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Cacoethes Scribendi 2007 So many foolish persons are rushing into print, that it requires a kind of literary police to hold them back and keep them in order. - Oliver Wendell Holmes |
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♫Pop Goes ♪the Credit ♪Bubble♪♫ (12/8/2007) (Sung to the Tune of "Pop Goes the Weasel")
In January of 2005 (in my Blog Archives) one of my New Year predictions was that "The housing bubble bursts". At the time the housing market was going crazy and everyone thought that it was a no-brainer way to get rich quick. TV shows were produced telling people how to "Flip This House" - the real estate equivalent of day trading stocks in the heyday of the dotcoms. And then it happened. But it wasn't obvious until 2 years later.
Let's start with what we know about the severity of the crisis. http://www.howestreet.com/articles/index.php?article_id=5251
All told, the mortgage and housing crisis could cost investors and banks as much as $400 billion because of writedowns and losses on mortgage-related securities and other investments. In fact, a New York Times story in late October pegged the total loss in household wealth due to falling home values at anywhere from $2 trillion to $4 trillion! Here are a few pertinent charts that show the scale of the debacle. Note how some of the data extends over decades.
Unfortunately too many people still don't realize that we are only at the beginning of a credit crisis not at the end of one. Most feel as though the FED will be able to magically reverse the trend by reducing the FED Funds Rate - or the rate member banks charge each other for overnight lending. The thought being that these reduced rates will be passed along to you and I (the Consumer) which will allow us to continue to .....consume. Consumption comprises over 70% of this nations GDP. Lower rates are also supposed to help institutions such as Citigroup and Countrywide stay liquid and in business by supplying them with much needed capital. The chart below shows that the FED doesn't engineer economic recoveries with lower rates. They simply follow the direction and magnitude of the 3 month Treasury Bill. Alan Greenspan has admitted as much. The Bill yield goes down because the funds from the markets flow to the safest form of cash when it's participants are scared and uncertain.
Why might they be scared? Remember what happened between 2000 and late 2002? The dotcoms and S&P crashed. What's happening now? The housing market is crashing and the value of all the derivatives based on subprime mortgages around the world has been called into question. Suddenly hundreds of billions of dollars of derivatives are worth pennies on the dollar on the open market. The ironic - or perhaps moronic - side effect of this is that the "investors" - because of their ignorance and fear shun and distrust even the solid assets held by financial institutions and banks around the world. Some of these banks and institutions have had runs on them. Shades of the 1930s! The overwhelming majority of "Investors" hold the opinion that lowering interest rates are somehow "good" for their investments and the economy in general. Why? The data in the chart below shows that this is clearly not the case.
The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window. Our current crisis has been created by the credit bubble. Why would the expectation be that if we were only extended more credit that the crisis go away? Short term interest rates will be lowered by the market and the FED, but fewer people will be willing to take out loans, and fewer people will qualify for loans as credit standards are tightened. Today for example it was announced that Fannie Mae and Freddie Mac will be charging higher fees for mortgage loan transactions. There is nothing the FED can do to avoid the economic abyss we are headed for. The government has just released a plan to freeze interest resets for perhaps a million households who are in danger of being foreclosed on. Peter Schiff has stated quite eloquently, and I believe accurately, the folly of this plan. When it is clear that the FED, or the foreign markets, or Dubai will not be able to stop the continual decay of the individual investor's assets - the fear and ignorance that lie just below the surface at this point will erupt into a full blown investor stampede which will lead to a crash in the financial markets worldwide. “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The question is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” - Ludwig von Mises
Japan's Day of Infamy (7/22/2007)
For 99.99% of Americans, WWII started when Japan attacked Pearl Harbor Naval Shipyard on that "day of infamy" December 7, 1941. What they don't realize are the series of events that led up to the attack.
In my reading of history America became directly responsible for the attack when they forced Japan to join the modern world. In 1854 Commodore Perry gave the Japanese the choice of opening their country either through trade or by facing their cannons.
The Japanese warrior class became so disenchanted with the weak front the Shogun showed the barbarians that the samurai eventually revolted under the leadership of Saigo Takemori and placed the Emperor back in charge for the first time in 300 years.
Ultimately, in the Emperor Meiji's attempts to bring Japan into the modern world, the samurai warrior class was forced to surrender their weapons and to lose their higher class status. Saigo reformed his forces and this time attacked the Emperors modernly equipped army.
They were slaughtered. The movie "The Last Samurai" was loosely based on this revolt. The Tom Cruise character was totally fictional.
The next thing the modern nations did was to teach Japan how to behave globally. Imperialism was all the rage. The world was being parceled out to those with the most powerful armies and the Japanese wanted a piece of the pie. Japan was forced to secure natural resources abroad in order to keep pace with the modern world because Japan is resource poor.
The Japanese are small of stature, but as warriors they are second to none with their single minded determination and highly integrated team work. They remind me of the Borg from the TV show "Star Trek: The Next Generation".
The Russians and the Chinese quickly fell.
This is the series of events that led directly to WWII in my opinion:
In the weeks prior to the Japanese attack on Pearl Harbor, the Americans knew that an attack was coming.
How?
Because we provoked the attack. Roosevelt wanted the attack to come so that the American people would get behind him in their willingness to go to war. That's why he embargoed oil and steel from Japan . Roosevelt knew that under the Tripartite Pact if he could draw Japan into a war that he would automatically be at war with Germany. The surprise for Roosevelt came when the attack came at Pearl Harbor. I think he was expecting the attack to hit Guam or Wake Island.
On December 8,1941 Roosevelt got his wish when Germany declared war on the United States.
More Predictions From "Frank the Imperturbable" (7/22/2007)
"Those who have knowledge, don't predict. Those who predict, don't have knowledge." - Lao Tzu
...with that...the following predictions.
Back in February (Predictions for 2007 (2/9/2007)) I predicted the stock market would crash in March, and in earlier predictions I said the Chinese would lead the way into recession. In late February the Chinese market corrected 10% overnight. The next day the DOW lost 500 points intraday. Since then the DOW has set a new "record" of just over 14000. The record of course fails to take into account that priced in Euros and most other fiat currencies the DOW is down about 35% since 2000 - which means that the FED is busily creating tons of fake money. In other words inflation.
First some history.
Since biblical times money has been defined by certain amounts of precious metals. Most typically gold and silver. As the leading empires or nations of the world determined that more money was needed to finance foreign and domestic intrigues - and that it could not be extricated from their citizens without fomenting a revolt - their only recourse was to debase their currency.
