrid and Amman; in London and Bali; in Washington and New York. If we could win a battle of ideas against the communists, we can stand with the vast majority of Muslims who reject the extremism that leads to hate instead of hope. This is the moment when we must renew our resolve to rout the terrorists who threaten our security in Afghanistan, and the traffickers who sell drugs on your streets. No one welcomes war. I recognize the enormous difficulties in Afghanistan. But my country and yours have a stake in seeing that NATO's first mission beyond Europe's borders is a success. For the people of Afghanistan, and for our shared security, the work must be done. America cannot do this alone. The Afghan people need our troops and your troops; our support and your support to defeat the Taliban and al Qaeda, to develop their economy, and to help them rebuild their nation. We have too much at stake to turn back now. This is the moment when we must renew the goal of a world without nuclear weapons. The two superpowers that faced each other across the wall of this city came too close too often to destroying all we have built and all that we love. With that wall gone, we need not stand idly by and watch the further spread of the deadly atom. It is time to secure all loose nuclear materials; to stop the spread of nuclear weapons; and to reduce the arsenals from another era. This is the moment to begin the work of seeking the peace of a world without nuclear weapons."
So now I would say this to my friends who drooled over Obama: What the hell are you complaining about? You got what you deserve, so man up and quit whining. And let's not forget that this is (at least) the second time in six years that people didn't pay attention. When the ground invasion of Iraq began in 2003, it was overwhelmingly popular with the American people, and with almost everyone in Congress. It's only when things started going badly, that suddenly these same people decided that they must have been lied to, and that President Bush was the Devil's Spawn. How much longer will it be before Obama's supporters decide that he's also the Devil's Spawn? Listening to the Sunday morning news talk shows today, I don't believe that I heard anyone outside of the Administration say that he liked <#stdurl http://www.whitehouse.gov/the-press-office/remarks-president-address-nation-way-forward-afghanistan-and-pakistan "President Obama's speech on Tuesday."#> Here's the most important excerpt:
"This review is now complete. And as Commander-in-Chief, I have determined that it is in our vital national interest to send an additional 30,000 U.S. troops to Afghanistan. After 18 months, our troops will begin to come home. These are the resources that we need to seize the initiative, while building the Afghan capacity that can allow for a responsible transition of our forces out of Afghanistan.
People on the left criticized it because it was another escalation of the Afghan war. People on the right criticized it because of the 18-month deadline. And listening to the Sunday morning news talk shows, there's apparently a lot of confusion over how firm that 18-month deadline is. It seems that most people (including myself) believe that the 18-month deadline was added as a sop to his supporters on the left, and that in practical terms it's meaningless. (By the way, how are those other promises going -- closing Guantanamo in one year, and pulling the troops out of Iraq in 16 months?) What we're seeing here is Generational Dynamics in action. President Obama is very young, and so he doesn't have much credibility on the world stage. What little credibility he started with has been used up bowing to foreign emperors, and advocating policies in Iran and the Mideast that <#inc ww2010.weblog.ref e090928 "are turning into disasters."#> A worse irony is that President Obama's Afghan war strategy is modeled after President Bush's "surge" strategy in Iraq, something that Senator Obama bitterly opposed before it turned out to be successful. However, as I wrote in <#inc ww2010.weblog.ref e090926 ""American army general warns of imminent defeat in Afghanistan war,""#> the Iraq "surge" strategy will not work in Afghanistan. Meanwhile, what's coming up next week is so ludicrous, that even by today's low standards it's hard to believe. First, President Obama is going to Oslo to accept his Nobel "peace" prize, where I understand he'll give a speech explaining why he's escalating the war. Next, President Obama is going to Copenhagen to give a boost to the <#inc ww2010.weblog.ref e071214b "latest farcical climate change conference,"#> a week after <#stdurl http://www.nytimes.com/2009/11/21/science/earth/21climate.html?scp=3&sq=anglia&st=cse "hacked 'Climategate' e-mail messages"#> showed a pattern of deception and fraud among climate researchers that's similar to the deception and fraud used by financial institutions like Goldman Sachs or Citibank. Mr. Obama will make promises in Copenhagen that everyone knows don't even make sense, and will be rejected by Congress, just as Vice President Al Gore's promises in the 1990s were rejected by Congress. I've written many times that if Al Gore had been President after 9/11, then we still would have invaded Iraq, and we would have been in the same place today. (See <#inc ww2010.weblog.ref e080217 ""The Iraq war may be related to the bombing of Hiroshima and Nagasaki.""#>) When generational forces are at play, politicians have no choice but to follow. Now we're seeing the same thing with President Obama and the Afghan war. President Obama undoubtedly wishes that things might go differently, but he's doing what he has to do. The Afghan war is following a certain path as part of the approach to the Clash of Civilizations world war, and neither Obama nor any other politician can change that. Still, it would be nice if President Obama didn't always look like he has no clue what's going on in the world. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=4 "Afghanistan, Pakistan and India"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091203 Goldman Sachs employees, doing 'God's work,' are acquiring handguns =data ww2010.weblog.y2009.e091203.head Goldman Sachs employees, doing "God's work," are acquiring handguns =data ww2010.weblog.y2009.e091203.keys =data ww2010.weblog.y2009.e091203.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091203.date 3-Dec-2009 =data ww2010.weblog.y2009.e091203.txt1 Worries about a "populist uprising against the bank." =data ww2010.weblog.y2009.e091203.txt2 I've been writing this web site for over seven years now, and I've been called many names in that time. A <#inc ww2010.weblog.ref e061230 "posting that appeared in 2006"#> drew criticisms of being "crazy" and "alarmist." It appeared at the height of the credit bubble, and I said the following:
"But what's happened in the last five years is so overwhelming that it can barely be grasped by the human mind. An ordinary 1990s stock market bubble, as bad as it was, has been turned, with the connivance of economic experts, journalists, professors, investors, central bankers, pundits and politicians, into a worldwide bubble of incredibly fastastic proportions that's so huge and so obvious that every expert should see it. Or maybe it's like the whole planet earth has turned from being an ordinary planet into a huge bubble planet, so that it's impossible to see what's going on any more. Do you remember what happened in 2001 after the Nasdaq crash and the Enron scandal? People wanted to put CEOs in jail -- ALL CEOs, even perfectly honest ones. People were going crazy. Well, it's going to happen again. The Enron scandal is one historical example, but a better example might be the bankruptcy of the French Monarchy in 1789 that led to the French Revolution. In the Reign of Terror that followed, any person who was an aristocrat, a relative of an aristocrat, a friend of an aristocrat, a servant of an aristocrat, or even had a resemblance to an aristocrat, would be tried and quickly convicted and sentenced to the guillotine. So as we enter 2007, I have some advice for the economics experts, journalists, professors, investors, central bankers, pundits and politicians that have been telling us that everything is OK and getting better: You'd better have your underground bunker picked out, because people are going to be coming after you, and the guillotine is going to seem mild compared to the punishment that they're going to want to inflict on you."
Now we're beginning to see the first signs of those warnings coming to fruition. Bloomberg reporter <#stdurl http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahD2WoDAL9h0 "Alice Schroeder has found"#> that Goldman Sachs employees are purchasing handguns for self-defense against a possible "populist uprising":
"Arming Goldman With Pistols Against Public “I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank. I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that “as a preliminary matter” it believes some of the bankers I inquired about do have pistol permits. The NYPD also said it will be a while before it can name names."
This story has not been confirmed by Goldman Sachs, but it's been quoted in many places, and so far it hasn't been denied either. Goldman's employees must be very frightened. And well they should be. These people were at the heart of the fraud that resulted in the real estate and credit bubble crashes. They defrauded investors out of hundreds of billions of dollars by creating and selling mortgage-backed securities and derivatives that have now turned out to be almost worthless. As I've pointed out many times, the circumstantial evidence is overwhelming that they did this on purpose. Their excuse is that they didn't know that the structured securities they were creating would become worthless. That excuse might have worked in 2002, 2003, 2004, and 2005, but by 2006 it was becoming clear that the computerized models they were using to create these securities were failing. And by 2007, the failures were glaringly obvious to anyone who (like myself) bothered to figure out what was going on. If the bankers at Goldman, Citibank, Bank of America, Bear Stearns and Lehman Brothers had been honest, then they would have warned their investors that the models were becoming questionable. Instead, they redoubled their sales efforts, to sell as many of these securities as they could before the roof caved in. And they made billions of dollars in commissions for themselves by perpetrating this fraud. This behavior has not changed, but has only taken a different form. These bankers, the exact same people who perpetrated the previous frauds, are now paying themselves million dollar bonuses, to reward themselves for having been clever enough to accept government bailouts. And Citibank and Bank of America are taking it a step further. They're arbitrarily raising interest rates to 30%, doubling or tripling minimum payments, and engineering phony fees of hundreds or thousands of dollars per customer, and then using the money to pay themselves the million dollar bonuses. These bankers are committing criminal extortion. And yet they're totally oblivious to the amount of hatred that they're generating against themselves. In <#stdurl http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6907681.ece "a story last month"#> in the London Sunday Times, based on an interview with Lloyd Blankfein, chairman and CEO of Goldman Sachs, author John Arlidge reports, "Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker 'doing God’s work.'" In <#stdurl http://www.vanityfair.com/business/features/2010/01/goldman-sachs-200101?printable=true " a story to appear in next month's Vanity Fair,"#> Bethany McLean reports, "All in all, Goldman executives seem to be gambling that the current mood, in which the rest of us are rethinking the system that brought us to the very edge, and maybe into the depths, of a vast black pit, will blow over. And they may be right." No, they are not right. From the point of view of Generational Dynamics, we're seeing a repeat of what happened in the 1930s Great Depression. At that time, bankers were doing exactly the same kinds of things they've been doing today -- defrauding investors and paying themselves enormous salaries, fees and commissions. In the investigations that followed until the end of the decade, many bankers went to jail. We're seeing only the bare beginning of the prosecution of these individuals. And as I've said several times on this web site, my parents and teachers hated bankers when I was growing up in the 1950s. I didn't understand why then, though I do now. The current mood will NOT blow over for decades to come. And all this is going on in the context of a Senate Commerce committee investigation that dozens of supposedly honest companies have tricked millions of online customers into paying billions of dollars in mysterious credit card charges. (See <#inc ww2010.weblog.ref e091124 ""How Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines are scamming you online.""#>) In 2005, <#inc ww2010.weblog.ref e051020 "I posted an article"#> describing what happened in 1929. What happens is that during a bubble, there's a lot of financial crime going on -- embezzlement and fraud -- but no one cares, because everyone is making money. After the bubble bursts, people and prosecutors look back to see what happened, and every act is examined. The result is that crimes are discovered and prosecuted years later. Here's how John Kenneth Galbraith described this phenomenon in his 1954 book, The Great Crash - 1929, as follows:
"In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in -- or more precisely not in -- the country's businesses and banks. This inventory -- it should perhaps be called the bezzle -- amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks. The stock market boom and the ensuing crash caused a traumatic exaggeration of these normal relationships. To the normal needs for money, for home, family and dissipation, was added, during the boom, the new and overwhelming requirement for funds to play the market or to meet margin calls. Money was exceptionally plentiful. People were also exceptionally trusting. A bank president who was himself trusting Kreuger, Hopson, and Insull was obviously unlikely to suspect his lifelong friend the cashier. In the late twenties the bezzle grew apace. Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to universal trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed. ... Each week during the autumn more such unfortunates were reveled in their misery. Most of them were small men who had taken a flier in the market and then become more deeply involved. Later they had more impressive companions. It was the crash, and the subsequent ruthless contraction of values which, in the end, exposed the speculation by Kreuger, Hopson, and Insull with the money of other people. Should the American economy ever achieve permanent full employment and prosperity, firms should look well to their auditors. One of the uses of depression is the exposure of what auditors fail to find. Bagehot once observed: "Every great crisis reveals the excessive speculations of many houses which no one before suspected."" [pp. 132-35]
In 1929, these crimes were rampant before the crash, but were not discovered until after the crash, as Galbraith describes. These crimes have been just as rampant in the last few years, and are continuing to this very day. History tells us that the consequences for everyone will be harsh, and are only just beginning to be felt. If Goldman Sachs employees are really acquiring handguns to protect themselves against a "populist uprising" for doing "God's work," then things may get worse than even gloomy people like me expect. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091202 Switzerland shocks itself by passing a ban on minarets. =data ww2010.weblog.y2009.e091202.head Switzerland shocks itself by passing a ban on minarets. =data ww2010.weblog.y2009.e091202.keys =data ww2010.weblog.y2009.e091202.loc ww2010.weblog.log0912 =data ww2010.weblog.y2009.e091202.date 2-Dec-2009 =data ww2010.weblog.y2009.e091202.txt1 The UN is heavily criticizing the ban as "anti-foreigner scaremongering" and "clearly discriminatory," =data ww2010.weblog.y2009.e091202.txt2 after the Swiss voters <#stdurl http://www.swissinfo.ch/eng/news_digest/UN_and_Turkey_slam_minaret_ban.html?siteSect=104&sid=11567101&ty=nd "overwhelmingly ratified"#> a referendum forbidding the building of minarets on any mosques in Switzerland. Switzerland has a fairly small Muslim population, and there are only four mosques with minarets in the entire country, and those will not be affected by the referendum. However, the referendum forbids minarets on new mosques. A minaret is a tower that stretches high above a mosque. Five times a day, a muezzin, or crier, climbs the minaret and intones a call to prayer directed at all Muslims in the vicinity. For those who are unfamiliar with minarets and the Islamic call to prayer, it's well worth your time to take a couple of minutes to watch <#stdurl http://wikicafe.metacafe.com/en/1635286 "this video,"#> which illustrates many mosques with minarets, accompanied by an Adhan, an Islamic call to prayer:
In terms of symbolism and purpose, the above is not much different from a Catholic priest intoning the Lord's prayer, as a bell rings in the steeple of the Church. =inc ww2010.blocking.start <#inc ww2010.pic g091201a.jpg right "" "Campaign poster by Swiss People's party advocating the ban on minarets"#> But the atmospherics surrounding the Muslim call to prayer is quite foreign to a Christian. At times like this, I like to use the phrase "looking for reasons." A Christian who is "looking for reasons" to like Muslims will ignore the difference in atmospherics; one who is "looking for reasons" to dislike Muslims will emphasize the differences. From the point of view of Generational Dynamics, these changes in attitude are highly dependent on the generational era. Europeans and Americans were last in a generational Awakening era in the 1960s and 1970s, and during Awakening eras, attitudes emphasize diversity and commonality. Today, we're into a generational Crisis era, and during Crisis era, public behavior becomes increasingly xenophobic. The party that sponsored the referendum is the anti-immigrant <#stdurl http://www.ausschaffungsinitiative.ch/ "Swiss People's Party,"#> generally <#stdurl http://middleeast.about.com/b/2009/10/27/switzerlands-far-right-war-on-minarets.htm "characterized by the media"#> as "far right-wing." The conducted a very aggressive campaign, symbolized by the above poster, which depicts minarets as missiles being launched by a woman in a burka. =inc ww2010.blocking.end =inc ww2010.blocking.start This was actually a stunning victory for the People's Party. <#inc ww2010.pic g071021.gif center "" "2007 anti-immigration People's Party election poster, declared "racist" by opponents, depicts white sheep kicking a black sheep away from a Swiss flag, with the caption, "Establish your security.""#> =inc ww2010.blocking.end In 2007, the Swiss People's party conducted a very aggressive anti-immigrant Parliamentary election campaign, and got 29% of the vote, making it the largest single party in the Parliament. They called for the forced deportation of any foreign family where any family member is a criminal. The party's campaign featured posters, such as the one shown above, of white sheep kicking a black sheep away from a Swiss flag. (See <#inc ww2010.weblog.ref e071022 ""Anti-immigrant Swiss People's Party makes large gains in election.""#>) This time they got 57.5% of the vote in the referendum, a sharp increase. It's very hard to see any rational reason for banning minarets. An <#stdurl http://www.jpost.com/servlet/Satellite?cid=1259243055210&pagename=JPost%2FJPArticle%2FShowFull "opinion column"#> in the Jerusalem Post by a Muslim writer, sympathetic to the referendum result, defends it for the following reasons: These are all deeply emotional reasons, but they do not explain why banning minarets is going to make the Swiss people any safer. I've written about several examples of European xenophobia on both sides in the past: In the past we described the <#inc ww2010.weblog.ref e060423 "sudden growth in popularity of the British National Party"#> in the UK. And <#inc ww2010.weblog.ref e041214 "Holland became increasingly nationalistic"#> when filmmaker Theo van Gogh was murdered by a Muslim extremist. In 2005, France experienced <#inc ww2010.weblog.ref e051102 "several days of rioting"#> by Muslim youth in the suburbs. A year later, French youth <#inc ww2010.weblog.ref e060411 "counter-rioted"#> over fear of losing jobs to Muslims. Nonetheless, the Swiss referendum vote is a startling new round of purely emotional xenophobia. As the world approaches the "Clash of Civilizations" world war, the fault line between Europeans and Muslims is going to see increasing conflict. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=144 "Europe"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091130 With Dubai threatening default, Greece enters the spotlight =data ww2010.weblog.y2009.e091130.head With Dubai threatening default, Greece enters the spotlight =data ww2010.weblog.y2009.e091130.keys =data ww2010.weblog.y2009.e091130.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091130.date 30-Nov-2009 =data ww2010.weblog.y2009.e091130.txt1 Greece will receive a European Union reprimand this week =data ww2010.weblog.y2009.e091130.txt2 for <#stdurl http://www.bloomberg.com/apps/news?pid=20601085&sid=aBQm_3_RB7.0 "failing to take "credible and sustainable" measures"#> to reduce its budget deficit, according to Bloomberg News. Greece's plight is suddenly the focus of worldwide attention in the financial community because of <#inc ww2010.weblog.ref e091127 "Dubai's bombshell announcement"#> on Wednesday that it would fail to make $3.5 billion in debt repayments next month. Greece is suffering from the same malaise as Dubai (and, for that matter, the U.S.). The government has been <#stdurl http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6630117/Greece-tests-the-limit-of-sovereign-debt-as-it-grinds-towards-slump.html "spending money like mad"#> for years. Public debt is expected to rise from 99% of GDP in 2008 to 135% in 2011. External debt is at 14.5% of GDP, and growing. The situation in Greece wouldn't be causing much concern -- investor complacency has been at an all time high for several weeks now -- but the Dubai situation is making people nervous, and the situation in Greece appears to be similar. Over the weekend, there have been mixed signals over whether Dubai's neighbor, oil-rich Abu Dhabi, would bail Dubai out. In London, the <#stdurl http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6936251.ece "Sunday Times headline"#> was "Abu Dhabi rides in to rescue Dubai from debt crisis." But the <#stdurl http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6679605/Abu-Dhabi-will-not-race-to-Dubais-rescue.html "Sunday Telegraph headline"#> was "Abu Dhabi will not race to Dubai's rescue." I guess from those two headlines, we're to conclude that Abu Dhabi will ride, but not race, help Dubai. According to news reports, Abu Dhabi has $700 billion in cash on hand lying around. With that much cash around, it's strange that it won't help out with Dubai's $3.5 billion debt payment due next month. Apparently, relations are not serene between the two neighboring emirates, both part of the United Arab Emirates (U.A.E.). According to a <#stdurl http://online.wsj.com/public/resources/documents/dubai1129.pdf "statement (PDF)"#> put out by the U.A.E. central bank,
"Central Bank of the UAE announced today that it stands behind UAE banks and branches of foreign banks operating in the UAE . Central Bank has issued a Notice to UAE banks and branches of foreign banks operating in the UAE, making available to them a special additional liquidity facility linked to their current accounts at the Central bank, at the rate of 50 basis points above the 3 months EIBOR."
