“Watching the pot come to a boil”

29-May-10 News — Terrorist attacks create carnage in Pakistan and India

China signals that it will side with South Korea on the warship sinking

Sunni terrorists massacre Shia worshippers in Lahore, Pakistan

Punjabi Taliban (Sunni Islamist terrorists) have taken credit for a massacre on Friday morning at two Shia Muslim mosques in Lahore, Pakistan, just as prayers were beginning on the holiest day of the week.

80 people were killed and at least 92 were injured in the attacks, according to Pakistan’s Daily Times.

At each mosque, the terrorists fired indiscrimately at worshippers, killing them at will with gunfire and grenades. The violence continued for three hours as they held off police by means of more gunfire and grenades. One of the terrorists blew himself up to avoid being captured.

Historically, Sunni and Shia Muslims have found many wars of extermination with each other. Shia Muslims have historically been allied with Hindus in many of these wars.

The worshippers were part of a small Shia sect known as the Ahmadis.

According to a profile at GlobalSecurity.org, Ahmadis are followers of Mirza Ghulam Ahmad, who founded the sect in the late 1800s. According to the profile, Ahmadis have been the subjects of attacks and societal discrimation since the founding of Pakistan.

From the point of view of Generational Dynamics, Pakistan and India are approaching a war refighting the genocidal ethnic and religious war that followed Partition (the partitioning of the Indian subcontinent into Pakistan and India in 1947). Friday’s massacre appears to be part of that scenario.

Maoist terrorists

The ‘Red Corridor’ of regions fully or partially controlled by the Maoists (Naxalites) (Source: Asia Times)

As we’ve previously reported (see “19-May-10 News — Maoist terrorism puts India on high alert”), India has been on high alert after a series of high profile terrorist attacks by Maoist terrorists. Of particular concern was the safety of trains and buses.

On Friday, 81 people were killed and 150 were wounded when two trains collided in the night, with the collision apparently engineered by Maoist terrorists, according to the Calcutta Telegraph.

The terrorists sabotaged a portion of the tracks by removing clips that keep the tracks in place. With the clips gone, the tracks became unstable as the train rolled over that portion, and the train tipped over and collided with a train coming from the opposite direction on another track. Click here for a graphic diagram that shows what happened.

This is the third major terrorist attack by the Maoists in a couple of months. For example, here’s the opinion of one columnist, Barkha Dutt, appearing in the Hindustan Times, where he refers to the previous attacks in Dantewada and Mangalore:

“Perhaps nothing was more indicative of the paralysis that now plagues any discourse on Maoist violence than the confusion, tentativeness and prevarications that followed Bengal’s train tragedy yesterday. Coming right after ten horrible days that have driven home life’s essential fragility to us as a country — first Dantewada, then the Mangalore air crash — the tragedy of watching bodies being pulled out from under heaps of metal was underlined by the apparent nervousness within the political establishment. …The public rhetoric around the Naxal debate has certainly created the impression of India being a coun try that is fiercely divided over how best to tackle the terror of the ultra-Left. This impression has been falsely reinforced by facile media debates that deliberately seek shrill polarisations and ask the people of India to choose between extremes.”

What’s interesting about this particular statement is its focus on paralysis and “shrill polarisations.” This is exactly the same thing that we’ve discussed as occurring in Washington and other countries. It’s typical of a generational Crisis era, up to the point where a “regeneracy event” puts the nation’s survival in question, and forces civic unity to be “regenerated” behind the leaders.

Remarkably, with terrorist attacks being perpetrated by Maoists, by Hindu extremists, and by Sunni Muslim extremists in India, in Kashmir, and right across the border in Lahore, India has not yet reached the point where it can unite to resolve these problems.

Additional links

Chinese Premier Wen Jiabao has told South Korean president Lee Myung-bak that “We will shield no one.” This remark is being interpreted to mean that Beijing agrees with Seoul’s conclusion that the North Koreans are responsible for the torpedo attack that sank the Cheonan warship on March 26, killing 46. JoongAng

A harsh United Nations report on North Korea finds that that the country is using shell companies and overseas criminal networks to circumvent U.N. sanctions. The 47 page report details numerous North Korean violations, especial violations related to weapons of mass destruction (WMDs). Associated Press

Fitch Ratings service lowered the AAA credit rating on Spain’s debt one step down to AA+. S&P Ratings service lowered Spain’s credit rating on April 28. Bloomberg

Is Europe heaing for a meltdown? Europe has run out of moves; one more mistake, and it’s game over. Telegraph

For years we’ve described China’s military preparations for war with the United States. The US is developing n air-sea battle concept to counter China’s military buildup, but political and budgetary problems may kill the program. International Relations and Security Network (ISN)

(Comments: For reader comments, questions and discussion, see the 29-May-10 News — Terrorist attacks create carnage in Pakistan and India thread of the Generational Dynamics forum. Comments may be posted anonymously.) (29-May-2010) Permanent Link

28-May-10 News — Tempers flare on Korean peninsula

Terrorists bomb a concert crowd in southern Russia

Terrorist bomb in southern Russia kills people at concert

A bomb exploded among a crowd waiting to enter a theatre in Stavropol in Russia on Wednesday evening. Seven people died and more than 40 were injured, according to Ria Novosti.

The bomb was a homemade device, with TNT packed into a juice container, so that it was not detected prior to the explosion.

Stavropol is just north of Russia’s Caucasus provinces of Chechnya and Dagestan, where there has been a great deal of ethnic and terrorist violence. Stavropol itself has been relatively free of violence, so this bombing apparently represents an expansion and deepening of terrorist violence in Caucasus.

From the point of view of Generational Dynamics, the Caucasus region is one of the most dangerous in the world because it’s deep into a generational Crisis era, and because it’s been the site, over the centuries, of numerous ethnic and religious wars between the Orthodox Christian civilization and the Muslim civilization.

According to Russian Television, Nikolay Petrov from the Carnegie Moscow Center says that what is going on now is not only an escalation of terrorist attacks in the region, but an expansion of the region where previous attacks have taken place, and that terrorism may be spreading throughout the region.

Tempers flare in North and South Korea

Tensions continue to mount on the Korean peninsula, as each side continues to take steps that are confrontational to the other side.

