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


Web Log - November, 2009


With Dubai threatening default, Greece enters the spotlight

Greece will receive a European Union reprimand this week for failing to take "credible and sustainable" measures to reduce its budget deficit, according to Bloomberg News.

Greece's plight is suddenly the focus of worldwide attention in the financial community because of Dubai's bombshell announcement on Wednesday that it would fail to make $3.5 billion in debt repayments next month.

Greece is suffering from the same malaise as Dubai (and, for that matter, the U.S.). The government has been spending money like mad for years. Public debt is expected to rise from 99% of GDP in 2008 to 135% in 2011. External debt is at 14.5% of GDP, and growing.

The situation in Greece wouldn't be causing much concern -- investor complacency has been at an all time high for several weeks now -- but the Dubai situation is making people nervous, and the situation in Greece appears to be similar.

Over the weekend, there have been mixed signals over whether Dubai's neighbor, oil-rich Abu Dhabi, would bail Dubai out.

In London, the Sunday Times headline was "Abu Dhabi rides in to rescue Dubai from debt crisis." But the Sunday Telegraph headline was "Abu Dhabi will not race to Dubai's rescue."

I guess from those two headlines, we're to conclude that Abu Dhabi will ride, but not race, help Dubai.

According to news reports, Abu Dhabi has $700 billion in cash on hand lying around. With that much cash around, it's strange that it won't help out with Dubai's $3.5 billion debt payment due next month. Apparently, relations are not serene between the two neighboring emirates, both part of the United Arab Emirates (U.A.E.).

According to a statement (PDF) put out by the U.A.E. central bank,

"Central Bank of the UAE announced today that it stands behind UAE banks and branches of foreign banks operating in the UAE .

Central Bank has issued a Notice to UAE banks and branches of foreign banks operating in the UAE, making available to them a special additional liquidity facility linked to their current accounts at the Central bank, at the rate of 50 basis points above the 3 months EIBOR."

In other words, the U.A.E. government in Abu Dhabi will make sure that the Dubai problem won't cause a chain reaction putting the U.A.E. banks into default, but it won't do anything to help Dubai itself.

That's what's frightening investors, who had assumed that Abu Dhabi would bail out Dubai for sure, as it has several times in the past.

Investors in Greece had been hoping that the EU would bail out Greece -- again. The Dubai debacle has caused investors to become anxious.

From the point of view of Generational Dynamics, the stock market has been overpriced by 150-200% since 1995, and a stock market crash is 100% certain. (See: "How to compute the 'real value' of the stock market.") The only issue is the question of what will trigger the coming stock market crash. Next week, we may see whether the situations in Dubai and Greece will begin to settle down, or whether they cause more serious problems.

(Comments: For reader comments, questions and discussion, see the Financial Topics thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) (30-Nov-2009) Permanent Link
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World markets plunge 3-5% as Dubai bombshell sinks in

The most extravagant real estate project since the ancient Pyramids is finally faltering.

Palm Jumeirah Islands, one of several groups of man-made islands developed off the coast of Dubai
Palm Jumeirah Islands, one of several groups of man-made islands developed off the coast of Dubai

During the halcyon days the real estate bubble, there was extravagance around the world, but nowhere was the extravagance greater than in the Dubai, one of the United Arab Emirates.

The Burj Dubai hotel, the tallest skyscraper in the world, dominates the Dubai skyline.
The Burj Dubai hotel, the tallest skyscraper in the world, dominates the Dubai skyline.

The picture above depicts the Palm Islands, one of several groups of man-made islands that Dubai built in the Persian Gulf.

The picture on the right is the Dubai skyline, including the Burj Dubai hotel, the tallest building in the world.

No expense was spared in these development projects. Even the opening night parties for the hotels cost millions of dollars apiece.

That was until about a year ago. Little is known about Dubai's finances outside of Dubai itself, but it appears that around November 2008, Dubai started laying off people and cutting back on previously committed projects. By February of this year, projects worth $582 billion, or 45% of the value of all developments, had been put on hold. Dubai property values have crashed 50% in 2009.

Still, it seemed there was little cause for alarm. Dubai had been hit by the worldwide financial crisis, and as of a few weeks ago, seemed to be showing signs of recovery. Furthermore, the Dubai government has repeatedly said that all debts would be repaid. Finally, everyone assumed that if Dubai was in trouble, they would be bailed out by oil-rich Abu Dhabi.

It's pretty obvious in retrospect that Dubai financial and political officials had been lying. This should be no surprise, however, since scamming and lying have become the norm these days. In fact, as I've pointed out many times on this web site, Washington regulators have repeatedly told financial institutions to lie about the market value of their "toxic assets." One of the worst offenders has been New York Insurance Superintendent Eric Dinallo who spent several months in 2008 helping the banks and "monoline" bond insurance companies to collude to commit fraud.

So investors in Dubai are said to be "furious" today because they feel they were misled by the Dubai government. Well, why should they be surprised, when there's so much fraud going on openly around the world? I guess they were all taken in by the giddy airhead optimism that I keep complaining about in Washington and CNBC.

One example of an airhead analysis is the following from Barclays Bank on November 4:

"We expect several developments to act as positive catalysts for Dubai’s sovereign spreads. First, the likely repayment of the Nakheel sukuk in December. Second, Dubai’s ability to raise the second USD10bn tranche with the support of Abu Dhabi. Third, a successful conclusion of the merger between Emaar and Dubai Holding, as well as a solution allowing mortgage providers Amlak and Tamweel to resume lending.

On that basis, we recommend a long position in Dubai sovereign credit and see today’s negative price actions as an opportunity to buy. While the newly issued sukuk is our preferred instrument, we also feel comfortable in a recommendation to sell 5y CDS outright or against the CDX EM Index in a relative value trade."

(Note: A sukuk is a bond issued under Islamic Sharia law.)

Anyone who followed Barclay's airhead advice on November 4 is in deep trouble today.

At any rate, investors, creditors and financial institutions around the world were shocked and surprised by the bombshell that was set off on Wednesday. Dubai World, the major government-owned investment company, announced that they would be unable to meet their $3.5 billion loan payments due next month, and they requested a six month delay. They claimed that all debts ($60 billion) would be repaid, but they just needed a little more time. (If anyone believes that, then I've got a bridge in Brooklyn that I'd like to sell you.)

The bombshell announcement was apparently timed to cause as few market effects as possible. It occurred after Wall Street had closed on Wednesday for the Thanksgiving holiday, and at a time when markets in the Mideast are closed for the Muslim religious celebrations in Mecca.

Nonetheless, investors were shocked by the news. Many banks in Europe, Asia and the Middle East have invested billions of dollars in Dubai, and are now faced with the possibility of losing their investments. On Thursday and Friday, markets in Europe and Asia were down 3-5%. On Friday morning, Wall Street futures were down 2%.

Abu Dhabi is now facing world wide pressure to bail out its neighbor, Dubai. They've already said that they won't do that, but whether they change their minds remains to be seen.

From the point of view of Generational Dynamics, nothing has changed from what this web site has been saying for almost seven years. We're entering a new 1930s style Great Depression, and nothing has happened to change that. That forecast was based on a long-term analysis of stock market trends. (See: "How to compute the 'real value' of the stock market.") Those conclusions are just as valid today as they were in 2002, despite several huge bubbles that have occurred since then.

The only issue is the question of what will trigger the coming stock market crash. Perhaps it will be the Dubai default, or perhaps it will be something else. But it's coming with absolute certainty.

(Comments: For reader comments, questions and discussion, see the Financial Topics thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) (27-Nov-2009) Permanent Link
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How Priceline, Orbitz, FTD, 1-800-Flowers, Pizza Hut, and Continental Airlines are scamming you online

If you're seeing "mysterious" $10-20 credit card charges, here's why.

Here's how the scam works:

The Senate Commerce Committee has been investigating this scam since May. A recent Commerce Committee press release lists the companies under investigation:, Inc.     Hotwire, Inc.  , Inc.
    AirTran Holdings, Inc.      Intelius, Inc.           Redcats USA, Inc., Inc., Inc.   Shutterfly, Inc.
    Continental Airlines, Inc.  Orbitz Worldwide, Inc.   US Airways Group, Inc.
    FTD, Inc.                   Pizza Hut, Inc.          Vistaprint USA, Inc.
    Fandango, Inc.

According to the Senate Commerce committee, there are three marketing firms under investigation: Affinion, Vertrue, and Webloyalty. These are the firms that charge your credit card every month.

This scam has netted more than $1.4 billion, by tricking millions of customers. According to the Senate reports, the managers at these firms are fully aware that they're tricking people -- in fact the whole online experience is specifically designed to trick people, and they're aware that customers are furious at being tricked, but they don't care because they're making so much money.

