Regulators investigating the collapse of MF Global have determined that the firm combined money between securities and futures accounts owned by customers, and transferred funds outside the country to at least one entity, a source said on Friday.

To view popup window put your cursor on the blue words

Days of Noah

“But as the days of Noe were, so shall also the coming of the Son of man be.”
—Matthew 24:37

Corruption

”The earth also was corrupt•Strongs 2040: haracç, haw-ras´; a primitive root; to pull down or in pieces, break, &ä destroy:—beat down, break (down, through), destroy, overthrow, pluck down, pull down, ruin, throw down, x utterly. before God,and the earth was filled with violence”.
—Gen 6:11

“The further we get into (the investigation) the more complex it is … but we’re making progress,” the source said, adding that the commingling and transferring of money is making it harder for regulators to determine what money belongs where.

MF Global took futures segregated money and put it into the account for customer securities, essentially mixing futures and securities that were both owned by customers, said an official familiar with the matter.

Until now, it was believed that only customer futures accounts were affected.

The source also told Reuters that MF Global had been using customer funds for “several days if not weeks” rather than just a few days before the firm collapsed.

Regulators had previously thought the firm was using customer funds on the Thursday and Friday before it filed for bankruptcy on October 31.

CME Group, the Chicago exchange where MF Global traded, said it had reviewed the company’s books a week before the bankruptcy and found no issues with the customer money.

If MF Global started improperly dipping into its customers’ accounts long before the firm’s collapse, the allegation would raise questions of why the regulators and auditors failed to spot such behavior.

Congress has already started asking questions about potential lapses in regulatory oversight of MF Global. The pressure on regulators would only increase if MF Global turns out to have misused customer funds over an extended period of time.

“Establishing the specifics of what happened is key to figuring out how the system failed and how to fix it going forward,” Republican Senator Chuck Grassley of Iowa said in a statement on Thursday. “Congress will need to keep drilling down.”

MF Global collapsed in late October after the firm was forced to reveal that it had made a $6.3 billion bet on European sovereign debt.

An effort to sell the firm failed, partially due to the revelation that hundreds of millions of dollars in customer money were not where they should have been.

Investigators such as the Commodity Futures Trading Commission have been scouring the company’s books, described as messy and unorganized, for the fund shortfall that has been estimated as much as $1.2 billion by the liquidating trustee..

However, regulators have been at odds with the trustee, believing that figure is too high.

(Additional reporting by Philip Shishkin; Editing by Gary Hill)

For Germans, the question isn’t whether to save the euro. It’s when to save the euro. For the rest of us, the question is whether the Germans will wait until it’s already too late.

To view popup window put your cursor on the blue words

Perplexity

“…upon the earth distress•Strongs 4928: sunoche, soon-okh-ay´; from 4912; restraint, i.e. (figuratively) anxiety: — anguish, distress. of nations, with perplexity•Strongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
•Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed….”
—Luke 21:25

Foretaste of Revelation

“And the ten horns which thou sawest are ten kings, which have received no kingdom as yet; but receive power as kings one hour with the beast.”
— Revelation 17:12

Over the course of dozens of interviews conducted in Berlin over the last few days, I’ve spoken to members of Angela Merkel’s government, members of the opposition Social Democrats, industrialists, and bankers. No one has evinced even the slightest willingness to see the euro zone crack apart. But nor have they quite said they’re willing to save it. Rather, they remain serenely confident that they will save it. But they don’t have a surefire strategy. They have a bet. A big one.

That’s really the key to understanding the German psychology on the euro. In America, we keep asking why they don’t join with the European Central Bank to end the run on the European periphery. The answer is simple: they don’t want to end the run on the European periphery. To them, the run on Italy and Greece and Portugal and Spain is a feature, not a bug. It’s leverage, and they want to use it.

Look how much it has already gotten them. Greece, Portugal, Italy and Ireland are working their way through stringent deficit-reduction plans. The widely disliked governments of Greece and Italy, which proved unequal to the task of fiscal reform, have been toppled. There is a good chance that the euro zone might become what Germany has always wanted it to be: a fiscal union, in which the members meet their deficit targets and reform their labor markets. And none of this would have happened without the markets making their run at the European periphery.

So to understand the German position, look at it from their perspective: Why in the world would Germany let up the pressure now? When they’re so close to amending the very treaty underlying the euro zone? When France has joined with them on a set of reforms? When the market is doing what the Germans never could?

I worry this makes the Germans sound like puppetmasters. They’re not. Many of their intended reforms are very sensible. The flaws they point to in the euro zone are, indeed, deep, structural flaws in the euro zone. They do envision a future that includes sacrifice on their part: eurobonds that raise Germany’s cost of borrowing and a bailout fund — excuse me, a fiscal stabilization fund — that they contribute heavily to.

So my concern isn’t that the Germans are selfish and calculating. It’s that, without quite realizing it, they have become reckless. They are trying to time the market, betting that they can, in essence, manage the run — that they can do just enough to keep the pressure on without letting matters get totally out of hand. They are like a doctor who, faced with an unhealthy patient presenting signs of a heart attack, demands to see the patient lose weight before they will administer the life-saving treatment.

In almost all of their arguments, the Germans are right. The euro does need to be fixed. But first it needs to be saved. The Germans are betting that this is their opportunity to do both. If they’re right, it will have been a remarkable play. If they’re wrong, it will have been a disastrous one.

The Chinese have called it their “Underground Great Wall” — a vast network of tunnels designed to hide their country’s increasingly sophisticated missile and nuclear arsenal.

To view popup window put your cursor on the blue words

Perplexity

“…upon the earth distress•Strongs 4928: sunoche, soon-okh-ay´; from 4912; restraint, i.e. (figuratively) anxiety: — anguish, distress. of nations, with perplexity•Strongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
•Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed….”
—Luke 21:25

Kings of the East

“And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared.”
—Revelation 16:12

For the past three years, a small band of obsessively dedicated students at Georgetown University has called it something else: homework.
Led by their hard-charging professor, a former top Pentagon official, they have translated hundreds of documents, combed through satellite imagery, obtained restricted Chinese military documents and waded through hundreds of gigabytes of online data.
The result of their effort? The largest body of public knowledge about thousands of miles of tunnels dug by the Second Artillery Corps, a secretive branch of the Chinese military in charge of protecting and deploying its ballistic missiles and nuclear warheads.
The study is yet to be released, but already it has sparked a congressional hearing and been circulated among top officials in the Pentagon, including the Air Force vice chief of staff.
Most of the attention has focused on the 363-page study’s provocative conclusion — that China’s nuclear arsenal could be many times larger than the well-established estimates of arms-control experts.

“It’s not quite a bombshell, but those thoughts and estimates are being checked against what people think they know based on classified information,” said a Defense Department strategist who would discuss the study only on the condition of anonymity.
The study’s critics, however, have questioned the unorthodox Internet-based research of the students, who drew from sources as disparate as Google Earth, blogs, military journals and, perhaps most startlingly, a fictionalized TV docudrama about Chinese artillery soldiers — the rough equivalent of watching Fox’s TV show “24” for insights into U.S. counterterrorism efforts.

(Graphic: Evidence of China’s nuclear storage system)

