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


Web Log - September, 2010


30-Sep-10 News -- Iran denies Stuxnet delayed nuclear plant opening

Britons are being trained by al-Qaeda for terrorist attacks

Iran delays nuclear plant opening, but denies Stuxnet cause

If you read Thursday's Tehran Times, then you'll read that the U.S. has launched a cyber war against Iran in response to president Mahmoud Ahmadinejad's recent speech at the U.N. where he blamed 9/11 on Americans. And you'll read that Iran's computer systems have such remarkably high security, they are impenetrable.

That may be nothing but spin. On Wednesday, Iran announced a three-month delay, from October until January, of the startup of the Bushehr nuclear power plant, according to VOA.

No reason was given for the delay. Although Iran denies it, some people suspect that the Stuxnet virus is the cause of the delay.

As we reported recently in "27-Sep-10 News -- Iran's nuclear plant attacked by Stuxnet computer virus," Iran has already admitted that the virus has spread to some of the Windows computers at the Bushehr plant, but that the major systems at the plant had not been damaged.

According to Debka, which has contacts within Israeli intelligence, Iran is hiding a far more desperate situation:

"Tehran this week secretly appealed to a number of computer security experts in West and East Europe with offers of handsome fees for consultations on ways to exorcize the Stuxnet worm spreading havoc through the computer networks and administrative software of its most important industrial complexes and military command centers. debkafile's intelligence and Iranian sources report Iran turned for outside help after local computer experts failed to remove the destructive virus. ...

Looking beyond Iran's predicament, [one expert] wondered whether the people responsible for planting Stuxnet in Iran - and apparently continuing to offload information from its sensitive systems - have the technology for stopping its rampage. "My impression," he said, "is that somebody outside Iran has partial control at least on its spread. Can this body stop malworm in its tracks or kill it? We don't have that information at present, he said. ...

While Tehran has given out several conflicting figures on the systems and networks struck by the malworm - 30,000 to 45,000 industrial units - debkafile's sources cite security experts as putting the figure much higher, in the region of millions. If this is true, then this cyber weapon attack on Iran would be the greatest ever."

In other words, some foreign government, who launched the Stuxnet attack, may be either downloading sensitive information or actually controlling parts of the reactor.

The Debka report appears to be based on fact, augmented by some speculation. But if the figures stated turn out to be true, then this will be a world-changing event, not only because of its success, but because of the thousands of imitators it will spawn.

Additional links

American drone strikes in Pakistan's tribal regions have killed a number of Britons -- Muslims with British passports -- who have been in al-Qaeda training camps, preparing for "Mumbai style" terrorist attacks back in Britain. Telegraph

The acrimony between France and the EU government in Brussels got worse on Wednesday after the European Commission in Brussels sent an ultimatim to France to permit Roma Gypsies to have unfettered freedom of movement around the EU. France was given an October 15 deadline to remedy the problem. Guardian

The suicide rate for the Boomer generation has been increasing significantly. Rutgers University

Women's rights activists in Iran have delivered a petition with 5,000 signatures to the Iranian parliament demanding that the practice of polygamy be banned. This is interesting because Iran is in a generational Awakening era, and women's issues always become more important during such eras. (For example, consider the 'women's lib' movement in America in the 1960s.) Polygamy has an important social purpose when war kills off much of the male population, leaving behind a surplus of unattached women. During Awakening eras, the new generation of young men and women reject their parents' views of sexuality and women. Eurasia Review

(Comments: For reader comments, questions and discussion, see the 30-Sep-10 News -- Iran denies Stuxnet delayed nuclear plant opening thread of the Generational Dynamics forum. Comments may be posted anonymously.) (30-Sep-2010) Permanent Link
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29-Sep-10 News -- The eclipsing of China's Hu Jintao and Wen Jiaboa

Anti-austerity sweep across Europe on Wednesday

The eclipsing of China's Hu Jintao and Wen Jiaboa

My report yesterday described the increasingly belligerent actions of China in the recent confrontation with Japan indicates an astonishing change from a generally conciliatory foreign policy to a much more nationalistic and less compromising foreign population.

From the point of view of Generational Dynamics this indicates a generational change: Decisions are made less often by the conciliatory generation of survivors of the bloody Communist Revolution crisis civil war, and increasingly are made by the younger and much more confrontational younger generations, corresponding to America's Boomers and Generation-X.

China's President Hu Jintao (R) and Premier Wen Jiabao in 2008 <font face=Arial size=-2>(Source: Xinhua)</font>
China's President Hu Jintao (R) and Premier Wen Jiabao in 2008 (Source: Xinhua)

The Chinese Communist Party (CCP) has "scheduled" a generational change, in a way. The 18th CCP Congress will be held in 2012. At that time, the generation of war survivors, led by President Hu Jintao and Premier Wen Jiabao, are expected to step down and give way to the next generation, born after the war.

The incident with Japan gives us a first glimpse of what things will be like after that generational change, and makes us wonder whether the younger generations will even wait until 2012 to take power.

Although nationalism has always been a big part of China's policies, as is true of any country, it's in the past couple of years that we've been seeing the signs of really aggressive Chinese nationalism.

The world financial crisis has been a big motivator, as most Chinese people, especially young people, blame America for the crisis, and for any suffering that it's caused in China. Furthermore, the Chinese people felt enormously humiliated by the worldwide condemnation of their actions in Tibet. (See "Chinese embarrassment and anger grows over Tibet and Olympics.")

A big turning point in public attitudes was the publication in March 2009 of a highly popular, highly nationalistic and highly anti-American book, as described in "New book, 'Unhappy China,' stokes Chinese nationalism and anti-Americanism."

In that report, I quoted one summary of the book as saying: "The authors ... denounce Western influences and specifically deride the United States for being “irresponsible, lazy, and greedy, and engaged in robbery and cheating.” They blame the United States for causing the current global recession. The authors urge the Chinese people to “conduct business with a sword in hand.” They call for the emergence of a group of heroes to “lead our people to successfully control and use more resources, ridding [the world of] of bullies and bringing peace to good people.”"

In March, 2009, those were loudly stated opinions of the authors, and widely adopted by many Chinese in their thinking. What we're seeing now, with the Japan incident, is that those opinions and thoughts are becoming national policy. The "bullies" are countries like Japan and the U.S., and China's retaliation, and threats of further retaliation, for the boat captain jailing were just the first step in ridding the world of bullies and bring peace to good people. The implication is that no one should ever compromise with or give concessions to bullies.

Is China afraid of its own people?

A new article from Foreign Policy magazine examines the change in policy from a different angle. The title of the article is, "Is China afraid of its own people?" This caught my attention because it's a subject that I've written about many times for a totally different reason.

China's history is full of major rebellions -- the White Lotus rebellion around 1800, the Taiping Rebellion of the 1860s, and Mao's Communist Revolution, that began with the Long March in 1934 and climaxed with his victory in 1949, are the most recent examples. From the point of view of Generational Dynamics, China is due for a new one, and the Chinese Communist Party (CCP) leaders are well aware that rebellion is in the air.

According to the article, China conducts its foreign policy in fear of a widespread nationalistic backlash:

"Apart from the party leadership's well-known tradition of undemocratic governance, the main reason behind "black-box diplomacy" is to avoid taking responsibility for failing to stand up to foreign powers such as the United States or Japan. Despite the relative efficacy of the Great Firewall of China, fast-growing numbers of nationalists have frequently been able to use the Internet to express their views, including negative ones about Beijing's foreign and security policies. These increasingly vocal nationalists generally believe that rising China has become a mature power and deserves a place in world affairs to match its burgeoning economic clout.

It is out of fear of a nationalist backlash that China's negotiations with the United States and other countries regarding its accession to the World Trade Organization for instance, were wrapped in secrecy. Beijing apparently worried that should ordinary Chinese learn about the considerable concessions that it had made in areas including tariff reductions, senior cadres including former Premier Zhu Rongji would be labeled "traitors" by WTO opponents. ...

President Hu Jintao and then Japanese Prime Minister Yasuo Fukuda reached a theoretical accord in mid-2008 to settle sovereignty disputes over the East China Sea. The agreement was largely based on the principle of "seeking joint development while shelving sovereignty.

Again, Beijing made no efforts to explain to its citizens the rationale behind the potentially win-win solution. When the East China Sea accord was announced a couple of weeks after Hu left Tokyo, Chinese netizens expressed massive disapproval, even on official websites. Since then, Chinese diplomats have dragged their feet in negotiations on transforming the Hu-Fukuda theoretical agreement into a formal treaty."

It's out of fear of a backlash spinning out of control that the CCP has discouraged anti-Japanese protests in the current incident -- the opposite of what happened after an incident in 2005.

I would restate the last sentence in the quoted paragraph much less optimistically: With the generational changes in China in recent years, the opportunity of signing a formal agreement is lost for good. It will not be possible to resolve sovereignty of the islands except by war.

And it won't just be war between China and Japan.

Last week, US Secretary of State Hillary Clinton met with Japanese Foreign Minister Seiji Maehara in New York and said that the United States would be obligated to intervene militarily against China if China moved to take control of the Senkaku Islands, the islands under dispute.

Hillary Clinton referred to a 1960 treaty between the U.S. and Japan that obliged the U.S. to defend Japan against any attack on a territory under Tokyo's administration, according to AFP. Clinton spokesman Philip Crowley later confirmed what she said: "We do believe that, because the Senkaku islands are under Japanese jurisdiction, that it is covered by the US-Japan security treaty. That said, we also stressed that we don't take a position on the sovereignty of the Senkaku islands."

And so the Senkaku Islands (called the Diaoyu Islands by the Chinese) now have the same status as Taiwan. China claims both as their sovereign territory, and we're obligated to go to war with China to defend either of them.

From the point of view of Generational Dynamics, war with China is inevitable and unavoidable. The eclipsing of conciliators like the people in Hu Jintao's and Wen Jiaboa's generation, and their replacement by aggressively nationalistic people in their children's generation, means that war will approach more quickly.

Additional links

Earlier this month, China's president Hu Jintao met with a White House delegation and said, "China looks positively on the fresh progress made in China-US relations, and we are willing to work together with the United States in promoting the advance of healthy and stable China-US relations." These kinds of conciliatory remarks from Chinese leaders are increasingly in the past. AFP

By contrast, an article in state-run Xinhua says that Japan is "sinisterly harboring two ulterior motives," by adopting an "Ostrich Policy" domestically, and by hyping a "China Threat Theory" in foreign policy. People's Daily

China and Japan have been in a kind of competition to find historical documents to prove that their side has sovereignty over the Senkaku / Diaoyu Islands. The Japanese claim to have found an article in the People's Daily of January 8, 1953, that says that the Senkaku Islands are part of Japan's territory. Japan Times

China is increasingly being accused of being the "new colonizer" of Africa, and is looking for ways to counter that impression. One effort is by archeologists who are searching for a 15th century shipwreck off the coast of Kenya, to show that China beat white explorers in discovering Africa, and to demonstrate a long history of African-Chinese trade. Asia Times

China's foreign policies may be changing, but domestic politics are changing as well. Strikes and labor unrest are still rare, but are more frequent, and are being dealt with sympathetically by the state-controlled press and the security forces which formerly arrested strike leaders. Current incidents of labor unrest have increased because of a wave of suicides among young workers of Foxconn International Holdings Ltd., which manufactures electronic computers and gadgets sold by western companies. South Asia Analysis Group

The first congress of the Workers' Party of [North] Korea in 30 years has, as previously speculated, elevate president Kim Jong-il's third son, Kim Jong-un, to an official status and positioned to succeed his father as president. He was made a general, and was named vice chairman of the party's military commission. CS Monitor

Anti-austerity protests and strikes are sweeping across Europe on Wednesday, with major demonstrations in Greece, Spain, Ireland and Brussels. Associated Press

Pakistan is reeling in the wake of a devastating flood, rampant militancy, bad governance and a crisis between the executive and the judiciary. All it might take to trigger military intervention is one incendiary incident, possibly a clash between the judiciary and the government. Asia Times

Pakistan's military is pushing for a change of government, because they're angered by the governments inept handling of the country's devastating floods, and alarmed by the collapse of the economy. NY Times

While Americans blame the bankers for the economic crisis, and the Chinese blame the Americans, the many Europeans are blaming immigrants, leading to xenophobic responses. Europe's boom years were kept going by cheap migrant labor, but now foreign workers are being accused of petty crimes and of driving wages down. The Age (Australia)

Germany will make its last reparations payment for World War I on Oct. 3, settling its outstanding debt from the 1919 Versailles Treaty. That date is also the 20th anniversary of German reunification. Der Spiegel

The disadvantaged Russian minority in Estonia is panic-buying buckwheat, because of Russia's ban on export of buckwheat, even though Estonia does not really face a shortfall. AFP

I've often joked that young American college students know so little geography that they couldn't find China on a map. Apparently the same kind of thing is true in Israel, where young students don't know what continent Israel is on, and some think that Napoleon Bonaparte is Israel's chief of staff. Palestine Chronicle

A female Toronto judge has struck down all of Canada's prostitution laws, saying that they "force prostitutes to choose between their liberty interest and their right to security of the person as protected under the Canadian Charter of Rights and Freedoms." Government lawyers will have 30 days to appeal, before all prostitution laws are invalidated. Toronto Star

Will the snuggle suit kill off the slanket? Telegraph

(Comments: For reader comments, questions and discussion, see the 29-Sep-10 News -- The eclipsing of China's Hu Jintao and Wen Jiaboa thread of the Generational Dynamics forum. Comments may be posted anonymously.) (29-Sep-2010) Permanent Link
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28-Sep-10 News -- China becomes more belligerent over disputed islands

Kazakhstan willl ban the export of buckwheat and oilseed

Japan demands compensation as China becomes more belligerent

Japan attempted to turn the tables on China on Monday, by demanding that China pay for repairs to two Coast Guard vessels that were damaged during the confrontation with a Chinese fishing boat on September 8, according to Bloomberg.

The Chinese boat had been fishing in waters surrounding uninhabited islands claimed by both China and Japan. During the confrontation, the Chinese boat collided with the Japanese Coast Guard vessels, causing some damage.

Japan arrested the boat captain, and faced a storm of retaliatory threats from China. China cut off shipments of rare earth metals to Japan, and then arrested four Japanese consultants working in China.

Japan released the boat captain within a few days, in order to improve relations between the two countries, and both Japanese and American officials fully expected the whole conflict to simmer down at that point.

But that hasn't happened. Much to everyone's surprise, Japan's acquiescence to Chinese demands has resulted in even greater belligerence by the Chinese. China treated the returning boat captain as a national hero, and demanded an apology and monetary compensation from Japan.

China used to say that disputes over these islands should be resolved by negotiation, but now the Chinese are saying that the disputed islands belong to China unequivocally, and that no compromise of any kind is possible. China is also increasing its use of its own patrol boats in the disputed waters, according to Yomiuri.

From the point of view of Generational Dynamics, it appears that a significant generational change of some kind has occurred.

I've written several times in the past that China's leaders, including president Hu Jintao and premier Wen Jiaboa, grew up during Mao's Communist Revolution crisis war. Like America's Silent Generation, they grew up in the midst of enormous human suffering, and they experienced a kind of generational child abuse that makes them put compromise and conciliation ahead of everything else when they're adults.

This stunning change from a generally conciliatory foreign policy to a much more nationalistic and less compromising foreign policy indicates to me that Hu and Wen and their entire generation are losing influence rapidly, and that people from younger generations are beginning to make all the important decisions.

Of course we won't know for a while, if ever, what's going on in China's government, and how the decision making process is changing. But analysts who expect this level of Chinese nationalism and belligerence to be a one-time event should prepare to be surprised.

Additional links

Kazakhstan will join Russia and other former Soviet republics in banning the export of buckwheat and oilseed. The Russian export is blamed for this year's surging world food prices. Bloomberg

France remains on high alert, as new terrorist attacks are threatened. Washington Post

Israel's Navy is closely watching a new "freedom flotilla" boat with Jewish activists that left Cyprus on Sunday with the goal of breaking the Gaza blockage, and says it will use force to stop it. Haaretz

Saudi Arabia's Ministry of Islamic Affairs is implementing educational programs to Imams and preachers to encourage moderation in sermons. Media Line

Mazlan Othman, a Malaysian astrophysicist, will appointed by the United Nations to head UNOOSA, the UN Office for Outer Space Affairs. In case aliens ever land on earth and say "Take me to your leader," it will be her responsibility to meet and greet them. At first I thought this story was a joke, but apparently it isn't. Australian

(Comments: For reader comments, questions and discussion, see the 28-Sep-10 News -- China becomes more belligerent over disputed islands thread of the Generational Dynamics forum. Comments may be posted anonymously.) (28-Sep-2010) Permanent Link
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27-Sep-10 News -- Iran's nuclear plant attacked by Stuxnet computer virus

Mideast peace talks extended one more week as settlement freeze expires

Stuxnet computer virus attacks Iran's Bushehr nuclear plant

A major computer virus attack has spread to the Windows computers at Iran's Bushehr nuclear power plant, according to the Telegraph. However, the project manager at Bushehr said that the major systems at the plant have not been damaged.

Iran's Bushehr nuclear power plant
Iran's Bushehr nuclear power plant

Stuxnet is not an ordinary, garden variety computer virus, like the ones that erase your hard drives, steal your bank accounts, or send your browsers to porn sites.

In fact, experts aren't completely sure what it is, or what it's trying to do. One thing they're sure of: This virus wasn't concocted by some hacker sitting at a computer in his basement. This virus MUST have been created by some government or government-level group, using a well-financed highly organized team of programmers, with access to plenty of specialized resources.

This conclusion is reached because of the complexity and large numbers of components in the virus, and because it makes use of stolen encryption certificates and secret technical information that would be available only to high-level intelligence agencies.

Thus, it appears that Stuxnet was designed by one nation to target facilities in another nation, as a kind of guided missile. It's not known which two nations are involved, but the unconfirmed speculation is that the virus was designed by Israel to target Iran.

Here's what is known. Stuxnet has spread virally, around the world. And like any ordinary virus, it installs itself in Windows computers as a so-called "rootkit." Once a virus gets installed in that way, it can do pretty much anything it wants to your computer, and is completely invisible to the computer operator. But Stuxnet doesn't harm most computers.

Stuxnet then searches your computer for a certain kind of software -- industrial control software (ICS) that's used in pipelines or factories or chemical or power plants, according to Symantec.

If this kind of ICS software is on your computer, it then looks to see what kind of factory or plant the software is controlling.

Large factories and plants of this kind are generally not controlled directly by Windows computers. Instead, each device in the plant has its own computer that runs a special kind of software program known as a "programmable logic controller" (PLC). So, the Stuxnet virus looks for Windows software that's communicating with a device running a PLC -- specifically, certain kinds of PLCs made by the giant German company Siemens AG.

Finally, once the virus identifies the right kind of factory or plant, it installs yet another virus into the plant's PLC software. From that point on, the attacker can invisibly control the entire plant or factory.

Whether the target is Bushehr is just a guess. Experts have attempted to reverse engineer the virus to determine what it's doing, but these attempts have been only partially successful. All that's known is that the virus is targeting one or more factories or power plants or pipelines or similar installations that satisfy certain unknown parameters.

Once it finds its target (or targets), it's expected to issue a series of commands that will destroy the plant, according to PC World. This might happen, for example, by making the plant overheat, by making crucial machinery suddenly spin rapidly out of control, or by making dangerous chemicals get dispersed.

The larger picture here is that this is a new kind of warfare -- cyber warfare -- that will become increasingly prevalent. The military is now treating cyber as the "fifth domain," after the other domains -- land, sea, air and space. The bad news is that very few people in the U.S. military are trained to deal with this kind of warfare, but the good news is that the same is true of other countries.

So expect to see stories of this type more frequently. Inasmuch as a virus of this type can effectively destroy an entire factory or power plant, the results could be as spectacular as the detonation of a bomb. And there would be no trace of the bomber, or any way to find out who it is. There may yet be such an outcome from the Stuxnet virus. No one knows.

For the individual Windows computer user, there are a few lessons to be learned here. First, make sure that you subscribe to a computer anti-virus service. Second, make sure that you turn on the option that automatically installs all the regular Windows updates from Microsoft. The Stuxnet virus is able to infect computers because of vulnerabilities in Windows software that the automatic updates are now repairing.

