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10-Oct-11 World View — Sarkozy/Merkel Announce Non-Plan, As Dexia Bank Breaks Up


This morning’s key headlines from

* 23 dead in clash between Coptic Christians and Egyptian security

* Sarkozy/Merkel announce non-plan, as Dexia bank breaks up

* European banks much worse off than reported

* Belgium and France agree to break up collapsed Dexia Bank

* France and Turkey trade barbs on genocide and colonization

* China commemorates the centennial of the 1911 Xinhai Revolution

Web site traffic doubles

For some reason unknown to me, traffic to suddenly more than doubled on Sunday. Let me welcome all the new visitors. I do try to answer all e-mail questions from readers, though I must again apologize that I’ve been getting behind. If something is urgent, please indicate so in the subject line, and I’ll try to get to it right away. You might also try posting your question or comment in the Generational Dynamics forum. In any case, welcome!

23 dead in clash between Coptic Christians and Egyptian security

Coptic Christians marching in Cairo
Coptic Christians marching in Cairo

Twenty-three people, mostly Coptic Christians, died in clashes Sunday between Coptic Christians and Egyptian security forces in Cairo, Egypt. 174 people were injuried. The clashes occurred as thousands of Coptic Christians marched to protest a recent attack on a church. They came under assault by people in plain clothes who fired pellets at them and pelted them with stones. In the ensuing brawl, Copts used batons and security forces used guns. AFP

Sarkozy/Merkel announce non-plan, as Dexia bank breaks up

French President Nicolas Sarkozy almost had to cancel Sunday’s meeting with German Chancellor Angela Merkel because his wife, Carla Bruni, was scheduled to give birth. He might as well have canceled the meeting, because at the end, Sarkozy and Merkel announced that they had a plan to save Europe, but that they’d supply the details later — by the end of the month. It’s known that they have a specific disagreement about the issue at hand — how to recapitalize the banks after Greece defaults. Sarkozy wants the euro zone as a whole to recapitalize the banks, which Merkel wants each individual country to recapitalize its own banks. Sunday’s postponement is only the latest in many months of postponements. “By the end of the month, we will have responded to the crisis issue and to the vision issue,” said Sarkozy. Bloomberg

European banks much worse off than reported

Europeans banks are much worse off than even the dire reports you read in the papers. Spreads are widening (that is, interest rates are rising sharply) and liquidity is drying up. The collapse of Drexia Bank is the tip of the iceberg. Europe’s new European Financial Stability Facility (ESFS) is supposed to save the banks, but the money that Europe needs will overwhelm the €440 billion fund. Many analysts think that it will take at least €2 trillion and one analysts estimates that it will need to be over €6 trillion. John Mauldin

Belgium and France agree to break up collapsed Dexia Bank

An announcement is expected on Monday providing details for the dismantling of Dexia Bank, the first major bank victim of Greece’s debt crisis. Dexia’s breakup, three months after it got a clean bill of health in European Union stress tests, brought Europe’s banking crisis to a head. Dexia has units in both France and Belgium. France and Belgium rushed to protect their local units, they wrestled over responsibility for the troubled assets. When the details are announced, it’s thought that the objective will be to protect individual bank depositers, while investors will have to take “haircuts” of 40-60%. France is one of only six countries left in the eurozone with an AAA rating from Moody’s and S&P, and the French objective is to keep that rating. Bloomberg

France and Turkey trade barbs on genocide and colonization

Before a routine signing ceremony with Turkey, France’s president Nicolas Sarkozy visited Armenia to make statements that Turkey should admit the allegation that massacres against Armenians in the last years of the Ottoman Empire amounted to genocide. Sarkozy implied that the timing was appropriate because of the approach of the 100th anniversary of the infamous campaign of 1915 that led to the cleansing of the native Armenian population of Turkey before the end of WWI that triggered the War of Liberation in which the Ottoman Empire ended as well. Turkish Foreign Minister Ahmet Davutoglu’s reply was interesting: France should first face its colonialist past in Africa before attacking Turkey’s past. Davutoglu was referring to the Turkish withdrawal, 100 years ago, from Libya and Algeria to leave the rule of the lands to Italy and France respectively. The next face-off between France and Turkey could occur in Syria Hurriyet (Ankara)

China commemorates the centennial of the 1911 Xinhai Revolution

The 1911 Revolution, or Xinhai Revolution, which began on Oct. 10, 1911 and led by Dr. Sun Yat-sen, founder of the Kuomintang, ended one of the world’s longest periods of autocratic rule by toppling the Qing Dynasty (1644-1911) and establishing a republican government. Imperial rule in China began in B.C. 221 under Emperor Qinshihuang. Xinhua

After the Revolution of 1911, there was no fundamental change in the semi-colonial, semi-feudal nature of Chinese society, the Chinese people remained in misery, and the bourgeois political parties and other political groups in China were unable to complete the historic mission of overthrowing imperialism and feudalism, according to Lin Jun, Chairman of the All-China Federation of Returned Overseas Chinese. “History convincingly proves that without the CPC [Communist Party of China], there would have been no New China, that only socialism can save China, and that only reform and opening up can develop China,” said Lin, who speaks on behalf of the country’s various people’s organizations. Xinhua

China’s 1911 revolution was a bloodless coup that resulted in the end of a 250 year old dynasty. From the point of view of Generational Dynamics, this was an Awakening era climax, similar to Richard Nixon’s resignation in 1974. The 1911 revolution occurred midway between two extremely bloody, massive civil wars, the Taiping Rebellion of 1852-64, and the Communist Revolution of 1934-49, each slaughtering tens of millions of people. Today’s China is in a generational Crisis era, and so no comparison to the 1911 revolution makes any sense. In particular, no bloodless coup is possible, as China heads for a new, massive, extremely bloody civil war.


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