In other words, the U.A.E. government in Abu Dhabi will make sure that the Dubai problem won't cause a chain reaction putting the U.A.E. banks into default, but it won't do anything to help Dubai itself. That's what's frightening investors, who had assumed that Abu Dhabi would bail out Dubai for sure, as it has several times in the past. Investors in Greece had been hoping that the EU would bail out Greece -- again. The Dubai debacle has caused investors to become anxious. From the point of view of Generational Dynamics, the stock market has been overpriced by 150-200% since 1995, and a stock market crash is 100% certain. (See: <#hreftext ww2010.i.panic070820 ""How to compute the 'real value' of the stock market.""#>) The only issue is the question of what will trigger the coming stock market crash. Next week, we may see whether the situations in Dubai and Greece will begin to settle down, or whether they cause more serious problems. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091127 World markets plunge 3-5% as Dubai bombshell sinks in =data ww2010.weblog.y2009.e091127.head World markets plunge 3-5% as Dubai bombshell sinks in =data ww2010.weblog.y2009.e091127.keys =data ww2010.weblog.y2009.e091127.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091127.date 27-Nov-2009 =data ww2010.weblog.y2009.e091127.txt1 The most extravagant real estate project since the ancient Pyramids is finally faltering. =data ww2010.weblog.y2009.e091127.txt2 <#inc ww2010.pic g091127a.jpg center "" "Palm Jumeirah Islands, one of several groups of man-made islands developed off the coast of Dubai"#> During the halcyon days the real estate bubble, there was extravagance around the world, but nowhere was the extravagance greater than in the Dubai, one of the United Arab Emirates. <#inc ww2010.pic g091127b.jpg right "" "The Burj Dubai hotel, the tallest skyscraper in the world, dominates the Dubai skyline."#> The picture above depicts the Palm Islands, one of several groups of man-made islands that Dubai built in the Persian Gulf. The picture on the right is the Dubai skyline, including the Burj Dubai hotel, the tallest building in the world. No expense was spared in these development projects. Even the opening night parties for the hotels cost millions of dollars apiece. That was until about a year ago. Little is known about Dubai's finances outside of Dubai itself, but it appears that around November 2008, Dubai started laying off people and cutting back on previously committed projects. By February of this year, projects worth $582 billion, or 45% of the value of all developments, <#stdurl http://www.rte.ie/business/2009/1126/dubai2.html "had been put on hold."#> Dubai property values have crashed 50% in 2009. Still, it seemed there was little cause for alarm. Dubai had been hit by the worldwide financial crisis, and as of a few weeks ago, seemed to be <#stdurl http://www.ft.com/cms/s/0/5ad63b00-da79-11de-9c32-00144feabdc0.html "showing signs of recovery."#> Furthermore, the Dubai government has repeatedly said that all debts would be repaid. Finally, everyone assumed that if Dubai was in trouble, they would be bailed out by oil-rich Abu Dhabi. It's pretty obvious in retrospect that Dubai financial and political officials had been lying. This should be no surprise, however, since scamming and lying <#inc ww2010.weblog.ref e091124 "have become the norm these days."#> In fact, as I've pointed out many times on this web site, Washington regulators have repeatedly told financial institutions to lie about the market value of their "toxic assets." One of the worst offenders has been <#inc ww2010.weblog.ref e080208 "New York Insurance Superintendent Eric Dinallo"#> who spent several months in 2008 helping the banks and "monoline" bond insurance companies to collude to commit fraud. So investors in Dubai are said to be "furious" today because they feel they were misled by the Dubai government. Well, why should they be surprised, when there's so much fraud going on openly around the world? I guess they were all taken in by the giddy airhead optimism that I keep complaining about in Washington and CNBC. One example of <#stdurl http://ftalphaville.ft.com/blog/2009/11/26/85521/barclays-capital-change-their-view-on-dubai/ "an airhead analysis"#> is the following from Barclays Bank on November 4:
"We expect several developments to act as positive catalysts for Dubai’s sovereign spreads. First, the likely repayment of the Nakheel sukuk in December. Second, Dubai’s ability to raise the second USD10bn tranche with the support of Abu Dhabi. Third, a successful conclusion of the merger between Emaar and Dubai Holding, as well as a solution allowing mortgage providers Amlak and Tamweel to resume lending. On that basis, we recommend a long position in Dubai sovereign credit and see today’s negative price actions as an opportunity to buy. While the newly issued sukuk is our preferred instrument, we also feel comfortable in a recommendation to sell 5y CDS outright or against the CDX EM Index in a relative value trade."
(Note: A sukuk is a bond issued under Islamic Sharia law.) Anyone who followed Barclay's airhead advice on November 4 is in deep trouble today. At any rate, investors, creditors and financial institutions around the world were shocked and surprised by the bombshell that was set off on Wednesday. Dubai World, the major government-owned investment company, announced that they would be unable to meet their $3.5 billion loan payments due next month, and they requested a six month delay. They claimed that all debts ($60 billion) would be repaid, but they just needed a little more time. (If anyone believes that, then I've got a bridge in Brooklyn that I'd like to sell you.) The bombshell announcement was apparently timed to cause as few market effects as possible. It occurred after Wall Street had closed on Wednesday for the Thanksgiving holiday, and at a time when markets in the Mideast are closed for the Muslim religious celebrations in Mecca. Nonetheless, investors were shocked by the news. Many banks in Europe, Asia and the Middle East have invested billions of dollars in Dubai, and are now faced with the possibility of losing their investments. On Thursday and Friday, markets in Europe and Asia were down 3-5%. On Friday morning, Wall Street futures were down 2%. Abu Dhabi is now facing world wide pressure to bail out its neighbor, Dubai. They've already said that they won't do that, but whether they change their minds remains to be seen. From the point of view of Generational Dynamics, nothing has changed from what this web site has been saying for almost seven years. We're entering a new 1930s style Great Depression, and nothing has happened to change that. That forecast was based on a long-term analysis of stock market trends. (See: <#hreftext ww2010.i.panic070820 ""How to compute the 'real value' of the stock market.""#>) Those conclusions are just as valid today as they were in 2002, despite several huge bubbles that have occurred since then. The only issue is the question of what will trigger the coming stock market crash. Perhaps it will be the Dubai default, or perhaps it will be something else. But it's coming with absolute certainty. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091124 How Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines are scamming you online =data ww2010.weblog.y2009.e091124.head How Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines are scamming you online =data ww2010.weblog.y2009.e091124.keys =data ww2010.weblog.y2009.e091124.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091124.date 24-Nov-2009 =data ww2010.weblog.y2009.e091124.txt1 If you're seeing "mysterious" $10-20 credit card charges, here's why. =data ww2010.weblog.y2009.e091124.txt2 Here's how the scam works: The Senate Commerce Committee has been investigating this scam since May. A recent <#stdurl http://commerce.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=1c0794dc-94a7-4527-9ebe-6b2b2d5a8c59&Month=11&Year=2009 "Commerce Committee press release"#> lists the companies under investigation: 
    1-800-FLOWERS.com, Inc.     Hotwire, Inc.            Priceline.com, Inc.
    AirTran Holdings, Inc.      Intelius, Inc.           Redcats USA, Inc.
    Classmates.com, Inc.        Movietickets.com, Inc.   Shutterfly, Inc.
    Continental Airlines, Inc.  Orbitz Worldwide, Inc.   US Airways Group, Inc.
    FTD, Inc.                   Pizza Hut, Inc.          Vistaprint USA, Inc.
    Fandango, Inc.
According to the Senate Commerce committee, there are three marketing firms under investigation: Affinion, Vertrue, and Webloyalty. These are the firms that charge your credit card every month. This scam has <#stdurl http://news.cnet.com/8301-1023_3-10399880-93.html "netted more than $1.4 billion,"#> by tricking millions of customers. According to the Senate reports, the managers at these firms are fully aware that they're tricking people -- in fact the whole online experience is specifically designed to trick people, and they're aware that customers are furious at being tricked, but they don't care because they're making so much money. You know, Dear Reader, I'm almost sputtering mad as I type things. These companies, Priceline, Orbitz, etc., are supposed to be reputable companies, but instead they're run by people with no morals, no ethics, no decency. These companies are being run by cheap crooks. There is a way to get around this problem, but unfortunately to do so you have to patronize the worst crook of them all: Citibank. I've been using Citibank's "virtual credit card" number service for almost ten years, and it's saved me thousands of dollars. With this service, when you type a credit card number online, or give one over the phone, the number you give them is a unique number obtained from the Citibank web site. When you obtain the number, you specify the maximum amount that can be charged, and you specify an expiration date. Only one vendor is allowed to charge to that number, and only up to the maximum amount and the specified date. I really hate to say anything that endorses Citibank, since they're perpetrating criminal extortion by raising interest rates to 30%, and using the money to pay themselves million dollar bonuses. But as loathesome as Citibank's behavior is, they have the only service of this type that I know of. Paypal and DiscoverCard offer similar services, but you can't specify a maximum amount or a time limit, so those services have only limited usefulness. Only Citibank's service does it right, as far as I know. If you decide to use Citibank's service, make sure that you don't carry a balance on the Citibank credit card. At least that way they can't extort from you by charging you 30% interest. I'm currently living through another example of a scam by a supposedly reputable company. Those of you who have Comcast cable are aware that Comcast is forcing its customers to tune all channels through a cable box, no longer permitting you to bypass a box and use your TV set's tuner. They're providing customers with new DTAs ("Digital Transport Adapters"), and they're providing them for free. I got two DTAs last week. Only one of the two worked, and after a couple of days, the one that worked froze up and stopped working. I went to the Comcast office and swapped them for new ones, and of the two new ones, only one works at all, and it doesn't get all the channels. I've spoken to two different Comcast support people on the phone. One of them told me that the DTAs weren't working for most people, and if you want working boxes, then Comcast wants you to spend $8.00 apiece per month for upgraded cable boxes. He all but said that the DTAs were a Comcast scam. The second Comcast support person denied that it was a scam, but she agreed that my only real choice was to pay an extra $16.00 per month. And these statements are from Comcast employees. All of these companies know that they're scamming customers, but they don't care because they're making so much money. These people have no morals, no ethics, and no decency. I always receive some criticism when I blame Generation-X for things like this, but by this time, almost in the year 2010, all of these companies' decision makers are Gen-Xer's. Throughout my life, I've been aware of a few people who are crooks, but today, with Generation-X in charge, being a crook is the norm. For those of you who are decent, honest, ethical, hard-working members of Generation-X, I apologize for appearing to be stereotyping you, but what we're seeing here is that "the bad drives out the good." That is, the few Gen-Xers who are crooks have succeeded in driving out the hard-working decent people from businesses like Citibank, Comcast, Priceline, Orbitz, etc., and all that's left in these businesses are people with the ethics and morals of something you might find under a rock -- and who are proud of themselves, because they're making so much money by screwing you. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091122 UK honors the journalist who documented Stalin's man-made 1932-33 famine in Ukraine =data ww2010.weblog.y2009.e091122.head UK honors the journalist who documented Stalin's man-made 1932-33 famine in Ukraine =data ww2010.weblog.y2009.e091122.keys =data ww2010.weblog.y2009.e091122.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091122.date 22-Nov-2009 =data ww2010.weblog.y2009.e091122.txt1 Known as the "Holodomor," millions of Ukrainians starved to death. =data ww2010.weblog.y2009.e091122.txt2 On November 13, the White House issued a <#stdurl http://www.whitehouse.gov/the-press-office/statement-president-ukrainian-holodomor-remembrance-day "press release:"#>
"Seventy six years ago, millions of innocent Ukrainians – men, women, and children – starved to death as a result of the deliberate policies of the regime of Joseph Stalin. Tomorrow, we join together, Ukrainian-Americans and all Americans, to commemorate these tragic events and to honor the many victims. From 1932 to 1933, the Ukrainian people suffered horribly during what has become known as the Holodomor – “death by hunger” – due to the Stalin regime’s seizure of crops and farms across Ukraine. Ukraine had once been a breadbasket of Europe. Ukrainians could have fed themselves and saved millions of lives, had they been allowed to do so. As we remember this calamity, we pay respect to millions of victims who showed tremendous strength and courage. The Ukrainian people overcame the horror of the great famine and have gone on to build a free and democratic country."
Much of what we know today about the Holodomor comes from a journalist, Gareth Jones, who went to Ukraine and documented the horrors. Jones walked across Ukraine, from village to village, talking to people, and writing down everything he saw and heard in his diaries. There is a major new display of his diaries at Oxford University. His diaries are available online at <#stdurl http://www.garethjones.org/Gareth_Jones_diaries.htm#> Jones <#stdurl http://www.guardian.co.uk/film/2009/nov/13/gareth-jones-story-retold-documentary "walked alone along a railway line,"#> documenting the starvation and cannibalism that killed 4-5 million Ukrainians. On March 29, 1933, Jones' article appeared on the front page of the New York Evening post: "Famine Grips Russia — Millions Dying. Famine on a colossal scale, impending death of millions from hunger, murderous terror ... this is the summary of Mr. Jones's firsthand observations." However, these and other stories, based on Jones' reporting, were not believed (just as people today can't believe that we're headed for a major financial crisis and world war). When the news is too bad, and contradicts conventional wisdom, it's simply rejected. Leading the criticism of Jones was the New York Times, which was a supporter of Josef Stalin, and was just as ideological in its news "reporting" then as it is today. New York Times correspondent Walter Duranty wrote, "There is no famine or actual starvation, nor is there likely to be." He dismissed Jones' eyewitness accounts as a "big scare story". Attacks by Duranty and others <#stdurl http://www.google.com/hostednews/ap/article/ALeqM5jp3RmOWBug3DV2S3i7Jge22_livgD9BUA3R80 "completely discredited Jones."#> Jones worked on other assignments as a journalist, and within a couple of years, Jones was killed under mysterious circumstances -- presumably by Soviet agents. <#inc ww2010.pic caucas5.gif center "" "The Black Sea, Caucasus, Caspian Sea region"#> =inc ww2010.h2 holo "Ukraine vs Russia today on the Holodomor" Ukraine was part of the Soviet Union until the latter broke up in 1991, making Ukraine an independent country. Since then, relations between Ukraine and Russia have been very bitter. Even relations within Ukraine are bitter, since the population of eastern Ukraine are mostly ethnic Russians, while western Ukraine is populated mostly by ethnic Ukrainians. It's worthwhile to take a moment to recall some recent events in this relationship: <#inc ww2010.pic g041211.jpg right "" "Viktor Yushchenko - August 2004 versus October 2004 (Source: AFP)"#> Relations between Russia and Ukraine remain very bitter. There's no Russian ambassador in Ukraine, and Russian president Medvedev has promised that there won't be one as long as Yushchenko is in power. The dispute over the Holodomor has to be seen in that context. =inc ww2010.h2 holo "The Ukraine famine -- the Holodomor" "Holodomor" is the word that Ukrainians use to refer to the 1932-33 famine. The web site <#stdurl http://www.holodomor.org.uk/#> has been set up as part of a campaign to get the UK government to recognize the Holodomor as an act of genocide. Here is <#stdurl http://www.youtube.com/watch?v=9JAiUcqy3lM "a very dramatic video"#>
=inc ww2010.h2 church "Orthodox Church in Kiev and Moscow" Kiev is the capital city of Ukraine, and it's also the cradle of the Russian Orthodox Christian church. The story of how that happened would be simply cute or amusing, if it weren't for the fact that it changed the world. In 980, a pagan named Vladimir became ruling prince of the Slavs, headquartered in Kiev. And Vladimir went religion shopping. According to legend, he rejected Islam, because it forbade alcoholic drink. He sent commissions to visit the Christian Churches. The Bulgarians, they reported, smelt. The Germans had nothing to offer. But Constantinople had won their hearts. There, they said in words often to be quoted, "we knew not whether we were in heaven or earth, for on earth there is no such vision nor beauty, and we do not know how to describe it; we know only that there God dwells among men." Around 988, Vladimir accepted Orthodox Christianity for himself and his people. Vladimir might have chosen Catholicism, and then the Orthodox Christian religion might have disappeared completely. Instead, as the Slav culture moved east to Moscow and formed the Russian Empire in the centuries that followed, the Orthodox Christian religion followed it. Even more important, Moscow inherited the mantle of leading the worldwide Orthodox Church after the Muslims conquered Constantinople (Istanbul, Turkey) in 1453, destroying the Byzantine Empire, the last vestige of the Roman Empire. In 1472, Russia's Grand Prince Ivan III ("Ivan the Great") took the title of Tsar, and thus became the first Tsar of the new Tsarist Russia. ("Tsar," or "Czar," was derived from the name of the Roman Emperor Caesar, as is the German word "Kaiser.") Thus, Ivan would be not only the head of Russia, he would also be head of the "Orthodox" (or "true") Christian Church. Russia's Bolshevik Revolution in 1917 replaced Tsarist Russia with an atheistic Communist government that destroyed much of the Russian Orthodox Church. The Church was revived during World War II when Stalin needed it to support the fight against the Nazis. When the Soviet Union collapsed in 1991, the Russia Orthodox Church regained a special position in the Russia and the Russian Government, but has not fully regained its place as the world leader of the Orthodox churches. In the 1990s, the Orthodox Church also revived in Kiev and Constantinople, along with the existing center in Athens. Under Putin in the 2000s decade, the Russians have been trying to regain supremacy, but are facing resistance from Kiev. =inc ww2010.h2 xx "Church vs Politics and the Holodomor" The Holodomor was not the only famine in human history. Russians experienced a horrible famine in World War II in the Nazi siege of the city of Leningrad. So you would think that, at the very least, the Russians would express some sensitivity to the sufferings of the Ukrainians in the 1932-33 famine. But Ukrainians were infuriated last week when Putin appeared to be <#stdurl http://tap-the-talent.blogspot.com/2009/11/putin-refers-to-holodomor-memorial-as.html "mocking Yushchenko's commemoration of the Holodomor."#> The Russians are infuriated by what they see as <#stdurl http://russiatoday.com/Top_News/2009-04-03/Rewriting_Ukrainian_history__truth_or_falsification.html?fullstory "Ukrainians' rewriting of history,"#> not only of the famine, but also of Ukraine's entire role in World War II. They blame Yushchenko for expelling some Russian diplomats, and look forward to Ukraine's elections next year, hoping that Yushchenko will be defeated. This political cauldron has affected the relations between the Kiev and Moscow branches of the Orthodox Christian Church. The Ukrainian Orthodox Church is under the authority of the Russian Orthodox Church, but a schism has developed. Last year, Ukrainian officials <#stdurl http://www.directionstoorthodoxy.org/n/ukrainian_authorities_negotiate_with_the_constantinople_patriarc.html&thread_style=flat&thread_style=threaded&thread_style=flat&thread_style=threaded&thread_style=flat "asked officials in the Constantinople church"#> to recognize a second church in Kiev, one that is entirely separate from the Moscow church. Thus, while the Russian government is expressing open hostility to the Ukrainian government, the Russian Church has been attempting to reconcile with the Ukrainian Church. When Russian president Medvedev refused an invitation from Yushchenko last year to visit a monument to the Holodomor, the invitation WAS accepted by Archbishop Kirill of the Russian church. This year, Kirill became the leader of the entire Russian church, and he's pursued the theme of reconciliation, <#stdurl http://www.interfax-religion.com/?act=news&div=6253 "by saying,"#>
"This [Holodomor] was a common misfortune for all the people who lived in the same country at the time. ... The famine, dreadful famine, which was entirely the result of a specific policy and became even worse due to natural disasters, claimed an enormous number of lives in Ukraine, Volga region, North Caucasus, Southern Urals, Western Siberia and Kazakhstan."
=inc ww2010.h2 after "After Yushchenko" Moscow hopes that Yushchenko will lose next year's elections, and that relations between Ukraine and Russia will become cordial again. From the point of view of Generational Dynamics, this outcome is almost completely impossible. Yushchenko may or may not lose next year's election, but either way, the hatred is between the Ukrainian and Russian people, and that will not change. Ukraine itself is divided by this hatred, with Ukrainians populating the west, and Russians populating the east. The centuries old historical divide between the Ukrainians and Russians runs very deep, and there's still extreme bitterness over conflicts between Ukrainian and Russian soldiers in World War II. The entire Caucasus and Black Sea region is smoldering with ethnic and religious hatreds. What we <#inc ww2010.weblog.ref e080827 "learned last year"#> as an outcome of the Georgian war is that there isn't much visceral hatred between Georgians and Russians but that there is plenty of genocidal fury between Georgians and Ossetians. In the past, I've frequently referred to the Caucasus region as the most dangerous region in the world (though, at other times, first place was taken by Pakistan or the Mideast). The Caucasus and Black Sea regions were the theatres for extremely bloody wars throughout the 1910s, 1920s, 1930s, and 1940s. From that perspective, the Holodomor was only a small part, but an overwhelmingly important part for the Ukrainians. Generational Dynamics predicts that all of these wars will be re-fought as part of the Clash of Civilizations world war. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=180 "Caucasus and Black Sea region"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091118 In a slap at Washington, Israel announces 900 settlements in East Jerusalem =data ww2010.weblog.y2009.e091118.head In a slap at Washington, Israel announces 900 settlements in East Jerusalem =data ww2010.weblog.y2009.e091118.keys =data ww2010.weblog.y2009.e091118.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091118.date 18-Nov-2009 =data ww2010.weblog.y2009.e091118.txt1 The Obama administration sharply rebuked the Israeli decision =data ww2010.weblog.y2009.e091118.txt2 to tear down Palestinian homes in a disputed East Jerusalem region of the West Bank and <#stdurl http://www.reuters.com/article/topNews/idUSTRE5AG2P520091117 "build 900 settlements."#> This follows by two weeks the <#inc ww2010.weblog.ref e091107 "announcement by Palestinian president Mahmoud Abbas"#> that he'll step down, as the Mideast situation continues to deteriorate. According to <#stdurl http://www.maannews.net/eng/ViewDetails.aspx?ID=240659 "a report sympathetic to the Palestinians,"#>
"Israeli bulldozers demolished a four-story house in Jerusalem as reports in the Israeli media announced the approval of construction of 900 new settlement homes in the Israeli Gilo settlement on Tuesday. Neighbors of Nasry Nassar Al-Husseini said his home, a four-story, multi-family structure in a neighborhood south of the Old City of Jerusalem, was destroyed by Israeli bulldozers as the family looked on. The structure was home to 30 Palestinians. The demolition is part of what Palestinians call an ongoing campaign of Judaizing Jerusalem, including the eviction of Palestinians from their homes, the destruction of Palestinian homes and the continued construction of settlements. According to the Israeli daily newspaper Haaretz, the plan involves the construction of 900 four- and five-bedroom housing units, "in an effort to lure relatively well-off residents.""
