Prehistory: Our Ancestors Emerge

Evidence of the origins of Homo sapiens sapiens, the species to which all humans belong, comes from a small, but increasing, number of fossils, from genetic and anatomical studies, and from interpretation of the geological record. The latest evidence suggests that humans evolved from apelike primate ancestors that lived in central Africa 6-7 mil years ago (mya). Although all humans living today are members of a single subspecies, the fossil record confirms that our ancestors coexisted with a number of similar species throughout evolution. Current theories trace the first hominid (upright walking, humanlike primate) to Africa, where several distinct species appeared 5-7 mil years ago. These species lived in a variety of environments throughout the continent, including swampy forests, woodlands, and open savannas. In addition to Australopithecus—best known from "Lucy," a 3.2-mya-Ethiopian specimen found in 1974—these early hominid species include such recent discoveries as Sahelanthropus, Ardipithecus, Kenyanthropus, and Orrorin.

Our own human ancestry arose 2-3 mya, when hominid species began to produce elaborate stone tools. The oldest tools are dated to 2.5-2.6 mya from Ethiopia, and were made by systematically removing sharp flakes from a core. This produced tools for scraping meat and sinew, as well as a sharp chopping implement useful for obtaining marrow from long bones. Although we cannot determine whether these early hominids had the ability to speak, they were social animals, lived in semi-permanent camps, and had a food-gathering economy. A closer ancestor, Homo erectus, appeared in Africa 1.9 mya and was the first to leave the continent, spreading into Asia by 1.3 mya, and Europe shortly thereafter. These individuals had skeletal structures similar to modern humans, hunted, learned to control fire, and may have had primitive language skills.

Europe has provided a particularly rich set of fossil evidence. Human-like in many important respects, Neanderthal appeared c. 200,000 bp (years before the present), had sophisticated tools and a developed social culture, and was well adapted to the harsh climate of Ice Age Europe. Recent genetic evidence supports the theory that Neanderthal was a distinct species that in some places coexisted with, but did not interbreed with, early modern humans (also called Cro-Magnons). A similar situation may have occurred in Asia, where more primitive species of Homo coexisted with early modern humans 100,000-150,000 bp. Further study of Homo antecessor, a new species identified in Spain, may clarify the relationship between anatomically modern Homo sapiens and Neanderthals in Europe.

The 1st Homo sapiens sapiens originated in E Africa 100,000-200,000 bp. The oldest modern human fossils are dated to 195,000 bp, and were found at the Ethiopian site of Omo. Our species quickly spread. Humans were living in Israel by 100,000 bp, and in Romania by 35,000 bp. Migration from Asia to Australia via the Timor Straits took place as early as 100,000 bp. First confirmation for the crossing from Asia to the Americas by land bridge dates to the end of the last Ice Age, at 14,000 bp; however, genetic data suggest that small, isolated groups of people arrived in the Americas 18,000 to 14,000 years ago, settling in both continents.

A variety of cultural modes—in toolmaking, diet, shelter, social arrangements, and spiritual expression—arose as humans adapted to different geographic and climatic zones and the knowledge base grew. Sites from all over the world show seasonal migration patterns and efficient exploitation of a wide range of plant and animal foods.

Fire-making probably began 1 mya in Africa and spread to Asia and Europe. Hearths were used in N Israel by c. 750,000 bp, and by 465,000 bp in W France. Fire-hardened wooden spears, weighted and set with small stone blades, were fashioned by big-game hunters 400,000 bp in Germany. Scraping tools, dated 30,000-200,000 bp in Europe, N Africa, the Middle East, and Central Asia, suggest the treatment of skins for clothing. Impressions in clay artifacts from the Czech Republic document the ability to weave cloth baskets and nets by 28,000 bp. By the time Australia was settled, human ancestors had learned to navigate in boats over open water. The earliest bone tools found so far were developed 80,000 bp in the Congo basin by fishermen, who created sophisticated fishing tackle to catch giant catfish.

About 60,000 bp the earliest immigrants to Australia carved and painted designs on rocks. Painting and decoration flourished, along with stone and ivory sculpture, from 35,000 bp in Europe, where more than 200 caves show remarkable examples of naturalistic wall painting. A variety of musical instruments, including bone flutes with precisely bored holes, have been found in sites dated to 40,000-80,000 bp. Around 30,000 bp, the number of people surviving long enough to become grandparents dramatically increased. There were now 2 adults over 30 for every adult under 30. With more adults available to provide child care, humans began to develop more complex social systems.

Shortly after 10,000 bc, among widely separated communities, a series of dramatic technological and social changes occurred, marking the Neolithic, or New Stone, Age. As the world climate became drier and warmer, humans learned to cultivate plants and domesticate animals. This encouraged growth of permanent settlements. Manufacture of pottery and cloth began at this time. These techniques precipitated a dramatic increase in world population and social complexity.

Sites in the Americas, SE Europe, and the Middle East show roughly contemporaneous (8000-10,000 bc) evidence of Neolithic traits. Dates near 5000-8000 bc have been given for E and S Asian, W European, and sub-Saharan African Neolithic remains. Farming spread rapidly throughout the Mediterranean, perhaps in 100-200 years. The variety of crops—field grains, rice, maize, squash, and roots—and a mix of other characteristics suggest that this adaptation occurred independently in each region. Evidence for fermented beverages likewise coincides with the early Neolithic settled farming lifestyle. Northern Chinese farmers concocted a wine-like drink from rice, honey, and fruit between 6000 and 7000 bc; in the Middle East, Iranian vintners were fermenting grapes by 5400 bc.

History Begins: 4000-1000 bc

It's a Fact!

Tutankhamen became a pharaoh in 1343 bc at the age of 9, and ruled until his death at about age 18. Despite his short life, he lives on more than most Egyptian pharoahs because his underground tomb, discovered in 1922 by archaeologist Howard Carter, is the only pharoah's tomb to have survived into modern times virtually untouched. Treasures from King Tut's tomb went on tour in the U.S. in 1976-79, and a new 27-month tour was launched in Los Angeles in June 2005. Items on display include his royal diadem, a sculpture of the boy king in alabaster, and a jeweled container that holds his mummified organs.

Near Eastern cradle. If history began with writing, the first chapter opened in Mesopotamia, the Tigris-Euphrates river valley. The Sumerians used clay tablets with pictographs to keep records after 4000 bc. A cuneiform (wedge-shaped) script evolved by 3000 bc as a full syllabic alphabet. Neighboring peoples adapted the script for their own use.

Sumerian life centered, from 4000 bc, on large cities (Eridu, Ur, Uruk, Nippur, Kish, and Lagash) organized around temples and priestly bureaucracies, with surrounding plains watered by vast irrigation works and worked with traction plows. Sailboats, wheeled vehicles, potter's wheels, and kilns were used. Copper was smelted and tempered from c. 4000 bc; bronze was produced not long after. Ores, as well as precious stones and metals, were obtained through long-distance ship and caravan trade. Iron was used from c. 2000 bc. Improved ironworking, developed partly by the Hittites, became widespread by 1200 bc.

Sumerian political primacy passed among cities and their kingly dynasties. Semitic-speaking peoples, with cultures derived from the Sumerian, founded a succession of dynasties that ruled in Mesopotamia and neighboring areas for most of 1,800 years; among them were the Akkadians (first under Sargon I, c. 2350 bc), the Amorites (whose laws, codified by Hammurabi, c. 1792-1750 bc, have biblical parallels), and the Assyrians, with interludes of rule by the Hittites, Kassites, and Mitanni.

Mesopotamian learning, maintained by scribes and preserved in vast libraries, was practically oriented. Lists of astronomical phenomena, plants, animals, and stones were maintained; medical texts listed ailments and herbal cures. The Sumerians worshiped anthropomorphic gods representing natural forces. Sacrifices were made at ziggurats—huge stepped temples.

The Syria-Palestine area, site of some of the earliest urban remains (Jericho, 7000 bc), and of the recently uncovered Ebla civilization (fl. 2500 bc), experienced Egyptian cultural and political influence along with Mesopotamian. The Phoenician coast was an active commercial center. A phonetic alphabet was invented here before 1600 bc. It became the ancestor of many other alphabets.

Egypt. Agricultural villages along the Nile River were united by around 3300 bc into 2 kingdoms, Upper and Lower Egypt, unified (c. 3100 bc) under the pharaoh Menes. A bureaucracy supervised construction of canals and monuments (pyramids starting 2700 bc). Control over Nubia to the S was asserted from 2600 bc. Brilliant Old Kingdom Period achievements in architecture, sculpture, and painting reached their height during the 3rd and 4th Dynasties. Hieroglyphic writing appeared by 3200 bc, recording a sophisticated literature that included religious writings, philosophy, history, and science. An ordered hierarchy of gods, including totemistic animal elements, was served by a powerful priesthood in Memphis. The pharaoh was identified with the falcon god Horus. Other trends included belief in an afterlife and short-lived quasi-monotheistic reforms introduced by the pharaoh Akhenaton (c. 1379-1362 bc).

After a period of dominance by Semitic Hyksos from Asia (c. 1700-1550 bc), the New Kingdom established an empire in Syria. Egypt became increasingly embroiled in Asiatic wars and diplomacy. Conquered by Persia in 525 bc, it eventually faded away as an independent culture.

India. An urban civilization with a so-far-undeciphered writing system stretched across the Indus Valley and along the Arabian Sea c. 3000-1500 bc. Major sites are Harappa and Mohenjo-Daro in Pakistan, well-planned geometric cities with underground sewers and vast granaries. The entire region may have been ruled as a single state. Bronze was used, and arts and crafts were well developed. Religious life apparently took the form of fertility cults. Indus civilization was probably in decline when it was destroyed by Aryans who arrived from the NW, speaking an Indo-European language. Led by a warrior aristocracy whose legendary deeds are in the Rig Veda, the Aryans spread E and S, bringing their sky gods, priestly (Brahman) ritual, and the beginnings of the caste system; local customs and beliefs were assimilated by the conquerors.

Europe. On Crete, the Bronze Age Minoan civilization emerged c. 2500 bc. A prosperous economy and richly decorative art was supported by seaborne commerce. Mycenae and other cities in mainland Greece and Asia Minor (e.g., Troy) preserved elements of the culture until c. 1200 bc. Cretan Linear A script (c. 2000-1700 bc) remains undeciphered; Linear B script (c. 1300-1200 bc) records an early Greek dialect. The possible connection between Mycenaean monumental stonework and the megalithic monuments of W Europe, Iberia, and Malta (c. 4000-1500 bc) is unclear.

China. Proto-Chinese neolithic cultures had long covered N and SE China when the first large political state was organized in the N by the Shang dynasty (c. 1523 bc). Shang kings called themselves Sons of Heaven, and they presided over a cult of human and animal sacrifice to ancestors and nature gods. The Chou dynasty, starting c. 1027 bc, expanded the area of the Son of Heaven's dominion, but feudal states exercised most temporal power. A writing system with 2,000 characters was already in use under the Shang, with pictographs later supplemented by phonetic characters. Many of its principles and symbols, despite changes in spoken Chinese, were preserved in later writing systems. Technical advances allowed urban specialists to create fine ceramic and jade products, and bronze casting after 1500 bc was the most advanced in the world. Bronze artifacts discovered in N Thailand date from 3600 bc, hundreds of years before similar Middle Eastern finds.

Americas. Olmecs settled (1500 bc) on the Gulf coast of Mexico and developed the first known civilization in the western hemisphere. Temple cities and huge stone sculpture date from 1200 bc. A rudimentary calendar and writing system existed. Olmec religion, centering on a jaguar god, and Olmec art forms influenced later Meso-American cultures.

Classical Era of Old World Civilizations: 1000 bc-400 bc

Greece. After a period of decline during the Dorian Greek invasions (1200-1000 bc), the Aegean area developed a unique civilization. Drawing on Mycenaean traditions, Mesopotamian learning (weights and measures, lunisolar calendar, astronomy, musical scales), the Phoenician alphabet (modified for Greek), and Egyptian art, Greek city-states saw a rich elaboration of intellectual life. The two great epic poems attributed to Homer, the Iliad and the Odyssey, were probably composed around the 8th cent. bc. Long-range commerce was aided by metal coinage (introduced by the Lydians in Asia Minor before 700 bc); colonies were founded around the Mediterranean (Cumae in Italy in 760 bc; Massalia in France c. 600 bc) and Black Sea shores.

Philosophy, starting with Ionian speculation on the nature of matter (Thales, c. 634-546 bc), continued by other "Pre-Socratics" (e.g., Heraclitus, c. 535-415 bc; Parmenides, b. c. 515 bc), reached a high point in Athens in the rationalist idealism of Plato (c. 428-347 bc), a disciple of Socrates (c. 469-399 bc; executed for alleged impiety), and in Aristotle (384-322 bc), a pioneer in many fields, from natural sciences to logic, ethics, and metaphysics. The arts were highly valued. Architecture culminated in the Parthenon (438 bc) by Phidias (fl. 490-430 bc). Poetry (Sappho, c. 610-580 bc; Pindar, c. 518-438 bc) and drama (Aeschylus, 525-456 bc; Sophocles, c. 496-406 bc; Euripides, c. 484-406 bc) thrived. Male beauty and strength, a chief artistic theme, were celebrated at the national games at Olympia.

Ruled by local tyrants or oligarchies, the Greeks were not politically united, but managed to resist inclusion in the Persian Empire—Persian king Darius was defeated at Marathon (490 bc), his son Xerxes at Salamis (480 bc), and the Persian army at Plataea (479 bc). Local warfare was common; the Peloponnesian Wars (431-404 bc) ended in Sparta's victory over Athens. Greek political power subsequently waned, but Greek cultural forms spread far and wide.

Hebrews. Nomadic Hebrew tribes entered Canaan before 1200 bc, settling among other Semitic peoples speaking the same language. They brought from the desert a monotheistic faith said to have been revealed to Abraham in Canaan c. 1800 bc and Moses at Mt. Sinai c. 1250 bc, after the Hebrews' escape from bondage in Egypt. David (r. 1000-961 bc) and Solomon (r. 961-922 bc) united them in a kingdom that briefly dominated the area. Phoenicians to the N founded Mediterranean colonies (Carthage, c. 814 bc) and sailed into the Atlantic.

A temple in Jerusalem became the national religious center, with sacrifices performed by a hereditary priesthood. Polytheistic influences, especially of the fertility cult of Baal, were opposed by prophets (Elijah, Amos, Isaiah).

Divided into two kingdoms after Solomon, the Hebrews were unable to resist the revived Assyrian empire, which conquered Israel, the N kingdom, in 722 bc. Judah, the S kingdom, was conquered in 586 bc by the Babylonians under Nebuchadnezzar II. With the fixing of most of the biblical canon by the mid-4th cent. bc and the emergence of rabbis, Judaism successfully survived the loss of Hebrew autonomy. A Jewish kingdom was revived under the Hasmoneans (168-42 bc).

China. During the Eastern Chou dynasty (770-256 bc), Chinese culture spread E to the sea and S to the Yangtze R. Large feudal states on the periphery of the empire contended for preeminence, but continued to recognize the Son of Heaven (king), who retained a purely ritual role enriched with courtly music and dance. In the Age of Warring States (403-221 bc), when the first sections of the Great Wall were built, the Ch'in state in the W gained supremacy and finally united all of China.

Iron tools entered China c. 500 bc, and casting techniques were advanced, aiding agriculture. Peasants owned their land and owed civil and military service to nobles. China's cities grew in number and size; barter remained the chief trade medium.

Intellectual ferment among noble scribes and officials produced the Classical Age of Chinese literature and philosophy. Confucius (551-479 bc) urged a restoration of a supposedly harmonious social order of the past through proper conduct in accordance with one's station and through filial and ceremonial piety. The Analects attributed to him are revered throughout E Asia.

Among other thinkers, Mencius (d. 289 bc) added the view that the Mandate of Heaven can be removed from an unjust dynasty. The Legalists sought to curb the supposed natural wickedness of people through new institutions and harsh laws. The Naturalists emphasized the balance of opposites—yin, yang—in the world. Taoists sought mystical knowledge through meditation and disengagement.

India. The political and cultural center of India shifted from the Indus to the Ganges River Valley. Buddhism, Jainism, and mystical revisions of orthodox Vedism all developed c. 500-300 bc. The Upanishads, last part of the Veda, urged escape from the physical world. Vedism remained the preserve of the Brahman caste.

In contrast, Buddhism, founded by Siddhartha Gautama (c. 563-c. 483 bc)—Buddha ("Enlightened One")—appealed to merchants in the urban centers and took hold at first (and most lastingly) on the geographic fringes of Indian civilization. The classic Indian epics were composed in this era: the Ramayana perhaps c. 300 bc, the Mahabharata over a period starting around 400 bc.

N India was divided into a large number of monarchies and aristocratic republics, probably derived from tribal groupings, when the Magadha kingdom was formed in Bihar c. 542 bc. It soon became the dominant power. The Maurya dynasty, founded by Chandragupta c. 321 bc, expanded the kingdom, uniting most of N India in a centralized bureaucratic empire. The third Mauryan king, Asoka (reigned c. 274-236 bc), conquered most of the subcontinent. He converted to Buddhism and inscribed its tenets on pillars throughout India. He downplayed the caste system.