You know, Dear Reader, I'm almost sputtering mad as I type things. These companies, Priceline, Orbitz, etc., are supposed to be reputable companies, but instead they're run by people with no morals, no ethics, no decency. These companies are being run by cheap crooks.

There is a way to get around this problem, but unfortunately to do so you have to patronize the worst crook of them all: Citibank.

I've been using Citibank's "virtual credit card" number service for almost ten years, and it's saved me thousands of dollars.

With this service, when you type a credit card number online, or give one over the phone, the number you give them is a unique number obtained from the Citibank web site. When you obtain the number, you specify the maximum amount that can be charged, and you specify an expiration date. Only one vendor is allowed to charge to that number, and only up to the maximum amount and the specified date.

I really hate to say anything that endorses Citibank, since they're perpetrating criminal extortion by raising interest rates to 30%, and using the money to pay themselves million dollar bonuses.

But as loathesome as Citibank's behavior is, they have the only service of this type that I know of. Paypal and DiscoverCard offer similar services, but you can't specify a maximum amount or a time limit, so those services have only limited usefulness. Only Citibank's service does it right, as far as I know.

If you decide to use Citibank's service, make sure that you don't carry a balance on the Citibank credit card. At least that way they can't extort from you by charging you 30% interest.

I'm currently living through another example of a scam by a supposedly reputable company.

Those of you who have Comcast cable are aware that Comcast is forcing its customers to tune all channels through a cable box, no longer permitting you to bypass a box and use your TV set's tuner. They're providing customers with new DTAs ("Digital Transport Adapters"), and they're providing them for free.

I got two DTAs last week. Only one of the two worked, and after a couple of days, the one that worked froze up and stopped working. I went to the Comcast office and swapped them for new ones, and of the two new ones, only one works at all, and it doesn't get all the channels.

I've spoken to two different Comcast support people on the phone. One of them told me that the DTAs weren't working for most people, and if you want working boxes, then Comcast wants you to spend $8.00 apiece per month for upgraded cable boxes. He all but said that the DTAs were a Comcast scam. The second Comcast support person denied that it was a scam, but she agreed that my only real choice was to pay an extra $16.00 per month. And these statements are from Comcast employees.

All of these companies know that they're scamming customers, but they don't care because they're making so much money. These people have no morals, no ethics, and no decency.

I always receive some criticism when I blame Generation-X for things like this, but by this time, almost in the year 2010, all of these companies' decision makers are Gen-Xer's. Throughout my life, I've been aware of a few people who are crooks, but today, with Generation-X in charge, being a crook is the norm.

For those of you who are decent, honest, ethical, hard-working members of Generation-X, I apologize for appearing to be stereotyping you, but what we're seeing here is that "the bad drives out the good." That is, the few Gen-Xers who are crooks have succeeded in driving out the hard-working decent people from businesses like Citibank, Comcast, Priceline, Orbitz, etc., and all that's left in these businesses are people with the ethics and morals of something you might find under a rock -- and who are proud of themselves, because they're making so much money by screwing you.

(Comments: For reader comments, questions and discussion, see the Financial Topics thread of the Generational Dynamics forum. Read the entire thread for discussions on how to protect your money.) (24-Nov-2009) Permanent Link
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UK honors the journalist who documented Stalin's man-made 1932-33 famine in Ukraine

Known as the "Holodomor," millions of Ukrainians starved to death.

On November 13, the White House issued a press release:

"Seventy six years ago, millions of innocent Ukrainians – men, women, and children – starved to death as a result of the deliberate policies of the regime of Joseph Stalin. Tomorrow, we join together, Ukrainian-Americans and all Americans, to commemorate these tragic events and to honor the many victims.

From 1932 to 1933, the Ukrainian people suffered horribly during what has become known as the Holodomor – “death by hunger” – due to the Stalin regime’s seizure of crops and farms across Ukraine. Ukraine had once been a breadbasket of Europe. Ukrainians could have fed themselves and saved millions of lives, had they been allowed to do so. As we remember this calamity, we pay respect to millions of victims who showed tremendous strength and courage. The Ukrainian people overcame the horror of the great famine and have gone on to build a free and democratic country."

Much of what we know today about the Holodomor comes from a journalist, Gareth Jones, who went to Ukraine and documented the horrors. Jones walked across Ukraine, from village to village, talking to people, and writing down everything he saw and heard in his diaries. There is a major new display of his diaries at Oxford University. His diaries are available online at

Jones walked alone along a railway line, documenting the starvation and cannibalism that killed 4-5 million Ukrainians.

On March 29, 1933, Jones' article appeared on the front page of the New York Evening post: "Famine Grips Russia — Millions Dying. Famine on a colossal scale, impending death of millions from hunger, murderous terror ... this is the summary of Mr. Jones's firsthand observations."

However, these and other stories, based on Jones' reporting, were not believed (just as people today can't believe that we're headed for a major financial crisis and world war). When the news is too bad, and contradicts conventional wisdom, it's simply rejected. Leading the criticism of Jones was the New York Times, which was a supporter of Josef Stalin, and was just as ideological in its news "reporting" then as it is today. New York Times correspondent Walter Duranty wrote, "There is no famine or actual starvation, nor is there likely to be." He dismissed Jones' eyewitness accounts as a "big scare story".

Attacks by Duranty and others completely discredited Jones. Jones worked on other assignments as a journalist, and within a couple of years, Jones was killed under mysterious circumstances -- presumably by Soviet agents.

The Black Sea, Caucasus, Caspian Sea region
The Black Sea, Caucasus, Caspian Sea region

Ukraine vs Russia today on the Holodomor

Ukraine was part of the Soviet Union until the latter broke up in 1991, making Ukraine an independent country. Since then, relations between Ukraine and Russia have been very bitter. Even relations within Ukraine are bitter, since the population of eastern Ukraine are mostly ethnic Russians, while western Ukraine is populated mostly by ethnic Ukrainians.

It's worthwhile to take a moment to recall some recent events in this relationship:

Viktor Yushchenko - August 2004 versus October 2004 <font size=-2>(Source: AFP)</font>
Viktor Yushchenko - August 2004 versus October 2004 (Source: AFP)

Relations between Russia and Ukraine remain very bitter. There's no Russian ambassador in Ukraine, and Russian president Medvedev has promised that there won't be one as long as Yushchenko is in power. The dispute over the Holodomor has to be seen in that context.

The Ukraine famine -- the Holodomor

"Holodomor" is the word that Ukrainians use to refer to the 1932-33 famine. The web site has been set up as part of a campaign to get the UK government to recognize the Holodomor as an act of genocide.

Here is a very dramatic video

Orthodox Church in Kiev and Moscow

Kiev is the capital city of Ukraine, and it's also the cradle of the Russian Orthodox Christian church.

The story of how that happened would be simply cute or amusing, if it weren't for the fact that it changed the world.

In 980, a pagan named Vladimir became ruling prince of the Slavs, headquartered in Kiev. And Vladimir went religion shopping.

According to legend, he rejected Islam, because it forbade alcoholic drink. He sent commissions to visit the Christian Churches. The Bulgarians, they reported, smelt. The Germans had nothing to offer. But Constantinople had won their hearts. There, they said in words often to be quoted, "we knew not whether we were in heaven or earth, for on earth there is no such vision nor beauty, and we do not know how to describe it; we know only that there God dwells among men." Around 988, Vladimir accepted Orthodox Christianity for himself and his people.

Vladimir might have chosen Catholicism, and then the Orthodox Christian religion might have disappeared completely. Instead, as the Slav culture moved east to Moscow and formed the Russian Empire in the centuries that followed, the Orthodox Christian religion followed it.

Even more important, Moscow inherited the mantle of leading the worldwide Orthodox Church after the Muslims conquered Constantinople (Istanbul, Turkey) in 1453, destroying the Byzantine Empire, the last vestige of the Roman Empire.

In 1472, Russia's Grand Prince Ivan III ("Ivan the Great") took the title of Tsar, and thus became the first Tsar of the new Tsarist Russia. ("Tsar," or "Czar," was derived from the name of the Roman Emperor Caesar, as is the German word "Kaiser.") Thus, Ivan would be not only the head of Russia, he would also be head of the "Orthodox" (or "true") Christian Church.

Russia's Bolshevik Revolution in 1917 replaced Tsarist Russia with an atheistic Communist government that destroyed much of the Russian Orthodox Church. The Church was revived during World War II when Stalin needed it to support the fight against the Nazis. When the Soviet Union collapsed in 1991, the Russia Orthodox Church regained a special position in the Russia and the Russian Government, but has not fully regained its place as the world leader of the Orthodox churches.

In the 1990s, the Orthodox Church also revived in Kiev and Constantinople, along with the existing center in Athens. Under Putin in the 2000s decade, the Russians have been trying to regain supremacy, but are facing resistance from Kiev.

