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


Web Log - September, 2004


Oil prices fall, since inventories are up after all

After reading analyst reports that claimed that US oil inventories are at rock bottom, which I wrote about yesterday, quoting a Bloomberg news report, one of several places I'd seen the claim, that said that US inventories are at historic lows.

However, a report published on Wednesday by the US Department of Energy says that crude oil inventories are unexpectedly high. According to the new Bloomberg news report, "Supplies gained last week for the first time in nine weeks. Twelve of 13 analysts surveyed by Bloomberg expected a decline."

In addition, the threat of a new Nigerian civil war seems to have passed, and so oil prices fell on Wednesday. More to come.

Update: The US Department of Energy report referenced above can be found at (30-Sep-04) Permanent Link
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IBM claims supercomputer title from NEC

In the worldwide race to build the next generation of the world's faster computers, the Japanese have been leading the world since 2002, when NEC announced the novel Earth Simulator supercomputer, running at 35.8 megaflops (35.8 trillion calculations per second), more than twice as powerful as anything that any American firm had to offer.

Today IBM announced that Blue Gene/L supercomputer can achieve a sustained rate of 36.01 megaflops.

IBM's supercomputer is not yet officially number one, however, since the performance results have to be confirmed by independent researchers. The official list of top supercomputers can be found on the web site The list will next be updated in November.

Robot from <i>I, Robot</i>
Robot from I, Robot

Although the development of a new supercomputer doesn't seem particularly relevant to most people, it actually affects everyone on earth in a very fundamental way. As we discussed in conjunction with the release of the movie I, Robot, it will be only a few years from now that supercomputers will be more intelligent than human beings.

By the 2020s, autonomous super-intelligent computers will be performing varied tasks, everything from repairing the plumbing to being a 24-hour nursemaid, to being an intelligent soldier. By 2030 or so, the "Singularity" will have occurred, and super-intelligent computers will be able to research and manufacture new versions of themselves, raising doubts about the continuing role of the human race.

As today's announcement by IBM shows, there is a worldwide race to produce this new technology. Today, America and Japan are the leaders, but the UK, China and India are also in the race. By the 2010s, there will be additional competitors. (29-Sep-04) Permanent Link
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Kremlin negotiator says he has evidence of planned "revenge attacks" in Caucasus

"The situation is balanced between war and peace," says Rusian Aushev, former President of Ingushetia.

Troubled areas in Caucasus region - including North Ossetia and Chechnya
Troubled areas in Caucasus region - including North Ossetia and Chechnya

"If Ingushetia gets drawn into a conflict with Ossetia, it will be a mess," he said, according to news stories. "Look at the map of the region. There is Georgia, there is South Ossetia, there are Abkhazia, Kabardino-Balkaria and Dagestan. It's a big pot where everyone will seek to solve his own problems. So, this is a very dangerous scenario. Those who are doing this either do not understand what they are doing or are doing this on purpose to set the south of Russia, and maybe the North Caucasus and the entire Caucasus, on fire."

One of the observations of Generational Dynamics is that war is like sex in that it's a basic human need. Today, Islamic terrorists throughout Asia and the Mideast are actively working to spark a war between the Muslim and Western civilizations.

As we've said, the Caucusus is the most dangerous region in the world. This region has been the site of numerous major ethnic and religious wars for centuries. Generational Dynamics predicts another major war is to come, and we can see how the that war seems to approach closer every day. (29-Sep-04) Permanent Link
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The debate dialectic

Both Bush and Kerry will be lying on Thursday evening, but so what? They're politicians.

Iraq will be a big subject on the Thursday evening debates.

We invaded Iraq because we were convinced that there were weapons of mass destruction in Iraq. Most of the rest of the world was convinced of the same thing.

Generational Dynamics is based on the very real observation that nobody knows much of anything that happened before they were born, with the result that societies and nations repeat the same mistakes cyclically.

But if we're to judge from the Iraq situation, people's memories are even worse than that. Because no one remembers that two years ago we were all convinced, beyond a shadow of a doubt, that Saddam had chemical and biological weapons in his possession.

Now that it turns out that there aren't any -- and we still don't know where they all went to -- the politicians have to scramble.

Bush will say that weapons of mass destruction weren't the main reason, which of course is a lie.

Kerry will say that he would have pursued the war on Iraq more cleverly than Bush, which is a lie.

Bush will say that bringing democracy to Iraq will bring democracy to the entire Mideast, which is a lie.

Kerry will say he'll do things differently in Iraq, which is a lie.

Hopefully all the bickering over the Vietnam era is over, but there is one outstanding issue: John Kerry must repudiate his 1971 remarks that American soldiers committed atrocities and war crimes on a day to day basis in Vietnam, with the full awareness of officers at all levels of command. If he's elected President without repudiating those remarks, he's going to have a big problem being President.

As for what's going to happen in Iraq, it makes no difference who's elected in November. The future of Iraq and the entire Mideast has been "baked into the cake" for decades. It only remains for us to play out our moves and see how it turns out. (29-Sep-04) Permanent Link
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Oil drops just barely below $50 - closing at $49.75 yesterday.

But surprise! US oil inventories are low after all. For several months, oil industry analysts have been blaming the increasing price of oil on speculators who were building up large inventories.

Well, now the news reports are that inventories, in the US at least, are at historic lows.

One analyst is quoted as saying: "Prices will only drop to the levels of the 1990s if there's a total collapse of demand or if the market is flooded with supplies. I'm sure demand will go down with the high prices, but I don't see the market being flooded."

Meanwhile, Saudi Arabia is promising to increase its output of oil, to try to bring the price down.

This creates a very interesting situation, because some experts are claiming that oil production has reached a peak.

Global oil production, as predicted by the peak-oil movement. <font size=-2>(Source: WSJ)</font>
Global oil production, as predicted by the peak-oil movement. (Source: WSJ)

Just last week, the Wall Street Journal ran a front page story on the peak-oil movement, and Colin Campbell, one of its gurus. The adjoining graph shows that Campbell and others are predicting that oil production is leveling off, and can no longer rise to reach further increasing demands.

Saudi Arabia's promise to increase output puts the peak-oil movement into greater focus. Everyone's walking on eggshells right now, because no one wants to be blamed for trying to affect the US Presidential election. After November, we may begin to get some firm answers. (29-Sep-04) Permanent Link
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Rioting and looting in Haiti following hurricanes may destabilize country

Haiti is almost a textbook case of impending civil war caused by poverty amidst a "market-dominant minority." The French-speaking light-skinned minority controls most of the economy, while the vastly greater number of Creole-speaking blacks live in poverty.

It all started with the best of intentions in the 1700s, when Haiti was an extremely wealthy French colony, thanks to crops sugar, rum, coffee and cotton -- and thanks to the efforts of 500,000 slaves that the French had imported from Africa. As time went on, Haiti became independent, international markets changed, and population grew. Since population always grows faster than the food supply, Haiti has become increasingly poor.

Today, Haiti is literally the poorest country in the Western hemisphere. The average Haitian makes $1.00 a day.

As we described when we wrote about Haiti last Spring, Haiti's last generational crisis civil war followed the American occupation that began in 1915. It didn't end until 1934.

So it's been long enough. Why isn't Haiti breaking out into another into total anarchy?

It's being headed off by a large United Nations led peacekeeping force, and a great deal of foreign aid.

I was startled to read a news story that says that even China is contributing.

Why is China helping out in Haiti? Doesn't China have enough poverty in its own country? Isn't this the country that massacres and jails people for meditating and exercising to Richard Simmons tapes -- wait -- I mean, meditating and exercising as spiritual followers of the Falun Gong?

Well, maybe China is sucking up to the UN because Taiwan is trying to get its own seat in the UN, something that China bitterly opposes.

Meanwhile, there are similar pockets of poverty in Asia and around the world.

When studying Generational Dynamics and the resulting patterns of genocidal wars, one learns to put one's feelings aside, and treat human history as a kind of scientific experiment, and in that sense Haiti is an interesting test. Haiti's population is growing at the rate of 1.71%, almost twice as fast as the food supply grows. That means that things are getting worse every year, every month, every day, and even international help can't help forever.

Last Spring, when President Aristide was forced out, Haiti was close to anarchy, and was saved by international aid.

Today, armed gangs are shooting at UN aid workers (which is what caused the UN to leave Iraq). The hurricanes have brough Haiti close to anarchy again. We'll put our feelings aside and watch to see whether the UN peacekeeping forces can continue to work their magic. (29-Sep-04) Permanent Link
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Nigeria civil war threat pushes oil prices past $50 per barrel

For months, analysts have been predicting that oil prices would start falling after Labor Day, but late yesterday evening oil prices passed $50 per barrel in after hours trading.

The details of the threatened Nigerian civil war are not yet entirely clear, but Nigeria has a long history of wars between the Muslims in the North and the Christians in the South.

