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


Web Log - April, 2005


Another ominous day for the American economy

Stocks fell 1.3% on Thursday as volatility continues, growth slows, and other indicators are lower.

The business news:

DJIA, April 28 2004-2005
DJIA, April 28 2004-2005

Quarterly GDP (Gross Domestic Product) increases, 2004-present
Quarterly GDP (Gross Domestic Product) increases, 2004-present

I've been forecasting since 2002 that we're entering a new 1930s style Great Depression, and that the market would fall to the Dow 3000 by the 2006-2007 time frame. With the balance of payments and public debt continuing to grow exponentially, and with stocks overpriced by 100%, using standard price/earnings measurements, there's certainly no reason to revise that forecast now.

As I discussed last week, the continuing market volatility is very ominous, because it creates the kind of environment that precedes a market crash, provided the right kind of trigger occurs. These negative GDP and related figures could provide that kind of trigger in the next few weeks.

This is not a certainty, of course; perhaps the stock market will fall only slightly, or will recover and go up again. But Generational Dynamics predicts that such a crash must occur in the next few years, and with greater than 50% probability before the end of 2007.

Normally optimistic financial analysts yesterday expressed far more concern than usual.

"Business capital spending growth slowed markedly and, with the slump in capital goods orders late in the quarter, may portend an earlier and more abrupt slowdown than we had reckoned on," said David H. Resler and Gerald Zukowski, Nomura Securities International, as quoted by the Wall Street Journal.

The Economist reports that a recent analysis shows American consumers will have to cut spending by 1/3 for ten full years, just to cut the deficit in half. "For America's consumers, that will be an unpleasant shock. Prudent central bankers should be preparing them for it."

But central bankers are doing nothing of the sort, and that's the problem.

A reader recently asked me whether my prediction of a stock market crash could ever be proved wrong, or would I always just say "Wait till next year."

My response is that I'll begin to have my doubts about my prediction as soon as something is done to show a change in direction. I watch these figures every day, and they constantly get worse. The balance of payments keeps growing exponentially. Public debt keeps growing exponentially. The Medicare / Medicaid / Social Security packages are growing out of control, and Washington is doing nothing about it.

And nobody really shows any signs of giving a damn. Even the Fed is living in a fantasy world, if we're to judge from the bizarre February speech by Fed Governor Ben Bernanke, where he blamed America's public debt on other saying that it was caused by a "global saving glut" in other countries of the world.

In the meantime, I'm warning my readers again that the economy is exhibiting extremely ominous signs right now, and a great deal of caution is in order. (29-Apr-05) Permanent Link
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Taiwan opposition leader's trip to Beijing is high theatre

Taiwan's generational split is on display today, amid cheers and cries of "traitor."

Lien Chan, leader of KMT, Taiwan's opposition Nationalist Party <font size=-2>(Source: BBC)</font>
Lien Chan, leader of KMT, Taiwan's opposition Nationalist Party (Source: BBC)

Lien Chan was just a youth when he and his family fled mainland China for Taiwan to escape execution by Mao Zedong's army, after the Communist Party defeated the Nationalist Party in a 15-year civil war that ended in 1949.

Lien is returning to the mainland today for the first time in 56 years. He'll be leading a delegation of senior officials of the same Nationalist Party that fled from the Communists in 1949. It'll be the first meeting of Communist and Nationalist Party officials since then.

Mr Lien, who was born in China, has called his trip to the mainland a journey of peace - saying he hopes it will help the two sides work towards reconciliation after more than half a century of conflict.

Lien says his trip is a journey of peace. "I hope the journey will contribute in whatever small way towards mutual assistance, mutual concern, and the creation of a win-win situation," he said.

This is rich in irony of course, as any good political ploy is. The trip has infuriated supporters of the ruling Democratic Progressive Party, although President Chen Shui-bian has given the trip cautious approval.

The trip dramatizes the sharp differences in views between people of different generations.

Lien was born in 1936. He grew up during the genocidal civil war, and saw dozens or hundreds of his friends and family slaughtered during the war. Like most people in the generation that grows up during a crisis war, he suffered a kind of "generational child abuse," and grew up to be an indecisive adult who seeks compromise and containment of problems rather than confrontation.

President Chen was born in 1950, part of the risk-seeking generation that grows up after a crisis war (like America's Baby Boomer generation). He has no personal memory of the civil war, and has no fear of confrontation.

The younger generations were greatly influenced by China's bloody 1989 Tiananmen Square massacre, which convinced them that they didn't want to be part of China. Taiwan's college students began the "Wild Lily Rebellion" several months later, and in 2000, one of their leaders became President of Taiwan: Chen Shui-Bian.

Taiwan poll results to question: "Do you feel Taiwanese, Chinese or both?" <font size=-2>(Source: WSJ)</font>
Taiwan poll results to question: "Do you feel Taiwanese, Chinese or both?" (Source: WSJ)

The adjoining graph, which shows the number of Taiwanese who call themselves "Chinese" versus "Taiwanese" shows how the generational change is playing out. As the older generation dies out, the number of people calling them "Chinese" has been decreasing; as younger generations grow older, the number of people calling themselves "Taiwanese" is increasing.

From the point of view of Generational Dynamics, a reunification war between China and Taiwan is inevitable, and will occur with 100% certainty. As we've previously described, China has announced double-digit war budgets for each the past several years, and appears to be preparing for a preemptive strike. China is believed to be building a navy of amphibious vehicles capable of transporting an invading army to Taiwan. Such a war would bring military retaliation from America. (27-Apr-05) Permanent Link
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Russian President Vladimir Putin bares his teeth as unrest spreads in Russia

Putin threatened to crack down heavily on any attempts to instigate a popular revolution in Russia, in Sunday's State of the Nation speech.

Vladimir Putin
Vladimir Putin

The speech comes as social unrest has been spreading throughout Russia.

The social unrest is increasing because of a recent law that removed numerous benefits, and replaced them with cash payments worth much less for many pensioners.

In past years, the public would be demonstrating against their local government leaders, but that no longer makes sense, since Putin abolished direct election of regional leaders last year.

"It is evident now that instead of making its life easier with this proposal, the Kremlin created huge problems for itself," said Nikolai Petrov, an analyst at the Moscow Carnegie Center who studies regional politics. "There are now no legal means for the opposition in this or that region to beat the incumbent governor."

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

Ethnic protests have been also occurring in Karacheyevo-Cherkassia, Ingushetia and North Ossetia, Russia's Muslim southern provinces in the Caucasus. A neighboring province, Chechnya, has been the site of a regional war with Russia that's now over ten years old.