Church vs Politics and the Holodomor

The Holodomor was not the only famine in human history. Russians experienced a horrible famine in World War II in the Nazi siege of the city of Leningrad. So you would think that, at the very least, the Russians would express some sensitivity to the sufferings of the Ukrainians in the 1932-33 famine.

But Ukrainians were infuriated last week when Putin appeared to be mocking Yushchenko's commemoration of the Holodomor.

The Russians are infuriated by what they see as Ukrainians' rewriting of history, not only of the famine, but also of Ukraine's entire role in World War II. They blame Yushchenko for expelling some Russian diplomats, and look forward to Ukraine's elections next year, hoping that Yushchenko will be defeated.

This political cauldron has affected the relations between the Kiev and Moscow branches of the Orthodox Christian Church. The Ukrainian Orthodox Church is under the authority of the Russian Orthodox Church, but a schism has developed. Last year, Ukrainian officials asked officials in the Constantinople church to recognize a second church in Kiev, one that is entirely separate from the Moscow church.

Thus, while the Russian government is expressing open hostility to the Ukrainian government, the Russian Church has been attempting to reconcile with the Ukrainian Church.

When Russian president Medvedev refused an invitation from Yushchenko last year to visit a monument to the Holodomor, the invitation WAS accepted by Archbishop Kirill of the Russian church. This year, Kirill became the leader of the entire Russian church, and he's pursued the theme of reconciliation, by saying,

"This [Holodomor] was a common misfortune for all the people who lived in the same country at the time. ... The famine, dreadful famine, which was entirely the result of a specific policy and became even worse due to natural disasters, claimed an enormous number of lives in Ukraine, Volga region, North Caucasus, Southern Urals, Western Siberia and Kazakhstan."

After Yushchenko

Moscow hopes that Yushchenko will lose next year's elections, and that relations between Ukraine and Russia will become cordial again.

From the point of view of Generational Dynamics, this outcome is almost completely impossible.

Yushchenko may or may not lose next year's election, but either way, the hatred is between the Ukrainian and Russian people, and that will not change. Ukraine itself is divided by this hatred, with Ukrainians populating the west, and Russians populating the east.

The centuries old historical divide between the Ukrainians and Russians runs very deep, and there's still extreme bitterness over conflicts between Ukrainian and Russian soldiers in World War II.

The entire Caucasus and Black Sea region is smoldering with ethnic and religious hatreds. What we learned last year as an outcome of the Georgian war is that there isn't much visceral hatred between Georgians and Russians but that there is plenty of genocidal fury between Georgians and Ossetians.

In the past, I've frequently referred to the Caucasus region as the most dangerous region in the world (though, at other times, first place was taken by Pakistan or the Mideast). The Caucasus and Black Sea regions were the theatres for extremely bloody wars throughout the 1910s, 1920s, 1930s, and 1940s. From that perspective, the Holodomor was only a small part, but an overwhelmingly important part for the Ukrainians. Generational Dynamics predicts that all of these wars will be re-fought as part of the Clash of Civilizations world war.

(Comments: For reader comments, questions and discussion, see the Caucasus and Black Sea region thread of the Generational Dynamics forum.) (22-Nov-2009) Permanent Link
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In a slap at Washington, Israel announces 900 settlements in East Jerusalem

The Obama administration sharply rebuked the Israeli decision to tear down Palestinian homes in a disputed East Jerusalem region of the West Bank and build 900 settlements.

This follows by two weeks the announcement by Palestinian president Mahmoud Abbas that he'll step down, as the Mideast situation continues to deteriorate.

According to a report sympathetic to the Palestinians,

"Israeli bulldozers demolished a four-story house in Jerusalem as reports in the Israeli media announced the approval of construction of 900 new settlement homes in the Israeli Gilo settlement on Tuesday.

Neighbors of Nasry Nassar Al-Husseini said his home, a four-story, multi-family structure in a neighborhood south of the Old City of Jerusalem, was destroyed by Israeli bulldozers as the family looked on. The structure was home to 30 Palestinians.

The demolition is part of what Palestinians call an ongoing campaign of Judaizing Jerusalem, including the eviction of Palestinians from their homes, the destruction of Palestinian homes and the continued construction of settlements.

According to the Israeli daily newspaper Haaretz, the plan involves the construction of 900 four- and five-bedroom housing units, "in an effort to lure relatively well-off residents.""

A report sympathetic to the Israelis blames the growing rift between Israel and the US on President Obama:

"There is no place outside the US (where, in view of the likelihood of Senate approval of health reform, the situation is a bit different) where people are not disappointed in President Barack Obama. This is not an entirely justified disappointment: Anyone with eyes, particularly here in the Middle East, should have known that his commitments and style could not produce the results he promised. True, the man has vision, charisma and natural leadership qualities, but the trees he has climbed are too high."

This corresponds to an article I posted in September, "After a week of foreign policy disasters, President Obama's entire program is adrift."

(An article in Der Spiegel on Tuesday begins, "US President Barack Obama came to office promising hope and change. But on climate change, he has followed in the footsteps of his predecessor, George W. Bush. Now, should the climate summit in Copenhagen fail, the blame will lie squarely with Obama. ... Obama Lied to the Europeans. Barack Obama cast himself as a "citizen of the world" when he delivered his well-received campaign speech in Berlin in the summer of 2008. But the US president has now betrayed this claim. In his Berlin speech, he was dishonest with Europe." Readers may wish to look back at how I described that speech in July, 2008, in "Barack Obama in Berlin calls for greater European militarism.")

Ever since I first posted "Mideast Roadmap - Will it bring peace?" in May 2003, I've been following the turns in the Mideast, especially the continuing deterioration that followed the death of Yasser Arafat in November, 2004. This includes three wars that have occurred since Arafat's death: Israelis vs Hizbollah in Lebanon in 2006, Palestinian Fatah vs Hamas in Gaza in 2008, and Israelis vs Hamas in Gaza in 2009.

I can't prove this, but it now appears to me that there is a change in attitude going on in the Mideast. I began to touch on this a couple of days ago in "Lebanon agrees on a unity government with Hizbollah."

During the Bush administration, it seems to me, the Israelis felt that they were being fully supported, while the Palestinians felt resigned to wait for something to change. But Obama's campaign and presidency raised hugely unrealistic expectations on both sides, and now both sides are becoming aware how unrealistic they are. This is going to shift power away from moderates into the hands of Hamas and the radicals.

I've been very critical of Obama's extravagant and unrealistic promises, and of the mistakes he's made because of his youth and inexperience. But this is a good time to say again that, from the point of view of Generational Dynamics, what politicians do makes no predictable difference on the course of events.

The Mideast is headed for a major war between Israelis and Palestinians, refighting the genocidal war that began in 1948 with the partitioning of Palestine and the creation of the state of Israel, and there is nothing that President Obama or any other politician can do to cause this or prevent it.

(Comments: For reader comments, questions and discussion, see the Middle East thread of the Generational Dynamics forum.) (18-Nov-2009) Permanent Link
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Lebanon agrees on a unity government with Hizbollah

Meanwhile, tension between Saudi Arabia and Iran is increasing.

The west breathed a sigh of relief earlier this year in June, when the pro-Western coalition defeated the pro-Syria Hizbollah bloc in Lebanon's parliamentary elections.

The pro-Western coalition, known as the "March 14" bloc, is led by Prime Minister Saad Hariri, the son of Rafiz Hariri, who was killed by a terrorist bomb in February, 2005. (See "Massive Beirut explosion killing Rafiq Hariri puts Lebanon into state of shock.")

The March 14 bloc won a narrow victory over Hizbollah's "March 8" coalition, but Hizbollah still had enough seats to effectively hold a veto power of all legislation. This caused a continuing political crisis that prevented a government from being formed.

But now, in a significant turn of events Lebanon has announced a national unity Cabinet, with a strong opposition presence led by Hezbollah.

From the point of view of Generational Dynamics, this agreement is significant because it resolves many of the political disputes of Lebanon's generational Awakening era. It may even turn out to be the Awakening era climax, though it's too soon to know that for sure.

Lebanon's last crisis war began in 1975, and it became a war with Syria in 1976. Israel was an off-and-on participant, and the war reached an explosive climax in 1982 when Christian Arab forces, allied with Israel, massacred and butchered hundreds or perhaps thousands of Palestinian refugees in camps in Sabra and Shatila.

Since that war ended, the Lebanese people have been haunted by that episode, and officials have been determined not to allow anything like it to happen again.

On November 5 of last year, a web site reader wrote the following to me:

"I am very impressed with your site, especially when looking at some of your past predictions. I was trapped in Lebanon during the fighting in early May and everyone was in great fear that a civil war was in progress. You predicted that it would fizzle out, and it did."