Before its final decline in India, Buddhism developed into a popular worship of heavenly Bodhisattvas ("enlightened beings"), and it produced a refined architecture (the Great Stupa [shrine] at Sanchi, ad 100) and sculpture (Gandhara reliefs, ad 1-400).

Persia. Aryan peoples (Persians, Medes) dominated the area of present Iran by the beginning of the 1st millennium bc. The prophet Zoroaster (born c. 628 bc) introduced a dualistic religion in which the forces of good (Ahura Mazda, "Lord of Wisdom") and evil (Ahriam) battle for dominance; individuals are judged by their actions and earn damnation or salvation. Zoroaster's hymns (Gathas) are included in the Avesta, the Zoroastrian scriptures. A version of this faith became the established religion of the Persian Empire.

Africa. Nubia, periodically occupied by Egypt since about 2600 bc, ruled Egypt c. 750-661 bc and survived as an independent Egyptianized kingdom (Kush; capital Meroe) for 1,000 years. The Iron Age Nok culture flourished c. 500 bc- ad 200 on the Benue Plateau of Nigeria.

Americas. The Chavin culture controlled N Peru c. 900 bc to 200 bc. Its ceremonial centers, featuring the jaguar god, survived long after. Its architecture, ceramics, and textiles had influenced other Peruvian cultures. Mayan civilization began to develop in Central America as early as 1500 bc.

Great Empires Unite the Civilized World: 400 bc-ad 400

Persia and Alexander the Great. Cyrus, ruler of a small kingdom in Persia from 559 bc, united the Persians and Medes within 10 years and conquered Asia Minor and Babylonia in another 10. His son Cambyses, followed by Darius (r. 522-486 bc), added vast lands to the E and N as far as the Indus Valley and Central Asia, as well as Egypt and Thrace. The whole empire was ruled by an international bureaucracy and army, with Persians holding the chief positions. The resources and styles of all the subject civilizations were exploited to create a rich syncretic art.

The kingdom of Macedon, which under Philip II dominated the Greek world and Egypt, was passed on to his son Alexander in 336 bc. Within 13 years, Alexander had conquered all the Persian dominions. Imbued by his tutor Aristotle with Greek ideals, Alexander encouraged colonization, and Greek-style cities were founded. After his death in 323 bc, wars of succession divided the empire into 3 parts—Macedon, Egypt (ruled by the Ptolemies), and the Seleucid Empire. In the ensuing 300 years (the Hellenistic Era), a cosmopolitan Greek-oriented culture permeated the ancient world from W Europe to the borders of India, absorbing native elites everywhere.

Hellenistic philosophy stressed the private individual's search for happiness. The Cynics followed Diogenes (c. 372-287 bc), who stressed self-sufficiency and restriction of desires and expressed contempt for luxury and social convention. Zeno (c. 335-c.263 bc) and the Stoics exalted reason, identified it with virtue, and counseled an ascetic disregard for misfortune. The Epicureans tried to build lives of moderate pleasure without political or emotional involvement. Hellenistic arts imitated life realistically, especially in sculpture and literature (comedies of Menander, 342-292 bc).

The sciences thrived, especially at Alexandria, where the Ptolemies financed a great library and museum. Fields of study included mathematics (Euclid's geometry, c. 300 bc); astronomy (heliocentric theory of Aristarchus, 310-230 bc; Julian calendar, 45 bc; Ptolemy's Almagest, c. ad 150); geography (world map of Eratosthenes, 276-194 bc); hydraulics (Archimedes, 287-212 bc); medicine (Galen, ad 130-200); and chemistry. Inventors refined uses for siphons, valves, gears, springs, screws, levers, cams, and pulleys.

A restored Persian empire under the Parthians (northern Iranian tribesmen) controlled the eastern Hellenistic world from 250 bc to ad 229. The Parthians and the succeeding Sassanian dynasty (c. ad 224-651) fought with Rome periodically. The Sassanians revived Zoroastrianism as a state religion and patronized a nationalistic artistic and scholarly renaissance.

Rome. The city of Rome was founded, according to legend, by Romulus in 753 bc. Through military expansion and colonization, and by granting citizenship to conquered tribes, the city annexed all of Italy S of the Po in the 100-year period before 268 bc. The Latin and other Italic tribes were annexed first, followed by the Etruscans (founders of a great civilization, N of Rome) and the Greek colonies in the S. With a large standing army and reserve forces of several hundred thousand, Rome was able to defeat Carthage in the 3 Punic Wars (264-241, 218-201, 149-146 bc), despite the invasion of Italy by Hannibal (218 bc), thus gaining Sicily and territory in Spain and N Africa.

Rome exploited local disputes to conquer Greece and Asia Minor in the 2nd cent. bc, and Egypt in the 1st (after the defeat and suicide of Antony and Cleopatra, 30 bc). The Mediterranean civilized world, up to the disputed Parthian border, was now Roman and remained so for 500 years. Less civilized regions were added to the Empire: Gaul (conquered by Julius Caesar, 58-51 bc), Britain (ad 43), and Dacia NE of the Danube (ad 107).

The original aristocratic republican government, with democratic features added in the 5th and 4th cent. bc, deteriorated under the pressures of empire and class conflict (Gracchus brothers, social reformers, murdered in 133 bc and 121 bc; slave revolts in 135 bc and 73 bc). After a series of civil wars (Marius vs. Sulla 88-82 bc, Caesar vs. Pompey 49-45 bc, triumvirate vs. Caesar's assassins 44-43 bc, Antony vs. Octavian 32-30 bc), the empire came under the rule of a deified monarch (first emperor, Augustus, 27 bc-ad 14).

Provincials (nearly all granted citizenship by Caracalla, ad 212) came to dominate the army and civil service. Traditional Roman law, systematized and interpreted by indepen­dent jurists, and local self-rule in provincial cities were supplanted by a vast tax-collecting bureaucracy in the 3rd and 4th cent. The legal rights of women, children, and slaves were strengthened.

Roman innovations in civil engineering included water mills, windmills, and rotary mills and use of cement that hardened under water. Monumental architecture (baths, theaters, temples) relied on the arch and the dome. The network of roads (some still standing) stretched 53,000 mi, passing through mountain tunnels as long as 3.5 mi. Aqueducts brought water to cities; underground sewers removed waste.

Roman art and literature were to a large extent derivative of Greek models. Innovations were made in sculpture (naturalistic busts, equestrian statues), decorative wall painting (as at Pompeii), satire (Juvenal, ad 60-127), history (Tacitus, ad 56-120), prose romance (Petronius, d. ad 66). Gladiatorial contests dominated public amusements, which were supported by the state.

India. The Gupta monarchs reunited N India c. ad 320. Their peaceful and prosperous reign saw a revival of Hindu religious thought and Brahman power. The old Vedic traditions were combined with devotion to many indigenous deities (who were seen as manifestations of Vedic gods). Caste lines were reinforced, and Buddhist practices gradually disappeared or were integrated with Hindu traditions. The art (often erotic), architecture, and literature of the period, patronized by the Gupta court, are considered among India's finest achievements (Kalidasa, poet and dramatist, fl. c. ad 400). Mathematical innovations included use of the zero and decimal numbers. Invasions by White Huns from the NW destroyed the empire c. 550.

Rich cultures also developed in S India during this period. Emotional Tamil religious poetry contributed to the Hindu revival. The Pallava kingdom controlled much of S India c. 350-880 and helped to spread Indian civilization to SE Asia.

China. The Ch'in ruler Shih Huang Ti (r. 221-210 bc), known as the First Emperor, centralized political authority. standardized the written language, laws, weights, measures, and coinage, and conducted a census, but tried to destroy most philosophical texts. The Han dynasty (202 bc-ad 220) instituted the Mandarin bureaucracy, which lasted 2,000 years. Local officials were selected by examination in Confucian classics and trained at the imperial university and provincial schools.

The invention of paper facilitated this bureaucratic system. Agriculture was promoted, but peasants bore most of the tax burden. Irrigation was improved, water clocks and sundials were used, astronomy and mathematics thrived, and landscape painting was perfected.

With the expansion S and W (to nearly the present borders of today's China), trade was opened with India, SE Asia, and the Middle East, over sea and caravan routes. Indian missionaries brought Mahaya­na Buddhism to China by the 1st cent. ad and spawned a variety of sects. Taoism was revived and merged with popular superstitions. Taoist and Buddhist monasteries and convents multiplied in the turbulent centuries after the collapse of the Han dynasty.

Monotheism Spreads: ad 1-750

Roman Empire. Polytheism was practiced in the Roman Empire, and religions indigenous to particular Middle Eastern nations became international. Roman citizens worshiped Isis of Egypt, Mithras of Persia, Demeter of Greece, and the great mother Cybele of Phrygia. Their cults centered on mys­teries (secret ceremonies) and the promise of an afterlife, symbolized by the death and rebirth of the god. The Jews of the empire preserved their monotheistic religion, Judaism, the world's oldest (c. 1300 bc) continuous religion. Its teachings are contained in the Bible (the Old Testament). 1st-cent. Judaism embraced several sects, including the Sadducees, mostly drawn from the Temple priesthood, who were culturally Hellenized; the Pharisees, who upheld the full range of traditional customs and practices as of equal weight to literal scriptural law and elaborated synagogue worship; and the Essenes, an ascetic, millennarian sect. Messianic fervor led to repeated, unsuccessful rebellions against Rome (66-70, 135). As a result, the Temple in Jerusalem was destroyed and the population decimated; this event marked the beginning of the Diaspora (living in exile). To preserve the faith, a program of codification of law was begun at the academy of Yavneh. The work continued for some 500 years in Palestine and in Babylonia, ending in the final redaction (c. 600) of the Talmud, a huge collection of legal and moral debates, rulings, liturgy, biblical exegesis, and legendary materials.

Christianity, which emerged as a distinct sect by the 2nd half of the 1st cent., is based on the teachings of Jesus, whom believers considered the Savior (Messiah or Christ) and son of God. Missionary activities of the Apostles and such early leaders as Paul of Tarsus spread the faith. Intermittent persecution, as in Rome under Nero in ad 64, on grounds of suspected disloyalty, failed to disrupt the Christian communities. Each congregation, generally urban and of plebeian character, was tightly organized under a leader (bishop), elders (presbyters or priests), and assistants (deacons). The four Gospels (accounts of the life and teachings of Jesus) and the Acts of the Apostles were written down in the late 1st and early 2nd cent. and circulated along with letters of Paul and other Christian leaders. An authoritative canon of these writings was not fixed until the 4th cent.

A school for priests was established at Alexandria in the 2nd cent. Its teachers (Origen c. 182-251) helped define doctrine and promote the faith in Greek-style philosophical works. Neoplatonism underwent Christian coloration in the writings of Church Fathers such as Augustine (354-430). Christian hermits began to associate in monasteries, first in Egypt (St. Pachomius c. 290-345), then in other eastern lands, then in the W (St. Benedict's rule, 529). Devotion to saints, especially Mary, mother of Jesus, spread. Under Constantine (r. 306-37), Christianity became in effect the established religion of the Empire. Pagan temples were expropriated, state funds were used to build churches and support the hierarchy, and laws were adjusted in accordance with Christian ideas. Pagan worship was banned by the end of the 4th cent., and severe restrictions were placed on Judaism.

The newly established church was rocked by doctrinal disputes, often exacerbated by regional rivalries. Chief heresies (as defined by church councils, backed by imperial authority) were Arianism, which denied the divinity of Jesus; Monophysitism, denying the human nature of Christ; Donatism, which regarded as invalid any sacraments administered by sinful clergy; and Pelagianism, which denied the necessity of unmerited divine aid (grace) for salvation.

Islam. The earliest Arab civilization emerged by the end of the 2nd millennium bc in the watered highlands of Yemen. Seaborne and caravan trade in frankincense and myrrh connected the area with the Nile and Fertile Crescent. The Minaean, Sabean (Sheba), and Himyarite states successively held sway. By Muhammad's time (7th cent. ad), the region was a province of Sassanian Persia. In the N, the Nabataean kingdom at Petra and the kingdom of Palmyra were Aramaicized, Romanized, and finally absorbed, as neighboring Judea had been, into the Roman Empire. Nomads shared the central region with a few trading towns and oases. Wars between tribes and raids on communities were common and were celebrated in a poetic tradition that by the 6th cent. helped establish a classic literary Arabic.

About 610, Muhammad, a 40-year-old Arab of Mecca, emerged as a prophet. He proclaimed a revelation from the one true God, calling on contemporaries to abandon idolatry and restore the faith of Abraham. He introduced his religion as "Islam," meaning "submission" to the one God, Allah, as a continuation of the biblical faith of Abraham, Moses, and Jesus, all respected as prophets in this system. His teachings, recorded in the Koran (al-Qur'an in Arabic), in many ways were inclusive of Abrahamic monotheistic ideas known to the Jews and Christians in Arabia. A key aspect of the Abrahamic connection was insistence on justice in society, which led to severe opposition among the aristocrats in Mecca. As conditions worsened for Muhammad and his followers, he decided in 622 to make a hijra (emigration) to Medina, 200 mi to the N. This event marks the beginning of the Muslim lunar calendar. Hostilities between Mecca and Medina increased, and in 629 Muhammad conquered Mecca. By the time he died in 632, nearly all the Arabian peninsula accepted his political and religious leadership.

After his death the majority of Muslims recognized the leadership of the caliph ("successor") Abu Bakr (632-34), followed by Umar (634-44), Uthman (644-56), and Ali (656-60). A minority, the Shiites, insisted instead on the leadership of Ali, Muhammad's cousin and son-in-law. By 644, Muslim rule over Arabia was confirmed. Muslim armies had threatened the Byzantine and Persian empires, which were weakened by wars and disaffection among subject peoples (including Coptic and Syriac Christians opposed to the Byzantine Orthodox establishment). Syria, Palestine, Egypt, Iraq, and Persia fell to Muslim armies. The new administration assimilated existing systems in the region; hence the conquered peoples participated in running of the empire. The Koran recognized the so-called Peoples of the Book, i.e., Christians, Jews, and Zoroastrians, as tolerated monotheists, and Muslim policy was relatively tolerant to minorities living as "protected" peoples. An expanded tax system, based on conquests of the Persian and Byzantine empires, provided revenue to organize campaigns against neighboring non-Muslim regions.

Under the Umayyads (661-750) and Abbasids (750-1256), territorial expansion led Muslim armies across N Africa and into Spain (711). Muslim armies in the W were stopped at Tours (France) in 732 by the Frankish ruler Charles Martel. Asia Minor, the Indus Valley, and Transoxiana were conquered in the E. The conversion of conquered peoples to Islam was gradual. In many places the official Arabic language supplanted the local tongues. But in the eastern regions the Arab rulers and their armies adopted Persian cultures and language as part of their Muslim identity.

Disputes over succession, and pious opposition to injustices in society, led to a number of oppositional movements, which also led to the factionalization of Muslim community. The Shiites supported leadership candidates descended from Muhammad, believing them to be carriers of some kind of divine authority. The Kharijites supported an egalitarian system derived from the Koran, opposing and even engaging in battle against those who did not agree with them.

New Peoples Enter World History: 400-900

Barbarian invasions. Germanic tribes infiltrated S and E from their Baltic homeland during the 1st millennium bc, reaching S Germany by 100 bc and the Black Sea by ad 214. Organized into large federated tribes under elected kings, most resisted Roman domination and raided the empire in time of civil war (Goths took Dacia in 214, raided Thrace in 251-69). Germanic troops and commanders dominated the Roman armies by the end of the 4th cent. Huns, invaders from Asia, entered Europe in 372, driving more Germans into the W empire. Emperor Valens allowed Visigoths to cross the Danube in 376. Huns under Attila (d. 453) raided Gaul, Italy, and the Balkans.

The W empire, weakened by overtaxation and social stagnation, was overrun in the 5th cent. Gaul was effectively lost in 406-7, Spain in 409, Britain in 410, Africa in 429-39. Rome was sacked in 410 by Visigoths under Alaric and in 455 by Vandals. The last western emperor, Romulus Augustulus, was deposed in 476 by the Germanic chief Odovacar.

Celts. Celtic cultures, which in pre-Roman times covered most of W Europe, were confined almost entirely to the British Isles after the Germanic invasions. St. Patrick completed (c. 457-92) the conversion of Ireland and a strong monastic tradition took hold. Irish monastic missionaries in Scotland, England, and the continent (Columba c. 521-97; Columban c. 543-615) helped restore Christianity after the Germanic invasions. Monasteries became centers of classic and Christian learning and presided over the recording of a Christianized Celtic mythology, elaborated by secular writers and bards. An intricate decorative art style developed, especially in book illumination (Lindisfarne Gospels, c. 700; Book of Kells, 8th cent.).

Successor states. The Visigothic kingdom in Spain (from 419) and much of France (to 507) saw continuation of Roman administration, language, and law (Breviary of Alaric, 506) until its destruction by the Muslims (711). The Vandal kingdom in Africa (from 429) was conquered by the Byzantines in 533. Italy was ruled successively by an Ostrogothic kingdom under Byzantine suzerainty (489-554), direct Byzantine government, and German Lombards (568-774). The Lombards divided the peninsula with the Byzantines and papacy under the dynamic reformer Pope Gregory the Great (590-604) and successors.