But the strongest condemnation has come from nonproliferation experts who worry that the study could fuel arguments for maintaining nuclear weapons in an era when efforts are being made to reduce the world’s post-Cold War stockpiles.
Beyond its impact in the policy world, the project has made a profound mark on the students — including some who have since graduated and taken research jobs with the Defense Department and Congress.
“I don’t even want to know how many hours I spent on it,” said Nick Yarosh, 22, an international politics senior at Georgetown. “But you ask people what they did in college, most just say I took this class, I was in this club. I can say I spent it reading Chinese nuclear strategy and Second Artillery manuals. For a nerd like me, that really means something.”
For students, an obsession
The students’ professor, Phillip A. Karber, 65, had spent the Cold War as a top strategist reporting directly to the secretary of defense and the chairman of the Joint Chiefs of Staff. But it was his early work in defense that cemented his reputation, when he led an elite research team created by Henry Kissinger, who was then the national security adviser, to probe the weaknesses of Soviet forces.
Karber prided himself on recruiting the best intelligence analysts in the government. “You didn’t just want the highest-ranking or brightest guys, you wanted the ones who were hungry,” he said.
In 2008, Karber was volunteering on a committee for the Defense Threat Reduction Agency, a Pentagon agency charged with countering weapons of mass destruction.
After a devastating earthquake struck Sichuan province, the chairman of Karber’s committee noticed Chinese news accounts reporting that thousands of radiation technicians were rushing to the region. Then came pictures of strangely collapsed hills and speculation that the caved-in tunnels in the area had held nuclear weapons.
Find out what’s going on, the chairman asked Karber, who began looking for analysts again — this time among his students at Georgetown.
The first inductees came from his arms-control classes. Each semester, he set aside a day to show them tantalizing videos and documents he had begun gathering on the tunnels. Then he concluded with a simple question: What do you think it means?
“The fact that there were no answers to that really got to me,” said former student Dustin Walker, 22. “It started out like any other class, tests on this day or that, but people kept coming back, even after graduation. . . . We spent hours on our own outside of class on this stuff.”
The students worked in their dorms translating military texts. They skipped movie nights for marathon sessions reviewing TV clips of missiles being moved from one tunnel structure to another. While their friends read Shakespeare, they gathered in the library to war-game worst-case scenarios of a Chinese nuclear strike on the United States.
Over time, the team grew from a handful of contributors to roughly two dozen. Most spent their time studying the subterranean activities of the Second Artillery Corps.
While the tunnels’ existence was something of an open secret among the handful of experts studying China’s nuclear arms, almost no papers or public reports on the structures existed.
So the students turned to publicly available Chinese sources — military journals, local news reports and online photos posted by Chinese citizens. It helped that China’s famously secretive military was beginning to release more information, driven by its leaders’ eagerness to show off China’s growing power to its citizens.
The Internet also generated a raft of leads: new military forums, blogs and once-obscure local TV reports now posted on the Chinese equivalents of YouTube. Strategic string searches even allowed the students to get behind some military Web sites and download documents such as syllabuses taught at China’s military academies.
Drudgery and discoveries
The main problem was the sheer amount of translation required.
Each semester, Karber managed to recruit only one or two Chinese-speaking students. So the team assembled a makeshift system to scan images of the books and documents they found. Using text-capture software, they converted those pictures into Chinese characters, which were fed into translation software to produce crude English versions. From those, they highlighted key passages for finer translation by the Chinese speakers.
The downside was the drudgery — hours feeding pages into the scanner. The upside was that after three years, the students had compiled a searchable database of more than 1.4 million words on the Second Artillery and its tunnels.
By combining everything they found in the journals, video clips, satellite imagery and photos, they were able to triangulate the location of several tunnel structures, with a rough idea of what types of missiles were stored in each.
Their work also yielded smaller revelations: how the missiles were kept mobile and transported from structure to structure, as well as tantalizing images and accounts of a “missile train” and disguised passenger rail cars to move China’s long-range missiles.
To facilitate the work, Karber set up research rooms for the students at his home in Great Falls. He bought Apple computers and large flat-screen monitors for their video work and obtained small research grants for those who wanted to work through the summer. When work ran late, many crashed in his basement’s spare room.
“I got fat working on this thing because I didn’t go to the gym anymore. It was that intense,” said Yarosh, who has continued on the project this year not for credit but purely as a hobby. “It’s not the typical college course. Dr. Karber just tells you the objective and gives you total freedom to figure out how to get there. That level of trust can be liberating.”
Some of the biggest breakthroughs came after members of Karber’s team used personal connections in China to obtain a 400-page manual produced by the Second Artillery and usually available only to China’s military personnel.
Another source of insight was a pair of semi-fictionalized TV series chronicling the lives of Second Artillery soldiers.
The plots were often overwrought with melodrama — one series centers on a brigade commander who struggles to whip his slipshod unit into shape while juggling relationship problems with his glamorous Olympic-swim-coach girlfriend. But they also included surprisingly accurate depictions of artillery units’ procedures that lined up perfectly with the military manual and other documents.
“Until someone showed us on screen how exactly these missile deployments were done from the tunnels, we only had disparate pieces. The TV shows gave us the big picture of how it all worked together,” Karber said.
A bigger Chinese arsenal?
In December 2009, just as the students began making progress, the Chinese military admitted for the first time that the Second Artillery had indeed been building a network of tunnels. According to a report by state-run CCTV, China had more than 3,000 miles of tunnels — roughly the distance between Boston and San Francisco — including deep underground bases that could withstand multiple nuclear attacks.
The news shocked Karber and his team. It confirmed the direction of their research, but it also highlighted how little attention the tunnels were garnering outside East Asia.
The lack of interest, particularly in the U.S. media, demonstrated China’s unique position in the world of nuclear arms.
For decades, the focus has been on the two powers with the largest nuclear stockpiles by far — the United States, with 5,000 warheads available for deployment, and Russia, which has 8,000.
But of the five nuclear weapons states recognized by the Non-Proliferation Treaty, China has been the most secretive. While the United States and Russia are bound by bilateral treaties that require on-site inspections, disclosure of forces and bans on certain missiles, China is not.
The assumption for years has been that the Chinese arsenal is relatively small — anywhere from 80 to 400 warheads.
China has encouraged that perception. As the only one of the five original nuclear states with a no-first-use policy, it insists that it keeps a small stockpile only for “minimum deterrence.”
Given China’s lack of transparency, Karber argues, all the experts have to work with are assumptions, which can often be dead wrong. As an example, Karber often recounts to his students his experience of going to Russia with former defense secretary Frank C. Carlucci to discuss U.S. help in securing the Russian nuclear arsenal.
The United States had offered Russia about 20,000 canisters designed to safeguard warheads — a number based on U.S. estimates at the time.
The generals told Karber they needed 40,000.
Skepticism among analysts
At the end of the tunnel study, Karber cautions that the same could happen with China. Based on the number of tunnels the Second Artillery is digging and its increasing deployment of missiles, he argues, China’s nuclear warheads could number as many as 3,000.
It is an assertion that has provoked heated responses from the arms-control community.
Gregory Kulacki, a China nuclear analyst at the Union of Concerned Scientists, publicly condemned Karber’s report at a recent lecture in Washington. In an interview afterward, he called the 3,000 figure “ridiculous” and said the study’s methodology — especially its inclusion of posts from Chinese bloggers — was “incompetent and lazy.”
“The fact that they’re building tunnels could actually reinforce the exact opposite point,” he argued. “With more tunnels and a better chance of survivability, they may think they don’t need as many warheads to strike back.”
Reaction from others has been more moderate.
“Their research has value, but it also shows the danger of the Internet,” said Hans M. Kristensen of the Federation of American Scientists. Kristensen faulted some of the students’ interpretation of the satellite images.
“One thing his report accomplishes, I think, is it highlights the uncertainty about what China has,” said Mark Stokes, executive director of the Project 2049 Institute, a think tank. “There’s no question China’s been investing in tunnels, and to look at those efforts and pose this question is worthwhile.”
This year, the Defense Department’s annual report on China’s military highlighted for the first time the Second Artillery’s work on new tunnels, partly a result of Karber’s report, according to some Pentagon officials. And in the spring, shortly before a visit to China, some in the office of then-Defense Secretary Robert M. Gates were briefed on the study.
“I think it’s fair to say senior officials here have keyed upon the importance of this work,” said one Pentagon officer who was not authorized to speak on the record.
For Karber, provoking such debate means that he and his small army of undergrads have succeeded.
“I don’t have the slightest idea how many nuclear weapons China really has, but neither does anyone else in the arms-control community,” he said. “That’s the problem with China — no one really knows except them.”

Now is a particularly dangerous moment for American national security interests. It’s not just because threats are growing. It’s not just because the current administration is making a historic bungle from China to Iraq to Iran to Russia to Europe to Mexico to our historic allies in the Middle East – both Jewish and Muslim. All that would be bad enough.

To view popup window put your cursor on the blue words

Perplexity

“…upon the earth distress•Strongs 4928: sunoche, soon-okh-ay´; from 4912; restraint, i.e. (figuratively) anxiety: — anguish, distress. of nations, with perplexity•Strongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
•Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed….”
—Luke 21:25

Kings of the East

“And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared.”
—Revelation 16:12

But the greatest threat to our national security at the moment is the manifest indifference of the voting public to these foreign threats – and the silence on them from our alleged leaders. It’s understandable.

The devil has our economy by the throat, and Americans (when they think about politics) are focused on what Washington should do – or should stop doing – to defeat our domestic economic threat.

Obviously, the public is in no mood to go looking for foreign devils. Every 27-year-old junior Washington political operative knows this is a political season to advise candidates to talk about jobs , jobs, jobs. And they should.

But it is precisely when the public cries out for taking care at home that true statesmen must stand up and warn of foreign dangers brewing. A few Republican senators are trying to be heard, warning the public of the dangerous consequences of a predatory China, the further weakening of our military and the White House’s retreat from Iraq. But there is little evidence that the public – even the GOP public – cares much.

For example, in a matter of weeks, the congressional supercommittee assigned to reduce the deficit will determine whether it gets its job done or pulls the trigger that would cut defense spending another $600 billion.

If such a cut were to be carried out, it could by itself determine – adversely to America – the coming geostrategic struggle between the U.S. and China. To contain Chinese ambitions, we are going to need, among other things, a much stronger Navy, not a much weaker one. Of course, navies take years to build up (they can be sunk or turned to rust more quickly) and such a drastic budget cut inevitably would reduce our Navy to ineffectiveness in East Asia.

Last week, the supercommittee and the nation should have heard – but did not – a rousing warning cry about China and explicitly connected it to the $600 billion cut.

What am I talking about, you might wonder? Last week, as Europe struggled to raise sufficient cash to manage the Greek debt default, European leaders sent an emissary to China to seek money. Der Speigel, the leading German newsmagazine, reported: “One day after European leaders announced a plan to boost their euro backstop fund to 1 trillion euros, China indicated it may attach conditions to any money it invests. One of those stipulations – that Europe stop criticizing Beijing’s monetary policy – could strain trans-Atlantic relations.”

The price of Chinese money will be European silence on China’s predatory trade practices. The Der Speigel quote suggested that such a demand would strain trans-Atlantic – that is, U.S.-European – relations.

Yet not a peep was heard from our government or, to the best of my knowledge, from any senior Washington politician of either party.

This should have sent shock waves across America. It also should have been thrown down at the door of the supercommittee as a warning not to disembowel our defense budget in the face of the coming danger.

The very mention of the idea that Europe, with a quarter of the world’s economic activity, might agree to be silenced in what probably will be the No. 1 international issue of the next decade – Chinese economic predation – should have set off alarm bells. It also strongly suggests a greater burden that may fall on our military and naval capacity.

Of course, the Chinese have good reason to expect such passivity. As the British Oxford scholar Nigel Cliff recounts in his current book, “Holy War”: “Between 1405 and 1433 the Ming emperors staged a spectacular piece of seaborne theater. Seven floating embassies had arrived in the Indian Ocean under the command of Admiral Zheng He. … The First fleet alone comprised 317 ships manned by 27,870 sailors, soldiers, merchants, physicians, astrologers and artisans. At its head were 62 nine-masted treasure ships, and yet in a display of munificence that would have utterly baffled Europeans, the ships were designed not to receive treasure but to dispense it. As they sailed into the harbors … they disgorged huge quantities of silks, porcelain, gold and silver wares and other marvels of Chinese manufacturing. Such terrifying munificence invariably had the intended effect: In the space of a few years, the envoys of 37 nations rushed to pay homage to the emperor at Beijing.”

It may not be popular at the moment for our elected and aspiring officials to warn a threadbare public that we will have to spend more, not less, on our defense if we are to guard our freedoms and future prosperity.

But giving the public hard advice in hard times is what distinguishes temporarily unpopular statesmen from historically reviled political hacks.

Tony Blankley is the author of “American Grit: What It Will Take to Survive and Win in the 21st Century” (Regnery, 2009) and vice president of the Edelman public relations firm in Washington.

When China announced a nearly $600 billion package to ward off the 2008 global financial crisis, city planners across the country happily embarked on a frenzy of infrastructure projects, some of them of arguable need.

To view popup window put your cursor on the blue words

Perplexity

“…upon the earth distress•Strongs 4928: sunoche, soon-okh-ay´; from 4912; restraint, i.e. (figuratively) anxiety: — anguish, distress. of nations, with perplexity•Strongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
•Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed….”
—Luke 21:25

Kings of the East

“And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared.”
—Revelation 16:12

Chengdu, the capital of southwestern Sichuan province, answered the call for stimulus action with a bold plan for a railway hub modeled after Waterloo railway station in London.

Except London’s Waterloo was not ambitious enough.

