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


Web Log - June, 2006


Israeli Air Force buzzes Syrian President's Palace as Israeli settlers are kidnapped

As the level of brinksmanship increases, so does the risk of miscalculation.

Israeli tanks and soldiers pushed across the border into the southern Gaza Strip on Tuesday and Wednesday. According to the Israelis, their objective is to rescue the Israeli soldier hostage, Gilad Shalit, being held by Hamas militants.

Israeli air strikes destroyed bridges that provide access in and out of Gaza City, and also fired on a power station. According to the Israelis, the objective was to prevent movement of the hostage.

"We have no intention of recapturing the Gaza Strip. We have no intention of staying there," said Israeli Prime Minister Ehud Olmert.

Palestinian militias kidnapped two Israeli settlers in the West Bank. Late reports are that they've been killed. No reason was given for the kidnappings.

Israeli jets made low passes over the summer home of Syrian President Bashar al-Assad, and Syrian forces fired on the jets. Israelis say that much of the Hamas military leadership lives in Syria, and receives protection from Syria, and this is acknowledged by Hamas. According to the Syrians, Syria has played no part in the kidnapping of the soldier, and does not know where the hostage is being held.

The living situation is Gaza is getting increasingly worse. The power station had provided most of Gaza's electric power, and now many homes and businesses, including hospitals, are dark. Because of sharp security restrictions imposed by the Israelis, almost no travel is allowed into or out of Gaza, and the destruction of the two bridges limits travel within Gaza as well. On the bright side, the Israeli incursion has, so far, not killed or wounded any Palestinians.

On the Israeli side, a brief segment aired by CNN on Wednesday showed high approval by Israelis of the military incursion.

Another day has gone by, and each day that goes by makes the situation worse in the Mideast. The trend path is that we should expect full scale war before too much longer, although mediators from Egypt, Europe and America are trying their best to head this off.

Of all the events described above, there are two things to focus on if you want to understand the trend line:

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

Please note that I'm NOT saying that these two results can be avoided. Quite the contrary, this is the kind of thing that I predicted in May, 2003, when the "Mideast Roadmap to Peace" came out.

As each day brings new surprises and counter-surprises, the chances of miscalculation on either side could bring events to spiral out of control into full-scale war.

In 2004, I identified the six most dangerous regions in world, six regions of the world where a regional war was likely and where a regional war would lead to a world war. These regions are shown on the adjoining graphic. Using Generational Dynamics forecasting techniques, I computed the probability that a war would break out in one of these regions to be approximately 22% in 2005, and slightly higher in 2006.

At that time I didn't know which of the six regions would break into war first, and in fact considered major war in the Caucasus to be the most likely. But now it looks more and more that the Mideast will be first, and that war will be coming pretty soon. It's impossible to predict whether full scale war will break out next week, next month or next year, but it looks more and more that it will happen sooner rather than later. (29-Jun-06) Permanent Link
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Israeli armed forces mass on Gaza border after soldier's kidnapping

Egyptian mediators are attempting to head off a "large scale military offensive" by Israel to recover the kidnapped soldier.

The soldier was kidnapped by Hamas' military wing. There is a security fence along the border between Gaza and Israel, but the Hamas cells spent several weeks digging a tunnel, 530 meters (580 yards) long, underneath the security fence. On Sunday morning, the cell crossed through the tunnel into Israel and caught an Israeli tank with three soldiers by surprise. Using anti-tank weapons, the Palestinians killed two soldiers, and kidnapped the third.

Palestinians are generally thrilled by this and Israelis are furious -- not only at the Palestinians but also at their own IDF (Israeli Defense Forces) for permitting it to happen.

As I've written about repeatedly on this web site, but no pundit, journalist or analyst seems to be capable of understanding, is that political events in the Mideast are "attracted" (in the sense of a "chaotic attractor" in Chaos theory) to war.

Events prove this out almost every day. Tensions have been boiling among Palestinians and Israelis, and the situation has gotten worse on almost a daily basis.

You can go back 16 months to the election of Mahmoud Abbas as President, and almost every day since then you can find some event that brought the region closer to war, but rarely an event that helped the (laughable) "peace process."

The current crisis has wide ramifications, even if the Egyptians can work their magic and find a way to talk the Israelis out of military action in Gaza:

Obviously, the terrorist cells that carried out this kidnapping, had some or all of these results as objectives.

One thing that people don't understand is that during a generational crisis period, young people have no fear of war. That's true of young Americans, just as it's true of young Israelis and young Palestinians.

The median age of the entire population of the Gaza Strip is 15.6, and yet not one news or analytical article ever mentions this fact, or its consequences. You don't have to be a rocket scientist or know anything about Generational Dynamics to understand that a media age of 15.6 means that the Gaza strip is being run by children. We know that young people in the US get all their news from the Comedy Channel, and we can assume that young people in the Gaza strip get their news from something similar. And so, the Gaza strip is not being run by Abbas or Fatah or Hamas -- it's being run by children who learn about world events from the Palestinian Comedy Channel.

You can see the consequences here. Even if Hamas Prime Minister Ismail Haniyeh would like to see the Israeli hostage freed (and he says that he would), it's not up to him. It's up to the children who are holding the hostage, and it depends on whether Haniyeh and the Egyptian mediators can threaten or seduce or cajole these children into freeing him.

The children holding the hostage belong to Hamas's Izz el-Deen al-Qassam Brigades, the Popular Resistance Committees and the Islamic Army.

This group is demanding the release of hundreds of Palestinian women and children in Israeli jails, in exchange for release of the hostage.

Israeli Prime Minister Ehud Olmert rejected the demand, saying that, "The time is approaching for a comprehensive, sharp and severe Israeli operation. We will not wait forever. We will not become a target of Hamas-terrorist blackmail."