King Clovis (r. 481-511) united the Franks on both sides of the Rhine and, after his conversion to Christianity, defeated the Arian heretics, Burgundians (after 500), and Visigoths (507) with the support of native clergy and the papacy. Under the Merovingian kings, a feudal system emerged: Power was fragmented among hierarchies of military landowners. Social stratification, which in late Roman times had acquired legal, hereditary sanction, was reinforced. The Carolingians (747-987) expanded the kingdom and restored central power. Charlemagne (r. 768-814) conquered nearly all the Germanic lands, including Lombard Italy, and was crowned Emperor by Pope Leo III in Rome in 800. A centuries-long decline in commerce and arts was reversed under Charlemagne's patronage. He welcomed Jews to his kingdom, which became a center of Jewish learning (Rashi, 1040-1105). He sponsored the Carolingian Renaissance of learning under the Anglo-Latin scholar Alcuin (c. 732-804), who reformed church liturgy.

Byzantine Empire. Under Diocletian (r. 284-305) the empire had been divided into 2 parts to facilitate administration and defense. Constantine founded (330) Constantinople (at old Byzantium) as a fully Christian city. Commerce and taxation financed a sumptuous, orientalized court, a class of hereditary bureaucratic families, and magnificent urban construction (Hagia Sophia, 532-37). The city's fortifications and naval innovations repelled assaults by Goths, Huns, Slavs, Bulgars, Avars, Arabs, and Scandinavians. Greek replaced Latin as the official language by c. 700. Byzantine art, a solemn, sacral, and stylized variation of late classical styles (mosaics at the Church of San Vitale, Ravenna, Italy 526-48), was a starting point for medieval art in E and W Europe.

Justinian (r. 527-65) reconquered parts of Spain, N Africa, and Italy, codified Roman law (Codex Justinianus [529] was medieval Europe's chief legal text), closed the Platonic Academy at Athens, and ordered all pagans to convert. Lombards in Italy and Arabs in Africa retook most of his conquests. The Isaurian dynasty from Anatolia (from 717) and the Macedonian dynasty (867-1054) restored military and commercial power. The Iconoclast controversy (726-843) over the permissibility of images helped alienate the Eastern Church from the papacy.

Abbasid Empire. Baghdad (est. 762), became seat of the Abbasid dynasty (est. 750), while Ummayads continued to rule in Spain. A brilliant cosmopolitan civilization emerged, inaugurating a Muslim-Arab golden age. Arabic was the lingua franca of the empire; intellectual sources from Persian, Sanskrit, Greek, and Syriac were rendered into Arabic. Christians and Jews equally participated in this translation movement, which also involved interaction between Jewish legal thought and Islamic law, as much as between Christian theology and Muslim scholasticism. Persian-style court life, with art and music, flourished at the court of Harun al-Rashid (786-809), celebrated in the masterpiece known to English readers as The Arabian Nights. The sciences, medicine, and mathematics were pursued at Baghdad, Cordova, and Cairo (est. 969). The culmination of this intellectual synthesis in Islamic civilization came with the scientific and philosophical works of Avicenna (Ibn Sina, 980-1037), Averroes (Ibn Rushd, 1126-98), and Maimonides (1135-1204), a Jew who wrote in Arabic. This intellectual tradition was translated into Latin and opened a new period in Christian thought.

The decentralization of the Abbasid empire, from 874, led to establishment of various Muslim dynasties under different ethnic groups. Persians, Berbers, and Turks ruled different regions, retaining connection with the Abbasid caliph at the religious level. The Abbasid period also saw various religious movements against the orthodox position held by governing authorities. This situation in Muslim religion led to the establishment of different legal, theological, and mystical schools of thought. The most influential mass movement was Sufism, which aimed at the reaching out of the average individual in quest of a spiritual path. Al-Ghazali (1058-1111) is credited with reconciling personal Sufism with orthodox Sunni tradition.

Africa. Immigrants from Saba in S Arabia helped set up the Axum kingdom in Ethiopia in the 1st cent. (their language, Ge'ez, is preserved by the Ethiopian Church). In the 3rd cent., when the kingdom became Christianized, it defeated Kushite Meroe and expanded its influence into Yemen. Axum was the center of a vast ivory trade and controlled the Red Sea coast until c. 1100. Arab conquest in Egypt cut Axum's political and economic ties with Byzantium.

The Iron Age entered W Africa by the end of the 1st millennium bc. Ghana, the first known sub-Saharan state, ruled in the upper Senegal-Niger region c. 400-1240, controlling the trade of gold from mines in the S to trans-Sahara caravan routes to the N. The Bantu peoples, probably of W African origin, began to spread E and S perhaps 2,000 years ago, displacing the Pygmies and Bushmen of central and S Africa during a 1,500-year period.

Japan. The advanced Neolithic Yayoi period, when irrigation, rice farming, and iron and bronze casting techniques were introduced from China or Korea, persisted to c. ad 400. The myriad Japanese states were then united by the Yamato clan, under an emperor who acted as chief priest of the animistic Shinto cult. Japanese political and military intervention by the 6th cent. in Korea, then under strong Chinese influence, quickened a Chinese cultural invasion of Japan, bringing Buddhism, the Chinese language (which long remained a literary and governmental medium), Chinese ideographs, and Buddhist styles in painting, sculpture, literature, and architecture (7th cent., Horyu-ji temple at Nara). The Taika Reforms (646) tried unsuccessfully to centralize Japan according to Chinese bureaucratic and Buddhist philosophical values.

A nativist reaction against the Buddhist Nara period (710-94) ushered in the Heian period (794-1185) centered at the new capital, Kyoto. Japanese elegance and simplicity modified Chinese styles in architecture, scroll painting, and literature; the writing system was also simplified. The courtly novel Tale of Genji (1010-20) testifies to the enhanced role of women.

Southeast Asia. The historic peoples of SE Asia began arriving some 2,500 years ago from China and Tibet, displacing scattered aborigines. Their agriculture relied on rice and yams. Indian cultural influences were strongest; literacy and Hindu and Buddhist ideas followed the S India-China trade route. From the S tip of Indochina, the kingdom of Funan (1st-7th cent.) traded as far W as Persia. It was absorbed by Chenla, itself conquered by the Khmer Empire (600-1300). The Khmers, under Hindu god-kings (Suryavarman II, 1113-c. 1150), built the monumental Angkor Wat temple center for the royal phallic cult. The Nam-Viet kingdom in Annam, dominated by China and Chinese culture for 1,000 years, emerged in the 10th cent., growing at the expense of the Khmers, who also lost ground in the NW to the new, highly organized Thai kingdom. On Sumatra, the Srivijaya Empire controlled vital sea lanes (7th to 10th cent.). A Buddhist dynasty, the Sailendras, ruled central Java (8th-9th cent.), building at Borobudur one of the largest stupas in the world.

China. The Sui dynasty (581-618) ushered in a period of commercial, artistic, and scientific achievement in China, continuing under the Tang dynasty (618-906). Inventions like the magnetic compass, gunpowder, the abacus, and printing were introduced or perfected. Medical innovations included cataract surgery. The state, from its cosmopolitan capital, Chang-an, supervised foreign trade, which exchanged Chinese silks, porcelains, and art for spices, ivory, etc., over Central Asian caravan routes and sea routes reaching Africa. A golden age of poetry bequeathed valuable works to later generations (Tu Fu, 712-70; Li Po, 701-62). Landscape painting flourished.

Commercial and industrial expansion continued under the Northern Sung dynasty (960-1126), facilitated by paper money and credit notes. But commerce never achieved respectability; government monopolies expropriated successful merchants. The population, long stable at 50 million, doubled in 200 years with the introduction of early-ripening rice and the double harvest. In art, native Chinese styles were revived.

Americas. From 300 to 600 a Native American empire stretched from the Valley of Mexico to Guatemala, centering on the huge city Teotihuacán (founded 100 bc). To the S, in Guatemala, a high Mayan civilization developed (150-900) around hundreds of rural ceremonial centers. The Mayans improved on Olmec writing and the calendar and pursued astronomy and mathematics. In South America, a widespread pre-Inca culture grew from Tiahuanacu, Bolivia, near Lake Titicaca (Gateway of the Sun, c. 700).

Christian Europe Regroups and Expands: 900-1300

It's a Fact!

In 13th-century Europe salt was cheap but pepper was expensive (an ounce cost the same as a whole chicken). Knives and spoons were used at table, but there were no forks. People of means could enjoy fish, meats, vegetables, eggs, cheese, soup, and wine, but there was no coffee, tea, potatoes, pasta, corn, tomatoes, or chocolate.

Scandinavians. Pagan Danish and Norse (Viking) adventurers, traders, and pirates raided the coasts of the British Isles (Dublin, est. c. 831), France, and even the Mediterranean for over 200 years beginning in the late 8th cent. Inland settlement in the W was limited to Great Britain (King Canute, 994-1035) and Normandy, settled (911) under Rollo, as a fief of France. Vikings also reached Iceland (874), Greenland (c. 986), and North America (Leif Ericson and others, c. 1000). Norse traders (Varangians) developed Russian river commerce from the 8th to the 11th cent. and helped set up a state at Kiev in the late 9th cent. Conversion to Christianity occurred in the 10th cent., reaching Sweden 100 years later. In the 11th cent. Norman bands conquered S Italy and Sicily, and Duke William of Normandy conquered (1066) England, bringing feudalism and the French language, essential elements in later English civilization.

Central and East Europe. Slavs began to expand from about ad 150 in all directions in Europe, and by the 7th cent. they reached as far S as the Adriatic and Aegean seas. In the Balkan Peninsula they dislocated Romanized local populations or assimilated newcomers (Bulgarians, a Turkic people). The first Slavic states were Moravia (628) in Central Europe and the Bulgarian state (680) in the Balkans. Missions of St. Methodius and Cyril (whose Greek-based cyrillic alphabet is still used by some S and E Slavs) converted (863) Moravia.

The Eastern Slavs, part-civilized under the overlordship of the Turkish-Jewish Khazar trading empire (7th-10th cent.), gravitated toward Constantinople by the 9th cent. The Kievan state adopted (989) Eastern Christianity under Prince Vladimir. King Boleslav I (992-1025) began Poland's long history of eastern conquest. The Magyars (Hungarians), in present-day Hungary since 896, accepted (1001) Latin Christianity.

Germany. The German kingdom that emerged after the breakup of Charlemagne's W Empire remained a confederation of largely autonomous states. Otto I, a Saxon who was king from 936, established the Holy Roman Empire—a union of Germany and N Italy—in alliance with Pope John XII, who crowned (962) him emperor; he defeated (955) the Magyars. Imperial power was greatest under the Hohenstaufens (1138-1254), despite the growing opposition of the papacy, which ruled central Italy, and the Lombard League cities. Frederick II (1194-1250) improved administration and patronized the arts; after his death, German influence was removed from Italy.

Christian Spain. From its N mountain redoubts, Christian rule slowly migrated S through the 11th cent., when Muslim unity collapsed. After the capture (1085) of Toledo, the kingdoms of Portugal, Castile, and Aragon undertook repeated crusades of reconquest, finally completed in 1492. Elements of Islamic civilization persisted in recaptured areas, influencing all Western Europe.

Crusades. Pope Urban II called (1095) for a crusade to restore Asia Minor to Byzantium and to regain the Holy Land from the Turks. Some ten crusades (lasting until 1291) succeeded only in founding four temporary Frankish states in the Levant. The 4th crusade sacked (1204) Constantinople. In Rhineland (1096), England (1290), and France (1306), Jews were massacred or expelled, and wars were launched against Christian heretics (Albigensian crusade in France, 1229). Trade in eastern luxuries expanded, led by the Venetian naval empire.

Economy. The agricultural base of European life benefited from improvements in plow design (c. 1000) and by draining of lowlands and clearing of forests, leading to a rural population increase. Towns grew in N Italy, Flanders, and N Germany (Hanseatic League). Improvements in loom design permitted factory textile production. Guilds dominated urban trades from the 12th cent. Banking (centered in Italy, 12th-15th cent.) facilitated long-distance trade.

The Church. The split between the Eastern and Western churches was formalized in 1054. Western and Central Europe was divided into 500 bishoprics under one united hierarchy, but conflicts between secular and church authorities were frequent (German Investiture Controversy, 1075-1122). Clerical power was first strengthened through the international monastic reform begun at Cluny in 910. Popular religious enthusiasm often expressed itself in heretical movements (Waldensians from 1173), but was channeled by the Dominican (1215) and Franciscan (1223) friars into the religious mainstream.

Arts. Romanesque architecture (11th-12th cent.) expanded on late Roman models, using the rounded arch and massed stone to support enlarged basilicas. Painting and sculpture followed Byzantine models. The literature of chivalry was exemplified by the epic (Chanson de Roland, c. 1100) and by courtly love poems of the troubadours of Provence and minnesingers of Germany. Gothic architecture emerged in France (choir of St. Denis, c. 1040) and spread along with French cultural influence. Rib vaulting and pointed arches were used to combine soaring heights with delicacy, and they freed walls for display of stained glass. Exteriors were covered with painted relief sculpture and embellished with elaborate architectural detail.

Learning. Law, medicine, and philosophy were advanced at independent universities (Bologna, late 11th cent.), originally corporations of students and masters. Twelfth-cent. translations of Greek classics, especially Aristotle, encouraged an analytic approach. Scholastic philosophy, from Anselm (1033-1109) to Aquinas (1225-74), attempted to understand revelation through reason.

Apogee of Central Asian Power; Islam Grows: 1250-1500

Turks. Turkic peoples, of Central Asian ancestry, were a military threat to the Byzantine and Persian Empires from the 6th cent. After several waves of invasions, during which most of the Turks adopted Islam, the Seljuk Turks took (1055) Baghdad. They ruled Persia, Iraq and, after 1071, Asia Minor, where massive numbers of Turks settled. The empire was divided in the 12th cent. into smaller states ruled by Seljuks, Kurds (Saladin, c. 1137-93), and Mamluks (a military caste of former Turk, Kurd, and Circassian slaves), which governed Egypt and the Middle East until the Ottoman era (c. 1290-1922).

Osman I (r. c. 1290-1326) and succeeding sultans united Anatolian Turkish warriors in a militaristic state that waged holy war against Byzantium and Balkan Christians. Most of the Balkans had been subdued, and Anatolia united, when Constantinople fell (1453). By the mid-16th cent., Hungary, the Middle East, and N Africa had been conquered. The Turkish advance was stopped at Vienna (1529) and at the naval battle of Lepanto (1571) by Spain, Venice, and the papacy.

The Ottoman state was governed in accordance with orthodox Muslim law. Greek, Armenian, and Jewish communities were segregated and were ruled by religious leaders responsible for taxation; they dominated trade. State offices and most army ranks were filled by slaves through a system of child conscription among Christians.

India. Mahmud of Ghazni (971-1030) led repeated Turkish raids into N India. Turkish power was consolidated in 1206 with the start of the Sultanate at Delhi. Centralization of state power under the early Delhi sultans went far beyond traditional Indian practice. Muslim rule of most of the subcontinent lasted until the British conquest 600 years later.

Mongols. Genghis Khan (c. 1167-1227) first united the feuding Mongol tribes, and built their armies into an effective offensive force around a core of highly mobile cavalry. He and his immediate successors created the largest land empire in history; by 1279 it stretched from the E coast of Asia to the Danube, from the Siberian steppes to the Arabian Sea. East-West trade and contacts were facilitated (Marco Polo, c. 1254-1324).

The western Mongols were Islamized by 1295; successor states soon lost their Mongol character by assimilation. They were briefly reunited under the Turk Tamerlane (1336-1405).

Kublai Khan ruled China from his new capital Beijing (est. c. 1264). Naval campaigns against Japan (1274, 1281) and Java (1293) were defeated, the latter by the Hindu-Buddhist maritime kingdom of Majapahit. The Yuan dynasty used Mongols and other foreigners (including Europeans) in official posts and tolerated the return of Nestorian Christianity (suppressed 841-45) and the spread of Islam in the S and W. A native reaction expelled the Mongols in 1367-68.

Russia. The Kievan state in Russia, weakened by the decline of Byzantium and the rise of the Catholic Polish-Lithuanian state, was overrun (1238-40) by the Mongols. Only the northern trading republic of Novgorod remained independent. The grand dukes of Moscow emerged as leaders of a coalition of princes that eventually (by 1481) defeated the Mongols. After the fall of Constantinople in 1453, the Tsars (Caesars) at Moscow (from Ivan III, r. 1462-1505) set up an independent Russian Orthodox Church. Commerce failed to revive. The isolated Russian state remained agrarian, with the peasant class falling into serfdom.

Persia. A revival of Persian literature, making use of the Arab alphabet and literary forms, began in the 10th cent. (epic of Firdausi, 935-1020). An art revival, influenced by Chinese styles introduced after the Mongols came to power in Iran, began in the 13th cent. Persian cultural and political forms, and often the Persian language, were used for centuries by Turkish and Mongol elites from the Balkans to India. Persian mystics from Rumi (1207-73) to Jami (1414-92) promoted Sufism in their poetry.

