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


Web Log - April, 2006


Immigration: Xenophobia and paranoia growing rapidly as "Great American Boycott" approaches

In what appears to be a sea change in public attitude, similar to the sudden growth in popularity of the British National Party in the UK, a new Rasmussen poll finds that strict enforcement of immigration and border control laws is becoming a potent issue in the 2006 Congressional elections and the 2008 Presidential elections.

On the other side, immigrants are suddenly staying out of work and schools for fear of federal roundups and deportations.

This combination of xenophobia and paranoia is quickly beginning to dominate the immigration debate as we approach Monday's Great American Boycott, which calls on immigrants and immigration supporters to skip work and school and take part in demonstrations. Organizers are hoping for huge turnouts in Los Angeles and in cities across the country.

Immigration has not been an important issue until recently, but in the last few months we've seen it become almost the dominant feature of the American political debate. And now poll results are highlighting its importance in various ways:

From the point of view of Generational Dynamics, it's not surprising that this swing in publc opinion is happening in both Britain and the U.S. at almost exactly the same time. That's because this kind of xenophobia is typical of any society in a "generational crisis" period, and World War II ended at almost exactly the same time for Britain and the U.S. As we pointed out last week in the discussion of the British National Party, the same thing is happening as well in other countries that fought in WW II.

Many people appear to believe that these sudden changes in attitudes among American and British voters are temporary, and that once a few political issues are settled, then attitudes will revert back.

But that isn't how it works. What we're actually seeing is the early days of a growing change in public opinion. Instead of reverting, positions will continue to harden, perhaps rather quickly, and the only way to resolve the issues will be war.

It would be helpful to have similar opinion polls within the immigrant community, but even without polls it's clear that opinions are also hardening on the immigrant side -- as can be seen simply from the fact that the crowds at pro-immigrant demonstrations have been growing.

We can also see that immigrants are becoming more fearful of federal raids of workplaces and forced deportation. So increasing American xenophobia is being complemented by increasing immigrant paranoia.

Hispanics are also much more willing than before to be confrontational. This is clear from the confrontational nature of Monday's planned boycott -- where supporters are being encouraged to shut down businesses by staying out of work.

One novel development is the release of "Nuestro Himno" (Our Anthem), the "Star-Spangled Banner" in Spanish. This has brought a sharp response from the President: "I think the national anthem ought to be sung in English. People who want to be a citizen of this country ought to learn English, and they ought to learn to sing the national anthem in English."

If the Spanish version had been a true translation, there probably wouldn't be so much outrage. Instead, the composers changed the song substantially.

I've always loved the Star-Spangled Banner, especially its visual imagery. Francis Scott Key wrote the song as he was being held as a prisoner of war during an overnight battle. He knew that if the Americans lost the battle, then the American flag would be taken down. Hence the words: "And the rockets red glare, the bombs bursting in air, gave proof through the night that our flag was still there." However, this visual imagery has been removed, as has the phrase, "Home of the brave."

The Star-Spangled Banner is kind of a sacred song, and the translation changes it from a war song to some kind of brotherly love song. Many people (including me) consider this to be inappropriate.

If the Spanish version were a straight translation, and if immigration supporters sang that straight translation version as they marched and demonstrated that they're Americans too, then this might have actually improved relations with immigrants. Instead, they turned this sacred song into a cheap political stunt, and that's not going to help.

Adam Kidron, the producer of "Nuestro Himno," says that he thinks that the effort is " really cool to do something that was artful, emotional and, to some extent, patriotic."

Obviously it isn't being accepted that way by Americans, and that's how things work during "generational crisis" periods. During the 1960s, when America was in a generational awakening era, and even as late as the 1990s, "Nuestro Himno" might indeed have won a popular political following as a "multicultural" tool. But multiculturalism always disappears during generational crisis periods, in every country and at every time in history, because an individual at that time becomes concerned about the welfare of himself and his family, and about the viability of his country and its way of life, and these factors have higher priorities than multiculturalism.

One more point: A reader has sent me an e-mail message discussing the situation and expressing the belief that poor blacks will join with the Latinos, and will fight with the Mexicans rather than with the Americans. There will, in fact, some support for the boycott from the black community. I guess this point is arguable, but I see very little chance of a lasting coalition between blacks and Mexicans, since blacks have no connection to Mexico, and Mexicans have no real use for blacks.

From the point of view of Generational Dynamics, the increasing xenophobia shows that we're headed for war between America and Mexico. Violence is increasing throughout Mexico anyway, and and the country is already headed for a civil war between the descendants of the indigenous people (Aztecs, Mayans, Commancheros) and the descendants of the Spanish conquerors. Within the United States, the immigration issue will become increasingly polarizing, just as the rise of the British National Party will be increasingly polarizing in Britain. All of these conflicts will eventually become parts of the "clash of civilizations" world war. (30-Apr-06) Permanent Link
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UN World Food Program will cut Darfur humanitarian rations in half

This continuing genocide is a very sad situation, but it can't be stopped.

George Clooney in the company of two senators. <font size=-2>(Source: NZ Herald)</font>
George Clooney in the company of two senators. (Source: NZ Herald)

There's a big movie star involved. George Clooney, who's just returned from a trip to Darfur, says "What we cannot do is turn our heads and look away and hope that this will somehow disappear. If we do ... an entire generation will be gone and then only history will be left to judge us."

Yes, Darfur is in the news again, after being mostly ignored for the last year. Suddenly there's a big push to "Save Darfur."

Darfur - southwest region of Sudan <font size=-2>(Source: BBC)</font>
Darfur - southwest region of Sudan (Source: BBC)

The conflict became genocidal in 2004, roughly around the time that UN Secretary General Kofi Annan said, at a huge ceremony memorializing the Rwanda genocide of 1994, said that nothing like that must ever be permitted to happen again.

In June 2004, Annan called on the world to stop the new genocide that was occurring in Darfur, where white Muslims sponsored by the government of Sudan in Khartoum were slaughtering black Muslims in the western province of Darfur.

In an article called, "Darfur genocide: The UN is completely irrelevant," I predicted that the Darfur genocide would not be stopped, and that in the months to follow close to a million people would die.

Well, that's pretty much what's happened, though so far "only" 180,000 people have been killed. But the worst may not be over.

Some two to three million people are living in tents in camps set up by the United Nations. These people were forced to move from their homes by a combination of attacks from the air by Sudanese attack helicopters and attacks on the ground by large groups of armed Arabs known as Janjaweed militias.

Here's a typical recent scene, of the type that's been going on for two years now:

"Last month, in the town of Mershing, South Darfur, there was chaos and carnage. On a scorching day in February, four hundred Janjaweed militiamen attacked, firing indiscriminately on civilians, destroying homes, and looting livestock. Eight hours after the initial onslaught, the Janjaweed returned for a second round of mayhem, assaulting women and children and looting the town's main market. Following a terror-filled night, the 55,000 residents of Mershing fled for their lives. Thirteen infants were trampled to death and 220 children separated from their families in the exodus."

This is the kind of thing that always happens in genocidal civil wars. It happened in Rwanda in 1994, it happened with the "ethnic cleansing" in Bosnia in the early 1990s, it happened in the Iran/Iraq war of the 1980s, it happened in the killing fields of Cambodia in the mid-1970s, and it happened in many places in World War II.

Whether we like it or not, what the Janjaweed militia are doing is an integral part of being human, buried deep in our "survival of the fittest" mechanism without which the human species would never have even survived this long. Genocidal war is as essential to the survival of the human species as sex is, and neither can be stopped.

Sex and genocidal war are closely linked. Genocidal war usually goes according to a standard script: The men are mass-murdered, and the women are raped. The purpose of genocidal war is to determine which of two tribes or ethnic groups or religious groups can exterminate the other. The winner gets a reward - the right to spread his genes around in the losing side's women.

There's a good reason for all this: Population always grows faster than available food. The population of Sudan has been growing at close to 3% per year for a long time, and that rate a genocidal war in Sudan sooner or later was literally a mathematical certainty.

