After the death of Nasser in September 1970, Anwar Sadat succeeded him as president of Egypt. As early as 1971, Sadat raised the possibility of a treaty with Israel if Israel returned the occupied territories. While he worked with the Nixon Administration to pursue diplomatic means, Sadat also prepared Egypt for war. One of Sadat’s goals was to reopen the Suez Canal to provide Egypt with a source of revenue.
Talks stumbled over whether Israel would withdraw to the borders of June 4, 1967 or whether the new border would be negotiated. The two sides also had differences on the width of the frontier between the two armies. Another stumbling block was Israel’s desire for recognition from the Arab nations.
Sadat also seemed determined to restore Egypt’s honor and pride after the humiliating loss in the Six-Day War. On becoming president, he said, “the key to everything…was to wipe out the disgrace and humiliation that followed from the 1967 defeat. I reckoned it would be 1,000 times more honorable for us—40,000 of my sons in the armed forces and myself—to be buried crossing the Canal than to accept such disgrace and humiliation. Posterity would say we had died honorably on the battlefield…and posterity would carry on the struggle.”
Sadat had learned several lessons from the 1967 war. First, Egypt prepared a deadly umbrella of surface-to-air missiles and anti-aircraft guns to shield Arab ground forces from Israeli aircraft. Egypt also worked to coordinate the action of their military units in order to maximize their effectiveness. The Egyptian military improved their logistics plan to move supplies and reinforcements across the Suez. Sadat also decided to plan a surprise attack rather than a public military buildup such as the one that alerted Israel in 1967.
For Israel, terror attacks continued. On May 30, 1972, Japanese Red Army terrorists sympathetic to the Palestinian cause opened fire in Tel Aviv’s airport killing twenty-six people and wounding 78. In September 1972, PLO terrorists murdered eleven Israeli athletes at the Munich Olympics.
In the spring of 1973, Egypt mobilized their armed forces. Israel mobilized as well. Eventually both sides stood down, but the mobilization had been very expensive for Israel. Over the summer, Egypt conducted deceptions to lull the Israelis into a false sense of security. When Egypt began mobilizing again in the fall, Israeli leaders were reluctant to call up their reserves again. The Israel Defense Force was only partially activated in the hours before the war started.
At 2:00 pm, on Saturday, October 6, 1973, as Israel celebrated Yom Kippur, the Day of Atonement, 70,000 Egyptian infantry streamed across the Suez and overran the Bar Lev Line of Israeli defensive positions manned by 500 soldiers. The Israeli Air Force was initially ineffective due to Egypt’s air defenses. Israeli reinforcements arrived in the afternoon and were unable to push back the Egyptians, but did manage to stop the Egyptian advance.
Syria launched a simultaneous attack on the Golan Heights with 1,100 tanks opposing 157 Israeli tanks. The Syrians captured Mount Hermon, an Israeli intelligence post, and began to shell northern Israeli settlements. Soon the Syrians controlled the majority of the Heights.
Other Arab nations also joined in the fray. Iraq contributed aircraft to both the Egyptian and Syrian fronts. Jordan contributed two armored brigades and artillery to the Syrian front. Saudi Arabia sent 3,000 soldiers and Libya supplied Egypt with aircraft. Additionally, Saudi Arabia, Kuwait, and Libya helped to finance the Arab armies. Tunisia, Sudan, and Morocco also offered assistance.
This time, the Israelis gave the Syrian front priority since the Egyptian front was relatively stable. On October 8, Israeli armor led a counterattack and, over the next week, pushed the Syrians back and even crossed the border into Syria. Israeli aircraft were unable to destroy the Syrian SAM sites, but Israeli fighter-bombers successfully attacked the Syrian General Command and Air Force Command buildings in Damascus. Israeli troops retook Mount Hermon and advanced to within forty miles of Damascus.
As the war settled into a stalemate, the Soviets resupplied the Arab armies, while the UN attempted to arrange a ceasefire, which Egypt refused to accept. As Israeli losses mounted and the Israeli forces depleted their stocks of ammunition and supplies, the United States began a month long airlift of supplies. This resupply effort may have saved Israel. The TOW and Maverick missiles brought by the Americans accounted for many destroyed Arab tanks. The effort also cost the US much of its influence in the Arab world. This also led to an Arab oil embargo of the US and Europe.
On October 15, the Israelis, led by Ariel Sharon, attacked between the Egyptian Second and Third armies, crossing the canal, and encircling the Egyptian Third Army. In the next four days, the Israelis destroyed much of the Egyptian air defenses, allowing Israeli planes to attack the Egyptians more effectively. Finally, the Israelis were able to reach the Suez-Cairo road and come within 65 miles of Cairo itself.
When it became clear that Cairo was vulnerable to Israeli attack, Egypt finally accepted a UN ceasefire. On October 22, 1973, the war ended and the UN passed resolution 338 which called on the combatants to negotiate toward UN resolution 242, which was passed after the 1967 war. Casualties were estimated at 2,700 Israelis, 3,500 Syrians, and 15,000 Egyptians. The Israelis had destroyed 1,100 Syrian tanks and threatened to totally destroy the Egyptian Third Army. Due to Israel’s small size, its population could not easily absorb the loss as easily as the Arab nations.
The strong showing of Egypt’s armies in the opening days of the war enabled Sadat to reclaim Egypt’s pride and honor. He built upon this limited success and was able to finally talk peace with the Israelis. Agreements were signed between Israel and Egypt in 1974 and 1975, in which Israel agreed to withdraw behind UN security zones in the Sinai. Israel also signed a disengagement agreement with Syria in 1974.
In November 1977, Sadat traveled to Jerusalem to address the Knesset, the Israeli parliament. This, in turn, led to the Camp David Accords, a lasting peace agreement signed in 1979 between Israel and Egypt that has lasted to this day. Sadat shared the 1978 Nobel Peace Prize with Israeli Prime Minister Menachem Begin for their roles in crafting the agreement. For what many Arabs viewed as a betrayal, Sadat was assassinated by Islamic radicals in 1981.
Sources
http://www.jewishvirtuallibrary.org/jsource/myths/mf9.html
http://www.palestinefacts.org/pf_1967to1991_ykwar_course.php
http://www.answers.com/topic/anwar-al-sadat
http://www.historylearningsite.co.uk/yom_kippur_war_of_1973.htm
http://encarta.msn.com/encyclopedia_761564886/Arab-Israeli_War_of_1973.html
http://www.palestinefacts.org/pf_1967to1991_lod_1972.php
http://www.palestinefacts.org/pf_1967to1991_territories.php
http://newsocietyjournal.com/2008/07/09/did-golda-meir-cause-the-%E2%80%9Cyom-kippur-war%E2%80%9D/
http://middleeast.about.com/od/terrorism/a/me080803e.htm
http://www.globalsecurity.org/military/library/report/1997/Moulton.htm
http://www.palestinefacts.org/pf_1991to_now_israel_us_support.php
Tuesday, April 14, 2009
Sunday, April 12, 2009
Economic Leaders Call for Single World Currency
Over the past month, world economic leaders have begun calling for a new world currency to replace the dollar. The world financial crisis has led to worries about the stability of the dollar, which, in turn, has led other countries to feel the need for a new world reserve currency.
For decades, the dollar has been the standard international currency. Many governments maintain a large reserve of dollars as part of their treasuries, such as the $1 trillion in US government debt and securities held by China. International commodities such as crude oil are bought and sold in dollars and international business is typically conducted in dollars.
President Obama’s attempts to stimulate the economy are leading to massive increases in government spending and federal deficits. Creditor nations such as China worry that the ballooning federal debt will lead to inflation and a devalued dollar, which would have almost the same effect on foreign creditors as if the US defaulted on its debt.
In late March, a United Nations panel released a report which recommended that the world create a new reserve currency based on a hard traded, basket of currencies similar to the old European currency unit (Ecu) or an accounting unit called the Special Drawing Right (SDR). The Ecu and the SDR are weighted combinations of currencies that can be traded in financial markets. The Euro had a similar start as a combination of European currencies.
Prior to the April G20 economic summit, both Russia and China indicated their support for world reserve currency. Arkady Dvorkovich, a Kremlin economic advisor, said that Russia would call for discussions of a “supra-national reserve currency.”
Zhou Xiaochuan, governor of China’s central bank, wrote that a new currency would help “to achieve the objective of safeguarding global economic and financial stability.” He worries that there are “inherent vulnerabilities and systemic risks in the existing international monetary system” based on the dollar. He would like the new currency to be used for international trade, commodities pricing, and accounting, unlike current SDRs, which are only used for government finance.
At one point, US Treasury Secretary appeared to agree with the Chinese proposal, saying, “We’re actually quite open to that.”
Within ten minutes of Geithner’s comment, the value of the dollar started to drop sharply. The Secretary quickly recanted his statement and noted that he had not actually read the Chinese proposal.
President Obama, Secretary Geithner, and Federal Reserve Chairman Ben Bernanke all downplayed the proposals for a new currency. “I don’t believe there is a need for a global currency,” President Obama said. He added “the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world.”
Nevertheless, just a few days later, the G20 did decide to create $250 billion in special drawing rights for the International Monetary Fund (IMF) in what the international financial press described as a “surprising” move. The SDR is an accounting tool used by governments and is not a currency itself, but is made up of a basket of values of four currencies: the dollar, the euro, the British pound sterling, and the Japanese yen. The SDRs would be allocated to governments based on their contributions to the IMF for lending to poorer countries. In essence, SDRs are a form of foreign aid in which wealthy nations borrow to loan money to poor nations.
While the creation of the SDRs is not the creation of a worldwide currency, it seems to be a step toward a global economic system, especially in light of the recent Russian and Chinese proposals. It is also similar to the creation of the euro. The European Community had its roots in the 1951 Treaty of Paris between Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands that created the European Coal and Steel Community. In 1957, the Treaty of Rome between the same nations expanded that cooperation to create the European Economic Community.
It wasn’t until 1979 that the European nations took the next step toward creating a common currency. That year the European Monetary System was created, and, with it, the Ecu, a common currency unit similar to the new SDR.
In 1986, the Single European Act extended the jurisdiction of the European Community to monetary policy. In 1992, the Treaty of Maastricht created the European Union and set a deadline of January 1999 to establish a common currency, as well as a single monetary and economic policy.
In January 1999, the European Union, by then eleven nations, pegged their exchange rates to the euro. At the same time, the euro began to be used for non-cash transactions and accounting. The euro was also used in stock markets and was used on bank statements and corporate bond offerings.
Three years later, in January 2002, the euro went into circulation. A few months later, the old national currencies were phased out.
The creation of the euro was a gradual process that took fifty years. The new Russian and Chinese proposals go beyond the creation of Special Drawing Rights, and may very well eventually lead to the creation of a worldwide version of the euro. There is a possibility that the world financial crisis will accelerate the timetable for the creation of this world currency, especially if the dollar becomes unstable under staggering mountains of US federal debt.
Until recently, the idea of a world currency has been the province of conspiracy theorists and Bible prophecy scholars. It is somewhat shocking to find the idea meeting with widespread acceptance from world leaders.
For many years, theologians have believed that the Biblical Book of Revelation has held an implicit prophecy of a single world currency. Revelation 13:16-17 says “He also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead, so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name.”
