This morning's key headlines from
GenerationalDynamics.com
- Algeria ends four-day terrorist siege with a no-mercy assault
- Hillary Clinton tells China to steer clear of the Senkaku/Diaoyu islands
- Federal Reserve officials were caught by surprise by financial crisis
Algeria ends four-day terrorist siege with a no-mercy assault
Mokhtar Belmokhtar is the leader of the terrorist group responsible for the siege of the Algerian natural gas complex (Reuters)
Algerian troops ended the four-day siege by Islamist terrorists at a
natural gas complex in the Sahara with a no-mercy, no-negotiation
assault that killed the seven remaining foreign hostages, along with
all the remaining hostage takers. Algeria's interior ministry said
that 107 foreign hostages and 685 Algerian hostages had survived, but
there are still people unaccounted for, including Americans, Britons,
Norwegians and French, and many people are fearing the worst. At
least 15 unidentified burned bodies were found at the plant. Some
Western governments have expressed anger that they weren't even
notified before the Algerians went ahead with the initial assault,
risking the lives of the hostages, but the Algerians feared that any
delay would make matters worse. Reuters
Hillary Clinton tells China to steer clear of the Senkaku/Diaoyu islands
U.S. Secretary of State Hillary Rodham Clinton is warning China not to
take "any unilateral actions that would seek to undermine Japanese
administration" of the Sankaku/Diaoyu islands. If China does take any
action, then presumably she or her successor will issue another
warning. As we've reported, (
"19-Jan-13 World View -- China's directive to the People's Liberation Army: Get Ready for War"), Chinese military
officials believe that "the U.S. is bluffing in the East China Sea,"
and that Americans will "run like rabbits" if there's a clash.
Japan Times
Federal Reserve officials were caught by surprise by financial crisis
The transcripts of Federal Reserve meetings from 2007 have just been
released, and they indicate that Federal Reserve officials, from
chairman Ben Bernanke on down, were completely clueless about the
coming financial crisis. One Fed official, then-San Francisco Fed
President Janet Yellen, raised the alarm about the housing bubble in
January, but she was ignored and backed down later in the year. As
I've said many times, mainstream economists did not predict and can't
explain the 1990s tech bubble, the real estate bubble, the 2007
financial crisis, or anything that's happening today, and they don't
have the vaguest clue what's going to happen next year.
I still can't get used to this. It was perfectly obvious to me by
2004 that there was a housing bubble and a stock market bubble. It
was also obvious to Alan Greenspan, who gave some alarming speeches on
the subject in 2005. (See "Ben S. Bernanke: The man without agony" from 2005.) And
I'm not blessed with any special powers, but I do understand the Law
of Mean Reversion, which is taught in Economics 1.01, and when you
apply the Law of Mean Reversion, you could see well before 2007 that
there was a housing bubble, a stock market bubble and a credit bubble,
and that there was going to be a crash. So I was able to apply
Economics 1.01 and predict what was going to happen, but Ben Bernanke
and the gang at the Fed were totally unable to do the same thing.
These are the same people that are running the Fed today. They still
don't have a clue what's going on. As I wrote in "1-Jan-13 World View -- 2013 Forecast: Financial Crisis and China Threat", the S&P 500 Price/Earnings
Ratio index (also called "valuations") has been well above average
since 1995, and by the Law of Mean Reversion, stocks will at some
point fall sharply, to the Dow 3000 level or lower, and stay there
until the 2020s. Bloomberg and AP
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