This morning's key headlines from GenerationalDynamics.com:

• Afghan suicide attack kills 13 in revenge for anti-Islamic movie
• Appearing to panic, U.S. announces end of joint operations with Afghan soldiers
• China's nuclear weapons dilemma
• China discovering billions of dollars in fraud over steel warehousing
• Russia reveals a huge diamond mine in Siberia

Afghan suicide attack kills 13 in revenge for anti-Islamic movie

A militant group called Hezb-i-Islami (Party of Islam) claimed responsibility for one of the most deadly insurgent attacks in Kabul, Afghanistan, this year, after a suicide bomber detonated a car filled with explosives on a main thoroughfare. Most of the victims were South Africans, packed into a minivan on their way to work at the airport. The suicide bomber rammed into the minivan, creating a huge explosion whose shockwaves were felt in many parts of the city, sending the minivan flying at least 160 feet from its original location. ABC News

Appearing to panic, U.S. announces end of joint operations with Afghan soldiers

In a move that strikes at the heart of the strategy for withdrawing Nato forces from Afghanistan by 2014, the U.S. has announced that it will no longer conduct joint operations with Afghan soldiers. These joint operations are an essential component of the withdrawal strategy, because they're needed to train the Afghan soldiers to defend themselves after Nato leaves. Now they're going to be left on their own without having been properly trained. 

The decision may have been made in panic, as none of America's Nato allies were informed of the decision before it was announced. The decision was made in reaction to a series of killings of Nato soldiers by the Afghan partner soldiers they were supposed to be working with and training. It turns out that many of them had joined the Afghan army to await an opportunity to kill Americans and other Nato forces, and then flee back to their Taliban barracks. So far in 2012, 51 Nato soldiers have been killed in this way, 8 of them over the last weekend.

The Obama administration had implemented a "surge" strategy, attempting to emulate President Bush's successful surge strategy in Iran in 2007. However, as I've written many times in the last three years, a Generational Dynamics analysis shows significant generational differences between Iraq and Afghanistan that make it impossible for the same surge strategy to work.

The fundamental difference is that in Iraq's two previous generational crisis wars, Iraqis put aside sectarian (Sunni vs Shia) differences to fight an external enemy. So they had no trouble cooperating to eject another foreign intruder, al-Qaeda in Iraq.

But Afghanistan's last generational crisis war was an extremely bloody sectarian civil war, with Sunni Pashtuns (Taliban) fighting against Shia Hazaris. There isn't a snowflake's chance in hell that the Sunni Taliban are going to agree to a peace deal with Nato.

In fact, Tuesday's announcement reflects exactly that. The Afghan army is infiltrated with Sunni Taliban soldiers who are committed to jihad against Nato and America, as well as against the Shia Hazaris with whom they're supposed to be uniting.

The Nato leadership hopes that once the furor over the American anti-Muslim film dies down, then Nato can resume joint patrols with the Afghans. But almost all of those 51 incidents this year occurred long before that furor began, and so the Nato plan for smooth withdrawal from Afghanistan remains wishful thinking. The real danger, and quite a realistic one, is the complete collapse of the Afghan army, such as what happened when the Americans withdrew from Vietnam in 1974. Guardian (London) and Khaleej Times (Dubai)

China's nuclear weapons dilemma

According to an assessment of China's nuclear weapons strategy, China has a serious dilemma: 

• They don't want to be the first to use nuclear weapons
• Therefore a "defensive" first strike would have to be with conventional missiles, and these missiles have to be ready to strike first and hard.
• But the same Chinese military bases are used for both conventional weapons and nuclear weapons
• Therefore, if they launch conventional weapons, their enemy (the U.S.) won't be able to tell the difference, and will assume that they're nuclear weapons, and will respond with nuclear weapons.
• Therefore, "Escalation to nuclear war could become accelerated and unavoidable."

PhysOrg

China discovering billions of dollars in fraud over steel warehousing

There's just no end to the imagination of financial criminals in today's world culture of fraud and extortion, and a new kind of fraud has been revealed in China. Many firms had borrowed billions of dollars from banks, and pledged warehouses containing stacks of stored steel as collateral. Now many of those firms are defaulting, and the banks are discovering that the warehouses are ghosts -- they either don't exist, or they're empty. Many firms pledged the same warehouses as collateral for multiple loans. According to an analyst in Shanghai, "What we have seen so far is just the tip of the iceberg. The situation will get worse as poor demand, slumping prices and tight credit from banks create a domino effect on the industry." Reuters and ZeroHedge

Russia reveals a huge diamond mine in Siberia

World diamond markets may soon become chaotic with sharply falling prices, after Russia revealed a huge diamond mine in Siberia, with enough diamonds to supply global markets for another 3,000 years. The diamond mine was actually discovered in 1971, but it was kept secret because the Russians did not want to risk losing money from their own lucrative diamond sales. CS Monitor

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