North Korea said it would “completely nullify” inter-Korean agreements designed to prevent military confrontations, according to JoongAng. These pacts were signed in the past decade to avoid misunderstandings that might lead to military clashes.

These measures include cutting off a naval hot line between the two capitals. This phone line was installed to prevent a repeat of deadly naval skirmishes that happened in 1999 and 2002, according to the NY Times.

In addition, North Korea warned that if South Korean ships intrude into North Korean seas, it will launch “a prompt physical strike.”

These threats came on the same day that the South Korean navy conducted a large anti-submarine drill in the waters separating the North and South.

On the same day, a large rally in Seoul demanded revenge and retaliation for the sinking, on March 26, of the South’s warship Cheonan, killing 46, by a North Korean torpedo. There were thousands of demonstrators, most of them elderly survivors of the 1950s Korean war, according to VOA.

At the same time, Japan’s Yomiuri news service is reporting that the Japanese parliament is imposing its own sanctions on North Korea. In particular, the Japan Coast Guard will begin inspecting all North Korean cargo vessels arriving in Japan. These sanctions will directly affect the 600,000 Koreans living in Japan, especially the “pro-Pyongyang” General Association of Korean Residents.

There are now many, many ways for a war to start between North and South Korea — many more ways than existed only a few weeks ago. The simplest would be a miscalculation or misunderstanding arising from some line being crossed somewhere, and with the “shoot first and talk later” attitude increasingly being adopted by both sides, such an event could quickly spiral out of control.

‘Freedom Flotilla’ of humanitarian aid heads for Gaza

A monstrous political publicity stunt will come to a head on Friday, when a “Freedom Flotilla” of 8 ships carrying some 700 political activists and 10,000 tons of aid and construction materials will approach the Gaza Strip from Turkey and European ports.

Israel has vowed to blockade the flotilla, preventing the ships from reaching Gaza, according to CS Monitor.

Turkey has demanded that Israel permit the flotilla to reach Gaza, according to the Palestinian Imemc news service.

The Israelis say that the aid will reach Gaza, according to Haaretz, but the flotilla will be required to land at the Israeli port of Ashdod first, so that the cargo can be inspected first.

Meanwhile, the Jerusalem Post reports that a “counter PR stunt” will be launched by a group protesting Hamas’s terror record.

It sounds like it will be a lot of fun, with a good time to be had by all.

But a UPI analysis points out that this is just one more step deepening the split between former allies Turkey and Israel, which is consistent with trends that I’ve described before.

Additional links

Local elections will be held all across South Korea on June 2. The results of these elections will provide some indication of who the people believe is at fault for handling the Cheonan incident, and whether there is a widespread desire for revenge. Asia Sentinel

For those wondering how a new Korean War might unfold, here are the specs for CONPLAN 8022, developed when Donald Rumsfeld was Secretary of Defense. Pajamas Media

The Korean War began 60 years ago, on June 25, 1950. This brief history tells why it’s “the war that never ends.” Asia Times

China’s huge real estate bubble has caused millions of people to be routed from their homes by wealthy land developers who appropriate the land, demolish the homes that are on it, and construct new buildings. But now the peasants are fighting back. NY Times

A government-created baby boom in Germany has failed to materialize, as the country becomes increasingly gray. Spiegel

Under a secret directive signed last September by Gen. David H. Petraeus, the US is vastly expanding the use of Special Operations troops throughout Mideast, particularly directed against Iran. NY Times

US and EU are oceans apart on fiscal policy. In particular, the Europeans want to cut budgets, while the US would like Europe to provide more stimulus to their economies. Spiegel

Tens of thousands of French workers took to the streets on Thursday to protest gradually raising the retirement age from 60. Telegraph

Rock star M.I.A. (Maya Arulpragasam) is a very hot chick and a very controversial artist, because she is a Sri Lankan Tamil, and she used her fame to support the Tamil Tigers during the civil war that ended last year. NY Times

Exercising the throat muscles can help relieve sleep apnea. NY Times

How Tetris conquered the world. Telegraph

(Comments: For reader comments, questions and discussion, see the 28-May-10 News — Tempers flare on Korean peninsula thread of the Generational Dynamics forum. Comments may be posted anonymously.) (28-May-2010) Permanent Link

27-May-10 News — Iran clashes with Russia over nuclear sanctions

Interbank lending is slowing again, raising concerns of new credit crisis

Iran gets testy after Turkey/Brazil ploy fails

As we described last week, Iran came up with a very clever ploy to preclude Western sanctions. Iran made a deal with Turkey and Brazil to have Brazil enrich Iran’s uranium, so that Iran won’t do its own uranium enrichment. (See “18-May-10 News — Iran may have snookered the West, with the help of Turkey and Brazil.”)

However, the ploy appears to have failed, as the West is going ahead with sanctions. Furthermore, the sanctions will apparently NOT be vetoed by either Russia or China in the United Nations Security Council. According to Politico, Congressional plans for U.S.-only sanctions will now be delayed to allow the administration to push the U.N. sanctions.

The failure of the Iranian ploy appears to have caused quite a bit of consternation in Iran. According to the Tehran Times, Iran’s government is still waiting for the West to approve of the deal with Brazil and Turkey.

More significant is a major clash between Iran and Russia over Russia’s agreement to support the sanctions, according to the NY Times. In blunt language, Iranian president Mahmoud Ahmadinejad blasted Russia for bowing to US pressure, and added, “If I were the Russian president, when making decisions about subjects related to a great nation (Iran) … I would act more cautiously, I would think more.”

A Kremlin official shot back, “No one has ever managed to preserve one’s authority with political demagoguery. I am convinced, the thousand-year history of Iran itself is evidence of this. The Russian Federation is governed by its own long-term state interests. Our position is Russian: it reflects the interests of all the peoples of greater Russia and so it can be neither pro-American nor pro-Iranian.”

This clash with Russia appears to be an act of desperation by an Iranian administration increasingly out of touch with its own people and, perhaps more importantly, not in control of the Revolutionary Guards. (See “Revolutionary Guards in Iran’s government – military dictatorship?”)