The implication here is that the latter day world ruler, the beast or Antichrist, has total control over the world economy and financial system. Scholars believe that, at that point, the entire world economy will be tied together with a single cashless currency system. Using the system requires a mark of loyalty that, when applied to the right hand or forehead, is easily visible.
One possibility, explored in Tim LaHaye’s Left Behind series, is that when the mark is applied, a RFID (radio frequency identification) chip is implanted under the skin. This chip would be tied to the user’s bank and financial accounts, so that when a purchase is made, the transaction would be completed by simply scanning the buyer’s hand or face. Essentially, it would be like having a debit card in your body.
Interestingly, this technology is already available. In 2003, Applied Digital Solutions (now called Digital Angel) announced the development of a system called VeriPay, which used microchips half the size of a grain of sand to identify consumers to ATM machines in lieu of an ATM or debit card. The technology did not catch on, but the company changed its focus to market biochips to pet owners. A chip with an identification number is implanted between the pet’s shoulders. If the animal is found, the chip is scanned and the owner’s information is retrieved from a database. The chips have already been implanted into some humans as well.
A cashless economy based on electronic funds transfers would enable a world leader to exercise unprecedented control over world finances. Without cash, it would be impossible for an underground “black” market to thrive. Similarly, dissidents could find themselves with no access to their financial accounts.
The greater danger for those who participate in the beast’s economy is the loss of their souls. Revelation further indicates (20:4, 11-15) that those who take the beast’s mark, showing allegiance to the Antichrist, will be judged and cast into the lake of fire. The only way to escape this fate is accept Jesus Christ as Lord and believe that He rose from the dead (Romans 10:9).
The creation of a single world currency is most likely still a long way off. Recent events show that many world leaders would like to move in that direction, however. These steps are yet another positive indication that the Bible accurately foretells the future and that it is a reliable source of information from God. We can be assured that its prophecies of the return of Jesus are not only accurate; they are drawing nearer.
Sources:
http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318
http://www.russianews.net/story/483953
http://news.yahoo.com/s/ap/20090325/ap_on_re_as/as_china_global_currency
http://www.washingtontimes.com/news/2009/mar/26/geithner-gaffe-on-dollar-roils-stock-bond-markets/
http://www.telegraph.co.uk/finance/economics/5051075/A-world-currency-moves-nearer-after-Tim-Geithners-slip.html
http://online.wsj.com/article/SB123854148528775677.html
http://www.ft.com/cms/s/0/0afa92e4-21f5-11de-8380-00144feabdc0,dwp_uuid=60a3db68-b177-11dd-b97a-0000779fd18c.html?nclick_check=1
http://www.cbc.ca/news/background/euro/history.html
http://news.cnet.com/2100-1041_3-5111637.html
NOTE: This may seem like a strange topic for an Easter blog, but if Jesus was able to rise from the dead, then it follows that He will be able to return as He said He would. The signs that He gave to signify His return bear a striking resemblance to today's headlines.
Jesus is risen indeed.
Happy Easter!
Dulles VA
For decades, the dollar has been the standard international currency. Many governments maintain a large reserve of dollars as part of their treasuries, such as the $1 trillion in US government debt and securities held by China. International commodities such as crude oil are bought and sold in dollars and international business is typically conducted in dollars.
President Obama’s attempts to stimulate the economy are leading to massive increases in government spending and federal deficits. Creditor nations such as China worry that the ballooning federal debt will lead to inflation and a devalued dollar, which would have almost the same effect on foreign creditors as if the US defaulted on its debt.
In late March, a United Nations panel released a report which recommended that the world create a new reserve currency based on a hard traded, basket of currencies similar to the old European currency unit (Ecu) or an accounting unit called the Special Drawing Right (SDR). The Ecu and the SDR are weighted combinations of currencies that can be traded in financial markets. The Euro had a similar start as a combination of European currencies.
Prior to the April G20 economic summit, both Russia and China indicated their support for world reserve currency. Arkady Dvorkovich, a Kremlin economic advisor, said that Russia would call for discussions of a “supra-national reserve currency.”
Zhou Xiaochuan, governor of China’s central bank, wrote that a new currency would help “to achieve the objective of safeguarding global economic and financial stability.” He worries that there are “inherent vulnerabilities and systemic risks in the existing international monetary system” based on the dollar. He would like the new currency to be used for international trade, commodities pricing, and accounting, unlike current SDRs, which are only used for government finance.
At one point, US Treasury Secretary appeared to agree with the Chinese proposal, saying, “We’re actually quite open to that.”
Within ten minutes of Geithner’s comment, the value of the dollar started to drop sharply. The Secretary quickly recanted his statement and noted that he had not actually read the Chinese proposal.
President Obama, Secretary Geithner, and Federal Reserve Chairman Ben Bernanke all downplayed the proposals for a new currency. “I don’t believe there is a need for a global currency,” President Obama said. He added “the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world.”
Nevertheless, just a few days later, the G20 did decide to create $250 billion in special drawing rights for the International Monetary Fund (IMF) in what the international financial press described as a “surprising” move. The SDR is an accounting tool used by governments and is not a currency itself, but is made up of a basket of values of four currencies: the dollar, the euro, the British pound sterling, and the Japanese yen. The SDRs would be allocated to governments based on their contributions to the IMF for lending to poorer countries. In essence, SDRs are a form of foreign aid in which wealthy nations borrow to loan money to poor nations.
While the creation of the SDRs is not the creation of a worldwide currency, it seems to be a step toward a global economic system, especially in light of the recent Russian and Chinese proposals. It is also similar to the creation of the euro. The European Community had its roots in the 1951 Treaty of Paris between Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands that created the European Coal and Steel Community. In 1957, the Treaty of Rome between the same nations expanded that cooperation to create the European Economic Community.
It wasn’t until 1979 that the European nations took the next step toward creating a common currency. That year the European Monetary System was created, and, with it, the Ecu, a common currency unit similar to the new SDR.
In 1986, the Single European Act extended the jurisdiction of the European Community to monetary policy. In 1992, the Treaty of Maastricht created the European Union and set a deadline of January 1999 to establish a common currency, as well as a single monetary and economic policy.
In January 1999, the European Union, by then eleven nations, pegged their exchange rates to the euro. At the same time, the euro began to be used for non-cash transactions and accounting. The euro was also used in stock markets and was used on bank statements and corporate bond offerings.
Three years later, in January 2002, the euro went into circulation. A few months later, the old national currencies were phased out.
The creation of the euro was a gradual process that took fifty years. The new Russian and Chinese proposals go beyond the creation of Special Drawing Rights, and may very well eventually lead to the creation of a worldwide version of the euro. There is a possibility that the world financial crisis will accelerate the timetable for the creation of this world currency, especially if the dollar becomes unstable under staggering mountains of US federal debt.
Until recently, the idea of a world currency has been the province of conspiracy theorists and Bible prophecy scholars. It is somewhat shocking to find the idea meeting with widespread acceptance from world leaders.
For many years, theologians have believed that the Biblical Book of Revelation has held an implicit prophecy of a single world currency. Revelation 13:16-17 says “He also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead, so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name.”
The implication here is that the latter day world ruler, the beast or Antichrist, has total control over the world economy and financial system. Scholars believe that, at that point, the entire world economy will be tied together with a single cashless currency system. Using the system requires a mark of loyalty that, when applied to the right hand or forehead, is easily visible.
One possibility, explored in Tim LaHaye’s Left Behind series, is that when the mark is applied, a RFID (radio frequency identification) chip is implanted under the skin. This chip would be tied to the user’s bank and financial accounts, so that when a purchase is made, the transaction would be completed by simply scanning the buyer’s hand or face. Essentially, it would be like having a debit card in your body.
Interestingly, this technology is already available. In 2003, Applied Digital Solutions (now called Digital Angel) announced the development of a system called VeriPay, which used microchips half the size of a grain of sand to identify consumers to ATM machines in lieu of an ATM or debit card. The technology did not catch on, but the company changed its focus to market biochips to pet owners. A chip with an identification number is implanted between the pet’s shoulders. If the animal is found, the chip is scanned and the owner’s information is retrieved from a database. The chips have already been implanted into some humans as well.
A cashless economy based on electronic funds transfers would enable a world leader to exercise unprecedented control over world finances. Without cash, it would be impossible for an underground “black” market to thrive. Similarly, dissidents could find themselves with no access to their financial accounts.
The greater danger for those who participate in the beast’s economy is the loss of their souls. Revelation further indicates (20:4, 11-15) that those who take the beast’s mark, showing allegiance to the Antichrist, will be judged and cast into the lake of fire. The only way to escape this fate is accept Jesus Christ as Lord and believe that He rose from the dead (Romans 10:9).
The creation of a single world currency is most likely still a long way off. Recent events show that many world leaders would like to move in that direction, however. These steps are yet another positive indication that the Bible accurately foretells the future and that it is a reliable source of information from God. We can be assured that its prophecies of the return of Jesus are not only accurate; they are drawing nearer.
Sources:
http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318
http://www.russianews.net/story/483953
http://news.yahoo.com/s/ap/20090325/ap_on_re_as/as_china_global_currency
http://www.washingtontimes.com/news/2009/mar/26/geithner-gaffe-on-dollar-roils-stock-bond-markets/
http://www.telegraph.co.uk/finance/economics/5051075/A-world-currency-moves-nearer-after-Tim-Geithners-slip.html
http://online.wsj.com/article/SB123854148528775677.html
http://www.ft.com/cms/s/0/0afa92e4-21f5-11de-8380-00144feabdc0,dwp_uuid=60a3db68-b177-11dd-b97a-0000779fd18c.html?nclick_check=1
http://www.cbc.ca/news/background/euro/history.html
http://news.cnet.com/2100-1041_3-5111637.html
NOTE: This may seem like a strange topic for an Easter blog, but if Jesus was able to rise from the dead, then it follows that He will be able to return as He said He would. The signs that He gave to signify His return bear a striking resemblance to today's headlines.
Jesus is risen indeed.
Happy Easter!
Dulles VA
Saturday, April 11, 2009
Arabs and Israelis II: The Six Day War
For the next few years, the Middle East was relatively quiet. The presence of the UNEF along Israel’s Sinai border prevented hostilities from re-igniting there. A new group called the Palestine Liberation Organization (PLO) was founded in 1964. The group launched guerilla attacks across the Israeli-Syrian border after its inception, but overall there was little military activity.
This situation gradually changed as relations between the US and Egypt grew distant. The Soviet Union stepped in to supply Egypt with weapons and encouraged the Arab nations to unify against a common enemy, Israel. Since the fall of communism, historians have learned that the Russians were intimately involved in the Arab planning for a war against Israel.
Relations between Israel and Jordan were relatively cordial with one notable exception. On November 11, 1966, an Israeli border patrol jeep hit a mine, killing and wounding several soldiers. In response, the Israelis sent a large force to the village of Es Samu in the West Bank, from which they believed the militants who had set the mine had come. The Israelis ran into a Jordanian force and several soldiers on both sides were killed in the ensuing battle.
In the spring of 1967, Fatah, the military arm of the PLO stepped up attacks from Syria. At the same time, the Syrians went so far as to divert the flow of the Jordan River in order to deprive northern Israel of water. The Syrians also attacked Israeli water stations and tractors near the border. On April 7, one such attack resulted in an aerial battle in which several Syrian planes were shot down by the Israeli Air Force.
Israel retaliated with patrols into the Syrian demilitarized zone and a diplomatic offensive. The United Nations censured the Arab attacks. The Soviets derailed a similar resolution in the Security Council.