This debasement would usually take one of two forms. Both of which resulted in the monetary unit being redefined by a smaller amount of precious metal.
In the less subtle form the coins might be "clipped" removing edges to be re-melted and re-struck as more coins. Sometimes the coins would be struck using lesser amounts of the metals hoping that their citizens wouldn't notice the slightly decreased weight.
On other occasions the precious metals would be alloyed with a base metal - lowering the precious metal content but making up for it with a base metal such as copper to make their shenanigans less detectable to their citizens.
Modern governments have advanced the art of "fiat" currency. Initially our currencies were gold and silver coin also. But eventually in times of deficit spending - we'll call them wars - the governments issued paper currencies that were really IOUs for a given amount of gold or silver coin. This little trick allowed them to borrow money so that they could go about the task of killing each other.
Gradually the lines between what was money and what was paper issued by the government became blurred. Gold coins met their end as money in this country under Roosevelt's administration. Silver coins were slowly debased over time by adding base metals to them. By 1964 all silver was removed from our coins.
Then in the early 1970's Nixon closed the gold window on foreign governments. They could no longer request gold from the U.S. as a means to settle debts. From then on it was all paper currency backed by nothing other than Americas promise to pay - which is an easy promise to keep.
America can afford anything. All we have to do is print the cash up!
When Americans and the world figure out that those dollars they have in their wallets is nothing more than linen and ink...well just imagine the worst possible scenario that you can and multiple it by 10.
At any rate I was going to make some predictions despite Lao Tzu's warning - and here it is:
Immigration By The Numbers (7/21/2007)
There is a website out there dedicated to curtailing immigration levels from the current 1,000,000 per year back to the "official" number set by government policy in 1965.
That website is http://www.numbersusa.com/content/about-us.html
This is the video that states their case: http://video.google.com/videoplay?docid=4094926727128068265&q=numbersusa&hl=en While I agree that there are too many low-quality people in this country (the President being one of them) - I do not agree with 'Numbers USA' President Roy Beck's proposition that the problem is limited to the future quality of life for Americans. Or that our government allows 1,000,000 immigrants into this country each year because we are trying to save them from 3rd world poverty. Whether Beck realizes it or not, what he is really trying to do is maintain an oasis of wealth and privilege in America while locking the cage on the 5 billion people of the 3rd world. The most eye popping number to me in the video was the fact that there are more than 4.6 billion(!) people more impoverished than the Mexicans! The average Mexican has 1/10 the yearly income of the average American. If you've traveled at all in Mexico you have a sense of what 'impoverished' means. As I mentioned, Beck seems to think that the reason the politicians are letting all the new immigrants in is because we're trying to help out the third world. The politicians are letting more immigrants in because they need more workers to pay into Social Security and Medicaid as the boomers retire. Both programs, by the governments reckoning, will be bankrupt by 2025. Imagine the civil unrest that would breakout should that happen. Personally I think they will be bankrupt sooner. America represents 5% of the world's population yet we use 80% of the natural resources. Of the 83million barrels of oil consumed daily, America consumes over 20million barrels per day. We drink 50 billion containers of bottled water a year. It takes 492 million barrels of oil just to transport it. The 3rd world doesn't have clean water to drink. When I was born in 1955 there were 2.8 billion people on earth. Today there are 6.5 billion. By 2050 there will be 9.2 billion. By 2050 the whole world is going to look like Calcutta. It is impossible for everyone to live as well as we do - the natural resources don't exist. And whether we limit immigration or not, our quality of life will diminish as time goes by - as it must. The jobs are going to China where they are becoming the manufacturing giant America was for the last 100 years. And China will soon become the main consumer of the worlds resources and their population of 1.3 billion (compared to our 300 million) will siphon off the American standard of living. For the Chinese (4X our population) to live like we do they will need 240% of the worlds natural resources all by themselves. Then there are the Indians...and the Africans...and the East Europeans...and the Southeastern Asians and the Middle Easterners. And what about the South Americans? In their struggle to attain the American quality of life they are clearing thousands of square kilometers of the Amazon Rain Forest every year. The Amazon - among other things - is considered to be the 'lungs' of planet earth. The trees breathe in CO2 and exhale O2. Maybe that's one other reason for the CO2 levels to be the highest recorded in 650,000 years (glacial cores) - not to mention all the slashing and burning that accompanies it. I think the real crux of the terrorist movement against the U.S. is based on the haves - and have not's. The 4.6 billion impoverished see us as taking all their natural wealth (resources) and living high on the hog when they are left with nothing. The real problem that nobody seems to want to address is worldwide population growth. Humans seem determined to grow our population as though we were a colony of bacteria in a Petri dish. Our population will grow geometrically until we outrun our resources and foul the planet with our wastes...and then our numbers will fall as fast as they rose. Ultimately we won't be any smarter than the bacteria. In conclusion I will predict that over the next few years immigration will be sharply curtailed in this country as well as in other countries around the world. We are entering a period of time of exclusion and restriction. We will also restrict imports of goods - like other countries will - and trade wars will break out...which will lead to shooting wars. Roy Beck ought to just sit back and relax. There is absolutely nothing he can do about any of this.
The Great Bell curve (4/13/2007) In many natural processes, random variation conforms to a particular probability distribution known as the normal distribution, which is the most commonly observed probability distribution. And within statistics the normal distribution is known as the bell curve. This is the shape of the frequency distribution one gets when conducting measurements of just about anything in the natural world. The bell curve first came to prominence in the early nineteenth century when Adolph Quetelet, the Belgian Astronomer Royal, collected data on the chest measurements of Scottish soldiers and the heights of French soldiers, and found that when both sets of measurements were plotted they tended to cluster in a symmetrical shape around a mean. Or, less technically, most soldiers were in a height range fairly close to the average. Below is the normal distribution for I.Q. in the U.S.:
The mean I.Q. is 100, while 34% of the population has an I.Q. between 100 and 110, and another 34% has an I.Q. between 90 and 100. Therefore 68.27% of the population has an I.Q. between 90 and 110 as shown in the graph. The percentage of the population who have an I.Q. below 110 would be 34%+34%+14%+2% = 84% Although this graph displays the distribution of I.Q. in this country, it is of the same form that would describe any other human behaviors or randomly distributed population characteristics - physical, social or otherwise. For example, I.Q. is not a metric for wisdom, and it has been my experience that the most well educated are not necessarily the wisest of individuals. So although the distribution for 'wisdom' amongst the population would look the same, the individuals who are the wisest would be different than the individuals with the highest I.Q. Another example might be religious beliefs. On one end of the curve (2%) you would find the militant atheists and on the other end (2%) would be the fanatical worshipers. Most would be in the middle of the curve - essentially the 68% who make up the "we believe in god but don't go to church every Sunday" set. It is in a country such as ours, that is governed "by the people and for the people", that the 68.27% of the people hold the power. On any issue in this country, these are the people who make the decisions. Sometimes however it is a small vocal minority that sets policy. The reason this happens is because the overwhelming remainder of the population either doesn't know about or doesn't care about the particular issue - mostly because of their perception that it will have no significant effect on them either way. So ultimately the decisions that we perceive to be most important to us are decided by the 68.27% of us with their votes. You may say that only 20% of the people eligible to vote in this country actually do - "so who then holds the power?" The answer is that the shape of the bell curve doesn't change - and that even though the total number of voters is only 20% of the eligible population, each "I.Q." group maintains the same proportional representation and therefore the same candidate is elected had 100% of the vote turned out. Not the most knowledgeable or, and more importantly, not the wisest amongst us are leading America. We are governed by the mediocre majority...and always will be. "A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship." - Alexander Tyler Many Americans now living will live to see the collapse of the Republic - and fully 84% of them won't even see it coming.