Iran is only a few years into its generational Awakening era, following the Islamic Revolution of the 1979 and the Iran/Iraq war that climaxed in 1987. At this point in the Awakening era, Ahmadinejad would be facing an enormous amount of political pressure from the young generation born after the war. The massive “green movement” student demonstrations that followed last year’s June 12 presidential elections have been temporarily quiesced by means of extreme violence against the demonstrators, but they have not ended. Furthermore, the Revolutionary Guard itself, which was originally formed to protect the goals of the Islamic Revolution, is now populated by the same young people who have little patience with the austere demands of the old fogie hardliners running the government.

As I’ve said many times before, my expectation is that Iran will side with the West (including the US and Israel) when forced to choose in the Clash of Civilizations world war, since the Iranian people are far more pro-American and pro-West than the government is.

Ahmedinejad’s outburst sounds desperate to me. If it is, then Iran’s government may be forced to reform soon.

Additional links

Interbank lending has been showing increasing strain for several weeks, as measured the by “Libor” rate, which measures the interest rates that banks charge one another. Although the libor rate is still below the peaks it reached after the Lehman collapse, the continually increasing rate is raising concerns for a new credit crisis. Telegraph

“I’ve been drunk many times, and I know that the best way to postpone a hangover is to keep on drinking.” — Marc Faber, in a tv interview, when asked why not use more stimulus packages?

Greece’s tourism industry, which was supposed to help the country’s recovery, is in crisis. Reservations are down by 30% since last year and cancellations are soaring, because of general strikes and mass protests, and stories of corruption, sleaze and fraud. Spiegel

A recent survey of Japanese bond investors shows that the Japanese no longer trust European bonds. Financial Times

8 reasons why you should care about the world debt crisis. CS Monitor

First human ‘infected with a computer virus.’ BBC

Syria has supplied Hizbollah with 1,000 ballistic missiles that are now pointed at specific Israeli military and civilian targets. Debka

Prostitutes are blamed for the property bubble in Beijing. Asia Times

Mount Baekdu is a dormant volcano on the border between North Korea and China, and it’s increasingly showing signs of being about to erupt. Korea Times

Indian Prime Minister Manmohan Singh has vowed to bridge the “trust gap” with Pakistan, and to overcome the strains that have occurred since Pakistan-based militants attacked Mumbai in 2008. BBC

The Mexican government is all but applauding President Obama’s plan to send 1200 National Guard troops to the US-Mexico border, because the troops won’t be used to enforce immigration law. CS Monitor

(Comments: For reader comments, questions and discussion, see the 27-May-10 News — Iran clashes with Russia over nuclear sanctions thread of the Generational Dynamics forum. Comments may be posted anonymously.) (27-May-2010) Permanent Link

26-May-10 News — Is North Korea preparing for war?

Austerity programs in countries across Europe threaten the economy

North Korea responds to South’s president’s speech

Tuesday’s major development is that North Korea cut all ties with South Korea. The statement is the response to Monday’s televised speech by South Korean president Lee Myung-bak, outlining retaliation for the North’s sinking of the Cheonan warship. I described that speech in detail yesterday.

The following are portions of the statement issued by the North’s official Korean Central News Agency (KCNA), as quoted by Reuters:

“The Committee for the Peaceful Reunification of Korea, accordingly, formally declares that from now on it will put into force the resolute measures to totally freeze the inter-Korean relations, totally abrogate the agreement on non-aggression between the north and the south and completely halt the inter-Korean cooperation.In this connection, the following measures will be taken at the first phase:

1. All relations with the puppet authorities will be severed.

2. There will be neither dialogue nor contact between the authorities during (South Korean President) Lee Myung Bak’s tenure of office.

3. The work of the Panmunjom Red Cross liaison representatives will be completely suspended.

4. All communication links between the north and the south will be cut off.

5. The Consultative Office for North-South Economic Cooperation in the Kaesong Industrial Zone will be frozen and dismantled and all the personnel concerned of the south side will be expelled without delay.

6. We will start all-out counterattack against the puppet group’s ‘psychological warfare against the north.’

7. The passage of South Korean ships and airliners through the territorial waters and air of our side will be totally banned.

8. All the issues arising in the inter-Korean relations will be handled under a wartime law.

There is no need to show any mercy or patience for such confrontation maniacs, sycophants and traitors and wicked warmongers as the (South Korean President) Lee Myung Bak group.”

So far this is all rhetoric. However, there is some ambiguity about what is meant by “counterattack” with respect to the South’s “psychological warfare.” As we reported yesterday, there was a threat on Monday to shoot to destroy the South’s loudspeakers, and it’s not clear whether that threat has been rescinded.

However, it may also be that some actual war preparations are being taken. The Chosun news agency reports that Kim Jong-il has used a secret communication network to order the entire army to prepare for war, and that the North should “achieve the reunification of the fatherland by all means” since it failed during the 1950s Korean War.

(The secret communication network is something I hadn’t heard of before, but it seems like something directly out of George Orwell’s “1984.” Apparently there are speakers in everyone’s home connected by wire to Pyongyang. Kim can broadcast to these speakers information or orders that he doesn’t want the outside world to know about.)

The order to prepare for war was obtained by defectors through unnamed sources in the North, but it hasn’t been confirmed. But if the North is truly preparing for war, that’s a very ominous sign.

Will there be a war?

From the point of view of Generational Dynamics, this is the wrong question to ask. North and South Korea are in generational Crisis eras, and there’s a clear fault line with enormous anger and hostility across it. There WILL be a war, with almost mathematical certainty, so the correct question is whether the current crisis will lead to an immediate war.

I was surprised to hear former Ambassador John Bolton on television say that he considers it very unlikely that there’ll be a war. Bolton has always taken a very hardline towards Iran, China and North Korea, and he did so again. But he scoffed at the possibility that Kim Jong-il will start a war, saying that Kim’s threats are empty. “Next he’ll say that you’ll see a ‘sea of fire’ across the Korean peninsula. He’s got a series of these things.”

A web site reader forwarded to me a message he’d received from his friend who works in South Korea: “It is kind of a strange situation over here. The people I work with don’t seem to concern themselves with these matters. Just this morning President Lee addressed the ROK [Republic of Korea or South Korea] via live tv broadcast and after I finished reading the English transcript I went ahead and asked a few of my co-workers what they thought of the speech. No one had watched it and no one seemed to think much of it. All they said was ‘this sort of thing happens often and nothing will come of it.’”

