Egypt’s armed forces chief has warned the current political crisis “could lead to a collapse of the state”.
General Abdul Fattah al-Sisi, in comments posted on the military’s Facebook page, said such a collapse could “threaten future generations”.
He made his statement following a large military deployment in three cities along the Suez Canal where a state of emergency has been declared.
More than 50 people have died in days of protests and violence.
Overnight, thousands of people in Port Said, Ismailia and Suez – where some of the worst unrest has been – ignored a night-time curfew imposed by President Mohammed Morsi to take to the streets.
Category Archives: Collapse
They’ve applied a mathematical model to a real-world situation, Erhai Lake in China’s Yunnan province, to help prove a theory that suggests that an ecosystem “flickers”, or fluctuates dramatically between healthy and unhealthy states, shortly before its eventual collapse.
“We chose Erhai Lake for this study because we had a great deal of background information from previous studies and also knew that there were recent problems with water quality from 2000 onward that we could study in the context of critical transitions,” Professor John Dearing, head of Geography at the University of Southampton, told China Daily.
“We’ve worked at Erhai Lake since about 2001,” he said. “We wanted to prove that this ‘flickering’ occurs just ahead of a dramatic change in a system — be it a social, ecological or climatic one — and that this method could potentially be used to predict future critical changes in other impacted systems in the world around us.”
When a stable system is near collapse then small things can cause relatively large impacts – flickering. This indicates the system is at an inflection point. This continues for awhile then some small event causes a complete collapse.
We can see this flickering in the world today. The outsized Chinese reaction over the Japanese government’s purchase of the Senkaku Islands. The Russian threats of nuclear war over western interference in the Middle East. Those are just two of the latest examples indicating the current international order is at an inflection point – collapse is near.
China’s president Thursday warned the Communist Party faces “collapse” if it fails to clean up corruption and called for an economic revamp as he opened a congress to inaugurate a new slate of leaders.
The week-long party congress will end with a transition of power to Vice President Xi Jinping, who will govern for the coming decade amid growing pressure for reform of the communist regime’s iron-clad grip on power.
The party’s outgoing general-secretary, President Hu Jintao, delivered his starkest warning yet about fighting rampant corruption following a top-level murder and graft scandal involving former regional boss Bo Xilai.
Could China be facing into a perfect storm?
Widespread moral decline has long plagued the nation, according to both ordinary and prominent Chinese. Even the prime minister, Wen Jiabao, at a news conference in March, said that Chinese society and politics suffered from corruption and a lack of “credibility.”
Now there are snowballing reports of a sharply slowing economy, such as this one from my colleague Keith Bradsher and this one in Caixin magazine, which quotes a Jiangsu Province official, referring to the collapsing shipbuilding industry, as saying that “a hurricane is approaching.”
Like a blow on a bruise, these reports of a weakening economy combined with concern over morals pose a question for China as it prepares for its fifth generation of post-revolutionary leaders, starting this fall — the same generation that ended Communist rule in the former Soviet Union. Are we looking at the end game? Do Communist states, perhaps, have a natural lifespan?
Bruno Iksil, the London Whale, had a massive long position on corporate CDS in general, and the CDX.NA.IG.9 index in particular. He was selling protection, betting that credit spreads would go down, rather than up. The position was meant to be a hedge, although it’s a bit unclear how JP Morgan could have some massive short position in corporate debt that it was hedging against. In any case, CDS spreads went up — and credit spreads, in the cash market, didn’t.
Cue a $2 billion loss.
Rarely has a position been as widely publicized as Iksil’s, and I wouldn’t be at all surprised to learn that the credits with the highest basis were precisely the credits CDX.NA.IG.9 index. Whenever a trader has a large and known position, the market is almost certain to move violently against that trader — and that seems to be exactly what happened here. On the conference call, when asked what he should have been watching more closely, Dimon said “trading losses — and newspapers”. It wasn’t a joke. Once your positions become public knowledge, the market will smell blood.
