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


Web Log - January, 2007


Today's Schadenfreude: The Congressional pay raise is blocked.

Congress is so paralyzed, they can't even raise their own salaries!

Lawmakers will have to make do with their $165,200 salary this year, thanks to political bickering that's causing their usual 1.7% cost of living increase to be cancelled.

The details are too boring for any but the politically obsessed to care, but basically it's that the Democrats screwed the Republicans last year when the Republicans were in power, so now the Republicans want to screw the Democrats when the Democrats are in power.

My reason for mentioning this is to tie it into what I've been saying frequently: governments of countries that fought in World War II are all becoming increasingly paralyzed. That's because the various government agencies and infrastructures were set up by the survivors of the war, with the purpose of keeping any new war from happening again. The generation of people born after the war (like America's Baby Boomer generation) don't have the skills to effectively operate these agencies, now that the people who set them up are gone, and only know how to argue.

We can see this happening in the European Union, which is unable to agree on a new constitution, we can see it in Britain, where Prime Minister Tony Blair is being forced to step down under fire, and we can see it here in America, where members of Congress, now mostly from the Boomer generation, are crippling the government and preventing President Bush from governing, without providing any alternative. We can see this in Israel, mired in scandals over the Lebanon war, and in the Palestinian government, which is close to civil war. Even China's People's National Congress was paralyzed by ideology last year.

So it's not surprising to me that the U.S. Congress can't even pass it's own pay raise, though it causes a good laugh to hear it.

I'm going to be interested in seeing whether Congress is capable of doing ANYTHING this year. Will they pass a minimum wage bill? Will they even be able to pass that famous non-binding resolution against the Iraq war "surge" that everyone on TV has been talking about? We'll have to wait and see.

But there's one thing for sure: whatever happens, the Democrats and Republicans will be passing gas blaming each other for it. So, for those of you who are partisans on one side or the other, your fun has only just begun. And this thing about the Congressional pay raises is certainly something we can all enjoy. (31-Jan-07) Permanent Link
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When did lending standards start changing so much?

The world was a very different place right after World War II, according to a comment posted by "Olive," a reader of the the Housing Bubble blog, in response to a comment I posted.

Here's the comment by Olive:

"It seems the lending standards have been loosening gradually as part of the ongoing economic cycle, as stated by John X, since the last depression. Although you could buy Model T Fords on credit in the twenties, by the late 1950’s/early 60’s when my dad was a banker (in Canada), he says there was no such thing at that time as a car loan. If you wanted a car - you paid for it in cash. No one had credit cards. I recall in the mid 1980’s when I was coming of age, you had to prove your credit worthiness before you were allowed the honour of getting a credit card. Ten years later, university students without jobs were getting them. Finally today total credit insanity has taken over! No doubt after this blows up the lending standards will go back to how they were in the 1930’s and 40’s and it will all start over again…."

I thought this was interesting because I had forgotten that car loans are such a new thing (or rather, a new thing since WW II). I do remember my father buying a car in the 1950s and paying for it with a check, but it was a used car, and the cost was just $250! Later, around 1960, they bought a new car. I don't recall the cost, but they paid for it out of savings.

Of course my parents lived through the 1929 crash and the Great Depression. My mother, who insisted that everyone (including me) call her Roxie, often told the story of her father's candy store. These were high quality candies, and the store did very well in the 1920s, but people simply stopped buying candy in the 1930s. Roxie said that her father could hardly sleep for months until the day that he lost the candy store to bankruptcy, and then "that night he slept like a baby." After that, Roxie managed to get a job by lying about being able to operate the business machines of the day, but she figured them out on the job. Her pay? $8 per week.

By the 1950s, when I was growing up, Roxie had become a full-charge bookkeeper, and eventually the equivalent of the CFO for a midsized manufacturing firm. But she never stopped fearing a new Great Depression. Every bit of bad business news raised her concerns - "Is this a Depression again?" It affected every decision my parents made. I recall the day that Roxie was absolutely furious. They had enough savings to prepay the remaining balance on their home mortgage. They had just come back from the bank, and the bank manager had told them that they would be charged a "prepayment fee." She just couldn't believe that the bank had the nerve to do that, but somehow my parents had talked the bank manager into accepting the prepayment without the fee.

When Roxie fell ill in 1995, I had the gut-wrenching job of reviewing her finances, and I was utterly astounded by what I found. She lived on almost nothing. She paid rent for a decent apartment, she paid the electric and phone bills, and she subscribed to TV Guide, and that was it. I mean that literally -- she had no more recurring expenses. Her only other expenses were for groceries, cigarettes, her (1972) car, and occasional clothing. Her Depression-era experiences caused her to count every penny as if it were her last. No one born after 1940 would ever live like that -- although we may have to learn to as the next few years progress.

A fascinating example of this from literature is Charles Dickens' 1843 novel, A Christmas Carol, which describes a generational struggle between an old skinflint, Ebenezer Scrooge, and his struggling employee, Bob Cratchit, who has a crippled son, Tiny Tim.

Almost every depiction of this story portrays Scrooge as a skinflint who hoards money to the point of being evil about it. But in fact, Scrooge's miserliness was quite justified, according to what the novel tells us about his past. The bankruptcy of the French Monarchy had impoverished all of Europe, and many people starved to death or went to debtors' prison. In fact, Ebenezer Scrooge's own father had died in poverty, and Scrooge had been separated from his sister because of poverty. So Scrooge's whole life was shaped by the horrors of his experiences with the bankruptcy, and he was perfectly justified in saving every penny.

The three ghosts ("Christmas past," "Christmas present," and "Christmas future") represent the voices of the younger generation of arrogant, self-assured people who were born after the war. The period following a crisis war (like WW II) is almost always a time of great prosperity, since so many people have been killed by the war that there is plenty of food and other resources for the few that survive. These people (like our Boomer generation) see no need to suffer by saving every penny, and they despised and ridiculed the Ebenezer Scrooges of the world.

Over the years, I've come more and more to appreciate Scrooge. He was a man who knew what he had to do, ran his life that way, and didn't let other people talk him into stuff he didn't believe in. Of course, he let himself slip for a day after that psychotic episode with the three ghosts, but hopefully it was only a brief episode, and he was back to his old self by December 26.

Anyway, those stories, together with Olive's, illustrate the vast differences in world view between the generations that lived through the 1930s Great Depression, and the Boomer generation, who believe that there are no risks left, since somebody else will take care of everything. What almost everyone in my generation of Boomers is clueless about is that those "someone elses" are all gone now.

Incidentally, here's the question originally posed by the Housing Bubble blog:

"[W]hen did lending standards start changing so much? I was involved in real estate 20 years ago, mostly as a property manager, but also doing some sales in Capitol Hill/DC, a lot of shells and distressed stuff that was being rehabbed by investors.

I remember how difficult it was to get ‘investor’ loans back then, and that rental income was really discounted in terms of qualifying, etc.; as a result, we did a lot of seller-financed deals with a balloon in 3 to 5 years (usually paid off in a year or two when the property was rehabbed and sold).

When did it start becoming easy for folks to get these low- and no- doc loans and by 3, 5, 10 — whatever — properties to try and flip? I’d love a history of the change in standards if someone has some good insight — who (agencies/companies) started this shift?"

And here's the comment that I posted in response:

"The answer to your question is that it's completely generational.

The people who were born before the 1929 crash, and who lived through the 1930s Great Depression and its horrors -- homelessness, starvation, bankruptcy -- were extremely cautious investors.

That generation of people all disappeared (retired or died) all at once in the early 1990s, and suddenly the senior financial managers and investors were from the Baby Boomer generation, with absolutely no fear of credit, and convinced that "Great Depressions" went out with dinosaurs.

If you go back through history, there are of course many small or regional recessions. But since the 1600s there have been only five major international financial crises: Tulipomania bubble (1637), South Sea Bubble (1721), French Monarchy bankruptcy (1789), Hamburg Crisis of 1857, and 1929 Wall Street crash.

Each of these major international crises occurred roughly 70-80 years after the previous one. What you find is that each new "debt bubble" occurs at exactly the time that the generation of people who grew up during the previous financial crisis all disappear (retire or die), all at once. Thus, the length of time between these "generational" financial crises is approximately equal to the length of a maximum human lifetime.

Today, the GI and Silent generations are gone, and the Boomer generation has been loosening lending standards ever since it took over, starting with loose credit card requirements in the 80s and 90s. It's this generational change that answers your questions about "when."

Our 70-80 year interval is pretty much over. The next major 1930s style Great Depression is just around the corner, with 100% certainty. Nothing can be done to stop it. All we can do is prepare for it."

(29-Jan-07) Permanent Link
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Palestinian civil war between Hamas and Fatah now seems inevitable

Peace talks and ceasefires seem close to being over for good.

Sixty Palestinians have died in on-and-off street fighting in Gaza and the West Bank in January, 29 in the upsurge that began four days ago. The clashes between Hamas and Fatah involved mortars, grenades, bombs and assault rifles.

Both sides accepted an invitation from Saudi Arabia's King Abdullah to mediate peace between the two sides, but no date has yet been set for a meeting. However, for the last few months, there have been several peace meetings and cease-fires, with the meetings separated by a resumption of hostilities.

The Mideast has been deteriorating constantly since Yasser Arafat's death, as I predicted in May, 2003, based on the generational changes that would occur with the disappearance of Arafat.

But it's clear from the news reports that even people close to the action don't understand what's going on.

A former Hamas official, Nashat Aqtash, is quoted as saying, "We are going from bad to worse. I'm not optimistic that the fighting will stop by this weekend. It will take a few weeks more. They are taking the long way, and are fighting to win. Winning means controlling the streets" or losing power altogether.

How can Aqtash believe that things are going to settle down in a few weeks? Things have been getting worse daily for over two years, and the trend isn't going to change now.

Here's a quote from Shlomo Brom, an Israeli analyst and a retired army general: The Gaza muddle is likely to continue because, "The probability of a full-scale war is low, because the two parties understand the consequences and they understand there will be no clear winner."

This is an example of somebody who has no idea what's going on. If people actually followed this philosophy then, for example, the American civil war would never have occurred.

The error that Brom is making is that he believes that the leaders ship of Fatah and Hamas are going to make the decision to go to war with each other. It's the generation of kids who will make that decision, especially in the Gaza strip, which is densely populated with a median age of 15.8, and is run by children who couldn't care less about the "consequences," and who don't believe for a second that there'll be no clear winner.

Another quote, from a Fatah official, Gaza Maher Miqdat, said: "There is a bloody stream in Hamas that insists on provoking the fights because they don't believe in political partnership, and they want to impose an external agenda on the Palestinians." Well, that "bloody stream" is the kids.

Other developments show that the region is headed for an extremely violent civil war.

According to Fatah security sources, thousands of weapons are being amassed by Fatah, in preparation for a battle with Hamas.

In fact, both sides have been amassing rifles, missiles, ammunition and explosives, in preparation for a battle. The weapons have been pouring inth Gaza through tunnels under the border with Egypt.

Ironically, high-quality Kalashnikov assault rifles, which used to be easily available in the Palestinian territories, are now becoming increasingly scarce. Why? Because Fatah and Hamas are hoarding them, so that they're no longer available on the street.

According to unconfirmed intelligence obtained by Debka, Fatah has given Hamas an ultimatum: Either accept their previous "peace agreements," or there will be war, and Fatah is willing to sustain 200 to 500 dead to win total control of Gaza.

In summary: First, the repeated and continuing deterioration of the situation since the death of Yasser Arafat is consistent with the May, 2003, Generational Dynamics prediction that Arafat's disappearance would be part of a generational change that would lead the Mideast into a massive new crisis war (between Jews and Arabs), re-fighting the bloodbath war in 1948-49 following the partitioning of Palestine and the creation of the state of Israel. It now appears that the most likely scenario will be a Palestinian civil war leading into a war with the Israelis.

Second, the massive hoarding of weapons by both sides indicates that the civil war cannot be far off. They would not be hoarding weapons if they didn't plan to use them soon.

And third, if the Debka story is true, then it could all start within the next few days.

Here's one final word for people who aren't regular readers of this web site: Lebanon and Iraq are in generational Awakening eras, and so a civil war is impossible in those countries, as I've explained many times. These countries had their last crisis wars in the 1980s, and so their population today is "attracted" (in the sense of a Chaos Theory attractor) away from war. However, the Palestinians, Israel and Jordan are in a generational crisis period, since their last generational crisis war was in the 1940s, and so they're "attracted" toward a new war.

That's why I'm able to predict that Lebanon is NOT close to civil war, while the Palestinians ARE. (29-Jan-07) Permanent Link
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Journalists complain about closing of foreign bureaus

And yet, I have no difficulty reporting foreign news on this web site.

The complaints have centered about last week's announcement by the Boston Globe that it is closing it's last foreign bureaus, in Jerusalem, Berlin and Bogota, Colombia. The reason for the cuts is to save money, at a time when newspapers are making less money, as people turn more and more to the Internet for their news. Journalists have been expressing regrets about this, such as on the Boston local PBS media show, Beat the Press.

On Sunday morning on CNN's media show Reliable Sources, Howard Kurtz pointed out that CNN still have many foreign bureaus, as do many major newspapers, including the New York Times, the Los Angeles Times, the Washington Post, and the Wall Street Journal. But midsize newspapers, such as the Boston Globe, New York's Newsday, the Baltimore Sun, the Philadelphia Inquirer, have closed all their foreign bureaus. Other newspapers, such as the Pittsburgh Post-Gazette and the Toledo Blade have even closed their Washington DC bureaus.

"Don't you think that readers of the Boston Globe or Philadephia Inquirer or Baltimore Sun took pride in reading world-class newspapers, whose vision extended beyond the immediate suburbs?," asked Howard Kurtz. He concluded, "You won't see much [more] of that. Their owners have downsized their dreams."

The ironic thing about Kurtz's remarks is that they were immediately followed by one of CNN's "Now in the News" news briefs, featuring a report from one of their foreign reporters in Iraq. The brief showed three video segments: a grainy scene of American soldiers running across a field, a blackened car that had been demolished by a terrorist suicide bomber, and a school that had been the targeted by terrorist missiles.

Now, what's the point of claiming that you need foreign bureaus and foreign reporters, if all they're going to do is show the gore resulting from terrorist attacks? And if you look at almost any mainstream media news report, that's most of what they do.

