This morning’s key headlines from GenerationalDynamics.com

Arab countries recruit more soldiers from Pakistan

Saudi Arabia has begun recruiting soldiers in Pakistan’s tribalareas, which are the stronghold of Taliban and al-Qaeda militants.According to a report on the recruitment:

Youths skilled in firearms are given preferences.

Monthly salary 75,000 rupees [$750]. Medical and other facilitieswill also be given.

Will be deployed on borders with Yemen and oilinstallations.

Preference is being given to youths skilled in using an AK-47.According to the Saudis, up to $20 billion in foreign exchange couldcome annually to Pakistan.

Kuwait, Bahrain, Qatar, UAE, and Oman are also recruiting in Pakistan.Kuwait is opening a military office in Pakistan’s capital, Islamabad,to recruit retired Pakistani military officers and trainers to train11,000 Kuwaiti soldiers.

Ten years ago, based on a generational analysis, I said that thecoming Clash of Civilizations world war would pit the West, India,Russia, and Iran versus China, Pakistan, and the Sunni Muslim countries.Ten years ago, that seemed far-fetched, but as each year goes by, thetrend continues to move in that direction. Memri (4/15)and Memri

U.S. threatens to cut off all aid to the Palestinians

As we reported two days ago, 79-year-old Palestinian president MahmoudAbbas is threatening to personally retire, and also “retire” thePalestinian Authority (PA) that’s responsible for governing the WestBank, leaving it to Israel and the United Nations to takeresponsibility.

The U.S. State Department is responding with a threat to cut offall aid to the Palestinians, according to spokesman Jen Psaki atMonday’s press conference:

QUESTION: “Are you telling Abbas not to keep issuingstatements and proclamations that they are going to sort of justclose shop with the PA and turn over the occupation responsibilityto the Israelis?”

MS. PSAKI: “Well, let me speak to that, because it’s an importantquestion. That – we’re aware, of course, of these reports andcomments. That type of extreme step would obviously have graveimplications. A great deal of effort has gone into buildingPalestinian institutions by Palestinians as well as theinternational community, and it would certainly not be in theinterests of the Palestinian people for all of that to be lost. We- the United States has put millions of dollars into thiseffort. It would obviously have very serious implications for ourrelationship, including our assistance goingforward.”

The Palestinian Authority gets about $400 million in aid each yearfrom the U.S. Members of Congress have already threatened cut aidearlier this month, after Mahmoud Abbas applied for membership in 15United Nations organizations as the State of Palestine. U.S. State Dept. and Israel National News (3-Apr)

ZeroHedge: China’s commodity and real estate bubbles are bursting

For the last two months, the ZeroHedge blog has been publishing aseries of articles analyzing China’s collapsing credit and real estatebubbles and responding to pundits who say that the collapseisn’t happening or that it’s purely a Chinese domestic matter.

The latest offering shows how China has been creating hugeamounts of debt by using soybean contracts in the sameway that American banks used subprime mortgages. You’ll recallthat investors were “flipping” properties in 2004-2007,meaning that someone would buy a property, wait a few months forproperties to rise, and then sell it at a profit. This pushedup the prices of all real estate. When the bubble burst, millionsof people lost their homes.

China has been “flipping” soybean contracts in the same way. OneChinese business sells a contract to someone else at a higher price,and everyone makes money, as long as the price of soybeans keeps goingup. And international soybean prices have been skyrocketing intobubble levels in the last two months. The problem is thatinternational soybean contract prices have been getting ahead ofChina’s local soybean market, which has been getting depressed.Soybean contracts are different from actual soybeans, and a price risein one doesn’t necessarily mean a price rise in the other. So whenit’s time for the soybean contract to be fulfilled, and the soybeansare shipped for delivery to the contract holder, the holder has tocome up with the money he’s committed to pay on the contract. But ifhe’s going to be stuck with a $10 million contract in soybeans forwhich he can only get $3 million in his local market, then he’ll gobankrupt.

This has been happening more and more frequently in the last fewweeks, and it portends a bursting of the soybean bubble, along withChina’s credit bubble in general. Since the soybeans are beingshipped from the United States and South America, a lot of soybeanfarmers are not going to get paid.

It’s estimated that Chinese buyers are going to default on a total ofabout $900 million in soybean contracts. That’s a huge dominoeffect, and it’s going on right now.

I recall vividly how in 2006, all the expert economists were sayingthat a real estate bubble is impossible because “everyone has to livesomewhere,” and “these building contractors know what they’re doing,and wouldn’t keep building in a bubble.” Then in 2008, Ben Bernankeand other expert economists were saying that there was a problem, butthe problem was “contained.” What all this means is that the Chinabubble may or may not be bursting, but that the “expert” economistswho say that a China bubble is impossible, or that it’s “contained”domestically, don’t have a clue what’s going on, and are probably fullof crap. ZeroHedge and Reuters

45 people in Chicago shot over the weekend

In Chicago over the weekend, 9 people were killed and 36 were woundedfrom gunshots. 6 children were shot on Sunday night. Almost all ofit was gang violence, scattered around the city. Unfortunately, thisis a typical Chicago weekend. Chicago is beginning to read likeKarachi, Pakistan, or Baghdad, Iraq. Chicago Tribune

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