In May, the Israelis planned to celebrate their Independence Day with a military parade through their capitol, Jerusalem. Jerusalem was a divided city, as well as a holy city to the Arabs, and the idea of large numbers of Israeli soldiers in the holy city outraged Muslims. The Israelis acceded to the Muslim wishes and did not bring heavy weapons into Jerusalem. The Soviets used the absence of military hardware in Jerusalem to convince Anwar Sadat, speaker of the Egyptian National Assembly, that Israel was planning to invade Syria. The Syrians supported the claim and informed Nasser, still president of Egypt, that Israeli troops were massing on the border. Nasser mobilized the Egyptian army and declared a state of emergency.
Leaders throughout the Arab world began to prepare for war. Nasser and his allies made clear that their goal was to totally destroy Israel. Nasser said that the national aim was “the eradication of Israel.” Ahmed Shukairy, chairman of the PLO, said that all Jewish immigrants would have to leave: "This is a fight for the homeland – it is either us or the Israelis. There is no middle road. The Jews of Palestine will have to leave. We will facilitate their departure to their former homes. Any of the old Palestine Jewish population who survive may stay, but it is my impression that none of them will survive." It was clear that the Arabs wanted to exterminate the Jews.
On May 14, Egyptian General Muhammad Fawzi visited the Syria-Israel border. He saw that there was no evidence of an Israeli troop buildup and communicated this Nasser. Egyptian military intelligence and the US embassy in Cairo confirmed this to Nasser. Additionally, Israel invited UN observers to verify the absence of an invasion force. By this point, though, Nasser’s mind was made up. It was time to destroy Israel.
The Egyptians tripled the number of their forces in the Sinai, while Syria deployed its army in the Golan Heights overlooking northern Israel. On May 17, Egyptian reconnaissance planes violated Israeli airspace, flying over the Israeli nuclear reactor at Dimona. At this point, Israel started calling up reserves and placed the IDF on heightened alert.
The Egyptians continued the provocations over the next few weeks. The Egyptians told the UNEF to leave the Sinai and the Egyptian army took up positions on Israel’s southern border. On May 22, Egypt again closed the Straits of Tiran, a cause of the 1956 war. Lebanon, Kuwait, Saudi Arabia, and Iraq all readied their armies.
Diplomatic efforts by the Israelis were unsuccessful. The US would not agree to an Israeli pre-emptive strike. The sole sign of hope was a proposal from President Johnson that the US might lead a multinational naval force to break the blockade of the Straits of Tiran. Unfortunately, this plan met with little international support and troop buildups continued on both sides.
On May 30, Nasser signed a defense pact with King Hussein of Jordan. The pact effectively gave Egypt control of the Jordanian army. Iraq and Syria soon joined the alliance as well. The combined force opposing Israel at this point was estimated to be 500,000 infantry, 5,000 tanks, and 1,000 aircraft. Also at this point, Moshe Dayan was appointed Israel’s defense minister. Finally, on June 4, the Israeli cabinet voted to launch a pre-emptive strike in spite of US opposition and a ban on weapons sales from France, Israel’s chief supplier.
Early in the morning of June 5, 1967, the Israelis launched a surprise air attack against Egypt. The Israeli Air Force, leaving just twelve aircraft to defend the country, attacked while the Egyptian generals were locked in Cairo traffic jams on their way to work. The Israeli attacks almost totally destroyed the Egyptian air force, including their air bases and surface-to-air missile sites. At the same time, Israeli ground forces attacked the Egyptians in Gaza and the Sinai.
Realizing that the UN and the superpowers might intervene to stop the war at any time, the Israelis planned to make large gains quickly in order to be able to trade land for an end to the Egyptian blockade. Israeli tanks quickly penetrated and overwhelmed the Egyptian defenders despite their fortified positions. As the Egyptian position deteriorated, Marshal Amer, the Egyptian military commander, began to panic. He issued contradictory orders to his commanders, further confusing the situation, before finally ordering a retreat. Some Egyptian commanders fled to Cairo, leaving their troops to fend for themselves. As the Egyptian tanks left cover to withdraw, they became easy targets for Israeli planes. As the Egyptians took massive casualties, the retreat became a rout.
After 96 hours of fighting, Israeli forces captured the Mitla and Gidi Passes and partly blocked the Khatmia Pass, effectively trapping most of the Egyptian army. The Israelis also captured Sharm el Sheikh, the coastal base from which the Egyptians enforced their blockade. By June 8, Israeli forces had reached the Suez Canal and controlled the entire Sinai, as well as the Gaza Strip.
Egyptian losses were put at 11,500 killed, 5,000 captured, and as many as 50,000 wounded. Israel lost 275 killed and 800 wounded, a high number for such a small country. Many of the Egyptian prisoners were fed and transported to the canal, where Egyptian boats took them home, although some officers were traded for captured Israeli pilots.
As the fighting started in the Sinai, the Jordanians watched the planes flying between Egypt and Israel on their radar. Convinced by the Egyptians that the planes were attacking Israel, Jordan began shelling border areas of Israel. In reality, the planes had been the Israeli Air Force returning from the destruction of the Egyptian Air Force.
Israeli Prime Minister Levi Eshkol sent a message through UN General Odd Bull to King Hussein of Jordan that Israel had attacked Egypt, but would not attack Jordan unless Jordan attacked Israel first. By the time the message was received, Jordanian artillery was already in action and Jordanian airplanes had launched in a combined operation with Iraqi and Syrian jets. Jordanian troops also captured Government House, the UN headquarters located on the Hill of Evil Counsel in the demilitarized zone between the two countries.
The Israelis initially did not respond to Jordan’s attacks, but as the attacks grew stronger and Jordanian ground forces crossed the armistice lines, the Israelis first ordered the air force to respond to the Jordanian air attacks. Around noon on June 5, Israeli planes caught the Jordanian planes on the ground refueling and destroyed the entire Jordanian air force. The Syrian air force was also largely destroyed, as well as the base from which the Iraqi planes were operating.
Next Israeli ground attacks were launched with the goals of eliminating pockets of Jordanian territory that bulged out into Israel near Jenin and Latrun, threatening Israeli communications and giving the Arabs a place to launch mortar and artillery attacks deep into Israel. A third Israeli objective was to open a secure road to Mount Scopus, a Jewish enclave in Jerusalem surrounded by Jordanian territory, which had to be resupplied by UN convoys.
Around 2:30 in the afternoon, the first Israeli ground forces attacked Jordanian troops that occupied the Government House. The Israelis recaptured the Government House, and then attacked the village of Sur Baher to the south. When the village fell, the Israelis controlled the road from Jerusalem to Bethlehem and Hebron, cutting off Jordanian forces to the south.
As this was happening, Israeli armored forces moved from the Latrun area toward Ramallah Ridge, which controlled the northern and eastern approaches to Jerusalem. Since the time of Joshua, Ramallah Ridge has historically been an objective of armies seeking control of Jerusalem. In heavy fighting, the Israelis captured the ridge from Jordan’s crack Arab Legion, and then took the fortified village of Biddu. An Israeli brigade also defeated Jordanian and Egyptian forces in Latrun itself.
As the Jordanian army fell back, King Hussein agreed to send reinforcements. After dark, Jordanian tanks and infantry began moving toward Jerusalem on the road from Jericho. They were ultimately detected and the column was virtually wiped out by Israeli warplanes. Israeli aircraft and ground forces also prevented other Jordanian attempts at reinforcing their front-line troops from succeeding.
Just after 0200 on June 6, the Israelis began their assault on Jerusalem. Israeli paratroopers under Motta Gur and tanks from the Jerusalem Brigade attacked the Police School and Ammunition Hill. The hand-to-hand fighting was intense and went on for four hours. Finally, the Israelis controlled Jerusalem up to the north wall of the Old City.
At 0830 on June 7, the Israelis renewed their attack against Augusta Victoria Hill, high ground overlooking Jerusalem to the east. As the Israelis attacked the hill from two directions, a third force penetrated the walls of the Old City at St. Stephen’s Gate. The Israelis met little resistance in the Old City and soon controlled the Temple Mount, a holy site in both Judaism and Islam, for the first time since Jerusalem fell to the Babylonians in 586 BC.
Simultaneously, in Judea and Samaria, other areas of the West Bank, Jordanian armor and artillery was defeated by combined Israeli armor and air attacks. By the night of June 7, both sides had agreed to a UN ceasefire, leaving Israel in complete control of the West Bank. Israel lost 550 soldiers in the West Bank, while Jordan lost 700 killed and 2,500 wounded.
In northern Israel, the Israeli forces were heavily outgunned by the Syrians. The Syrians fielded 40,000 troops and 260 tanks and self-propelled guns which made up three armored brigades and five infantry brigades. The Israelis, with the majority of their army facing the more dangerous Egyptian army in the south, had only one armored brigade and one infantry brigade.
The war in the north started in the morning of June 5 with Syrian air strikes on targets in Israel including the city of Tiberias and oil refineries at Haifa. Israeli warplanes destroyed much of the Syrian air force later in the day, catching the Syrian planes on the ground.
The next day, the Syrians renewed their attack, first with an artillery barrages against civilian Israeli targets, and then with a ground incursion by two companies of infantry, which attacked Kibbutz Tel Dan. Israeli defenders with air support were able to force the Syrians back across the border. With the main force of Israeli army in action against the Egyptians and the Jordanians, Israel was unable to mount offensive operations.
On June 8, Syria and Israel agreed to a UN ceasefire. Five hours later, the Syrians resumed their shelling. As the fighting waned in the south, Israeli army units began to move north toward Syria.
The United States also hinted that an offensive against Syria should be started. The US National Security Advisor, McGeorge Bundy, told Israeli Foreign Minister Abba Eban that, with Syria “getting off without injury,” the nation that was instrumental in starting the war “would be free to start the whole deadly sequence again.” The US may have reasoned that a Syrian defeat would be an embarrassment to the Soviet Union and a blow to Soviet prestige in the nation.
The terrain along the border rose steeply to a plateau about 2,000 feet above sea level, known as the Golan Heights. The area had been occupied and fortified by the Syrians for the past eighteen years. This high ground was often used to launch artillery attacks against communities in northern Israel. Now Israel saw a chance to remove the thorn in their side.
The attack started with a prolonged air attack on the morning of June 9. Around noon, the Israeli ground forces launched five separate attacks. The primary objective was Q’ala, a town that was the most lightly defended by the Syrians because of the nearly impassable terrain. Q’ala was very close to a strategic road that would allow the Israelis to both threaten the rear of the Syrian forces deployed on the Heights as well as attack toward the Syrian regional headquarters at Quneitra, a strategic crossroads that would also open the door to Damascus.
One armored brigade and one infantry brigade attacked Q’ala. Engineers led the way through the Syrian minefield and bulldozers cut a road up the mountain under Syrian fire. The Israeli tanks moved single file through the minefield taking heavy casualties. It took almost six hours for the tanks to travel three miles to the objective.
The infantry brigade attacked a mile to the north at Tel Fakhir to protect the flank of the armor. After seven hours of fighting, virtually every Israeli soldier was either killed or wounded; yet the Syrian units became fragmented, with many soldiers and officers disappearing from the battle. After Tel Fakhir, other Syrian strongholds began to fall to the Israelis as well.