A <#stdurl http://www.jpost.com/servlet/Satellite?cid=1258489189931&pagename=JPost%2FJPArticle%2FShowFull "report sympathetic to the Israelis"#> blames the growing rift between Israel and the US on President Obama:
"There is no place outside the US (where, in view of the likelihood of Senate approval of health reform, the situation is a bit different) where people are not disappointed in President Barack Obama. This is not an entirely justified disappointment: Anyone with eyes, particularly here in the Middle East, should have known that his commitments and style could not produce the results he promised. True, the man has vision, charisma and natural leadership qualities, but the trees he has climbed are too high."
This corresponds to an article I posted in September, <#inc ww2010.weblog.ref e090928 ""After a week of foreign policy disasters, President Obama's entire program is adrift.""#> (An <#stdurl http://www.spiegel.de/international/world/0,1518,661678,00.html "article in Der Spiegel on Tuesday"#> begins, "US President Barack Obama came to office promising hope and change. But on climate change, he has followed in the footsteps of his predecessor, George W. Bush. Now, should the climate summit in Copenhagen fail, the blame will lie squarely with Obama. ... Obama Lied to the Europeans. Barack Obama cast himself as a "citizen of the world" when he delivered his well-received campaign speech in Berlin in the summer of 2008. But the US president has now betrayed this claim. In his Berlin speech, he was dishonest with Europe." Readers may wish to look back at how I described that speech in July, 2008, in <#inc ww2010.weblog.ref e080725 ""Barack Obama in Berlin calls for greater European militarism.""#>) Ever since I first posted <#hreftext ww2010.i.may01 ""Mideast Roadmap - Will it bring peace?""#> in May 2003, I've been following the turns in the Mideast, especially the continuing deterioration that followed the <#inc ww2010.weblog.ref e041114 "death of Yasser Arafat"#> in November, 2004. This includes three wars that have occurred since Arafat's death: Israelis vs Hizbollah in Lebanon in 2006, Palestinian Fatah vs Hamas in Gaza in 2008, and Israelis vs Hamas in Gaza in 2009. I can't prove this, but it now appears to me that there is a change in attitude going on in the Mideast. I began to touch on this a couple of days ago in <#inc ww2010.weblog.ref e091117 ""Lebanon agrees on a unity government with Hizbollah.""#> During the Bush administration, it seems to me, the Israelis felt that they were being fully supported, while the Palestinians felt resigned to wait for something to change. But Obama's campaign and presidency raised hugely unrealistic expectations on both sides, and now both sides are becoming aware how unrealistic they are. This is going to shift power away from moderates into the hands of Hamas and the radicals. I've been very critical of Obama's extravagant and unrealistic promises, and of the mistakes he's made because of his youth and inexperience. But this is a good time to say again that, from the point of view of Generational Dynamics, what politicians do makes no predictable difference on the course of events. The Mideast is headed for a major war between Israelis and Palestinians, refighting the genocidal war that began in 1948 with the partitioning of Palestine and the creation of the state of Israel, and there is nothing that President Obama or any other politician can do to cause this or prevent it. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=27 "Middle East"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091117 Lebanon agrees on a unity government with Hizbollah =data ww2010.weblog.y2009.e091117.head Lebanon agrees on a unity government with Hizbollah =data ww2010.weblog.y2009.e091117.keys =data ww2010.weblog.y2009.e091117.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091117.date 17-Nov-2009 =data ww2010.weblog.y2009.e091117.txt1 Meanwhile, tension between Saudi Arabia and Iran is increasing. =data ww2010.weblog.y2009.e091117.txt2 The west breathed a sigh of relief earlier this year in June, when the pro-Western coalition <#stdurl http://www.timesonline.co.uk/tol/news/world/middle_east/article6452810.ece "defeated the pro-Syria Hizbollah bloc"#> in Lebanon's parliamentary elections. The pro-Western coalition, known as the "March 14" bloc, is led by Prime Minister Saad Hariri, the son of Rafiz Hariri, who was killed by a terrorist bomb in February, 2005. (See <#inc ww2010.weblog.ref e050216 ""Massive Beirut explosion killing Rafiq Hariri puts Lebanon into state of shock.""#>) The March 14 bloc won a narrow victory over Hizbollah's "March 8" coalition, but Hizbollah still had enough seats to effectively hold a veto power of all legislation. This caused a continuing political crisis that prevented a government from being formed. But now, in a significant turn of events Lebanon has <#stdurl http://www.timesonline.co.uk/tol/news/world/middle_east/article6911723.ece "announced a national unity Cabinet,"#> with a strong opposition presence led by Hezbollah. From the point of view of Generational Dynamics, this agreement is significant because it resolves many of the political disputes of Lebanon's generational Awakening era. It may even turn out to be the Awakening era climax, though it's too soon to know that for sure. Lebanon's last crisis war began in 1975, and it became a war with Syria in 1976. Israel was an off-and-on participant, and the war reached an explosive climax in 1982 when Christian Arab forces, allied with Israel, <#stdurl http://news.bbc.co.uk/onthisday/hi/witness/september/17/newsid_2891000/2891661.stm "massacred and butchered hundreds or perhaps thousands of Palestinian refugees in camps in Sabra and Shatila."#> Since that war ended, the Lebanese people have been haunted by that episode, and officials have been determined not to allow anything like it to happen again. On November 5 of last year, a web site reader wrote the following to me:
"I am very impressed with your site, especially when looking at some of your past predictions. I was trapped in Lebanon during the fighting in early May and everyone was in great fear that a civil war was in progress. You predicted that it would fizzle out, and it did."
This fear of renewed violence has been a major theme for Lebanese politics. Ironically, it's this very fear that prevents similar violence from happening again. That's why crisis wars never occur within generational Awakening eras, and any warlike violence quickly fizzles out. Thus, we have Time Magazine <#stdurl http://www.time.com/time/world/article/0,8599,1937298,00.html?xid=rss-topstories "reporting on the new unity government"#> by saying that "the deal ends the three-year political crisis that brought the country to the brink of civil war." That's simply not true. Lebanon was never on the brink of a civil war, paradoxically because of the widespread fear that Lebanon was on the brink of a civil war. At various times on this web site, we've discussed similar concepts with a number of countries in generational Awakening eras -- Iran, Iraq, Lebanon, Syria, Thailand. These Awakening eras are similar in many ways to America's last Awakening era in the 1960s. Just to take one obvious comparison, America saw violent riots and demonstrations in the 1960s, as well as the assasination of President Kennedy. Lebanon has seen massive demonstrations by Hizbollah, and the assassination of former Prime Minister Rafik Hariri. (See <#hreftext ww2010.i.sixties040501 ""Iraq Today vs 1960s America.""#>) From the point of view of generational theory, what's going on in the Mideast is very interesting because of the potential clashes involving countries in Awakening eras, like those just noted, and those in generational Crisis eras, including Israel, Palestinian territories, Jordan, Yemen and Saudi Arabia. We've already seen a fascinating example of this in the summer 2006 Israeli/Hizbollah war in Lebanon. Israel, in a generational Crisis era, panicked and fought the war in a "hot" fashion, with maximum force. Hizbollah warriors, in a generational Awakening era in Lebanon, fought the war in a "cool" fashion, launching missiles and returning home to the arms of their wives. (See: <#hreftext ww2010.i.060724hizbollah ""Israel/Lebanon war forces Muslims to choose,""#> and <#inc ww2010.weblog.ref e061223 ""How Israel panicked in pursuing the summer Lebanon war with Hizbollah.""#>) The Lebanese people were greatly shocked by what they considered to be Israel's overreaction in the 2006 war. Recall that the war was triggered when Hizbollah kidnapped two Israeli soldiers on the border between Lebanon and Israel. Israel's response was completely panic-driven. Israel went to war in four hours, with no plan, no objective, and no idea what was going on. Hizbollah chief Sheik Sayyed Hassan Nasrallah has had to apologize to the Lebanese people for provoking the 2006 war, saying that he never expected Israel to react so violently. That's not the kind of thing you would ever expect to hear from the leaders of Hamas, following <#inc ww2010.weblog.ref e090106 "the war in Gaza"#> earlier this year. But that's the difference between the Lebanese, in an Awakening era, and the Palestinians, in a Crisis era like the Israelis. As the Mideast heads into full-scale war, we can expect to see battles and sub-wars waged between belligerents who are mismatched in the sense that one is in a generational Awakening era, and the other is in a generational Crisis era. <#inc ww2010.pic yemen2.gif right "" "Yemen, where the Houthis in Saada province are at war with the Saudis, and displaced refugees are nearing Yemen's capital, Sana'a. (Source: CIA Fact Book / Economist)"#> One war of this type is already heating up: a spiraling conflict between Saudi Arabia (in a Crisis era), and Iran (in an Awakening era). Two months ago, I posted a report entitled <#inc ww2010.weblog.ref e090913 ""Escalating civil war in Yemen threatens to pull in Iran, Saudi Arabia and U.S.""#> The war in Yemen is turning into a proxy war between Saudi Arabia and Iran. Within the last couple of weeks, Houthis (who are Shia) in Yemen (which is mostly Sunni) <#stdurl http://english.aljazeera.net/news/middleeast/2009/11/2009111675649700628.html "crossed the border into Saudi Arabia,"#> killed a border guard, and took control of a small area of Saudi territory. The Saudi air force immediately became embroiled in the war, bombing Houthi targets, and <#stdurl http://news.bbc.co.uk/2/hi/middle_east/8349984.stm "taking Houthi anti-aircraft fire."#> You can see a similar pattern here to the 2006 war in Lebanon. Iran is being accused of supplying weapons to the Houthis, but other than that, playing a completely passive role. The Saudis, on the other hand, are reacting directly at war with the Houthis. This Saudi/Iranian conflict has the potential to spiral into a major regional crisis. As I've written many times, Generational Dynamics predicts a major war between Sunni and Shia Muslims, and the Saudis and Iranians will be major respective belligerents in that conflict. According to <#stdurl http://www.atimes.com/atimes/Middle_East/KK14Ak01.html "an analysis by Ambassador M K Bhadrakumar,"#> a career diplomat in the Indian Foreign Service, the Saudis are actively stepping up their confrontation of the Iranians on three fronts: According to Bhadrakumar,
"One thing is certain. Tehran will do nothing adventurous that sullies its reputation as a "responsible" regional power. A confrontation with the US is the last thing that Tehran is looking for, either. Persians have a keen sense of history and have always preferred brain over brawn. Tehran cannot be oblivious that in any case, it is well placed to garner political mileage out of excessive Saudi involvement in Yemen, which will tarnish Riyadh's regional standing and inevitably produce a Houthi (Yemenese nationalist) backlash."
This is an interesting statement because Iran didn't prefer brain over brawn in the 1979 Islamic revolution, its last crisis era war, which was a very bloody civil war. But Iran is in an Awakening era now, when brain over brawn does prevail. But as he points out, the Saudis are much more involved militarily, and as America has learned in so many wars, air power doesn't guarantee victory. --- It's been almost a month since I've written anything about the financial crisis (see <#inc ww2010.weblog.ref e091027 ""Nouriel Roubini apparently is predicting a global market crash.""#>) During this time, the stock market has continued its parabolic rise into a new superbubble. The funny thing about what's going on is that even <#inc ww2010.weblog.ref e090615 "the fig leaf of "operating earnings""#> has disappeared -- the P/E ratio based on operating earnings is up in the 27 range. Not to mention that the "ordinary" <#stdurl http://online.wsj.com/mdc/public/page/2_3021-peyield.html?mod=topnav_2_3002 "S&P 500 P/E ratio is above 70."#> The "reason" for optimism that I keep hearing is the 3rd quarter earnings are higher than expected. Well, that's true. They were expected to be 35% lower than last year's deflated earnings, but instead they're only 14% lower. Ummm, let's see: Earnings are down 14%, but stock prices are up 40%. Could someone do that math for me? There is absolutely no shred of anything fundamental that points anywhere but downward. I tell people that a crash must occur "with 100% certainty," and they give me a smug look and tell me how I've been proven wrong by the rally. I just can't believe how crazy everything has become. At least in the past few years, I could see how someone could massage the facts and convince themselves that the market would always go up, but today there's nothing to massage. How does one explain this? How does one explain a public insanity that's so great that even fantasy reasons don't apply? I'm sure that no regular reader of this web site is so dumb as to own stocks at a time when price/earning ratios are above 70, when the historical average is 14. However, if any of your friends are in the stock market now, they're going to lose a great deal of money. There is now a very broad consensus that the current stock market bubble is being driven by massive stimulus spending. With Treasury interest rates effectively zero, investors are borrowing money at zero percent interest rates and investing the money in commodities and stocks. This is a typical "carry trade" scenario, and it will work as long as the dollar continues to weaken. On CNBC on Monday morning, <#stdurl http://www.cnbc.com/id/15840232?video=1332545843&play=1 "Art Cashin described"#> the most likely scenario that will end this bubble: "My great fear is that you'll have some sort of geopolitical event, and people will start rushing to the dollar, and a flight to safety, and that will catch all these carry traders flat-footed, and you could have a real problem.... It could happen when you least expect it." Thus, with a war escalating on the Saudi border, as well as potential crises elsewhere in the world, a flight to safety created a demand for the dollar would quickly push up the value of the dollar against other currencies. This would force the carry traders to sell their commodity and stock positions quickly, in order to return the dollars they had borrowed. (Paragraph corrected, Nov 22) (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=27 "Middle East"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091112 Politicians are gloomy about reaching climate deal in Copenhagen. Awwwwwwwwww! =data ww2010.weblog.y2009.e091112.head Politicians are gloomy about reaching climate deal in Copenhagen. Awwwwwwwwww! =data ww2010.weblog.y2009.e091112.keys =data ww2010.weblog.y2009.e091112.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091112.date 12-Nov-2009 =data ww2010.weblog.y2009.e091112.txt1 It seems that this money and power grab is down for another year. =data ww2010.weblog.y2009.e091112.txt2 =inc ww2010.xr.related1 right climate 3 According to <#stdurl http://www.guardian.co.uk/environment/2009/nov/05/copenhagen-climate-change-treaty-delay "news reports:"#>
"No global climate change treaty likely for up to a year, negotiators admit World's key industrialised nations say they have abandoned hope of legally binding deal at Copenhagen summit ... A global treaty to fight climate change will be postponed by at least six months and possibly a year or more, senior negotiators and politicians conceded today. In a day of gloomy statements, the world's key industrialised nations said they had abandoned hope of a legally binding treaty at the Copenhagen summit next month and had begun to plan only for a meeting of world leaders. The stark statements follow weeks of pessimism and represent a significant downgrading of the summit's goal. In London, Ed Miliband, the UK climate change secretary, became the first British politician to acknowledge publicly that Copenhagen would produce no legal climate change treaty. Speaking in the House of Commons, he said: "The UN negotiations are moving too slowly and not going well." He went on to describe a "history of mistrust" between developed and developing nations with negotiators "stuck in entrenched positions", an impasse that prompted African nations to stage a walkout at the negotiations this week."
The "legal climate change treaty" that activists were hoping for was for a tax on all financial transactions in Western nations. That money would be diverted to the activists and their favorite causes. For some strange reason, that proposal even went too far for the Obama administration. The "African nations ... walkout" in the above excerpt refers to a <#stdurl http://www.guardian.co.uk/environment/2009/nov/06/developing-nations-copenhagen-walkout "preliminary climate change"#> meeting in Barcelona last week. The developing nations, including the Africans, threatened to walk out unless the US came to Copenhagen with a legally binding promise to pay billions of dollars to the developing nations. It's a sign of the total craziness of our times that no one is debating where the technology is coming from to reduce carbon emissions. This sickness pervades everything, including the stock market and the health care legislation. It's always just a financial deal. The sickness is ignoring fundamentals, and thinking that all you need is a financial scam, moral outrage, and a smooth sales pitch to solve all problems. Let's list some of the problems with the current global warming strategy. In about 1970, I remember reading in the leftist Ramparts Magazine an article predicting that ocean pollution would cause algae to cover the ocean worldwide by 1980. Obviously that never happened, but it shows that loony environmental claims seem to be a standard part of the leftist playbook. Today we're supposed to worry about global warming, but in the 1970s, we were supposed to worry about global cooling. Here's <#stdurl http://www.denisdutton.com/cooling_world.htm "the text of a Newsweek article"#> from April 28, 1975. Today, 35 years later, this article is hilarious:
"The Cooling World -- Newsweek, April 28, 1975 There are ominous signs that the Earth’s weather patterns have begun to change dramatically and that these changes may portend a drastic decline in food production – with serious political implications for just about every nation on Earth. The drop in food output could begin quite soon, perhaps only 10 years from now. The regions destined to feel its impact are the great wheat-producing lands of Canada and the U.S.S.R. in the North, along with a number of marginally self-sufficient tropical areas – parts of India, Pakistan, Bangladesh, Indochina and Indonesia – where the growing season is dependent upon the rains brought by the monsoon. The evidence in support of these predictions has now begun to accumulate so massively that meteorologists are hard-pressed to keep up with it. In England, farmers have seen their growing season decline by about two weeks since 1950, with a resultant overall loss in grain production estimated at up to 100,000 tons annually. During the same time, the average temperature around the equator has risen by a fraction of a degree – a fraction that in some areas can mean drought and desolation. Last April, in the most devastating outbreak of tornadoes ever recorded, 148 twisters killed more than 300 people and caused half a billion dollars’ worth of damage in 13 U.S. states. To scientists, these seemingly disparate incidents represent the advance signs of fundamental changes in the world’s weather. The central fact is that after three quarters of a century of extraordinarily mild conditions, the earth’s climate seems to be cooling down. Meteorologists disagree about the cause and extent of the cooling trend, as well as over its specific impact on local weather conditions. But they are almost unanimous in the view that the trend will reduce agricultural productivity for the rest of the century. If the climatic change is as profound as some of the pessimists fear, the resulting famines could be catastrophic. “A major climatic change would force economic and social adjustments on a worldwide scale,” warns a recent report by the National Academy of Sciences, “because the global patterns of food production and population that have evolved are implicitly dependent on the climate of the present century.” ... Climatologists are pessimistic that political leaders will take any positive action to compensate for the climatic change, or even to allay its effects. They concede that some of the more spectacular solutions proposed, such as melting the Arctic ice cap by covering it with black soot or diverting arctic rivers, might create problems far greater than those they solve. But the scientists see few signs that government leaders anywhere are even prepared to take the simple measures of stockpiling food or of introducing the variables of climatic uncertainty into economic projections of future food supplies. The longer the planners delay, the more difficult will they find it to cope with climatic change once the results become grim reality."