We've previous discussed the question of why these things always seem to happen in Africa (its geography) in connection with the Darfur genocide, which is still in progress.

Analysts have been predicting that oil prices would fall into the $30-40 range, and Bear Stearns even predicted a fall to $25 per barrel.

Events have continued to conspire to keep international oil prices up. Demand from India and China stays high; the Yukos crisis in Russia continues; Iraq continues to have difficulty exporting oil; and even the Florida hurricane's have had a local effect, at least on American gas prices.

Why can't oil prices fall again into the $30-40 per barrel range? Frankly, I'm surprised as well, but here's my speculation: I believe that the Chinese is more out of control than people are saying, and that China is importing even more oil than the Chinese themselves know. This is an educated guess, of course, but from the point of view of Generational Dynamics, China is in a "generational unraveling" period, and the Beijing government really no longer has any real control over most of the economy. We'll see how this plays out.

We'll have more analysis on the civil war in Nigeria, the price of oil, and the Chinese economy as further facts become known. (28-Sep-04) Permanent Link
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Gender gap replaced by a marriage gap or mother gap

The new phrase replacing "soccer moms" is "security moms," worried about their family's safety from terrorism.

A few days ago, I used the Janet Jackson fine to show how public attitudes are changing on gender issues, that the public is demanding that women become more modest again, and that women are depending on men more than they did ten years ago. In particular, the gender gap is narrowing, and women are expected to vote more like men in the next election, a change that appears to favor Bush over Kerry.

Recent polling has shown that the issue is more complicated. It turns out that it's young mothers, in particular, who are more likely to vote for Bush than they used to. Older women and single women are voting pretty much as before.

This is being called the marriage gap, because the new results are rather startling:

Percentage of voters favoring each candidate
Men Voters54%41%
Women Voters45%49%
Single Voters30%65%
Married Voters57%38%

As you can see, there's still a gender gap, but the marriage gap is much larger.

The marriage gap is being attributed mainly to "soccer moms," who formerly favored the Democrats on issues such as health care, are now turning into "security moms," who are favoring Bush because of his fight in the war on terror.

This is an interesting development from the point of view of Generational Dynamics. As far as I know, the historians who have studied American generational cycles (mainly William Strauss and Neil Howe in their book, Generations) have identified gender-based cycles, but not cycles based on marital status. The "marriage gap" adds some depth to the gender cycle issue.

It's worth pointing out again that it's very hard to beat an incumbent President during a generational crisis period because people don't like to change leaders during a crisis. That's why Franklin Roosevelt was elected to four consecutive terms during the last crisis period - the 1930s and 1940s. (28-Sep-04) Permanent Link
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Israel joins America and Russia in striking at terrorists wherever they are

Israeli agents are believed to be behind the assassination of a Hamas leader in Damascus, Syria.

Israel has not claimed responsibility for the car booby-trap bombing of Iz a-Din al Sheikh Khalil, but Israeli is widely believed to be behind the killing.

If true, this marks a major change in Israeli policy -- a willingness to strike terrorists on Syrian soil. From the point of view of Syria, this is a major provocation, and Syria is sure to be considering revenge in some form.

Israel has assassinated two other top Hamas leaders in Gaza this year, and has promised to assassinate others, in retaliation for terrorist attacks against Israel. But until now, Israel has not crossed the line to perform assassinations in other countries.

Israel is thus expressing its willingness to strike at terrorists wherever they are. This is what Russia's Vladimir Putin announced as Russia's new policy, following the Beslan hostage taking that resulted in the deaths of hundreds of children.

Israel and Russia, who are cooperating with each other against terrorism, have thus also joined with one another in the policy of striking at terrorists anywhere.

This, of course, is also America's policy, and Britain's, ever since 9/11.

So now we have four countries - America, Britain, Israel and Russia - who are following a policy of striking terrorists in foreign countries.

This is another example of countries picking sides, as we approach the "clash of civilizations" world war. (27-Sep-04) Permanent Link
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Debate over long-term interest rates

Analysts are clearly puzzled over why long-term interest rates have been falling, while the Fed is pushing up short-term interest rates.

This phenomenon, known as "flattening of the yield curve," is a sign of trouble if it continues for long, as we've discussed.

Australia is having a national election on October 9, and Prime Minister John Howard, who is seeking a fourth term, is making interest rates an election issue, by pointing out that short-term interest rates are 5.25% now, and were 7.5% when the Labor government, his opponents, lost power in 1996. "Interest rates will always be higher under a Labor government than a coalition government," Howard said. (I just love it when politicians brag about things they have no control over and probably don't even understand; but if they didn't talk about things like that, they probably wouldn't have anything to talk about.)

However, what analysts in Australia are puzzled about is the same thing that's puzzling American analysts: How can long-term rates be falling, while short term rates are rising?

The Australian central bank has been more aggressive than the American Fed in raising short-term interest rates, which is why the Australian short-term rate is 5.25% (compared to 1.75% in America). But the 10-year bond rate is down to 5.33% in Australia (compared to 4% in America). What these extremely low long-term rates indicate is that the market expects the economy to grow very slowly - around 2% - in the next decade, both here and in Australia. It's a matter of some debate whether the market is right or wrong.

Here in America, the question was debated in an op-ed in Friday's Wall Street Journal, in which financial analyst Brian S. Wesbury considers several different theories to explain the phenomenon.

He considers several different theories: the economy is growing without inflation; oil prices are slowing the economy; dollars held by Japan, China and other countries are finding their way back into the American economy.

In the end, he finally concludes that nothing is wrong: "Many of the theories used to explain the recent decline in long-term bond yields break down under close scrutiny. The best explanation continues to be excessively accommodative Fed policy. ... It is this policy stance, not some imminent economic collapse that is holding down long-rates. As we saw in 2003 and again earlier this year, no matter how many different theories are bandied about, once bond yields shake loose of the Fed, they rise sharply. There is no reason to suspect that this time will be any different."

This is the standard view. He compares today's situation to recent history (2003 and 2004), but overlooks the fact that public debt has become astronomically high in the last year, and he overlooks the fact that stocks are selling at extremely high valuations (measured by price/earnings ratios). To say that "There is no reason to suspect that this time will be any different" is silly. There are plenty of reasons to suspect that this time will be different, and analysts have a responsibility to analyze those reasons, not just dismiss them out of hand.

Wesbury's column illustrates the problem with mainstream analysts. Wesbury considers only a few unsound reasons to explain the current situation, and ignore the really huge issues (public debt and stock valuations).

These are the issues that explain the current situation: Stocks are overvalued by about 100%, but near-zero Fed financial rates are encouraging people to borrow money to purchase them, keeping their prices up. Many companies, burdened by huge corporate bureaucracies, are preserving cash by cutting expenses, and employees. Unemployed people and near bankrupt businesses have mortgaged or sold long-term assets and borrowed short-term money to pay debts. Now that all the homes and other long-term assets have been mortgaged, the demand for long-term debt has decreased, lowering long-term yields, even while short-term yields are increasing (thanks to the Fed). This string is close to running out. (26-Sep-04) Permanent Link
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CBS fined $550,000 because Janet Jackson bared her breast on MTV show

Women love "manly men"; the gender gap is narrowing. The sex revolution is over.

Janet Jackson's hand covers her bare breast as Justin Timberlake looks on during the Superbowl halftime show on CBS
Janet Jackson's hand covers her bare breast as Justin Timberlake looks on during the Superbowl halftime show on CBS

The FCC's $550,000 fine was historically high, reflecting the public's massive change in attitudes in recent years in matters of public sexuality.

The country is becoming increasingly conservative on sexual matters. While the women's lib and feminist movements of the 70s, 80s and 90s have emphasized the similarity of men and women, today we're seeing men and women emphasize their gender-specific roles. The sexual revolution has ended.

The change began to show shortly after 9/11 -- several news stories indicated that, all of a sudden, "women love manly men." Stories during the 1980s and 1990s tended to indicate women's attraction to "sensitive" men.

I noticed it myself when firemen and policemen were being praised as heroes for their willingness to run back into burning buildings to save people. It was the first time I could remember since the 1950s when men as a group were being called "heroes."

A related sign is that the "gender gap" is narrowing, indicating that the gender wars of the 1990s are ending. Recent polls have shown that the women and men are voting more and more similarly.

Generational Dynamics predicts that this trend will continue for the next two or three decades.

I've written about the end of the sexual revolution on one or two occasions on the past.

One reader criticized my statement, and wrote this to me:

The answer is yes, women will again become very much like they were in the 1950s -- staying closer to home, reluctant to take jobs outside the home, dependent on their husbands to support this. This is a cyclic thing that all societies go through at all times in history. The "Roaring 1920s" was a time of great sexual freedom, just like the 1990s, for example.