The social unrest throughout Russia is being encouraged by the success of protests in three former Soviet Republics: Georgia, Kyrgyzstan and Ukraine. During the last 18 months, widespread protests and demonstrations have resulted in the downfall of Kremlin-supported leaders in each of these three now independent nations.

These three losses have been extremely humiliating to Putin, as he indirectly indicated in his State of the Nation speech, when he referred to the 1991 breakup of the Soviet Union as "the biggest geopolitical catastrophe of the last century. Specifically for the Russian people it became a real drama. Dozens of millions of our citizens and compatriots found themselves outside of the borders of Russian territory".

Many Muslims considered this statement to be quite ominous, as indicated by an editorial in the Arab News:

As I've written on several occasions, Putin is a man of steely determination. He made some missteps by overreaching in Ukraine, where he humiliated himself, but he stepped back and covered his tracks very adroitly, all the while accumulating more power for himself in the Kremlin.

From the point of view of Generational Dynamics, Russia and the Caucasus is one of the the six most dangerous regions of the world, in that a regional war is almost certain to expand quickly into a world war. Generational Dynamics predicts that the violent Russian civil war, ending in 1928 following the Bolshevik Revolution and killing tens of millions of Russians, is going to be refought, with near absolutely certainty.

An eerie sign of this is the revival in veneration for Josef Stalin, one of the greatest monsters of the 20th century, who committed genocidal atrocities against Muslims, Chechens, Ukrainians, and several other ethnic groups in the 1930s and 1940s. These fault lines are all reopening. (26-Apr-05) Permanent Link
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China makes five demands of Japan

After Japanese leader apologized at length for Japan's history, a private Saturday meeting between Chinese President Hu Jintao and Japanese Prime Minister Junichiro Koizumi at the Asian-African summit in Jakarta failed to resolve differences between the two countries.

The day before the meeting Mr. Koizumi said that Japan humbly accepted the facts of history that "through its colonial rule and aggression, [it had] caused tremendous damage and suffering to the people of many countries, particularly to those of Asian nations."

He added, "With feelings of deep remorse and heartfelt apology always engraved in mind. Japan has resolutely maintained, consistently since the end of World War II, never turning into a military power but an economic power, its principle of resolving all matters by peaceful means, without recourse through the use of force."

However, in an accident of bad timing, just hours before Koizumi's speech, Japanese lawmakers paid a long-scheduled visit to Yasukuni Shrine, which honors Japan's 2.5 million war dead from World War II, including a number of war criminals.

This led a frosty Hu to snap, "Remorse expressed for (Japan's invasion of China and World War II) should be translated into action and no move should be made to offend the people of China and the people from other Asian countries."

The Saturday meeting between Hu and Koizumi was cordial, but Hu used the meeting to make five "proposals" to Japan to improve relations between the two countries:

  1. The Japanese government should strictly abide the existing "Peace and Friendship Treaty" between the two countries, and take specific actions to forge a friendly and cooperative relationship.
  2. The Japanese government should reflect on the aggression by the Japanese militarists against China in the 1930s and 40s, and deal with historic problems in a serious and sincere manner. (This refers to the Chinese complaints that Japanese textbooks don't deal with Japan's history sincerely.)
  3. Japan should support the "one China" policy, and oppose Taiwan independence. (In recent months, Japan and Taiwan have been supporting each other's positions against the Chinese.)
  4. Differences between the two nations need to be resolved through dialogues and peaceful negotiations.
  5. The two countries should further strengthen communication and cooperation.

Needless to say, not all Japanese are willing to simply accept these Chinese "proposals." Japanese Foreign Minister Nobutaka Machimura is playing "bad cop" to Prime Minister Koizumi's "good cop." He warned Beijing against more anti-Japan demonstrations, and then he criticized China's textbooks, saying that, "There is a tendency toward this in any country, but the Chinese textbooks are extreme in the way they uniformly convey the 'our country is correct' perspective."

From the point of view of Generational Dynamics, Japan and China are heading for war with 100% certainty. As the generation of people who grew up during and have personal memory of the horrors of World War II all retire, the younger generations will increasingly reject compromise and containment of problems, and adopt solutions involving confrontation.

It's important to remember that all of this is really irrespective of what the politicians do. If it were up to Koizumu and Hu, the two countries would probably work out some sort of compromise. But both countries are entering a "generational crisis" period, and during these periods it's the masses of people that lead the country into war, not the politicians. If the politicians tried to compromise, the people would throw them out of office.

As Leo Tolstoy wrote about Napoleon's invasion of Russia in War and Peace, "Had Napoleon then forbidden [his army] to fight the Russians, they would have killed him and have proceeded to fight the Russians anyway, because it was inevitable." We're seeing the same sort of thing today between China and Japan, as well as in other regions of the world, at this unique time in history, 60 years after the end of World War II. (25-Apr-05) Permanent Link
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Giddy, ebullient investors push stocks to highest gain in years

Wild turbulence continues as stocks close 2% higher after week's 7% fall.

All three major Wall Street indexes -- the Dow, the S&P 500 and the Nasdaq -- rose 2% to 2.5% Thursday, in the largest gain since October 2003.

And as of midday Friday, Japan's Nikkei index is following suit with a 2% jump. (Update: By end of day Friday, the Nikkei is making only a 0.55% jump.)

Commentators are expressing ebullience. On Thursday's NPR Marketplace business program, host David Brown referred to the "broad smiles" on the faces of investors.

Anyone who's been reading this web site for a while knows that I'm a curmudgeon who's critical of most of what passes for financial commentary today, but this giddiness is almost beyond belief.

DJIA, April 21 2004-2005
DJIA, April 21 2004-2005

The market has been going up and down for the last year or more, as the adjoining graph shows. But in the last few weeks, these oscillations have been getting more rapid, making the market increasingly volatile. As we wrote about yesterday (see next item, below), this doesn't necessarily mean that a crash is imminent, but this is the behavior that always precedes a crash.

Let's take a look at the psychology of what's going on. Why would investors sell so much for a few days, and then buy so much on the next day?

Dow Jones Industrial Average - the trend value in 2006 is 4900; in 2010 it's 5800
Dow Jones Industrial Average - the trend value in 2006 is 4900; in 2010 it's 5800

First of all, the stock market is a bubble floating in mid-air. Stock prices today have no relationship to the actual values of the companies they represent, as the adjoining graph shows. As we've previous described, the actual value of the companies being represented is shown the the long-term trend line, which has a value of 4900 in 2006 and 5800 in 2010. These values are far below todays stock market prices, above Dow 10000, indicating that today's stock market is some 100% overpriced.