From the point of view of Generational Dynamics, the "attraction" of day to day political events to a state of total war appears to be accelerating. It was fairly slow in the period following Yasser Arafat's death, and really began to speed up following the Israeli evacuation of Gaza. Today, events in the Mideast appear to be spiraling out of control very rapidly. (26-Jun-06) Permanent Link
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Are Germans now proud to be Germans?

World Cup euphoria may be making the difference.

From the point of view of Generational Dynamics, the most fascinating things are large changes in attitudes or behavior by large masses of people. The attitudes of politicians are endlessly fascinating to journalists and pundits, but fairly useless in telling us what's going on in the world. But when an entire population changes its attitude about something, it almost always has a major generational significance, and it almost signals that the world is about to change significantly.

But this change is remarkable enough that even the journalists are noticing it.

Official German Flag and colors -- black, red and gold
Official German Flag and colors -- black, red and gold

For the first time in decades, Germans are being openly patriotic again. German flags are flying all over the place, around the sites of the World Cup (soccer) games. Germans are even openly singing their national anthem again -- at least the third verse, since the other first two verses were banned after World War II.

This is a dramatic change. For almost 60 years, since the end of World War II, the German people have been associated around the world with Hitler and with Auschwitz and other concentration camps, where Jews were exterminated.

The time is right for a change, from the point of view of Generational Dynamics. Like every nation that fought in WW II as a crisis war, the German population is finally losing the generations of people who lived through that war. Even today's senior leaders were, for the most part, in the generational born after the war, meaning that they could not have fought in the Nazi army, could not even been part of the Nazi youth.

It's easier to be a patriotic German when the sins of the past can really be placed firmly in the past, and that's what's happening.

However, it's important to note that the change in public opinion is still ongoing.

It was just a month ago that we discussed a new poll that described a different change in public opinion: that Germans believe "clash of civilizations" with Muslims is coming. So it remains to be seen how increased German patriotism and changing German attitudes towards Muslims will combine to form a merged world view.

Both the German flag and the German national anthem have had turbulent histories.

The modern German flag, shown above, was created in 1848, at a time when the united nation of Germany was just being formed. The colors represented the unity of the Germans: the black of Prussia, the red of Austria and the gold representing the other states.

German flag with Nazi Swastika adopted by Hitler
German flag with Nazi Swastika adopted by Hitler

However, when Hitler came to power he adopted a different flag, the Nazi Swastika. When the war ended, the earlier flag was re-adopted.

The melody of the German national anthem was originally composed by Franz Joseph Haydn in 1797, and put to words in 1841, to create "Das Lied der Deutschen."

The anthem has three verses.

The first verse celebrates the unification of Germany, as it was contemplated in the mid 1800s. It begins "Germany, Germany above all, above everything in the world," and talks about Germans standing together to protect one another.

This verse was adopted by Hitler as an official Nazi anthem. The concept of German unity for mutual protection suddenly was reinterpreted as a desire for German conquest of the world.

So, in 1952, the first verse was officially removed from the German national anthem.

The second verse is a sweet homage to "German women, German loyalty, German wine and German song." It's a tribute to German life and German values in a unified Germany, but because it seemed almost humorous in 1952, the second verse was also banned from the national anthem.

Today the official anthem consists of the third verse and only the third verse, which begins "Unity and law and freedom for the German Fatherland." Finally, there's a verse that made sense in the mid 1800s in the context of a desire for German unity, and also made sense in the mid 1900s in the context of a desire to end war and replace it with freedom and the rule of law.

Here are the three verses of the original German national anthem, and their literal English translation:

Das Lied der Deutschen Song of the Germans
Deutschland, Deutschland über alles,
Über alles in der Welt,
Wenn es stets zu Schutz und Trutze
Brüderlich zusammenhält,
Von der Maas bis an die Memel,
Von der Etsch bis an den Belt -
Deutschland, Deutschland über alles,
Über alles in der Welt.
Germany, Germany above all,
Above everything in the world,
When always, for protection,
We stand together as brothers.
From the Maas to the Memel
From the Etsch to the Belt -
Germany, Germany above all
Above all in the world.
Deutsche Frauen, deutsche Treue,
Deutscher Wein und deutscher Sang
Sollen in der Welt behalten
Ihren alten schönen Klang,
Uns zu edler Tat begeistern
Unser ganzes Leben lang.
Deutsche Frauen, deutsche Treue,
Deutscher Wein und deutscher Sang
German women, German loyalty,
German wine and German song,
Shall retain in the world,
Their old lovely ring
To inspire us to noble deeds
Our whole life long.
German women, German loyalty,
German wine and German song.
Einigkeit und Recht und Freiheit
für das deutsche Vaterland!
Danach lasst uns alle streben
Brüderlich mit Herz und Hand!
Einigkeit und Recht und Freiheit
Sind des Glückes Unterpfand;
Blüh' im Glanze dieses Glückes,
Blühe, deutsches Vaterland.
Unity and law and freedom
For the German Fatherland
Let us all strive for that
In brotherhood with heart and hand!
Unity and law and freedom
Are the foundation for happiness
Bloom in the glow of happiness
Bloom, German Fatherland.

The first verse of the original anthem is still controversial, and has been associated with racial attacks against foreigners.

This fact only exposes the intensity of the changes that are occurring in German attitudes and behaviors, as Germans once again are willing to say that they're proud to be Germans.

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

From the point of view of Generational Dynamics, Europe is headed for another major genocidal crisis war. People who doubt this refuse to learn from history - there have been genocidal European wars for millennia, most recently in the 1940s, and there's absolutely no reason on earth to believe that it will never happen again.

In Asia, we can see China, Iran and Pakistan forming a new axis, opposing the new allies - Japan, India, Russia, and America.

But the details of the European war are still not completely clear, at least to me. As I've said before, the level of vicious animosity that the British and French hold for each other is a strong trend indication that the French and the British will be fighting each other in the next European war. But the role of Germany in such a war is still unclear. Also unclear is how this war will interact with the war between Europeans and Muslims that will occur at the same time on European soil.