Additional links

The Mideast peace talks will be extended for one more week, as the 10-month moratorium on Israeli settlement building in the West Bank ended on Sunday evening at midnight. Some settlement building began as the ban was ending, but not a great deal yet. The next crucial date will be October 4, when the Arab League meets, and decides whether to approve continued peace talks between the Israelis and the Palestinians. Jerusalem Post

A senior minister in Pakistan's government has been forced to resign after accusing the army of being responsible for the deaths of Benazir Bhutto and some other high profile figures. This entire subject area is a super no-no for discussion in Pakistan, since the army leaders are mostly Sunni Muslims and Benazir Bhutto is from one of Pakistan's leading Shia Muslim families. AP

A new "peace flotilla" has set sail from Cyprus with the intention of breaching Israel's sea blockade of Gaza. This time, the passengers are Jewish activists. Earlier this year, a major international incident was triggered when nine Turkish citizens on a similar flotilla boat were killed in a confrontation with Israel's army. That incident led to a continuing rift between former allies Turkey and Israel. BBC

The recent sea incident and subsequent legal battle between China and Japan over Japan's jailing of the captain of a Chinese fishing trawler in disputed waters is straining relations with China's neighbors, who fear similar treatment, as China becomes more nationalistic and belligerent. The result is improved relations between the U.S. and Asian countries. Bloomberg

(Comments: For reader comments, questions and discussion, see the 27-Sep-10 News -- Iran's nuclear plant attacked by Stuxnet computer virus thread of the Generational Dynamics forum. Comments may be posted anonymously.) (27-Sep-2010) Permanent Link
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26-Sep-10 News -- China turns the screws on a humiliated Japan

Mideast peace talks may collapse Sunday over moratorium issue

China turns the screws on a humiliated Japan

China gloated and sought to consolidate and enhance its diplomatic victory over Japan, after Japan's capitulation on Friday, saying they would accede to China's demand that the fishing trawler captain be released and sent back to China.

China is demanding that the Japanese issue a formal apology and pay compensation for the arrest. This demand has infuriated the Japanese, according to the NY Times, and Japan has firmly rejected the demand.

China is holding four Japanese nationals that it seized on Thursday, probably in retaliation for the Japanese arrest of the boat captain. It's not known whether the release of the boat captain will have any effect on the status of the Japanese nationals, according to the Japan Times.

China is taking another form of revenge as well. China has unofficially begun an embargo on shipments of rare earth minerals to Japan, needed in the manufacture of electronic gadgets, according to Reuters.

An analysis by the Chinese government publication Global Times indicates that China's foreign policy is becoming less conciliatory and more nationalistic, and that this incident is an example of that change. The article quotes a Chinese international expert as saying,

"A tougher stance would deter other countries from jeopardizing the nation's maritime interests. China's demand for an apology and compensation is to make it clear that China will never compromise on sovereignty. "China has sufficient military capabilities to secure its maritime territory, but resorting to war is absolutely not the optimal solution to maritime territorial disputes with Japan or Southeast Asian nations."

This increasingly belligerent Chinese attitude is occurring as the survivors of Mao's Communist Revolution all die off, and are replaced by young officers who feel completely unrestrained, and correspond to America's Generation-X. I included the following in yesterday's posting, but it's worth repeating here:

"China’s military spending is growing so fast that it has overtaken strategy," says a China expert from Singapore. "The young officers are taking control of strategy and it is like young officers in Japan in the 1930s. They are thinking what they can do, not what they should do. This is very dangerous. They are on a collision course with a US-dominated system." Presumably, the 'young officers' correspond to America's Generation-X. Telegraph

Additional links

Israel's moratorium on building West Bank settlements is due to expire on Sunday, and Palestinian President Mahmoud Abbas has taken a hard line, saying that negotiations will end unless the moratorium is extended. Prime Minister Benjamin Netanyahu has also taken a hard line, saying that the moratorium will not be extended. The Americans are frantically running around, trying to get everyone to compromise on some kind of partial moratorium, so far without success. Haaretz

India's prime minister Manmoham Singh has announced an eight-point initiative to quell the violence in Indian-held Kashmir, which has a majority Muslim population. This will "begin the process of sustained dialogue" with the Kashmiris. Prisoners will be freed, and schools will be reopened. The Hindu

This week, the North Korean Workers' party will hold its first conference since 1980. North Korean élites are jostling for power, and analysts outside of Korea are trying to figure out what's going on. It's possible that the increasingly frail president Kim Jong-il will announce that his successor will be his youngest son, Kim Jong-un. This transition of power into the hands of a young boy will certainly cause a powerful struggle with uncertain outcome. Guardian

(Comments: For reader comments, questions and discussion, see the 26-Sep-10 News -- China turns the screws on a humiliated Japan thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-Sep-2010) Permanent Link
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25-Sep-10 News -- Japan kowtows to China over trawler captain

Sarkozy declares victory over striking labor unions

Japan kowtows to China over arrest of fishing trawler captain

Denying that he's been pressured by the government in Tokyo, a Japanese prosecutor announced on Friday the decsion to release a Chinese fishing boat captain who had been held for two weeks

He said the decision came after "careful consideration of future Japan-China relations" and the repercussions caused by the incident, according to the Japan Times.

However, it also came a day after the Chinese arrested four Japanese contractors in China. The Japanese have had no contact with the abducted contractors, according to Yomiuri (Japan).

A survey by the Mainichi Times (Japan) indicates, not surprisingly, that many foreign media outlets are saying that Japan is bowing to China's pressure.

According to the official Chinese news service Xinhua, Japan has not yet done enough to atone for its action. The demand from China's Foreign Ministry is that the Japanese must apologize and pay compensation for the incident. "Such an act seriously infringed upon China's territorial sovereignty and violated the human rights of Chinese citizens. Japan's detention, investigation or any form of judiciary measures for the Chinese trawler and fishermen are unlawful and invalid."

The Japanese had arrested the fishing trawler captain because his boat was fishing in waters surrounding the Senkaka Islands (called the Diaoyu Islands by the Chinese), and those waters are claimed by both countries. The statement from China's Foreign Ministry claims that the Diaoyu Islands and surrounding islets have been "China's inherent territory since the ancient time and China possesses undisputable sovereignty over the islands." It adds, "The stance of the Chinese side has not and will not change."

A new statement by Japan's Foreign Ministry indicates that a new confrontation may be close by. The Wall Street Journal (Access) reports that Japan's new Foreign Minister Seiji Maehara has warned China against starting drilling in a gas field near the disputed islands, saying that Japan would take countermeasures if evidence of Chinese gas extraction work is confirmed.

Aerial photographs taken by Japan's Self-Defense Forces revealed that the Chinese had transferred some "equipment" to the gas field, according to the article.

In my opinion, this whole situation is a really big deal.

Sarkozy declares victory over striking labor unions

A bill to raise France's legal retirement age from 60 to 62 triggered nationwide strikes by France's public service unions on Thursday.

President Nicolas Sarkozy claimed victory after government estimates indicated the size of the protest was smaller than a similar protest staged on Septeber 7, according to the Telegraph. However, the unions disputed this finding, and claimed that the protests were in fact larger.

The next two days of strikes and demonstrations will be October 2 and October 12. According to Bloomberg, the unions chose the Oct 2 date because it's a Saturday, and will therefore permit more people to participate in the demonstrations and protests.

This whole situation has become something of an international joke because French labor unions are demanding that the retirement age remain at 60, while other European countries have increased their retirement ages to 65 or even 67.

Additional links

"China’s military spending is growing so fast that it has overtaken strategy," says a China expert from Singapore. "The young officers are taking control of strategy and it is like young officers in Japan in the 1930s. They are thinking what they can do, not what they should do. This is very dangerous. They are on a collision course with a US-dominated system." Presumably, the 'young officers' correspond to America's Generation-X. Telegraph

Friction is rising between China and its Asian neighbors, with the result that the United States is beginning to look better and better to the neighbors. NY Times.

Three people -- two Russian cosmonauts and one American astronaut -- were stuck in space on Friday, when a Russian space craft that was supposed to bring them all back to earth failed to undock from the International Space Station. It's believed that the problem is in a sensor, and they will try again over the weekend. Ria Novosti

Secretary of State Hillary Clinton is meeting with Palestinian and Israeli leaders to try to prevent total collapse of the Mideast peace talks when the settlement freeze expires on Sunday. Reuters

Britain is facing a new terrorism threat: A revival of Irish-related terrorism by dissident republican groups trying to copy the Provisional IRA (Irish Republican Army). However, this threat is not as great as the threat from international terrorism. BBC

The United States and South Korea will hold a new round of joint naval exercises, to last for five days. The exercises will emphasize anti-submarine warfare. VOA

(Comments: For reader comments, questions and discussion, see the 25-Sep-10 News -- Japan kowtows to China over trawler captain thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-Sep-2010) Permanent Link
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24-Sep-10 News -- UN meets to discuss surging food prices

Wheat prices have risen by 60% in the last 12 months.

United Nations schedules emergency meeting over surging food prices

Wheat prices have risen by 60% in the last 12 months. In addition to the direct impact on food prices, it also impacts the cost of animal feed, resulting in international meat prices at a 20 year high, according to the Telegraph.

Food prices have spiked in the last couple of months because of the drought and wildfires in the Russian Federation, which led to a Russian decision to end all wheat exports until the end of 2011.

According to the U.N. Food and Agriculture Organization (FAO), world food prices are still well below those reached during the major food crisis of 2008.

But food prices are still rising, and because of widespread anxiety about the stability of food markets, the FAO has called an "extraordinary meeting" in Rome on Friday to discuss the situation.

The FAO announcement contains the following interesting statement that I hadn't seen before:

"However, with an increasing proportion of world grain supplies originating from the Black Sea region, an area known for large variations in yields, unexpected production shortfalls are likely to emerge more as a common feature rather than an exception in the years to come."

Ordinarily, yield variations in one region wouldn't matter much to world prices, but as time goes on and population grows faster than the food supply, marginal issues like this one become increasingly important.

A major trend developed after the world food crisis in 2008. Countries around the world became concerned with food security, and began competing with one another to purchase available farmland, usually in Africa and South America.

Sovereign wealth funds from the Mid-East, as well as state-entities from China, the Pacific Rim, and even India are trying to lock up chunks of the world's future food supply according to Ambrose Evans-Pritchard in the Telegraph. This world wide "land grab" has the potential for conflicts in the future.

(Comments: For reader comments, questions and discussion, see the 24-Sep-10 News -- UN meets to discuss surging food prices thread of the Generational Dynamics forum. Comments may be posted anonymously.) (24-Sep-2010) Permanent Link
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23-Sep-10 News -- France raises alert level for al-Qaeda terrorism

China makes stronger retaliation threats to Japan for arrest of fishing captain

France raises alert level for al-Qaeda suicide attacks

Security measures in France have been stepped up since last week, when evidence came to light that al-Qaeda linked militants are planning an attack.

Frederic Pechenard, director general of police and domestic intelligence services, is quoted by Agence France Presse (AFP) as saying, "I'm not here to frighten people, but we have serious evidence coming from reliable intelligence sources telling us that there is a risk of a major attack."

He indicated that the most likely threats were an assassination bid on an important figure or a bombing of a subway train or department store.

Although security measures have been stepped up, the official alert level remains at "reinforced red." If it were to be increased to the top level, "scarlet," it would mean closing airports and railway stations.

Nigerian kidnappings

The terror threat may be connected to the "fully mobilizing" to free French hostages in Nigeria kidnapped by the north African branch of al-Qaeda, known as Al-Qaeda in the Islamic Maghreb (AQIM).

AQIM has taken credit for kinapping seven oil industry workers in Niger, five of whom are French, according to Bloomberg.

According to Debka, Algeria's intelligence agency has reported to France that AQIM has sent to France and Europe a number of Algerian jihadist women trained to carry out suicide bombings on trains and railway stations.

I've written about AQIM in the past in conjunction with regional terrorist threats carried out in Algeria and Morocco. (See my 2007 article, "Algeria bombings are from new generation of young al-Qaeda terrorists.")

But now AQIM is extending its reach into Europe for two reasons, according to the Debka article:

Because of the conflict with France and the influx of jihadists, AQIM is preparing terrorist attacks targeting France and the rest of western Europe.

Homeland Security: Al-Qaeda terror threat increasing

On the same day that France raised its terror alert, US Director of Homeland Security Janet Napolitano testified before Congress on the increased threat of terrorism.

According to her testimony:

"Today I would like to highlight the main ways in which the terrorist threat to our country is changing - ways that increasingly challenge law enforcement and the intelligence community. I would also like to highlight some specific - though not exhaustive - ways that the Department of Homeland Security is moving to address this evolving threat.

The terrorist threat changes quickly, and we have observed important changes in the threat even since this Committee convened a similar hearing last year. The threat is evolving in several ways that make it more difficult for law enforcement or the intelligence community to detect and disrupt plots.

One overarching theme of this evolution is the diversification of the terrorist threat on many levels. These include the sources of the threat, the methods that terrorists use, and the targets that they seek to attack."

Among the affiliates of al-Qaeda, she mentioned al-Shabaab in Somalia, Tehrik-e Taliban (TTP), headquartered in Pakistan, and al Qaeda in the Arabian Peninsula (AQAP), headquartered in Yemen.

She also indicated increasing danger from "homegrown terrorists" -- terrorist operators who are US citizens, but have been trained in terror tactics by al-Qaeda.

Additional links

China is making stronger threats of retaliation against the Japanese for the arrest of a boat captain fishing in waters around islands claimed by Japan. Chinese Premier Wen Jiabao said: "The Japanese side has paid no heed to China's numerous serious representations, and so China cannot but take necessary countermeasures. If Japan acts wilfully despite advice to the contrary, China will take further actions, and Japan must accept full responsibility for all the severe consequences. Wen called the islands "China's sacred territory." Reuters

In the past four months, the computer virus Stuxnet has infected at least 45,000 industrial control computer systems around the world. These are the computer systems that control things like factories, refineries, and power plants, and there are concerns that the objective of the virus is to control or destroy some particular target. Experts around the world have been trying to reverse engineer the highly encrypted code to determine its intended target. One speculation is that it's already completely its mission by forcing the shutdown of Iran's Bushehr nuclear power plant in August. CS Monitor

Hamas has arrested an unknown number of Palestinians in the Gaza, giving rise to rumors that they'll all be executed for the crime of collaborating with Israel. Media Line (Paragraph corrected, 23-Sep)

How do you amend a country's Constitution? Nicaragua's President Daniel Ortega took advantage of last week's public holiday, when almost the entire country was on vacation, to reprint the constitution, and in doing to made some modifications that he favored. CS Monitor

About 400 people -- researchers, exterminators, vendors, and government housing bureaucrats -- have gathered in Rosemont, Ill., for the first of its kind Bed Bug Summit. Chicago Tribune

(Comments: For reader comments, questions and discussion, see the 23-Sep-10 News -- France raises alert level for al-Qaeda terrorism thread of the Generational Dynamics forum. Comments may be posted anonymously.) (23-Sep-2010) Permanent Link
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22-Sep-10 News -- More on xenophobia in Europe

All sides prepare for collapse of Mideast peace talks

More on xenophobia in Europe

Yesterday, I posted a news story about the recent Parliamentary elections in Sweden. (See "21-Sep-10 News -- Sweden shocked at anti-immigrant victories.")

In that article, I referred to the 2004 murder by a Muslim extremist of Theo van Gogh in the Netherlands, and the "widespread violence against Muslims" including the burning of Dutch Mosques and Churches after the murder.

A web site reader from Eindhoven, the city where van Gogh was murdered, wrote to me, questioning whether I had accurately reported the situation.

His comment piqued my interest, and I wondered whether I had properly sourced my comments when I reported them in 2004.

It's my practice, whenever I write something more controversial than usual, to collect as much information as I can, including contemporary news stories where possible, and fortunately I did so in this case.

So I've retrieved 21 of these news stories from my archives, and I've placed them onto a separate web page: "- 21 news stories after the murder of Theo van Gogh."

Going back and rereading these stories is an amazing experience, because the enormous shock that was felt in the immediate aftermath of Theo van Gogh's murder is barely remembered today, only six years later.

Thus, one article by Holland's Expatica begins, "Amid growing public tension in the aftermath of the murder of Dutch filmmaker Theo van Gogh, the Netherlands risks falling into a situation similar to the one that led to the Crystal Night in 1938 and the hardening of Jewish persecution by the Nazis, a Danish newspaper has warned."

This illustrates an important principle about Generational Dynamics: When you want to evaluate a historical event, then you MUST try to obtain descriptions of it from as many points of view as possible AT THE TIME that the event occurred, and then compare those accounts to later accounts of the same event. That comparison can yield a great deal of information about how perspectives change over time, and how different generations view the same event.

This event occurred after 9/11, but it was before the subway bombings in London and Madrid, and other European terrorist acts by al-Qaeda linked Islamist terror groups. Since 2004, the general European public has become inured to terrorist violence, and would no longer react so dramatically the murder of a single person, as horrible as that murder was.

The second thing that's happened is that Europeans have gradually turned away from embracing immigrants, especially Muslim immigrants, and are gradually adopting the kinds of attitudes that gradually developed in the 1930s.

This is a worldwide phenomenon. As massive numbers of people in the West become increasingly xenophogic about Muslims, Muslims around the world are becoming increasingly anti-American and anti-West.

A news story that's going on right now is a growing confrontation between Japan and China over Japan's arrest of a fishing trawler captain found in disputed waters. This confrontation could spiral out of control, though it's much more likely to fizzle within a few days. But either way, it represents the growth of another example of mutual xenophobia.

So, whether it's anti-Americanism or Islamophobia or a form of xenophobia that doesn't have a special name, xenophobia in increasing in regions around the world, and worsening as more and more World War II survivors die off.

I've been writing about this for years, because it's predicted by Generational Dynamics as occurring in every generational crisis era, throughout history. Typically, xenophobia continues to worsen, exacerbated by population growth, shortages or resources like food and water, and increased nationalism, leading to wars of extermination. In today's world, those wars of extermination will spiral into the Clash of Civilizations world war. It's happening right before our eyes, and all we can do is argue.

All sides prepare for collapse of Mideast peace talks

Israel is refusing to extend the moratorium on building West Bank settlements that's set to expire on Sunday. The Israeli government is under enormous international pressure to extend it, but there's even more pressure NOT to extend it, coming from political groups within Israel. So now it appears that it won't be extended.

Will the peace talks end on Sunday? That's the way it looks right now, but who knows? Maybe someone on the Israeli side or the Palestinian side will back down. Right now, though, it doesn't look that way.

The Israeli Defense Forces (IDF) chief is warning that violence could flare if the talks break down, according to Haaretz.

Israeli prime minister Benjamin Netanyahu is preparing "contingency plans" for dealing with the hostile international political situation if the talks break down, according to the Jerusalem Post.

Hamas, which has opposed the peace talks from the beginning, is warning of renewed violence in the West Bank. However, Hamas is always warning about that, so I suppose the collapse of the Mideast peace talks won't affect that one way or the other.

Nothing has changed since 2003, when I wrote "Mideast Roadmap - Will it bring peace?" I said that peace was impossible, because Arabs and Jews will be re-fighting the genocidal war they fought in 1948, after the partitioning of Palestine and the creation of the state of Israel.

Soooooo, let's see what happens on Sunday. Maybe the Obama administration can pull a rabbit out of the hat, and get the peace talks to continue.

Additional links

When a person over 50 loses his job, the chances are that he'll never find another job again. NY Times

I thought this was a joke when a web site reader first sent it to me, but I guess it's not: The UK's tax collection agency is proposing that all paychecks should go to the government first, and the government would then deduct taxes and fees and pay the worker. CNBC

As the number of wealthy people in China rises, the bodyguard industry is growing. Washington Post

Outspoken atheist Christopher Hitchens, who is very ill from esophageal cancer, will not be participating on Monday in "Everybody Pray for Hitchens Day" in Alabama. Associated Press

Now you can buy "divorce insurance," that pays off when you get divorced. Time. Warning to men: Don't bother. You won't get any of the insurance money. Every penny will go to your ex-wife and the lawyers.

Marijuana growers in California are joining the Teamsters labor union. Sacramento Bee

(Comments: For reader comments, questions and discussion, see the 22-Sep-10 News -- More on xenophobia in Europe thread of the Generational Dynamics forum. Comments may be posted anonymously.) (22-Sep-2010) Permanent Link
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21-Sep-10 News -- Sweden shocked at anti-immigrant victories

China threatens Japan over detention of fishing boat captain

Swedes shocked as 'far right' party springs from nothing in election

Some 6,000 people gathered in central Stockholm square on Monday evening at 6 pm to protest electoral success of the far-right political party, Swedish democrats, shouting "No to racism!" according to Swedish Wire.

"It has been a big shock for me that they got so many votes," said one person. Another was quoted as saying, "It is very important to show that the big majority of the Swedish population is against the right-wing extremists like the Sweden Democrats." The headlines in Monday's Stockholm's newspapers read, "Chaos!"

Sweden's Parliament seat distribution prior to Sunday's election <font face=Arial size=-2>(Source: Reuters)</font>
Sweden's Parliament seat distribution prior to Sunday's election (Source: Reuters)

Sunday's parliamentary election has caused two major problems for Swedes.

The first is the election of politicians that many believe are racist, according to Reuters.

I've read and heard some of the positions of the Swedish Democrats in various newspapers and on the BBC. Swedish Democratic party members claim that immigrants are coming to Sweden only to take advantage of the country's very generous "socialist" social programs. Under the slogan, "Keep Sweden Swedish," they wish to slow down the rate of immigration by 90%. They also demand assimilation -- expecting immigrants to adopt the Swedish language and culture -- and reject integration -- which allows enclaves of immigrants to maintain their own languages and culture.

They emphasize three issues: The economy -- "immigrants are costing the country too much money"; social factors -- "immigrants are importing crime, as immigrants are grossly overrepresentated in crime statistics"; and cultural factors - "Swedes don't feel at home in their own cities."