This reminds me that most Northerners were completely surprised in 1861 when the American Civil War started, even though the South had threatened it many times. Even so, they didn’t take the war seriously until several months later, when the bloody Battle of Bull Run shocked them into understanding that a real war was going on. (Paragraph added on 26-May)

An analysis entitled “How likely is a war between North and South Korea?” appearing in the Guardian, calls the threats and counter-threats saber rattling, and adds that “both sides have sent clear signals they would refrain from initiating any attack.” But the reasons given in the analysis for the attack being unlikely are not convincing.

One reason is that “the North Korean army is in no shape to fight against a well-trained, well-equipped modern army from the South, backed by 29,000 US troops” and that soldiers have “little to eat.” But they are not reasons for avoiding war; these are reasons for pursuing war.

The North Korean army has a million men. They could swarm across the demilitarized zone and be in Seoul in a few hours, and they could be motivated by the promise of free food in Seoul. Given a choice between going on for months and years with little food for himself and his family, versus going to war to solve all his problems, it’s clear what choice a soldier will make. This is particularly true of a generational Crisis era, when there is little fear of war, because there’s no memory of the preceding crisis war.

Another reason given by the article is that China “will want to keep its wayward neighbour in check.” But Kim Jong-il has repeatedly humiliated China through his belligerence — testing nuclear weapons, sinking the Cheonan, for example. It may be that China will want to keep Kim in check, but there’s absolutely no reason to believe that China can succeed.

In a generational Crisis era, wars are not fought for rational reasons. Yesterday I posted the six most prominent theories about why the North Koreans sank the Cheonan, and today I’m posting the reasons why the North won’t want a war. But this is all rationalized nonsense.

North Korea is a starving country, and the situation get worse every month. North Korea is completely isolated and cut off from the rest of the world, so they have little idea what’s going on. North Korea is very paranoid, so the little information they get can be interpreted as a cause for war.

If you’d like a modern day example, one that I’ve written about many times, consider how Israel, in a generational Crisis era, panicked and attack Hizbollah in Lebanon in 2006 with absolutely no plan and no objective. (See: “Israel/Lebanon war forces Muslims to choose,” and “How Israel panicked in pursuing the summer Lebanon war with Hizbollah.”) Or, recall that the American invasion of Iraq was caused by panic over WMDs. (See: “The Iraq war may be related to the bombing of Hiroshima and Nagasaki.”)

It’s not surprising that Ambassador Bolton and the South Koreans don’t think that there’ll be any war. They assume that the North Koreans will continue to act as they always have in the past, forgetting that generational changes have occurred, putting younger people in charge, and the economic situation has substantially worsened.

At some point, maybe tomorrow, maybe next month, maybe next year, the North Koreans are going to panic, and they’ll decide that their million man army, underfed and underequipped as it is, is still large enough to overwhelm the South Korean and American defenders. They will be deluding themselves, but that’s the stuff of history.

Additional links

The International Monetary Fund (IMF) has issued a blunt warning to Spain to implement harsh budget cuts and transform the country’s labor market. EU Observer

The government of Italy has already approved massive spending cuts, to take effect next year. Public sector workers and pensions will be especially hard hit, resulting in protests from labor unions. BBC

Austerity drives are taking place in one country after another in Europe, reflecting a huge change in public attitude that something must be done to avoid Greece’s path. However, economists are warning that these austerity drives will harm Europe’s economy. NY Times

A Syrian-backed terrorist group loaded up a donkey with explosives and detonated the donkey near the Gaza border. There were no human casualties but — poor donkey! Jerusalem Post

President Obama will send up to 1200 additional National Guard troop to patrol the border with Mexico. LA Times

Talks in Beijing between the US and China have brought forth no agreements on North Korea or currency. The Hindu

(Comments: For reader comments, questions and discussion, see the 26-May-10 News — Is North Korea preparing for war? thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-May-2010) Permanent Link

25-May-10 News — Belligerent words between North and South Korea

Britain is moving ‘from an age of plenty to an age of austerity’

[A technical problem has caused this to be posted late.]

North and South Korea exchange belligerent words

The major development on Monday was a televised speech by South Korean president Lee Myung-bak outlining retaliation against North Korea, following last week’s report that the the North was the guilty party in the sinking of the warship Cheonan on March 26, killing 46.

“S Korea takes punitive measures against DPRK over warship sinking,” where DPRK = Democratic People’s Republic of Korea = North Korea, is the way that China’s news agency Xinhua headlines its article on Lee’s speech. These are the major points, according to the article:

• “North Korea (DPRK) will pay a price corresponding to its provocative acts. I will continue to take stern measures to hold the North accountable.From now on, the Republic of Korea (South Korea) will not tolerate any provocative act by the North and will maintain the principle of proactive deterrence. If our territorial waters, airspace or territory are violated, we will immediately exercise our right of self-defense.”
• DPRK-flagged ships will be banned from South Korean waters, and will be forcibly returned if they don’t comply.
• South Korea will also suspend trade and exchanges between the two Koreas.
• The incident will be referred to the United Nations Security Council, for having violated the armistice agreement that ended hostilities in the Korean War in 1954.
• “I solemnly urge the North Korean authorities to do the following. Apologize immediately to the Republic of Korea and the international community. Immediately punish those who are responsible for and those who were involved in the incident. These are basic measures that the North has to take before anything else.”
• South Korea will resume “propaganda activities” against the North.
• South Korea and the U.S. will hold previously unplanned military exercises, as a show of force to North Korea.
• South Korean citizens may no longer travel to DPRK.
• Further investment in DPRK is banned.

The “propaganda activities” mentioned above refer to a program called “The Sound of Freedom,” according to JoongAng. The program was suspended in 2004, but now will be reinstated. South Korean loudspeakers on the border will blast propaganda messages into the North.

The North Koreans replied that they will fire at the loudspeakers, shooting to destroy them.

South Korea’s defense minister replied that if North Korea attacks South Korean loudspeakers, “then there’s no other choice than to strike back immediately.”

So you already have a situation where EITHER there will be a military confrontation OR the North will have to back down OR the South will have to back down.

Why did North Korea sink the Cheonan warship?