This fear of renewed violence has been a major theme for Lebanese politics. Ironically, it's this very fear that prevents similar violence from happening again. That's why crisis wars never occur within generational Awakening eras, and any warlike violence quickly fizzles out.

Thus, we have Time Magazine reporting on the new unity government by saying that "the deal ends the three-year political crisis that brought the country to the brink of civil war."

That's simply not true. Lebanon was never on the brink of a civil war, paradoxically because of the widespread fear that Lebanon was on the brink of a civil war.

At various times on this web site, we've discussed similar concepts with a number of countries in generational Awakening eras -- Iran, Iraq, Lebanon, Syria, Thailand.

These Awakening eras are similar in many ways to America's last Awakening era in the 1960s. Just to take one obvious comparison, America saw violent riots and demonstrations in the 1960s, as well as the assasination of President Kennedy. Lebanon has seen massive demonstrations by Hizbollah, and the assassination of former Prime Minister Rafik Hariri. (See "Iraq Today vs 1960s America.")

From the point of view of generational theory, what's going on in the Mideast is very interesting because of the potential clashes involving countries in Awakening eras, like those just noted, and those in generational Crisis eras, including Israel, Palestinian territories, Jordan, Yemen and Saudi Arabia.

We've already seen a fascinating example of this in the summer 2006 Israeli/Hizbollah war in Lebanon. Israel, in a generational Crisis era, panicked and fought the war in a "hot" fashion, with maximum force. Hizbollah warriors, in a generational Awakening era in Lebanon, fought the war in a "cool" fashion, launching missiles and returning home to the arms of their wives. (See: "Israel/Lebanon war forces Muslims to choose," and "How Israel panicked in pursuing the summer Lebanon war with Hizbollah.")

The Lebanese people were greatly shocked by what they considered to be Israel's overreaction in the 2006 war. Recall that the war was triggered when Hizbollah kidnapped two Israeli soldiers on the border between Lebanon and Israel. Israel's response was completely panic-driven. Israel went to war in four hours, with no plan, no objective, and no idea what was going on.

Hizbollah chief Sheik Sayyed Hassan Nasrallah has had to apologize to the Lebanese people for provoking the 2006 war, saying that he never expected Israel to react so violently. That's not the kind of thing you would ever expect to hear from the leaders of Hamas, following the war in Gaza earlier this year. But that's the difference between the Lebanese, in an Awakening era, and the Palestinians, in a Crisis era like the Israelis.

As the Mideast heads into full-scale war, we can expect to see battles and sub-wars waged between belligerents who are mismatched in the sense that one is in a generational Awakening era, and the other is in a generational Crisis era.

Yemen, where the Houthis in Saada province are at war with the Saudis, and displaced refugees are nearing Yemen's capital, Sana'a. <font size=-2>(Source: CIA Fact Book / Economist)</font>
Yemen, where the Houthis in Saada province are at war with the Saudis, and displaced refugees are nearing Yemen's capital, Sana'a. (Source: CIA Fact Book / Economist)

One war of this type is already heating up: a spiraling conflict between Saudi Arabia (in a Crisis era), and Iran (in an Awakening era).

Two months ago, I posted a report entitled "Escalating civil war in Yemen threatens to pull in Iran, Saudi Arabia and U.S." The war in Yemen is turning into a proxy war between Saudi Arabia and Iran.

Within the last couple of weeks, Houthis (who are Shia) in Yemen (which is mostly Sunni) crossed the border into Saudi Arabia, killed a border guard, and took control of a small area of Saudi territory. The Saudi air force immediately became embroiled in the war, bombing Houthi targets, and taking Houthi anti-aircraft fire.

You can see a similar pattern here to the 2006 war in Lebanon. Iran is being accused of supplying weapons to the Houthis, but other than that, playing a completely passive role. The Saudis, on the other hand, are reacting directly at war with the Houthis.

This Saudi/Iranian conflict has the potential to spiral into a major regional crisis. As I've written many times, Generational Dynamics predicts a major war between Sunni and Shia Muslims, and the Saudis and Iranians will be major respective belligerents in that conflict.

According to an analysis by Ambassador M K Bhadrakumar, a career diplomat in the Indian Foreign Service, the Saudis are actively stepping up their confrontation of the Iranians on three fronts:

According to Bhadrakumar,

"One thing is certain. Tehran will do nothing adventurous that sullies its reputation as a "responsible" regional power. A confrontation with the US is the last thing that Tehran is looking for, either. Persians have a keen sense of history and have always preferred brain over brawn. Tehran cannot be oblivious that in any case, it is well placed to garner political mileage out of excessive Saudi involvement in Yemen, which will tarnish Riyadh's regional standing and inevitably produce a Houthi (Yemenese nationalist) backlash."

This is an interesting statement because Iran didn't prefer brain over brawn in the 1979 Islamic revolution, its last crisis era war, which was a very bloody civil war. But Iran is in an Awakening era now, when brain over brawn does prevail. But as he points out, the Saudis are much more involved militarily, and as America has learned in so many wars, air power doesn't guarantee victory.


It's been almost a month since I've written anything about the financial crisis (see "Nouriel Roubini apparently is predicting a global market crash.")

During this time, the stock market has continued its parabolic rise into a new superbubble. The funny thing about what's going on is that even the fig leaf of "operating earnings" has disappeared -- the P/E ratio based on operating earnings is up in the 27 range. Not to mention that the "ordinary" S&P 500 P/E ratio is above 70.

The "reason" for optimism that I keep hearing is the 3rd quarter earnings are higher than expected. Well, that's true. They were expected to be 35% lower than last year's deflated earnings, but instead they're only 14% lower. Ummm, let's see: Earnings are down 14%, but stock prices are up 40%. Could someone do that math for me?

There is absolutely no shred of anything fundamental that points anywhere but downward.

I tell people that a crash must occur "with 100% certainty," and they give me a smug look and tell me how I've been proven wrong by the rally.

I just can't believe how crazy everything has become. At least in the past few years, I could see how someone could massage the facts and convince themselves that the market would always go up, but today there's nothing to massage.

How does one explain this? How does one explain a public insanity that's so great that even fantasy reasons don't apply?

I'm sure that no regular reader of this web site is so dumb as to own stocks at a time when price/earning ratios are above 70, when the historical average is 14. However, if any of your friends are in the stock market now, they're going to lose a great deal of money.

There is now a very broad consensus that the current stock market bubble is being driven by massive stimulus spending. With Treasury interest rates effectively zero, investors are borrowing money at zero percent interest rates and investing the money in commodities and stocks. This is a typical "carry trade" scenario, and it will work as long as the dollar continues to weaken.

On CNBC on Monday morning, Art Cashin described the most likely scenario that will end this bubble: "My great fear is that you'll have some sort of geopolitical event, and people will start rushing to the dollar, and a flight to safety, and that will catch all these carry traders flat-footed, and you could have a real problem.... It could happen when you least expect it."

Thus, with a war escalating on the Saudi border, as well as potential crises elsewhere in the world, a flight to safety created a demand for the dollar would quickly push up the value of the dollar against other currencies. This would force the carry traders to sell their commodity and stock positions quickly, in order to return the dollars they had borrowed. (Paragraph corrected, Nov 22)

(Comments: For reader comments, questions and discussion, see the Middle East thread of the Generational Dynamics forum.) (17-Nov-2009) Permanent Link
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Politicians are gloomy about reaching climate deal in Copenhagen. Awwwwwwwwww!

It seems that this money and power grab is down for another year.

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According to news reports:

"No global climate change treaty likely for up to a year, negotiators admit

World's key industrialised nations say they have abandoned hope of legally binding deal at Copenhagen summit ...

A global treaty to fight climate change will be postponed by at least six months and possibly a year or more, senior negotiators and politicians conceded today.

In a day of gloomy statements, the world's key industrialised nations said they had abandoned hope of a legally binding treaty at the Copenhagen summit next month and had begun to plan only for a meeting of world leaders.

The stark statements follow weeks of pessimism and represent a significant downgrading of the summit's goal.

In London, Ed Miliband, the UK climate change secretary, became the first British politician to acknowledge publicly that Copenhagen would produce no legal climate change treaty.

Speaking in the House of Commons, he said: "The UN negotiations are moving too slowly and not going well." He went on to describe a "history of mistrust" between developed and developing nations with negotiators "stuck in entrenched positions", an impasse that prompted African nations to stage a walkout at the negotiations this week."

The "legal climate change treaty" that activists were hoping for was for a tax on all financial transactions in Western nations. That money would be diverted to the activists and their favorite causes. For some strange reason, that proposal even went too far for the Obama administration.

The "African nations ... walkout" in the above excerpt refers to a preliminary climate change meeting in Barcelona last week. The developing nations, including the Africans, threatened to walk out unless the US came to Copenhagen with a legally binding promise to pay billions of dollars to the developing nations.