An interesting read is Naomi Wolf's 1993 book, Fire with Fire, The New Female Power and How It Will Change the 21st Century. (You may recall that in 2000, Wolf was appointed as an advisor to Al Gore. Her job was to help Gore learn to act and dress as more of an "alpha male.") She details how the poorer women filled factory jobs in the earlier 1800s, while the wealthier women moved "into lives of enforced domesticity, sexual repression, economic dependency, and unpaid `good works.'" It's the first group that continually expanded women's rights through war and peace. And the reader is right -- these changes will not backtrack during the next decades.

But there's another aspect. People don't understand the 1950s. It's true that women stayed at home and depended on their husbands, but that wasn't caused by the feminists' evil patriarchy.

The mothers of the 1950s were not the same as the mothers of today. The mothers of the 1950s had lived through the 1940s, and seen their brothers, fathers and friends killed overseas. Even people who've seen the movie Saving Private Ryan see the D-Day invasion as something like a live cartoon, but these 1950s mothers had seen the men they love storm the Normandy beach and get shot down like fish in a barrel. If we were traumatized by 9/11, imagine how they must have felt when all those men, the men they loved, were massacred, almost by their own choice.

So in the 1950s, these mothers wanted to stay home and be close to their children. Thus, women in the 1950s focused much more on home life than women today. It's what 1950s women wanted for themselves and their daughters.

Today, after forty years of women's lib and feminism, women are becoming increasingly anxious and concerned about terrorism, and this is causing them once again to assume feminine roles more and more, and to depend on men more and more. It's not a massive overnight change; instead, it's a gradual change that will take place over a period of years.

People in older generations today are confused by this, but the point of the generational paradigm is that what's important to a boy (or a girl) varies in a cyclic manner. During an awakening period like the 1960s, society stresses individual rights, and equality of men and women becomes the political goal. In a crisis period like today, individual rights are sacrificed to the needs of the nation as a whole.

Today's young men and women in the Millennial generation have noticed how anxious and frightened their parents are about terrorism, and they're concerned about their parents' welfare. Not only that, they've noticed that young men who serve as policemen, firemen and soldiers -- who are on the front lines of the war against terror -- are being called heroes. This is a vast change from the 1990s when, boys were expected to act like girls. Today's boys want to be those heroes, and today's girls want to be those heroes' girlfriends - they want to love "manly men." That's a major reason why there's no antiwar movement in today's colleges.

If you want to understand young people today, you have to reverse everything you concluded during the 1960s. The public got angry at Janet Jackson's breast bearing because women are expected to be increasingly modest today. Women are voting more like men because women trust men more than they used to, and because they have the same concerns that men have. As we approach the "war of civilizations" world war, we'll see more and more examples of how the sexual revolution is over -- at least for a decade or two. (24-Sep-04) Permanent Link
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The "Index of Leading Indicators" falls for third month in a row.

One economic indicator after another is surprising analysts:

Now we see that the Conference Board's index of leading indicators fell in August for the third month in a row.

This contrasts to the statement made by the Fed (specifically, the Federal Open Market Committee) on Tuesday when it raised interest rates by 0.25% to 1.75%. According to the statement, "output growth appears to have regained some traction," which contradicts the actual results we've been seeing.

If we look at the leading indicators since the beginning of the year, we get the following table:

                 Index of Leading Indicators for each month
                     Jan. Feb. Mar. Apr.  May June July  Aug
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
    Leading Index    +0.5 +0.3 +0.3 +0.1 +0.5 -0.2 -0.3 -0.3
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----

As you can see, the leading indicators have been falling significantly in the last three months.

This is the same three month period when the Fed has been raising interest rates, and it's also the same three month period when inflation rates have been so unexpectedly low as to indicate a deflationary trend.

And of course the job creation rate is still far below expectations.

Now, you can make what you want of these figures, but at the very least you should conclude that the pundits and high-priced analysts have absolutely no idea what's going on with the economy.

As for the Fed, I was giving them the benefit of the doubt until last week, when the Fed published an incredible report bragging that they'd saved the economy by misleading the public.

As I've been saying since 2002, Generational Dynamics predicts that the economy is entering a new 1930s style "great depression," and that stocks will fall by 50% or more in the next two or three years. (23-Sep-04) Permanent Link
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Russia and Israel cooperating against terrorism

The most unpopular politician in the world is George Bush, but Vladimir Putin and Ariel Sharon are close behind.

The reasons are similar in all cases. All three politicians have been very aggressive in response to major terrorist attacks. President Bush initiated wars in Afghanistan and Iraq after the 9/11 attacks. Ariel Sharon has announced a "disengagement" policy, and is implementing it by building a barrier separating Israel from the Palestinian lands around it.

And Putin has promised preemptive revenge against international terrorists, following the recent series of terrorist attacks in Russian, including the incident in Beslan, North Ossetia, that killed hundreds of people, almost half of them children. These threats have alarmed the entire Eastern Asian region, including Georgia, Turkey, and Roumania. Many Western countries have called on Putin to negotiate with the Chechen terrorists; Putin has angrily rejected these suggestions, and suggested sarcastically that America should start negotiating with Osama bin Laden.

As a practical matter, only America has the power, the technology, the forces and the bases to strike at international terrorists around the world. Russia simply does not have that kind of reach.

But now, it appears more and more that America, Russia and Israel are coming together on the subject of terrorism.

Israel has sent anti-terrorism experts to Russia, and the two countries are dicussing even closer cooperation.

America has been critical of Putin's power grab in the past, but in his speech to the United Nations yesterday, President Bush appeared to side with Putin.

From the point of view of Generational Dynamics, these changes are significant because they show how the countries of the world are choosing sides in the coming "clash of civilizations" world war.

As a separate issue, James Wolfensohn, president of the World Bank, is going against the grain and supporting Putin. He questions the attacks on Putin's motives, saying, "I think Russia is a pretty difficult place to run, and so I wouldn't come to that conclusion too quickly."

The head of the World Bank is more motivated by economic concerns than by political concerns, so Wolfensohn's support of Putin is not surprising.

This comes at a time when the Fed has increased short term interest rates. However, as discussed in yesterday's analysis of the flattening yield curve, long-term interest rates are falling significantly as short-term rates are rising, indicating an increastingly troubling level of public debt. (22-Sep-04) Permanent Link
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Things that the Class of 2008 knows nothing about

If you want to understand today's college freshmen, just remember that they know nothing about Crystal Pepsi, or about almost anything that happened before the early 1990s.

The reason that Generational Dynamics works is because almost no knows anything that happened before they were five years old.

The Class of 2008 sees the world quite differently than older folks do.

Beloit College annually releases a list of things that you have to know to understand the freshman class. Here's this year's list, for the class of 2008.

  1. Most students entering college this fall were born in 1986.
  2. Desi Arnaz, Orson Welles, Roy Orbison, Ted Bundy, Ayatollah Khomeini, and Cary Grant have always been dead.
  3. "Heeeere's Johnny!" is a scary greeting from Jack Nicholson, not a warm welcome from Ed McMahon.
  4. The Energizer bunny has always been going, and going, and going.
  5. Large fine-print ads for prescription drugs have always appeared in magazines.
  6. Photographs have always been processed in an hour or less.
  7. They never got a chance to drink 7-Up Gold, Crystal Pepsi, or Apple Slice.
  8. Baby Jessica could be a classmate.
  9. Parents may have been reading The Bourne Supremacy or It as they rocked them in their cradles.
  10. Alan Greenspan has always been setting the nation's financial direction.
  11. The U.S. has always been a Prozac nation.
  12. They have always enjoyed the comfort of pleather.
  13. Harry has always known Sally.
  14. They never saw Roseanne Roseannadanna live on Saturday Night Live.
  15. There has always been a Rock and Roll Hall of Fame.
  16. They never ate a McSub at McD's.
  17. There has always been a Comedy Channel.
  18. Bill and Ted have always been on an excellent adventure.
  19. They were never tempted by smokeless cigarettes.
  20. Robert Downey, Jr. has always been in trouble.
  21. Martha Stewart has always been cooking up something with someone.
  22. They have always been comfortable with gay characters on television.
  23. Mike Tyson has always been a contender.
  24. The government has always been proposing we go to Mars, and it has always been deemed too expensive.
  25. There have never been any Playboy Clubs.
  26. There have always been night games at Wrigley Field.
  27. Rogaine has always been available for the follicularly challenged.
  28. They never saw USA Today or the Christian Science Monitor as a TV news program.
  29. Computers have always suffered from viruses.
  30. We have always been mapping the human genome.
  31. Politicians have always used rock music for theme songs.
  32. Network television has always struggled to keep up with cable.
  33. O'Hare has always been the most delay-plagued airport in the U.S.
  34. Ivan Boesky has never sold stock.
  35. Toll-free 800 phone numbers have always spelled out catchy phrases.
  36. Bethlehem has never been a place of peace at Christmas.
  37. Episcopal women bishops have always threatened the foundation of the Anglican Church.
  38. Svelte Oprah has always dominated afternoon television; who was Phil Donahue anyway?
  39. They never flew on People Express.
  40. AZT has always been used to treat AIDS.
  41. The international community has always been installing or removing the leader of Haiti.
  42. Oliver North has always been a talk show host and news commentator.
  43. They have suffered through airport security systems since they were in strollers.
  44. They have done most of their search for the right college online.
  45. Aspirin has always been used to reduce the risk of a heart attack.
  46. They were spared the TV ads for Zamfir and his panpipes.
  47. Castro has always been an aging politician in a suit.
  48. There have always been non-stop flights around the world without refueling.
  49. Cher hasn't aged a day.
  50. M.A.S.H. was a game: Mansion, Apartment, Shelter, House.