The next morning, June 10, Israeli reinforcements were sent through the hole in the Syrian line. The Israelis secured the breach and then began to move toward Quneitra. While still ten miles away, Syrian radio erroneously announced that Quneitra had fallen. When Syrians soldiers heard this, they became afraid that they would be encircled by the Israelis and trapped. Most of the Syrian army fled at this point.
By the time the fighting stopped, the Israelis had lost 115 killed and 306 wounded. The Syrian losses were 2,500 killed, 5,000 wounded, and 591 captured.
One of the most controversial aspects of the Six-Day War was the Israeli attack on the USS Liberty. The USS Liberty was an American electronic intelligence gathering ship. Through a series of communication mistakes, the ship, which was supposed to be 100 miles away, was cruising ten miles off the Egyptian coast near El Arish. On June 8, the ship was attacked by two Israeli jets sent to investigate reports of shelling from the sea. The Israeli jets strafed the ship and attacked it with napalm. Shortly after, Israeli torpedo boats attacked as well. When the Israelis realized the ship was American, they broke off the attack, but 34 US sailors were killed and 171 wounded. Some of the sailors claimed that the Israelis intended to attack the ship, but several investigations by the US government have agreed that the attack was a case of mistaken identity.
Israel hoped that the war would provide the basis for peace with their Arab neighbors. The decisive victory might inspire the respect of their foes and Israeli territorial gains could be traded for national recognition. Several months after the war, however, Arab leaders met in Khartoum to reaffirm their pledge of “no peace with Israel, no negotiations with Israel, no recognition of Israel.”
The next three years became known as the War of Attrition. A few weeks after the Six-Day War ended, in July 1967, Egypt began shelling Israeli positions in the Sinai. On October 21, 1967, an Egyptian missile attack sank the Israeli destroyer Eilat off Port Said. The War of Attrition continued until 1970, when, after Nasser’s death, the US helped Israel and Egypt to negotiate a ceasefire. Thousands of Israeli soldiers and civilians were killed and wounded in this low intensity conflict.
Sources:
http://www.sixdaywar.org/
http://netwmd.com/blog/2008/09/06/2592
http://meria.idc.ac.il/journal/2000/issue4/jv4n4a5.html
http://www.jewishvirtuallibrary.org/jsource/History/67_War.html
http://encarta.msn.com/encyclopedia_761570433/Six-Day_War.html
http://www.sixdaywar.org/uss-liberty.asp
http://www.jewishvirtuallibrary.org/jsource/myths/mf8.html
http://eilat48.tripod.com/
http://egyptianchronicles.blogspot.com/2008/10/41-years-on-sinking-eilat-destroyer.html
This situation gradually changed as relations between the US and Egypt grew distant. The Soviet Union stepped in to supply Egypt with weapons and encouraged the Arab nations to unify against a common enemy, Israel. Since the fall of communism, historians have learned that the Russians were intimately involved in the Arab planning for a war against Israel.
Relations between Israel and Jordan were relatively cordial with one notable exception. On November 11, 1966, an Israeli border patrol jeep hit a mine, killing and wounding several soldiers. In response, the Israelis sent a large force to the village of Es Samu in the West Bank, from which they believed the militants who had set the mine had come. The Israelis ran into a Jordanian force and several soldiers on both sides were killed in the ensuing battle.
In the spring of 1967, Fatah, the military arm of the PLO stepped up attacks from Syria. At the same time, the Syrians went so far as to divert the flow of the Jordan River in order to deprive northern Israel of water. The Syrians also attacked Israeli water stations and tractors near the border. On April 7, one such attack resulted in an aerial battle in which several Syrian planes were shot down by the Israeli Air Force.
Israel retaliated with patrols into the Syrian demilitarized zone and a diplomatic offensive. The United Nations censured the Arab attacks. The Soviets derailed a similar resolution in the Security Council.
In May, the Israelis planned to celebrate their Independence Day with a military parade through their capitol, Jerusalem. Jerusalem was a divided city, as well as a holy city to the Arabs, and the idea of large numbers of Israeli soldiers in the holy city outraged Muslims. The Israelis acceded to the Muslim wishes and did not bring heavy weapons into Jerusalem. The Soviets used the absence of military hardware in Jerusalem to convince Anwar Sadat, speaker of the Egyptian National Assembly, that Israel was planning to invade Syria. The Syrians supported the claim and informed Nasser, still president of Egypt, that Israeli troops were massing on the border. Nasser mobilized the Egyptian army and declared a state of emergency.
Leaders throughout the Arab world began to prepare for war. Nasser and his allies made clear that their goal was to totally destroy Israel. Nasser said that the national aim was “the eradication of Israel.” Ahmed Shukairy, chairman of the PLO, said that all Jewish immigrants would have to leave: "This is a fight for the homeland – it is either us or the Israelis. There is no middle road. The Jews of Palestine will have to leave. We will facilitate their departure to their former homes. Any of the old Palestine Jewish population who survive may stay, but it is my impression that none of them will survive." It was clear that the Arabs wanted to exterminate the Jews.
On May 14, Egyptian General Muhammad Fawzi visited the Syria-Israel border. He saw that there was no evidence of an Israeli troop buildup and communicated this Nasser. Egyptian military intelligence and the US embassy in Cairo confirmed this to Nasser. Additionally, Israel invited UN observers to verify the absence of an invasion force. By this point, though, Nasser’s mind was made up. It was time to destroy Israel.
The Egyptians tripled the number of their forces in the Sinai, while Syria deployed its army in the Golan Heights overlooking northern Israel. On May 17, Egyptian reconnaissance planes violated Israeli airspace, flying over the Israeli nuclear reactor at Dimona. At this point, Israel started calling up reserves and placed the IDF on heightened alert.
The Egyptians continued the provocations over the next few weeks. The Egyptians told the UNEF to leave the Sinai and the Egyptian army took up positions on Israel’s southern border. On May 22, Egypt again closed the Straits of Tiran, a cause of the 1956 war. Lebanon, Kuwait, Saudi Arabia, and Iraq all readied their armies.
Diplomatic efforts by the Israelis were unsuccessful. The US would not agree to an Israeli pre-emptive strike. The sole sign of hope was a proposal from President Johnson that the US might lead a multinational naval force to break the blockade of the Straits of Tiran. Unfortunately, this plan met with little international support and troop buildups continued on both sides.
On May 30, Nasser signed a defense pact with King Hussein of Jordan. The pact effectively gave Egypt control of the Jordanian army. Iraq and Syria soon joined the alliance as well. The combined force opposing Israel at this point was estimated to be 500,000 infantry, 5,000 tanks, and 1,000 aircraft. Also at this point, Moshe Dayan was appointed Israel’s defense minister. Finally, on June 4, the Israeli cabinet voted to launch a pre-emptive strike in spite of US opposition and a ban on weapons sales from France, Israel’s chief supplier.
Early in the morning of June 5, 1967, the Israelis launched a surprise air attack against Egypt. The Israeli Air Force, leaving just twelve aircraft to defend the country, attacked while the Egyptian generals were locked in Cairo traffic jams on their way to work. The Israeli attacks almost totally destroyed the Egyptian air force, including their air bases and surface-to-air missile sites. At the same time, Israeli ground forces attacked the Egyptians in Gaza and the Sinai.
Realizing that the UN and the superpowers might intervene to stop the war at any time, the Israelis planned to make large gains quickly in order to be able to trade land for an end to the Egyptian blockade. Israeli tanks quickly penetrated and overwhelmed the Egyptian defenders despite their fortified positions. As the Egyptian position deteriorated, Marshal Amer, the Egyptian military commander, began to panic. He issued contradictory orders to his commanders, further confusing the situation, before finally ordering a retreat. Some Egyptian commanders fled to Cairo, leaving their troops to fend for themselves. As the Egyptian tanks left cover to withdraw, they became easy targets for Israeli planes. As the Egyptians took massive casualties, the retreat became a rout.
After 96 hours of fighting, Israeli forces captured the Mitla and Gidi Passes and partly blocked the Khatmia Pass, effectively trapping most of the Egyptian army. The Israelis also captured Sharm el Sheikh, the coastal base from which the Egyptians enforced their blockade. By June 8, Israeli forces had reached the Suez Canal and controlled the entire Sinai, as well as the Gaza Strip.
Egyptian losses were put at 11,500 killed, 5,000 captured, and as many as 50,000 wounded. Israel lost 275 killed and 800 wounded, a high number for such a small country. Many of the Egyptian prisoners were fed and transported to the canal, where Egyptian boats took them home, although some officers were traded for captured Israeli pilots.
As the fighting started in the Sinai, the Jordanians watched the planes flying between Egypt and Israel on their radar. Convinced by the Egyptians that the planes were attacking Israel, Jordan began shelling border areas of Israel. In reality, the planes had been the Israeli Air Force returning from the destruction of the Egyptian Air Force.
Israeli Prime Minister Levi Eshkol sent a message through UN General Odd Bull to King Hussein of Jordan that Israel had attacked Egypt, but would not attack Jordan unless Jordan attacked Israel first. By the time the message was received, Jordanian artillery was already in action and Jordanian airplanes had launched in a combined operation with Iraqi and Syrian jets. Jordanian troops also captured Government House, the UN headquarters located on the Hill of Evil Counsel in the demilitarized zone between the two countries.
The Israelis initially did not respond to Jordan’s attacks, but as the attacks grew stronger and Jordanian ground forces crossed the armistice lines, the Israelis first ordered the air force to respond to the Jordanian air attacks. Around noon on June 5, Israeli planes caught the Jordanian planes on the ground refueling and destroyed the entire Jordanian air force. The Syrian air force was also largely destroyed, as well as the base from which the Iraqi planes were operating.
Next Israeli ground attacks were launched with the goals of eliminating pockets of Jordanian territory that bulged out into Israel near Jenin and Latrun, threatening Israeli communications and giving the Arabs a place to launch mortar and artillery attacks deep into Israel. A third Israeli objective was to open a secure road to Mount Scopus, a Jewish enclave in Jerusalem surrounded by Jordanian territory, which had to be resupplied by UN convoys.
Around 2:30 in the afternoon, the first Israeli ground forces attacked Jordanian troops that occupied the Government House. The Israelis recaptured the Government House, and then attacked the village of Sur Baher to the south. When the village fell, the Israelis controlled the road from Jerusalem to Bethlehem and Hebron, cutting off Jordanian forces to the south.
As this was happening, Israeli armored forces moved from the Latrun area toward Ramallah Ridge, which controlled the northern and eastern approaches to Jerusalem. Since the time of Joshua, Ramallah Ridge has historically been an objective of armies seeking control of Jerusalem. In heavy fighting, the Israelis captured the ridge from Jordan’s crack Arab Legion, and then took the fortified village of Biddu. An Israeli brigade also defeated Jordanian and Egyptian forces in Latrun itself.
As the Jordanian army fell back, King Hussein agreed to send reinforcements. After dark, Jordanian tanks and infantry began moving toward Jerusalem on the road from Jericho. They were ultimately detected and the column was virtually wiped out by Israeli warplanes. Israeli aircraft and ground forces also prevented other Jordanian attempts at reinforcing their front-line troops from succeeding.
Just after 0200 on June 6, the Israelis began their assault on Jerusalem. Israeli paratroopers under Motta Gur and tanks from the Jerusalem Brigade attacked the Police School and Ammunition Hill. The hand-to-hand fighting was intense and went on for four hours. Finally, the Israelis controlled Jerusalem up to the north wall of the Old City.