It's a sign of the total craziness of our times that no one is debating where the technology is coming from to reduce carbon emissions. This sickness pervades everything, including the stock market and the health care legislation. It's always just a financial deal. The sickness is ignoring fundamentals, and thinking that all you need is a financial scam, moral outrage, and a smooth sales pitch to solve all problems.

Let's list some of the problems with the current global warming strategy.

In about 1970, I remember reading in the leftist Ramparts Magazine an article predicting that ocean pollution would cause algae to cover the ocean worldwide by 1980. Obviously that never happened, but it shows that loony environmental claims seem to be a standard part of the leftist playbook.

Today we're supposed to worry about global warming, but in the 1970s, we were supposed to worry about global cooling.

Here's the text of a Newsweek article from April 28, 1975. Today, 35 years later, this article is hilarious:

"The Cooling World -- Newsweek, April 28, 1975

There are ominous signs that the Earth’s weather patterns have begun to change dramatically and that these changes may portend a drastic decline in food production – with serious political implications for just about every nation on Earth. The drop in food output could begin quite soon, perhaps only 10 years from now. The regions destined to feel its impact are the great wheat-producing lands of Canada and the U.S.S.R. in the North, along with a number of marginally self-sufficient tropical areas – parts of India, Pakistan, Bangladesh, Indochina and Indonesia – where the growing season is dependent upon the rains brought by the monsoon.

The evidence in support of these predictions has now begun to accumulate so massively that meteorologists are hard-pressed to keep up with it. In England, farmers have seen their growing season decline by about two weeks since 1950, with a resultant overall loss in grain production estimated at up to 100,000 tons annually. During the same time, the average temperature around the equator has risen by a fraction of a degree – a fraction that in some areas can mean drought and desolation. Last April, in the most devastating outbreak of tornadoes ever recorded, 148 twisters killed more than 300 people and caused half a billion dollars’ worth of damage in 13 U.S. states.

To scientists, these seemingly disparate incidents represent the advance signs of fundamental changes in the world’s weather. The central fact is that after three quarters of a century of extraordinarily mild conditions, the earth’s climate seems to be cooling down. Meteorologists disagree about the cause and extent of the cooling trend, as well as over its specific impact on local weather conditions. But they are almost unanimous in the view that the trend will reduce agricultural productivity for the rest of the century. If the climatic change is as profound as some of the pessimists fear, the resulting famines could be catastrophic. “A major climatic change would force economic and social adjustments on a worldwide scale,” warns a recent report by the National Academy of Sciences, “because the global patterns of food production and population that have evolved are implicitly dependent on the climate of the present century.” ...

Climatologists are pessimistic that political leaders will take any positive action to compensate for the climatic change, or even to allay its effects. They concede that some of the more spectacular solutions proposed, such as melting the Arctic ice cap by covering it with black soot or diverting arctic rivers, might create problems far greater than those they solve. But the scientists see few signs that government leaders anywhere are even prepared to take the simple measures of stockpiling food or of introducing the variables of climatic uncertainty into economic projections of future food supplies. The longer the planners delay, the more difficult will they find it to cope with climatic change once the results become grim reality."

The last paragraph is the funniest of all. I love that proposed solution of covering the Arctic ice cap with black soot, to force it to melt.

And the last sentence, "The longer the planners delay, the more difficult will they find it to cope with climatic change once the results become grim reality," is exactly the same horsecrap argument that we're hearing today. It's a good thing that we didn't pay attention in 1975.

(Comments: For reader comments, questions and discussion, see the Climate Change thread of the Generational Dynamics forum.) (12-Nov-2009) Permanent Link
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Europe celebrates the fall of the Berlin Wall on November 9, 1989

If East and West Germany were reunited, then why not North and South Korea?

On the 20th anniversary of the fall of the Berlin Wall, all of Europe was celebrating. The following short video, Domino Effect:The Berlin Wall Falls Down Again, shows some of the more spectacular events in the celebration:

I was as shocked and surprised as anyone when the Berlin Wall fell in 1989. I never dreamed that I would see it fall in my lifetime.

When World War II ended in 1945, much of the world was furious at the Germans. They blamed Nazi Germany for World War II, and they incorrectly also blamed Germany for World War I.

The WW II victors decided to partition Germany, to make sure that they wouldn't start WW III. According to the 1945 Potsdam Agreement, Germany was partitioned into four regions, one to be administered and occupied by each of four countries -- the Soviet Union, the UK, France, and the U.S. The last three of these regions were quickly merged into West Germany, while the Soviets retained control of what became East Germany.

The Soviets didn't stop there. They took control of all of Eastern Europe -- East Germany, Bulgaria, Poland, Hungary, Czechoslovakia, Romania and Albania. These became known as "Iron Curtain countries" after Winston Churchill's famous 1946 Iron Curtain speech:

"From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in some cases, increasing measure of control from Moscow. Athens alone -- Greece with its immortal glories -- is free to decide its future at an election under British, American and French observation. The Russian-dominated Polish Government has been encouraged to make enormous and wrongful inroads upon Germany, and mass expulsions of millions of Germans on a scale grievous and undreamed-of are now taking place. The Communist parties, which were very small in all these Eastern States of Europe, have been raised to pre-eminence and power far beyond their numbers and are seeking everywhere to obtain totalitarian control. Police governments are prevailing in nearly every case, and so far, except in Czechoslovakia, there is no true democracy."

Soviet authorities built border fences separating east and west Europe, and border guards shot and killed anyone who tried to escape to the west.

But there was one gaping hole in the Iron Curtain -- the city of Berlin. Berlin was physically located inside of East Germany, but according to the Potsdam Agreement, Berlin itself was partitioned, with East Berlin controlled by the Soviets, and West Berlin still part of West Germany. This was never a comfortable situation, as the Soviets in 1948 tried to blockade West Berlin, and prevent supplies from reaching the city. President Harry Truman ordered the Berlin Airlift to supply tons of food and other supplies.

Throughout the 1950s, the vast differences between east and west became apparent to the world. People living in western European countries, such as UK, France and West Germany, enjoyed democracy and thriving economies. But people in Iron Curtain countries were oppressed and tortured for political crimes, and they lived in poverty. News stories coming out of eastern Europe told of the indignities and hardship of daily life, such as having to wait in a queue for hours just to buy a roll of toilet paper.

Millions of people who were trapped in the east would escape by making their way to East Berlin and crossing over to West Berlin and to freedom. Finally, the Soviets could stand it no more. On August 12, 1961, the East German army began tearing up streets that connected East and West Berlin, and installed a barbed wire barrier encircling all of West Berlin, guarded by troops ordered to shoot to kill anyone who tried to defect. Thus, the border was closed within 24 hours. After that, the East Germans replaced the barbed wired with 12 foot high concrete barriers, guarded by watch towers.

The Berlin Wall split friends, families and lovers for decades. People who were trapped in the East could no longer travel to the West, and people in the West didn't want to go East, for fear of being trapped there. Thousands of East Germans tried to escape by climbing over the wall, and hundreds were killed by East German border guards.

By the 1980s, the Berlin Wall was becoming intolerable to the Germans themselves. Germany entered a generational Unraveling era and, as indicated by the name, all the austere measures that were imposed after WW II to prevent a new war began to unravel. A triggering event may have been President Ronald Reagan's 1987 speech in Berlin, in which he said, "Mr. Gorbachev, open this gate. Mr. Gorbachev, tear down this wall!"

During the next few years, an incredible domino effect occurred. First, Hungary opened its border with Austria, permitting East Europeans to escape to the West via that route. Mass demonstrations began in East Germany, and continued for weeks. On November 9, a televised news program mistakenly reported that the Berlin borders would be opened immediately. Huge crowds of East Germaners mobbed the border gates, and border guards were faced with the choice of shooting into the crowd or opening the gates. Fortunately, they chose the latter.

Germany was reunited within a few months after the fall of the Berlin Wall. There was still fear among WW II survivors over the reunification of Germany -- fear that a reunited Germany would once again become a military threat to Europe. I recall seeing Henry Kissinger on television saying something like, "I will have no trouble dying happily if Germany is never reunited in my lifetime."

Recent news reports indicate that British Prime Minister Margaret Thatcher and French President Francois Mitterand feared that a united Germany would a "unstoppable force" in an unbalanced Europe.

Very quickly, Communism collapsed in other East European countries, and within a couple of years, the Soviet Union collapsed. Johnny Carson joked that America was the only country that still had a Communist Party.

That was a great joke, but of course there are still two Communist countries remaining -- North Korea and Cuba. Why can't North and South Korea be reunited as Germany was, and why can't Communism in Cuba end, as it did in East Germany?

Generational Dynamics provides some answers.