The last few years have been a political farce in the United Nations, with every country passing the buck to other countries. The most cynical act occurred when the UN declared that the Darfur war was not genocide. According to the UN charter, such a declaration would have required the UN to act. That left only one solution: say that it isn't genocide.

And speaking of food, the U.N. World Food Program (WFP) has just announced that food rations to those 2-3 million people living in camps are about to be cut in half -- from 2000 calories per day to 1000 calories per day. This will cause thousands or tens of thousands of additional deaths by starvation.

What's going on? Because donations to the WFP are far below what was hoped for and expected. Donor governments have given the World Food Program only $238 million of the $746 million the agency needs this year.

The main problem is that the worldwide price of food has gone up substantially in the last few years. The reason is that the population grows much faster than the food supply. According to my own computations, food production increases by at most 0.96% per year, while population grows at 1.72%. Therefore, the amount of food per person keeps decreasing, and so food becomes scarcer and, by the law of supply and demand, the price of food keeps going up. In fact, the worldwide price of food has been skyrocketing in the last couple of years, thanks to massive feeding programs in China. As the price of food goes up, poverty increases in large marginal populations around the world.

The one thing we can be grateful for in the Darfur situation is that, for once, America isn't the "evil giant." The United Nations refuses to call the Darfur war genocide, but the United States has officially designated it as genocide. And of the $238 million that has been donated this year to the WFP, $188 million was donated by the United States. The European Union and China have given next to nothing.

This causes problems for people like George Clooney, who are going around saying that the George Bush administration has to do more to stop the genocide in Darfur. What more can we do? In an interview on CNN Friday, Clooney was asked what he wanted the Bush administration to do. "Do you want the administration to send American troops into Darfur?"

This is a loaded question, since Clooney is one of the critics of our war in Iraq. That hasn't stopped some people. For example, that great anti-war activist Jesse Jackson called for sending American troops to Darfur in the same interview in which he criticized sending troops to Iraq. What this goes to prove is that no one is truly against war; everyone has a war they like.

But George Clooney wasn't so dissembling. He fumbled over his answer for a while, saying "no American troops," but then saying that George Bush should work through Nato to stop the genocide in Darfur.

Well, how's that going to work? If the Europeans can't even send money to the World Food Program, are they really going to send troops to Darfur, just because George Bush asks? I don't think so.

There's going to be a major rally in Washington DC on Sunday, led by Clooney and a coalition of 160 religious and political groups, to demand that Bush press for a stronger multinational force in Darfur. They're hoping that tens of thousands of people will attend the rally -- we'll have to see if anything like that happens, or whether only a few thousand will show up.

From the point of view of Generational Dynamics, what's going on in Darfur is a "generational crisis war," and generational crisis wars cannot be stopped. Since its founding, America has had two crisis wars, the Civil War and World War II. Neither of those wars could be stopped, and neither will the Darfur war be stopped until it runs its course.

Now, 61 years after the end of World War II, when all the people in the generations that fought and lived through WW II are almost completely gone, Generational Dynamics predicts that we're headed for a new world war, a "clash of civilizations" war that will involve almost every country in the world.

This war might begin this year, next year, or after that, but each year the probability of war that year is higher than for the year before. In a 2004 article called "The six most dangerous regions in world," I did a rough calculation that the probability of a new world war beginning in 2005 was a little less than 21%, that it's a little more than 21% in 2006, and that it goes up a little bit more each year.

From the point of view of Generational Dynamics, we can only give a probabilistic estimate of when the world war will begin, but we can say with certainty that it can't be stopped, any more than the war in Darfur can. (29-Apr-06) Permanent Link
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Housing prices continue to fall

Sales volume partially recovered, indicating that you can still sell, if you lower the price enough.

New home sales and prices, seasonally adjusted, January 2000 to March 2006
New home sales and prices, seasonally adjusted, January 2000 to March 2006

According to a new report by the Census Bureau and Dept. of Commerce (PDF), new home sales rose 13.8% in March, after falling for four months in a row.

Median prices fell 3% in March to $224,200, down 8% from the October peak of $243,900. Total sales have fallen 3% since October.

Housing inventory in number of months, seasonally adjusted, January 2000 to March 2006
Housing inventory in number of months, seasonally adjusted, January 2000 to March 2006

Housing inventories fell slightly to 5.5 months from 6.3 months, but still considerably higher than the typical inventory of around 4 months.

What appears to have happened is that demand built up since the housing bubble burst in October, and now sales are partially recovering because prices have fallen substantially, proving that you can still sell a home if you're willing to lower the price enough.

For existing home sales, March sales rose 0.3%, while prices remained steady.

In Sydney, Australia, the housing prices peaked in 2003, and then started falling, and a recent study describes the effects today -- a big increase in defaults, and a big drop in government services. The economy of the entire state of New South Wales is affected.

Actually, the fall in housing prices has only been modest so far, and the Australian national economy hasn't been hurt too much, thanks to huge Chinese demand for Australian minerals.

In fact, Sydney housing prices have a long way to fall, according to the latest Demographia Inc. International Housing Affordability Survey.

Sydney was still the 7'th least affordable housing market in the survey! This indicates that a housing price crash hasn't really affected Sydney yet, since houses are still way overpriced.

Demographia measures housing markets by computing the "Median Multiple," which equals the Median House Price for the region divided by the Median Household Income for the region. A typical index value is around 3.0, meaning that median house prices equal three times the median household income. (For example, if the median household income is $50,000 and the median house price is $150,000, then the "median multiple" is 3.0.)

The countries surveyed were Australia, Canada, Republic of Ireland, New Zealand, United Kingdom, and the United States.

In those countries, the least affordable housing markets were:

          20 Least affordable housing markets

Rank Housing Market Median Multiple ---- -------------------------------- --------------- 1 US Los Angeles 11.2 2 US San Diego 10.8 3 US Honolulu 10.6 4 US Ventura County 9.6 5 US San Francisco 9.3 6 US Miami 8.8 7 Australia Sydney 8.5 8 US New York 7.9 9 US Riverside 7.7 10 US San Jose 7.4 11 UK London 6.9 12 UK Bristol 6.8 12 US Fresno 6.8 12 US Sacramento 6.8 15 NZ Auckland 6.6 15 Australia Hobart 6.6 15 Canada Vancouver 6.6 18 Australia Adelaide 6.5 19 US Las Vegas 6.4 19 Australia Melbourne 6.4

However, there's another side to this survey: there are still many affordable housing markets, and some of the most affordable are in the United States:

          24 most affordable housing markets

Rank Housing Market Median Multiple ---- -------------------------------- --------------- 1 US Buffalo 2.2 1 US Rochester 2.2 3 US Indianapolis 2.4 3 Canada Winnipeg 2.4 5 US Akron 2.5 5 US Omaha 2.5 5 US Pittsburgh 2.5 8 US Grand Rapids 2.6 8 US St. Louis 2.6 8 US Tulsa 2.6 11 US Dayton 2.7 11 US Kansas City 2.7 11 US Oklahoma City 2.7 14 US Atlanta 2.8 14 US Austin 2.8 14 US Cincinnati 2.8 14 US Dallas-Fort Worth 2.8 14 Canada Edmonton 2.8 14 US Louisville 2.8 14 Canada Quebec 2.8 21 US Columbus 2.9 21 US Houston 2.9 21 US San Antonio 2.9 24 US Cleveland 3.0

These results show that there are still housing markets that aren't overpriced. But once a major financial crisis occurs, everyone wil suffer. (28-Apr-06) Permanent Link
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Who's responsible for the Egypt tourist resort bombings?

Monday's was the third seaside resort bombing in two years, and officials are uncertain exactly whom to blame.

Seaside tourist resort Dahab, in Sinai desert, Egypt <font size=-2>(Source: <i>Toronto Star</i>)</font>
Seaside tourist resort Dahab, in Sinai desert, Egypt (Source: Toronto Star)

On Monday, three buildings were bombed at the packed tourist resort of Dahab in the Sinai desert on the Red Sea: a restaurant, a cafe and a supermarket. 24 people were killed, mostly Egyptians on vacation, and 80 were wounded. Dahab is a vacation resort for backpackers, surfers and scuba divers, while the two previous bombing sites -- Taba in 2004 and Sharm el Sheikh in 2005 -- had far more luxurious five-star hotels, where 34 and 70 were killed, respectively.