“I was shocked when I finally got to visit Waterloo. It was so small,” said Chen Jun, a director at Chengdu Communications Investment Group, which built the new Chinese terminal. “I realized we would probably need a station a few times bigger to meet the demands of our city.”

In a manner typical of many infrastructure projects in China, Chengdu more than doubled the size of its planned transport hub, borrowed 3 billion yuan ($473 million) from a state bank to finance it, then set out on a blistering construction timeline that saw the finishing touches put on the project two years later.

But instead of getting the accolades they expected for helping to stimulate the economy, Chengdu Communications and many of China’s 10,000 local government financing vehicles (LGFV) have now come under a harsh spotlight for the grim side-effects of the construction binge.

China’s local governments have piled up a mountain of bad debt, some of it to finance bridges to nowhere and other white elephant projects, which now threatens to constrict growth at a time when the global economy is sputtering. It is adding to other systemic risks in China, including a sharp downturn in the property market and a rapid rise in problematic loans.

Local governments had amassed 10.7 trillion yuan in debt at the end of 2010. The government expects 2.5 to 3 trillion yuan of that will turn sour, while Standard and Chartered reckons as much as 8 to 9 trillion yuan will not be repaid — or about $1.2 trillion to $1.4 trillion.

In other words, the potential debt defaults could be even larger than the $700 billion U.S. bail-out programme during the 2008 crisis.

Reuters reported in mid-year the government was working on a relief plan for local governments, including allowing them to tap the municipal bond market for the first time as an alternative to bank loans, which are becoming harder to get.

The risks of default are rising. Nearly 85 percent of the local government finance vehicle loans in northeast Liaoning province, for instance, missed debt service payments in 2010, an audit report posted on the Liaoning Daily website said.

But in visits and interviews at city-run vehicles around China, officials appeared unworried. They say they were only following Beijing’s directives to keep growth on track, and the central government would surely step in to bail them out.

Perhaps their complacency is justified. Beijing, which holds more than $3 trillion in foreign exchange reserves, certainly has the resources to rescue them, and has done so in the past — it set up asset management companies to help China’s top banks clean up mountains of bad loans in the late 1990s.

But China is also vulnerable to a global downturn, and would need every piece of its economy performing well to avoid a serious slump. The infrastructure boom insulated the economy from a collapse in exports in 2008. Beijing has less firepower now. Inflation is uncomfortably high, and dumping more money into the economy would only make things worse.

Barclays Capital has predicted a global recession would trigger a “hard landing” in China, with gross domestic product sinking well below the 8 percent mark seen as the minimum for assuring enough job creation to keep up with urban migration.

A severe economic slump would depress land sales, a vital source of funding for local governments, and make their debt load even more precarious.

BUBBLE-SOME PROPERTY

In Chengdu, Chen leans back on a sofa in his office, smiles and readily concedes Chengdu will have big problems covering the bills for its version of the Waterloo train station.

“We’re still unable to reflect on our accounts the problems that may arise from our investments into Chengdu’s railroads,” Chen said. “What happens next is that we may face some trouble repaying our loans when many of them come due.”

Chengdu Communications had liabilities of 18.9 billion yuan at the end of 2010 against current assets valued at 11.7 billion yuan.

Chen is not unduly concerned. He thinks he has a solution, one local governments across China have also grasped: Real estate. Chen, the chairman of six other state companies in the city, intends to build huge residential and commercial projects around stations such as Waterloo — with borrowed money, of course.

The problem with that idea is that Beijing has been taking increasingly urgent steps to halt a speculative property boom and has told state banks to cut lending. Domestic investment — much of it in property and infrastructure development — accounted for 70 percent of China’s gross domestic product last year, a far bigger share than in developed economies.

According to the McKinsey Global Institute, the proportion of China’s total debt to gross domestic product was 159 percent at the end of 2008, before it began the massive stimulus programme that has racked up piles of local government debt.

Local governments have long had to tap other sources of income to supplement their meager share of the country’s taxes. Beijing controls the bulk of tax revenues to prevent local officials from spending wastefully, and as a way of redistributing wealth between poor and rich provinces.

So they raise money by selling or taxing property or borrowing money. They are barred from borrowing directly from banks as government entities, however, hence the proliferation of their financing vehicles.

Local officials have a strong interest in keeping property prices high, since it is a key source of revenue. China Real Estate Information Corp., a Shanghai-based property information and consulting firm, estimates 40 percent of local government revenue came from land sales last year. Land also is often used as collateral backing the loans to their financing vehicles.

So throughout China, a building boom financed with massive bank borrowing is being securitized by land prices that local governments fervently hope will stay high, even as Beijing tries to tamp them down.

“The underlying problem here is that local governments have a lot of expenditure mandates for infrastructure, for social services, and they don’t have enough regular revenue to cover it,” says economist Arthur Kroeber.

BRIDGE FINANCING

Wuhan, capital of central Hubei province, is known as one of China’s “four ovens”, cities where summertime temperatures can soar to 40 degrees Celsius. Its strategic location at the intersection of the Yangtze and Han rivers has made it a major transportation hub and in the past three years the city has been feverishly building bridges, railways and expressways.

Wuhan Urban Construction Investment and Development Co., the vehicle set up to finance much of this infrastructure, had taken out 68.5 billion yuan in bank loans as of September 2010, a sum far in excess of its operating cash flow of 148 million yuan.

Perhaps for that reason, city officials found a novel if unpopular way to pay for the three new bridges they have built across the Yangtze, adding to the seven already spanning the world’s third-longest river after the Amazon and Nile.

Besides the usual bridge tolls, Wuhan requires residents with cars to cross them at least 18 days a month, at 16 yuan a round trip.

The city of 9.8 million is expanding its subway system by adding another 215 km of track by 2017, with financing coming from big state-owned banks. Like other cities, Wuhan is counting on land sales and to secure the loans. Its land authority says land prices for high-end residential property have more than doubled since 2004 to 11,635 yuan per square meter today, despite a proliferation of housing developments.

For that reason, investment bank Credit Suisse called Wuhan one of China’s “top 10 cities to avoid”, warning in a report this year it would take eight years to sell off its existing housing stock, let alone the tens of thousands under construction.

Wuhan Urban Construction Investment and Development is the largest government financing vehicle in the city, employing 16,000 workers and sitting atop total assets of 120 billion yuan.

Despite its debt woes, Shen Zhizhong, a deputy director at the vehicle’s media office, argued his firm should not be blamed for the profusion of red ink.

“What we do is all decided by the government. We don’t have any project that belongs to us,” Shen said, adding it was “unscientific” to ask his company how Wuhan plans to pay off its debt. “We are like a sportsman, not a coach or a referee. How can you ask a sportsman something only known by a coach or a referee?”

After building the roads, railways and bridges that China said were so desperately needed just a few years ago, the financing vehicles now resent being made scapegoats for the mounting risk in the financial system.

NO WORRIES

Chengdu and Wuhan officials insist their own books are fine; the problem lies elsewhere.

Zeng Mingyou, head of Chengdu’s economic planning department, said despite a mounting debt load the city was controlling expenses and managing risks.

“What is important is that we have risk control measures in place,” said “Compared to other cities, Chengdu has very good controls in place.”

The Chengdu government began reining in its financing vehicles about three years ago after it discovered highways were being built across farmland where there was no traffic, Zeng said.

He also said the city had stopped using land as collateral for infrastructure loans. “We can’t be taking all our land and using it to back up loans,” Zeng said. “At some point we’ll run out of land. This is why the focus now is on sustainable development.”

In Wuhan, Xie Zuohuai, deputy director of the media office at the Wuhan branch of China’s bank regulator, said his city, too, was exemplary when it comes to managing its debt.

“Wuhan is a model city in implementing Beijing’s rules of regulating local government debt,” he said in between lighting up cigarettes and stubbing them out in an overflowing ashtray. “I’m confident the central government will successfully manage risks,” Xie added, echoing a widespread perception that Beijing will come to their rescue if need be.

Any wave of defaults big enough to destabilise major banks or crimp the government’s finances could have consequences not only for China’s economy, but for global growth and financial markets as well.

That risk appears to be pretty low for now, given the strength of bank balance sheets. The banking system has a bad loan coverage ratio at the end of 2010 of 218 percent to cover any losses, up from 80 percent at the end of 2008 and 155 percent at the end of 2009.

Despite that strengthened treasure chest, bank executives in Beijing, Wuhan and Chengdu say they have stopped lending to local governments entirely, unless their projects have some guarantee of profitability or are too big and costly to scrap.

“Right now, most banks have cut off new loans to local government financing firms,” said a senior executive at a medium-sized bank in Beijing, who declined to be named because he was not authorised to speak on the matter.

The cities and financing vehicles themselves say credit is harder to come by.

“What the banks want to see now is a clear revenue stream,” said Chen at Chengdu Communications. “Loans for big projects like highways and railroads are now harder to get.”

For that reason, Chengdu Communications has become one the city’s biggest operators of petrol stations, and Chen says he has so far faced no problems trying to get a bank to finance new ones.

SHADOW BANKING

Local officials need to keep their economies humming because they largely earn their Communist Party stripes with projects that boost employment and growth. With the loan spigots being turned off to rein in bubbly property prices, they face the prospect of housing projects grinding to a halt.

Enter the “shadow bankers”. These are the underground lenders and trust companies who extend credit to people and companies that may not qualify for loans otherwise. They then slice and dice those loans into investment packages, akin to what American banks did with sub-prime mortgages for much of the past decade.

Credit Suisse last week described the burgeoning growth of informal lending as a “time bomb” that posed a bigger risk to the Chinese economy than even the local government debt pileup.

Credit Suisse estimated the size of China’s informal lending at up to 4 trillion yuan, equivalent to around 8 percent of above-board bank lending. Interest rates on these loans runs as high as 70 percent and they are expanding at an annual rate of about 50 percent.

The shadow bankers have lent 208 billion yuan to real estate developers so far this year, nearly as much as formal bank lending of 211 billion yuan. The risks, analysts say, is that even healthy developers become vulnerable to a liquidity crisis, given the short tenor and high rates of these loans.

Formal banks have transferred some risky loans off their balance sheets to the shadow banking industry. As a result, Fitch Ratings has warned, lending has not slowed down as much as official data suggests — and as Beijing would like.

Official banks have also been restructuring and reclassifying loans to dress up their books, analysts said. For example, they now get to classify local government borrowings as corporate loans, which allows them to set aside less in provisions and thus add to their quarterly earnings. According to Chinese media reports, banks plan to reclassify 2.8 trillion yuan worth of loans.