Imus (4/13/2007)
Riddle: What do Don King and Al Sharpton have in common?
Answer: Both individuals are low-lives with high-hair who attach themselves to others while sucking out their lifeblood like the parasitic leeches they are.
Maybe I shouldn't compare Don King to Al. Don is a "moral" notch above Al in the sense that the hosts he attaches himself to (boxers) sign on for the bloodsucking. Sharpton has a much more predatory nature with his victims. But the title of this blog is "Imus". Don Imus is essentially a "shock-jock" who achieves his on-air ratings, as far as I can tell, by saying crude and offensive things. I have never heard his show but I assume he is essentially in the same vein as Howard Stern and Rush Limbaugh - two other personalities I can do without. At any rate Imus was fired from his job yesterday, due mostly to public pressure applied by Al Sharpton, that eventually caused Imus's sponsors to pull out. Did the sponsors pull out because they recognized that it was the correct moral and ethical thing to do? Or did they pull out because they realized that all the public attention might negatively impact their bottom line? I think the answer is obvious. This is the exchange that led to the incident:
Imus: So, I watched the basketball game last night between — a little bit of Rutgers and Tennessee, the women's final. Rosenberg: Yeah, Tennessee won last night — seventh championship for [Tennessee coach] Pat Summitt, I-Man. They beat Rutgers by 13 points. Imus: That's some rough girls from Rutgers. Man, they got tattoos and — McGuirk: Some hard-core hos. Imus: That's some nappy-headed hos there. I'm gonna tell you that now, man, that's some — woo. And the girls from Tennessee, they all look cute, you know, so, like — kinda like — I don't know. McGuirk: A Spike Lee thing. Imus: Yeah. McGuirk: The Jigaboos vs. the Wannabes — that movie that he had. Imus: Yeah, it was a tough — Charles McCord: Do The Right Thing. McGuirk: Yeah, yeah, yeah. Imus: I don't know if I'd have wanted to beat Rutgers or not, but they did, right? http://www.foxnews.com/story/0,2933,264808,00.html For two guys sitting on a couch, drinking some beers while watching the game - this is a typical conversation that doesn't mean anything. It doesn't speak to hookers, it isn't a racial slur - it's just meaningless conversation. Not the most brilliant conversation to be sure, but still meaningless. Imus's mistake was that he got so comfortable in his show that he forgot that he wasn't sitting on the couch talking to his buddy while drinking some beers and watching the Championship game. He was live and nationwide. He was talking to people who were bound to take this conversation as a racial slur, a sexual slur and as just pure obnoxious conversation. I'm not trying to defend Imus. I know what he's about and that's why I don't listen to him. He said something typical of him - something stupid and obnoxious. It wasn't the first time he's said something with racial or sexual overtones - but this time he was called on it. I don't care that Imus was fired, even though I don't believe that he is either a racist or a sexist. I object to the way in which it was done. Even people who don't listen to Imus's show were bound to hear about this and to raise vocal objection - enter Al Sharpton. This blog isn't about Don Imus, or even about Don King, as much as it is about Al Sharpton. The only "racist" involved in this whole sorry mess is Al Sharpton. Sharpton has a gift for entering altercations that have nothing to do with "racism" and fanning those flames until they become racial firestorms of confrontation. He are examples of some of Sharpton's previous crusades: 1987: Sharpton
spreads the incendiary Tawana Brawley hoax, insisting heatedly that a
15-year-old black girl was abducted, raped, and smeared with feces by a
group of white men. He singles out Steve Pagones, a young prosecutor.
Pagones is wholly innocent -- the crime never occurred -- but Sharpton
taunts him: "If we're lying, sue us, so we can . . . prove you did it."
2007files\Slate_Sharpton.htm 2005: Three Duke lacrosse players are accused by a young black stripper of rape during a team party. Jesse Jackson and Al Sharpton showed up immediately, with Jackson declaring to reporters that "Precious" was the victim of a racially motivated hate crime, and his Rainbow Coalition was going to pay the remainder of her college tuition. Duke immediately disbanded the lacrosse team and the three students were expelled, probably in an attempt to keep a race riot from erupting in mostly black Durham. Two years later all charges
were dropped against the defendants as "Precious" turned out to be Tawana
Brawley ACT II, and N.C. District Attorney Mike Nifong was charged with
withholding evidence and other ethics violations.