Ten people have been arrested as suspects in the bombings, but who's masterminding them?

Although al-Qaeda is the obvious suspect for the mastermind, there's a completely different group suspected in this case. It's a small militant group called Al Tawhid Wal Jihad ("Monotheism and Jihad"), drawn from Bedouin tribes in the Sinai.

The idea that a local Bedouin group is responsible for the bombings is supported by the fact that all three bombings occurred on Egyptians national holidays - days when the resorts are sure to be crowded with Egyptian vacationers.

The day of the Taba attack fell on October 5 when Egyptians commemorate the 1973 Arab-Israeli War. The Sharm el Sheikh bombs exploded on July 22, Egyptian Independence Day. And the latest bombing occurred during a holiday period celebrating the Israeli withdrawal from Sinai.

Who are the Bedouins? They've been around longer than anyone. They're nomadic tribes that have lived on the Arabian peninsula since time immemorial. Their way of life survived until well into the 20th century, and they were pretty much the sole inhabitants of the Sinai desert until Israel and Egypt signed a peace treaty in 1979.

That's when the "Nile Valley people" of Egypt started pouring into the Sinai, and dominated the police, the government and the tourist industry. Thus, we see the same textbook situation that we've described in countries around the world -- two distinct cultures, one wealthy one poor, trying to share the same piece of land.

Bedouins live throughout the Arabian peninsula, and there's one more interesting fact to know about them: Arab Bedouins are the only Arabs that can serve in the Israeli Army. There's also a Bedouin member of the Israeli Knesset.

That's not to say that the Israelis and Bedouins get along particularly well, but they do have long-standing relationship dating back to the formation of Israel, and that makes the the objects of even greater suspicion on the part of the Egyptians, with the result that the Israelis are the lesser of two evils when compared to the Egyptians.

Thus, the Bedouins are the logical suspects for bombings that target Egyptian vacationers at lucrative Egyptian seaside resorts on Egyptian holidays.

But even if the Bedouins are directly responsible for the Dahab attacks -- and that's far from proven -- that still doesn't mean that al-Qaeda wasn't involved.

Egypt's Muslim Brotherhood, which is at least loosely linked with al-Qaeda, is a radical Islamist group determined to turn Egypt into an Islamic theocracy. With regard to that 1979 peace treaty mentioned above: When Egypt's president at that time, Mohammed Anwar El-Sadat, signed the peace treaty with Israel, it was considered a traitorous act in the Arab world. Egypt was expelled from the Arab League for ten years, and El-Sadat was assassinated in 1981 by a member of the Muslim Brotherhood.

El-Sadat was succeeded by the current president, Hosni Mubarak, whom the Muslim Brotherhood considers to be almost as much an infidel as George Bush, if only because Mubarak has continued good (though strained) relations with Israel.

By the way, Hamas is a military offshoot of the Muslim Brotherhood, and even if there were no other reason, that reason alone would explain why it's impossible for the Hamas-led Palestinian government cannot possibly recognize Israel. Nonetheless, in a Monday press release, the Hamas government said that the Palestinians "strongly condemn the criminal act which goes against religious beliefs and is against Arab interests."

Still there's no doubt that the Bedouin group Al Tawhid Wal Jihad could have links to either the Muslim Brotherhood or al-Qaeda or both, and could have received money or weapons from either.

As the Mideast continues its accelerating descent into total chaos, the Bedouins and Al Tawhid Wal Jihad in particular are two more groups that will be playing a part. (26-Apr-06) Permanent Link
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The far right anti-immigration British National Party suddenly surges in popularity

Supporters say that Britain "seems like a foreign country," in a a poll sponsored by the Sunday Telegraph, ahead of the local elections to be held on May 4.

Poll shows sudden and dramatic new support for the British National Party <font size=-2>(Source:</font>
Poll shows sudden and dramatic new support for the British National Party (Source:

The poll confirms what had been considered to be a shocking and sensational claim by Margaret Hodges, UK's employment minister, and a close associate of Prime Minister Tony Blair:

"They can't get a home for their children, they see black and ethnic minority communities moving in and they are angry. When I knock on doors I say to people, 'are you tempted to vote BNP?' and many, many, many - eight out of 10 of the white families - say 'yes'. That's something we have never seen before, in all my years. Even when people voted BNP, they used to be ashamed to vote BNP. Now they are not." Mrs Hodge said the pace of ethnic change in her area had frightened people. "What has happened in Barking and Dagenham is the most rapid transformation of a community we have ever witnessed.

"Nowhere else has changed so fast. When I arrived in 1994, it was a predominantly white, working class area. Now, go through the middle of Barking and you could be in Camden or Brixton. That is the key thing that has created the environment the BNP has sought to exploit. It is a fear of change. It is gobsmacking change."

The poll firmed up these comments, and shows that 7% of the voters have already decided to vote for BNP and that 24% are considering it.

Among those people who are considering voting for the BNP, they give the following reasons (where each voter can check more than one reason):

Reason% of potential BNP voters
Britain nowadays seems almost like a foreign country 71
We should take tougher action against Muslims who want to destroy this country 67
None of the major parties is prepared to stand up for this country 64
The local council often gives black and Asian people preference over white people who have lived locally for many years. 61
I want to let those who run this country know that from now on they have to pay attention to people like me 56
Too many black and Asian people have been let into this country 48
All the major parties, including Labour, have deserted the working class 45

From the point of view of Generational Dynamics, this kind of sudden change in public opinion is upsetting, but unfortunately is completely expected. We're at a unique time in history, a "generational crisis" period, 60 years after the end of WW II, just as the people of last generation that actually lived through that war are almost completely gone (dead or retired). The kind of xenophobia we're seeing in Britain always occurs during generational crisis periods.

In fact, we're seeing it around the world.

The same thing is happening here in America.

We saw it a few weeks ago with the nationwide hostility to Muslims in the "Dubai Port" deal.

Possibly more important, take another look at the table above listing the reasons why voters are supporting the BNP. Now imagine American voters giving the same reasons why they're concerned about Latino immigrants.

Polls have shown decreasing support for immigrants over the years:

                        Increasing Immigration Worries

Sept Dec Mar Immigrants today... 2000 2005 2006 ---------------------------------------------- ---- ---- ---- Are a burden because they take jobs, housing 38% 44% 52% Strengthen the US with their hard work/talents 50% 45% 41% Don't know 12% 11% 7% ---------------------------------------------- ---- ---- ---- 100% 100% 100% Source: Pew Research Center

The above table shows that the percentage of Americans that believe that immigrants "are a burden" has been increasing steadily in the last six years, while the number who believe that they "strengthen the US" has been going down.

More and more we're hearing Americans express increasing xenophobia. Here's an opinion piece of a type we see and hear more often these days:

The sentence, "Lou Dobbs would make a good president" refers to CNN TV journalist Lou Dobbs, who has made his Monday-Friday 6-7pm ET television show a daily harangue against illegal immigration. Dobbs appears to want to make himself a hero to the anti-immigration political movement.

From the point of view of Generational Dynamics, there is only one possible conclusion to all this. California had been part of Mexico prior to the Mexican-American war of the 1840s, and that war is going to have to be re-fought. The Mexican population of California is already so large that a war cannot be avoided.

Violence is increasing throughout Mexico anyway, and and the country is already headed for a civil war. The clash with Americans in the United States parallels the clash of Europeans with Muslims, and the increasing support for anti-immigration laws parallels the rise of the BNP in Britain. As we head for a new "clash of civilizations" world war, these will be new and and unwelcome components. (23-Apr-06) Permanent Link
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India Sensex stock market reaches historic high in record time.

Startled analysts are debating whether the market is close to a crash.

The Bombay Sensex (BSE) stock market index shot past 11,000 on March 21, and then picked up speed and raced past 12,000 yesterday, to land at 12,053.74. That was the fastest 1,000 point rally in history.

Is this a bubble? Not according to Indian government officials. I don't think there is any bubble (in the stock market), a top finance ministry official said.