Under normal circumstances, the stock market will oscillate around that line, with stock prices sometimes a little overpriced, and sometimes a little underpriced.

But something went wrong in the 1920s and the 1990s bubbles, when stock prices went high above their underlying values, and price/earnings ratios went into the 20s or 30s or higher. Today, stock prices are still in bubble territory.

So if today's stock prices have no real relationship to the companies they represent, then why does the market go up and down on a daily basis?

This is "behaviorial economics" gone amok. Investors use faulty data based on faulty theoretical models. In fact, I've written several times about the nutty misinterpretations of price/earnings ratios used by financial analysts who try to hide the fact that almost all stocks are overpriced.

When you look at investors' decision making process, you see that there's been a dramatic change in the last few months. In "normal times," investors make decisions about buying or selling individual stocks. But today, investors are making decisions based on whether the market as a whole will go up or down on a daily basis.

This means that investors are following a "herd mentality," all tending to move in the same direction, dictated by the market as a whole, rather than in different directions, dictated by individual stocks.

It's the volatility of the market that indicates that the herd mentality is going on, and the greater the volatility, the greater the herd mentality.

In "normal times," an individual stock can be highly volatile, as investors as a group sell off the stock or buy the stock heavily, based on rumors or emotions or real data.

Today, with investors moving in unison, the whole stock market is becoming more and more volatile, and the stock market as a whole moves up or down, based on rumors or emotions or real data. And that means that, one of these days, there will be a sharp selloff.

My original prediction, made in 2002, based on generational analysis and standard growth analysis, was that we would have a major stock market crash (DOW down to 3000-4000 range, S&P 500 index down to 400) by 2006 or 2007. This MUST happen sooner or later because stocks are so far overpriced. The rapidly increasing volatility of the market indicates that that day is coming sooner rather than later. (22-Apr-05) Permanent Link
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Increasingly volatile stock market falls to six-month lows

Investors are becoming increasingly risk-averse, indicating a major correction may be in store.

Stocks have fallen 1-2% per day in four out of the last six sessions, for roughly a 7% fall. Japan's Nikkei index has taken a similar fall, and as of midday Thursday, the Nikkei is down an additional 2%.

If there's going to be a major stock market crash, then this is exactly the type of situation that would be a prelude.

From the point of view of Generational Dynamics, a stock market crash to about Dow 3000-4000 is near 100% certain. As usual, Generational Dynamics tells you what the final destination will be, but doesn't tell you the path or how long it will take to arrive there.

S&P 500 index, 1950 to present
S&P 500 index, 1950 to present

In 2002, we predicted that America entering was entering a new 1930s Great Depression, with a fall to the Dow 3000 range by 2007. This was based on straightforward analysis using price/earnings ratios and growth trends, as illustrated by the adjoining graph.

When a stock market crash occurs, it happens after the kind of volatility we've been seeing. Thus, there's a possibility that we'll see a major stock market crash within the next few weeks.

This is not a certainty in this time frame, of course. A stock market crash is a certainty, but the precise time frame is not.

There are several reasons factors that indicate that it's coming sooner, rather than later:

I've computed the probability of a stock market crash before the end of 2007 as being above 50%. For reasons that I described last year, there's good reason why major disasters (Civil War, 1929 crash, Pearl Harbor, 9/11) are likely to occur in the fall of the year following a Presidential election, and so if a stock market crash is going to occur this year, I would expect it in the fall.

So it's possible that the stock market will temporarily recover from the past week's downturn. But this past week has been especially ominous, and I'm posting this notice to readers of my web site to be prepared for the worst in the next few weeks. (21-Apr-05) Permanent Link
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Neither China nor Japan backing off from increasing confrontation

As conflict increases, America's Pacific strategy is coming apart at the seams.

Japanese lawmakers said Tuesday that they plan to visit Yasukuni Shrine, which honors Japan's 2.5 million war dead from World War II. But the infuriated Chinese say some of the dead being honored were war criminals who committed atrocities against the Chinese.

This follows three weekends in which tens of thousands of Chinese students violently rioted against the Japanese embassy and Japanese businesses in several large cities in Eastern China.

Japan has demanded that China apologize for the violence, and China has refused. China blames the violence on Japan for refusing to face up to its history and show proper contrition for its actions in WW II.

The level of mutual acrimony between Japan and China has been increasing steadily and openly for weeks, so much so that an alarmed United Nations Secretary-General Kofi Annan asked the leaders of the two countries to meet and resolve the dispute. Such a meeting could take place later this week at the Asia-Africa summit, which opens in the Indonesian capital, Jakarta, on Thursday.

However, Japanese Prime Minister Junichiro Koizumi put such a meeting in doubt by saying, ďA meeting that becomes an exchange of criticism is not constructive."

The Wall Street Journal reports that American foreign policy is being affected by the dispute:

China already failed to meet Washington's fond hopes and expectations when it didn't convince North Korea to abandon its plans to acquire nuclear weapons. But North Korea has increasingly adopted a hard line against negotiations after walking out of the nuclear non-proliferation talks. It's now believed that North Korea already has 6-8 nuclear weapons, as well as the missiles to deliver them as far as Japan or even California.

And now, North Korea has suddenly shut down its main nuclear reactor, evidently in order to remove spent plutonium and reprocess into weapons fuel into six to eight additional nuclear weapons. "We don't know the state of readiness of their reprocessing facility," says an official of the International Atomic Energy Agency, but "if it's fully operational, then they have a reprocessing capability that can separate the spent plutonium in a matter of months."

Generational Dynamics predicts that North Korea will start a war to reunite South and North Korea under North Korean control, that China will start a war to return Taiwan to Chinese control, and that China and Korea will get revenge against Japan for the latter's actions prior to and during World War II. These wars could begin next week or next year, but they're coming with 100% certainty. (20-Apr-05) Permanent Link
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Chinese rage at Japan grows, as does fear of uncontrolled rioting

Chinese Internet boards are calling for renewed anti-Japanese riots this weekend.

The new riots would follow last weekend's massive riots, where 20,000 Chinese threw rocks and bottles at the Japanese embassy and at Japanese businesses in other cities.

Map of East China Sea and disputed region <font size=-2>(Source: BBC)</font>
Map of East China Sea and disputed region (Source: BBC)

The Chinese were further enraged this week when Japan began allocating gas exploration rights in an area of the East China Sea also claimed by China.