The last paragraph is the funniest of all. I love that proposed solution of covering the Arctic ice cap with black soot, to force it to melt. And the last sentence, "The longer the planners delay, the more difficult will they find it to cope with climatic change once the results become grim reality," is exactly the same horsecrap argument that we're hearing today. It's a good thing that we didn't pay attention in 1975. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=9&t=178 "Climate Change"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091111 Europe celebrates the fall of the Berlin Wall on November 9, 1989 =data ww2010.weblog.y2009.e091111.head Europe celebrates the fall of the Berlin Wall on November 9, 1989 =data ww2010.weblog.y2009.e091111.keys =data ww2010.weblog.y2009.e091111.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091111.date 11-Nov-2009 =data ww2010.weblog.y2009.e091111.txt1 If East and West Germany were reunited, then why not North and South Korea? =data ww2010.weblog.y2009.e091111.txt2 On the 20th anniversary of the fall of the Berlin Wall, all of Europe was celebrating. The following short video, <#stdurl http://www.youtube.com/watch?v=SRZhTqAVWiw "Domino Effect:The Berlin Wall Falls Down Again,"#> shows some of the more spectacular events in the celebration:
I was as shocked and surprised as anyone when the Berlin Wall fell in 1989. I never dreamed that I would see it fall in my lifetime. When World War II ended in 1945, much of the world was furious at the Germans. They blamed Nazi Germany for World War II, and they incorrectly also blamed Germany for World War I. The WW II victors decided to partition Germany, to make sure that they wouldn't start WW III. According to the 1945 Potsdam Agreement, Germany was partitioned into four regions, one to be administered and occupied by each of four countries -- the Soviet Union, the UK, France, and the U.S. The last three of these regions were quickly merged into West Germany, while the Soviets retained control of what became East Germany. The Soviets didn't stop there. They took control of all of Eastern Europe -- East Germany, Bulgaria, Poland, Hungary, Czechoslovakia, Romania and Albania. These became known as "Iron Curtain countries" after Winston Churchill's famous <#stdurl http://www.historyguide.org/europe/churchill.html "1946 Iron Curtain speech:"#>
"From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in some cases, increasing measure of control from Moscow. Athens alone -- Greece with its immortal glories -- is free to decide its future at an election under British, American and French observation. The Russian-dominated Polish Government has been encouraged to make enormous and wrongful inroads upon Germany, and mass expulsions of millions of Germans on a scale grievous and undreamed-of are now taking place. The Communist parties, which were very small in all these Eastern States of Europe, have been raised to pre-eminence and power far beyond their numbers and are seeking everywhere to obtain totalitarian control. Police governments are prevailing in nearly every case, and so far, except in Czechoslovakia, there is no true democracy."
Soviet authorities built border fences separating east and west Europe, and border guards shot and killed anyone who tried to escape to the west. But there was one gaping hole in the Iron Curtain -- the city of Berlin. Berlin was physically located inside of East Germany, but according to the Potsdam Agreement, Berlin itself was partitioned, with East Berlin controlled by the Soviets, and West Berlin still part of West Germany. This was never a comfortable situation, as the Soviets in 1948 tried to blockade West Berlin, and prevent supplies from reaching the city. President Harry Truman ordered the Berlin Airlift to supply tons of food and other supplies. Throughout the 1950s, the vast differences between east and west became apparent to the world. People living in western European countries, such as UK, France and West Germany, enjoyed democracy and thriving economies. But people in Iron Curtain countries were oppressed and tortured for political crimes, and they lived in poverty. News stories coming out of eastern Europe told of the indignities and hardship of daily life, such as having to wait in a queue for hours just to buy a roll of toilet paper. Millions of people who were trapped in the east would escape by making their way to East Berlin and crossing over to West Berlin and to freedom. Finally, the Soviets could stand it no more. On August 12, 1961, the East German army began tearing up streets that connected East and West Berlin, and installed a barbed wire barrier encircling all of West Berlin, guarded by troops ordered to shoot to kill anyone who tried to defect. Thus, the border was closed within 24 hours. After that, the East Germans replaced the barbed wired with 12 foot high concrete barriers, guarded by watch towers. The Berlin Wall split friends, families and lovers for decades. People who were trapped in the East could no longer travel to the West, and people in the West didn't want to go East, for fear of being trapped there. Thousands of East Germans tried to escape by climbing over the wall, and hundreds were killed by East German border guards. By the 1980s, the Berlin Wall was becoming intolerable to the Germans themselves. Germany entered a generational Unraveling era and, as indicated by the name, all the austere measures that were imposed after WW II to prevent a new war began to unravel. A triggering event may have been President Ronald Reagan's 1987 speech in Berlin, in which he said, "Mr. Gorbachev, open this gate. Mr. Gorbachev, tear down this wall!" During the next few years, an incredible domino effect occurred. First, Hungary opened its border with Austria, permitting East Europeans to escape to the West via that route. Mass demonstrations began in East Germany, and continued for weeks. On November 9, a televised news program mistakenly reported that the Berlin borders would be opened immediately. Huge crowds of East Germaners mobbed the border gates, and border guards were faced with the choice of shooting into the crowd or opening the gates. Fortunately, they chose the latter. Germany was reunited within a few months after the fall of the Berlin Wall. There was still fear among WW II survivors over the reunification of Germany -- fear that a reunited Germany would once again become a military threat to Europe. I recall seeing Henry Kissinger on television saying something like, "I will have no trouble dying happily if Germany is never reunited in my lifetime." Recent <#stdurl http://www.telegraph.co.uk/news/worldnews/europe/germany/6532255/Berlin-Wall-have-Margaret-Thatchers-fears-about-Germany-been-proved-right.html "news reports"#> indicate that British Prime Minister Margaret Thatcher and French President Francois Mitterand feared that a united Germany would a "unstoppable force" in an unbalanced Europe. Very quickly, Communism collapsed in other East European countries, and within a couple of years, the Soviet Union collapsed. Johnny Carson joked that America was the only country that still had a Communist Party. That was a great joke, but of course there are still two Communist countries remaining -- North Korea and Cuba. Why can't North and South Korea be reunited as Germany was, and why can't Communism in Cuba end, as it did in East Germany? Generational Dynamics provides some answers. Generational Dynamics views civil wars very differently from external wars. A civil war pits neighbor against neighbor, brother against brother, husband against wife. If a country fights an external war then, win or lose, the country can celebrate or mourn and then move on. But a country can never celebrate a civil war, and may need a century or more to really move on. East Germany became partitioned from West Germany by a political decision, not by a civil war. By the time the generational Unraveling era had arrived, there had been two generations of young people who had no personal memory of WW II and didn't fear a reunited Germany, so the political decision was reversed. But the partitioning of Korea was no simple political decision. It was a bitter civil war between two groups of Koreans. It's not a surprise that reunification is difficult or impossible -- without another war. Cuba is a different story. Cuba also had a civil war -- Fidel Castro's Cuban Revolution that climaxed in 1959. Cuba today is in the middle of a generational Unraveling era, and when Fidel Castro stepped down, replaced by his brother Raoul, there were some signs that the Communist economy was beginning to unravel. The fall of the Berlin Wall ended the story of East Germany, but the stories of North Korea and Cuba are still being told. Update: I left China out of this discussion because I didn't want to lengthen the article, but a web site reader said I should have included it. Briefly, China also had a major civil war, Mao Zedong's Communist Revolution, climaxing in 1949. However, China is different from the others. It's nominally a Communist country today, having a repressive government that jails, tortures and executes political dissidents. But China has given up control of many parts of the economy, so China today would more accurately be called a Fascist country, rather than a Communist country. (Paragraphs added, Nov 11) (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=144 "Europe"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091109 Theological split in Iran widens as opposition protests continue =data ww2010.weblog.y2009.e091109.head Theological split in Iran widens as opposition protests continue =data ww2010.weblog.y2009.e091109.keys =data ww2010.weblog.y2009.e091109.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091109.date 9-Nov-2009 =data ww2010.weblog.y2009.e091109.txt1 The Islamic Republic of Iran versus the Persian Republic of Iran. =data ww2010.weblog.y2009.e091109.txt2 I've written several times about the belief of Iranian President Mahmoud Ahmadinejad in the Mahdaviat -- the Shia Muslim belief that the Mahdi (or "the 12'th Imam" or "the Hidden Imam") is coming to save mankind. See, for example, <#inc ww2010.weblog.ref e060822 ""Iran and Ahmadinejad are waiting for the Mahdi""#> This belief is roughly equivalent to the Christian belief in the second coming of Christ. (There's also a Buddhist belief in the Maitreya -- that a new Buddha is to appear on earth, and will achieve complete enlightenment.) (Paragraph corrected, Dec 16) In that article, I quoted a couple of paragraphs from his <#stdurl http://www.globalsecurity.org/wmd/library/news/iran/2005/iran-050918-irna02.htm "speech to the U.N. General Assembly on Sept. 17, 2005:"#>
"From the beginning of time, humanity has longed for the day when justice, peace, equality and compassion envelop the world. All of us can contribute to the establishment of such a world. When that day comes, the ultimate promise of all Divine religions will be fulfilled with the emergence of a perfect human being who is heir to all prophets and pious men. He will lead the world to justice and absolute peace. O mighty Lord, I pray to you to hasten the emergence of your last repository, the promised one, that perfect and pure human being, the one that will fill this world with justice and peace."
Now, <#stdurl http://news.bbc.co.uk/2/hi/programmes/analysis/8314920.stm "a new BBC documentary"#> by Edward Stourton sheds new light on the depth of this belief, and the way that it's affecting Iranian foreign policy. According to Stourton, Ahmadinejad, Supreme Leader Ayatollah Ali Khamenei, and top level government officials are members of a narrow Shia Muslim sect called the "Hasteners" -- people who believe that the return of the Imam is imminent, and that it is the duty of the faithful to take whatever steps they can to hasten the return. It's as if President Obama, or some other Christian political leader, belonged to a sect that advocated starting a nuclear war in order to hasten the second coming of Christ. Thus, Shia Islam has <#stdurl http://gulfnews.com/opinions/columnists/the-young-and-elite-are-rising-in-iran-1.240795 "two conflicting doctrines"#> that guide the faithful in their lives. One doctrine, known as Intizar (patient waiting) maintains that the best that believers can do is to be patient and wait until the Imam decides to return. That doctrine is opposed by another known as Ta'ajil (to hasten). The Ta'ajilis (hasteners) insist that believers should seek to unite the entire Islamic community and lead it into battle against the "Infidel" with the view of provoking a final showdown for global domination, to hasten the return of the Mahdi. Thus, Ahmadinejad is quoted as saying, "Do you know why we wish to have chaos at any price? Because after the chaos, we shall see the greatness of Allah." And so we have Ahmadinejad doing things like talking about pushing Israel into the sea or pursuing policies that would allow Iran to develop nuclear weapons. The implication is that Ahmadinejad is pursuing these policies in order to provoke world chaos (presumably, chaos in the form of war) in order to hasten the return of the Mahdi. Stourton quotes Mehdi Khalaji, a Shia theologian who studied in Qom and a senior fellow of the Washington Institute:
"We call apocalyptics people who believe in the imminent return of Hidden Imam and people who believe that worshippers have some duties more than prayer in order to prepare the ground for the return of Hidden Imam. Apocalyptics, they've been always in margin of the religious community and also political structure of the country. But with Ahmadinejad, this is the first time that they take over the political power. ... [this apocalyptic trend] is frightening, and it is not only frightening for the international community...."
Of course, not everyone agrees with that explanation of Ahmadinejad's policies. Stourton quotes Professor Ali Ansari, director of the Institute for Iranian Studies at the University of St Andrews:
"Ahmadinejad and the others, yes, they do believe that the hidden imam will arrive when the world has reached the most disastrous situation. Whether they feel they have to help that along is a different matter. I think that’s where you’ve got to be a little bit careful. I haven’t seen anything which suggests that. I mean he hasn’t said anything specific. That’s not to say that he might not at some stage. It’s perhaps a question of semantics and a question of being quite pedantic about it but it’s important because people do then extrapolate from things that he has not said yet – whole policy decisions, which I think are unhelpful."
And so the question is whether the religious beliefs of Ahmadinejad, Khamenei, and other senior leaders of Iran's government are pursuing a policy of provoking war BECAUSE OF their religious beliefs. =inc ww2010.h2 cause "Religion doesn't cause war; war causes religion" From the point of view of Generational Dynamics, the view that Ahmadinejad decided at one point, perhaps in his childhood, to join a sect called the "Hasteners," and then later was guided by those religious beliefs to become a politician with the job of provoking world war -- that view makes no sense all. What makes much more sense is the view that Ahmadinejad and Khamenei have adopted a certain set of policies designed to keep themselves in power, and that they've adopted a version of the "Hastener" religious doctrine to justify those policies. I discussed the role of religion in Generational Dynamics at length in 2007 in <#inc ww2010.weblog.ref e070603 ""Book review review: Christopher Hitchens: 'God Is Not Great: How Religion Poisons Everything.'""#> In the past few years, Christopher Hitchens has made a career of claiming that religion is the cause of all wars, with the bizarre implication that if we could only get rid of all religions, then we could get rid of all wars. From the point of view of Generational Dynamics, the opposite is true. Wars have a political component as well as a military component, and the political component requires the political leaders to justify the moral superiority that's required to kill other people. There are many possible ways to do that, but the easiest vehicle is religion. Thus, Osama bin Laden may be attacking Western interests because he hates his father, but he justifies his terrorism by talking about infidels and 72 virgins. What we're seeing in Iran right now appears to be an archetypical example of how war causes religion. I've written many articles on this web site describing how Iran's strategy evolved, and it has nothing to do with religion. The Islamic Revolution of 1979 was a massive civil war that brought into power a new group of politicians who justified their victory in religious terms. They achieved this victory by blaming all their problems on outsiders -- America, Britain, Israel, and later Iraq. They took over the American embassy in Tehran, and held 52 American hostages for 444 days. They described Iran as an innocent victim of outside exploiters and invaders, and in doing so, they unified the entire country behind their Revolution. Now, they're trying to repeat that strategy, by attempting to blame America, Britain and Israel as interfering, or threatening to attack, the same innocent victim, Iran. But that strategy worked in 1979 because Iran was in a generational Crisis era; today, Iran is in a generational Awakening era, when that kind of strategy cannot possibly succeed. (For information about generational eras, see <#hreftext ww2010.i.basics080622 ""Basics of Generational Dynamics.""#> For information about America's Awakening era in the 1960s, see <#inc ww2010.weblog.ref e070612b ""Boomers commemorate the 40th anniversary of the Summer of Love.""#> For an extensive analysis of Iran's strategy, see <#inc ww2010.weblog.ref e080405 ""China 'betrays' Iran, as internal problems in both countries mount.""#>) When the big street protests began in Tehran after the June 12 presidential elections, every mainstream analyst that I'm aware of, including the BBC and Stratfor, predicted that the government would crush the protests and that they would end quickly, as happened in the 1989 Tiananmen Square massacre in China. I <#inc ww2010.weblog.ref e090626 "wrote that,"#> from the point of view of Generational Dynamics, Tiananmen Square is the wrong historical analogy; the best analogy is America's Summer of Love in 1967, which led to almost a decade of political conflict, and failed presidencies of Lyndon Johnson and Richard Nixon. In fact, the <#inc ww2010.weblog.ref e090919 "street protests are continuing and growing,"#> especially since colleges opened in the fall. Last week, Iran celebrated the 30th anniversary of the takeover of the American embassy in Tehran, on November 4, 1979. The government scheduled large pro-government demonstrations, but they were met with <#stdurl http://www.csmonitor.com/2009/1104/p06s19-wome.html "large anti-government counter-demonstrations."#> What is becoming increasingly clear is that the student protests are gaining in strength and are presenting a fundamental threat to the Ahmadinejad / Khamenei government, just as America's 1960s protests threatened the Johnson and Nixon administrations. If Ahmadinejad and Khamenei succeed in politically surviving the protestors, then the "Hastener" sect will be given a huge boost. From the point of view of Generational Dynamics, that would be a typical example of how a new religious sect gains traction. On the other hand, if they fail, and they're forced to step down, then the "Hastener" sect will also suffer a major setback, and that would be an example of how a religious sect can fizzle. =inc ww2010.h2 clash "An Islamic Republic or a Persian Republic?" Iran is going through a generational Awakening era, and really it's quite typical of such eras. There is massive political chaos, with occasional violence that fizzles fairly quickly. We've seen this in Iran, Iraq and Lebanon, three Awakening era countries that I've written a lot about on this web site, all having had crisis wars in the 1980s. The political chaos always reflects the themes of the preceding crisis war, and always pits the generations of war survivors, who attempt to impose austere measures to prevent a new war, against the younger generation, born after the war, rebelling against those austere measures. Today, <#stdurl http://www.foreignpolicy.com/articles/2009/11/04/whos_really_running_irans_green_movement "there are three major political factions"#> in Iran: One thing that should be clear from the above description is that even if Ahmadinejad steps down and is replaced by someone from the Opposition, the riots and demonstrations won't stop. It's also pretty clear that as the older generations die off, and the size of the younger generations grows from 70% to 80% to 90%, the Kids are going to win. The only question is how long it will take, and how chaotic the transition will be, over the next 10-15 years. =inc ww2010.h2 clash "The growing theological dispute" At the beginning of this report, I referenced <#stdurl http://news.bbc.co.uk/2/hi/programmes/analysis/8314920.stm "a new BBC documentary"#> by Edward Stourton. That documentary was triggered when Stourton submitted some questions to Grand Ayatollah Hoseyn Ali Montazeri via his web site. Montazeri is one of Shia Islam's most respected theologians, and much to Stourton's surprise, Montazeri answered the questions with <#stdurl http://news.bbc.co.uk/2/hi/middle_east/8314266.stm "detailed replies."#> Here are some excerpts:
"Q: What is your view of claims that Mahmoud Ahmadinejad is in contact with the Hidden Imam and that his government is working for the return of the Mahdi? ... Montazeri: During his occultation or disappearance it is possible to establish contact with His Holiness the Hidden Imam (may God speed his return). But anyone who made such contact would never dream of announcing it publicly because making use of such claims for propaganda and political purposes would be contrary to the qualities required for such contact. The best way to prepare for the re-appearance of the Hidden Imam would be to act in accordance with Islamic teachings in order to establish justice and Islamic values in society. Q: How far has the current regime fallen - in your view - from the ideal of the Islamic Republic? Montazeri: Although some sincere and faithful people have made great efforts and endeavours now and in the past to implement the goals of the revolution, unfortunately, due to the short-sightedness, ineptitude and lack of wisdom, as well as arrogance and neglect of the demands of the majority of the people by a small inefficient minority, many of the initial ideals of the revolution have not been fulfilled. In view of this, our people are very dissatisfied and they protest against the deviations from the goals of the revolution. ... Q: What (if anything) should Iranian clerics do to bring about change in Iran? Montazeri: The important action that the esteemed Iranian clerics can and must take in order to initiate reforms, to change the present situation and the current policies, must be in step with the people - with intellectuals and experts, with the members of the elite and with committed political activists. The clerics should tell the people of their rights. They must also remain faithful the values of the revolution and to the goals of the reforms. Otherwise, their social standing among the people will become weaker and shakier."
