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Web Log - August, 2011

Summary

31-Aug-11 World View -- Israel training West Bank settlers against Palestinian uprising

Pakistan: Americans to remain in Afghanistan until 2024 as power base

This morning's key headlines from GenerationalDynamics.com.

* Israel training West Bank settlers against Palestinian uprising
* Israel and Egypt deploy troops opposite each other on border
* Pakistan: Americans to remain in Afghanistan until 2024 as power base

Israel training West Bank settlers against Palestinian uprising

Israel's army is implementing an aggressive campaign to arm West Bank settlers and train them to defend themselves from Palestinians. The main assumption of the Israeli Defense Forces (IDF) is that a declaration of Palestinian statehood, espected in September, will cause a public uprising "which will mainly include mass disorder." Accordingly, settlers will receive tear gas and stun grenades, and will be trained to use them as soon as Palestinians cross a "red line" determined for each settlement. At that point, soldiers will be ordered to shoot at the feet of Palestinian protesters if the line is crossed. Haaretz

Israel and Egypt deploy troops opposite each other on border

The Israeli Defense Forces (IDF) is deploying large numbers of infantry soldiers along Israel’s border with Egypt, as fears mount regarding the possible infiltration of terrorists with plans to kidnap residents from borderline communities. According to intelligence collected by the defense establishment, the Islamic Jihad cell currently in Sinai consists of over 10 terrorists who are currently on their way to carry out an attack against Israel along the Egyptian border. Meanwhile, reports indicate that some 1,500 Egyptian soldiers and police officers, supported by tanks and armored vehicles, are in a military operation to hunt down jihadi groups in northern Sinai Peninsula, near the Gaza and Israeli borders. Jerusalem Post

Pakistan: Americans to remain in Afghanistan until 2024 as power base

With American efforts to train Afghan forces to take over the fight against the Taliban reaching a dead end, the U.S. is coercing Afghan President Hamid Karzai to agree to allow American forces to remain until 2024. According to Pakistani sources, the Pakistanis see this as an American attempt to establish a base in Afghanistan in order to project power throughout central Asia. Pakistan Observer

(Comments: For reader comments, questions and discussion, see the 31-Aug-11 World View -- Israel training West Bank settlers against Palestinian uprising thread of the Generational Dynamics forum. Comments may be posted anonymously.) (31-Aug-2011) Permanent Link
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30-Aug-11 World View -- Bird flu pandemic concerns increase again

An excellent analysis of Libya by a web site reader

This morning's key headlines from GenerationalDynamics.com.

* Bird flu pandemic concerns increase again
* Internal WikiLeaks disputes puts intelligence sources at risk
* Christine Lagarde is rebuffed in attempt to save Europe
* Germany's foreign minister under fire over Libya
* New deadly Christian-Muslim violence in Jos, Nigeria
* An excellent analysis of Libya by a web site reader
* Climate change scientists warn of extraterrestrial attacks

Bird flu pandemic concerns increase again


 A Vietnamese billboard warning about bird flu
A Vietnamese billboard warning about bird flu

The H5N1 bird flu pandemic in 2009 caused a few hundred deaths, but did not cause the thousands or more deaths that had been feared. However, bird flu has never disappeared, and it's still endemic in poultry and wild birds in six countries: Bangladesh, China, Egypt, India, Indonesia and Vietnam. Now a new mutation, combined with migratory bird movements, is causing it to spread to other countries -- the Palestinian Territories, Bulgaria, Romania, Nepal and Mongolia -- in a form that's resistant to vaccines that used to work. "The general departure from the progressive decline observed in 2004-2008 could mean that there will be a flareup of H5N1 this fall and winter, with people unexpectedly finding the virus in their backyard," says Chief Veterinary Officer Juan Lubroth, adding, "This is no time for complacency." UN Food and Agriculture Organization (FAO)

Internal WikiLeaks disputes puts intelligence sources at risk

WikiLeaks founder Julian Assange has always insisted that leaked US State Department cables would be edited to protect sources, so that the lives of informants would not be at risk. However, thanks to a conflict with a former employee, an encrypted file containing 251,000 documents in their original form has been put on the internet. Then, in the spring of 2011, the encryption password was accidentally released. This release potentially endangers the informants mentioned in the documents, many of whom live in countries whose governments are hostile to the US. Spiegel

Christine Lagarde is rebuffed in attempt to save Europe


Christine Lagarde
Christine Lagarde

Christine Lagarde is the new head of the International Monetary Fund (IMF), having taken over when rape charges forced Dominique Strauss-Kahn to step down. In her maiden speech on Sunday, she said that the world economy is in a "dangerous new phase" that requires European governments to recapitalize, or bail out, all the European banks holding debt issued by Greece, or other toxic assets. Without an "urgent" recapitalization, "we could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis." Officials from Germany, Spain and the European Union immediately rebuffed Lagarde's call, saying that plans already in place would do all that's necessary. Bloomberg

Germany's foreign minister under fire over Libya

Guido Westerwelle, the foreign minister in German Chancellor Angela Merkel's government, is under fire because he didn't support the humanitarian Libya mission when it started. France and Britain led the effort to intervene in Libya, but Germany, Russia and China opposed the intervention. Last week, Westerwelle embarrased Merkel by suggesting that economic sanctions, rather than NATO air strikes, had played a decisive role in the collapse of the Gaddafi regime in Libya. Then he did a flip-flop on Sunday, acknowledging the "help provided by the international military mission" - too late for many of his critics. Deutsche-Welle

New deadly Christian-Muslim violence in Jos, Nigeria

In February, we reported on numerous atrocities committed by Christians and Muslims against each other in Nigeria's central city of Jos. ( "24-Feb-11 News -- Clashes in Jos, Nigeria, pit Christians against Muslims") At least 9 people have been killed and 106 injuried in new clashes between Muslims and Christians on Monday. A group of Muslims had gone to a prayer ground in Jos to mark the end of Ramadan when they were surrounded by residents of the Christian-dominated neighbourhood. Violence ensued, with motorcycles and cars burnt. Christians involved in the clashes spoke of preventing Muslims from marking their holiday in revenge for a string of bombs that exploded in Jos on Christmas Eve last year. Jos is right on the fault line between Muslims in the north and Christians in the south. This violence follows Friday's suicide bombing of the UN building in Abuja by an Islamist terrorist. AFP

An excellent analysis of Libya by a web site reader


Libya, showing the three historic divisions: Tripolitania, Fezzan and Cyrenaica
Libya, showing the three historic divisions: Tripolitania, Fezzan and Cyrenaica

The following is from a web site reader in France. It concludes that the current Libyan war does have the early characteristics of a generational crisis war, from which it follows that the war is going to get much worse:

John, You wrote Monday: "As I wrote several times when the Libya action began, I have been unable to do a detailed generational analysis of Libya because I haven't found any information about possible tribal conflicts during the 1930s."

Neither have I. So I assume there was no tribal conflicts in 1930's Libya because all tribes were submitted to foreign colonial rule-the one of fascist Italy. At the same moment the French and British empires led by democratic countries succeeded in putting an end to all tribal wars in Africa so it would have been odd if a totalitarian state failed to do it and everybody would have laughed at those Italians unable to rule over Arabs.

We hypothesized both last February the last generational crisis of Libya was the 1920's conquest by Italy. The conquest actually began in 1911 when the Italians defeated the Ottoman empire. However Turkish rule on Libya was nominal and the Italians at first controlled only coastal areas. The hinterland was mostly under the authority of a prestigious imams lineage, the Senoussis with their Islamic brotherhood (later they would become the Libyan royal family). Fezzan however wasn't subject to the Senoussis nor the Italians until 1934.

In 1921 Rodolfo Graziani (later a fascist vice-Roy of Ethiopia, a WW2 military leader and a war criminal) was sent to pacify Libya. There began the real conquest. Graziani used mobile columns (a invention of the Vendean wars: it's a column of light infantry and cavalry targeting dispersed civilian population supporting guerrilla warfare), air bombings, destruction of the cattle, chemical weapons and concentration camps. A eight of all Libyan population including a half of the Cyrenaica population died in the process.

I have found a video from a movie called "Lion of the desert" with Oliver Reed as Graziani where we can see pictures of the Italian concentration camps. Of course it's a propaganda movie (it was censored in Italy until 2009) but it can be used :

So the last generational Libyan crisis ended in the mid-1930's with the Fezzan brutal conquest following the bloodly Cyrenaica conquest. For the ongoing one I'm not sure the rebels will unavoidably divide with the West invading the East or the contrary. Gaddafi and his son Saif Al Islam are still free and alive. Moreover the rebels have not yet taken the control of Syrte area and the Fezzan. So I suppose in the next months the civil war will continue with loyalists claiming to fight a NATO Quisling puppet government.

You wrote: "the current civil war has not been anything like a generational crisis war."

Well, both sides committed war crimes. They killed prisoners of war and finished off wounded fighters. The rebels target blacks because Gaddafi hired Chadians mercenaries and sometimes tortured them. Before giving up a town the loyalists routinely killed political prisoners or tried to do it.

Climate change scientists warn of extraterrestrial attacks


A scene from Mars Attacks!
A scene from Mars Attacks!

According to Nasa-affiliated scientists at Pennsylvania State University, extraterrestrial beings might view changes in Earth's atmosphere as symptomatic of a civilisation growing out of control – and take drastic action to keep us from becoming a more serious threat. To bolster humanity's chances of survival, the researchers call for caution in sending signals into space, and in particular warn against broadcasting information about our biological make-up, which could be used to manufacture weapons that target humans. Guardian

(Comments: For reader comments, questions and discussion, see the 30-Aug-11 News -- Bird flu pandemic concerns increase again thread of the Generational Dynamics forum. Comments may be posted anonymously.) (30-Aug-2011) Permanent Link
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29-Aug-11 World View -- China expresses 'strong dissatisfaction' with the Pentagon's report

Egypt to deploy troops, armor, helicopters in Sinai

This morning's key headlines from GenerationalDynamics.com.

* China expresses 'strong dissatisfaction' with the Pentagon's report
* Egypt to deploy troops, armor, helicopters in Sinai
* Lockerbie bomber Abdel Baset al-Megrahi near death
* Arab League proposes Syria peace plan
* Euro bailout plan deteriorates further as 'hysteria' sweeps Germany
* AQIM takes credit for suicide bombing in Algeria on Friday

China expresses 'strong dissatisfaction' with the Pentagon's report


China's disputed territories (U.S. Dept. of Defense)
China's disputed territories (U.S. Dept. of Defense)

China's Ministry of Defense has expressed "strong dissatisfaction" and "firm opposition" to Wednesday's report by the Pentagon on China's military. Spokesman Yang Yujun says that the report "severely distorted the facts." He added:

"China unswervingly adheres to the path of peaceful development, and its national defense policy is defensive in nature.

[China's defense building] is solely to safeguard its own sovereignty and territorial integrity, and ensure smooth economic and social development, and does not target any country.

Given the progress of science and technology, it's normal for the Chinese army to develop and renew some weapons and equipment."

China's Ministry of Defense

The new Pentagon report shows that China is rapidly preparing for all-out war with America over Taiwan. An attack within 12-18 months is a reasonable expectation.

Please see my complete analysis of the Pentagon report:

"New Pentagon report outlines China's military buildup"

Egypt to deploy troops, armor, helicopters in Sinai

Israel's defense minister, Ehud Barak, is reported to have said that Israel and Egypt have agreed that Egypt should deploy thousands of troops in Sinai, along with helicopters and armored vehicles, in even though the 1979 Camp David agreement strictly forbids it. "Sometimes you have to subordinate strategic considerations to tactical needs," said Barak. The agreement comes after a recent terrorist attack in southern Israel that was perpetrated by terrorists passing through Sinai, and the deaths of five Egyptians by Israeli forces in the aftermath of the attack. Economist

The Economist report has generated a great deal of interest throughout the Mideast, and a great deal of controversy in Israel, because it brings Egypt's armed forces close to Israel's border for the first time since the 1970s. When questioned about the report on Sunday, Israel's prime minister Benjamin Netanyahu seemed to confirm it by saying that the deployment is "not something that we have to rush into." He added that "Security arrangements must be dealt with, and we must invest more resources in building the barrier on the border with Egypt." Jerusalem Post

Lockerbie bomber Abdel Baset al-Megrahi near death


Abdel Basset al-Megrahi on Sunday (CNN)
Abdel Basset al-Megrahi on Sunday (CNN)

One hoped-for outcome of the war in Libya was that Abdel Baset al-Megrahi, the Libyan found guilty of the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, would be returned to Scotland to serve out his jail sentence. However, Libya's rebel government said on Sunday that they will not extradite al-Megrahi to Britain. Then, several hours later, a CNN reporter was allowed by his family to visit al-Megrahi, and found him to be near death. According to his family, they've been unable to get al-Megrahi any medical care since Tripoli fell to the rebels. VOA and CNN

Arab League proposes Syria peace plan

The Arab League on Sunday joined the long line of nations and organizations calling on Syria's president Bashar al-Assad to stop massacring his own people. Arab League Secretary-General Nabil al-Arabi will visit Syria with "an initiative" to end the violence. But the statement provoked an angry rejection from Syria though, which condemned it as "a clear violation ... of the principles of the Arab League charter and of the foundations of joint Arab action." Telegraph

Euro bailout plan deteriorates further as 'hysteria' sweeps Germany

Klaus Regling, the director of the EU's bailout rescue fund, says that "Hysteria is sweeping Germany," as opposition in penny-pinching Germany grows to bailing out the profligate "olive zone" nations in the south. Chancellor Angela Merkel no longer has enough votes in the Bundestag (Parliament) to guarantee backing of the euro bailout plan. Christian Wulff, Germany's president, stunned the country last week by accusing the European Central Bank of going "far beyond its mandate" with mass purchases of Spanish and Italian debt, and warning that the Europe's headlong rush towards fiscal union stikes at the "very core" of democracy. There may be a major crisis as early as next week, when Germany's Verfassungsgericht (constitutional court) rules on the legality of the EU's bailout package. A negative ruling would set off an instant brushfire across the euro zone. Ambrose Evans-Pritchard

AQIM takes credit for suicide bombing in Algeria on Friday

The group Al Qaeda in Islamic Maghreb (AQIM) claimed responsibility in a statement Sunday for the double suicide bombing that killed 18 people two days earlier at the Military Academy of Cherchell in Algeria. AQIM is also thought to be linked to the terrorist group Boko Hara that took credit for the bombing Friday of the United Nations building in Abuja, the capital city of Nigeria. Ennahar (Algiers)

(Comments: For reader comments, questions and discussion, see the 29-Aug-11 World View -- China expresses 'strong dissatisfaction' with the Pentagon's report thread of the Generational Dynamics forum. Comments may be posted anonymously.) (29-Aug-2011) Permanent Link
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28-Aug-11 World View -- Al-Qaeda's second in command killed in Pakistan

Mexico's federal agents raid Monterrey casinos

This morning's key headlines from GenerationalDynamics.com.

* Al-Qaeda's second in command killed in Pakistan
* New evidence of atrocities in Libya by Gaddafi's forces
* Dramatic massacre in mosque in Damascus, Syria
* Mexico's federal agents raid Monterrey casinos

Al-Qaeda's second in command killed in Pakistan


Atiyah Abd al-Rahman
Atiyah Abd al-Rahman

US officials confirmed on Saturday that Atiyah Abd al-Rahman was killed in Waziristan, in the tribal areas of Pakistan, on August 22. Al-Rahman had been promoted to al-Qaeda's second in command, directly under top terrorist Ayman al-Zawahiri. Both promotions had occurred following the killing of Osama bin Laden in May by US forces. The death of al-Rahman is a serious blow to al-Qaeda, since al-Zawahira depends on him to run daily operations and to help guide the organization. Al-Rahman had played a key role in managing ties between the core leadership and al Qaeda in Iraq and helped negotiate the formation in 2007 of al Qaeda in the Islamic Maghreb (AQIM) with a group of Algerian Islamist guerrillas. Tribune (Pakistan) and Reuters

New evidence of atrocities in Libya by Gaddafi's forces

Some 53 bodies were found in a burnt-out warehouse in Tripoli on Saturday. Eyewitnesses who escaped the massacre said that the people were murdred by Gaddafi's forces on August 23-24. They were gunned down and set on fire. Evidence of mass killings and atrocities is growing, along with humanitarian concerns, as the city of Tripoli runs out of food and water. Tripoli Post

Dramatic massacre in mosque in Damascus, Syria


Pro-Assad demonstrators in central Damascus on Saturday (AFP)
Pro-Assad demonstrators in central Damascus on Saturday (AFP)

Pro-democracy demonstrators in Syria continue every day to protest the regime of president Bashar al-Assad, despite massacres by live fire from Assad's regime forces. A particularly dramatic slaughter occured on Saturday at a mosque in Kafarsouseh, near Damascus. Protesters were greeted by teargas from regime forces and "shabiha" (regime thugs). They threw back the teargas cannisters and rocks, and the security forces responded with live fire. The protesters fled into the mosque, and then the mosque itself was assaulted by security forces, violating core Islamic principles. There have been protests across the country, but so far they've been rare in Damascus. Assad is desperate to avoid large Damascus protests, as those would more seriously threaten his rule. Al-Jazeera

Mexico's federal agents raid Monterrey casinos

After the horrific arson attack on Thursday on the Casino Royale in Monterrey, killing 52 people, hundreds of soldiers and federal agents raided 11 Monterrey casinos on Saturday, an confiscated about 1,500 slot machines. It said the continuing operation was meant to verify whether casinos had paid taxes or introduced slot machines illegally. It's nice to know that even if the Mexican feds can't prevent this kind of violence, at least they can make some money from it. Houston Chronicle

Casinos are technically illegal in Mexico, and so the establishments categorize their games as "skill" rather than "chance." The casinos are lucrative in themselves, but they're also heavily used by organized criminal gangs for money laundering. The result is rising tension in the underworld over who controls this lucrative and important business. The motive for Thursday's attack, according to press reports, was that the casino refused to pay its "quota," or extortion payment to some drug cartel. This doesn't make sense, because extortionists don't make money by eliminating money making organizations. They do, however, want to injure their enemies' businesses, and although no one wants to talk about it, this appears to be the most likely motive. Insight Crime

(Comments: For reader comments, questions and discussion, see the 28-Aug-11 World View -- Al-Qaeda's second in command killed in Pakistan thread of the Generational Dynamics forum. Comments may be posted anonymously.) (28-Aug-2011) Permanent Link
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27-Aug-11 World View -- Mexico blames U.S. for Monterrey terror attack

Dozens killed in suicide bombing of U.N. building in Nigeria

This morning's key headlines from GenerationalDynamics.com.

* Mexico's Pres. Calderon partially blames U.S. for Monterrey terror attack
* Iran's Ahmadinejad says Palestinian state is only the 'first step'
* Egypt's 'million man protest' rally attracts only hundreds
* Report accuses Moody's of ratings bias
* Stocks rise because Bernanke announces a two-day meeting
* Dozens killed in suicide bombing of U.N. building in Nigeria

Mexico's Pres. Calderon partially blames U.S. for Monterrey terror attack


Calderon attends a cermony outisde the Casino Royale after terror attack (AP)
Calderon attends a cermony outisde the Casino Royale after terror attack (AP)

Mexico's President Felipe Calderon has called for three days of mourning following Thursday's terror attack on the Casino Royale in Monterrey, killing 52. A group of gangsters barged into the casino, spread gasoline (petrol) all over the place, and set the casino on fire. The act has shaken all of Mexico. Calderon referred to the terrorist act as part of a broader struggle for the control of Mexico. "It is clear to everyone that the enemies of Mexico are the criminals. Yesterday they showed to what point they are capable of going in their stupid and irrational violence." VOA

Calderon said that rampant corruption within his nation's judiciary and law enforcement bore some blame. But he also blasted the United States, saying,

"We are neighbors, allies and friends. But you, too, are responsible. This is my message.

[You should] once and for all stop the criminal sale of high-powered weapons and assault rifles to criminals that operate in Mexico. ...

Part of the tragedy that we Mexicans are living through has to do with the fact that we are next to the world's greatest drug consumer, and also the greatest global arms vendor that pays billions of dollars each year to criminals."

Miami Herald

Iran's Ahmadinejad says Palestinian state is only the 'first step'

Iranian President Mahmoud Ahmadinejad said on Friday that having the U.N. gives full membership to a Palestinian state -- in the Gaza Strip and the West Bank, with East Jerusalem as its capital -- was only the first step. "Recognising the Palestinian state is not the last goal. It is only one step forward towards liberating the whole of Palestine." Reuters

China's special envoy to the Middle East, Wu Sike, said here Friday that his country fully supports the Palestinians' right to establish an independent state in a balanced manner and through peace talks. "China supports the Palestinian people and their cause. We also support the Palestinians to get the United Nations recognition of a Palestinian state on the lands occupied in 1967 with Jerusalem as capital." Xinhua

Egypt's 'million man protest' rally attracts only hundreds

Turnout was much lower than expected for an Egyptian demonstration on Friday outside Israel's embassy in Cairo calling on Egypt's government to expel Israel's ambassador, and to reevaluate the 1979 Camp David agreement with Israel. Activists had promised a "million man protest," but far fewer showed up. Israel has never been a target for this year's "Arab revolutions," and that's apparently still true in Egypt, even though national elections are coming up soon. The demands were triggered by the deaths of five Egyptians in the aftermath of last week's terrorist attack in southern Israel. Haaretz

Report accuses Moody's of ratings bias

There have been accusations by many people (including me) that the ratings agencies took fat fees in return for AAA ratings to fraudulent mortgage-backed securities in the 2003-2007 time period. Now a study by college professors claims that Moody's Investors Service inflated the credit scores of those securities which earned the most money for Moody's. Moody's challenges the validity of the study, but it's clear that there is going to be greater scrutiny on the ratings agencies to determine why they gave AAA ratings to synthetic securities that later turned out to be almost worthless. CNN Money

Stocks rise because Bernanke announces a two-day meeting

What's going on is really laughable. At his speech on Friday morning, Fed Chairman Ben Bernanke did not give traders anything that they were hoping for -- specifically a promise of more "quantitative easing" to help the banksters get their million dollar bonuses. But he did say that policy makers will meet for two days next month, instead of just one, to "allow a fuller discussion" of the economy and the Fed’s possible response. That was enough for the traders, who pushed stocks up 1.5-2% on Friday. Bloomberg

Dozens killed in suicide bombing of U.N. building in Nigeria


Rescue workers search for survivors in U.N. building in Abuja, Nigeria (Reuters)
Rescue workers search for survivors in U.N. building in Abuja, Nigeria (Reuters)

Dozens of people were killed or injured on Friday when a suicide car bomber rammed a Honda car laden with explosives into the United Nations building in Abuja, the capital city of Nigeria. All the four floors of the building were affected. The car, which rammed into the lobby of the building, exploded immediately, killing the suspected bomber instantly and almost everyone that was at the spot. The Nation (Nigeria)

In February, we reported on numerous atrocities committed by Christians and Muslims against each other in Nigeria's central city of Jos. ( "24-Feb-11 News -- Clashes in Jos, Nigeria, pit Christians against Muslims") Like Jos, Abuja is right on the fault line between Muslims in the north and Christians in the south. The Islamist terrorist group Boko Hara took credit for the attack on Friday. In the Hausa language, the group's name means "western education is a sin." It's believed that Boko Hara has ties to Al-Qaeda in the Islamic Maghreb (AQIM), which has committed numerous terrorist attacks in the Maghreb (northern Africa). VOA

(Comments: For reader comments, questions and discussion, see the 27-Aug-11 World View -- Mexico blames U.S. for Monterrey terror attack thread of the Generational Dynamics forum. Comments may be posted anonymously.) (27-Aug-2011) Permanent Link
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26-Aug-11 News -- Fears of tribal violence in Libya grow

Muammar and Leezza, sittin' in a tree ...