© 2004 Beloit College, Beloit, Wisconsin (21-Sep-04) Permanent Link
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Neo-Nazis and Communists gain in regional German elections

German Chancellor Gerhard Schröder and the country's mainstream political parties suffered a major setback Sunday in regional elections that gave the Nazi and Communist parties substantial gains.

"It's a great day for Germans who still want to be German," said Holger Apfel, a spokesman for the neo-Nazi National Democratic Party.

These are regional elections, so the results won't give the fringe parties a significant share of the power in the country, but they send a message of extreme discontent to the two major parties.

The popular anger is greatest in East Germany, where unemployment is near 20% and Schröder's government has been cutting long-term unemployment benefits.

The fringe parties have been blaming Jews and foreigners for these problems, by complaining that they're taking all the good-paying jobs.

For Generational Dynamics, the significance of these election results is that Germany, like America, has been entering a generational crisis period, where the generational of people who lived through the last crisis war all disappear (retire or die) all at about the same time. The most recent crisis war for Germany (and America) was World War II.

Naziism has been a mark of shame for Germany ever since World War II, especially as long as the actual participants (or their immediate families) were still alive. But now, there's almost no one left who remembers Naziism, and the kids who were born after the war think of Naziism as a great way "for Germans who still want to be German."

Major West European "world wars" have been occurring through the centuries like clockwork: the Franco-Prussian war (1869-70), the French Revolution and Napoleonic Wars (1789-1814), the War of the Spanish Succession (1701-14), the Thirty Years War (1618-48).

Generational Dynamics predicts that we're going to see a new West European in the next few years. It's impossible to predict exactly when, but these elections show how the fault lines are forming. (20-Sep-04) Permanent Link
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Chechen terrorist Shamil Basayev now has the same stature as Osama bin Laden

Putin's ploy of blaming "international terrorists" for the Beslan terrorism was demolished on Friday when Shamil Basayev, a warlord from Chechnya, posted a statement on the internet taking full credit for the series of terrorist acts which brought down two passenger planes, killed hundreds of children and adults, and caused the Russian people to demand justice and revenge.

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Shamil Basayev
Shamil Basayev is dead: The Chechen terrorist responsible for the Beslan school massacre... (11-Jul-06)
Shamil Basayev gains in stature and power as pan-Caucasus terror leader: He claims credit for leading Nalchik attack, but blames a traitor for leaking advance information.... (19-Oct-05)
Chechnya terrorists attack Russian town (Nalchik) massively: Coordinated attack by 300 Chechen gunmen raises Caucusus violence to new level.... (14-Oct-05)
Russia is barring ABC News reporters from working in Russia: Still infuriated over ABC Nightline's airing of interview with Chechen terrorist warlord Shamil Basayev,... (2-Aug-05)
Russia infuriated over ABC "Nightline" interview of Shamil Basayev: "How many more bombs must hit New York before the American media learns... (29-Jul-05)
Passenger train bombed in Dagestan, following Putin's visit: This is the 70'th terrorist attach this year in Dagestan,... (25-Jul-05)
Massive bomb blasts in Egypt vacation resort: This follows new blasts in London and Chechnya.... (23-Jul-05)
Chechnya: Russian killing of rebel leader returns world's focus back to Caucasus: Terrorist Shamil Basayev may gain, as rebels select an obscure Islamic cleric... (11-Mar-05)
Russia ejects international patrols from Russia-Georgia border: As an act of defiance, Russia has vetoed continuation of an international peacekeeping force... (12-Jan-05)
Chechen terrorist Shamil Basayev now has the same stature as Osama bin Laden: Putin's ploy of blaming "international terrorists" for the Beslan terrorism was demolished... (19-Sep-04)
Russian President Vladimir Putin appears to be calling for revenge: Putin said that Russian "weakness in the face of danger" has caused Russia to be "beaten up" in the face of "a total and full-blown war."... (4-Sept-04)

Russian President Vladimir Putin had blamed "international terrorists" for the acts, since blaming Chechen terrorists would have further inflamed Russia's southern provinces, possibly to a major regional war.

However, Basayev is determined to inflame the situation as much as possible. For reasons we've described, Basayev's goal actually is to start a war.

Basayev was born in Chechnya in 1965, and was raised by a generation that had just returned to the region after being exiled by Stalin to Kazakhstan and Siberia.

In terms of Generational Dynamics, Basayev is in the powerful and alienated "Nomad" generation, the second generation following a crisis war. Osama bin Laden, born 1957 in Saudi Arabia, is in that country's "Nomad" generation. In today's America, the "Nomad" generation is Generation X, born during the turmoil of the 1960s and 70s. Their alienation turns to fury and their power turns them to taking revenge for whatever wrongs their parents reluctantly accepted.

As we've said, the Caucusus is the most dangerous region in the world. The Beslan terror incident has caused Putin to threaten to make preemptive strikes on terrorists, even in other nations, and this has most frightened Georgia, Turkey and other nations in the Caucasus region.

This region has been the site of numerous major ethnic and religious wars for centuries. Generational Dynamics predicts another major war is to come, and we can see how the that war seems to approach closer every day. (19-Sep-04) Permanent Link
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Federal Reserve congratulates itself on jawboning policy

Fed says it propelled the economy upward merely by promising to keep interest rates low. The claims are based on a study led by Fed Governor Ben Bernanke. The study found that merely by making statements that interest rates would be kept low for a "considerable period," the Fed changed public expectations so much that the values of stocks increased from 2003 to 2004. The conclusion is that the Fed can continue to use verbal statements to affect the economy positively.

I cannot say how strongly I disagree with this conclusion. It presumes that stock prices are based totally on emotions, and not on fundamentals.

Maybe that does work once, for a few months, but could Bernanke and the others possibly believe this strategy could ever work again? The only reason it worked this time is because it's never been used before. If it's ever tried again, people will remember, and won't be fooled a second time.

Which brings me to the Generational Dynamics point. Yes, this strategy might work again -- after 60 or 70 years when the last generation of people who remember the recent events all disappear (retire or die). That, after all, is what the generational paradigm is all about.

What really bothers me about all this is that Fed governors actually seem to believe this stuff.

I listen to high-priced analysts on TV all the time, and for them there's never any bad news. When stocks go up it's good news because stocks are going up; when stocks go down, it's good news because prices are low and people can buy more stocks cheaply. If these analysts were more balanced in their appraisals I might find them more credible, but when it's good news all the time, my conclusion is that they're in a serious state of denial.

Bernanke's report leads me to conclude that the Fed governors are in denial too, if they really believe that they can continue to get away with using a jawboning policy.

As we've previously said, the fundamentals are clear that we're in a period of long-term deflation, and can expect prices to fall by 30% in the next few years. Jawboning might postpone (and indeed has postponed) that result, but the fundamentals will win out sooner or later. In fact, it will probably be sooner, since the Fed has indicated that it will continue increasing interest rates, with the next increase evidently planned for September 21.

Meanwhile, if you're interested in this kind of stuff, then read the Fed's full report (Click here for PDF.)

The problem it addresses is the following: The Fed reduced short-term interest rates to near-zero in 2001, and cannot lower them to below zero, and so the Fed has effectively lost its most valuable tool for stimulating the economy.

The report considers three "non-standard" tools that the Fed could use, once the short-term interest rate string has run out:

  1. The jawboning policy that we've been discussing.
  2. A policy called "quantitative easing," where the Fed in fact does let short term interest rates fall below zero for short periods of time to extend use of this tool
  3. A policy of lowering long-term interest rates by repurchasing long-term 10-year bonds, in order to keep 10-year interest rates low. (This is contrasted to the standard policy of lowering short-term interest rates.)

The report discusses examples of each of these policies at length, in both America and Japan, and concludes that the first of them is very successful. (17-Sep-04) Permanent Link
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The Consumer Price Index grew slower than expected in August, further indicating a period of deflation.