“Banks have to admit to some NPLs (non-performing loans), but they don’t want to admit it because regulators are allowing them to restructure these loans,” said Victor Shih, a professor at Northwestern University in Chicago who has written a book on China’s financial system.

“This is unlike the late 1990s when the government forced the banks to admit to a huge amount of non-performing loans. This time round, the strategy is just to not admit to NPLs.”

Such an arrangement appears to suit everyone. Beijing wants to keep the financial system from becoming destabilised, especially given the financial sector crises in the West. And local officials are keen to keep growth strong in the run-up to a critical Communist Party Congress next fall, when Party chief and President Hu Jintao is expected to hand power to younger leaders headed by the anointed next leader, Xi Jinping.

Whether they will also hand over a looming financial crisis to him as well remains to be seen.

(Additional reporting by Koh Gui Qing; editing by Brian Rhoads and Bill Tarrant)

China passed Japan in 2010 to become the world’s second-largest economy after the U.S., a historic shift that has drawn mixed emotions in the two Asian powers: resignation tinged with soul-searching in long-stagnant Japan, pride but also caution in an ascendant China wary of shouldering new global responsibilities.

To view popup window put your cursor on the blue words

Perplexity

“…upon the earth distress•Strongs 4928: sunoche, soon-okh-ay´; from 4912; restraint, i.e. (figuratively) anxiety: — anguish, distress. of nations, with perplexity•Strongs 640: aporia, ap-or-ee´-a; from the same as 639; a (state of) quandary:—perplexity.
•Strongs 639: aporeo, ap-or-eh´-o; from a compound of 1 (as a negative particle) and the base of 4198; to have no way out, i.e. be at a loss (mentally):— (stand in) doubt, be perplexed….”
—Luke 21:25

Kings of the East

And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared.”
—Revelation 16:12

The Japanese government made official the long-expected flip Monday morning in Tokyo, reporting that the economy shrank at a 1.1% annual rate for the last three months of the year, a period when China’s gross domestic product surged 9.8% from a year earlier. With those figures, Japan’s full-year GDP was $5.47 trillion—about 7% smaller than the $5.88 trillion China reported in January.

Both still remain considerably smaller than the American economy. Japan and China combined are still worth less than the U.S.’s 2010 GDP of $14.66 trillion. But the news marks the end of era. For nearly two generations, since overtaking West Germany in 1967, Japan stood solidly as the world’s No. 2 economy. The new rankings symbolize China’s rise and Japan’s decline as global growth engines.

For the U.S., while Japan was in some ways an economic rival, it also has been a geopolitical and military ally. China, however, is a potential challenger on all fronts.

China’s ascent has been the main source of popular legitimacy for the ruling Communist Party. But Beijing worries that the mantle of economic titan comes with unwanted obligations for a country still in many ways poor. “China Surpassing Japan to Become World’s Second Biggest Economy—But Not the Second Strongest,” said the headline on a recent article on the website of the People’s Daily, the party’s flagship newspaper.

In Japan, the moment is seen as another marker of an extended weakening. “It’s only natural that Japan would be overtaken considering China’s ballooning GDP and larger population,” Tokyo Gov. Shintaro Ishihara told reporters recently. The outspoken nationalist was once the proud voice of a cocky nation, co-authoring the bubble-era 1989 book, “The Japan That Can Say ‘No.’” Now, he talks about his country’s standing with a tinge of sadness. “It’s just unfortunate that various other signs of Japan’s decline stand out so much against that backdrop.”

The complex reactions in both countries reflect the fact that China still lags behind Japan in many respects—and the reality that their growing interdependence makes them partners as much as rivals.

China’s per capita income is still only a tenth of Japan’s. The World Bank estimates that more than 100 million Chinese citizens—nearly the size of Japan’s entire population—live on less than $2 a day. Robin Li, chief executive of Chinese Internet search giant Baidu Inc. notes: “There’s still the undeniably awkward fact that China still has yet to produce an enterprise with truly global influence commensurate with China’s rising power,” such as Toyota Motor Corp. or Sony Corp.

As many Japanese business leaders note, Japan’s economy would have been even weaker without exports to China and an influx of Chinese tourists. China surpassed the U.S. as Japan’s largest trading partner in 2009. “I expect China’s GDP to be double Japan’s” in about eight years, said 53-year-old Masayoshi Son, spokesman for a new generation of Japanese leaders as CEO of Softbank Corp., which has managed to grow amid the country’s decline. China’s rise also presents an opportunity: “If more Japanese companies also viewed this situation as something positive, Japan’s economic prospects would also brighten up.”

Japan’s economy minister Kaoru Yosano on Monday welcomed the Chinese ascendancy to No. 2. “For a neighbor country like us, it is something to celebrate that the Chinese economy is making a leap forward,” the minister said. He called China’s expansion “one of the cornerstones for simultaneous growth in the region.”

Still, there are clear strains, with historical tension lingering from Japan’s brutal wartime occupation, and China flexing newfound muscle against a weakened neighbor. The recent defining moment: last fall’s standoff over disputed islands near Taiwan, ending in Japan’s sudden release of an arrested Chinese fishing captain under pressure from Beijing, despite video evidence that the captain had violently charged a Japanese coast guard vessel.

The contrasting outlooks of an ascendant China and a declining Japan was evident in Nielsen Co.’s latest international consumer confidence survey of 52 countries released last month. Chinese consumers were among the most optimistic, with a “confidence index” of 100, compared with the global average of 90. Japan’s consumers tied with Romania’s for fourth most pessimistic, with an index of 54. (Americans stood between the two, with an index of 81.)

For Beijing, being No. 2 means, among other things, new clout. China has trumpeted its willingness to use its $2.85 trillion hoard of foreign-exchange reserves to help stabilize struggling countries such as Greece by purchasing their bonds. Officials have chastised Washington for monetary policies they say could endanger the value of China’s massive holdings of U.S. government debt.

But Beijing also suspects that developed countries want to use its rise to foist on it greater responsibilities in areas like carbon-emissions reduction and currency policy. When China’s GDP passed Japan’s on a quarterly basis last summer, official media outlets ran commentaries rebutting what they called “China responsibility theories” in the West exaggerating the country’s global role. The theories, one Chinese expert told the Xinhua news agency, “are fabricated to slow down and check China’s development.”

At home, the rise to No. 2 complicates the Communist Party’s national narrative, steeped in a sense of victimhood at the hands of foreign powers—not least 1930s Japan—that China is now overtaking. Party leaders are aware that China’s image as an economic powerhouse risks calling attention to the shortcomings of a country both powerful and poor.

So the government takes credit for China’s economic accomplishment while playing it down. When the National Bureau of Statistics reported China’s 2010 GDP last month, director Ma Jiantang was asked about the looming No. 2 milestone. The rise “is the result of hard struggle and continuous progress of the Chinese people under the leadership of the Communist Party,” he said—adding that China remains one of the world’s poorer countries on a per capita basis.

The official ambivalence is mirrored in China’s public reaction. “There might be people feeling thrilled about this, but I’m not one of them,” said Zheng Maohua, a 65-year-old retired government official in Beijing. The GDP landmark “can’t reflect the true situation of this society,” which he described as “rich country, poor people.”

In the 1980s and 1990s, Japan faced the same pressures China now fears, of global demands to shoulder extra responsibilities. China’s official rise to Asia’s top economy takes the spotlight off Tokyo. While still the oldest liberal democracy in East Asia and a cornerstone of the U.S. defense umbrella, Japan no longer faces the same pressure from Western peers to exercise “checkbook diplomacy” or open its markets—even though Japan’s trade surpluses with the U.S. remain high.

Some Japanese elites are wistful for those demands. “Some of us look back to the era of Japan-bashing with nostalgia,” says Takatoshi Ito, an economics professor at Tokyo University and a former top finance ministry official. “We were frustrated back then, but ignored is worse than being bashed.”

For others, the debate is on to define Japan’s role and image for the era of No. 3. One influential Japanese ruling-party politician, Renho, who uses only one name, touched a nerve last year with her book titled “Do We Have to Be No. 1?” It encouraged Japanese to take comfort in the notion that Japan need not be a leader in everything—or anything—to be considered successful.

Japan now is more focused on different, less-quantitative, ways of defining success. Its influence abroad remains extensive, and in some ways has grown. But it is more low-key, less directed in contentious areas of strategic technology and more in the realm of cultural diplomacy.

The notion of Japan as a center of creativity and innovation—in hybrid-engine-powered cars or 3-D videogames—contrasts with its image 20 years ago as a copycat that mimicked design and technology pioneered elsewhere, and then outpowered the original makers with superior manufacturing. That label is now attached more to China.

The Ministry of Economy, Trade and Industry—once famous for crafting an industrial policy that helped Japan’s manufacturers rule the world— has a new Creative Industries Promotion office designed to spread the appeal of anime cartoons, manga comics and Japanese videogames. “We see it as a matter of quality over quantity,” said Motohisa Ikeda, a vice minister for trade, noting Japan’s enduring prowess as a maker of high-value-added goods. “Japan is still a wealthy nation in many senses of the word.”

— Loretta Chao in Beijing
and Juro Osawa in Tokyo contributed to this article.

Read more: http://www.time.com/time/health/article/0,8599,2048138,00.html#ixzz1DaWC7d6a

On Feb. 15, 1965, a diffident but self-possessed high school student named Raymond Kurzweil appeared as a guest on a game show called I’ve Got a Secret. He was introduced by the host, Steve Allen, then he played a short musical composition on a piano. The idea was that Kurzweil was hiding an unusual fact and the panelists — they included a comedian and a former Miss America — had to guess what it was.

To view dictionary popup window put your cursor on the blue words

Knowledge Increased

“And the LORD said, Behold, the people is one, and they have all one language; and this they begin to do: and now nothing will be restrained from them, which they have imagined•Strongs 2161: zamam, zaw-mam´; a primitive root; to plan, usually in a bad sense:—consider, devise, imagine, plot, purpose, think (evil). to do.”
—Genesis 11:6

“Because that, when they knew God, they glorified him not as God, neither were thankful; but became vain•Strongs 3154: mataioo, mat-ah-yo´-o; from 3152; to render (passively, become) foolish, i.e. (morally) wicked or (specially), idolatrous:—become vain.
•Strongs 3152: mataios, mat´-ah-yos; from the base of 3155; empty, i.e. (literally) profitless, or (specially), an idol:—vain, vanity. in their imaginations•Strongs 1261: dialogismos, dee-al-og-is-mos´; from 1260; discussion, i.e. (internal) consideration (by implication, purpose), or (external) debate:—dispute, doubtful(-ing), imagination, reasoning, thought. , and their foolish heart was darkened.”
—Romans 1:21

“And he had power to give life unto the image•Strongs 1504: eikon, i-kone´; from 1503; a likeness, i.e. (literally) statue, profile, or (figuratively) representation, resemblance:—image. of the beast, that the image of the beast should both speak, and cause that as many as would not worship the image of the beast should be killed.”
—Revelation 13:15

On the show (you can find the clip on YouTube), the beauty queen did a good job of grilling Kurzweil, but the comedian got the win: the music was composed by a computer. Kurzweil got $200. (See TIME’s photo-essay “Cyberdyne’s Real Robot.”)

