Generational Dynamics: Forecasting America's Destiny Generational
 Forecasting America's Destiny ... and the World's


Generational Dynamics Web Log for 18-Apr-2010
18-Apr-10 News -- North Korea denies sinking South Korean warship

Web Log - April, 2010

18-Apr-10 News -- North Korea denies sinking South Korean warship

China vows to stop the 'last madness' of the real estate bubble.

North Korea denies sinking the South Korean ship Cheonan

It's been three weeks since the Cheonan, a South Korean navy warship, exploded and sank near North Korean waters. Only 58 people were rescued out of 104 crew members, and the other 46 drowned.

The DPRK (Democratic People's Republic of Korea, the official name of North Korea) has remained silent about the incident until now, even though suspicions have been growing that the explosion was caused by a DPRK military strike.

On Saturday, for the first time, the DPRK spoke out on the incident, denying any involvement, and claiming a frame-up by the South Koreans.

Xinhua quotes a DPRK official as saying, "Failing to probe the cause of the sinking of the ship, the puppet military warmongers, right-wing conservative politicians and the group of other traitors in South Korea are now foolishly seeking to link the accident with the north at any cost." The official added that another aim of the South Koreans is "to justify the persistent and anachronistic policy towards the DPRK and shirk the blame for having driven the inter-Korean relations to the worst crisis."

The South Koreans have been very reluctant to be specific about suspicions about the DPRK, but they did make a statement on Friday.

According to the South Korean newspaper The Hankyoreh, a joint military-civilian investigation team tentatively concluded Friday that the Cheonan was split in half by a water shock wave, or “bubble jet,” resulting from an external explosion. This means that there was no direct strike on the hull of the Cheonan by a torpedo. Instead, a torpedo or mine exploded BENEATH the ship, creating a powerful shock wave or gas bubble that repeatedly expands and contracts. This causes the vessel to rise and fall, and the hull of the vessel splits in two as a result of this shock.

An analysis in the Asia Times, says that the sinking of the Cheonan is to Korea as 9/11 was to America, in that the sinking is a wake-up call to the sea and land threats from North Korea.

The article points out that a North Korean action may have been retaliation for a November incident, when a South Korea ship, similar to the one that was sunk, poured cannon fire onto a North Korean patrol boat, sending it back to port in flames.

This is, in fact, the typical kind of ping-pong situation that leads to a major war during a generational Crisis era: Each side is shocked and surprised by what the other side does, and responds by "crossing the line" even farther than last time, until war is declared.

Right now, it seems to me that the most likely outcome of the current situation is that the South Koreans will conclude that a DPRK strike was the most likely cause, but they'll hedge it in such a way that they can avoid retaliation.

But that will not be the end of it. The South Korea people and military are furious about this incident, and the South will retaliate as soon as there's an opportunity to do so.

China vows to stop the 'last madness' of the real estate bubble

The People's Bank of China (POB) is pledging to implement new lending rules to cool the real estate bubble, and the market's "last madness," according to Bloomberg.

The moves come in the midst of a real estate bubble of truly staggering proportions. In office space alone, there is enough for a 5x5 cubicle for every man, woman and child in China, as we've reported in the past.

POB adviser Li Daokui said that investors "don’t realize how strong and resolute the political will is among top leaders to curb price gains," as the market is having its "last madness."

An example of one of the new rules is that down payments for second homes must be at least 50%, up from 40%.

I have to laugh at the phrase "strong and resolute ... political will" in view the obvious lack of will in formulating rules.

Unfortunately, Li's words almost contradict themselves. He's right that there's madness in China's real estate markets, and in China's financial markets in general. But you can't cure madness by changing a couple of rules. Madness always wins out, especially financial madness.

From the point of view of Generational Dynamics, nothing that the POB does will have any effect on the madness. This is the madness of crowds, the madness of entire generations, and a few rule changes will only cause the speculators to adapt. China is in serious trouble, even more serious than America (as hard as that is to believe), and is headed for a financial crisis of truly historic proportions. The bubble will continue to grow until something triggers a crash, and then the financial crisis will begin.

Additional Links

Two burqa-clad male suicide bombers killed 44 and injured 70 in a refugee camp, among people waiting to receive food. Lashkar-e-Jhangvi claimed responsibility, citing the presence of Shias at the camp as a reason. Pakistan Daily Times. To my knowledge, al-Qaeda/Taliban linked terrorists specifically targeting Shias in Pakistan is new in recent times.

Scientists have wondered for years whether there's water on the moon, and it now turns out that there are billions of tons of water. Cosmos

Last Wednesday's earthquake in China's Qinghai province occurred in a region heavily populated by Tibetans. The Chinese government has mounted a huge relief effort, but the relief effort has exacerbated tensions with Han Chinese, as the Tibetans complain that the Han are using the earthquake as a public relations opportunity. NY Times

(Comments: For reader comments, questions and discussion, see the 18-Apr-10 News -- North Korea denies sinking South Korean warship thread of the Generational Dynamics forum. Comments may be posted anonymously.) (18-Apr-2010) Permanent Link
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