At 0830 on June 7, the Israelis renewed their attack against Augusta Victoria Hill, high ground overlooking Jerusalem to the east. As the Israelis attacked the hill from two directions, a third force penetrated the walls of the Old City at St. Stephen’s Gate. The Israelis met little resistance in the Old City and soon controlled the Temple Mount, a holy site in both Judaism and Islam, for the first time since Jerusalem fell to the Babylonians in 586 BC.
Simultaneously, in Judea and Samaria, other areas of the West Bank, Jordanian armor and artillery was defeated by combined Israeli armor and air attacks. By the night of June 7, both sides had agreed to a UN ceasefire, leaving Israel in complete control of the West Bank. Israel lost 550 soldiers in the West Bank, while Jordan lost 700 killed and 2,500 wounded.
In northern Israel, the Israeli forces were heavily outgunned by the Syrians. The Syrians fielded 40,000 troops and 260 tanks and self-propelled guns which made up three armored brigades and five infantry brigades. The Israelis, with the majority of their army facing the more dangerous Egyptian army in the south, had only one armored brigade and one infantry brigade.
The war in the north started in the morning of June 5 with Syrian air strikes on targets in Israel including the city of Tiberias and oil refineries at Haifa. Israeli warplanes destroyed much of the Syrian air force later in the day, catching the Syrian planes on the ground.
The next day, the Syrians renewed their attack, first with an artillery barrages against civilian Israeli targets, and then with a ground incursion by two companies of infantry, which attacked Kibbutz Tel Dan. Israeli defenders with air support were able to force the Syrians back across the border. With the main force of Israeli army in action against the Egyptians and the Jordanians, Israel was unable to mount offensive operations.
On June 8, Syria and Israel agreed to a UN ceasefire. Five hours later, the Syrians resumed their shelling. As the fighting waned in the south, Israeli army units began to move north toward Syria.
The United States also hinted that an offensive against Syria should be started. The US National Security Advisor, McGeorge Bundy, told Israeli Foreign Minister Abba Eban that, with Syria “getting off without injury,” the nation that was instrumental in starting the war “would be free to start the whole deadly sequence again.” The US may have reasoned that a Syrian defeat would be an embarrassment to the Soviet Union and a blow to Soviet prestige in the nation.
The terrain along the border rose steeply to a plateau about 2,000 feet above sea level, known as the Golan Heights. The area had been occupied and fortified by the Syrians for the past eighteen years. This high ground was often used to launch artillery attacks against communities in northern Israel. Now Israel saw a chance to remove the thorn in their side.
The attack started with a prolonged air attack on the morning of June 9. Around noon, the Israeli ground forces launched five separate attacks. The primary objective was Q’ala, a town that was the most lightly defended by the Syrians because of the nearly impassable terrain. Q’ala was very close to a strategic road that would allow the Israelis to both threaten the rear of the Syrian forces deployed on the Heights as well as attack toward the Syrian regional headquarters at Quneitra, a strategic crossroads that would also open the door to Damascus.
One armored brigade and one infantry brigade attacked Q’ala. Engineers led the way through the Syrian minefield and bulldozers cut a road up the mountain under Syrian fire. The Israeli tanks moved single file through the minefield taking heavy casualties. It took almost six hours for the tanks to travel three miles to the objective.
The infantry brigade attacked a mile to the north at Tel Fakhir to protect the flank of the armor. After seven hours of fighting, virtually every Israeli soldier was either killed or wounded; yet the Syrian units became fragmented, with many soldiers and officers disappearing from the battle. After Tel Fakhir, other Syrian strongholds began to fall to the Israelis as well.
The next morning, June 10, Israeli reinforcements were sent through the hole in the Syrian line. The Israelis secured the breach and then began to move toward Quneitra. While still ten miles away, Syrian radio erroneously announced that Quneitra had fallen. When Syrians soldiers heard this, they became afraid that they would be encircled by the Israelis and trapped. Most of the Syrian army fled at this point.
By the time the fighting stopped, the Israelis had lost 115 killed and 306 wounded. The Syrian losses were 2,500 killed, 5,000 wounded, and 591 captured.
One of the most controversial aspects of the Six-Day War was the Israeli attack on the USS Liberty. The USS Liberty was an American electronic intelligence gathering ship. Through a series of communication mistakes, the ship, which was supposed to be 100 miles away, was cruising ten miles off the Egyptian coast near El Arish. On June 8, the ship was attacked by two Israeli jets sent to investigate reports of shelling from the sea. The Israeli jets strafed the ship and attacked it with napalm. Shortly after, Israeli torpedo boats attacked as well. When the Israelis realized the ship was American, they broke off the attack, but 34 US sailors were killed and 171 wounded. Some of the sailors claimed that the Israelis intended to attack the ship, but several investigations by the US government have agreed that the attack was a case of mistaken identity.
Israel hoped that the war would provide the basis for peace with their Arab neighbors. The decisive victory might inspire the respect of their foes and Israeli territorial gains could be traded for national recognition. Several months after the war, however, Arab leaders met in Khartoum to reaffirm their pledge of “no peace with Israel, no negotiations with Israel, no recognition of Israel.”
The next three years became known as the War of Attrition. A few weeks after the Six-Day War ended, in July 1967, Egypt began shelling Israeli positions in the Sinai. On October 21, 1967, an Egyptian missile attack sank the Israeli destroyer Eilat off Port Said. The War of Attrition continued until 1970, when, after Nasser’s death, the US helped Israel and Egypt to negotiate a ceasefire. Thousands of Israeli soldiers and civilians were killed and wounded in this low intensity conflict.
Sources:
http://www.sixdaywar.org/
http://netwmd.com/blog/2008/09/06/2592
http://meria.idc.ac.il/journal/2000/issue4/jv4n4a5.html
http://www.jewishvirtuallibrary.org/jsource/History/67_War.html
http://encarta.msn.com/encyclopedia_761570433/Six-Day_War.html
http://www.sixdaywar.org/uss-liberty.asp
http://www.jewishvirtuallibrary.org/jsource/myths/mf8.html
http://eilat48.tripod.com/
http://egyptianchronicles.blogspot.com/2008/10/41-years-on-sinking-eilat-destroyer.html
Friday, April 10, 2009
Arabs and Israelis I: The Suez Crisis
Note: This is the first in a series of Part II of my synopsis of modern Israeli history. To read Part I detailing how the modern nation of Israel came to be, go to my blog:
http://captainkudzu.blogspot.com/2008/06/brief-history-of-modern-state-of-israel.html
At the conclusion of Israel’s War for Independence, the new state of Israel signed armistice agreements with Egypt, Jordan, Syria and Lebanon. Iraq was the only Arab nation that did not sign an armistice. Instead the Iraqis withdrew their forces and turned the territory that they controlled over to the Jordanians. The defeat at the hands of the Israelis is great humiliation for the governments of the Arab nations.
At the end of the hostilities on January 7, 1949, Israel had captured an additional 5,000 square kilometers over territory allotted to it by the United Nations partition. The city of Jerusalem remained divided with Trans Jordan controlling the eastern part of the city. Nevertheless, the Israelis made Jerusalem their new capitol and moved government offices to their part of the city. On May 11, 1949, Israel became a member of the United Nations.
At this point, Jewish immigrants from around the world began to converge on Israel. Between 1948 and 1951, the Jewish population of Israel doubled as over 600,000 new Israelis arrived, many from Arab countries. The influx helped to get the economy of the new nation onto its feet. In 1950, Israel passed the Law of Return, which guarantees the right of Jews around the world to immigrate to Israel and become citizens.
For the Arab population, the picture was not so bright. Many Arabs had fled the fighting, often at the urging of the Arab armies. The approximately 600,000 Arab refugees were not welcomed by the Arab countries in which they found themselves. Rather than assimilating the refugees as the Israelis had done, the Arabs segregated them into refugee camps. They were caught in a no-man’s land, not wanting to return to their homes to live under a Jewish government and not being permitted to enter society elsewhere. The problem of the Arab refugees continues to fester today.
The Suez Crisis
In spite of the armistice agreements, Israel was not at peace at this point. The Arab nations refused to negotiate permanent peace until Israel returned the land that the Arabs had lost in the 1948 War. Egypt had closed the Suez Canal to Israeli shipping in 1949. In spite of a UN resolution ordering Egypt to allow the Israelis to traverse the canal, the Egyptians did not comply. The Egyptians also blockaded the Straits of Tiran, preventing ships from using the Israeli port of Eilat. Additionally, this period also saw attacks by fedayeen guerillas from Arab countries across the border into Israel.
On July 26, 1956, Egyptian President Gamal Abdul Nasser, emboldened by an arms deal with the Soviet Union, announced that Egypt would nationalize the Suez Canal. Nasser was a former army officer who had led a coup against Egypt’s king in 1952 following Egypt’s defeat by Israel. By nationalizing the canal, Nasser was directly challenging the British and French, even though Nasser promised to compensate shareholders and not disrupt navigation.
The British and French immediately began planning Operation Musketeer to regain control of the canal. The United States, under President Eisenhower, opposed the use of force. The Soviet Union and India led several other neutral countries in supporting the Egyptians. Diplomatic efforts were made to resolve the crisis and Britain and France, while preparing for war, brought the matter before the UN Security Council. Ultimately, a Soviet veto prevented the council from reaching a decision.
The French began supplying Israel with weapons as the crisis grew, and, as diplomatic efforts failed, the two nations began to discuss joint military action. Golda Meir, the minister of foreign affairs, Shimon Peres, director-general of the Ministry of Defense, and Moshe Dayan, chief-of-staff of the Israel Defense Force (IDF) were involved in the talks with the French.
Finally, it was decided that Israel would open the war with an attack on the Egyptians in the Sinai. France and Egypt would then demand that both Israel and Egypt withdraw from the area, so that French and British forces could take control of the canal to ensure navigational safety. The British Prime Minister, Anthony Eden, was convinced to join in the plan on the condition that Britain’s collusion remain secret.
On October 29, 1956, Israeli paratroops assaulted the Mitla Pass forty miles east of Port Said at the northern end of the canal, while Israeli ground forces rolled into the Sinai. Britain and France, as planned, demanded that the two nations clear the canal zone. Israeli forces stopped their advance, while Nasser refused the demand. The British and French used Nasser’s refusal as a pretext to attack Egypt, launching major air strikes on October 31.
President Eisenhower, who was not privy to the plan, immediately saw through the deception and became irate. The United States, the Soviet Union, and most of the rest of the world immediately began to put pressure on England, France and Israel. Since the British and French were both members of the Security Council with veto power, a special session of the UN General Assembly was held.
On November 5, British and French paratroops dropped near Port Said and Port Tawfiq. The next day, more soldiers came ashore in amphibious landings. After advancing about thirty miles, the force stopped as Anthony Eden bowed to international pressure and domestic public opinion and ordered a ceasefire. Israeli forces had also resumed their offensive and now controlled the entire Sinai Peninsula.
The United Nations formed a special Emergency Force to take responsibility for the canal zone. The British, French, and Israelis withdrew their forces on December 22. The Egyptians promptly evicted the UNEF and regained control of their territory. The Israelis attempted to hold Sharm-al-Sheikh in order to prevent a resumption of the Tiran blockade. UN sanctions and Eisenhower’s assurance that the US would maintain freedom of navigation in the straits eventually persuaded the Israelis to withdraw.