http://news.findlaw.com/cnn/docs/duke/ncbnifong12407cmp.html One wonders why Al Sharpton’s apparently delicate sensibilities—as evidenced by his current snit over Imus’ comments—were undisturbed by the incessant, ugly rhetoric that accompanied the Freddy’s boycott. Equally inexplicable is how someone with Sharpton’s professed abhorrence for racial insensitivity could have spent so many years as a strong supporter of the late Khalid Abdul Muhammad, whose vulgar diatribes against whites were too incendiary for even Louis Farrakhan to condone. Perhaps you remember Mr. Muhammad, who publicly referred to Jews as “slumlords in the black community” who are busy “sucking our [black’] blood on a daily and consistent basis”; who said that Jews had provoked Adolf Hitler when they “went in there, in Germany, the way they do everywhere they go, and they supplanted, they usurped”; who said that blacks, in retribution against South African whites of the apartheid era, should “kill the women,…kill the children,…kill the babies,…kill the blind,…kill the crippled,…kill the faggot,…kill the lesbian,…kill them all”; who praised Colin Ferguson, a black man who had shot some twenty white and Asian commuters (killing six of them) in a racially motivated 1993 shooting spree aboard a New York commuter train, as a hero who possessed the courage to “just kill every goddamn cracker that he saw”; who advised blacks that “[t]here are no good crackers, and if you find one, kill him before he changes”; who told a Donahue television audience in May 1994 that “[t]here is a little bit of Hitler in all white people”; and who characterized black conservatives as “boot-licking, butt-licking, bamboozled, half-baked, half-fried, sissified, punkified, pasteurized, homogenized Nigger[s].” Perhaps you think that an individual who could utter such filth must be a hollow-headed racist. Well, Al Sharpton did not think so, not by any means. In fact, Sharpton actually lauded Muhammad for being nothing less than “a very articulate and courageous brother.” At another public event, Sharpton declared: “White folks was in caves while we was building empires...We taught philosophy and astrology and mathematics before Socrates and them Greek homos ever got around to it.” http://www.libertypost.org/cgi-bin/readart.cgi?ArtNum=183676 If Sharpton is so concerned about the effect the phrase "nappy-headed hos" has on the psyche of young black children as well as on (presumably) young white children, maybe he ought to tackle the predominately black Rapper labels and "artists" for their song lyrics. If you want to see some truly offensive phrases do a search on 'obnoxious rapper lyrics'. I'm sure these songs get more extensive airtime than Imus does. America should vote on whether or not to "fire" Imus from the airwaves - not Al Sharpton. And the way they would do that is by choosing, or not choosing, to tune into his show. Too bad the Reverend Martin Luther King is no longer amongst us. I'm sure he would give the Reverends Jackson and Sharpton the swift kick in the asses they need. Note: Imus has filed a $120million lawsuit against CBS - his former employers. Imus's lawsuit says that the network expected him to be controversial and irreverent under the terms of his contract. In addition Imus's show was on a five second delay that allowed the network to censor him if they wanted.
Democracy's Cycle (2/23/2007) The pity of email is that it is so easily forwarded and critical thinking so easily suspended. The emailed message typically tailored to short-attention-span, sound-bite, run-a-commercial-and-get-my-vote, tell-me-what-to-think, instant-intelligence Americans. "See how cleverly written the blurb is and how brilliant the author was. Since I forward it on, am I not these things too?" The email below (blue font) is an example of an author's (Alexander Tyler) wise perceptions taken and twisted into some self-serving trash by the pseudo intellectual Professor Olson. It was then sent to me to make a statement about the superiority of the Republican Party philosophy over the Democratic Party's philosophy, and finally as a statement against a proposal to grant amnesty to the 20 million illegal Mexicans in America. About the time our original 13 states adopted their new constitution, in 1787, Alexander Tyler, a Scottish history professor at the University of Edinburgh, had this to say about the fall of the Athenian Republic some 2,000 years prior: "A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship." "The average age of the worlds greatest civilizations from the beginning of history, has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
Professor Joseph Olson of Hamline University School of Law, St. Paul, Minnesota, points out some interesting facts concerning the 2000 Presidential election: Population of counties won by: Gore: 127 million - Bush: 143 million; Square miles of land won by: Gore: 580,000; Bush: 2,427,000 States won by: Gore: 19; Bush: 29 Murder rate per 100,000 residents in counties won by: Gore: 13.2; Bush: 2.1 Professor Olson adds: "In aggregate, the map of the territory Bush won was mostly the land owned by the tax-paying citizens of this great country. Gore's territory mostly encompassed those citizens living in government-owned tenements and living off government welfare..." Olson believes the United States is now somewhere between the "complacency and apathy" phase of Professor Tyler's definition of democracy, with some 40 percent of the nation's population already having reached the "governmental dependency" phase. Pass this along to help everyone realize just how much is at stake, knowing that apathy is the greatest danger to our freedom. PS . #9 If the Senate grants Amnesty and citizenship to 20 million criminal invaders called illegals which can vote, then good bye USA in less than 5 years Alexander Tyler's perceptions about the fall of the Athenian Republic written in 1787 are absolutely brilliant. He points out the temporary nature of a Democracy and describes the cycle of it's fall. Professor Olson, who is obviously a Republican, appears to subscribe to Tyler's theory of Democracy's cycle. He seems to be attempting to gauge where we are in Tyler's cycle by equating the number of Democrats (votes for Gore) to those who are "dependant" on government. Professor Olson fails to understand that Tyler's theory is independent of whether the voter is affiliated with the Democratic or Republican Parties. Professor Olson believes that, governmental dependency = Democrats, as though there are no Republicans on the public dole. It is about our form of government - a Democracy (actually a representative Republic - the 'Founding Fathers' understood the dangers of a Democratic form of government) where voters "vote themselves generous gifts from the public treasury." That means everybody! I also believe the good professor missed his guess on where we are in the cycle. We are somewhere between the apathy and dependence phases. During the next economic downturn, the number of people who quickly enter the dependence phase will be breathtaking...and I didn't have to study the results of the 2000 election and strain to derive erroneous conclusions based on tortured statistics as Professor Olson has. Meanwhile the government is working very hard to get us fully into the dependence phase of the cycle because the more who are dependent on them the more powerful they become. In the second to last line, someone in the email chain decided that "apathy is the greatest danger to our freedom." It would have been more correct to say "Democracy is the greatest danger to our freedom", since it is the mechanism that leads us ultimately back to bondage. Finally, as for the 20 million illegal Mexicans - all I will say is that I have stated my opinion in previous rants and that there is no point in trying to educate rabid Nationalists (Nazis) of the larger economic problems that would be realized should 20 million productive people be deported. If anything the illegal Mexicans are good for this country because unlike the rest of the apathetic, dependent Americans, they are still in the early sequences of Tyler's Democracy cycle. They are escaping from bondage and are somewhere between "spiritual faith", "great courage", "liberty" and "abundance". It would make much better sense to deport 20 million of the "nation's population <who have already> reached the governmental dependency phase." U.S. citizens all. I would like to state for the record that I am all for deporting the Clintons and Kennedys (particularly Teddy).