Ironically, there was a truly major story on Sunday that was barely mentioned. The level of conflict between Hamas and Fatah in the Palestinian territories has escalated sharply in the last few days, and a major Palestinian civil war at any time would not be a surprise. This will affect America and the world far more than a terrorist act in Iraq, but these news organizations have their priorities, and it isn't the news.

This web site,, isn't primarily a news site, but I do report a lot of relevant news, and it's perfectly obvious to me that you can use Internet sources to do excellent international reporting, certainly much better than CNN's reporting on Iraq.

If you happen to doubt this, dear reader, let me assure you that it's absolutely true. I've done articles on this web site and prepared for it by collecting as many as 40 or 50 stories from mainstream news sites around the world, allowing me to get points of view from dozens countries. Since 2003 alone, I've collected over 15,000 stories and articles from the web, and they're all indexed and available to me on my computer at any time. This is a capability that's far superior, and produces far superior results, compared to getting the point of view of just one foreign bureau reporter.

So Howard Kurtz's poetic claims about newspapers' "vision extended beyond the immediate suburbs" falls flat with me. What reporters are really complaining about is that they can't get expense-paid trips abroad where they get to use their nationwide news platform to express their personal political opinions.

I began noticing a change in journalism about ten years ago, when several people over the course of a couple of years sent me e-mail messages containing articles they'd written, asking me to critique their writings and about getting published.

The e-mail conversation usually went something like this:

And this is, in fact, the journalistic standard. If you write an opinion piece, you have to provide substantiation for all your facts as if it were a news story. You're allowed to add your own interpretation, provided that it's clear from the wording that it's your opinion. So an opinion piece can contain facts and opinions, but they have to be clearly separated, and the facts have to be substantiated.

On this web site, I actually have a larger problem, since I have to distinguish between four different classes of information, and I have to maintain as high a level of credibility as possibility:

However, journalistic standards of this sort are of little concern to many of today's journalists. We say that two weeks ago when NBC's Chris Matthews melted down on MSNBC, expressing the view that he knows more than anyone else when in fact he knows little of what's happening in the Mideast.

And we see it on the front pages of newspapers every day, when supposedly professional journalists feel free to allow their political biases affect the reporting, as desired. We also see it on the BBC every day, whose every report seethes with fanatical anti-Americanism.

So it's too bad that Howard Kurtz thinks that newspapers have "downsized their dreams," but it seems to me that their dreams SHOULD be downsized. (29-Jan-07) Permanent Link
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Computer chip speed breakthrough brings the Singularity closer

Announcements by Intel and IBM replace silicon for the first time in 40 years

The new announcement means that it will soon be possible to pack more transistors on a chip, making the chips much faster.

The first commercial computers, made in 1950s, used components "vacuum tubes," some of which were as large as Anjou pears.

By 1965, these components had been miniaturized into transistors in such a way that many transistors could fit on a single computer chip. These components were made of silicon, and this has been the basic technology for 40 years.

During that 40 years, engineers have constantly worked to improve the speed of these computer chips (and hence the computer) by making the components smaller, so that they can be packed more densely on a chip.

The reason that this speeds up the chip's performance is as follows: The speed of operation of a chip is limited by the speed of light, since the performance is determined by how quickly the electrons can move around the chip from transistor to transistor. If the components are packed closer together, then the electrons have a smaller distance to travel, and so the chip runs faster.

The rate of improvement has been dictated by Moore's law. Moore's Law was was written in a paper by Gordon Moore of Intel Corp. in the early 1960s. It predicted that the number of transistors on a computer chip would grow at an exponential rate. History has shown that the number of transistors on a computer chip has been doubling every 18 months or so since then, and so the power of computers has been doubling every 18 months.

The size of a transistor is measured by its width at a certain point. Today, most industry chips use 90-nanometer technology (a nanometer is one-billionth of a meter). At that scale, about 1,000 transistors would fit in the width of a human hair. Starting in 2005, 65 nanometer chips became available.

As chips became smaller and more densely packed, the separations became so small that they suffered "current leakage," meaning that electrons would leak from their intended path, making the transistor hotter and slower.

The transistor is attached to the chip's silicon through a "gate," itself made of silicon. The new breakthrough is to manufacture the gate out of a metal oxide, rather than silicon.

Using these new materials, the 65 nanometer technology can now be replaced by 45 nanometer transistors.

The new transistors can be packed on chip with twice the density of the old transistors. The transistors are so small, that 2,000 of them fit could fit across a human hair, 30,000 of them could fit on the head of a pin.

Interestingly enough, Intel isn't saying what the performance improvement will be, but it should approximately double.

What all this shows is that computers continue to improve according to Moore's Law. Physicists and engineers keep finding new tricks and techniques to that the size of the transistor keeps getting smaller, and computer performance keeps doubling every 18 months.

However, the density of transistors on a computer chip is going to reach physical limits shortly after 2010. After that, different technologies will be used to continue the same exponential growth path in computer power. These will include biotechnology, nanotechnology, protein folding technology, molecular technology, and quantum technology -- under development to take the place of integrated circuits and keep the power of computers growing steadfastly, as history shows will happen.

Within a few years, it will be possible to build supercomputers that are as powerful as the human brain, and then it will be possible to develop computer software that, within a few years, make the computer as intelligent as a human being.

At some point, probably some time in the late 2020s, computers will be intelligent enough so that they'll be responsible for their own research and development as necessary to invent new, more powerful versions of themselves. At this point, known as the Singularity, computers will quickly become so much more intelligent than humans that they'll displace humans as the major "species" on earth. Whether the human race will survive long after 2030 is not known, and is impossible to predict.

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

When the movie I, Robot was released in 2004, I thought that the movie would stimulate a public discussion of the Singularity, and would motivate philosophers and religious scholars to begin to thing about its meaning for humanity.

However, I've learned from many conversations with various people that almost no one wants to think about the Singularity. That's not surprising, I guess, since investors don't seem to want to think about the global financial crisis, and politicians don't seem to want to think about the coming Clash of Civilizations World War.

Nonetheless, the Singularity is coming, whether we like it or not, and there's still time enough to prepare for it. (28-Jan-07) Permanent Link
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"Antiwar" rally in Washington fails to stir passions or crowds

Thousands of aging Boomers got together Saturday to commemorate the huge 1960s rallies, when several hundred thousand demonstrators would come to the Washington mall to hear fiery speeches by young Boomer antiwar protestors.

Sparse crowd at Saturday's "antiwar" rally in Washington <font face=Arial size=-2>(Source: CNN)</font>
Sparse crowd at Saturday's "antiwar" rally in Washington (Source: CNN)

The crowd on Saturday appeared to be sparse, and was estimated at "thousands" by some news stories, "tens of thousands" by others.

The crowd came on Saturday to listen to boring speeches by aging Boomer antiwar protesters. An old guy led the crowd chanting, "Hey, hey, Uncle Sam! We remember Vietnam!" A group called the Raging Grannies sang songs reminiscient of the 1960s.

Aging Boomer antiwar protester and activist, Jane Fonda <font face=Arial size=-2>(Source: CNN)</font>
Aging Boomer antiwar protester and activist, Jane Fonda (Source: CNN)

The star of Saturday's protest was Jane Fonda, the resuscitated antiwar activist from the 1960s. More about her in a minute.

Boomer journalists and pundits on Saturday were completely clueless as to why college students had little or no interest in joining the demonstrations, since they remembered fondly the fun and eroticism of the "summer of love," the women's lib parties where the guys burned their draft cards and the girls burned their bras, the weekly demonstrations on colleges across the country, and the huge crowds at the antiwar rallies in Washington and other major cities.

Commentary from Bill Schneider, CNN's senior political analyst, who has a doctorate in political science from Harvard University and has taught at several prestigious colleges, just couldn't figure it out. He gave two reasons why college students weren't participating the way they did in the 1960s:

As I've been saying for years, a 1960s-style antiwar movement today is impossible, because there's no "generational gap" today, as there was in the 1960s. I wrote a lengthy analysis of this in June, 2006.

It was particularly distasteful to see Jane Fonda again.

In the 1960s and 1970s, antiwar protestors, led by the likes of Jane Fonda, would spit on soldiers, call them war criminals and baby killers, and even become violent with them. Fonda became known as "Hanoi Jane," because she went to have her picture taken with the North Vietnamese enemy.

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

Fonda gave a half-hearted, selective apology in 2004 for going to Hanoi, and she said she regretted the picture the moment it was taken. But it's obvious that Fonda was lying, because she later began wearing a necklace made from the melted parts of a U.S B-52 shot down by Hanoi, as shown in the adjoining picture.

As I've been saying for years, there is no antiwar movement to speak of today, and there won't be. But Jane Fonda's hatred of America is palpable, and having her lead an antiwar demonstration only turns a weird relic of past days into a disgusting relic. (28-Jan-07) Permanent Link
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Iraqi soldiers show contempt for American soldiers in Baghdad

This is the other side of the question, "What's REALLY happening in Iraq."

A story in Friday's NY Times shows the contempt that many Iraqi soldiers have for the effort to remove the insurgents from Baghdad.

In this situation, American forces arrived on Haifa Street in Baghdad planning to join up with Iraqi forces to dislodge Sunni insurgents and Shiite militias, but the Iraqi forces didn't show up! Here's what happened, according to the embedded reporter:

"When the Iraqi units finally did show up, it was with the air of a class outing, cheering and laughing as the Americans blew locks off doors with shotguns. As the morning wore on and the troops came under fire from all directions, another apparent flaw in this strategy became clear as empty apartments became lairs for gunmen who flitted from window to window and killed at least one American soldier, with a shot to the head. ...

Many of the Iraqi units that showed up late never seemed to take the task seriously, searching haphazardly, breaking dishes and rifling through personal CD collections in the apartments. Eventually the Americans realized that the Iraqis were searching no more than half of the apartments; at one point the Iraqis completely disappeared, leaving the American unit working with them flabbergasted.

“Where did they go?” yelled Sgt. Jeri A. Gillett. Another soldier suggested, “I say we just let them go and we do this ourselves.”

Then the gunfire began. It would come from high rises across the street, from behind trash piles and sandbags in alleys and from so many other directions that the soldiers began to worry that the Iraqi soldiers were firing at them. Mortars started dropping from across the Tigris River, to the east, in the direction of a Shiite slum.

The only thing that was clear was that no one knew who the enemy was. “The thing is, we wear uniforms — they don’t,” said Specialist Terry Wilson."

This is the other side of the story of what's happening in Iraq.

To analyze this situation, once again we start from the point that Iraq is in a generational Awakening era, as we've discussed many, many times. In simplest terms, this means that the Iraqi people don't want any part of a war, certainly not an all-out civil war that the idiots in Washington can't stop talking about.

We've shown how this works out in Lebanon, which is also in a generational Awakening era: In the summer war, Hizbollah fought the war with Israel as a "war from the comfort of home," launching missiles toward Israel and then returning home to their wives. And then, Hizbollah chief Nasrallah's attempt to overthrow the government in Lebanon has caused Nasrallah to lose support among his own Lebanese supporters, in reaction to the 1980s civil war.

And yesterday, we showed how this works in Iraq: Al-Qaeda cannot get Iraqi jahidists to fight, except when paid. So they have to import suicide bombers and other jihadists from other countries, mostly from Saudi Arabia, which is deeply into a generational Crisis era.

The New York Times article quoted above shows that the American forces have exactly the same problems with Iraqis: They simply don't want to fight. They'd just as soon let the Sunni jihadists and Shia death squads kill each other.

Surely this convinces anyone who is not yet convinced that there's nothing resembling a civil war going on in Iraq, except for the airheads in Washington most of whom believe whatever supports their political position.

However, the fact that it means there's no civil war doesn't mean that it's good news. The war in Iraq is a proxy war between al-Qaeda and Iran. If the Iraqis aren't willing to fight for the Sunni jihadists (or the Shiite militias), then they aren't willing to fight against the Sunni jihadists or the Shiite militias.

In simplest terms, this affects our strategy in Iraq as follows:

Always keep in mind, though, that when historians look back at this period, the Iraq war will be a minor sideshow. The main show, the center ring of the circus, is still in Israel and the Palestinian territories. The situation in those two regions continues to deteriorate every day almost without fail, and a major war cannot be far off. And that war will engulf the entire region, with Iraq becoming far less important than it seems today. (26-Jan-07) Permanent Link
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Three killed in student riots at Beirut Lebanon's Arab University

However, there are signs of diminishing violence in both Lebanon and Iraq.

At least two students are dead and 30 injured in street battles at the Beirut Arab University on Thursday, resulting in army intervention.

Street battles at Beirut Arab University <font face=Arial size=-2>(Source: CNN)</font>
Street battles at Beirut Arab University (Source: CNN)

The mainstream media have been continuing their incessant talk of impending civil war even though, as regular readers of this web site know, Lebanon is in a generational Awakening era, since only one generation has passed since the crisis civil war of the 1980s, and a new crisis civil war is impossible in a generational Awakening era.

One can see this generational concept in action today in Lebanon. The amount of horror and concern over the possibility of a new civil war is palpable, so much so that it serves to inhibit anything resembling a new civil war.

For example, one pro-government official said: "I hope that the memory of the Lebanese civil war was still strong enough in the memory of most to deter them from repeating the same mistake."

Strangely, the memory of the 1980s civil war has been the greatest factor in the public attitude toward Hizbollah chief Sheik Sayyed Hassan Nasrallah.

Hizbollah chief Sheik Sayyed Hassan Nasrallah on Lebanese television Thursday, telling his supporters to stop fighting and go home. <font face=Arial size=-2>(Source: CNN)</font>
Hizbollah chief Sheik Sayyed Hassan Nasrallah on Lebanese television Thursday, telling his supporters to stop fighting and go home. (Source: CNN)

Many Lebanese were actually opposed to the summer war when it was actually on, but they sided with Nasrallah and Hizbollah because it was considered of utmost important that the Lebanese people be unified, in contrast to what happened in the 1980s. Many people would have liked to complain, especially since their entire country was being torn up, but their sense of purpose in maintaining unity caused many people to support Hizbollah when they otherwise wouldn't have.

But now, six months later, things have changed. Recently, Nasrallah has been directing his fury not at Israel, but at the Lebanese government, insisting that he be given veto power over lawmaking. He called massive demonstrations and riots, and they just kept on without much happening.

Then on Tuesday he held the nation wide strike that shut down the country, and this was too much for many in the public. It was one thing to support Nasrallah when he was fighting Israel, but there's no patriotic duty at all to support Nasrallah when he's fighting the Lebanese government.