Swedes in particular, and Europeans in general, are being roiled by bitter issues involving immigration and xenophobia.

As I've reported in the last few days, we've seen bitter outbursts from politicians in Brussels, with an EU commissioner accusing France of using Nazi tactics in their treatment of the Roma Gypsies. There have been similar advances by anti-immigration parties in Austria, Belgium, the Netherlands, Denmark, Britain, and elsewhere.

Much of the anti-immigrant sentiment is targeted at Muslims, who have immigrated from Turkey, Iraq, Morocco, Algeria and other Muslim countries.

If any event can be said to have triggered this anti-immigrant wave, a good candidate would be the murder, on November 2, 2004, by a Muslim extremist of filmmaker Theo van Gogh, the great-grandnephew of famous Dutch artist Vincent van Gogh, triggering widespread violence against Muslims. (See "Dutch Mosques and Churches burning after terrorist murder of author.")

And then, just two weeks later, the Dutch people were given the opportunity to vote on the greatest Dutchman of all time. They rejected Rembrandt van Rijn, Vincent van Gogh, Erasmus, and William of Orange, and selected instead Pim Fortuyn, a harshly anti-immigrant politician who had been murdered two years earlier by an animal rights activist. (See "Dutch vote murdered anti-Islamic polemicist as 'Greatest Dutchman of all time'.")

Since that time, Europe has been trending increasingly towards xenophobia in general and Islamophobia in particular, a phenomenon we've also witnessed in America, as I've previously discussed.

I said that Sunday's election presented Sweden with two problems.

The second problem is that Sweden now is facing political chaos because it has a hung Parliament. The diagram above shows the distribution of seats prior to Sunday's election. There were seven major parties, split into two coalitions.

The governing coalition was "The Alliance," a center-right coalition consisting of the Moderate, Liberty, Centre and Christian Democrat parties.

The opposition was the "Red-Green coalition," a center-left group of Social Democrats, Left Party and Green Party.

After Sunday's election, neither of the above coalitions has a majority of seats. The Swedish Democrats, who previously had held zero seats, now hold 20 seats. The Alliance now has 172 seats, and the Red-Green coalition now has 157 seats.

The Alliance now has to persuade one of the Red-Green parties to join the Alliance, according to Reuters. Of course, one coalition or the other could ask the Swedish Democrats to work with them, giving that coalition a majority, but politicians in both coalitions are holding their noses at such a prospect right now.

Hence the newspaper headlines: "Chaos!"

From the point of view of Generational Dynamics, we're seeing in action trends that I've been writing about for years, since they always occur during generational crisis eras.

One trend is an increase in xenophobia, which has surged around the world in the last ten years. The reason is the disappearance of the survivors of WW II. The Silent Generation that grew up during the war suffered a kind of generational child abuse that made them seek compromise and conciliation. As long as they were around, the kind of racial attitudes exemplified by the Nazis could never happen again. Now that younger generations are replacing the Silents, racial and ethnic xenophobia is sharply increasing.

The other trend is political chaos, leading to a major political realignment in a way that can't be predicted. In America, we can see that happening through the instrument of the Tea Party. In Europe, we're seeing the rise of multiple anti-immigrant parties that cause increasing conflict, and even hatred.

The old joke is that history never repeats itself, but it rhymes. We're not seeing the rise of a new Hitler or a new Holocaust in Europe today, but we are seeing the gradual rise of something that's very different, but not really different at all.

Additional links

China's Foreign Ministry has issued a statement expressing "strong indignation and protest ... over the decision of continuing [Japan's] illegal detention of the Chinese [fishing boat] captain. [If] the Japanese side does not release the Chinese captain immediately and unconditionally, China will take strong counter-measures. The Japanese side shall be held responsible for all the consequence. Wang also stressed that the incident caused by Japan has caused serious damage to China-Japan relations. What will happen in the future totally depends on what choices Japan makes." Foreign Ministry of the People's Republic of China

North Korea had been scheduled to hold the first party congress in 30 years in early September. The meeting never took place, giving rise to speculation about infighting and government crisis. But now the official announcement is that the Workers Party of Korea will meet on September 28. One possible outcome is the the increasingly frail president Kim Jong-il will announce that his successor will be his youngest son, Kim Jong-un. This transition of power into the hands of a young boy will certainly cause a powerful struggle with uncertain outcome. Bloomberg

There have been rumors that the European Central Bank will be forced to bail out Ireland, in the same way that the ECB was forced to bail out Greece. Credit default swap prices and bond yields have been reaching historic highs, as they did just before the Greece bailout, and speculators are licking their chops. A crisis could come as early as today (Tuesday), when Ireland tries to sell $1.96 billion in government bonds. Bloomberg

Politicians are meeting in New York this week to congratulate themselves on the cleverness of the "Millennium Development Goals," even though they've been largely a failure. The plan, which was launched in the year 2000, was to Eradicate extreme poverty and hunger; Achieve universal primary education; Promote gender equality, and empower women; Reduce child mortality; Improve maternal care; Combat serious disaeses; Onsure environmental sustainability; and Create a global partnership for development. (These sound like President Obama's 2008 campaign promises.) However, the despite the mutual congratulations of the politicians, they've accomplished little. Spiegel

United States diplomats are telling Europeans that they're concerned that the Mideast peace talks are about to collapse, because both sides are holding fast to their positions. Thus, the Israelis is refusing to extend the settlement building moratorium that expires on September 26, and the Palestinians will not agree to recognize Israel as a Jewish state. Long-time readers of this web site are already well aware that a peace agreement is impossible, since Generational Dynamics predicts that Jews and Arabs will be re-fighting the genocidal war that followed the partitioning of Palestine and the creation of the state of Israel in 1948. Haaretz

If someone wants to steal your identity, the easiest way is to check your mailbox for tax notices. Even though they've been ordered not to do so, the IRS puts your full social security number, along with your name and address, on all tax notices mailed to you. An identity thief obtaining just one of these notices will be able to steal your identity. Fierce Government IT

(Comments: For reader comments, questions and discussion, see the 21-Sep-10 News -- Sweden shocked at anti-immigrant victories thread of the Generational Dynamics forum. Comments may be posted anonymously.) (21-Sep-2010) Permanent Link
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20-Sep-10 News -- Unrest grows in Bahrain over Shia 'terror network' arrests

Mideast peace talks may be near collapse

Unrest grows in Bahrain over Shia 'terror network' arrests

On Tuesday, a bomb blast damaged four police cars just outside Manama, the capital of Bahrain. There were no casualties, according to AFP, but the attack is thought to be part of an Iran-supported series of planned terrorist attacks, targeting Bahrain's "vital sites."

Persian Gulf region
Persian Gulf region

Bahrain is just a group of 33 small islands, a tiny dot on the above map, but with enormous strategic significance, for several reasons.

One reason is that the U.S. Navy's Fifth Fleet is headquartered in Manama with responsibility for the area stretching from the Red Sea to the Indian Ocean, including the Arabian Sea and the entire Persian Gulf.

A second reason is that Bahrain's population is roughly 2/3 Shia Muslim, and Iran has historically claimed that Bahrain is part of Iran. As recently as February, 2009, an adviser to Iran's Supreme Leader Ayatollah Seyyed Ali Khamenei stated officially that Iran had sovereignty over Bahrain, according to Al-Arabiya, although Iran had to back down in the face of vigorous protests by other Gulf Arab states.

But Iran backing down doesn't change the fact that Bahrain's Shia majority population are becoming increasingly angry at the government, which is controlled by the Sunni minority. Shia activists are accusing the government of discrimination in employment, housing and public services.

Starting in mid-August, the government began arresting Shia activists. It's believed that as many as 250 people are in jail, according to Al-Jazeera, including 23 leaders of the Shia activist movement. They've been accused of belonging to a "terror network" seeking the government's overthrow -- a charge that carries the death penalty, according to the Washington Times.

However, parliamentary elections are scheduled for October 23, and activists are claiming that the arrests are part of a campaign to guarantee reelection for the Sunni minority. Human rights groups are accusing the government of torture, and warning that the arrests could set off sectarian violence of the kind that occurred between Sunnis and Shias in the 1990s.

The upcoming elections are also a reason why Iran would be targeting Bahran for subversive operations, according to Debka. Any weakening of the government in Bahrain would undermine American influence in the Persian Gulf, and send shock waves around the region, especially in Saudi Arabia and Kuwait which also have large Shia populations.

For millennia, Bahrain has alternated between Arab rulers and Persian rulers. It became a British protectorate in the 1830s, and remained so until independence in August 1971. The King allowed parliamentary elections in 2002, for the first time in decades.

However, in a controversial move, in June 2002 the King issued a decree allowing citizens of other Gulf nations to take up dual Bahraini nationality. According to the U.S. State Dept., opposition political groups have charged that the purpose was to increase the Sunni population. Today, 10% of the population are naturalized citizens, further angering the Shia majority, who see their jobs taken away by Sunni immigrants.

From the point of view of Generational Dynamics, Bahrain is in the early stages of a growing fault line conflict between the birth-defined market-dominant Sunni minority versus the discriminated Shia majority. If Bahrain were an isolated country, then it might take years for violence to occur.

But Bahrain is not isolated. It's one of Iran's targets, and it's in the heart of one of the most volatile regions on earth, guardian of the Persian Gulf, through which most of the world's oil passes in tankers. Thus, we can expect Bahrain to become a focus of the world's attention much sooner than that.

Additional links

World leaders are meeting on Monday in NYC to discuss the "Millennium Development Goals." The objective of the program in 2000 was to eliminate world poverty by 2015, but it's pretty much failed, especially as world food prices have surged in the last decade. Expect to see a bunch of politicians making speeches that amount to nothing. Independent

It's possible that the Mideast peace talks are near collapse. The Israelis are insisting that the settlement freeze will not be extended when it expires on September 26, just a week from now, and the Palestinians have said the talks will cease if the freeze is not extended. The Palestinians are also saying that they will not recognize Israel as a Jewish state, which is one of Israel's conditions. AFP

Thousands of anti-government "red-shirt" protesters marched through Bangkok, Thailand, on Sunday, defying a government state of emergency that's been in place for four months. The protesters demanded the release of activists who were arrested across the country, and they released thousands of red ballons. BBC

(Comments: For reader comments, questions and discussion, see the 20-Sep-10 News -- Unrest grows in Bahrain over Shia 'terror network' arrests thread of the Generational Dynamics forum. Comments may be posted anonymously.) (20-Sep-2010) Permanent Link
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19-Sep-10 News -- State pensions systems are in a 'death spiral'

Snakebot: Robot snake climbs a real tree

State pensions systems are in a 'death spiral'

A study by the Chicago Tribune finds that local officials and administrators in cities and towns around the state of Illinois have been colluding with one another, "looking the other way," in order to help each other obtain enormously bloated pensions.

The scam that's used in Illinois and in other states is as follows: In most states, your annual pension amount is determined by your salary in the your last working year. So you save up your vacation, holidays and sick days, and get cash for them when you retire. That money then boosts your final income, and your retirement.

If that were all of it, it might not be so bad. But city officials collude with one another to award bonuses, car allowances and other perks in the last year of work. The result of this collusion is that pension amounts are up to 45% higher than if they had followed the rules.

That's one half of the problem.

The other half of the problem is that officials have essentially been lying about the amount of money available in pension funds. The way that this trick works is to make fastastic assumptions on the returns on the pension funds' investments, according to Wall Street Journal (Access).

The National Association of State Retirement Administrators surveyed 15 public pension systems, and found that they're assuming 8% return on investments, which is enormously unrealistic at a time when interest rates are close to zero.

For example, Calpers, California's giant state pension fund, has been assuming 7.75% annual return on investments, according to the NY Times, even though its returns in the last decade have bee in in the 3-4% range.

As a result, many state pension funds are in a "death spiral," according to an analysis by Bloomberg, with Illinois leading the way.

You have state officials, led by state labor unions, colluding with one another to provide huge pensions, and lying about how much money is available, presumably under the assumption that the Democratic administration in Washingotn will bail them out.

I keep getting into discussions about today's economy with people who scoff at me and tell me that the worst if over. It is totally beyond belief to me that anyone could seriously believe that. I like to point out that the financial crisis that we've already been though was not caused by one or two bad apples -- it was caused by fraud perpetrated by people in almost every major financial institution in the world -- people who were willing to commit fraud and screw as many investors as possible for their own gain.

And exactly those same people are still running those same financial institutions.

And now we see that people in state labor union, supported by people in Washington, have exactly the same attitude -- screw as many people as possible for their own gain. That's certainly was the intended purpose of the "ObamaCare" bill, which is an act of economic insanity.

People in the mainstream media, as well as Democratic politicians, keep making contemptuous remarks about the Tea Party, calling them things like "lunatics" and "wingnuts" (though at least they've stopped using the "teabagger" vulgarity). These people have no idea what's going on.

A couple of weeks ago, I was watching Geraldo Rivera, a liberal commentator on Fox News. He expressed total confusion and puzzlement that Tea Partiers were objecting to raising taxes on "wealthy people" with incomes above $250,000, when the average Tea Partier income is only $50,000. "Why would someone who makes $50,000 object to taxing someone who makes $250,000," he openly and genuinely wondered?

It's because Tea Partiers believe at a visceral level that the people in Washington are all crooks. In most cases they haven't seen this web site's description of how greedy, nihilistic, destructive, self-destructive Generation-Xers have taken charged, supported by greedy, incompetent Boomer managers, have thrown away all moral values except "screw everyone and make money."

Few Tea Partiers have any understanding of those details of what's going on, but they do understand the bottom line at a visceral level, and they're willing to throw out an Republican or Democratic incumbent, in the hope that someone new at least won't be a total crook.

What Rivera doesn't seem to grasp is that Tea Partiers would rather leave all that money in the hands of "wealthy people," who at least are relatively likely to comply with the law, rather than give that same money to the people in Washington who will simply piss it away on their cronies.

I've been saying for many years that the the country is facing a major political realignment that neither Democrats nor Republicans will like, and you're seeing it in action. Sleazy actions by administrators of state and local pension funds is just one more in a long list of reasons.

Snakebot: Robot snake climbs a real tree

One more step in the development of intelligent robots is Snakebot, a robot developed by the Biorobotics Lab at Carnegie Mellon University.

It slinks along like a snake, and then climbs a tree, always looking around with its giant eye (a camera).

Here's the video. It's both eerie and hilarious.

These snakes are not about to take over the world, but it's fascinating to see new developments of this type.

(Comments: For reader comments, questions and discussion, see the 19-Sep-10 News -- State pensions systems are in a 'death spiral' thread of the Generational Dynamics forum. Comments may be posted anonymously.) (19-Sep-2010) Permanent Link
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18-Sep-10 News -- Near-zero CPI hints at deflation

Housing foreclosures continue to hit new record levels

Consumer Price Index remains near zero, hinting at deflation

The consumer price index (CPI) rose 0.3% in August, mainly because of a big jump in gasoline prices.

However, the "Core CPI" index, which is the CPI, but excluding volatile food and energy costs, was flat (0% rise), according to Reuters.

Pundits are concerned about deflation, according to the article, which quotes an economist as saying, "It keeps alive the possibility that the (inflation) trend could turn negative over the next year or two."

As I've been saying for several years, we're in a deflationary spiral. Deflation has been held off by means of low interest rates, quantitative easing, and massive bailouts and stimulus programs. If we were in any other generational era, it would mean massive inflation, but in this generational crisis era, deflationary trends cannot be overcome.

The economy has been continuing its decline since May, as I first wrote about in "7-Jun-10 News -- Globally, May was a month of ominous events."

Manufacturing in the Philadelphia region unexpected contracted in September, for a second month, as orders and sales declined, according to Bloomberg.

U.S. home foreclosures reached a fresh record for the third time in five months, according to Bloomberg. The foreclosure crisis is far from over, according to the article. According to one economist, about 2 million homes will be foreclosed through 2011. "More serious price depreciation" in housing in forecast, with the possibility that "things [will] fall precipitously."

(Comments: For reader comments, questions and discussion, see the 18-Sep-10 News -- Near-zero CPI hints at deflation thread of the Generational Dynamics forum. Comments may be posted anonymously.) (18-Sep-2010) Permanent Link
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17-Sep-10 News -- Furious Sarkozy tirade at EU meeting over Roma Gypsies

Saturday is anniversary of Japan's invasion of Manchuria on September 18, 1931

Furious Nicolas Sarkozy launches tirade at EU meeting

France's president Nicolas Sarkozy launched a furious "violent" tirade against European Commission chief Jose Manuel Barroso over the issue of Roma expulsions from France. The confrontation took place behind closed doors, but it was loud enough to be heard through the walls.

The fury was triggered by the accusation, as I reported two days ago, by the EU Justice Commission that France's expulsions of Roma Gypsies was comparable to Nazi atrocities in the 1930s.

In the tirade, Sarkozy said that he was "defending the honor of France," according to the EU Observer.

Later, when speaking to the press, he said I am the head of the French state. I cannot let my country be insulted."

He added that the expulsion policy will continue.

Barroso, on the other hand, insisted that an investigation of France's policies will continue, with the possibility that the EU will take legal action against France.

Drunken Chinese diplomat rants against Americans

Another undiplomatic tirade occurred this week. This was by the Chinese diplomat Sha Zukang, at a retreat for top UN officials.

According to the Telegraph, Sha's drunken rant continued for 15 minutes, but seemed like an eternity.

Speaking to the Ban Ki-moon, Sha said, "I know you never liked me Mr. Secretary-General – well, I never liked you, either, You've been trying to get rid of me. You can fire me anytime, you can fire me today."

Later in the same rant, Sha turned to the American diplomat, Bob Orr, and said, "I really don't like him: he's an American and I really don't like Americans."

Sha is the same diplomat that I quoted in 2006. (See "Furious Chinese ambassador harshly threatens U.S. over Taiwan.")

At that time, Sha was being interviewed by the BBC, and he furiously and harshly threatened the U.S. over Taiwan. He was literally screaming in an interview with a BBC reporter:

"The moment that Taiwan declares independence, supported by whomever, China will have no choice but to [use] whatever means available to my government. Nobody should have any illusions on that. ...

It's not a matter of how big Taiwan is, but for China, one INCH of the territory is more valuable than the LIVES of our people."

[With regard to the U.S.'s constant criticism of China's rapid militarization:] It's better for the U.S. to shut up, keep quiet. That's much, much better. China's population is 6 times or 5 times the United States. Why blame China? No. forget it. It's high time to shut up. It's a nation's sovereign right to do what is good for them. But don't tell us what's good for China. Thank you very much."

Sha must be a real party guy.

Taiwan to develop and deploy cruise missiles targeting China

Taiwan made an announcement on Thursday that may have some relevance to the 2006 rant by Sha Zukang just described.

Taiwan will develop its own cruise missiles, capable of striking targets in mainland China, according to VOA.

Taiwan has a long way to go to catch up with the mainland Chinese, however, who have over 1,000 missiles pointed at Taiwan.

According to a recent Pentagon report (see "23-Aug-10 News -- China is ready for war"), there are seven "red lines" which, if crossed, would lead to a Chinese military attack on Taiwan:

Taiwan's development of cruise missiles does not appear to cross any of these red lines, but it will certainly raise tensions.

Additional links

Saturday marks the 79 year anniversary of Japan's invasion of Manchuria on September 18, 1931, which led to 14 years of Japan's bloody occupation of China. However, China appears reluctant to encourage anti-Japanese protests over the matter. CS Monitor

Despite a 17% jump in the price of wheat, expected over the coming weeks, there's no reason to panic, according to the Washington DC-base International Food Policy Research Institution. According to the director, "Apparent similarities between today's rising wheat prices and the food-price crisis of 2007-2008 are just that: apparent, not real. Suggestions to the contrary serve to drive up prices and hurt poor people, who spend much or most of their incomes on food. They need neither jittery markets nor ad hoc protectionism, which has exacerbated past food crises." In other words, he's admitting that he has an agenda for telling people not to worry, which means that he lacks any credibility at all. Asia Sentinel

As Al-Qaeda on the Arabian Peninsula (AQAP), headquartered in Yemen, becomes a greater and greater threat to American security, the State Dept. and the Dept. of Defense are deeply divided over the amount of military aid to be given to Yemen to fight the threat. The military wants to provide automatic weapons, coastal patrol boats, transport planes and helicopters, as well as training. Opponents worry that the military aid will cause a backlash that will further destabilize the country's government. NY Times

A new book claims that Carla Bruni once asked Michelle Obama what it was like to be First Lady, and she replied, "It's hell. I can't stand it." Michelle Obama and a Bruni spokesman have both denied the story. AP

Carla Bruni, the wife of French president Nicolas Sarkozy, says that she's uncovered a plot by Sarkozy's ex-sister-in-law to get Bruni kicked out of Élysée palace, and replaced by his first wife. You just can't make this stuff up. Daily Mail

(Comments: For reader comments, questions and discussion, see the 17-Sep-10 News -- Furious Sarkozy tirade at EU meeting over Roma Gypsies thread of the Generational Dynamics forum. Comments may be posted anonymously.) (17-Sep-2010) Permanent Link
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16-Sep-10 News -- Cuba's seismic shift has global implications

Luxembourg furious as France strikes back over Roma Gypsy accusations

In a seismic shift with global implications, Cuba will lay off 500,000 workers

It was a dry bureaucratic announcement appearing in the official Granma web site (Translation). It signaled the end of Cuba’s Communist economy.