Star Wars - Episode III "The Return of the Boneheads" (2/10/2007) "WASHINGTON (CNN) -- China last week successfully used a missile to destroy an orbiting satellite, U.S. government officials told CNN on Thursday, in a test that could undermine relations with the West and pose a threat to satellites important to the U.S. military. Under a space policy authorized by President Bush in August, the United States asserts a right to "freedom of action in space" and says it will "deter others from either impeding those rights or developing capabilities intended to do so." The policy includes the right to "deny, if necessary, adversaries the use of space capabilities hostile to U.S. national interests." "If we, for instance, got into a conflict over Taiwan, one of the first things they'd probably do would be to shoot down all of our lower Earth-orbit spy satellites, putting out our eyes," said John Pike of globalsecurity.org, a Web site that compiles information on worldwide security issues. " http://www.cnn.com/2007/TECH/space/01/18/china.missile/index.html The question that immediately springs to my mind would be: Why are all the other big bad Communist, Terrorist, Fascist, Socialist countries always trying to hurt the poor old little United States of America. All we want for everyone is to "Let Freedom Ring!" China is only doing the sensible thing by developing countermeasures against U.S. weapons systems that could be used for aggressive purposes. We have told them many times in the past that we would not allow a Chinese invasion of Taiwan. It's been U.S. policy since 1950 when Mao chased Chiang Kai-Shek off the mainland, to support our "democratic" Taiwanese brethren. Ignore for the moment that Chiang was a dictator and that interfering in a China - Taiwan conflict would be akin to interfering in yet another country's Civil War. All other nations recognize the growing Imperialistic tendencies of the U.S. They recognize that they must increase their military strength if they hope to dissuade an American invasion - the likes of which they've seen in Iraq and Afghanistan as of late. They recognize the heavy-handedness that the U.S. has come to rely on when dealing with it's Allies, enemies and the United Nations alike. Russia's President Putin is the latest to rail against the global bid for U.S. hegemony in his State of the Union Address. So why are the Chinese developing anti-satellite weaponry? This is why.
http://www.mda.mil/mdalink/html/mdalink.html The U.S. continues to develop "defensive" weapons systems, that are understandably perceived by foreign nations to be a threat to their national sovereignty. The only thing this strategy will accomplish will be to intensify an international arms race while giving Americans a false sense of immunity from attack. America's leadership wishes to one day hold an overwhelming "Death Star" weapons advantage over the world so that they can suspend diplomacy altogether. When America speaks other nations will be expected to jump. In a time when it's clear that the only way to keep America out of your country is to be a nuclear power, the missile defense system (MDS) will do nothing other than lead to increasing international tension - which will lead ultimately to nuclear war - the exact consequence MDS is being billed as designed to prevent. What is America getting for it's $107 billion dollar (through 2007, plus ~ $8billion/year thru 2013) investment? What are the scenarios that would employ such a system? Scenario 1 - "One finger on the button nuclear dictator" The system is obviously designed to counteract a few nukes fired at us from a rogue "terrorist" nation. 2002 is the year the funding doubled for this project, and it has maintained that funding pace ever since, indicating to me that the fear is from a North Korea, Iran or Iraq type nuclear attack. Of these three, North Korea is probably the only nation where launch may be controlled by only one man - Kim Jong-Il. It is definitely the only nation of the three that is approaching the capability of hitting the west coast with a nuclear weapon. Any nation that launches a nuke at the U.S. should realize that the response would almost certainly be nuclear and overwhelming - the equivalent of national suicide. Would the North Korean generals be willing to carry out such an order? Let's assume they did. Even if we did have the MDS in place (which we won't for years to come) would it eliminate the threat? Ever try to shoot down a bullet with a bullet? MDS is multilayered - Aegis ballistic missile defense, airborne lasers, multiple kill vehicles, Patriot-3, Kinetic energy interceptors - therefore you have multiple chances to shoot down an incoming nuke...because we are going to need multiple shots. Multiple opportunities for a shoot down will also help to counteract some predictable tactics like using multiple incoming delivery vehicles - some nuke some not. But how reliable are these methods? The only "battle proven" weapon would be the Patriot missile. The U.S. government claimed a 100% scud kill ratio using Patriot missiles during Gulf War I. The actual truth was far different. Latest estimates put the ratio closer to 9% and even those are questionable. Of course these are the "new and improved" Patriot-3s. Maybe we'll get 15% out of them. The best plan of attack for the North Koreans to pursue would be to attack the South Koreans and draw America into their "kill zone". Then they could fire their nukes at American troops in the South with far more reliability once they switched from conventional warfare. But why use nukes at all? It's a war the North Koreans could win without firing a nuke. They have a well trained million man army. Would Americans chance losing another 50,000 troops in Korean War II? I guarantee that Americans would weary first. Third world nations know how to beat America at war. They don't need nukes! Scenario 2 - "Nuclear Terrorists" MDS has absolutely no capability against this sort of nuclear attack - be it a dirty bomb or one of the mushroom cloud variety. When the launch platform is a human being, plane, train or automobile - the multi-hundred billion dollar defense system is effectively neutered. Who would America launch a counterattack against - the entire Middle East? If drugs and all manner of other types of contraband can be smuggled into this country so can nukes. Only 3% of the cargo containers entering this nations ports are fully inspected although 100% of the documentation is inspected - we can't even manage to keep out the Mexicans. I'm in the Quality Engineering field and I know that their is no such thing as "100%" inspection. Studies have shown that "100%" inspection is 80% effective. Briefcase nukes and shoulder fired nukes are for sale. Terrain hugging cruise missiles are also on the block. (Ukraine has just sold some to China and Iran) http://www.globalsecurity.org/wmd/world/iran/x-55.htm. Congressman Christopher Shays, chairman of the House Subcommittee on National Security, stated that an aide to Russian President Vladimir Putin admits that out of 140 of the briefcase nukes, "the Russians could only account for about 80 of them." There are literally tons of oil money and drug money (opium) floating around in the Middle East that can be used to purchase weapons of any kind. The fallacy is in believing that controlling nukes is somehow key to keeping America safe from Terrorists. There are thousands of ways to attack American commerce and infrastructure that wouldn't involve nuclear weapons. The World economy is in such an unstable state that it wouldn't take much to bring it to it's knees. Scenario 3 - "War against a major nuclear power" Aschert's Axiom - "Any war involving two opposing major nuclear powers will end with nuclear destruction". It will begin conventionally. As soon as one side realizes it will lose, the other side will realize that it will win. The losing side will know that in order to reverse their fortune that they will have to use their nukes. The winning side will know the same thing. It will become obvious to both that whomever launches first will stand the best chance of "winning". If the Germans had nukes in 1945 would they have used them? If the Japanese had nukes in 1945 would they have used them? If the Americans had nukes in 1945 would they have...oh that's right. When virtually any weapons platform, from individual soldiers, to tanks, to jets, to submarines, to unmanned Predator surveillance vehicles can launch a "tactical nuke", how long will it take for conventional "Marques of Queensbury Rules" warfare to evolve into full out "Jungle Rules" nuclear war? American Trident missiles can hit anywhere on the planet within 30 minutes of launch. The enemy won't know if they are carrying conventional or nuclear warheads. What might their response be? All satellites would be destroyed in space. Any launch would be treated as a nuclear attack. War is a time of insanity. Don't expect rational thought or actions. Will MDS have much of an effect against this type of attack? I think not, and it will be hard to claim 100% knock down rate like we did in Gulf War I when 85% of our cities are in ashes. America must lead by example. Trying to decide who can have nuclear weapons and who can't is a fools game. To claim that China doesn't have the right to impede America's "freedom of action" in space, as though space were somehow part of our "Manifest Destiny" is silly in the extreme. As long as any nation thinks it's okay to have nukes, America included, the destruction of civilization is assured.