Generational Dynamics views civil wars very differently from external wars. A civil war pits neighbor against neighbor, brother against brother, husband against wife. If a country fights an external war then, win or lose, the country can celebrate or mourn and then move on. But a country can never celebrate a civil war, and may need a century or more to really move on.

East Germany became partitioned from West Germany by a political decision, not by a civil war. By the time the generational Unraveling era had arrived, there had been two generations of young people who had no personal memory of WW II and didn't fear a reunited Germany, so the political decision was reversed.

But the partitioning of Korea was no simple political decision. It was a bitter civil war between two groups of Koreans. It's not a surprise that reunification is difficult or impossible -- without another war.

Cuba is a different story. Cuba also had a civil war -- Fidel Castro's Cuban Revolution that climaxed in 1959. Cuba today is in the middle of a generational Unraveling era, and when Fidel Castro stepped down, replaced by his brother Raoul, there were some signs that the Communist economy was beginning to unravel.

The fall of the Berlin Wall ended the story of East Germany, but the stories of North Korea and Cuba are still being told.

Update: I left China out of this discussion because I didn't want to lengthen the article, but a web site reader said I should have included it. Briefly, China also had a major civil war, Mao Zedong's Communist Revolution, climaxing in 1949. However, China is different from the others. It's nominally a Communist country today, having a repressive government that jails, tortures and executes political dissidents. But China has given up control of many parts of the economy, so China today would more accurately be called a Fascist country, rather than a Communist country. (Paragraphs added, Nov 11)

(Comments: For reader comments, questions and discussion, see the Europe thread of the Generational Dynamics forum.) (11-Nov-2009) Permanent Link
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Theological split in Iran widens as opposition protests continue

The Islamic Republic of Iran versus the Persian Republic of Iran.

I've written several times about the belief of Iranian President Mahmoud Ahmadinejad in the Mahdaviat -- the Shia Muslim belief that the Mahdi (or "the 12'th Imam" or "the Hidden Imam") is coming to save mankind. See, for example, "Iran and Ahmadinejad are waiting for the Mahdi" This belief is roughly equivalent to the Christian belief in the second coming of Christ. (There's also a Buddhist belief in the Maitreya -- that a new Buddha is to appear on earth, and will achieve complete enlightenment.) (Paragraph corrected, Dec 16)

In that article, I quoted a couple of paragraphs from his speech to the U.N. General Assembly on Sept. 17, 2005:

"From the beginning of time, humanity has longed for the day when justice, peace, equality and compassion envelop the world. All of us can contribute to the establishment of such a world. When that day comes, the ultimate promise of all Divine religions will be fulfilled with the emergence of a perfect human being who is heir to all prophets and pious men. He will lead the world to justice and absolute peace.

O mighty Lord, I pray to you to hasten the emergence of your last repository, the promised one, that perfect and pure human being, the one that will fill this world with justice and peace."

Now, a new BBC documentary by Edward Stourton sheds new light on the depth of this belief, and the way that it's affecting Iranian foreign policy.

According to Stourton, Ahmadinejad, Supreme Leader Ayatollah Ali Khamenei, and top level government officials are members of a narrow Shia Muslim sect called the "Hasteners" -- people who believe that the return of the Imam is imminent, and that it is the duty of the faithful to take whatever steps they can to hasten the return.

It's as if President Obama, or some other Christian political leader, belonged to a sect that advocated starting a nuclear war in order to hasten the second coming of Christ.

Thus, Shia Islam has two conflicting doctrines that guide the faithful in their lives. One doctrine, known as Intizar (patient waiting) maintains that the best that believers can do is to be patient and wait until the Imam decides to return. That doctrine is opposed by another known as Ta'ajil (to hasten). The Ta'ajilis (hasteners) insist that believers should seek to unite the entire Islamic community and lead it into battle against the "Infidel" with the view of provoking a final showdown for global domination, to hasten the return of the Mahdi.

Thus, Ahmadinejad is quoted as saying, "Do you know why we wish to have chaos at any price? Because after the chaos, we shall see the greatness of Allah."

And so we have Ahmadinejad doing things like talking about pushing Israel into the sea or pursuing policies that would allow Iran to develop nuclear weapons. The implication is that Ahmadinejad is pursuing these policies in order to provoke world chaos (presumably, chaos in the form of war) in order to hasten the return of the Mahdi.

Stourton quotes Mehdi Khalaji, a Shia theologian who studied in Qom and a senior fellow of the Washington Institute:

"We call apocalyptics people who believe in the imminent return of Hidden Imam and people who believe that worshippers have some duties more than prayer in order to prepare the ground for the return of Hidden Imam. Apocalyptics, they've been always in margin of the religious community and also political structure of the country. But with Ahmadinejad, this is the first time that they take over the political power. ... [this apocalyptic trend] is frightening, and it is not only frightening for the international community...."

Of course, not everyone agrees with that explanation of Ahmadinejad's policies. Stourton quotes Professor Ali Ansari, director of the Institute for Iranian Studies at the University of St Andrews:

"Ahmadinejad and the others, yes, they do believe that the hidden imam will arrive when the world has reached the most disastrous situation. Whether they feel they have to help that along is a different matter. I think that’s where you’ve got to be a little bit careful. I haven’t seen anything which suggests that. I mean he hasn’t said anything specific. That’s not to say that he might not at some stage. It’s perhaps a question of semantics and a question of being quite pedantic about it but it’s important because people do then extrapolate from things that he has not said yet – whole policy decisions, which I think are unhelpful."

And so the question is whether the religious beliefs of Ahmadinejad, Khamenei, and other senior leaders of Iran's government are pursuing a policy of provoking war BECAUSE OF their religious beliefs.

Religion doesn't cause war; war causes religion

From the point of view of Generational Dynamics, the view that Ahmadinejad decided at one point, perhaps in his childhood, to join a sect called the "Hasteners," and then later was guided by those religious beliefs to become a politician with the job of provoking world war -- that view makes no sense all. What makes much more sense is the view that Ahmadinejad and Khamenei have adopted a certain set of policies designed to keep themselves in power, and that they've adopted a version of the "Hastener" religious doctrine to justify those policies.

I discussed the role of religion in Generational Dynamics at length in 2007 in "Book review review: Christopher Hitchens: 'God Is Not Great: How Religion Poisons Everything.'"

In the past few years, Christopher Hitchens has made a career of claiming that religion is the cause of all wars, with the bizarre implication that if we could only get rid of all religions, then we could get rid of all wars.

From the point of view of Generational Dynamics, the opposite is true. Wars have a political component as well as a military component, and the political component requires the political leaders to justify the moral superiority that's required to kill other people. There are many possible ways to do that, but the easiest vehicle is religion. Thus, Osama bin Laden may be attacking Western interests because he hates his father, but he justifies his terrorism by talking about infidels and 72 virgins.

What we're seeing in Iran right now appears to be an archetypical example of how war causes religion.

I've written many articles on this web site describing how Iran's strategy evolved, and it has nothing to do with religion. The Islamic Revolution of 1979 was a massive civil war that brought into power a new group of politicians who justified their victory in religious terms. They achieved this victory by blaming all their problems on outsiders -- America, Britain, Israel, and later Iraq. They took over the American embassy in Tehran, and held 52 American hostages for 444 days.

They described Iran as an innocent victim of outside exploiters and invaders, and in doing so, they unified the entire country behind their Revolution.

Now, they're trying to repeat that strategy, by attempting to blame America, Britain and Israel as interfering, or threatening to attack, the same innocent victim, Iran. But that strategy worked in 1979 because Iran was in a generational Crisis era; today, Iran is in a generational Awakening era, when that kind of strategy cannot possibly succeed.

(For information about generational eras, see "Basics of Generational Dynamics." For information about America's Awakening era in the 1960s, see "Boomers commemorate the 40th anniversary of the Summer of Love." For an extensive analysis of Iran's strategy, see "China 'betrays' Iran, as internal problems in both countries mount.")

When the big street protests began in Tehran after the June 12 presidential elections, every mainstream analyst that I'm aware of, including the BBC and Stratfor, predicted that the government would crush the protests and that they would end quickly, as happened in the 1989 Tiananmen Square massacre in China. I wrote that, from the point of view of Generational Dynamics, Tiananmen Square is the wrong historical analogy; the best analogy is America's Summer of Love in 1967, which led to almost a decade of political conflict, and failed presidencies of Lyndon Johnson and Richard Nixon.

In fact, the street protests are continuing and growing, especially since colleges opened in the fall.

Last week, Iran celebrated the 30th anniversary of the takeover of the American embassy in Tehran, on November 4, 1979. The government scheduled large pro-government demonstrations, but they were met with large anti-government counter-demonstrations.