All we can do at this time is watch developments, like the current change in German attitudes, and see how the trends develop. (23-Jun-06) Permanent Link
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Tensions reaching the boiling point among Palestinians and Israelis

So-called "pinpoint" Israeli missile strikes have killed several civilians, including children in the Gaza strip, as the Israeli Defense Force (IDF) attempts to kill terrorist leaders selectively with missiles.

This is increasingly infuriating the Palestinians, at a time when the tensions between the two major Palestinian government factions -- Mahmoud Abbas' Fatah and Hamas -- are also increasing enormously.

There's a growing sense that no one is in charge anymore, according to Robert Rosenberg's Ariga column. "And with tensions running so high -- between Hamas and Fateh, as well as Israel and the Palestinians -- each passing day without a deal carries the risk of an outbreak of internecine hostilities inside Gaza," says Rosenberg, "as well as escalation of Palestinian attacks on Israel iin retaliation for Israeli retaliations for those attacks."

From the point of view of Generational Dynamics, this increasingly unfortunate situation is exactly what was expected and has been frequently predicted on this web site. As predicted in May, 2003, when the "Mideast Roadmap to Peace" came out, not only did the "Roadmap" fail, but the Mideast is descending into increasing chaos on almost a daily basis. This has only accelerated since the death of Palestinian president Yasser Arafat and the incapacitation of Israeli prime minister Ariel Sharon.

Recall that for many years, the West blamed Yasser Arafat for sabotaging any peace process and for encouraging Palestinian terrorism. This mantra was repeated over and over again by politicians, pundits and journalists, none of whom understood, or were capable of understanding, even the simplest, most elementary concepts of how generational changes work. This lack of understanding of simple generational theory explains why politicians, analysts and pundits of all political parties make so many stupid mistakes, and constantly get things wrong.

For some reason, which constantly escapes me, these politicians, analysts and pundits just can't seem to get their head around the concept that policy isn't being made by the dinosaur Palestinian and Israeli politicians whom everyone credits or blames when anything happens. Like in America, these politicians have to answer to their constituencies, and in the Mideast, these constituencies are increasingly young kids with little or memory of anything in Mideast politics but Palestinian terrorism and Israeli military strikes. In the most extreme case, the Gaza strip, the median age is 15.6, meaning that policy is being set by children who really couldn't care less about any of nuances of international politics that politicians, analysts and pundits seem to prattle on and on and on about endlessly.

From the point of view of Generational Dynamics, the increasing chaos and lack of political control is what's expected. As I wrote about in March at length, the Palestinian government was already dysfunctional, and with the incapacitation of Sharon, Israel is also becoming increasingly dysfunctional. In simplest terms, this is because the complex political infrastructures that were set up by the generation of Heroes who fought in World War II are now old and creaky, encrusted with bureaucracy and so fragile that almost any crisis will shatter them. This is true of international organizations, like the United Nations, and it's also true of political organizations in every country that fought in WW II as a generational crisis war.

The level of threat and confrontation is growing around the world, but probably no more so than in the Mideast. The Palestinian Liberation Organization (PLO) when led by Yasser Arafat was able to maintain order among the Palestinians, but now it's crumbling into a pile of dust that would be a joke if it weren't so serious. And the Israeli parliamentary structure, once led by Liberal or Conservative war heroes like Yitzhak Rabin (1922-1995), Menachem Begin (1913-1992), or Ariel Sharon (1928-), is now being run by Ehud Olmert (1945-), who is a perfectly capable guy but with little understanding of the horrors of a crisis war, and by the abortive Kadima party, where Kadima means "forward," but might also mean "joke."

A new genocidal crisis war between Arabs and Jews cannot be avoided -- Generational Dynamics tells us that with 100% certainty, and you can see it with your own eyes as each day goes by. We can't prevent such a war, but we CAN prepare for it. And every day we sit around talking about a non-existent "peace" process, and every day we nurture "hopes" that the Palestinians and Israelis will fall in line, like at teenage boy "hoping" that the pretty girl across the room will come over and ask him out, is another wasted day that we could have spent preparing ourselves and our nation for the worst - which is what's coming, whether we like it or not. (21-Jun-06) Permanent Link
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US activates its missile defense system over North Korea crisis

The U.S. may try to shoot down any test missile launched by the North Korea, using a ground-based missile defense system that's still under development. A U.S. defence official confirmed that the Pentagon had switched the missile-defense system from test mode to operational.

Michael Kucharek, a spokesman for US Northern Command, would not comment on the status of the missile defence system.

A spokesman for the U.S. Northern Command said, "As the command tasked with homeland defence, we are prepared to do what is necessary to defend this nation on land, sea, air and in space."

The long-range Taepodong-2 missile can travel far enough from North Korea to reach Alaska. They may have an upgraded version capable of reaching Washington state.

At one level, this is all grand theatre. The North Koreans gain some attention, and may or may not get to test out their missile technology. And the United States gets to test its missle-defense system -- at least the tracking technology even if no attempt is made to intercept the Korean missile.

Still, were talking about a real missile, being tested by a country that has a nuclear weapon capablity. And what makes many countries especially nervous the North Korean situation is its linkage to the Iran situation. If the world doesn't stand up to the North Koreans, then the Iranians can assume they have a free hand.

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

From the point of view of Generational Dynamics, all this is just one more step on the road to a crisis war on the Korea Peninsula to reunify North and South Korea -- a war that we'll be drawn into because of our defense treaties with South Korea, that Japan will be drawn into because the Japanese and the Koreans are headed for a revenge war, that China will be drawn into because North Korea is on China's border. (21-Jun-06) Permanent Link
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Massacre of civilians in Sri Lanka leading the way to a crisis war

From the point of view of Generational Dynamics, the gratuitous murder of civilians in a war indicates that the genocidal level of the war is increasing, and this indicates that a crisis war is building.