Fears of tribal violence in Libya grow

Libya is a tribal society, with over 140 tribes, according to CNN. Some analysts are claiming urbanization has reduced tribal identities, and that the population has become much more homogeneous, but I strongly disagree with that, based on theory from Generational Dynamics.


Libyan rebel fighters step on a picture of Muammar Gaddafi in Tripoli (Reuters)
Libyan rebel fighters step on a picture of Muammar Gaddafi in Tripoli (Reuters)

Northern Ireland is a good example of how tribal violence never completely disappears, as I reported two months ago in "23-Jun-11 News -- Sectarian violence in Northern Ireland grows again." To this day, there is still bitter violence between the indigenous Gaelic Irish people and the descendants of the English and Scottish people. The two groups fought the bloody Nine Years War four centuries ago (1594-1603), and the hate-filled memories continue until this day.

So the tribes in Libya are "playing nice" right now, because they still have Gaddafi as a common enemy, and because they want to get their hands on the billions of dollars of frozen Libyan funds. As soon as those motivations recede, it's quite possible, even likely, that full-scale tribal war will break out.

A proper understanding of what's happening in Libya today requires at least going back to the tribal wars of the 1930s. As I've said many times, I haven't found detailed information on those tribal wars, and it's quite possible that nothing was ever written down.

Mission accomplished or tribal war?


Libya, showing the three historic divisions: Tripolitania, Fezzan and Cyrenaica
Libya, showing the three historic divisions: Tripolitania, Fezzan and Cyrenaica

Based on the limited information we have, we know that there's a sharp split between Tripoli and west Libya (Tripolitania), versus Benghazi and east Libya (Cyrenaica). The National Transitional Council (NTC), located in Benghazi, is a government of mostly eastern tribes, and western tribes do not necessarily feel that it represents them, especially because many of the western tribes (Warfalla, Magarha, Warshafana, Tarhuna, and Gaddafi's Qadadfa tribe in Sirte) enjoyed long-standing government largesse from Gaddafi's government, according to CNN. A list of the major Libyan tribes by region has been compiled by writer Sandra Gore Nielsen.

There are also substantial conflicts within the east and west. The commander of the rebel forces, General Abdel Fatah Younis, was assassinated several weeks ago, and the perpetrators still haven't been identified. Ali Senussi, the leader of the Obeidi tribe, centered in Tobruk, that Younis belonged to, promises that once things have begun to settle down, his tribe will get revenge, by either government law or tribal law, according to CS Monitor. "The Obeidis are promising this will not go unpunished. We hope to be in a country of law and good judgment that ensures our rights without us having to take them ourselves. But if we needed to take our justice by ourselves, we will do it."

Tribal atrocities are already occurring in Tripoli. Fighting still continues between rebels and Gaddafi supporters in Tripoli. With anti-aircraft fire, mortars, machine gunners and snipers raking sectors of the city of 2 million, the streets have run red with blood, according to Reuters.

According to the article, capital reporters saw the bodies of 30 men who apparently fought for Gaddafi. At least two had their hands bound. One was strapped to a hospital gurney with a drip still in his arm. Meanwhile medical workers report that Gaddafi's forces carried out a "mass execution" of 16 or more prisoners. A survivor of the massacre said the troops methodically shot the group as they prepared to retreat.

A major tribal war is brewing around the city of Sirte (Surt), according to AP.

Sirte is Gaddafi's home town, and the home of Gaddafi's own tribe. Gaddafi's whereabouts are unknown, but one possibility is that he's returned to Sirte and is being protected there. Rebel forces are now closing in on Sirte, and there may be a very bloody battle there.

But even apart from all this, Generational Dynamics theory says that the tribal wars of the 1930s are going to be repeated. Even if the older generations are advising against it, the younger generations will remember the bits and pieces of the bloody violence of the 1930s, and will act upon it, as young people do.


Condoleezza Rice at 2008 Glamour Magazine awards
Condoleezza Rice at 2008 Glamour Magazine awards

An interesting angle to this situation is the assessment of international winners and losers. Germany, Russia and China all supported Gaddafi until the very end, and so they're likely to be cut out of commercial deals under the new government. France, Britain and the United States all supported the Libyan action, so they're likely to come out winners.

But don't declare "Mission Accomplished!" just yet. Just as the Iraq war didn't end in 2003, it's likely that the Libya war isn't over yet.

Muammar and Leezza, sittin' in a tree ...

Rebels searching Muammar al-Gaddafi's compound in Tripoli have found a photo album filled with photos of former Secretary of State Condoleezza Rice. Gaddafi reportedly said to al-Jazeera in 2007, "Leezza, Leezza, Leezza ... I love her very much," calling her his "darling black African woman." Fox News

(Comments: For reader comments, questions and discussion, see the 26-Aug-11 News -- Fears of tribal violence in Libya grow thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-Aug-2011) Permanent Link
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26-Aug-11 World View -- Egyptian activists plan 'million man protest'

Greece has yet to describe debt swap plan for bailout

This morning's key headlines from GenerationalDynamics.com.

Traders await Bernanke's Friday speech, following Perry's slam


Ben Bernanke
Ben Bernanke

Stock market traders this week have been wild with anxiety over what Fed Chairman Ben Bernanke is going to talk about in the speech that he'll give on Friday in Jackson Hole, Wyoming. In last year's speech, he hinted at more quantitative easing, triggering a 28% rally on Wall Street. When this was being discussed on Tuesday, I honestly thought that some of the anchors on Bloomberg TV were going to burst out into song, as they sported the broadest of grins and joyously reported the rally in Wall Street stocks. Matt Miller gushed that he wished there could be an earthquake every day, if that's what it took to push the stock market up. However, the excitement wore off and stocks were down again by Thursday, as traders realized that Bernanke is unlikely to announce any new quantitative easing program. That was true anyway, but the recent accusation by Republican presidential candidate Rick Perry that quantitative easing is "treasonous" makes any QE attempt subject to accusations that Bernanke is supporting President Obama's reelection. Miami Herald

Egyptian activists plan 'million man protest' on Friday

Remarkably, Israel has not been a part of the "Arab revolutions" that have spread around the Mideast since January, but with national elections coming up soon in Egypt, Egyptian activists are demanding that the government reevaluate the Camp David agreement with Israel. The demands were triggered by the deaths of five Egyptians in the aftermath of last week's terrorist attack in southern Israel. Activists are planning a "million man protest" on Friday, but the planned demonstrations have split the activist groups, many of whom do not wish to participate. Haaretz

Greece has yet to describe debt swap plan for bailout

A crucial part of the plan for the second bailout of Greece is that banks be forced to take a "voluntary" haircut of 21% on their existing holdings of Greek bonds. As we reported, the 21% figure is based on unrealistic assumptions, and may be much higher. (See "24-Jul-11 World View -- Mauldin: Greece's bond 'haircuts' are at 75-80%.") However, Greece has yet to send out a detailed plan for the bond swap, suggesting that there are problems with coming up with a plan that won't be ridiculed by almost every analyst in the world. Irish Times

Iraqi refugees in Syria now under attack from Assad

At the height of Iraq's sectarian war in 2006, a flood of refugees took their families to Syria and Jordan for safety. However, Bashar al-Assad's bloody regime is now turning its tanks and guns on the civilians in eastern Syria, on the Iraq border. As a result, many refugees are considering returning to Iraq for safety. Inter-Press Service (IPS)

Dick Cheney wanted to bomb Syrian nuclear reactor in 2007

In June, 2007, Vice President Dick Cheney urged President George W. Bush to bomb Syria's suspected nuclear reactor site, according to leaked passages from Cheney's new memoir. "I again made the case for U.S. military action against the reactor. But I was a lone voice. After I finished, the president asked, 'Does anyone here agree with the vice president?' Not a single hand went up around the room." As it turned out, the Israeli Air Force bombed the site in September of the same year. Jewish Telegraphic Agency

Putin increases lead over Medvedev in public opinion polls

As the March 2012 presidential election approaches, public approval President Dmitry Medvedev fell in August to its lowest level since he took office, while the approval of Prime Minister Vladimin Putin has held steady. But both of their ratings would be the envy of American politicians. Medvedev's approval rating fell to 63% in August from 66% in July, while Putin's rating was steady at 68%. Moscow Times

Russian Prime Minister Vladimir Putin and President Dmitry Medvedev will probably wait until December to reveal which of them will run for president in 2012. Bloomberg

New U.S. ambassador to China receives vitriolic attacks

Gary Locke is the first Chinese-American to be appointed as American ambassador to China, and this has generated an enormous amount of public interest, especially in the question: Is he more Chinese or more American? Upon arriving in Beijing, he said that "[he is] a child of Chinese immigrants representing America, the land of my birth, and the American values my family holds dear. [I and my family] all personally represent America and America's promise as a land of freedom, equality and opportunity. And it is that enduring promise and those values that I will represent in my official capacity serving the president and the American people as the United States ambassador to China." This was met by overwhelming public disapproval, many with vitriolic personal attacks, accusing the new ambassador of being a "Chinese traitor," "shameless showman," and part of a "carefully designed plot with ulterior motives." Washington Times

(Comments: For reader comments, questions and discussion, see the 26-Aug-11 News -- Fears of tribal violence in Libya grow thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-Aug-2011) Permanent Link
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25-Aug-11 World View -- Euro crisis regains the spotlight

Glenn Beck rally in Jerusalem stirs controversy

This morning's key headlines from GenerationalDynamics.com.

* Greek bonds crashing again as euro crisis regains the spotlight
* Finland refuses to back down on its demands for collateral
* Moody's warns that collateral deals may force a Greek default
* Alan Greenspan says that the euro is breaking down
* Rich EU members feel growing resentment of the 'Olive Zone'
* Japan's credit downgrade may affect Germany
* Iran unveils new cruise missiles with U.S. bases in range
* Sporadic fighting continues in Tripoli as Gaddafi eludes capture
* Glenn Beck rally in Jerusalem stirs controversy

Greek bonds crashing again as euro crisis regains the spotlight


Greece's 2 year bond yields at 44.025%
Greece's 2 year bond yields at 44.025%

With those lazy, hazy, crazy days of summer floating by, you may have thought that the Greece debt crisis was a thing of the past, but it's euro crisis time again. The last time I posted a graph of the Greek 2-year bond yields (interest rates) was July 19, when they were at a paltry 28.131%, lower than even a Citibank credit card. But yields have been rising since then, and in the last few days, Greek bond prices have completely crashed, pushing yields up to historically high 44.025% on Wednesday, a rate that would even make Citibank executives earning million dollar bonuses drool with jealousy. Furthermore, bond yields of other euro countries crept up, though to nowhere near the level of Greece. Reuters

Finland refuses to back down on its demands for collateral

The reason for the renewed crisis is that Finland's demand for collateral has thrown the entire recent bailout of Greece in doubt. (See "22-Jul-11 World View -- Europeans announce bailout plan allowing Greece to default") It turns out that Finland only agreed to that bailout if they received collateral from Greece for their share of the bailout. (The collateral is about 20% of the amount of money that Finland is contributing to the bailout. That is, Finland contributes X zillion euros, and receives back 20% of X zillion euros as collateral. This makes no particular sense to me -- but what does these days? But apparently it allows Finland's politicians to mislead Finland's public into thinking that there's no risk.) Now other countries, led by Austria, are demanding that they get the same collateral terms. Associated Press and Reuters

Moody's warns that collateral deals may force a Greek default

According to Moody's rating service: "The agreement between Greece and Finland, which is small by itself, assumes much greater significance. The pursuit of such agreements could delay the next tranche of financial support for Greece and so precipitate a payment default." If Greece is going to default anyway, then Greece's bonds are worth much less. That's why bond yields are above 44%. EurActiv

Alan Greenspan says that the euro is breaking down


Alan Greenspan
Alan Greenspan

According to former Federal Reserve Chairman Alan Greenspan: "The euro is breaking down and the process of its breaking down is creating very considerable difficulties in the European banking system." Business Insider

Rich EU members feel growing resentment of the 'Olive Zone'

The euro countries with AAA ratings are: Germany, France, Finland, Luxembourg, the Netherlands and Austria. The countries in serious trouble are: Greece, Portugal, Italy, Spain and Ireland. The rich countries of the northern euro zone are bearing the brunt of bailing out their debt-stricken fellow members. Resentment is growing among their populations, helping euroskeptic right-wing populists to win support. Der Spiegel

Japan's credit downgrade may affect Germany

Moody's Investors Service Inc. said Wednesday it had lowered the credit rating of Japanese government bonds one notch. The ratings agency cited the delay in economic recovery from the March 11 disaster and frequent administration changes, which made it difficult to implement long-term economic and fiscal management effectively, as reasons for the downgrade. Yomiuri

Germany’s government debt may be downgraded in the next three months after Moody’s decision to cut Japan’s credit rating reflects investor concern about developed nation debt. "The writing is on the wall" said one analyst, citing "weak fiscal fundamentals" in the country and risks from the euro-area structure. Bloomberg

Iran unveils new cruise missiles with U.S. bases in range

Iran on Monday unveiled a new cruise missile which it said has the capability to strike at warships at a range of 200 km, including U.S. bases in the Persian Gulf region. The missile designed for sea targets was put on display at a 'defence marine show' inaugurated by President Mahmoud Ahmadinejad. The missile called "Qader" (Able) is built indigenously by Iranian scientists and has a high destructive ability against coastal targets and warships, the state run TV said. PTI

Sporadic fighting continues in Tripoli as Gaddafi eludes capture

Gunfire is continuing in several Tripoli neighbohoods as fighters loyal to Muammar Gaddafi put up a stiff fight. The forests around Tripoli are full of Gaddafi snipers. Gaddafi himself is nowhere to be found. One analyst expressed the concern that Gaddafi might return to his stronghold in his hometown of Sirte, and attempt to set up a regional government there. Al-Jazeera

Glenn Beck rally in Jerusalem stirs controversy

Glenn Beck's speaking tour in Israel, while receiving enthusiastic audience applause, is generating controversy over his motives. Moshe Feiglin, head of Likud's Jewish Leadership faction, wrote: "I must admit that when a friendly non-Jew starts to quote the Bible, I get a bit nervous. It is not just the long history of anti-Semitism that has developed a genetic mutation in the noses of Jews, giving them great sensitivity to anything that smells of Christianity - but also my own personal experience with avowed lovers of Israel and the settlers who took great pains to mask their Christian motives." However, David Ha’Ivri responded, "Glenn Beck is one of those unique gentiles who appreciates the Jewish people and our national, historical and theological goals. His agenda is out in the open and very clear: he wishes us well as the Jewish people preserving our Torah culture on our Holyland." Israel National News

(Comments: For reader comments, questions and discussion, see the 25-Aug-11 World View -- Euro crisis regains the spotlight thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-Aug-2011) Permanent Link
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24-Aug-11 World View -- Gaddafi vows 'Martyrdom or Victory' in Libya

China's looming debt disaster

This morning's key headlines from GenerationalDynamics.com.

* Libya's rebels overrun Gaddafi's Bab al-Aziziya compound
* Gaddafi vows 'Martyrdom or Victory' in Libya
* U.N. Human Rights Council condemns Syria
* Turkey says it killed 100 Kurdish terrorists in Iraq
* Israel denies apologizing for Egyptian deats
* Three Egyptians took part in terrorist attacks on southern Israel
* China's looming debt disaster
* Switzerland's Word of the Year: Sterbetourismus

Libya's rebels overrun Gaddafi's Bab al-Aziziya compound


Rebel fighter tears down the iconic giant golden hand crushing a US fighter jet (BBC)
Rebel fighter tears down the iconic giant golden hand crushing a US fighter jet (BBC)

After five hours of intense fighting, Libya's rebels breached a main gate of Muammar Gaddafi's Bab al-Aziziya compound, and quickly overran it. The rebels were shown destroying statues - including the iconic giant golden hand crushing a US fighter jet - firing guns in the air in celebration, and seizing weapons and ammunition from arms depots. Gaddafi's Bedouin tent, where he used to receive visiting foreign dignitaries, was set on fire, while his golf cart, in which he appeared frequently, was paraded around the compound. BBC

Gaddafi vows 'Martyrdom or Victory' in Libya

The whereabouts of Muammar Gaddafi are still unknown. He may or may not be in Tripoli, and he may or may not be in Libya. In an audio messge, Gaddafi said his withdrawal from his Bab al-Aziziya headquarters in the heart of Tripoli was a tactical move after it had been hit by 64 NATO air strikes and he vowed "martyrdom" or victory in his fight against the alliance. Reuters

U.N. Human Rights Council condemns Syria

The U.N. Human Rights Council has overwhelmingly adopted a resolution condemning Syria for grave and systematic human-rights violations. The resolution also calls for an international investigation into possible crimes against humanity. The vote was 33 in favor, nine abstentions, and four opposed -- Russia, China, Cuba and Syria. Russia called the resolution one-sided and politicized. China said the right way to protect human rights is through respect and dialogue, not through accusations. The Syrian representative called the resolution political and unbalanced. Meanwhile, the carnage goes on, with five more activists killed on Tuesday by the regime of president Bashar al-Assad. VOA

Turkey says it killed 100 Kurdish terrorists in Iraq

A series of air strikes by Turkey's air force in Iraq has killed 90 to 100 fighters in the outlawed Kurdistan Workers' party (PKK) in the last six days. The air strikes followed a PKK attack in southeast Turkey, in which eight Turkish soldiers and a guard died. In the wake of that attack, Turkey's prime minister, Recep Tayyip Erdogan, said: "The time for words is over. Now is the time for actions." Erdogan's opposition says that he's mishandling the situation, and that the air strikes may trigger civil unrest and ethnic violence in Iraq and among Turkey's own Kurdish population of 15 million. In recent years, Turkey has developed massive economic influence over northern Iraq. More than half of the 2,000 foreign companies working in northern Iraq are Turkish, and 75 percent of all goods sold in the region are Turkish made. Guardian and CS Monitor

Israel denies apologizing for Egyptian deaths

Israeli Defense Minister Ehud Barak on Monday denied apologizing to Egypt following the deaths of five Egyptian soldiers at the hands of Israeli forces Thursday. "I didn't apologize to Egypt, I expressed regret," Barak said in a televised interview. Al-Masry Al-Youm

Three Egyptians took part in terrorist attacks on southern Israel

A probe carried out by Egyptian security forces found that three of the militants that perpetrated the terrorist attack in southern Israel last week on Thursday were Egyptian members of an extremist Islamic group. One of them had escaped from an Egyptian prison during the revolution against Hosni Mubarak. Remarks yesterday by Egypt's foreign minister, Mohammed Kamel Amr, suggest a wish to return to normalcy in relations with Israel, and the demand for an apology has been sidelined for the time being. In Cairo the expression of sympathy by Defense Minister Ehud Barak was perceived as a step in the right direction. Haaretz

China's looming debt disaster

With the United States and Europe buried in debt, much of the world is hoping that China will provide the engine to bail the world out. However, thanks to China's "hidden debts," China may be far worse off than either America or Europe. When the global downturn hit in 2008, China decided to spend its way out of the crisis, and pumped $1.1 trillion into its $4.3 trillion economy. One result is the building of 65 million apartments -- enough housing for 200 million people -- all empty. Despite the obvious oversupply, the government—in conjunction with private developers—is constructing 40 to 50 million more units. And the Chinese government recently announced it will be building 20 new cities a year over the next two decades, to match the numerous ghost cities already built. Daily Beast

Switzerland's Word of the Year: Sterbetourismus

"Sterbetourismus" (death tourism) has been selected from over 2,000 suggestions as Word of the Year in German-speaking Switzerland. Swiss law tolerates assisted suicide when the patient commits the act and the helper has no direct interest. Most Swiss people support assisted suicide, but they are divided over whether the service should be provided to foreigners. A runner-up word was 'Taschenmunition,' ammunition that each Swiss soldier must keep at home. A previous "Unword of the Year," which is awarded for a term considered "crassly inappropriate", was Klimakompensation (climate compensation). This means for example sitting on a plane with a clear conscience in the knowledge that you have chipped in to a tree-planting project somewhere in the world. SwissInfo

(Comments: For reader comments, questions and discussion, see the 24-Aug-11 World View -- Gaddafi vows 'Martyrdom or Victory' in Libya thread of the Generational Dynamics forum. Comments may be posted anonymously.) (24-Aug-2011) Permanent Link
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23-Aug-11 World View -- Libya's Saif al-Islam Gaddafi shows up

Israel's government votes for self-restraint in Gaza

This morning's key headlines from GenerationalDynamics.com.

* Saif al-Islam Gaddafi shows up to 'dispel the rumors' for reporters
* Fighting continues in Tripoli against 'pockets of resistance'
* Egypt announces its official recognition of rebel government in Syria
* Gaddafi's implosion in Libya puts pressure on an intervention in Syria
* Egypt says that Israel's apology is not enough
* Israel's government votes for self-restraint in Gaza
* Are 'flash mobs' racial or economic?