Africa. Two militant Islamic Berber dynasties emerged from the Sahara to carve out empires from the Sahel to central Spain—the Almoravids (c. 1050-1140) and the fanatical Almohads (c. 1125-1269). The Ghanaian empire was replaced in the upper Niger by Mali (c. 1230-1340), whose Muslim rulers imported Egyptians to help make Timbuktu a center of commerce (in gold, leather, and slaves) and learning. The Songhay empire (to 1590) replaced Mali. To the S, forest kingdoms produced refined artworks (Ife terra cotta, Benin bronzes).

Other Muslim states in Nigeria (Hausas) and Chad originated in the 11th cent. and continued in some form until the 19th-cent. European conquest. Less-developed Bantu kingdoms existed across central Africa.

Some 40 Muslim Arab-Persian trading colonies and city-states were established all along the E African coast from the 10th cent. (Kilwa, Mogadishu). The interchange with Bantu peoples produced the Swahili language and culture. Gold, palm oil, and slaves were brought from the interior, stimulating the growth of the Monamatapa kingdom of the Zambezi (15th cent.). The Christian Ethiopian empire (from 13th cent.) continued the traditions of Axum.

Southeast Asia. Islam was introduced into Malaya and the Indonesian islands by Arab, Persian, and Indian traders. Coastal Muslim cities and states (starting before 1300) soon dominated the interior. Chief among these was the Malacca state (c. 1400-1511), on the Malay peninsula.

Arts and Statecraft Thrive in Europe: 1350-1600

Italian Renaissance and Humanism. Distinctive Italian achievements in the arts in the late Middle Ages (Dante, 1265-1321; Giotto, 1276-1337) led to the vigorous new styles of the Renaissance (14th-16th cent.). Patronized by the rulers of the quarreling petty states of Italy (Medicis in Florence and the papacy, c. 1400-1737), the plastic arts perfected realistic techniques, including perspective (Masaccio, 1401-28, Leonardo, 1452-1519). Classical motifs were used in architecture, and increased talent and expense were put into secular buildings. The Florentine dialect was refined as a national literary language (Petrarch, 1304-74). Greek refugees from the E strengthened the respect of humanist scholars for the classic sources. Soon an international movement aided by the spread of printing (Gutenberg, c. 1397(?)-1468), humanism was optimistic about the power of human reason (Erasmus of Rotterdam, 1466-1536, More's Utopia, 1516) and valued individual effort in the arts and in politics (Machiavelli, 1469-1527).

France. The French monarchy, strengthened in its repeated struggles with powerful nobles (Burgundy, Flanders, Aquitaine) by alliances with the growing commercial towns, consolidated bureaucratic control under Philip IV (r. 1285-1314) and extended French influence into Germany and Italy (popes at Avignon, France, 1309-1417). The Hundred Years War (1337-1453) ended English dynastic claims in France (battles of Crécy, 1346, and Poitiers, 1356; Joan of Arc executed, 1431). A French Renaissance, dating from royal invasions (1494, 1499) of Italy, was encouraged at the court of Francis I (r. 1515-47), who centralized taxation and law. French vernacular literature consciously asserted its independence (La Pléiade, 1549).

England. The evolution of England's unique political institutions began with the Magna Carta (1215), by which King John guaranteed the privileges of nobles and church against the monarchy and assured jury trial. After the Wars of the Roses (1455-85), the Tudor dynasty reasserted royal prerogatives (Henry VIII, r. 1509-47), but the trend toward independent departments and ministerial government also continued. English trade (wool exports from c. 1340) was protected by the nation's growing maritime power (Spanish Armada destroyed, 1588).

English replaced French and Latin in the late 14th cent. in law and literature (Chaucer, c. 1340-1400) and English translation of the Bible began (Wycliffe, 1380s). Elizabeth I (r. 1558-1603) presided over a confident flowering of poetry (Spenser, 1552-99), drama (Shakespeare, 1564-1616), and music.

German Empire. From among a welter of minor feudal states, church lands, and independent cities, the Habsburgs assembled a far-flung territorial domain, based in Austria from 1276. Family members held the title of Holy Roman Emperor from 1438 to the Empire's dissolution in 1806, but failed to centralize its domains, leaving Germany disunited for centuries. Resistance to Turkish expansion brought Hungary under Austrian control from the 16th cent. The Netherlands, Luxembourg, and Burgundy were added in 1477, curbing French expansion.

The Flemish painting tradition of naturalism, technical proficiency, and bourgeois subject matter began in the 15th cent. (Jan Van Eyck, c. 1390-1441), the earliest northern manifestation of the Renaissance. Albrecht Dürer (1471-1528) typified the merging of late Gothic and Italian trends in 16th-cent. German art. Imposing civic architecture flourished in the prosperous commercial cities.

Spain. Despite the unification of Castile and Aragon in 1479, the 2 countries retained separate governments, and the nobility, especially in Aragon and Catalonia, retained many privileges. Spanish lands in Italy (Naples, Sicily) and the Netherlands entangled the country in European wars through the mid-17th cent., while explorers, traders, and conquerors built up a Spanish empire in the Americas and the Philippines.

From the late 15th cent., a golden age of literature and art produced works of social satire (plays of Lope de Vega, 1562-1635; Cervantes, 1547-1616), as well as spiritual intensity (El Greco, 1541-1614; Velazquez, 1599-1660).

Black Death. The bubonic plague reached Europe from the E in 1348, killing up to half the population by 1350. Labor scarcity forced wages to rise and brought greater freedom to the peasantry, making possible peasant uprisings (Jacquerie in France, 1358; Wat Tyler's rebellion in England, 1381).

Explorations. Organized European maritime exploration began, seeking to evade the Venice-Ottoman monopoly of E trade and to promote Christianity. Beginning in 1418, expeditions from Portugal explored the W coast of Africa, until Vasco da Gama rounded the Cape of Good Hope in 1497 and reached India. A Portuguese trading empire was consolidated by the seizure of Goa (1510) and Malacca (1551). Japan was reached in 1542. The voyages of Christopher Columbus (1492-1504) uncovered a world new to Europeans, which Spain hastened to subdue. Navigation schools in Spain and Portugal, the development of large sailing ships (carracks), and the invention (c. 1475) of the rifle aided European penetration.

Mughals and Safavids. E of the Ottoman Empire, 2 Muslim dynasties ruled unchallenged in the 16th and 17th cent. The Mughal dynasty of India, founded by Persianized Turkish invaders from the NW under Babur, dates from their 1526 conquest of the Delhi Sultanate. The dynasty ruled most of India for more than 200 years, surviving nominally until 1857. Akbar (r. 1556-1605) consolidated administration at his glorious court, where the Urdu language (Persian-influenced Hindi) developed. Trade relations with Europe increased. Under Shah Jahan (1629-58), a secularized art fusing Hindu and Muslim elements flourished in miniature painting and in architecture (Taj Mahal). Sikhism (founded c. 1519) combined elements of both faiths. Suppression of Hindus and Shi'ite Muslims in S India in the late 17th cent. weakened the empire.

Fanatical devotion to the Shi'ite sect characterized the Safavids (1502-1736) of Persia and led to hostilities with the Sunni Ottomans for more than a century. The prosperity and the strength of the empire are evidenced by the mosques at its capital city, Isfahan. The Safavids enhanced Iranian national consciousness.

China. The Ming emperors (1368-1644), the last native dynasty in China, wielded unprecedented personal power, while the Confucian bureaucracy began to suffer from inertia. European trade (Portuguese monopoly through Macao from 1557) was strictly controlled. Jesuit scholars and scientists (Matteo Ricci, 1552-1610) introduced some Western science; their writings familiarized the West with China. Chinese technological inventiveness declined from this era, but the arts thrived, especially in the areas of painting and ceramics.

Japan. After the decline of the first hereditary shogunate (chief generalship) at Kamakura (1185-1333), fragmentation of power accelerated, as did the consequent social mobility. Under Kamakura and the Ashikaga shogunate (1338-1573), the daimyos (lords) and samurai (warriors) grew more powerful and promoted a martial ideology. Japanese pirates and traders plied the China coast. Popular Buddhist movements included the nationalist Nichiren sect (from c. 1250) and Zen (brought from China, 1191), which stressed meditation and a disciplined esthetic (tea ceremony, gardening, martial arts, No drama).

Reformed Europe Expands Overseas: 1500-1700

Reformation. Theological debate and protests against real and perceived clerical corruption existed in the medieval Christian world, expressed by such dissenters as John Wycliffe (c. 1320-84) and his followers (the Lollards) in England, and Huss (burned as a heretic, 1415) in Bohemia.

Martin Luther (1483-1546) preached that faith alone leads to salvation, without the mediation of clergy or good works. He attacked the authority of the pope, rejected priestly celibacy, and recommended individual study of the Bible (which he translated c. 1525). His 95 Theses (1517) led to his excommunication (1521). John Calvin (1509-64) said that God's elect were predestined for salvation and that good conduct and success were signs of election. Calvin in Geneva and John Knox (1505-72) in Scotland established theocratic states.

Henry VIII asserted English national authority and secular power by breaking away (1534) from the Catholic Church. Monastic property was confiscated, and some Protestant doctrines given official sanction.

Religious wars. A century and a half of religious wars began with a S German peasant uprising (1524), repressed with Luther's support. Radical sects—democratic, pacifist, millennarian—arose (Anabaptists ruled Münster in 1534-35) and were suppressed violently. Civil war in France from 1562 between Huguenots (Protestant nobles and merchants) and Catholics ended with the 1598 Edict of Nantes, tolerating Protestants (revoked 1685). Habsburg attempts to restore Catholicism in Germany were resisted in 25 years of fighting; the 1555 Peace of Augsburg guarantee of religious independence to local princes and cities was confirmed only after the Thirty Years War (1618-48), when much of Germany was devastated by local and foreign armies (Sweden, France).

A Catholic Reformation, or Counter Reformation, met the Protestant challenge, defining an official theology at the Council of Trent (1545-63). The Jesuit order (Society of Jesus), founded in 1534 by Ignatius Loyola (1491-1556), helped reconvert large areas of Poland, Hungary, and S Germany and sent missionaries to the New World, India, and China, while the Inquisition suppressed heresy in Catholic countries. A revival of religious fervor appeared in the devotional literature (Teresa of Avila, 1515-82) and in grandiose Baroque art (Bernini, 1598-1680).

Scientific Revolution. The late nominalist thinkers (Ockham, c. 1300-49) of Paris and Oxford challenged Aristotelian orthodoxy, allowing for a freer scientific approach. At the same time, metaphysical values, such as the Neoplatonic faith in an orderly, mathematical cosmos, still motivated and directed inquiry. Nicolaus Copernicus (1473-1543) promoted the heliocentric theory, which was confirmed when Johannes Kepler (1571-1630) discovered the mathematical laws describing the orbits of the planets. The traditional Christian-Aristotelian belief that the heavens and the earth were fundamentally different collapsed when Galileo (1564-1642) discovered moving sunspots, irregular moon topography, and moons around Jupiter, though he did face religious opposition (Galileo's retraction, 1633). He and Sir Isaac Newton (1642-1727) developed a mechanics that unified cosmic and earthly phenomena. Newton and Gottfried von Leibniz (1646-1716) invented calculus. René Descartes (1596-1650), best known for his influential philosophy, also invented analytic geometry.

An explosion of observational science included the discovery of blood circulation (Harvey, 1578-1657) and microscopic life (Leeuwenhoek, 1632-1723) and advances in anatomy (Vesalius, 1514-64, dissected corpses) and chemistry (Boyle, 1627-91). Scientific research institutes were founded: Florence (1657), London (Royal Society, 1660), Paris (1666). Inventions proliferated (Savery's steam engine, 1696).

Arts. Mannerist trends of the High Renaissance (Michelangelo, 1475-1564) exploited virtuosity, grace, novelty, and exotic subjects and poses. The notion of artistic genius was promoted. Private connoisseurs entered the art market. These trends were elaborated in the 17th cent. Baroque era on a grander scale. Dynamic movement in painting and sculpture was emphasized by sharp lighting effects, rich materials (colored marble, gilt), and realistic details. Curved facades, broken lines, rich detail, and ceiling decoration characterized Baroque architecture. Monarchs, princes, and prelates, usually Catholic, used Baroque art to enhance and embellish their authority, as in royal portraits (Velazquez, 1599-1660; Van Dyck, 1599-1641).

National styles emerged. In France, a taste for rectilinear order and serenity (Poussin, 1594-1665), linked to the new rational philosophy, was expressed in classical forms. The influence of classical values in French literature (tragedies of Racine, 1639-99) gave rise to the "battle of the Ancients and Moderns." New forms included the essay (Montaigne, 1533-92) and novel (Princesse de Cleves, La Fayette, 1678).

Dutch painting of the 17th cent. was unique in its wide social distribution. The Flemish tradition of undemonstrative realism reached its peak in Rembrandt (1606-69) and Jan Vermeer (1632-75).

Economy. European economic expansion was stimulated by the new trade with the East, by New World gold and silver, and by a doubling of population (50 million in 1450, 100 million in 1600). New business and financial techniques were developed and refined, such as joint-stock companies, insurance, and letters of credit and exchange. The Bank of Amsterdam (1609) and the Bank of England (1694) broke the old monopoly of private banking families. The rise of a business mentality was typified by the spread of clock towers in cities in the 14th cent. By the mid-15th cent., portable clocks were available; the first watch was invented in 1502.

By 1650, most governments had adopted the mercantile system, in which they sought to amass metallic wealth by protecting merchants' foreign and colonial trade monopolies. The rise in prices and the new coin-based economy undermined craft guild and feudal manorial systems. Expanding industries (clothweaving, mining) benefited from technical advances. Coal replaced wood as the chief fuel; it was used to fuel new 16th-cent. blast furnaces making cast iron.

New World. The Aztecs united much of the Meso-American area in a militarist empire by 1519, from their capital, Tenochtitlán (pop. 300,000), which was the center of a cult requiring ritual human sacrifice. Most of the civilized areas of South America were ruled by the centralized Inca Empire (1476-1534), stretching 2,000 mi from Ecuador to NW Argentina. Lavish and sophisticated traditions in pottery, weaving, sculpture, and architecture were maintained in both regions.

These empires, beset by revolts, fell in 2 short campaigns to gold-seeking Spanish forces based in the Antilles and Panama. Hernan Cortes took Mexico (1519-21); Francisco Pizarro, Peru (1532-35). From these centers, land and sea expeditions claimed most of North and South America for Spain. The indigenous high cultures did not survive the impact of Christian missionaries and the new upper class of whites and mestizos. Although the Spanish administration intermittently concerned itself with their welfare, the population was reduced by European diseases and remained impoverished at most levels. New World silver and such native products as potatoes, tobacco, corn, peanuts, chocolate, and rubber exercised a major economic influence on Europe.

Brazil, which the Portuguese reached in 1500 and settled after 1530, and the Caribbean colonies of several European nations developed a plantation economy where sugarcane, tobacco, cotton, coffee, rice, indigo, and lumber were grown by slaves. From the early 16th to late 19th cent., 10 million Africans were transported to slavery in the New World.

Netherlands. The urban, Calvinist N provinces of the Netherlands rebelled (1568) against Habsburg Spain and founded an oligarchic mercantile republic. Their control of the Baltic grain market enabled them to exploit Mediterranean food shortages. Religious refugees—French and Belgian Protestants, Iberian Jews—added to the commercial talent pool. After Spain absorbed Portugal (1580), the Dutch seized Portuguese possessions and created a vast but short-lived commercial empire in Brazil, the Antilles, Africa, India, Ceylon, Malacca, Indonesia, and Taiwan. The Dutch also challenged or supplanted Portuguese traders in China and Japan. Revolution in 1640 restored Portuguese independence.

England. Anglicanism became firmly established under Elizabeth I after a brief Catholic interlude under "Bloody Mary" (1553-58). But religious and political conflicts led to a rebellion (1642) by Parliament. Forces of the Roundheads (Puritans) defeated the Cavaliers (Royalists); Charles I was beheaded (1649). The new Commonwealth was ruled as a military dictatorship by Oliver Cromwell, who also brutally crushed (1649-51) an Irish rebellion. Conflicts within the Puritan camp (democratic Levelers defeated, 1649) aided the Stuart restoration (1660), but Parliament was strengthened and the peaceful "Glorious Revolution" (1688) advanced political and religious liberties (writings of Locke, 1632-1704). British privateers (Drake, 1540-96) challenged Spanish control of the New World and penetrated Asian trade routes (Madras taken, 1639). North American colonies (Jamestown, 1607; Plymouth, 1620) provided an outlet for religious dissenters from Europe.

France. Emerging from the religious civil wars in 1628, France regained military and commercial great power status (under the ministries of Richelieu, Mazarin, and Colbert). Under Louis XIV (reigned 1643-1715), royal absolutism triumphed over nobles and local parlements (defeat of Fronde, 1648-53). Permanent colonies were founded in Canada (1608), the Caribbean (1626), and India (1674).

Sweden. Sweden seceded from the Scandinavian Union in 1523. The thinly populated agrarian state (with copper, iron, and timber exports) was united by the Vasa kings, whose conquests by the mid-17th cent. made Sweden the dominant Baltic power. The empire collapsed in the Great Northern War (1700-21).