Fidel Castro
Fidel Castro

Here are some excerpts (sometimes paraphrased):

"After 52 years, the Cuban Revolution is a living and unshakable direction for the nation, and our people's will and determination to continue the construction of socialism, and make further progress in the development and updating of the economic model we must follow, and consolidate the gains achieved. ...

Cuba faces the urgent need to move forward economically, better organize production, enhance productivity and raise reserves, improve discipline and efficiency and this is only possible through the dignified and devoted to our people. Today, the duty of the Cubans is to work and do it well, with seriousness and responsibility, and to make better use of resources available to better serve our needs.

In order to update the economic model and economic projects for the 2011-2015 period, the guidelines call for the reduction of more than 500 000 workers in the public sector and in parallel the increase in non-state sector.

The timetable for implementation [of the reduction] for agencies and businesses is the first quarter of 2011. ...

Our state neither can nor should continue to burden companies and productive organizations with services and inflated budgets that weigh down the economy, are counterproductive, create bad habits and distort the behavior of workers. It is necessary to increase production and quality of services, reduce social spending and eliminate bulky improper gratuities, excessive subsidies.

Hundreds of thousands of workers will move to self-employment in the coming years.

Within the state sector, it will only be possible to go to places with a historical workforce deficit, such as agriculture, construction, teachers, police, industrial workers and others.

A matter of singular importance is the salary. We must reinvigorate the socialist principle of distribution, to pay to each according to the quantity and quality of work provided.

The unity of the Cuban workers and our people has been key to maximizing the gigantic edifice built by the Revolution and the changes that we are now undertaking she will continue to be our most important strategic weapon."

In brief, the Cuban government will lay off 500,000 workers by April. These workers will have to move to self-employment or private businesses. However, we will reinvigorate the socialist principle of distribution, so this is GOOD FOR YOU.

Why socialism and communism always fail

I am not making an ideological argument here. I'm making a mathematical argument, further enhanced by a generational argument.

It's easy to prove mathematically that socialism cannot work as population grows. If you're a serf lord or a war lord and you control a couple of hundred people, then socialism is easy. You just appoint your son to be chief bureaucrat, and have him monitor all commercial transactions.

As the population P grows exponentially (proportional to e**P), the number of transactions between two people grows even faster (proportional to e**2P). So as the population grows, the number of bureaucrats grows even faster.

So, I was particularly amused by the following in Cuba's official announcement:

"For the union movement and the workers, paying the utmost attention to downsizing, to the process of labor and employment availability, and to ensuring proper utilization of human resources -- this is an unavoidable task. It is known that there are an excess of over one million seats in the budget and business sectors."

An excess of over one million seats in the financial bureaucracy!!! That's amazing, and it shows what happens -- what MUST happen -- in socialist economies. That's the mathematics of socialism.

I happened to attend the huge CeBIT computer conference in Hannover, Germany, in spring, 1990, just after the Berlin Wall fell. With the border open, for the first time large numbers of East Germans were permitted to visit the show, and the culture shock was enormous for both sides. I spoke to Andreas Heuer, a young man working for Finanzgruppe, and he spoke earnestly of his pain when talking to these visitors from the east. "They visit here and within an hour they have a blackout -- it's too much for them. Their savings banks have no electronic devices to do the work. They do all their work with only mechanical devices." Pictures of 1950s vintage adding machines sprang to my mind.

This is the remarkable thing about all the Communist countries -- East Germany, Russia, China, North Korea and Cuba -- they were all stuck in the 1950s. There's a good reason for that. A socialist government cannot allow the introduction of new products, because the bureaucracy can't handle the huge volume of transactions that would be generated.

Mao Zedong must have understood this problem, when he decided to implement "true Communism" with his Great Leap Forward that began in 1958.

500,000,000 million peasants were taken out of their individual homes and put into communes, creating a massive human work force. The workers were organized along military lines of companies, battalions, and brigades. Each person's activities were rigidly supervised.

The family unit was dismantled. Communes were completely segregated, with children, wives and husbands all living in separate barracks and working in separate battalions. Communal living was emphasized by eating, sleeping, and working in teams. Husbands and wives were allowed to be alone only at certain times of the month and only for brief periods. All workers took part in ideological training sessions, to provide for ideological training of the Chinese masses.

Mao's stipulated purpose was to mobilize the entire population to transform China into a socialist powerhouse -- producing both food and industrial goods -- much faster than might otherwise be possible. This would be both a national triumph and an ideological triumph, proving to the world that socialism could triumph over capitalism.

The program failed because of the reasons stated above -- it takes too many bureaucrats to closely govern a large population. The result was disaster: management and reporting structures collapsed, and there was too little food to feed everyone, resulting in tens of millions of deaths from starvation.

That triggered the collapse of China's Communist experiment, leading to a kind of "free market socialism" that resembles Nazi Germany's economic experiment, with central control of only selected industries.

From the point of view of Generational Dynamics, we see a historical pattern being repeated over and over in Communist countries.

First off, there's no such thing as a "slippery slope" towards socialism. The slippery slope is always towards capitalism and free markets, because that's where the mathematics leads. This should be reassuring to people who are afraid that President Obama is trying to lead us to socialism.

A country is susceptible to a Communist revolution ONLY during a generational crisis period, and only when there's a fault line between two birth-defined demographic groups, one of which is a market-dominant minority. The resolution of the bloody civil war is to confiscate the property of the market-dominant minority. There's more than one way to accomplish this goal, some more or less dictatorial than others, but Communism provides one of the most convenient dictatorial templates.

Geopolitical significance

In Venezuela, President Hugo Chávez is trying to introduce Communism during a generational Unraveling era. I'm willing to bet that his efforts will collapse. You need a bloody civil war to implement Communism, and besides, Chávez must really be feeling apoplectic these days, watching his pal Fidel and Cuba's Communism go down the tubes.

So Communist revolutions always begin during generational crisis eras. When do they end? The evidence from East Germany, Russia, and now Cuba seems to indicate the mid to late generational Unraveling era. This makes sense, because it's about the time when the nation's leaders in the Hero generation of the previous crisis civil war retire or die off (as is happening to Fidel), and when the mathematical tensions become unbearable, resulting in a "bloodless coup."

This brings us to the geopolitical implications of Cuba's announcement, which may be significant. We've already described the effect on Venezuela, but other countries will be affected as well.

The North Koreans have managed to use iron-like dictatorial control on the population to keep the Communist economy together much longer than they should have, and they're now well into a new generational crisis era. The tension caused by economic factors, including globally surging food prices, and by the political situation with Kim Jong-il apparently near death, will almost certainly mean a major change. The collapse of Cuba's Communist system will give an enormous boost to the reformers in North Korea. But since North Korea is in a generational crisis era, reform will almost certainly mean a civil war, a massive starving refugee crisis, and probably war with South Korea.

The implications for China are also potentially enormous. The elders of the Chinese Communist Party (CCP) have been experiencing enormous panic and paranoia since 1991, when the Soviet Communist economy collapsed. They've been fearing for their lives, and rightly so.

Now another Communist economy is collapsing in Cuba, and I can only imagine that Beijing is watching this in horror -- and well they should. Ironically, the CCP itself has become a birth-defined market-dominant minority in China, and with tens of thousands of "mass incidents" every year, they know that a full-scale rebellion may be close. China is forced to import huge amounts of food to prevent unrest among the peasants, but as food shortages grow and food prices increase, that can only go so far.

Let's not forget the significance for Cuba itself. The collapse of Communism in Russia and East Germany may have been relatively "bloodless," but both regions were economic basket cases for years. Cuba does not have any infrastructure to absorb 500,000 unemployed people all at once, and there will certainly be massive economic chaos in Cuba in the next years, with implications for the United States.

Additional links

As we reported yesterday, Viviane Reding, a Luxembourg politician serving as the EU's justice commissioner, accused France's Roma Gypsy expulsions of being comparable to Nazi WW II atrocities. On Wednesday, French President Nicolas Sarkozy struck back, saying that he was only applying European regulations, French laws, and France was irreproachable in the matter but that if the Luxembourgers want to take them he had no problem. A furious Jean Asselborn, Luxembourg's foreign minister, replied, "I know that Nicolas Sarkozy has problems with Luxembourgers, but he's gone too far here." Telegraph

French socialist MPs are furious at president Nicolas Sarkozy because France's National Assembly has passed a bill that raises the minimum retirement age from 60 to 62. Let's all share a moment of silence and send our best wishes to the poor French people whose lives will be destroyed by working two additional years. EuroNews

As Mideast peace talks proceed in Egypt, Hamas terrorists have been trying to derail the talks by firing phosphorus shells into Israel from Gaza. Jerusalem Post

In Bahrain, the majority of the population is Shia Muslim, while the Sunni Muslims form a market-dominant minority. The Sunni-dominated government is arresting scores of Shia political activists, accusing them of plotting to overthrow the government. Washington Times

China's Prime Minister Wen Jiabao says that the real estate bubble -- runaway property prices -- are a grave threat to China's economy and could imperil social stability. Reuters

Just holding an alcoholic drink in your hand makes you seem dumb. AOL

(Comments: For reader comments, questions and discussion, see the 16-Sep-10 News -- Cuba's seismic shift has global implications thread of the Generational Dynamics forum. Comments may be posted anonymously.) (16-Sep-2010) Permanent Link
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15-Sep-10 News -- Europe bitterly attacks France on Roma Gypsy expulsions

Mideast peace talks start again under strong U.S. pressure

European Commission bitterly attacks France on Roma Gypsy expulsions

Journalists and politicians alike were stunned on Tuesday when the European Commissioner for Justice, Fundamental Rights and Citizenship bitterly attacked France for its policy of expelling Roma Gypsies, and returning them to their homelands, usually Bulgaria or Romania.

Speaking in Brussels, Viviane Reding is quoted by AFP as follows:

"[I am] appalled by a situation which gave the impression that people are being removed from a member state of the European Union just because they belong to a certain ethnic minority.

This is a situation I had thought Europe would not have to witness again after the Second World War. ...

The role of the commission as guardian of (Europe's) treaties is made extremely difficult if we can no longer have confidence in the assurances given by two ministers in a formal meeting.

This is not a minor offence. After 11 years of experience in the commission, I even go further: this is a disgrace."

This is a nasty, shocking accusation from a member of the European Commission, and it was accompanied by specific threats of legal action. Now that the accusation has been made, the European politicians are going to have to figure out a way of dealing with it, and that will be very ugly.

What triggered the outburst was a leaked memo, signed by the French interior minister's chief of staff saying that "300 camps of illegal settlements must be cleared within three months, Roma camps are a priority." This memo implies that the French are specifically targeting the Roma ethnic group, and targeting a specific ethnic group allegedly violates EU law.

Viviane Reding is a politician from Luxembourg, and on the BBC I heard a French politician mocking Reding. Apparently a number of other countries, including Luxembourg and Italy, are also expelling Roma Gypsies, and the claim was the Reding was being naïve.

One thing that's certain is that this will be an increasingly bitter issue in Europe, and will have a lot of nasty twists and turns.

Mideast peace talks start again under strong U.S. pressure

Skepticism is so high that the new Mideast talks will accomplish anything that nobody is providing any clue what the two sides are talking about. The talks are between Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas.

However, it's certain that the U.S. is putting enormous pressure on both the Israelis and the Palestinians to come to an agreement on a two-state solution. U.S. Secretary of State Hillary Clinton and U.S. peace envoy George Mitchell are both attending the meeting of Netanyahu and Abbas in order to turn the screws any way they can. (CS Monitor)

The question on everyone's mind is whether the talks will collapse on September 26. That's the day that the ten-month moratorium on building new settlements in the West Bank expires. Netanyahu has said that the freeze will not be extended. Israel's foreign minister, Avigdor Lieberman, who is part of Prime Minister Benjamin Netanyahu's governing coalition, said last week, "A promise is a promise. We will not agree to any extension. I promise that if there's a proposal that we don't accept, it will not pass." (Associated Press)

In addition, groups of Jewish settlers are promising to 'declare war' on Netanyahu if he tries to extend the moratorium, according to the Jerusalem Post.

Abbas has said that the talks will collapse if the freeze is NOT extended.

The U.S. diplomats are praying that a compromise involving a selective lifting of the moratorium can be worked out before September 26.

From the point of view of Generational Dynamics, nothing has changed since I made my first major prediction on this subject in 2003. (See "Mideast Roadmap - Will it bring peace?") There is no chance of a lasting peace deal because Arabs and Jews will be re-fighting the genocidal war that they fought in 1948, after the partitioning of Palestine and the creation of the state of Israel.

Additional links

France's Senate has voted to ban wearing the Islamic full veil in public. BBC. In the article, check out the pictures of the various styles of Muslim women's headscarves.

The number of undernourished people in 2010 is lower than in 2009, but prices of grain, meat and sugar are still rising. They haven't yet reached the crisis levels of 2008, but they're up significantly, and they're creating instability. Reuters

China, which as overtaken Japan as the second largest economy in the world, says that the world should not expect it to increase its foreign aid to developing countries. "The international community should not ask China to replace developed countries, to assume their obligations," said a Chinese official. "Though China is not rich and still faces many development bottlenecks ... we are providing support to the extent we can to other developing countries." Reuters

Maoist (Naxalite) terrorists in India, who the government calls the biggest threat to India's internal security, are growing in numbers, but are turning into plunderers, extoring money from contractors of construction companies. Asia Sentinel

After Monday's explosion of violence that killed 17 Muslim protesters in Indian-controlled Kashmir, a strict curfew has been put into effect. However, protests continued on Tuesday, with sporadic violence that killed one more person. Hindustani Times

The Kremlin is angered by an activist movement in Siberia to allow people to identify themselves as having Siberian 'nationality' in the upcoming Russian census. Eurasia Review

(Comments: For reader comments, questions and discussion, see the 15-Sep-10 News -- Europe bitterly attacks France on Roma Gypsy expulsions thread of the Generational Dynamics forum. Comments may be posted anonymously.) (15-Sep-2010) Permanent Link
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14-Sep-10 News -- Kashmir protesters burn Obama in effigy

EU dithering on financial crisis is now backfiring

Muslim protesters burn Obama in effigy as dozens are killed in Kashmir

Obama burned in effigy by Kashmir protestors <font face=Arial size=-2>(Source: VOA)</font>
Obama burned in effigy by Kashmir protestors (Source: VOA)

Policemen fired on hundreds of Muslim protestors in Indian-controlled Kashmir on Monday, killing 14 people and injuring 45, according to the VOA, in the deadliest violence in years. The protesters had set fire to a Christian missionary school and some government buildings.

During one of the protests, protesters burned President Barack Obama in effigy, after an Iranian state-run channel had reported that a copy of the Koran had been damaged in anti-Muslim protests in America over the weekend.

The situation is reminiscent of the worldwide Muslim protests that followed the publication of the "Danish cartoons" in 2005. (See "Cartoon controversy explodes into worldwide confrontations between Muslims and Westerners.")

It later turned out that Islamist militant activists had used the Danish cartoons to stoke protests in the Muslim community. The same thing appears to be happening again.

Kashmir and Jammu were a major site of the extremely bloody war between Hindus and Muslims after Partition in 1947 (when the India subcontinent was partitioned into Pakistan and India). After the war, Kashmir and Jammu were split into Pakistani-controlled and India-controlled regions, separated by a "line of control" (LoC). Since then, Pakistan and India have fought two non-crisis wars over the region, and it's been a continuing source of unrest, terrorist attacks, and violence.

During the past three months, violence in the Kashmir region appears to be spiraling out of control. From the point of view of Generational Dynamics, India and Pakistan will re-fight the 1947 war, this time with nuclear weapons, and Kashmir will be a major issue in that war.

Pakistanis fear anarchy and terrorism, while the world forgets them

Not only have the floods not yet receded in Pakistan, but in fact they're still destroying towns and villages, especially in Sindh province in the south, forcing tens of thousands of people to abandon most of their possessions and flee, according to Reuters. Some 250,000 may still be forced to evacuate their homes in the next few days.

The floods have already affected one fifth of Pakistan's land, a land area equal in size to the entire country of Italy. 7.5 million people have been displaced, and 20 million have been affected. 1.4 million houses have been destroyed, and one thousand bridges have been destroyed. 4 million acres of farm land have been washed away, and 500,000 tonnes of seeds have been destroyed.

In addition to coping with the floods, Pakistan has been facing a new wave of suicide and bomb attacks carried out by Taliban militants linked to al-Qaeda. There had been a lull in such attacks because of the floods, but the attacks have resumed in full force.

The result is that many Pakistanis are increasingly concerned about facing total anarchy. The government has shown itself to be incompetent and corrupt, according to the Asia Times. Many fear that the Taliban will control much terrority in Pakistan before long, as they already do in Afghanistan.

Additional links

The "wait and see" approach adopted by the European Union following the collapse of Lehman Brothers two years ago has not worked, according to Wolfgang Münchau. The original short-term strategy was to throw a lot of money at the problem; the long-term strategy was to pray for a strong V-shaped recovery. The ridiculously optimistic assumptions are now backfiring. "If you assume a post-reform Greece will miraculously turn into a Aegean tiger, or that Ireland will generate another housing price bubble, the present rate of indebtedness will be no big deal. It all rests on your assumptions about growth." This strategy came badly unstuck last week in Ireland, when it became clear that the Irish government massively understimated the scale of the problem. Financial Times (Access).

A census report to be issued later this week is expected to show record increases in the number of people in poverty. Associated Press

An Australian lawyer, who is an atheist, is smoking pages torn from the Koran and the Bible, to determine which is best. Telegraph

(Comments: For reader comments, questions and discussion, see the 14-Sep-10 News -- Kashmir protesters burn Obama in effigy thread of the Generational Dynamics forum. Comments may be posted anonymously.) (14-Sep-2010) Permanent Link
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13-Sep-10 News -- Split between Ahmadinejad and Iran's hardliners widens

Talk of an Arab alliance against Iran

Political split widens between Ahmadinejad and Iran's hardliners

On Thursday, Iranian officials announced that on Saturday they would release Sarah E. Shourd, one of the three Americans who were arrested a year ago and jailed under accusations of spying. Shourd was arrested with her fiancé and a friend, while hiking in the mountains of Iraqi Kurdistan. They were accused of crossing the border into Iran, which they claim they did unwittingly, if at all, according to the Telegraph. Shourd is known to be in poor health, and may have cancer.

The NY Times reported that Iran's Ministry of Culture and Islamic Guidance invited reporters to witness the release on Saturday morning. The release would be an act of clemency, granted on Eid al-Fitr, a major Muslim holiday and the last day of Ramadan. (There was no indication that the release was related to the commemoration of 9/11.)

The release was favored by Iran's president, Mahmoud Ahmadinejad. But on Saturday, Iran's chief prosecutor, controlled by the Supreme Leader Ayatollah Seyyed Ali Khamenei, announced that the release would be delayed, possibly for months, while court proceedings took place.

Finally, on Sunday, the chief prosecutor announced that Shourd would be freed on the payment of $500,000. Shourd is still being held in Tehran, awaiting further developments.

This situation is part of a larger growing confrontation between Ahmadinejad and the Supreme Leader. During the last couple of weeks, an increasingly confrontational rift has been growing between the Majlis (Parliament), controlled by the Supreme Leader, and Ahmadinejad, over several foreign envoy appointments he's made, as well as his declaration to make Saturday a holiday.

According to the Tehran Times, an MP (Member of Parliament) has sent a letter to Ahmadinejad, saying, "The president should not think that the Majlis will deal cautiously with the administration’s unlawful actions forever. Our caution is due to political considerations, but MPs will (eventually) run out of patience." He asked, "Based on what permission did you declare Saturday a holiday? According to the law, the parliament has the right to designate a day as a holiday."

Iran is in a generational Awakening era, as I've described in detail many times, and the way to understand this political infighting is to compare it to the political fights that Presidents Lyndon Johnson and Richard Nixon had during America's last Awakening era, in 1960s and 1970s. America went through years of angry protests by the young Boomer generation, and the era climaxed with the resignation of President Nixon. Iran is just starting to go through years of similar turmoil, with angry protests by the young college generation, in the same generational archetype as America's Boomers in the 60s.

Like any Awakening era, Iran is in a generational struggle between the survivors of the last crisis war -- the 1979 Great Islamic Revolution followed by the Iran/Iraq war -- and the kids who were born after that war.

I wrote just a couple of weeks ago there are signs of a split, including a theological split, between Ahmadinejad and the hardliners led by Khamanei. (See "30-Aug-10 News -- Generation gap splits Iran's government.")

The new events indicate that this split is growing and continuing, and it appears that Ahmadinejad is beginning to side with the kids, rather than the hardliners.

Talk of a Arab alliance against Iran

There has been occasional talk in the Mideast press about Arab countries forming an alliance to counter Iran's increasing threat to the security and stability of the Gulf states. But a new analysis by Memri indicates that this and other options are being actively discussed, at least in Kuwait.

