This morning’s key headlines from GenerationalDynamics.com

Syria claims Israel’s warplanes strike near Damascus


Hezbollah-provided picture of Sunday’s Israeli air strike (Al Arabiya)

The Syrian government said on Sunday that Israel’s warplanes had bombed areas nearDamascus international airport and in the town of Dimas, near theborder with Lebanon. Syrian state media said that messages had beensent to the United Nations demanding sanctions against Israel:

The messages read that Israel has committed a heinouscrime against the sovereignty of Syria as Israeli warplanesattacked two safe areas in al-Dimas and near DamascusInternational Airport in Damascus Countryside, causing materialdamage in a number of institutions there.

The Ministry stressed that the attack is in the framework ofextending help and support to the armed terrorist groups in Syria,especially after the series of achievements made by the Syrianarmy in Deir Ezzor, Aleppo, Daraa and other areas. […] 

The attack reflects the Israeli explicit involvement in supportingthe armed terrorist groups in Syria, on top of which Jabhatal-Nusra, along with well-known regional and westerncountries.

Israel and Syria have been in a state of war since 1948. Israelrefused comment on the accusations.

It’s thought that, if true, Israel was striking advanced weaponry or chemicalweapons held by the regime of Syria’s president Bashar al-Assad and intransit to Hezbollah in Lebanon for use in attacking Israel. However,a Lebanese TV correspondent reported that Israel struck 10 crucialintelligence-linked locations in Syria that belong to Iran.

SANA (Syria) and Jerusalem Post and Al Arabiya (Saudi Arabia)

Egypt continues building buffer zone on Sinai border with Gaza

Schools in Egypt’s North Sinai region along the border with the GazaStrip are reopening after ten days’ closure due to Egypt’scounter-insurgency operations in the area.

Egypt’s army is attempting to eliminate “once and for all” the threatfrom Hamas terrorists from Gaza, following a massive October 24terrorist attack with a car bomb that killed 33 Egyptian troops.Egypt’s president Abdel al-Fattah al-Sisi labeled the attack anexistential threat to Egypt, and ordered that a buffer zone be builtalong the border with Gaza with the objective of eliminating thesmuggling tunnels under the wall that separates Gaza from Sinai.

The original plan was that the buffer zone would be 500 meters(1/2 km) wide and 13.5 km along the border. However, severaldays ago, Egypt announced that it would double the width ofthe buffer zone to 1 km. According to the state news agency:

A decision was taken to increase the buffer zonealong the border in Rafah to one kilometer. The decision… cameafter the discovery of underground tunnels with a total length of800 to 1,000 meters.

Egypt has been demolishing homes in Sinai along the Gaza borderin order to make room for the buffer zone. Egypt originallyannounced that 802 homes were to be demolished and 1,156 familiesto be relocated. With the doubling of the width of thebuffer zone, it’s assumed that 1600 homes will be demolishedand 2300 families displaced and relocated.

There has been little international condemnation or interest inEgypt’s plan to demolish 1600 homes. However, there has been a greatdeal of international condemnation when Israeli forces demolished the home of Abdelrahman Shaludi,a terrorist who had purposely plowed his car into pedestrians onOctober 22, killing two people. Daily News Egypt and Daily News Egypt (18-Nov)

Bank of International Settlements warns of ‘fragile’ and ‘sensitive’ markets

Last week, on one of days when the Dow Jones Industrial Averagereached a fresh all-time high, I heard one of the male anchors on CNBCsay something like: “The Dow Jones has reached an all-time high 48times this year. That’s the highest number since 1929.” The femaleanchor said, “What are you saying????” and quickly changed thesubject.

In fact, the near-parabolic spike in stock prices is only one of theways that Wall Street is signaling danger. According to Friday’sWall Street Journal, the S&P 500 Price/Earnings index (stockvaluations) on Friday (December 5) has shot up to 19.54. This is farabove the historical average of 14, indicating that the stock marketis in a huge bubble that could burst at any time.

On October 16, I warned that wild stock market swings, which are similar to the wild swings thatoccurred in October 1929, were particularly dangerous because thenext wild swing could be sharply downward by hundreds of points.

Now the Bank of International Settlements (BIS) is confirmingthis view in its quarterly report:

These abrupt market movements (in October) were evenmore pronounced than similar developments in August, when a suddencorrection in global financial markets was quickly succeeded byrenewed buoyant market conditions.

This suggests that more than a quantum of fragility underlies thecurrent elevated mood in financial markets. Global equity marketsplummeted in early August and mid-October. Mid-October’s extremeintra-day price movements underscore how sensitive markets havebecome to even small surprises.

The BIS pointed out that the US dollar has been strengtheningsignificantly in recent weeks against the euro, the yen, and otheremerging market currencies. This is happening because the FederalReserve is cutting back on quantitative easing (“printing money”) atthe same time that the European Central Bank (ECB) and the Bank ofJapan (BOJ) have been significantly increasing their quantitativeeasing programs. On Friday, there was an unemployment report of alarger-than-expected rise in U.S. jobs in November, and this sent thedollar to multi-year highs against the yen and euro.

Many companies in emerging economies have been going increasingly intodebt, just as American companies did in the mid-2000s, leading to thefinancial crisis. However, many of the emerging market company debtsare denominated in dollars, and so a significant strengthening of thedollar means, in effect, that the amount owed is growingsubstantially, relative to the country’s own currency. This couldforce these businesses into bankruptcy, creating a chain reaction offurther bankruptcies. Also, it could force many hedge funds andbusinesses to liquidate their assets, such as stocks and bonds, inorder to pay their debts, causing a chain reaction of asset sales,causing a stock market plunge.

According to one currency analyst, Kit Juckes at Sociéte Générale,this could have an effect as early as Monday morning:

It’s the warning that the rising dollar could bringmore (emerging markets) trouble in its wake – as it did in the1990s – that is going to challenge FX [foreign exchange] marketstomorrow [Monday] morning while we’re all thinking about what theU.S. non-farm payroll data mean for Fed rate hiketiming.

Reuters and AFP and Bank of International Settlements (BIS)

KEYS: Generational Dynamics, Israel, Syria, Damascus, Hezbollah,Lebanon, Jabhat al-Nusra, al-Nusra Front, Dimas,Egypt, Sinai, Abdel al-Fattah al-Sisi, Gaza, Hamas,Abdelrahman Shaludi, Israel,Bank of International Settlements, BIS,Sociéte Générale, Kit Juckes, Federal Reserve,European Central Bank, ECB, Bank of Japan, BOJ
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