An article in Financial Times conveniently lists the “top six theories” about why North Korean president Kim Jong-il ordered the attack. Here they are in brief:

• Revenge for a sea battle last November in which one of its ships was damaged.
• To gain a propaganda victory for his son, Kim Jong-eun, in order to smooth the way for his succession.
• The work of a rogue commander, not ordered by Kim Jong-il at all.
• A victory by hardline ideologues in the administration over the more liberal faction that had previously been favored.
• A breakdown of command in the North Korean armed forces.
• As a distraction from severe economic wores.

It’s certainly possible that one or more of these reasons played a part. But as I wrote last week, I’m increasingly convinced that North Korea wants a new war.

From the point of view of Generational Dynamics, this would not be surprising at all. It’s the worst kind of national self-delusion and fantasy that if life is hell then a war can’t be any worse, and will solve all your problems.

Additional links

Britain is moving “from an age of plenty to an age of austerity,” according to David Laws, chief secretary to the treasury, as the new government announced £6 billion worth of immediate spending cuts, with the possibility that 300,000 public sector workers will be laid off. Laws says that the cuts will be made with “progressive values.” Irish Times

The European debt crisis is causing yields (interest rates) on all corporate bonds to surge, pushing sales down. Companies have issued $47 billion of debt in May, down from $183 billion in April. The rise in bond yields is the worst since the collapse of Lehman Brothers in September, 2008. Bloomberg

Child mortality is dropping rapidly around the world. Death rates for children under 5 have been dropping by about 2% a year from 1990 to 2010. Some parts of Latin America, north Africa and the Middle East have had declines as steep as 6% a year. NY Times. As the gloomiest person in the world, it falls to me to point out that this worsens the population explosion and the food shortage, and will mean hundreds of millions of additional deaths in the coming Clash of Civilizations world war.

European skies are ash-free for the first time in 40 days, as Iceland’s Eyjafjallajokull (ay-yah-FYAH-lah-yer-kuhl) volcano finally shows signs of settling down. Bloomberg

(Comments: For reader comments, questions and discussion, see the 25-May-10 News — Belligerent words between North and South Korea thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-May-2010) Permanent Link

24-May-10 News — Les Miserables of Thailand at a turning point

S. Korean president gives harsh speech severing commercial ties with North

Thailand citizens clean up Bangkok business district to reopen on Monday

Thousands of middle and upper class Thai citizens were out on the streets of Bangkok on Sunday with brooms and mops to clean the streets, and razor knives to scratch off the anti-government posters.

The clean up is necessary after two months of occupation by lower-class “red shirt” protestors. The protests finally ended on Wednesday when the Thai army ran tanks through their barricades and assaulted them with live ammunition, and after the most radical elements of the protestors retaliated by burning down shopping centers and the stock exchange.

Class bitterness runs very deep now. The Times of India quotes a dress shop owner as saying, “I think the Red Shirts are not Thai people because they destroyed things, they destroyed Bangkok, they destroyed Thailand. My friends have shops here, destroyed, they have nothing.”

The feeling among Bangkok’s upper classes is that the red shirt protestors wanted to destroy the city. One health club owner was glad that the battle against the protestors had been won, but she’s worried that they’ll be back, according to Washington Post. “It’s not over. It has just begun.”

The government has imposed curfews in Bangkok and 23 provinces, and they continue to be extended until the government feels safe.

There’s great bitterness on the red shirt side as well. As many as 500 red shirt activists have been arrested across the country, according to red shirt estimates. One leader is quoted as saying, “We are finished. We lost everything. Right now we have to save just ourselves. Instead of getting half, we got nothing.”

Warnings are widespread that violence will continue, perhaps moving from Bangkok out to the provinces. Anger is perhaps greatest in the province of Chiang Mai, the original power base of former prime minister Thaksin Shinawatra, who champions the red shirts, according to the Globe and Mail. One leader is quoted as saying, “We want to tell people that we are not hiding, that we are going to fight again after the emergency decree and the curfews are over.”

Some analysts are predicting that the fighting will resume worse than ever. For example, some analysts quoted by Der Spiegel predict civil war.

Whatever happens now, it seems clear that a turning point has been reached. In the following section, we’ll assess what this turning point will look like, from the point of view of Generational Dynamics.

Les Misérables of Thailand

Victor Hugo’s great novel, Les Misérables describes the failed uprising of students that occurred in Paris in 1832. This uprising occurred toward the end of the generational Awakening era in France, following the French Revolution.

Likewise, the recent violent protests in Bangkok occurred towards the end of a generational Awakening era, following Thailand’s last crisis war, the “killing fields” civil war of Cambodia that ended in 1979.

In the past year, I’ve posted two videos of music from the play Les Misérables. One was a video of Susan Boyle’s spectacular performance last year of “I Dreamed a Dream” — a video that’s well worth another listen.

And the second was more recent, the video of the song “Do You Hear the People Sing?” in an article on Greeks protesting austerity measures.

But actually, Les Misérables is most relevant to the recent failed uprising in Bangkok. The protestors have been defeated, and they’ve lost everything.

So here’s another video of music from Les Misérables, Michael Ball singing “Empty Chairs at Empty Tables”:

The tremendous sadness of this song must convey exactly how the red shirt protestors of Thailand feel today, having had all their hopes and dreams destroyed, and having gained nothing.

The future of Thailand

The collapse of the red shirt protests appears to me to be what’s called an “Awakening era climax,” a moment in which political victory has been unambiguously achieved.

An Awakening era is always a political battle between two generations, the generation of survivors of the last crisis war versus their children’s generation. The Awakening era climax resolves this “generation gap” battle in a political victory, and it’s almost always a political victory of the younger generation. This happened in the U.S. in 1974, for example, when President Richard Nixon was forced to resign.

However, it’s very dangerous for a country if the older generation wins, and the generation gap mutates into a fault line war between two groups. That happened, for example, in 1989 in the Tiananmen Square massacre in Beijing, when the élite Chinese Communist Party forces defeated the peasant groups represented by the demonstrators.

As we’ve reported at length in the past, this confrontation in Thailand pits two ethnic groups against each other. The army and government forces represent the Thai-Chinese fair-skinned elite market-dominant minority, while the red-shirted protestors represent the indigenous dark-skinned laborers, mostly migrants from the north and northeast.

The red shirts won their victory almost ten years ago, with the election of their hero, Thaksin Shinawatra, as prime minister in 2001, and his reelection in 2005. Thaksin was very popular with the lower class laborers, whom he favored with large spending programs for their benefit. But this made him increasingly unpopular with wealthy elite Thai-Chinese class.

It’s worth taking a moment to look at the mathematics of the situation. The size of the Thai laboring class is about three times the size of the Thai-Chinese elite class. This means that the laboring class is going to win elections, and it also means that wealth is going to be transferred from the elites to the laborers. This is going to make the elites unhappy, and they’ll find ways to maintain power by force.

In 2006, the army, siding with Thailand’s elite, staged a bloodless coup, overthrowing the Thaksin government. There were new elections, and Thaksin’s party won, resulting in Thaksin’s ally, Samak Sundaravej, becoming prime minister.

Well, it turns out that Samak is also quite a good amateur cook, and for many years he hosted a televised cooking show. He kept on with the cooking show after he became Prime Minister, causing a court, siding with the elites, to remove him from office, because the cooking show represented a conflict of interest with his job as Prime Minister.

So another Thaksin ally, Somchai Wongsawat, became prime minister. This time there were massive protests by elites, and the courts ruled that Somchai and other Thaksin allies should be banned from holding office.

So now the elites have gotten their way, with prime minister Abhisit Vejjajiva. The army and the courts have used their power to make sure that Thaksin’s allies cannot return, and rural Thai ethnic groups feel REALLY SCREWED.

So will there be a civil war? Well, that’s not how it works. As the Awakening era ends and the Unraveling era begins, there will be low-level violence, and it will be handled by police action of various kinds. But there cannot be any great civil war between the two ethnic groups until the next Crisis era.

There’s one more point to be made about civil war. Recall that many historians say that the Sri Lanka civil war, which climaxed violently last year, began in 1975. That’s because historians look back to see when low-level violence began, and name that as the starting point.

It’s possible that future historians will look back at this time and say that the civil war began in 2010, even though no real civil war can begin for some years to come.

We can look to Les Misérables again for some insight. In the play, Marius is defeated in the uprising, and he sings “Empty Chairs at Empty Tables.” But then he goes off and marries Cosette, and they live happily ever after.

But we know from history that didn’t happen. Low-level violence occurred in France for years and decades, climaxing in the Paris Commune civil war in 1871, when tens of thousands of Parisians took up arms and brutally murdered each other. It was the utter insanity of the Paris Commune that caused Friedrich Nietzsche to say, “Insanity in individuals is something rare – but in groups, parties, nations and epochs, it is the rule.”

Additional links

In a strongly worded televised speech on Monday, South Korean president Lee Myung-bak suspended trade with the North and demanded an apology for sinking the warship Cheonan. Tensions continue to grow. BBC

A new American intelligence analysis says that North Korean president Kim Jong-il personally ordered the torpedo assault that sank the South Korean warship Cheonan in order to help secure the succession of his youngest son. NY Times

One European city after another is on the verge of a major debt crisis. Guardian

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism. But now Europeans are realizing that their social model is coming to an end. NY Times

A new computer program can compose stunningly beautiful, original works of classical music, raising the possibility that human composers will soon be obsolete. Slate. This is of personal interest to me because my late first cousin Yannis Xenakis did the foundational work in the 1950s, developing the mathematical algorithms for creating music by computer.

Pakistan’s former president, Pervez Musharraf, says that he may return to Pakistan and run for President again. Dawn

As Israel begins military exercises near the Lebanon border, Prime Minister Benjamin Netanyahu has sent calming messages to Syria and Lebanon, saying that there’s no intention of starting a war. Haaretz

15 ways to predict divorce. Daily Beast

(Comments: For reader comments, questions and discussion, see the 24-May-10 News — Les Misérables of Thailand at a turning point thread of the Generational Dynamics forum. Comments may be posted anonymously.) (24-May-2010) Permanent Link

23-May-10 News — Some humor that isn’t really very funny

Major offensive in Kandahar may be turning point in Afghanistan war

Barney Frank in 2005 discusses the real estate bubble

Earlier this week, Massachusetts congressman Barney Frank, head of the Financial Services Committee, appeared on CNBC, and bragged:

“I have always been critical of this effort to equate a decent home with homeownership. We should have done more to get affordable rental housing. My efforts have been towards affordable rental housing. I was very much in disagreement with this push into home ownership.”

So the folks at CNBC dug out the following Barney Frank video from 2005:

This is very funny, except that it’s not at all. I was writing about the housing bubble in 2004 (see “Greenspan uses circular reasoning on housing bubble”). I knew that there was a housing bubble, Alan Greenspan knew that there was a housing bubble, and other financial analysts did as well.

I just could never understand in 2005 why those politicians, journalists and analysts couldn’t see that there was a housing bubble. And I still can’t understand why they didn’t see it.

Barney Frank’s committee is investigating whether financial execs committed crimes by not knowing that the housing bubble would burst. Well, why doesn’t he investigate himself? Why doesn’t he investigate other politicians, Republicans and Democrats?

And here we have the CNBC article asking the following question:

“These conflicting statements raise the following question: Why should we believe Congress gets financial regulation right this time around when a guy who is unanimously lauded as extremely smart (whether you like him or not) can be so wrong about housing? And so revisionist of where he stood on the expansion of home ownership?”

Wow! Good question! But I could ask the experts at CNBC the same question: Why should we believe anything you say at CNBC, when you claim to have experts on your staff, and you change your opinion all the time?

At the end of 2006, I quoted one of CNBC’s experts, a regular contributor, Jack Bouroudijian of the Brewer Investment Group, as saying the following:

“This has been a wonderful six months for the market. And the worst thing about it is that we underperformed the rest of the world. So it’s really of question of whether we’re at the beginning of a multi-year run in equities. I guess that’s the big debate. When you’ve got these superstar fund managers like the Bill Millers of the world, that are underperforming that are still unbelievers out there, that makes me even more bullish than I am. And we see all this data coming out and this is absolutely everything that you want.”

In that article ( “Financial analysts gush at stock market’s meteoric rise”), I wrote this: I have to tell you, dear reader, that I just never cease to be absolutely, totally astounded by these statements. This guy probably makes a few million dollars a year in salary, and probably just received another few million in year-end bonuses. And yet, his gushing is one of the stupidest statements I’ve ever heard. Though really I should hedge this last sentence by saying that I can’t be sure, since I’ve been hearing so many incredibly stupid statements by high-paid financial consultants. It’s almost beyond belief.