There has been a shift in public opinion in Kuwait regarding Iran, as a result of numerous recent events, assessments and rumors:

As a result, columnists and public figures in Kuwait are united in their assessment that Iran intends to take over the Gulf states. Various writers have suggested different ways to address the threat, including the following:

None of this is surprising, and is consistent with Generational Dynamics trends. As we've said many times, we expect Sunni Muslim states to be aligned with China against the West in the coming Clash of Civilizations world war, and we expect Iran to be aligned with the West.

Additional links

Iran may be creating an alliance of its own. The "Persian Summit" was a recent meeting in Tehran of the leaders of the Persian-speaking countries of Iran, Tajikistan, and Afghanistan. Eurasia Daily Monitor

Former Cuban leader Fidel Castro, a longtime critic of Israel, now accuses Iranian president Mahmoud Ahmadinejad of anti-semitism for denying the Holocaust. Castro called for an end to slander of the Jews. Guardian

Tens of thousands of Muslims marched through Indian Kashmir's main city on Saturday, setting fire to government and police buildings in the latest of what are the biggest protests in two years against Indian rule. Reuters

Devastating floods over the past six weeks in Pakistan have affected more than 20 million people and laid waste a fifth of the country's land mass. The fear now is that in the expected anarchy, a fiercely anti-American Islamic revolution could break out, lead by violent Sunni Muslim extremists. Asia Times

Since the breakup of the Soviet Union, Ukraine has been two countries in one. The eastern half is mostly populated by Russians, and is loyal to Russia. The western half is mostly populated by ethnic Ukrainians, as well as ethnic Russians who were encouraged to migrate there by Moscow after WW II. However, instead of "Russifying" eastern Ukraine, as Moscow expected, the ethnic Russians in the east, especially in the younger generations, are becoming more like the Ukrainians, and are voting for Ukrainian parties. Eurasia Review

Generation-Xers are much more religious than Boomers, according to research by the University of Nebraska. This is considered surprising, because Gen-Xers are supposed to be "a rules-rejecting, authority-questioning group," but what the authors fail to remember is that the Boomers are the "God is Dead" generation, and so becoming religious actually is rejecting rules -- the Boomers' rules. Science Daily

A new study by Harvard Medical School finds that the 2006 Massachusetts Health Reform law has led to improvements in insurance coverage as well as a decline in financial barriers to care, but it has not increased people's access to a personal physician or improved their self-rated health. Furthermore, it has not reduced healthcare inequalities between ethnic or income groups. Science Centric

(Comments: For reader comments, questions and discussion, see the 13-Sep-10 News -- Split between Ahmadinejad and Iran's hardliners widens thread of the Generational Dynamics forum. Comments may be posted anonymously.) (13-Sep-2010) Permanent Link
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Works by Iannis Xenakis gain wider prominence and recognition

His opera 'Oresteia' will be performed in Los Angeles in November

Iannis Xenakis's Oresteia to play on November 7 at Calif. Institute of the Arts

The complete version of Oresteia, an epic opera by my late cousin Iannis Xenakis, only made its American debut in New York in 2008, as reviewed by the NY Times.

Since then interest in the opera has been growing, and new production will be mounted on November at the California Institute of the Arts (CalArts).

Iannis Xenakis
Iannis Xenakis

The production will launch a four month "constellation of events an exhibitions throughout Los Angeles, celebrating the life and work of Iannis Xenakis."

Within a certain circle of music theorists, my cousin is considered one of the greatest composers of the twentieth century. He combined mathematics, architecture and music, and composed a number of avant-garde pieces, including the masterpiece Metastasis. Much of his theoretical work was related to computer-assisted music composition, and it's still used today. I personally do not claim to have even a distant understanding of my cousin's music, but several years ago I did meet someone who had a doctorate in music from Harvard University, and who told me that he expected to spend much of his life studying my cousin's music.


Oresteia is signifcant to me at many levels, because it's partially the story of the mythical Cassandra. It's based on a trilogy of tragic plays by Aeschylus, one of the great tragic playwrights of ancient Greece. Oresteia begins at the end of the Trojan War.

Before the Trojan War, the god Apollo became smitten with the very beautiful Cassandra, and gave her the gift of being able to prophesy the future. But Cassandra refused Apollo's advances, so he cursed her: She would still be able to prophesy the future, but no one would believe her predictions.

Cassandra lived in the city of Troy, and she warned the people not to bring the wooden horse into the city, and predicted that it would lead to disaster. She was hated and disbelieved when she made her predictions, and when her predictions came true, and the soldiers poured out of the Trojan Horse and massacred most of the people in the city, Cassandra was reviled and raped. Although I hope that the worst won't happen to me, I identify closely with Cassandra, because of my work on Generational Dynamics, and in many ways I feel one with her.

It's at this point that Oresteia begins. Oresteia explores human emotions at their worst -- a cheating husband, a murderous wife, a vengeful son, and redemption at the very end.

The end of the Trojan war does not mean the end of Cassandra's gift -- or the end of her curse. Cassandra becomes the mistress of King Agamemnon, and she foresees that when he returns home with her, then Clytemnestra, his wife, will kill both of them. Agamemnon does not believe her but her prophecy of course comes true. Agamemnon's son, Orestes, kills him mother in revenge for his father's death, and then faces a trial by the gods for matricide. He is saved through the intervention of the goddess Athena.

As a Greek I know that a sense of tragedy is in my bones, and it's one of the things that made it possible for me, almost uniquely, to develop Generational Dynamics. Tragedy as an art form was invented in ancient Greece, and three of four great tragic artists of all time were Aeschylus, Sophocles and Euripides of ancient Greece. (The fourth was Shakespeare.)

Many people misunderstand the deepest meanings of tragedy. If a child is killed in a random traffic accident, then it's a terrible event, but it's not a tragedy in the classical sense, because of that randomness.

The essence of classical tragedy is that the tragic event is not random. The tragic event is inevitable: it MUST occur, and the reason it must occur is because of the nature, the personality, the very CHARACTER of the protagonists. A true tragedy cannot be prevented, even by those who foresee it, because the forces bringing about the tragedy are too powerful for anyone to stop.

Like the child killed in a random traffic accident, the protagonists of a true tragedy have a great future before them, and in the Greek view, perhaps even a heroic future. But the heroic future turns into disaster because the players in the true tragedy move step by step towards that disaster; and all of us on the outside can see it coming, because only these particular players are uniquely capable of inflicting this disaster on one another.

That's why I identify Generational Dynamics so closely with Greek tragedy, and with my cousin's work. The world should have a great, happy, fulfilling future, but it's headed inexorably for financial catastrophe and world war. This is because of the nature and character of not just one individual, but of entire generations of individuals who, through their own stupidity, greed and nihilism, are driving the world to this fate.

The Xenakis Project for the Americas

The Xenakis Project for the Americas at the City University of New York has a web page with a lengthy biography of my cousin, which I'll take the liberty of quoting in its entirety:

The Xenakis Project of the Americas was established at the Brook Center in early 2010. XPA aims to become a resource and media center for all things Xenakis in the Americas, and to present public programs of Xenakis’s works in cooperation with recognized new music presenters, as well as the works of others inspired by him and by his unique philosophy of the arts. Those spearheading the project include Sharon Kanach, Joel Chadabe, Claire Brook, and Daniel Cooper, with the support of Françoise Xenakis [his wife].

Iannis Xenakis (1922 – 2001), one of this century’s greatest musical minds, was perhaps a latecomer to the avant-garde scene in the Americas, but the imprint made on him and those he encountered had motivational as well as inspirational repercussions that are still felt today.

Xenakis’ first visit to the USA was in 1963 in response to Aaron Copeland’s invitation teach composition at the Berkshire Music Center (Tanglewood). From that first engagement, many life and career changing encounters ensued and the Americas became a vital link between the composer and his audience until his last active days. Six of his compositions received their premieres in the USA : his epic Oresteia (1965-66), in Ypsilanti Michigan, the only work of his entire opus to which that Xenakis – who pleaded for ‘creative amnesia’ in order to ensure originality – he returned to throughout his career (adding Kassandra in 1987, and later adding La Déesse Athéna in 1987). The entire cycle received it’s North American première in 2008 at the Miller Theatre in NYC to unanimous critical acclaim and three sold-out performances. Evryali (1973), for solo piano, was premiered the year of its composition at Avery Fischer Hall, performed by its dedicatee, Marie-Françoise Bucquet; Gmeeoorh (1974) for organ, was first performed at Hartford University; Dmaathen (1976) – with reputedly one of the most difficult percussion parts ever written – premiered by Nora Post (oboe) and Jan Williams (perc) at Carnegie Hall in 1977. His last piano concerto, Keqrops (1986), was presented by Zubin Mehta and Roger Woodward at Lincoln Center; and finally his short duo for violin and cello, Hunem-Iduhey (1996), was premiered at Lincoln Center.

It was in Canada, at the Montreal Expo ’67, that Xenakis realized his first signature “Polytope” (Polytope de Montréal), a ground-breaking spectacle in light and sound that was performed once an hour in the French Pavilion at the World’s Fair. The overwhelmingly enthusiastic reception he received at the time led to a commission from the French Festival d’Automne to write an “opera” for its opening season in 1972. After his experience in Montreal and his subsequent contact with the then-nascent laser technology in Osaka in 1971, he proposed, instead, a Polytope de Cluny. This multi-disciplinary genre, developed over the decade 1967-78 had five such realizations, and is now heralded as the pioneering work of the current darling of the contemporary cultural world, New Media Art. Other important commissions came from our Canadian cousins as well, notably his longest work (75’), Kraanerg (1969), for the inauguration of the National Arts Center in Ottawa, with choreography by Roland Petit, and set design by Vasserely.

Other works of this period included Akrata (1964-65, commissioned by the Koussevitsky Fund, although premiered at the English Bach Festival in Oxford, England. American-based conductors such as Gunther Schuller, Lukas Foss, Juan-Pablo Izquierdo, and Seija Ozawa championed his music both at home and abroad.

Achorripsis (1956-57) for chamber orchestra of 21 musicians, Xenakis’ first work entirely composed using only stochastics (probability theory), was premiered in 1958 by Hermann Scherchen in Buenos Aires, Argentina by one of the XXth century’s greatest advocates of new music. Beginning in 1966, when Metastaseis and Pithoprakta received their Mexican premières, Xenakis became more and more intrigued by pre-Columbian civilization (“where men become gods”) and projected, as of 1978, a mega-polytope at the site of the Teotihuacán pyramids. It was never realized.

After his engagement at Tanglewood, Xenakis became a frequent visiting lecturer at many mainstream institutions, from Princeton University to Mills College; from the Universidad Nacional Autonoma de México to the Institut Torcuati di Tella in Argentina; at Orford and Banff, as well as the Université de Montréal, among many others. He finally accepted a full-time position at Indiana University, Bloomington, where he taught from 1967-72. During this time and after, scholarly journals such as Perspectives of New Music regularly published his theoretical articles and IU Press brought out the first edition of his seminal Formalized Music (later revised and augmented as published by Pendragon Press). His research and teaching directly influenced an entire generation of composers, from David del Tredici to Curtis Roads, and his place as a visionary of algorithmic music is now incontestable.

Since his death in 2001, several festivals honoring the memory and work of Xenakis have taken place or are in the planning stages in the Americas: from the inaugural soundaXis Festival in Toronto in 2006, to the monographic exhibition of his working papers at The Drawing Center museum in New York City (Jan- April 2010), The Drawing Center’s exhibition Iannis Xenakis: Composer, Architect, Visionary will travel to the Canadian Centre for Architecture in Montreal (June-Oct. 2010) and then to the Los Angeles Museum of Contemporary Art – Pacific Design Center (Nov. 2010-Feb. 2011). In January 2010, XPA co-produced with BXMC of NYU Polytechnic a three-day seminar in which thrity Pan-American scholars, performers and architects participated at NYU Polytechnic. A major new recording of his Oresteia which will take place in Santiago, Chile in April 2010 under the direction of Juan-Pablo Izquierdo…

It is blindingly obvious that the seminal role of Iannis Xenakis in the evolution of the arts in the Americas is finally achieving its over-due recognition and the Xenakis Project of the Americas intends to record and promote all such developments.

(Comments: For reader comments, questions and discussion, see the Works by Iannis Xenakis gain wider prominence and recognition thread of the Generational Dynamics forum. Comments may be posted anonymously.) (12-Sep-2010) Permanent Link
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11-Sep-10 News -- The coming political tsunami and realignment

Glenn Beck, the Tea Party, and the next rock star

The coming political tsunami on November 2

The word "tsunami" is being used a lot these days, as a result of polls that indicate an expected significant Republican win in the midterm elections on November 2. In "Countdown to the coming Republican tsunami" in Time:

"Without any intervening events, Republicans are in a position to ride a huge wave to a net pickup of as many as 60 House seats Democrats now hold, more than enough to take back the majority. And there are enough vulnerable Democratic-held Senate seats for Republicans to ride the wave to the 10-seat pickup they need to control both chambers of Congress."

A lot of people are trying to figure out the significance of this tsunami, especially as related to the Tea Party movement. I'm not a member of, or participant in, the "tea party" movement, but I identify with much of their anger, and I see them as having adopted MY anger, rather than the other way around

I listened to a podcast/webinar of a discussion by Tea Party supporters, sponsored by Republic Magazine, and found it very interesting as a statement of the expectations of Tea Partiers after November 2.

My reaction is: "Be careful what you wish for."

I'm particularly reacting to a comment by Steve Bannon, who you may recall was the writer and director of the documentary movie Generation Zero that I've discussed in the past, and in which I appear as commentator. (See "More on the politics of the 'Generation Zero' movie" and "New York City premiere of Generation Zero documentary movie.")

The comment by Bannon is that Tea Partiers are going to wake up on November 3, after a Republican victory, and they're going to be furious because nothing has changed.

I've been writing for years about the coming political realignment, and how it will be something that neither Democrats nor Republicans will like. You can see it building now.

President Obama was elected when he became a rock star to massive numbers of voters led by Generation-Xers who hate Boomers and would have voted for anyone who represented "un-Bush" and "un-Boomer."

Obama made ridiculously extravagant promises to get elected. I wrote repeatedly that NONE of these promises would be fulfilled, and that's turned out to be true.

Obama was going to heal the world with his mere presence -- cure global warming, provide universal health care, end nuclear proliferation, close Guantanamo, leave Iraq in peace, bring a two-state solution to Palestinians and Israelis, beat the Taliban in Afghanistan, reduce joblessness, restore the stock market bubble, and dismantle President Bush's war against terror. Nothing was beyond his reach. I said repeatedly that he would accomplish NONE of these things, and that has turned out to be true. In particular, I said that the health care bill was a proposal of economic insanity, because it was just like President Nixon's wage-price controls. The disastrous consequences of the health care bill are still unfolding.

Rhetoric aside, the state of the country and the world is little different from what it would be if Bush had had a third term. Both the left and the right are repelled by this concept, but there's little objective evidence, or even speculative evidence, refuting it. Even the huge multi-trillion dollar bailouts and stimulus packages would have occurred anyway, and whoever was in office would be blamed for their failure.

So now that Obama has failed at all of his promises, and the Gen-Xers are fleeing in disarray, we have the Tea Party -- the "Revenge of the Boomers" -- demanding a return to post WW II wisdom.

But post WW II wisdom will not work any better than Obama's insane promises. Cutting spending and/or taxes will only hasten the crisis.

As Bannon said, Tea Partiers will wake up on November 3 and realize that nothing has changed, but that now it's no longer possible to simply blame the Democrats. As the crisis worsens next year, the Republicans will be blamed as much as the Democrats.

With November 2 looking more and more like a Republican tsunami, I'm hearing the same kinds of hopes and dreams for "change you can believe in," without the actual use of that slogan.

One of the most extreme examples of this is Stuart Varney on Fox Business Network, who is insisting that a Republican victory on November 2 will shock the country, improve the economy, and jolt the stock market upward to new highs. This is about as close to Obama-level insanity as anyone could get.

It's anyone's guess as to what will happen next year, as the nation fully grasps the massive failure of both political parties. Those who claim to predict that Republicans will do well or that Democrats will recover don't know what they're talking about. There's no rule book, as the saying goes, and nobody has the vaguest idea what's coming, any more than anyone predicted the Tea Party when Obama won. What we're headed for is a tsunami of a different kind -- one that will scramble everything up in an unpredictable way.

The Tea Party and Glenn Beck

The rock star concept is not unique to President Obama. A rock star is a part of the crisis era experience. As the crisis deepens, a desperate, anxious population turns to someone who they hope will save them.

If I'm to believe what I saw at a recent Washington DC rally, the mantle of rock star status has been transferred from Obama to Glenn Beck, although Beck appears to be more of an evangelist than a politician.

According to a report by Politico:

"Glenn Beck’s program at the Lincoln Memorial Saturday focused more on God than government.

The Fox News host followed through on a commitment to avoid wading explicitly into partisan politics. So President Barack Obama’s name did not come up once during a 200-minute program that featured multiple prayers, gospel songs and bagpipers playing “Amazing Grace.”

Choreographing the event so it felt more like an old-fashion religious revival than a tea party-inspired political rally gave Beck just enough cover to credibly position himself as an heir to Martin Luther King’s legacy on the 47th anniversary of the legendary “I have a dream” speech, even as prominent African-American leaders attacked him at a counter-rally for being insensitive to civil rights iconography.

Beck, who first called the timing coincidental and later embraced it as fitting, didn’t respond directly to attacks as he spoke to a massive crowd that extended for a mile all the way back to the Washington Monument.

He instead filled the stage with a racially diverse mix of religious people who sympathize with his social conservatism.

King’s niece, anti-abortion activist Alveda King, told the multitudes that her “Uncle Martin” would commend them for showing up. She said that metaphorical check King wanted cashed in his 1963 speech still hasn't been and only will be when there's prayer in schools and the public square.

Beck also introduced a new "Black-Robed Regiment" of clergy, bringing 240 clergy of various denominations and ethnicities onto the stage. He asserted that thousands more were in the crowd.

“God is the answer,” Beck said."

Beck generates an enormous amount of emotion, both positive and negative, according to an analysis by the LA Times.

Glenn Beck is by far the most loved and the most hated of all the talking heads studied <font size=-2>(Source: LA Times)</font>
Glenn Beck is by far the most loved and the most hated of all the talking heads studied (Source: LA Times)

Obama has faded as a rock star, and as the crisis worsens next year, there will be a new rock star. It might be Glenn Beck, even though he says he has no interest in running. Or it might be someone else that no one's yet ever heard of. That's what happens with rock stars. They come out of nowhere and flame brightly for a while, and then flame out. There are real dangers -- particularly that the new rock star will be someone on the radical left or radical right. The current rise in Islamophobia is particularly worrisome. That's how Hitler got elected.

The one additional comment that I would make about the webinar is that you shouldn't count on hyperinflation. This is just part of the fantasy that says that the stock market bubble will come back. The Weimar Republic example occurred under completely different circumstances that are TOTALLY IRRELEVANT to what's happening today. There are powerful deflationary forces in the world economy that are coming unleashed, and you should expect a fall in the CPI of at least 30%.

Additional links

I've referred to Tea Partiers as wanting to apply "post WW II wisdom" to our problems, but an April poll shows that they're split down the middle along a fault line between two camps. 43% of those polled expressed the distinctly conservative view that government does too much, while also saying that it needs to promote traditional values. An almost identical 42% say that government does too much but should not try to promote any particular set of values — the hallmarks of libertarians. Politico

South Africa and other African countries have been eagerly soliciting investments from China, and China has been happy to comply, in return for Africa's resources. However, China's vast operations in Africa are causing problems. Domestic firms are losing to the cheaper Chinese commodities being dumped in their markets, raising unemployment, and promoting discontent against the Chinese people. China is also criticized for bringing workers from China instead of hiring locals. Institute for Defence Studies and Analyses

Fidel Castro is reported as saying that Cuba's communist economic model no longer works. Associated Press. However, in a later clarification, Castro said that he was "amused" by how his remark was "overplayed" by his opponents. Bloomberg

Drug gang attacks killed 25 people in Ciudad Juárez in Mexico, making Friday the deadliest day in more than two years for the city. Nearby, 85 inmates scaled the walls of a prison and escaped in Mexico's biggest jail break in recent memory. Associated Press

Japan will jail that Chinese fishing trawler captain for at least ten days. China reacted by postponing planned diplomatic talks. BBC

(Comments: For reader comments, questions and discussion, see the 11-Sep-10 News -- The coming political tsunami and realignment thread of the Generational Dynamics forum. Comments may be posted anonymously.) (11-Sep-2010) Permanent Link
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10-Sep-10 News -- Venezuela moves toward food rationing

Suicide car bomber in crowded market in North Ossetia kills 17

Venezuela's 'Good Life Card' may be first step in food rationing

In Venezuela, our good friend President Hugo Chávez is introducing the "Good Life Card," according to the Miami Herald. "It's a card for you to purchase what you are going to take and they keep deducting," according to Chávez. "It's to buy what you need, not to promote communism, but to buy what just what you need."