This is an extremely dangerous and rapidly changing situation, because, as I discussed the other day, a genocidal war between Tamils and Sinhalese could easily spread from Sri Lanka to India, and from there to a larger region.

Indian subcontinent, with the island of Sri Lanka off the southern tip of India.
Indian subcontinent, with the island of Sri Lanka off the southern tip of India.

The latest incidents incidents illustrate this. Three days ago, a bus was bombed, killing 64 people, including children. Yesterday, a church with 200 civilian Tamils, including children, was bombed, killing 7 people.

The government blames the Tamils for the bus bombing, but the Tamils deny responsibility. The Tamils blame the government for the church bombing, but the government denies responsibility. But civilians are being killed on both sides, and that's really all that matters right now.

I'd like to use this as an opportunity to discuss some things about crisis wars in general, in order to emphasize why the situation in Sri Lanka is so dangerous.

The meanings of "crisis era" and "crisis war" are very complex and subtle, which explains why I get questions from readers on the subject. Even people familiar with generational theory find the concepts confusing.

Right now, today, the question often is this: If America is currently in a "generational crisis" period (which it is), does that mean that the Iraq war is a "genocidal crisis war" that we're waging against the Iraqi people?

This question is currently being discussed in John Derbyshire's postings on the National Review online blog, in a discussion comparing the Iraq war to the Vietnam war. (On that page, the underlined phrase, "This is an optional war, not a "crisis war"" is an indirect link to my book on Amazon.)

So are we pursuing the Iraq war as a genocidal war?

Obviously not, since we go to a lot of trouble to avoid killing civilians, except by accident; and when it appears that our armed forces may have intentionally killed civilians, then it becomes a criminal investigation and an international news story, as in the Hadith scandal, currently under way.

So we appear to have a contradition in Generational Dynamics: How could this be a "generational crisis period," if the Iraq war is not a genocidal crisis war?

The answer is that generational crisis periods build slowly. What characterizes crisis eras is that the generation of risk-averse people who grew up during the previous crisis war all disappear (retire or die), all at about the same time, leaving behind younger generations of confrontational people, who take the country to a new crisis war.

Early in a crisis era, there are still a few people around in the generation that grew up in the previous crisis war. (In our case today, this refers to the Silent generation that grew up during World War II. Secretary of Defense Donald Rumsfeld is in the Silent generation, and Chinese President Hu Jintao is in the corresponding generation for China.)

As long as enough of these people are in power, then wars can begin and be pursued with vigor, but the "rules of war" will be followed, and care will be taken, for the most part, to protect the lives of innocent civilians.

However, as crisis eras progress, and people from this generation continue to die off, then the population becomes increasingly willing to "cross lines" and risk various kinds of brinksmanship, including the killing of civilians as collateral damage. This raises the stakes in a non-genocidal war, so that a "tit for tat" pattern arises.

A certain "tipping point" occurs in every crisis war, when the public becomes so anxious, furious and outraged by acts (real or perceived) on the other side that the desire to win and to protect one's nation and way of life become more important than anything else. This point is called the "regeneracy," because the public forgets about political differences, and starts worrying about national survival. It's the time of regeneration of civic unity, and, in a sense, it's the time of regeneration of the entire nation.

In the American Civil War, it was the Battle of Bull Run that turned the war from a spectator sport into a serious war, and led to the bloody Battle of Gettysburg and Sherman's "scorched earth" March through Georgia. In WW II, it was the Bataan Death March that infuriated and united the country, and let to the Allies' saturation bombing of civilians in Germany and Japan.

Unlike the Civil War and WW II, the Vietnam war was an "awakening era" war for America, not a crisis war, and so the nation acted very differently. In 1967, the North Vietnamese "Tet Offensive" was a military disaster for them, but it invigorated and united the North Vietnamese against us, since this war was a crisis war for them. But it was an awakening era war for America, so the Tet offensive only served to heighten the "generation gap" that split America politically, and led to the American defeat.

That's why the online discussion, mentioned above, comparing the Iraq and Vietnam war, is so completely, totally meaningless.

It's like saying, "Apple blossoms grow in the spring. Why don't they grow in the fall?" Or, "Leaves blow off of trees on windy days in the fall. Why don't they blow off of trees on windy days in the spring?"

America today is in a generational crisis era. During the 1960s, when America fought the Vietnam war, America was in a generational awakening era. It's nonsense to compare the Vietnam War to today's Iraq war, just as it's nonsense to compare apple blossoms in the spring with apple blossoms in the fall. It just doesn't make sense.

It astounds me that almost no one, including people who should know better, sees the vast differences. For example, the massive anti-war protestors against the Vietnam war were from the college-age Baby Boomer generation, and they were protesting against their parents. Today's tiny collection of anti-war demonstrators are old crones and geezers from the geriatric Baby Boomer generation, and they're protesting against George Bush, reliving their childhoods. This is as plain as the nose on your face, and the implications are profound, but it never ceases to astound me that journalists, pundits, analysts and politicians just can't see this. It's as if somebody had pounded a nail into the portion of their brains that can figure such things out.

This brings us back to the genocidal violence in Sri Lanka. This civil war is occurring in what is definitely a crisis era, since the last crisis war occurred just after the end of WW II. But the civil war violence has been mostly "low-level," and even resulted in a peace agreement in 2002.

But, in the last few months, the violence has increased. But more than that, we're beginning to see lines being crossed, both sides are practicing brinksmanship. The bombing of a bus and then a church filled with civilians, including children, are major lines being crossed.

If this weren't a crisis era for Sri Lanka, then the violence might stop there. As long as there are plenty of people around who lived survived the last crisis war, then "cooler heads will prevail." Old people who remember the last crisis war will say, "Let's simmer down for a while until we see who's responsible for these bombings, and we'll decide what to do next."