I get criticized for calling people stupid, as if I should play the game and pretend that they people aren’t liars and crooks. These people were saying anything that would get them more advertisers, more clients, and more fat commissions. Truth was irrelevant. It’s disgusting, and that’s why the Barney Frank video isn’t funny.

A ‘hilarious’ video by Max Keiser

Michael “Mish” Shedlock’s column on Saturday refers us to the following video of Max Keiser’s report on Russian Television. It’s 25 minutes long, but you don’t have to listen to more than a couple of minutes of it. Shedlock suggests listening to the first few minutes of it because it’s so hilarious.

I did not find it hilarious. Like so many things I run into these days, I find it to be extremely depressing. It describes in some detail the shell game that’s being played among the central banks in the US and European countries.

A number of years ago, when credit cards were first becoming more widely available, I saw the poster that read, “Can I pay my Master Card with my Visa?” That was very funny at the time. Ha, ha, ha. But now we have central banks doing exactly the same thing.

I just can’t understand this. Why is this funny? Why don’t ordinary investors, journalists and politicians see what a disaster this is?

The FlashCrash

One day three weeks ago, the Dow Industrials fell almost a thousand points in a few minutes, before partially recovering. The period has become known as the “FlashCrash.”

Here’s how Time Magazine portrayed the situation:

The FlashCrash (Source: Time)

In an article a couple of years ago, I posted the following joke from 1930:

“Did you hear about the fellow who engaged a hotel room and the clerk asked him whether he wanted it for sleeping or jumping?”"No — but I heard there were two men who jumped hand-in-hand because they’d held a joint account!”

Additional links

The war in Afghanistan may have a major turning point this summer, as the Obama administration launches a “go for broke” offensive in Kandahar. Washington Post

The U.S. and South Korea may raise their state of military readiness as tension continues to grow, following the South’s report naming the North as the perpetrator of the sinking of the Cheonan warship on March 26. Guardian

Japan’s Prime Minister Yukio Hatoyama has apologized to the people of Okinawa for ditching his campaign promise to move the US Marine Corps’ military base off of the island. Washington Post

Liam Fox, Britain’s new Defense Secretary, rejects humanitarian goals for the war in Afghanistan. “We are not in Afghanistan for the sake of the education policy in a broken 13th-century country. We are there so the people of Britain and our global interests are not threatened.” Times Online

(Comments: For reader comments, questions and discussion, see the 23-May-10 News — Some humor that isn’t really very funny thread of the Generational Dynamics forum. Comments may be posted anonymously.) (23-May-2010) Permanent Link

22-May-10 News — Germany approves its share of the euro bailout

Tempers flare in North and South Korea

Germany approves the $1 trillion euro bailout, amid controversy

On Friday, the German Bundestag (parliament) approved Germany’s share of the $1 trillion bailout announced two weeks ago. There is a fair amount of bitterness among the German people towards the Greeks, who lied about their finances to get into the eurozone, and now are going to be paid a great deal of money earned by hardworking Germans. Thus, there was a great deal of bitter discussion in the Bundestag, according to the BBC.

There are also bitter disagreements within the eurozone countries, especially between Germany and France, according to the Independent.

The Germans are calling for a harsh overhaul of the eurozone’s budgetary rules, including a new rule suspending a country for violating the budgetary constraints.

The French have a simpler solution, according to the article. They blame the instabilities within the eurozone on the fact that the Germans save their money and export their manufactured goods. So the French want the Germans to consume more and export less.

The French blame the size of the current crisis on Merkel’s dithering during discussions on bailing out Greece. PressEurop claims that France is backed in their opposition to German policies by Italy, Spain and Portugal — three countries in the PIIGS group, who may have to receive their own bailouts.

After a tumultuous week on the financial markets, there’s a lot of discussion about whether the euro currency can survive. All the commentators I heard indicated that there will at least be many tumultuous weeks to come.

Tempers flare in South and North Korea after warship sinking accusations

A day after South Korea accused North Korea of being the culprit in the March 26 sinking of the warship Cheonan, tensions are rising on both sides of the border.

South Korean Defense Minister Kim Tae-young North Korea is quoted by VOA as saying, “Even in a boxing match, the fighters agree to wear gloves. North Korea has stepped over that limit and for that we will make it pay.”

North Korea continued its threats of war if South Korea retaliates in any way. However, these threats of war are a sign of panic, according to an expert quoted by the article. North Korea never dreamed that the South would find the fragments of the torpedo that sank the warship.

The more I follow this situation, the more I believe that the North Koreans want to have a war. This is hardly rare in history, and it’s the worst form of national self-delusion that a country can solve its problems by going to war. But North Korea’s words and actions increasingly point in that direction.

Some people in the Generational Dynamics forum have been comparing the Korea situation today to the situation with Germany in the 1980s, prior to reunification. Korea’s last crisis war was World War II, meaning that Korea today is deep into a generational Crisis era, making it very unlikely that Korea can be reunited without a war. Germany, by contrast, was in a generational Unraveling era when reunification occurred after the Berlin wall came down in 1989, with the senior people in all organizations being survivors of World War II, and readily willing to compromise difficult issues to achieve reunification. The two situations are completely different, and not really comparable at all.

Additional links

Tensions are also growing in the Mideast. Hizbollah militants are preparing for a possible confrontation with the Israeli Defense Forces (IDF), who are beginning week-long training exercises on Sunday, near the Lebanon border. So far it’s nothing but rhetoric. Haaretz

From Gaza to Golan, IDF soldiers are being trained for war Haaretz

Some intelligence sources claim that the Obama administration is about to deploy thousands of additional American troops to the Mediterranean and Persian Gulf regions, challenging Iran. Debka

Pakistan blocked internet access to Facebook, in retaliation for one Facebook member’s invitation to draw pictures of Mohammed. But editorial writers in Pakistan are ridiculing the government move. Dawn

Teenage girls send and receive far more text messages than boys. Duh. A teenage girl will typically send and receive 80 texts a day. For a typical boy, the number is 30. Pew Research

Go to http://www.google.com and click on the Google logo, and for a day or two you’ll be able to play a traditional game of PacMan for free, celebrating the game’s 30th anniversary. CNN

(Comments: For reader comments, questions and discussion, see the 22-May-10 News — Germany approves its share of the euro bailout thread of the Generational Dynamics forum. Comments may be posted anonymously.) (22-May-2010) Permanent Link

21-May-10 News — S. Korea accuses N. Korea of sinking warship

Market selloff confuses financial analysts.

