This morning’s key headlines from GenerationalDynamics.com.

• Tensions continue to rise in the South China Sea
• Iceland’s scapegoat former PM Geir Haarde avoids jail

Tensions continue to rise in the South China Sea

I’ve been writing for several years about China’s increasingly aggressive activities in claiming as under its “indisputable sovereignty” over islands and “related waters” in huge regions of the South China Sea, including islands that have formerly been part of the Philippines, Vietnam, Malaysia, Taiwan and Brunei. A new report by the International Crisis Group details the history of the controversy, and its importance to the world economy.

In fact, 10% of the entire world’s fisheries catch takes place in the South China Sea, making the region vitally important to the economies of all the nations around it. As China has become more aggressive in asserting its claims, the neighboring countries have been scrambling to bolster their own claims, by occupying as many of the features as possible. This has led to a series of maritime incidents, beginning in 1974 with a standoff between China and Vietnam. But the number of incidents has increased dramatically in the last two years, including the latest incident between China and the Philippines over Scarborough Shoal, an island off the coast of Manila and far from China’s shores.

Like many nations in the world, China is becoming increasingly nationalistic. This can take many forms, but in China it’s taking the form of demands for sovereignty over lands controlled by India, Russia, and Japan, in addition to those in the South China Sea. This desire for land, similar to Hitler’s demands for Lebensraum, is substantially increasing tensions in the regions to the point where a miscalculation or misunderstanding on someone’s part could lead to military action.

According to the report, the situation in China is substantially complicated by the fact that numerous Chinese government and semi-government agencies are competing with one another to be the heroes in the South China Sea.

There’s a bulky bureaucracy that includes eleven ministerial level government agencies, under which there are five law enforcement agencies and private actors. The most active of these eleven actors include the Bureau of Fisheries Administration, China Marine Surveillance, the local governments, the People’s Liberation Army Navy (PLAN), and the foreign ministry. China’s government has deliberately imbued the maritime disputes with nationalist sentiment. In current textbooks, the map of China includes the South China Sea and China’s claims.

According to the report, netizens and nationalists have long called for Beijing to step up military deployments in the region to “teach the Vietnamese, the Filipinos and Malaysians a good lesson.” Many have expressed a desire for the South Sea Fleet to repeat the 1974 and 1988 “victories” and send the Vietnamese “home with tails between their legs.” Most nationalist scholars and netizens are ardent supporters of a maximalist view of Chinese claims, calling “not to forget the 3 million sq km of Chinese maritime territory” and arguing that “the size of Chinese territory should be 12.6 million sq km, not 9.6 million.” International Crisis Group

Iceland’s scapegoat former PM Geir Haarde avoids jail

Geir Haarde, 61, who was prime minister of Iceland between 2006 and 2009, was acquitted on Monday of charges of gross negligence in failing to prepare for the financial crisis, but was found guilty of failing to hold emergency cabinet meetings in the run-up to the crisis, though he won’t go to jail for that.

This whole situation is incredibly vomit-worthy on so many levels. Guilty of “failing to hold emergency cabinet meetings”?? Are you kidding me?

During the trial, Haarde said,

“None of us realized at the time that there was something fishy within the banking system itself, as now appears to have been the case.”

Well, so Haarde didn’t know. And neither did Gordon Brown, who was Britain’s Chancellor of the Exchequer and then Prime Minister during this period. And of course neither did that brilliant economist Paul Krugman, who won a Nobel Prize in economics because of his hatred of George Bush, and who said in 2008, “Who knew that Iceland was going to have a financial collapse? Who knew?”

So none of these people knew that there was “something fishy,” but I knew.

In February 2006, I wrote about the possible default of Iceland’s banks in “Sudden collapse of Iceland krona portends bursting of ‘carry trade’ bubble.” In that article, I described how Fitch Ratings that it was revising the outlook for Iceland’s banks from “stable” to “negative,” saying that the new ratings “[took] into account Iceland’s macro-prudential risks, including rising inflation, rapid credit growth, buoyant asset prices, a steep current account deficit and escalating external indebtedness.”

I wrote later articles on the subject as well. So I knew, but Haarde didn’t know, Brown didn’t know, and Krugman didn’t know. That’s just great.

So Haarde got off by claiming ignorance of something that he should have known, and probably did know, which means he was lying. But it’s just as well, because Haarde was just the scapegoat of a lot of politicians who lied and accused him to save their own butts. And as I’ve said many times, no one is prosecuting the thousands of Gen-X banksters who purposely committed illegal acts, because Gen-Xers refuse to blame each other for anything, even serious crimes, with the result that the same people are in the same jobs committing the same kind of fraud, only worse, paying themselves the same huge bonuses to do so. Irish Times