Saif al-Islam Gaddafi shows up to 'dispel the rumors' for reporters


Saif al-Islam Gaddafi shows up for reporters (Al-Jazeera)
Saif al-Islam Gaddafi shows up for reporters (Al-Jazeera)

Reporters in Tripoli, Libya, were shocked on Monday evening when a convoy drove up to their hotel, and out came Muammar Gaddafi's son, Saif al-Islam Gaddafi, saying that that Tripoli was under government control. He added that his father was still in Tripoli. The rebels had claimed on Sunday that Saif was in their custody, and now Saif's appearance throws many of the other rebel claims into question. Reuters

Fighting continues in Tripoli against 'pockets of resistance'

The head of Libya's National Transitional Council (NTC) has announced the end of the Gaddafi era, but fighting and gun battles continued in Tripoli on Monday. Reports say a NATO warplane shot down a scud missile fired from Gaddafi's home town of Sirte. Al-Jazeera

Gaddafi's implosion in Libya puts pressure on an intervention in Syria

Thanks the to unexpectedly sudden collapse of Gaddafi's forces in Libya, more attention is now being focused on Syria, with the thought that if Nato can end a massacre in Libya, then perhaps Nato also ought to end the massacre in Syria. Reuters

In particular, an initiative led by India in the U.N. Security Council to block sanctions against Syria may run into trouble, now that the various UNSC-approved interventions in Libya have apparently been so successful. Times of India

Egypt announces its official recognition of rebel government in Syria


Libya's new flag of independence
Libya's new flag of independence

Egypt's foreign minister Mohamed Kamel Amr announced that Egypt now recognizes the rebel National Transitional Council as Libya’s official representative. Gaddafi's green flag has been removed from the Libyan embassy in Cairo, and replaced with the new Libyan independence flag. Al-Ahram

Egypt says that Israel's apology is not enough

Israel's president Shimon Peres made an official apology for the killing of Egyptian soldiers at the border between Israel and Egypt last Thursday, describing the incident as a "mistake." He said, "None of us wanted nor will want in the future for an Egyptian soldier to be killed, even in these difficult situations. However, Egypt's government is said that an apology is not enough to contain public anger in Egypt. "Israel has to unveil the actions that it will take to prevent such incidents from happening again in the future. Egypt is solely responsible for Sinai’s security and it refuses any interference in this matter." Al-Ahram

Israel's government votes for self-restraint in Gaza

Despite heavy political pressure within Israel to strike back at the Gaza Strip in retaliation for last Thursday's terrorist attack and the recent rocket attacks, Israel's cabinet ministers took the direction from Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak and voted to refrain from any escalation, and to cooperate with the truce Hamas declared on Sunday. What emerged most clearly from Netanyahu's and Barak's statements to the cabinet was that Israel lacks the international legitimacy needed for a large-scale operation in Gaza. The diplomatic crisis with Egypt further constrains Israel's freedom of action. Haaretz

Are 'flash mobs' racial or economic?

After the recent mob violence in London, a potentially explosive political issue is brewing over the increase in "flash mob" violence in cities across America, especially because many of the flash mobs are black youths committing hate crimes against whites. The situation is made worse by the policy of the mainstream media to always identify race when the perpetrator is white and the victim is black, and never to identify race when the perpetrator is black and the victim is white. (I'm told that the mainstream media had the opposite policy in the 1950s.) Because the mainstream media lacks credibility and appears to be covering up a liberal agenda, many people in the public are becoming anxious about black on white violence. Accuracy in Media

(Comments: For reader comments, questions and discussion, see the 23-Aug-11 News -- Libya's Saif al-Islam Gaddafi shows up thread of the Generational Dynamics forum. Comments may be posted anonymously.) (23-Aug-2011) Permanent Link
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22-Aug-11 World View -- Libyan rebels take control of central Tripoli, and have a party

Hamas and Gaza militant groups agree to ceasefire with Israel

This morning's key headlines from GenerationalDynamics.com.

* Hamas and Gaza militant groups agree to ceasefire with Israel
* Arab League condemns Israel's attacks on Gaza
* Israeli politicians call for major military action in Gaza
* Egyptian protesters call for expulsion of Israeli ambassador
* Debka: Netanyahu accepts ceasefire to placate Egypt
* Vietnam reverses policy -- forbids anti-China demonstrations
* Libyan rebels take control of central Tripoli, and have a party
* International Criminal Court to prosecute Libya's Saif al-Islam Gaddafi
* What now for Libya?
* Anti-government protesters greet U.N. team visiting Syria
* Turkey's anti-PKK military action in Iraq stirs clashes in Istanbul

Hamas and Gaza militant groups agree to ceasefire with Israel


Hamas official surveys the damage from an Israeli airstrike in Gaza on Sunday (Reuters)
Hamas official surveys the damage from an Israeli airstrike in Gaza on Sunday (Reuters)

The Islamic Jihad, and other militant Palestinian factions in the Gaza Strip, have agreed on Sunday evening to a ceasefire with in an effort to bring an end to the violence. According to Islamic Jihad official Ahmed Mudalal: "The Islamic Jihad, as well as the rest of the Palestinian factions, are trying to spare our people from the agony of war. However if it’s enforced upon them, then the people must show patience and the resistance must protect ithem with all its might." BikyaMasr (Cairo)

Arab League condemns Israel's attacks on Gaza

An emergency meeting of the Arab League in Cairo on Sunday condemned Israel's air assaults on the Gaza Strip and said the United Nations must take action to end the attacks. Arab League Secretary-General Nabil Elaraby said, We issued a statement condemning the Israeli offensive on Gaza ... and Egyptian land. The United Nations has to take procedures to stop the Israeli offensive on Gaza." Reuters

Israeli politicians call for major military action in Gaza

As Palestinian militants tried to forge a tentative cease-fire agreement with Israel on Sunday, pressure was building on Israeli Prime Minister Benjamin Netanyahu to retaliate for the latest round of violence by launching a major military campaign in the Gaza Strip similar to the 22-day Operation Cast Lead in late 2008. Opposition lawmakers also urged Netanyahu to cripple the infrastructure of Hamas, the Islamist group that controls the Gaza Strip. "You must use force against terrorism," said opposition leader Tzipi Livni, whose Kadima Party was in power during Operation Cast Lead. LA Times

Egyptian protesters call for expulsion of Israeli ambassador

Hundreds of protesters in front of the Israeli embassy in Cairo continued to demand the expulsion of Israel's ambassador to Egypt, in reaction to Israel's killing of five Egyptian policemen in Sinai on Thursday, following the terrorist attack in southern Israel. One protester, dubbed "Egyptian Spiderman," has become a national hero after scaling 21 stories to remove the Israeli flag from the embassy. Jerusalem Post

Debka: Netanyahu accepts ceasefire to placate Egypt

Israeli Prime Minister Benjamin Netanyahu is receiving harsh criticism from commentators and opposition politicians for allowing Cairo to take credit for brokering a ceasefire between Hamas and Israel. Netanyahu was won over by the assurance Washington received from Egypt's military rulers that the Jihad Islami's leader Ramadan Shalah had endorsed the Hamas truce. [[Wow! That's four levels of indirection! - JX]] However, Islamic Jihad continued firing missiles after the truce took effect, and Israel's Air Force struck terrorist targets in northern and central Gaza. Debka

Vietnam reverses policy -- forbids anti-China demonstrations

Vietnamese police detained scores of people taking part in an anti-China rally in Hanoi on Sunday in defiance of a government order to end a three-month string of demonstrations. At first, Vietnam permitted the demonstrations, protesting China's violations of their country's sovereignty in the South China Sea. The anti-China demonstrations started after the Vietnamese government made public a case in late May in which it said Chinese patrol ships harassed a Vietnamese seismic survey ship operating in Vietnamese waters. In addition to Vietnam and China, four other nations -- Brunei, Malaysia, Taiwan and the Philippines -- also have competing claims to parts of the South China Sea. Vietnam's Communist Party is now stopping the demonstrations because it fears Arab-style protests against their autocratic rule. Reuters

Libyan rebels take control of central Tripoli, and have a party


Tens of thousands of Libyans celebrate in Tripoli (AFP)
Tens of thousands of Libyans celebrate in Tripoli (AFP)

The defenses of Libyan leader Muammar Gaddafi in Tripoli collapsed on Sunday evening, dramatically reversing the tides in the six-month-old civil war. Thousands of jubilant civilians rused out of their homes to cheer the long convoys of pickup trucks with rebel fighters shooting in the air. It's not known where Gaddafi is, but there were unconfirmed reports that two South African air force planes were spotted at Tripoli airport. Other unconfirmed reports indicated that he had already fled to Algeria. "There's a party in the Libyan capital tonight. The people are in charge of the city. They've decided the square is now called Martyr's Square, the original name. They're shouting 'we're free' and shooting at a poster of Gaddafi." Al-Jazeera

International Criminal Court to prosecute Libya's Saif al-Islam Gaddafi

The United Nations International Criminal Court (ICC) will talk with Libya's rebels on Monday, to request that Saif al-Islam Gaddafi, one of the sons of Muammar Gaddafi who were captured on Sunday, be transferred to ICC custody, for prosecution for crimes against humanity. However, a report broadcast by al-Jazeera indicates that people in Benghazi are furious about this, since they would "like to take care of Saif themselves." CNN

What now for Libya?

Haunted by the memories of chaos in Baghdad in 2003, analysts don't know whether Libya will stabilize or slied into anarchy, with rival armed factions or tribes vying for control of Libya's oil wealth. There are separate rebel armies in the east and west, creating the danger of a rivalry. Libya has been effectively split in two for six months, and reintegrating the two administrations could create friction. Australian

As I wrote several times when the Libya action began, I have been unable to do a detailed generational analysis of Libya because I haven't found any information about possible tribal conflicts during the 1930s. One thing's for sure - the current civil war has not been anything like a generational crisis war. Based on the information that I have so far, the most likely scenario is that tribal conflict will increase in the next few months, spiraling into full scale war. This is a tentative conclusion, but it seems unlikely that Libya will now settle down into a stable democracy.

Anti-government protesters greet U.N. team visiting Syria

Officials in the regime of Syria's president Bashar al-Assad were infuriated on Sunday when anti-government protesters greeted a United Nations human rights mission. The U.N. mission on Sunday visited two Damascus suburbs, where it was met by hundreds of anti-government demonstrators within minutes of arriving in each place. Protesters demanded the release of family members in detention and called for the al-Assad regime's collapse. Syrian regime officials had hope to "whitewash" Assad's crimes against humanity by scrubbing the blood off the streets, according to an unnamed diplomat, but were furious when the demonstrators appeared. CNN

Turkey's anti-PKK military action in Iraq stirs clashes in Istanbul

Turkey's military action in northern Iraq continues, striking at militants of the outlawed Kurdistan' Workers' Party (PKK). Turkey has vowed to continue the military action the Kurdish militants in northern Iraq are totally eliminated. But the Regional Kurdish Administration issued a statement saying that Turkey was violating international law. Clashes erupted in central Istanbul on Sunday when police intervened in protests by the pro-Kurdish Peace and Democracy Party (BDP), including sit-down protests. Hurriyet (Ankara)

(Comments: For reader comments, questions and discussion, see the 22-Aug-11 World View -- Libyan rebels take control of central Tripoli, and have a party thread of the Generational Dynamics forum. Comments may be posted anonymously.) (22-Aug-2011) Permanent Link
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21-Aug-11 World View -- Israel apologizes to save relationship with Egypt

Libya's rebels claim that victory over Gaddafi is near

This morning's key headlines from GenerationalDynamics.com.

Libya's rebels claim that victory over Gaddafi is near


A rebel fighter destroys a Gaddafi poster (Reuters)
A rebel fighter destroys a Gaddafi poster (Reuters)

Rebel commanders have indicated that the final attack on Libyan leader Muammar Gaddafi's main stronghold in Tripoli is beginning. Gun battles and rounds of mortar shelling were heard clearly at the hotel where foreign correspondents stay in Tripoli. Explosions were heard also in the area as Nato aircraft carried out heavy bombing runs after nightfall. Tunisia, which had been neutral until now, officially recognized on Saturday the rebel National Transitional Council as the sole legitimate government of the Libyan people. Independent

To prove that he was still alive, Libya's leader Muammar Gaddafi broadcast a live radio address on Sunday morning. He congratulated his supporters for repelling an attack by rebel "rats" in the capital Tripoli, and accused French President Nicolas Sarkozy of trying to steal the country's oil. He added that the rebels were "bent on the destruction of the Libyan people." However, he announced that the rebel fighters in Tripoli have been eliminated. Reuters

Israel mobilizes for Gaza attack, as Egypt recalls its ambassador

Israel’s government was considering on Saturday night the possibility of escalating its military response to the continued rocket fire from Gaza. At least one man was killed and dozens of others were wounded by the more than 80 rockets that pounded southern Israel over the weekend. The options vary: they could include an expansion in airstrikes, possibly to hundreds of targets throughout the Gaza strip; there could be a ground offensive inside Gaza, with small and isolated operations; or there could be targeted assassinations against leaders of terrorist organizations in Gaza. The objective will be to exact a price for the rockets without triggering a new war like Operation Cast Lead, the war between Israel and Hamas in Gaza early in 2009. Jerusalem Post

Arab League will meet on Sunday to discuss Gaza

Palestinian president Mahmoud Abbas has requested an emergency meeting of the Arab League on Sunday to protest the Israel Defense Forces (IDF) air strikes over the past three days. The air strikes followed a deadly terror attack in southern Israel on Thursday. Abbas has also called for an emergency United Nations Security Council session to discuss the IDF air strikes. Haaretz

Israel apologizes to save relationship with Egypt

Israel's Defense Minister Ehud Barak issued a public statement on Saturday expressing regret for the deaths of Egyptian policemen in the course of retaliating for Thursday's terrorist attack on the Israel-Egypt border, in the hope of convincing Egypt to rescind its decision to recall its ambassador to Israel. Barak issued the statement after he and Prime Minister Benjamin Netanyahu conferred with US Secretary of State Hillary Clinton and Defense Secretary Leon Panetta, who said that an immediate apology was necessary. By Saturday evening, Egypt had not responded to the apology, and had not altered its decision to recall the ambassador. The decision is caught up in the politics of Egypt's coming election. Protesters at the Israeli embassy in Cairo have been demanding the Israeli ambassador's expulsion. Debka

Egypt beefs up its forces along Israel border in Sinai

Thursday's terrorist attack in southern Israel is serving as a wake-up call to both Israel and Egypt that something has to be done about the lawlessness of the Sinai desert near Israel's border. The "Camp David peace accords" that Israel and Egypt signed in 1979 restricts the amount of military force that Egypt is permitted to send into Sinai, and it's now generally recognized by both countries that this restriction has to be modified to prevent terrorist attacks in the future. Jerusalem Post

Obama administration instructs colleges to presume male guilt in rape accusations

The Obama administration has issued a directive to colleges that they should assume that males are automatically guilty of any rape allegations, and threatens the colleges with losing federal aid if males are given due process. False allegations of rape and domestic violence are a major technique used by feminist organizations to raise money. Wall Street Journal (Access)

Sunday Comics


Preparations
Preparations

Dilbert

(Comments: For reader comments, questions and discussion, see the 21-Aug-11 World View -- Israel apologizes to save relationship with Egypt thread of the Generational Dynamics forum. Comments may be posted anonymously.) (21-Aug-2011) Permanent Link
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20-Aug-11 World View -- Gaza-Israel violence escalates again

Europe's bailout of Greece, announced with fanfare, is unraveling

This morning's key headlines from GenerationalDynamics.com.

Military confrontation between Gaza and Israel spirals up again


Violence escalates between Israel and Gaza (WSJ)
Violence escalates between Israel and Gaza (WSJ)

The exchange of terrorist gunfire and missile attacks that we reported yesterday is triggering an escalation in the military confrontation between Gaza and Israel, after a lull of several months. Gaza militants fired rockets deep into southern Israel on Friday, injuring six people when one landed next to a religious hospital. This followed Israeli air strikes that that killed at least 12 Palestinians, including 10 militants. Independent

Hamas's military wing, Izz al-Din al-Qassam Brigades, announced early Saturday that it is ending its ceasefire with Israel. However, Hamas's political leadership appears intent on allaying tensions in the region and bringing the latest round of fighting to an end. Ynet

Egyptians protest Israel's killing of Egyptian personnel in Sinai

Israel's troops are reported to have killed three Egyptian security personnel in Sinai on Friday, while pursuing the suspected Gaza terrorists. On Friday, hundreds of demonstraters protested in front of the Israeli embassy in Cairo and the Israeli consulate in Alexandria. Egypt filed an official protest over the incidents and demanded an urgent investigation. Al-Ahram

Europe's bailout of Greece, announced with fanfare, is unraveling

When European officials announced the most recent bailout of Greece (see "22-Jul-11 World View -- Europeans announce bailout plan allowing Greece to default") it was pretty obviously hokey from the start. It would force major European banks to "voluntarily" take 21% haircuts on their holdings of Greek bonds, and it would require approval of all 17 eurozone countries. Now it turns out that Finland never agreed to the bailout, except on condition that their contribution would be partially "collateralized." Finland's demands have been very controversial, but now four more countries -- Austria, the Netherlands, Slovenia and Slovakia -- will also demand collateral deals. It remains to be seen with the announced bailout will actually be implemented, especially since almost everyone now believes that Greece is going to default on its debt anyway. Bloomberg

I heard a German analyst on BBC explain why he and other German politicians are opposed to "euro bonds" and to the bailout of Italy (paraphrasing):

"We've had experience with bailouts within Germany. Bavaria, a strong state, has to pay for weaker states like Berlin or Breman. It's not working in Germany. It always takes pressure away from states to cut deficits and spending for social things, for things that are popular. In Bavaria, people have to pay for things in Breman or Berlin, and that's not right because it takes off the pain, takes off the pressure that's necessary to have a balanced budget."

BBC World Business (mp3 - around 8:20)

Columnist Abdullah Bozkurt: Syria's fate depends on Turkey

Turkey has reached a point of no return with the Syrian authoritarian leadership, with US and European leaders now openly asking for the departure of President Bashar al-Assad. It is a shame that Assad brushed aside all the achievements he has helped Syria gain over the last decade, saving the country from isolation and from being an international pariah to become a country eager to implement reforms such as impressive economic undertakings. Now it all has gone down the tube thanks to the oppressive mentality of the powerful inner circle Assad leads, with quite a push from the Iranian leadership. Assad must appreciate the fact that Turkey has never played on majority Sunni fears in Syria and kept pretty much silent on increasing Iranian activities in the country. It did not allow him to be a proxy in the undeclared war between Sunni Arab countries and Shiite regimes in the Middle East. But this may change if Turkey, a Sunni majority country, is pushed into a corner. Zaman

Turkey plans expanded military garrisons in northern Iraq

The outlawed Kurdistan Workers' Party (PKK), based in northern Iraq, has been conducting terrorist attacks in Turkey since the 1980s. There have been several agreed ceasefires, but the latest one ended in February, and dozens of Turkey's soldiers have been killed or wounded by PKK terrorists since then. Turkey's warplanes have participated in in aerial raids against PKK hideouts in northern Iraq this week. Turkey already maintains 2500 troops in intelligence gathering outposts in Northern Iraq and they were deployed in 1995 with the permission of the Kurdish regional government. Now word has leaked that Turkey plans to turn the outposts into operational front garrisons to support major operations against PKK terrorists. Zaman

Turkey's Erdogan visits Somalia to increase influence in Africa

Turkey's Prime Minister Recep Tayyip Erdogan became the first major Western leader in decades to visit Somalia, a country wracked by war and famine. The visit was designed to demonstrate Turkey's readiness to help victims of a devastating famine, but also to showcase Turkey's ambition to become a major political and economic player in Africa. Erdogan was accompanied by his wife Emine and three of his four children, as well as Ahmet Davutoglu, his foreign minister, who is scheduled to tour South Africa and Ethiopia after leaving Somalia. Erdogan has focused during the last decade on expanding Turkey's influence in the Arab world, and now he's turning to expanding Turkey's influence in Africa. The National (UAE)

Taliban terrorists kill 9 in attack on Britain's cultural center in Afghanistan


Smoke billows from British Council in Kabul on Friday (Reuters)
Smoke billows from British Council in Kabul on Friday (Reuters)

The Taliban are claiming responsibility for a suicide bombing attack on Britain's cultural center on Friday, in Kabul, the capital of Afghanistan. At least nine people were killed in the assault, which took place on the 92nd anniversary of Afghanistan's independence from Britain. VOA

Teen suicide bomber kills 55 in Pakistan's tribal area

Tehrik-e Taliban Pakistan (TTP), the Pakistan Taliban, are suspected as perpetrators of a horrific attack by a teenage suicide bomber in Pakistan's tribal area. The attack took place in a mosque attended by more than 400 people during Friday prayers. 55 people were killed and more than 117 others were killed, after the roof of the mosque caved in. Nation (Pakistan)

(Comments: For reader comments, questions and discussion, see the 20-Aug-11 World View -- Gaza-Israel violence escalates again thread of the Generational Dynamics forum. Comments may be posted anonymously.) (20-Aug-2011) Permanent Link
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19-Aug-11 World View -- Global markets plunge on bad economic news

Israel strikes Gaza targets, after terrorist attack on southern Israel

This morning's key headlines from GenerationalDynamics.com.

Israel strikes Gaza targets, after terrorist attack on southern Israel


The Sinai is the easternmost region of Egypt, along the border with Israel
The Sinai is the easternmost region of Egypt, along the border with Israel

As we reported yesterday, Egypt's Sinai region has become almost completely lawless since the pro-democracy protests began in January, and the new government withdrew all its security forces from Sinai. Egypt has recently been returning its army to the Sinai, but not soon enough. On Thursday, terrorists, thought to have come from the Gaza Strip, killed at least eight Israelis and wounded as many as 40 others in multiple coordinated attacks on public buses and private cars just north of the Red Sea tourist town of Eilat. Two of the dead were reported as a four year old and a six year old. A Hamas official said that Hamas was not behind the attacks, but he praised the attacks anyway. Israel Project

The Israeli military carried out air strikes over the Gaza Strip, targeting those it blamed for a series of deadly attacks in southern Israel. At least six people, including a senior militant, were killed in the air strikes. BBC

West Urges Syria's Assad to Step Down

The United States, European Union and other world powers are calling for the resignation of Syrian President Bashar al-Assad because of his continued bloody massacre of innocent civilians. However, I did not hear or read one person who claimed that this action would cause Assad to do anything different. Turkey did not participate in the announcement. The U.S. already has economic sanctions in place for Syria, and the Europeans plan to push for Syrian sanctions in the United Nations Security Council. VOA

Karachi Pakistan in a daze after another 30 killed in ethnic violence


Funeral of three people killed on Thursday (PPI)
Funeral of three people killed on Thursday (PPI)

The port city of Karachi, Pakistan, is in a state of constant fear after two days of ethnic violence in which 50 people were killed. In at least 21 cases, a person was kidnapped, tortured for several hours, killed with multiple gunshots, stuffed into a gunny bag, and dumped at a random place. Dawn (Karachi)

Banks fear a new credit freeze

When the "credit crunch" began late in 2007, it meant that it had become impossible for one bank to lend money to another (See my 2007 article, "Markets fall as torrents of CDO exposures bolster fears of new credit crunch.") Now, the burgeoning European credit crisis is motivating the Fed to scrutinize the assets of European banks with offices in the U.S. This has caused concerns among bankers that this will trigger a new credit crunch like the one in 2007. Reuters

Analysts stunned by freefall of Philadelphia Fed factory index

The Philadelphia Fed's business outlook survey index fell to -30.7 in August from +3.2 in July. A positive index indicates growth, and analysts were expecting a reading of +0.5. Instead, the enormous decline stunned analysts, and indicated a rapidly weakening economy. Another early look at manufacturing in August, the New York Fed’s Empire State manufacturing survey, was also weak. The survey fell to a reading of negative 7.7, the third straight negative monthly reading. MarketWatch

Previously occupied home sales fall unexpectedly

The number of people who bought previously occupied homes fell in July for the third time in four months. This year is on pace to be the worst in 14 years for home sales, as more Americans worry that the economy could slip back into another recession. Home sales fell 3.5 percent last month to a seasonally adjusted annual rate of 4.67 million homes, the National Association of Realtors said Thursday. That's far below the 6 million that economists say must be sold to sustain a healthy housing market. Associated Press

Wall Street stocks fall 4-5% after a slew of bad economic news

Many commentators were "shocked" by Thursday's stock market plunge of 4-5% for Wall Street stocks, and some blamed a note from Morgan Stanley saying that the U.S. and Europe "dangerously close to recession" because of unsatisfactory responses from policymakers. As I've explained in the past, analysts had been predicting a huge recovery in last half of this year, including vastly bloated earnings predictions. A recession would mean that the bloated earnings predictions are wrong, and that stock valuations are much higher than usual, meaning that stock prices are high, and it's time to sell. The Morgan Stanley report was followed by a slew of bad economic news, including a negative Philadelphia Fed manufacturing report, and a fall in home sales. Stocks also fell sharply in Europe. The Street

From the point of view of Generational Dynamics, a full-fledged panic and crash is coming with certainty, either now or before too long. This is being debated in the Generational Dynamics forum.