An explanation by the pro-Chávez VenezuelAnalysis paints a very bizarre picture:

"Yesterday, President Hugo Chavez announced the creation of a new bank card that can be used to purchase food at affordable prices in new community run supermarkets called “Biceabastos,” and to maintain accounts in a new system of communal banks linked to state owned banks.

The announcement was the latest step forward in the government-sponsored formation of communes as an alternative form of community governance. In the process, communal councils, which are community decision-making bodies grouping together around 100 to 400 families, link together into a broader form of organisation that includes community production and consumer needs. ...

Chavez called the cards, “cards for living well” because they are for “necessary consumption, not consumerism.” The card will be supplied by the state owned Bank of Venezuela, which was nationalized in 2008.

According to the minister for commerce, Richard Canan, as of the start of August there were 21 biceabastos employing 4,345 workers. By comparison, there are 37,000 workers in the PDVALs, Mercals, and food houses. The government hopes to create 200 biceabastos by the end of the year.

The state run and community run food markets are part of the government’s “food sovereignty” strategy to guarantee basic food products to the population at affordable prices and to avoid the scarcity of certain items of food caused by profit-driven hoarding."

As I understand this, you get the card from the state-sponsored bank, and then you buy all your food from the state-run Biceabastos. The Biceabastos are controlled by state-sponsored community councils. If you do the arithmetic in the next-to-last paragraph, it appears that the Biceabastos are going to replace all the other food markets.

Apparently, the card appears to be like a food-rationing technique used by the Cubans. The card would restrict the types and amounts of food that Venezuelans could buy, and could be used to control the entire distribution and supply chain. Many consumer goods in Venezuela have become scarce because Chávez has nationalized many companies, and then operated them poorly. Chávez got away with this when times were good, but the rise in food prices is now causing unrest.

Food shortages in Russia

The recent jump in wheat prices was triggered mainly by the Russian once-in-a-century drought and wildfires that have been occurring for several months, causing Russia's wheat crop yield to fall significantly, and the government to ban wheat exports until the end of 2011.

Even Russia is experiencing food shortages, even though there should be enough wheat, since the country has banned wheat exports. Wheat cannot be found in store shelves in Russia, according to the NY Times, causing Russian officials to fear political instability. They're blaming the shortage on panic buying, hoarding, and speculators.

The growing food crisis

From the point of view of Generational Dynamics, this food crisis is entirely predictable, and will only grow worse.

I first started writing about rising food prices in 2004, with "Food: Green revolution v Malthus effect." In 2005, I wrote an article that showed that food prices had been falling for decades, but had started to rise much faster than inflation in the year 2000.

The "Malthus effect" is my name for the fact that the population grows faster than the food supply. In a book called An Essay on the Principle of Population published in England in 1798, Thomas Roberts Malthus reached exactly that conclusion.

Malthus made some math errors, but his conclusion is basically correct. Malthus also made some social errors. He said that the inevitable result of food shortages would be famines and deaths from starvation. That might be true for "dumb" animals, but societies of "intelligent" human beings do not simply starve to death. Instead, they have food riots, and eventually resort to war to exterminate their neighbors and get their resources, including farmland. That's built in to the human DNA.

Some politicians make the claim that Malthus' predictions have proven untrue, a claim that I consider bizarre when you consider that you can pick any day of any year and there are 10-40 wars going on in the world.

My own rough estimate is that food production grows by 0.96% per year, while population growth exceeds 1.72% per year (since 1950), and is 2-4% in some countries. (However, the United States population has been growing around 0.92% per year.)

To bring the amount of food per capita back to 1950 levels would require the elimination of some two billion people. That's why I've been using the figure two billion as the estimated number of deaths that will occur in the coming Clash of Civilizations world war. This result is mathematically unstoppable, despite the protestations of politicians and college professors who seek money, in the name of fighting starvation and poverty, for their committees, their pet projects, and their personal bank accounts.

Additional links

Violence has increased substantially in Russia's southern provinces in the north Caucasus region. On Thursday, a suicide car bomber killed 17 people in a crowded central market in Vladikavkaz, the captal of North Ossetia. Associated Press

Copper prices have been rising because of demand from China for two reasons: to sustain its rate of growth; and to spend its US dollar surplus on something useful. China has been stockpiling copper in recent months, but experts believe that demand will slack in the next few months, with a fall-off in prices that could affect stock prices. International Relations and Security Network (ISN)

The Organization for Economic Cooperation and Development (OECD) says that the "slowdown in the pace of recovery of the world economy ... is somewhat more pronounced than previously expected." It blames the cut back on stimulus, as governments look to cut record budget deficits. Bloomberg

On Wednesday, North Korea celebrated the 62n anniversary of the nation's establishment, but the day passed with no sign of naming of a successor to ailing president Kim Jong-il. A party congress was supposed to have begun by now, but the meeting has been delayed because of floods. Bloomberg

The political confrontation between Japan and China worsened on Thursday, as Japan threatened to prosecute the boat captain that they arrested a day earlier for fishing in waters claimed by Japan. (See yesterday's posting.) An official statement said, "A wave of indignation is brewing in Chinese society, which might snowball into a major public outcry if the Japanese authorities continue to take a hardline stance." This threatens a repeat of the anti-Japan violence that occurred in Beijing in 2005. Guardian

Several unexploded bombs were found on Wednesday to have been planted in Bangkok, Thailand, and in a neighboring province. Government officials accused the "red shirt" protestors, who had shut down Thailand's shopping district last spring, of having planted the bombs, and said that the discovery justified the continuation of the state of emergency that gives the government the power to arrest anyone at will. (However, it seems possible to me that the bombs were planted by the government to justify the continued state of emergency.) Reuters

HIV has spread "out of control" among French gay men. Reuters

(Comments: For reader comments, questions and discussion, see the 10-Sep-10 News -- Venezuela moves toward food rationing thread of the Generational Dynamics forum. Comments may be posted anonymously.) (10-Sep-2010) Permanent Link
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9-Sep-10 News -- Fed reports 'widespread signs of deceleration' in economy

China threatens 'further actions' after Japan arrests a Chinese fisherman

Fed reports 'widespread signs of deceleration' in economy

In its regular "Beige Book" report, released on Wednesday, the Federal Reserve reported "widespread signs of deceleration" in the economy. This is a change in assessment that's occurred just over a few weeks, according to Bloomberg.

In a speech last month, Fed chairman Ben Bernanke said "the preconditions for a pickup in growth in 2011 appear to remain in place," but the current report undermines that appraisal, without predicting a new recession.

This report is consistent with the numerous articles that I've been posting since June, starting with "7-Jun-10 News -- Globally, May was a month of ominous events."

Since that time, trends in numerous areas, including jobs, retail, manufacturing, housing, and GDP have all shown declines or slowing growth.

The report says that the economy particularly lost strength in late summer, according to the Associated Press.

There are twelve regions tracked by the Fed, and the reasons for slow economic growth differ by region. Thus, Philadelphia had a mixed picture, reporting slower manufacturing and real estate activity, but retailing revenue.

In New York, on the other hand, retail sales dropped, factory production slowed, and both residential and commercial real estate turned even softer.

Still, I hear nutjobs, liars and crooks on CNBC and Bloomberg TV, all of whom stand to make money from commissions and fees (including advertising fees) from a rising stock market, claiming that this new report is just a temporary blip, and prosperity is just around the corner. this is actually both sickening and fascinating to watch, because it's exactly the kind of thing that happened in the 1930s, and it's what's happening today.

Ireland and Greece raise new concerns about Europe's financial problems

Bond spreads -- interest rates for debt issued by Ireland, Greece and Spain, measured by the amount it exceeds interest rates for Germany's debt <font size=-2>(Source: Financial Times)</font>
Bond spreads -- interest rates for debt issued by Ireland, Greece and Spain, measured by the amount it exceeds interest rates for Germany's debt (Source: Financial Times)

After a summer where everyone forgot about Europe's financial problems, people seem to be paying attention again, especially to the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain).

Greece is being accused of continuing to hide the details of secret financial transactions that it used to conceal debt, according to Bloomberg. Although several countries besides Greece, including Germany, Italy, Poland and Belgium, used synthetic securities in the past to hide debt levels from the EU, Greece is the only country that continued to lie about them after 2008, and is the only country that is still concealing the details of those transactions.

The European Union’s statistics agency Eurostat is heading to Greece later this month to audit the debt hidden by these opaque contracts. The audit is expected to be tough.

Another PIIGS country, Ireland, is also receiving new scrunity.

As we reported several months ago (see "2-Apr-10 News - Ireland's banks in crisis,"), an Ireland agency has found 80 billion euros of "toxic assets" in Ireland's banks, about half the size of the economy.

Ireland has nationalized the banks, and those toxic assets are now on Ireland's books, adding to Ireland's debt, which Ireland cannot repay in any reasonable time frame.

The result is that Ireland's bond yields have been increasing, like those of Greece. Rising bond yields mean that the country has to pay much more interest payments when borrowing money, which creates a vicious cycle, since the higher interest payments make it even more likely that the country will default.

On Wednesday, Ireland announced that it will split its most troubled financial institution, the Anglo Irish Bank, into two banks, a "good bank" and a "bad bank," according to Associated Press. All of the toxic assets will be transferred to the "bad bank," leaving the "good bank" with good assets.

The concept, as I understand it, is that the government will slowly sell off the debts incurred by the bad bank, and in the meantime, the good bank can borrow money at lower interest rates. However, what doesn't make sense to me -- or apparently to investors as well -- is that if Ireland can't pay its debts when there's one bank, how can they pay their debts just because they've split up one bank into two?

Europe's bank stress tests were all but fraudulent

On Tuesday, the Wall Street Journal (Access) published the result of an analysis that shows that European banks essentially lied last spring, when they reported the results of mandated "stress tests."

Before going further, let me say that lying is the norm today. I just explained how Greece is continuing to lie. For years, I've repeatedly claimed that so-called experts on CNBC and Bloomberg TV constantly lie about price/earnings ratios. (See, for example, "24-Aug-10 News -- Ariel's Bobrinskoy gives price/earnings fantasy.") So when these European banks lied, I guess they aren't really lying, because they're just doing what everyone else does.

The stress tests were mandated for 91 European banks. The purpose of the stress tests was to regain investor confidence by revealing how exposed these banks were to "toxic assets" in the form of debt owed by other countries, especially the PIIGS countries. It was thought that once the exact size of the problem was known, then investors would feel confident enough to start growing the stock market and credit bubbles again.

According to the WSJ analysis, many banks simply cheated, by using various subterfuges to high toxic assets.

For example, using data from the Bank of International Settlements, WSJ determined that French banks were holding about €20 billion of Greek sovereign debt and €35 billion of Spanish sovereign debt. In the stress tests, four French banks, which represent nearly 80% of the assets in France's banking system, reported holding a total of €11.6 billion of Greek government debt and €6.6 billion of Spanish debt.

As I look back over the Europe stories that I've written today in the last few paragraphs, I'm struck by something: Ireland is the only country of the bunch that appears not to be committing fraud at the moment. Of course, Ireland is screwed as far as its debt is concerned, but that's because they lied massively in the past. Still, it's nice to know that there might be some people who may be telling the truth, in a world where lying and fraud continue to be the norm.

China threatens 'further actions,' after Japan arrests a Chinese fisherman

Simmering tensions over islands in the East China Sea claimed by both China and Japan boiled over on Wednesday, after Japan arrested the captain of a fishing trawler that was fishing in the disputed waters, and pledged to bring criminal charages against him.

For centuries Japan and China have disputed the ownership of the small island chain, called the Senkaku Islands by the Japanese and the Diaoyu Islands by the Chinese. The islands are little more than rocks in the middle of the sea, but they are valuable because of a potential oil field there.

In 2005, the dispute became so bitter that military action was being threatened on both sides. (See "China and Japan head for military confrontation over disputed islands.")

In the latest incident, Japan's coast guard said that the Chinese boat twice struck Japanese patrol vessels after ignoring instructions to cease fishing in the disputed waters, according to the Telegraph. No one was injured.

The 2005 dispute led to violent riots in Beijing targeting the Japanese embassy.

On Wednesday, more than 30 people, holding up banners and Chinese flags, demonstrated in front of the same embassy, according to the Chinese government publication Global Times. One protestor is quoted as saying, "Japan, get out of the Diaoyu Islands. Get out." Another protestor said, "Japan's arrest of the Chinese captain is a form of illegal kidnapping."

So far, everything is pretty calm. But if Japan implements its threat to bring criminal charges against the captain, and sentence him to jail, then the dispute could become more violent.

Additional links

June 2005: Jean-Claude Juncker, Tony Blair, Jacques Chirac
June 2005: Jean-Claude Juncker, Tony Blair, Jacques Chirac

In 2005, there was a bitter budget dispute between Britain and France because of rules on rebates and agricultural subsidies dating back to the 1980s. The dispute became so visceral that it threatened the entire European Union, and it was settled only when Britain caved in to France's demands. (See "Press reports say that Tony Blair caving on EU budget.") Now five years have passed, and there's a new budget cycle, and the same dispute is starting up again. EU Observer

Participation of Saudi women in violent al-Qaeda activities is growing. This creates a problem because Saudi Arabia's male security forces are not permitted to question and keep track of women. Furthermore, women terrorists can disguise themselves by wearing face veils, and thereby gain access to areas where a man cannot. The result is that Saudi women are being recruited to participate in anti-terrorist programs. Global Post

As relations between India and China continue to deteriorate, and China and Pakistan develop closer relations, India is developing closer relations with Japan and South Korea. This is consistent with the expectation that Japan, South Korea, India and Russia will be allied with the West against China and Pakistan in the Clash of Civilizations world war. South Asia Analysis Group

Two new books on the Caucasus region -- including Georgia, Armenia, Azerbaijan and parts of Turkey and Russia -- describe a region without meaningful borders with unique social mores and a long history of violence. EurasiaNet

Secretary of State Hillary Clinton signaled a major shift in U.S. policy towards Mexico, by saying that the Mexico drug wars are starting to look like a leftist insurgency. From the point of view of Generational Dynamics, Mexico is headed for a re-fighting of the 1910s Mexican Revolution, pitting descendants of Europeans against indigenous people (Aztecs and Mayans). LA Times

The BBC completely fails to understand the Tea Party movement. Telegraph

Tylenol-loaded mice dropped from air to control snakes. CNN

(Comments: For reader comments, questions and discussion, see the 9-Sep-10 News -- Fed reports 'widespread signs of deceleration' in economy thread of the Generational Dynamics forum. Comments may be posted anonymously.) (9-Sep-2010) Permanent Link
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8-Sep-10 News -- India political uproar over 'saffron terror'

Abbas rejects Netanyahu's 'historic compromise' on Jerusalem

India has political uproar over 'saffron terror' or 'Hindutva violence'

There was a suicide bombing in Malegaon in India on September 29, 2008, and Muslim Jihadists were immediately suspected. However, Indians were shocked to learn that evidence pointed to a widespread terror network, a Hindu Hindutva group that seeks revenge against Muslims. Even worse, this terrorist group has links to India's major opposition party, the Hindu nationalist Bharatiya Janata Party (BJP). (See "'Hindutva' terrorist violence against Muslims shocks Indians.")

The issue never achieved much prominence in India at the time, but it has now. On August 25, India's Home Minister (like America's Secretary of State), speaking to a group of police chiefs in New Delhi, said that a new phenomenon of "saffron terrorism," led by radical Hindu groups, was responsible for well-planned terror attacks and inciting communal violence.

Home Minister P Chidambaram is quoted by New Delhi Television as saying,

"There is no let up in the attempts to radicalise young men and women in India. There has been a recent uncovered phenomenon of saffron terrorism that has been implicated in many bomb blasts in the past. My advice to you is that we must remain ever vigilant and continue to build, at both Central and state level, our capacities in counter-terrorism."

He linked saffron terrorism, or Hindutva violence, to several terrorist attacks in the last three years, including the Malegaon suicide bombing mentioned above.

The phrase "saffron terrorism" has caused a political outcry, because saffron is the color associated with Hinduism, Hindu nationalism, Hindu valor, and with Hindu heroes. Thus, some interpreted the remark as an attack against all Hindus, and against Hinduism itself. The phrase was also interpreted as striking at the opposition political party, the Bharatiya Janata Party (BJP), which has historically been associated with Hindu nationalism. (See the 2008 article referenced above for the interesting history of Hindutva.) However, Chidambaram subsequently issued a clarification saying that his remark was not targeting the BJP.

The issue has gotten quite heated. On Tuesday, BJP chief Rajnath Singh struck back, according to the Hindustan Times:

"Home Minister Chidambaram has committed a serious mistake. Nationalist forces would raise this issue, and launch an agitation if [Prime Minister Manmohan Singh] does not seek an apology from him and direct him to withdraw his words,

Saffron is not just a word related to BJP but is a symbol of peace and happiness. Saffron is also one of the colours in the national flag and represents the Indian ethos of sacrifice and devotion. ...

We never use a term like Islamic terror because the scourge can not be linked with a particular set of social, moral, ethnic and religious values."

From the point of view of Generational Dynamics, a resurgence of Hindu violence is to be expected. Hindus and Muslims fought a massively genocidal war following Partition (the 1947 partitioning of the Indian subcontinent into India and Pakistan), and Generational Dynamics predicts that that war will be fought in the years to come.

Additional links

Adriana Alves
Adriana Alves

You can't make this stuff up. The new Tory MP Mike Weatherley, who just took office a few weeks ago, was shocked to learn that his wife, Adriana Alves, is a prostitute working in three brothels, charging £70 for a good time. According to Weatherley, he and his wife separated in February. Mirror (UK)

In an interview Saturday for a Palestinian newspaper, Palestinian Authority President Mahmoud Abbas rejected Prime Minister Benjamin Netanyahu's talk about an "historic compromise" and said there would be no compromises on core issues such as Jerusalem and borders. He also reiterated his rejection of Netanyahu's demand that the Palestinians recognize Israel as a Jewish state. Jerusalem Post

Israel's foreign minister, Avigdor Lieberman, is leading the effort to block any extension of Israel's settlement freeze, set to expire on September 26. Lieberman is part of Prime Minister Benjamin Netanyahu's coalition, but he's in a right-wing political party, the Yisrael Beiteinu ("Israel is our home") political party, which mostly represents immigrants from Russia and the Soviet Union. "A promise is a promise," he said. "We will not agree to any extension. I promise that if there's a proposal that we don't accept, it will not pass." A compromise on the settlement freeze must be reached by September 26 if the Mideast peace talks are to continue. Associated Press

After the international uproar over the Gaza flotilla incident several months ago, Israel eased controls on the movement, import and export of goods in the Palestinian Terroritories. The result is that the economies of both the West Bank and Gaza have been booming. Media Line

In northwest Pakistan, a remote-controlled bomb blast inside a police colony killed at least 20 people on Tuesday evening, mostly relatives of policemen. Dawn

Speculation abounds that North Korea's ailing president, Kim Jong-il, is going to use the Workers' Party conference this month to announce that he will anoint his son, Kim Jong-un, to be his successor. An official statement said that the meeting would "mark a meaningful chapter in the history of our party," and that, "The people's hearts awaiting the revolutionary, festive occasion heat up due to their joy and happiness." Associated Press

A state in eastern Germany is so worried about neo-Nazis trying to take over kindergartens that it has ordered teachers to vow allegiance to democracy. But that won't tackle the underlying problem -- the racist youths who assaulted immigrants in the 1990s are now parents intent on rearing little skinheads. Spiegel

The Army is warning its personnel about viewing or downloading documents posted on Wikileaks, since the documents may be classified, and downloading them could "potentially expose Army networks to sensitive data or create situations in which data is improperly safeguarded." Fierce Government IT

In a fraud plot, four women invented a man, and then killed him off. Talking Points Memo

(Comments: For reader comments, questions and discussion, see the 8-Sep-10 News -- India political uproar over 'saffron terror' thread of the Generational Dynamics forum. Comments may be posted anonymously.) (8-Sep-2010) Permanent Link
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7-Sep-10 News -- Europe's bonds return to crisis levels

Belgium is close to total dissolution

Europe's bonds return to crisis levels as summer season ends

European Union finance ministers, arriving for a two-day meeting in Brussels, expressed satisfaction with the progress so far. German Finance Minister Wolfgang Schaeuble was quoted by Bloomberg as saying. "Developments in the first half were rather good. [The result is] a slight slackening of the dynamism to draw consequences."

I was wondering what that peculiar last sentence meant, until I read a France24 article quoting Schaeuble as conceding that with each passing week it seemed that "the enthusiasm for learning the lessons is weakening bit by bit."

In other words, now that the crisis is "over," there is less and less enthusiasm among the finance ministers to pass needed reforms.

And what are those needed reforms? Well, Reuters says that the finance ministers want to impose a tax bank profits and financial transactions, so that they can get a new windfall of money for their various spending programs in each of their countries. Gag me with a spoon.

While this farce is going on, bond spreads are deteriorating to the levels that led to the Greek bond crisis and the gargantuan bailout last May. (See "11-May-10 News -- Europe's super-nuclear bailout.")