Media reports from Lebanon on Wednesday and Thursday have been filled with people expressing loss of confidence in Nasrallah, most significantly from his formerly devoted Shiite supported.

In one report, a Lebanese woman says, "I was a supporter. Before, (Hezbollah leaders) acted in a more transparent way. But I am very much against what they did yesterday – destroying roads, traffic lights and everything else."

Another former supported said his sympathy for Nasrallah "died yesterday. They take advantage of our religious loyalties … but turn the streets into military zones."

MEMRI translated a a series of interviews appearing on Lebanese TV.

One woman said, "They said they would take to the streets in a civilized and peaceful manner. It has become evident just how civilized and peaceful they are in their attack against us and against our children, in their beating and killing them. Never mind, all we hope is for that hole-dweller, that 'Abu Lahb' ... We hope that this mouse will come out of his hole. Then we will show him what he's worth. That's it."

Another said, "I want to tell him that we won't let anyone turn this place into a second Israel-Palestine with stones, and with all the war fatwas he issues all the time. He says he wants national unity, but this is not national unity. He got it wrong."

Another summed it up by saying, "Nasrallah, are you happy now? You've driven the Lebanese to fight one another. Are you happy now, Nasrallah?"

What you're seeing here is Generational Dynamics theory in action. People frequently ask me, how can you be so certain that there won't be a civil war in Iraq (as I've been saying since 2003) and Lebanon? The theoretical answer is that you can't have a crisis civil war in an Awakening era. But for a "street answer," just look at what's happening.

You have college students rioting and fighting at Beirut Arab University. College students rioting is a standard fixture of Awakening eras, as anyone knows who remembers what happened during the 1960s, America's last generational Awakening era.

The reason that there are always college students rioting during Awakening eras is because they're in the first generation born after the previous crisis war, so they have no personal memory of its horrors. And so, being young, they fight with each other and with their parents. (Later, they grow up into a generation like our Boomers, who still fight with each other and never do anything else.)

But during an awakening era, you can see from the above quotes how greatly their parents and their leaders pressure them to stop fighting. People in the older generations typically are so traumatized from the crisis war that they've vowed that their children and grandchildren will never have to go through anything like it.

Now we're finally beginning to see that kind of pressure being applied in Iraq. It's been a long time coming, but an analysis by Hudson Institute fellow Nibras Kazimi, says that "al Qaeda is about to run out of steam" in Iraq:

"What needs to be understood is the central role that Al Qaeda — or more accurately its successor organization, a group called the Islamic State of Iraq — is playing on these fronts and the diminishing role of all the other insurgent groups.

The wider Sunni insurgency — the groups beyond Al Qaeda — is being slowly, and surely, defeated. The average insurgent today feels demoralized, disillusioned, and hunted. Those who have not been captured yet are opting for a quieter life outside of Iraq. Al Qaeda continues to grow for the time being as it cannibalizes the other insurgent groups and absorbs their most radical and hardcore fringes into its fold. The Baathists, who had been critical in spurring the initial insurgency, are becoming less and less relevant, and are drifting without a clear purpose following the hanging of their idol, Saddam Hussein. Rounding out this changing landscape is that Al Qaeda itself is getting a serious beating as the Americans improve in intelligence gathering and partner with more reliable Iraqi forces.

In other words, battling the insurgency now essentially means battling Al Qaeda. This is a major accomplishment."

Other reports have indicated that al-Qaeda has been forced to import many jihadists from other countries, mostly from Saudi Arabia and Jordan, because native Iraqis were unwilling to fight unless they were paid to do so, and were unwilling to risk death. In particular, almost all suicide bombers have been imported; almost none have been Iraqis. This is typical behavior for people in a country in an Awakening era.

So Kazimi's analysis makes it clear that al-Qaeda hasn't gotten a break in Iraq. They've had lukewarm support from Iraqi Sunnis, and they've had to face American weapons. Not a pleasant environment.

The insurgency was actually beginning to diminish at the end of 2005, but grew again after Sunni groups bombed the Shiite al-Askariya shrine in Samarra in February, 2006. This inflamed the Shiites, who had previously been restrained, to the extent that they began launching death squads against the Sunni jihadists.

Now, ten months later, Kazimi describes the result:

"Sadly, it took many thousands of young Sunnis getting abducted by death squads for the Sunnis to understand that in a full-fledged civil war, they would likely lose badly and be evicted from Baghdad. I believe that the Sunnis and insurgents are now war weary, and that this is a turnaround point in the campaign to stabilize Iraq."

Of course, not all of the Mideast is in a generational Awakening era. In particular, Saudi Arabia is deeply into a crisis era, and Palestine is also in a generational Crisis era.

And there's no pulling away from war there. The Israeli people are anxious and frightened, and are willing to go to war at the slightest provocation, as happened last summer in the war with Hizbollah, when Israel panicked and rushed to war in four hours, with no plan and no clear objective. That's how countries in generational Crisis eras act.

And there's no pulling away from war for the young Palestinians in the terrorities, especially in Gaza where the median age is 15.8, making Gaza a densely packed region that's run by children with guns and missiles.

In 2003, I predicted that the Palestine region would descend into chaos and finally war, once Yasser Arafat and Ariel Sharon are out of the picture, and I predicted that there would be no major civil war or uprising in Iraq unless it became a theatre of war by outside forces, especially Palestinian and "mujahadeen" terrorists moving into Iraq to fight the war.

Those were my predictions in 2003, and they've come true as predicted. I don't see how those predictions could have been any better, given the available knowledge at the time. I've gotten one prediction after another completely correct, unlike ordinary "experts" whose predictions are no better than throwing a dart. I've repeatedly challenged anyone to find any web site in the world with a prediction record that comes even close to mine, and no one has.

Generational Dynamics thus gives a very accurate country-by-country picture of what's happening and what's going to happen in the Mideast and any other regions of the world.

The traffic to this web site has been growing steadily since I put it up in 2002. There are now over 500 unique visitors per day (not including search engines), which probably equates to 2-3000 regular or occasional visitors.

But it frustrates me to have so many web site readers, and still not be able to attract the attention of the people in the State Dept. or the Dept. of Defense, especially when I know that this material and this methodology would be extremely valuable to our government.

So I'm asking my readers: If you are from the Federal government, or if you know somebody who is, please contact me and give me an opportunity to make this material available where it can do a lot of good. (26-Jan-07) Permanent Link
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A great parody of Tuesday's State of the Union speech.

Don't miss the "Democratic response" at the end, starting at around 6:00.

(25-Jan-07) Permanent Link
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Hizbollah leader Nasrallah's latest coup attempt collapses again

A general strike against the government on Tuesday paralyzed the government for several hours, but was called off by the Hizbollah-led opposition when it was clear that it would not bring down the government. Prime Minister Fouad Siniora - issued a brief, firm address to the nation in which he stood his ground and announced he would remain in office.

I find myself in a familiar situation, explaining why there's no civil war coming, even though everyone else is predicting one. From the point of view of Generational Dynamics, a civil war in Lebanon is impossible, since only one generation has passed since the civil war bloodbath of the 1980s.

And yet, the mainstream media appears to be unanimous in saying that the country is on the edge of civil war.

Scenes from BBC coverage of Tuesday's Lebanon protests. <font face=
Scenes from BBC coverage of Tuesday's Lebanon protests.

The BBC really hyped the violence and the five or so deaths that occurred. However, the dramatic pictures weren't buildings burning, but only tires burning in the middle of the road.

An article in the Christian Science Monitor says that, "Violence at sectarian flash points during a Hizbullah-backed opposition strike prompts fears of renewed civil war."

The virulently anti-American Robert Fisk of the London Independent found nothing to blame America for, but appeared to be close to tears in his article:

"So the worst nightmare years may have begun again. There were thousands of them - Christians fighting Christians north of Beirut, Sunni and Shia Muslims in the capital, a rain of stones, shrieks of hatred and occasionally even gunfire - that turned Lebanon into a sectarian battleground yesterday.

At the corner of a street off Corniche al-Mazraa, I watched what historians may one day claim was the first day of Lebanon's new civil war, huge mobs of young men, supporters and opponents of Fouad Siniora's government screaming abuse and throwing tens of thousands of rocks at each other as a wounded Lebanese soldier sat next to me and wept.

For the army of this tragic country is now the thin red line - some actually were wearing red berets - that stands between a future for Lebanon and the folly of civil conflict.

After 31 years in this country, I never truly believed I would see again what I witnessed on the streets of Beirut yesterday, thousands of Shia and Sunni Muslims, the first supporting the Hizballah, the second the government once led by the murdered ex-prime minister Rafiq Hariri, hurling stones and hunks of metal at each other. They crashed down around us, smashing the road signs, the advertisement hoardings, the windows of the bank against which seven Lebanese soldiers and I were cowering. Again and again, the soldiers ran into the roadway to try - with a desperation all of them understood, and they were brave men - to drag the youths from each other. Some of the Shia men, Amal members, loyal (heaven spare us) to the Speaker of Parliament, wore hoods and black face masks, most wielding big wooden clubs.

Their predecessors - perhaps their fathers - were dressed like this 31 years ago when they fought in these same streets, executioners-to-be, all confident in the integrity of their cause. Perhaps they were even wearing the same hoods. Some of the troops fired into the air; they shouted at the stone throwers. "For God's love, stop," one young soldier screamed. "Please, please."

I should mention that, as much as I've castigated the vast majority of journalists for being abysmally ignorant of the Mideast, that's not true of Fisk, who is truly an expert and is worth listening to even when he's ranting against America.

But he's wrong that Lebanon is close to civil war. The key to understanding this is the last sentence above: "For God's love, stop," one young soldier screamed. "Please, please."

The Lebanese are terrified of another civil war. This is true of every country in a generational Awakening era. In this case, the survivors who lived through the 1980s are still, to this day, completely traumatized and horrified because of the barbarity of what ordinary Lebanese people did to each other. This was especially true in the explosive climax in 1982 when Christian Arab forces massacred and butchered hundreds or perhaps thousands of Palestinian refugees in camps in Sabra and Shatila.

It's this horror and fear of repeating the atrocities of the last crisis war that prevent the survivors from ever taking part in a new crisis war. That's the essence of a generational Awakening era.

Once again, let's remember what happened during the 1960s, America's last generational Awakening era. It began in August 1963, when Martin Luther King led a march on Washington in which over 200,000 people participated. Later, President Kennedy was assassinated, and so was King. There were numerous demonstrations and riots throughout the country, some of them shutting down the government in Washington. There were "long, hot summers," led by the Black Panthers, and there were bombings and declarations of war against the government, led by the Weather Underground. President Lyndon Johnson was driven from office, and the climax was when President Richard Nixon was forced to resign.

This is the kind of thing that happens to every nation in a generational Awakening era, one generation past a crisis war, and it's what's happening in Lebanon today.

Hizbollah leader Hassan Nasrallah, with plenty of support and funding from Syria and Iran, has been attempting to overthrow the existing Lebanese government since the summer. He's called for several huge demonstrations, as well as Tuesday's general strike, but he's failed repeatedly.

Nasrallah has had one failure after another, and now even the Shia in Southern Lebanon are turning against him.

So what's going to happen in Lebanon? It's impossible to predict, except that it will be a political battle. At some point, a political winner will be declared -- either the current government or Hizbollah. But there won't be a civil war. (24-Jan-07) Permanent Link
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Barack Obama to Boomers: Drop dead!

Most Boomers don't realize how much Gen-Xers hate us.

According to a a New York Times article on Sunday, Barack Obama believes that Americans are sick of feuding Boomers, and ready to turn to Generation X, "after the campus culture wars between freaks and straights, and after young people had given up on what überboomer Hillary Rodham Clinton called in a 1969 commencement address a search for 'a more immediate, ecstatic and penetrating mode of living.'"

"In the back and forth between Clinton and Gingrich, and in the elections of 2000 and 2004," writes Obama, "I sometimes felt as if I were watching the psychodrama of the baby boom generation — a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago — played out on the national stage."

No question he's right about that. Boomers are arrogant and narcissistic, as I've said many times. They have no skills except the ability to argue with each other. A lot of people are, like Obama, sick of them.

Unfortunately, what Obama doesn't mention is that Gen-Xers aren't any better.

The reason that Xers don't like Boomers is that Xers grew up in Boomers' shadows for decades.

Here's what Democratic Party strategist and Clinton aide Paul Begala said in an article he wrote in Esquire in 2000, entitled "The Worst Generation" (a different and free version is available here):

"I hate the Baby Boomers. They're the most self-centered, self-seeking, self-interested, self-absorbed, self-indulgent, self-aggrandizing generation in American history. As they enter late middle age, the Boomers still can't grow up. Guys who once dropped acid are now downing Viagra; women who once eschewed lipstick are now getting liposuction.

I know it's a sin to hate, so let me put it this way: If they were animals, they'd be a plague of locusts, devouring everything in their path and leaving but a wasteland. If they were plants, they'd be kudzu, choking off ever other living thing with their sheer mass. If they were artists, they'd be abstract expressionists, interested only in the emotions of that moment -- not in the lasting result of the creative process. If they were a baseball club, they'd be the Florida Marlins: prefab prima donnas who bought their way to prominence, then disbanded -- a temporary association but not a team."

He concludes his article as follows:

"Greatest Generation chronicler Tom Brokaw has the difference pegged: "The World War II generation did what was expected of them. But they never talked about it. It was part of the Code. There's no more telling metaphor than a guy in a football game who does what's expected of him -- makes an open-field tackle -- then gets up and dances around. When Jerry Kramer threw the block that won the Ice Bowl in '67, he just got up and walked off the field."

That kind of self-effacing dignity is wholly alien to the Boomer elite. But when that day comes, when they finally walk off the field -- or what's left of the field -- a few of us who've been trailing behind them will be doing a little dance of our own."

So, it looks like Obama is consciously or subconsciously taking advice from his pal, Paul Begala.

What they don't realize is that Xers are even worse than Boomers.

There's no question that we Boomers are can't do anything but argue, but we're good-hearted folks who care about individuals.

But Xers have no skills either. Since they're so frustrated and furious with Boomers' inaction, Xers are ready to charge in and get things done. But how do they know what to do if they have no skills? Easy. Since they hate the Boomers, they just do the opposite of whatever the Boomers would like to do. And that's not always the best thing.

In a generational Crisis period, like the one America is in today, there's a tremendous amount of craziness and insanity around.