The fact that a high level Iranian cleric would be openly critical of the government with the press shows how deeply the Islamic government is under attack. =inc ww2010.h2 effect "Effect of Iran's conflict on Islam" If you look at the 20th century from the point of view of Islam, there have been two major earth-shaking events. The first was the destruction of the Ottoman empire after World War I. Centered in Istanbul, Turkey, the Caliphate had been the office of the supreme spiritual leader for Sunni Muslims worldwide, and it was abolished, leaving Sunni Muslims around the world rudderless. After several decades passed, this rudderlessness turned into al-Qaeda and international terrorism. The second was Iran's Islamic Revolution of 1979. For the first time since the 1920s, there was an Islamic state, and a revolutionary method for achieving it. Unfortunately for the Sunnis, Iran is a Shia Muslim state, so it didn't help them. But it did reveal a path by which a Sunni Muslim state might appear again. Just as Iran's leaders have been trying to recapture their own revolutionary unity by provoking a confrontation or even an attack by Western powers, Islamist Sunnis have been trying to provoke a war in various countries, in the hope of creating a Sunni Muslim state. They've tried this in Iraq, Somalia, Yemen, Afghanistan, Pakistan and <#inc ww2010.weblog.ref e091102 "Uzbekistan,"#> and it is still the main goal of al-Qaeda. The inspiration provided by Iran's Islamic Revolution of 1979 has been a guiding light to Islamist Sunnis around the world for 30 years. The interesting question then arises: What will Islamist Sunnis around the world conclude about Iran's Islamic Revolution, now that the Revolution appears to be unraveling? Will they still try to follow the same path, or will they change tactics in some way, trying to learn from Iran's experience? Only time will tell, and this is something to be watched. In fact, Sunni clerics in other countries are beginning to point to <#stdurl http://washingtontimes.com/news/2009/oct/29/sunnis-say-crackdown-exposes-political-flaws/ "a possibly fatal flaw"#> in Iran's system of government: the core belief that supreme leader Ayatollah Khamenei should have the final say on all Iranian foreign and domestic policies. What is happening in Iran at present, is "an explosion as a result of a deep existing contradiction in the political system in Iran, which has a religious base, and at the same time seeks to pass on authority through democratic means," according to Sunni scholar Khaled al Dakheel, a professor at King Saud University in Riyadh, Saudi Arabia. Basically, the question is how you can have a democracy of the people, when a single religious leader has the final say on everything? At its core, this is a political struggle over the question of separation of Mosque and State, a conflict that occurs, in one way or another, in almost every country. From the point of view of Generational Dynamics, the major trends have not changed. As I've said many times, it's my expectation that Iran will be the ally, not the enemy, of America, Israel and the West, in the Clash of Civilizations World War. In Asia, Iran will be allied with India, Russia and America against China and Sunni Muslim countries, including Pakistan, Uzbekistan, and the Arabs. The theological debate and political chaos in Iran are part of the scenario that will take us in that direction. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=120 "Iran"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091107 Palestinian president Mahmoud Abbas says he'll step down following Hillary Clinton's statement on settlements =data ww2010.weblog.y2009.e091107.head Palestinian president Mahmoud Abbas says he'll step down following Hillary Clinton's statement on settlements =data ww2010.weblog.y2009.e091107.keys =data ww2010.weblog.y2009.e091107.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091107.date 7-Nov-2009 =data ww2010.weblog.y2009.e091107.txt1 Is it a tactical manoeuver or the end of an era? =data ww2010.weblog.y2009.e091107.txt2 Mahmoud Abbas was born in 1935 in what is now northern Israel. His family were <#stdurl http://www.reuters.com/article/latestCrisis/idUSL556567 "among hundreds of thousands of Palestinians"#> who fled or were driven from their homes in the genocidal 1948 war between Palestinians and Jews that followed the partitioning of Palestine and the creation of the state of Israel. So as a young teenager, Abbas and all his friends were fully exposed to the horrors of war all around them. This is the kind of "generational child abuse" that Generational Dynamics talks about. Kids who live through this kind of experience, like America's Silent Generation, grow up never wanting their own kids or grandkids to experience something so awful. So when Abbas was elected President of the Palestinian Authority in January, 2005, it appeared to the world that the "Mideast problem" would finally be solved. Abbas was considered more "moderate" than his predecessor, Yasser Arafat, and Abbas was committed to implementing the <#hreftext ww2010.i.may01 "Mideast Roadmap to Peace"#> that had been put forth by the Bush Administration in May, 2003. With Arafat gone, and Abbas in place as President, the Roadmap would finally be implemented, leading to two states, Israel and a Palestinian state, existing side by side in the Mideast, in eternal peace and happiness. Actually, the euphoria surrounding Abbas's election was ridiculous, as were the <#inc ww2010.weblog.ref e050108 "unrealistically high expectations"#> that Abbas had raised during the campaign. As I wrote at the time, one day he would speak in Arabic and promise the Palestinians the "right of return" to the lands occupied by the "Zionist enemy." The next day, he would speak in English, and promise to rid Palestine of the terrorists. (The obvious comparison is with President Barack Obama, who made similarly extravagant and unrealistic campaign promises -- cure global warming, provide universal health care, close Guantanamo, leave Iraq in peace, bring a two-state solution to Palestinians and Israelis, beat the Taliban in Afghanistan, restore the stock market bubble, and dismantle President Bush's war against terror. Now we're seeing that he appears to be failing at every one of these promises.) Instead of bringing peace, Abbas's presidency has only made things worse. There have been three "small" wars: Israelis vs Hizbollah in Lebanon in 2006, Palestinian Fatah vs Hamas in Gaza in 2008, and Israelis vs Hamas in Gaza in 2009. There's no reduction in tension whatsoever, and it's only a matter of time before one of these small wars triggers a larger war. The latest crisis occurred because one of President Obama's unrealistic promises intersected with one of President Abbas's unrealistic promises. Since taking office, President Obama has demanded that the Israelis stop building settlements on land that would be part of the Palestinian nation under the Roadmap to Peace. As recently as June, in his <#stdurl http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-at-Cairo-University-6-04-09 "speech in Cairo,"#> directed to the Muslim world, President Obama said, "At the same time, Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine's. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop." But the Obama administration appeared to change policy last week, when Secretary of State <#stdurl http://www.nytimes.com/2009/11/06/world/middleeast/06mideast.html "Hillary Clinton praised"#> as "unprecedented" Israel’s compromise offer to slow down, but not stop, construction of settlements. This change of position has infuriated may Arabs and Palestinians, and it triggered Abbas's decision to step down as President. Abbas put it as diplomatically as possible when <#stdurl http://www.reuters.com/article/topNews/idUSTRE5A457920091105 "he said,"#>
"We pledged, us and the Israelis, with the participation and sponsorship of the international community, to reach a two-state solution. But month after month, year after year, there was procrastination and the increase of Jewish settlement and Israeli settlement on our land, which compromises the credibility of negotiations. ... The stated position of the United States in relation to settlements and the Judaisation and annexation of Jerusalem are well-known and appreciated by us. However, we were surprised by their favoring of the Israeli position. But the problem which requires a solution is ... the ongoing Israeli settlement activities in all of the West Bank and especially in occupied East Jerusalem, which is facing an unprecedented change to its character."
It's impossible to know at this time if Abbas seriously plans to step down, or whether he's using the threat of stepping down as a negotiating strategy. If Abbas does stop down and is replaced by someone younger, it will be the end of an era. Someone younger will certainly be more demanding and confrontational than Abbas, and this will change the political climate in the Mideast. As I've been saying since 2003, Generational Dynamics predicts that we're headed for a major crisis war in the Mideast, re-fighting the genocidal 1940s war between Arabs and Jews. I speculated in 2003 that the death of Yasser Arafat would trigger such a war, but although things have gotten steadily worse since Arafat's death, the major war is yet to come. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=27 "Mideast"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091102 Islamist Uzbeks lead terrorists in Pakistan and Afghanistan =data ww2010.weblog.y2009.e091102.head Islamist Uzbeks lead terrorists in Pakistan and Afghanistan =data ww2010.weblog.y2009.e091102.keys =data ww2010.weblog.y2009.e091102.loc ww2010.weblog.log0911 =data ww2010.weblog.y2009.e091102.date 2-Nov-2009 =data ww2010.weblog.y2009.e091102.txt1 They're the largest group of foreign militants, and they're "fanatical." =data ww2010.weblog.y2009.e091102.txt2 It's now been two weeks since the Pakistani army began its war against militants in South Waziristan at the south of the Federally Administered Tribal Area (FATA). <#inc ww2010.pic g091101.jpg right "" "Central Asia (Source: CIA Fact Book)"#> And the <#stdurl http://news.bbc.co.uk/2/hi/south_asia/8331860.stm "most dangerous enemy of all"#> is not the Taliban (indigenous Pashtun militants), but the Uzbeks from the al-Qaeda linked Islamic Movement of Uzbekistan (IMU). It's not known how many Uzbek militants are in South Waziristan, but estimates vary from 500 to 5000. In fact, it's possible that eliminating just the Uzbek force is the <#stdurl http://www.csmonitor.com/2009/1027/p06s01-wosc.html "primary Army objective"#> of the war. Army Chief Gen. Ashfaq Kiyani "was of the opinion that the dynamics of South Waziristan might change if we can take out the Uzbek fighters. They are the staunchest followers of Al Qaeda ideology, and they are viciously, rabidly anti-Army." From the point of view of Generational Dynamics, there are good reasons for the ferocity of the Uzbek fighters, and we're going to explore those reasons here. =inc ww2010.h2 brief "Brief generational history of Uzbekistan" The Uzbeks are one of the many tribes that have populated Central Asia for centuries, and the wars they fought were mainly with one another until the Russians conquered the region in the late 1800s. Life didn't change much under the Tsars, but a violent <#stdurl http://encyclopedia.farlex.com/Uzbekistan "anti-Russian movement"#> began in World War I and the Bolshevik Revolution of 1917. Although the main fault lines were ethnic (Uzbeks vs Russians), it's worth noting that Uzbeks are mostly Sunni Muslim, while the Russians are Orthodox Christians. This was Uzbekistan's last generational Crisis war. World War II thus occurred during a generational Awakening era for the Uzbeks. Thus the Uzbeks stayed out of the war, and in fact carried out a "humanitarian mission," according to <#stdurl http://www.turkishweekly.net/news/44851/the-science-conference-the-humanitarian-mission-of-uzbekistan-during-the-world-war-ii-.html "one Turkish source:"#> "During the World War II the Uzbek people are known to have accomplished a true feat by sheltering in their families the hundreds of thousands of refugees from the fascist occupied territories. Special care, warmth and generosity have seen the war-broken children. In all, during the war Uzbekistan had accepted over 200,000 children from Russia, Ukraine, Baltic States, Poland, and other countries...." As part of Stalin's Soviet Union, Uzbekistan became a cotton powerhouse starting in the 1920s. In support of the cotton trade, millions of ethnic Russians began pouring into the country, especially into the fertile Fergana Valley (or Ferghana Valley), in the far eastern portion of the country. (Dear Reader, you should make a mental note of the Fergana Valley and the city Andijon, as it is one of the most strategically important regions in Central Asia and the world.) <#inc ww2010.mappic uzbek.gif center "" "Uzbekistan (Source: CIA Fact Book)"#> The old Uzbek / Russian fault line became critical again, starting in the 1980s with the Russian invasion of Afghanistan. At that time, Uzbek militants began joining the Pashtuns in Afghanistan to fight the Soviets. 1991 was a pivotal year for the Fergana Valley. That was the year that the Soviet Union collapsed, resulting in the formation of Uzbekistan as an independent republic. It also resulted in a great deal of financial hardship for the Russians in the Fergana Valley. The result was <#stdurl http://www.southasiaanalysis.org/papers11/paper1075.html "the first signs"#> of Islamic fundamentalism in Uzbekistan when some unemployed young Muslims seized the Communist Party headquarters in the city of Namangan in the Fergana Valley. The leaders of this terrorist action, Tohir Yuldeshev and Juma Namangani, eventually made their way to Afghanistan in 1996, after the Taliban had taken control of the government. They joined Osama bin Laden and al-Qaeda, and formed the Islamic Movement of Uzbekistan (IMU). The IMU has been playing an important role in terrorist acts in Afghanistan and Pakistan. This is particularly true since the 2005 <#stdurl http://www.voanews.com/english/archive/2005-09/2005-09-28-voa48.cfm "massacre at Andijon"#> in the Fergana Valley. Hundreds of civilians were killed by government troops, to put down a violent takeover attempt by Islamist IMU militants. =inc ww2010.h2 ethnic "Sunni ethnic groups in Afghanistan and Pakistan" After the London subway bombings on July 7, 2005, I wrote <#hreftext ww2010.i.050718pape "an analysis of suicide bombers,"#> based on data collected by the Chicago Project on Suicide Terrorism, published in a book by Robert A. Pape. Pape analyzed the nationality of al-Qaeda suicide attackers, and found that they come from 11 different countries, but that they overwhelmingly come from just two countries: Saudi Arabia and Morocco. From the point of view of Generational Dynamics, this is exactly what's to be expected, since these two countries are the deepest into generational Crisis periods. Saudi Arabia's last crisis war was the Ibn Saud conquest, ending in 1925, and Morocco's was the Rif War, ending in 1927. I used this information to <#hreftext ww2010.i.iraq070401 "analyze the war in Iraq,"#> particularly in the nationalities of suicide bombers in Iraq. The terrorist group al-Qaeda in Iraq was having difficulties getting Iraqis to become suicide bombers, so most suicide bombers had to be imported from Saudi Arabia. Once again, with Iraq in a generational Awakening era, and Saudi Arabia deep into a Crisis era, this made perfect sense. But it's been difficult and confusing to analyze the ethnic groups of the militants in Afghanistan and Pakistan. It's always been clear that they've received ideological guidance from bin Laden and al-Qaeda, and that made sense because al-Qaeda is a Saudi group. It's also been clear that the Taliban, made up of Islamist militant Pashtuns, have not been driving the terrorist acts. One fascinating sign of this is that Afghan Taliban suicide bombers almost <#inc ww2010.weblog.ref e081222 "never kill anyone but themselves."#> This is not surprising, since Afghanistan's last crisis war was the bloody ethnic civil war in the early 1990s, and Afghanistan is in a generational Recovery era. So it's always been a bit of a puzzle to understand where the genocidal fury among the Taliban comes from, even in Pakistan. This study of the role of the Uzbeks in Pakistan provides a solution to this puzzle. Uzbekistan is similar to Saudi Arabia in that its last crisis war ended in the 1920s, and so it is also deep into a generational Crisis era. Last week, on October 28, a massive terrorist attack occurred in Peshawar, the capital of the NorthWest Frontier Province (NWFP) of Pakistan, a largely Pashtun province. Over 90 innocent civilians, including many women and children, were killed by a timed car bomb explosion in a busy market area. There have been numerous terrorist attacks across the country on a weekly basis, but this one was different. Whereas previous attacks had targeted police or military installations, this one targeted a civilian marketplace. There was no claim of responsibility for this explosion. In fact, sources in al-Qaeda and the Taliban are denying responsibility and condemning the explosion. Of course the denials are not necessarily true, but assuming they are, who would have perpetrated this explosion? Government officials are thought to believe that <#stdurl http://www.southasiaanalysis.org/%5Cpapers35%5Cpaper3479.html "the attacks on civilians are being carried out by Uzbeks"#> -- in the Islamic Movement of Uzbekistan (IMU) and the Islamic Jihad Union (IJU), another Uzbek group, both allied to al-Qaeda. Once again, this makes perfect sense from the point of view of generational theory. The Uzbeks, deep into a generational Crisis era, would be in a generational mood that's much more accepting of genocidal acts, including the bombing of civilians. Obviously, more research is required to draw a definite conclusion, but the role of Uzbeks in Afghanistan and Pakistan appears to confirm many of the basic concepts in generational theory and Generational Dynamics, as they apply to Afghanistan and Pakistan. (Comments: For reader comments, questions and discussion, as well as more frequent updates on this subject, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=4 "Afghanistan, Pakistan and India"#> thread of the Generational Dynamics forum.) =// &&2 e091027 Nouriel Roubini apparently is predicting a global market crash =data ww2010.weblog.y2009.e091027.head Nouriel Roubini apparently is predicting a global market crash =data ww2010.weblog.y2009.e091027.keys =data ww2010.weblog.y2009.e091027.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091027.date 27-Oct-2009 =data ww2010.weblog.y2009.e091027.txt1 Many others are experiencing a "sense of foreboding," =data ww2010.weblog.y2009.e091027.txt2 according to Gillian Tett of the Financial Times. In a <#stdurl http://www.ft.com/cms/s/0/15be1498-bf6c-11de-a696-00144feab49a.html "recent article,"#> Tett quotes a banker correspondent:
"Forget about the events of the past 12 months. ... The punters are back punting as aggressively as ever. Highly leveraged short-term trades are back in vogue as players ... jostle to load up on everything from Reits [real estate investment trusts] and commercial property, commodities, emerging markets and regular stocks and bonds. ... Any sense of control is being chucked out of the window. After the dotcom boom and bust it took a good few years for the market to get its collective mojo back [but] this time it has taken just a few months. ... Was October 2008 just a dress rehearsal for the crash when this latest bubble bursts?"
Tett concludes by saying, "It is crystal clear that the longer that money remains ultra cheap, the more traders will have an incentive to gamble (particularly if they privately suspect that today's boom will be short-lived and want to score big over the next year). Somehow all this feels horribly familiar; I just hope that my sense of foreboding turns out to be wrong." The title of Tett's article is "Rally fuelled by cheap money brings a sense of foreboding." She refers to the same facts that I referenced a couple of weeks ago in the article <#inc ww2010.weblog.ref e091014 ""The current stock market bubble correlates with bailouts and stimulus,""#> Since that time, it's been more and more widely recognized that the current stock market rally is being fueled by governments around the world pouring out free or low-cost money, via central banks and fiscal policy. On CNBC on Monday morning, NYU professor Nouriel Roubini discussed explicitly how central banker policy was creating a "wall of liquidity" that was feeding a new worldwide asset bubble, growing larger than the last one. Along the way, he appears to be predicting a global market clash with near certainty. The following is my transcription. The lines in brackets [] are paraphrases of interviewer questions.
"[Could we see the stock market run continue?] Yes, in the short run what's happening is that there's a wall of liquidity, not just in the United States but around the world, that's chasing assets -- it's equities, it's commodities, it's gold, it's emerging market asset classes. <#inc ww2010.pic g091026.jpg right "" "Nouriel Roubini (Source: CNBC)"#> And now we have even the mother of all carry trades. Everyone is borrowing short, shorting the dollar, borrowing and investing in assets all over the world. Global equities, comodities, credit, emerging market asset classes. The risk is however, right now people are borrowing at zero percent interest rates in the United States. Effectively the rate of borrowing is negative, because with the dollar falling -- ?? in the capital gain, -- you're buying any asset around the world. All these assets are perfectly correlated. Eventually, the dollar cannot keep on falling. Once the dollar stops falling, it reverses. You have a sudden reversal of the dollar, you have to close your shorts, you have to dump assets, and you could have a market crash all over the world. That's a risk. [Is that anywhere near happening?] No, it's not near happening because for the time being the Fed is keeping short rates at zero, expected to remain zero, and the Fed is becoming the biggest seller of volatility because it's buying $1.8 trillion of Treasuries, agency debt and RMBSs, so volatility on the long end is low, and on the short end is zero, so this game is played until ????. [Question about central banks] There's a gap between what you have to do for the real economy, and what you have to do for financial stability. The real economy is still weak. There's deflation actually in the economy. Look at the cycle 2001-2006. They kept the fund rates all the way down to 1% through 2004, three years after the recession was over. Then they did step by step [raises of] 25 basis points every six weeks. This time it's the same, only worse. Output has fallen 4%, not 0.4%. Unemployment rate is going to peak at 10%, not at 6.5. We have actual deflation rather than risk of deflation. So if the Fed wants to target the real economy and avoid deflation, it has to keep the Fed funds rate at 0 for longer. But if it does that, then you create another huge asset bubble. With the carry trade, that asset bubble is now becoming global, and everyone has to follow U.S. monetary policy by intervening in a non-sterilized way. That eases money at reduced rates, and therefore we're exporting our monetary policy to the rest of the world. And that's leading to a global asset bubble. And once there's the unraveling of that carry trade that eventually is going to occur, because the dollar cannot keep on falling, then you can have a market crash on a global basis. [q: Is this current asset bubble worse than the one that preceded the fall of Lehman?] It could become worse because if the Fed keeps the rates at zero, and if the Fed keeps controlling and reducing volatility on the long end, then everybody is playing the same game. Everybody is buying dollars and going long in risky assets all over the world. [Have we put out one fire, only to create another one?] I think we have two objectives here -- stabilize the real economy, and avoid financial instability. But we're using one target, the Fed funds rate, to target the real economy, but we're creating a new asset bubble, bigger than the previous one, and that's a mistake we're doing right now."