Wolfgang Münchau, the widely respected columnist for the Financial Times (Access), says, "Do not fall for talk of European solvency." According to Münchau,

"While the Europeans are celebrating the end of the financial crisis, something strange is happening in the bond markets. The gap in the yields – the spread – between the 10-year bonds of peripheral eurozone countries and Germany has been growing at an alarming rate. It is now close to the level that prevailed in the days before the European Union decided to set up its bail-out fund in May.

Last Friday, the spreads were 3.4 per cent for Ireland, 9.4 per cent for Greece, 3.4 per cent for Portugal, and 1.7 per cent for Spain. The yield on 10-year German bonds is currently ridiculously low, about 2.3 per cent. The financial markets somehow regard Germany as a paragon of virtue, stability and sound financial management, and are happy to demand virtually no return on 10-year investments. If the bond markets were ever returned to normal, and if the spreads were to persist, peripheral Europe would find itself subject to an intolerable market interest rate burden."

What this stuff about "bond spreads" means is the following: Many investors are putting their money into what they consider to be the safest places -- German 10 year bonds, that are paying an incredibly low interest rate of 2.3%. (Incidentally, U.S. 10 year bonds are in that ball park as well.) But investors consider bonds from other countries to be much riskier investments, and they're demanding much higher interest rates: 2.3%+3.4%=5.7% for Ireland, 2.3%+9.4%=11.7% for Greece, and so forth.

These rising interest rates indicate a rising conviction among investors that these other countries are going to default, and not pay their debts. This creates a "vicious spiral," where rising interest rates mean that a country has to pay more to borrow money, which means that there's an even high chance of default, which causes investors to demand even higher interest rates, and so forth, round and round.

Münchau says that Greece's adjustment program is going much better than anyone had hoped, but even so, it isn't enough to prevent insolvency. He concludes, "Yes, it is possible that Greece will get through this crisis, and repay all of its debt. But it is far more likely that parts of peripheral Europe will end up only repaying parts of their debt. That is what the bond spreads are telling us, and I think that the bond markets have got this one right."

None of this should be a surprise to regular readers of this web site. It was absolutely certain last May, when the "super-nuclear bailout" was announced, that Greece was going to default anyway, and I wrote about it several times. But now that the summer doldrums are ending, there is increasing focus on this reality.

Meanwhile, things are also going poorly on this side of the Atlantic. Nouriel Roubini is quoted by the Telegraph as saying that the United States, Japan and large parts of Europe have exhausted their policy arsenal, leaving them defenseless against a double-dip recession. "We have reached stall speed. Any shock at this point can tip you back into recession. With interbank spreads rising, you can get a vicious circle like 2008-2009."

Belgium is close to total dissolution

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

After the resignation of a key mediator over the weekend, leading politicians are now openly talking about the prospect of breaking up Belgium, according to EurActiv.

Since Belgium was created in 1830, it's been two countries in one: 6 million Dutch speakers in the flat, northern lands of Flanders (the Flemish), and 4 million French speakers in the southern region of Wallonia (the Walloons). Many Flemish voters are increasingly frustrated at having to subsidize social security bills in the poorer, French-speaking south, where the collapse of traditional industry has led to much higher unemployment than in the north.

For this reason, the Flemish generally favor breaking up the country, while the Walloons tend to oppose it. However, one stumbling block to a breakup is that both sides wish to claim the capital city, Brussels. Over 80% of the population of Brussels is French-speaking, but the city lies on the Flemish side of the border. To make the point, on Sunday, thousands of Flemish separatists took part in an annual demonstration, that consists of symbolically encircling Brussels by bike to remind locals that they are surrounded by Flanders.

A breakup of Belgium could lead to financial disaster, according to Reuters. The country's debt is already the third highest in Europe, and is expected to be greater than the country's GDP next year. A breakup could only make things worse.

In fact, bond spreads for Belgian debt have already begun to rise on fear of a breakup, according to Market News.

Additional links

Something that I've felt for a long time is that the enormous stimulus and bailout packages are not only not helping the economy, but are actually making it worse by using up resources to delay the inevitable crash, which will then be worse than it would have been. Apparently some mainstream economists are starting to adopt this view, and favor letting housing prices crash right away, rather than spending large amounts of money to prop up the housing market temporarily, which is what we've been doing. NY Times

France's public sector labor unions began their nationwide strike on Monday, with the worst effects to be felt on Tuesday. They're protesting pension reform including the horror of having the retirement age raise from 60, where it is now, to 62. Associated Press

Another day, another suicide attack in Pakistan. On Monday, a terrorist ramed his explosives-laden vehicle into a police station in northwest Pakistan, killing 19 people, including women and schoolchildren. There's been a lull in these suicide attacks for a while, apparently because the terrorists were as disabled by the massive floods as ordinary people were. But now, this is the third major suicide attack in Pakistan in the last week. Dawn

(Comments: For reader comments, questions and discussion, see the 7-Sep-10 News -- Europe's bonds return to crisis levels thread of the Generational Dynamics forum. Comments may be posted anonymously.) (7-Sep-2010) Permanent Link
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6-Sep-10 News -- US proposes more military aid to Yemen

Report: Iran is paying the Taliban $1,000 for killing each US soldier

US Central Command proposes $1.2 billion in military aid to Yemen

The US Armed Forces Central Command has proposed delivering up to $1.2 billion in weapons and related expenses for Yemen's security forces, to be used in fighting Al-Qaeda on the Arabian Peninsula (AQAP).

Predator drone firing missile
Predator drone firing missile

In recent years, US military assistance to Yemen has expanded dramatically, costing $155 million in 2010 alone, according to AFP. In the past, the aid has included military helicopters, patrol boats, trucks and training, while American special forces also work in Yemen.


American involvement is suspected of being deeper than that. In June, a story broke that missile parts from an American cruise missile were found in an al-Qaeda training camp, from an attack in Yemen in December. However, Yemeni authorities insist that the attack was carried out by their forces alone, according to the Independent.

The new request comes only a couple of weeks after the CIA has made a remarkable change in its assessment of AQAP, now considering it to be a greater threat to US security than the core al-Qaeda group in Pakistan and Afghanistan. (See "27-Aug-10 News -- U.S. considering escalating military role in Yemen.")

This situation has been building since December 25 of last year, when an attempted bombing of an airplane over Detroit failed, and it was learned that the perpetrator, the "underwear bomber," had been trained by AQAP in Yemen.

In January, U.S. Gen. David Petraeus recommended providing additional security funds to Yemen, but said that no American troops would be involved, according to CNN.

The new weapons being considered for Yemen are armed, unmanned aerial drones operated by the CIA, mirroring the CIA's drone campaign in Pakistan, according to the Wall Street Journal (Access).

It's not known whether the change in CIA assessment means that the question of US troops in Yemen is now on the the table, but the Yemenis themselves insist that US troops are not wanted, since the Yemeni troops can handle the problems by themselves, according to the Yemen Post. (See "1-Sep-10 News -- Amsterdam arrests highlight Yemen confusion.")

There are widespread fears for the Yemen government's stability.

Yemen is fighting two separate wars at the same time. In northwest Yemen, the army is fighting a rebellion by ethnic Houthis. This fight spilled over the border into Saudi Arabia earlier this year, bringing Saudi airstrikes into the Houthi region of Yemen. It's also suspected that Iran is supplying some weapons to the Houthi rebels, who practice a form of Shia Islam.

In the south, Yemen is fighting al-Qaeda militants, who have taken control of a large region and set up terrorist training camps. The CIA assessment is that AQAP is becoming more agile and agressive, and capable of training many more suicide bombers, so that sooner or later one of them will succeed in launching a successful terrorist attack on American soil.

As we've discussed a number of times in the past, al-Qaeda has turned into a kind of "virtual terrorist group," a brand name for loosely linked local Sunni Muslim terrorist groups in countries from the Pacific, through Asia and the Mideast to Africa, and north through central Asia to Russia and the Caucasus. The objective of Osama bin Laden and al-Qaeda leaders is to replicate the success of the 1979 Islamic Revolution of Iran to create a Sunni Muslim state in some country. They've tried in Iraq, Somalia, Yemen, Pakistan, Uzbekistan, and other countries, and they've failed so far, but they will not stop until they succeed.

The situation in Yemen is becoming increasingly serious, and the American involvement in Yemen continues to escalate. Whether or when American troops will be introduced into Yemen remains to be seen, but it seems certain that if a severe crisis develops in Yemen, then American troops may well be considered necessary.

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According to a report, Iran is paying the Taliban $1,000 for each U.S. soldier that they kill in Afghanistan. MSNBC. This report shows how confused Iran's situation is. Sunni extremist groups, including al-Qaeda and the Taliban, have been targeting Shia groups in Pakistan. So if this report is true, then Iran is paying off its enemy.

The Nato troop withdrawal, set to begin in July 2011, along with the drive by President Hamid Karzai's government for reconciliation with the Taliban, is causing a resurgence of some of the harshest effects of Sharia law, including the closure of all girls' schools, barring women from employment, and forcing women to wear the all-encompassing burqa, while men are ordered to cover their heads as well. RFE/RL

20% of Pakistan is still covered by flood waters, and the floods are giving renewed clout to the Pakistan Army, and weakening the Pakistan government of President Asif Ali Zardari. Reuters

Like France, Italy is shutting down Roma Gypsy settlement camps, and deporting the people back to their countries of origin. However, Italy isn't really copying the French, since they've been doing it longer than the French have. Apparently, the French policy is based on what the Italians have been doing. NY Times

(Comments: For reader comments, questions and discussion, see the 6-Sep-10 News -- US proposes more military aid to Yemen thread of the Generational Dynamics forum. Comments may be posted anonymously.) (6-Sep-2010) Permanent Link
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5-Sep-10 News -- Thousands protest Gypsy expulsions from France

New Mideast peace talks scheduled for September 14 in Cairo

Tens of thousands protest in France over Roma Gypsy expulsion policy

Tens of thousands, led by "left-leaning political parties and human rights organizations," protested in 130 cities across France on Saturday, according to the LA Times.

They were protesting the policy of French president Nicholas Sarkozy in dismantling refugee camps and deporting Roma Gypsies back to their home countries, usually Bulgaria or Romania.

One protestor, of Algerian origin, said, "It's always the same people who are stigmatized He is saying that immigration is linked to crime, but there are immigrants who work, and are educated, like me. We feel so French.... They don't like us, and to them we'll never be French."

According to France24, French trade unions plan a week of protests. Widespread disruption is planned for Tuesday, in everything from schools and public transport to telecommunications.

However, many of these are less about the Roma Gypsies, and more about the planned pension reforms, and other austerity measures.

Despite these protests, polls show that a majority of the French people support Sarkozy in the deportations.

I wanted to get a better feel for what's going on, and so I'm printing a selection of reader comments to an opinion article in the Independent that was supportive of the deportation policy. I apologize in advance that most of comments are "anti-Roma," but I'm particularly interested in getting a feeling for the reasons given by people who object to the Roma Gypsies.

As regular web site readers know, I use the word "xenophobia" in these situations, where there is a visceral fear of or animosity towards people, based solely on a demographic factor like ethnicity.

Here in America, we have two examples of this kind of xenophobia, Latinos and Muslims, and the causes are widely debated. So let's see some of the reasons that French people give about the Roma Gypsies:

All of these comments (except the last one) are extremely negative toward the Roma, and indicate that a very serious problem is developing in Europe. However the current political dispute in France turns out, the Roma Gypsy situation is going to continue to be a serious problem in Europe.

Additional links

Some politicians are declaring victory already in the Mideast peace talks, since the talks didn't collapse on the first day, and a new meeting is scheduled for September 14 in Cairo. The real critical day will be September 26, when the Israeli moratorium on building settlements ends. Haaretz

Many of the recent suicide bombings in Pakistan have been directed at Shia Muslim targets. These attacks from Sunni terrorist groups, including al-Qaeda, Tehrik-e-Taliban Pakistan (TTP) and Lashkar-e-Jhangvi (LEJ), are intended to send a message that Iran is also the target. In many ways, the mutual hostility of Sunnis and Shias in Pakistan is increasing. This is consistent with the Generational Dynamics prediction of a major war between Sunni and Shia Muslims. Eurasia Review

India is becoming increasingly nervous about the presence of 7,000 Chinese working in Kashmir to build a highway linking western China to the port it is building in Pakistan, on the shore of the Arabian Sea. Guardian

(Comments: For reader comments, questions and discussion, see the 5-Sep-10 News -- Thousands protest Gypsy expulsions from France thread of the Generational Dynamics forum. Comments may be posted anonymously.) (5-Sep-2010) Permanent Link
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4-Sep-10 News -- Food prices soar around the world, causing food riots

Why college professors lie about the economy

Mozambique has food riots as world food prices soar

Seven people were killed in food riots in Maputo, the capital of Mozambique, on Wednesday and Thursday, according to VOA. The situation was calmer on Friday, thanks to a heavy police and military presence, but more demonstrations are expected on Monday. In the meantime, riots have spread to suburban cities outside the capital.

Mozambique is one of the poorest countries in the world, and the price of bread has risen 30% recently, triggering the riots.

FAO Food Price Index
FAO Food Price Index

In fact, food prices around the world have been surging, according to the UN Food and Agriculture Organization (FAO). According to the latest report (PDF), the jump in wheat prices is the main driver for the increase in food prices in August.

As you can see from the above graph, food prices in 2010 are already well above levels in 2006 and 2009, and are threatening to surpass the major food price crisis that occurred in 2008.

The recent jump in wheat prices was triggered mainly by the Russian once-in-a-century drought and wildfires that have been occurring for several months, causing Russia's wheat crop yield to fall significantly. Initially, Russia announced that it would ban exports until the end of 2010, but now Russian Prime Minister Vladimir Putin has announced that the export ban will remain in place until the end of 2011, according to the International Business Times.

The floods in Pakistan have also contributed to the food price surge. With 20% of the country covered by floods, many wheat crops and seed stocks have been destroyed.

The UN has called for an international meeting on September 24 to discuss the problem, though it's not clear to me how a meeting will solve the wheat shortages.

Tension is growing in countries around the world because of the rise in food prices, and it's feared that food riots will occur around the world, as happened in 2008.

Why college professors lie about the economy

In my posting yesterday on Prof. Jeremy Siegel, I discussed a conundrum that's bothered me in the 1950s, and is still bothering me today. In the 1950s, my teachers all told me that analysts were wrong for years during the Great Depression, predicting that "prosperity was just around the corner," when they kept getting it wrong, time after time after time. Why did that happen? And this is highly relevant today, since exactly the same thing is happening.

It's occurred to me since then that there's only one possible explanation that I can think of. I have no evidence that this applies specifically to Jeremy Siegel, but I feel pretty confident that it applies to a lot of the analysts spouting nonsense on CNBC and Bloomberg TV.

By way of introduction, let's recall that dishonesty and and lying are the norm today. The financial crisis was not caused by one or two "bad apples." It was caused by people in almost every financial institution in the world, creating synthetic securities that they knew were faulty, and fraudulently selling them to investors, in order to collect fat fees and commissions. This ubiquitous fraud was the result of a generational change, following the retirement of the Silent generation.

The same Boomers and Gen-Xers are still in charge today, still commiting fraud. A college professor who's invited to appear on CNBC or Bloomberg TV has an opportunity to turn it into real money. Since he's supposed to be an expert, he can generate fat consulting fees. By saying that prosperity is just around the corner, he'll be invited back to CNBC or Bloomberg TV time after time. Thus, he lies on TV in order to gain publicity for himself, and to get consulting clients.

I don't claim to have any proof that this is going on. But I don't really believe that all these financial experts are as stupid as the things they're saying. This explanation is consistent with everything else that's going on today, and actually explains what's happening.

Additional links

Egypt imports 40% of its wheat, much of it from Russia. Now that Russian wheat is cut off, Egypt is forced to spend millions of dollars to subsidize rising bread prices. Reuters

China has ordered local leaders to raise vegetable production, to keep food prices under control. Associated Press

The cost of food was almost 15% higher last week than it was a year ago in India, there have been good monsoon rains, so a good harvest is expected in the fall, which should stabilize food prices. The Hindu

People in Africa are eating weeds to try to prevent starvation, as rising food prices pur food out of their reach. Australian

The Mideast peace talks that began in Washington on Thursday are polarizing relations between Iran and Egypt. Egypt is cooperating with the peace talks, which Iran is calling for an destruction of Israel. The Hindu

There was another suicide bombing on a Shia group in Pakistan, this time in Quetta in southwest Pakistan. 53 people were killed. Police were forced to quell unrest from an angry mob after the bombing. Dawn

Why don't black Americans swim? BBC

As Americans withdraw from Iraq, Turkey and Iran are competing for influence in Iraq, with the potential for conflict over the Kurdish region in the north. The National (UAE)

(Comments: For reader comments, questions and discussion, see the 4-Sep-10 News -- Food prices soar around the world, causing food riots thread of the Generational Dynamics forum. Comments may be posted anonymously.) (4-Sep-2010) Permanent Link
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3-Sep-10 News -- Financial expert Jeremy Siegel makes no sense at all

PIIGS countries are facing worse debt crisis, while Germany thrives

TV interview with Prof Jeremy Siegel makes no sense

There are many aspects of today's world that fascinate me, and one of the greatest is the similarity in unrealistic attitudes between now and the early 1930s.

When I was in school in the 1950s, there was a great deal of talk about the Great Depression, and there was one theme that my teachers repeated over and over: How journalists and politicians of the time would predict that the 1929 stock market crash was a temporary dip, and that it would start going up again the following week or month or season. Prosperity was always just around the corner. How could so many people consistently gotten everything so wrong, time after time after time? Couldn't they learn from their mistakes? Why did they make the same mistakes over and over?

So what's fascinating to me today is to see exactly the same scenario playing out in real time, as exactly the same kinds of mistakes are made by exactly the same kinds of people in exactly the same way.

Some of you may not remember, but this was supposed to be the "Recovery Summer" for the Obama administration.

As far as I can tell, they bet all their chips on this strategy. They pushed through the monster health care bill and wasted time and effort on all sorts of other things, because they REALLY BELIEVED that the economy was going to recover dramatically this summer.

In fact, prosperity has always been just around the corner since the financial crisis began in late 2007. There were people on CNBC or Bloomberg TV constantly saying that the economy would pick up in one or two quarters. First it would be the last half of 2008, then it would be early 2009, then it would be the last half of 2009, then it would be early 2010, and then it would be the "Recovery Summer."

It's hard for me to convey how astonishing it is for me to be living through this, to see this puzzle that occupied many of my teachers in the 1950s be repeated right before our very eyes.

Jeremy Siegel
Jeremy Siegel

So on Tuesday, I saw a Bloomberg TV interview with Jeremy Siegel, professor of finance at the Wharton School of Business. This interview seemed to capture everything that's wrong with todays analysts, journalists and professors. He seems to have learned nothing from his past mistakes, promises that prosperity is just around the corner, and even provides almost contradictory reasoning in support of his promise.

Here are some excerpts from the interview (my transcription):

"Q: The Fed is expressing caution, but you continue to be upbeat. What is it that you're seeing that the Fed is not?

SIEGEL: First of all, I am disturbed that there is so much debate about whether they should use quantative easing, if this slowdown continues. This surprised me. I did not think we were going to have this slowdown. I do think we're going to have an acceleration by the fourth quarter for a number of reasons.

I want the Fed to to be ready to use more QE [quantitative easing] without a fight in the FOMC. I think Ben Bernanke was right. It looked like he moved to an easing status from his speech at Jackson Hole, but he obviously has opposition in the FOMC if he wants to move further.

I think that is unfortunate because we're not getting clarity on the fiscal side with the taxes, which I think is a very big negative for the markets, particularly the equity markets.

I want at least a proactive monetary authority that is ready to move if it feels it has to."

Here's where the see the basic internal contradiction in his reasoning, that I find entirely puzzling. He thinks that we're going to have "an acceleration in the fourth quarter for a number of reasons." But then he says that he wants to apply stimulus in the form of quantitative easing.

So what does he believe? Does he believe that there will be an acceleration in the fourth quarter with or without QE, or is QE a precondition? I can't figure out from the interview which he means. And this is where I begin to wonder whether he's lying to get on television.

The way the QE works is that the Fed purchases bonds and other financial assets from companies, in order to give them cash. For example, if a bank holds a billion dollars in mortgages on its books, the Fed could purchase the mortgages, so that the bank would have a billion dollars in cash to buy more mortgages.

This is what he's proposing: that the Fed purchase all the securitized loans that banks have on their books -- credit card loans, mortgages, etc. -- so that banks will have the money to make more loans. He calls this "lowering of risk premiums" -- that is, making it less risky for banks to make loans.

There are two problems with this proposal. One is that it's already been tried, and the Fed has a couple of trillion dollars of these assets on its books, but it hasn't worked.

And the second problem is that the mood of the public has changed, and is increasingly opposed to these unchecked and uncontrolled stimulus and bailout programs.

He defended quantitative easing in the case of Japan:

"I think we would get bang for the buck. I think QE or quantitative easing got a bad rap - people say it failed in Japan. The truth of the matter is it really didn't fail in Japan - they planned to actually stop, after a given period. It did stop the deflation. And I think that it would support prices and assets and the economy if we move forward on that."