Asian stocks sink on fears of U.S. recession

As of this writing on Thursday evening (Friday morning in Asia), stock markets in Asia open sharply lower amid signs of a possible U.S. recession and renewed worries over the financial health of Europe's banks. Also Wall Street futures are sharply lower, suggesting a lower opening on Friday morning. AP

Georgetown basketball exhibition game in China ends in brawl


Basketball brawl
Basketball brawl

What began as a goodwill trip to China for the Georgetown men’s basketball team turned violent Thursday night when its exhibition game against a Chinese professional club deteriorated into a benches-clearing melee in which players exchanged blows, chairs were thrown and spectators tossed full water bottles at Hoyas players and coaches as they headed to the locker room. The American team returned to the locker room with 9 minutes 32 seconds left in the game and the scored tied at 64 after a chaotic scene in which members of the Georgetown and Bayi Military Rockets teams began swinging wildly and tackling one another. Washington Post

(Comments: For reader comments, questions and discussion, see the 19-Aug-11 World View -- Global markets plunge on bad economic news thread of the Generational Dynamics forum. Comments may be posted anonymously.) (19-Aug-2011) Permanent Link
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18-Aug-11 World View -- Turkey backs off on threat to Syria

Syria threatens family members of Syrian-Americans

This morning's key headlines from GenerationalDynamics.com.

2,000 Egyptian troops take on al-Qaeda in the Sinai


Flames rise over gas pipeline targeted by Bedouin militants
Flames rise over gas pipeline targeted by Bedouin militants

When Egypt's pro-democracy protests began in January, they were relatively peaceful in Cairo, but the one area of Egypt that appeared ready to explode into violence was the Sinai, the region adjacent to Israel where major battles were fought in the 1967 Six-Day War and the 1973 Yom Kippur War between Israel and Arab states. Under the 1979 Camp David peace agreement between Israel and Egypt, Egyptian forces must stay out of the Sinai region. The result is that movements sympathetic to al-Qaeda are forming in the Sinai, especially since January, when Egyptian security forces withdrew in confusion, leaving the region lawless. With an increase in terrorist acts in the Sinai, Egypt sent 2,000 troops back to attempt to police the region, but they're largely unarmed because of the 1979 agreement. Jamestown and Debka

Turkey backs off on threat to Syria

A statement by Turkey's foreign minister Ahmet Davutoglu appears to back off from previous implied military threats to Syria if Syria does not stop the massacre of innocent civilians. In a press conference on Tuesday, he said,

"If the operations continue in Syria and the operations become a regional problem, Turkey can naturally not remain indifferent. We believe that Syria would make a very big contribution to the stability of the region if it goes through a peaceful transformation. However, for this to happen bloodshed must stop and reforms must be enacted. The sufferings in many cities in Ramadan should end. There are many important common efforts that can be exerted by Turkey and Jordan to form a regional sensitivity because they are both immediate neighbors of Syria. Our consultations will continue and intensify, and we will try to make progress on the issue of a regional stance."

Davutoglu was asked about news reports that Turkey's army might enter Syria to create a buffer zone on Syrian soil. He said that there were no such plans: "We're talking about a border that is 900 kilometers long. We cannot talk about such a development right now."

However, there was one breathtaking threat described by the article: Sources say it is still too early to call on Assad to step down, but underline that patience is running out fast, meaning that Ankara may finally call for his departure soon. Whew! Zaman

Hamas deeply embarrassed by Syria's assault on Palestinians


Palestinian girl in Ramallah holds poster depicting Assad with a red 'X' across his face. (Reuters)
Palestinian girl in Ramallah holds poster depicting Assad with a red 'X' across his face. (Reuters)

Ordinary Palestinians in the West Bank and the Gaza Strip have been extremely and openly critical of the massacre of innocent civilians in Syria, especially after last weekend's bloody assault on Palestinians in a refugee camp in Latakia. However, Hamas, the governing authority in the Gaza Strip, has its headquarters and numerous backers in Damascus. Thus Hamas' leaders have refused to say anything about the violence against Palestinians, and have moved to prevent public demonstrations against Syria in Gaza. Thus, rumors are growing that Hamas may move its heaquarters to Qatar, Turkey or Sudan. (Egypt has refused to allow the group to open an office in Cairo.) Reuters

Syria threatens family members of Syrian-Americans

U.S. officials are accusing Syrian diplomats in Washington of tracking and photographic anti-regime activists in the United States, and sending the reports back home. Several Syrian-Americans say that as a result of their activities in the U.S., family members have been interrogated, threatened or arrested in Syria. One Syrian scientist visited the U.S., and then was tortured to get the names of anyone he might have met with, and was then killed. Syrian diplomats are pursuing similar activities in countries around the world, blaming activists as being "Zionist conspirators." Wall Street Journal (Access)

Israel firm on not apologizing to Turkey

Israel's Prime Minister Benjamin Netanyahu announced on Wednesday that Israel will not apologize to Turkey for the deaths of nine Turkish citizens last year in May during the confrontation between Israel's Defense Forces (IDF) and the "Freedom Flotilla" that had been dispatched to break Israel's sea blockade on Gaza. Later on Wednesay, Turkish Prime Minister Recep Tayyip Erdogan said it would be impossible for Turkish-Israeli ties to improve unless Israel apologised and paid compensation for the killing of the nine Turks. Ynet

Widespread disappointment over Sarkozy-Merkel meeting

Tuesday's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy had been hyped by people claiming that it would solve the European debt crisis. Instead, it produced nothing but vague words, according to most commentators. Der Spiegel

Switzerland continues desperate attempt to inflate the franc

The Swiss National Bank (SNB) has been flooding the currency markets with huge amounts of liquidity -- 200 billion Swiss francs ($253 billion) -- in an attempt to deflate the "massively overvalued" currency. However, currency investors aren't cooperating, and they're pouring money into Swiss currency as a "safe haven" against a euro currency beset by the massive debt crisis. The result is that the Swiss franc continues to surge against the euro and the U.S. dollar. However, some people are benefiting. Swiss tourists are flooding across the border into Germany and using their expensive francs to purchase volumes of German good priced in relatively weak euros. Bloomberg and Spiegel

(Comments: For reader comments, questions and discussion, see the 18-Aug-11 World View -- Turkey backs off on threat to Syria thread of the Generational Dynamics forum. Comments may be posted anonymously.) (18-Aug-2011) Permanent Link
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17-Aug-11 News -- New GDP reports put European economy at near standstill

Sarkozy and Merkel reject euro bonds

New GDP reports put European economy at near standstill


Sarko and Merkel discuss euro bonds (PressEurop)
Sarko and Merkel discuss euro bonds (PressEurop)

The momentum with which the German economy started into 2011 has slowed down considerably, according to Germany's Federal Statistical Office (Destatis). In the second quarter of 2011, the gross domestic product (GDP) rose just 0.1% on the first quarter, after the result for the first quarter was corrected downwards to +1.3%. However, imports in the second quarter of 2011 rose more strongly than exports.That large increase in imports on the one hand led to higher building of inventories, while on the other hand it resulted in a balance of exports and imports that had an altogether negative impact on economic growth. Also, final consumption expenditure of households and capital formation in construction had a slowdown effect on the German economy in the second quarter of 2011.

The figures for Germany were much lower than economists had expected, and French GDP was also stagnant. Figures released later in the day showed that the entire eurozone growth was stagnant. The main reason for the bad eurozone figures was the slowdown in its two largest economies, Germany and France, according to Spiegel.

Many on-air commentators talked about what a shock this was, because Europe needed a robust Germany economy to lead the continent out of its debt crisis. As I've reported many times, economists in Europe and America have been counting on a "V-shaped" recovery in the last half of this year, so that the rapid growth would wipe out the staggering debt without any sacrifices. This prediction had been based on 1970s and 1980s macroeconomic models that are no longer valid because the generational constellation has changed.

I'd like to quote (paraphrasing) an analyst that I heard on BBC on Tuesday:

"The biggest worry is that the growth in consumption (consumer purchases) is falling. People have suffered a number of shocks that have created a sense of uncertainty, and people are starting to behave in a very careful manner. People are saving money like mad, which is causing the Germany economy to slow down, which will cause the whole of Europe to slow down. No one knows if people will continue to save, and not spend. No one can predict the future."

In fact, it IS possible to predict the future in some areas. We're repeating the 1930s, when economists and politicians were predicting that "prosperity is just around the corner," and were proven wrong. People today are becoming increasingly risk averse, just as they did in the 1930s.


Investors are risk averse too (WSJ)
Investors are risk averse too (WSJ)

This means that consumption is going to continue falling, and there's no hope at all of a "V-shaped recovery." To the contrary, the sharp fall in consumption will result in a deflationary spiral. There won't be any significant growth again until the 2020s, when the new generation of young people reaches teen years and starts nagging their parents for money to spend.

Sarkozy and Merkel offer additional disappointments

Investors had been hoping for one of Europe's famous "shock and awe" announcements, like the various nuclear option bailouts that have been going on for 18 months. In particular, when French President Nicolas Sarkozy and German Chancellor Angela Merkel met in Paris on Tuesday, they were hoping for a big "euro-bond" announcement. Under this scheme, all 17 eurozone countries would jointly issue and guarantee euro bonds, and individual countries would no longer issue national bonds.

Instead, Sarkozy and Merkel announced some vague plans for closer eurozone integration, according to Reuters. Sarkozy said, "We have exactly the same position on euro bonds. Euro bonds can be imagined one day, but at the end of the European integration process, not at the beginning." This immediately caused a Wall Street stock slide.

The European Central Bank (ECB) has been keeping Spain and Italy from falling off a cliff by purchasing €21 billion in bonds from the two countries at low interest rates. Several commentators indicated that they feared that Spain and Italy are now going to start falling off a cliff again, because the of the disappointing performance of Sarkozy and Merkel.

(Comments: For reader comments, questions and discussion, see the 17-Aug-11 News -- New GDP reports put European economy at near standstill thread of the Generational Dynamics forum. Comments may be posted anonymously.) (17-Aug-2011) Permanent Link
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17-Aug-11 World View -- Libya's rebels predict victory 'within the month'

China's new aircraft carrier vulnerable to attack in South China Sea

This morning's key headlines from GenerationalDynamics.com.

The failed Russian coup, 20 years later


Mikhail Gorbachev returns to Moscow from the Crimea in August, 1991, after attempted coup (Reuters)
Mikhail Gorbachev returns to Moscow from the Crimea in August, 1991, after attempted coup (Reuters)

August 16 is the 20th anniversary of the attempted coup by Soviet hardliners to eliminate President Mikhail Gorbachev and to take control of the government. They put Gorbachev under house arrest in his vacation villa on the Black Sea in the Crimea. All communications were cut off, and no one knew whether he was dead or alive. The hardliners claimed that Gorbachev was ill and there was disorder in various, unspecified parts of the Soviet Union. Gennady Yanaev signed the decree naming himself as acting USSR president on the pretext of Gorbachev’s inability to perform presidential duties due to "illness." The political winner of coup attempt was Boris Yeltsin, because he happened to be at the right place at the right time, and took over when the coup failed. That was the event that signaled the final end of the Soviet Union. Jamestown

Libya's rebels predict victory 'within the month'

Libya's rebel National Transitional Council (NTC) is claiming that their forces now totallt control the town of Zawiya, about 30 miles west of Tripoli, cutting off the major route that was keeping the capital, Tripoli, supplied with food and fuel. The TNC is claiming that the war against Muammar al-Gaddafi had entered a "decisive phase," and that victory is possible within the month (which, I assume, means in the next two weeks). Tripoli Post

U.S. restores funding to aid groups in Gaza

The U.S. has restored funding to international aid groups in the Gaza Strip, after Hamas rulers backed down from a demand from one of the groups to turn over its books for auditing and to allow Hamas officials to search its offices. Aid groups have refused to allow the audit from concern that Hamas would try to control its activities. Hamas is listed as a terror organization by the US and EU. A Hamas official said that they backed down from the demand to audit the International Medical Corps., but said that the organization had agreed to independent auditing. AP

Hamas claims that Fatah is violating their reconciliation agreement

Hamas today accused Fatah of going back on previous agreements between the two political groups and violating the reconciliation deal that had been signed in Cairo earlier this year. The accusation concerns a detail involving voter registration. Future elections will determine which organization is in control of the unity government. Palestine News Network

North Korean slams joint U.S-S. Korea Yellow Sea naval drills

Tens of thousands of American and South Korean military personnel are taking part in joint military drills that began on Tuesday in the Yellow Sea. The exercises will last for 10 days. The U.S. calls the exercises routine and defense-oriented because they're aimed at simulating the destroying of North Korea’s weapons of mass destruction. peaking through its official media, Pyongyang has urged Seoul and Washington to call off the drills, saying they increase the likelihood of nuclear war. VOA

China's new aircraft carrier vulnerable to attack in South China Sea

China's new aircraft carrier has returned to port after completing its initial sea trials. The carrier is hugely popular in China, where it is being touted as a symbol of the country's ascent to great-power status. Ardent online fans have already christened the vessel Shi-Lang, after the 17th century Taiwan-conquering admiral. The carrier would seem to decisively shift the palance of power in the South China Sea, where China has territorial disputes with Vietnam, Taiwan, the Philippines, Malaysia and Brunei. However, the carrier would be extremely vulnerable in those waters, because it has inadequate protection against incoming missiles. Asia Times

Russia moves to return border guards to Tajik-Afghanistan border

Russia has been pressing Tajikistan hard to allow the return of Russian border guards to the border between Tajikistan and Afghanistan. Russian officials are genuinely concerned about the impact of Afghan narcotics, most of which are smuggled into the country through Central Asia. An estimated 130,000 people in Russia die each year from heroin overdoses and drug-related crime. Last year, Russia’s anti-narcotics chief, Viktor Ivanov, suggested that about 60 percent of Russia-bound Afghan heroin is smuggled through Tajikistan, which needs support in fighting drug trafficking through its borders. However, Tajikistan is balking at giving up its sovereignty to allow the Russian border guards. Jamestown

(Comments: For reader comments, questions and discussion, see the 17-Aug-11 News -- New GDP reports put European economy at near standstill thread of the Generational Dynamics forum. Comments may be posted anonymously.) (17-Aug-2011) Permanent Link
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16-Aug-11 News -- Turkey threatens Syria, as military attacks Palestinian refugee camp

Turkey issues very harsh, strongly worded implied threat to Syria

Turkey threatens Syria, as military attacks Palestinian refugee camp

The U.S. State Dept. has called "abhorrent and repulsive" the massive new military assault by the army and navy of Syria's president Bashar al-Assad on the port city of Latakia, according VOA.


Latakia's Ramleh district is pummeled with tank, gunboat and automatic weapons fire.  (AFP)
Latakia's Ramleh district is pummeled with tank, gunboat and automatic weapons fire. (AFP)

Assad's forces have avoided the neighborhoods of Assad's Alawite sect, and instead have been targeting Sunni Muslim neighborhoods, including a large Palestinian refugee camp in Latakia's al-Ramel district. Five to ten thousand refugees were forced to flee, and their whereabouts are unknown, according to the BBC. Newspapers in the region have expressed anger about Arab states' failure to respond to events in Syria.

Another report indicates that Assad's security forces began ordering residents of the Ramleh region, which includes a refugee camp housing more than 10,000 Palestinians, to go to a soccer stadium ahead of what they described as a huge military operation. After the people were herded into the stadium, security forces took away their identification cards and cellphones. At least five people were confirmed dead, according to the LA Times

Turkey issues very harsh, strongly worded implied threat to Syria

Turkey's Foreign Minister Ahmet Davutoglu has issued a stark warning to Syrian authorities to immediately halt military operations across the country or he said there will be nothing left to talk about the steps that would be taken in support of the Syrian people, according to Zaman:

"If these operations do not stop there will be nothing left to say about the steps that would be taken. This is our final word to the Syrian authorities, our first expectation is that these operations stop immediately and unconditionally.

In the context of human rights this cannot be seen as a domestic issue."

The last sentence is important because it establishes a justification for Turkish military action.

Davutoglu was essentially repeating what he said a week ago in connection with his visit to Syria on Tuesday. However, he did not specify what action Turkey would take if the attacks continue, and he stopped short of calling for Assad to step down, which is a demand of Syria's pro-democracy activists.

In the past few weeks, we've seen unconfirmed reports that (1) Turkey is talking about a military action to establish a buffer zone on Syrian soil, (2) Iran is threatening retaliation with missiles on Turkey, if such an action occurs, and (3) American assets in the Mediterranean and on bases in the region will be used to protect Turkey from the Iranian missiles. On Sunday, we quoted an unconfirmed report that this US-Turkish military operation would begin on August 27 if the slaughter hasn't stopped. This is speculative, of course, but what isn't speculative is that not only is the slaughter of civilians not ending, but in fact Assad seems to be getting more violent and bloody every day, which could well force the hand of even a reluctant Turkey.

(Comments: For reader comments, questions and discussion, see the 16-Aug-11 News -- Turkey threatens Syria, as military attacks Palestinian refugee camp thread of the Generational Dynamics forum. Comments may be posted anonymously.) (16-Aug-2011) Permanent Link
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16-Aug-11 World View -- Korea criticizes Japan on Liberation Day

Euro crisis continues as 'euro bond' proposal stirs debate

This morning's key headlines from GenerationalDynamics.com.

Korea stirs nationalism over Dokdo/Takeshima islands on Liberation Day


Lee Myung-bak and first lady, Kim Yoon-ok (center) wave Korean flags on Liberation Day (Yonhap)
Lee Myung-bak and first lady, Kim Yoon-ok (center) wave Korean flags on Liberation Day (Yonhap)

South Korea's president Lee Myung-bak was harshly critical of Japan in his Liberation Day speech on Monday, at a time when Korea-Japan relations are at a low ebb. Liberation Day commemorates the end of Japan's colonial rule of Korea from 1905-1945. Lee was particularly critical of Japan's approval of new textbooks that claim Japanese sovereignty over two small islands between the two countries, known as the Dokdo islands to the Koreans, and the Takeshima islands to the Japanese. According to Lee,

"Japan has a responsibility to teach its young generation the truth about what happened in the past. By doing so, we can then allow young people in Korea and Japan to forge ahead into the new era with a correct recognition and understanding of history. This kind of cooperation will greatly contribute to the peace and prosperity of the world as well as Northeast Asia.

[The pain and suffering inflicted by the Japanese would be something that Koreans would never forget.]

For the sake of the future relationship, Korea will not be bound by the unfortunate past. But at the same time, the Korean people can never forget the history of the recent past altogether."

JoongAng (Seoul)

Here's a pretty interesting video that describes the situation:

Al-Jazeera

Euro crisis continues as 'euro bond' proposal stirs debate

It was revealed that, in order to keep Italy and Spain from being dragged into a sovereign debt crisis, the European Central Bank (ECB) last week bailed out the two countries and broke all previous records by purchasing €22 billion in bonds from the two countries. The ECB has been harshly criticized for waiting too long to bail out Greece, Ireland and Portugal, and apparently they're taking the criticism to heart by pursuing an early and enormous bond purchase program. Guardian

Many analysts are saying that there's only one way left to save the euro -- by issuing "euro bonds." Instead of having each of the 17 eurozone countries issue its own bonds, the countries would jointly issue and guarantee euro bonds that represent the entire eurozone. (This seems to me like another total fantasy -- or worse -- being perpetrated by EU politicians. If Italy and Spain and the euro could be saved by issuing euro bonds, then Italy and Spain and the euro could be saved by the ECB purchasing country bonds, which is what they're doing now. This is another example of politicians thinking the rhetoric and appearances will trump fundamentals.) Bloomberg

The German government is saying publicly that it is adamantly opposed to the "euro bond" idea, because they would "take away the pressure to save" from debt-laden states. However, there are some mixed messages coming from Berlin that some politicians, especially Angela Merkel's political opponents, are ready to accept the euro bond idea. Financial Times (Access)

U.N. says Somalia food aid is being stolen, fueling civil war


A group of internally displaced people crowd underneath a partially destroyed building in Mogadishu on Sunday (AFP)
A group of internally displaced people crowd underneath a partially destroyed building in Mogadishu on Sunday (AFP)

With nearly 3.2 million people in Somalia facing starvation, it's to be expected that some food aid pouring into Somalia might go missing. But the sheer scale of the theft taking place calls into question aid groups’ ability to reach the starving. It also raises concerns about the willingness of aid agencies and the Somali government to fight corruption, and whether diverted aid is fueling Somalia’s 20-year-old civil war. Associated Press

(Comments: For reader comments, questions and discussion, see the 16-Aug-11 News -- Turkey threatens Syria, as military attacks Palestinian refugee camp thread of the Generational Dynamics forum. Comments may be posted anonymously.) (16-Aug-2011) Permanent Link
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15-Aug-11 World View -- Libya's rebel forces deliver crucial blow to Gaddafi's regime

Merkel and Sarkozy to meet Monday for make-or-break euro crisis talks

This morning's key headlines from GenerationalDynamics.com.