As I've said before, it's amazing what the survivors of World War II did. They carefully set up worldwide organizations -- the United Nations, the World Bank, the World Health Organization, the Food and Agriculture Organization, etc. -- whose purpose was, most of all, to prevent another world war. They accomplished huge things. They set up country boundaries, set up world monetary policies, as well as trade and commerce policies. They made sure everyone would be fed. They attacked all of the miseries of the World Wars -- poverty, famine, disease and war -- so that nothing like World War II would ever happen to their children or grandchildren.

But those people are all gone now, and what we have for leadership today are the Boomers and Xers -- the blind leading the blind.

Obama is obviously making this advance to contrast himself with Boomer Hillary Clinton.

So now you have a choice if you're a Democrat: a confused, arrogant Boomer fanatic, or a furious, hysterical Gen-Xer fanatic.

The bad news is that these leaders will stumble around and get us into a new Clash of Civilizations World War.

The good news is that once the war is over, the survivors will have a brand new, saner world in which to start over. (23-Jan-07) Permanent Link
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Iraq war rhetoric summary on Sunday news talk shows

Supporters of President's Iraq strategy were as scarce as hen's teeth.

Generally, each speaker on the Sunday programs started from the same assumption: That Iraq is in a "tribal sectarian civil war," and that if you don't do what the speaker says, then Iraq will spiral out of control into "anarchy" and "chaos" and millions of Sunnis and Shia will be killing each other in a huge bloodbath.

This is everyone's assumption, but it's completely wrong: Iraq is NOT in a civil war, and there's no chance whatsoever of it spiraling out of control into a huge bloodbath, no matter what we do, since Iraq is in a generational Awakening era. I'll come back to this point later.

So people like Republican Senator Chuck Hagel (Neb), and Democratic Senators Ted Kennedy (Mass) and Joe Biden (Del) used the incorrect assumption as follows: "It's crazy to put more troops into a civil war situation."

And Republican Senators John McCain (Az) and Lindsey Graham (S.C.) used the incorrect assumption as follows: "If we pull out, the huge civil war bloodbath will force us back in right away."

Another completely wrong assumption is that the Iraq war is like the Vietnam war. The reason that this is completely wrong is that Iraq today is in a generational Awakening era, while Vietnam in the 1960s and 1970s was in a generational Crisis era, and so comparisons are almost completely irrelevant.

So the Democrats used this incorrect comparison as follows: "We're hearing the same arguments that we heard in Vietnam. We should have pulled out of Vietnam earlier, and we should pull out of Iraq right away."

The Republicans used this incorrect comparison as follows: "When we pulled out of Vietnam, the Vietnamese civil war expanded into Cambodia, killing millions of people, and we can't let the same thing happen in the Mideast."

Democrats also used this argument: "The Administration has gotten every prediction wrong so far, and there's no reason to believe that their predictions on the 'surge' proposal will be right."

This last argument really makes me laugh, because almost all the Democrats supported the war in 2003, so EVERYONE's predictions were wrong.

The same is true of most of the "anti-war" pundits today, almost all of whom initially supported the war, and are now acting like reformed drunks who want to burn down every liquor store.

The only consistently correct predictions that I know of are the Generational Dynamics predictions on this web site.

In August 2003, when the terrorist attacks were beginning and terrorists blew up the United Nations building in Baghdad, pundits and politicians immediately started predicting a massive uprising against Americans and a massive civil war. I explained that these things are impossible, since Iraq is in a generational Awakening era, and I made the following predictions on August 19, 2003:

"That's why you're seeing massive riots and demonstrations among the Shi'ites in southern Iraq, but you're not seeing massive violence against the American occupiers. There's no "Tet offensive" and no Vietnam-like "quagmire" in the cards for the Americans. ...

That's not to say there aren't dangers, and here we'll point out two major ones:

First, the terrorist attacks may continue and get worse. Terrorism is more a political technique rather than a military technique. Al Qaeda may succeed in increasing the level of terrorist attacks in order to influence American public opinion.

And second, the terrorist acts may presage a larger regional war involving the Palestinian Arabs and the al Qaeda against Americans in Iraq. Iraq is in an awakening period, but the Palestine region is just about to enter a crisis period. Some analysts claim that the terrorist acts are being perpetrated by Palestinian Arabs and "Mujahadeen" being paid thousands of dollars each, funded by Saddam and Osama bin Laden, arriving from Syria and Saudi Arabia.

The really dangerous scenario is that large numbers of Palestinian and "mujahadeen" terrorists will be motivated by identity group relationships to move into Iraq as a theatre of war against the Americans. That isn't happening now, but it's one of several possible scenarios that may unfold in the Mideast region during the next few months and years."

This is exactly what has happened. Given the information that I had at the time, I'm not aware of how I could have had a more accurate prediction for Iraq. And it wasn't a lucky guess -- it was based entirely on Generational Dynamics principles. The only major change today is that terrorist attacks are coming from the Shiite/Iran side as well as from the Sunni/al-Qaeda side.

As I mentioned recently, I'm working on a major status report on the Iraq war. I'm still working on it, but I've reached the point where I believe I can summarize what's going on in Iraq:

The question is: If the Iraq war isn't a civil war, then what kind of war is it?

Thus, there is a unique situation today. Those, like Biden and Kennedy, who claim that there's a civil war and that nothing's changed are simply wrong. A lot has changed in the last few months, and there truly is a new situation in Iraq today.

Does that mean that President Bush's new "escalation" policy will work to stabilize the government? There's no way to predict. But if you ignore the political hysteria, it's a reasonable thing to try.

What would happen if Americans withdrew from Iraq? When Americans withdrew from Vietnam, the Vietnamese civil war spiraled out of control and spread to other countries.

That can't happen in today's Iraq, because there's no civil war to spiral out of control. Instead of a civil war spreading OUTWARD, the external groups funding the insurgency would converge INWARD. Iran, Turkey and Saudi Arabia would certainly intervene. Whether that resulted in a major war cannot be predicted.

However, the most important point is within the framework of the entire Mideast, the Iraq war is just a sideshow. The main show, the center ring of the circus, is still in Israel and the Palestinian territories. The situation in those two regions continues to deteriorate every day almost without fail, and a major war cannot be far off. And that war will engulf the entire region, with Iraq becoming far less important than it seems today. (22-Jan-07) Permanent Link
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Financial Times discovers that something's wrong with hedge funds

It looks more and more like massive fraud by hedge fund managers.

Gillian Tett, a senior economics writer for Financial Times, says in an article on Friday that she received an e-mail message from a "senior banker":

"Hi Gillian. I have been working in the leveraged credit and distressed debt sector for 20 years . . . and I have never seen anything quite like what is currently going on. Market participants have lost all memory of what risk is and are behaving as if the so-called wall of liquidity will last indefinitely and that volatility is a thing of the past.

I don't think there has ever been a time in history when such a large proportion of the riskiest credit assets have been owned by such financially weak institutions . . . with very limited capacity to withstand adverse credit events and market downturns.

I am not sure what is worse, talking to market players who generally believe that 'this time it's different', or to more seasoned players who . . . privately acknowledge that there is a bubble waiting to burst but . . . hope problems will not arise until after the next bonus round. ...

The degree of leverage at work . . . is quite frankly frightening. Very few hedge funds I talk to have got a prayer in the next downturn. Even more worryingly, most of them don't even expect one."

This is interesting on several levels.

The first paragraph says, "Market participants have lost all memory of what risk is...." This is wrong. Today's market participant were born well after the Great Depression, and so they never had a memory of what risk is. This is something that analysts and journalists don't understand: what's happening today is caused by generational changes.

What he's essentially describing is a pyramid scheme, which is what I've been saying for years, and as I recently described in detail.

However, I want to call your attention to a few sentences that I'm repeating here:

"I am not sure what is worse, talking to market players who generally believe that 'this time it's different', or to more seasoned players who . . . privately acknowledge that there is a bubble waiting to burst but . . . hope problems will not arise until after the next bonus round. ...

Very few hedge funds I talk to have got a prayer in the next downturn. Even more worryingly, most of them don't even expect one."

This text makes very clear that there are two kinds of investors: Those who don't know that there's a crash coming, and those that do know, but are still earning commissions by convincing the first kind to keep buying into the bubble.

This is out and out fraud. Ms. Gett doesn't seem to realize this, but what her article shows is that hedge fund managers in particular are committing fraud. They are making promises of / hinting at big returns when they know that those promises / hints won't be met.

Managers and advisors have a fiduciary duty to their clients to give them the best professional advice available. Any advisor or manager who makes money by purposely giving incorrect advice is committing criminal fraud.

These advisors and managers think that they're safe, because all their clients have signed multi-page small print contracts that say that the client is responsible for all losses. But those contracts won't protect the managers and advisors from charges of criminal fraud.

Furthermore, no contract in the world will protect these managers and advisors from angry investors when they find out that the advisors protected themselves financially but didn't protect their clients.

I've pointed this out before, but it's worth repeating. Do you remember what happened in 2001 after the Nasdaq crash and the Enron scandal? People wanted to put CEOs in jail -- ALL CEOs, even perfectly honest ones. People were going crazy. Well, it's going to happen again.

The Enron scandal is one historical example, but a better example might be the bankruptcy of the French Monarchy in 1789 that led to the French Revolution. In the Reign of Terror that followed, any person who was an aristocrat, a relative of an aristocrat, a friend of an aristocrat, a servant of an aristocrat, or even had a resemblance to an aristocrat, would be tried and quickly convicted and sentenced to the guillotine.

So I have some advice for the economics experts, journalists, professors, investors, central bankers, pundits and politicians that have been telling us that everything OK and getting better: You'd better have your underground bunker picked out, because people are going to be coming after you, and the guillotine is going to seem mild compared to the punishment that they're going to want to inflict on you. (21-Jan-07) Permanent Link
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Mutation creates Egyptian bird flu strain resistant to Tamiflu

Egypt's 19th human case of H5N1 high potency avian influenza (HPAI) was identified on Thursday. A total of 19 cases have been identified in Egypt to date, and 10 have been fatal. Worldwide, there have been 161 fatalities among 267 known cases since 2003, according to the World Health Organization (WHO).

In additional news, two people who died of bird flu in Egypt last month had a strain of the H5N1 virus containing a mutation that made it resistant to Tamiflu, the principal antiviral medicine available.

"[T]his is a major concern if the [mutation] is widespread because there have already been problems reported [of] associated resistance of H5N1 to Tamiflu," according to an analysis on Henry Niman's Recombinomics web site. "[Drug resistance] has already developed in patients treated sub-optimally with Tamiflu, and many countries have increased the H5N1 treatment dosage. The newly reported change would raise serious questions about the use of Tamiflu for both treatment and prevention of H5N1 containing [the mutation]."

Although the virus is mutating, it's impossible to predict when a particular mutation will permit easy human-to-human transmission, which would result in a worldwide pandemic. This could happen next week, next month, next year, or thereafter.

Once again, as I always say, 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. (19-Jan-07) Permanent Link
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China successfully tests an anti-satellite weapon

In a military escalation clearly targeting the United States, China has destroyed one of its old weather satellites by means of an anti-satellite weapon, according to a report on the Aviation Week & Space Technology website on Thursday.

The technology used was a "kinetic kill vehicle." A ballistic missile was launched from earth. When it reached the correct altitude, it launched the KKV in the direction of the satellite to be destroyed. The KKV strikes the satellite with a great deal of force, destroying it.

This was not the first test of this type by the Chinese. Several months ago, the Chinese attempted to blind US spy satellites by means of ground-based lasers. It seems extremely likely that the Chinese are developing a number of other technologies as well.

The current test is a very big deal and is raising alarm bells around the world. The United States, Australia and Canada have voiced concern over the implications of this test for a new space weapon race, as well as for the debris and space junk that the destroyed weather satellite will create.

A great deal of the U.S. military's strategic advantage relies on space technology. The U.S. uses space satellites to take photographs, guide missiles through the Global Positioning Satellite (GPS) system, as well as for communication and varied forms of intelligence.

Thus, in a war with China, a series of successful strikes incapacitating our satellites would seriously degrade many of our military capabilities.

From the point of view of Generational Dynamics, a war with China is coming with absolute certainty, and probably sooner rather than later. It will be a major component of the coming "clash of civilizations" world war. (19-Jan-07) Permanent Link
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CNN: Iraqi man was forced to become suicide bomber

This helps us understand what's going on in Iraq.

A CNN International report today was about an Iraqi family man named al-Khaqani. He was kidnapped by terrorists, and secured into the drivers seat of a car loaded with bombs. Somehow (I didn't quite understand how from the report), the car was aimed at a crowd of people. However, the man was able to scream out the window that he was about to blow up and the people scattered. The driver was killed, and only one or two in the crowd were injured. The driver is considered a hero.

This is significant because of something that most people don't realize -- there are no Iraqi suicide bombers. This is never mentioned in the mainstream media reports, and you have to dig it out of original source documents, as I've done.

As I mentioned a couple of days ago, I'm working on an analysis of what the war in Iraq is really about. The network and other mainstream media reporters apparently don't even know something as simple as whether al-Qaeda is Sunni or Shiite, so they don't have a clue. They just assume in their stupidity that it's exactly the Vietnam war.

However, the picture I'm increasingly getting is that the Iraq war is a proxy war between al-Qaeda and Iran. The ordinary Iraqi people do not want any part of a war, since the country is in a generational Awakening era, just one generation past the Iran/Iraq war of the 1980s. They're willing to take part in the war only if they're paid to do so, and they're not willing to get killed.

Therefore, the suicide bombers, who are mostly al-Qaeda, require people imported from other countries, mostly Saudi Arabia, Jordan, and the Palestinian terrorities, three regions that are in generational Crisis eras.

At some level, this must be embarassing to the al-Qaeda terrorists, especially since our armed forces intelligence people are aware of it.

So I interpret the event reported by CNN to be an attempt by al-Qaeda to change the picture. By forcing an Iraqi family man to appear to be a suicide bomber (who, incidentally, would not be around later to tell what happened), al-Qaeda can make it appear that Iraqis themselves are more willing to be suicide bombers.

The mainstream media is acting completely shamefully over this whole thing. It's perfectly obvious that the terrorists are perpetrating one or two suicide bombings every day because they know for a certainty that the mainstream media will showcase them. And you can count on it -- every mainstream media newscast puts the latest suicide bombing on as the lead story, every time every day, without fail. It's just amazing to me what dupes these media people are, and how ignorant they are, as I've discussed before.