The CPI, which measures consumer prices, increased by a tiny 0.1% in August. Economists had expected a 0.2% increase. The "core index," which excludes food and energy items, increased 0.1%.

Earlier this month, the Producer Price Index, which measures wholesale prices, actually fell. Economists had expected an increase.

Both the PPI and the CPI have been lower than economists' expectations for several months, even the Fed seems to worry only about inflation.

The following table shows the values of the PPI and CPI for each month so far in 2004:

                        Changes from preceding month    
                     Jan. Feb. Mar. Apr.  May June July  Aug
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   PPI                .6    .1   .6   .7   .7  -.3   .1  -.1
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   PPI "Core index"   .3   -.1   .3   .1   .4   .2   .1  -.1
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   CPI                .5    .3   .5   .2   .6   .3  -.1   .1
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   CPI "Core index"   .2    .2   .4   .3   .2   .1   .1   .1
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----

A further increase in interest rates will exacerbate the inflationary trend, and yet the Fed is expected to do exactly that on September 21.

As we've previously said, if you look at long-term trends instead of just a few months, we're actually in a long-term deflationary period. We actually expect prices to fall by 30% in the next few years. (16-Sept-04) Permanent Link
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Israel makes it official: The American-backed "road map to peace" is dead.

In fact, Israel itself is in enormous turmoil today because of Ariel Sharon's disengagement plan. The "road plan to peace" never had a chance anyway, but it's always fascinating when a politician actually tells the truth about something like that.

Israel: Ariel Sharon is proposing to "disengage" from the Gaza Strip and the West Bank
Israel: Ariel Sharon is proposing to "disengage" from the Gaza Strip and the West Bank

The road plan required Israel and the Palestinians to negotiate the details of Palestinian state side by side with Israel by 2005. However, this plan could never have worked because it would be violently opposed by extremists in both sides.

Palestinian leader Yasser Arafat and Israeli Prime Minister both understand this, of course. Palestinian militia factions have almost gone to war with each other on several occasions, only to be pulled back from the brink by Arafat himself. History tells us that it will be almost impossible for the Palestinians to avoid civil war after Arafat is gone.

However, the past few months have similarly seen the level of bitterness and conflict in Israel itself increase significantly. The conflict revolves around Sharon's disengagement plan: Build a ten-foot high barrier around Israel, and then remove Israeli settlements outside the barrier from Gaza and the West Bank.

In fact, the Israeli cabinet has approved payment of substantial compensation funds for 8,500 settlers to withdraw from Gaza by September of next year.

The problem is that the settlers and their supporters have no intention of withdrawing under any circumstances. One opposition leader described the removal of settlements as "a crime against humanity," essentially equating it to the Nazi genocide of Jews during World War II. He promised an armed confrontation if the withdrawal plan goes ahead.

An infuriated Sharon responded: "We have witnessed in the past few days a fierce campaign of incitement, including references to civil war. I find these threats on defence force officers and members of the security establishment to be a severe offence."

So we have three separate confrontations going on: Israeli versus Palestinian, Palestinian versus Palestinian, and Israeli versus Israeli.

Meanwhile, the population in the Gaza strip continues to grow at the rate of almost 4% per year,. If a war has been avoided so far, it's only because of massive American foreign aid. That will only work for so long. Each day more babies are born and the pressure cooker atmosphere gets worse and worse. It's only a matter of time before someone declares war on someone. (16-Sep-04) Permanent Link
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Putin moving to restore Soviet-style dictatorship in Russia

Reacting to the recent horrific terrorist acts in Russia, Russian President Vladimir Putin announced substantially more centralized control of Russia. Last week, a furious Putin announced that he would take drastic measures to curtail terrorist acts, such as the horrific slaughter of children in Beslan, and the downing of two planes in flight from Moscow by "black widows," women carrying bombs.

Putin appeared to be promising revenge. The terrorist acts are widely believed to have been perpetrated with Islamic terrorists in Chechnya. However, in order to avoid inflaming the highly volatile region further, Putin blamed the acts on "international terrorists."

Nonetheless, there have been specific threats as tensions have been Russia's Colonel General Yuri Baluyevsky announced last week that that He added, "We will take all measures to liquidate terrorist bases in any region of the world."

These threats have unsettling throughout Russia's southern Muslim provinces, including Chechnya and Ingushetia, but they've also further inflamed Georgia, the nation on Russia's southern border which is already threatening war with Russia to expel Russian troops from South Ossetia.

On Monday, Putin announced a drastic restructuring of all levels of Russian government. Many legislators who were formerly elected will now be appointed by the Kremlin, and will be required to follow Kremlin policies.

This is absolutely no surprise, as we've been saying for several months with respect to Yukos, Russia's oil giant. Putin has effectively nationalized Yukos. He began last October by jailing former Yukow CEO Mikhail Khodorkovsky, right after he announced he would be challenging Putin politically. Since then, the Kremlin has been taking one legal step after another to harvest all of Yukos' wealth.

If there's any principle that this web site supports, it's the principle that history repeats itself, and we see this happening now.

The Kremlin practice of taking any assets it wants is part of the Soviet policy. This practice was used by Nicolai Lenin from the beginning of the Bolshevik (Communist) Revolution in 1917 when he destroyed the Russian Orthodox Church in order to harvest its wealth. In one of his early letters to the Politburo he writes:

Following the Bolshevik Revolution, there was a massive civil war throughout Russia that killed tens of millions of people before it ended in the late 1920s.

If history is any guide, and it is, then we can expect to see Putin move more and more to nationalize private assets, take more and more control of the government, take harsher and harsher measures against terrorists, and eventually live through a repeat of the civil war of the 1920s. (14-Sep-04) Permanent Link
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Whoever forged the CBS documents is an idiot, about 20-25 years old

I worked for IBM in the early 1970s, and we had Selectric typewriters all over the place. Even the computer terminal I used to write mainframe software on was a specially modified Selectric typewriter.

How was the superscript "th" produced?
How was the superscript "th" produced?

Selectric typewriters are in the news today, because they're providing the explanation for how someone could have produced a superscript "th" as shown on the adjoining graphic in a 1973 memo. The memo is one of four documents exhibited by CBS News in a news story indicating George W. Bush failed to meet Texas Air National Guard standards. (For PDF copies of the documents, click here.)

Now, I typed many memos myself on Selectric typewriters, so I know that the superscript effect is indeed possible. What you would have had to do is this: You go along typing your memo, until you've typed the "187." Then you remove the type ball from the Selectric, and replace it with a type ball in a font having a smaller point size. Then you physically rotate the platen so that paper slides down. Then you type the "th." Then you rotate the platen back. Then you remove the typeball with the smaller font size and replace it with the original type ball. Then you go on typing.

So it's possible, but nobody in the world would ever go to that much trouble. You just type "187th" and be done with it. Who cares?

That's why I'll be very amazed if it turns out that these memos are real.

So why do I say that the forger is an idiot, about 20-25 years old?

Well, first off, he's never used a real typewriter, or he'd know that no one would ever bother with all that. That's why he's 20-25 years old.

In fact, it's pretty obvious he's used word processors his whole life, and it never even occurred to him that a memo produced by a typewriter would look different from a memo produced by a word processor. That's why he's an idiot.

This incident is relevant to the subject matter of this web site, because it shows how little people know about life and history before they were born. It's a rare college kid today who can even tell you what the 1991 Gulf War was about, since today's college kids were too young to know what's going on.

That's why the generational paradigm works. That's why countries walk into violent, genocidal crisis wars on a regular 70-90 year cycle: Because it happens when the generation of people who remember the last crisis war all disappear (retire or die), all at the same time. That's what's happening around the world today to the generation of people who lived through World War II, and that's why we're headed for a "clash of civilizations" world war.

It's always surprising to compare something like a Selectric typewriter to a world war, but the principle is the same. Let's see how the CBS document scandal pans out. (13-Sep-04) Permanent Link
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Nobel Prize Winner SV Naipaul calls for destruction of countries that "foment religious war"

The well-known and prolific Hindu author wants to see Saudi Arabia and Iran dealt with, according to an interview appearing in The Guardian.

Sir Vidia Naipaul won the Nobel prize for Literature in October, 2001, shortly after the 9/11 attacks, for his analysis of civilizations, as expressed in sweeping novels such as A Bend in the River. Much of his work highlights the conflict between the Western and Islamic civilizations.

When we think of the "clash of civilizations," we're usually talking about a clash between Islam and Western Christianity and Judaism. Naipaul reminds us that the clash is also with Orthodox Christianity and the Hindu civilization, based in India. It's in the Hindu context that he calls for the destruction of Saudi Arabia, Iran, and other countries that foment religious war.

Naipaul has recently been expressing many controversial opinions that some regard has extreme. He has reacted to a population explosion in India by demanding that immigrants be required to become more thoroughly assimilated into society. He argues that society is "not a melting pot but a salad bowl," and that this causes problems and conflicts.