Predictions for 2007 (2/9/2007)
I suppose I should write this now. If I wait any longer it will be a "history" of 2007.
Predictions for the New Year will be followed by the "Scorecard" for last year.
Specific predictions will be underlined.
1) The Stock Market will CRASH in March. The extent of the crash will exceed all previous crashes. Many other markets will crash along with stocks such as housing, foreign markets, commodities and oil. How's that for setting myself up for failure?
2) The dollar will strengthen for most of this year - by at least10%. There will be a flight to the dollar as the markets collapse.
3) There are any number of possible "triggers" for the market crash. I believe the most likely scenario is for China to trigger the crash by entering into recession in 2007. <Comment only> China's recession may be triggered by a credit contraction in America.
4) Democrats raise taxes. <a no-brainer>
5) The longer term direction (20years) for the price of gold is up - in the thousands of dollars/oz range. What it will do in the short run is the question. I predict that when the market crashes (this year) gold will retreat with it. When it does buy it. It may get as low as $450/oz before turning up. If it breaks below $400/oz I expect it to continue to below $200/oz
6) Oil may have a spike up to $100/bbl if Iran is attacked/or attacks. But thereafter oil will recede towards $10/bbl as the world enters recession/depression. Oil will break into $40/bbl range this year.
7) FED will lower interest rates in 1/2 point increments when the market crashes.
8) The U.S. will "discover" Iran supplying aid (weapons, intelligence etc) to Iraqi Shias and attack them - in a quantum escalation of the Middle Eastern War.
9) Russia , China, and South America increasingly become rogue nations/areas from America's perspective. Military posturing will become more evident from the new axis of evil.
10) The "Surge" planned in Baghdad will fail (see previous rant) and the President will either have to create some misdirection (drag Iran into the fray) or he will have to declare that the Iraqi military is ready to take on the task and pull the American military out. The clock on the 2008 Presidential elections is ticking.
11) The deflation in housing prices is far from over. Foreclosures will be up even more than the 35% nationwide increase they had in 2006. Scorecard for 2006 Predications Once again I don't think I was wrong on most of my predictions of last year - just early. As these predictions are reviewed at some future date, perhaps 10 years from now, I feel certain that what may look like an excuse for being wrong now may fit nicely in the context of a longer time frame. Recognizing trends are one thing, but trying to pick the exact year when the trends end is quite another. Right/Wrong/Neutral January 16, 2006 - Predictions for the New Year 1) The price of gold will decline this year below the $500/oz. level. Wrong - gold hit $730/oz then broke back to $560/oz. It's now $630/oz.
2) The dollar will continue to strengthen and gain another 6% this year before resuming it's larger trend of weakening to ultimate worthlessness Wrong. - the dollar was weak all year. I recognized that the pattern wasn't panning out and sold my position for a $300 gain.
3) Early on the FED will continue the 1/4 point increases in the short rates. By the end of the year the FED will be dropping the interest rates as the economy is clearly headed for recession. Long interest rates will gradually rise. Neutral - The FED did continue to cut rates in 1/4 point increments. However most of the rest of the year they stood pat.
4) The stock market will continue it's decline begun in 2000 (in which the recent bounce from Oct. 2002 ended last year/early this year) and decline by 30% or more. This will be the year of recognition when everyone realizes the financial trouble we are really in. Wrong - the DOW has set a new nominal record. Even though in real terms (DOW in gold not dollars) it has crashed. In Euros it is lower by over 30%. The new record is also in terms of a dollar that is 20% lower than it was in 2000 when the original record was set.
5) Tensions between America with Iran and Russia will increase. Right - tensions continue to escalate against Iran and "The Bush administration is quietly exploring ways of recalibrating U.S. policy toward Russia in the face of growing concerns about the Kremlin's crackdown on internal dissent and pressure tactics toward its neighbors" http://www.washingtonpost.com/wp-dyn/content/article/2006/02/25/AR2006022501399.html
This isn't a prediction for this year. Nuclear War is inevitable. There is nothing in the history of mankind that leads me to believe that there is anything we can do to avoid it...quite the contrary. War is an integral part of human civilization. It will never be obsolete. All weapons at our disposal will be used.
6) When the economy enters recession Bush will be impeached for conducting illegal surveillance on American citizens without a court order. Poorly written prediction. We haven't entered recession in 2006. I would enjoy having the Bush impeached for falsifying evidence in support of invading Iraq, as I strongly suspect they did, but that would be asking for too much. Why does anyone believe that the Administration were the victims of bad intelligence like the rest of the American people? When the risk is the deaths of tens of thousands of innocent people and the expenditure of hundreds of billions of dollars - the Bush Administration owed it to everyone to carefully examine every shred of contrary evidence. At the time we had weapons inspectors in Iraq and they were saying there was no evidence of a weapons program. Iraq was contained by no-fly zones. Al-Qaeda was an Egyptian and Saudi organization not Iraqi. Saddham and Osama reviled each other. The Administration was clearly looking for excuses to invade - not for reasons to not invade. http://www.commondreams.org/views03/0706-02.htm http://www.nytimes.com/2006/01/18/politics/18niger.html 7) China's economy leads the world towards Depression by entering Recession first. Wrong - Poorly written prediction. China hasn't entered recession in 2006
8) The housing bubble bursts. House prices in San Diego, Miami and Denver drop by 20% - 50%, much like they have in Shanghai. Wrong - Evidence is that the bubble has deflated, however not yet burst
9) The price of oil will decline into the $30/bbl range as the coming recession takes hold and demand abates. Wrong - price came down to $50/bbl from $78
10) As the U.S. presidential elections of 2008 draw nearer Bush will feel more and more compelled to remove troops from Iraq. He will claim the Iraqis are capable of defending themselves and slowly pull troops out of Iraq to nearby countries...thus destabilizing nearby countries. The Iraqi Civil War will gain momentum. Wrong - Poorly written prediction. Bush is pushing for a last ditch effort to win by introducing 20000 more troops in the "Surge". After that fails this prediction will hold true.