The war signaled the end of British and French prominence in the Middle East. The main winner was President Nasser. Even though his forces were militarily routed, with the help of the United States, he had come out on top. He became the father of Arab nationalism and the leader of the Arab world.
Sources:
http://www.mideastweb.org/briefhistory-oslo.htm
http://www.hello-newman.com/Israel/history.html
http://www.palestinefacts.org/pf_independence_war_end.php
http://www.migrationinformation.org/Profiles/display.cfm?ID=321
http://www.peacefaq.com/refugees.html
Suez Crisis
http://www.answers.com/topic/suez-crisis
http://www.answers.com/topic/gamal-abdel-nasser
http://www.jewishvirtuallibrary.org/jsource/History/Suez_War.html
http://captainkudzu.blogspot.com/2008/06/brief-history-of-modern-state-of-israel.html
At the conclusion of Israel’s War for Independence, the new state of Israel signed armistice agreements with Egypt, Jordan, Syria and Lebanon. Iraq was the only Arab nation that did not sign an armistice. Instead the Iraqis withdrew their forces and turned the territory that they controlled over to the Jordanians. The defeat at the hands of the Israelis is great humiliation for the governments of the Arab nations.
At the end of the hostilities on January 7, 1949, Israel had captured an additional 5,000 square kilometers over territory allotted to it by the United Nations partition. The city of Jerusalem remained divided with Trans Jordan controlling the eastern part of the city. Nevertheless, the Israelis made Jerusalem their new capitol and moved government offices to their part of the city. On May 11, 1949, Israel became a member of the United Nations.
At this point, Jewish immigrants from around the world began to converge on Israel. Between 1948 and 1951, the Jewish population of Israel doubled as over 600,000 new Israelis arrived, many from Arab countries. The influx helped to get the economy of the new nation onto its feet. In 1950, Israel passed the Law of Return, which guarantees the right of Jews around the world to immigrate to Israel and become citizens.
For the Arab population, the picture was not so bright. Many Arabs had fled the fighting, often at the urging of the Arab armies. The approximately 600,000 Arab refugees were not welcomed by the Arab countries in which they found themselves. Rather than assimilating the refugees as the Israelis had done, the Arabs segregated them into refugee camps. They were caught in a no-man’s land, not wanting to return to their homes to live under a Jewish government and not being permitted to enter society elsewhere. The problem of the Arab refugees continues to fester today.
The Suez Crisis
In spite of the armistice agreements, Israel was not at peace at this point. The Arab nations refused to negotiate permanent peace until Israel returned the land that the Arabs had lost in the 1948 War. Egypt had closed the Suez Canal to Israeli shipping in 1949. In spite of a UN resolution ordering Egypt to allow the Israelis to traverse the canal, the Egyptians did not comply. The Egyptians also blockaded the Straits of Tiran, preventing ships from using the Israeli port of Eilat. Additionally, this period also saw attacks by fedayeen guerillas from Arab countries across the border into Israel.
On July 26, 1956, Egyptian President Gamal Abdul Nasser, emboldened by an arms deal with the Soviet Union, announced that Egypt would nationalize the Suez Canal. Nasser was a former army officer who had led a coup against Egypt’s king in 1952 following Egypt’s defeat by Israel. By nationalizing the canal, Nasser was directly challenging the British and French, even though Nasser promised to compensate shareholders and not disrupt navigation.
The British and French immediately began planning Operation Musketeer to regain control of the canal. The United States, under President Eisenhower, opposed the use of force. The Soviet Union and India led several other neutral countries in supporting the Egyptians. Diplomatic efforts were made to resolve the crisis and Britain and France, while preparing for war, brought the matter before the UN Security Council. Ultimately, a Soviet veto prevented the council from reaching a decision.
The French began supplying Israel with weapons as the crisis grew, and, as diplomatic efforts failed, the two nations began to discuss joint military action. Golda Meir, the minister of foreign affairs, Shimon Peres, director-general of the Ministry of Defense, and Moshe Dayan, chief-of-staff of the Israel Defense Force (IDF) were involved in the talks with the French.
Finally, it was decided that Israel would open the war with an attack on the Egyptians in the Sinai. France and Egypt would then demand that both Israel and Egypt withdraw from the area, so that French and British forces could take control of the canal to ensure navigational safety. The British Prime Minister, Anthony Eden, was convinced to join in the plan on the condition that Britain’s collusion remain secret.
On October 29, 1956, Israeli paratroops assaulted the Mitla Pass forty miles east of Port Said at the northern end of the canal, while Israeli ground forces rolled into the Sinai. Britain and France, as planned, demanded that the two nations clear the canal zone. Israeli forces stopped their advance, while Nasser refused the demand. The British and French used Nasser’s refusal as a pretext to attack Egypt, launching major air strikes on October 31.
President Eisenhower, who was not privy to the plan, immediately saw through the deception and became irate. The United States, the Soviet Union, and most of the rest of the world immediately began to put pressure on England, France and Israel. Since the British and French were both members of the Security Council with veto power, a special session of the UN General Assembly was held.
On November 5, British and French paratroops dropped near Port Said and Port Tawfiq. The next day, more soldiers came ashore in amphibious landings. After advancing about thirty miles, the force stopped as Anthony Eden bowed to international pressure and domestic public opinion and ordered a ceasefire. Israeli forces had also resumed their offensive and now controlled the entire Sinai Peninsula.
The United Nations formed a special Emergency Force to take responsibility for the canal zone. The British, French, and Israelis withdrew their forces on December 22. The Egyptians promptly evicted the UNEF and regained control of their territory. The Israelis attempted to hold Sharm-al-Sheikh in order to prevent a resumption of the Tiran blockade. UN sanctions and Eisenhower’s assurance that the US would maintain freedom of navigation in the straits eventually persuaded the Israelis to withdraw.
The war signaled the end of British and French prominence in the Middle East. The main winner was President Nasser. Even though his forces were militarily routed, with the help of the United States, he had come out on top. He became the father of Arab nationalism and the leader of the Arab world.
Sources:
http://www.mideastweb.org/briefhistory-oslo.htm
http://www.hello-newman.com/Israel/history.html
http://www.palestinefacts.org/pf_independence_war_end.php
http://www.migrationinformation.org/Profiles/display.cfm?ID=321
http://www.peacefaq.com/refugees.html
Suez Crisis
http://www.answers.com/topic/suez-crisis
http://www.answers.com/topic/gamal-abdel-nasser
http://www.jewishvirtuallibrary.org/jsource/History/Suez_War.html
Wednesday, March 25, 2009
Recession Home Prices In Villa Rica
Villa Rica is a small town to the west of Atlanta. Like many areas around Atlanta, this city, whose name ironically means “rich village,” has been hit hard by the mortgage crisis. Home prices here were rising quickly over the past few years as Atlanta’s real estate market blossomed amid rising home values and a booming local economy. Homeowners in Villa Rica, the site of a gold rush in the early 1800s, found that their homes were an investment that was as good as gold.
All that came to a swift end when the mortgage crisis hit in 2008. Development all but stopped as home sales crashed to a halt. Rising numbers of foreclosures meant that many homes sat empty for months on end.
In my neighborhood on the north side of town, near Wesley Chapel Road, home prices had increased by 30% over the previous ten years. This is a small, quiet subdivision with newer houses that were close to the median price for the area. Almost overnight, the market value of these homes fell by approximately half. A planned subdivision that was being built behind my neighborhood now sits silent. Its roads are completed but there are no houses along them.
For Sale signs went up but brought in few prospective buyers. Most prospective sellers stopped bothering with real estate agents and put out For Sale By Owner signs. For a period of almost a year, we had vacant foreclosure houses on either side of my home. It has only been in the past few weeks that a family has bought one of these houses using seller financing. The other is still vacant.
The credit freeze is an important aspect of the fallen real estate prices. With banks afraid to lend money, it can be hard for many people to qualify for mortgages. Since we have owned our house for several years, as interest rates fell I contacted our loan officer to discuss refinancing our mortgage.
He told me that even though we have excellent credit, a refinance is out of the question because of the declining values of homes. As home prices fell, we lost equity so that, like many other homeowners around the country, we now owe more on our mortgage than our home is currently worth.
The same trend makes it difficult for new homebuyers to secure financing. In sharp contrast to the past decade, most banks are now requiring borrowers, even those with excellent credit, to make a down payment of at least twenty percent of the purchase price of the home. When combined with the crash of the stock market and other investments, this means that many prospective buyers do not have a sufficiently large nest egg to take advantage of the many great real estate deals that exist. The one recent sale in my neighborhood was financed by the seller and did not involve a bank.
Eventually, the economy will begin to grow again and the real estate markets will wake from their slumber. Banks will begin to lend more money and people will once again be able to purchase their dream home. As buyers enter the market, home prices will once again start to rise. For homeowners in Villa Rica and around the country, that day cannot come soon enough.
3/25/09
Bedford MA
All that came to a swift end when the mortgage crisis hit in 2008. Development all but stopped as home sales crashed to a halt. Rising numbers of foreclosures meant that many homes sat empty for months on end.
In my neighborhood on the north side of town, near Wesley Chapel Road, home prices had increased by 30% over the previous ten years. This is a small, quiet subdivision with newer houses that were close to the median price for the area. Almost overnight, the market value of these homes fell by approximately half. A planned subdivision that was being built behind my neighborhood now sits silent. Its roads are completed but there are no houses along them.
For Sale signs went up but brought in few prospective buyers. Most prospective sellers stopped bothering with real estate agents and put out For Sale By Owner signs. For a period of almost a year, we had vacant foreclosure houses on either side of my home. It has only been in the past few weeks that a family has bought one of these houses using seller financing. The other is still vacant.
The credit freeze is an important aspect of the fallen real estate prices. With banks afraid to lend money, it can be hard for many people to qualify for mortgages. Since we have owned our house for several years, as interest rates fell I contacted our loan officer to discuss refinancing our mortgage.
He told me that even though we have excellent credit, a refinance is out of the question because of the declining values of homes. As home prices fell, we lost equity so that, like many other homeowners around the country, we now owe more on our mortgage than our home is currently worth.
The same trend makes it difficult for new homebuyers to secure financing. In sharp contrast to the past decade, most banks are now requiring borrowers, even those with excellent credit, to make a down payment of at least twenty percent of the purchase price of the home. When combined with the crash of the stock market and other investments, this means that many prospective buyers do not have a sufficiently large nest egg to take advantage of the many great real estate deals that exist. The one recent sale in my neighborhood was financed by the seller and did not involve a bank.
Eventually, the economy will begin to grow again and the real estate markets will wake from their slumber. Banks will begin to lend more money and people will once again be able to purchase their dream home. As buyers enter the market, home prices will once again start to rise. For homeowners in Villa Rica and around the country, that day cannot come soon enough.
3/25/09
Bedford MA
Tuesday, March 24, 2009
Buying a First Home in a Tight Economy
The mortgage crisis has created a surplus of homes for sale with very few buyers. This means that many people have a golden opportunity to get a great deal on a nice home. Plunging prices tempt buyers to purchase homes at a discounts of approximately fifty percent of what the house sold for a few years ago in many cities. First time homebuyers might be skittish about buying a home in such an unstable economy, but if you do your “homework” you can safely get a good deal.