Roubini's reasoning can be summarized as follows: I've read through this transcript several times, and I don't see that he's left much doubt that this is going to happen. The only point of ambiguity in what he's saying is the timing. He says that it won't happen soon because the Fed will keep interest rates low for a while, but surely he realizes that isn't the issue. The trigger will not be the Fed funds rate, which is set by policy; the trigger will be the ending of the fall of the dollar, and that's set by the market. And with deflation already occurring, the dollar could stop falling at any time, irrespective of the Fed funds rate. As usual, you have to ask the question, "What would Nouriel Roubini say if he believed that a global market crash was imminent?" And the answer is that he'd be saying what he said in the above transcript. He wouldn't be talking about a global market crash at all if he thought it was a distant possibility; the fact that he seems to predict it indicates that he believes that it could happen in the near future. I've always been puzzled by what people like Nouriel Roubini and Ben Bernanke really believe. As I've been saying for seven years, a market crash MUST occur with 100% probability by applying the Law of Mean Reversion. I don't expect the man on the street to understand the Law of Mean Reversion, but I DO expect professors of economics at NYU and Princeton to understand the Law of Mean Reversion. This is the first time that I've heard Roubini, or indeed any major financial official in Washington or around the world, predict a market crash. This is a big change in opinion by Roubini, or at least a big change in what he's saying. From the point of view of Generational Dynamics, the increasingly reckless behavior of financial institutions explains why there MUST be a major stock market crash, and that the worst, by far, is yet to come. Citibank is an archetypal example of what's going on. The financial engineers and managers at Citibank were prime perpetrators in defrauding investors and the public in creating structured securities that are now called "toxic assets," and they did so in such a way that they could pay themselves billions of dollars irrespective of how many other people lost everything. And now those same people at Citibank are <#stdurl http://globaleconomicanalysis.blogspot.com/2009/10/how-citi-grinch-stole-christmas-and-why.html "charging millions of their own customers 30% interest,"#> and using the money to pay themselves hundreds of millions of dollars in additional bonuses. This appears to me (as a non-lawyer) to be criminal extortion. Citibank appears to be turning into a criminal organization. I've been talking for several years about the debauched and depraved abuse of credit that we've seen in financial institutions, and I've been increasingly sickened and disgusted as I've seen it get worse and worse, as long-time readers of this web site are well aware. But I just can't find the words to describe what I'm seeing today in Citibank and elsewhere. I've lived a long life in America, and I've seen individual examples of criminal behavior, including such people as Bernie Madoff. But I've never seen any behavior so nauseating and loathsome as I'm seeing in Citibank and other places. I truly believe that many of these people are going to go to jail, as their counterparts did in the 1930s, and no one will be happier to see that than I will. But getting back to the generational point, you can see why there MUST be a major stock market crash. The portion of the crisis that's occurred so far has done nothing to curb the behavior of financial engineers and managers at Citibank in using fraud and extortion to pay themselves million dollar bonuses. The only thing that will stop them, and other bankers like them, is a financial crisis that will destroy Citibank itself. (This is why I often talk about the <#inc ww2010.weblog.ref e080121c ""The nihilism and self-destructiveness of Generation X.""#>) Citibank gouging and screwing their own customers with 30% interest rates is so self-destructive that it almost appears to be a last act of desperation. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091026 Iran plays a grand game in international nuclear weapons talks =data ww2010.weblog.y2009.e091026.head Iran plays a grand game in international nuclear weapons talks =data ww2010.weblog.y2009.e091026.keys =data ww2010.weblog.y2009.e091026.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091026.date 26-Oct-2009 =data ww2010.weblog.y2009.e091026.txt1 Will she or won't she? =data ww2010.weblog.y2009.e091026.txt2 Whenever politicians say something, I like to apply a simple test: What would the politicians be saying if the thing they're denying is true? Usually, they'd be saying exactly the same thing. This doesn't prove that what they're denying is true, but it does prove that you can't believe anything that the politicians say. Applying this test to the hardline Iranian politicians, we ask ourselves, what would the politicians say under these assumptions: Under those assumptions, the Iranians would say that they have no desire for nuclear weapons, and that they want to fully cooperate with the international community. And they would would stall and raise a lot of extraneous issues. And of course, that's exactly what they've been doing. That doesn't prove that they're developing nuclear weapons, but it does prove that you can't believe anything they say. The current drama began in mid-September when President Obama and the leaders of France and Britain disclosed that Iran had been <#stdurl http://www.nytimes.com/2009/09/29/world/middleeast/29tehran.html?em "constructing a secret nuclear processing plant in Fordo,"#> a village about 115 miles south of Tehran. The disclosure was extremely embarrassing to Iran, and appeared to have infuriated two of Iran's main supporters, Russia and China, who felt betrayed by Iran's lying. This was followed a few days later by a test-firing of new missiles capable of striking Israel. Taken together, the two incidents raised many international alarm bells. American and Europe began considering new sanctions, and Russia and China indicated that they might not veto the sanctions in the U.N. Security Council. Some people feared that an air strike by Israel could be coming soon. So Iran's politicians moved quickly into obfuscation mode. On October 4, an ebullient Mohamed ElBaradei, head of the U.N.'s International Atomic Energy Agency (IAEA) <#stdurl http://www.latimes.com/entertainment/news/la-fg-iran5-2009oct05,0,5412023.story "announced that"#> Iran was moving away from confrontation with the West, and was agreeing to allow inspections of the Fordo plant by October 25 -- allowing itself plenty of time to remove anything incrminating. ElBaradei also announced that Iran would return to the negotiating table with the West. Strangely enough, Iran said nothing about these announcements. Nonetheless, ElBaradei's announcements were enough to defuse talk of sanctions, at least for a while. The negotiations have yielded a complex plan: Iran would <#stdurl http://news.xinhuanet.com/english/2009-10/25/content_12319226.htm "ship"#> most of its existing low-grade enriched uranium to Russia and France, where it would be processed into fuel rods with enriched uranium of a purity of 20 percent. This plan would guarantee that Iran would not develop uranium-processing facilities that could also provide weapons-grade material, but would still provide them with the enriched uranium for energy and medical needs. Once again, it was ElBaradei who announced this plan on Monday, with Iran saying nothing. Iran was asked to approve the plan by Friday, but they keep asking for more time. If the assumptions that I listed above are correct, then they will find a way not to approve this plan. While this discussion is going on, IAEA inspectors are now arriving at the Fordu nuclear plant to begin their inspection. Iran's politicians are well aware that it was Saddam Hussein's refusal to allow IAEA inspections that caused the Clinton administration to bomb Iraq almost on a daily basis, starting in 1998, and the Bush administration to launch the 2003 ground offensive. They believe that by allowing inspections, they'll defuse the West's desire to bomb Iran's nuclear installations or impose sanctions. However, if we're to judge what Iran's Persian-language newspapers are saying, they have no intention whatsoever of agreeing to ElBaradei's enriched uranium plan. While ElBaradei and western media have been have been bubbling with enthusiasm over the supposed success of this plan, sometimes calling it a victory for President Obama's accommodating, non-confrontational approach to Iran, <#stdurl http://www.memri.org/bin/latestnews.cgi?ID=SD261609 "analysis by MEMRI"#> of Iranian media produces these statements: From the point of view of Generational Dynamics, one cannot simply stop here and conclude that Iran will reject the plan with 100% certainty. Iran is in a generational Awakening era, a time of enormous political turmoil, as could be seen with this summer's <#inc ww2010.weblog.ref e090623 "student street protests,"#> which are still continuing. There are conflicting pressures in Iran, as follows: The political turmoil gives rise to the possibility that Iran may agree to ElBaradei's plan. But on balance, I estimate the chances to be vanishingly small. We can thus expect Iran to continue playing its grand game, and continue to tie the Western community into political knots. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=120 "Iran"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091023 Pakistan, in a 'state of war,' shuts schools and universities nationwide. =data ww2010.weblog.y2009.e091023.head Pakistan, in a "state of war," shuts schools and universities nationwide. =data ww2010.weblog.y2009.e091023.keys =data ww2010.weblog.y2009.e091023.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091023.date 23-Oct-2009 =data ww2010.weblog.y2009.e091023.txt1 Following two suicide bombings at Islamabad's International Islamic University, =data ww2010.weblog.y2009.e091023.txt2 Interior Minister Rehman Malik said that Pakistan is currently in a <#stdurl http://www.dailytimes.com.pk/default.asp?page=2009\10\21\story_21-10-2009_pg1_2 "state of war."#> <#inc ww2010.pic pakfata2.gif right "" "Official map of Pakistan, with the addition of the FATA (Federally Administered Tribal Areas) (Source: pakistan.gov.pk)"#> Pakistan went on nationwide heightened alert Wednesday, and <#stdurl http://www.straitstimes.com/Breaking%2BNews/Asia/Story/STIStory_445157.html "shut down all schools and colleges nationwide."#> These events occurred in the context of a <#inc ww2010.weblog.ref e091020 "growing military operation in South Waziristan,"#> the southernmost region of the Federally Administered Tribal Areas (FATA). Schools in most of country are expected to reopen by Monday, but schools in Punjab province may remain closed indefinitely. This reflects the increasing role of Punjabi militants in Taliban terrorist attacks. Whereas the Taliban was originally formed from ethnic Pashtuns in Afghanistan and northwest Pakistan, recent intelligence shows that Punjabi militants are <#stdurl http://washingtontimes.com/news/2009/oct/21/punjabi-taliban-threat-growing/ "increasingly in control of the Taliban."#> It was the Punjabi terrorist group Lashkar-e-Taiba (LeT) that perpetrated the <#inc ww2010.weblog.ref e090304 "attack on the Sri Lanka cricket team"#> in Lahore in March of this year, and the the horrendous <#inc ww2010.weblog.ref e081130 "'26/11' terrorist attack on Mumbai"#> in November of last year. The same Punjabi group is believed to have perpetrated Tuesday's university attack, and it's feared that attacks on additional universities are planned in the Punjab province. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=4 "Afghanistan, Pakistan and India"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091022 Furious Iran blames Pakistan, US and Britain for Sunday's terrorist attacks =data ww2010.weblog.y2009.e091022.head Furious Iran blames Pakistan, US and Britain for Sunday's terrorist attacks =data ww2010.weblog.y2009.e091022.keys =data ww2010.weblog.y2009.e091022.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091022.date 22-Oct-2009 =data ww2010.weblog.y2009.e091022.txt1 Iran's Revolutionary Guards vow revenge. =data ww2010.weblog.y2009.e091022.txt2 Mohammad Ali Jafari, the Revolutionary Guards' commander-in-chief, said that Jundollah, the terrorist group claiming credit for Sunday's terrorist attack in southeastern Iran, <#stdurl http://www.timesonline.co.uk/tol/news/world/middle_east/article6880877.ece "has ties to"#> American, British and Pakistani intelligence organizations. <#inc ww2010.pic g091021.jpg right "" "Iran, Afghanistan, Pakistan, highlighting the region of the Jundullah attack"#> I briefly mentioned Sunday's attack a couple of days ago, in my <#inc ww2010.weblog.ref e091020 "article"#> on the growing war between the Pakistani army and the Taliban. Jundullah, the Sunni Islamist terrorist group with links to al-Qaeda and the Taliban, <#stdurl http://www.bloomberg.com/apps/news?pid=20601087&sid=aiRqC6Gts7TQ "killed 42 people"#> in a bomb attack, including 20 or so top commanders in the Revolutionary Guards. What's becoming increasingly clear is that this terrorist attack is a major humiliation to the Revolutionary Guards. It's the biggest attack on the Revolutionary Guards since the Iran/Iraq war of the 1980s, and apparently the leadership will demand revenge for the attacks. To put this into a generational context, think back to the beginning of American President John F. Kennedy's administration in 1961. WW II had just ended 16 years earlier, and JFK was a young president who had to prove to Americans that he could stand up to the Russians. So he triggered the Bay of Pigs disaster and risked thermonuclear war with the Cuban Missile Crisis. Today, the Iran/Iraq war ended just 21 years ago, and Mahmoud Ahmadinejad is a young president who has to prove to Iranians that he can stand up the West. Sooner or later, he may be forced to trigger some major international confrontation, to prove that he's "tough enough." Blaming the US and Britain is a knee-jerk reaction for the Iranian hardliners. In the Iranian hostage crisis of 1979, employees of the American embassy in Tehran were kept as hostages for over a year. Iran's ayatollahs were able to unify the Iranian people behind the Islamic Revolution by blaming "the Great Satan" for all their troubles. Iranian hardliners today are looking for ways to repeat that formula. They've certainly tried it in opposing the <#inc ww2010.weblog.ref e090623 "student street protests"#> of this summer -- and incidentally, these street protests <#stdurl http://www.payvand.com/news/09/oct/1139.html "are still continuing on an almost weekly basis"#> on college campuses. But what's really fascinating about this situation is the <#stdurl http://news.xinhuanet.com/english/2009-10/20/content_12284042.htm "increasing tension between Iran and Pakistan."#> Iran's Intelligence Minister Heidar Moslehi is quoted as saying, "We have good evidence and documents ... which show that Abdulmalek Rigi (Jundullah leader) and all his terrorist agents are in contact with Pakistani intelligence system. ... An Iranian delegation is due to visit Pakistan to present them with the documents." Thus, one possible scenario in the next few weeks and months is that Iranian forces could cross the border back into Pakistan to attack Jundullah on Pakistani soil. This could spiral into a full-fledged diplomatic crisis. From the point of view of Generational Dynamics, what's interesting about this situation is that we see the two sides forming in the coming battle between Sunni and Shia Muslims. Mahmoud Ahmadinejad and other Iran hardliners have been pursuing an incredible fantasy that Iran can create an Islamic empire encompassing the entire Mideast, and that even Sunni groups would be willing to be governed by Tehran. What we've <#inc ww2010.weblog.ref e091020 "been seeing recently"#> is that al-Qaeda is playing the part of the "glue" that's been unifying Sunni militants from the entire region, including Somalia, Yemen, Afghanistan, Pakistan and Uzbekistan, against the West, Shia Muslims and Hindus. This new confrontation between Iran and Pakistan makes it clear that Shia Iran is clearly on the side of the West in that confrontation. As I've been pointing out for years, the Iranian people (as opposed to their leaders) are generally pro-American and pro-West, and it's still my expectation that Iran will be an ally of America, Britain, Israel and the West in the coming Clash of Civilizations World War. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=120 "Iran"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091020 After a week of terrorist carnage across Pakistan, the army declares war on militants =data ww2010.weblog.y2009.e091020.head After a week of terrorist carnage across Pakistan, the army declares war on militants =data ww2010.weblog.y2009.e091020.keys =data ww2010.weblog.y2009.e091020.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091020.date 20-Oct-2009 =data ww2010.weblog.y2009.e091020.txt1 Al-Qaeda, the Taliban, and Punjabi terrorists appear to be linking up. =data ww2010.weblog.y2009.e091020.txt2 <#inc ww2010.pic pakfata2.gif right "" "Official map of Pakistan, with the addition of the FATA (Federally Administered Tribal Areas), highlighting Swat Valley (Source: pakistan.gov.pk)"#> For two weeks there have been almost daily suicide bombing attacks in cities across Pakistan, including Peshawar in the northwest, Rawalpindi, which is adjacent to Islamabad, the nation's capital, and Lahore, in the east. The widespread attacks appear to be coordinated, and appear to be targeting Pakistan's security forces. Over 150 people have been killed. According to Taliban leaders, these have been revenge attacks for last spring's <#inc ww2010.weblog.ref e090531 "army operations in Swat valley,"#> which the army claims were successful in driving in the Taliban from the region, and for the planned new army operations now beginning in South Waziristan in the FATA. The widespread nature of the recent terrorist attacks, and the fact that they appear to be coordinated, indicate that terrorist Islamists from different ethnic groups, all Sunni Muslim, are coordinating their activities: All of these groups have a great deal in common. They're all Sunni Muslim extremists. They're all funded by the drug trade in Afghanistan. They're all anti-American, anti-Western, and anti-Shia. And with al-Qaeda in the ideological lead, their primary objective is to take control of some country. They're ideal model is the 1979 Islamic Revolution in Iran which, ironically, is a Shia state. They tried to create a similar revolution in Iraq, and failed, and now they're trying in Somalia and Pakistan, with potential future targets in Saudi Arabia and Palestine. On the other side are Shia groups -- the Persians in Iran, the Sindhis in Pakistan -- and their historic allies, the Hindus in India. More and more, we can see the growing trend leading towards the major war between Sunni and Shia Muslims that will encompass the entire region. From the point of view of Generational Dynamics, this war is coming with absolute certainty. =inc ww2010.h2 wazir "The war in South Waziristan" <#inc ww2010.pic paktribal2.jpg center "" "Pakistan's Federally Administered Tribal Areas (FATA) form a safe haven for Taliban and al-Qaeda terrorists striking Afghanistan. (Source: cfr.org)"#> On Saturday, Pakistan launched <#stdurl http://www.telegraph.co.uk/news/worldnews/asia/pakistan/6377813/Pakistan-plans-to-overwhelm-Taliban-within-two-weeks.html "a massive air and ground attack"#> on Taliban strongholds in South Waziristan, hoping to score a victory within a few weeks. Communication with South Waziristan is difficult in the best of times, but now there's none at all. However, <#stdurl http://www.bloomberg.com/apps/news?pid=20601091&sid=alZNk8.ccrMk "hundreds of thousands of refugees"#> are pouring out of the region to escape the fighting, and the fighting is believed to be particularly bloody, often at the level of hand to hand <#stdurl http://news.bbc.co.uk/2/hi/south_asia/8313317.stm "street fighting."#> Here's an <#stdurl http://www.youtube.com/watch?v=WUUnfy3Qwyg "al-Jazeera video"#> on the fighting:
From the point of view of Generational Dynamics, this war is the next step in the path to a totally genocidal crisis war. As I explained several months ago in <#inc ww2010.weblog.ref e090511 ""Sri Lanka, Pakistan and Gaza are all following the same path,""#> these wars, occurring in a generational Crisis era, become increasingly bloody as time goes on. Thus, previous army battles in the FATA region ended in stalemate, while last spring's army battle in the Swat Valley was more violent, and the current war will be move violent still. (Comments: For reader comments, questions and discussion, as well as more frequent updates on this subject, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=4 "Afghanistan, Pakistan and India"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091014 The current stock market bubble correlates with bailouts and stimulus =data ww2010.weblog.y2009.e091014.head The current stock market bubble correlates with bailouts and stimulus =data ww2010.weblog.y2009.e091014.keys =data ww2010.weblog.y2009.e091014.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091014.date 14-Oct-2009 =data ww2010.weblog.y2009.e091014.txt1 This is another refutation of Richard Koo's stimulus theories. =data ww2010.weblog.y2009.e091014.txt2 An <#stdurl http://jessescrossroadscafe.blogspot.com/2009/10/speculative-bubble-in-equities-and-case.html "analysis posted"#> on the "Jesse's Café Américain" blog provides an explanation for the current stock market bubble that's been soaring since March. The analysis shows that stimulus, bailout and quantitative easing money from the government is highly correlated to the current stock market bubble, implying that this government money is pouring into stocks and boosting this new bubble. The following graph of the adjusted monetary base provides an indication of the amount of money that's been injected into the economy by means of bailouts, stimulus and quantitative easing: <#inc ww2010.pic g091012b.gif center "" "Adjusted monetary base (Source: Jesse's Café Américain)"#> The above graph shows that the monetary base has expanded from $900 billion in late 2008 to $1.9 trillion today, a $1 trillion increase in the last year. But where has that $1 trillion gone? In the past, I've posted several discussions on presentations by Richard C. Koo, Chief Economist at Nomura Research Institute, on the experience of the 1930s Great Depression and the 1990-2005 "lost decade" in Japan. (See, for example <#inc ww2010.weblog.ref e090401 ""Fiscal stimulus programs in 1930s and today.""#>) The theory presented by Koo is the entire basis in mainstream macroeconomic theory justifying the large stimulus programs being implemented by the Obama administration, as well as by countries around the world. As explained in the Koo presentations, this theory is based on the following assumption: That the stimulus money will first create jobs, and then will return to the Treasury in the form of bond purchases, because there's nowhere else for the money to go. So where has all the money gone? It certainly hasn't gone into bank lending, as the following graph shows: <#inc ww2010.pic g091012c.gif center "" "Total bank credit (Source: Jesse's Café Américain)"#> The above graph shows that bank lending has plummeted, even as $1 trillion in bailouts, stimulus and quantitative easing has poured into the economy. This is what's expected from Koo's concept of "balance sheet recession," his name for a deflationary spiral. During such a period, assets are destroyed, but debts remain, so everyone is in debt. People and businesses refuse to go even deeper into debt, and instead of spending any money they have, they either save it or use it to pay down debt. Either way, it goes into a bank, which (according to Koo) uses the money to purchase government bonds, thus returning the money to the Treasury. But the bank does not risk lending the money out, which is consistent with the above graph. But what if the money was somehow being used to buy stocks? There's certainly a correlation, as shown by the following graphs of the S&P 500 price/earnings ratio (also called "valuations"): <#inc ww2010.pic g091012d.gif center "" "Price/earnings ratios, based on operating earnings and reported earnings (Source: Jesse's Café Américain)"#> Notice that the as-reported P/E ratios began skyrocketing at exactly the same time that the stimulus money started pouring out. Also notice that the operating earnings P/E ratio has also been soaring. (For a discussion of "operating" versus "as reported" earnings, see <#inc ww2010.weblog.ref e090615 ""Wall Street Journal sharply revises its fantasy price/earnings computations.""