The CNN story should have mentioned the Iraqi suicide bomber angle, but if they're even aware of it, I'm sure they would have decided that to do so would be carrying water for the Administration. No, they're committed to carrying water for the terrorists and only the terrorists.

However, the story is potentially quite significant. It indicates a level of desperation on the part of al-Qaeda, and if it's repeated, then it indicates a significant new direction for the terrorists. (18-Jan-07) Permanent Link
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Australian Muslim women go ga-ga over the Burkini

What do you wear on the beach if you're too modest for an ordinary swimsuit?

Woman on right is wearing a Burkini.
Woman on right is wearing a Burkini.

Many Muslim women are expected or required to wear a Burka, a garment that covers them from head to foot, exposing only their faces.

But the beach presents a problem, since a robe can be uncomfortable, and doesn't permit swimming.

The answer is the Burkini, which has become a craze in Australia, where 9,000 garments have been sold for US$125-160.

Victorian swimwear
Victorian swimwear

The Burkini is actually very similar to swimware from the Victorian age, the time in the 1800s when Queen Victoria ruled Britain and women wore much more modest clothing generally. (18-Jan-07) Permanent Link
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Israeli army chief of staff resignation threatens entire government

Israel is still reeling from the disastrous performance in the summer Lebanon war of the Israeli Defense Forces (IDF), a war which is widely perceived to be a humiliating defeat for Israel.

With public dissatisfaction with the government extremely high, the IDF chief of staff was forced to resign yesterday, and it's possible that the entire government of Prime Minister Ehud Olmert may fall as well.

As we reported in our analysis of the war last month, the IDF has been conducting an intensive investigation of what went wrong. The report won't be released until February.

But some conclusions of what is to be called the Winograd Commission Report were released to the Knesset on Tuesday. Some of those conclusions, where are consistent with the rumored conclusions we discussed last month, are as follows:

Basically, as we've discussed, Hizbollah abducted two Israeli soldiers, the Israeli government panicked and went to war in four hours, with no clear plan or objective.

These preliminary conclusions led to the resignation of IDF Chief of General Staff Lt.-Gen. Dan Halutz. He said that his decision to resign was based on "deep-rooted values, those of strong ethics, loyalty to the organization and integrity." "I served the army responsibly for over four decades, and this responsibility continued in the last few months. It is this responsibility that led me to announce my resignation."

Public pressure for Prime Minister Ehud Olmert and his Defense Minister Amir Peretz to resign is expected to increase, as the time for the release of the full report approaches. Olmert's troubles are increased by the fact that he's become the target of a criminal probe for his part in a financial scandal that took place in 2005, when he was finance minister.

As we've said several times in the past, governments of countries that fought in World War II are all becoming increasingly paralyzed. That's because the various government agencies and infrastructures were set up by the survivors of the war, with the purpose of keeping any new war from happening again. The generation of people born after the war (like America's Baby Boomer generation) don't have the skills to effectively operate these agencies, now that the people who set them up are gone, and only know how to argue.

We can see this happening in the European Union, which is unable to agree on a new constitution, we can see it in Britain, where Prime Minister Tony Blair is being forced to step down under fire, and we can see it here in America, where members of Congress, now mostly from the Boomer generation, are crippling the government and preventing President Bush from governing, without providing any alternative.

And the government in the most chaos of all is, of course, the Palestinian government, which is close to civil war.

If the current Israeli government falls, where will it go next? We can only guess: The Israeli people are furious about the summer Lebanon war, and they're extremely anxious and frightened because of Hizbollah and Hamas are planning for war, with Iran's support. The absolutely highest priority for the people of Israel is security, and a new government has to be in a direction that's increasingly militaristic and confrontational, and less tolerant of compromise with the Palestinians.

From the point of view of Generational Dynamics, this is the culmination of the generational cycle, leading to a new crisis war.

As we described above, the survivors in the countries that fought in World War II set up organizations like the United Nations to prevent another such war, and set up compromises and austere rules for the same reason. The generations of people born after the war spend their young adulthood angrily objecting to the austere rules, with a "generation gap" that leads to a great deal of political chaos. This is called a "generational Awakening era." America's last Awakening era occurred in the 1960s and 1970s.

But today, 61 years after WW II ended, the survivors of the war are all gone, and the generations born after the war (Baby Boomers and Generation X) are literally incompetent to take their place, since they don't have the wisdom that comes from having lived through the crisis war. That's when things start falling apart, new chaos ensues, and a new world war begins.

Today we're seeing that happen before our eyes. There's no way to stop the "clash of civilizations" world war that's approaching; all we can do is prepare for it. (18-Jan-07) Permanent Link
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Guess what? British politicians and journalists are just as ignorant as Americans

Gloating by Brits about dumb Americans turns out to be inappropriate.

A survey by the London Times newspaper, in which they informally quizzed 30 politicians and "Middle East" experts in the British government, showed that they were abysmally ignorant of even the simplest facts regarding the Middle East.

Typical questions were, "What's the difference between Sunnis and Shiites?" and "Is al-Qaeda Sunni or Shiite?" and "Is Hizbollah Sunni or Shiite?" In almost cases, the politicans and experts guessed, or had no idea.

The article is a response to gloating by some UK journalists to a similar survey conducted in America. In article last week by BBC journalist Brian Walden, published before the Times article, Walden claims, "I mention this disturbing religious and political illiteracy not because I want to make the point: 'Look at the stupid Americans. Aren't we lucky to be British and cleverer than they are?'" But he then goes on to claim, in effect, "Look at the stupid Americans. Aren't we lucky that I'm British and cleverer than anyone."

<i>Daily Mirror</i> front page, November 4, 2004
Daily Mirror front page, November 4, 2004

Actually, we all know what the British think of Americans. After the 2004 election, the London Daily Mirror tabloid's front page headline was: "How can 59,017,382 people be so DUMB?"

And the BBC is so anti-American that in January, 2004, the BBC was reprimanded after a long investigation resulting in the Hutton Report. The investigation found that the BBC had purposely lied in news stories in order to make Tony Blair's administration look bad in pursuing the Iraq War.

So it's not surprising when BBC reporter Brian Walden says, "I happen to believe that the war in Iraq was a blunder of the first magnitude," but he provides no evidence whatsoever of this, except to quote polls.

In fact, Walden simply shows his own ignorance:

The reason that Walden doesn't address these points is that he's as ignorant of history as he claims that Americans are: He obviously knows nothing about the Truman Doctrine and its importance to American policy; and he obviously knows nothing about the Iran/Iraq war, and its effect on the regional politics today. (See discussion of the Truman Doctrine and the Iran/Iraq war in the weblog entry on Chris Matthews.)

Walden quotes for support an American analyst who says that the Bush Administration "naively assumes that US military power can still be used to create a stable and unified democracy." This is another unsupported statement, especially since American power did exactly that in countries like Kuwait, Germany, Italy and Japan. Of course, British military power helped out, but the fact that Walden doesn't remember even that makes him look even more stupid.

He says, "We're at a new year, and I see no sign that official circles in Washington and London have learnt the lessons that will prevent us making a similar mistake again." What mistake is he referring to? Is he referring to the mistakes that people like him made in underestimating Hitler, and ended up being called appeasers?

See, look: This BBC reporter Walden is an ideologue. He knows little about history, and the history he does know or apply is selective. What makes him a fool is that he thinks he actually knows more than other people.

His gloating came about, as we said, because of a similar survey of American politicians and analysts. That survey was conducted by Jeff Stein, national security editor for Congressional Quarterly. He wrote an article for the New York Times in October 2006, and a December article in Congressional Quarterly.

Stein was interviewing Silvestre Reyes, whom Nancy Pelosi had selected to be chairman of the House Intelligence Committee. At the end of the interview he asked Reyes whether al-Qaeda was a Sunni or Shiite organization. He said, "Predominantly — probably Shiite."

Completely wrong. Al-Qaeda is a Sunni organization. So get this: A 5-term congressman, who's been on the House Intelligence Committee for five years, and is now about to become its chairman, couldn't answer a simple question about the Mideast.

This reminded me of an incident involving Nancy Pelosi just after the election. A reporter asked to respond to something or other that President Bush had said about al-Qaeda in Iraq. She said something about Bush lying again because the 9/11 Commission had found that there was no al-Qaeda in Iraq. Of course there is, at this time al-Qaeda in Iraq, but everyone assumed, including me, that she had simply misunderstood the question. I now realize that she knows nothing at all about al-Qaeda.

This isn't restricted to Democrats. Jeff Stein found that both Democrats and Republicans in Congress were abysmally ignorant about the Mideast. He even found that some CIA agents who specialized in Mideast affairs were extremely ignorant.

What all of these newspaper articles fail to mention is that journalists are just as ignorant. I've pointed this out numerous times on this web site.

ABC's George Stephanopoulos looked like an idiot in November because Jordan's King Abdullah had to tell him five times of the importance of the Israeli/Palestine situation, but he was still clueless. NBC's Chris Matthews exhibited vitriolic partisanship and sheer stupidity after President Bush's speech, making it clear that he knows nothing about such things as the Iran/Iraq war or the Truman Doctrine. CNN's Michael Ware, talking about the Iraq war, said "If this isn't a civil war, then I'd hate to see a real civil war," apparently completely unaware that there is a real civil war going on Darfur, and that the Iraq war is nothing like that. And there's Brian Walden, the BBC reporter I discussed earlier in this article.

The worst example is Bob Woodward who, I suspect, knows so little that he'd have difficulty picking out Iraq on a map, but still wrote a whole book, State of Denial, in which he claimed he knows more than everyone.

You know, dear reader, you may find this hard to believe, but more than one person has actually criticized me for referring to these people as morons. But really, what am I supposed to say about people who know so little, then go on television to shout their ignorance to anyone will listen, and then claim that they're the only ones who know what's really going on?

I could repeat Abraham Lincoln's quote: "Better to remain silent and be thought a fool than to speak out and remove all doubt." Lincoln was probably talking about journalists, because these people are the dumbest and loudest of all.

Remember that one of the questions asked was: "Is al-Qaeda a Sunni or Shiite organization?" This is one of these questions that the politicians couldn't answer, and I'm sure the journalists are the same.

But if you don't understand that, then you can't possible have any idea what's going on in Iraq. These "experts" always talk about a civil war with Sunnis and Shiites shooting at each other, but have no idea what that means. (I remember Stephanopoulis saying that to King Abdullah; what an idiot.)

I've been trying to answer the question myself: If the Iraq war isn't a civil war, then what is it? I've been studying dozens of historical accounts and on the scene reports, things that most journalists are clueless about. And what's increasingly clear is that the war in Iraq is a proxy war between al-Qaeda and Iran. I'm writing an analysis on this subject, and I hope to post it within the next few days.

You know, dear reader, before 9/11 I didn't know much about the Mideast either. But in order to develop Generational Dynamics, and in order to write a book, and in order to do this web site, I've had to read and absorb literally hundreds of history books. I've written about the Mideast hundreds of times, and each time I've had to learn something new.

I've had to do this because, if for no other reason, if I make a mistake in history on this web site, then I look like an idiot, and someone always writes to me and tells me so.

So of course I know the difference between Sunnis and Shiites -- I made a point of learning it and writing about it in my first book. I studied the Quran, the life of Mohammed, the Muslim conquests, the Ottoman Empire, and so forth. How many journalists today have the vaguest idea, for example, that the construction of Mosques in Spain today is raising fears related to the Muslim occupation of Spain prior to 1492 - the same year the Columbus sailed the ocean blue? That's just one example of a thousand things you have to know to understand what's going on today.

In fact, I've written about dozens of countries on this web site, and each time I write about a new country, I have to go and study the history of that country, in order to understand how it got to where it is today. Because you can't understand today's world until you understand yesterday's world. And journalists are even more abysmally ignorant about yesterday's world than they are about today's world.

When I began this project, shortly after 9/11, it was simply to try to figure out what's going on in the world. I've had many shocks and surprises in the 5+ years since then, but probably no more shocking than the realization that I now know more about the history and current events about the world than do 99.9% of the politicians, analysts, journalists, pundits and others in Washington. This is a reflection on how much work I've done, but it's even more a reflection of the sheer arrogance and stupidity that pervades Washington.

It's also worth pointing out that these politicians, journalists and others always get things wrong. They make predictions that are no more than sheer guesswork, and their predictions produce no better results than flipping a coin. They get one prediction after another wrong, but that doesn't stop them from making more wrong predictions, and then asserting that they actually know more about what's going to happen than anyone else does. They know nothing, as their record shows.

Speaking of predictions, this web site has correctly predicted what would happen in Iraq in August, 2003, what would happen in the Mideast in May, 2003, what would happen in Darfur in June, 2004, and what would happen to the "anti-war movement" in February, 2003. There have been no Generational Dynamics predictions that have turned out to be wrong. I've repeatedly challenged anyone to find any web site anywhere in the world with a predictive success record anywhere close to this web site's record. There is none. If you want to know what's going on in the world, this is the one and only web site that will tell you.

From the point of view of Generational Dynamics, the arrogance of and stupidity of the people running Washington today is to be expected, because they're all in the Baby Boomer generation.

The the London Times article that I referenced above quotes Ali Ansari, director of the British Institute of Persian Studies at St Andrews University as saying this:

"When you are making decisions about life and death, war and peace, it behoves our representatives to brush up a bit on aspects on the Middle East.

When it comes to the opposition parties, I really would expect them to have more of a handle of the issues.

Anthony Eden, for all his woes, did have a first in oriental studies from Oxford. He spoke Persian and Arabic fluently. I have to say I think our politicians from 50 years ago were probably a more worldly aware bunch than now."

The speaker refers to Anthony Eden, who became British Prime Minister in 1955. Of course all the people who had lived through World War II and survived it knew what was going on in the world.

It's amazing what the survivors of World War II did. They carefully set up worldwide organizations -- the United Nations, the World Bank, the World Health Organization, the Food and Agriculture Organization, etc. -- whose purpose was, most of all, to prevent another world war. They accomplished huge things. They set up country boundaries, set up world monetary policies, as well as trade and commerce policies. They made sure everyone would be fed. They attacked all of the miseries of the World Wars -- poverty, famine, disease and war -- so that nothing like World War II would ever happen to their children or grandchildren.

But the generations of people who set up those organizations and did those great things are gone now, and the people left behind don't have the skills to make them work effectively.