Syria's regime shells Latakia civilians by land and by sea


Syria
Syria

Now that Syria's president Bashar al-Assad has turned to the port city of Latakia as a target, he's massacring unarmed civilians by land and by sea. In a major escalation, Syria's navy turned its gunboats on random civilian neighborhoods of Latakia, while army tanks blasted neighborhoods from the other directions. Latakia is a key strategic asset, as we reported yesterday, because Iran has agreed to fund a military base at the city's airport to facilitate arms deliveries. Telegraph

Libya's rebel forces deliver crucial blow to Gaddafi's regime

In a major strategic victory, Libya's rebel forces took control of the town of Zawiya, about 50 km (30 miles) west of Tripoli, cutting off the major route that was keeping the capital, Tripoli, supplied with food and fuel. But rebel forces are now in their strongest position since the uprising against four decades of Gaddafi's rule began in February. They now control the coast both east and west of Tripoli. To the north of the capital is the Mediterranean and a Nato naval blockade, while to the south is empty desert. However, a Gaddafi spokesman denied that Zawiya was held by the rebels, saying it was "under our full control." Irish Times

Late Sunday evening, sources reported that representatives of Libya's rebels were holding negotiations with representatives of Muammar Gaddafi's government. The talks are being held in a hotel on the Tunisian island of Djerba near the border with Libya. Reuters

Libya's tribes may turn against one another

The assassination of the Libyan rebels' army commander, Abdel Fatah Younis, that we reported two weeks ago, is exposing important fault lines among rebel factions and tribes. In particular, Younis was a member of the Obeidi tribe, who are now threatening retaliation. The tribes are all united now in the fight against Muammar Gaddafi's forces, but the fear is that once Gaddafi is defeated, the tribes will begin to turn against each other. Since Libya is in a generational Crisis era, this would not be a surprise. If the rebel forces win, it will turn out to be particularly dangerous to have been a member of a tribe that supported Gaddafi during the current war. NY Times

China seeks to return to abandoned projects in Banghazi, Libya

When war broke out almost six months ago, China evacuated its workers from Libya, leaving behind many unfinished construction projects. Once one of Muammar Gaddafi's closest supporters, China is now shifting its stance, and warming relations with the rebel National Transitional Council. Financial Times (Access)

Merkel and Sarkozy to meet Monday for make-or-break euro crisis talks

After last week's stock market roller coaster ride, fueled by a possible French banking crisis, French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet in Paris on Monday for what is being billed a make or break summit for the euro. With Greece, Ireland, and Portugal in bailout mode, and questions about a bailout of Italy floating in the air, Sarkozy and Merkel are said to be considering "euro bonds." Unlike bonds issued by individual countries, "euro bonds" would be backed by the entire euro zone. By this means, the "virtuous countries" like Germany can continue to bail out the "profligate countries," like Greece. Daily Mail

(Comments: For reader comments, questions and discussion, see the 15-Aug-11 World View -- Libya's rebel forces deliver crucial blow to Gaddafi's regime thread of the Generational Dynamics forum. Comments may be posted anonymously.) (15-Aug-2011) Permanent Link
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14-Aug-11 World View -- Syria's Assad asks for 15 more days to slaughter civilians

Desperate Swiss try to devalue the Swiss franc

This morning's key headlines from GenerationalDynamics.com.

London residents wonder why their homes and businesses were destroyed


The flaming Carpet Right building in Tottenham has become the horrible iconic picture of last week's London riots
The flaming Carpet Right building in Tottenham has become the horrible iconic picture of last week's London riots

Every explanation for last week's UK riots seems unsatisfactory, designed to conform to an ideology or a theory. "I hear social deprivation blamed, yet there are other poor areas of the country that didn't riot. Others blame atheism and the lack of morality. Yet I have never lived in a community in London where so many of my neighbours go to church. Even the simplest explanation of Conservative ministers that it is simply 'criminality' is meaningless." Guardian

I make a connection between the nihilism of the rioters, who destroyed people's lives for the enjoyment of it, with the nihilism of the Gen-X financial engineers who knowingly created some $50 trillion of fraudulent artificial securities that are still sitting in bank portfolios, waiting to implode. I realize that the rioters were young, and were not Gen-Xers, so there is still a lot to be understood from a generational point of view. Both the above article and a Reuters article of several days ago emphasize the relationship between the rioters and their parents, with some parents participating in the riots. I also make the connection to the nihilism of the July 7, 2005, London subway bombings, where young people in immigrant communities blew themselves and the subways up, motivated by "altruistic suicide," believing that their parents would be proud of them for committing these acts. The generational connection that needs to be explored is how the nihilism of the Nomad archetype (like Generation X) gets translated into a full scale crisis, perpetrated by the Nomads and their Hero archetype children. Reuters

Syria's Assad asks for 15 more days to slaughter civilians

Reports indicate that Syria's president Bashar al-Assad told Turkey's Foreign Minister Ahmet Davutoglu on Tuesday that, with a free hand, he would finish off the revolt in 10 to 15 days and then get down to introducing political reforms including free elections with full opposition participation. If he went back on his word, then Obama and Erdogan would talk again about a possible US-Turkish military operation in Syria. They decided to trust Assad "one last time" regardless of his broken promises in the past. So mark your calendar, folks -- the deadline is August 27. Debka

US/Saudi leaders tell Syria's Assad to stop, as his regime smashes into Latakia

The Syrian army's bloody rampage against unarmed civilians is moving on to a new city, Latakia, on the Mediterranean coast in the west. On Saturday, Saudi Arabia's King Abdullah and U.S. President Barack Obama joined in a toothless demand that the Syrian regime "immediately" halt its brutal crackdown on protesters. Obama and Abdullah "expressed their shared, deep concerns about the Syrian government's use of violence against its citizens. They agreed that the Syrian regime's brutal campaign of violence against the Syrian people must end immediately, and to continue close consultations about the situation in the days ahead." Arab News

Iran building a military base in Latakia, western Syria

Iran has agreed to provide $23 million to build a new military complex at Latakia airport, to handle Iranian arms shipments to Syria, to include machine guns, rockets and medium-range missiles. It will be completed by the end of next year. Iran plans to fly hundreds of tons of weapons to Latakia on freight planes which have a capacity of up to 40 tons each. Previous Iranian efforts to provide arms shipments have suffered several setbacks after Turkish officials intercepted a number of shipments destined for Syria. In return for Iranian military support, Syria has supported Tehran's attempts to develop the Islamic Shia fundamentalist Hizbollah militia into a major political force in neighboring Lebanon. Telegraph

Interim assessment of the humanitarian mission in Libya

Although Nato is nominally in charge of the Libya mission, it was really launched and is led by Europe's residual military powers, France and Britain, operating in their respective national capacities. President Nicolas Sarkozy and Prime Minister David Cameron each embarked on this intervention as a short-term political project, taking "days not weeks," only to see it turn into stalemate, and the expected political rewards turn into liabilities. The resulting perception is that Nato has been held in check by Colonel Muammar Gaddafi’s third-rate troops for all these months. Nato's last perceived military success was Kosovo in 1999. Along with the costly failure in Afghanistan, another failure in Libya would make Nato look irrelevant to American and West-European publics, exposing it to even more debilitating budget cuts after those it has already incurred. Jamestown (#1) and Jamestown (#2)

Libyan diplomats tried 'fire sale' in Britain prior to expulsion

In the days before the expulsion of Libya's diplomats from London several weeks ago, they attempted a a "fire sale" of properties and expensive cars worth up to $160-million in the days leading up to their expulsion, intelligence sources have disclosed. Montreal Gazette

Palestinians visit Caribbean nations to gain UN recognition

Palestinian Authority Foreign Minister Riyad Malki has been making the rounds of 19 countries in Central America and the Caribbean to convince them to support the Palestinians' attempt in September to gain U.N. General Assembly recognition of a Palestinian state. Some of these countries have a population less than 45,000, but they're still sovereign U.N. member states. The Palestinians need two-thirds of the U.N. member states -- that is, at least 129 countries -- and that assumes that America won't carry out its threat to veto the resolution in the Security Council. In the case of a veto, the only option remaining would be to ask the General Assembly for nonmember state status, which they can get with only a majority of the votes of those present in the session. LA Times

Saudi-Pakistan relations at a new high

Pakistan maintains close military ties with Saudi Arabia through expertise, and extensive support and training for Saudi defense forces. Saudi Arabia has been more supportive of Pakistan on the Kashmir issue (versus India) than any other nation in the world. Saudi-Pakistan bilateral trade is above $3.3 billion per year. Arab News

Desperate Swiss try to devalue the Swiss franc

Switzerland is one of the European countries that retained its national currency, and did not join the euro currency. Now, top officials at the Swiss National Bank (SNB) are desperately trying to devalue the Swiss franc, because it's become "massively overvalued." Before the 2008 credit crisis, one euro could buy you 1.65 Swiss francs. But after last week's wild stock market gyrations, leaving France's banks in crisis, one euro could only purchase 1.08 Swiss francs. Swiss francs are becoming more valuable because investors are looking for "safe havens" where they can put their money. US Treasuries are one such safe haven, and the Swiss franc is another safe haven. The highly revalued Swiss franc has put Switzerland into dangerous territory this past month, because the tourist industry is collapsing, and the machine tool industry is heading for major layoffs. The Swiss are trying to devalue the franc by "printing money" - flooding the market with francs, but all of these measures failed during a similar crisis in 1978. Telegraph (Paragraph corrected - 14-August)

(Comments: For reader comments, questions and discussion, see the 14-Aug-11 World View -- Syria's Assad asks for 15 more days to slaughter civilians thread of the Generational Dynamics forum. Comments may be posted anonymously.) (14-Aug-2011) Permanent Link
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13-Aug-11 World View -- Turkish army forces on high alert near the Syrian border

Europeans commemorate the building of the Berlin Wall, 50 years ago

This morning's key headlines from GenerationalDynamics.com.

Europeans commemorate the building of the Berlin Wall, 50 years ago


Workers build part of the Berlin Wall 50 years ago, August 13, 1961 (AP)
Workers build part of the Berlin Wall 50 years ago, August 13, 1961 (AP)

When the Soviets suddenly erected the Berlin wall, separating East and West Berlin, the two populations diverged. When the wall fell twenty years ago, it was even more shocking to the East Germans, because their country disappeared, and with it their own identities. Now, younger generations of East Germans are beginning to ask questions about why it happened, and why it lasted so long. PressEurop

Turkish army forces on high alert near the Syrian border

In recent days, the Turkish army summoned hundreds of officers for reserve duty, placing them in bases near the border with Syria, where they remain on high alert. The protests and the bloodshed continued on Friday. 13 protesters were shot to death by President Assad's security forces, when live fire was shot at thousands of worshippers on their way home from Friday prayers. Increasingly, the Syrian uprising is turning from an internal affair to a regional one, and a potential regional war, with Iran and Iraq siding with Syria against Turkey, Saudi Arabia, and the other gulf states. Haaretz

Abbas envisions US peacekeeping role in new Palestinian state

Palestinian Authority president Mahmoud Abbas and prime minister Salam Fayyad have been giving conflicting signals as to whether they will seek UN recognition of a Palestinian state in September. Abbas gave his vision of security in a future Palestinian state, saying that a third party comprised of NATO forces under US command would take responsibility. Jerusalem Post

Cost of protecting Jerusalem settlements at $11,000 per resident

In traditional Arab neighborhoods near the Old City where tensions run particularly high, it costs $22 million to provide security roughly 2,000 Israelis – or $11,000 per resident, according to an Israeli group opposed to the settlements. This comes at a time when Israel's government is facing unprecendent public protests over the soaring cost of housing. CS Monitor

US threatens to cut off aid to Gaza after Hamas crackdown

The U.S. will cut $100 million in American aid money to Paletinians in Gaza, if Hamas continues with "unwarrented audits" of local American nonprofit organizations. Hamas shut down one such organization, the U.S.-financed International Medical Corps, after it refused to submit to a Hamas audit. AP

Why won't Germans have more babies?


Anemic birth rate in German (Spiegel)
Anemic birth rate in German (Spiegel)

Germany is a country where fewer children are being born despite all official efforts to reverse the trend. For years, administrations in Berlin have tried to encourage Germans to have more children. Indeed, the Merkel administration has been particularly active on this issue, with generous parental leave benefits, that have already cost the government almost €15 billion. But no matter how much money the state throws at the problem, Germans just won't have children. From the point of view of Generational Dynamics, birth rate is a very interesting issue, since a high birth rate, combined with low infant mortality, provides cannon fodder for the next war. Since WW II, Sunni Muslim states and Israel have had explosive birth rates, while birth rates have declined in many other nations. Spiegel

Violent protests break out in southwest China town

There are tens of thousands of regional protests in China every year, and the number has been growing. (See my 2005 article, "China approaches Civil War") Some are ethnic (e.g., Han Chinese versus Tibetans or Uighurs), but most of them are along the fault line between peasants and government elite. On Thursday, thousands of Chinese took to the streets of Qianxi, Guizhou, in southwestern China, with some smashing police vehicles in protest of rough handling by government officials. China reported almost 90,000 such "mass incidents" of riots, protests, mass petitions and other acts of unrest in 2011, up from 60,000 in 2006. Reuters and China Daily

France, Italy, Spain, Belgium attempt to ban short selling

Hoping to stem the growing financial crisis in Europe, four countries -- France, Italy, Spain, Belgium -- are blaming the "speculators," and trying to end speculation by imposing bans on short selling. In short selling, an investors "bets" that the price of the stock will go down. The way it works is that the investor borrows shares of the stock from his stock broker and then sells the stock, promising to buy it back in a fixed period, like 90 days. If the price goes down in the meantime, the investor makes money. Bloomberg

(Comments: For reader comments, questions and discussion, see the 13-Aug-11 World View -- Turkish army forces on high alert near the Syrian border thread of the Generational Dynamics forum. Comments may be posted anonymously.) (13-Aug-2011) Permanent Link
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12-Aug-11 World View -- Female suicide bombers kill 7 in Pakistan

Wall Street prices surge again as turmoil continues

This morning's key headlines from GenerationalDynamics.com.

Seven people killed by two female suicide bombers in Peshawar, Pakistan


Police van affected by bomb blast
Police van affected by bomb blast

At least seven persons including four police personnel and a child were killed and more than 20 others injured in twin acts of terrorism in Peshawar, in northwest Pakistan, on Thursday. Two burqa-clad female suicide bombers blew themselves up at police check post, killing both suicide bombers. Some people are saying that the Taliban's use of female suicide bombers is an act of desperation for them, but they're presenting special problems for police. The burqa-clad women terrorists found no hurdle in getting close to their targets since traditionally the male police staff had been reluctant to check women for security needs. The Nation (Lahore) and Daily Times (Lahore)

Syria's Assad thumbs his nose at Turkey, NATO and the West

It's been two days by the visit by Turkey's Foreign Minister Ahmet Davutoglu to Syria's president Bashar al-Assad to issue a "final warning" to stop the slaughter of his own civilians. Not only did the trip fail to produce any results, and it's being viewed increasingly as not only a failed mission, but even a humiliating mission. Assad's forces continued the massacres while Davutoglu was visiting Damascus, and then proceeded to goad Turkey by immediately after the visit following up with attacks on towns in Turkey's border region. Syria has also received assurances from Iran that Iran's missiles would attack any Mideast air base from which planes took off to take part in an attack on Syria. Syria increasingly sees Turkey, NATO and the West as too weak to do anything to stop his massacres. Debka

The Syria uprising and Assad's violent response continues to exacerbate the divisiveness of politics in neighboring Lebanon. Hizbollah continues to lose credibility for failing to criticize his ally, Assad, for slaughtering innocent civilians, while Walid Jumblatt, leader of an opposing party, is openly expressing his support for the Syrian people's right to freedom and democracy. Syria ended its three-decade military and political occupation of Syria in 2005, but Lebanese politics remain divided along lines of loyalty to Damascus and its benefactor Iran. Those rivalries – many rooted in old enmities of ethnicity and religion – have now been exacerbated by the seemingly open-ended turmoil unfolding next door. Jerusalem Post and Daily Star (Lebanon)

Turkey now remains a real wild card, given the enormous amount of prestige that the Erdogan government has invested in trying to convince Assad to end the violence. Jamestown

Wall Street prices surge again as turmoil continues


Four-day roller coaster ride on Wall Street
Four-day roller coaster ride on Wall Street

Just before 9 am ET, Reuters reported from anonymous sources that banks in Asia were cutting credit lines to major French banks. Markets in America and Europe initially reacted negatively, but then largely shrugged it off. Stock prices surged 4-5% on Wall Street on Thursday, continuing the huge see-saw daily movements. Reuters

France's CAC 40 Index, which lost 5.5% on Wednesday, lost another 0.6% on Thursday, after the above Reuters report. With France's banks essentially in crisis, French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet next week. They will be working to fulfill their promise that "they would formulate joint recommendations aimed at strengthening political and economic governance in the euro area before the end of the summer." Bloomberg

Postal Service asks Congress to allow 120,000 layoffs

Facing bankruptcy as early as September, the United States Postal Services has appealed to Congress to remove collective bargaining restrictions and allow 120,000 layoffs and major changes to employee benefits. CNN

David Cameron threatens to block social media in Britain

Britain's prime minister David Cameron is threatening to respond to the recent riots in London and other cities by blocking individuals' access to Twitter, Facebook, BlackBerry Messenger, and other social media. Speaking to the House of Commons on Thursday, where the MPs had been dragged back from their summer vacations, Cameron said:

"Everyone watching these horrific actions will be stuck by how they were organised via social media. Free flow of information can be used for good. But it can also be used for ill.

So we are working with the Police, the intelligence services and industry to look at whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality. I have also asked the police if they need any other new powers."

Presumably he could ask the Iranians and Syrians how they do it. 36% of British teens are on the Blackberry. Financial Times (Access)

Boy or girl? A simple test raises ethical concerns

A simple blood test can determine with 95% accuracy whether an unborn baby is a boy or a girl. As the tests become more widely available, they raise ethical questions, since couples could use a gender test to decide whether to have an abortion. LA Daily News

One-third of the world's population is experiencing rising restrictions on religion

Among the world’s 25 most populous countries – which account for about 75% of the world’s total population – restrictions on religion substantially increased in eight countries and did not substantially decrease in any. In China, Nigeria, Russia, Thailand, the United Kingdom and Vietnam, the increases were due primarily to rising levels of social hostilities involving religion. In Egypt and France, the increases were mainly the result of government restrictions. The rest of the 25 most populous countries, including the United States, did not experience substantial changes in either social hostilities or government-imposed restrictions. Pew Research

Israel to approve 4,300 settlement units in Jerusalem

In a move that's certain to outrage the Palestinians, Israel's Interior Ministry has given final authorization to build 1,600 apartments in Greater Jerusalem and will approve 2,700 more in the coming days. Israel National News

(Comments: For reader comments, questions and discussion, see the 12-Aug-11 World View -- Female suicide bombers kill 7 in Pakistan thread of the Generational Dynamics forum. Comments may be posted anonymously.) (12-Aug-2011) Permanent Link
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11-Aug-11 News -- Stock panic resumes on concerns over Europe's solvency

The euro is quickly unraveling

Stock panic resumes on concerns over Europe's solvency

World stock markets give all appearances of being in free fall, as the Dow Jones Industrial Average fell another 519 points, down 4.6% in another roller coaster day, and has now lost more than 2,000 points since July 21, according to AP. From the point of view of Generational Dynamics, this wild lurching is a danger sign that full scale panic may be near.


Frankfurt Stock Exchange - people stand in the balcony above the DAX index board on 10-Aug (Reuters)
Frankfurt Stock Exchange - people stand in the balcony above the DAX index board on 10-Aug (Reuters)

Based on various comments I heard on TV, here's what I infer has been going on: Analysts have been predicting the fabled "V-shaped" recovery in the last half of this year, and that prediction was based on bloated predictions of corporate earnings in the last half of the year. Starting from these bloated predictions, analysts further screw things up by ignoring one-time expenses (these are the so-called "operating earnings"). The result is that analysts were predicting huge profits this year, which would mean low price/earnings ratios (also called "valuations"), which would mean that stocks are "oversold" and "the cheapest they've been in years."

Since July 21, it's become increasingly clear to the general public that mainstream economists and analysts don't have the vaguest idea what they're talking about, and that politicians simply lie about economics every time they open their mouths. This has caused investors to realize that the bloated earnings predictions are not valid.

If the bloated earnings predictions are wrong, then valuations are much higher than the analysts and economists have been saying, and therefore stocks are overpriced after all. Thus, the reasoning concludes, it's time to sell. And that's what they did.

Selling on the rumor

All it took on Wednesday was a trigger: A rumor that France's debt was going to be downgraded from AAA, immediately denied by all three major ratings agencies. But the rumor was too credible to be ignored, since France is worse off than the U.S., and the U.S. has lost its AAA rating.

The other part of the rumor was that France's major banks -- Société Générale, BNP Parabas, and Crédit Agricole -- were all in serious trouble because of their exposure to Greek debt. Once again, all three issued immediate denials, SocGen particularly saying that it plenty of reserves. But let's recall that in March, 2008, Bear Stearns went bankrupt. (See "A historic day in Ben Bernanke's Great Historic Experiment")

Two days before Bear Stearns collapsed, the CEO Alan Schwartz had appeared on CNBC, responding to rumors that Bear was having a liquidity crisis. At that time, he said:

"We finished the year, and we reported that we had $17 billion of cash sitting at the parent company as a liquidity cushion. As the year has gone on, since year end, that liquidity cushion has been virtually unchanged, ... The markets have certainly gotten worse, but our liquidity position has not changed at all, our balance sheet has not weakened at all,"

It was a complete lie.

So SocGen and the other banks made a similar statement on THIS Wednesday, and there's no reason to believe SocGen's denial.

What we do know is that, at the end of August, SocGen and other European banks are going to be forced to "voluntarily" do a bond swap of their Greek bonds, and that will force them to take a "voluntary" haircut of at least 21%, and possibly a lot more. (See "24-Jul-11 World View -- Mauldin: Greece's bond 'haircuts' are at 75-80%").

So it's not surprising that investors didn't really believe the nonsense denials. The result was that SocGen was down 14.7%, Agricole was down 11.8%, and BNP was down 9.4% -- on Wednesday alone. Italy's Intesa Sanpaolo was off 14%, and Monte dei Paschi fell 10%, according to Financial Times (Access).

Once the European banks led the way, American banks started selling off as well. The reason is that American banks are just as overexposed to European banks, especially French banks, as European banks are overexposed to Greek banks.


S&P 500 Price/Earnings Ratio (P/E1) 1871 to August 2010
S&P 500 Price/Earnings Ratio (P/E1) 1871 to August 2010

I'm posting this chart again because it's still highly relevant, and it explains what's going on on Wall Street. Even if you don't understand the Law of Mean Reversion at all, you can still understand this chart. This shows that P/E ratios (also called "valuations") have been high, sometimes astronomically high, continuously since 1995. And you can see that valuations are on their way down to 1982 levels, which implies a stock market at the Dow 3000 level or lower.

The euro is quickly unraveling

What's becoming increasingly clear, based on the commentary that I heard on Wednesday, is that the euro is quickly unraveling.

Europe has exactly two choices right now:

There is no way that this is going to be anything but ugly. Emotions run deep, and many of these European countries still feel the same hatreds towards each other that they did in WW II, even though those feelings have been masked for decades by the "European Project."