#>) The following graph overlays the monetary base with the reported earnings P/E ratio: <#inc ww2010.pic g091012e.gif center "" "Monetary base overlaid with price/earnings ratios based on reported earnings (Source: Jesse's Café Américain)"#> These graphs show that the bailouts, stimulus and quantitative easing are highly correlated with this years stock market bubble. Correlation doesn't imply causation, of course, but the size and duration of this year's stock market bubble has been extremely puzzling, and this correlation provides a highly credible explanation. This is an extremely significant conclusion because it strikes at the heart at the macroeconomic justification for the massive stimulus programs. For stimulus to work, it's absolutely essential that the stimulus money create jobs and then come back into the Treasury through saving and debt reduction. If the money is being channeled into the stock market, then much of it will "leak" out of the country into investments in other countries, thus defeating the purpose of the stimulus. How much longer can this go on? How long can the Fed and the Treasury pour out hundreds of billions of dollars to expand the stock market bubble? That can't be predicted, of course, but every bubble has to burst some time, and all it would take is some surprise event to trigger a panic. The "Jesse's Café Américain" article contains another interesting chart: <#inc ww2010.pic g091012f.gif center "" "Wealth disparity -- income share of top .01% of the population -- 1913 to present (Source: Jesse's Café Américain)"#> =inc ww2010.xr.related1 right fiscal 3 I've often wondered about the wealth disparity and income inequality statistics. I've been reading for years that income inequality has been increasing, and I felt intuitively that this had to be related to the generational financial cycle. This graph supports the conclusion that income inequality is a generational trend. It seems that income inequality increases substantially during the generational stock market, real estate and credit bubbles, and then presumably crashes along with the stock market. In fact, we can think of wealth disparity as just one more bubble that's still growing today, and will crash along with the other bubbles. I was shocked earlier this year when Citibank, Bank of America and other banks announced that they would continue paying million dollar bonuses. These and other banks had caused the financial crisis by creating worthless structured securities and fraudulently selling them to investors. Paying big bonuses to people who defrauded the public for years is, at the very least, a public relations disaster. What's become apparent in the last few months is that this disaster goes far beyond simple public relations. Citibank, Bank of America and other banks have been screwing and gouging their own customers in order to provide the cash flow to justify the million dollar bonuses. Stories abound about banks arbitrarily raising interest rates to 30%, doubling or tripling minimum payments, or engineering phony fees of hundreds or thousands of dollars per customer. In one sense, this should be no surprise at all. The same people who made billions of dollars selling worthless structured securities to investors are now making billions of dollars by gouging their own customers. They've changed only their methods, not their patterns of behavior. As I've mentioned several times on this web site, when I was growing up in the 1950s, my parents and my teachers really hated bankers, but I never understood why. I sure understand why today. Bankers did exactly the same kinds of things in the 1930s that they're doing today. Many bankers went to jail by the end of the 1930s, and the rest of them were hated for decades. If you look at the narrative that I've presented in this article, you can see some ironies. These banks have received hundreds of billions of dollars in bailout money, and are benefiting from the stimulus and quantitative easing programs. They aren't lending any of this money to consumers, since credit card defaults might reach as high as 10-15%, and they're evidently not investing the cash in safe Treasuries. Instead, a lot of the money is being channeled into stock market bubble, and when that bubble bursts, they're going to lose much more money than they would have from credit card defaults. That's not all. If you look at the last graph above, the wealth disparity graph, and you see what happened in the 1930s, then you can predict what's going to happen before long now. That wealth disparity is going to disappear, as the Principle of Maximum Ruin catches up with the bankers who have been perpetrating all these misdeeds, defrauding investors and gouging customers. It's a modern morality play. From the point of view of Generational Dynamics, you can see how the circle is closing. I know that long-time readers of this web site are sick and tired of hearing me endlessly talk about the <#inc ww2010.weblog.ref e080121c ""The nihilism and self-destructiveness of Generation X,""#> and how the lethal combination of greedy, nihilistic Gen-Xers, along with greedy, incompetent Boomers, has brought about the current financial disaster. Now we're beginning to see how the people in this lethal combination used destruction and nihilism to lay the seeds for their own self-destruction. Not only will most of them lose all their ill-gotten wealth, but many of them will go to jail. The rest will be hated for decades. To that end, a significant <#stdurl http://www.bloomberg.com/apps/news?pid=20602085&sid=aDQk9.j62S.I "criminal trial began on Tuesday."#> Two former Bear Stearns executives, Ralph Cioffi and Matthew Tannin are charged with securities fraud and face 20 years in prison if convicted. It's no surprise that Bear Stearns executives defrauded investors. (See, for example, <#inc ww2010.weblog.ref e070624 ""Bear Stearns bails out defaulting hedge funds, preventing broad market meltdown.""#>) But there's increasing momentum in public opinion building that people who perpetrated this fraud should be punished, just like the 1930s. As I've said many times, there's no doubt whatsoever that fraud was rampant. It was absolutely clear by 2006 that the real estate bubble was bursting, and that the computerized risk models that had been used to justify the creation of mortgage-backed structured securities were based on incorrect assumptions. If investment bankers had been honest, then they would have warned their investors that something was wrong. Instead, they redoubled their efforts to sell these securities (now called "toxic assets"), paying themselves huge commissions for each sale. Thus, there's absolutely no doubt at all that massive fraud was going on. However, this is all circumstantial evidence, not enough to convict anyone in court. And political figures are just as guilty as investment bankers. This has nothing to do with any political party. You have Robert Rubin from the Clinton administration, Henry Paulson from the Bush administration, and Larry Summers from the Obama administration -- all of them made many millions of dollars participating in this fraud, and they're still running things. Journalists are to blame as well. They've lied about this fraud because they didn't want to lose advertisers. In the Ralph Cioffi / Matthew Tannin case that begins today, prosecutors have obtained the e-mail messages they exchanged in March 2007. These messages indicate that they were telling each other that the funds were likely to crash, while they were telling investors that they were solid. If prosecutors obtain a conviction against Cioffi and Tannin, then they will have opened the door to obtaining convictions against other investment bankers. This brings us back to the original subject of this article. Cioffi and Tannin are typical of an entire generation of investment bankers, real estate execs, politicians, journalists, and others who believe that rules don't apply to them, and they're allowed to screw anyone they want to make as much money as they want. The bailout, stimulus and quantitative easing money is supposed to be used for consumer loans and job creation. Instead, it's being channeled into the stock market bubble, undoubtedly by people who are paying themselves fat commissions for brokering stock purchases. This causes even more damage to the economy in general, and encourages ordinary investors to invest in the bubble, and risk losing everything. In other words, the same people who created the financial crisis for their own gain are now prolonging and worsening the financial crisis, for their own gain. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091012 The global housing bubble began in the mid-1990s. =data ww2010.weblog.y2009.e091012.head The global housing bubble began in the mid-1990s. =data ww2010.weblog.y2009.e091012.keys =data ww2010.weblog.y2009.e091012.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091012.date 12-Oct-2009 =data ww2010.weblog.y2009.e091012.txt1 This completely explodes the myth that Alan Greenspan caused the housing bubble. =data ww2010.weblog.y2009.e091012.txt2 A few weeks ago, I posted the article <#inc ww2010.weblog.ref e090908 ""The housing bubble began in 1995.""#> That article was based on an analysis that showed that the American housing bubble began in 1995. From the point of view of Generational Dynamics, that conclusion makes perfect sense. The dot-com stock market bubble also began in 1995. Both bubbles occurred just as the generations of survivors of the 1930s Great Depression were all disappearing (retiring or dying), all at once. Those people had pursued risk-averse investment policies for decades, but by the mid-1990s, they were replaced in senior management positions by Boomers who had no regard for old fogey risk aversion. Now, <#stdurl http://www.mckinseyquarterly.com/newsletters/chartfocus/2009_10.htm "a new report by McKinsey Global Institute"#> completes the picture. Consider this graph from the report: <#inc ww2010.pic g091012.gif center "" "Housing price index in various countries, 1970-2008 (Source: McKinsey Global Institute)"#> This graph shows that, just as in the United States, housing prices in many countries around the world soared, starting in the mid-1990s. It is thus completely impossible for Alan Greenspan's Fed to have caused the housing bubble by lowering interest rates in the 2002-2005 time frame. What this DOES show is that the same generational changes that occurred in America also occurred in countries around the world. This is not surprising, since the 1930s Great Depression was a worldwide event, not restricted to the United States. An interesting exception is Japan, whose real estate bubble began in the mid-1980s -- also at the same time as the beginning of their own stock market bubble! (See <#inc ww2010.weblog.ref e070220 ""Japan's real estate crash may finally end after 16 years""#> for a complete analysis.) And that is also precisely the time that the survivors of Japan's previous generational stock market crash (1919) all retired and died. I'm always hearing from people who say that "you haven't proven any of the claims you make about Generational Dynamics, and the things you've gotten right are just lucky guesses." Well, I don't know how much more proof you need, and Generational Dynamics seems to produce one "lucky guess" prediction after another. (See <#hreftext ww2010.i.forecast090503 ""Generational Dynamics forecasting methodology""#> and <#hreftext ww2010.i.predictions ""List of major Generational Dynamics predictions.""#>) The analysis that the global housing bubble began in the 1990s in multiple countries around the world really completes the picture, and provides almost irrefutable evidence of the validity of the Generational Dynamics analysis of the financial crisis. There's plenty of criticism these days of mainstream macroeconomics, which has totally failed to predict the financial crisis, and mis-predicted many things. (I was reminded this weekend that Ben Bernanke said early in 2008 that the "subprime mortgage crisis was completely contained," and would not affect the broader economy.) And yet, mainstream economists seem to have some kind of neuron dislocations in their brains, that make it impossible for them to understand generational explanations of macroeconomic trends, no matter how obvious the generational explanation is. If economists began incorporating generational theory into their macroeconomic models, then they'd finally start producing more accurate results, though they may not like what they get. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091011 Latvia may be near financial collapse, as GDP falls 18% this year =data ww2010.weblog.y2009.e091011.head Latvia may be near financial collapse, as GDP falls 18% this year =data ww2010.weblog.y2009.e091011.keys =data ww2010.weblog.y2009.e091011.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091011.date 11-Oct-2009 =data ww2010.weblog.y2009.e091011.txt1 October 23 will be a crucial day for Latvia and for Europe. =data ww2010.weblog.y2009.e091011.txt2 Like many countries (including the United States), Latvia went on a multi-year spending spree, borrowing money, and taking advantage of a huge real estate bubble. Now the credit crisis is hitting hard, and Latvia has to pay the price. =inc ww2010.pic neeurope.jpg right "" "Northeastern Europe" In the halcyon days of the credit and real estate bubbles, Latvia followed an especially pernicious form of credit abuse. Latvia has its own currency, the lat, and Latvia is in the European Union. Therefore, everyone assumed that Latvia would would soon adopt the euro currency (in fact, this is still the plan for 2013), and therefore everyone assumed that the <#stdurl http://www.moneyweek.com/news-and-charts/economics/eastern-europe-economics-latvia-euro-94103.aspx "lat was as good as the euro."#> Thus, many European banks, especially those in Switzerland and Sweden, loaned enormous amounts of money at low interest rates (we call these "subprime loans" in America) to Latvian consumers and businesses, causing the credit and real estate bubbles to be especially large in Latvia. When the bubbles started popping, Latvia was hit very hard. Latvia's gross domestic product (GDP) is down almost 20% from last year. Retail sales are <#stdurl http://www.newsday.com/business/latvian-retail-sales-plunge-30-3-pct-1.1487502 "down over 30%."#> Latvia’s government debt will rise to <#stdurl http://www.bloomberg.com/apps/news?pid=20601085&sid=aRPDVDM8h0fg "61 percent of GDP"#> by the end of 2011, compared with 20 percent at the end of last year. Real estate values have <#stdurl http://business.timesonline.co.uk/tol/business/economics/article6473253.ece "fallen 50%."#> Latvia is no longer able to finance its debts by issuing bonds, which only creates more debt. They could devalue their currency, but that would violate the EU rules for joining the euro currency in 2013. Instead, they've had to beg for help. No one would care very much about the Latvians, except for the fear that a Latvian default or currency devaluation would cause a <#stdurl http://business.timesonline.co.uk/tol/business/economics/article6440716.ece "chain reaction of defaults and devaluations"#> throughout Eastern Europe, especially in Lithuania, Estonia, Poland, Hungary, Bulgaria and Romania. So last spring, Sweden, the EU and the IMF agreed to bail out Latvia. They offered to provide a $12 billion loan to help Latvia get through the crisis. There were conditions, though. In order to get the loan Latvia would have to cut public spending by 500 million lats ($1 billion) per year. Several months ago, the Latvian government agreed to <#stdurl http://danskeanalyse.danskebank.dk/link/Latvia051009update/$file/Latvia_051009_update.pdf "cut 225 million lats from the budget and impose 100 million lats in tax increases,"#> in partial compliance with these demands. Even with this partial compliance, salaries for public workers were cut by 40%, and many hospitals and schools were closed. As I wrote two months ago in <#inc ww2010.weblog.ref e090815 ""Iceland begs for mercy as Europe turns the screws,""#> the EU and the IMF are in no mood to be lenient to countries that get into trouble. So it's not surprising that they're demanding the full 500 million lats in budget cuts before any aid can be provided. The Swedes are being particularly vociferous in demanding full Latvian compliance because Swedish banks are especially at risk. Riksbank, Sweden's central bank, and a chorus of top Swedish officials <#stdurl http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL842610720091008 "are warning Latvia"#> that they can't simply ignore their previous agreements. "It is as though we are living in a completely different world," said Riksbank Governor Stefan Ingves. There have been some recent developments that have raised concerns that a major crisis is brewing: There is a feeling in the financial community that the entire worldwide financial crisis is over, and that therefore there's no real need to bail out Latvia. This illustrates the problem with the airheaded optimism that pervades today. It causes people to make wrong, sometimes disastrous decisions. When these decisions backfire, everyone is shocked, and the consequences can be enormous. That's why we say that the <#inc ww2010.weblog.ref e091005 ""Principle of Maximum Ruin""#> applies to today's financial marketplace. <#inc ww2010.pic g091011.gif right "" "Fear index -- 11-Oct-2008 to 11-Oct-2009 (Source: Marketpsych)"#> To see how complacent the financial community has become, take a look at the adjoining graph. Long-time readers of this web site may recall that in 2007 I occasionally discussed <#inc ww2010.weblog.ref e070918 "the "Marketpsych Fear Index.""#> This index measures the anxiety of investors by examining media stories. They have a computerized methodology that counts words in financial stories to determine how anxious investors are. As you can see, the anxiety level of investors has plummeted to the lowest level in over a year, and actually to the lowest level since early 2007, the start of the financial meltdown. The overconfidence is astonishing, as is the new stock market bubble we're seeing. Most of these overconfident people in the investment and financial community probably couldn't even spell "Latvia," let alone find it on a map. If they could, they wouldn't be so complacent. On October 23, the Latvian government must submit its budget proposal for 2010. The choices are appalling: All of these decisions have to be made by October 23. At that point we'll see if the Latvian situation fizzles, or if it triggers a major new financial crisis. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=172 "Latvia"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091008b Budget deficit triples (yes, triples!) in 2009 =data ww2010.weblog.y2009.e091008b.head Budget deficit triples (yes, triples!) in 2009 =data ww2010.weblog.y2009.e091008b.keys =data ww2010.weblog.y2009.e091008b.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091008b.date 8-Oct-2009 =data ww2010.weblog.y2009.e091008b.txt1 One of the major causes is falling tax revenues. =data ww2010.weblog.y2009.e091008b.txt2 A year ago, I wrote the article, <#inc ww2010.weblog.ref e081125 ""One, Two, Three ... Infinity,""#> in which I compared to the ever-increasing government spending plans to a book by George Gamow that I read in school in the 1950s. (Paragraph corrected - 1-Jan-10) My use of that particular phrase was to convey the idea that American debt was on an exponential growth path that would not be stopped except by a major financial collapse and crisis. As if to prove the point, the Congressional Business Office has announced that for the fiscal year ending on September 30, 2009, the <#stdurl http://www.google.com/hostednews/ap/article/ALeqM5g-YziTsAJw1ofv-BiXk2MoSXknwQD9B6HS000 "budget deficit was $1.4 trillion,"#> more than tripling the record 2008 deficit of $459 billion. There is absolutely no reason to believe that any steps will be taken to prevent the deficit from doubling or tripling again next year. <#inc ww2010.pic g091007.gif right "" "Annual tax revenues (Source: CNN)"#> One major reason is the <#stdurl http://money.cnn.com/2009/10/07/news/economy/tax_revenue_falling/?postversion=2009100711 "collapse in tax revenues."#> As I wrote two months ago in <#inc ww2010.weblog.ref e090804 ""US tax revenues fall sharply, the most since 1932,""#> tax revenues for fiscal 2009 have fallen by almost 50% from last year. Other reasons include the bailouts and stimulus packages. Stein's Law: If something cannot go on forever, then it won't. It is mathematically impossible for this rapid exponential growth to continue indefinitely. It is politically impossible to end this rapid exponential growth without a major financial crisis. Therefore, it will be stopped only by a major financial crisis that includes a major stock market crash. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e091008 Communist China celebrates its 60th anniversary with bizarre military parade =data ww2010.weblog.y2009.e091008.head Communist China celebrates its 60th anniversary with bizarre military parade =data ww2010.weblog.y2009.e091008.keys =data ww2010.weblog.y2009.e091008.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091008.date 8-Oct-2009 =data ww2010.weblog.y2009.e091008.txt1 Twin messages from the government: Enemies are both inside and outside China. =data ww2010.weblog.y2009.e091008.txt2 A comparable event would be the July 4, 1976, celebrations of the 200th anniversary of America's birth. There were parades, concerts, fireworks, and spectacular visits by tall ships from around the world. It was a nationwide celebration, with families and ordinary people attending events across the country. But that isn't what happened in China last week, as the country celebrated the 60th anniversary of the Mao Zedong's victory in the Communist Revolution, and the birth of the People's Republic of China. There was indeed a parade in Beijing, but there were no "ordinary people" to be seen. They were all told to stay at home and watch it on TV. They weren't allowed anywhere near the parade. Tens of thousands of <#stdurl http://www.theglobeandmail.com/news/world/chinas-anniversary-showcases-military-might/article1308718/ "heavily armed police"#> were stationed around Beijing to keep people away from the parade. Hotels were closed, and residents from nearby neighborhoods <#stdurl http://www.latimes.com/news/nationworld/nation/la-fg-china-parade2-2009oct02,0,5892663.story "were evacuated."#> Here's <#stdurl http://www.youtube.com/watch?v=4ytYYuW8E7o "a video"#> of China's 60th National Day parade:
The parade was rehearsed to perfection by almost 200,000 people taking part. They were selected based on the Chinese Communist Party (CCP) affiliation, and those appearing in groups were chosen to have the same height. The heart of the parade were the military. There were thousands of troops from the People's Liberation Army (PLA), showcasing tanks and trucks carrying nuclear missiles, while fighter planes flew overhead. On display were <#stdurl http://www.atimes.com/atimes/China/KJ02Ad02.html "52 new weapons systems,"#> all developed from Chinese technology (as opposed to the past, when weapons systems were all purchased from Russia). The celebration concluded on Thursday evening, with applause, cheers and fireworks, after a chorus by about 60,000 people, including President Hu Jintao, <#stdurl http://news.xinhuanet.com/english/2009-10/01/content_12165280.htm "danced and sang"#> the classic "Ode To The Motherland." =inc ww2010.h2 paranoia "Message #1: Paranoia of the Beijing government" The 60th anniversary celebrations sent to the world two major messages, both of which I've written about many times. The first message is that the Chinese government is scared to death of its own people, to the extent that this is probably the most paranoid government on earth. This paranoia began with the Tiananmen Square massacre in 1989, followed in 1991 by the collapse of Russia's Communist government and the dissolution of the Soviet Union. Since then, the CCP has lived with increasing fear and anxiety that the same thing would happen to them. There's good reason for them to have this fear. The number of "mass incidents" is now exceeding 100,000 per year. Each mass incident can involve just a few dozen people, but some of them involve tens of thousands of people. If even one of these mass incidents occurred in the U.S., it would be international news, but there are tens of thousands of them each year in China. These mass incidents are mostly directed against the wealthy élite of the CCP. The Chinese security forces are very experienced at keeping these mass incidents under control, but China has a history of these things growing out of control, leading to a major rebellion. These fears have grown in the last two years, thanks to the widespread violence in Tibet in 2008, and the widespread violence among the Uighurs in Xinjiang province earlier this year. According to <#stdurl http://www.spiegel.de/international/business/0,1518,653438,00.html#ref=nlint "one study:"#>
"China has grown sixteenfold since reforms began. But in the absence of effective institutions that restrain the discretionary powers of CCP officials and render them accountable for their actions, it is the state and the CCP that grows stronger rather than the Chinese people and civil society. Many problems in modern China begin with the increased role of the Chinese Communist Party in Chinese economy and society. Tellingly, the number of officials before and after the Tiananmen protests has more than doubled, from 20 million to 45 million. Since the early 1990s, the CCP has retaken control of the economy. State-controlled enterprises receive more than three-quarters of the country's entire capital each year, reversing the situation prior to 1989. The private sector, on the other hand, is denied both formal capital (bank loans) and access to the most lucrative markets, which are reserved for the state-controlled sector. Only about 50 of the 1,400 listed companies on the Shanghai and Shenzhen stock exchanges are genuinely private. Fewer than 50 of the 1,000 richest people in China are not linked to the Party. This state-corporatist model favors a relatively small number of well-placed insiders. Rise in Corruption Meanwhile, a billion people remain "outsiders" in the corporate-state system and are largely missing out on the fruits of gross domestic product growth. In fact, 400 million people have seen their net incomes decline during the past decade. Absolute poverty has doubled since 2000. This extensive role of the CCP has coincided with a rise in systemic corruption. Courts at all levels are still explicitly under the control of Party organs. According to studies by the Chinese Academy of Social Sciences, stealing from the public purse by officials amounts to about 2 percent of GDP each year, and it is rising. According to a 2005 CASS report, more than 40 million households have had their lands illegally seized by corrupt and unaccountable officials since the early 1990s."