The Baby Boomers certainly don't have those skills. Boomers have no skills except to argue. They've spent their whole lives expecting the older generations -- the WW II survivors -- to take care of them. But there's no one else left. And the Generation Xers are even worse -- they're just furious at the Boomers.

So that's where we stand today.

I have no idea whether the "surge" of new troops into Iraq is going to work or not, but here's what I do know:

As we approach the "clash of civilizations" world war, we'll soon reach the point anywhere where we won't have any choice but to let the President govern, since anything resembling the current paralysis of government would be a disaster. (14-Jan-07) Permanent Link
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NBC News reporter Chris Matthews exhibits abysmal ignorance and vitriolic partisanship

Commenting on the President's speech, Matthews was the worst of a bad bunch of ignorant journalists.

NBC News reporter Chris Matthews commenting on President Bush's speech <font size=-2>(Source: MSNBC)</font>
NBC News reporter Chris Matthews commenting on President Bush's speech (Source: MSNBC)

Chris Matthews, NBC News reporter and the moderator of MSNBC's Hardball, exhibited abysmal ignorance of what's happening the Mideast as well as American history in his comments following President Bush's speech on Wednesday evening. This is fairly typical of Washington's politicians and journalists, but Matthews exhibited the most ignorance, and then insulted the knowledgeable viewer by claiming that he knew more than anyone.

I've never taken any position on whether we should have pursued the 2003 war in Iraq, and I'm certainly taking no position on whether it's good or bad to pursue the "surge" that President just announced. These decisions will have chaotic (in the sense of Chaos Theory) results that no one can predict, which hasn't stopped journalists and politicians from making ridiculous, random predictions all week. But I do take a position that Washington politicians, journalists and pundits should earn their salaries and not act like partisan morons.

Matthews' comments were based on the speech, and also on an hour-long briefing by the President that many Washington reporters had attended on Wednesday afternoon. Matthews was not at the briefing, but NBC reporter Tim Russert attended.

According to Russert, Bush said, "I'm glad Saddam is gone, because if he were still there, he and Iran would be in a race to acquire a nuclear bomb, and if he didn't stop him, Iran would be going to Pakistan or China, and things would be much worse." Russert added, in a tone of voice that indicated his contempt for President Bush, "That's the way he sees the world."

Russert also paraphrased Bush as saying that he wished he could reveal all the intelligence they had received. "If you knew what we know, you would understand why we have to go on," Russert paraphrased Bush.

Chris Matthews went ballistic, because of this and because of Bush's mention of Iran and Syria in his televised speech.

"A lot people are going to go to bed tonight terrified. I'm worried that the President maintains that neo-conservative aggressiveness, the same attitude that we have to go into countries when we don't like their weapon systems. If we're going to attack Iran, that's serious business." Actually, Bush didn't say we were going to attack Iran.

"He still thinks like that," Matthews continued angrily, shouting at times. "He still thinks in terms of a hair trigger -- we're gonna go in their and knock it out -- we're gonna go in there the minute they do something , we're gonna look and see if they're interacting in any way with Iraq, and then we're going to war with them."

Matthews reacted particularly angrily to Bush's wish that the journalists had access to all the intelligence he gets. "The possibility exists," enunciated Matthews, "that we know more than he knows."

And although I didn't hear it myself, I understand that Matthews continued his furious assault on Thursday morning on the Imus show on MSNBC, when he said, "We have Cheney, who always wants to kill."

There's no question that there's a great deal of animosity and partisanship in the Washington press, targeted at President Bush, and it's true that most journalists, politicians and analysts are abysmally ignorant of even basic facts about what's going on in the Mideast, but Matthews' vitriolic performance was particularly egregious, given his incredible ignorance of what's happening in the Mideast today and what's been happening in America for the last 60 years.

Let's begin with the latter point.

Truman Doctrine and Iran/Iraq War

We don't get much appreciation for it, even by our own people, but America is "policeman of the world." This is not something that George Bush made up; it was enunciated by President Harry Truman in the Truman Doctrine of 1947, where President Harry Truman said that America had to be the country guaranteeing freedom around the world.

Truman defended the doctrine by saying that, no matter how expensive it would be, it would be a lot cheaper than World War II was.

Every President since then has followed the Truman Doctrine. Truman himself launched the Korean war.

President John F. Kennedy, whom Chris Matthews idolizes, launched TWO pre-emptive wars against Cuba -- the first, based on faulty CIA intelligence, led to the "Bay of Pigs disaster," and the second, the blockade of Cuba, risked nuclear war with Russia. Then Kennedy launched the Vietnam War, which led to America's first defeat.

Skipping ahead, we have the Bosnian war and the Kosovo war in the 1990s, and the Afghan war in 2002. So there have been lots of pre-emptive wars, and President Bush is not uniquely evil in the history of the world in pursuing the war in Iraq.

Matthews is also too ignorant to remember that the Iraq war didn't start in 2003. It started in 1991, after Saddam invaded Kuwait. It escalated sharply in 1999, with Pres. Clinton's daily bombing of no-fly zones, after Saddam expelled the U.N. weapons inspectors.

It escalated again with the 2003 ground war, but if we hadn't done that, then we'd still be bombing no-fly zones, and we still wouldn't know whether or not Saddam had weapons of mass destruction (WMDs).

And this brings us to the other area of Matthews' ignorance. He and Russert were obviously contemptuous of President Bush's claim that if Saddam were in power, then Iraq and Iran would be competing to develop a nuclear weapon.

That this claim is correct is perfectly obvious to anyone who is familiar with the extremely vicious, bloody Iran/Iraq war of the 1980s, that killed 1½ million people.

Actually, few Americans are. The Iran/Iraq war was a major historical war in Arab/Persian relations, and it greatly impacts events today.

Briefly, Saddam shocked and surprised by the fury of Saddam's attack, and especially by his WMDs -- he used poison gas on the enemy and was developing nuclear weapons technology. Iranians today note that they're surrounded by countries -- Pakistan, Israel, India, Russia -- that have nuclear weapons. Having been attacked by WMDs during the Iran/Iraq war, they believe that they need nuclear weapons (and perhaps other WMDs) to defend themselves. Animosity between Iran and Iraq has continued after the war, and if Saddam were still in power, there's little question is that he would be in competition with Iran to develop nuclear weapons.

So what President Bush told Russert in the background briefing was not worthy of his contempt, and it was almost certainly true.

On CBS's "Late Show with David Letterman" a few days ago, Letterman told the following as a strange but true "miscellaneous fact": The cause of the Iran/Iraq war was that Iran and Iraq couldn't agree whether to call it the 'Iran/Iraq war' or the 'Iraq/Iran war.'"

Letterman's statement was a joke, of course, but I doubt that Chris Matthews or any of the Washington journalists knows much more about the Iran/Iraq war than that joke.

So Chris Matthews pursued his ridiculous rant, shouting about how everybody is going to go to bed tonight terrified, and even claiming that he knows more than anyone in the Administration, and it turns out that Chris Matthews is just an ignorant loudmouth.

Not all of the politicians and journalists in Washington are as much loudmouths, but unfortunately almost all of them are equally ignorant. This is discussed further in the next web log item, which describes, among other things, how British politicians and journalists are just as ignorant as American politicians and journalists. (14-Jan-07) Permanent Link
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Senator Ted Kennedy compares Iraq war to Vietnam War.

In a speech demanding total withdrawal from Iraq, Kennedy said that the American people demanded withdrawal in the recent election. The Massachusetts Democrat gave his speech on Tuesday afternoon to the National Press Club.

Senator Ted Kennedy at National Press Club <font size=-2>(Source: CNN)</font>
Senator Ted Kennedy at National Press Club (Source: CNN)

He said the following:

"Some will disagree. Listen to this comment from a high-ranking American official.

'It became clear that if we were prepared to stay the course, we could help lay the cornerstone for a diverse and independent region.

If we faltered, the forces of chaos would smell victory, and decades of strife and aggression would stretch endlessly before us. The choice was clear. We would stay the course, and we shall stay the course.'

That's not President Bush speaking; it's Lyndon Johnson speaking, 40 years ago, ordering 100,000 more American soldiers to Vietnam."

This is an interesting comparison. What Kennedy fails to mention is that Lyndon Johnson was absolutely right about what would happen if we faltered. After America withdrew, there was a huge genocidal war engulfing the entire region, with millions of people killed in Vietnam, and then in the "killing fields" of Cambodia.

So if I could ask Senator Kennedy a question, I would ask him this question: "Are you prepared to allow what happened in Vietnam to happen in the Mideast -- a huge war, engulfing the entire region, with millions of people killed?"

Unfortunately, none of the hotshot journalists at the National Press Club will think to ask that question.

However, none of this matters, because Senator Kennedy is partially correct as well.

From the point of view of Generational Dynamics, the genocidal war in Vietnam and Cambodia would have occurred no matter what the U.S. did; their previous crisis war was the French conquest of Indochina (1865-1885), and so a new crisis war in the region was overdue.

In the Mideast today, there's going to be a huge genocidal war between Jews and Arabs, with the survival of Israel not guaranteed (and perhaps not even likely, at least in its current form), and this will happen no matter what the U.S. does.

So what should we do about this? How do you make policy when you know that a cataclysm can't be prevented? Suppose that President Bush understood and accepted the conclusions of Generational Dynamics. What would then be the correct policy decision?

Should we withdraw from Iraq and Mideast and let the war occur -- just get it over with, like a dentist appointment? There's a big historical downside to that policy: History would blame the U.S. for anything that happened. Or should we continue our current policy, so that at least we won't be blamed?

Of course there's no rationality to any of this. Kennedy believes that the "American people" want withdrawal from Iraq, but he's talking only for Boomers. Younger generations want the Iraq problem solved, but will not tolerate a major American defeat, such as happened in Vietnam.

Boomers are on the decline today. More and more, the leaders are Generation X, as well as the new college-age generation (the "Millennial generation" or "Generation Y"). In the end, it's not Kennedy's Boomers who will make the decision, and it's not even President Bush. It's the younger generations who will decide, through polls, letters to Congress, and elections. And chances are that it will be like Israel's summer war with Hizbollah: a decision made in total panic, with little or no advance planning. (9-Jan-07) Permanent Link
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Sunday news talk shows exhibit craziness and politics

Will the U.S. come as close to anarchy as Israel is?

As you read this article, remember this: There is no solution to the Iraqi situation. Iraq is increasingly a theatre of war for the larger war between Iran and al-Qaeda, thanks mainly to the Israeli/Palestinian situation, and that's not going to change.

Brent Scowcroft on <i>This Week With George Stephanopoulos</i> <font size=-2>(Source: ABC)</font>
Brent Scowcroft on This Week With George Stephanopoulos (Source: ABC)

Most of the interviews and discussion on yesterday's Sunday morning news talk shows were blathering political nonsense. The only interview that I saw that had any substance was the one with Brent Scowcroft on This Week With George Stephanopoulos.

In an op-ed in the New York Times on Thursday, Scowcroft recommends solving the Palestinian/Israeli problem, and then the Iraqi problem will fall into place. "Most of the elements of a settlement are already agreed as a result of the negotiations of 2000 and the 'road map' of [2003]," he wrote. "What is required is to summon the will of Arab and Israeli leaders, led by a determined American president, to forge the various elements into a conclusion that all parties have already publicly accepted in principle."

Stephanopoulos asked:

"The heart of your argument is that the US has to get re-engaged in the overall process for Arab-Israeli peace, as a way to decrease tension thruout the mideast. But even if Israel gave back the West Bank tomorrow, even if the Palestinians promised to disarm and recognize israel, how would that stop Sunnis and Shiites from killing each other in Baghdad."

Now, we've been here before. Stephanopoulos does not have a clue about what's going on in the Mideast, or the effect of the Palestinian issue on the entire region. George Stephanopoulos looked like an idiot in November because Jordan's King Abdullah had to tell him five times of the importance of the Israeli/Palestine situation, but he was still clueless. This is an incredible situation, but it's the result of Boomers not being able to think in any terms other than ideology.

Brent Scowcroft replied:

"That's the obvious question. What it would do is change the psychological climate of the region. What we have is a number of different issues coming together, and the region is in great turmoil. and there's a great sense in the region of historical injustice on the part of the Muslims. This would change that. This would see us as participating and helping in a problem which is central to the region, which has been a gnawing sore for Muslims for 50 years. It would give the Arabs the incentive to do what is in their interest to do and that is help deal with the issue of Iran. Because this is their neighborhood - they want to help. They helped us in the first Gulf War, enormously, with troops, with money. They're sitting on their hands now. Why? Because it's dangerous to be seen helping the U.S. now. This would change all that."


"You talk about the turmoil in the region. Part of that turmoil now inside the Palestinian territoris is Palestinians fighting each other, Hamas and Fatah, basically on the verge of civil war. Don't the Palestinians have to make peace with themselves for Israel to make peace with them?"


"Yes of course they do, and that's a major part of dealing with the peace process. I think it can be done. It can be done if we can get the Egyptians, the Saudis, thoroughly engaged in dealing with the Palestinian sectarian problem, between Hamas and Fatah. It won't be easy but I think it is doable.

And the other [problematical] aspect of this [is that we treat Iraq nonchalantly]. If we get it ok, then fine; if we don't then we'll just leave. It's not that easy. We will be seen as abandoning the region, abandoning our friends, abandoning the people who have put our faith in us. And the results will be a dreadful region."

Except for one tiny thing, Scowcroft's reasoning is absolutely correct. If we're perceived to be abandoning Iraq by any means -- withdrawal, redeploying, whatever -- we'd be universally condemned by your friends and allies, and our enemies would humiliate us unmercifully.

(Incidentally, we're in same situation with other countries with whom we have defense treaties, including Israel, Japan, South Korea. If we're perceived to abandon any of them, it would cause an international crisis. That's because we're policemen of the world, because of the Truman doctrine.)

So Scowcroft's reasoning is right, except for one tiny thing: There isn't a snowflake's chance in hell of any peace process working. As you can see from yesterday's item, the Palestinians are getting closer to an all-out crisis, and the Israeli government is close to anarchy. Like almost everyone in Washington, Scowcroft is living in the past, and has no idea of the effect of generational changes.

Stephanopoulos continued:

"At what point do you say though that we've done all that we can, that there's no more good that can be done. We can't be held hostage to the decisions that the Iraqis make."