Conflict Risk Graphic, February 12, 2011
Conflict Risk Graphic, February 12, 2011

This is the conflict risk graphic that appears on the home page of my web site. I last modified it in February when the "Arab spring" riots began, raising the risk level for "Arab Israeli" to level 3 (red).

I first started posting this graphic in 2005, and I've always put "W. Europe" at level 1 (green), because there seemed to be no chance of conflict within the prescribed 6-12 months. But as the euro continues to unravel, that might change. It will certainly change if there are any major bank failures, as appears to be increasingly likely.

As for what comes next on Wall Street, we can be sure that the turbulence will continue. We've been debating in the Generational Dynamics forum, based on historical analysis, whether it's likely that a full scale panic will come in the next few days, at the end of August, or later. What is certain is that the stock market is very dangerous right now, and should be avoided completely.

Note: At this writing on Wednesday evening, Wall Street stock futures are up by almost 2%, suggesting that Thursday will see a new lurch upward.

(Comments: For reader comments, questions and discussion, see the 11-Aug-11 News -- Stock panic resumes on concerns over Europe's solvency thread of the Generational Dynamics forum. Comments may be posted anonymously.) (11-Aug-2011) Permanent Link
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11-Aug-11 World View -- Taiwan exhibits anti-Chinese ship missile

North and South Korea exchange fire near their maritime border

This morning's key headlines from GenerationalDynamics.com.

Taiwan exhibits anti-ship missile as China's aircraft carrier leaves port


Taiwan's new Hsiung Feng ('Brave Wind') anti-ship missile
Taiwan's new Hsiung Feng ('Brave Wind') anti-ship missile

In a blunt challenge to China, Taiwan's military displayed a model Hsiung Feng (“Brave Wind”) III (HF-3) anti-ship missile, using as a backdrop a large picture of a burning aircraft carrier. The burning ship bore a striking resemblence to China's new aircraft carrier, which began sea trials earlier in the day. Taiwan's military had displayed the missile previously, but this was the first time it was shown in a context that prominently displayed its intended target. Taipei Times

Britain's PM David Cameron under attack for London riots

In view of four days of violence and riots in London and other cities, Britain's Prime Minister David Cameron appeared to be increasingly isolated, even deserted by people in his own Conservative Party, because of his plans to make 20% cuts in police budgets. Some commentators are pointing out that American cities will be forced to undergo similar budget cuts, and that the results may be similar violent riots. Independent

The riots in Birmigham have taken on racial overtones, after suspected rioters driving a car killed three young men in the Asian community, two of them brothers. It's believed that the drivers of the hit-and-run car were black. There have been violent outbursts between black and Asian youths in the past, and this event has infuriated the Asian community. Police are trying to head off more violence by treating it as a triple murder investigation. Independent

BRICS countries block sanctions against Syria

The army of Syria's president Bashar al-Assad continues to massacre innocent civilians, and European countries, including Britain, France, Germany and Portugal, would like the United Nations Security Council to impose harsh sanctions on Syria. But the five BRICS nations -- Russia and China, backed by India, South Africa and Brazil -- are unalterably opposed to sanctions, fearing that trying to impose them will cause a slide into a large-scale military intervention, such as the one in Libya. Reuters

A week after Saudi Arabia's King Abdullah broke his silence and condemned the violence in Syria, a human rights organization is claiming that the Syrian regime has arrested dozens of Saudis in cities across the country for no reason apart from the fact that they are Saudi citizens. Arab News

Syria's crackdown continues to erode Hizbollah's credibility

At recent protests, Syrian protesters have been unleashing their anger at Hizbollah over its blunt support for the regime of Bashar al-Assad. Some protesters have set fire to the yellow flag of Hezbollah and pictures of the group's leader, Sheik Hassan Nasrallah. This is a startling change in a country that has prided itself in supporting Hizbollah in its resistance to U.S. and Israel. AP

North and South Korea exchange fire near their maritime border

A North Korean coastal artillery battery fired three shells into waters near the Northern Limit Line northeast of Yeonpyeong Island in the West Sea on Wednesday afternoon. The South Korean military fired three K-9 self-propelled howitzer shells back. Since only one of the North Korean shells fell in South Korean waters, the Marine Corps' Yeonpyeong unit fired three shells under new operational guidelines stipulating that return fire should be at least three times more powerful than the attack. Last year, the North Koreans fired on Yeonpyeong Island, killing four South Koreans. South Korea didn't respond, but later vowed that any additional attacks would be met with an appropriate military response. Chosun

Hong Kong Stock Exchange is attacked by hackers

Hong Kong Exchanges & Clearing Ltd., the world’s biggest stock market by market value, suspended trading in several stocks on Thursday, after a "malicious attack" by hackers on the exchange's web site for corporate filings. Bloomberg

Stock market volatility causes heart attacks

A study examined the relationship between daily changes in the Shanghai Stock Exchange index and coronary heart disease deaths in Shanghai, and found that high stock market volatility causes heart attacks. European Heart Journal

(Comments: For reader comments, questions and discussion, see the 11-Aug-11 News -- Stock panic resumes on concerns over Europe's solvency thread of the Generational Dynamics forum. Comments may be posted anonymously.) (11-Aug-2011) Permanent Link
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10-Aug-11 World View -- Wall Street crashes upward

China and the anticipated commodities collapse

This morning's key headlines from GenerationalDynamics.com.

I apologize to my readers that I've been flat out busy and am getting way behind on answering my e-mail. If something is urgent, please indicate so in the subject line, or you might try posting your question in the Generational Dynamics forum.

Wall Street crashes upward, recovering most of Monday's loss


Wall Street's wild ride on Tuesday, 9-Aug-2011
Wall Street's wild ride on Tuesday, 9-Aug-2011

Monday's frowns were turned upside on Tuesday, as champagne corks were popped. Monday's 6% point fall in stock prices partially offset by a 5% surge on Tuesday. This is the other side of the coin from a panic. From the point of view of Generational Dynamics, the issue on days like this in not whether stocks are going up or down, but whether investors are exhibiting behavior that could lead to a full scale panic and crash. In this case, the market turned negative after a Fed report said that the the chances of a recession had increased. But then, investors apparently realized that they could interpreted this as the usual "bad news is good news" reaction, because if there's a reduction, the presumably the Fed will have to start a new quantitative easing program, which will pour new liquidity into the banks and stock market. However, by the Law of Diminishing Returns, it's very likely that a new program of this type will have even less effect than the last one.

China and the anticipated commodities collapse

With the slowdown in the economies of America and Europe, China's export-led economy is also going to face a slowdown. Since 2008, China has responded to the financial crisis by enormous direct government spending and by stimulating growth of a massive credit bubble that dwarfs America's credit bubble of the mid-2000s decade. One highly visible consequence has been a staggering real estate bubble that has created empty ghost cities across the country, and enough office space to provide a 5x5 cubicle for every man, woman and child in China. Thanks to the Law of Diminishing Returns, it's going to be much more difficult this time for China, and the government won't be able to prevent a substantial slowdown. This will cause world commodity prices to fall severely, and also cause social unrest. Seeking Alpha

N. Korea reportedly attempting to assassinate S. Korean defense minister

Intelligence sources are reporting that N. Korea has send a number of would-be assassins to Seoul to kill South Korean Defense Minister Kim Kwan-jin. Kim took office in December, shortly after the North Koreans shelled Yeonpyeong Island, killing four South Koreans. Kim has taken a tough stance on North Korea for its provocations, and has called on South Korean forces to respond immediately if there's a new provocation. North Korea has called Kim an "anti-North Korea confrontation maniac" and a "traitor." Yonhap (Seoul)

Turkey's foreign minister visits Syria's president Assad


Bashar al-Assad and Ahmet Davutoglu in Damascus on Tuesday (Zaman)
Bashar al-Assad and Ahmet Davutoglu in Damascus on Tuesday (Zaman)

Turkey's Foreign Minister Ahmet Davutoglu had six-hours of talks with Syrian President Bashar al-Assad in Damascus on Tuesday. Davutoglu had been sent to Syria by Prime Minister Recep Tayyip Erdogan because "his patience was running out" over the massacres that Assad's regime continues to conduct against innocent civilians. It was thought that Davutoglu would threaten military action, but if that happened on Tuesday, there's no sign of it. Zaman

Israel deploys drones to protect gas fields from Hezbollah

As we've been reporting, Lebanon is planning a United Nations challenge of Israel's right to drill for oil and gas in the Mediterranean, claiming that the drilling is occurring in a maritime region in Lebanon's Exclusive Economic Zone (EEZ). The Israeli Air Force (IAF) is deploying unmanned aerial vehicles after Hizbollah deputy chief Naim Qassem said that Lebanon "will remain vigilant in order to regain its full rights, whatever it takes." Jerusalem Post

Rioting in Britain begins to recede


People hold up their brooms at riot cleanup on Tuesday morning
People hold up their brooms at riot cleanup on Tuesday morning

A request on Twitter and other social media quickly went viral on Tuesday morning, and large numbers of people turned out with their brooms to help repair the damage caused by Monday night's violence. The Twitter account gained over 70,000 followers in 13 hours. Metro (London)

Thanks to massive police presence in London, the city remained largely quiet on Tuesday evening, with only sporadic violence on the fourth night of rioting. However, disturbances have been seen in Manchester, Salford, Wolverhampton, Nottingham, Leicester and Birmingham with shops being looted and set alight. BBC

Notably, boroughs where Indians or Indian-origin people are largely settled have been relatively peaceful. West London suburbs of Southall and Hounslow, Harrow and Wembley in the north-west and Leicester in the East Midlands of England did not report any violence. Times of India

(Comments: For reader comments, questions and discussion, see the 10-Aug-11 World View -- Wall Street crashes upward thread of the Generational Dynamics forum. Comments may be posted anonymously.) (10-Aug-2011) Permanent Link
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9-Aug-11 News -- World stock markets continue their dramatic slide

Repeating October 21, 1929

World stock markets continue their dramatic slide

July 21 was the day on which Wall Street stocks reached their most recent high, the highest since May 10.


A trader at the NYSE (AFP)
A trader at the NYSE (AFP)

July 21 was also the day when the Europeans announced a new bailout plan allowing Greece to default. This was the third bailout of Greece in 18 months, and it was clear to most people at the time that this bailout had simply "kicked the can down the road," that it was a fraud and would fail like the others.

Since July 21, Wall Street stocks have been falling pretty steadily.

Last week, Congress and the President announced a debt ceiling agreement that was also clearly a fraud. Only the most crooked CNBC/Bloomberg TV analysts could claim that it would be successful.

Since then, the fall in stock prices has been accelerating. On Thursday of last week, markets plunge 5% over bad economic news.

Over the weekend, the European Central Bank announced it would effectively start to bail out Spain and Italy -- a move of clear desperation. On Monday, Wall Street stocks fell about 6%, and stocks fell 2-6% on other stock markets around the world, according to UPI.

In other words, since July 21, it's become abundantly clear to the public that politicians in Washington and Brussels, and economists around the world really don't have the vaguest idea what they're talking about. This is something that students of Generational Dynamics have known for years, but in the past three weeks, the general public has become aware of it.

Along these lines, it's not surprising that the Dow Industrials fell an additional 200 points as President Obama began to speak on Monday afternoon, and continued to blame the problems on the S&P downgrade and that lack of tax increases. Obama is no different from any other politician these days, in that people no longer want to hear crap from politicians.

In the spirit of vitriol, Democrats are saying that the problem is a "Tea Party downgrade." Next thing you know, we'll hear Chris Matthews and Bill Maher say that the people at S&P are "racist terrorists."


S&P 500 Price/Earnings Ratio (P/E1) 1871 to August 2010
S&P 500 Price/Earnings Ratio (P/E1) 1871 to August 2010

I'm posting this chart again because it's highly relevant to what happened on Monday. Even if you don't understand the Law of Mean Reversion at all, you can still understand this chart. This shows that P/E ratios (also called "valuations") have been high, sometimes astronomically high, continuously since 1995.

You don't have to be a rocket scientist to see that they're falling to their 1982 levels. And if you do the math, that means that stock prices are to fall to roughly 1/3 of their current prices. This is mathematically certain, and can't be prevented.

By the way, the S&P downgrade of U.S. debt announced on Friday does not seem to have any relation to the fall in stock prices, since prices of U.S. Treasuries rose sharply on Monday, indicating that investors do not fear that U.S. debt is going to default. What's happening is that investors are pulling money out of stock markets, and putting them into US Treasuries, which they consider to be the safest place to put your money these days.

Repeating October 21, 1929

The following is taken from my Dow Jones historical page:

"The market had fallen 16% since it reached its peak on September 3,
but no one was concerned.  In fact, pundits said that it was time to
buy.  Everone believed that the economy and the market were
"fundamentally sound" (that phrase is a sure sign of trouble), and so
few suspected that anything was wrong."

Date DJIA (Change) (% of trend) (% of 1929 high) ----------------- -------------- ---------------- ---------------- Mon 1929-10-21 320.91( -3.71%) (213% of 150.23) ( 84% of 1929-09-03) Tue 1929-10-22 326.51( +1.75%) (217% of 150.25) ( 85% of 1929-09-03) Wed 1929-10-23 305.85( -6.33%) (203% of 150.26) ( 80% of 1929-09-03) Thu 1929-10-24 299.47( -2.09%) (199% of 150.28) ( 78% of 1929-09-03) Black Thursday Fri 1929-10-25 301.22( +0.58%) (200% of 150.30) ( 79% of 1929-09-03) --------------------------------------------------------------------- Mon 1929-10-28 260.64(-13.47%) (173% of 150.36) ( 68% of 1929-09-03) Black Monday Tue 1929-10-29 230.07(-11.73%) (152% of 150.38) ( 60% of 1929-09-03) Wed 1929-10-30 258.47(+12.34%) (171% of 150.40) ( 67% of 1929-09-03) Thu 1929-10-31 273.51( +5.82%) (181% of 150.41) ( 71% of 1929-09-03) (half-day) --------------------------------------------------------------------- Mon 1929-11-04 257.68( -5.79%) (171% of 150.49) ( 67% of 1929-09-03) Wed 1929-11-06 232.13( -9.92%) (154% of 150.53) ( 60% of 1929-09-03) Thu 1929-11-07 238.19( +2.61%) (158% of 150.55) ( 62% of 1929-09-03) Fri 1929-11-08 236.53( -0.70%) (157% of 150.57) ( 62% of 1929-09-03) --------------------------------------------------------------------- Mon 1929-11-11 220.39( -6.82%) (146% of 150.62) ( 57% of 1929-09-03) Tue 1929-11-12 209.74( -4.83%) (139% of 150.64) ( 55% of 1929-09-03) Wed 1929-11-13 198.69( -5.27%) (131% of 150.66) ( 52% of 1929-09-03) Thu 1929-11-14 217.28( +9.36%) (144% of 150.68) ( 57% of 1929-09-03) Fri 1929-11-15 228.73( +5.27%) (151% of 150.70) ( 60% of 1929-09-03) ---------------------------------------------------------------------

My reason for posting this data is because what we're seeing these days appears to be very similar to what happened prior to the 1929 crash, especially the wild volatility, and the calm assurance of some analysts that the worst is over.

Does that mean that we're days away from a crash? It's impossible to tell, of course, and Higgenbotham in the Generational Dynamics forum expects the market to remain fairly steady for at least a few more weeks.

What can be said with certainty is that the stock market is very dangerous right now. Take care.

Note: At this writing, late Monday evening ET, Wall Street stock index futures are down another 2.5%, and Asian stocks on Tuesday morning are nosediving, according to CNBC.

(Comments: For reader comments, questions and discussion, see the 9-Aug-11 News -- World stock markets continue their dramatic slide thread of the Generational Dynamics forum. Comments may be posted anonymously.) (9-Aug-2011) Permanent Link
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9-Aug-11 World View -- Riots and looting spread across Britain

More Arab states recall envoys from Syria

This morning's key headlines from GenerationalDynamics.com.

Riots and looting spread across Britain


Arson and looting in London
Arson and looting in London

British Prime Minister David Cameron cut short his vacation on Monday to fly home and speak soothing words, as riots and looting spread across London for the third night in a row, and began to spread to other cities, including Birmingham, Liverpool and Bristol. Reuters

The cause of the riots is being debated. Apparently there are no racial or ethnic issues, leading one politicial to say, "It was needless, opportunistic theft and violence - nothing more, nothing less." However, an economist blames the riots on austerity measures that have made deep public spending cuts and hiked taxes. "In real terms the actual spending reduction program is the most painful if it all came to fruition since the 1940s in terms of its actual squeeze on the levels of public spending. It's something that the U.K. has not endured for many, many years." VOA

More Arab states recall envoys from Syria

Arab states, normally loath to criticize another Arab state publicly, are falling in line behind Saudi Arabia's King Abdullah in strongly condemning the violence perpetrated by Syria's president Bashar al-Assad. Abdullah has called Assad a "killing machine." Bahrain and Kuwait have followed Abdullah's lead in recalling their ambassador's to Syria. This comes at a time when Turkey's foreign minister is scheduled to visit Syria on Tuesday to deliver a strong message, possibly warning of potential military action from Turkey. Reuters

Philadelphia imposes 9 pm curfew on teenagers


Philadelphia mayor Michael A. Nutter
Philadelphia mayor Michael A. Nutter

Michael A. Nutter, the Mayor of Philadelphia, has announced a 9 pm weekend curfew on teenagers, in response to "flash mobs" of marauding teens who beat random people and destroy property. He's created controversy by blaming the problem mostly on blacks, particularly blaming absent fathers and neglectful parents in the black community. "You have damaged your own race." Philadelphia Inquirer

Japan releases China's trawlers fishing in Sea of Japan

In a replay of an event that brought relations between China and Japan to a crisis level last year in September, Japan on Friday detained two Chinese fishing trawlers and their 17 passengers, charging them with fishing illegally in the Sea of Japan. Japan's Kyodo News reported that once the captains admitted to fishing illegally and offered cash for security or to sign papers promising to pay, a quick release would follow. Global Times (Beijing)

N. Korean government earns cash from hacking S. Korean online games

North Koreans have made $6 million in two years by hacking into popular South Korean online gaming sites such as "Lineage" and "Dungeon and Fighter." This allowed them free access to the games' servers, which allowed them to accumulate virtual money in the game. This virtual money can then be sold to real human game players, who use it to buy game accessories online. NY Times

(Comments: For reader comments, questions and discussion, see the 9-Aug-11 News -- World stock markets continue their dramatic slide thread of the Generational Dynamics forum. Comments may be posted anonymously.) (9-Aug-2011) Permanent Link
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8-Aug-11 World View -- Threats to Syria grow from all sides

Desperate European Central Bank fires a bazooka

This morning's key headlines from GenerationalDynamics.com.

Syrian armored forces move on to flatten Deir Ezzor


Syrian protesters run from tear gas canisters in Homs (Reuters)
Syrian protesters run from tear gas canisters in Homs (Reuters)

Things appear to be moving quickly with respect to the situation in Syria, as threats emerge from the entire region.

Some 55 people were killed by Syria's army on Sunday across the country. Having massacred as many people as possible in Homa, the armed forces of Bashar al-Assad's regime has moved on to the city of Deir Ezzor. The technique being used in each of these cities is that tanks first surround the city to prevent anyone from fleeing and then, once the city is sealed, the tanks start flattening residential neighborhoods and the snipers kill anyone on the street, even children. UPI and Debka

Syria replies harshly to threat from Turkey

As we reported yesterday, Turkey's foreign minister Ahmed Davutoglu will visit Syria on Tuesday to hand Syria a final message that Turkey will not stand by while Syria commits these massacres on Turkey's doorstep. It's thought that this is Turkey's last warning before intervening militarily in Syria. Syria has responded harshly to the warning, saying that they would deliver an "even more decisive" message. "If Davutoglu is to deliver a decisive message to Syria, he will hear Syria's more decisive reply regarding the Turkish stance which failed to condemn the brutal killing and crimes committed by the armed terrorist groups against the civilians, military and police members until now." Zaman

Arab League breaks silence and condemns violence in Syria

Arab nations have been strangely silent during the massacre in Syria for five months, but on Sunday Arab League Secretary-General Nabil Elaraby issued a statement expressing "growing concern and strong distress over the deteriorating security conditions in Syria due to escalating violence and military operations in Hama and Deir Ezzor and other areas of Syria." Elaraby’s statement was one of the strongest made by an Arab leader since the start of the Syrian uprising, as most governments had stayed silent apparently fearing the power of the protests would move to other Arab states. Al-Arabiya

Saudi King Abdullah recalls the Saudi ambassador to Syria

Saudi Arabia's King Abdullah issued a statement on Monday morning that he was withdrawing the Saudi ambassador from Damascus in protest of the violence. "What is happening in Syria is not acceptable for Saudi Arabia. Syria should think wisely before it’s too late and issue and enact reforms that are not merely promises but actual reforms." He said that Syria has two choices: "Either it chooses wisdom on its own or it will be pulled down into the depths of turmoil and loss. The events are grave and cannot be justified, and this has resulted in the loss of large numbers of lives and left many injured. This cannot be contemplated by any sane Muslim, Arab or other human being. He added that all should be aware that what's happening in Syria cannot be condoned by Islam. Arab News

Desperate European Central Bank fires a bazooka

I had thought that Washington and Brussels had finally run out of bullets in their attempt to halt the increasingly rapid deterioration of the global financial system. It turns out that they HAVE run out of bullets, so now the European Central Bank (ECB) "has decided to bring out the bazooka," according to one analyst. After having refused to do so for months, and having said that he would never do so, ECB president Jean-Claude Trichet announced on Sunday evening that the ECB would begin buying bonds from Italy and Spain, in a massive exercise in quantitative easing. In helping to bailout Greece, Ireland and Portugal, the ECB has previously purchased about €74 billion of assets from those countries. But doing the same for Spain and Italy will cost at least several billion euros, possibly more than €1 trillion. So this is truly a move of complete desperation, and one that can't succeed. Bloomberg and Reuters

It's that '1937 feeling' all over again

Analysts are comparing today's environment to 1937, when the Fed pulled back on lending and government spending fell 10%, and this was followed by a deepening of the economic slump. However, that's really wishful thinking. (See the 1932 book, "The bubble that broke the world.") Today is actually much more like 1931, and we're soon going to see the equivalent of the collapse of Austria's Credit-Anstalt bank and Germany's Danatbank in 1931. These events brought about massive unemployment, and social tension that gave rise to Communism and Naziism. Reuters

US Postal Service comes closer to bankruptcy

The U.S. Postal Service posted a $3.1 billion loss for third quarter, and will completely run out of cash by the end of September. Suggestions offered to save money are to eliminate Saturday deliveries, to close more post offices, or for Congress to allow the Postal Service to borrow more money. Bloomberg

Residents of Dubai skyscraper have to fast longer during Ramadan


The Burj Khalifa hotel in Dubai, the tallest skyscraper in the world
The Burj Khalifa hotel in Dubai, the tallest skyscraper in the world

Muslims residing above the 80th floor in Dubai's Burj Khalifa, the tallest skyscraper in the world, during Ramadan must fast for two or three minutes longer in the evening, because the sun sets 2-3 minutes later, according to the Dubai Islamic Affairs Department in a Fatwa. Furthermore, they must begin their daily fasting two minutes earlier, since the sun rises earlier above the 80th floor. Gulf News

Workers in Dubai are not exempt from work or fasting during Ramadan

Manual laborers who work under the scorching Gulf sun are not exempt from work during the month of fasting; however breaking of the fast mid-way is acceptable depending on level of 'hardship'. Dubai People engaged in work that is of a strenuous and demanding nature do not fall under the category of those exempt from fasting, according to the latest of the Ramadan series of fatwas issued by the Dubai Islamic Affairs and Charitable Activities Department (IACAD). The fatwa goes on to say, however, that it is permissible for such a person to break their fast during the day if forced by the tough nature of their job — provided the missing day of fast is compensated for later. Al-Bawaba

Avigdor Lieberman warns that Palestinians want 'bloodshed'


Avigdor Lieberman
Avigdor Lieberman

Israel's hard right Foreign Minister Avigdor Lieberman warns that the Palestinian Authority is preparing to attack Israel with "bloodshed on a scale we haven't seen" in September, after the UN recognizes Palestine. He announced that he is advocating that Israel sever all ties with the Palestinian Authority. Israel National News

(Comments: For reader comments, questions and discussion, see the 8-Aug-11 World View -- Threats to Syria grow from all sides thread of the Generational Dynamics forum. Comments may be posted anonymously.) (8-Aug-2011) Permanent Link
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7-Aug-11 News -- Bitter recriminations fly over U.S. debt downgrade

China issues a bitter, acerbic statement

Bitter recriminations fly over U.S. debt downgrade

The late Friday Standard & Poor's report (PDF) downgrading U.S. debt from AAA to AA+, with negative outlook, has raised anger and anxiety around the world, and led to a feeling that the deterioration of the global financial system is speeding up.