Others aren't so sanguine. Saying that the Sensex resembles the American stock market of 1929, an editorial in India Daily says, "The fundamentals of India's real fiscal situation is bleak. The trade deficit, 75% of imported oil and gas bill with oil at $75 and pseudo buying of stocks by foreign financial institutions and hedge funds all point to an imminent crash of Indian stock market that may follow a protracted long term severe slow down in Indian economy."

Bombay Sensex (BSE) 30 index as of April 19, 2006 <font size=-2>(Source:</font>
Bombay Sensex (BSE) 30 index as of April 19, 2006 (Source:

That's what it looks like to me from the adjoining chart. For whatever reason, investors have frantically poured money into the BSE, pushing prices sky high.

(Remember how a bubble works: If I pay $100 for a share of stock, sell it to you for $200, and you sell it back to me for $300, then we've both somehow made $100 each, even though the underlying value of the share of stock is still only $100.)

But we don't have to go all the way to India to see a stock market bubble.

The Dow Jones Industrial Average (DJIA) closed today at 11342.89, just above the 2001-May-21 index of 11337, the highest it's been since January 2000.

And the DJIA is now within striking distance of 11723, the all-time high, that it reached on January 14, 2000.

What a glorious day it will be when the DJIA tops 11723! Oh, how the champagne corks will be popping!

There is absolutely no rational explanation for what's going on. Oil prices have more than doubled in the last few years, and keep on rising. Interest rates are rising, so credit is becoming less available. This is happening at a time when investors are becoming increasingly risk-averse. The real estate bubble appears to have burst last October. the stock market is increasingly overpriced; the the trade deficit keeps increasing exponentially; and Japan's plans to raise interest rates are threatening the "carry trade" bubble.

It's like the world has gone crazy, just like the world went crazy in 1929.

This is what I've been calling The Principle of Maximum Ruin. Government officials, journalists, pundits and high-priced analysts tell everyone that the market can only continue to go up. This draws more and more people into the market, and each person invests more and more of his money. When the bubble bursts and the crash occurs, then the maximum number of people are ruined.

But that's not all. The crash doesn't occur all at once. In 1929 the stock market kept falling for four full years. During that four years, more and more people were ruined.

The following paragraph from John Kenneth Galbraith's book, The Great Crash - 1929 explains how it worked:

"A common feature of all these earlier troubles [previous panics] was that having happened they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune."

So even after the initial crash occurs, the same government officials, pundits, journalists and high-priced analysts keep predicting that the worst is over. "The fundamentals are solid" is a commonly held statement put forth by analysts during these times. These statements draw more and more people and more of their money into a falling market, thus causing continuing and increasing ruin for a long time to come.

Even Alan Greenspan, now freed from the restrictions imposed by being Federal Reserve Chairman, is warning of sharp falls in financial asset values.

As I've been saying since 2002, Generational Dynamics predicts that America is entering a new 1930s style Great Depression, with a stock market crash to the Dow 3000-4000 range by the 2007 time frame. I certainly have no reason to change this prediction now. (21-Apr-06) Permanent Link
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An eerie similarity: Chinese President Hu Jintao and Donald Rumsfeld

Hu gives President Bush a copy of Sun Tzu's "The Art of War" when they meet on Thursday.

Pundits are saying that Hu wants to help Bush learn how to fight the Iraq war, but it seems more likely to me that he's warning Bush about Taiwan.

Sun Tzu
Sun Tzu

The Art of War, written in the sixth century BC, is probably the most famous book on military strategies and tactics ever written. The silk edition given to Bush is a powerful message.

Taiwan is the number one issue on Hu's mind these days, because 60% of Chinese people believe that it's the #1 Sino-U.S. issue, and other polls have shown most Chinese believe that the U.S. and China will have a war over Taiwan.

The warning to Bush comes from a Chinese leader who is genial, well-liked, but enigmatic:

Now think about our own generational differences here in America. This description of Hu doesn't sound like someone from the G.I. generation, the decisive people that won World War II, nor from the Baby Boomer generation, the self-absorbed people that can't do anything but argue.

Hu Jintao
Hu Jintao

No, Hu Jintao sounds like someone from our Silent generation, the people who grew up during the Great Depression and World War II. William Strauss and Neil Howe, in their book Generations, describes people of the Silent generation as problem solvers. But, "their solutions -- fairness, openness, due process, expertise -- reflect a lack of surefootedness, but also a keen sense of how and why humans fall short of grand civic plans or ideal moral standards. Silent appeals for change have seldom arisen from power or fury, but rather through a self-conscious humanity and tender social conscience.... Lacking an independent voice, they have adopted the moral relativism of the skilled arbitrator, mediating arguments between others -- and reaching out to people of all cultures, races, ages, and handicaps." (Generations, p. 282)

Any generation that grows up during a crisis war is called an "Artist generation," because of their sensitivity to the needs of other people.

Hu Jintao is deeply embedded in China's last Artist generation. He was born in 1942, seven years before the end of China's last crisis war, the violent, genocidal civil war that began with Mao Zedong's "Long March" in 1934, and ended in 1949, after the deaths of tens of millions of Chinese, with the flight of Chiang Kai-shek and his defeated army to the island of Taiwan.

Conflict risk level for next 6-12 months as of: 9-Feb-2006
W. Europe 1 Arab Israeli 3
Russia Caucasus 2 Kashmir 2
China 2 North Korea 2
Financial 3 Bird flu 3
Key: 1=green 1=Low risk 2=yellow 2=Med 3=red 3=High 4=black 4=Active

In my conflict risk graphic, I've often considered increasing the risk level for China from 2 (medium risk) to 3 (high risk), but one of the factors holding me back was that China's President is from the Artist generation, and is very unlikely to make an actual decision to wage war preemptively.

These are the things that lead me to make a comparison between Hu and Secretary of Defense Donald Rumsfeld. Rumsfeld is also in an Artist generation -- America's Silent Generation. No matter what one may think of him, there's no doubt that Rumsfeld extremely genial, and always manages to maintain his sense of humor, even under the most hostile questioning by the Wasington press corps.

Rumsfeld is also a very unlikely person to initiate a war; he certainly didn't make the decision to invade Iraq.

But here's the point: Once the decision had been made by President Bush, Rumsfeld prosecuted the war with brutal energy. I still remember Rumsfeld at press conferences during the Afghan and Iraq wars, responding to a reporter's question with something like the following: "We aren't trying to be nice to these people; what we want is to kill them."

Rumsfeld can say that without flinching because he grew up at a time when there were only two choices: kill the Germans and the Japanese, or be killed by them. I always felt a great deal of sadness in Rumsfeld as I watched the press conferences, but a ruthlessness as well.

Similarly, Hu Jintao may never be the one who makes the decision to go to war over Taiwan, but he won't have to - the decision will be made by the Communist Party's Central Committee, by people who are in younger generations and quite willing to declare war. Once the decision is made, Hu will be like Rumsfeld -- he'll pursue the war energetically and ruthlessly.

So what I'm imagining about Hu Jintao as he meets Bush is that, as an Artist, he'll be reaching out with sadness, hoping to prevent a war over Taiwan. But he'll also be warning Bush that the war will be pursued ruthlessly.

How ruthlessly? Consider the following commentary in Lionel Giles' 1910 translation of The Art of War:

This anecdote should make it clear that any war with China will be far more savage than most people expect.

Unfortunately, Generational Dynamics predicts that such a war over Taiwan will occur with 100% certainty. It may begin this year or next year or after, but it's likely to occur sooner rather than later. (20-Apr-06) Permanent Link
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Hamas calls Monday's Tel Aviv bombing "justified"

The Mideast slide toward all out war appears to be accelerating, because the forces holding the region back from war are quickly disappearing.

In the past few days, the following have happened:

Meanwhile, a similar reaction is occurring in Israel. The Israeli "bunker mentality" -- the desire to hide behind a security barrier and have nothing to do with the Palestinians -- has been badly eroded by Monday's terrorist success.

Thus, both sides are feeling increased justification for increased violence. Hamas feels justified for more suicide attacks, and Israel feels justified for greater retaliation.