But this is only the latest in what the Chinese see as provocations fueled by Japanese nationalism and an unwillingness to face up to its historical crimes. (However, one commentator recently made the point that the Chinese also refuse to face up to their history, especially the genocidal Great Leap Forward in the late 1950s, which killed tens of millions of people.)

In return, Japan accused China of ignoring anti-Japanese violence in China, by "implying that the responsibility lies with the Japanese side and not with the Chinese side. ... Such violent acts, however, cannot be justified for any reason whatsoever in the international community today."

This dispute may have torpedoed Japan's bid to convince the world to gain a permanent seat on the UN Security Council.

Chinese Premier Wen Jiabao made extremely strong anti-Japanese remarks during a visit to India, referring to the Security Council issue: "The core issue in China-Japan relations is that Japan needs to face up to history squarely. ... Only a country that respects history, takes responsibility for past history and wins over the trust of people in Asia and the world at large can take greater responsibility in the international community."

Asian nations are lining up on both sides of this issue.

North Korea called Japan "a vulgar and shameless political dwarf," protesting new Japanese school textbooks that appear to gloss over Japan's actions in World War II. They added, "This is a grave insult to the people of Korea and the rest of Asia who suffered all sorts of misfortune and pain due to Japanese imperialists." South Koreans have also expressed outrage over the textbook.

On the other hand, Japan and Taiwan appear to be forming an anti-China alliance. This will only provoke China further.

Chinese protests carry a risk - to China

However, starting a couple of days ago, the Chinese government has started to discourage the rioting, and has ordered leaders of last weekend's protests to stay at home. China is also clamping down on Internet message traffic that encourages further rioting. (China is the most sophisticated country in the world in controlling the Internet, according to a study and report from the OpenNet Initiative.)

The reason is that China is afraid that the rioting will spiral out of control and turn against the Chinese government itself. Large mass riots have been occurring throughout the country in recent months, and as I wrote in January, China appears to be close to civil war. Such a civil war might be triggered by any sort of financial crisis that throws many of its 150 million itinerant workers out of employment.

"The basic policy of our government has been to be conciliatory to Japan and the rest of the world," says Pan Wei, a political theorist at Beijing University. "But that policy has become less viable today, when people are demanding a harder line."

We'll have to see whether China's "conciliatory" attempts bear fruit this weekend.

What is happening is that the level of conflict in the region -- Japan, China, Korea, Taiwan -- is increasing every day. There may well be war in the region in the next 12 months.

Why such a dire forecast?

A couple of readers have asked me why my forecasts for the North Pacific region seem more dire than forecasts for other regions.

Last year, when I wrote about the six most dangerous regions of the world, I felt that the Caucasus (southern Russia) region was the most dangerous, because of the 10-year-old Chechen war and a long series of bloody terrorist events, culminating in the Beslan school massacre. I also felt that the Caucasus was the most dangerous because it's farthest into a "generational crisis" period, with Russia itself on the World War I timeline (while other regions are on the World War II timeline).

However, Putin has been increasingly conciliatory for the last few months, backing off from putting pressure on Ukraine and Georgia, for example.

The Mideast entered a conciliatory period, with the election of Mahmoud Abbas in Palestine, although the good will is quickly fraying at the edges.

But nothing like that has happened in the North Pacific. The one major conciliatory act in the last few months was the "five noes" speech by Taiwan President Chen Shui-bian, in which he pledged no declaration of Taiwan independence, no incorporation of "two states" into its constitution, no change of the so-called country's name and no referendum on Taiwan independence.

However, that one act of conciliation turned to fury and massive anti-Chinese Taiwan public demonstrations, the largest in history, after China responded by passing its Anti-Secession law, making it legal for China to invade Taiwan.

The point is that other regions bounce back and forth between confrontation and conciliation, but the North Pacific doesn't. North Korea and China are clearly mobilizing for war, and almost every day brings a fresh spiking of the level of confrontation.

It's quite possible that North Korea or China will pursue a preemptive war over reunification with South Korea and Taiwan, respectively. But even if there is no preemptive war, there's still the possibility of overreaction or miscalculation.

For example, this dispute of gas rights in the East China Sea could lead to a small armed skirmish between Chinese and Japanese patrols in the islands themselves, and that could quickly escalate to a much larger conflict.

Most of the time, Japan and China would back down from such a confrontation; but in a generational crisis period, they'll look for reasons to confront and escalate rather than to compromise and contain problems.

That's why anything from a financial setback to a mild skirmish can lead to war. And in the mood these countries are in, that could happen at any time. (16-Apr-05) Permanent Link
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US trade deficit hits new monthly record high

Meanwhile, former Fed Chairman Paul Volcker is predicting a financial crisis

Trade deficit, 2002-present. <font size=-2>(Source: WSJ)</font>
Trade deficit, 2002-present. (Source: WSJ)

For a long time now, analysts have been hopefully predicting that the trade deficit would fall.

Instead of falling, the trade deficit had a fresh monthly high in February, $61.0 billion. Indeed, it continues to grow exponentially, as shown by the adjoining graph.

The new high was achieved because of the increased volume of clothing imports from China, and because of the increase in the price of oil.

Imports and exports <font size=-2>(Source: Dept. of Commerce)</font>
Imports and exports (Source: Dept. of Commerce)

A more detailed picture is shown by examining the components in the adjacent graph, taken from the full US Dept. of Commerce report (PDF file).

The trade deficit is computed by subtracting the amount of our exports to other countries from the amount of our imports from other countries. As this graph shows, the amount of imports keeps rising, while the amount of exports has leveled off.

Is there any reason to believe that either of two trends will change? I sure don't know of any reason.

In fact, a report from the Bloomberg service today says that several analysts are reducing their forecasts for the American economy.

The leveling off of exports is especially ominous, because it shows that the American economy is not making goods that people want to buy. This reinforces the analysis from Generational Dynamics that the American economy as a whole is becoming increasing inefficient, as the new businesses created during the 1930s Great Depression have been getting increasing bureaucratic and inflexible in the intervening decades.

I've been pointing out frequently that Fed Chairman Alan Greenspan has sounded increasingly alarmed in the past year. As Fed Chairman, Greenspan has to be very careful about what he says, so his statements of concern have to be taken seriously.

However, now we have an opinion from Paul Volcker, the man who was Fed Chairman from 1979 to 1987, and whom Alan Greenspan replaced.

In an April 8 editorial in the Washington Post, Volcker says that "[current] circumstances seem to me as dangerous and intractable as any I can remember, and I can remember quite a lot."

Having been born in 1927, Volcker remembers the Great Depression of the 1930s, so Volcker must have been referring to that period.