This is exactly the kind of environment that gave rise to massive rebellions in the past. Previous major popular rebellions have included the White Lotus Rebellion (1796-1805), the Taiping Rebellion (1851-64), and the Communist Revolution (1934-49). The time is right for a new one, and the CCP is well aware of the danger. (See my 2005 article, <#hreftext ww2010.i.china050116 ""China approaches Civil War.""#>) By closing the 60th anniversary parades and celebrations to ordinary Chinese citizens, the CCP's paranoia has taken a giant step forward. =inc ww2010.h2 war "Message #2: Preparing for war" The massive military display is another warning to the world that China is preparing for war, especially with the United States. One thing that I've noticed over the years is that the Chinese don't really deny this. Officially, they talk about "harmonious relations" with other countries, but that's always in the context of assuming that other countries will do as China wants. But if you look at what China is DOING, rather than what they're SAYING, it's clear that they expect a war. (See, for example, my 2006 article, <#inc ww2010.weblog.ref e060501 ""China's plans for war with America.""#>) The massive military display last week is yet another warning to the U.S. and the world. The Chinese military must feel increasingly confident to have put up that kind of display. These two messages -- an internal rebellion and an external war -- are not contradictory. In fact, that's what happened last time, when they fought the Japanese in WW II right in the middle of their Communist Revolution. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=5&t=76 "China"#> thread of the Generational Dynamics forum.) =eod =// &&2 e091005 Confusion and the Principle of Maximum Ruin reign in the stock markets =data ww2010.weblog.y2009.e091005.head Confusion and the Principle of Maximum Ruin reign in the stock markets =data ww2010.weblog.y2009.e091005.keys =data ww2010.weblog.y2009.e091005.loc ww2010.weblog.log0910 =data ww2010.weblog.y2009.e091005.date 5-Oct-2009 =data ww2010.weblog.y2009.e091005.txt1 Is the bear market rally finally over? =data ww2010.weblog.y2009.e091005.txt2 I've just moved to a new apartment in Cambridge, Mass. For the last few weeks I've been distracted by packing and moving boxes and furniture. Now I'm distracted by unpacking boxes and searching for missing things. Even with all that going on, I still couldn't miss the gathering disaster in the stock markets and financial markets in general. Right now, there's a great deal of confusion. The mainstream analysts have no idea what's going on. There are some non-mainstream analysts who realize how great the danger is, but anyone who talks about it is quickly marginalized. On Wednesday, I saw CNBC anchor Joe Kernen gloating about how dumb the "bears" have been. He was mocking all the people who said the market would go down, and laughed at them in view of the "best" quarter for the S&P in many years. If anything is a sign of danger, this kind of gloating surely must be. On Friday, the <#stdurl http://www.bloomberg.com/apps/news?pid=20601087&sid=ac5o726kkr4Q "September jobs report"#> came out, and it was an utter disaster:
"U.S. Economy: September Job Losses Exceed Forecast Oct. 2 (Bloomberg) -- U.S. job losses accelerated last month and the unemployment rate climbed to the highest level since 1983, stark reminders of how the worst financial crisis in more than seven decades may undermine consumer spending and economic growth in the months ahead. Hours after today’s Labor Department report, President Barack Obama said he’s working to “explore any and all additional measures” to spur growth. ... Payrolls dropped by 263,000 in September, exceeding the median forecast in Bloomberg’s survey, with losses extending from cash-strapped state and local governments to retailers to builders, today’s report showed. The jobless rate rose to 9.8 percent from 9.7 percent in August, while working hours matched a record low. ... A Commerce Department report today showed that orders placed with factories fell unexpectedly in August, restrained by long-lasting items such as commercial aircraft and construction machinery. Bookings fell 0.8 percent after a revised 1.4 percent increase in July that was larger than previously estimated. Excluding transportation equipment, orders rose 0.4 percent. Obama called today’s report a “sobering reminder that progress comes in fits and starts” in remarks at the White House after returning from Copenhagen, where he made an unsuccessful bid for Chicago to host the 2016 Olympic Games. ... September’s losses bring total jobs lost since the recession began in December 2007 to 7.2 million, the biggest decline since the Great Depression. Payrolls were expected to drop 175,000, the median of 84 estimates in a Bloomberg News survey of economists. Forecasts ranged from decreases of 260,000 to 100,000. Job losses peaked at 741,000 in January, the most since 1949. The September unemployment rate matched the median projection. ... The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009. The data currently show a 4.8 million drop in employment during that time. The projected decrease was three times larger than the historical average, the Labor Department said. Most of the drop occurred in the first quarter of this year, probably due to an increase in business closings, the government said."
The last couple of paragraphs are interesting, because they expose a flaw in the "birth/death model" that the Labor Department uses to estimate the unemployment rate. Mike "Mish" Shedlock has been <#stdurl http://globaleconomicanalysis.blogspot.com/2009/10/jobs-contract-21th-straight-month.html "commenting on this flaw for months,"#> and says that the current estimates are still "wildly optimistic." Commenting on the jobs report, Ken Langone, former CEO of Home Depot, <#stdurl http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZQ4c_DQ19gQ "appeared on Bloomberg tv"#> to say that there was a huge disconnect between the economy and the stock market, and that the U.S. is in "horrible economic storm." He agrees that the unemployment picture is much worse than government figures indicate (some of this is paraphrasing):
"We had a 9.8% unemployment rate this morning. That's peanuts. 38% of the people who have jobs today are worried about losing their jobs in the next 12 months. What is the mindset of a person who's afraid of losing his job? "Honey, if you can't eat it, don't buy it. We're not going to go on a vacation. We're not going to put a new roof on the house - we're going to repair the old roof. We're not going to put a bathroom or a kitchen in." ... [With regard to the stock market] All of the people that I respect, as investors and as people, are all scratching their heads saying, "We don't get it." This stock market rise over the last 7 months -- and you look at the economy -- and I spend a lot of my time now reaching out to companies running businesses -- and I'm getting the same thing from everybody -- it's terrible, it's getting worse, September was worse than August. ... And by the way, this stimulus package, I'm sorry it's an enormous waste. ... It's not creating jobs. This "cash for clunkers" we know now, it was doing nothing but pulling orders forward. No net change in aggregate daemand over a period of months or years. ... I know of one agency in Washington, I can't say who because I don't want to get people in trouble. Last year they were given $3 million for their operation. And this is an activity that doesn't create jobs. This year, they were given $6 billion, and they were told, go spend it. Go get rid of the money." Not, "Come back and tell us how many jobs yuo've created." This stimulus package, in my opinion, is going to backfire. ... If we in business ever did what all these so-called sagacious economists from the government are telling us -- "it's getting better" and "things are looking up" -- we would be investigated by the SEC for consumer fraud."
Christina Romer, chairman of the White House’s Council of Economic Advisers, and the worst bubblehead in Washington except for Paul Krugman, came on to respond to Langone. She said, "You're right that the jobs number is disappointing. We like the market had been expecting less job loss, so that's unfortunate. On the other hand, this is how real recoveries happen. They come in fits and starts, and and I think what this is is a fit." Well, I'm glad she cleared that up. People like Romer and Krugman are complete idiots and don't have the vaguest idea what's coming, even though they claim to be economists. =inc ww2010.h2 ben "Ben Bernanke" But what about Ben Bernanke? I've harshly criticized his policies, but I've also said that <#inc ww2010.weblog.ref e090326 ""I have a lot of respect for him,""#> and I certainly don't think he's an idiot like Romer and Krugman. So what about Bernanke? I've had to think about him a lot in the past few days, after a co-worked said to me, "Look, how can you claim to know what's going on, and claim that Ben Bernanke doesn't. Are you really saying that you're the only person who's intelligent, and everyone else is stupid?" It's a good question. It's true that most journalists and politicians really are incredibly stupid and ignorant. In the case of the Iraq war, this was shown by <#inc ww2010.weblog.ref e070114b "articles in the Congressional Quarterly,"#> where the editor asked Washington journalists, analysts and politicians simple basic questions about what was going on in Iraq. These were people who represented themselves as experts on Iraq, but they didn't know the differences between Sunni and Shi'ite, and they didn't know that al-Qaeda is operating in Iraq, or that al-Qaeda is a Sunni organization. There's been no similar Congressional Quarterly study on so-called Washington experts and economists on the financial crisis, but I doubt all but 0.001% of these experts could explain, for example, what a "collateralized debt obligation (CDO)" is, and how it was used to create the financial crisis. I actually went to a great deal of trouble to learn how they worked (see <#hreftext ww2010.i.cdo080123 ""A primer on financial engineering and structured finance""#>) so that I could write about them on this web site, and I'm not even being paid, but I doubt that almost any of those so-called Washington experts who ARE being paid to be journalists or analysts bothered to figure out what was going on. So back to Ben Bernanke. I believe that there's a good chance that he knows exactly what a CDO is, and how it was used to create the financial crisis. As head of the Princeton University Economics Department, I have no doubt that he knows a very great deal about what's going on, unlike the standard Washington idiot. So why do I know what's coming, and he doesn't? I think the answer comes from the following key question:
"Suppose (hypothetically) that Ben Bernanke has applied his macroeconomic models, and performed all the necessary analyses, and suppose that he's concluded that there will be a major stock market crash, with, say 99% probability. What would he be doing and saying today?"
When you ask the question that way, then the answer is completely obvious: He'd be saying and doing exactly what he IS saying and doing, and HAS BEEN saying and doing since the crisis began in August 2007. He certainly couldn't announce to the world, "My analysis is that there will be a major stock market crash, with 99% probability." If he said anything like that, he would infuriate everyone on both the left and right, he'd be fired as Fed chairman, he'd cause a national and worldwide panic, and he'd be personally blamed for CAUSING the stock market crash, whenever it occurred. That's simply not an option. The only option available to him is to do what he's doing -- talk about "green shoots," and become the grandfather of many stimulus, quantitative easing and bailout plans, all the time hoping, hoping, hoping for a miracle, the other 1%, and no stock market crash. So that provides the answer to my co-worker's question. If you apply pure logic, then you can't conclude anything from what Bernanke says or does, because he'd say and do the same thing whether he believes that a stock market crash is coming or not. From the point of view of Generational Dynamics, there isn't even a 1% chance of avoiding a stock market crash, but that's beside the point. For Bernanke, there's a tiny of sliver of hope for him to grasp, and he'll do so, even though his economic models tell him that there's really no hope at all. =inc ww2010.h2 hope "The power of hope" When people are anxious and scared, they'll do what Bernanke is doing -- grasp at any sliver of hope available to them, and lie to themselves and others about it. The stock market rally has turned into an extremely dangerous bubble that has hurt a lot of people, and will hurt a lot more when the bubble deflates. The "mainstream" journalists and analysts have it all figured out. There are mainstream bulls and bears. The bulls think the stock market will keep going up forever. The bears think that it will pull back slightly, then will keep going up forever. The "mainstream" is guided by the following beliefs: It's worth mentioning one major expected green shoot that hasn't happened. Corporate earnings have been falling rapidly since fourth quarter 2007. Each quarter since then, the journalists and analysts have solemnly declared that earnings growth would exceed 50% within a quarter or two. This is a never-ending prediction that's been wrong every quarter. In January of this year, analysts were predicting explosive earnings growth by the third quarter. Well now, third quarter 2009 earnings are coming out, and once again, the growth is negative, according to <#stdurl http://www.cnbc.com/id/15839135/site/14081545/ "CNBC earnings central."#> Earnings appear to have fallen 25% from third quarter of last year -- and remember that in third quarter of last year, they were down 20% from the previous year. That means that corporate earnings have fallen 40% in two years, and are still falling. The main thing holding the mainstream journalists and analysts together is that they can't believe this crisis isn't over. No crisis in their lifetime has lasted this long, so it's IMPOSSIBLE that this crisis will continue. It HAS to be over, irrespective of any actual facts. It's once again time to post this quote from John Kenneth Galbraith's 1954 book The Great Crash - 1929. It describes how the "Principle of Maximum Ruin" played out in 1929:
"A common feature of all these earlier troubles [previous panics] was that having happened they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. ... The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or fourth of the purchase price in the next twenty-four months. ... The ruthlessness of [the stock market was] remarkable." (p. 108)
This is the text from which I derived the Principle of Maximum Ruin so many years ago -- that the current stock market will ruin the maximum number of people to the maximum extent possible. The rally that started last March, and is ending just now (or may not even be ending) has sucked huge amounts of money from short sellers, and will suck more huge amounts of money from those holding stock. Web site readers used to ask me, several years ago, exactly how the Principle of Maximum Ruin would work, and I said that I honestly didn't know how it would work, only that it would work. But now we really see well it works. A lot of people were comparing this rally to the 1930 rally, and when this one lasted longer, they said, "See? This isn't like the Great Depression. This rally is lasting much longer, so it's OK to assume that the market will keep going up and up." Thus you get people like Joe Kernen gloating. As Galbraith said, "Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune." As for me, I'm going to go back to unpacking boxes now. I'm still pretty wiped out from moving, and my writing for this web site has suffered as a result. Hopefully, things will be back on track in a few more days. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?f=14&t=2 "Financial Topics"#> thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) =eod =// &&2 e090929 An amazing video of Ukrainian sand artist, Kseniya Simonova =data ww2010.weblog.y2009.e090929.head An amazing video of Ukrainian sand artist, Kseniya Simonova =data ww2010.weblog.y2009.e090929.keys =data ww2010.weblog.y2009.e090929.loc ww2010.weblog.log0909 =data ww2010.weblog.y2009.e090929.date 29-Sep-2009 =data ww2010.weblog.y2009.e090929.txt1 The winner of Ukraine's Got Talent competition brings people to tears. =data ww2010.weblog.y2009.e090929.txt2 Kseniya Simonova used a light-box filled with sand to depict Ukraine's experiences in World War II. Quite possibly, Ukraine suffered more in World War II than any other nation. The Nazi invasion killed one in four Ukrainians, and that was after millions had been killed by Russian dictator Josef Stalin. In one of the most amazing displays of pure talent that I've ever seen, Kseniya Simonova won the Ukraine's Got Talent competition on September 24 by portraying <#stdurl http://www.guardian.co.uk/world/2009/sep/27/ukraine-youtube-talent-show "the Nazi invasion"#> of Ukraine in 1941. "The opening scene shows a couple sitting on a bench under a starry sky. Warplanes appear and the happy scene is obliterated to be replaced by crying faces. Then a baby arrives and the woman smiles again, but war and chaos return and a young woman becomes an old widow, before the image turns into an obelisk – the Ukrainian monument to its Unknown Soldier." Here's <#stdurl http://www.youtube.com/watch?v=518XP8prwZo "the video:"#>
Incidentally, I believe that's Jacques Brel singing about halfway through. (Comments: For reader comments, questions and discussion, see the <#stdurl http://generationaldynamics.com/forum/viewtopic.php?t=18 "Russia"#> thread of the Generational Dynamics forum.) =eod =// &&2 e090928 After a week of foreign policy disasters, President Obama's entire program is adrift =data ww2010.weblog.y2009.e090928.head After a week of foreign policy disasters, President Obama's entire program is adrift =data ww2010.weblog.y2009.e090928.keys =data ww2010.weblog.y2009.e090928.loc ww2010.weblog.log0909 =data ww2010.weblog.y2009.e090928.date 28-Sep-2009 =data ww2010.weblog.y2009.e090928.txt1 Obama's first term is indistinguishable from Bush's "third term." =data ww2010.weblog.y2009.e090928.txt2 I've been extremely critical of President Obama's policies, and the core of my criticism, which I first wrote about almost four years ago in <#inc ww2010.weblog.ref e070123 ""Barack Obama to Boomers: Drop dead!""#>, is that Obama's world view is based on his contempt, typical of Generation-Xers, for the values and accomplishments of those in the Boomer and Silent generations. According to Obama, Americans are sick of feuding Boomers, and ready to turn to Generation X, "after the campus culture wars between freaks and straights, and after young people had given up on what überboomer Hillary Rodham Clinton called in a 1969 commencement address a search for 'a more immediate, ecstatic and penetrating mode of living.' ... In the back and forth between Clinton and Gingrich, and in the elections of 2000 and 2004, I sometimes felt as if I were watching the psychodrama of the baby boom generation — a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago — played out on the national stage." In that same article I quoted Democratic advisor Paul Begala as saying, "I hate the Baby Boomers. They're the most self-centered, self-seeking, self-interested, self-absorbed, self-indulgent, self-aggrandizing generation in American history." Obama and Begala are both Generation-Xers, and their contempt for and hatred of Boomers is typical of their generation. Boomers, growing up after the trauma of WW II, received a great deal of love, attention and privileges from their parents. By the time the Gen-Xers came along, growing up in the 60s and 70s, they didn't receive anything like the same level of attention, and came to have the attitudes expressed by Obama and Begala in the quotes above. During the election campaign, Obama could say anything he wanted, as long as he criticized President Bush. He would receive wildly enthusiastic cheers from his supporters no matter what the content of his speech. As I wrote in July, 2008, in <#inc ww2010.weblog.ref e080725 ""Barack Obama in Berlin calls for greater European militarism,""#> it was clear that the people, in America and Europe, who were wildly cheering Obama had absolutely no idea what he was talking about. They were cheering a fantasy Obama, not the real Obama standing before them. Standing in front of an audience that cheers wildly no matter what you say is a like a drug-induced euphoria. You become addicted to the drug, you crave it more and more, and you begin to believe that the wild cheering is for the real you, not the fantasy in their minds. Thus, the fantasies held by the audience are transferred to the mind of the speaker like a kind of virus. Obama frequently said that the world would change on January 20, 2009, as soon as he was inaugurated as President. His goal was to heal the world with his mere presence -- cure global warming, provide universal health care, close Guantanamo, leave Iraq in peace, bring a two-state solution to Palestinians and Israelis, beat the Taliban in Afghanistan, restore the stock market bubble, and dismantle President Bush's war against terror. Nothing was beyond his reach. I was actually quite shocked by Obama's speeches after he won the election. Once he had won, he should have pulled back from some of his more quixotic and far-fetched campaign promises. Instead, much to my surprise, he seemed to become even more strident in claiming that the world would change on January 20. That's when I really began to realize that Obama held a totally fantastical set of beliefs, that weren't just campaign rhetoric. He actually believed them. He really believed that there was no universal health care, that Guantanamo prison was open, that the Palestinians and Israelis could not agree to peace, etc. -- he really believed that these things were true because the Bush administration was simply evil and ideological, that it catered to special interests rather than to the best interests of the country, that all the country's problems really were caused by "the psychodrama of the baby boom generation — a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago — played out on the national stage." It's becoming increasingly clear that Obama himself has no strategic world view that goes beyond the reaction to what he calls the "psychodrama of the baby boom generation." He's deeply involved in the "old grudges and revenge plots" that he complained about in the Boomers. This was apparent in his highly partisan nationally televised September 9 <#stdurl http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-to-a-Joint-Session-of-Congress-on-Health-Care/ "health care speech to Congress."#> For all that effort, I doubt that it changed a single person's mind. (Polls showed that <#stdurl http://abcnews.go.com/PollingUnit/Politics/obama-health-care-abc-news-washington-post-poll/story?id=8536886 "his approval rating increased slightly"#> after the speech, but the increase quickly dissipated.) If you watched the news in the following days, the only real discussion of the speech were the endless comments on Representative Joe Wilson's outburst "You lie!". The point is that the actual content of the speech was barely mentioned. It was a wasted speech. A lot of the news this past week has taken place with Obama on the international stage. As usual, he's been a brilliant speaker, but he has nothing to show for it except a series of foreign policy disasters. Let's take a look at the issues: