“Watching the pot come to a boil” more from Generationaldynamics.com

“Watching the pot come to a boil”

3-Mar-10 News – Greece crisis continues, as opposition to bailout remains
Japan begins its third ‘lost decade.’

The Germans appear to be hardening their position against a bailout of Greece

Otmar Issing, an adviser to Chancellor Angela Merkel, and a former ECB economist, has laid out solid arguments rejecting aid to Greece from either Germany or the EU, according to Frankfurter Allgemeine (translation).

Criticism of Greece is widespread for having lied about its budget deficits to qualify to be part of the euro currency. Issing points out that Greece has already gotten enormous benefits out of the euro, and has drawn substantial monies from EU funds, and now, “Let me be very clear: You have to watch the Greeks’ every move.”

As for EU funding, that would violate the Lisbon Treaty on the European Union. “There is the so-called “no bail-out” clause of the Treaty. … That is a ban, and I think that the contract must be respected.”

Other German newspapers take a more cautious approach, talking about vague assurances to Greece, according to a summary by Reuters. Thus, Die Welt says, “The Germans will have to help the Greeks to stop their own country being hit — even if hardly anyone wants to hear this (yet). The danger is too great that countries such as Spain will get into trouble. The euro zone faces a financial crisis at state level that it can barely manage alone.”

It’s difficult to know how to assess remarks like these. It’s like saying, “We have to have health reform” or “We have to save the world from global warming” or “We have to save the people in Darfur,” but nothing ever happens. That’s because, in a generational crisis era like this one, there is little political consisus, and political discussion is almost always reduced to bickering.

To make matters worse, Der Spiegel reports that corruption is “booming” in Greece. According to the article, Greeks paid an average of $1,800 in bribes last year, up 23% from 2007. The bribes go for speeding up getting driver’s licenses, getting admitted to public hospitals, or manipulating tax returns.

In my opinion, the only thing that can unite Europeans enough to talk seriously about a Greek bailout is a major financial crisis. Until that happens, there will be nothing but bickering, but after that happens, it will be too late.

Prime Minister Papandreou wants to ‘avert disaster’

The Greeks are well aware of the attitudes of the Germans and others, and are working desperately to try to convince the Europeans that Greece will cut its budget deficit. The EU has set a March 16 deadline to show progress in reducing its deficit.

The NY Times quotes Prime Minister George A. Papandreou as saying, “We are in a race against time to keep our economy alive. “If we don’t ensure that we can borrow at the same rates [as other European Union countries’ the consequences will be beyond catastrophic. We must avert such a disaster.”

On Wednesday, Papandreou is expected to announce severe austerity measures on Wednesday, including reduced bonuses, a later retirement age, and numerous new fees and taxes. However, Greece’s public sector unions have threatened a 24-hour strike for March 16, the date of the EU deadline.

As I’ve said many times before, there is no solution to this problem. Greece cannot solve its problems without a bailout, and a bailout is politically impossible. If we assume that somehow a bailout occurs, then the political backlash would be enormous, and it wouldn’t be enough to solve Greece’s problems, or to solve the same problems in the other European countries nearing default.

Japan begins its third ‘lost decade’

It’s always hard for me to believe the Pollyannish nonsense that I hear all the time on CNBC and Bloomberg TV, or read in the Wall Street Journal.

I doubt that many long-time readers of this web site could possibly still believe that nonsense, but for those that do, Michael “Mish” Shedlock has a blog entry entitled, “I’m Sure Glad The Recession Ended.” In it, he has several interesting graphs and charts showing that the recession has definitely NOT ended.

He also has the following chart of the Nikkei index from the Tokyo Stock Exchange, from 1980 to the present:

Nikkei stock index, 1980-present <font face=Arial size=-2>(Source: Mish Shedlock)</font>
Nikkei stock index, 1980-present (Source: Mish Shedlock)

Japan had a huge stock market and real estate bubble in the 1980s, which burst at the beginning of 1990. People talk about Japan’s “lost decade,” but as this graph shows, Japan has had two “lost decades,” and is about to start a third decade.

Notice that along the way there were several year-long rallies, and the rally from 2002 to 2007 lasted a full five years.

Those who cling to the belief that the Wall Street stock market is only going to go up should contemplate this chart. The Japanese financiers and bankers are fully as intelligent as American and European financiers and bankers. There is absolutely no reason to believe that a similar collapse long-term collapse won’t occur in New York, London, or Frankfurt — or Shanghai.

In fact, Japan has had some major advantages that America, Europe and China won’t have. Japan was able to get through its long decade by exporting products into the countries in the massive credit bubble. But America, Europe and China won’t have any other countries in a credit bubble to export into.

As I’ve said many times, from the point of view of Generational Dynamics, the situation hasn’t changed. The stock market has been historically overpriced by substantial amounts since 1995, and by the Law of Mean Reversion, will have to fall sharply and stay down there for a comparable length of time (15 years). This is a mathematical certainty. (See “How to compute the ‘real value’ of the stock market.”)

Additional links

How does a young Pakistani, raised by proud parents who sent him to medical school, turn into a terrorist militant? The NY Times gives an interesting case history.

Richard Holbrooke is President Obama’s special envoy to Afghanistan, but he’s now expanding his portfolio to all of Central Asia, according to Asian Times. If Hillary Clinton steps down as Secretary of State, then Holbrooke is the likely candidate to replace her.

The British pound currency has been falling precipitously against the dollar in recent days, due to a budget deficit that is arguably much worse than Greece’s. NY times.

(Comments: For reader comments, questions and discussion, see the 3-Mar-10 News – Greece crisis continues, Japan’s 3rd lost decade thread of the Generational Dynamics forum. Comments may be posted anonymously.) (3-Mar-2010) Permanent Link

The politics of the ‘Generation Zero’ documentary movie
The movie reflects a continuing political realignment.

An article entitled “Preparing for the Inevitable Bursting Bubble” appeared in the NY Times over the weekend. It begins, “Financial bubbles are a way of life now. They can upend your industry, send your portfolio into spasms and leave you with whiplash. And then, once you’ve recovered, the next one will hit.”

My eyes popped out when I saw that article. The NY Times and the mainstream media didn’t even BELIEVE in bubbles a few years ago. People used to call me crazy for talking about a housing bubble. Mainstream financial analysts, economists and journalists would say, “Housing prices can’t go down — people have to live somewhere,” and “Banks won’t foreclose — it’s not in their interest to do so” and “These housing construction firms know what they’re doing, and they wouldn’t be building houses if it were just a bubble.”

What’s astonishing is the complete public turnaround in attitudes towards bubbles and the budget deficit. And this is one of the major issues capturing the attention of the Tea Party movement. This movement is moving rapidly to provide a new definition for the “right” side of the political spectrum. No one can be sure what the new “right” will encompass, but we can be sure that personal and financial security will be a big part of it.

How is the left adapting to this emerging new definition of the right?

The left is on the defensive these days. This isn’t surprising from a historical point of view. I first wrote about this during the 2004 election, in “Does history favor George Bush or John Kerry?” Very briefly, the argument is that the Republicans “won” the Civil War crisis era, the Democrats “won” the Great Depression / WW II crisis era, and so now the pendulum is swinging back to the Republican side in the current crisis era — and by this, I really mean the new “right.”

The left has adapted by adopting the message that everything will be all right, that there shouldn’t be too much concern about personal and financial security, and that people who talk about personal and financial security are using scare tactics.

Is it all the fault of the Boomer hippies?

Steve Bannon, the writer/director of “Generation Zero,” told me that when the movie was shown at a Republican convention a couple of weeks ago, the audience loved the last 2/3 of the movie, but hated the first 1/3, because even Republicans don’t like the idea that “hippies” and “flower children” and the “Woodstock generation” are being blamed for the financial crisis. This goes against the narrative that in the 1960s the Boomers wanted to change the world — and that they succeeded.

And yet, that’s becoming a dominant theme of those who criticize the movie.

An article entitled “Did Woodstock hippies lead to US financial collapse?” in CS Monitor quotes film producer David Bossie as saying that generational narcissism, as represented by the 1969 Woodstock Festival, is responsible for the excessive spending, mortgage crisis, and recklessness on Wall Street. The article quotes him as follows: “The people who were at Woodstock turned into the yuppies of the ’80s and the junk bond traders of the ’90s and the Wall Street executives of the 2000s. They went from Woodstock to driving a Jaguar.”

The other side of the argument is taken up as follows:

“Quantifying baby boomers as yuppies is a familiar position taken by conservative groups, says Leonard Steinhorn, author of “The Greater Generation: In Defense of the Baby Boom Legacy.”Mr. Steinhorn says it is common for boomers to become a target, because their generation helped “reverse the social order of the ’50s” by creating civil rights for blacks, women, and gays, and by helping address issues such as environmental pollution.

“Not every boomer was a hippie, but the normative structure of the baby-boom generation has been for a more inclusive, equal, and free society, and so if you have problem with that, you’re going to have problem with boomers,” he says.”

That the arguments about the movie “Generation Zero” are centering on these points about the hippies is a consequence of a decision made by Steve Bannon. I’ve been writing on this web site for years that the financial crisis was possibly ONLY through the cooperation and greed of both the Boomers and the Gen-Xers — the nihilistic Gen-Xers to perpetrate the frauds, and the full support of their Boomer bosses.

Bannon chose to leave this material out of the movie, so that the conclusion of the movie is that the Boomers are SOLELY responsible for the financial crisis (which is impossible, of course, since everybody knows that Boomers are too dumb to have done it alone).

(See also “New documentary movie ‘Generation Zero’ brings generational theory to the public.”)

Bush administration vs Obama administration

I’ve been writing the same kinds of things about generational theory on this web site since 2002, but only in 2010 is the subject getting wider public attention. What’s changed?

I’ve been warning about a financial crisis since 2002. During the Bush administration, this message would not have been of interest to Republicans because it appeared to be criticizing Bush, and it would not have been of interest to Democrats because it appeared to be scaring people.

During the Obama administration, things changed. The message is not of interest to Democrats, because it’s still scaring people, but now it’s of interest to Republicans because it appears to be criticizing Obama.

The omission of any criticism of Gen-Xers adds to the film’s controversy, by allowing the political arguments to be framed as either a criticism or a defense of Boomers.

From the point of view of Generational Dynamics, the “personal and financial security” message will win, and will force a political realignment of some kind. How big the realignment will be, and how far to the right the country will move, will depend on how deep the crisis becomes.

(Comments: For reader comments, questions and discussion, see the Generation Zero – The Inconceivable Truth thread of the Generational Dynamics forum.) (2-Mar-2010) Permanent Link

1-Mar-10 News – Real estate and Greek crises
Harvard professor Niall Ferguson and ‘America, the fragile empire’

Mish Shedlock analyzes the commercial real estate crisis

Michael “Mish” Shedlock has pulled together several stories on the worsening crisis in commercial real estate in his blog.

Here are some of the facts pulled together by Shedlock:

  • The same story is playing out in shopping malls across the country: Stores and entire shopping centers are foreclosed and put on the auction block, and no one is bidding on them.
  • Elizabeth Warren, chairman of the Congressional Oversight Panel, is quoted as saying: “There’s been an enormous bubble in commercial real estate, and it has to come down. There will be significant bankruptcies among developers and significant failures among community banks.”
  • Nearly 3,000 community banks — 40% of the banking system — have a high investment in commercial real estate loans.
  • The Washington Post points out that in Washington, the number of troubled properties has multiplied at a phenomenal rate, with the value growing from only $13 million in 2007 to $40 billion now.
  • Nationwide, at least $1.4 trillion in commercial real estate debt is expected to roll over during the next three years. Half of commercial real estate mortgages will be underwater by the beginning of 2011. A fifth of residential mortgages are underwater now, she said.
  • Unlike residential mortgages, which often can be paid over 30 years, commercial real estate mortgages typically must be paid off or refinanced within five years. Commercial properties mortgaged in 2005, 2006 and 2007, at the height of the boom, are reaching their maturity date.

If you do the math on this, according to Shedlock, then expect to see a thousand commercial bank failures in the next couple of years.

The commercial real estate crisis is coming later than the residential real estate crisis. There’s a huge, growing “‘Shadow inventory’ of unsold homes” in the US, ready to trigger a housing panic, and a commercial real estate panic is now a parallel possibility.

Greece and the euro face another tough week

In the face of large public sector union strikes, opposing the austerity measures that Greece is facing, Prime Minister George Papandreou has been using very strong language. He’s quoted by the Greek newspaper Kathimerini as telling Parliament that additional “harsh” measures are required:

“Unfortunately, history has confirmed our worst fears. Our duty today is to forget about political cost and think only about the survival of the country. Past policies make it necessary to proceed with harsh changes.The dilemma we face is: Are we going to let this country go bankrupt or are we going to react?

We became the weak victim, the guinea pig. We stood unprotected before the markets’ wild appetite.

We must do whatever we can now to address the immediate dangers. Tomorrow, it will be too late and the consequences will be much more dire.”

There have been conflicting reports and speculation over whether the EU will find a way to bail Greece out. France’s AFP quotes German Chancellor Angela Merkel as saying on Sunday that there would be no bailout.

Merkel denied that any such plan was in the works, saying “there is absolutely no question of it. We have a (European) treaty under which there is no possibility of paying to bail out states in difficulty.”

On the other hand, an EU audit of Greece’s finances begins on Monday, and there is speculation that the audit will lead to some kind of bailout.

Papandreou is planning to visit Merkel in Berlin on March 5, and Barack Obama in Washington on March 9, according to Kathimerini. Presumably the purpose of the trips is to beg for mercy.

As in the areas of US residential and commercial real estate, the Greek situation in particular, and the European situation in general, is also ripe for a panic.

Harvard professor Niall Ferguson: ‘America, the fragile empire’

Harvard professor Niall Ferguson’s latest book is “The Ascent of Money: A Financial History of the World,” and he narrated a PBS documentary by the same name.

In his article, “America, the fragile empire,” in the Los Angeles Times, he describes how history is filled with “fat tail” events that occur suddenly, and cause the collapse of a society or nation almost overnight.

He describes nations and empires as “complex systems” where a small event can produce huge, often unanticipated changes. This, of course, is the process described by Chaos Theory that I’ve described many times.

Here’s an example:

“The most recent and familiar example of precipitous decline is the collapse of the Soviet Union. With the benefit of hindsight, historians have traced all kinds of rot within the Soviet system back to the Brezhnev era and beyond. Perhaps, as the historian and political scientist Stephen Kotkin has argued, it was only the high oil prices of the 1970s that “averted Armageddon.” But this did not seem to be the case at the time. The Soviet nuclear arsenal was larger than the U.S. stockpile. And governments in what was then called the Third World, from Vietnam to Nicaragua, had been tilting in the Soviets’ favor for most of the previous 20 years.Yet, less than five years after Mikhail Gorbachev took power, the Soviet imperium in central and Eastern Europe had fallen apart, followed by the Soviet Union itself in 1991. If ever an empire fell off a cliff, rather than gently declining, it was the one founded by Lenin.”

The very rapid collapse of the Soviet empire is a recent example that shows what can happen to America:

“One day, a seemingly random piece of bad news — perhaps a negative report by a rating agency — will make the headlines during an otherwise quiet news cycle. Suddenly, it will be not just a few policy wonks who worry about the sustainability of U.S. fiscal policy but the public at large, not to mention investors abroad. It is this shift that is crucial: A complex adaptive system is in big trouble when its component parts lose faith in its viability.”

This is EXACTLY the kind of thing that I’ve been talking about for years.

I hope that one day Niall Ferguson has a chance to familiarize himself with Generational Dynamics, because it provides a theoretical underpinnings for his warnings.

For example, those commentators who talk about “fat tails” or “black swan events” seem to imply that they could happen at any time. Generational theory tells us that’s not true. The kind of panic and collapse the Ferguson describes could not happen during a generational Recovery Era, or Awakening era, or Unraveling era. For example, a 1929-style stock market panic could not have happened in 20 years earlier in 1909, or 20 years later in 1949. It happened at the right point in the generational cycle. Such a panicked collapse can only happen in a generational crisis era, such as we’re in now. In fact, using specialized terminology, it’s such an event transforms a “pre-regeneracy” crisis era into a full-fledged crisis.

The issues described earlier — commercial and residential real estate, the Greek financial crisis — are examples of areas where a small event might trigger a panic.

Additional links

Peace talks between Pakistan and India have moved disappointingly slowly, because they have conflicting agendas. India is laser-focused on terrorism, while Pakistan wants to discuss the broader issue of the future of Kashmir. Asian Times.

Whether the Persian Gulf should be called the Arabian Gulf is one of the many issues separating Persian Muslims from Arab Muslims. The disagreement even caused the scrapping of the Islamic Solidarity Games, the Olympics of the Muslim world. NY Times. This is just one more manifestation of the growing Sunni-Shia divide.

(Comments: For reader comments, questions and discussion, see the 1-Mar-10 News – Real estate and Greek crises thread of the Generational Dynamics forum. Comments may be posted anonymously.) (1-Mar-2010) Permanent Link

28-Feb-10 News – China faces social unrest disaster
EU President is called a ‘Damp rag,’ and Russia blames Obama for its drug problem.

We have a bumper crop of news stories today.

8.8 Magnitude earthquake strikes Chile

A building in Talca, Chile, destroyed by Saturday's earthquake. <font size=-2>(Source: NY Times)</font>
A building in Talca, Chile, destroyed by Saturday’s earthquake. (Source: NY Times)

Epicenter of Chile's earthquake <font size=-2>(Source: NY Times)</font>
Epicenter of Chile’s earthquake (Source: NY Times)

Chile’s President Michelle Bachelet declared a “state of catastrophe” in Chile, following the massive earthquake that’s killed hundreds of people. NY Times.

British politician calls the EU President a ‘Damp Rag’

Nigel Farage, one of the UK’s representatives to the European Parliament, addressed European Union President Herman Van Rompuy as follows, earlier this week:

“I don’t want to be rude.But you know, really, you have the charisma of a damp rag and the appearance of a low grade bank clerk.

The question that I want to ask and that we are all going to ask is: who are you? I had never heard of you; nobody in Europe had ever heard of you. I would like to ask you, Mr President: who voted for you? And what mechanism – I know democracy is not popular with you lot – what mechanism do the peoples of Europe have to remove you? Is this European democracy?

Sir, you have no legitimacy in this job at all, and I can say with confidence that I can speak on behalf of the majority of the British people in saying: we do not know you, we do not want you, and the sooner you are put out to grass, the better.

I have no doubt that it is your intention to be the quiet assassin of European democracy and of the European nation states. You appear to have a loathing for the very concept of the existence of nation states; perhaps that is because you come from Belgium, which of course is pretty much a non-country.”

Farage is facing a reprimand for his remarks, according to The Telegraph.

I listened to a BBC segment on this story. They went through a litany of parlianmentary insults from several countries in Europe, as well as Canada, Korea and Japan.

As for the U.S., the only thing they could come up with was the shouted “You lie!” during President Obama’s State of the Union address.

The BBC segment then had a long discussion on why Americans were so much more civilized than the rest of the world. There were several deep psychological suggestions.

Actually, I believe that the answer is much simpler than that: America is not a parliamentary democracy. When Farage called van Rompuy a “damp rag,” it may have been in the hope of getting some popular movement going that would drive him out of office quickly, perhaps through a vote of no confidence.

But that’s not possible in the American system. If you hate George Bush, or you hate Barack Obama, you know that he’s going to be around until the end of his term, so insulting him can only backfire.

China’s top expert on social unrest predicts ‘revolutionary turmoil’

In a speech described as “very significant,” Professor Yu Jianrong, an expert close to China’s President Hu Jintao and Premier Wen Jiabao, is predicting looming internal disaster, based on on-the-ground surveys and also the views of Chinese government ministers.

The speech was given on December 26. It was never publicly reported, but it’s recently emerged on Chinese web sites. It’s being recognized in the West now because of reporting by the Sydney Morning Herald.

That China is facing looming internal disaster due to social unrest is hardly news. I laid out all the reasons in 2005 in my article, “China approaches Civil War.”)

The Chinese Communist Party (CCP) has been in a state of near-panic since 1991, which the Soviet Union collapsed. They’ve been afraid that if Communism could collapse in the Soviet Union, then it could collapse in China. The CCP are also well aware that China’s history of massive rebellion — the White Lotus rebellion of 1795, the Taiping Rebellion of 1852, and Communist Revolution that began with Mao’s Long March in 1934. In 2007, Chinese premier Wen Jiabao said that China is “unsteady, unbalanced, uncoordinated and unsustainable.”

Now, Wen Jiabao said on Friday that 2010 will be the “most complicated” year for the country’s economy, according to the Taiwan News. “Two things can hurt social stability. One is corruption. The other is the price of products,” Wen said, adding that the government should be able to regulate both.

Actually, corruption has been growing rapidly in China, and is the source of a great deal of unrest, as Wen suggests, and housing prices at least are completely out of control. (See “Corruption is increasing in China,” and “Skyrocketing real estate prices in China alarm officials.”)

Mass incidents

Some of the most remarkable things about China — and I first wrote about this in 2004 (see “Up to 50,000 workers riot and clash with police in southeast China”) — are the “mass incidents.” In a typical situation, there might be a busy shopping district. Someone accidentally bumps into somebody or, even worse, someone accidentally bumps into someone’s wife. A fight ensues, and people start gathering around, taking sides. They use their cell phones to notify other people, and pretty soon there are dozens, hundreds, thousands or sometimes even tens of thousands of people fighting each other.

If even one incident like this occurred in the U.S., it would be international news. But there are thousands of “mass incidents” in China every year.

In his speech, Professor Yu cited statistics that show that the number of these mass incidents has been growing steadily, from a few thousand in the 1990s to over 90,000 in the last year. “More and more evidence shows that the situation is getting more and more tense, more and more serious,” Professor Yu said.

China’s ‘Ant Tribes’ face hard times

The “ants” are the hundreds of millions of interchangeable workers in Beijing and other big cities in China. The name comes from the book “Ants Tribe,” according to the AFP.

Even though many of them are college graduates, it’s getting harder and harder for them to find jobs. In 2009, move than 1/3 of the Beijing “ants” had no employment contracts, and many were unemployed or were changing jobs frequently.

This is the exactly the kind of problem that Professor Yu was talking about, and it’s exactly the kind of atmosphere that can give rise to social unrest.

Terrorist bombing in Kabul, Afghanistan

This video is an AFP story of a terrorist bombing in Kabul on Friday.

Taliban suicide bombers targeted guesthouses in the heart of Kabul on Friday, killing at least 16 people. Nine Indian nationals, a French film-maker and an Italian diplomat were confirmed killed in the blast as well as several police.

Russia blames the U.S. for heroin addiction in Russia

Victor Ivanov, the head of Russia’s federal drug control agency, is blaming the Nato coalition forces in Afghanistan for not doing enough to curb opium production in Afghanistan.

According to the BBC, he particularly blamed the Obama administration for ending a military drive to destroy opium poppy crops in Afghanistan. The US had abandoned that practice because it was alienating farmers and driving them to support the Taliban.

Russia has millions of heroin addicts, and Russian President Dmitry Medvedev has called Afghan heroin, which makes up 90% of Russia’s narcotics trade, a threat to Russia’s national security.

Additional Links

— The Federal Trade Commision has notified almost 100 organizations that person information, including sensitive data bout customers or employees, has been hacked from the organizations’ computers, and is available on file-sharing networks for identify theft. FTC Press Release.

— I’m always being criticized for being too gloomy, so let me not omit mention of this NY Times story. It seems that there’s a big silver lining to Greece’s financial crisis. The crisis will force the European nations to finally cooperate with one another, especially in fiscal policy. “Greece was the birthplace of Europe,” says the writer, Jacques Attali, “and the Greek crisis will, in the end, be the midwife of the completion of the European project.” According to Generational Dynamics, Attali is absolutely right — but not before the Clash of Civilizations World War has ended.

— Greece is facing a major showdown next week, as it will try to sell 10-year bonds to finance its current interest payments. The WSJ reports that German and French officials have been discussing a 30 billion euro bailout of Greece, to be financed by state-owned French and German banks. The timing is unclear, and nothing has been approved.

— Mirhossein Mousavi was the opposition leader who claims that last year’s Iranian Presidential election was stolen from him by a corrupt Mahmoud Ahmadinejad last year. On Saturday, Mousavi’s web site said that the legitimacy of Iran’s clerical rulers were “a cult that has no respect for Iran’s national interests,” and has waning credibility. Reuters. It’s amazing that Mousavi hasn’t been arrested, or worse.

— The potential political crisis in Kenya that we reported a couple of weeks ago (see “Kenya’s political coalition may collapse and lead to tribal warfare”) has been averted for now, according to AFP. Bitter political enemies, President Mwai Kibaki and Prime Minister Raila Odinga, from different ethnic tribes, have put differences aside to preserve the coalition government that was formed in the wake of the massive violence two years ago.

— Sufism is a mystical tradition within both the Sunni and Shia sects of Islam. This NY Times article describes Sufism in Pakistan. For more information, you may enjoy this video of Whirling Dervishes in Turkey:

Just watching that video makes me dizzy.

(Comments: For reader comments, questions and discussion, see the 28-Feb-10 News – China faces social unrest disaster thread of the Generational Dynamics forum. Comments may be posted anonymously.) (28-Feb-2010) Permanent Link

27-Feb-10 News – War in Darfur may be starting again
A major explosive battle has yet to occur.

Omar Al Bashir, the president of Sudan, is saying that the war in Darfur is completely over, according to the Sudan Daily.

Al-Bashir, who is running for reelection as President of Sudan, said at a campaign stop on Friday, “Darfur crisis and the battle of arms are over for good. All are now heading for the battle of development, progress, building and prosperity.” Like any good politician, he pledged to transform all money that was being used in war into development and construction programs. This claim is based on a recent truce that was signed.

However, al-Bashir’s statement is being contradicted by the AP, which reported on Friday that heavy fighting is going on between government forces and a “rebel group” that had refused to sign the truce.

The Darfur war has been a media circus since 2004, when the world “discovered” Darfur. The whole thing would be a hilarious joke if you ignored the tragedy of what’s actually going on.

First off, the mainstream media reports are that the Darfar war began in 2004. Nothing could be farther from the truth. It actually began in the 1970s, as a series of low-level incidents between camel herders, whose camels sometimes destroyed farmers’ crops, and farmer, who put fences around their land to keep the herders’ camels from stomping on their crops. This kind of dispute happens in almost every country at some point, including the United States in the 1800s.

In the 1970s, it was just an occasional series of incidents that could be resolved by elders from the conflicted herder and farmer tribes. These elders were people who had survived the previous generational crisis war in Darfur, and who knew how to resolve conflicts before they got out of hand. As those survivors died off, the number of incidents increased throughout the 1980s and 1990s. In 2002-03, it escalated into a full scale crisis war, and it was discovered by the world in 2004. (See Ban Ki Moon blames Darfur genocide on global warming, for a complete generational analysis of the Darfur war.)

Since 2004, there has been a lot of international game playing with the Darfur war. In 2004, anti-war “peace activist” Jesse Jackson called for sending American troops to Darfur. In 2007, then-Senator (now Vice President) Joe Biden wanted to pull our troops out of Iraq and move them to Darfur. What these examples show is that these people never were “anti-war”; they just wanted to send troops into politically correct wars.

The United Nations was particularly playful. In 2005, the UN declared Darfur war was not genocide because UN members didn’t want to have to deal with it in the Security Council. In 2007, the UN Secretary General Ban Ki Moon blames Darfur genocide on global warming, which he then blamed on the United States, making the entire Darfur war the fault of President Bush. There was just no end to the hilarity.

From the point of view of Generational Dynamics, this war has never reached a climax. It appeared in 2006-7 that a massive battle was building, but that battle never occurred, because the United Nations formed refugee camps with three million refugees in huge tent farms in the middle of the desert. Food, water and other needs were supplied by international care agencies. (See U.N. commander claims that the Darfur war is over.)

The new fighting has driving 1500 more people from their homes. Those three million refugees will be sitting ducks when the international forces are withdrawn, which may happen in any major emergency.

The climax of the Darfur crisis war is yet to come.

Additional Links

Iran is confounding international nuclear inspectors, according to the NY Times, because Iran has moved its entire stockpile of low-enriched fuel out into the open. One theory is that they’re taunting the West, provoking Israel into a military strike. Another theory is that they simply ran out of underground storage.

(The Generational Dynamics forum will be unavailable for a few days due to technical problems.) (27-Feb-2010) Permanent Link

26-Feb-10 News – Turkey debates Islam versus secularism
Consumer confidence plummets along with bank lending.

Operation Sledgehammer coup plot roils Turkey’s politics

A major confrontation is developing between the Islamist AKP party, currently in power in Turkey, versus the pro-secular Army. 30 Army officers have been jailed after evidence has been found that they attempted a coup in 2003.

The coup plan, code named Operation Sledgehammer, involved bombing two Istanbul mosques and escalating tensions with Greece by forcing Greek jets to down a Turkish plane over the Aegean Sea, according to Al-Jazeera. The operation was planned after the Islamist AKP party first won parliamentary elections in 2002. This was the first non-secular government in power since the early 1920s, when Kemal Ataturk, the father of modern Turkey, declared Turkey to be a secular state.

A secular country?

Is Turkey now a Muslim state or a secular state? That’s a question that’s plagued the country for centuries, and it’s rising as a major political issue again.

When Constantinople (now called Istanbul) fell in 1453 to the Muslim Ottomans, it marked the end of the Byzantine Empire, and even the end of the last vestiges of the Roman Empire. It was possibly the most important world event of the millennium, and an enormous victory for the Ottomans. The Ottoman Empire began scoring one victory after another, as it took on both Western Christians and Orthodox Christians in the following centuries.

However, the balance of power began to shift from the Muslims to the Christians in 1699, when the Ottomans were forced to sign the Treaty at Karlowitz after being defeated by the Germans and allies in the War with the Holy League. This war stunned the Muslim world, and even today is considered by many Muslim scholars to be the most calamitous defeat in Muslim history.

After that, the Ottomans began losing pieces of their empire, and they were particularly humiliated by the Crimean War in the 1850s, when they had to be saved from a Russian invasion by European forces.

In the generational Awakening era that followed this crisis war, there began a movement of young Muslims to develop a new Turkish (as opposed to Ottoman) culture, and this led to the “Young Turks” rebellion in 1908. The Ottoman Empire was finally destroyed completely in the aftermath of World War I.

WW I was not a crisis war for the West, but it was a generational crisis war for Turkey. After any generational crisis war, a country always goes through major political changes. For Turkey, led by Kemal Ataturk, it was a huge change: Turkey would abandon its position as Caliphate for Muslims worldwide, and would become a completely secular country.

(It’s worthwhile noting that Russia went through a similar change at that time, when the Bolshevik Revolution turned the country from the head of worldwide Orthodox Christianity to an atheist nation. Today, Russia and Turkey are both questioning those decisions.)

The headscarf controversy

In 2007, I wrote a brief historical analysis of Turkey in the article More than a million of secularists rally in Turkey. As I pointed out in that article, a controvery over headscarves has been the focal point of a culture war between the Islamists and the secularists.

Turkey’s current president, Abdullah Gul, is from the Islamist AKP party, and his wife wears a headscarf, according to some Muslim traditions. But in the secular Turkey established by Ataturk in 1924, wearing headscarves in public buildings is illegal.

I recall that my mother used to wear a headscarf at times, to keep her hair in place, and she isn’t even Muslim! We have one Muslim country, Iran, where women who DON’T wear headscarves are swept up by the police and arrested, and we have a secular country, Turkey, where WEARING a headscarf is illegal is some circumstances. This shows how confusing this issue is for Muslims, and especially how confusing it is for Turkey.

The stakes are very high in Turkey now, with two large, powerful institutions fighting over the secularist vs Muslim issue. The Army has a history of enforcing Ataturk’s laws about secularism, and it’s widely known that the army has triggered coups in the past to keep the government secular. But Operation Sledgehammer really crossed the line, in the minds of many Turks.

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US Consumer Confidence fell to its lowest level since last spring. According to Bloomberg, that this means that consumers may “hold back the spending needed to sustain the recovery.” Once again, the dreams of those who are hoping that a full-fledged credit bubble will return again are dashed.

In fact, bank lending is falling at an “epic pace,” according to WSJ. “Besides registering their biggest full-year decline in total loans outstanding in 67 years, U.S. banks set a number of grim milestones. According to the FDIC, the number of U.S. banks at risk of failing hit a 16-year high at 702. More than 5% of all loans were at least three months past due, the highest level recorded in the 26 years the data have been collected.”

In the past two weeks, Iranian president Mahmoud Ahmadinejad has been stepping up his calls for the destruction of Israel. In one speech translated by Memri, he said, “A Middle East without Zionism is a divine promise… Time is on the side of the peoples of the region. The Zionist entity is nearing the threshold of nonexistence. Its raison d’être is finished, and its path is a dead end. If Israel wants to repeat the mistakes of the past, the death of the Zionist entity is certain… This time, all the nations of the region will stand fast in the face of the [Zionist regime], and will uproot it.”

(Comments: For reader comments, questions and discussion, see the 26-Feb-10 News – Turkey debates Islam versus secularism thread of the Generational Dynamics forum. Comments may be posted anonymously.) (26-Feb-2010) Permanent Link

25-Feb-10 News – Greeks call Germans ‘Nazis’ as strikes shut Greece down
YouTube links for ‘Generation Zero’ movie special coverage on Hannity

YouTube links for ‘Generation Zero’ special on Hannity

If you missed the ‘Generation Zero’ Hannity special on Fox News Channel on Tuesday evening, it’s now available on YouTube.

You can go to youtube.com, and search for “generation zero hannity”. The links are as follows:

2/23/10 Hannity Special ‘Generation Zero’ Part 1
2/23/10 Hannity Special ‘Generation Zero’ Part 2
2/23/10 Hannity Special ‘Generation Zero’ Part 3
2/23/10 Hannity Special ‘Generation Zero’ Part 4

Each part shows clips from the movie. I appear in the clips in the first two parts.

A transcript of the full hour can be found here, on FoxNews.com.

Greeks call Germans ‘Financial Nazis’

A Greek depiction of the Berlin statue of the goddess Victoria, shown holding a swastika <font face=Arial size=-2>(Source: Eleftheros Typos / WSJ)</font>
A Greek depiction of the Berlin statue of the goddess Victoria, shown holding a swastika (Source: Eleftheros Typos / WSJ)

The picture on the right, appearing Wednesday in the Athens newspaper Eleftheros Typos, depicts the statue of the goddess Victoria, atop the Siegessaeule in Berlin, showing it holding a swastika. According to the WSJ, the paper was reacting to the cover of this week’s German magazine Focus showing the Venus di Milo making an obscene gesture (“the finger”) at Europe, with the headline “Swindlers in the European Family.”