Volcker points out a number of imbalances -- the housing bubble, high personal debt and disappearance of savings are examples. He indicates that these imbalances could be resolved if there were a national will to do so. But, "[what] really concerns me is that there seems to be so little willingness or capacity to do much about it."

That's exactly the kind of public attitude that Generational Dynamics predicts. During the 1950s-1980s, when all our nation's leaders had lived through the starvation, homelessness, unemployment and devastation of the Great Depression, there was a strong national determination to be fiscally sound, so that the Depression would not repeat itself.

Paul Volcker himself was part of such an effort. During the 1970s, inflation grew rapidly and appeared to be spiraling completely out of control. Paul Volcker was appointed Fed Chairman and he immediately raised interest rates and cooperated with Congress to control inflation. The program was successful.

But today there's no similar willingness to resolve our current economic crisis, according to Volcker. He suggests several policies, and says:

"But can we, with any degree of confidence today, look forward to any one of these policies being put in place any time soon, much less a combination of all? The answer is no. So I think we are skating on increasingly thin ice. On the present trajectory, the deficits and imbalances will increase."

and he concludes:

"I don't know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change."

There can be little doubt of this.

American consumers are buying more and more clothing manufactured in China. Even though gasoline prices have almost doubled in the last year, gasoline demand in US is 2% higher than it was a year ago, and jet fuel demand is 11% higher. There are no signs that the American consumer is cutting back on using credit cards and home equity to purchase everything under the sun.

So there is no national will to bring about a change, and the current trend lines seem to be reaching a crisis point fairly quickly. Things have been getting steadily worse for many months now, and there's nothing on the horizon suggesting a change. (13-Apr-05) Permanent Link
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Jane Fonda's half-hearted selective apology

This puts John Kerry in the spotlight.

I was sufficiently confused about the Vietnam War in the 70s that I didn't know what to make of Fonda's trip to Hanoi. But I did clearly understand the difference between criticizing the President (first President Johnson and then President Nixon) versus criticizing the soldiers who were bravely doing the jobs that their nation asked them to do.

Jane Fonda mirthfully posing with enemy North Vietnamese soldiers
Jane Fonda mirthfully posing with enemy North Vietnamese soldiers

So when Fonda now apologizes and says she didn't hate our soldiers, I know she's lying. That was a big part of the antiwar campaign. Antiwar protestors, led by the likes of Jane Fonda, would spit on soldiers, call them war criminals and baby killers, and even become violent with them.

The adjoining picture is that one the Fonda now disavows. She says that as soon as the picture was taken, she immediately regretted it, because she knew it would look that she was demonstrating against the soldiers rather than against President Nixon.

Jane Fonda, back from Hanoi, wearing a necklace gift from the North Vietnamese. The necklace was made from the melted parts of a U.S. B-52 shot down by Hanoi.
Jane Fonda, back from Hanoi, wearing a necklace gift from the North Vietnamese. The necklace was made from the melted parts of a U.S. B-52 shot down by Hanoi.

Well, her "regret" didn't last long. In the above picture, she's shown wearing a necklace made from the melted parts of a U.S B-52 shot down by Hanoi. So her regret didn't last long enough to avoid celebrating the death or capture of the American soldiers shot down with it.

And Fonda's real feelings came out in 1976, when it became clear that the Chinese and North Vietnamese were supporting a holocaust and genocide of historical proportions going on in Cambodia. Millions of people were being tortured and killed, but Fonda, allied with her communist leaning friend William Kunstler, refused to condemn or criticize the Vietnamese or Chinese in any way. Finally Kunstler, speaking for himself and Fonda, said, "I would never criticize the actions of any Socialist government." So Fonda actively supported and helped our enemies, and then refused to condemn the same people when she perpetrated a massive genocidal holocaust.

From the point of view of Generational Dynamics, there's an important context to this story. The political turmoil of the 1960s and 1970s occurred in a "generational awakening" period. A generational awakening period is characterized by massive political struggle based on a "generation gap," a conflict between the aging (World War II) war heroes and their children. Basically, the younger generation is opposed to whatever their fathers are for.

In the 1970s, Fonda's hatred of her father, Henry Fonda, was well known. The father had starred in a number of WW II moves that Jane Fonda now despised, along with her father. They only finally made up in 1981, when they starred in the movie On Golden Pond together.

Still, let's let bygones be bygones. I'm glad that Jane Fonda has finally figured out the distinction between hating Nixon and hating our soldiers, and that's she's apologizing for the latter. Of course, she's lying about it, and she's only doing it because she's promoting her new book and her new movie that's coming out next month, but I'm glad that she apologized anyway.

That brings us to Senator John Kerry of Massachusetts.

In 1971, Kerry said that American soldiers in Vietnam were committing war crimes "on a day-to-day basis with the full awareness of officers at all levels of command." He said that these atrocities included rape, torture, and cutting off ears, heads and limbs.

Now, when I wrote about this during last year's Presidential campaign, I said that I didn't care what Kerry said decades ago, but I wanted to know what he believes today. I believed that Kerry must repudiate his 1971 remarks, because if he were elected President without repudiating those remarks, then he'd have to do it anyway as President, 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.

I discussed this issue with some friends of mine who were strong Kerry supporters. Their response was to say that Kerry's 1971 statement was correct since, in essence, American soldiers in Vietnam were the equivalent of Nazi Storm Troopers of World War II who committed atrocities against the Jews.

Well! Anyway, Kerry didn't win, so it's no longer absolutely necessary for him to repudiate his 1971 statement. But it would be nice if he took Jane Fonda's leave and apologized for them.

But still, I live in Massachusetts, so Kerry is my Senator. And I would still like to know what Kerry believes today. Does Kerry believe today that American soldiers in Vietnam were no different than Nazi Storm Troopers? Enquiring minds want to know, but I have a feeling we aren't going to find out. (11-Apr-05) Permanent Link
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Thousands of Chinese protesters hurl bottles at Japan Embassy in Beijing

Anti-Japanese feelings in China and Korea have been erupting for weeks.

On Saturday, 10,000 stone-throwing protesters smashed windows at the Japanese embassy and Japanese-owned businesses in Beijing. It's not known who organized what is called a "patriotric rally" protesting Japan's actions prior to and during World War II, but notices appeared on Chinese internet bulletin boards, and the rally appears to have been sanctioned by the Chinese government.

This is only the latest in the series of expressions of anti-Japanese sentiments that have been building in intensity since last month, when Korea protested Japan's claim to the the tiny Dokdo/Takeshima islands.

Before last month, relations with Japan had seemed to be ever-improving, and 2005 was named as "Korea-Japan Friendship Year."