First, look at the big picture. Examine the industry in which you work and take a close look at how your company is faring. If your industry is particularly unstable, or if your company is considering layoffs or pay cuts, you should be very careful about committing yourself to a mortgage. You should try to minimize the chance that you will not be able to pay your bills by considering the chance that you will be facing unemployment or decrease in pay.
Second, when you start shopping for a home, carefully consider how much you should spend. Traditionally, lenders have desired that a mortgage payment be no more than 25% of borrower’s take-home pay and that all payments be less than 32% of the total take home pay. For example, if you make $5,000 per month after taxes, your mortgage payment, including escrows for homeowner’s insurance and property taxes, should be less than $1250 per month. Similarly, your total monthly obligations, including credit cards, car payments, etc. should be less than $1600 per month. This ensures that there will be plenty of money left over to pay utilities and buy other necessities, such as food and clothing. In the current economic climate, a borrower would be wise to be even more conservative than these traditional guidelines.
In the past, borrowers could finance almost all of the cost of a home. Now, however, mortgages with no money down or small down payments are a thing of the past. To minimize their own risks, most banks are requiring a down payment of at least twenty percent of the sale price. This means that most borrowers will need a sizable nest egg to qualify for a mortgage. Banks normally require that the down payment money be verified over a period of time. For example, it is not uncommon to require six months of bank statements or documentation showing the source of the funds. Gifts are normally acceptable, but it is common to require that the donor complete forms that state that the money is a gift and not a loan. Gifts or abnormal sources of down payments will likely trigger additional scrutiny of loan applications these days.
Shop around to find the best interest rate and down payment. Dealing with a mortgage broker instead of individual banks makes it easier to find the best deal. A major cause of the current crisis is that many people were not fully aware of what type of mortgage they were buying. Ask questions and find out exactly what is being offered. This is particularly important if you are buying an adjustable rate mortgage (ARM). You should find out how much the interest rate can adjust and how much that will increase your payment. Also find out if there is a prepayment penalty or a balloon payment. If you do not understand what you are signing, don’t sign!
The best way to shop for a house is to get pre-approved for a mortgage before you start looking at houses. This way you will know in advance how much the bank is willing to loan and you can shop for houses within your price range. This also makes it easier to close on your house quickly when you find your dream home. Since your finances have already been approved by the lender, only items dealing with your specific house will have to be completed.
When you begin shopping for a house, consider foreclosures and other distressed sales. These homes often sell at deep discounts, but do carry some additional risks. For example, such homes are often sold “as is” with no warranty. Since the previous owner could not afford to make the mortgage payments on the home, it is unlikely that they were able to pay for upkeep and maintenance on the home as well. In some cases, the previous owner may even have vented their frustrations on the house’s windows, walls, and doors. This damage will probably not be repaired by the seller and therefore will add to the real cost of buying the home. If the house has been unoccupied, there may be damage from vandals as well.
To minimize the risk of finding unpleasant surprises in the form of expensive repairs after closing on your new home, it is essential to have both an appraisal and a home inspection done before you buy your home. The appraisal confirms the market value of the home and will likely be required by your lender. The home inspection checks the condition of the house and protects the borrower from hidden defects. Additionally, you should maintain a cash reserve to cover any unexpected expenses that arise after the closing.
You can also obtain valuable inside knowledge on local real-estate markets from realtors. You should understand that the listing agent on a house works for the seller. To get the maximum benefit of a realtor, you should hire your own realtor to work for you. This creates a fiduciary relationship between you and your realtor that does not exist between you and the seller’s realtor. Having two realtors will not add to the cost of the house since the two realtors will split the commission.
The collapse in home prices has caused many problems within the financial sector of the United States, but for certain individuals it is also a great opportunity. For a prospective buyer who has excellent credit and money for a down payment, there are plenty of opportunities to buy a very nice home at a fire sale price.
March 24, 2009
Enroute from Atlanta to Newark NJ
First, look at the big picture. Examine the industry in which you work and take a close look at how your company is faring. If your industry is particularly unstable, or if your company is considering layoffs or pay cuts, you should be very careful about committing yourself to a mortgage. You should try to minimize the chance that you will not be able to pay your bills by considering the chance that you will be facing unemployment or decrease in pay.
Second, when you start shopping for a home, carefully consider how much you should spend. Traditionally, lenders have desired that a mortgage payment be no more than 25% of borrower’s take-home pay and that all payments be less than 32% of the total take home pay. For example, if you make $5,000 per month after taxes, your mortgage payment, including escrows for homeowner’s insurance and property taxes, should be less than $1250 per month. Similarly, your total monthly obligations, including credit cards, car payments, etc. should be less than $1600 per month. This ensures that there will be plenty of money left over to pay utilities and buy other necessities, such as food and clothing. In the current economic climate, a borrower would be wise to be even more conservative than these traditional guidelines.
In the past, borrowers could finance almost all of the cost of a home. Now, however, mortgages with no money down or small down payments are a thing of the past. To minimize their own risks, most banks are requiring a down payment of at least twenty percent of the sale price. This means that most borrowers will need a sizable nest egg to qualify for a mortgage. Banks normally require that the down payment money be verified over a period of time. For example, it is not uncommon to require six months of bank statements or documentation showing the source of the funds. Gifts are normally acceptable, but it is common to require that the donor complete forms that state that the money is a gift and not a loan. Gifts or abnormal sources of down payments will likely trigger additional scrutiny of loan applications these days.
Shop around to find the best interest rate and down payment. Dealing with a mortgage broker instead of individual banks makes it easier to find the best deal. A major cause of the current crisis is that many people were not fully aware of what type of mortgage they were buying. Ask questions and find out exactly what is being offered. This is particularly important if you are buying an adjustable rate mortgage (ARM). You should find out how much the interest rate can adjust and how much that will increase your payment. Also find out if there is a prepayment penalty or a balloon payment. If you do not understand what you are signing, don’t sign!
The best way to shop for a house is to get pre-approved for a mortgage before you start looking at houses. This way you will know in advance how much the bank is willing to loan and you can shop for houses within your price range. This also makes it easier to close on your house quickly when you find your dream home. Since your finances have already been approved by the lender, only items dealing with your specific house will have to be completed.
When you begin shopping for a house, consider foreclosures and other distressed sales. These homes often sell at deep discounts, but do carry some additional risks. For example, such homes are often sold “as is” with no warranty. Since the previous owner could not afford to make the mortgage payments on the home, it is unlikely that they were able to pay for upkeep and maintenance on the home as well. In some cases, the previous owner may even have vented their frustrations on the house’s windows, walls, and doors. This damage will probably not be repaired by the seller and therefore will add to the real cost of buying the home. If the house has been unoccupied, there may be damage from vandals as well.
To minimize the risk of finding unpleasant surprises in the form of expensive repairs after closing on your new home, it is essential to have both an appraisal and a home inspection done before you buy your home. The appraisal confirms the market value of the home and will likely be required by your lender. The home inspection checks the condition of the house and protects the borrower from hidden defects. Additionally, you should maintain a cash reserve to cover any unexpected expenses that arise after the closing.
You can also obtain valuable inside knowledge on local real-estate markets from realtors. You should understand that the listing agent on a house works for the seller. To get the maximum benefit of a realtor, you should hire your own realtor to work for you. This creates a fiduciary relationship between you and your realtor that does not exist between you and the seller’s realtor. Having two realtors will not add to the cost of the house since the two realtors will split the commission.
The collapse in home prices has caused many problems within the financial sector of the United States, but for certain individuals it is also a great opportunity. For a prospective buyer who has excellent credit and money for a down payment, there are plenty of opportunities to buy a very nice home at a fire sale price.
March 24, 2009
Enroute from Atlanta to Newark NJ
Monday, March 2, 2009
Investing in the Obama Economy
Whether we voted for him or not, we must realize that Barack Obama is going to change the face of the United States and its economy. Radical changes in numerous areas of our economy are causing upheaval in the stock market and investment portfolios. To make the best investment choices, we should look at what Obama plans to do and the likely effects of his policies.
A big question on the minds of most investors is whether to ride out the crashing market or to try and salvage what remains of their portfolios. Since the financial crisis began in September 2008, the Dow Jones Industrial Average has fallen from a high above 13,000 to below 6,800 in trading today (3/2/09). If you are still in the market, you have probably seen a loss of approximately half the value of your portfolio.
A good strategy depends on the length of time that you have to recoup your losses. Historically, the stock market always shows a profit over time. Even in the stock market crash of 1929, when the Dow fell from 380 to 42 as the US entered the Great Depression, the stocks eventually regained their value. The down side is that this takes time. The market did not recover to its pre-1929 values until the late 1950s.
President Obama is following a set of policies that is very similar to those enacted by President Roosevelt in the 1930s and the government of Japan in the 1990s. In both cases, the increased government spending, higher taxes, and increased regulation led to a deeper recession and a slow recovery that took in excess of ten years. What we can learn from this is that, in all likelihood, we may not recover our past losses until 2030.
President Obama’s stimulus and bailouts have not stopped Wall Street’s freefall. With every new bailout and nationalization, the market falls further. Since there is no end in sight to government dabbling in the economy, there is also no bottom in sight to market losses.
If you are someone who needs your investment money in the short term, up to ten years from now, my recommendation is that you consider cutting your losses and get out of the stock market. Your current losses will become permanent, but you will preserve what you have left.
On the other hand, if you will not need your money for twenty to thirty years and are somewhat risk tolerant, you should consider staying in the market. The economy is cyclical and, in spite of everything that we can throw against it, it will recover in time. If a substantial change in government policy occurs over the next few years, the recovery might be sooner and sharper than anyone imagines.
For investors with a middle range outlook, from ten to twenty years, you should talk with your investment advisor about moving at least part of your portfolio to more conservative, less risky investments. You will lock in some losses, but you will also preserve more of your cash in the event of a long recovery.
The next question is what does constitute a safe and conservative investment in this economic climate. To answer this, we should look at what President Obama has announced as his intentions as well as what he has already done in his first six weeks in office. His banking polices, including government purchases of bank stock, have caused the value of bank stocks to crash. Auto stocks have fallen amid government bailouts and increased government control of the industry. Obama’s cap-and-trade energy tax will likely hurt traditional energy companies as well as the many businesses whose operations require energy to produce and transport their products. Health care is likely to be a target for nationalization or price controls in the near future. All of these sectors are likely to be poor investments for the next few years.
In past recessions, investors were able to invest in foreign markets when the domestic economy slowed. The current crisis, however, is worldwide. In spite of the poor performance of the US economy, it still leads that of most of other nations. Russia, Venezuela, and other oil producers have been hit hard by the collapse of oil prices. European nations have banking problems similar to ours and many are constructing their own bailout plans. Countries that depend heavily on US imports, such as China, are suffering from diminished US consumer demand.
On the other hand, a slowing economy does offer some opportunities. As more Americans make do with less, discount retailers are likely to do well. Family Dollar (FDO) is currently trading near its 52 week high, as is Dollar Tree (DLTR). McDonalds (MCD) is another company that has thus far done well in the crisis as people forgo expensive restaurants for the dollar menu.
Another likely growth sector is green energy. Obama’s energy policy will be to force a change from traditional sources of energy to new ones such as wind and solar. Carbon based energy, such as coal and oil, will be targeted by the federal government. During the campaign, Obama himself predicted that his policies would bankrupt companies that try to operate coal power plants. Similarly, companies that focus on ethanol, fuel cells, and hybrid technologies will be good bets. Even if they are not profitable on their own terms, they will be likely to receive substantial government subsidies and contracts.