"We're not being held hostage to it. But we have a responsibility now to the region. Because, like it or not, the region is much more unsettled, much more in turmoil. The Iranians are on the offensive - they're stimulating Hizbollah, they're stimulating Hamas. The Sunnis are afraid of a Shia crescent, and so on and so forth. Six or seven years ago they weren't. That is a result of US actions. We have to try to produce stability in the region. What I'm suggesting is the moves toward the Palestinian peace process would help both in Iraq and stabilizing."

This is a very peculiar statement. What's he talking about? The Sunnis weren't afraid of the Shias six or seven years ago, and they are now because of the Iraq war? One hardly knows where to start. The Sunni vs Shia wars have been going on for 1½ millennia. The 1980s Iran/Iraq war was a major historical event in Arab/Persian and Sunni/Shia relations. Iran was caught relatively unprepared by Saddam's invasion in the 1980s, and they were particularly unprepared for Saddam's use of weapons of mass destruction -- and that's the reason why Iran today is absolutely determined to develop nuclear weapons.

Finally, the Iraq war didn't begin in 2003; the Iraq war began in 1991, and escalated sharply in 1999 with almost daily bombing of no-fly zones. The 2003 ground war was another escalation, but if we hadn't done it, we'd still be bombing no-fly zones, and that would infuriate the jihadists just as much. Furthermore, if Saddam were still in power, we (and Iran) still wouldn't know whether or not Saddam had WMDs, and the tension between Iran and Iraq would be enormous, and might be as destabilizing an issue in the Mideast as the Palestinian/Israeli issue is.

Stephanopoulos and Scowcroft believe two completely different things, both wrong. Stephanopoulos believes that Iraq is on a separate island, completely unconnected to the Israeli/Palestinian problem, and so there's no point in focusing on that problem. Scowcroft sees the connection, but believes that we can solve that problem, even though a number of Admistrations have failed to do so. Neither Stephanopoulos nor Scowcroft has any concept about the generational changes taking place, or even realizes that the Gaza strip, which is densely populated with a median age of 15.8, is being run by children who couldn't care less about any peace plan whatsoever.

At least that segment had some substance. Pretty much all other segments on the Sunday news talk shows were filled with political nonsense, mostly by Boomer politicians who claimed to be speaking "for the people," but who had no idea what people of any generation other than Boomers were thinking.

According to the speculation, the Administration is planning to propose a "surge" of 20,000-40,000 addition forces into Baghdad, accompanied by a $1 billion "jobs program" in Baghdad to give the young jihadists jobs.

Most of the discussion began with this letter from Nancy Pelosi and Harry Reid to the President on Friday:

"Surging forces is a strategy that you have already tried and that has already failed. Like many current and former military leaders, we believe that trying again would be a serious mistake. They, like us, believe there is no purely military solution in Iraq. There is only a political solution. Adding more combat troops will only endanger more Americans and stretch our military to the breaking point for no strategic gain. And it would undermine our efforts to get the Iraqis to take responsibility for their own future. We are well past the point of more troops for Iraq. ...

Rather than deploy additional forces to Iraq, we believe the way forward is to begin the phased redeployment of our forces in the next four to six months, while shifting the principal mission of our forces there from combat to training, logistics, force protection and counter-terror. A renewed diplomatic strategy, both within the region and beyond, is also required to help the Iraqis agree to a sustainable political settlement . . In short, it is time to begin to move our forces out of Iraq and make the Iraqi political leadership aware that our commitment is not open ended, that we cannot resolve their sectarian problems, and that only they can find the political resolution required to stabilize Iraq."

This letter is straight out of the Vietnam era, with a couple of names changed. Pelosi is calling for a Vietnam-style withdrawal from Iraq and a Vietnam-style military defeat.

However, even Boomers remember that a huge genocidal war followed the American withdrawal from Vietnam, with millions of people killed in Vietnam and then in the "killing fields" of Cambodia. A big question in Washington these days is whether a withdrawal from Iraq will cause a similar cataclysmic war in the Mideast.

There's a little black humor in this situation. Ideologues are continuing to insist that the war in Iraq is a "civil war," even though it's clearly not, for reasons I've given many times. But the interesting thing now is that the use of the "civil war" phrase has moved from the left to the right. In the past, leftists used it to attack Bush's performance in Iraq. Now, people on the right are using it to attack the Democrats' withdrawal plans, with words like this: "If we withdraw from Iraq, then we'll have a full-scale civil war that will affect the entire region, so we can't withdraw from Iraq." What goes around comes around.

Nancy Pelosi on <i>Face the Nation with Bob Schieffer</i> <font size=-2>(Source: CBS)</font>
Nancy Pelosi on Face the Nation with Bob Schieffer (Source: CBS)

On Face the Nation, host Bob Schieffer interviewed Nancy Pelosi and tried repeatedly to pin down Pelosi on her strategy for Iraq.

However, no matter how many times Schieffer tried, Pelosi kept evading the question. Q: Won't a withdrawal cause chaos? A: It's chaos now. Q: Won't American interests be harmed? A: They're being harmed now. Q: What would be your plan? A: Bush has no plan. Q: Are you going to cut off funding for the war? A: We'll continue to support the troops. Schieffer tried over and over again to get Pelosi to provide some substance, but nothing ever came out of Pelosi's mouth but political crap.

So what are the Democrats going to do? There were numerous discussions of that question, but only one answer: The Democrats will "provide oversight" of the war, will hold hearings questioning every decision, past and present, and will be looking for misjudgments and scandals. In other words, they're just acting like Boomers, with no skills whatsoever except to brawl. Every single politician I saw on Sunday did the same thing Pelosi did: Emit political crap.

A year ago, I pointed out that the Congressional calendar was just 97 days for all of 2006, because the Congress was going to do nothing.

The only person who was actually doing something was Donald Rumsfeld. Rumsfeld was born in 1932, and is from the Silent generation, a generation of people who actually have skills besides arguing. Rumsfeld has been restructuring the armed forces to prepare the country for the coming Crisis. He was replaced by former CIA director Robert M. Gates, a bureaucratic Boomer. We have yet to see whether Gates is able to actually do anything to help the country.

It's for certain that the Boomer Democrats elected to Congress won't. They don't even claim to have any plans except to brawl with the President. They don't even claim to be making a positive contribution. I listened to all of them on Sunday, and they never claimed to have anything but a "f--k you" attitude toward any attempt to govern. There was nothing else from any of them.

My question is whether America is going to get as bad off as the Palestinians and Israelis. As I described a couple of days ago, the Palestinians are so paralyzed that they're close to civil war, and the Israelis are so paralyzed that they're close to anarchy.

Right now, it looks like the results of the November election will be to bring the country as close to anarchy as the Israeli government.

I'll mention two things that some politicians mentioned in terms of a possible improvement.

A couple of Democratic politicians pointed out that the Social Security reform that happened in the 1980s took place in an environment of divided government (Republican President, Democratic Congress). They said that, for that reason alone, the new divided goverment may be able to get things done. We'll see.

A couple of Republican politicians pointed out that "the President is not doing the popular thing, and he's not doing the easy thing; there's only one possibility left: he's trying to do the right thing." It's certainly true that the proposal to surge troops into Baghdad is neither easy nor popular. It may or may not be right, but historians probably won't know for sure for ten years or so.

But at least President Bush is still attempting to govern. At times like this we can appreciate the fact that we don't have a Parliamentary form of government because, if we did, then Bush would immediately be replaced by someone of the same party as the election winner, and we'd be totally paralyzed, like Israel.

This situation will not last long.

William Strauss and Neil Howe, the founders of generational theory, analyzed these political cycles in their 1997 book, The Fourth Turning. When a country is in a Crisis era, as we are now, the political bickering becomes almost unbearable, as it is now. This certainly happened prior to Pearl Harbor in Franklin Roosevelt's administration, which was riddled with scandal from top to bottom. But once Pearl Harbor was bombed, and once the country suffered the disastrous loss in the Philippines and the Bataan death march (February-April, 1942), the country was unified and the political brawling mostly stopped. Strauss and Howe call this time the "regeneracy," because national unity is regenerated after decades of degenerating.

What we're waiting for is an event similar to Pearl Harbor to unify the country and cause a "regeneracy" today. It might be a terrorist attack or a big military loss overseas. Strauss and Howe 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]

It's impossible to predict exactly what kind of event will trigger this "regeneracy" of public unity today, but we'll know it when we see it, because it will be as disastrous as the Bataan Death March in WW II or the Battle of Bull Run in the Civil War. And it will unify the country behind George Bush (or whoever takes office in 2009), just as those events unified the country behind Franklin Roosevelt and Abraham Lincoln.

I'll close this article with one moment of levity in the Sunday News Shows.

Hysterical laughter on <i>This Week With George Stephanopoulos</i> <font size=-2>(Source: ABC)</font>
Hysterical laughter on This Week With George Stephanopoulos (Source: ABC)

On the pundit panel portion of This Week With George Stephanopoulos, the guest pundit was Harold Ford Jr., former Democratic congressman from Tennessee.

Stephanopolous asked him a question about taxes, the point of which was that the new Congress cannot possibly fulfill all the contradictory promises that they've made. Ford immediately began: "The thing is that they're off to a different start, a new direction."

This response was so ridiculous that Cokie Roberts and George Will, both of whom have been around Washington for many decades, broke out into hysterical laughter, while Ford did his best to keep a straight face. But one shouldn't single out Ford; every politician's response on Sunday was equally ridiculous. (8-Jan-07) Permanent Link
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Palestinians' Fatah/Hamas crisis increases as Israeli government is close to anarchy

The possibility of a Hamas vs Fatah civil war in the Palestinian territories appears to be increasing by the day.

The murder of a senior Fatah official caused Palestinian President Mahmoud Abbas, who is also head of Fatah, to to outlaw the Executive Force, Hamas' militia.

In response, Hamas declared that their Executive Force militia is perfectly legal, and announced plans to double the size of its militia.

An uncomfirmed DEBKA story reports that Mohammed Dahlan, a radical Fatah leader, has enlisted a terrorist group, the Palestinian Army of Islam, to join Hamas in the fight against Hamas. The Palestinian Army of Islam is a radical Gaza militia group independent of either Fatah or Hamas, but is pro-Fatah, especially since December, when two of its leaders were murdered by Hamas gunmen.

Dahlan, who may be leading the Fatah side into civil war, also led a huge Fatah rally in Gaza, marking the 42nd anniversary of Yasser Arafat's founding of the Fatah movement.

"Let Hamas shoot me," he said to the tens of thousands of cheering Gazans. "If they think the murderers will not be punished, they are mistaken. If they attacked one Fatah person, we'll attack two more."

You'll notice something about this rhetoric, dear reader. If you look at the rhethoric between Arab and Israeli leaders, you don't hear anything this inflammatory. The kind of inflammatory rhetoric that Dahlan is using indicates that the value of an individual human life is decreasing, which is part of the path to a crisis war.

All of these events followed a semi-comical series of joint announcements from Hamas and Fatah during the previous few weeks. The leaders would have a meeting, and announce a cease fire. The ceasefire would last 2-3 days, and then violence would spiral up to previous levels or higher. Then they'd have another meeting. This went through four or five cycles.

They've stopped having these meetings lately, and it appears that both sides are girding for a real battle.

Meanwhile, the Israeli government continues on its path to total paralysis, thanks to financial scandals and the military's poor performance in the Lebanon summer war against Hizbollah.

The fallout from the Lebanon war continues to increase. A new report, published on Sunday, says that Israel's Military Intelligence during the war was "unprofessional," and "mediocre to inferior." This adds to the condemnation of the Israeli Defense Force (IDF) during war, which is perceived to have panicked and rushed to war quickly, without adequately planning or even any realistic objectives.

Ehud Olmert is in Ariel Sharon's shadow. <font size=-2>(Source: Spiegel)</font>
Ehud Olmert is in Ariel Sharon's shadow. (Source: Spiegel)

According to an analysis in the German publication Der Spiegel, Israelis consider the current Prime Minister Ehud Olmert to be incompetent and indecisive, especially compared to the man he replaced. Ariel Sharon, who was often hated, is now highly respected and missed, since he went into a coma a year ago. According to Spiegel:

"Sharon ... -- as even some of his enemies are willing to admit -- was a master at crisis management. Indeed, even some of his most ardent opponents miss his steady hand these days. Amos Oz for example. A year ago, Oz praised Sharon for his "mysterious transformation" which made him suddenly sound less like the military leader he had been throughout his career and more like a pacifist from the left. Sharon's unilateral decision to pull out of the Gaza Strip not only represented a dramatic new course for Israel, but also had to be pushed through against bitter resistance from the right.

Olmert, by comparison, seems to have little in the way of a political vision. The main policy he campaigned on -- that of withdrawing from parts of the West Bank and dismantling some of the settlements there -- was left behind months ago. Instead of fulfilling his campaign promises, he shuffled his coalition government to include the right-wing politician Avigdor Lieberman, a man not exactly known for his willingness to compromise with Israel's Palestinian neighbors."

The problems going on in Israel and in the Palestinian territories are no surprise. This web site has documented the fall of the Palestinian region into chaos on almost a daily basis, just as I predicted in May, 2003. That prediction was no accident and no guess; it was derived from solid generational principles, based on the fact that the region was re-fighting the genocidal war between Arabs and Jews that occurred in the late 1940s, following the partitioning of Palestine and creation of the state of Israel. As I wrote at the time, it was Yasser Arafat and Ariel Sharon who were keeping the region from slipping back into a total crisis war, and their disappearance would lead to total war, probably within a copule of years. That appears to be what's happening.

The new Mideast war will pull in every country in the region, including the United States, and will be part of the fabric of the new "clash of civilizations" world war that's quickly approaching.

If you get the impression, dear reader, that the entire Mideast is increasingly in total chaos, with no one having any idea what's going on or what to do next, you're right. This state of near-anarchy cannot continue much longer.

(And incidentally, if you've been watching what's been going on in Washington this past week, you'll see that the United States government may also be approaching a similar chaos.)

The new Mideast war will pull in every country in the region, including the United States, and will be part of the fabric of the new "clash of civilizations" world war that's quickly approaching. (7-Jan-07) Permanent Link
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Vietnam's bird flu resurgence called a "huge threat to public safety"

We're now at the most dangerous time of the year.

Margaret Chan, the new chief of the United Nations World Health Organization (WHO) has warned that bird flu remains a global threat, and that the danger was particularly severe in poor countries. "We must not let our guard down. We must maintain our vigilance," she said.

The latest warning comes about because of a resurgence of bird flu in Vietnam, after a one-year absence.