However, the protests over the islands seem to have aroused strong feelings among the Chinese and Japanese people. Before that time, public anti-Japanese sentiments were expressed on bulletin boards, but rarely in any overtly public way. The islands controversy seems to have "made it OK" for the Chinese and Koreans to express their fury overtly.

Other protests that have occurred are the following:

From the point of view of Generational Dynamics, this provides a classic example of how genocidal crisis wars begin. Older generations of people suppress their hatred and fury in order to avoid a repeat of the horrors of the previous crisis war. Younger generations, with no personal memory of those horrors, lead the way in letting these feelings bubble to the surface.

A new generation of young Chinese professions have been actively campaigning against Japan.

One of them, Lu Yunfei, webmaster for the web site, organized an online petition that received 830,000 signatures in the last two weeks protesting Japan's campaign to gain a UN Security Council seat. "It is Japan that has stimulated our national pride," says Lu. "They have never taken seriously their actions during the war and they continue to teach their children lies." [1931-9-18 is the day that Japan invaded China.]

If you use the Google language translator on Lu's web site home page, the rough translation gives some additional protest information: protest Japanese control of the Diaoyu Island lighthouse; protest the Nanjing massacre of 1937, where hundreds of thousands of civilians were murdered; protest Japanese encroachment on East China Sea; protest the issuance of the song, "Taiwan, my brothers," which promotes a Japan-Taiwan alliance against China.

As we've been reporting for months, the tension in the North Pacific is growing on a daily basis. China has passed an "Anti-Secession Law," that legalizes a Chinese invasion of Taiwan. North Korea is mobilizing for war, and is refusing to attend nuclear non-proliferation talks.

North Korea in particular is adopting an increasingly hardline stance on talks. According to Selig Harrison, an analyst at Washington-based Center for International Policy, "There has been a major policy shift in Pyongyang in recent weeks. The hardline elements there are riding high, the army has increasingly asserted its control over nuclear policy. Now North Korea is not prepared to discuss dismantling its nuclear weapons until complete normalization of all economic and diplomatic relations with the United States."

Generational Dynamics predicts that North Korea will start a war to reunite South and North Korea under North Korean control, that China will start a war to return Taiwan to Chinese control, and that China and Korea will get revenge against Japan for the latter's actions prior to and during World War II. These wars could begin next week or next year, but they're coming with 100% certainty. (09-Apr-05) Permanent Link
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Jewish extremists attempt to provoke Palestinian extremists to violence

Israeli and Palestinian security forces are out in force this weekend protecting the Al Aqsa Mosque, Islam's third-holiest site, on a hilltop in Jerusalem's Old City.

The same hilltop is also sacred to the Jews, and is known as Temple Mount. However, to reduce tensions, Jewish access has been strictly limited since Israel captured east Jerusalem in the 1967 Mideast war. Indeed, when opposition leader Ariel Sharon, now Prime Minister, visited Temple Mount in September 2000, the visit touched off Palestinian riots that triggered the 4 1/2 year Intifida.

Sooooooooo, Jewish extremists, who are opposing Israel's pullout from the Gaza strip, and the abandonment of the Jewish settlements there, have announced a huge rally at Temple Mount on Sunday.

The purpose of such a rally would be to provoke the Palestinians to violence, which would, presumably, cause Sharon to reverse the Gaza pullout plan. Devious, huh?

Well, it's working so far. Palestinian extremist militia group Hamas has promised a massive counter-rally if the Jewish extremist rally takes place.

"They will not be able to storm Al Aqsa Mosque, God willing, but if they do, all that has happened during the so-called quietness will disappear in the wind," said Nizar Rayan, a Hamas official. "We will move with our rockets and our mujahadeen in order to defend Al Aqsa and to protect it. Not only Hamas but all the Palestinians and Muslims."

The "quietness" that Rayan is referring to is the honeymoon period following the election in January of Abu Mazen Mahmoud Abbas as the new president of the Palestinian Organization formerly headed by the late Yasser Arafat. Hamas and other militia groups have refused to sign on to any peace agreement between Abbas and Sharon, but they have agreed to honor a temporary ceasefire. The Sunday rallies would end the ceasefire.

The Israeli security forces are planning a major show of force to prevent the Jewish extremists from reaching their goal. But keep in mind that the Gaza pullout isn't scheduled until July, so there is still plenty of time for Jewish extremists to provoke violence, even if violence is avoided this weekend.

These aren't the only signs that Abbas' honeymoon is over. Last week, Abbas was forced to dismiss two senior security men and to announce plans to retire hundreds more, in response to a shooting rampage by a group of Palestinian militants in Abbas' West Bank compound last week.

On the Israeli side, Sharon has announced plans to plans to build more settlements in a portion of the West Bank with the "Mideast Roadmap" peace plan designates as Palestinian land. The European Union is expressing "deep concern" over the plan, saying that it violates international humanitarian laws, as well as UN revolutions.

President Bush will be meeting with Ariel Sharon in Texas on Monday, and he's indicated that he will also chastise Sharon for the settlment expansion plans.

For the Palestinians themselves, the high expectations of change and permanent peace with Israel are not being met. There has been little relief from the regime of Israeli checkpoints that give Israel a veto over ordinary Palestinians' ability to work, study, and visit relatives, and there is little or no chance that Israel will remove the checkpoints any time soon.

This concept of unrealistic expectations not being met is a theme that I've discussed frequently on this web site, in various contexts. The concept is that terrorist groups and warmaking groups put plans on hold pending an election, thanks to unrealistic expectations that the election will change things. When the unrealistic expectations are not met, then the terrorist groups vigorously resume their previous plans. This appears to be what's happening with Hamas today.

Generational Dynamics predicts that we're heading for a major new Mideast war, replaying the genocidal war between Jews and Arabs in the 1940s. (09-Apr-05) Permanent Link
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World Bank warns that global economy recovery has "peaked"

Saying that global economic growth is at a "turning point," the World Bank's annual Global Development Finance report, predicted a slowdown in global growth, and that the slowdown could be quite severe.

"The global economy is at a turning point," says the report. "Growth has peaked, and pressures to address global imbalances are growing, exposing important risks facing both developed and developing countries as the needed adjustments occur."

In some scenarios the adjustment could be mild, but a new global recession is also a possibility. "A reduction in the pace at which central banks are accumulating dollars, a weakening in investors' appetite for risk, or a greater-than-anticipated pickup in inflationary pressures could cause interest rates to rise farther than projected, providing a deeper-than-expected slowdown or even a global recession."