This is an absolutely remarkable statement. As I reported a few days ago, Japan has recently announced its 17th consecutive month of deflation. Japan is still in a deflationary spiral 20 years after its stock market bubble crashed in 1990. So what on earth does Siegel mean?

His sentences were fairly garbled, so perhaps he meant that Japan only tried QE for a while, and while it was going on, it stopped deflation. But even in that interpretation, it misses the point. What these stimulus and bailout programs are supposed to do is "jump start" the economy so that the bailout programs can start, and the economy can become "self sustaining." If that doesn't happen -- if the money is simply wasted, and doesn't do any permanent good -- then what's the point of spending the money? You're only using up resources and wasting them.

This situation with Japan is really serious, and ought to give anyone pause. Ben Bernanke is known to have believed that deflation is impossible in any economy based on "fiat currency" -- that is, currency that's not limited by some gold standard. In such case, according to the theory, the central bank can just issue as much money as necessary to prevent deflation from occurring.

What's amazing to me is that so many economists still believe this, even though the Japan case clearly proves that its wrong. What's wrong with these idiots? How can Siegel point to the Japan case that so clearly invalidates his case?

One of the problems that Siegel identifies is that more "clarity" is needed on taxes, and he's counting on Congress to provide that clarity. He was asked why on earth he believes that's going to happen:

"Well, something's got to be decided on taxes.

I think that the market is anticipating absolutely the worst - a total lapse to th pre-Bush taxes, which is a sharp increases in taxes, which is not going to be good for stocks and the economy. I don't think it's going to be that bad. I think that there's a game of chicken going on between the Democratic congress and the Republicans.

And I personally think the Democrats are going to have to step back, because this election is not looking good for them, unless they bring some clarity for the economic outlook. So I do think we're going to get some resolution there.

And this worst case scenario, which I think that investors are now looking at, is not going to materialize."

This is about as close to total fantasy as I can imagine. There's a great deal of political debates these days is whether to extend the Bush tax cuts that will expire on January 1. President Obama was highly critical of these tax cuts during the campaign, and he'd rather have all his teeth pulled then see them extended. There is no chance that they'll be extended before the November elections, though there's a possibility that they'll be extended after that, before January 1. But that will be too late for Siegel's scenario, so what Siegel is saying is total nonsense.

So once again, what does Siegel believe? Does he believe that there'll be prosperity in the fourth quarter no matter what happens in Washington? Or does he set these impossible preconditions? Or is he simply lying? I have no idea. All I know is that he's reciting the kind of nonsense that one can hear all day from these financial experts on TV.

Recall the following GDP growth table that I posted a few days ago, after the Commerce department issued a disastrous 2nd quarter GDP report:

        Quarter      GDP Growth rate
        -------      ---------------
        Q1 2009      –4.9
        Q2 2009      –0.7
        Q3 2009       1.6
        Q4 2009       5.0 
        Q1 2010       3.7
        Q2 2010       1.6

What this table shows is a steady decline in GDP growth for three quarters in a row. Many analysts are concerned that GDP growth is going to turn negative in Q3 (this quarter), signalling the start of a "double-dip recession." But not Jeremy Siegel:

"I still do not think a double dip [recession] is in the offing, and I still think that the fourth quarter - we're going to see 3% [growth in GDP] and that's gonna bring us momentum into 2011. So we have really a two quarter soft patch -- we've had them before -- coming out of recessions - I think we'll get a little clarity again on the fiscal side, if the Fed isn't afraid to do some more quantitative easing, just to bring down some of those risk premiums. I think the market is really looking for that, and that's what we need to turn the psychology a little bit positive. I think when people see the world is not falling apart, and that we can move forward in our economies, that's when the recovery's really going to start in earnest. ... I think that this quarter, the 3rd quarter's going to be slow again, but I see an accelaration of 3% into the fourth quarter, and 3 to 3 1/2 % in the 2011. And that's what I think will bring the market back. Once [investors] see its growth."

These two paragraphs represent the heart of his reasoning -- and there's nothing there. The fall in GDP doesn't matter because we've had "soft patches" before. We'll get "a little clarity" on the fiscal side because Congress will do as he demands. Throw in a little psychology, and happy days are here again.

In the end, he predicted that the S&P 500 index will rise to 1250 or 1300 by the end of the year. He had expected the stock market to be much higer at this time, but he says he was wront about that. But he's certain that he's right about what will happen by the end of the year. This time it's different.

I want to emphasize some things I've pointed out many times before. Mainstream economists like Siegel didn't predict or explain the tech bubble, or why it occurred in 1995 instead of 1985 or 2005. They didn't predict and can't explain the real estate bubble, the credit bubble, the credit freeze, the financial crisis, or the worldwide trade and transportation freeze. They can't explain what's happening today, and they have no idea what's coming next year. Everything they say is lying or guesswork.

I wanted to present these excerpts to show how vacuous these people are. But what about the puzzle that's been bothering me since the 1950s? Do I yet have an answer to what's going on today, and what happened in the 1930s?

One thing that I notice when I listen to Siegel or any of the people I see on CNBC or Bloomberg TV is that they have absolutely no historical grasp whatsoever. They believe that economic problems are cause by some kind of public malaise, and that if you can only snap people out of it, then the economy will return to normal. In the case of the stock market, I've noted before that analysts think that only the past 200 days of stock prices are relevant to what's going to happen next.

From the point of view of Generational Dynamics, this is completely wrong. The 1929 stock market crash and subsequent Great Depression created risk averse generations that rarely even went into debt. By the 1990s, these people all disappeared (retired or died), all at once, leaving behind generations born after the Great Depression who had no sense of the dangers of the abusive use of debt.

Mainstream economists simply have no concept of this, as I've said many, many times. They don't understand how the Great Depression created a population wave that's affecting us today. They can't grasp that a generation born in the 1920s-30s has completely different attitudes towards money and debt than a generation born in the 1960s and 1970s, and how that can mean that the worst today is far from over.

There's nowhere to go but up

One of the most hilarious news stories these days is this one from Bloomberg:

"The U.S. economy is so bad that the chance of avoiding a double dip back into recession may actually be pretty good.

The sectors of the economy that traditionally drive it into recession are already so depressed it’s difficult to see them getting a lot worse, said Ethan Harris, head of developed markets economics research at BofA Merrill Lynch Global Research in New York. Inventories are near record lows in proportion to sales, residential construction is less than half the level of the housing boom and vehicle sales are more than 40 percent below five years ago.

“It doesn’t rule out a recession,” Harris said. “It just makes it less likely than otherwise.”

The possibility of the economy lapsing into another contraction during the next year is 25 percent, he said in a Sept. 1 report. Harris cut his forecast for growth this year by 0.1 percentage point to 2.6 percent and lowered his 2011 estimate by a half point to 1.8 percent, according to the report."

Once again, one can only marvel at the stupid things that these analysts and experts say. Harris probably makes hundreds of thousands or even millions of dollars a year, and he comes up with this nonsense.

Here's one other example. I was listening to Stuart Varney on Thursday morning on the Fox Business Network. I don't have an exact transcript, but he said that a Republican victory in the November elections would give such a jolt to the economy that the stock market would go up and up and up. Where the hell do they get this stuff from?

I'm telling you, dear reader, that I often listen to Bloomberg TV over the internet while I'm working, and I listen to CNBC at other times, and at least 75% of what they say is total, utter nonsense.

So really, I still don't have an answer to the 1950s conundrum. How could the analysts in the 1930s have been so wrong, and how can they be so wrong today? Are they lying or are they stupid? I'm still just as puzzled as I was in the 1950s.

Additional links

The PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) are still in a great deal of financial trouble, while Germany is doing very well, thank you. This "two speed economy" in Europe has a lot of people worried, as "bond spreads" are increasing. This means that Ireland, Spain and Portugal have to pay much higher interest rates to borrow money than Germany does. Greece has the highest interest rates of all, but doesn't have to worry because they were bailed out by the EU and the IMF last May, and won't have to borrow money from private sources for two more years. Financial Times (Access).

Afghanistan's banking system is near collapse, as depositors are panicking and withdrawing money from the banking systems. Unless the U.S. provides aid by guaranteeing deposits, some banks may fail. NY Times

Iran's banking system and stock market may also be near collapse. The stock market has been booming, which is a puzzle in a country where productivity has fallen for 28 consecutive months, and where profitability has been negative for most state-owned banks. It's believed that the booming stock market may be an artificial bubble, where different government controlled companies buy and sell stocks to each other, bossting the price each time. RFE/RL

Red Cross aid workers in Pakistan are facing angry crowds when distributing food. Reuters

Vladimir Putin announced that Russia's ban on exporting wheat will extend into next year, causing a further rise in world wheat prices. Bloomberg

Speakers of a remote Australian aboriginal language do not use words like "left" and "right" when giving directions. Instead, they might say, "When you get out of the elevator, walk south, and then take the second door to the east." These people have a completely different way of viewing the world, and at any time they can always tell you which way is north. NY Times

In Japan, real men go to a hotel with virtual girlfriends. Wall Street Journal (Access)

Heavy drinkers live longer than those who abstain from drinking. Time

(Comments: For reader comments, questions and discussion, see the 3-Sep-10 News -- Financial expert Jeremy Siegel makes no sense at all thread of the Generational Dynamics forum. Comments may be posted anonymously.) (3-Sep-2010) Permanent Link
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2-Sep-10 News -- Mideast peace talks begin in Washington amid deep skepticism

Suicide bombers attacked Shia worshippers in Lahore, Pakistan

Mideast peace talks begin in Washington amid deep skepticism

It's about Mideast peace and a Palestinian state, but this summit is President Obama's show. The President greeted Israeli prime minister Benjamin Netanyahu and Palestinian Authority president Mahmoud Abbas in Washington on Wednesday, in preparation for peace talks to begin on Thursday.

Benjamin Netanyahu and Mahmoud Abbas shake hands in summit meeting with President Obama
Benjamin Netanyahu and Mahmoud Abbas shake hands in summit meeting with President Obama

Obama pushed hard to get this meeting going without further delay, because there's a kind of a deadline. Last year, the Israelis agreed to a ten-month moratorium on building new settlements in the West Bank, and that moratorium is due to expire on September 26.

Netanyahu has said that the moratorium will not be extended, and it's believed that his governing coalition would not survive if he tried.

Abbas has said that the talks will end if the moratorium is not extended.

So the first order of business for the peace talks will be to find a compromise on the moratorium issue. One possibility will be to allow settlements only in certain areas that are expected to be part of Israel in some final agreement, but that's all up in the air.

The Hamas terrorist group, which is in control of the Gaza strip, doesn't like the peace talk at all. On Saturday, Hamas leader Khalil al-Hayya said, "Abbas and his negotiating team do not represent Palestine, Jerusalem, the refugees, or al-Aqsa, and we will not recognize any agreement signed by the Zionist enemy. Hamas continues to grow stronger and prepare for the final battle until your banishment from Palestine. Your existence is on its way to disappearing," according to Ynet news.

Hamas would like to throw a monkey wrench into the peace summit, and may have partially succeeded. Hamas has taken responsibility for the the shooting of four Israeli settlers on Tuesday, and has promised more killings, according to Bloomberg. Settler leaders responded by pouring cement for new settlements at several sites, openly violating the moratorium.

(Late news is that there are more shootings on Wednesday evening, and the threat of a campaign of shootings to derail the peace talks.)

How many times have I written about this dance? The first major Generational Dynamics prediction that I made on my web site came when President Bush announced his "Mideast Roadmap to Peace" in May, 2003. (See "Mideast Roadmap - Will it bring peace?")

That prediction was pretty straightforward, as generational predictions go. Palestinian president Yasser Arafat, whom everyone considered to be a terrorist and a liar, was thought to be the only obstacle to the adoption of Bush's Mideast peace plan. But from the point of view of Generational Dynamics, Arafat was part of the generation that survived the genocidal war between Arabs and Jews that followed the partitioning of Palestine and the creation of the state of Israel in 1948, and people in his generation would be doing everything possible to prevent another war. Hence, my prediction was that the death of Arafat, whenever it may come, would not mean peace, but would be part of a generational change that would lead to a re-fighting of the bloody 1948 war, and that in any event, the Roadmap to Peace would fail.

There was more worldwide euphoria after Yasser Arafat died in November, 2004. There was a lot of silly rhetoric from politicians at that time that now that this "truly evil man" was gone, peace was at hand.

It was interesting to see what happened next. Chaos and suicide attacks began to increase and worsen almost by the day, and there have been three wars since then -- the war between Israelis and Hizbollah, fought largely on Lebanon's soil in 2006; the war between Palestinian factions Hamas and Fatah in Gaza in 2008, that led to Hamas control of Gaza; and the war between Israel and Hamas in Gaza early in 2009. There are rumors and reports that Hamas and Hizbollah are preparing for a new war, with the help of Syria and Iran.

So now we have Netanyahu and Abbas in Washington at a peace summit that's supposed to resolve all the issues and create two side-by-side states, Israel and Palestine.

Here's one thing that nobody ever mentions, but it's crucial: The median age of the entire population of Gaza is 17, according to the CIA Fact Book. That means that Gaza is being largely run by kids with guns and missiles.

It's a major principle of Generational Dynamics that major events in history come from the people, massive numbers of people, entire generations of people. What politicians say or do is irrelevant, except insofar as their actions reflect the attitudes of the people that they represent, and so politicians can neither cause nor prevent the great events of history.

So you have the kids in Gaza, restless and bored just like American kids, wondering what their future is going to be like in a region dominated by the Jews who took their land away from their parents and grandparents. And just like American kids, they have no fear of war. Does anyone really think that these Gaza kids are going to listen to a couple of old farts like Abbas and Netanyahu, no matter what they come up with?

So as the peace talk summit begins on Thursday, nothing has changed since the Generational Dynamics prediction of 2003. The Mideast is headed for a massive new war between Arabs and Jews, re-fighting the war that followed the creation of Israel in 1948. And nothing that President Obama or any politician does is going to stop it.

Additional links

With Pakistan still trying to handle the floods, a series of suicide bombings in Lahore attacked a Shia religious procession, killing 25 people and injuring hundreds. The concern is that further suicide attacks will be directed at foreign aid workers helping with the flood recovery. CS Monitor

Pakistan's farmers are in desperate need of wheat seeds, after the floods devastated much of the country's farmland and seed stock. They need it quickly, or they'll miss the next sowing season. Dawn

Europeans are losing faith in the European Union. Just 42% of Europeans say they trust the European Union, according to a new opinion poll, down six percentage points in just six months. EurActiv

France is facing enormous international criticism for it's new policy of rounding up Roma Gypsies and deporting back to their home countries, usually Bulgaria or Romania. However, many of them are unable to find work in their home countries, and they're planning to return to France as quickly as possible. Spiegel

Why Congressional web sites suck. Fierce Government IT. And check out the worst political web site ever

(Comments: For reader comments, questions and discussion, see the 2-Sep-10 News -- Mideast peace talks begin in Washington thread of the Generational Dynamics forum. Comments may be posted anonymously.) (2-Sep-2010) Permanent Link
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1-Sep-10 News -- Amsterdam arrests highlight Yemen confusion

Palestinian gunmen try to sabotage upcoming Mideast peace talks

Web site software problems

My web site software failed on Monday because of the large number of web log postings I've made this year. So I had to spend last night making critical changes to the software, and there was no time for a news story. I apologize for the interruption.

It was a fairly drastic change to a section of the software, and bugs are always a possibility. If you run into any problems -- a bad link, or an error message embedded in the article text, for example -- please let me know.

Yemen confused over America's military intentions

The news on Tuesday was certainly bizarre.

Two men of Yemeni descent traveled by plane to Chicago. From there, they went on to Amsterdam, planning to go on to Dubai, but their luggage went to Washington DC -- which already is a breach of Homeland Security rules. When the luggage was searched, they found several cell phones taped together, and another cell phone taped to a bottle of Pepto-Bismol, according to the NY Times.

Security officials became concerned that the flight was a dry run for a terrorist attack, and the two Yemenis were held for questioning in Amsterdam. However, it's been concluded that all the evidence had innocent explanations -- it's a "cultural" thing to tape things together. OK, fine.

But the story is one more example of the extreme sensitivity that's developed towards Yemen, and to Al-Qaeda on the Arabian Peninsula (AQAP), headquartered in Yemen -- ever since it was learned that last year's Christmas "underwear bomber" was trained in Yemen.

As we've reported, the CIA has made a remarkable reassessment: They now consider AQAP to be a bigger security threat to the United States than the core al-Qaeda group in Pakistan and Afghanistan.

Horn of Africa
Horn of Africa

Furthermore, the BBC is reporting that there are now British military personnel stationed in Yemen.

Yemeni politicians and journalists have reacted sharply and negatively to these stories, apparently for fear that an escalating American presence in Yemen could turn the country into another theatre of war, like Iraq and Afghanistan.

Yemen's Defense Ministry is quoting officials who are denying reports that there are British and American troops in Yemen, and are labeling those reports as "lies," according to News Yemen. "Yemen doesn't accept any foreign military existence on its land and it has a strong security and military institutions able to carry their tasks in combating terrorism and control security," he says.

An opinion column in the Yemen Post says that local analysts are "lost and astonished" to hear that the US government is claiming that AQAP is a bigger threat than "its mother in Pakistan," and blames the situation on Saudi Arabia.

Readers may recall that on several occasions I've reported on a war in northern Yemen between Houthi rebels and Yemen's army, with support from the U.S. army in the form of intelligence, American special forces, and attacks by America cruise missiles. (See "Yemen wars escalate rapidly, as US provides military support.")

In that story, I reported that the Houthis, who are Shia Muslims with links to Iran, were expanding the war by crossing the border into Saudi Arabia, and that the Saudi air force was making bombing strikes on Houthi positions in north Yemen.

Much to my surprise, the opinion writer referenced above has a completely different interpretation of that whole scene:

"Over 80% of Al-Qaeda followers in Yemen were raised or studied in Saudi Arabia. Sources even clarified that Saudi princes paid Al-Qaeda to leave Saudi and head to Yemen. This angered [Yemen's] President Saleh and that is why some believe that Saleh forced Saudi to involve itself in the war against Houthis, which in return disgraced the Saudi regime and showed its weakness. This was done in retaliation.

Even with Saudi being a bigger Al-Qaeda threat, we all know the United States can’t rage war against Saudi, who has been tremendously loyal and obedient to Washington over the last three decades.

Is Al-Qaeda in Yemen really a threat to America? Let’s change the question. Is the United States a threat to Yemen? Will the United States be the cause for killing thousands of civilians in Yemen as it did in Pakistan, Afghanistan and Iraq?

In an interview I had with Al-Jazeera earlier, I stated that the United States must understand that its strategy in its war against terror has failed in every country it approached, and that spilling blood will not solve problems. The United States has not won a single war against Al-Qaeda in its short history, only if you think that the 5% of lands the Afghan government controls in Afghanistan is a success in the war on terror."

This is a substantially different set of facts than what the media has reported before. We'll be watching this situation in the future to get a clearer picture, and we'll be especially watching to see how the Obama administration escalates its military involvement in Yemen's fight with al-Qaeda.

Additional links

As the Mideast peace talks approach, Palestinian gunmen opened fire on an Israeli car in the West Bank, killing four passengers. It's thought that the purpose of the attack was to sabotage the peace talks. Associated Press

Concerns are growing in Mongolia that China is trying to gain economic hegemony over the country. As a result, a new railway will be built entirely in Mongolian territory, rather than taking a much shorter route that crosses Chinese territory. Geopolitical Monitor

At the same time, tensions are growing between Russia and China over Russia's mineral-rich Far East, which is increasingly being populated by ethnic Chinese. Telegraph

As President Obama announces that US combat troops are withdrawing from Iraq, Baghdad residents are mourning their departure. Spiegel

As tensions grow between India and China, India is feeling concern about China's increasing presence in the Indian Ocean. Reuters

Overseas remittances to Saigon (Ho Chi Minh city) in South Vietnam totaled $2.56 billion in the first eight months of the year, a drop of 20% from the same period in 2009. Reuters

China is supposed to be a wealthy nation, but the Moody's ratings agency is expressing concern that China's banks are borrowing a great deal of money (presumably for its stimulus and bailout programs) and going into debt. As I've said, China's economy is in even more trouble than America's economy, and by the Law of Diminishing Returns, the bailout and stimulus programs are less and less effective. Telegraph

ROTC was abolished at many politically liberal colleges in the 1960s and 1970s, but now it's poised to make a comeback at many élite colleges. Time Magazine

US consumers are split into two clear and distinct groups. The ones with secure jobs, who are surviving the economic downturn are spending as much as ever, while the ones who war dealing with chronic unemployment have cut back sharply, spending only on the bare necessities. Thus, for example, McDonald's is doing well, and high-end restaurant chains like Starbucks are doing well, but businesses in the middle are faltering. Financial Times (Access).

The constant use of computers and smart phones is giving young people in both Japan and China "character amnesia," where they're unable to write any more in the character based writing system. Independent

Man-eating giant squid devouring fish stocks. UK Express

(Comments: For reader comments, questions and discussion, see the 1-Sep-10 News -- Amsterdam arrests highlight Yemen confusion thread of the Generational Dynamics forum. Comments may be posted anonymously.) (1-Sep-2010) Permanent Link
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