11) The Republican Party begins its long slide to oblivion with the confessions of Jack Abramhoff. In 2008 they will disappear from power - possibly forever. Poorly written prediction. Right - the Democratic Party took power in the House and Senate in 2006.
12) Nothing changes in New Orleans - nobody cares. Right
13) Seattle Seahawks win the Superbowl. Wrong - they won the NFC Championship, but were defeated in the SuperBowl due to poor officiating in my opinion. Holmgren complained about the officiating on TV right after the game. The NFL always hands out fines when coaches complain about officiating - they didn't this time, indicating to me that they were in agreement.
The Surge (1/24/2007)
The Republicans have lost the House and the Senate to Democratic control. Bush’s approval ratings are in the low 30% range. America has put Bush on notice that we don’t approve of his war on Iraq.
I’ve heard the entire range of opinions on how America should proceed in it’s handling of the war
“The Surge” is a silly idea indicative of a desperate President grasping at any straws he can to try to grab victory from the jaws of defeat.
Congress and the overwhelming majority of Americans are against it – not that their dimwitted opinions mean anything. After all, four years ago when it mattered most the overwhelming majority of Congress (100% - 2 individuals) and the American people (60%) were for attacking Iraq.
The idea behind "The Surge" is to introduce an additional 20000 troops in Baghdad in an attempt to control the civilian population and to put a halt to the sectarian violence - and the undeclared and loath to be admitted - Civil War.
The hope being that if the capitol can be controlled then "Greater Iraq" will be controlled.
Once obtained, that control will be slowly ceded to Iraqi forces and America will be able to back out of Iraq, declare victory, and hand control over to the Iraqi government.
...And then presumably move on to Iran.
Surely you jest.
I suppose the concept of "winning" for these Americans would look something like this...
Visualize Canada...except populated by Arabs and located in the Middle East. That's what winning means to these baboons.
America is incapable of "winning" in Iraq. Just as we were incapable of winning in Korea, Vietnam, Lebanon, Somalia and Israel - Palestine. We can suppress violence by sheer military might just as was done in the old Soviet Union and Saddam's Iraq, but once the martial law is removed...be it after one year, or one hundred, or one thousand...old hatreds are reignited and civil war breaks out.
After enough war and enough death, peace or extermination are finally realized. I don't believe the "gift of Democracy" from the American people will cut the mustard.
America - in looking after "our" interests in the Middle East - completely disregard what is in Arabic, and Persian, interests in the Middle East. To "win" the war we must place Arabic interests first. We must come to realize that Arabs don't want to live in Podunk Idaho.
Arabic interests quite clearly are to dissolve the Jewish state that was forced upon them by Western powers as a result of the outcomes of the first and second world wars. Until that happens there will be no "winning" of wars in the Middle East.
When President Ahmadinejad of Iran says he doesn't believe in the Holocaust, what I believe he is trying to say (at least the message I got by watching him deliver it on C-Span a couple of times) is that the Arabic and Persian people had nothing to do with the persecution and attempted "ethnic cleansing" of the Jews during WWII or for 1000 years previous to that.
The Holocaust was perpetrated on Europeans by Europeans, therefore why does the Middle Eastern Islamic communities have to bear the brunt of the establishment of a Jewish state in their lands. In other words, if you wanted to establish a Jewish state you should have done so either in America or Europe.
The Jews claim the Bible as their "deed of ownership" for the land now known as Israel.
I don't believe the Muslims either read, or believe in the Bible. If the Koran said the Jews owned Israel I think they would have a stronger case.
Regardless of our Leaders unwillingness to draw comparisons between this war and the Vietnam war - for obvious reasons - the similarities are striking.
In both instances we are meddlers in somebody else's Civil War.
In the case of Iraq we ignited it. In the case of Vietnam we prolonged it - or reignited it if you wish by piling on after the Vietnamese beat the French fair and square at Dien Bien Phu.
As in this war, we entered Vietnam under false pretenses. Instead of "weapons of mass destruction" it was a phantom attack on our Navy in the Gulf of Tonkin. The second attack at least. The first attack came because the U.S. Navy was illegally aiding the South Vietnamese in a raid on North Vietnamese forces while in North Vietnamese waters.
The North Vietnamese attacked a U.S. Destroyer with essentially a PT boat which displayed quite a bit of courage on their part.
In both cases, the military and political leadership believed they could win if they only had more troops. By 1969 there were 550,000 troops in Vietnam. As I stated earlier, with more troops you may be able to suppress the fighting - but only for as long as the troops are present.
Obviously 550,000 weren't enough in Vietnam. Why would 145,000 be enough in Iraq?
Our exit strategy for victory is identical. In Vietnam we called it "Vietnamization". In other words, train the Vietnamese to fight, let them take over the military mission, declare victory...and back out.
Sound familiar?
In both cases millions of people died.
They are fighting for a CAUSE. They will NOT quit. They will NOT give quarter until it is decided. The total numbers that die DO NOT matter - unlike in this country where 3000 troops dead in Iraq are too many, or in Vietnam where 53000 were too many.
What does that tell you about the strength of "our cause"?
Do you know how many Vietnamese died fighting America? How about Iraqis?
Google it.
The Vietnam War cost this country $600 Billion dollars (in today's dollar). The Iraqi War has cost this country to date $400 Billion dollars.
Today I noticed an additional $10 Billion is being earmarked for Afghanistan...on top of what that war has already cost us there.
Remember Afghanistan? The country we invaded to find Osama Bin Laden...who we still can't find...as though finding him would make a difference anyway? The Taliban have returned to strength there and the country is a haven for Al-Qaeda...and the opium poppies are in bloom.
You know how people are fond of saying "...we need to remember (fill in the blank) so it never happens again...."?
We NEVER REMEMBER ANYTHING beyond what happened on the lastest episode of "American Idol".
I wrote a rant over two years ago predicting this outcome and presenting my solution - "October 5, 2004 - Frank's Iraqi Solution".