But a population in a crisis era is like a tigress in heat, and a crisis war is like wild, uncontrollable sex. There's no rational thought, just a desire to take action based on blind emotions. And I'm not exaggerating or joking when I compare crisis wars to sex. They are both totally irrational and guided by gut emotions -- unlike non-crisis wars, which are much more guided by reason and rationality. Talking about "mission creep" in a crisis war makes as much sense as talking about "mission creep" in sex.

So now we can answer some of the questions we raised at the beginning of this essay.

Are we pursuing the Iraq war as a genocidal war? No, because it's early in America's crisis era. Wait until some horrible surprise happens -- a large terrorist attack on American soil, a substantial military loss overseas, or a nuclear missile or two landing on American cities, for example. This would launch American into a war of revenge and retribution and, with today's high-tech weaponry it would be a war like none the world has ever seen.

Why is the Sri Lanka war so dangerous? Because the entire Indian sub-continent is in a generational crisis era right now, 61 years past the end of World War II, and a genocidal war in Sri Lanka might quickly spread to a war in the entire sub-continent, and then to a world war. (18-Jun-06) Permanent Link
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Violence leading to Sri Lanka war is increasing

Tamil Tiger rebels are being blamed for a mine attack on a bus, killing 60 people including children.

In retaliation, the government Air Force is stepping up raids on Tamil positions.

Indian subcontinent, with the island of Sri Lanka off the southern tip of India.
Indian subcontinent, with the island of Sri Lanka off the southern tip of India.

As we wrote in last month's analysis of the approaching Sri Lanka war, this war would not necessarily involve other countries, since Sri Lanka is an island nation off the southern coast of India.

However, both ethnic groups, the Sinhalese and the Tamils, are linked to larger populations within India itself. So a genocidal crisis war between the Sinhalese and the Tamils might well have consequences within India itself. In the worst scenario, it would trigger a civil war within India, as well as a war with Pakistan. (16-Jun-06) Permanent Link
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Jubilation as stock markets "panic upward" around the world

Suddenly stocks are gaining sharply in synchronized markets in North America, Europe and Asia.

After big gains on Wednesday, markets around the world had a second day of major gains on Thursday.

New York markets gained another 2% on Thursday, topping 11,000, and the S&P index had its biggest one-day gain in several years.

European markets gained 2-4% on Thursday.

As of midday Friday, Asian markets are up 3-4%.

News anchors and analysts are smiling broadly, expressing open relief that those crazy, panicky investors who caused sharp selloffs have now come to their senses and buying back into the stock market. I'm sure that champagne corks are popping somewhere.

Unfortunately, this "upward panic" is just as dangerous as a sharp selloff.

Panicky investors buy when they're afraid of missing out on a big rally, and they sell when they're afraid of getting stuck in a big selloff.

Both kinds of behavior are equally dangerous, and could lead to a full scale panic.

In fact, what we're seeing is that all markets in the world are synchronized, all going up or down together. Investors are no longer making buy or sell decisions based on the valuation of any particular stock. If you're going to buy, then what difference does it make if you buy IBM or Johnson & Johnson, since all stocks are rising and falling together?

We no longer have a million different stocks. We have only one stock: call it "stock market." Investors are making decision in unison eithr to buy shares of "stock market," or sell shares of "stock market."

And just like any single stock, if it can go up or down 2-3% in one day, then it can go up or down 20-30% in one day. I know it would be exciting if the entire stock market went up 20% in one day, but that's never happened, and anyway, the stock market is overpriced by over 200%, same as in 1929.

We're still on the path for an early stock market crash, as I described in my May 30 essay, "Speculations about a stock market panic and crash."

What would it take to get off that path? On May 31, I said that there are three major possible ways:

Any one of these three things would take us off the path to a major stock market panic, but none of them is happening. If anything, we're more firmly on this path every day.

As I've said many times, a stock market panic is a chaotic event, so it's impossible to predict the exact date of a stock market panic.

But we're in a very dangerous time now, with increasing volatility, and all the markets synchronized in lock-step. A major "generational panic" in the stock markets would not be a surprise to me, and should not be a surprise to any readers of this web site, but obviously it would be to Ben Bernanke and to champagne-cork popping investors around the world. (15-Jun-06) Permanent Link
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US warns North Korea on "countermeasures" over missile test

North Korea appears to be making preparations for a long-range missile test. The missile being tested would presumably be capable of carrying a nuclear weapon to the US mainland.

Lee Tae Sik, South Korea's ambassador to Washington, said that the situation was "very worrisome."

Ban Ki Moon, South Korea's foreign minister, said his ministry "was in discussions with related departments on possible measures" against a North Korean test.

Alexander Vershbow, American's amabassador to South Korea, said that a missile test "would be viewed as a very serious matter and we would have to take appropriate measures in response."

Vershbow didn't say what the "appropriate measures" would be. Presumably it would be something like saying, "Damn you, North Korea!" or something equally consequential.

It's worth taking a moment to step back and ask ourselves: What have been the accomplishments of international diplomacy in the last few years?

Let's list some items:

My point is that nothing has been done in one international crisis after another. Oh, there's been plenty of talk -- there's always a lot of that. But nobody is able to DO anything to prevent the worldwide rush to world war.

There's only real exception to that statement: No matter what you think of the Iraq war, the American decision to invade was the last time anyone was able to actually DO anything to draw the world back from world war (by preventing Iraq from developing or using weapons of mass destruction).

Since then, no one has been able to DO anything.

In fact, since then America is now as politically paralyzed as the rest of the world, and is no longer able to DO anything any more either.

That's the explanation for my joke above. Will America or anyone else DO anything if North Korea tests a missile? Or will there just be empty rhetoric? I expect the latter.