South Korea accuses North Korea of sinking warship Cheonan

The South Korean warship Cheonan was sunk on March 26 by an explosion, killing 46. As we’ve been reporting for weeks, South Korean President Lee Myung-Bak has carefully avoided accusing the North of being responsible for the explosion, for fear that merely saying so would also compel him to a declaration of war.

But now that time has ended. On Thursday, South Korea’s Joint Civilian-Military Investigation Group (JIG) released a report citing “overwhelming evidence” that the Cheonan was sunk by a North Korean torpedo. And the dramatic conclusion was reached not by the South Koreans alone, but including experts from the United States, Australia, Britain and Sweden.

As we’ve described in the past, the evidence initially pointed to a torpedo that exploded BELOW the ship, creating a shock wave that split the the ship in two. A torpedo shock wave, it turns out, is far more devastating than a direct hit by a torpedo.

Here are some of the conclusions, as reported by BBC (or full report PDF):

“A shockwave and bubble effect caused significant upward bending of the CVK (Center Vertical Keel), compared to its original state, and shell plate was steeply bent, with some parts of the ship fragmented.On the main deck, fracture occurred around the large openings used for maintenance of equipment in the gas turbine room and significant upward deformation is present on the port side. Also, the bulkhead of the gas turbine room was significantly damaged and deformed.

As for conclusive evidence that can corroborate the use of a torpedo, we have collected propulsion parts, including propulsion motor with propellers and a steering section from the site of the sinking.

The evidence matched in size and shape with the specifications on the drawing presented in introductory materials provided to foreign countries by North Korea for export purposes…

The marking in Hangul, which reads ["No. 1" in English], found inside the end of the propulsion section, is consistent with the marking of a previously obtained North Korean torpedo. The above evidence allowed the JIG to confirm that the recovered parts were made in North Korea.”

Apparently the final confirmation came during the last week, when the South Koreans trawled the sea floor beneath the site of the explosion and were able to recover torpedo parts that could be unambiguously identified as North Korean.

Now that President Lee has arranged for almost two months of investigation to give tempers time to cool, we’re about to see if tempers have in fact cooled.

As expected, the North Koreans are humiliated by this accusation, and they’re responding accordingly. A rare public statement from North Korea’s high level National Defense Commission said that the investigation was “a sheer fabrication orchestrated by the group of traitors in a deliberate and brigandish manner to achieve certain political and military aims,” according to S. Korea’s JoongAng news service.

The North Koreans also implied that any retaliatory action would be considered an act of war. “The world will clearly see what a dear price the group of traitors will have to pay for the clumsy ‘conspiratorial farce’ and ‘charade’ concocted to stifle compatriots.”

According to the article, analysts in Seoul considers these threats to be mostly rhetorical, since no pre-emptive strike is threatened.

American State Department spokesman P.J. Crowley called the attack an “unprovoked and unwarranted act,” according to the Washington Post, and that “clearly this was a serious provocation by North Korea and there will definitely be consequences because of what North Korea has done.”

China, on the other hand, says that it has “noted” the investigation results, and and is “calling on all parties to exercise calmness and restraint over relevant issues of the sinking,” according to Xinhua.

The most likely scenario seems to be that the U.S. will call on the United Nations Security Council to condemn the North Koreans and to impose new sanctions. The Chinese will then have to decide whether to veto such a motion. Also, the United States could announce unilateral sanctions. However, such sanctions would be one of the provocations that the North Koreans threatened to start a war over.

North Korea’s biggest backer is China, and they’ll play a crucial role in mediating the crisis, to prevent it from spiraling out of control.

However, the South Koreans are not going to allow anything like this to happen again, and tensions are very high. A miscalculation on any side could lead to a military confrontation.

Market selloff stuns pundits

Thursday’s big market selloff seems to have put a lot of pundits into a state of shock. The recent narrative has been first that Greece’s economy is too tiny for a default to affect the American economy. Now the narrative is that, despite Merkel’s apocalyptic speech on Wednesday, Europe’s economy will easily survive the current crisis, without having too much effect on the US economy. The greater narrative is that we’ve learned a great lesson from the Lehman failure, and that now we know exactly how to prevent any further crisis.

From the point of view of Generational Dynamics, we’ve learned absolutely nothing from the financial crisis of the past three years, and that all the abuses that led to it are still being practiced in even greater form.

A major exception of the general narrative is famous bear market strategist David Tice. He was on Bloomberg TV for a long time on Thursday afternoon, and he’s predicting a crash, based on Von Mises theory and the Austrian school. I found it interesting that he predicted that the “fair value” for the S&P is around 500, that the market will overshoot and fall to 400. Those figures are similar to mine, and I wonder how he arrived at them. Perhaps he’s read my article “How to compute the ‘real value’ of the stock market,” or perhaps he arrived at the figures independently the same way I did.

Generational Dynamics predicts that a panic and stock market crash must come at some point, by the Law of Mean Reversion, because the stock market has been historically overpriced since 1995.

Additional links

Tens of thousands of workers protested non-violently in Athens on Thursday, protesting austerity measures, as unions conducted a nationwide strike. CS Monitor

The German Bundestag will vote on Friday whether to approve the $1 trillion eurozone bailout. Bloomberg

German chancellor Angela Merkel is “criminally incompetent” for surprising everyone, including her allies, with her unexpected announcement of banning naked short sales. French Finance Minister Christine Lagarde says that France will not go along with the German decision. EuroIntelligence

Jobless claims rise by largest amount in 3 months. AP

“Synthia” is the name give to a cell of artificial life created in the laboratory from synthetic DNA. J. Craig Venter, who headed the team creating the cell, says, “This takes us across that border, into a new world.” Times Online

(Comments: For reader comments, questions and discussion, see the 21-May-10 News — S. Korea accuses N. Korea of sinking warship thread of the Generational Dynamics forum. Comments may be posted anonymously.) (21-May-2010) Permanent Link