Poland. After the union with Lithuania in 1447, Poland ruled vast territories from the Baltic to the Black Sea, resisting German and Turkish incursions. Catholic nobles failed to gain the loyalty of their Orthodox Christian subjects in the E; commerce and trades were practiced by German and Jewish immigrants. The bloody 1648-49 Cossack uprising began the kingdom's dismemberment.

China. A new dynasty, the Manchus, invaded from the NE, seized power in 1644, and expanded Chinese control to its greatest extent in Central and SE Asia. Trade and diplomatic contact with Europe grew, carefully controlled by China. New crops (sweet potato, maize, peanut) allowed an economic and population growth (pop. 300 million, in 1800). Traditional arts and literature were pursued with increased sophistication (Dream of the Red Chamber, novel, mid-18th cent.).

Japan. Tokugawa Ieyasu, shogun from 1603, finally unified and pacified feudal Japan. Hereditary daimyos and samurai monopolized government office and the professions. An urban merchant class grew, literacy spread, and a cultural renaissance occurred (haiku, a verse innovation of the poet Basho, 1644-94). Fear of European domination led to persecution of Christian converts from 1597 and to stringent isolation from outside contact from 1640.

Philosophy, Industry, and Revolution: 1700-1800

Science and Reason. Greater faith in reason and empirical observation, espoused since the Renaissance (Francis Bacon, 1561-1626), was bolstered by scientific discoveries . René Descartes (1596-1650) used a rationalistic approach modeled on geometry and introspection to discover "self-evident" truths as a foundation of knowledge. Sir Isaac Newton emphasized induction from experimental observation. Baruch de Spinoza (1632-77), who called for political and intellectual freedom, developed a systematic rationalistic philosophy in his classic work Ethics.

French philosophers assumed leadership of the Enlightenment in the 18th cent. Montesquieu (1689-1755) used British history to support his notions of limited government. Voltaire's (1694-1778) diaries and novels of exotic travel illustrated the intellectual trends toward secular ethics and relativism. Jean-Jacques Rousseau's (1712-1778) radical concepts of the social contract and of the inherent goodness of the common man gave impetus to antimonarchical republicanism. The Encyclopedia (1751-72, edited by Diderot and d'Alembert), designed as a monument to reason, was largely devoted to practical technology.

In England, ideals of liberty were connected with empiricist philosophy and science in the followers of John Locke. But British empiricism, especially as developed by the skeptical David Hume (1711-76), radically reduced the role of reason in philosophy, as did the evolutionary approach to law and politics of Edmund Burke (1729-97) and the utilitarian ethics of Jeremy Bentham (1748-1832). Adam Smith (1723-90) and other physiocrats called for a rationalization of economic activity by removing artificial barriers to a supposedly natural free exchange of goods.

German writers participated in the new philosophical trends popularized by Christian von Wolff (1679-1754). Immanuel Kant's (1724-1804) transcendental idealism, unifying an empirical epistemology with a priori moral and logical concepts, directed German thought away from skepticism. Italian contributions included work on electricity (Galvani, 1737-98; Volta, 1745-1827), the pioneer historiography of Vico (1668-1744), and writings on penal reform (Beccaria, 1738-94). Benjamin Franklin (1706-90) was celebrated in Europe for his varied achievements.

The growth of the press (Spectator, 1711-12) and the wide distribution of realistic but sentimental novels attested to the increase of a large bourgeois public.

Arts. Rococo art, characterized by extravagant decorative effects, asymmetries copied from organic models, and artificial pastoral subjects, was favored by the continental aristocracy for most of the cent. (Watteau, 1684-1721) and had musical analogies in the ornamentalized polyphony of late Baroque. The Neoclassical art after 1750, associated with the new scientific archaeology, was more streamlined and was infused with the supposed moral and geometric rectitude of the Roman Republic (David, 1748-1825). In England, town planning on a grand scale began.

Industrial Revolution in England. Agricultural improvements, such as the sowing drill (1701) and livestock breeding, were implemented on the large fields provided by enclosure of common lands by private owners. Profits from agriculture and from colonial and foreign trade (1800 volume, £54 million) were channeled through hundreds of banks and the Stock Exchange (est. 1773) into new industrial processes.

The Newcomen steam pump (1712) aided coal mining. Coal fueled the new efficient steam engines patented by James Watt in 1769, and coke-smelting produced cheap, sturdy iron for machinery by the 1730s. The flying shuttle (1733) and spinning jenny (c. 1764) were used in the large new cotton textile factories, where women and children were much of the work force. Goods were transported cheaply over canals (2,000 mi; built 1760-1800).

American Revolution. The British colonies in North America attracted a mass immigration of reli­gious dissenters and poor people throughout the 17th and 18th cent., coming from the British Isles, Germany, the Netherlands, and other countries. The population reached 3 million non-natives by the 1770s. The small native population was greatly reduced by European diseases and by wars with the various colonies. British attempts to control colonial trade and to tax the colonists to pay for the costs of colonial administration and defense clashed with notions of local self-government and eventually provoked the colonies to rebellion.

Central and East Europe. The monarchs of the three states that dominated E Europe—Austria, Prussia, and Russia—accepted the advice and legitimation of philosophes in creating modern, centralized institutions in their kingdoms, which were enlarged by the division (1772-95) of Poland.

Under Frederick II (called the Great) (r. 1740-86) Prussia, with its efficient modern army, doubled in size. State monopolies and tariff protection fostered industry, and some legal reforms were introduced. Austria's heterogeneous realms were unified under Maria Theresa (r. 1740-80) and Joseph II (r. 1780-90). Reforms in education, law, and religion were enacted, and the Austrian serfs were freed (1781). With its defeat in the Seven Years' War in 1763, Austria failed to regain Silesia, which had been seized by Prussia, but it was compensated by expansion to the E and S (Hungary, Slavonia, 1699; Galicia, 1772).

Russia, whose borders continued to expand, adopted some Western bureaucratic and economic policies under Peter I (r. 1682-1725) and Catherine II (r. 1762-96). Trade and cultural contacts with the West multiplied from the new Baltic Sea capital, St. Petersburg (est. 1703).

French Revolution. The growing French middle class lacked political power and resented aristocratic tax privileges, especially in light of the successful American Revolution. Peasants lacked adequate land and were burdened with feudal obligations to nobles. War with Britain led to the loss of French Canada and drained the treasury, finally forcing the king to call the Estates-General in 1789 (first time since 1614), in an atmosphere of food riots (poor crop in 1788).

Aristocratic resistance to absolutism was soon overshadowed by the reformist Third Estate (middle class), which proclaimed itself the National Constituent Assembly June 17 and took the "Tennis Court oath" on June 20 to secure a constitution. The storming of the Bastille on July 14, 1789, by Parisian artisans was followed by looting and seizure of aristocratic property throughout France. Assembly reforms included abolition of class and regional privileges, a Declaration of Rights, suffrage by taxpayers (75% of males), and the Civil Constitution of the Clergy providing for election and loyalty oaths for priests. A republic was declared Sept. 22, 1792, in spite of royalist pressure from Austria and Prussia, which had declared war in April (joined by Britain the next year). Louis XVI was beheaded Jan. 21, 1793, and Queen Marie Antoinette was beheaded Oct. 16, 1793.

Royalist uprisings in La Vendée and military reverses led to institution of a reign of terror in which tens of thousands of opponents of the Revolution and criminals were executed. Radical reforms in the Convention period (Sept. 1793-Oct. 1795) included the abolition of colonial slavery, economic measures to aid the poor, support of public education, and a short-lived de-Christianization.

Division among radicals (execution of Hebert, Danton, and Robespierre, 1794) aided the ascendancy of a moderate Directory, which consolidated military victories. Napoleon Bonaparte (1769-1821), a popular young general, exploited political divisions and participated in a coup Nov. 9, 1799, making himself first consul (dictator).

India. Sikh and Hindu rebels (Rajputs, Marathas) and Afghans destroyed the power of the Mughals during the 18th cent. After France's defeat (1763) in the Seven Years' War, Britain was the primary European trade power in India. Its control of inland Bengal and Bihar was recognized (1765) by the Mughal shah, who granted the British East India Co. (under Clive, 1725-74) the right to collect land revenue there. Despite objections from Parliament (1784 India Act), the company's involvement in local wars and politics led to repeated acquisitions of new territory. The company exported Indian textiles, sugar, and indigo.

Change Gathers Steam: 1800-40

French ideals and empire spread. Inspired by the ideals of the French Revolution, and supported by the expanding French armies, new republican regimes arose near France: the Batavian Republic in the Netherlands (1795-1806), the Helvetic Republic in Switzerland (1798-1803), the Cisalpine Republic in N Italy (1797-1805), the Ligurian Republic in Genoa (1797-1805), and the Parthenopean Republic in S Italy (1799). A Roman Republic existed briefly in 1798 after Pope Pius VI was arrested by French troops. In Italy and Germany, new nationalist sentiments were stimulated both in imitation of and in reaction to developments in France (anti-French and anti-Jacobin peasant uprisings in Italy, 1796-99).

From 1804, when Napoleon declared himself emperor, to 1812, a succession of military victories (Austerlitz, 1805; Jena, 1806) extended his control over most of Europe, through puppet states (Confederation of the Rhine united W German states for the first time and Grand Duchy of Warsaw revived Polish national hopes), expansion of the empire, and alliances.

Among the lasting reforms initiated under Napoleon's absolutist reign were: establishment of the Bank of France, centralization of tax collection, codification of law along Roman models (Code Napoléon), and reform and extension of secondary and university education. In an 1801 concordat, the papacy recognized the effective autonomy of the French Catholic Church.

Napoleon's continental successes were offset by British victory under Adm. Horatio Nelson in the Battle of Trafalgar (1805).

In all, some 400,000 French soldiers were killed in the Napoleonic Wars, along with about 600,000 foreign troops.

Last gasp of old regime. The disastrous 1812 invasion of Russia exposed Napoleon's overextension. After Napoleon's 1814 exile at Elba, his armies were defeated (1815) at Waterloo, by British and Prussian troops.

At the Congress of Vienna, the monarchs and princes of Europe redrew their boundaries, to the advantage of Prussia (in Saxony and the Ruhr), Austria (in Illyria and Venetia), and Russia (in Poland and Finland). British conquest of Dutch and French colonies (S Africa, Ceylon, Mauritius) was recognized, and France, under the restored Bourbons, retained its expanded 1792 borders. The settlement brought 50 years of international peace to Europe.

But the Congress was unable to check the advance of liberal ideals and of nationalism among the smaller European nations. The 1825 Decembrist uprising by liberal officers in Russia was easily suppressed. But an independence movement in Greece, stirred by commercial prosperity and a cultural revival, succeeded in expelling Ottoman rule by 1831, with the aid of Britain, France, and Russia.

A constitutional monarchy was secured in France by the 1830 Revolution; Louis Philippe became king. The revolutionary contagion spread to Belgium, which gained its independence (1830) from the Dutch monarchy, to Poland, whose rebellion was defeated (1830-31) by Russia, and to Germany.

Romanticism. A new style in intellectual and artistic life replaced Neoclassicism and Rococo after the mid-18th cent. By the early 19th cent., Romanticism prevailed in Europe.

Rousseau had begun the reaction against rationalism; in education (Émile, 1762) he stressed subjective spontaneity over regularized instruction. German writers (Lessing, 1729-81; Herder, 1744-1803) favorably compared the German folk song to classical forms and began a cult of Shakespeare, whose passion and "natural" wisdom was a model for the romantic Sturm und Drang (Storm and Stress) movement. Goethe's Sorrows of Young Werther (1774) set the model for the tragic, passionate genius.

A new interest in Gothic architecture in England after 1760 (Walpole, 1717-97) spread through Europe, associated with an aesthetic Christian and mystic revival (Blake, 1757-1827). Celtic, Norse, and German mythology and folk tales were revived or imitated (Macpherson's Ossian translation, 1762; Grimm's Fairy Tales, 1812-22). The medieval revival (Scott's Ivanhoe, 1819) led to a new interest in history, stressing national differences and organic growth (Carlyle, 1795-1881; Michelet, 1798-1874), corresponding to theories of natural evolution (Lamarck's Philosophie Zoologique, 1809; Lyell's Geology, 1830-33). A reaction against classicism characterized the English romantic poets (beginning with Wordsworth, 1770-1850). Revolution and war fed an emphasis on freedom and conflict, expressed by both poets (Byron, 1788-1824; Hugo, 1802-85) and philosophers (Hegel, 1770-1831).

Wild gardens replaced the formal French variety, and painters favored rural, stormy, and mountainous landscapes (Turner, 1775-1851; Constable, 1776-1837). Clothing became freer, with wigs, hoops, and ruffles discarded. Originality and genius were expected in the life as well as the work of inspired artists (Murger's Scenes from Bohemian Life, 1847-49). Exotic locales and themes (as in Gothic horror stories) were used in art and literature (Delacroix, 1798-1863; Poe, 1809-49).

Music exhibited the new dramatic style and a breakdown of classical forms (Beethoven, 1770-1827). The use of folk melodies and modes aided the growth of distinct national traditions (Glinka in Russia, 1804-57).

Latin America. Francois Toussaint L'Ouverture led a successful slave revolt in Haiti, which subsequently became the first Latin American state to achieve independence (1804). The mainland Spanish colonies won their independence (1810-24), under such leaders as Simon Bolivar (1783-1830). Brazil became an independent empire (1822) under the Portuguese prince regent. A new class of military officers divided power with large landholders and the church.

United States. Territory under U.S. control nearly doubled in size with the Louisiana Purchase (1803). Heavy immigration and exploitation of ample natural resources fueled rapid economic growth. The spread of the franchise, public education, and antislavery sentiment were signs of a widespread democratic ethic.

China. Failure to keep pace with Western arms technology exposed China to greater European influence and hampered efforts to bar imports of opium, which had damaged Chinese society and drained wealth overseas. In the Opium War (1839-42), Britain forced China to expand trade opportunities and to cede Hong Kong.

Triumph of Progress: 1840-80

Idea of Progress. As a result of the cumulative scientific, economic, and political changes of the preceding eras, the idea took hold among literate people in the West that continuing growth and improvement was the usual state of human and natural life.

Charles Darwin's statement of the theory of evolution and survival of the fittest (Origin of Species, 1859), defended by intellectuals and scientists against theological objections, was taken as confirmation that progress was the natural direction of life. The controversy helped define popular ideas of the dedicated scientist and of science's increasing control over the world (Foucault's demonstration of earth's rotation, 1851; Pasteur's germ theory, 1861).

Liberals following Ricardo (1772-1823) in their faith that unrestrained competition would bring continuous economic expansion sought to adjust political life to new social realities and believed that unregulated competition of ideas would yield truth (Mill, 1806-73). In England, successive reform bills (1832, 1867, 1884) gave representation to the new industrial towns and extended the franchise to the middle and lower classes and to Catholics, Dissenters, and Jews. On both sides of the Atlantic, reformists tried to improve conditions for the mentally ill (Dix, 1802-87), women (Anthony, 1820-1906), and prisoners. Slavery was barred in the British Empire (1833), the U.S. (1865), and Brazil (1888).

Socialist theories based on ideas of human perfectibility or progress were widely disseminated. Utopian socialists such as Saint-Simon (1760-1825) envisaged an orderly, just society directed by a technocratic elite. A model factory town, New Lanark, Scotland, was set up by utopian Robert Owen (1771-1858), and communal experiments were tried in the U.S. (Brook Farm, Mass., 1841-47). Bakunin's (1814-76) anarchism represented the opposite extreme of total freedom. Karl Marx (1818-83) posited the inevitable triumph of socialism in industrial countries through a dialectical process of class conflict.

Spread of industry. The technical processes and managerial innovations of the English industrial revolution spread to Europe (especially Germany) and the U.S., causing an explosion of industrial production, demand for raw materials, and competition for markets. Inventors, both trained and self-taught, provided means for larger-scale production (Bessemer steel, 1856; sewing machine, 1846). Many inventions were shown at the universal prosperity-themed 1851 London Great Exhibition at the Crystal Palace.

Local specialization and long-distance trade were aided by a revolution in transportation and communication. Railroads were first introduced in the 1820s in England and the U.S. Over 150,000 mi of track had been laid worldwide by 1880, with another 100,000 mi laid in the next decade. Steamships were improved (Savannah crossed Atlantic, 1819). The telegraph, perfected by 1844 (Morse), connected the Old and New Worlds by cable in 1866 and quickened the pace of international commerce and politics. The first commercial telephone exchange went into operation in the U.S. in 1878.

The new class of industrial workers, uprooted from their rural homes, lacked job security and suffered from dangerous overcrowding at work and at home. Many responded by organizing trade unions (legalized in England, 1824; France, 1884). The U.S. Knights of Labor had 700,000 members by 1886. The First International (1864-76) tried to unite workers worldwide around a Marxist program. The quasi-Socialist Paris Commune uprising (1871) was violently suppressed. Acts to reduce child labor and regulate conditions were passed (1833-50 in England). Social security measures were introduced by the Bismarck regime (1883-89) in Germany.