These are good examples of the Chaos Theory aspect of what's going. As day to day political events are "chaotic events" that fall like snowflakes in random ways, but the events "attracted" to the impending Mideast war.

Every one of the political events that I listed above move toward war, and you would be hard-pressed to think of any political event that moves away from war. That's how it works.

There is no end to this process except an actual war.

Generational Dynamics predicts that there'll be a major genocidal war between Arabs and Jews that will engulf the entire region. The path to that war appears to be accelerating. (18-Apr-06) Permanent Link
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Secretary of Defense Donald Rumsfeld under fire

Rumsfeld is the only person in Washington, Republican or Democrat, who knows what's going on in the world and is in a position to do something about it.

As I've said before, Rumsfeld was born in 1932, and is a member of the "Silent Generation" that grew up during the Great Depression and World War II. Rumsfeld was old enough to understand that the militarization of Hitler's Germany in the mid 1930s led to the most violent war the world has known, and Rumsfeld can see the same thing happening in China's aggressive militarization today. Thus, he's been modernizing the armed forces and refocusing it on the Pacific, in preparation for a preemptive war by China.

We should thank our lucky stars that we have the services of this highly skilled person from the Silent generation. Given the cataclysmic world war that's coming soon, Donald Rumsfeld may be uniquely able to prepare the armed forces and the country for this war, especially given today's nasty political climate. I absolutely dread the day that Rumsfeld is replaced as Secretary of Defense by a Boomer or Generation-Xer. No Boomer or Xer of either political party could yet possibly understand the world as well as Rumsfeld.

I normally don't comment on politics because, frankly, it doesn't make any difference. My view is that Al Gore would have been a fine President, George Bush is a fine President, and Hillary Clinton or whoever is elected in 2008 will be a fine President. And if Al Gore had been President after 9/11, then we'd be just as deeply into Iraq today as we are under Bush. It couldn't have happened any other way.

But the fact that I rarely comment on politics doesn't mean that I don't feel enormous distaste and disgust at the level of political debate that we hear every day in the news. This is particularly true these days when we have people on the left accusing the administration of planning to attack Iran with nuclear weapons, with the accusations led by Seymour Hersh, a man who compares the American armed forces to Nazi Storm Troopers in Hitler's Third Reich. (This is comparable to Massachusetts Senator John Kerry who apparently believes that American soldiers in Vietnam were the equivalent of Nazi Storm Troopers of World War II who committed atrocities against the Jews. How we can take any such people seriously is beyond me.)

From the point of view of Generational Dynamics, this kind of destructive and fatuous political nonsense is typical of generational crisis periods. This is certainly what happened during America's last two generational crisis wars, the Civil War and World War II.

Abraham Lincoln was bitterly criticized during the Civil War in the 1860s. The early battles were "disasters" and "quagmires" for the North. The most vicious criticisms came from the "Copperheads" - Peace Democrats who despised Lincoln and argued that the civil war was his fault. The 1864 Democratic Party Platform called for peace negotiations with the South, to end the war as quickly as possible, "after four years of failure to restore the Union by the experiment of war, during which, under the pretence of military necessity, ... the Constitution itself has been disregarded in every part, and public liberty and private right alike trodden down."

As for Franklin Roosevelt, the Republicans were able to accuse the President of one scandal after another. Just google the words "fdr scandal" to get a sense of how those scandals are still remembered today.

This kind of political egg-throwing is not unique to America. It corresponds to something I've talked about frequently -- that country after country around the world gets mired in politics and is unable to accomplish anything. It happens when people in the previous postwar generation -- in our case the Baby Boomers -- take leadership positions some 55-60 years after they're born. (The last time I discussed this, I was pointing out that the Congressional calendar this year is just 97 days.)

William Strauss and Neil Howe, the founders of generational theory, analyzed these political cycles in their 1997 book, The Fourth Turning. Just after any crisis war, like WW II, the society is fully unified. Political strife begins with the "generational awakening" era, such as 1960s America, when the first postwar generation (the Boomers, in our case) comes of age. From that point on, society continues to unravel until we reach the current stage, where we have a maximum of political brawling, and a minimal capability to get anything done.

However, this level of political discord does not continue forever. A generational crisis, such as we're in now, is characterized by a series of unpleasant shocks, of which the 9/11 attacks was only the first. Eventually one of these shocks turns the public around, and makes people realize that their country and their entire way of life are in danger. That point, which occurs in every crisis war, is called the "regeneracy," because it signals the regeneration of civic unity.

They describe what happens as follows:

"Collective action is now seen as vital to solving the society's most fundamental problems. ... A Crisis mood does not guarantee that the new governing policies will be well designed or will work as intended. To the contrary: Crisis eras are studded with faulty leadership and inept management -- from President Lincoln's poor record of choosing generals to President Roosevelt's collossal blunders with such alphabet soup agencies as the AAA, NRA and WPA. What makes a Crisis special is the public's willingness to let leaders lead even when they falter and to let authorities be authoritative even when they make mistakes. Amid this civic solidarity, mediocre leaders can gain immense popular following; bad policies can be made to work (or, at least, be perceived as working); and, as at Pearl Harbor, even a spectacular failure does not undermine public support. Good policy choices pay off quickly. (In an Awakening, by contrast, even the best leaders and plans can fail, and one misstep can destroy public confidence.)" [The Fourth Turning, pp 257-258]

What kind of event causes this kind of regeneracy of civic unity? From history we know that it's a shock of such enormous magnitude that it make all political considerations irrelevant. In 1861, it was the disastrous Union loss at the Battle of Bull Run. In 1941, it was the disastrous Pearl Harbor attack, which wiped out almost all of America's entire Pacific fleet.

It's impossible, of course, to predict what event will cause the regeneracy of civic unity in 2000s America. It might be a huge terrorist attack on American soil, it might be a bird flu pandemic, or it might be a disastrous military loss overseas. But when it comes, it will cause a tremendous national reaction, a rejection of all the petty political disputes we see today, and the public unifying behind their leaders.

In the meantime, all we can do is prepare.

I've repeatedly urged all my readers to prepare for a bird flu pandemic. And while these preparations are nominally for a pandemic, the same preparations will help you and your family in other kinds of emergencies.

It's also necessary for the nation to prepare. In our current hateful political atmosphere, it's very hard for anyone to get anything done at all, let alone restructure our armed forces to prepare for a 21st century world war.

But Donald Rumsfeld has been doing that for five years, and continues to do it. We're lucky to have him, and every day that he's in office represents one more day of preparation for what's to come. (17-Apr-06) Permanent Link
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Allah Akbar!! Ahmadinejad announces that Iran is enriching uranium

Clearly trying to provoke an Israeli or American military attack on Iran, Iranian President Mahmoud Ahmadinejad announced "good news," and gave a triumphant press conference announcing that Iran was producing enriched uranium, "for peaceful purposes," and would soon be producing much more.

His announcement was met with wild excitement and cheers of "Allahu Akbar" (Allah is the greatest) from the largely Iranian audience.

Quoting from an Iranian press release:

"With the blessings of God Almighty and with the help of Iran's youth, today we perfected the A to Z of technology that is used to produce nuclear fuel and we have the capability to produce it," said the president proudly.

Noting that Iran's success in the production of nuclear fuel is still on the laboratory scale, Ahmadinejad added: "Based on our wise plans, God willing we will move on quickly to the level of industrial production (of nuclear fuel).

"This will, of course, make our enemies angry because today, real power is in the persistence, knowledge, culture and civilization of nations," the president said.

That is why, he went on to say, "when the Iranian nation made the decision (to pursue nuclear energy) global equations were changed." Ahmadinejad, recalling years of sanctions imposed by the enemies, said: "When we were weak, the enemies were not able to cause us any harm. Now that our nation has added to its successes, we will move on in this long, honorable track."

This is what Ahmadinejad said to wildly enthusiastic Iranians.

I've quoted this at length so you can get a feel for what's going on.

So imagine you hear a pundit say something like the following: "We have time to try diplomacy. The right combination of carrots and sticks could work with Iran just as it worked with Libya. We should be looking to change this regime's behavior, not to overthrow the regime."