Actually, I was discussing this with a friend earlier today, and he mentioned an intriguing possibility: When Vershbow said that we would take "appropriate measures in response," he might have meant a military action to blow the missile out of the sky with American anti-missile technology of some kind.

This action would illustrate a different point: That as the world becomes politically and socially more and more paralyzed, the only options left are in the realm of military brinksmanship. North Korea will launch a missile, thinking that we can't do anything about it. We knock the missile out, thinking that they can't do anything about.

As military brinksmanship continues, the steps get more and more aggressive, until a miscalculation occurs and they spiral out of control into war.

That's certainly what's happening today in the Mideast, with the military brinksmanship increasing on a daily basis between the two major Palestinian factions, as well as between the Palestinians and Israelis.

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 current "world risk level" graphic, I've placed North Korea at "Medium Risk" because I don't think that they're yet prepared to launch an attack on South Korea or Japan. I still think that's true, but the current situation with the missile test shows that a war could really begin at any time through miscalculation. Anyway, a Mideast war appears to be far more imminent than a war in Korea right now. (14-Jun-06) Permanent Link
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Trade deficit continued to grow in April

What passes for good news in Washington is that it grew less than expected.

Economists had expected that the trade deficit would increase to $65 billion. Instead, it increased a mere $63.4 billion, only $1.9 billion larger than in March, according to the Dept. of Commerce.

According to a Financial Times analysis, "Many economists believe that the underlying deterioration of the trade position should moderate as US consumers tighten their belts and growth picks up in Europe and Japan. In recent weeks there has been mounting evidence that the long-awaited cooling of the US economy is under way."

There's a great deal of irony in this so-called analysis.

First off, economists have been saying for three or more years that "the underlying deterioration of the trade position should moderate," meaning that the size of the trade deficit should start to come down. But US consumers never do seem to "tighten their belts," do they? They just keep going deeper into debt.

Second, the "mounting evidence that the long-awaited cooling of the US economy is under way" is highly correlated to the recent selloff in the stock market. More of the "long-awaiting" cooling will mean more stock market selloffs.

The reason that I mention the trade deficit every now and then is because it shows that the mainstream economists, politicians, journalists and pundits don't know what they're talking about. If they did, the trade deficit would have been coming down for at least a year or two.

From the point of view of Generational Dynamics, the way to understand what's going on is to understand that a business, or any organization, starts out as "lean and mean," very efficient and energetic. But as time goes on, senior managers establish bureaucracies, products and services become institutionalized, and the organization becomes increasingly inefficient and inflexible, and vulnerable to attack by competitors.

In the case of America, this has happened to the country as a whole. During the Great Depression of the 1930s, almost every organization went bankrupt or renewed itself completely. But as time has gone on, many organizations -- federal, state and local governments, businesses, labor unions, public schools, colleges, financial institutions, military, and so forth -- have become increasingly bureaucratic. Averaging all these organizations together, the country as a whole is increasingly bureaucratic and inefficient, and has been losing manufacturing jobs to a more efficient China and service jobs to a more efficient India. This trend continues, so exports continue to level off, while imports continue to increase.

The only way to resolve this situation is another "cleansing depression" that forces most organizations into bankruptcy again, like the 1930s, so the cycle can start again.

Trade deficit (imports minus exports) continued to grow in April 2006 <font size=-2>(Source: Dept. of Commerce)</font>
Trade deficit (imports minus exports) continued to grow in April 2006 (Source: Dept. of Commerce)

The adjoining graph shows the story. The gap between imports and exports shows no sign of leveling. If you look carefully at the blue line (Exports), you can see that it's leveling off, indicating that, if anything, the trade gap is likely to increase if this trend continues. Generational Dynamics predicts that we're entering a new 1930s style Great Depression, and the crisis is expected sooner, rather than later. (12-Jun-06) Permanent Link
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Hamas reopens missile strikes into Israel after beach picknickers are killed

Abbas announces a July 26 referendum, bitterly opposed by Hamas, on recognizing Israel's existence.

A major rise in tensions was expected soon anyway. A report by the Israeli Defense Forces (IDF), to be released next month, says that Israel is headed toward a major, violent war with the Palestinians.

This assessment follows a series of interviews by World Net Daily with leaders of major Palestinian terror organizations, saying that they're ready to launch a 'third intifida', a violent attack on Israel. (The first intifida, or "uprising," occurred from 1987-93 and the second went from 2000 to 2004.) The third intifada will be directed against the security fence, will make increased use of suicide bombers, and will use increasingly accurate armed missiles against Jewish communities.

"The new intifada is only a question of time and this will be the hardest and the most dangerous one," said Abu Nasser, a senior leader of Al-Aqsa Brigades. "It's just about timing until the order to blow up a new wave of attacks will be given."

Hamas, Al-Aqsa and other terrorist groups agreed to an Egyptian-brokered ceasefire with Israel 16 months ago.

But two groups, the Popular Resistance Committee and Islamic Jihad, never agreed to the ceasefire, and so violence has continued all along. On the Palestinian side, this has mostly consisted of the firing of Qassam missiles from Gaza into Israel, but these missiles have rarely done much damage because they lack a guidance system. On the Israeli side, the violence consisted mostly of shelling suspected Qassam sites.

On Friday, one of Israel's shells landed on a Gaza beach, killing ten people, including a family with three children. One girl survived because she had been swimming in the sea when the shell landed. Highly compelling video of this screaming girl is being widely shown on television.

This has outraged the Palestinians, and led Hamas to call off the ceasefire.

Hamas immediately began cross-border rocket and mortar attacks on Saturday. Israeli Defense Minister Peretz then announced that it would target attacks against Hamas leaders.

Also on Saturday, President Mahmous Abbas condemned the Israeling shelling of the Gaza beach, calling it a "massacre," but at the same time he set July 26 as the date of the referendum on the "prisoners’ document." This referendum is bitterly opposed by Hamas because, as I described last week, a side effect of accepting the Prisoners' document would be recognizing Israel.