Revolutions of 1848. Among the causes of the continent-wide revolutions were an international collapse of credit and resulting unemployment, bad harvests in 1845-47, and a cholera epidemic. The new urban proletariat and expanding bourgeoisie demanded greater political roles. Republics were proclaimed in France, Rome, and Venice. Nationalist feelings reached fever pitch in the Habsburg empire, as Hungary declared independence under Kossuth, as a Slav Congress demanded equality, and as Piedmont tried to drive Austria from Lombardy. A national liberal assembly at Frankfurt called for German unification.

But riots fueled bourgeois fear of socialism (Marx and Engels, Communist Manifesto, 1848), and peasants remained conservative. The old establishment—the Papacy, the Habsburgs with the help of the Czarist Russian army —was able to rout the revolutionaries by 1849. The French Republic succumbed to a renewed monarchy by 1852 (Emperor Napoleon III).

Great nations unified. Using the "blood and iron" tactics of Bismarck from 1862, Prussia controlled N Germany by 1867 (war with Denmark, 1864; Austria, 1866). After defeating France in 1870 (annexation of Alsace-Lorraine), it won the allegiance of S German states. A new German Empire was proclaimed (1871). Italy, inspired by Giuseppe Mazzini (1805-72) and Giuseppe Garibaldi (1807-82), was unified by the reformed Piedmont kingdom through uprisings, plebiscites, and war.

The U.S., its area expanded after the 1846-48 Mexican War, defeated (1861-65) a secession attempt by southern states in the Civil War. Canadian provinces were united in an autonomous Dominion of Canada (1867). Control in India was removed from the East India Co. and centralized under British administration after the 1857-58 Sepoy rebellion, laying the groundwork for the modern Indian State. Queen Victoria was named Empress of India (1876).

Europe dominates Asia. The Ottoman Empire began to collapse in the face of Balkan nationalisms and European imperial incursions in N Africa (Suez Canal, 1869). The Turks had lost control of most of both regions by 1882. Russia completed its expansion S by 1884 (despite the temporary setback of the Crimean War with Turkey, Britain, and France, 1853-56), taking Turkestan, all the Caucasus, and Chinese areas in the E and sponsoring Balkan Slavs against the Turks. A succession of reformist and reactionary regimes presided over a slow modernization (serfs freed, 1861). Persian independence suffered as Russia and British India competed for influence.

China was forced to sign a series of unequal treaties with European powers and Japan. Overpopulation and an inefficient dynasty brought misery and caused rebellions (Taiping, Muslims) leaving tens of millions dead. Japan was forced by the U.S. (Commodore Perry's visits, 1853-54) and Europe to end its isolation. The Meiji restoration (1868) gave power to a Westernizing oligarchy. Intensified empire-building gave Burma to Britain (1824-85) and Indochina to France (1862-95). Christian missionary activity followed imperial and trade expansion in Asia.

Respectability. Fine arts were expected to reflect and encourage the good morals and manners among the Victorians. Prudery, exaggerated delicacy, and familial piety were heralded by Bowdler's expurgated Shakespeare edition (1818). Government-supported mass education sought to inculcate a work ethic as a means to escape poverty (Horatio Alger, 1832-99).

The official Beaux Arts school in Paris set an international style of imposing public buildings (Paris Opera, 1861-74; Vienna Opera, 1861-69) and uplifting statues (Bartholdi's Statue of Liberty, 1884). Realist painting, influenced by photography (Daguerre, 1837), appealed to a new mass audience with social or historical narrative (Wilkie, 1785-1841; Poynter, 1836-1919) or with serious religious, moral, or social messages (pre-Raphaelites, Millet's Angelus, 1858) often drawn from ordinary life. The Impressionists (Monet, 1840-1926; Pissarro, 1830-1903; Renoir, 1841-1919) re­jected the formalism, sentimentality, and precise techniques of academic art in favor of a spontaneous, undetailed rendering of the world through careful representation of the effect of natural light on objects.

Realistic novelists presented the full panorama of social classes and personalities, but retained sentimentality and moral judgment (Dickens, 1812-70; Eliot, 1819-80; Tolstoy, 1828-1910; Balzac, 1799-1850).

Veneer of Stability: 1880-1900

Imperialism triumphant. The vast African interior, visited by European explorers (Barth, 1821-65; Livingstone, 1813-73), was conquered by the European powers in rapid, competitive thrusts from their coastal bases after 1880, mostly for domestic political and international strategic reasons. W African Muslim kingdoms (Fulani), Arab slave traders (Zanzibar), and Bantu military confederations (Zulu) were alike subdued. Only Christian Ethiopia (defeat of Italy, 1896) and Liberia resisted successfully. France (W Africa) and Britain ("Cape to Cairo," Boer War, 1899-1902) were the major beneficiaries. The ideology of "the white man's burden" (Kipling, Barrack Room Ballads, 1892) or of a "civilizing mission" (France) justified the conquests.

W European foreign capital investment soared to nearly $40 billion by 1914, but most was in E Europe (France, Germany), the Americas (Britain), and Europe's colonies. The foundation of the modern interdependent world economy was laid, with cartels dominating raw material trade.

An industrious world. Industrial and technological proficiency characterized the 2 new great powers—Germany and the U.S. Coal and iron deposits enabled Germany to reach 2nd or 3rd place status in iron, steel, and shipbuilding by the 1900s. German electrical and chemical industries were world leaders. The U.S. post-Civil War boom (interrupted by "panics"—1884, 1893, 1896) was shaped by massive immigration from S and E Europe from 1880, government subsidy of railroads, and huge private monopolies (Standard Oil, 1870; U.S. Steel, 1901). The Spanish-American War, 1898 (Philippine Insurrection, 1899-1902), and the Open Door policy in China (1899) made the U.S. a world power.

England led in urbanization, with London the world capital of finance, insurance, and shipping. Sewer systems (Paris, 1850s), electric subways (London, 1890), parks, and bargain department stores helped improve living standards for most of the urban population of the industrial world.

Westernization of Asia. Asian reaction to European economic, military, and religious incursions took the form of imitation of Western techniques and adoption of Western ideas of progress and freedom. The Chinese "self-strengthening" movement of the 1860s and 1870s included rail, port, and arsenal improvements and metal and textile mills. Reformers such as K'ang Yu-wei (1858-1927) won liberalizing reforms in 1898, right after the European and Japanese "scramble for concessions."

A universal education system in Japan and importation of foreign industrial, scientific, and military experts aided Japan's rapid modernization after 1868, under the authoritarian Meiji regime. Japan's victory in the Sino-Japanese War (1894-95) put Formosa and Korea in its power.

In India, the British alliance with the remaining princely states masked reform sentiment among the Westernized urban elite; higher education had been conducted largely in English for 50 years. The Indian National Congress, founded in 1885, demanded a larger government role for Indians.

Fin-de-siècle sophistication. Naturalist writers pushed realism to its extreme limits, adopting a quasi-scientific attitude and writing about formerly taboo subjects such as sex, crime, extreme poverty, and corruption (Flaubert, 1821-80; Zola, 1840-1902; Hardy, 1840-1928). Unseen or repressed psychological motivations were explored in the clinical and theoretical works of Sigmund Freud (1856-1939) and in works of fiction (Dostoyevsky, 1821-81; James, 1843-1916; Schnitzler, 1862-1931; others).

A contempt for bourgeois life or a desire to shock a complacent audience was shared by the French symbolist poets (Verlaine, 1844-96; Rimbaud, 1854-91), by neopagan English writers (Swinburne, 1837-1909), by continental dramatists (Ibsen, 1828-1906), and by satirists (Wilde, 1854-1900). The German philosopher Friedrich Nietzsche (1844-1900) was influential in his elitism and pessimism.

Postimpressionist art neglected long-cherished conventions of representation (Cézanne, 1839-1906) and showed a willingness to learn from primitive and non-European art (Gauguin, 1848-1903; Japanese prints).

Racism. Gobineau (1816-82) gave a pseudobiological foundation to modern racist theories, which spread in Europe in the latter 19th cent., along with Social Darwinism, the belief that societies are and should be organized as a struggle for survival of the fittest. The medieval period was interpreted as an era of natural Germanic rule (Chamberlain, 1855-1927), and notions of racial superiority were associated with German national aspirations (Treitschke, 1834-96). Anti-Semitism, with a new racist rationale, became a significant political force in Germany (Anti-Semitic Petition, 1880), Austria (Lueger, 1844-1910), and France (Dreyfus affair, 1894-1906).

Last Respite: 1900-9

Alliances. While the peace of Europe (and its dependencies) continued to hold (1907 Hague Conference extended the rules of war and international arbitration procedures), imperial rivalries, protectionist trade practices (in Germany and France), and the escalating arms race (British Dreadnought battleship launched; Germany widens Kiel canal, 1906) exacerbated minor disputes (German-French Moroccan "crises," 1905, 1911).

Security was sought through alliances: Triple Alliance (Germany, Austria-Hungary, Italy; renewed in 1902 and 1907); Anglo-Japanese Alliance (1902), Franco-Russian Alliance (1899), Entente Cordiale (Britain, France, 1904), Anglo-Russian Treaty (1907), German-Ottoman friendship.

Ottomans decline. The inefficient, corrupt Ottoman government was unable to resist further loss of territory. Nearly all European lands were lost in 1912 to Serbia, Greece, Montenegro, and Bulgaria. Italy took Libya and the Dodecanese islands the same year, and Britain took Kuwait (1899) and the Sinai (1906). The Young Turk revolution in 1908 forced the sultan to restore a constitution, and it introduced some social reform, industrialization, and secularization.

British Empire. British trade and cultural influence remained dominant in the empire, but constitutional reforms presaged its eventual dissolution: The colonies of Australia were united in 1901 under a self-governing commonwealth. New Zealand acquired dominion status in 1907. The old Boer republics joined Cape Colony and Natal in the self-governing Union of South Africa in 1910.

The 1909 Indian Councils Act enhanced the role of elected province legislatures in India. The Muslim League (founded 1906) sought separate communal representation.

East Asia. Japan exploited its growing industrial power to expand its empire. Victory in the 1904-5 war against Russia (naval battle of Tsushima, 1905) assured Japan's domination of Korea (annexed 1910) and Manchuria (Port Arthur taken, 1905).

In China, central authority began to crumble (empress died, 1908). Reforms (Confucian exam system ended 1905, modernization of the army, building of railroads) were inadequate, and secret societies of reformers and nationalists, inspired by the Westernized Sun Yat-sen (1866-1925) fomented periodic uprisings in the S.

Siam, whose independence had been guaranteed by Britain and France in 1896, was split into spheres of influence by those countries in 1907.

Russia. The population of the Russian Empire approached 150 million in 1900. Reforms in education, in law, and in local institutions (zemstvos) and an industrial boom starting in the 1880s (oil, railroads) created the beginnings of a modern state, despite the autocratic tsarist regime. Liberals (1903 Union of Liberation), Socialists (Social Democrats founded 1898, Bolsheviks split off 1903), and populists (Social Revolutionaries founded 1901) were periodically repressed, and national minorities were persecuted (anti-Jewish pogroms, 1903, 1905-6).

An industrial crisis after 1900 and harvest failures aggravated poverty among urban workers, and the 1904-5 defeat by Japan (which checked Russia's Asian expansion) sparked the Revolution of 1905-6. A Duma (parliament) was created, and an agricultural reform (under Stolypin, prime minister 1906-11) created a large class of land-owning peasants (kulaks).

The world shrinks. Developments in transportation and communication and mass population movements helped create an awareness of an interdependent world. Early automobiles (Daimler, Benz, 1885) were experimental or were designed as luxuries. Assembly-line mass production (Ford Motor Co., 1903) made the invention practicable, and by 1910 nearly 500,000 motor vehicles were registered in the U.S. alone. Heavier-than-air flights began in 1903 in the U.S. (Wright brothers' Flyer), preceded by glider, balloon, and model plane advances in several countries. Trade was advanced by improvements in ship design (gyrocompass, 1910), speed (Lusitania crossed Atlantic in 5 days, 1907), and reach (Panama Canal begun, 1904).

The first transatlantic radio telegraphic transmission occurred in 1901, 6 years after Marconi discovered radio. Radio transmission of human speech had been made in 1900. Telegraphic transmission of photos was achieved in 1904, lending immediacy to news reports. Phonographs, popularized by Caruso's recordings (starting 1902), made for quick international spread of musical styles (ragtime). Motion pictures, perfected in the 1890s (Dickson, Lumière brothers), became a popular and artistic medium after 1900; newsreels appeared in 1909.

Emigration from crowded European centers soared in the decade: 9 million migrated to the U.S., and millions more went to Siberia, Canada, Argentina, Australia, South Africa, and Algeria. Some 70 million Europeans emigrated in the cent. before 1914. Several million Chinese, Indians, and Japanese migrated to SE Asia, where their urban skills often enabled them to take a predominant economic role.

Social reform. The social and economic problems of the poor were kept in the public eye by realist fiction writers (Dreiser's Sister Carrie, 1900; Gorky's Lower Depths, 1902; Sinclair's The Jungle, 1906), journalists (U.S. muckrakers—Steffens, Tarbell), and artists (Ashcan school). Frequent labor strikes and occasional assassinations by anarchists or radicals (Empress Elizabeth of Austria, 1898; King Umberto I of Italy, 1900; U.S. Pres. McKinley, 1901; Russian Interior Minister Plehve, 1904; Portugal's King Carlos, 1908) added to social tension and fear of revolution.

But democratic reformism prevailed. In Germany, Bernstein's (1850-1932) revisionist Marxism, downgrading revolution, was accepted by the powerful Social Democrats and trade unions. The British Fabian Society (the Webbs, Shaw) and the Labour Party (founded 1906) worked for reforms such as Social Security and union rights (1906), while woman suffragists grew more militant. U.S. progressives fought big business (Pure Food and Drug Act, 1906). In France, the 10-hour work day (1904) and separation of church and state (1905) were reform victories, as was universal suffrage in Austria (1907).

Arts. An unprecedented period of experimentation, centered in France, produced several new painting styles: Fauvism exploited bold color areas (Matisse, Woman With Hat, 1905); expressionism reflected powerful inner emotions (the Brücke group, 1905); cubism combined several views of an object on one flat surface (Picasso's Demoiselles, 1906-7); futurism tried to depict speed and motion (Italian Futurist Manifesto, 1910). Architects explored new uses of steel structures, with facades either neoclassical (Adler and Sullivan in U.S.); curvilinear Art Nouveau (Gaudi's Casa Mila, 1905-10); or functionally streamlined (Wright's Robie House, 1909).

Music and dance shared the experimental spirit. Ruth St. Denis (1877-1968) and Isadora Duncan (1878-1927) pioneered modern dance, while Sergei Diaghilev in Paris revitalized classic ballet from 1909. Composers explored atonal music (Debussy, 1862-1918) and dissonance (Schoenberg, 1874-1951) or revolutionized classical forms (Stravinsky, 1882-1971), often showing jazz or folk music influences.

War and Revolution: 1910-19

War threatens. Germany under Wilhelm II sought a political and imperial role consonant with its industrial strength, challenging Britain's world supremacy and threatening France, which was still resenting the loss (1871) of Alsace-Lorraine. Austria wanted to curb an expanded Serbia (after 1912) and the threat it posed to its own Slav lands. Russia feared Austrian and German political and economic aims in the Balkans and Turkey.

An accelerated arms race resulted from these circumstances. The German standing army rose to more than 2 million men by 1914. Russia and France had more than a million each, and Austria and the British Empire nearly a million each. Dozens of enormous battleships were built by the powers after 1906.

The assassination of Austrian Archduke Franz Ferdinand by a Serbian, June 28, 1914, was the pretext for war. The system of alliances made the conflict Europe-wide; Germany's invasion of Belgium to outflank France forced Britain to enter the war. Patriotic fervor was nearly unanimous among all classes in most countries.

World War I. German forces were stopped in France in one month. The rival armies dug trench networks. Artillery and improved machine guns prevented either side from any lasting advance despite repeated assaults (600,000 dead at Verdun, Feb.-July 1916). Poison gas, used by Germany in 1915, proved ineffective. The entrance of more than 1 million U.S. troops tipped the balance after mid-1917, forcing Germany to sue for peace the next year. The formal armistice was signed on Nov. 11, 1918.

In the E, the Russian armies were thrown back (battle of Tannenberg, Aug. 20, 1914), and the war grew unpopular in Russia. An allied attempt to relieve Russia through Turkey failed (Gallipoli, 1915). The Russian Revolution (1917) abolished the monarchy. The new Bolshevik regime signed the capitulatory Brest-Litovsk peace in March 1918. Italy entered the war on the allied side in May 1915 but was pushed back by Oct. 1917. A renewed offensive with Allied aid in Oct.-Nov. 1918 forced Austria to surrender.

The British Navy successfully blockaded Germany, which responded with submarine U-boat attacks; unrestricted submarine warfare against neutrals after Jan. 1917 helped bring the U.S. into the war. Other battlefields included Palestine and Mesopotamia, both of which Britain wrested from the Turks in 1917, and the African and Pacific colonies of Germany, most of which fell to Britain, France, Australia, Japan, and South Africa.