US Debt vs GDP (BBC)
US Debt vs GDP (BBC)

We're in uncharted territory. No one knows what's going to happen next week, with opinions spanning the range from "non-event" to "catastrophe."

The most bitter, acerbic statement came from China's state run news agency Xinhua:

"The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered as its triple A-credit rating was slashed by Standard & Poor's (S&P) for the first time on Friday.

Though the U.S. Treasury promptly challenged the unprecedented downgrade, many outside the United States believe the credit rating cut is an overdue bill that America has to pay for its own debt addition and the short-sighted political wrangling in Washington.

Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth.

China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets.

To cure its addiction to debts, the United States has to reestablish the common sense principle that one should live within its means.

S&P has already indicated that more credit downgrades may still follow. Thus, if no substantial cuts were made to the U.S. gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way.

Moreover, the spluttering world economic recovery would be very likely to be undermined and fresh rounds of financial turmoil could come back to haunt us all."

Republicans and Democrats have been blaming each other for the downgrade. U.S. House Speaker Republican John Boehner blamed the downgrade on decades of reckless spending, accusing leading Democrats of refusing to make "tough choices." Democratic Senate Leader Harry Reid said the move "reaffirms the need for a balanced approach to deficit reduction," including an end to tax breaks for the wealthiest Americans – something Republicans refused to accept. VOA

From the point of view of Generational Dynamics, politicians could have neither caused nor prevented the growing financial crisis. This is a generational crisis, the first since the 1930s. The credit bubble of the mid-2000s decade created huge amounts of liquidity. With the collapse of that bubble, there is less money in the world every day, because of deleveraging. As liquidity becomes more scarce, meaning that the supply of liquidity goes down, the "price" of liquidity, as measured in interest rates (bond yields) goes up, particularly in Europe, by the law of supply and demand. This is causing a deflationary spiral that cannot be stopped by any politicians.

The bitter recriminations will continue and worsen until the crisis becomes so great that all sides will be forced to unite for the survival of the nation. This is the generational "regeneracy" of civic unity that will occur for the first time since the end of World War II.

(Comments: For reader comments, questions and discussion, see the 7-Aug-11 News -- Bitter recriminations fly over U.S. debt downgrade thread of the Generational Dynamics forum. Comments may be posted anonymously.) (7-Aug-2011) Permanent Link
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7-Aug-11 World View -- Turkey's patience runs out over Syria

Navy SEAL team killed in helicopter crash in Afghanistan

This morning's key headlines from GenerationalDynamics.com.

Turkey says that 'patience is running out' over Syria's savagery


Turkey's Foreign Minister Ahmet Davutoglu (Zaman)
Turkey's Foreign Minister Ahmet Davutoglu (Zaman)

For months, there's been talk that Turkey might invade Syria to create a "buffer zone" on Syrian soil to which people can flee. Now Turkey's Foreign Minister Ahmet Davutoglu will visit Syria next week to pass a stark warning to President Bashar al-Assad that Turkey will not remain a bystander if the five-month crisis in the neighboring country deepens. According to Prime Minister Recep Tayyip Erdogan:

" We have been very patient until now, waiting to see whether we can fix this; whether they will listen to what we have been saying. But our patience is running out now. [Davutoglu] will have the necessary talks and convey our messages in a determined manner. The ensuing process will be shaped according to the response we get."

Zaman (Istanbul)

Navy SEAL team among those killed in helicopter crash in Afghanistan


A helicopter similar to the one shot down on Saturday
A helicopter similar to the one shot down on Saturday

Navy SEALs suffered a devastating loss when nearly two dozen of the elite troops were among 30 Americans and seven Afghan commandos who died when their helicopter was shot down in Afghanistan early Saturday. It was the largest number of American troops killed in a single day in the war. U.S. officials said the helicopter appeared to have been felled by enemy fire, and the Taliban quickly claimed responsibility. The loss of so many SEALs represents a significant blow to a tightknit group that is involved in some of the most sensitive U.S. counter-terrorism operations around the world. LA Times

Rioters protesting in North London set cars, bus and shops on fire

Riot-squad officers clashed with demonstrators amid chaotic scenes in north London on Saturday evening, as a protest over the shooting of a man by police turned violent. Two patrol cars, at least one shop and a double-decker bus were set on fire. Independent

Al-Shabaab Islamists in Somalia flee from Mogadishu

In a rather startling development, Somalia's al-Shabaab Islamists have fled the capital Mogadishu, apparently driven out by African Union peacekeepers. The horrific famine in Somalia has drained major sources of income from the Islamists, exposing rifts in al-Shabaab's leadership between an international wing influenced by al-Qaeda fighters who favour guerrilla tactics like suicide bombings, and others who sought a conventional military strategy of holding territory. The abandonment of Mogadishu suggests the international faction won the day. "If that is the case then al Shabaab might leave other cities, ... melt away in the population and turn to guerrilla warfare, explosions, assassinations or suicide attacks," said one analyst. Reuters

Hundreds of thousands of Israelis march for economic reform


Israeli activists rally in Tel Aviv against rising property prices on 30-Jul (Reuters)
Israeli activists rally in Tel Aviv against rising property prices on 30-Jul (Reuters)

A quarter-million Israelis marched Saturday for lower living costs in an escalating protest that has catapulted the economy onto the political agenda and put pressure on Prime Minister Benjamin Netanyahu. The demonstrations have upstaged Netanyahu's standoff with the Palestinians ahead of their bid to lobby for U.N. recognition of statehood next month. Protests also deflated his celebration of Israel's stability as citizen revolts rock surrounding Arab states across the Middle East and North Africa. Reuters

(Comments: For reader comments, questions and discussion, see the 7-Aug-11 News -- Bitter recriminations fly over U.S. debt downgrade thread of the Generational Dynamics forum. Comments may be posted anonymously.) (7-Aug-2011) Permanent Link
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6-Aug-11 News -- U.S. State Dept. urges U.S. citizens to leave Syria immediately

Hizbollah's dilemma on Syria uprising

U.S. State Dept. urges U.S. citizens to leave Syria immediately

The U.S. Department of State on Friday issued a travel warning urging all U.S. citizens to depart Syria immediately, "while commercial transportation is still available." It warns, "Syrian efforts to attribute the current civil unrest to external influences may lead to an increase in anti-foreigner sentiment. Detained U.S. citizens may find themselves subject to allegations of incitement or espionage."


Kuwaitis in Kuwait City demonstrate to demand expulsion of Syrian ambassador (AFP)
Kuwaitis in Kuwait City demonstrate to demand expulsion of Syrian ambassador (AFP)

It was the first Friday in Ramadan and the first major day of demonstrations in the city of Hama since Syria's president Bashar al-Assad's regime began its bloody massacre on the unarmed civilians of the city, reportedly killing over 200 people. If Assad had hoped that the massacre would stop the anti-regime demonstrations, then his hopes were dashed on Friday, according to the LA Times.

In cities across the country, tens of thousands were willing to risk their lives by joining the demonstrations. At least 14 people were killed on Friday, 11 of them in the capital, Damascus, and its outskirts. "Because of the crackdown in Hama, people all over went out on the streets in solidarity. This is what happens when the government tries to stop us," according to one activist.

Assad is particularly focusing on Hama because of the city's historical significance. Syria's last generational crisis war was the civil war that began in 1976, and featured a major armed uprising by people under the name of the Muslim Brotherhood. The crisis climax of the war occurred when President Hafez al-Assad, the father of the current president, bombed the city flat in 1982, killing tens of thousands of people, in one of the most brutal genocidal acts since the end of World War II.

Today's president Assad is reliving those days. He imagines an armed uprising of "foreign activists," like the Muslim Brotherhood in days of old. He actually claims that the violence and slaughter were being perpetrated not by his forces but by these armed activists. Maybe he really believes that or maybe he's making a political statement, but either way, he's trying to prevent the massive bloodshed of a new uprising like the one in 1982.

What Assad doesn't understand is that such an uprising is literally impossible at this time. Syria is in a generational Awakening era, one generation past the bloody 1982 Hama massacre. The survivors of that massacre are still alive, and they've determined that nothing like that should ever happen again.

So we have a situation where Assad is acting in the belief that he's in the beginning of a massive new armed uprising in Hama, although such an uprising is impossible. If Assad understood Generational Dynamics theory (or read my web site), he would know that the bloody massacre he's perpetrating is completely unproductive.

Syrian's demonstrators today are not perpetrating an armed uprising. They're like the demonstrators in America's last generational Awakening era, in the 1960s and 1970s. The young generation, in the same archetype as America's Boomers of the 1960s, will continue to demonstrate and express outrage for years, until some climax occurs, such as the end of Assad's reign.

Russian president Medvedev says that Assad is 'in for a grim fate'


Photo of Assad scolding Russian president Medvedev
Photo of Assad scolding Russian president Medvedev

Although Russia refused to allow a UN Security Council resolution on Syria, it did go along with a toothless statement condemning the violence. However, even this represents a change by the Russians. But now, Russia's president Dmitry Medvedev says:

"In my discussions with President Assad during our personal conversations and in our correspondence I have been advocating one principal idea: that he should immediately launch reforms, reconcile with the opposition, restore civil accord, and start developing a modern state. Should he fail to do that, he is in for a grim fate, and we will eventually have to take some decisions on Syria, too. Naturally, we have been watching developments very attentively. The situation is changing, and so are our objectives."

Voice of Russia

Hizbollah’s dilemma on Syria uprising

Lebanon's terrorist group Hizbollah initially supported the "Arab spring" movements, with Hizbollah chief Sayyed Hassan Nasrallah saying, "We cannot stand idly when the disputes takes place between the oppressed and oppressor, between right and wrong." However, he's changed his tune since the Arab uprising spread to Syria, and threatened the regime of Hizbollah's close ally, Bashar al-Assad. Each wave of arrests and killings in Syria exposes the dual standards of his position. There have been reports of protesters chanting anti-Hizbollah slogans, and the organisation has come in for criticism from some former supporters in the Arab media. Financial Times (Access)

(Comments: For reader comments, questions and discussion, see the 6-Aug-11 News -- U.S. State Dept. urges U.S. citizens to leave Syria immediately thread of the Generational Dynamics forum. Comments may be posted anonymously.) (6-Aug-2011) Permanent Link
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6-Aug-11 World View -- S&P downgrades U.S. debt

Jobs report contains some ugly truths

This morning's key headlines from GenerationalDynamics.com.

Standard & Poor's downgrades U.S. debt from AAA to AA+


Standard & Poor's
Standard & Poor's

The S&P ratings service downgraded U.S. debt from AAA to AA+ late on Friday. The outlook is "negative," meaning that further downgrades are possible.

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics. ... More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating."

The Administration put tremendous political pressure this week on S&P, to convince it not to downgrade. However, as I've pointed out before, S&P could not succumb to this political pressure without creating a disastrous situation in Europe, where S&P had resisted political pressure not to downgrade various European countries.

There are many contracts in the world that are written to require investments only in AAA rated securities. Many mutual funds are required to invest only in AAA rated securities. Thus, the downgrading of US Treasuries presents a very complex situation with unforeseeable consequences.

The other two major ratings agencies, Moody's and Fitch, have reaffirmed their AAA ratings on U.S. debt, but still have a "negative" outlook, meaning that they can join S&P in its downgrade. However, for the time being at least, the fact that only one ratings agency out of three has lowered the U.S. rating may make it possible for many organizations to ignore the S&P downgrade, or to issue a waiver of some kind.

The first major market test of the downgrade will occur on Sunday evening ET, when the Asian markets open on Monday morning. Bloomberg and CNN

S&P downgrade tops a chaotic day on the markets

Wall Street stocks ended the day mixed, obscuring the 508-point range through with the DJIA traveled, in a roller-coaster ride that appeared to contain both upward and downward mini-panics. The jobs report for July came out at 8:30 am ET. It was extremely dismal, but it was less dismal than expected, and this triggered a huge initial market spike at the open. But then, each tiny bit of bad financial news caused the market to go down, and each tiny bit of good financial news pushed it back up. AP

I would warn my readers that the market is extremely dangerous right now, and that cash and Treasury bills are much safer than the stock market right now, despite the downgrade.

Jobs report contains some ugly truths

The Friday morning jobs report said that the economy added 117,000 jobs in July, and the unemployment rate fell to 9.1% from 9.2%. But according to the jobs report, there were 38,000 FEWER people working in July versus June. The anomaly was caused by a huge spike-up in the number of "discouraged workers," people who have stopped looking for work, and who are not counted as unemployed. And the so-called "real" unemployment rate, which adds in discouraged workers and others not counted as part of the headline unemployment rate, remains high at 16.1%. CNBC

Pouring water into a bucket with a hole in it

The chaos is much worse in Europe than on Wall Street. The European Central Bank is reacting by restarting its version of quantitative easing -- by purchasing bonds issued by Greece, Portugal and Ireland. But the ECB is not yet purchasing bonds issued by Spain and Italy, because these countries have not yet taken enough austerity measures. According to Luc Coene, on the ECB governing council:

"The bank is ready to make major efforts to help the situation, but countries have to do what is necessary first, otherwise it’s just like pouring water into a bucket with a hole in it. Markets have heard too many promises, without seeing anything concrete … once concrete measures are taken, contagion will stop automatically."

MarketWatch

Turkey will not participate in US-Israel military drills

The Turkish navy will not participate in upcoming joint drills staged by the United States and Israel in the Mediterranean, in a display of its disappointment with Israel after the country refused to apologize for the deaths of nine Turks in the confrontation between the Gaza "Freedom Flotilla" and the Israeli navy in May, 2010. The purpose of the drills, which have been going on for ten years, is to gain experience in collaborative research and rescue missions. Zaman (Ankara)

Lebanon and Israel disagree over offshore natural gas and oil rights

Lebanon's parliament has passed a law that, in effect, challenges Israel's rights to continue drilling for oil and natural gas in areas of the Mediterranean Sea that Lebanon claims are its own. Lebanon will submit the law to the United Nations, to determine the maritime boundary between the two countries and to define Lebanon's "exclusive economic zone" (EEZ). The National (UAE)

(Comments: For reader comments, questions and discussion, see the 6-Aug-11 News -- U.S. State Dept. urges U.S. citizens to leave Syria immediately thread of the Generational Dynamics forum. Comments may be posted anonymously.) (6-Aug-2011) Permanent Link
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5-Aug-11 News -- Markets plunge 5% on Thursday over bad economic news

N. Korea demands food, cement in response to S. Korea's flood aid offer

Markets plunge 5% on Thursday over bad economic news

Politicians scrambled to lie and point fingers, as they tried to figure out how to make sure that someone else was blamed for the plunge on world markets on Thursday. It was a truly vomit-inducing spectacle.


Jose Manuel Barroso
Jose Manuel Barroso

On Wall Street, the Dow Jones Industrial Average fell 512 points, with the biggest nine-day drop since March 2009. The "Volatility Index" (VIX), a measure of investor anxiety computed from the volume of certain hedging options, jumped 35% to 31.66, the highest close since July 2010, and the biggest jump since Feb 27, 2007, according to Bloomberg.

"It’s just panic out there," says one analyst. "Everyone is moving into cash. People are selling everything.”

The economic news has been particularly bad recently in America, Europe and China, as we've been reporting, and that may have triggered the mini-panic. However, many analysts said that it was triggered by a statement by European Commission president Jose Manuel Barroso in the form of a letter to the 27 leaders of the European Union:

"Developments in the sovereign bond markets of Italy, Spain and other euro area Member States are a cause of deep concern.

Though these developments are clearly unwarranted on the basis of economic and budgetary fundamentals and the recent efforts of these Member States, they reflect a growing scepticism among investors about the systemic capacity of the euro area to respond to the evolving crisis. Markets remain to be convinced that we are taking the appropriate steps to resolve the crisis.

The 21st of July bold decisions on the Greek package ... are not having their intended effect on the markets.

Markets highlight, among other reasons, the global economic uncertainties due to both economic growth and the protracted decision on budgetary adjustments in the US but, first and foremost, the undisciplined communication and the complexity and incompleteness of the 21st July package.

Whatever the factors behind the lack of success, it is clear that we are no longer managing a crisis just in the euro-area periphery."

It's really hard to know how to respond to this crap. The "July 21st package" was based on phony numbers and hasn't even been implemented yet. (See "24-Jul-11 World View -- Mauldin: Greece's bond 'haircuts' are at 75-80%")

Barroso and other EU officials have lied over and over, even though it's been obvious since early last year that any bailout of Greece would not prevent default.


Italy 10 year bonds - 8/2/2011 - 6.1% yield
Italy 10 year bonds - 8/2/2011 - 6.1% yield

However, Barroso is right about one thing: that the crisis has spread beyond the periphery, and is beginning to affect the euro's core countries -- Spain, Italy, Belgium, and even France. There's been a bond panic going on in Europe, as we've been describing, with people selling off bonds, forcing up yields (interest rates). The 6.1% yield on Italy's 10-year bonds is the particular value that triggered Barroso's statement.

But now the European bond panic has spread to the stock markets, including Wall Street.

What makes me angry about all this -- besides the constant, incessant lying by politicians in Washington and Brussels and by economists and analysts on CNBC and Bloomberg TV -- is that this was entirely predictable. As I've been saying for years, price/earnings ratios (also called "valuations") have been way above average since 1995.

Thus, by the Law of Mean Reversion, the valuations have to fall to values well below average for a roughly equivalent amount of time, meaning that the stock market will fall to Dow 3000 or lower, and stay there for years. There won't be any recovery until the 2020s.

If you look at the bottom of the Home Page of my web site, you'll see the price/earnings ratio chart that gets updated every week. Here's last Friday's version of the chart:


S&P 500 Price/Earnings ratio and S&P 500-stock Index as of 29-July-2011.  (MarketGauge ® by DataView, LLC)
S&P 500 Price/Earnings ratio and S&P 500-stock Index as of 29-July-2011. (MarketGauge ® by DataView, LLC)

And here's the version of the same chart from 2003:


S&P 500 Price/Earnings ratio and S&P 500-stock Index as of 10-Oct-2003.  (MarketGauge ® by DataView, LLC)
S&P 500 Price/Earnings ratio and S&P 500-stock Index as of 10-Oct-2003. (MarketGauge ® by DataView, LLC)

So for some of you guys who think I make all this stuff up, you can see that the MarketGauge people have reached exactly the same conclusion. And I didn't invent or make up the Law of Mean Reversion, either. I've been writing about this stuff for years, but in recent days the debt crises in Europe and America have finally educated people about how bad off things are.

I don't expect the average "man on the street" to understand the Law of Mean Reversion, but I do expect the high-priced analysts who appear on TV to understand the Law of Mean Reversion, and to tell the truth about what it means. Instead, they lie about valuations, and always say that stocks are cheap. (See "28-Jul-11 News -- Washington follows Brussels in fraud and extortion")

Mainstream economists are consistently wrong. They didn't predict and can't explain the 1990s tech bubble, the real estate and credit bubbles, the financial crisis since 2007, where we are today, and what's coming next year. They macroeconomic models based on 1970s-80s data, when Great Depression survivors were running things, so these models are consistently wrong today.

If you listen to mainstream economists, then you're going to get screwed. If you listen to analysts on CNBC or Bloomberg TV who are telling you that stocks are way cheap because of Thursday's panic, then you're going to get screwed.

From the point of view of Generational Dynamics, there's going to be a major panic and Wall Street crash to the Dow 3000 level and lower. I'm not saying that we're in the middle of this panic right now (though we may be), but I'm saying that it's coming with mathematical certainly. Use the time remaining to prepare yourself, your family, your community, and your nation.

Note: At this writing, on Thursday evening ET (Friday morning in Asia), Asian stock markets have fallen over 4%.

(Comments: For reader comments, questions and discussion, see the 5-Aug-11 News -- Markets plunge 5% on Thursday over bad economic news thread of the Generational Dynamics forum. Comments may be posted anonymously.) (5-Aug-2011) Permanent Link
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5-Aug-11 World View -- Another horrific day of slaughter in Hama, Syria

Peace in Our Time Dept.: China criticizes Japan

This morning's key headlines from GenerationalDynamics.com.