Kurzweil then demonstrated the computer, which he built himself — a desk-size affair with loudly clacking relays, hooked up to a typewriter. The panelists were pretty blasé about it; they were more impressed by Kurzweil’s age than by anything he’d actually done. They were ready to move on to Mrs. Chester Loney of Rough and Ready, Calif., whose secret was that she’d been President Lyndon Johnson’s first-grade teacher.

But Kurzweil would spend much of the rest of his career working out what his demonstration meant. Creating a work of art is one of those activities we reserve for humans and humans only. It’s an act of self-expression; you’re not supposed to be able to do it if you don’t have a self. To see creativity, the exclusive domain of humans, usurped by a computer built by a 17-year-old is to watch a line blur that cannot be unblurred, the line between organic intelligence and artificial intelligence.

That was Kurzweil’s real secret, and back in 1965 nobody guessed it. Maybe not even him, not yet. But now, 46 years later, Kurzweil believes that we’re approaching a moment when computers will become intelligent, and not just intelligent but more intelligent than humans. When that happens, humanity — our bodies, our minds, our civilization — will be completely and irreversibly transformed. He believes that this moment is not only inevitable but imminent. According to his calculations, the end of human civilization as we know it is about 35 years away. (See the best inventions of 2010.)

Computers are getting faster. Everybody knows that. Also, computers are getting faster faster — that is, the rate at which they’re getting faster is increasing.

True? True.

So if computers are getting so much faster, so incredibly fast, there might conceivably come a moment when they are capable of something comparable to human intelligence. Artificial intelligence. All that horsepower could be put in the service of emulating whatever it is our brains are doing when they create consciousness — not just doing arithmetic very quickly or composing piano music but also driving cars, writing books, making ethical decisions, appreciating fancy paintings, making witty observations at cocktail parties.

If you can swallow that idea, and Kurzweil and a lot of other very smart people can, then all bets are off. From that point on, there’s no reason to think computers would stop getting more powerful. They would keep on developing until they were far more intelligent than we are. Their rate of development would also continue to increase, because they would take over their own development from their slower-thinking human creators. Imagine a computer scientist that was itself a super-intelligent computer. It would work incredibly quickly. It could draw on huge amounts of data effortlessly. It wouldn’t even take breaks to play Farmville.

Probably. It’s impossible to predict the behavior of these smarter-than-human intelligences with which (with whom?) we might one day share the planet, because if you could, you’d be as smart as they would be. But there are a lot of theories about it. Maybe we’ll merge with them to become super-intelligent cyborgs, using computers to extend our intellectual abilities the same way that cars and planes extend our physical abilities. Maybe the artificial intelligences will help us treat the effects of old age and prolong our life spans indefinitely. Maybe we’ll scan our consciousnesses into computers and live inside them as software, forever, virtually. Maybe the computers will turn on humanity and annihilate us. The one thing all these theories have in common is the transformation of our species into something that is no longer recognizable as such to humanity circa 2011. This transformation has a name: the Singularity. (Comment on this story.)

The difficult thing to keep sight of when you’re talking about the Singularity is that even though it sounds like science fiction, it isn’t, no more than a weather forecast is science fiction. It’s not a fringe idea; it’s a serious hypothesis about the future of life on Earth. There’s an intellectual gag reflex that kicks in anytime you try to swallow an idea that involves super-intelligent immortal cyborgs, but suppress it if you can, because while the Singularity appears to be, on the face of it, preposterous, it’s an idea that rewards sober, careful evaluation.

See pictures of cinema’s most memorable robots.)

From TIME’s archives: “Can Machines Think?”

See TIME’s special report on gadgets, then and now.

People are spending a lot of money trying to understand it. The three-year-old Singularity University, which offers inter-disciplinary courses of study for graduate students and executives, is hosted by NASA. Google was a founding sponsor; its CEO and co-founder Larry Page spoke there last year. People are attracted to the Singularity for the shock value, like an intellectual freak show, but they stay because there’s more to it than they expected. And of course, in the event that it turns out to be real, it will be the most important thing to happen to human beings since the invention of language. (See “Is Technology Making Us Lonelier?”)

The Singularity isn’t a wholly new idea, just newish. In 1965 the British mathematician I.J. Good described something he called an “intelligence explosion”:

Let an ultraintelligent machine be defined as a machine that can far surpass all the intellectual activities of any man however clever. Since the design of machines is one of these intellectual activities, an ultraintelligent machine could design even better machines; there would then unquestionably be an “intelligence explosion,” and the intelligence of man would be left far behind. Thus the first ultraintelligent machine is the last invention that man need ever make.

The word singularity is borrowed from astrophysics: it refers to a point in space-time — for example, inside a black hole — at which the rules of ordinary physics do not apply. In the 1980s the science-fiction novelist Vernor Vinge attached it to Good’s intelligence-explosion scenario. At a NASA symposium in 1993, Vinge announced that “within 30 years, we will have the technological means to create super-human intelligence. Shortly after, the human era will be ended.”

By that time Kurzweil was thinking about the Singularity too. He’d been busy since his appearance on I’ve Got a Secret. He’d made several fortunes as an engineer and inventor; he founded and then sold his first software company while he was still at MIT. He went on to build the first print-to-speech reading machine for the blind — Stevie Wonder was customer No. 1 — and made innovations in a range of technical fields, including music synthesizers and speech recognition. He holds 39 patents and 19 honorary doctorates. In 1999 President Bill Clinton awarded him the National Medal of Technology. (See pictures of adorable robots.)

But Kurzweil was also pursuing a parallel career as a futurist: he has been publishing his thoughts about the future of human and machine-kind for 20 years, most recently in The Singularity Is Near, which was a best seller when it came out in 2005. A documentary by the same name, starring Kurzweil, Tony Robbins and Alan Dershowitz, among others, was released in January. (Kurzweil is actually the subject of two current documentaries. The other one, less authorized but more informative, is called The Transcendent Man.) Bill Gates has called him “the best person I know at predicting the future of artificial intelligence.”(See the world’s most influential people in the 2010 TIME 100.)

In real life, the transcendent man is an unimposing figure who could pass for Woody Allen’s even nerdier younger brother. Kurzweil grew up in Queens, N.Y., and you can still hear a trace of it in his voice. Now 62, he speaks with the soft, almost hypnotic calm of someone who gives 60 public lectures a year. As the Singularity’s most visible champion, he has heard all the questions and faced down the incredulity many, many times before. He’s good-natured about it. His manner is almost apologetic: I wish I could bring you less exciting news of the future, but I’ve looked at the numbers, and this is what they say, so what else can I tell you?

Kurzweil’s interest in humanity’s cyborganic destiny began about 1980 largely as a practical matter. He needed ways to measure and track the pace of technological progress. Even great inventions can fail if they arrive before their time, and he wanted to make sure that when he released his, the timing was right. “Even at that time, technology was moving quickly enough that the world was going to be different by the time you finished a project,” he says. “So it’s like skeet shooting — you can’t shoot at the target.” He knew about Moore’s law, of course, which states that the number of transistors you can put on a microchip doubles about every two years. It’s a surprisingly reliable rule of thumb. Kurzweil tried plotting a slightly different curve: the change over time in the amount of computing power, measured in MIPS (millions of instructions per second), that you can buy for $1,000.

As it turned out, Kurzweil’s numbers looked a lot like Moore’s. They doubled every couple of years. Drawn as graphs, they both made exponential curves, with their value increasing by multiples of two instead of by regular increments in a straight line. The curves held eerily steady, even when Kurzweil extended his backward through the decades of pretransistor computing technologies like relays and vacuum tubes, all the way back to 1900. (Comment on this story.)

Kurzweil then ran the numbers on a whole bunch of other key technological indexes — the falling cost of manufacturing transistors, the rising clock speed of microprocessors, the plummeting price of dynamic RAM. He looked even further afield at trends in biotech and beyond — the falling cost of sequencing DNA and of wireless data service and the rising numbers of Internet hosts and nanotechnology patents. He kept finding the same thing: exponentially accelerating progress. “It’s really amazing how smooth these trajectories are,” he says. “Through thick and thin, war and peace, boom times and recessions.” Kurzweil calls it the law of accelerating returns: technological progress happens exponentially, not linearly.

See TIME’s video “Five Worst Inventions.”

See the 100 best gadgets of all time.

Then he extended the curves into the future, and the growth they predicted was so phenomenal, it created cognitive resistance in his mind. Exponential curves start slowly, then rocket skyward toward infinity. According to Kurzweil, we’re not evolved to think in terms of exponential growth. “It’s not intuitive. Our built-in predictors are linear. When we’re trying to avoid an animal, we pick the linear prediction of where it’s going to be in 20 seconds and what to do about it. That is actually hardwired in our brains.”

Here’s what the exponential curves told him. We will successfully reverse-engineer the human brain by the mid-2020s. By the end of that decade, computers will be capable of human-level intelligence. Kurzweil puts the date of the Singularity — never say he’s not conservative — at 2045. In that year, he estimates, given the vast increases in computing power and the vast reductions in the cost of same, the quantity of artificial intelligence created will be about a billion times the sum of all the human intelligence that exists today. (See how robotics are changing the future of medicine.)

The Singularity isn’t just an idea. it attracts people, and those people feel a bond with one another. Together they form a movement, a subculture; Kurzweil calls it a community. Once you decide to take the Singularity seriously, you will find that you have become part of a small but intense and globally distributed hive of like-minded thinkers known as Singularitarians.