This is typical of the most nave statements by pundits who are supposed to know what they're talking about, though why anyone would think they did is beyond me, since just reading about Ahmadinejad's press conference makes it clear that nothing short of force is going to make him back down.

And what about force? As I wrote in January, Ahmadinejad and Iran are evidently trying to be as provocative and threatening as possible, with the intention of goading or provoking the West into the bombing of Iran's nuclear facilities.

Mideast, showing Israel/Palestine, Muslim countries, and Orthodox Christian countries. Somalia and Eritrea are in east Africa.
Mideast, showing Israel/Palestine, Muslim countries, and Orthodox Christian countries. Somalia and Eritrea are in east Africa.

It started last October when he spoke to students at a conference, "The World Without Zionism," he called for Israel to be "wiped off the map," and called for a new wave of Palestinian attacks to "wipe off this stigma from the face of the Islamic world." Later, Ahmadinejad said that Israel should be pushed into the sea, that the Holocaust never happened, and that the entire state of Israel should be moved to Europe or Alaska.

Lately he's been sticking his thumb in the eye of the world by his provocative announcements of nuclear technology and missile weaponry.

So we can assume through his goading that he's not afraid of a military attack on Iran, and would actually welcome it. Why? Because he would then be free to retaliate in any number of ways -- bomb oil fields in other countries, bomb ships at sea, or provide terrorist group Hizbollah with weapons to start a war with Israel.

As we speculated in January, it's because Ahmadinejad and his Muslim cleric superiors have concluded that if they can provoke a major regional war between Arabs and Jews, and if they can drive America out of Iraq, then Iran will be the superpower with hegemony over the entire region.

So, diplomacy won't work, threats of force won't work, and actual force won't work. What about doing nothing? Then Iran will continue with its nuclear development program, and develop nuclear bombs.

From the point of view of Generational Dynamics, it actually doesn't matter much what we do to Iran, or what Iran does. The Mideast is heading a major genocidal war between Jews and Arabs anyway, as we've discussed many times before, and Iran will supply weapons to the Arabs anyway, so whether we use diplomacy, threat of force, actual force, or we do nothing, the results will be the same.

This brings me to an important point having to do with politics. There's the usual nasty political debate going on over an article in New Yorker Magazine by Seymour Hersh about how the Pentagon has made contingency plans for a military strike on Iran's nuclear development facilities.

So what should we do -- bomb or not bomb? Does Generational Dynamics provide any guidance?

Well, the argument against bombing is that there'll be a catastrophe, because Iran will retaliate furiously causing a Mideast cataclysm.

However, this argument overlooks the fact that the Mideast is headed for war anyway, and Iran will find some excuse to cause the same kind of Mideast cataclysm anyway.

So both of these are bad, but which is worse?

Here we bring in some of the concepts of Chaos Theory. I assume you've heard of the "butterfly effect": If a butterfly in China flaps its wings, then that might cause a hurricane in America. However, you can never be sure. If someone sees a butterfly flap its wings in Beijing one day, and a few days later there's a hurricane in America, did the butterfly cause the hurricane? Maybe so, maybe not. There's no way to tell.

Similarly, there's no way to tell whether bombing Iran will make things better or worse. The results of bombing or not bombing Iran are completely unpredictable, completely chaotic. It might make things worse, it might make things better, but we won't know which until it's over, and even then we may not know. We may never know.

As an aside, there's no way to predict what effect Ahmadinejad's glitzy shenanigans will have, either. Maybe he'll goad America into a bombing, or maybe it will make people think he's bluffing. Chaos Theory and Generational Dynamics tell us that there's no predictable result to any of it.

So Generational Dynamics is of no help at all in trying to decide whether or not to bomb Iran, and neither is anything else. All we know for sure is that the Mideast is headed for a major new genocidal war that will engulf the entire region. But how that war will come about cannot be predicted. Allah Akbar. (13-Apr-06) Permanent Link
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French President Jacques Chirac caves in to the million-student street protests

In dramatic political reversal, Chirac rescinded a youth employment law on Monday, giving in to riots and demonstrations by over a million people, mostly students.

Monday's TV appearances by French President Jacques Chirac and then by his Prime Minister Dominique de Villepin couldn't have been more dramatic. De Villepin in particular had staked his reputation on the law, vowing last week that he would not back down.

The law, known as the CPE, that was rescinded would have permitted French employers to fire an employee under 26 years of age, if he's been employed for less than 2 years. Amazingly enough, a young French person who once gets a job has virtually a guarantee of holding that job for life. The result is that employers are afraid to hire young people, and the unemployment rate is 9.6% overall, but 22.2% for young people. The new law would have given young people less job security, but would hopefully have reduced youth unemployment.

Fault Line and Generational Conflicts
Fault Line and Generational Conflicts

Kinds of conflicts

From the point of view of Generational Dynamics, there are two kinds of mob conflicts:

We've been seeing both kinds of mob conflicts recently:

During awakening eras, such as America or France in the 1960s, political / generational conflicts tend to grow in intensity, while fault line conflicts tend to sputter and die.

But in crisis eras, like today, the opposite is true: generational conflicts tend to sputter, while fault line conflicts tend to grow in intensity, and even spiral into a full-scale crisis war.

What's next for France?

There's something that bothers me about the Paris street riots of the last two weeks: They seem way out of proportion to the issue.

Yes, I realize that we have young French people talking about how awful the "Anglo-Saxon" model is, and how the French system is so much more caring, and how awful it would be if some 25 year old lost one 37-hour-per-week job and had to go out and look for another 37 hour per week job. It's a terrible cross for them to bear, I know.

But even so, I just don't see a million students rioting over this one issue. It's too many people for too small an issue.

This brings me back to last autumn's street riots by suburban Muslims, many of them youthful. They were demanding jobs.

A major complaint of the Muslims at that time was that employers were reluctant to hire young Muslims -- for exactly the same reasons that they're reluctant to hire any young person. But it's worse for the Muslims because not only are they young, but also they suffer from ethnic discrimination.

If the new law, the CPE, were implemented, then employers would be more willing to hire young people -- including young Muslims. So the new law would benefit young Muslims, possibly at the expense of the young students who were rioting the last two weeks. Implementing the CPE would eliminate a major source of bias that favors ethnic Frenchmen over Muslims.

If I can figure that out, then so could those students, and their various supporters -- labor unions, educators, and so forth.

Thus, the street riots of the past two weeks were directed more against Muslims than against politicians. The street riots appeared to be a generational conflict, but they really represent an ethnic conflict in disguise.

We see growing fault line conflicts between Muslims and ethnic French in France, Arabs and Jews in the Mideast, and Latinos and non-Latinos in America. From the point of view of Generational Dynamics, all of these conflicts will continue to grow in intensity, and eventually lead to full scale war. And the way things are going in the world, this will occur sooner, rather than later. (11-Apr-06) Permanent Link
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Crunch time for Hamas, as American and European aid is cut off to Palestinians.

Will they "cry uncle" and recognize Israel in exchange for financial aid? To Palestinian youth, that would look like the ultimate hypocrisy and a total sellout -- especially in Gaza, where the especially in Gaza where the the median age of the entire population is 15.6. These are children who elected Hamas, a government of terrorists, and they will not tolerate hypocrisy in that government for long.

And yet it would seem that Hamas has no choice.

On Sunday, Norway discontinued foreign aid to Palestinians. The European Union is expected to do the same on Monday. America is doing the same. And we're talking about a lot of money -- $1.1 billion per year.

Some people think that the purpose of cutting off aid is to bring down Hamas, and to force a a new election (as if that would change anything).

That's certainly what Palestinian Prime Minister Ismail Haniyeh believes - calling it "blackmail." He vows that Hamas will not change its policies -- even though the Palestinian Authority is broke, and can't pay the March salaries of 140,000 government employees.

The Palestinians have received have some promises of money from Arab countries -- from Saudi Arabia, Kuwait and United Arab Emirates -- but it's a lot less than they need, and it's already late.

Meanwhile, the Gaza strip continues its descent into total chaos and lawlessness. Ever since the Israelis pulled out of Gaza last summer, the old settlements have become a paradise for scavengers, who dig up and sell everything from trees to pipes. Palestinian militias in Gaza are firing a dozen or so Qassam missiles into Israel every day, occasionally killing someone. In return, the Israeli air strikes and artillery barrages have killed several Palestinians, mostly militants.