What is becoming increasingly clear is that the student protests are gaining in strength and are presenting a fundamental threat to the Ahmadinejad / Khamenei government, just as America's 1960s protests threatened the Johnson and Nixon administrations.

If Ahmadinejad and Khamenei succeed in politically surviving the protestors, then the "Hastener" sect will be given a huge boost. From the point of view of Generational Dynamics, that would be a typical example of how a new religious sect gains traction. On the other hand, if they fail, and they're forced to step down, then the "Hastener" sect will also suffer a major setback, and that would be an example of how a religious sect can fizzle.

An Islamic Republic or a Persian Republic?

Iran is going through a generational Awakening era, and really it's quite typical of such eras. There is massive political chaos, with occasional violence that fizzles fairly quickly. We've seen this in Iran, Iraq and Lebanon, three Awakening era countries that I've written a lot about on this web site, all having had crisis wars in the 1980s. The political chaos always reflects the themes of the preceding crisis war, and always pits the generations of war survivors, who attempt to impose austere measures to prevent a new war, against the younger generation, born after the war, rebelling against those austere measures.

Today, there are three major political factions in Iran:

One thing that should be clear from the above description is that even if Ahmadinejad steps down and is replaced by someone from the Opposition, the riots and demonstrations won't stop.

It's also pretty clear that as the older generations die off, and the size of the younger generations grows from 70% to 80% to 90%, the Kids are going to win. The only question is how long it will take, and how chaotic the transition will be, over the next 10-15 years.

The growing theological dispute

At the beginning of this report, I referenced a new BBC documentary by Edward Stourton. That documentary was triggered when Stourton submitted some questions to Grand Ayatollah Hoseyn Ali Montazeri via his web site. Montazeri is one of Shia Islam's most respected theologians, and much to Stourton's surprise, Montazeri answered the questions with detailed replies.

Here are some excerpts:

"Q: What is your view of claims that Mahmoud Ahmadinejad is in contact with the Hidden Imam and that his government is working for the return of the Mahdi? ...

Montazeri: During his occultation or disappearance it is possible to establish contact with His Holiness the Hidden Imam (may God speed his return). But anyone who made such contact would never dream of announcing it publicly because making use of such claims for propaganda and political purposes would be contrary to the qualities required for such contact. The best way to prepare for the re-appearance of the Hidden Imam would be to act in accordance with Islamic teachings in order to establish justice and Islamic values in society.

Q: How far has the current regime fallen - in your view - from the ideal of the Islamic Republic?

Montazeri: Although some sincere and faithful people have made great efforts and endeavours now and in the past to implement the goals of the revolution, unfortunately, due to the short-sightedness, ineptitude and lack of wisdom, as well as arrogance and neglect of the demands of the majority of the people by a small inefficient minority, many of the initial ideals of the revolution have not been fulfilled. In view of this, our people are very dissatisfied and they protest against the deviations from the goals of the revolution. ...

Q: What (if anything) should Iranian clerics do to bring about change in Iran?

Montazeri: The important action that the esteemed Iranian clerics can and must take in order to initiate reforms, to change the present situation and the current policies, must be in step with the people - with intellectuals and experts, with the members of the elite and with committed political activists. The clerics should tell the people of their rights. They must also remain faithful the values of the revolution and to the goals of the reforms. Otherwise, their social standing among the people will become weaker and shakier."

The fact that a high level Iranian cleric would be openly critical of the government with the press shows how deeply the Islamic government is under attack.

Effect of Iran's conflict on Islam

If you look at the 20th century from the point of view of Islam, there have been two major earth-shaking events.

The first was the destruction of the Ottoman empire after World War I. Centered in Istanbul, Turkey, the Caliphate had been the office of the supreme spiritual leader for Sunni Muslims worldwide, and it was abolished, leaving Sunni Muslims around the world rudderless. After several decades passed, this rudderlessness turned into al-Qaeda and international terrorism.

The second was Iran's Islamic Revolution of 1979. For the first time since the 1920s, there was an Islamic state, and a revolutionary method for achieving it. Unfortunately for the Sunnis, Iran is a Shia Muslim state, so it didn't help them. But it did reveal a path by which a Sunni Muslim state might appear again.

Just as Iran's leaders have been trying to recapture their own revolutionary unity by provoking a confrontation or even an attack by Western powers, Islamist Sunnis have been trying to provoke a war in various countries, in the hope of creating a Sunni Muslim state.

They've tried this in Iraq, Somalia, Yemen, Afghanistan, Pakistan and Uzbekistan, and it is still the main goal of al-Qaeda. The inspiration provided by Iran's Islamic Revolution of 1979 has been a guiding light to Islamist Sunnis around the world for 30 years.

The interesting question then arises: What will Islamist Sunnis around the world conclude about Iran's Islamic Revolution, now that the Revolution appears to be unraveling? Will they still try to follow the same path, or will they change tactics in some way, trying to learn from Iran's experience? Only time will tell, and this is something to be watched.

In fact, Sunni clerics in other countries are beginning to point to a possibly fatal flaw in Iran's system of government: the core belief that supreme leader Ayatollah Khamenei should have the final say on all Iranian foreign and domestic policies.

What is happening in Iran at present, is "an explosion as a result of a deep existing contradiction in the political system in Iran, which has a religious base, and at the same time seeks to pass on authority through democratic means," according to Sunni scholar Khaled al Dakheel, a professor at King Saud University in Riyadh, Saudi Arabia.

Basically, the question is how you can have a democracy of the people, when a single religious leader has the final say on everything? At its core, this is a political struggle over the question of separation of Mosque and State, a conflict that occurs, in one way or another, in almost every country.

From the point of view of Generational Dynamics, the major trends have not changed. As I've said many times, it's my expectation that Iran will be the ally, not the enemy, of America, Israel and the West, in the Clash of Civilizations World War. In Asia, Iran will be allied with India, Russia and America against China and Sunni Muslim countries, including Pakistan, Uzbekistan, and the Arabs.

The theological debate and political chaos in Iran are part of the scenario that will take us in that direction.

(Comments: For reader comments, questions and discussion, see the Iran thread of the Generational Dynamics forum.) (9-Nov-2009) Permanent Link
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Palestinian president Mahmoud Abbas says he'll step down following Hillary Clinton's statement on settlements

Is it a tactical manoeuver or the end of an era?

Mahmoud Abbas was born in 1935 in what is now northern Israel. His family were among hundreds of thousands of Palestinians who fled or were driven from their homes in the genocidal 1948 war between Palestinians and Jews that followed the partitioning of Palestine and the creation of the state of Israel.

So as a young teenager, Abbas and all his friends were fully exposed to the horrors of war all around them. This is the kind of "generational child abuse" that Generational Dynamics talks about. Kids who live through this kind of experience, like America's Silent Generation, grow up never wanting their own kids or grandkids to experience something so awful.

So when Abbas was elected President of the Palestinian Authority in January, 2005, it appeared to the world that the "Mideast problem" would finally be solved. Abbas was considered more "moderate" than his predecessor, Yasser Arafat, and Abbas was committed to implementing the Mideast Roadmap to Peace that had been put forth by the Bush Administration in May, 2003. With Arafat gone, and Abbas in place as President, the Roadmap would finally be implemented, leading to two states, Israel and a Palestinian state, existing side by side in the Mideast, in eternal peace and happiness.

Actually, the euphoria surrounding Abbas's election was ridiculous, as were the unrealistically high expectations that Abbas had raised during the campaign. As I wrote at the time, one day he would speak in Arabic and promise the Palestinians the "right of return" to the lands occupied by the "Zionist enemy." The next day, he would speak in English, and promise to rid Palestine of the terrorists.

(The obvious comparison is with President Barack Obama, who made similarly extravagant and unrealistic campaign promises -- cure global warming, provide universal health care, close Guantanamo, leave Iraq in peace, bring a two-state solution to Palestinians and Israelis, beat the Taliban in Afghanistan, restore the stock market bubble, and dismantle President Bush's war against terror. Now we're seeing that he appears to be failing at every one of these promises.)

Instead of bringing peace, Abbas's presidency has only made things worse. There have been three "small" wars: Israelis vs Hizbollah in Lebanon in 2006, Palestinian Fatah vs Hamas in Gaza in 2008, and Israelis vs Hamas in Gaza in 2009. There's no reduction in tension whatsoever, and it's only a matter of time before one of these small wars triggers a larger war.

The latest crisis occurred because one of President Obama's unrealistic promises intersected with one of President Abbas's unrealistic promises. Since taking office, President Obama has demanded that the Israelis stop building settlements on land that would be part of the Palestinian nation under the Roadmap to Peace. As recently as June, in his speech in Cairo, directed to the Muslim world, President Obama said, "At the same time, Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine's. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop."