Dr. Chan is the first Chinese agency to head WHO. She expects that her Chinese origin will help in dealing with Chinese authorities, who have often been reluctant to reveal the details of bird flu outbreaks. "I think of all people I would be in a better position to work with the Chinese government," she told the BBC.

The new outbreaks come at the worst time of the year. In a few weeks, Vietnam will begin its Lunar New Year festival of Tet, and Chinese will have their Lunar New Year celebrations. Both of these celebrations involve massive increases in handling, transporting and slaughtering poultry. The number of bird flu cases spikes during these celebrations, because of large increases in transportation of potentially infected birds, allowing quick spread to other birds. This intermingled of potentially infected birds also makes this the time when the possibility of a mutation leading to a human bird flu pandemic is most likely to occur.

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-Jan-07) Permanent Link
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Government employment report shows December surge in job growth

Confused economists, whose predictions have been up and down like a yoyo, have gone back to the drawing board again, after Friday's government employment report from the Bureau of Labor Statistics (BLS) showed a surge of 167,000 jobs in December.

Economists at first had projected a growth of 150,000 jobs, but changed their minds after the ADP National Employment Report predicted a loss of 40,000 jobs. At that point, the consensus forecast went to the 100,000-110,000 range. The increase of 167,000 jobs is higher than any of the mainstream economists predicted.

Since 2004, the unemployment rate has been steadily going down, and employment data (total number of jobs) has been steadily increasing:

Employment/unemployment data, 2004-Present <font size=-2>(Source: BLS)</font>
Employment/unemployment data, 2004-Present (Source: BLS)

However, the job mix has been shifting, as manufacturing jobs have fled to China and other countries. In December, the economy lost 12,000 manufacturing jobs, but gained 178,000 service-producting jobs. Service-producing jobs include things like consulting, accounting, legal services, and financial services.

The December employment number is always the most volatile, mainly because of the seasonality of holiday employment. Weather may also have played a factor: Temperatures have been unseasonably high from the midwest to New England.

Listening to economists debate these figures this morning on CNBC, it's obvious that they were all pretty flummoxed by the unexpectedly high jobs data.

Liz Miller, Trevor Stewart Burton & Jacobsen <font size=-2>(Source: CNBC)</font>
Liz Miller, Trevor Stewart Burton & Jacobsen (Source: CNBC)

However, one person's analysis really caught my interest. She referred to price/earnings (P/E) ratios, and her expectation of "P/E expansion," or P/E increases.

Liz Miller, of Trevor Stewart Burton & Jacobsen, said the following:

"We're going to see some P/E expansion. We've had the lowest P/E in ten years, and we're going to see that improve. ... [W]e're somewhere around 18 right now, so let's say we start brushing the bottoms of 20. I'm not talking about going from 18 to 22."

She added that she expects the market to increase by 11-14% this year, thanks to "stabilizing P/E's."

Now Ms. Miller is a cute young chick, but being a woman obviously hasn't made her any smarter than all the airhead male analysts of her generation, all of whom apparently believe that the world was created ten years ago. Why else would she say, "We've had the lowest P/E in ten years"?

S&P 500 Price/Earnings Ratio (P/E1) 1871-2006
S&P 500 Price/Earnings Ratio (P/E1) 1871-2006

I've discussed P/E ratios on this web site many times. As you can see from the adjoining graph, the P/E ratio has indeed been very high for the last 10 years -- that's because of the stock market bubble that began in 1995.

But if you look at the graph prior to the bubble, you see that the average P/E index is about 14, and that the values are normally in a range between 10 and 20, but it's averaged 25.12 since the bubble started. Furthermore, the index has gone well below 10 six times in the last century. And this isn't exactly ancient history -- it was around 7 in the early 1980s.

This is exactly one of the reasons why a stock market panic is overdue. With stocks overpriced by a factor of 240%+, we can expect a panic that will drive stock prices down to the Dow 3000-4000 range.

But I guess this IS ancient history to Ms. Miller, because Ms. Miller doesn't care about anything that happened prior to 1995. That's why I say that she apparently believes that the world was created 10 years ago, and she believes that we'll be in a bubble forever.

What's apparent from the graph is this: The P/E ratio index has been far above average since 1995, and has been generally falling since 2001, and will presumably keep falling. At any rate, there's certainly no reason to predict, as Ms. Miller does, that we're going to have "P/E expansion," and that it will go up above 20 again. The index has been going down, and almost certainly it will keep going down.

It's much worse than that. The long-term average is 13.91, but it's averaged 25.12 since 1995. In order to compensate for the huge P/E values since 1995, the index will have go far below its average value for a comparably long time, or over ten years. This is the principle of "mean reversion," and it's as certain a law as the Law of Gravity or the Law of Supply and Demand.

You know, this isn't exactly rocket science; it's much closer to simple arithmetic. And high-paid analysts like Liz Miller should know this stuff, because it's their job to know it. Instead, these analysts say incredibly stupid things as a matter of course.

Generational Dynamics has been predicting since 2002 that we're entering a new 1930s style Great Depression, with a stock market crash most likely by the 2006-2007 time frame.

What's happened since 2001 is that the world's central banks have pumped huge amounts of money into the world economy. This prevented a stock market crash in 2002, but it created huge bubbles in stocks, real estate and commodities. If the central banks hadn't done that, we'd have had a crash, but the worst of it would have been over by now. Now we're going to have a FAR WORSE crash that will last FAR LONGER.

The real estate bubble has been deflating since October, 2005, and commodity prices (for oil, copper and others) have been falling sharply in the last few weeks. A stock market crash could begin next week, next month, next year or thereafter, but the deflation of these bubbles, combined with the idiocy of the current generations of stock analysts, indicates that the time is probably approaching quickly. (5-Jan-07) Permanent Link
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ADP Employment Report indicates abrupt fall in employment

This differs sharply from mainstream economist projections.

The nation lost 40,000 nonfarm jobs in December, according to the ADP National Employment Report.

Typically, this index shows a gain of 50,000 to 200,000 jobs per month. This was the first time that a loss of jobs was indicated since 2003. An abrupt turnaround to a substantial loss could be the first signal of a fairly substantial recession.

The official government jobs report from the Bureau of Labor Statistics (BLS) will be available this Friday, when the monthly employment report is published. If the BLS report also comes in negative, a lot of mainstream economists will be surprised, since they're expecting a gain of 150,000 jobs in December. Like the ADP figure, the BLS figure has not been negative since 2003.

The official BLS figure is computed each month through a government survey of hundreds of thousands of employers.

The ADP National Employment Report is computed each month from data collected by ADP Employer Services, which provides payroll services to 500,000 U.S. businesses. This data is made available to the private forecasting firm, Macroeconomic Advisers, which aggregates the data and publishes its monthly report a few days ahead of the BLS report.

The ADP report has fairly accurately predicted the BLS report for several years, but not always. The following graph compares the two:

ADP National Employment Report versus BLS Government Report -- historical comparison
ADP National Employment Report versus BLS Government Report -- historical comparison

The above graph shows both the ADP numbers (red stars) and the BLS numbers (blue circles) back to January, 2001. (The other two symbols represent sums that aren't of interest to us today.)

The graph shows that the ADP figures correctly predict the BLS figures pretty closely most of the time, and differences mostly cancel each other out over a period of several months. However, there are individual months where the two are diverge widely.

Thus, it's possible that the ADP figures are simply wrong this time. In fact, there's a greater chance of this than usual, due to the fact that December employment figures are very hard to gather accurately, since holiday seasonal employment can easily skew the results.

The December BLS figures will be released on Friday. If the BLS figures come in negative, and they're sustained in the next month or two, then it means we're at beginning a hard recession, which many (though not all) mainstream economists have been predicting anyway.

Generational Dynamics predicts that we're entering a 1930s style Great Depression that will begin with a generational panic and stock market crash.

Major international financial panics have occurred throughout history at regular 70-80 year intervals. The major financial crises since the 1600s have been identified as follows: Tulipomania bubble (1637), South Sea Bubble (1721), French Monarchy bankruptcy (1789), Hamburg Crisis of 1857 (Panic of 1857), and 1929 Wall Street crash.

At the present time, the stock market is overpriced by a factor of over 240%, and with price/earnings ratios around 20 or higher since 1995, a panic is long overdue. Such a panic is expected to lead to a fall to the Dow 3000 range, with the price/earnings ratio index falling well below 10. Note that the P/E ratio index has fallen below 10 several times in the 20th century, most recently in 1982, so this is a common occurrence. The exact timing cannot be predicted; it might occur next week, next month, next year or thereafter, but with global imbalances increasing so quickly, the chances that it will happen sooner rather than later.

The stock market has been experiencing an enormous bubble, propelled by hundreds of trillions of dollars (market price) of overpriced hedge funds, with no intrinsic value beyond the market price of other overpriced hedge funds. The largest single component of these hedge funds is the "financial derivatives" component. Financial derivatives provide a kind of insurance against loan defaults, and are being hugely overused by financial institutions who are willing to take any amount of risk to make money, believing that the financial derivatives will protect them. A hard recession in the American economy could be the trigger for panic selling that will lead to the generational panic described above. (4-Jan-07) Permanent Link
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Sunnis riot and demonstrate over mocking taunts during Saddam's execution

This is probably not as bad as it sounds.

As remarkable as any execution of Saddam Hussein would be, a series of even more remarkable ancillary events have caused puzzlement and outrage:

Thousands of people riot and demonstrate in Tikrit, protesting the execution of Saddam Hussein. <font size=-2>(Source: AP/New York Times)</font>
Thousands of people riot and demonstrate in Tikrit, protesting the execution of Saddam Hussein. (Source: AP/New York Times)

Nobody could have made this stuff up.

Anyway, is this the fuse that's going to going to light up Iraq into full-scale civil war? That's how the media's playing it. According to an AP/New York Times story,

"Angry Protests in Iraq Suggest Sunni Arab Shift to Militants

Enraged crowds protested the hanging of Saddam Hussein across Iraq’s Sunni heartland on Monday, as a mob in Samarra broke the locks off a bomb-damaged Shiite shrine and marched through carrying a mock coffin and a photo of the executed dictator. ...

The Sunni protests, which appeared to be building, could signal a spreading militancy."

As is so common with the mainstream media stories, this is pure unadulterated guesswork. They say that the protests "suggest" a shift to "a spreading militancy." Well, what if the protests die down in a few days. Will that "suggest a shift AWAY from militancy?"

Now, I have no way of knowing of whether the unauthorized video is going to spur further violence of cause a shift to "a spreading militancy." The point is that neither do the journalists.

This is the pathetic ideological state that the mainstream media has come to. At least in the past, they would have gone to the trouble to dig up an "expert" they could quote to make the ideological statement; "'This will call a shift to a spreading militancy,' says Imanut Case, an Iraq expert." But now they don't even bother with that. The "journalist" writing the article simply states his own ideological beliefs as news.

From the point of view of Generational Dynamics, these kinds of riots and protests are exactly what you would expect of a country in a "generational Awakening" era.

I discussed this point a month ago in connection with the Hizbollah's massive protests in Lebanon, which mainstream journalists were calling a sign of impending civil war. (In case you've wondered, there's no civil war in Lebanon, and the protests seem to be petering out.)

Remember what happened during the 1960s, America's last generational Awakening era. It began in August 1963, when Martin Luther King led a march on Washington in which over 200,000 people participated. Later, President Kennedy was assassinated, and so was King. There were numerous demonstrations and riots throughout the country. There were "long, hot summers," led by the Black Panthers, and there were bombings and declarations of war against the government, led by the Weather Underground. President Lyndon Johnson was driven from office, and the climax was when President Richard Nixon was forced to resign.

These kinds of massive protests have happened in every society and country throughout history during "generational Awakening" eras. What these eras all have in common is a "generation gap," a big political struggle between the college-age generation and their parents' generation. In this case, the execution of Saddam Hussein has provided a perfect excuse: the rioters are young, and they're rioting against the government that executed Saddam, as well as the government's American allies. It's a perfect combination.

There is no civil war between Sunnis and Shiites in Iraq. What we're seeing more and more is increasing use of death squads and foreign suicide bombers on both sides, with Sunni money, training and weapons from al-Qaeda and Shiite money, training and weapons from Iran.

From the point of view of Generational Dynamics, the real source of conflict in the Mideast has been the same for decades: The Israeli/Palestinian conflict, which is serving as a driving force for both sides (Iran and al-Qaeda). As the Israeli/Palestinian conflict heads inevitably for a major war, Iraq is increasingly becoming a theatre of that war, on the road to a "clash of civilizations" world war. (3-Jan-07) Permanent Link
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Ethiopians crush Islamists in Somalia, forcing retreat to Kenya

The problem is that Somalia may still not have a stable government.

Horn of Africa
Horn of Africa

Fears of a major regional war have been quelled as the forces controlled by the Islamic Courts Union (ICU) collapsed, with many changing sides or returning to their former warlords.

Somalia's internationally recognized Premier, Ali Mohammed Gedi, has called on people in Mogadishu (the Somali capital) to disarm themselves, and has asked the Kenyan government to close its border to escaping Islamists.

Of particular interest are three al-Qaeda terrorists wanted in the 1998 bombings of American embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania. The ICU has been harboring these terrorists, and Gedi's government forces would like to capture them before they cross the border into Kenya.

The Islamic Courts Union (ICU) is a radical Islamist group that captured Somalia's capital, Mogadishu, on June 6, and had been increasing in power and control ever since. The ICU had defeated the internationally recognized Transitional Federal Government (TFG), formed in 2000 as a confederation of the warlords who rule the various ethnic groups that have existed for centuries and had fought each other frequently.

Somalia has taken on increasing international strategic value since 9/11, since it's believed that al-Qaeda has been using the country for training camps for terrorists. In fact, al-Qaeda training in Somalia was linked to the 2005 London subway bombings. It has been feared that, under ICU's control, Somalia would turn into a full-fledged terrorist state like Afghanistan prior to 9/11.

As the ICU increased in power, it was considered a threat to Ethiopia, a mostly Christian nation on its border. This caused Ethiopia, with American encouragement, to intervene, finally leading to full-scale war between Ethiopia and Somalia. However, the war ended quickly in the ICU's defeat, and a major regional war was avoided.

Unfortunately, this is not the end of it. The TFG was not a stable government prior to the ICU takeover, and it won't be a stable government now that the war has ended. The Islamists are now warning they will start an Iraq-style insurgency, so we should not expect to hear the end of the story of Somalia for some time. (2-Jan-07) Permanent Link
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