Settlement. At the Paris Peace Conference (Jan.-June 1919), concluded by the Treaty of Versailles, and in subsequent negotiations and local wars (Russian-Polish War, 1920), the map of Europe was redrawn with a nod to U.S. Pres. Woodrow Wilson's principle of self-determination. Austria and Hungary were separated, and much of their land was given to Yugoslavia (formerly Serbia), Romania, Italy, and the newly independent Poland and Czechoslovakia. Germany lost territory in the W, N, and E, while Finland and the Baltic states were detached from Russia. Turkey lost nearly all its Arab lands to British-sponsored Arab states or to direct French and British rule. Belgium's sovereignty was recognized.

From 1916, the civilian populations and economies of both sides were mobilized to an unprecedented degree. Hardships intensified among fighting nations in 1917 (French mutiny crushed in May). More than 10 million soldiers died in the war.

A huge reparations burden and partial demilitarization were imposed on Germany. Pres. Wilson obtained approval for a League of Nations, but the U.S. Senate refused to allow the U.S. to join.

Russian revolution. Military defeats and high casualties caused a contagious lack of confidence in Tsar Nicholas, who was forced to abdicate Mar. 1917. A liberal provisional government failed to end the war, and massive desertions, riots, and fighting between factions followed. A moderate socialist government under Aleksandr Kerensky was overthrown (Nov. 1917) in a violent coup by the Bolsheviks in Petrograd under Lenin, who later disbanded the elected Constituent Assembly.

The Bolsheviks brutally suppressed all opposition and ended the war with Germany in Mar. 1918. Civil war broke out in the summer between the Red Army (the Bolsheviks and their supporters), and monarchists, anarchists, nationalities (Ukrainians, Georgians, Poles), and others. Small U.S., British, French, and Japanese units also opposed the Bolsheviks (1918-19; Japan in Vladivostok to 1922). The civil war, anarchy, and pogroms devastated the country until the 1920 Red Army victory. The Communist Party leadership retained absolute power.

Other European revolutions. An unpopular monarchy in Portugal was overthrown in 1910. The new republic took severe anticlerical measures in 1911.

After a century of Home Rule agitation, during which Ireland was devastated by famine (1 million dead, 1846-47) and emigration, republican militants staged an unsuccessful uprising in Dublin during Easter 1916. The execution of the leaders and mass arrests by the British won popular support for the rebels. The Irish Free State, comprising all but the 6 N counties, achieved dominion status in 1922.

In the aftermath of the world war, radical revolutions were attempted in Germany (Spartacist uprising, Jan. 1919), Hungary (Kun regime, 1919), and elsewhere. All were suppressed or failed for lack of support.

Chinese revolution. The Manchu Dynasty was overthrown and a republic proclaimed in Oct. 1911. First Pres. Sun Yat-sen resigned in favor of strongman Yuan Shih-k'ai. Sun organized the parliamentarian Kuomintang party.

Students launched protests on May 4, 1919, against League of Nations concessions in China to Japan. Nationalist, liberal, and socialist ideas and political groups spread. The Communist Party was founded in 1921. A Communist regime took power in Mongolia with Soviet support in 1921.

India restive. Indian objections to British rule erupted in nationalist riots as well as in the nonviolent tactics of Mahatma Gandhi (1869-1948). Nearly 400 unarmed demonstrators were shot at Amritsar in Apr. 1919. Britain approved limited self-rule that year.

Mexican revolution. Under the long Diaz dictatorship (1877-1911) the economy advanced, but Indian and mestizo lands were confiscated, and concessions to foreigners (mostly U.S.) damaged the middle class. A revolution in 1910 led to civil wars and U.S. intervention (1914, 1916-17). Land reform and a more democratic constitution (1917) were achieved.

The Aftermath of War: 1920-29

U.S. Easy credit, technological ingenuity, and war-related industrial decline in Europe caused a long economic boom, in which ownership of the new products—autos, phones, radios—became more democratized. Prosperity, an increase in women workers, women's suffrage (1920), and drastic change in fashion (flappers, mannish bob for women, clean-shaven men) created a wide perception of social change, despite prohibition of alcoholic beverages (1919-33). Union membership and strikes increased. Fear of radicals led to Palmer raids (1919-20) and the Sacco/Vanzetti case (1921-27).

Europe sorts itself out. Germany's liberal Weimar constitution (1919) could not guarantee a stable government in the face of rightist violence (Rathenau assassinated, 1922) and Communist refusal to cooperate with Socialists. Reparations and Allied occupation of the Rhineland caused staggering inflation that destroyed middle-class savings, but economic expansion resumed after mid-decade, aided by U.S. loans. A sophisticated, innovative culture developed in architecture and design (Bauhaus, 1919-28), film (Lang, M, 1931), painting (Grosz), music (Weill, Threepenny Opera, 1928), theater (Brecht, A Man's a Man, 1926), criticism (Benjamin), philosophy (Jung), and fashion. This culture was considered decadent and socially disruptive by rightists.

England elected its first Labour governments (Jan. 1924, June 1929). A 10-day general strike in support of coal miners failed in May 1926. In Italy, strikes, political chaos, and violence by small Fascist bands culminated in the Oct. 1922 Fascist March on Rome, which established Mussolini's dictatorship. Strikes were outlawed (1926), and Italian influence was pressed in the Balkans (Albania a protectorate, 1926). A conservative dictatorship was also established in Portugal in a 1926 military coup.

Czechoslovakia, the only stable democracy to emerge from the war in Central or E Europe, faced opposition from Germans (in the Sudetenland), Ruthenians, and some Slovaks. As the industrial heartland of the old Habsburg empire, it remained fairly prosperous. With French backing, it formed the Little Entente with Yugoslavia (1920) and Romania (1921) to block Austrian or Hungarian irredentism. Croats and Slovenes in Yugoslavia demanded a federal state until King Alexander I proclaimed (1929) a royal dictatorship. Poland faced nationality problems as well (Germans, Ukrainians, Jews); Pilsudski ruled as dictator from 1926. The Baltic states were threatened by traditionally dominant ethnic Germans and by Soviet-supported Communists.

An economic collapse and famine in Russia (1921-22) claimed 5 million lives. The New Economic Policy (1921) allowed land ownership by peasants and some private commerce and industry. Stalin was absolute ruler within 4 years of Lenin's death (1924). He inaugurated a brutal collectivization program (1929-32) and used foreign Communist parties for Soviet state advantage.

Internationalism. Revulsion against World War I led to pacifist agitation, to the Kellogg-Briand Pact renouncing aggressive war (1928), and to naval disarmament pacts (Washington, 1922; London, 1930). But the League of Nations was able to arbitrate only minor disputes (Greece-Bulgaria, 1925).

Middle East. Mustafa Kemal (Ataturk) led Turkish nationalists in resisting Italian, French, and Greek military advances (1919-23). The sultanate was abolished (1922), and elaborate reforms were passed, including secularization of law and adoption of the Latin alphabet. Ethnic conflict led to persecution of Armenians (more than 1 million dead in 1915, 1 million expelled), Greeks (forced Greek-Turk population exchange, 1923), and Kurds (1925 uprising).

With evacuation of the Turks from Arab lands, the puritanical Wahabi dynasty of E Arabia conquered (1919-25) what is now Saudi Arabia. British, French, and Arab dynastic and nationalist maneuvering resulted in the creation of 2 more Arab monarchies in 1921—Iraq and Transjordan (both under British control)—and 2 French mandates—Syria and Lebanon. Jewish immigration into British-mandated Palestine, inspired by the Zionist movement, was resisted by Arabs, at times violently (1921, 1929 massacres).

Reza Khan ruled Persia after his 1921 coup (shah from 1925), centralized control, and created the trappings of a modern secular state.

In 1922, English archaeologist Howard Carter discovered the tomb of the boy pharaoh Tutankhamen in the Valley of the Kings in Egypt.

China. The Kuomintang under Chiang Kai-shek (1887-1975) subdued the warlords by 1928. The Communists were brutally suppressed after their alliance with the Kuomintang was broken in 1927. Relative peace thereafter allowed for industrial and financial improvements, with some Russian, British, and U.S. cooperation.

Arts. Nearly all bounds of subject matter, style, and attitude were broken in the arts of the period. Abstract art first took inspiration from natural forms or narrative themes (Kandinsky from 1911) and then worked free of any representational aims (Malevich's suprematism, 1915-19; Mondrian's geometric style from 1917). The Dada movement (from 1916) mocked artistic pretension with absurd collages and constructions. Paradox, illusion, and psychological taboos were exploited by surrealists by the late 1920s (Dali, Magritte). Architectural schools celebrated industrial values, whether vigorous abstract constructivism (Tatlin, Monument to 3rd International, 1919) or the machined, streamlined Bauhaus style, which was extended to many design fields (Helvetica typeface).

Prose writers explored revolutionary narrative modes related to dreams (Kafka's Trial, 1925), internal monologue (Joyce's Ulysses, 1922), and word play (Stein's Making of Americans, 1925). Poets and novelists wrote of modern alienation (Eliot's Waste Land, 1922) and aimlessness (Lost Generation).

Sciences. Scientific specialization prevailed by the 20th cent. Advances in knowledge and technological aptitude increased with the geometric rise in the number of practitioners. Physicists challenged common-sense views of causality, observation, and a mechanistic universe, putting science further beyond popular grasp (Einstein's general theory of relativity, 1916; Bohr's quantum mechanics, 1913; Heisenberg's uncertainty principle, 1927).

Rise of Totalitarians: 1930-39

Depression. A worldwide financial panic and economic depression began with the Oct. 1929 U.S. stock market crash and the May 1931 failure of the Austrian Credit-Anstalt. A credit crunch caused international bankruptcies and unemployment: 12 million jobless by 1932 in the U.S., 5.6 million in Germany, 2.7 million in England. Governments responded with tariff restrictions (Smoot-Hawley Act, 1930; Ottawa Imperial Conference, 1932), which dried up world trade. Government public works programs were vitiated by deflationary budget balancing.

Germany. Years of agitation by violent extremists were brought to a head by the Depression. Nazi leader Adolf Hitler was named chancellor in Jan. 1933 and given dictatorial power by the Reichstag in March. Opposition parties were disbanded, strikes banned, and all aspects of economic, cultural, and religious life were brought under central government and Nazi party control and manipulated by sophisticated propaganda. Severe persecution of Jews began (Nuremberg Laws, Sept. 1935). Many Jews, political opponents, and others were sent to concentration camps (Dachau, 1933), where thousands died or were killed. Public works, renewed conscription (1935), arms production, and a 4-year plan (1936) all but ended unemployment.

Hitler's expansionism started with reincorporation of the Saar (1935), occupation of the Rhineland (Mar. 1936), and annexation of Austria (Mar. 1938). At Munich (Sept. 1938) an indecisive Britain and France sanctioned German dismemberment of Czechoslovakia.

Russia. Rapid industrialization was achieved through successive 5-year plans starting in 1928, using severe labor discipline and mass forced labor. Industry was financed by a decline in living standards and exploitation of agriculture, which was almost totally collectivized by the early 1930s (kolkhoz, collective farm; sovkhoz, state farm, often in newly worked lands). Successive purges increased the role of professionals and management at the expense of workers. Millions perished in a series of manufactured disasters: extermination (1929-34) of kulaks (peasant landowners), severe famine (1932-33), party purges and show trials (Great Purge, 1936-38), suppression of nationalities, and poor conditions in labor camps.

Spain. An industrial revolution during World War I created an urban proletariat, which was attracted to socialism and anarchism; Catalan nationalists challenged central authority. The 5 years after King Alfonso left Spain in Apr. 1931 were dominated by tension between intermittent leftist and anticlerical governments and clericals, monarchists, and other rightists. Anarchist and Communist rebellions were crushed, but a July 1936 extreme right rebellion led by Gen. Francisco Franco and aided by Nazi Germany and Fascist Italy succeeded, after a 3-year civil war (more than 1 million dead in battles and atrocities). The war polarized international public opinion.

Italy. Despite propaganda for the ideal of the Corporate State, few domestic reforms were attempted. An entente with Hungary and Austria (Mar. 1934), a pact with Germany and Japan (Nov. 1937), and intervention by 50,000-75,000 troops in Spain (1936-39) sealed Italy's identification with the fascist bloc (anti-Semitic laws after Mar. 1938). Ethiopia was conquered (1935-36), and Albania annexed (Jan. 1939) in conscious imitation of ancient Rome.

East Europe. Repressive regimes fought for power against an active opposition (liberals, socialists, Communists, peasants, Nazis). Minority groups and Jews were restricted within national boundaries that did not coincide with ethnic population patterns. In the destruction of Czechoslovakia, Hungary occupied S Slovakia (Nov. 1938) and Ruthenia (Mar. 1939), and a pro-Nazi regime took power in the rest of Slovakia. Other boundary disputes (e.g., Poland-Lithuania, Yugoslavia-Bulgaria, and Romania-Hungary) doomed attempts to build joint fronts against Germany or Russia. Economic depression was severe.

East Asia. After a period of liberalism in Japan, nativist militarists dominated the government with peasant support. Manchuria was seized (Sept. 1931-Feb. 1932), and a puppet state was set up (Manchukuo). Adjacent Jehol (Inner Mongolia) was occupied in 1933. China proper was invaded in July 1937; large areas were conquered by Oct. 1938. Hundreds of thousands of rapes, murders, and other atrocities were attributed to the Japanese.

In China Communist forces left Kuomintang-besieged strongholds in the S in a Long March (1934-35) to the N. The Kuomintang-Communist civil war was suspended in Jan. 1937 in the face of threatening Japan.

The democracies. The Roosevelt Administration, in office Mar. 1933, embarked on an extensive program of New Deal social reform and economic stimulation, including protection for labor unions (heavy industries organized), Social Security, public works, wage-and-hour laws, and assistance to farmers. Isolationist sentiment (1937 Neutrality Act) prevented U.S. intervention in Europe, but military expenditures were increased in 1939.

French political instability and polarization prevented resolution of economic and international security questions. The Popular Front government under Leon Blum (June 1936-Apr. 1938) passed social reforms (40-hr week) and raised arms spending. National coalition governments, which ruled Britain from Aug. 1931, brought economic recovery but failed to define a consistent international policy until Chamberlain's government (from May 1937), which practiced appeasement of Germany and Italy.

India. Twenty years of agitation for autonomy and then for independence (Gandhi's salt march, 1930) achieved some constitutional reform (extended provincial powers, 1935) despite Muslim-Hindu strife. Social issues assumed prominence with peasant uprisings (1921), strikes (1928), Gandhi's efforts for untouchables (1932 "fast unto death"), and social and agrarian reform by the provinces after 1937.

War, Hot and Cold: 1940-49

Arts. The streamlined, geometric design motifs of Art Deco (from 1925) prevailed through the 1930s. Abstract art flourished (Moore sculptures from 1931) alongside a new realism related to social and political concerns (Socialist Realism, the official Soviet style from 1934; Mexican muralist Rivera, 1886-1957; and Orozco, 1883-1949), which were also expressed in fiction and poetry (Steinbeck's Grapes of Wrath, 1939; Sandburg's The People, Yes, 1936). Modern architecture (International Style, 1932) was unchallenged in its use of artificial materials (concrete, glass), lack of decoration, and monumentality (Rockefeller Center, 1929-40). Larger-than-life U.S.-made films captured a worldwide audience (Gone With the Wind, The Wizard of Oz, both 1939).

War in Asia-Pacific. Japan occupied Indochina in Sept. 1940, dominated Thailand in Dec. 1941, and attacked Hawaii (Pearl Harbor), the Philippines, Hong Kong, and Malaya on Dec. 7, 1941 (precipitating U.S. entrance into the war). Indonesia was attacked in Jan. 1942, and Burma was conquered in Mar. 1942. The Battle of Midway (June 1942) turned back the Japanese advance. "Island-hopping" battles (Guadalcanal, Aug. 1942-Jan. 1943; Leyte Gulf, Oct. 1944; Iwo Jima, Feb.-Mar. 1945; Okinawa, Apr. 1945) and massive bombing raids on Japan from June 1944 wore out Japanese defenses. U.S. atom bombs, dropped Aug. 6 and 9 on Hiroshima and Nagasaki, forced Japan to agree, on Aug. 14, to surrender; formal surrender was on Sept. 2, 1945.

War in Europe. The Nazi-Soviet nonaggression pact (Aug. 1939) freed Germany to attack Poland (Sept.). Britain and France, which had guaranteed Polish independence, declared war on Germany. Russia seized E Poland (Sept.), attacked Finland (Nov.), and took the Baltic states (July 1940). Mobile German forces staged blitzkrieg attacks during Apr.-June 1940, conquering neutral Denmark, Norway, and the Low Countries and defeating France; 350,000 British and French troops were evacuated at Dunkirk (May). The Battle of Britain (June-Dec. 1940) denied Germany air superiority. German-Italian campaigns won the Balkans by Apr. 1941. Three million Axis troops invaded Russia in June 1941, marching through Ukraine to the Caucasus, and through White Russia and the Baltic republics to Moscow and Leningrad.