This highlights two problems with financial economics models:
Models assume independence. People won’t herd or conspire against you. That’s clearly not true. Here, everybody knew JP’s position and herded against that position.
Markets are continuous. Not true. Large jumps in prices are possible in extreme situations. That causes a breakdown in hedging.
Former Health Minister Yaung Chih-liang issued a strong warning in his new book titled “Taiwan’s Grand Collapse” that Taiwan’s younger generation is in the middle of a grave crisis of “four nots” — not marrying, not giving birth, not raising children and not living.
Declining birth rates, fewer and fewer marriages and higher and higher divorce rates are nothing new in Taiwan. Yaung’s proposed solution is to raise taxes, particularly from the wealthy who make big money on the stock market, and use the revenues to encourage young parents to raise more children.
Pervasive corruption, lawlessness among the ruling elites, and a sense of a loss of direction permeating all levels of Chinese society. The conditions for another Tiananmen may be there.
The Western media has largely missed the most significant development in Chinese politics these days. It’s not the dramatic downfall of Bo Xilai, although the incident is one of the most important events in elite politics in post-Deng China. Rather, it’s the stirrings that have revived contentious political issues banished from polite society in China since the Tiananmen crackdown more than two decades ago.
… First, there appears to be a widely shared consensus among China’s thinking class that the country’s economic reform is either dead or mired in stagnation. Second, those who believe that economic reform is dead or stuck argue that only political reform, specifically the kind that reduces the power of the state and makes the government accountable to its people, will resuscitate economic reform (some advocate for more radical, democratizing changes, although the consensus on this particular point has yet to emerge). Third, the status quo, which can be characterized as a sclerotic authoritarian crony-capitalist order, isn’t sustainable and, without a fundamental shift in direction, a crisis is inevitable.
It seemed that Beijing had made a conscious decision to abandon Deng Xiaoping’s prudential counsel not to alarm others as China built its economic and military power: “Hide your capabilities, bide your time,” Deng had advised. This was China’s “peaceful rise.”
More recently, those in the Chinese military, political, and intellectual establishment, whom Henry Kissinger has called “the triumphalists,” succeeded in advancing a disturbing new strategy for China: flaunt your capabilities, alarm your neighbors, intimidate the small countries, provoke the large powers, and alert the world to the rising China threat.
In response, countries throughout the region have begun to build up their own militaries, especially their naval forces. But they know that China’s foreign minister was right when he brusquely reminded his Asian counterparts that “you are small and China is big.” They cannot resist or challenge China one-on-one, so they are enhancing their multilateral cooperation through joint planning and exercises.
In trying to project future problems with China, one must first identify a change in pattern or change in state. A change in state would be like water freezing into ice. In this case the change of state is China’s “peaceful rise strategy” changing into the “big bad China strategy”.
The next problem is the change in state of demographics. Demographics in America, China and Russia have shifted from a crisis awareness state (and fear) to a non-crisis awareness state. Things have been going well for so long that people have forgotten what a real crisis is like. That means they will behavior in a manner that makes a real crisis more likely.
From an earlier blog (Democracy’s positive feedback and moral hazard):
[Positive Feedback] + [Moral Hazard] = [Crash: Internal]
This is referring to a crash based on internal reasons. Below the crash is based on external reasons.
[Change of State: Strategy] + [Change of State: Demographics] = [Crash: External]
The demographics change in state will automatically lead to an internal crash
[Positive Feedback] + [Moral Hazard] = [Change of State: Demographics] = [Crash: Internal]
[Change of State: Strategy] + [Crash: Internal] = [Crash: External]
What the above equation means is that when you see an internal crash (internal economic problems) plus you see a competitor change its world outlook, then you must be prepared for another crash based on external factors – war.
Greece spent wildly and accumulated debt it could not afford, resulting in crisis after crisis. Now the markets worry that Italy could be next. The US debt to GDP ratio is at roughly 100%. Could the US debt load become as unsustainable as that of Greece and Italy? Find out what the Front Page regulars think.