Not all of them are Kurzweilians, not by a long chalk. There’s room inside Singularitarianism for considerable diversity of opinion about what the Singularity means and when and how it will or won’t happen. But Singularitarians share a worldview. They think in terms of deep time, they believe in the power of technology to shape history, they have little interest in the conventional wisdom about anything, and they cannot believe you’re walking around living your life and watching TV as if the artificial-intelligence revolution were not about to erupt and change absolutely everything. They have no fear of sounding ridiculous; your ordinary citizen’s distaste for apparently absurd ideas is just an example of irrational bias, and Singularitarians have no truck with irrationality. When you enter their mind-space you pass through an extreme gradient in worldview, a hard ontological shear that separates Singularitarians from the common run of humanity. Expect turbulence.

In addition to the Singularity University, which Kurzweil co-founded, there’s also a Singularity Institute for Artificial Intelligence, based in San Francisco. It counts among its advisers Peter Thiel, a former CEO of PayPal and an early investor in Facebook. The institute holds an annual conference called the Singularity Summit. (Kurzweil co-founded that too.) Because of the highly interdisciplinary nature of Singularity theory, it attracts a diverse crowd. Artificial intelligence is the main event, but the sessions also cover the galloping progress of, among other fields, genetics and nanotechnology. (See TIME’s computer covers.)

At the 2010 summit, which took place in August in San Francisco, there were not just computer scientists but also psychologists, neuroscientists, nanotechnologists, molecular biologists, a specialist in wearable computers, a professor of emergency medicine, an expert on cognition in gray parrots and the professional magician and debunker James “the Amazing” Randi. The atmosphere was a curious blend of Davos and UFO convention. Proponents of seasteading — the practice, so far mostly theoretical, of establishing politically autonomous floating communities in international waters — handed out pamphlets. An android chatted with visitors in one corner.

After artificial intelligence, the most talked-about topic at the 2010 summit was life extension. Biological boundaries that most people think of as permanent and inevitable Singularitarians see as merely intractable but solvable problems. Death is one of them. Old age is an illness like any other, and what do you do with illnesses? You cure them. Like a lot of Singularitarian ideas, it sounds funny at first, but the closer you get to it, the less funny it seems. It’s not just wishful thinking; there’s actual science going on here.

For example, it’s well known that one cause of the physical degeneration associated with aging involves telomeres, which are segments of DNA found at the ends of chromosomes. Every time a cell divides, its telomeres get shorter, and once a cell runs out of telomeres, it can’t reproduce anymore and dies. But there’s an enzyme called telomerase that reverses this process; it’s one of the reasons cancer cells live so long. So why not treat regular non-cancerous cells with telomerase? In November, researchers at Harvard Medical School announced in Nature that they had done just that. They administered telomerase to a group of mice suffering from age-related degeneration. The damage went away. The mice didn’t just get better; they got younger. (Comment on this story.)

Aubrey de Grey is one of the world’s best-known life-extension researchers and a Singularity Summit veteran. A British biologist with a doctorate from Cambridge and a famously formidable beard, de Grey runs a foundation called SENS, or Strategies for Engineered Negligible Senescence. He views aging as a process of accumulating damage, which he has divided into seven categories, each of which he hopes to one day address using regenerative medicine. “People have begun to realize that the view of aging being something immutable — rather like the heat death of the universe — is simply ridiculous,” he says. “It’s just childish. The human body is a machine that has a bunch of functions, and it accumulates various types of damage as a side effect of the normal function of the machine. Therefore in principal that damage can be repaired periodically. This is why we have vintage cars. It’s really just a matter of paying attention. The whole of medicine consists of messing about with what looks pretty inevitable until you figure out how to make it not inevitable.”

Kurzweil takes life extension seriously too. His father, with whom he was very close, died of heart disease at 58. Kurzweil inherited his father’s genetic predisposition; he also developed Type 2 diabetes when he was 35. Working with Terry Grossman, a doctor who specializes in longevity medicine, Kurzweil has published two books on his own approach to life extension, which involves taking up to 200 pills and supplements a day. He says his diabetes is essentially cured, and although he’s 62 years old from a chronological perspective, he estimates that his biological age is about 20 years younger.

From TIME’s archives: “The Immortality Enzyme.”

See Healthland’s 5 rules for good health in 2011.

But his goal differs slightly from de Grey’s. For Kurzweil, it’s not so much about staying healthy as long as possible; it’s about staying alive until the Singularity. It’s an attempted handoff. Once hyper-intelligent artificial intelligences arise, armed with advanced nanotechnology, they’ll really be able to wrestle with the vastly complex, systemic problems associated with aging in humans. Alternatively, by then we’ll be able to transfer our minds to sturdier vessels such as computers and robots. He and many other Singularitarians take seriously the proposition that many people who are alive today will wind up being functionally immortal.

It’s an idea that’s radical and ancient at the same time. In “Sailing to Byzantium,” W.B. Yeats describes mankind’s fleshly predicament as a soul fastened to a dying animal. Why not unfasten it and fasten it to an immortal robot instead? But Kurzweil finds that life extension produces even more resistance in his audiences than his exponential growth curves. “There are people who can accept computers being more intelligent than people,” he says. “But the idea of significant changes to human longevity — that seems to be particularly controversial. People invested a lot of personal effort into certain philosophies dealing with the issue of life and death. I mean, that’s the major reason we have religion.” (See the top 10 medical breakthroughs of 2010.)

Of course, a lot of people think the Singularity is nonsense — a fantasy, wishful thinking, a Silicon Valley version of the Evangelical story of the Rapture, spun by a man who earns his living making outrageous claims and backing them up with pseudoscience. Most of the serious critics focus on the question of whether a computer can truly become intelligent.

The entire field of artificial intelligence, or AI, is devoted to this question. But AI doesn’t currently produce the kind of intelligence we associate with humans or even with talking computers in movies — HAL or C3PO or Data. Actual AIs tend to be able to master only one highly specific domain, like interpreting search queries or playing chess. They operate within an extremely specific frame of reference. They don’t make conversation at parties. They’re intelligent, but only if you define intelligence in a vanishingly narrow way. The kind of intelligence Kurzweil is talking about, which is called strong AI or artificial general intelligence, doesn’t exist yet.

Why not? Obviously we’re still waiting on all that exponentially growing computing power to get here. But it’s also possible that there are things going on in our brains that can’t be duplicated electronically no matter how many MIPS you throw at them. The neurochemical architecture that generates the ephemeral chaos we know as human consciousness may just be too complex and analog to replicate in digital silicon. The biologist Dennis Bray was one of the few voices of dissent at last summer’s Singularity Summit. “Although biological components act in ways that are comparable to those in electronic circuits,” he argued, in a talk titled “What Cells Can Do That Robots Can’t,” “they are set apart by the huge number of different states they can adopt. Multiple biochemical processes create chemical modifications of protein molecules, further diversified by association with distinct structures at defined locations of a cell. The resulting combinatorial explosion of states endows living systems with an almost infinite capacity to store information regarding past and present conditions and a unique capacity to prepare for future events.” That makes the ones and zeros that computers trade in look pretty crude. (See how to live 100 years.)

Underlying the practical challenges are a host of philosophical ones. Suppose we did create a computer that talked and acted in a way that was indistinguishable from a human being — in other words, a computer that could pass the Turing test. (Very loosely speaking, such a computer would be able to pass as human in a blind test.) Would that mean that the computer was sentient, the way a human being is? Or would it just be an extremely sophisticated but essentially mechanical automaton without the mysterious spark of consciousness — a machine with no ghost in it? And how would we know?

Even if you grant that the Singularity is plausible, you’re still staring at a thicket of unanswerable questions. If I can scan my consciousness into a computer, am I still me? What are the geopolitics and the socioeconomics of the Singularity? Who decides who gets to be immortal? Who draws the line between sentient and nonsentient? And as we approach immortality, omniscience and omnipotence, will our lives still have meaning? By beating death, will we have lost our essential humanity?

Kurzweil admits that there’s a fundamental level of risk associated with the Singularity that’s impossible to refine away, simply because we don’t know what a highly advanced artificial intelligence, finding itself a newly created inhabitant of the planet Earth, would choose to do. It might not feel like competing with us for resources. One of the goals of the Singularity Institute is to make sure not just that artificial intelligence develops but also that the AI is friendly. You don’t have to be a super-intelligent cyborg to understand that introducing a superior life-form into your own biosphere is a basic Darwinian error. (Comment on this story.)

If the Singularity is coming, these questions are going to get answers whether we like it or not, and Kurzweil thinks that trying to put off the Singularity by banning technologies is not only impossible but also unethical and probably dangerous. “It would require a totalitarian system to implement such a ban,” he says. “It wouldn’t work. It would just drive these technologies underground, where the responsible scientists who we’re counting on to create the defenses would not have easy access to the tools.”

Kurzweil is an almost inhumanly patient and thorough debater. He relishes it. He’s tireless in hunting down his critics so that he can respond to them, point by point, carefully and in detail.

See TIME’s photo-essay “A Global Look at Longevity.”

See how genes, gender and diet may be life extenders.

Take the question of whether computers can replicate the biochemical complexity of an organic brain. Kurzweil yields no ground there whatsoever. He does not see any fundamental difference between flesh and silicon that would prevent the latter from thinking. He defies biologists to come up with a neurological mechanism that could not be modeled or at least matched in power and flexibility by software running on a computer. He refuses to fall on his knees before the mystery of the human brain. “Generally speaking,” he says, “the core of a disagreement I’ll have with a critic is, they’ll say, Oh, Kurzweil is underestimating the complexity of reverse-engineering of the human brain or the complexity of biology. But I don’t believe I’m underestimating the challenge. I think they’re underestimating the power of exponential growth.”

This position doesn’t make Kurzweil an outlier, at least among Singularitarians. Plenty of people make more-extreme predictions. Since 2005 the neuroscientist Henry Markram has been running an ambitious initiative at the Brain Mind Institute of the Ecole Polytechnique in Lausanne, Switzerland. It’s called the Blue Brain project, and it’s an attempt to create a neuron-by-neuron simulation of a mammalian brain, using IBM’s Blue Gene super-computer. So far, Markram’s team has managed to simulate one neocortical column from a rat’s brain, which contains about 10,000 neurons. Markram has said that he hopes to have a complete virtual human brain up and running in 10 years. (Even Kurzweil sniffs at this. If it worked, he points out, you’d then have to educate the brain, and who knows how long that would take?) (See portraits of centenarians.)

By definition, the future beyond the Singularity is not knowable by our linear, chemical, animal brains, but Kurzweil is teeming with theories about it. He positively flogs himself to think bigger and bigger; you can see him kicking against the confines of his aging organic hardware. “When people look at the implications of ongoing exponential growth, it gets harder and harder to accept,” he says. “So you get people who really accept, yes, things are progressing exponentially, but they fall off the horse at some point because the implications are too fantastic. I’ve tried to push myself to really look.”