As for the "peace process," it's hard to discern any. Israel's new Prime Minister Ehud Olmert has adopted a policy known as "convergence" (the Hebrew word also means "consolidation") -- Israel will withdraw its West Bank settlements back into "blocs" within Israel, and will complete the security fence/barrier, thus unilaterally defining Israel's borders.

This kind of unilateral action will not be acceptable, according to Palestinian President Mahmoud Abbas, who says it will "lead to war" within a few years.

So this is crunch time, and given the current situation, it's hard to see where the "give" is. Something has to snap, somewhere. Either Hamas will recognize Israel and renounce terrorism, or America and EU will find some formula for resuming aid without that assurance, or the Palestinian government will collapse in some way.

From the point of view of Generational Dynamics, Jews and Arabs are headed for a major regional crisis war, refighting the genocidal 1940s war that followed the partitioning of Palestine and the creation of the state of Israel. As usual, Generational Dynamics tells where you're going, but not the path that will take you there.

So there's no way to predict how the current "crunch" will be resolved. All we can do is make some generalities.

Using the language of Chaos Theory, day to day political events are "chaotic events" that fall like snowflakes in random ways. The impending regional war is a "chaotic attractor," meaning that the chaotic day-to-day political events are "attracted" by the impending war.

We've seen this over and over again since the death of Yasser Arafat. His death was supposed to bring peace, but it didn't. The election of Mahmoud Abbas as Palestinian President brought a temporary respite from the chaos, but today Abbas is powerless and irrelevant. Israel's withdrawal from Gaza was supposed to bring peace and prosperity, but instead Gaza is increasingly chaotic. The parliamentary elections were supposed to provide the Palestinian Authority with a working government, but instead they put Hamas in control.

In each case, political events were "attracted" in the direction of the upcoming war.

The current "crunch" will do the same. Those Pollyannas who hope that the current crisis will bring about the failure of Hamas, and a resurgence Abbas and the Palestinian Authority are dreaming. The highest probability goes to the options that bring the region closer to war, and even if something "positive" happens, then it can't last.

If something as abstract as Chaos Theory doesn't please you, then let's make it more concrete.

As we said, Gaza is being run by children, children with a high intolerance for anything that smells of hypocrisy. They've already given up on Abbas because they consider him to be an irrelevant dinosaur. They've given Hamas a chance because they want a solution, not hypocrisy. If the Pollyannas get their wish and Hamas is brought down, then it will be replaced by some less moderate, more militant than Hamas. That's what happens when you have teenagers making all the decisions. (10-Apr-06) Permanent Link
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Maoist rebels bringing chaos to Nepal and the entire region

Nepal orders all-day curfew in Kathmandu for second day in order to prevent more protests demanding that King Gyanendra step down. The massive protests are led by Maoist rebels. The Maoist insurgency began in 1995 when the Nepal Communist Party left the government and started a rural rebellion.


What's a Maoist rebel? That's a good question, with Mao Zedong long gone. Even China isn't Maoist these days, so it's hard to see what a Maoist is, and anyway, China is supporting the King, not the rebels.

Nepal is a small, landlocked central Asian country in the midst of the Himalayan mountains. It's nestled right between China and India, and that fact reveals the strategic importance of Nepal and the current rebellion.

Nepal's royal family before being killed in 2001 <font size=-2>(Source: BBC)</font>
Nepal's royal family before being killed in 2001 (Source: BBC)

The country of Nepal isn't exactly on the radar of most Americans, but if you have a long memory, then you may remember when Nepal was headline news even here. In 2001, Crown Prince Dipendra got drunk at a party and gunned down the entire royal family, and then killed himself.

Devyani Rana, Crown Prince Dipendra's girlfriend. <font size=-2>(Source: BBC)</font>
Devyani Rana, Crown Prince Dipendra's girlfriend. (Source: BBC)

Dipendra's motive turned out to be that he had wanted to marry his girlfriend, Devyani Rana, but his parents had refused.

Anyway, Prince Gyanendra was soon crowned the new King of Nepal, and this apparently triggered a renewal of the Maoist insurgency. By 2005, the violence had increased to the point that King Gyanendra took dictatorial control of Nepal, and that a major issue in today's anti-King demonstrations.

See what can happen when a Crown Prince falls in love with the wrong girl?

More important though is that the Naxal terrorists, as the Maoist rebels are called, are linking up with the People's War Group in India, also Maoist rebels.

What ties them together, besides the name "Maoist," is that the rebels are mostly from lower castes in both countries, including the "untouchable" Dalits in India.

This has led to increased instability in Nepal and India, which China is taking advantage of in order to gain influence in the region at India's expense.

Generational Dynamics predicts that we're heading for a "clash of civilizations" world war. Although this is commonly thought of as a war between countries in the Muslim civilization and the West, there are many possible scenarios. Another component will certainly be something like a war in the Pacific involving China against Taiwan, Japan and America. India will be an ally of America and the West, if only because of its long-standing relationship with Great Britain as an English colony.

The rise of Maoist violent -- the Naxal group in Nepal and the People's War Group in India -- will play a part leading up to that war. (9-Apr-06) Permanent Link
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Bird flu spreading at lightning speed around the globe

Expected to reach North America within weeks, the US and Canada are stepping up detection programs.

"This is a really serious global situation. During the last three months globally, there has been an enormous and rapid spread of H5N1." That's the assessment of Dr. David Nabarro, the U.N.'s chief coordinator for avian influenza.

It's now reached 30 new countries in 2006 alone, spreading "at lightning speed," according to Nabarro.

The UK is the latest European country to be struck by the lethal H5N1, when a wild swan in Scotland was confirmed to have been killed by the virus.

Within a few weeks, millions of birds will migrate from Asia, over the Bering Straits into Alaska and Canada. The spread of H5N1 to North America at that time is all but certain.

U.S. agencies have announced an early detection program.

The main focus will be on studying about 15,000 eiders and geese among 28 bird species that arrive in Alaska from Asia. Alaskans who see any strange or dead birds are asked to call the hot line at 1-866-527-3358.

However, H5N1 has has now been confirmed in the African country Lagos, which is on the East Atlantic Flyway of migratings. This means that H5N1 can also enter North America through northeastern Canada, and at other migration points across the Atlantic.

Other recent related news includes the following:

With regard to the possibility of human to human transmission, nothing has changed. It's mainly a numbers game, and as H5N1 has spread farther and farther around the world, the opportunities for a mutation or recombination that will permit the virus to spread easily from human to human becomes more likely.

A human pandemic could begin at any time -- next week, next month, next year, or after that.

As I've said before, you and your family should prepare immediately for a possible pandemic. If human to human transmission became public next week on Monday, then by Tuesday all the shelves in grocery stores would be bare. If you stock up on food now, then you'll be sure to have what you need. Even if you think that you can beat the crowds to the grocery store, you should still stock up in advance. If you get your canned food after the panic begins, then you're depriving somebody else of food. But if you stock up in advance, then the shelves will be restocked, and you won't deprive someone else of food.

I once again strongly urge my readers to prepare for an H5N1 pandemic or for any kind of emergency (think of hurricane Katrina) by stocking up on food and water and currency and batteries for the entire household to live on for 2-3 months. This may cost a thousand dollars per person, but it's not wasted money since you can always eat the food later if no emergency occurs. Get canned or dried food that can last a long time in storage, and get a large container for storing water. Keep in mind that stored water becomes impure with time, so you'll also need some purifying tablets or bleach to kill bacteria in the water when the time comes. Finally, get whatever medicines you'll need to take care of yourself and your family for a long period of time. (7-Apr-06) Permanent Link
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Israel votes to move from occupation to withdrawal

Israel's increasing bunker mentality complements the Palestinians' increasing belligerence.

Israeli March 28 election results. <font size=-2>(Source:</font>
Israeli March 28 election results. (Source:

The Israelis have just elected a group of leaders committed to having as little to do with Palestinians as possible.