I've heard some news reports describe the referendum as the "current hope for peace" and a way "to continue he peace process." Actually, there is no peace process, and the referendum is more likely to increase tensions leading to civil war among the Palestinians.

Mideast, showing Israel/Palestine, Muslim countries, and Orthodox Christian countries
Mideast, showing Israel/Palestine, Muslim countries, and Orthodox Christian countries

I normally don't go into this much detail about political goings on, but I want to show how almost every political detail is heading the region for war. It's like that old joke, "If he didn't have bad luck, he wouldn't have any luck at all."

This is to illustrate again the concept of "chaotic attractor," in the sense of Chaos Theory. Political events are random, but in a generational crisis period, political events are "attracted" to war. The underlying cause, in this case, is a young generation of Palestinians in Gaza where the median age for the entire population is 15.6.

From the point of view of Generational Dynamics, the Mideast is entering a "generational crisis" era, since 57 years have passed since the end of the genocidal crisis war between the Arabs and Jews triggered by the 1948 partitioning of Palestine and the creation of the state of Israel.

When the Mideast "Roadmap to Peace" was put forward in May 2003, I predicted that the Roadmap would / could never succeed, and that the Mideast would move closer and closer to war as soon as Yasser Arafat and Ariel Sharon were out of the picture. That appears to be exactly what's happening, as the region moves closer each day to re-fighting the genocidal war of the 1940s, a war that will engulf the entire region. (11-Jun-06) Permanent Link
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"Searching for a bottom."

I'm told by a friend who does a lot of Internet-based day-trading that we're seeing a familiar pattern almost every day: The market starts the day by rallying, and institutional investors jump on it and buy, hoping that the market has "found a bottom," meaning that it'll start to go up again.

Dow Jones Industrial Average (DJIA), Jan 2005 to June 7, 2006
Dow Jones Industrial Average (DJIA), Jan 2005 to June 7, 2006

Then it slips a little around midday, and institutional investors get nervous and sell what they bought that morning, causing the market to fall further, so that they end up losing money.

This is getting closer and closer to full-scale panic behavior. It appears that the panic scenario that I described last week is still being followed. The markets are still plummeting worldwide, the volatility is still very high, and the markets are still synchronized with one another.

As I said a few days ago, this pattern has to be broken if a full-scale panic is to be avoided. There is no sign of this pattern breaking, and the up-down intraday pattern is like a mini-panic.

As of this writing, around midday Thursday in Asia, Tokyo's Nikkei is falling like a stone, down about 2.9%, below 15000 for the first time this year. Other Asian markets are also plummeting, though Europe had a small rally on Wednesday. The Dow fell only a "modest" 0.65% on Wednesday. (It's now a few minutes later, and the Nikkei at first was down only 2.5%, but then started plummeting again, and is now down 3.3%. That's 1% variation in just a few minutes - talk about volatility!)

A web site reader wrote to me yesterday wondering about the Nasdaq crash in 2000. "You list the 2000 NASDAQ bubble crash as one of the major financial crises," she said. "Why isn't your generational clock restarted, thereby expecting another crash in 2070 instead sometime before 2010?"

The answer is that the Nasdaq crash was bad, and a lot of people lost money, but it was really a gradual decline, and wasn't a generational crash, in the same way that some wars aren't generation wars.

I guess at this point it's hard to explain, but if there's a real panic in the near future, then believe me, you'll see the difference. The market will fall 20% in a day or a few days, and investors will go into, well, full-scale unmistakable panic. It will immediately be followed by stories of suicides, of congressional investigations, and of demands to blame anyone who can be blamed.

The same answer applies to another question -- someone asked me whether the market has "crashed" already, since it's fallen so far in the last few weeks. The answer is that this is nothing compared to a full-scale panic.

As always, it's impossible to predict the date of a full-scale panic. It could happen tomorrow, next week, next month or next year. However, as long as the current market behavior continues -- high volatility, synchronized markets around the world, and evidence of panicky intra-day behavior, then a panic must be close. In other words, the wild behavior of the last few weeks simply can't continue forever. Either this behavior will change, or a panic will occur. (8-Jun-06) Permanent Link
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Is Bernanke an idiot? Some investors are saying so.

As of noon Tuesday, the Dow continues to plummet, following sharp selloffs in Asia and Europe earlier today.

According to the, "THE DOW INDUSTRIALS SANK below 11000 as rate fears lingered, extending a broad selloff stoked by Bernanke's surprisingly hawkish comments on inflation."

Actually, the comments by new Fed Chairman Ben S. Bernanke weren't really all that unusual, but these are very anxious times.

People are beginning to blame Bernanke. One web site reader just wrote to me: "Bernanke, you're an idiot. Resign before you run us into a crash." This remark seems to reflect most pundits' beliefs right now.

The crash is inevitable, either now or soon, as I've been saying since 2002, because the stock market is overpriced by over 200%, same as in 1929.

It won't be Bernanke's fault, because there's nothing he can do or could have done to prevent it.

But it's just possible that "History" is going to put the blame on Bernanke. It's an outcome that would be loaded with irony, since "Ben S. Bernanke: The man without agony," may end up suffering the most agony of all. (6-Jun-06) Permanent Link
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Ex-CIA chief James Woolsey says Gaza pullout was "Worst result possible"

Five bystanders, including a pregnant woman, were killed by Palestinian gunmen Sunday in a shootout in Gaza between the two rival militias.

The two armies loyal to Hamas and Mahmoud Abbas' Fatah groups, respectively, were deployed in mid-May as the two rival governments compete for power. Tension and violence between the two groups appear to be increasing, especially in Gaza, and there are worldwide fears of a Palestinian civil war.