His call for destruction of countries that foment religious wars is significant to Generational Dynamics because it's one more example of the fury and hatred that more and more people and nations are feeling today. Thanks to terrorist attacks around the world, such as the ones in Jakarta, Indonesia, and Beslan, Russia, last week, more and more people are expressing the kinds of views that we're hearing from Nobel Prize winner VS Naipaul. (13-Sept-04) Permanent Link
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This is fun - "Fahrenheit 9/11" versus "Michael Moore Hates America"

Dallas has something for everyone this weekend, as the city hosts two film festivals, one conservative and one liberal.

The liberal Take Back Democracy Film Festival will show Michael Moore's Fahrenheit 9/11, which is harshly critical of President Bush, anti-war and especially anti-Iraq-war documentaries, and a movie critical of the Fox News channel.

Across town, the conservative American Film Renaissance Festival will be showing Michael Moore Hates America, which is harshly critical of Michael Moore, documentaries that praise the US military and explain why wars are ncessary, and a movie describing the impact of and praising Mel Gibson's movie, The Passion of the Christ.

The festivals are being held several miles apart and organizers said they do not expect customers to go to both. (10-Sept-04) Permanent Link
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The Producer Price Index unexpectedly fell in August, further indicating period of deflation

The PPI, which measures wholesale prices, fell 0.1% in August. Economists had expected a 0.2% increase. The PPI, which measures wholesale prices, fell 0.1% in August. Economists had expected a 0.2% increase.

The "core index," which excludes food and energy items, also fell 0.1%, while economists had expected an increase of 0.1%.

The Consumer Price Index (CPI), which measures retail prices, fell 0.1% in July. August CPI figures are not yet available.

Even though pundits and high-priced analysts have been talking about nothing else besides inflation, the fact is that the rate of inflation has been falling dramatically since May, indicating a period of increasing deflation.

The following table shows the values of the PPI and CPI for each month so far in 2004:

                        Changes from preceding month    
                     Jan. Feb. Mar. Apr.  May June July  Aug
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   PPI                .6    .1   .6   .7   .7  -.3   .1  -.1
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   PPI "Core index"   .3   -.1   .3   .1   .4   .2   .1  -.1
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   CPI                .5    .3   .5   .2   .6   .3  -.1  n/a
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----
   CPI "Core index"   .2    .2   .4   .3   .2   .1   .1  n/a
   ----------------- ---- ---- ---- ---- ---- ---- ---- ----

It was the May figures, which appeared to indicate an inflationary trend, that convinced the Fed and Alan Greenspan to increase interest rates for the last two months. The next interest rate decision day for the Fed will be on September 21. Opinion seems to be split on whether the Fed will further increase interest rates then.

As we've previously said, if you look at long-term trends instead of just a few months, we're actually in a long-term deflationary period. We actually expect prices to fall by 30% in the next few years. (10-Sept-04) Permanent Link
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My apologies - the Web Log was unavailable yesterday.

It was caused by a technical glitch which, hopefully, will not recur. (10-Sept-04) Permanent Link
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Third terrorist bomb blast in Indonesia in three years targets Australian embassy

If there's any "good news," it's that the bombing failed to achieve the effect of the 2002 bombing of a Bali nightclub that killed 202 people.

The second bombing occurred in 2003. A car bomb in front of the JW Marriott Hotel in Jakarta killed 12 people.

Azahari Husin - Asia's most-wanted man
Azahari Husin - Asia's most-wanted man

Today's bombing in central Jakarta cost the lives of 8 people, injuring 168 others. Most of the casualties were Indonesians, although the Australian embassy was targeted. The 2002 Bali nightclub bombing killed many Australian citizens on vacation, and that was thought to be the reason that the nightclub was targeted.

All three attacks are thought to be the work of Azahari Husin, a British-trained Malaysian engineer, working with Jemaah Islamiah, a branch of al-Qaeda.

Southeast Asia
Southeast Asia

Jemaah Islamiah's avowed aim is to establish a conservative Islamic state across the Malay archipelago encompassing Indonesia, the southern Philippines, Brunei, Singapore, peninsular Malaysia and southern Thailand.

(9-Sept-04) Permanent Link
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Housing prices are beginning to cool down after a year of record increases

The era of huge annual home price increases appear to be ending, as prices in some regions are beginning to cool.

Home prices grew at a record 9.36% during the last year, the highest four-quarter increase since the 1970s. The report (PDF) from the Office of Federal Housing Enterprise Oversight (OFHEO).

House price index, 1990-2004 <font size=-2>(Source: OFHEO)</font>
House price index, 1990-2004 (Source: OFHEO)

The report details housing price increases in regions throughout the nation. It shows that the highest increase, 23%, in Nevada, with Hawaii and California close behind; and the lowest increase (2.58%) is Utah, with Texas and Indiana close behind.

The huge spurt in the last year has been caused by exceptionally low interest prices. After the Nasdaq crash of 2000, falling stock prices might have caused numerous bankruptcies and foreclosures. The Fed reduced interest rates to near-zero, allowing people and businesses that might have gone bankrupt continue by means of low-interest credit.

Because of the low interest rates, mortgage payments became substantially cheaper, so that people could afford more expensive houses, thus increasing home prices.

Now that the Fed is increasing interest rates, housing prices are beginning to cool. However, according to a new estimate, prices of homes in California, Nevada and Florida have begun to fall abruptly in the last couple of months. One expert indicates that a one percent change in interest rates, which is approximately the amount that the Fed has promised for the next few months, will result in a 20% fall in home prices. Prices in surburban Boston are falling as well, according to The Wall Street Journal. And existing-home sales declined 2.9% in July, according to a report from the National Association of Realtors.

America is not the only country with overpriced real estate. According to investment firm Morgan Stanley, residential properties in countries around the world, including America, Australia, the United Kingdom, China, South Korea, Spain, the Netherlands, and South Africa, are overpriced by 50% or more.

Some of those prices are beginning to fall as well; Australian housing prices have begun falling substantially, for example.

The moral of this story is that if you own, or you're thinking of buying, residential property, then you should not assume that prices will continue to go up any longer. (9-Sept-04) Permanent Link
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Terrorism becoming a more issue important for voters, as Iraq becomes less important

According to a poll of likely voters conducted last weekend, terrorism has become a substantially more important issue in the last six weeks, and Iraq has become substantially less important.

According to the Gallup poll, the most important issues now and in mid-July are as follows:

  Economy Terror-
Iraq Health
2004-Sep 3-5 31% 31% 20% 15% 3%
2004-Jul 19-21 31% 26% 27% 15% 1%

As this table shows, terrorism has become a significantly more important issue (31% versus 26%), while Iraq has become a significantly less important issue (20% versus 27%) to voters in the last six weeks. The economy and health care remain unchanged in importance to likely voters.

The importance of this change relates to the fact that American deaths in Iraq have become a non-story, even though the number of deaths passed the 1,000 milestone on Tuesday.

As we've been saying, America entered a "generational crisis" period around the year 2000. Since that time, as in all crisis periods, Americans have become increasingly anxious and fearful about the American way of life and the increasing militancy of Islamic terrorists around the world.

The last time America was in a generational crisis period was during World War II, and the previous time was during the Civil War.

Most of the countries of the world that fought in World War II have recently also entered a generational crisis period. These include countries in Western Europe, the Mideast (except Iraq and Iran), China, Japan and Korea. Other regions, including Russia and the Caucasus countries, had their last generational crisis period prior to World War II, and so are even deeper into a new crisis period today. (8-Sept-04) Permanent Link
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An angry Putin refuses to negotiate with Chechnya

Facing mounting citizen anger and EU criticism for not stopping the barbaric terrorist slaughter in Beslan, Russian President Vladimir Putin refused to negotiate with Chechen rebels in a special press conference for foreign journalists on Monday.

"Why don't you meet Osama bin Laden, invite him to Brussels or to the White House and engage in talks, ask him what he wants and give it to him so he leaves you in peace? Why don't you do that?" he said. "You find it possible to set some limitations in your dealings with these bastards, so why should we talk to people who are childkillers? No one has a moral right to tell us to talk to childkillers."

Putin was referring to a row that began on Friday, when Dutch Foreign Minister Bernard Bot, who has just assumed the rotating role of European Union (EU) President, "requested" an explanation for the bloodshed in Beslan, North Ossetia, where a terrorist hostage-taking resulted in the deaths of 350 people, almost half of them children.

The outraged Russian Foreign Ministry responded with a statement that said, "Inappropriate statements by the Dutch minister look odious ... and blasphemous. We expect explanations from the Dutch side."

The EU backed down, saying that Bot's statement had created a "misunderstanding," but there's little doubt that many Europeans are blaming Putin's longstanding refusal to negotiate with Chechnya for the terrorist action.