My mind hasn't changed on the Iraqi War unlike that of so many of my fellow Americans and unlike that of our esteemed leaders in Congress...who had an epiphany and decided that the wisest course for America is to leave Iraq...after examining the polls...and just in time for the next elections.
How convenient.
Governor Schwarzenegger (1/14/2007)
I knew of Arnold Schwarzenegger before he was the Governor of California and even before he was "The Terminator". It was the late sixties - early seventies when I was reading "Strength and Fitness", or some of the other Weider publications that I knew him as "Mr. Olympia" and his nickname was "The Austrian Oak".
At 6'2" tall he towered above the competition, and I think that is what gave him an edge. Sure he was huge and doing steroids, but so was everyone else. You have to do steroids to get as big as these guys get.
I think the first successful movie he made may have been "Pumping Iron". That film documented his final run at the Olympia competition against the impressive newcomer Lou (The Incredible Hulk) Ferrigno. I believe he may have made an earlier movie, "Hercules in New York" which I also saw, but he was billed as Arnold Strong and his lines were dubbed in by another actor.
At the time, I assumed that when he retired from competition he would fade away, like all previous body builders with the exception of Steve Reeves. Steve was for my money the only "real" Hercules in much the same way that Sean Connery was the only "real" 007. At any rate I was ecstatic when "Conan the Barbarian" came out. Who better to play him than the Austrian Barbarian?
I saw Arnold's interview with George Stephanopoulos today as the Governor of California and I was impressed. He seems well informed - unlike our President - and it is clear to me that he stands behind, and says, what he believes to be true. He is unlike other politicians who seem to stand only for what they believe will get them votes in the next election, and who are only too willing to flip-flop from one side of the fence to the other while blaming their previous stances as "errors in judgment".
Politicians are constantly spinning their rhetoric in order to shift their previously cast ( and now errant) votes to match the ever changing public opinion on the hot issues of the day - like the Iraqi War. So if they are able to blame their previous lapses of judgment on "faulty intelligence" or on being "misled by the President", particularly if he is of the opposing party, so much the better.
I don't agree with all of Arnolds ideas, but at least I know he doesn't have a hidden agenda - and I can respect that. Unfortunately Arnold can't run for President because he is foreign born - which I know is his wish.
Neither can I for that matter - and for that same reason.
Some of us can tell the difference between honorable people with integrity and politicians. Unfortunately it is too few of us to make a difference in a Democracy.
Honduras (1/2/2007)
I don't usually feel the need to write a blog on a vacation destination. Normally I would just post the pictures with captions and add them to my "Travels" page. However, in this case Honduras seemed to be such an integral piece of the larger "World" picture that it begged for a blog of it's own.
The first thing I noticed while flying into Honduras was the iridescent opal-like quality of the reefs and waters bordering it's coastline. Much prettier than Hawaiian waters. The vast banana fields also reminded me of how Hawaii was decades ago when we first landed there in 1971.
Honduras is about 6° of latitude nearer the equator than Hawaii is so their climates are very similar. On the other hand, the fauna is quite different - crocodiles, caiman, monkeys, snakes, guatuza (paca), and otters to name a few.
We spent most of our time on the well-worn tourist paths, as you can see from the pictures posted on the "Travels" page. But what stuck in my mind was what seemed to be going on at the periphery of my senses...private security, guns visible in unexpected places, poverty, small children and babies everywhere, stories of gang violence, and strange behavior of grocery store clerks and policemen having their pictures taken.
There are entrepreneurs in Honduras (mostly women it seems to me) who are building businesses and trying to do everything they can to be successful and to bring jobs and stability to the country - one little economic oasis at a time, until their successes hit critical mass and they link up to bring the country out of it's third world status.
Talking to the business owners there, they say things are much better than they were just a couple of years ago when the gangs (MS-13 and 18th street) threatened to snuff out the tourist industry.
These are the most violent gangs in Central America and they reside in Honduras, Guatemala, and Nicaragua. The homicide rate was 154 per 100,000 in Honduras at it's worst prior to the government crackdown compared to 23 per 100,000 in the U.S.. It has since gone to about 46 per 100,000.
Seems the gang problem intensified in the mid 1990s when the U.S. started wholesale deportation of MS-13 gang members back to Honduras. Then hurricane Mitch hit the country and crippled the economy - sending even more people into poverty.
I didn't know about any of this and only began to worry about it when I was told by the locals not to go out after dark in San Pedro Sula. I'd previously read about MS-13 and knew their members to be extremely violent. There was no shortage of guns around either. After the civil unrest of the 1980s AK-47s and all kinds of other guns are available and cheap.
In the late 1990s the President of Honduras son was murdered in a botched kidnap attempt by the gangs. A law was passed making it illegal to be in a gang and gang members were easily identifiable by tattoos. They were rounded up and put into prison. Many of them were killed by police "hit-squads" on the street. Some of them were undoubtedly innocent of being gang members, most probably not.
That's how the government put a dent in gang activity. But it's only a dent and the gangs will adapt. Tattoos will be removed and they will get smarter. The root cause driving gang formation (young boys with nothing to do and extreme poverty) hasn't been adequately addressed. The way you do that is by adding jobs to the economy.
With a per capita income of US$800 per year, Honduras is one of the poorest countries in the region. Overall, 71.1 percent of Hondurans lives in poverty, and 77.7 percent of the rural population is poor. In urban areas, some 63.1 percent are poor. Income inequality is a critical issue. The richest 20 percent of households receive 54.3 percent of the total income of the country, while the poorest 20 percent receive only 3.2 percent. Of the country’s 7 million inhabitants, 41 percent are under age 14. Because the population is fairly young and economic conditions are harsh, a large number of marginalized youths struggle daily to subsist. Youths head 10 percent of Honduran households, and 68 percent of these households are below the poverty line. U.S. AID Report
In my opinion, the government will continue to associate the gangs with "Terrorist" activities and use that as an excuse to suspend the Civil Liberties of it's citizens. Corruption is rampant amongst those in power just like it is in this country and most others.
With any kind of economic disruption, the two opposing forces will gain strength. The gangs will gain recruits and the homicide rate will climb to new highs, and the government will slide into Dictatorship in an effort to maintain control and power over the people.
As the World's primary economies slide into recession the repercussions will be felt initially in the slowdown of tourism in third world economies. Money will stop flowing to the poorest countries.
When that happens I wouldn't want to be living in Honduras.
I met some good people in Honduras and for their sake - to be blindly optimistic about it and to totally disregard historical precedence ...I hope I'm wrong.
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