To make wise investment choices, we must also consider the likelihood of either deflation or inflation. Currently, with a backlog of production, rising unemployment, and flagging consumer confidence, deflation is a threat. Increased government spending can also cause deflation since the government is competing with the private sector for money and, in effect, reducing the money supply.
Deflation occurs when people stop spending, causing the value of goods and services to decline. This may seem like a good thing when prices start to decline until you realize that the value of your property and your savings is declining as well. As goods pile up, companies cut production and lay off workers. Since consumers have less money to spend, they buy even less and more goods pile up. The cycle is a vicious one that can be hard to break. Deflation plagued both the US under the New Deal and Japan in the 1990s.
If the economy does slide into deflation, the values of almost all investments will decline. In a deflationary economy, real estate, commodities, stocks, and bonds are all poor investments. The best investment choice for a deflationary economy is to hold on to your cash.
On the other hand, inflation occurs when prices rise. Many economists believe that inflation is likely in the long term due to large government spending programs funded by debt. To service the interest on this massive debt, the government is likely to have problems generating enough revenue from the sale of government bonds. Other countries, such as China, that buy our debt have their own financial problems. Likewise, US citizens are also saddled with debt and have little left over to invest. If the government cannot raise cash through the sale of bonds, they will be left with little choice but to print more money or default on their loans.
When the government prints more money, basic economics tells us that as the money supply increases, the price (value) of the dollar will decrease. A dollar will buy less and the price of goods will increase. In our recent history, the 1970s was a time of rising inflation and, due to the high cost of capital, stagnant growth. The combination was referred to as “stagflation.” Inflation and unemployment figures were combined into a “misery index” that topped 20% by the time President Carter left office.
While deflation is likely in the short term, it is likely that we will face inflation in the long term. While an inflated dollar might make it easier to repay loans, it also erodes the value of savings and investments. People on fixed incomes are also hurt because their cash flow stream may not be indexed for the real rate of inflation.
In times of inflation, since prices tend to rise, the best investment strategy is to buy things. This strategy works from household items to real estate and commodities. For example, if you know that prices are going to rise and you know that your children will need new clothes and shoes for school next year, you would be better off to buy now before the price rises. Similarly, buying a house at the onset of an inflationary period will see an increase in the value of the house due to the inflationary decline of the dollar.
Commodities, particularly gold, are a traditional refuge during times of inflation. Gold is touted as a hedge against inflation, but because it is a high profile commodity often carries an extra expense. The price of gold is also sometimes manipulated by governments because it is often seen as a referendum on the economy.
Oil is another commodity that traditionally does well during times of inflation. Oil is currently trading at $44 per barrel, down from a high of nearly $150 per barrel in the summer of 2008. A big part of oil’s collapse was due to declining demand as the world’s economy began grinding to a halt. As the recovery eventually begins, demand will increase and the price of oil will recover. Regardless of Obama’s push for alternate energy, most of the world will run on oil for a long time to come.
One final consideration for investing during Obama’s tenure is taxes. Obama has been open about his plans to raise taxes on upper-income taxpayers and it is extremely likely that middle-income families will soon face an increased tax burden as well. Investors should take this into account. Individual Retirement Accounts (IRAs) offer a common means of deferring taxes. Investors should also keep in mind that there are likely to be drastic changes to the tax code. Many tax shelters and deductions are likely to be eliminated as the government tries to increase revenue.
Regardless of how the economy performs, one smart use of your money is to get yourself out of debt. With fewer monthly obligations to meet, you will have more disposable income with which to handle whatever life throws at you. Instead of paying interest to a lender, you’ll either be able to collect interest on investments or buy goods that will appreciate in value. In a time of uncertainty, preparation and savings is the smartest investment.
Disclaimer: I am not a licensed financial advisor. Consult your professional financial advisor before making changes to your portfolio.
Sources:
www.Inflationdata.com
3/2/09
Newark NJ
A big question on the minds of most investors is whether to ride out the crashing market or to try and salvage what remains of their portfolios. Since the financial crisis began in September 2008, the Dow Jones Industrial Average has fallen from a high above 13,000 to below 6,800 in trading today (3/2/09). If you are still in the market, you have probably seen a loss of approximately half the value of your portfolio.
A good strategy depends on the length of time that you have to recoup your losses. Historically, the stock market always shows a profit over time. Even in the stock market crash of 1929, when the Dow fell from 380 to 42 as the US entered the Great Depression, the stocks eventually regained their value. The down side is that this takes time. The market did not recover to its pre-1929 values until the late 1950s.
President Obama is following a set of policies that is very similar to those enacted by President Roosevelt in the 1930s and the government of Japan in the 1990s. In both cases, the increased government spending, higher taxes, and increased regulation led to a deeper recession and a slow recovery that took in excess of ten years. What we can learn from this is that, in all likelihood, we may not recover our past losses until 2030.
President Obama’s stimulus and bailouts have not stopped Wall Street’s freefall. With every new bailout and nationalization, the market falls further. Since there is no end in sight to government dabbling in the economy, there is also no bottom in sight to market losses.
If you are someone who needs your investment money in the short term, up to ten years from now, my recommendation is that you consider cutting your losses and get out of the stock market. Your current losses will become permanent, but you will preserve what you have left.
On the other hand, if you will not need your money for twenty to thirty years and are somewhat risk tolerant, you should consider staying in the market. The economy is cyclical and, in spite of everything that we can throw against it, it will recover in time. If a substantial change in government policy occurs over the next few years, the recovery might be sooner and sharper than anyone imagines.
For investors with a middle range outlook, from ten to twenty years, you should talk with your investment advisor about moving at least part of your portfolio to more conservative, less risky investments. You will lock in some losses, but you will also preserve more of your cash in the event of a long recovery.
The next question is what does constitute a safe and conservative investment in this economic climate. To answer this, we should look at what President Obama has announced as his intentions as well as what he has already done in his first six weeks in office. His banking polices, including government purchases of bank stock, have caused the value of bank stocks to crash. Auto stocks have fallen amid government bailouts and increased government control of the industry. Obama’s cap-and-trade energy tax will likely hurt traditional energy companies as well as the many businesses whose operations require energy to produce and transport their products. Health care is likely to be a target for nationalization or price controls in the near future. All of these sectors are likely to be poor investments for the next few years.
In past recessions, investors were able to invest in foreign markets when the domestic economy slowed. The current crisis, however, is worldwide. In spite of the poor performance of the US economy, it still leads that of most of other nations. Russia, Venezuela, and other oil producers have been hit hard by the collapse of oil prices. European nations have banking problems similar to ours and many are constructing their own bailout plans. Countries that depend heavily on US imports, such as China, are suffering from diminished US consumer demand.
On the other hand, a slowing economy does offer some opportunities. As more Americans make do with less, discount retailers are likely to do well. Family Dollar (FDO) is currently trading near its 52 week high, as is Dollar Tree (DLTR). McDonalds (MCD) is another company that has thus far done well in the crisis as people forgo expensive restaurants for the dollar menu.
Another likely growth sector is green energy. Obama’s energy policy will be to force a change from traditional sources of energy to new ones such as wind and solar. Carbon based energy, such as coal and oil, will be targeted by the federal government. During the campaign, Obama himself predicted that his policies would bankrupt companies that try to operate coal power plants. Similarly, companies that focus on ethanol, fuel cells, and hybrid technologies will be good bets. Even if they are not profitable on their own terms, they will be likely to receive substantial government subsidies and contracts.
To make wise investment choices, we must also consider the likelihood of either deflation or inflation. Currently, with a backlog of production, rising unemployment, and flagging consumer confidence, deflation is a threat. Increased government spending can also cause deflation since the government is competing with the private sector for money and, in effect, reducing the money supply.
Deflation occurs when people stop spending, causing the value of goods and services to decline. This may seem like a good thing when prices start to decline until you realize that the value of your property and your savings is declining as well. As goods pile up, companies cut production and lay off workers. Since consumers have less money to spend, they buy even less and more goods pile up. The cycle is a vicious one that can be hard to break. Deflation plagued both the US under the New Deal and Japan in the 1990s.
If the economy does slide into deflation, the values of almost all investments will decline. In a deflationary economy, real estate, commodities, stocks, and bonds are all poor investments. The best investment choice for a deflationary economy is to hold on to your cash.
On the other hand, inflation occurs when prices rise. Many economists believe that inflation is likely in the long term due to large government spending programs funded by debt. To service the interest on this massive debt, the government is likely to have problems generating enough revenue from the sale of government bonds. Other countries, such as China, that buy our debt have their own financial problems. Likewise, US citizens are also saddled with debt and have little left over to invest. If the government cannot raise cash through the sale of bonds, they will be left with little choice but to print more money or default on their loans.
When the government prints more money, basic economics tells us that as the money supply increases, the price (value) of the dollar will decrease. A dollar will buy less and the price of goods will increase. In our recent history, the 1970s was a time of rising inflation and, due to the high cost of capital, stagnant growth. The combination was referred to as “stagflation.” Inflation and unemployment figures were combined into a “misery index” that topped 20% by the time President Carter left office.
While deflation is likely in the short term, it is likely that we will face inflation in the long term. While an inflated dollar might make it easier to repay loans, it also erodes the value of savings and investments. People on fixed incomes are also hurt because their cash flow stream may not be indexed for the real rate of inflation.
In times of inflation, since prices tend to rise, the best investment strategy is to buy things. This strategy works from household items to real estate and commodities. For example, if you know that prices are going to rise and you know that your children will need new clothes and shoes for school next year, you would be better off to buy now before the price rises. Similarly, buying a house at the onset of an inflationary period will see an increase in the value of the house due to the inflationary decline of the dollar.
Commodities, particularly gold, are a traditional refuge during times of inflation. Gold is touted as a hedge against inflation, but because it is a high profile commodity often carries an extra expense. The price of gold is also sometimes manipulated by governments because it is often seen as a referendum on the economy.
Oil is another commodity that traditionally does well during times of inflation. Oil is currently trading at $44 per barrel, down from a high of nearly $150 per barrel in the summer of 2008. A big part of oil’s collapse was due to declining demand as the world’s economy began grinding to a halt. As the recovery eventually begins, demand will increase and the price of oil will recover. Regardless of Obama’s push for alternate energy, most of the world will run on oil for a long time to come.
One final consideration for investing during Obama’s tenure is taxes. Obama has been open about his plans to raise taxes on upper-income taxpayers and it is extremely likely that middle-income families will soon face an increased tax burden as well. Investors should take this into account. Individual Retirement Accounts (IRAs) offer a common means of deferring taxes. Investors should also keep in mind that there are likely to be drastic changes to the tax code. Many tax shelters and deductions are likely to be eliminated as the government tries to increase revenue.
Regardless of how the economy performs, one smart use of your money is to get yourself out of debt. With fewer monthly obligations to meet, you will have more disposable income with which to handle whatever life throws at you. Instead of paying interest to a lender, you’ll either be able to collect interest on investments or buy goods that will appreciate in value. In a time of uncertainty, preparation and savings is the smartest investment.
Disclaimer: I am not a licensed financial advisor. Consult your professional financial advisor before making changes to your portfolio.
Sources:
www.Inflationdata.com
3/2/09
Newark NJ
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