Actually, this is not a new prediction. Many analysts last year predicted that there would be a recession this year, and they gave exactly the reasons that are now being given in the World Bank report:

The following are some graphs from the report:

Industrial production has been slowing around the world (page 36)
Industrial production has been slowing around the world (page 36)

Industrial production slowed around the world (excluding China) dramatically in 2004, and is expected to continue falling in the developing countries, and remain flat at a low level in high-income countries.

Foreign countries are financing the US account deficit (balance of payments) (page 38)
Foreign countries are financing the US account deficit (balance of payments) (page 38)

This graph shows who is financing the US current account deficit:

  • Foreign official assets and government securities is the category that's been growing exponentially. This is the purchase of US treasury bonds by foreign central banks.
  • Foreign direct investment (FDI) plus equity investment used to be the biggest category, representing foreign investors sending money to America in the form of private investments. By 2004, this category had a large negative value, meaning that American investors are investing overseas.
  • Other private securities and banking has remained relatively unchanged.

Foreign exchange reserves in developing countries (page 58)
Foreign exchange reserves in developing countries (page 58)

Because developing countries have been purchasing America's debt, the foreign exchange reserves held by these countries has been skyrocketing. The major countries include: China, India, Thailand, Malaysia, Venezuela, the Czech Republic and Pakistan.

Short / Long term interest rates in U.S. (page 40)
Short / Long term interest rates in U.S. (page 40)

This graph shows "real interest rates." The Fed lowered interest rates to 1% by 2002, but since this was lower than the inflation rate, short-term interest rates were actually effectively negative. In fact, they're still negative today. Long-term interest rates are positive, but still effectively close to zero.

Worldwide commodity prices have been rising since 2002 (page 43)
Worldwide commodity prices have been rising since 2002 (page 43)

Commodity prices have been skyrocketing since late 2003, thanks to huge demands from China. The rise in agricultural product prices is especially disturbing because it pushes huge masses of people around the world into poverty and starvation.

Most of the new demand for commodities is coming from China (page 43)
Most of the new demand for commodities is coming from China (page 43)

In just the last year, China's share of commodity demands has skyrocketed, to almost equal the rest of the world combined. (The OECD is the Organization for Economic Co-operation and Development, a group of 30 countries, including the United States that furnish international aid to developing countries.)

Global military spending, 1992-2003 (page 104)
Global military spending, 1992-2003 (page 104)

Global military spending decreased in the 1990s, but has been increasing steadily since 2000.

I've been reading enough of these analyses now to get the impression that many analysts expect something serious to happen this year, some time in the summer or the fall.

From the point of view of Generational Dynamics, America is entering a 1930s style Great Depression. (07-Apr-05) Permanent Link
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Analysts: Worldwide economy is getting weaker

After Greenspan's January warning that the global economic dangers are "without historical precedent," other pundits are beginning to take up the theme.

In Fed Chairman Alan Greenspan's January speech, he indicated that Fed actions since the beginning of the 1990s bubble have been based on the erroneous assumptions that the American economy is sufficiently self-contained so that the Fed's near-zero interest rate policy would prevent a new 1930s style Great Depression. Because of the global nature of the economy today, Greenspan is no longer certain.

Now other analysts are beginning to fill in some of the blanks.

Now that the Fed is being forced by concerns about the falling value of the dollar to raise interest rates again, ntelligence service points out that these interest rate hikes are going to hit China especially hard.

Chinese "debt is extremely vulnerable to interest rate hikes," says says the intelligence service, as quoted by financial analyst Joe Duarte in a column. "As rates rise, that debt will become impossible to maintain, and China will face the beginnings of a financial crisis. Given the makeup of the Chinese financial system, such a development is unavoidable. The only questions regarding the crisis to come are time frame and severity."

Duarte adds that the Chinese economy has to hit a "bump in the road" sooner or later, and that could happen later this year, perhaps in July or August, the "traditional time for markets to start stumbling." With the Fed raising interest rates, American debt-ridden households will be in a cash flow crunch, and "the Chinese economy is suddenly drained of foreign cash," with unspecified geopolitical instability.

Morgan Stanley chief economist Steven Roach in his weekly commentary says that "A US-centric global economy continues to run on fumes."

He points out that "lagging employment and real wage growth has been a hallmark of the first half of the 2000s in the developed world. Unemployment in Europe and Japan is hovering near-post-World War II highs. The US is in the midst of the weakest period of job creation in modern history -- its unemployment rate has been depressed by those fleeing the work force. Jobless recoveries have become the norms in most major segments of the developed world. And they persist to this very day."

The picture that Roach and Stratfor are painting is of a hollow American economy, but also equally hollow Japanese and European economies. The only country that's actually producing real manufactured goods is China, which depends on America as a market, and also on Japan and Europe to a lesser extent.

From the point of view of Generational Dynamics, America, Europe and Japan are all in generational crisis periods, facing the following problem: The Great Depression of the 1930s forced most organizations out of businesses, and their replacements were super-efficient, "lean and mean," with every employee doing a much needed job.

Today, over 70 years later, all those businesses have themselves become increasingly bureaucratic and inefficient, bogged down by stale, mindless, uninspired executives managing a sluggish, rule-bound work force more concerned about work breaks than working. This is true for all countries that fought in WW II, but it's perhaps most apparent in parts of Europe where it's actually against the law for anyone to work more than 40 hours per week. The only way way to fix this problem, unfortunately, is a new "cleansing" Great Depression, which is what we've been predicting since 2002. This is based on a historical analysis of secular adjustments that come every 70 years or so (Tulipomania bubble (1637), South Sea Bubble (1721), French Monarchy bankruptcy (1789), Hamburg Crisis of 1857, and 1929 Wall Street crash).

China is filling this gap, because it's a little bit behind America, Japan and Europe on the generational timeline. China is in a frenetic "generational unraveling" period, suffering from a heroin-like addiction to 20 years of 9% annual growth. When China has a recession, as everyone agrees it must, then China will move to a "generational crisis" period, as its economy starts collapse in the same way that has happened in America, Japan and Europe.

Interestingly enough, Stephen Roach gives an incorrect explanation of the global economic problems. He blames on the Internet, and its ability to create a "global labor arbitrage" which, for the first time, makes it possible to outsource all kinds of activities, including "software programming, engineering, design, accounting, medical technology, legal and actuarial expertise, and financial analysis at the upper end of the value chain."

However, this analysis doesn't stand up. Transportation and communications technology has been improving exponentially for centuries. The worldwide installation of international phone services in the 1950s-70s was just as significant then as the internet is today, but didn't cause the hollowed out economies we see today.