Mahmoud Abbas (Abu Mazen), considered by the west to be pretty much the only "good guy" in the increasingly chaotic Palestinian situation, has been scoring some significant political victories recently:

Related Articles

Chaos Theory
Hard-right politician Avigdor Lieberman joins Israeli cabinet: Like the Palestinians, the Israelis are daily becoming increasingly ungovernable.... (1-Nov-06)
While world watches Lebanon, Sri Lanka goes to war: Tamil Tiger rebels have engaged Sri Lanka government forces in heavy fighting... (3-Aug-06)
Hamas reopens missile strikes into Israel after beach picknickers are killed: Abbas announces a July 26 referendum, bitterly opposed by Hamas, on recognizing Israel's existence.... (11-Jun-06)
Speculations about a stock market panic and crash : Will there be a stock market panic next week, next month, or next year, and will it lead to a crash? We speculate on some possibilities. (31-May-2006)
International game of "chicken" leading to disaster in Gaza: Mideast envoy James Wolfensohn quits in disgust with all participants in the so-called "peace process."... (5-May-06)
Hamas calls Monday's Tel Aviv bombing "justified": The Mideast slide toward all out war appears to be accelerating,... (18-Apr-06)
Allah Akbar!! Ahmadinejad announces that Iran is enriching uranium: Clearly trying to provoke an Israeli or American military attack on Iran,... (13-Apr-06)
New home sales and prices fall dramatically four months in a row: This appears to confirm that the housing bubble burst four months ago.... (26-Mar-06)

So Abbas has scored a few points against Hamas, but it's clear that there are now two separate, competing governments attempting to rule the Palestinians. As I've repeatedly described, using concepts of Chaos Theory, that the Mideast is headed for a major regional war, and individual political events are "attracted" to war. This is what's been happening since Yasser Arafat died.

Things have continued downhill and have gotten so bad that former CIA director James Woolsey has expressed surprise that things are going so badly:

"The approach Israel is preparing to take in the West Bank was tried in Gaza and has failed utterly. The Israeli withdrawal of last year has produced the worst set of results imaginable: a heavy presence by al Qaeda, Hezbollah and even some Iranian Revolutionary Guard units; street fighting between Hamas and Fatah, and now Hamas assassination attempts against Fatah's intelligence chief and Jordan's ambassador; rocket and mortar attacks against nearby towns inside Israel; and a perceived vindication for Hamas, which took credit for the withdrawal. This latter almost certainly contributed substantially to Hamas's victory in the Palestinian elections."

Well, he's right about all the things that have gone wrong. In fact, he extends this list of problems back to the peace treaty Israel signed with the Palestinians in 1993:

"Three major Israeli efforts at accommodation in the last 13 years have not worked. Oslo and the 1993 handshake in the Rose Garden between Yitzhak Rabin and Yasser Arafat produced only Arafat's rejection in 2000 of Ehud Barak's extremely generous settlement offer and the beginning of the second intifada. The Israeli withdrawal from southern Lebanon in 2000 has enhanced Hezbollah's prestige and control there; and the withdrawal from Gaza has unleashed madness. These three accommodations have been based on the premise that only Israeli concessions can displace Palestinian despair. But it seems increasingly clear that the Palestinian cause is fueled by hatred and contempt."

It's interesting to see how these politicians think. This is a guy who used to run the CIA, and yet he has no concept of how generational forces could be causing the problems he's listed.

The Gaza Strip is the most densely population place in the world and as I've been pointing out for a long time, and many times since the first time, the median age in the Gaza strip is 15.6, and only slightly higher in the West Bank. That figure comes from the CIA World Factbook, so you'd think that Woolsey might be aware of it and think of its consequences.

So, instead of making a facile statement like "it seems increasingly clear that the Palestinian cause is fueled by hatred and contempt," he might try to draw some reasonable conclusions from the fact that -- demographically -- the Palestinians are being run by children. That's what a median age of 15.6 means. Even if the leaders of Hamas are senior, sophisticated politicians, they're dealing with huge mobs of their constituents, and if these constituents are children, then Hamas has to cater to children.

This is what keeps bothering me about these people -- these politicians, these analysts, these journalists, these pundits. It never even occurs to them to ask the obvious questions -- like what happens when children are running things. And this is a former CIA chief, so you'd think that at least think about some of this stuff.

So, what are Woolsey's conclusions:

"A two-state solution can become a reality when the Palestinians are held to the same standards as Israelis -- to the requirement that Jewish settlers in a West Bank-Gaza Palestinian state would be treated with the same decency that Israel treats its Arab citizens. Until then, three failures in 13 years should permit us to evaluate the wisdom of further concessions."

This is the last paragraph of his essay, and it's total nonsense. It's like saying that a two-state solution can become a reality when pigs fly.

This kind of thing explains a number of mistakes that the CIA and the administration have made in recent years. The "neo-conservative" strategy of assuming that the Iraqi invasion would lead to a string of democracies in the Mideast has been crazy from the beginning, but not for the ideological reasons that its opponents have given. It's been crazy because the Mideast nations have been in the wrong generational places.

That's why I've been hoping that someone from DoD or the State Dept. or the CIA would pick up on some of this stuff. It could mean a great deal as the nation enters a time of great peril.

Anyway, there is one thing, at least, that I like about what's going on. I LOVE the idea of a referendum, because a referendum tells us a lot about what the people are thinking, and what generational changes are occurring, especially if we can get exit poll data breaking down the vote by age group. (5-Jun-06) Permanent Link
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Web site RSS feed is working again

Sorry for the outage last week, folks. Apparently a bad character slipped into my May 24 item, and that made the entire feed invalid. I had no idea until a reader let me know.

While I was at it, I fixed some other problems in the two RSS feeds, and then I ran them through the World Wide Web Consortium (W3C) Feed Validation Service, and as of today both feeds are fully validated.

If any reader has any trouble with the RSS feed, or with any other aspect of the web site or its content, don't hesitate to let me know.

(3-Jun-06) Permanent Link
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