Another horrific day of slaughter in Hama, Syria


People duck to avoid gunfire from snipers in Hama (Reuters)
People duck to avoid gunfire from snipers in Hama (Reuters)

It's been another horrific day of slaughter by the regime of president Bashar al-Assad, targeting ordinary civilians in the city of Hama. According to various news reports, army tanks and snipers have totally locked down the city. Army tanks fire indiscriminately into residential neighborhoods. People are without electricity or food. If someone leaves home to try to get food, there's a good chance that a sniper will kill him. U.S. Secretary of State Hillary Clinton said Thursday that U.S. officials believe more than 2,000 people have been killed in the Syrian government’s months-long crackdown on dissent. VOA

N. Korea demands food, cement in response to S. Korea's flood aid offer

A day after S. Korea Seoul offered $4.7 million in emergency relief aid to the flood-stricken North Koreans, they asked South Korea to provide rice, flour, cement and heavy construction equipment instead. The South Koreans immediately turned down the request, saying that they would only send medical supplies and other necessities, including blankets and packs of instant noodles. North Korea has been hit hard by floods in recent years, mainly because of its lack of investment in disaster control and severe deforestation. However, South Korea stopped sending rice and cement to the North after North Koreas two military attacks last year, on a South Korea ship and island, respectively. Yonhap

Mubarak trial inflames supporters and detractors in Egypt


Deposed leader Hosni Mubarak on trial
Deposed leader Hosni Mubarak on trial

Hundreds of riot police in Cairo, Egypt, struggled to separate the supporters of deposed Egyptian leader Hosni Mubarak from those who despised him, as Mubarak's trial began. No one even knew for sure whether the ill Mubarak would even show up. So the picture of a humiliated Mubarak appearing in court in bed inside a steel cage served to infuriate his supporters and cheer his detractors. Mubarak is being charged with ordering security forces to shoot hundreds of demonstrators when the demonstrations began at the beginning of the year. He's also charged with corruption and abuse of power. LA Times and Associated Press

Peace in Our Time Dept.: China criticizes Japan

China has blasted Japan's annual defense report, which warned that China was stepping up belligerent activities in the East China Sea and the South China Sea, risking conflict. The report also criticizes China's rapid military buildup. However, China's foreign ministry issued a statement calling the report "China-bashing" and "nitpicking." "China has always conducted maritime exploration, training and other activities involving the protection of its national interests in its territorial waters. That's in line with China's legitimate demands for peaceful development," says the state-run news service. BBC and Xinhua

China continues to blame Pakistan for Uighur terrorism

China is pointing the finger of blame for a weekend terrorist attack by Uighurs at Pakistan, its close ally. China said that an “initial probe” had shown that leaders of Sunday’s attack on a restaurant, in which 11 people died, had received explosives and firearms training in Pakistan-based camps of the East Turkestan Islamic Movement, also known as ETIM. The allegation is striking because of China's close relationship with Pakistan, and because China is echoing similar complaints by the U.S., India and Afghanistan that Pakistan isn't doing enough to stop terrorism. The News (Pakistan)

(Comments: For reader comments, questions and discussion, see the 5-Aug-11 News -- Markets plunge 5% on Thursday over bad economic news thread of the Generational Dynamics forum. Comments may be posted anonymously.) (5-Aug-2011) Permanent Link
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4-Aug-11 World View -- UN Security Council condemns Syria's regime

Europeans are 'astonished' at growing euro financial crisis

This morning's key headlines from GenerationalDynamics.com.

Syrian tanks move into center of Hama


Tanks in Hama, Syria, after heavy shelling in the city (Reuters)
Tanks in Hama, Syria, after heavy shelling in the city (Reuters)

The Syrian regime's massacre of the city of Hama that began on Sunday continued on Wednesday as tank and rocket fire targeted civilian neighborhoods, and prevented people from escaping. LA Times

UN Security Council condemns Syria's regime

The continuing slaughter of unarmed Syrians by Bashar al-Assad's regime is outraging the international community, so much so that the 15-member United Nations Security Council on Wednesday actually approved unanimously a statement which "condemns the widespread violations of human rights and the use of force against civilians by the Syrian authorities." Security Council rules require that such a statement be adopted unanimously for it to become official, and so there have been months of acrimonious negotiations over the wording. Thus, Lebanon reluctantly didn't block the resolution, but as soon as it passed, Lebanon disavowed the statement. AFP

Russia particularly opposed any UN resolution that imposed sanctions on Syria. This follows an agreement between Russia and Iran that Russia would block any strong resolution condemning Iran's ally Bashar al-Assad. In return, Iran would cooperate more closely with the International Atomic Energy Agency (IAEA) in its nuclear program. Furthermore, Russia would work to get some of the sanctions against Iran removed. Russia's plan has been approved by U.S. and European governments, since it's becoming clear that nothing has the slightest effect on slowing Tehran's nuclear momentum Debka

Famine spreads in Somalia

The east African famine has spread to three new regions, leaving the entire southern Somalia likely to be declared a famine zone witin the next six weeks. Millions of people face starvation, and food aid is prevented from reaching many people because much of southern Somalia is controlled by al-Shabab Islamist militants who last year banned food aid and forced many aid groups out of the region. Washington Post

Pakistan deploys hundreds of extra troops to tackle Karachi violence

With ethnic and political violence responsible for over 300 deaths in Karachi, Pakistan has deployed hundreds of extra troops to Karachi to tackle the violence. Most of the violence is between two groups. One group is the Mohajir, the descendants of people who came to Pakistan after the partition of India; and the other group is Pashtun immigrants from Pakistan's tribal areas. Telegraph

Europeans are 'astonished' at growing euro financial crisis

Europeans had expected the bailout of Greece two weeks ago to contain Europe's financial crisis, but now they are beginning to panic, as the crisis spreads to Spain and Italy. EU Council President Herman Van Rompuy tried to counter rising bond yields for Italy and Spain by saying, "Astonishingly, since our [bailout] summit, the cost of borrowing has increased again for a number of euro area countries. I say astonishingly, because all macro economic fundamentals point in the opposite direction." As I've explained repeatedly, the "macro economic fundamentals" he talks about are based on models developed in the 1970s and 1980s, when the generations of Great Depression survivors were running things. Today, with the Great Depression survivors gone, those models are wrong. Europe and America are both headed for a major financial crisis and stock market panic. The worst is far from over. EU Observer

(Comments: For reader comments, questions and discussion, see the 4-Aug-11 World View -- UN Security Council condemns Syria's regime thread of the Generational Dynamics forum. Comments may be posted anonymously.) (4-Aug-2011) Permanent Link
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3-Aug-11 News -- Possible bond panic is in process, after can-kicking debt ceiling deal

Bond panic in Europe

Possible bond panic is in process, after can-kicking debt ceiling deal

Mainstream economists and analysts expected the stock market to rise on Tuesday, after the uncertainty about raising the debt ceiling was resolved by a bill passed by Congress. Instead, stocks on Wall Street fell 2%. As usual, mainstream economists were wrong.


Congress leaves for a taxpayer-paid four week vacation in the sun, as Spain's prime minister José Luis Rodríguez Zapatero has been forced to abandon holiday plans because of financial crisis. (AFP)
Congress leaves for a taxpayer-paid four week vacation in the sun, as Spain's prime minister José Luis Rodríguez Zapatero has been forced to abandon holiday plans because of financial crisis. (AFP)

When the bailout of Greece was announced a couple of weeks ago, at least the Europeans got two or three days of euphoria out of it, before it all fell apart into bitter recriminations. In Washington, the euphoria was almost nonexistent, and the bitter recriminations began instantly.

The Brussels agreement and the Washington agreement have one huge thing in common: Neither of them did anything but "kick the can down the road." In particular, the debt ceiling agreement sets up some kind of super-committee that's going to meet this fall and decide on budget cuts and tax increases. And the budget cuts won't actually cut anything -- they'll only slow the budget growth a little.

The situation in Washington is just as chaotic as it was before the agreement, except that the debt ceiling got raised, which everyone knew was going to happen anyway, one way or another.

However, investors were swayed by one piece of bad economic data after another:


Italy 10 year bonds - 8/2/2011 - 6.1% yield
Italy 10 year bonds - 8/2/2011 - 6.1% yield

Bond panic in Europe

Returning now to Europe, there has been increasing concern over unstoppable increases in bond yields (interest rates) for Italy and Spain. In particular, analysts who have been commenting on these bond yields have been saying that if Italy's 10-year bond yield ever goes up above 6% and stays there, then it will cause a major crisis for Italy.

Well, Italy's 10-year bond yield ended the day at 6.1% on Tuesday. Given Europe's experience ever since Greece was bailed out last year in May, there's absolutely no reason that I know of to assume that the bond yields are going to start falling.

Cyprus is also in serious trouble, as the government budget deficit widened sharply in the first half of the year. Yields on a 10-year government bond were at 10.54% on Tuesday, up from 9.71% on Friday, and around 6.2% in mid-May, according to the Cyprus Mail.

Bond prices move in the opposite direction as bond yields. So if bond yields are rising rapidly, then it means that bond prices are falling rapidly, and there may be a major panic at hand. We should know within a few days or weeks.

And as we've pointed out before, the recent bailout of Greece requires large banks to "voluntarily" take a 21% "haircut" -- which may be closer to 90%. The "voluntary" bond swap that will accomplish this is supposed to take place at the end of August.

So, we have a European bailout that won't be implemented until the end of August, and an American debt deal that won't be implemented until a super-committee starts to meet in the fall.

As a side note, Moody's Investors Service announced on Monday that it was not planning to reduce the AAA rating of the United States, citing the decision to raise the debt limit, according to Reuters. However, Moody's assigned a negative outlook to the rating.

Some pundits are predicting that the political pressure on the major ratings agencies (Moody's, S&P, Fitch) will be so great that they'll never reduce America's AAA ratings. But this overlooks a big problem that these ratings agencies have: They've been lowering the debt ratings of various European countries once or twice a week for months. The financial community will not tolerate giving America a pass for purely political reasons.

One thing that's become clear is that the people's attitudes have been changed by this debt. I know from experience that when I tell people about my web site and how bad things are, then they assume I'm just making stuff up. What this debate has done is to educate the American people about how bad things really are.

This feeds into the risk-aversion of people now. As I've said before, from the point of view of Generational Dynamics, a major generational change in attitudes is occurring, in that people have been badly burned financially, and they've become extremely risk averse, and will remain so for the rest of their lives. The result is that, despite the Pollyannaish nonsense predictions from mainstream economists, there will not be any recovery until the 2020s, when a new generation starts spending money.

(Comments: For reader comments, questions and discussion, see the 3-Aug-11 News -- Possible bond panic is in process, after can-kicking debt ceiling deal thread of the Generational Dynamics forum. Comments may be posted anonymously.) (3-Aug-2011) Permanent Link
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3-Aug-11 World View -- Ethnic and political violence in Karachi, Pakistan

Lashkar-e-Taiba (LeT) expands to international terror

This morning's key headlines from GenerationalDynamics.com.

Ethnic and political violence kills 34 in two days in Karachi, Pakistan


Burned out vehicles in Karachi (EPA)
Burned out vehicles in Karachi (EPA)

Ethnic violence and politically-motivated targeted killings have left at least 34 people dead in Pakistan's southern port city of Karachi in the past 24 hours and paralyzed life in the city. Armed groups controlled by criminal gangs and supported by the country's main political parties are responsible for the violence. The city has been brought to a standstill by the ongoing violence, which has seen scores of vehicles and shops being set ablaze by supporters of the two rival ethnic groups. Local media reported that at least 339 people were killed in the city last month alone. RTT

UN Security Council deeply divided over resolution condemning Syria

The massive slaughter of Syria's unarmed civilians by president Bashar al-Assad's army, which continued on Tuesday, has resulted in a deeply divided United Nations Security Council, as it considers a resolution condemning Syria. Western nations want to condemn Syria and impose new sanctions, but it's opposed by Russia, China, India, South Africa and Lebanon. Lebanon is right next door to Syria, and is receiving Syrian refugees, so Lebanon officials do not want to anger Assad. Russia says that it doesn't now want to open the door to military action, after what happened in Libya: "We are very strongly against, and have taken a very strong and clear position – thankfully supported by a number of members of the Security Council – that to go down the Libyan road would have dramatic and catastrophic consequences for Syria and for the region," said Russia’s ambassador to the UN, Vitaly Churkin. And of course China is opposed to any such resolution, since they conduct their own massacres against Tibetans and Uighurs. Jerusalem Post

Lashkar-e-Taiba (LeT) expands to international terror


Indian subcontinent, highlighting Kashmir and Jammu
Indian subcontinent, highlighting Kashmir and Jammu

The Lashkar-e-Taiba (LeT) terrorist group was originally created by Pakistan's Inter-Services Intelligence (ISI) directorate in 1993 to serve as the primary militia fighting against Indian forces in the disputed regions of Jammu and Kashmir (J&K). Although now banned, LeT has conducted a number of terrorist assaults in India, including the horrific Mumbai assault in November, 2008. Despite being established as a Kashmiri militant group, LeT has always defined its objectives in local and regional terms. Specifically, the group articulates a twofold ideological and operational agenda that aims to exploit ethno-religious tension in Kashmir in order to trigger a wider religious revolution across the Indian state. However, LeT has gone beyond regional terrorism, and is now at the forefront of indoctrinating, training and deploying militants with so-called “clean skins” to carry out terrorist attacks in the West and/or their country of origin. Jamestown

Iraq's leaders agree to have U.S. forces in Iraq after December

American forces are scheduled to be completely gone from Iraq by December 31 of this year, but after a four-hour meeting that ended early Wednesday morning between Iraq's government and U.S. officials, agreement was reached to begin negotiations about leaving U.S. forces in Iraq on a training mission. Most political leaders, with the major exception of anti-American Shiite cleric Muqtada al-Sadr, favor the training mission. CNN

Central Falls, R.I., declares bankruptcy on pension costs

Central Falls, Rhode Island, whose motto is "a city with a bright future," declared bankruptcy on Monday, after retired police officers and firefighters refused to accept cuts in pensions and benefits. The pension rates were granted to public sector unions during the halcyon days of the 1960s when the city was flourishing. But the economy began to decline in the 1970s with the departure of textile manufacturers. Central Falls is the fifth American community to enter bankruptcy this year, but additional municipal bankruptcies are expected. Bloomberg

Lebanon will file a U.N. complaint aginst Israel over border incident

Lebanon will file a complaint Wednesday against Israel at the U.N. after Israel's army and Lebanon's army exchanged gunfire on Monday. Lebanon claims that Israel's army unit crossed the "blue line" separating the two countries, but Israel denies this. Daily Star (Lebanon)

(Comments: For reader comments, questions and discussion, see the 3-Aug-11 News -- Possible bond panic is in process, after can-kicking debt ceiling deal thread of the Generational Dynamics forum. Comments may be posted anonymously.) (3-Aug-2011) Permanent Link
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2-Aug-11 World View -- China could defeat U.S. in war over Taiwan

Worldwide manufacturing growth stalls in July

This morning's key headlines from GenerationalDynamics.com.

China could defeat U.S. in war over Taiwan


China's DF-21D anti-ship ballistic missile
China's DF-21D anti-ship ballistic missile

A new report by Taiwan's Ministry of National Defense concludes that China already can defeat both Taiwan and the U.S. in a war over Taiwan, and that China's superiority continues to increase each year. In particular, the People's Liberation Army (PLA) has already deployed some DF-21D "carrier killer" ballistic missiles, which they believe can destroy any aircraft carrier that the U.S. Navy uses to come to Taiwan's aid. Furthermore, China has strengthened strategic nuclear deterrence and nuclear counterattack ability, making a U.S. attack to aid Taiwan not an option. (Some sources say that the DF-21D is still being tested.) Asia Times

Worldwide manufacturing growth stalls in July

Manufacturing indexes from China, Europe and the United States published on Monday all showed a significantly slowed growth trend, confirming other figures that indicate that an economic slump is approaching. Reuters and Dow Jones

Israel will negotiate with Palestinians on 1967 borders

In a turnaround, Israel's prime minister Benjamin Netanyahu has agreed for the first time to start from the pre-1967 borders in border negotiations with the Palestinians. However, the offer is unlikely to be accepted by the Palestinians because it's dependent on the Palestinians dropping their campaign for statehood at the United Nations next month and accepting Israel as a Jewish state. Telegraph

Turkey sharply raises its condemnation of Syria's Assad


Scenes of massacre in Hama, Syria, on Sunday (Zaman)
Scenes of massacre in Hama, Syria, on Sunday (Zaman)

Following the horrific slaughter of Syria's civilians by the army of president Bashar al-Assad on Sunday and continuing on Monday, Turkey's government officials have substantially sharpened their critical rhetoric. Turkey's President Abdullah Gül warned that it is not possible to remain silent in the face of such attacks that the whole world witnesses. "The incidents of Sunday simply horrified us. I am shaken by the use of heavy artillery and tanks against the people of Hama, right on the eve of the holy month of Ramadan." Turkey's Foreign Minister Ahmet Davutoglu described the attack as "unjustifiable," adding, "It is impossible to approve of the timing and methods of this operation. It is unacceptable for Ramadan to begin with casualties while we were expecting the Syrian regime to implement reforms swiftly." In the past, unnamed Turkish officials have discussed an Turkish invasion into northern Syria to create a buffer zone. Zaman

British MP: Turkey has to tighten migrant controls

Keith Vaz, the chairman of Britain's House of Commons home affairs committee demanded that Turkey dramatically enhance its border controls with Iran, Iraq and Syria, if it wants to pursue membership in the European Union. If not, then Turkey's membership would open the floodgates to illegal migrants from Asia, and increased drug smuggling. Up to 80 per cent of heroin currently used in Europe is estimated by intelligence agencies to pass through Turkey. The National (UAE)

Ramadan may bring increased turmoil to 'Arab Awakening'

Arab governments in the Middle East are preparing for increased tensions during the Muslim holy month of Ramadan which may reignite many of the violent uprisings of earlier in the year. "Throughout history, Ramadan has been the month of revolutions and victory," says one expert. "I think it will inspire the youths of the Arab Spring to complete their struggles against injustice and tyranny." Activists in Syria have already said that they plan to call for massive country-wide protests every day during Ramadan. Israel National News

China blames Muslim extremists trained in Pakistan for Xinjiang violence

China on Monday blamed Uighur Muslim extremists trained in Pakistan for launching the terrorist attacks in Xinjiang province over the weekend. The weekend violence, which killed 11, raised tensions across the Xinjiang region on China’s western frontier, which has been under tight security since 2009 when almost 200 people were killed in fighting between Han Chinese and minority Uighurs, a largely Muslim ethnic group that sees Xinjiang as its homeland. Pakistan is a close ally of China. Associated Press

(Comments: For reader comments, questions and discussion, see the 2-Aug-11 World View -- China could defeat U.S. in war over Taiwan thread of the Generational Dynamics forum. Comments may be posted anonymously.) (2-Aug-2011) Permanent Link
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1-Aug-11 World View -- Syria's regime massacres hundreds

Mexico arrests killer of 1500, including U.S. Consulate employee

This morning's key headlines from GenerationalDynamics.com.

Syria's regime massacres hundreds of peaceful citizens as Ramadan approaches


Smoke rises in the city of Hama on July 31, 2011 (Reuters)
Smoke rises in the city of Hama on July 31, 2011 (Reuters)

Syria's president Bashar al-Assad increased the level of slaughter and massacres of peaceful Syrian protesters on Sunday, with armored tank attacks on unarmed citizens in cities across the country. The focal point of the attack was Hama, where 80 civilians were killed on Sunday. Assad's forces had besieged the city of 700,00 for nearly a month before Sunday's attack, on the eve of the holy month of Ramadan. Tank shells were falling at the rate of four a minute in and around north Hama, residents said. U.S. President Barack Obama said he was appalled by the Syrian government's "horrifying" violence against its people in Hama and promised to work with others to isolate Assad. Reuters

JJ Harder, the press attache at the U.S. embassy in Damascus said to the BBC:

"[T]here is one big armed gang in Syria, and it's named the Syrian government. I think we can safely say it's full-on warfare by the Syrian government on its own people. This full-on warfare in which the government is engaged in today, I think, amounts to nothing less than a last act of utter desperation.

They're killing their own people, they're sending their tanks into their own cities. It's ridiculous. ... There is one big armed gang in Syria and it's named the Syrian government."

AFP

Taliban take credit for suicide bombing in Afghanistan


A policemen stands guard at site of suicide bombing in Lashkar Gah on Sunday (Xinhua)
A policemen stands guard at site of suicide bombing in Lashkar Gah on Sunday (Xinhua)

Ten Afghan police officers were killed Sunday when a suicide bomber detonated a car bomb outside the main police compound in the southern town of Lashkar Gah in Afghanistan, an area where coalition forces have turned full security responsibility over to Afghans. The Taliban have targeted many of the seven areas that are among the first phase of the transition to draw down U.S. troops. Sunday’s assault is the latest in a recent string of attacks that have included the assassination of numerous high-profile military and civil officials. The transition to a more independent Afghan security force is part of a gradual plan to withdraw U.S. and NATO forces by 2014. Washington Post

Because of the continuing threat posed by a resurgent Taliban, Britain is considering doubling the tour of duty of British combat forces from 6 to 12 months, in preparation for withdrawal by 2014. In particular, those involved in "mentoring" Afghan forces will be emphasized. Guardian

Violence between Uighurs and Han returns to China's Xinjiang province

Two years ago, in July 2009, there was a massive riot by ethnic Uighurs in China's Xinjiang province. ( "China's Xinjiang province is scene of violent anti-government protests") The Uighurs were protesting discimination from Han Chinese, and the Beijing government's policy of massively relocating Han Chinese into Xinjian to dilute the Uighur population. China violently crushed the protests, but suddenly new violence is occurring. Over the weekend, several incidents occurred that the Chinese are calling "terrorism." At least 14 people were killed, and there may or may not have been a bomb involved. LA Times

China imposes media ban on rail crash coverage

China's government, still shocked by the extent of public fury over the bullet train collision last weekend, is attempting to cut off protests by restricting further press coverage of the accident. According to an official statement issued on Friday, "All local media, including newspapers, magazines and websites must rapidly cool down the reports of the incident. [Editors] are not allowed to publish any reports or commentaries, except positive news or information released by the authorities." However, the ban itself is generating more outrage. Angry postings on Weibo, the Chinese equivalent of Twitter, have continued, suggesting that the ban may backfire. What links this story to the previous one (on Uighurs) is the Chinese Communist Party's overwhelming paranoic fear of a mass rebellion. Financial Times (Access)

Mexico arrests killer of 1500, including U.S. Consulate employee


Jose Antonio Acosta Hernandez gets 'perp walk' treatment (AP)
Jose Antonio Acosta Hernandez gets 'perp walk' treatment (AP)

Mexican authorities have arrested on Sunday a former federal police officer and Juarez drug cartel leader, accused of ordering 1,500 killings during a campaign of terrorism along the U.S.-Mexico border. Jose Antonio Acosta Hernandez, nicknamed "El Diego," is also accused of masterminding the attack last year that killed a U.S. Consulate employee, her husband and the husband of another Consulate worker in Ciudad Juarez. Washington Times

Chavez wants to increase OPEC's oil quota for Venezuela

President Hugo Chavez said Friday that Venezuela's oil production quota within OPEC should increase now that its proven crude reserves have grown. Earlier this month, OPEC recognized Venezuela as the country with the biggest proven oil reserves in the world, saying that with 296.5 billion barrels it now surpasses Saudi Arabia. "The more reserves you have, the higher the quota you have," Chavez said. AP

(Comments: For reader comments, questions and discussion, see the 1-Aug-11 World View -- Syria's regime massacres hundreds thread of the Generational Dynamics forum. Comments may be posted anonymously.) (1-Aug-2011) Permanent Link
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