If you want to see the real problem, look at the article by Patrik Jonsson in today, entitled "As China sews, few US mills left." It points out that only 677,000 textile and apparel jobs remain in America, down from 1.6 million in 1994. These jobs disappeared because of inefficient American textile mills, most of which have now been converted or bulldozed into the ground. What do closing textile mills have to do with the Internet?

Both Duarte and Roach point out that current conditions cannot continue much longer, and that a major correction is coming. From the point of view of Generational Dynamics, this correction will come in the form of a new Great Depression, with the same kind of bankruptcy, unemployment and homelessness as in the 30s. As Roach and Duarte point on, it's no longer a matter of "if." The only thing we don't know is "when," and that can't be too much longer. (06-Apr-05) Permanent Link
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UK Prime Minister Tony Blair schedules a new election for May 5

But pundits are saying that Iraq is not an issue. Could that be true?

Tony Blair could have selected any date before June 12, 2006 - five years after the last election, but he selected May 5. On Tuesday, he made a visit on Tuesday to Westminister Palace, to ask the Queen to dissolve Parliament, and the Queen graciously agreed. Next month's election will select all 646 Members of Parliament (MPs) in the House of Commons. The majority party (or coalition) will form a new government and select the Prime Minister, either Tony Blair or his replacement.

What's interesting is that the pundits do not expect the Iraq war to be the major issue. The major issues are expected to be related to the National Health Service, immigration, crime, taxes, and whether to adopt the proposed European Union constitution and the euro currency.

According to the BBC's election issues guide, here are the top priorities of each of the three major parties:

Here are the three parties' positions on the Iraq war:

According to early polls, Labor and the Conservatives are tied at about 35%, and the Liberal Democrats are a distant third at 21%.

Thus, if Labor or Conservatives win, as is overwhelmingly expected, the UK will continue to support the war in Iraq.

In this sense, the UK election parallels our own November Presidential election. The John Kerry and George Bush had almost completely identical platform positions on Iraq, but Iraq was a major election issue nonetheless.

Australia, America, UK

President George Bush, Prime Minister Tony Blair and Australian Prime Minister John Howard were the three major leaders in launching the Iraq war in 2003. John Howard was decisively reelected last year, This victory was a surprise because opposition leader Mark Latham has been highly critical of Australia's participation in the Iraq war, and indicated that if he won he would pull Australian troops out of Iraq.

Thus, Blair's is the third reelection bid of the three leaders. If we can predict anything based on these last elections, it's probably this: That Iraq is going to be in important issue, and will have an important effect on the election, though we don't yet know what it will be. (05-Apr-05) Permanent Link
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French scandal over teaching "La Marseillaise" in school.

Why is the French national anthem so much bloodier than the Star Spangled Banner?

It's one of the most familiar songs in the world: "Allons enfants de la patrie..." -- "Arise, patriotic children of France! The day of glory has arrived!"

In case you don't remember the song, check out this page from the site that gives you some MP3 files. Really, if you have an MP3 collection, don't miss out on this. And check out the rest of this web site as well.

It's a song that dates back to 1792, and the ideals of liberty, brotherhood, and equality.

And now, a new law requires the French public schools to teach the song to students.

And you may ask, What's wrong with that?

Well, it's quite a bloody song. "The ferocious soldiers are coming to cut the throats of your sons and wives. March! And make their impure blood soak into the land!"

Now, there's a huge debate going on in France about the appropriateness of teaching words like this to small children.

"I find it a little horrifying to hear toddlers howl La Marseillaise at the top of their lungs," says one opponent. "I don't see how we can teach them that we all have to live together, at the same time we talk about 'impure blood.'"

But France is in a "generational crisis" period, just like America and every other country that fought in WW II, and countries are becoming more nationalistic, and their people are becoming more patriotic. In fact, France recently passed another law making it a crime to say something offensive about La Marseillaise. The song is as inspirational to Frenchmen as The Star Spangled Banner is to Americans, and in a generational crisis period, that's what's important.

Indeed, if you play the MP3 file above, even YOU may be inspired by the stirring passage that ends it. The following is a fairly liberal translation that I feel captures the intensity of the French lyrics:

Arise you children of France
The day of glory has arrived!
The bloody flag of tyranny
Is being raised against us.
Their bloody flag is raised!
Listen to these ferocious soldiers
Howling in our fields.
They come to our homes
And cut the throats of our sons and wives.
To arms, citizens! Form your battalions! March! March! Spill their impure blood All over our soil!

And yet, the Star-Spangled Banner is much more "laid back." Here's the first stanza:

O say can you see, By the dawn's early light,
What so proudly we hail'd At the twilight's last gleaming,
Whose broad stripes and bright stars, Thro' the perilous fight,
O'er the ramparts we watch'd, Were so gallantly gleaming?
And the rocket's red glare, The bombs bursting in air
Gave proof thro' the night That our flag was still there. 

O say, does that star-spangled Banner yet wave O'er the land of the free And the home of the brave.

Nothing about blood in there.

Both of these national anthems were written at wartime -- La Marseillaise in 1792 during the French Revolution, and the Star-Spangled Banner in 1814 during the War of 1812. Why is the former song so much more warlike than the latter?

Any popular song, especially a national anthem, is going to reflect the mood of the times, and the mood of the times is going to be affected by where the nation is on the generational timeline.

In 1792, France was in a full-fledged crisis mood, filled with rage and a desire for retribution. They were just about to begin the genocidal Reign of Terror, which would execute more than 200,000 Frenchmen in the guillotine for crimes no more serious than being the acquaintance of an aristocrat. At that time, France had no national direction outside of survival.

But in 1814, 30 years had passed since the end of America's last crisis war, the Revolutionary War. That was a generational awakening period, when Americans had no desire for blood or war, but were anxious that their young Republic might not survive. America did have a direction at that time.

Perhaps the hopes and dreams of America in 1814 are best expressed by the fourth stanza of the Star-Spangled Banner:

O thus be it ever, When free men shall stand
Between their loved homes And the war's desolation;
Blest with vict'ry and peace, May the heav'n rescued land
Praise the Power that hath made And preserved us a nation!
Then conquer we must, When our cause it is just,
And this be our motto, "In God is our trust!" 

And the star-spangled banner In triumph shall wave O'er the land of the free And the home of the brave.

Today, of course, France and America have something in common: We have no national direction any more except to survive. And Generational Dynamics predicts that this will result in a "clash of civilizations" world war. It will not be until around 2015 or 2020 that the world will start once again to have hopes and dreams and new direction. (01-Apr-05) Permanent Link
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