While European governments have been reacting very cautiously since the Bot row, editorial writers have not always been so circumspect. An editorial in French newspaper Le Monde complains about "schizophrenic" French policy that is willing to oppose America in Iraq, but "closes its eyes to similar Russian threats that result in blood and slaughter."

Indeed, France is somewhat cornered today by forces beyond its control. On the one hand, France has received enormous sympathy from moderate Muslims over the kidnapping of French journalists in Iraq, and cannot afford to criticize the Islamic terrorists in Russia. On the other hand, Russia was France's ally in opposing UN support for America in Iraq, so France can't afford to criticize Russia too much either. As a result, French President Jacques Chirac is reduced to simply sympathizing with Russia over the slaughter.

Criticism of Russia goes even deeper from former Communist controlled states of Eastern Europe, however, especially those which have recently joined the EU. In fact, Bot's statement was apparently urged on him by foreign ministers from Lithuania and Latvia.

America used to be very critical of Russia's policies in Chechnya, but became much more sympathetic after 9/11.

Troubled areas in Caucasus region - including North Ossetia and Chechnya
Troubled areas in Caucasus region - including North Ossetia and Chechnya

However, Putin himself is under conflicting pressures in assigning blame for these exceptionally brutal and horrific terrorist acts. He called for revenge in his nationwide television address on Monday, but he blamed "international terrorism" from unnamed countries. His reluctance to blame Chechnya directly comes from what he sees as the real danger: An all-out war in the Caucasus, which has, for centuries, been a historic battleground between Orthodox Christian and Muslim civilizations.

That danger is quite real. Infuriated Ossetians, mostly Christian, are directing their anger at the neighboring province of Ingushetia, mostly Muslim.

In addition, Georgian President Mikheil Saakashvili appears to be ready to ready to declare war to expel Russian troops from South Ossetia, because of the perception that Russia is supporting the South Ossetians' moves towards secession from Georgia. Saakashvili appears to believe that Russia would be unable to defend against such a war, because doing so would risk inflaming the Chechen region still further. Saakashvili appears to believe that he would win such a war with relatively little bloodshed.

Thus, the Caucasus region is becoming increasingly inflamed. This is consistent with the Generational Dynamics prediction that a major war will occur in this region during the next few years with almost 100% certainty. In fact, the Caucasus region is the most dangerous region on earth today, even more dangerous than Palestine, because it's farther into a "generational crisis" period. (7-Sept-04) Permanent Link
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American deaths in Iraq has become a non-story

A suicide bombing in Iraq today killed seven Marines, bringing to 990 the number of American military deaths since the beginning of military operations in Iraq in March, 2003. It was the deadliest day for Americans in Iraq in four months.

Even though there have been American deaths almost daily, the number of war deaths is rarely reported in major newscasts today, or is reported only in passing. That's because the American people as a whole have changed in the last few years, more concerned about the danger to the American way of life than even battle deaths.

The number of deaths will probably cross the 1,000 mark later this week. That milestone will undoubtedly generate some news coverage, but to judge from recent reporting, the amount of coverage will simmer down again fairly quickly.

This is remarkable when you consider the fact that just a few combat deaths in Somalia in 1993 caused such a public outcry that the entire military engagement had to be scrapped.

For those who want to understand Generational Dynamics, then this is what happens when a country enters a "generational crisis" period. America began entering this period around the year 2000, as the generation of people who lived through World War II were quickly disappearing (retiring or dying), all at once.

In 1993, America was in a "generational unraveling" period, when individual rights have the highest public priority. Today, individual rights are no longer as important to the great masses of American people as preserving our way of life from Islamic terrorists.

All the countries who fought in World War II are entering generational crisis periods about now. France has clearly done so, as shown by the near-unanimous support for the new headscarf law when the French journalists were kidnapped. And Russia and the Caucasus are the most dangerous region on earth, because they've been in generational crisis period even longer.

It's amazing how the public mood can change so drastically within just a few years, but that's the kind of effect a major generational change can have. That's why, for example, we've been able to predict since 2002 that there would not be any significant antiwar movement in America, and there hasn't been. The world is a much, much more somber place than it was just a few years ago. (6-Sept-04) Permanent Link
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Russian President Vladimir Putin appears to be calling for revenge

Putin said that Russian "weakness in the face of danger" has caused Russia to be "beaten up" in the face of "a total and full-blown war."

A shaken Putin made his somber and angry remarks to a nationwide radio and television audience, after more than 340 people, including 156 children, were killed in a terrorist hostage-taking incident in Northern Ossetia.

This was only the most recent of three major terrorist acts in ten days, including the bombing of two airplanes in flight and a subway bombing in Moscow.

According to Putin, Russia has two choices: To "rebuff" the terrorists or to "begin obeying their orders." He added that "[our] actions [must] become proportionate to the size of the new threats."

In Putin's own words:

From a Generational Dynamics point of view, the call for national unity is significant. A nation in a generational crisis period experiences a series of shocks and surprises that unify the country against a common enemy and elicit a desire for revenge. In other (non-crisis) periods, the country is rent by political differences, and seeks to respond to challenges by means of compromise and containment. But in a crisis period, when the generation of people who lived through the last crisis war disappear (retire or die), the visceral reaction is revenge, not compromise. This eventually leads to a new crisis war.

Troubled areas in Caucasus region - including North Ossetia and Chechnya
Troubled areas in Caucasus region - including North Ossetia and Chechnya

According to President Putin, "The people who sent the terrorists to commit that utterly heinous crime harbored a hope to set on our peoples to fight with one another and unleash a bloody feud in Northern Caucasus."

Thus, Putin is going to try to walk a difficult line. On the one hand, he plans to invoke whatever measures are required to "rebuff" the terrorists. On the other hand, he wants to prevent war in the Caucasus.

Unfortunately, these are conflicting objectives. His enemies, the Chechen terrorists, are also in a crisis period; they're also becoming more and more unified, and they are also looking for revenge.

So any action that Putin takes in Chechnya will have to be fairly harsh, and any harsh actions will only lead to a harsh response. That's what happens during generational crisis periods, until a new crisis war occurs.

The Caucasus region is one of the most dangerous regions of the world right now. From the point of view of Generational Dynamics, it's even more dangerous than the Palestine region, since it's farther into a generational crisis period. It's a major front line in the centuries old war between Orthodox Christians and Muslims. (4-Sept-04) Permanent Link
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George Bush appears to have done well at the Republican Convention thanks to a strong message and a major piece of good luck

This morning's unemployment and jobs report was much more positive than expected, in view of recent weaknesses in manufacturing, retail, and consumer confidence figures. The unemployment rate fell to a three-year low of 5.4%, and the payroll estimates were higher than they have been.

This is a stroke of luck for the Republicans, who had a very weak economic message at the Republican National Convention this week.

The economy was barely mentioned all week. When Bush finally gave his acceptance speech he did have an economy message, but it was just the usually silly laundry list of promises for every one. (John Kerry had a similar list in his acceptance speech at the Democratic National Committee meeting.)

Bush had been in danger of being "Hooverized," in the sense that the Democrats might have painted him as a new President Herbert Hoover, who lost the 1932 election for failing to recognize that the economy was having serious problems and was failing. But now, the Republicans have had a very strong message on the War on Terror this week, and thanks to the jobs report, their weak message on the economy will not matter.

Fighting the Last Antiwar

During the 1960s and 1970s, the World War II heroes suffered one humiliating defeat after another because they didn't realize how much the nation had changed in the 20 years since the war ended. The young college student generation, including John Kerry, challenged the aging hero generation, and won one political victory after another.

One criticism of the aging heroes that was frequently repeated throughout the 1960s and 70s was that "they're always fighting the last war." The implication was the the older generation was out of date, and didn't realize that the new world was different, and different tactics were required for both wars and politics.

The fact that societies flip back and forth between "generational crisis" periods, during which the people feel that their entire way of life is in danger and individual rights are sacrificed, and "awakening periods," during which new political and spiritual ideas blossom and individual rights are emphasized, is part of Generational Dynamics, and has been verified for dozens of times and places throughout history.

So when I say, slightly facetiously, that John Kerry is "fighting the last antiwar," I'm making the point that he's conducting a campaign that would be quite appropriate for the 1960s and 70s, and even the 80s and 90s, but is inappropriate today.

Last night, following President Bush's speech, Kerry held a midnight campaign rally that appeared so desperate that it's hard to fathom what he might have been thinking. Following Bush's strong defense of his decisiveness in the War on Terror, and the laundry list of economic programs, all Kerry could do was make tasteless personal attacks on Bush and Cheney, framed by once more bragging about his Vietnam War record.