Both countries are showing increasing mutual acrimony in their public opinion, according to the article. The majority of Germans oppose bailing out Greece, while the Greeks refer to “financial naziism.”

Bitter generational words from Greece’s deputy prime minister

Even more bitter words came from Greece’s Deputy Prime Minister Theodoros Pangalos, in an interview with the BBC. Pangalos’ remarks were very wide-ranging. He accused Italy of lying about financial statistics even more than Greece had, and he said that Germans had no right to criticize the Greeks after the Nazi slaughter and occupation. “They took away the gold that was in the Bank of Greece, they took away Greek money, and they never gave it back. This is an issue that has to be faced sometime in the future,” he said.

He also made a statement that was very interesting from the point of view of Generational Dynamics. He attacked the caliber of the EU’s current political leaders, saying that those of the 1980s — such as Margaret Thatcher, Helmut Kohl and Francois Mitterrand – would never have permitted the current economic crisis. “This is another level of leadership which we don’t have today. The quality of leadership today in the union is very, very poor indeed.”

From the point of view of Generational Dynamics, this is completely true. The leaders in the 1980s were survivors of the Great Depression and WW II. Even when they were from different countries, or in different political parties, they shared common horrors when they were children, and gave the highest priority to preventing anything like that from happening again. Today’s politicians don’t care about anything except getting votes.

However, the problem with Pangalos’ statement is that it applies to Greek politicians as well, and he doesn’t seem to have any inkling of that.

The Greek politicians are in a complete state of denial, according to Brussels-based financial analyst Fredrik Erixon. “We haven’t yet seen anything of the fiscal contraction that Greece has to go through if it wants to avoid a sovereign default,” he said to Bloomberg. “The main problem is that the Greek government and the prime minister himself have not yet realized the depth of the mess.”

So, now we can turn it around. Erixon correctly states that the Greek politicians are in a state of denial, but he apparently doesn’t realize that the EU politicians in Brussels are also in a state of denial.

In fact, more and more analysts are reaching the conclusion that there IS no solution to the crisis. John Plender, writing in Financial Times,

“[T]o argue … that the difficulties of the southern European countries [Greece, Italy, Spain, Portugal] can be solved by a stringent dose of fiscal austerity and the equivalent of an International Monetary Fund programme is plausible but utterly wrong.All these countries suffer from poor cost competitiveness, exacerbated by the overvaluation of the euro. What they need is more external demand for their goods and services while they try to address problems of fiscal excess and overblown unit labour costs.

Yet much of northern Europe, with Germany in the lead, seems to think it can continue with its structural savings surplus and export-led growth model while Portugal, Italy, Greece and Spain are throttled.”

Crippling strikes in Greece, protests in Spain

Another person who’s in complete denial is Yiannis Panagopoulos, Head of GSEE private sector union. He’s leading crippling public sector strikes that shut down the country on Wednesday. All flights in and out of the country have been canceled, while public schools, ministries, municipal offices, and public transportation are shut down. Many hospitals are operating only with emergency staffing.

Greece may be the euro country worst hit by labor union strikes right now, but it’s far from the only one.

John Monks, secretary general of the European Trades Union Confederation, warned yesterday that unions across the EU were pushing back against austerity plans that were “socially unacceptable” and which would only exacerbate the recession by fuelling unemployment, according to The Independent.

In Spain, trade unionists led rallies in Madrid, Barcelona and Valencia against plans to raise the retirement age to 67, according to the article. Spain’s economy was driven by a huge real estate bubble during the boom years, and the current slump, with 20% unemployment, is worse than even the Greek slump.

In France, where unemployment is at 10%, oil refinery workers and air-traffic controllers are threatening strikes.

To repeat what I’ve said before, there is no solution to this crisis. Everyone wants as much as possible for himself, and couldn’t care less about anyone else. If someone suggests a compromise, it’s immediately shot down by the other side. This crisis can only end up in war, as I’ve said before. Exactly how the countries will choose up sides cannot yet be predicted, but the bitter acrimony between Greece and Germany, invoking the Nazi ghosts of WW II, makes it pretty clear that those two countries will be on opposite sides.

Additional Links

According to the Asian Times, the Sunni terrorist group Jundallah is poised to regroup and become even stronger, after the capture of its leader, Abdulmalik Rigi, that we reported yesterday. It’s believed that Pakistan intelligence helped Iran capture Rigi, but Jundallah is already dominated by anti-Shia terror organization Lashkar-e-Jhangvi, whose network spreads across Pakistan.

More trouble for Greece, as wealthy citizens are pulling money out of Greek banks and sending it abroad to Cyprus, Luxembourg and Switzerland, to escape anticipated punitive taxes. WSJ.

(Comments: For reader comments, questions and discussion, see the 25-Feb-10 News – Greeks call Germans ‘Nazis’ thread of the Generational Dynamics forum. Comments may be posted anonymously.) (25-Feb-2010) Permanent Link