But the Obama administration appeared to change policy last week, when Secretary of State Hillary Clinton praised as "unprecedented" Israel’s compromise offer to slow down, but not stop, construction of settlements.

This change of position has infuriated may Arabs and Palestinians, and it triggered Abbas's decision to step down as President. Abbas put it as diplomatically as possible when he said,

"We pledged, us and the Israelis, with the participation and sponsorship of the international community, to reach a two-state solution. But month after month, year after year, there was procrastination and the increase of Jewish settlement and Israeli settlement on our land, which compromises the credibility of negotiations. ...

The stated position of the United States in relation to settlements and the Judaisation and annexation of Jerusalem are well-known and appreciated by us. However, we were surprised by their favoring of the Israeli position. But the problem which requires a solution is ... the ongoing Israeli settlement activities in all of the West Bank and especially in occupied East Jerusalem, which is facing an unprecedented change to its character."

It's impossible to know at this time if Abbas seriously plans to step down, or whether he's using the threat of stepping down as a negotiating strategy.

If Abbas does stop down and is replaced by someone younger, it will be the end of an era. Someone younger will certainly be more demanding and confrontational than Abbas, and this will change the political climate in the Mideast.

As I've been saying since 2003, Generational Dynamics predicts that we're headed for a major crisis war in the Mideast, re-fighting the genocidal 1940s war between Arabs and Jews. I speculated in 2003 that the death of Yasser Arafat would trigger such a war, but although things have gotten steadily worse since Arafat's death, the major war is yet to come.

(Comments: For reader comments, questions and discussion, see the Mideast thread of the Generational Dynamics forum.) (7-Nov-2009) Permanent Link
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Islamist Uzbeks lead terrorists in Pakistan and Afghanistan

They're the largest group of foreign militants, and they're "fanatical."

It's now been two weeks since the Pakistani army began its war against militants in South Waziristan at the south of the Federally Administered Tribal Area (FATA).

Central Asia <font size=-2>(Source: CIA Fact Book)</font>
Central Asia (Source: CIA Fact Book)

And the most dangerous enemy of all is not the Taliban (indigenous Pashtun militants), but the Uzbeks from the al-Qaeda linked Islamic Movement of Uzbekistan (IMU). It's not known how many Uzbek militants are in South Waziristan, but estimates vary from 500 to 5000.

In fact, it's possible that eliminating just the Uzbek force is the primary Army objective of the war. Army Chief Gen. Ashfaq Kiyani "was of the opinion that the dynamics of South Waziristan might change if we can take out the Uzbek fighters. They are the staunchest followers of Al Qaeda ideology, and they are viciously, rabidly anti-Army."

From the point of view of Generational Dynamics, there are good reasons for the ferocity of the Uzbek fighters, and we're going to explore those reasons here.

Brief generational history of Uzbekistan

The Uzbeks are one of the many tribes that have populated Central Asia for centuries, and the wars they fought were mainly with one another until the Russians conquered the region in the late 1800s.

Life didn't change much under the Tsars, but a violent anti-Russian movement began in World War I and the Bolshevik Revolution of 1917. Although the main fault lines were ethnic (Uzbeks vs Russians), it's worth noting that Uzbeks are mostly Sunni Muslim, while the Russians are Orthodox Christians. This was Uzbekistan's last generational Crisis war.

World War II thus occurred during a generational Awakening era for the Uzbeks. Thus the Uzbeks stayed out of the war, and in fact carried out a "humanitarian mission," according to one Turkish source: "During the World War II the Uzbek people are known to have accomplished a true feat by sheltering in their families the hundreds of thousands of refugees from the fascist occupied territories. Special care, warmth and generosity have seen the war-broken children. In all, during the war Uzbekistan had accepted over 200,000 children from Russia, Ukraine, Baltic States, Poland, and other countries...."

As part of Stalin's Soviet Union, Uzbekistan became a cotton powerhouse starting in the 1920s. In support of the cotton trade, millions of ethnic Russians began pouring into the country, especially into the fertile Fergana Valley (or Ferghana Valley), in the far eastern portion of the country. (Dear Reader, you should make a mental note of the Fergana Valley and the city Andijon, as it is one of the most strategically important regions in Central Asia and the world.)

Uzbekistan <font size=-2>(Source: CIA Fact Book)</font>
Uzbekistan (Source: CIA Fact Book)

The old Uzbek / Russian fault line became critical again, starting in the 1980s with the Russian invasion of Afghanistan. At that time, Uzbek militants began joining the Pashtuns in Afghanistan to fight the Soviets.

1991 was a pivotal year for the Fergana Valley. That was the year that the Soviet Union collapsed, resulting in the formation of Uzbekistan as an independent republic. It also resulted in a great deal of financial hardship for the Russians in the Fergana Valley. The result was the first signs of Islamic fundamentalism in Uzbekistan when some unemployed young Muslims seized the Communist Party headquarters in the city of Namangan in the Fergana Valley.

The leaders of this terrorist action, Tohir Yuldeshev and Juma Namangani, eventually made their way to Afghanistan in 1996, after the Taliban had taken control of the government. They joined Osama bin Laden and al-Qaeda, and formed the Islamic Movement of Uzbekistan (IMU).

The IMU has been playing an important role in terrorist acts in Afghanistan and Pakistan.

This is particularly true since the 2005 massacre at Andijon in the Fergana Valley. Hundreds of civilians were killed by government troops, to put down a violent takeover attempt by Islamist IMU militants.

Sunni ethnic groups in Afghanistan and Pakistan

After the London subway bombings on July 7, 2005, I wrote an analysis of suicide bombers, based on data collected by the Chicago Project on Suicide Terrorism, published in a book by Robert A. Pape.

Pape analyzed the nationality of al-Qaeda suicide attackers, and found that they come from 11 different countries, but that they overwhelmingly come from just two countries: Saudi Arabia and Morocco. From the point of view of Generational Dynamics, this is exactly what's to be expected, since these two countries are the deepest into generational Crisis periods. Saudi Arabia's last crisis war was the Ibn Saud conquest, ending in 1925, and Morocco's was the Rif War, ending in 1927.

I used this information to analyze the war in Iraq, particularly in the nationalities of suicide bombers in Iraq. The terrorist group al-Qaeda in Iraq was having difficulties getting Iraqis to become suicide bombers, so most suicide bombers had to be imported from Saudi Arabia. Once again, with Iraq in a generational Awakening era, and Saudi Arabia deep into a Crisis era, this made perfect sense.

But it's been difficult and confusing to analyze the ethnic groups of the militants in Afghanistan and Pakistan. It's always been clear that they've received ideological guidance from bin Laden and al-Qaeda, and that made sense because al-Qaeda is a Saudi group.

It's also been clear that the Taliban, made up of Islamist militant Pashtuns, have not been driving the terrorist acts. One fascinating sign of this is that Afghan Taliban suicide bombers almost never kill anyone but themselves. This is not surprising, since Afghanistan's last crisis war was the bloody ethnic civil war in the early 1990s, and Afghanistan is in a generational Recovery era.

So it's always been a bit of a puzzle to understand where the genocidal fury among the Taliban comes from, even in Pakistan.

This study of the role of the Uzbeks in Pakistan provides a solution to this puzzle. Uzbekistan is similar to Saudi Arabia in that its last crisis war ended in the 1920s, and so it is also deep into a generational Crisis era.

Last week, on October 28, a massive terrorist attack occurred in Peshawar, the capital of the NorthWest Frontier Province (NWFP) of Pakistan, a largely Pashtun province. Over 90 innocent civilians, including many women and children, were killed by a timed car bomb explosion in a busy market area.

There have been numerous terrorist attacks across the country on a weekly basis, but this one was different. Whereas previous attacks had targeted police or military installations, this one targeted a civilian marketplace.

There was no claim of responsibility for this explosion. In fact, sources in al-Qaeda and the Taliban are denying responsibility and condemning the explosion. Of course the denials are not necessarily true, but assuming they are, who would have perpetrated this explosion?

Government officials are thought to believe that the attacks on civilians are being carried out by Uzbeks -- in the Islamic Movement of Uzbekistan (IMU) and the Islamic Jihad Union (IJU), another Uzbek group, both allied to al-Qaeda.

Once again, this makes perfect sense from the point of view of generational theory. The Uzbeks, deep into a generational Crisis era, would be in a generational mood that's much more accepting of genocidal acts, including the bombing of civilians.

Obviously, more research is required to draw a definite conclusion, but the role of Uzbeks in Afghanistan and Pakistan appears to confirm many of the basic concepts in generational theory and Generational Dynamics, as they apply to Afghanistan and Pakistan.

(Comments: For reader comments, questions and discussion, as well as more frequent updates on this subject, see the Afghanistan, Pakistan and India thread of the Generational Dynamics forum.)

(2-Nov-2009) Permanent Link
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