The net of the election, according to analysts, is that the voters want to continue on the path laid out by former Prime Minister Ariel Sharon. Of course Ariel Sharon became comatose in January, so we have to guess what Sharon would be doing if he were still in charge, and that means that Sharon's policies are colored by current politicians' views, and those views in turn are colored by what these politicians heard from the voters during the election campaign.

One of the biggest shocks of the election was the third place winner: the double-digit win of the Yisrael Beiteinu party headed by Avigdor Lieberman. Lieberman is considered a racist because of a specific proposal he has: Give up some portions of Israel occupied mostly by Arabs back to the Palestinians, in exchange for other Palestinian lands occupied mostly by Jews.

Lieberman's objective is to keep Israel as purely Jewish as possible, with as few Arabs as possible. The Beiteinu party is considered to be far right and racist because of this proposal, and so its capture of 12-14 seats after never winning even one seat before indicates a sharp turn of the Israeli electorate to the right.

As I wrote a couple of weeks ago, Israel is on the verge of changing direction, and the new direction will not be decided by the politicians of any of the parties. The new direction is determined by the young generation, the teens coming into adulthood. And the change of direction will be chosen almost like a new fashion accessory.

There's a formula for predicting what choice the young generation will make, or at least for narrowing down the list of choices. The formula was devised by Hannah Arendt in her monumental study of the Holocaust, in the book, The Origins of Totalitarianism..

Arendt describes this change of direction in the following way: The young generation's attitudes and convictions are actually "the attitudes and convictions of the bourgeoisie cleansed of hypocrisy." Today we can use the term "political correctness." In other words, if you hate the Jews but still make peace with them, then "cleansing of hypocrisy" or removal of political correctness means killing them. That, in essense, is how Arendt described how opinions developed in 1920s and 1930s Germany, and that's where the Palestinians are going today.

It's pretty clear that the Palestinians and Jews hate each other, that they hold each other in contempt, and consider each other pretty worthless. It's also pretty clear that the politically correct statement of that fact is "we don't always get along with them, but we have to live with them, so let's look for a peace process that let's us live together."

That's the politically correct statement of the Jewish elders and the Palestinian elders.

Now, what happens when you strip those opinions of hypocrisy, of political correctness? There are several choices in each case, but given the respective electoral successes of Hamas for the Palestinians and Lieberman for the Israelis, we can begin to narrow down the choices.

The messages of the young Palestinians and Israelis

For the young Palestinians, we've already seen part of the message: A refusal to accept unilateral decisions by the Israelis, a willingness to "encourage" further suicide bombings and other terrorist acts against the Israelis. The young Palestinians see last year's Israeli withdrawal from Gaza as a Palestinian victory caused by terrorist acts, and many feel that similar acts will drive Israel away altogether.

For the young Israelis, we're now seeing a part of their message: A desire to disengage completely from the Palestinians, a willingness to let them suffer economically, a willingness to use the armed forces (the IDF) to strike back at the Palestinians for any terrorist act. The young Israelis see the withdrawal from Gaza as a victory because it means less contact with the Palestinians, and they're willing to give up some West Bank settlements to have even less contact, as long the IDF is available for protection.

So where is this going next? If you're like several pundits I've heard in the last few days, then you think that "pragmatism" will rule. According to these pundits, both the Israelis and Palestinians will realize that they have to get along with each other, and they'll become "pragmatic," and come to an agreement.

That, unfortunately, is not how it works. Maybe the Palestinian Authority President Mahmoud Abbas would like to be "pragmatic," and maybe Israeli Prime Minister Ehud Olmert would like to be "pragmatic," but pundits who say that don't understand anything about the generational change that's taking place. The "pragmatic" older generation leaders are no longer in charge.

It's the young generations that are now in charge. And it's the young generations that are deciding policy. And the young generations are deciding policy by means of Hannah Arendt's formula: They take the attitudes and beliefs of their elders and strip away the hypocrisy, strip away the poltical correctness.

Now we've just described the young Palestinian and young Israeli messages so far. These messages will continue in the direction that they've already been going, rather than in the direction of "pragmatism." What are those messages?

As long as there are choices, then it's impossible to predict. But if you look at the messages so far, then it's not hard to narrow the choices. For the Palestinians, it's more and more terrorist violence. For the Israelis, it's more disengagement except for the IDF as needed.

For both, it's increasing contempt and hatred for the other side.

From the point of view of Generational Dynamics, I've been saying for years that it was Yasser Arafat and Ariel Sharon that have kept the Mideast at peace, despite the fact that they hated each other, and that once they were out of the picture, the Mideast would descend into chaos.

Generational Dynamics predicts that the Mideast will re-fight the violent, genocidal war between Arabs and Jews that occurred in the 1940s, surrounding the partitioning of Palestine and the creation of the state of Israel. And, as always, Generational Dynamics tells you the final destination, but doesn't tell you that path that will take you there.

But now we're beginning to see the path more and more clearly. The recent Palestinian and Israeli elections are clearly revealing the attitudes and convictions of the younger generation, and it's that generation that we have to understand if we want to know where the Mideast is going. Hanna Arendt's formula, the elder generation's attitudes and convictions stripped of hypocrisy and political correctness, gives you the answer.

In the weeks and months to come, I'll be writing about this formula as applied to other countries as well. But you can figure it out for yourself.

I like to brag that I've posted many, many predictions on this web site for over three years, and not a single one has been proven wrong. After all, it's easy to get a million predictions right -- just make two million predictions. What's hard is to make predictions and not get any wrong, and that's what I've done on this web site. Many of the predictions have been proven right, and some are still pending, but not a single one has turned out to be wrong.

I achieved this even though I'm not a psychic or a soothsayer or anything of the sort. I'm just applying the Generational Dynamics theory to real live situations.

The purpose of this web site is not only to make these predictions, but also to teach other people how to do the same thing. That's why I occasionally repeat various aspects of the theory -- partly to help new people, and partly to further educate regular readers.

Homework problems for you

So now you should be able to figure out for yourself where several situations are going. Here are some "homework problems" for you to work on:

If you'd like, send your homework answers to me at and I'll write back and let you know how you did. This will also give me a chance to see how well my readers are understanding what I'm talking about. (3-Apr-06) Permanent Link
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Gold skyrockets to $588 per ounce, highest in 25 years

It's one more sign that investors are becoming increasingly risk-averse.

Gold Prices - 2002 to present
Gold Prices - 2002 to present

As the adjoining graph shows, the price of gold in mid 2005 was about the same as it had been at the beginning of 2004, 18 months earlier.

Then it began to increase dramatically, and has been reaching successive highs since then.

On Friday, gold reached its highest price in 25 years, $588 per ounce.

There are many things that affect the price of gold, since it has many industrials uses as well as being an investment vehicle. And we have to remember that the price of other commodities has been going up in the last two years, mainly because China has been sucking all the oil and metals that it can acquire.

For those reasons, this increase in the price of gold as an isolated event wouldn't necessarily be significant.

But when combined with all the other indicators of increasing investor risk-averseness, we have to add this to the list:

Now, in the same time frame, the price of gold started rising rapidly.

Putting these together indicates that towards the end of last year investors became increasingly nervous.

This is exactly what Alan Greenspan warned about last year in August. He warned about the stock market and housing bubbles as follows:

What Alan Greenspan described is happening. Investors are becoming more cautious, and will support demands for loans to be paid off. He says that "history has not dealt kindly" with the situation we're in, and a financial crisis could develop next week, next month or next year.

As I've been saying since 2002, Generational Dynamics predicts that America is entering a new 1930s style Great Depression, with a stock market crash to the Dow 3000-4000 range by the 2007 time frame. I certainly have no reason to change this prediction now, especially with public debt and the trade deficit continuing to grow uncontrollably and exponentially, and with investors becoming increasingly risk-averse. Even Alan Greenspan might agree.

It's now the beginning of the second quarter, and corporate earnings reports will be coming in. Corporate earnings have been astronomically and unsustainably high for over ten years now. As these reports come out over the next few weeks, we'll see if they continue their high-wire act, and whether investors continue to put their faith in the stock market. (2-Apr-06) Permanent Link
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