It's quite possible that it's too late for Kerry to straighten out his campaign enough to do any good, but here's what he has to do:

A year ago, I strongly criticized Howard Dean for his vitriolic attacks against President Bush. Senator Kerry avoided such attacks for a while, especially in his passionate DNC acceptance speech, but the 1960s is too much a part of both him and Howard Dean, and right now it doesn't look like he has the sense to break free of his own demons. (3-Sept-04) Permanent Link
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France scores major diplomatic coup over hostage crisis

French Muslims have overwhelmingly put nationality above religion, showing the Muslims and Christians in France are far more united than might previously have been expected.

The terrorist kidnapping of two French journalists in Iraq initially stunned the French people because they had strongly opposed the war in Iraq.

However, the French people have now reacted to the crisis by overwhelmingly supporting the new law restricting obvious religious symbols, including Muslim headscarves, in public schools. The terrorists have demanded repeal of the law as a condition for release of the hostages.

Even Muslim opponents of the law are now strongly opposing repeal, because the hostage crisis amounts to foreign interference in French society. According to one Muslim leader, "Some (Muslim) women say that if the headscarf is to be tainted with the blood of hostage victims, then they don't want the headscarf."

The diplomatic coup is international, as Muslims throughout the world have been condemning the terrorist act and demanding the release of the French hostages.

Unfortunately, this international unity of France and the Muslim community does not guarantee that the hostages will be freed. The terrorists, whose goal is to increase the level of international conflict, may well decide that their goal is still best served by beheading their prisoners.

For those who are trying to understand what Generational Dynamics is about, this incident gives us an opportunity to explain why something like this is important.

Generational Dynamics predicts that there'll be a new West European crisis war in the next few years. This is based on the observation that West European crisis wars have occurred repeatedly for centuries, at fairly regular intervals dictated by generational changes. Like the last ones, the new war will involve at least France, Germany and England.

A crisis war unifies a society, and the people become more willing to sacrifice individual rights for the greater good of working together for national survival. This has been happening in America, as shown by the little political resistance to the Patriot Act.

The sudden show of unity by the French, and the willingness to give up individual rights in the form of displaying religious symbols, shows that the French have entered a generational crisis period, and that they'll be united as a people as the crisis proceeds. The show of unity tells us that France will not split along a religious fault line, and end up in a civil war.

The diplomatic closeness of France with the international Muslim community tells us that as the crisis progresses, France will side with the Muslims. This should not come as a surprise, given the enmity that France has shown to England's and America's participation in the Iraq war.

Specifically, this situation makes it clear that in a Mideast war between Palestinians and Israelis, the French will side with the Palestinians and the England and America will side with the Israelis. Nothing is certain until it actually happens, of course, but the hostage incident is clearly pointing France in that direction.

Incidentally, Germany and Russia also opposed the Iraqi war, but they're not exhibiting the same kinds of international unity with Muslims that France has. In particular, Russia has been the target of numerous terrorist acts by Islamic terrorists, and may be close to a major war in the Caucasus region.

As we head for the "Clash of Civilizations" world war, which Generational Dynamics predicts is coming with almost 100% certainty, we can watch events like the French hostage crisis to help us understand how events are most likely to unfold. (2-Sept-04) Permanent Link
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Russians in shock over three major terrorist attacks within a week

The world's most dangerous region, the Caucusus, is quickly becoming even more dangerous, as repeated major terrorist actions attributed to the Chechen "black widows" are creating the impression that Russian President Vladimir Putin is losing control of his country.

Russians themselves are furious that terrorists have taken hundreds of hostages, including 200 children and their parents, in an ongoing drama in North Ossetia.

This follows a car bombing yesterday that killed ten people outside a subway stop in Moscow.

And that follows last week's double airline bombing, attributed to two Chechen women in the two simultaneous incidents that killed 90 people. The perpetrators were two women, 30 and 37, who had been roommates. One of them had lost her brother when, according to reports, he was abducted, tortured and killed by Russian forces in 2001.

Other terrorist acts this year include a Moscow subway bombing in February that killed 41 people and the May 9 bombing in a stadium in the Chechen capital, Grozny, during a Victory Day ceremony, that killed 24 people, including Chechen President Akhmad Kadyrov.

Troubled areas in Caucasus region - including North Ossetia and Chechnya
Troubled areas in Caucasus region - including North Ossetia and Chechnya

Some analysts are blaming the wave of terror attacks on Russia in general and on Putin in particular, because of the policy that permits Russian security forces to abduct, torture and kill young Chechen men suspected of rebel ties. It's this policy that spawned the "black widow" movement, consisting of female Chechen suicide terrorists. The group is also known by the name "Islambouli Brigades of al-Qaeda."

While it's certainly true Putin has mishandled the situation, and it's certainly true that Russian policies have exacerbated the terrorist problem in the Caucasus, the terrorism precedes the Russian policies, going back to Chechnya's 1994 attempt to secede from Russia.

The Caucasus region is one of the most dangerous regions of the world right now. From the point of view of Generational Dynamics, it's even more dangerous than the Palestine region, since it's farther into a generational crisis period. It's a major front line in the centuries old war between Orthodox Christians and Muslims.

Today's terrorist hostage-takers are demanding the release of Chechen fighters seized by Russian forces during another terrorist attack, a June 22 attack by heavily armed rebels against the Russian Interior Ministry in the next-door province of Ingushetia.

The fact that this incident is taking place in North Ossetia relates it to another ongoing drama, the threatened secession of South Ossetia from Georgia, in order to merge with North Ossetia in Russia.

Mikheil Saakashvili appears to be ready to ready to declare war on Russia, because of the perception that Russia is supporting the South Ossetians' moves towards secession. Saakashvili appears to believe that Russia would be unable to defend against such a war, because doing so would risk inflaming the Chechen region. Saakashvili appears to believe that he would win such a war with relatively little bloodshed.

Generational Dynamics predicts that the "Clash of Civilizations" world war is going to occur within the next few years with almost 100% certainty. I think that we can now begin to see more clearly how events in the war on terror are likely to unfold. Islamic terrorists throughout Europe and Asia are using more and more terrorist attacks to inflame and infuriate people, even moderates. Sooner or later, one of these countries is going to declare war on somebody, in order to "solve the problem once and for all" - just as an infuriated America immediately declared war on Afghanistan after 9/11. We can't predict exactly where it will happen -- an infuriated Israeli population against the Palestinians, an infuriated Russian population against Chechnya, or a similar situation in Pakistan, Bangladesh, Philippines or other places. Once such a war begins, it's liable to lead, within a few months, to the spread of war to other regions, leading to the "Clash of Civilizations." None of this is certain, of course, but this appears to be an increasingly likely scenario.

A side note: The television commentators on the cable news stations seem to know very little about what's going on in this region. Several are attributing the hostage-taking to last Sunday's election; this ignores the fact that the Chechen issues are much deeper, and it also ignores the fact that the school takeover obviously required months of planning. One CNN analyst this morning spoke at length about the situation, and kept referring to the school takeover as taking place in "South Ossetia." Anyone who knows anything at all about this region could not possibly confuse South Ossetia, which is a northern province of Georgia, with North Ossetia, which is a southern province of Russia. (1-Sept-04) Permanent Link
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Republicans have strong message on terror, weak message on economy

Taking place only a few blocks away from the site of the World Trade Center destroyed on 9/11, Rudolph Giuliani, John McCain and Arnold Schwarzenegger gave a powerful justification for the War on Terror and the invasion of Iraq.

The Republicans are clearly hitting the right note on the terror issue, as Democratic candidate John Kerry continues to flounder from attacks on his 1971 remarks that American soldiers committed atrocities and war crimes on a day to day basis in Vietnam, with the full awareness of officers at all levels of command. As we've previously said, Kerry must repudiate his 1971 remarks or lose the election, because the War on Terror cannot be led by a President who believes that America committed the same kinds of atrocities in Vietnam that Islamic terrorists are committing today.

However, the Republicans are still in very dangerous territory on issues related to the economy. In Schwarzenegger's phrase, the message was that pessimists about the economy are economic girlie men. As we've said, Bush's reelection is in danger because the Democrats can accuse him of being another Herbert Hoover, a President who refused to acknowledge that the economy was in trouble by saying, "Prosperity is just around the corner."

Recent economic indicators have not been encouraging. In figures released separately yesterday, consumer confidence in the U.S. economy fell sharply for the first time since February, and a closely watched report by the National Association of Purchasing Management in Chicago indicates that manufacturing is slowing.

If the Republican message remains nothing more than "Prosperity is just around the corner," then they could be in trouble as early as Friday morning, when the next jobs report comes out. The jobs report has been negative for several months, after being positive in the spring.

With regard to the other major speakers at the Republican Convention, the Bush daughters, Barbara and Jenna, were waaaaaaaaaaay too cute, and Laura Bush was waaaaaaaaaaaaay too sweet. These speeches were completely out of place at the Convention. I hope that women viewers got something out of them, because they did nothing for me. (1-Sept-04) Permanent Link
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