In Kurzweil’s future, biotechnology and nanotechnology give us the power to manipulate our bodies and the world around us at will, at the molecular level. Progress hyperaccelerates, and every hour brings a century’s worth of scientific breakthroughs. We ditch Darwin and take charge of our own evolution. The human genome becomes just so much code to be bug-tested and optimized and, if necessary, rewritten. Indefinite life extension becomes a reality; people die only if they choose to. Death loses its sting once and for all. Kurzweil hopes to bring his dead father back to life.

We can scan our consciousnesses into computers and enter a virtual existence or swap our bodies for immortal robots and light out for the edges of space as intergalactic godlings. Within a matter of centuries, human intelligence will have re-engineered and saturated all the matter in the universe. This is, Kurzweil believes, our destiny as a species. (See the costs of living a long life.)

Or it isn’t. When the big questions get answered, a lot of the action will happen where no one can see it, deep inside the black silicon brains of the computers, which will either bloom bit by bit into conscious minds or just continue in ever more brilliant and powerful iterations of nonsentience.

But as for the minor questions, they’re already being decided all around us and in plain sight. The more you read about the Singularity, the more you start to see it peeking out at you, coyly, from unexpected directions. Five years ago we didn’t have 600 million humans carrying out their social lives over a single electronic network. Now we have Facebook. Five years ago you didn’t see people double-checking what they were saying and where they were going, even as they were saying it and going there, using handheld network-enabled digital prosthetics. Now we have iPhones. Is it an unimaginable step to take the iPhones out of our hands and put them into our skulls?

Already 30,000 patients with Parkinson’s disease have neural implants. Google is experimenting with computers that can drive cars. There are more than 2,000 robots fighting in Afghanistan alongside the human troops. This month a game show will once again figure in the history of artificial intelligence, but this time the computer will be the guest: an IBM super-computer nicknamed Watson will compete on Jeopardy! Watson runs on 90 servers and takes up an entire room, and in a practice match in January it finished ahead of two former champions, Ken Jennings and Brad Rutter. It got every question it answered right, but much more important, it didn’t need help understanding the questions (or, strictly speaking, the answers), which were phrased in plain English. Watson isn’t strong AI, but if strong AI happens, it will arrive gradually, bit by bit, and this will have been one of the bits. (Comment on this story.)

A hundred years from now, Kurzweil and de Grey and the others could be the 22nd century’s answer to the Founding Fathers — except unlike the Founding Fathers, they’ll still be alive to get credit — or their ideas could look as hilariously retro and dated as Disney’s Tomorrowland. Nothing gets old as fast as the future.

But even if they’re dead wrong about the future, they’re right about the present. They’re taking the long view and looking at the big picture. You may reject every specific article of the Singularitarian charter, but you should admire Kurzweil for taking the future seriously. Singularitarianism is grounded in the idea that change is real and that humanity is in charge of its own fate and that history might not be as simple as one damn thing after another. Kurzweil likes to point out that your average cell phone is about a millionth the size of, a millionth the price of and a thousand times more powerful than the computer he had at MIT 40 years ago. Flip that forward 40 years and what does the world look like? If you really want to figure that out, you have to think very, very far outside the box. Or maybe you have to think further inside it than anyone ever has before.

As the Pharaoh Hosni I totters on his throne, both Israel and the United States are feeling the pain. So are the kings in neighboring lands. The Saudis, for one, trusted in pharaoh to keep Egypt’s Muslim Brotherhood — a potential rival to their leadership of Sunni Muslims — in check.

To view popup window put your cursor on the blue words

Israel in the Last Days

“And he shall set up an ensign •Strongs 5251: nace; from 5264; a flag; also a sail; by implication, a flagstaff; generally a signal; figuratively, a token:—banner, pole, sail, (en-)sign, standard.
•Strongs 5264: naw-sas´; a primitive root; to gleam from afar, i.e. to be conspicuous as a signal; or rather perhaps a denominative from 5251 (and identical with 5263, through the idea of a flag as fluttering in the wind); to raise a beacon:—lift up as an ensign. for the nations, and shall assemble the outcasts of Israel, and gather together the dispersed of Judah from the four corners of the earth.”
—Isaiah 11:12

“For thus saith the LORD of hosts; After the glory hath he sent me unto the nations which spoiled you: for he that toucheth you toucheth the apple of his eye.”
—Zechariah 2:8

As the world watches the unpredictable turmoil in Egypt, no country is paying closer attention than Israel. The peace treaty between the two states is the most important result of 40 years of negotiations between Israel and its Arab neighbors, and is still the cornerstone of any lasting settlement to this complex, bitter and dangerous dispute.

From an Israeli point of view, the upheaval could not come at a worse time. Iran looms in the east, muttering about destruction of the Jewish state and working feverishly to build nuclear weapons. Hizbollah, Iran’s Lebanese ally, has just taken de facto control of that country’s government – frustrating years of joint U.S., European Union and Gulf Arab efforts to solidify Lebanese democracy and institutions.

Wikileaks-style revelations from Al Jazeera about Fatah leaders’ negotiating flexibility with Israel — wildly different from their tough public stands — have undercut their credibility and generated new support for Hamas. A combination of stunning Israeli rudeness and ineptitude, along with profound changes in Turkish political culture, has strained Israel’s other major regional alliance close to the breaking point.

Now Egypt, the moderate state on whom Israelis and their friends have pinned so many hopes for peace, could be on the brink of an uprising. The Muslim Brotherhood – which has strong and longstanding ties with Hamas – may storm its way into the halls of the pharaohs, even as other moderate Arab rulers review their emergency exit plans.

Sixty years after the proclamation of the state of Israel, 30 years after the Camp David Accords and almost 20 years after Yitzhak Rabin and Yasser Arafat shook hands at the White House, is Israel going to be once again isolated and friendless in a hostile Middle East?

At the moment, Israeli officials are scrambling to follow the confused and conflicting reports coming out of Cairo. It is too soon to know how this fast-moving situation will develop. In an unwelcome repetition of the Biblical Exodus, the families of Israeli diplomats have been called home from Cairo. American and other Western civilians and diplomats may be pulled out as well — though evacuating people scattered across a country of 85 million people is no easy task.

Events in Egypt may stop short of this kind of break. The peace treaty with Israel is unpopular among many Egyptians, but the military understands its importance to Egypt’s own security. Détente with Israel serves Egypt’s interests, not Israel’s alone — the treaty may well survive the Mubarak regime.

But if political change in Egypt leads to dramatic changes in Egyptian-Israeli relations, consequences could be profound.

First, hawks in Israel will likely be strengthened. Those who insist that peace with the Arabs is impossible are likely to point to the collapse of the Egyptian-Israeli relationship to prove their point. Their argument that Israel cannot trade land for peace will resonate. Israel returned the entire Sinai to Egypt and evacuated South Lebanon and Gaza – without getting any closer to peace.

Why get out of the West Bank? Whose word can they trust? President Barack Obama is likely to have an even harder time coaxing Prime Minister Benjamin Netanyahu to make concessions to the Palestinians for a peace that fewer and fewer Israelis will believe in.

(If the peace survives a regime change, though, the peace camp in Israel could benefit — arguing that agreements which meet the needs of both parties can survive political turmoil.)

Second, while U.S. debate over the costs of our alliance with Israel could sharpen, the United States is likely to draw closer to Israel if the regional climate grows more polarized. Between 50 percent and two-thirds of the American people routinely tell pollsters they believe Israel is a close ally that the United States should support. Israel is one of a small number of countries that a majority of Americans say they are willing to defend with military force.

While Israel seems relatively secure, that majority argues about whether the best way to help Israel is to push it toward concessions to the Palestinians or to support it as it hangs tough.

But when Israel comes under threat, those arguments fade into the background. If a radical regime emerges in Egypt that repudiates the peace treaty, supports violence by Hamas or in other ways threatens Israel’s security, the United States is unlikely to leave Israel twisting in the wind.

At the same time, a vocal American minority — ranging from the “truther” far left through parts of the respectable foreign policy establishment and extending out into the Buchananite far right — asserts that strong U.S. support for Israel endangers our vital interests throughout the Middle East.

If a radical government should emerge in Egypt, it could strengthen this conviction among the opponents of the U.S.-Israel relationship. They will likely redouble their efforts to distance Washington from Israel.

The net result: The Obama administration will likely draw closer to Israel in response to majority sentiment and the political winds, further weakening the president on his left flank and further narrowing the gap between the foreign policy of this administration and that of its predecessor.

The Egyptian upheaval could be an important turning point in world history. The consolidation of a reasonably moderate and democratic government in the cultural capital of the Arab world could put the region, and the world, on the road to a more durable peace. A radical victory could drive a wedge not only between Israel and the Arab world, but deepen the divide between the West and the whole Islamic world.

Back in the reign of King Hezekiah, the prophet Isaiah reports that Assyria, a Mesopotamian power whose lands would ultimately become part of the Persian Empire, was besieging Jerusalem. The commander of its army taunted the Hebrew defenders: You trust in Pharaoh to rescue you, he said, but Egypt is a broken reed. If you lean on it, it will pierce your hand.

We shall soon see if that warning holds good today.

Walter Russell Mead is the James Clarke Chace professor of political studies and humanities at Bard College and editor at large of The American Interest. He is writing a book for Knopf about the U.S.-Israel relationship.

Chinese Scholars On a Visit to Israel Say Their People Want To Know ‘What the Jewish Nation Is All About’

To view popup window put your cursor on the blue words

Israel in the Last Days

“And he shall set up an ensign •Strongs 5251: nace; from 5264; a flag; also a sail; by implication, a flagstaff; generally a signal; figuratively, a token:—banner, pole, sail, (en-)sign, standard.
•Strongs 5264: naw-sas´; a primitive root; to gleam from afar, i.e. to be conspicuous as a signal; or rather perhaps a denominative from 5251 (and identical with 5263, through the idea of a flag as fluttering in the wind); to raise a beacon:—lift up as an ensign. for the nations, and shall assemble the outcasts of Israel, and gather together the dispersed of Judah from the four corners of the earth.”
—Isaiah 11:12

Kings of the East

And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared.”
—Revelation 16:12

TEL AVIV — Back in 1991 Chen Yiyi was, as he puts it, a “bored” law student at Peking University. At the time, China was in the process of formalizing relations with Israel, and the Chinese Education Ministry and Israel’s Foreign Ministry selected his university as the site of China’s first Hebrew course taught by visiting Israeli teachers. When the class fell short of its eight-student enrollment target, Chen was persuaded to sign up to boost its numbers.
Little did Chen know at the time that he was embarking on a career in what would soon be a burgeoning field within Chinese academia: Jewish studies.
Chen, who is now director of Peking University’s Institute of Hebrew and Jewish Studies, teaches a Bible course at his school that is billed as a class in Tanach, using the Hebrew word for the Bible and drawing upon Jewish interpretations. Now in its eighth year, the class can accommodate a maximum of 200 students each session, but it regularly has 500 students sign up.
“People see it that the best students of the best university need to know about the cornerstones of other civilizations, and the cornerstone is Tanach,” Chen said.

Chen — whose accomplishments include translating the Israeli novelist A.B. Yehoshua into Chinese — was part of a delegation of 10 Chinese scholars of Jewish studies who visited Israel for a weeklong study tour in mid-January. The academics brought with them stories of their bursting-at-the-seams lecture halls and classes where Tanach, Hebrew and even Aramaic are studied, despite the fact that the field of Jewish studies essentially didn’t even exist in China 20 years ago.
The trip, the first of its kind, came on the heels of a separate seminar in Shanghai in December, where 35 Chinese policy-makers, government advisers and academics met with Israeli scholars to explore Israeli politics, history and culture. Both reflect the growing Chinese fascination with Judaism and Israel that extends from intellectuals to the general public.
“The interest in Jews and Israelis goes way beyond business, way beyond technology, to a wish to understand what the Jewish nation is all about,” said Ilan Maor, joint vice president of the Israel-Asia Chamber of Commerce and a former Israeli consul general in Shanghai.
Israel and some American Jewish groups have been eager to encourage the Chinese interest in things Jewish. For the visit by the Chinese academics, Israel’s Foreign Ministry partnered with the Charles and Lynn Schusterman Family Foundation and the American Jewish Committee’s Project Interchange, which organized the trip. A few days after the academics returned home, it was announced that China Central Television has just produced, in cooperation with Israel’s embassy in Beijing, a 12-part series intended to introduce Chinese audiences to the history of Israel and the Jewish people.
The Israel Project, a Washington-based advocacy group, has proposed building on this interest to create a strong base of support for Israel in China. Last year it conducted a focus group on opinions toward Israel in Shanghai.
“Because China’s interests in the Middle East are relatively recent, and Israel is still largely a blank slate to most Chinese, we have a real opportunity to make a significant impact on its decision-making and views concerning us and the wider Middle East,” Laura Kam, the group’s executive director for global affairs, wrote recently in The Jerusalem Post.
While growing closeness between China and Israel on the diplomatic and trade fronts can be explained in terms of the mutual interests of both countries, the Chinese public’s interest in Judaism is more puzzling.
According to Song Lihong, deputy director of the Glazer Institute of Jewish Studies at Nanjing University, a glance at the shelves of Jewish-interest books in Chinese bookstores provides a clue as to why Judaism fascinates. Popular titles include “The Talmudic Wisdom in Conducting Business,” “Talmud: The Greatest Jewish Bible for Making Money” and “Unveiling the Secrets of Jewish Success in World Economy: What’s Behind Jewish Excellence?”
While Song acknowledges that the nature of this interest may seem “ominous” to Westerners, he insists that there is nothing sinister about it. Divorced from the Christian context that bred conspiracy theories about Jews in finance and the Muslim context that perpetuated them, it is simply driven by a natural curiosity about a group that appears to play a significant role in world affairs.
In Song’s telling, the curiosity reflects “Judeophilia” rather than “Judeophobia.” As the Chinese nation has embarked on a process of economic and technological advancement, it looks upon Jews, another ancient people that seems to have excelled in this area while maintaining a distinctive identity, as a “model it can employ to modernize itself,” he explained.
Song said that Judaism is perceived by Chinese people as being part of the foundation of Western civilization. As a result, they see Judaism as synonymous with “Western,” and many take the view that to learn about the West, one should become familiar with Judaism.
Indeed, Song observed that Judaism is not just seen as Western, it is seen as the best of the West. In China, he said, many erroneously believe that John Rockefeller and Wolfgang Amadeus Mozart were Jewish. “Everything that is successful, smart and rich is regarded as Jewish,” he said.
While the most popular Jewish subjects in China are those related to Jews in finance and contemporary Jewry, some Chinese want to go back to basics and learn about scripture. The study of the Bible has never been particularly popular in China, where the dominant faiths have been Confucianism, Taoism and Buddhism, and where religion was repressed by the communist authorities. In today’s era of openness, however, it is the focus of much curiosity.
Since Christianity and Judaism are both regarded as foreign faiths, there is no reason that studying the Bible through the Christian tradition would necessarily seem more natural than through the Jewish tradition. And even among Chinese Christians there is an interest in studying Judaism. Many Jewish studies students are Christians who “think that they could do with understanding Judaism to understand Christianity,” Song said.
Other students, however, choose Jewish studies for more practical reasons. Zhu Lilan, a 21-year-old undergraduate Jewish studies student at Shanghai International Studies University, is currently brushing up her Hebrew on an exchange program at Tel Aviv University — one of some 150 Chinese students currently studying at Israeli universities. Figuring that the China-Israel trade relations are “getting better and better,” Zhu chose her course of study in part with material rewards in mind. “It think that it’s both interesting and good for future job prospects,” she said.

RALEIGH, N.C. – If there had been time, Marie Exley would have liked to start a family. Instead, the 32-year-old Army veteran has less than six months left, which she’ll spend spreading a stark warning: Judgment Day is almost here.

To view popup window put your cursor on the blue words

Editors Note: Well meaning brethren, however, the verse below warns us about such exact predictions.

We do believe this wonderful event “Then we which are alive and remain shall be caught up together with them in the clouds, to meet the Lord in the air: and so shall we ever be with the Lord.”
—1 Thessalonians 4:17, the Harpazo•Strongs 726: harpazo, har-pad´-zo; from a derivative of 138; to seize (in various applications): — catch (away, up), pluck, pull, take (by force). can happen at any time. We also believe it is the proper spiritual season for this event to take place but stay away from naming the day.

Therefore, we stand with other believers and look up for our redemption is drawing near.

“But of that day and hour knoweth no man, no, not the angels of heaven, but my Father only.”
—Matthew 24:36

Exley is part of a movement of Christians loosely organized by radio broadcasts and websites, independent of churches and convinced by their reading of the Bible that the end of the world will begin May 21, 2011.
To get the word out, they’re using billboards and bus stop benches, traveling caravans of RVs and volunteers passing out pamphlets on street corners. Cities from Bridgeport, Conn., to Little Rock, Ark., now have billboards with the ominous message, and mission groups are traveling through Latin America and Africa to spread the news outside the U.S.
“A lot of people might think, ‘The end’s coming, let’s go party,’” said Exley, a veteran of two deployments in Iraq. “But we’re commanded by God to warn people. I wish I could just be like everybody else, but it’s so much better to know that when the end comes, you’ll be safe.”
In August, Exley left her home in Colorado Springs, Colo., to work with Oakland, Calif.-based Family Radio Worldwide, the independent Christian ministry whose leader, Harold Camping, has calculated the May 21 date based on his reading of the Bible.
She is organizing traveling columns of RVs carrying the message from city to city, a logistics challenge that her military experience has helped solve. The vehicles are scheduled to be in five North Carolina cities between now and the second week of January, but Exley will shortly be gone: overseas, where she hopes to eventually make it back to Iraq.
“I don’t really have plans to come back,” she said. “Time is short.”
Not everyone who’s heard Camping’s message is taking such a dramatic step. They’re remaining in their day-to-day lives, but helping publicize the prophecy in other ways. Allison Warden, of Raleigh, has been helping organize a campaign using billboards, post cards and other media in cities across the U.S. through a website, We Can Know.
The 29-year-old payroll clerk laughs when asked about reactions to the message, which is plastered all over her car.
“It’s definitely against the grain, I know that,” she said. “We’re hoping people won’t take our word for it, or Harold Camping’s word for it. We’re hoping that people will search the scriptures for themselves.”
Camping, 89, believes the Bible essentially functions as a cosmic calendar explaining exactly when various prophecies will be fulfilled.
The retired civil engineer said all his calculations come from close readings of the Bible, but that external events like the foundation of the state of Israel in 1948 are signs confirming the date.
“Beyond the shadow of a doubt, May 21 will be the date of the Rapture and the day of judgment,” he said.
The doctrine known as the Rapture teaches that believers will be taken up to heaven, while everyone else will remain on earth for a period of torment, concluding with the end of time. Camping believes that will happen in October.
“If May 21 passes and I’m still here, that means I wasn’t saved. Does that mean God’s word is inaccurate or untrue? Not at all,” Warden said.
The belief that Christ will return to earth and bring an end to history has been a basic element of Christian belief since the first century. The Book of Revelation, which comes last in the New Testament, describes this conclusion in vivid language that has inspired Christians for centuries.
But few churches are willing to set a date for the end of the world, heeding Jesus’ words in the gospels of Mark and Matthew that no one can know the day or hour it will happen. Predictions like Camping’s, though, aren’t new. One of the most famous in history was by the Baptist leader William Miller, who predicted the end for Oct. 22, 1844, which came to be known as the Great Disappointment among his followers, some of whom subsequently founded the Seventh Day Adventist church.
“In the U.S., there is still a significant population, mostly Protestant, who look at the Bible as kind of a puzzle, and the puzzle is God’s word and it’s predicting when the end times will come,” said Catherine Wessinger, a professor at Loyola University in New Orleans who studies millennialism, the belief in pending apocalypse.
“A lot of times these prophecies gain traction when difficulties are happening in society,” she said. “Right now, there’s a lot of insecurity, and this is a promise that says it’s not all random, it’s part of God’s plan.”
Past predictions that failed to come true don’t have any bearing on the current calculation, believers maintain.
“It would be like telling the Wright brothers that every other attempt to fly has failed, so you shouldn’t even try,” said Chris McCann, who works with eBible Fellowship, one of the groups spreading the message.
For believers like McCann, theirs is actually a message of hope and compassion: God’s compassion for people, and the hope that there’s still time to be saved.
That, ultimately, is what spurs on Exley, who said her beliefs have alienated her from most of her friends and family. Her hope is that not everyone who hears her message will mock it, and that even people who dismiss her now might still come to believe.
“If you still want to say we’re crazy, go ahead,” she said. “But it doesn’t hurt to look into it.”