Russian winter counterthrusts (1941-42 and 1942-43) stopped the German advance (Stalingrad, Sept. 1942-Feb. 1943). Sustaining great casualties, the Russians drove the Axis from all E Europe and the Balkans in the next 2 years. Invasions of N Africa (Nov. 1942), Italy (Sept. 1943), and Normandy (launched on D-Day, June 6, 1944) brought U.S., British, Free French, and allied troops to Germany by spring 1945. In Feb. 1945, the 3 Allied leaders, Winston Churchill (Britain), Joseph Stalin (USSR), and Franklin D. Roosevelt (U.S.), met in Yalta to discuss strategy and resolve political issues, including the postwar Allied occupation of Germany. Germany surrendered May 7, 1945.

Atrocities. The war brought 20th-cent. cruelty to its peak. The Nazi regime systematically killed an estimated 5-6 million Jews, including some 3 million who died in death camps (e.g., Auschwitz). Gypsies, political opponents, sick and retarded people, and others deemed undesirable were also murdered by the Nazis, as were vast numbers of Slavs.

Civilian deaths. German bombs killed 70,000 British civilians. More than 100,000 Chinese civilians were killed by Japanese forces in the capture and occupation of Nanking. Severe retaliation by the Soviet army, E European partisans, Free French, and others took a heavy toll. U.S. and British bombing of Germany killed hundreds of thousands, as did U.S. bombing of Japan (80,000-200,000 at Hiroshima alone). Some 45 million people lost their lives in the war.

Settlement. The United Nations charter was signed in San Francisco on June 26, 1945, by 50 nations. The International Tribunal at Nuremberg convicted 22 German leaders for war crimes in Sept. 1946; 23 Japanese leaders were convicted in Nov. 1948. Postwar border changes included large gains in territory for the USSR, losses for Germany, a shift to the W in Polish borders, and minor losses for Italy. Communist regimes, supported by Soviet troops, took power in most of E Europe, including Soviet-occupied Germany (GDR proclaimed Oct. 1949). Japan lost all overseas lands.

Recovery. Basic political and social changes were imposed on Japan and W Germany by the western allies (Japan constitution adopted, Nov. 1946; W German basic law, May 1949). U.S. Marshall Plan aid ($12 billion, 1947-51) spurred W European economic recovery after a period of severe inflation and strikes in Europe and the U.S. The British Labour Party introduced a national health service and nationalized basic industries in 1946.

Cold War. Western fears of further Soviet advances (Cominform formed in Oct. 1947; Czechoslovakia coup, Feb. 1948; Berlin blockade, Apr. 1948-Sept. 1949) led to the formation of NATO. Civil War in Greece and Soviet pressure on Turkey led to U.S. aid under the Truman Doctrine (Mar. 1947). Other anti-Communist security pacts were the Organization of American States (Apr. 1948) and the SE Asia Treaty Organization (Sept. 1954). A new wave of Soviet purges and repression intensified in the last years of Stalin's rule, extending to E Europe (Slansky trial in Czechoslovakia, 1951). Only Yugoslavia resisted Soviet control (expelled by Cominform, June 1948; U.S. aid, June 1949).

China, Korea. Communist forces emerged from World War II strengthened by the Soviet takeover of industrial Manchuria. In 4 years of fighting, the Kuomintang was driven from the mainland; the People's Republic was proclaimed Oct. 1, 1949. Korea was divided by USSR and U.S. occupation forces. Separate republics were proclaimed in the 2 zones in Aug.-Sept. 1948.

India. India and Pakistan became independent dominions on Aug. 15, 1947. Millions of Hindu and Muslim refugees were created by the partition; riots (1946-47) took hundreds of thousands of lives; Mahatma Gandhi was assassinated in Jan. 1948. Burma became completely independent in Jan. 1948; Ceylon took dominion status in Feb.

Middle East. The UN approved partition of Palestine into Jewish and Arab states. Israel was proclaimed a state, May 14, 1948. Arabs rejected partition, but failed to defeat Israel in war (May 1948-July 1949). Immigration from Europe and the Middle East swelled Israel's Jewish population. British and French forces left Lebanon and Syria in 1946. Transjordan occupied most of Arab Palestine.

Southeast Asia. Communists and others fought against restoration of French rule in Indochina from 1946; a non-Communist government was recognized by France in Mar. 1949, but fighting continued. Both Indonesia and the Philippines became independent; the former in 1949 after 4 years of war with Netherlands, the latter in 1946. Philippine economic and military ties with the U.S. remained strong; a Communist-led peasant rising was checked in 1948.

Arts. New York became the center of the world art market; abstract expressionism was the chief mode (Pollock from 1943, de Kooning from 1947). Literature and philosophy explored existentialism (Camus's The Stranger, 1942; Sartre's Being and Nothingness, 1943). Non-Western attempts to revive or create regional styles (Senghor's Négritude, Mishima's novels) only confirmed the emergence of a universal culture. Radio and phonograph records spread American popular music (swing, bebop) around the world.

The American Decade: 1950-59

Polite decolonization. The peaceful decline of European political and military power in Asia and Africa accelerated in the 1950s. Nearly all of N Africa was freed by 1956, but France fought a bitter war to retain Algeria, with its large European minority, until 1962. Ghana, independent in 1957, led a parade of new black African nations (more than 2 dozen by 1962), which altered the political character of the UN. Ethnic disputes often exploded in the new nations after decolonization (UN troops in Cyprus, 1964; Nigerian civil war, 1967-70). Leaders of the new states, mostly sharing socialist ideologies, tried to create an Afro-Asian bloc (Bandung Conference, 1955), but Western economic influence and U.S. political ties remained strong (Baghdad Pact, 1955).

Trade. World trade volume soared, in an atmosphere of monetary stability assured by international accords (Bretton Woods, 1944). In Europe, economic integration advanced (European Economic Community, 1957; European Free Trade Association, 1960). Comecon (1949) coordinated the economies of Soviet-bloc countries.

U.S. Economic growth produced an abundance of consumer goods (9.3 million motor vehicles sold, 1955). Suburban housing changed life patterns for middle and working classes (Levittown, 1947-51). Pres. Dwight Eisenhower's landslide election victories (1952, 1956) reflected consensus politics. A system of alliances and military bases bolstered U.S. influence on all continents. Trade and payments surpluses were balanced by overseas investments and foreign aid ($50 billion, 1950-59).

USSR. In the "thaw" after Stalin's death in 1953, relations with the West improved (evacuation of Vienna, Geneva summit conference, both 1955). Repression of scientific and cultural life eased, and many prisoners were freed culminating in de-Stalinization (1956). Nikita Khrushchev's leadership aimed at consumer sector growth, but farm production lagged, despite the virgin lands program (from 1954). Soviet crushing of the 1956 Hungarian revolution, the 1960 U-2 spy plane episode, and other incidents renewed East-West tension and domestic curbs.

Eastern Europe. Resentment of Russian domination and Stalinist repression combined with nationalist, economic, and religious factors to produce periodic violence. E Berlin workers rioted (1953), Polish workers rioted in Poznan (June 1956), and a broad-based revolution broke out in Hungary (Oct. 1956). All were suppressed by Soviet force or threats (at least 7,000 dead in Hungary), but Poland was allowed to restore private ownership of farms, and a degree of personal and economic freedom returned to Hungary. Yugoslavia experimented with worker self-management and a market economy.

Korea. The 1945 division of Korea along the 38th parallel left industry in the N, which was organized into a militant regime and armed by the USSR. The S was politically disunited. More than 60,000 N Korean troops invaded the S on June 25, 1950. The U.S., backed by the UN Security Council, sent troops. UN troops reached the Chinese border in Nov. Some 200,000 Chinese troops crossed the Yalu R. and drove back UN forces. By spring 1951 battle lines had become stabilized near the original 38th parallel border, but heavy fighting continued. Finally, an armistice was signed on July 27, 1953. U.S. troops remained in the S, and U.S. economic and military aid continued. The war stimulated rapid economic recovery in Japan.

China. Starting in 1952, industry, agriculture, and social institutions were forcibly collectivized. In a massive purge, as many as several million people were executed as Kuo-mintang supporters or as class and political enemies. The Great Leap Forward (1958-60) unsuccessfully tried to force the pace of development by substituting labor for investment.

Indochina. Ho Chi Minh's forces, aided by the USSR and the new Chinese Communist government, fought French and pro-French Vietnamese forces to a standstill and captured the strategic Dienbienphu camp in May 1954. The Geneva Agreements divided Vietnam in half pending elections (never held) and recognized Laos and Cambodia as independent. The U.S. aided the anti-Communist Republic of Vietnam in the S.

Middle East. Arab revolutions placed leftist, militantly nationalist regimes in power in Egypt (1952) and Iraq (1958). But Arab unity attempts failed (United Arab Republic joined Egypt, Syria, Yemen, 1958-61). Arab refusal to recognize Israel (Arab League economic blockade began Sept. 1951) led to a permanent state of war, with repeated incidents (Gaza, 1955). Israel occupied Sinai, and Britain and France took (Oct. 1956) the Suez Canal, but were replaced by the UN Emergency Force. The Mossadegh government in Iran nationalized (May 1951) the British-owned oil industry in May, but was overthrown (Aug. 1953) in a U.S.-aided coup.

Latin America. Argentinian dictator Juan Perón, in office 1946, crushed opposition and enforced land reform, some nationalization, welfare state measures, and curbs on the Roman Catholic Church. A Sept. 1955 coup deposed Perón. The 1952 revolution in Bolivia brought land reform, nationalization of tin mines, and improvement in the status of Native Americans, who nevertheless remained poor. The Batista regime in Cuba was overthrown (Jan. 1959) by Fidel Castro, who imposed a Communist dictatorship, aligned Cuba with the USSR, but improved education and health care. A U.S.-backed anti-Castro invasion (Bay of Pigs, Apr. 1961) was crushed. Self-government advanced in the British Caribbean.

Technology. Large outlays on research and development in the U.S. and the USSR focused on military applications (H-bomb in U.S., 1952; USSR, 1953; Britain, 1957; intercontinental missiles, late 1950s). Soviet launching of the Sputnik satellite (Oct. 4, 1957) spurred increases in U.S. science education funds (National Defense Education Act).

Literature and film. Alienation from social and literary conventions reached an extreme in the theater of the absurd (Beckett's Waiting for Godot, 1952), the "new novel" (Robbe-Grillet's Voyeur, 1955), and avant-garde film (Antonioni's L'Avventura, 1960). U.S. beatniks (Kerouac's On the Road, 1957) and others rejected the supposed conformism of Americans (Riesman's The Lonely Crowd, 1950).

Rising Expectations: 1960-69

Economic boom. The longest sustained economic boom on record spanned almost the entire decade in the capitalist world; the closely watched GNP figure doubled (1960-70) in the U.S., fueled by Vietnam War-related budget deficits. The General Agreement on Tariffs and Trade (1967) stimulated W European prosperity, which spread to peripheral areas (Spain, Italy, E Germany). Japan became a top economic power. Foreign investment aided the industrialization of Brazil. There were limited Soviet economic reform attempts.

Reform and radicalization. Pres. John F. Kennedy, inaugurated 1961, emphasized youthful idealism and vigor; his assassination Nov. 22, 1963, was a national trauma. A series of political and social reform movements took root in the U.S. and other countries. Blacks demonstrated nonviolently and with partial success against segregation and poverty (1963 March on Washington; 1964 Civil Rights Act), but some urban areas erupted in extensive riots (Watts, 1965; Detroit, 1967; Martin Luther King assassination, Apr. 4, 1968). New concern for the poor (Harrington's Other America, 1963) helped lead to Pres. Lyndon Johnson's "Great Society" programs (Medicare, Water Quality Act, Higher Education Act, all 1965). Concern for the environment surged (Carson's Silent Spring, 1962).

Feminism revived as a cultural and political movement (Friedan's Feminine Mystique, 1963; National Organization for Women founded 1966), and a movement for homosexual rights emerged (Stonewall riot in NYC, 1969). Pope John XXIII called the Second Vatican Council (1962-65), which liberalized Roman Catholic liturgy and some other aspects of Catholicism.

Opposition to U.S. involvement in Vietnam, especially among university students (Moratorium protest, Nov. 1969), turned violent (Weatherman Chicago riots, Oct. 1969). New Left and Marxist theories became popular, and membership in radical groups (Students for a Democratic Society, Black Panthers) increased. Maoist groups, especially in Europe, called for total transformation of society. In France, students sparked a nationwide strike affecting 10 million workers in May-June 1968, but an electoral reaction barred revolutionary change.

China. China's revolutionary militancy under Mao Zedong caused disputes with the USSR under "revisionist" Khrushchev, starting in 1960. The 2 powers exchanged fire in 1969 border disputes. China used force to capture (1962) areas disputed with India. The "Great Proletarian Cultural Revolution" tried to impose a utopian egalitarian program in China and spread revolution abroad; political struggle, often violent, convulsed China in 1965-68.

Indochina. Communist-led guerrillas aided by N Vietnam fought from 1960 against the S Vietnam government of Ngo Dinh Diem (killed 1963). The U.S. military role increased after the 1964 Tonkin Gulf incident. U.S. forces peaked at 543,400 in Apr. 1969. Massive numbers of N Vietnamese troops also fought. Laotian and Cambodian neutrality were threatened by Communist insurgencies, with N Vietnamese aid, and U.S. intrigues.

Developing World. A bloc of authoritarian leftist regimes among the newly independent nations emerged in political opposition to the U.S.-led Western alliance and came to dominate the conference of nonaligned nations (Belgrade, 1961; Cairo, 1964; Lusaka, 1970). Soviet political ties and military bases were established in Cuba, Egypt, Algeria, Guinea, and other countries whose leaders were regarded as revolutionary heroes by opposition groups in pro-Western or colonial countries. Some leaders were ousted in coups by pro-Western groups—Zaire's Patrice Lumumba (killed 1961), Ghana's Kwame Nkrumah (exiled 1966), and Indonesia's Sukarno (effectively ousted in 1965 after a Communist coup failed).

Middle East. Arab-Israeli tension erupted into a brief war June 1967. Israel emerged from the war as a major regional power. Military shipments before and after the war brought much of the Arab world into the Soviet political sphere. Most Arab states broke U.S. diplomatic ties, while Communist countries cut their ties to Israel. Intra-Arab disputes continued: Egypt and Saudi Arabia supported rival factions in a bloody Yemen civil war 1962-70; Lebanese troops fought Palestinian commandos 1969.

East Europe. To stop the large-scale exodus of citizens, E German authorities built (Aug. 1961) a fortified wall across Berlin. Soviet sway in the Balkans was weakened by Albania's support of China (USSR broke ties in Dec. 1961) and Romania's assertion (1964) of industrial and foreign policy autonomy. Liberalization (spring 1968) in Czechoslovakia was crushed with massive force by troops of 5 Warsaw Pact countries. W German treaties (1970) with the USSR and Poland facilitated the transfer of German technology and confirmed postwar boundaries.

Arts and styles. The boundary between fine and popular arts was blurred to some extent by Pop Art (Warhol) and rock musicals (Hair, 1968). Informality and exaggeration prevailed in fashion (beards, miniskirts). A nonpolitical "counterculture" developed, rejecting traditional bourgeois life goals and personal habits, and use of marijuana and hallucinogens spread (Woodstock festival, Aug. 1969). Indian influence was felt in religion (Ram Dass) and fashion, and The Beatles, who brought unprecedented sophistication to rock music, became for many a symbol of the decade.

Science. Achievements in space (humans on the moon, July 1969) and electronics (lasers, integrated circuits) encouraged a faith in scientific solutions to problems in agriculture ("green revolution"), medicine (heart transplants, 1967), and other areas. Harmful technology, it was believed, could be controlled (1963 nuclear weapon test ban treaty, 1968 nonproliferation treaty).

Disillusionment: 1970-79

U.S.: Caution and neoconservatism. A relatively sluggish economy, energy shortages, and environmental problems contributed to a "limits of growth" philosophy. Suspicion of science and technology killed or delayed major projects (supersonic transport dropped, 1971; Seabrook nuclear power plant protests, 1977-78) and was fed by the Three Mile Island nuclear reactor accident (Mar. 1979).

There were signs of growing mistrust of big government and less support for new social policies. School busing and racial quotas were opposed (Bakke decision, June 1978); the proposed Equal Rights Amendment for women languished; civil rights legislation aimed at protecting homosexuals was opposed (Dade County referendum, June 1977).

Completion of Communist forces' takeover of South Vietnam (evacuation of U.S. civilians, Apr. 1975), revelations of Central Intelligence Agency misdeeds (Rockefeller Commission report, June 1975), and Watergate scandals (Nixon resigned in Aug. 1974) reduced faith in U.S. moral and material capacity to influence world affairs. Revelations of Soviet crimes (Solzhenitsyn's Gulag Archipelago, 1974) and Soviet intervention in Africa helped foster a revival of anti-Communist sentiment.

Economy sluggish. The 1960s boom faltered in the 1970s; a severe recession in the U.S. and Europe (1974-75) followed a huge oil price hike (Dec. 1973). Monetary instability (U.S. cut ties to gold in Aug. 1971), the decline of the dollar, and protectionist moves by industrial countries (1977-78) threatened trade. Business investment and spending for research declined. Severe inflation plagued many countries (25% in Britain, 1975; 18% in U.S., 1979).

China picks up pieces. After the 1976 deaths of Mao Zedong and Zhou Enlai, struggle for the leadership succession was won by pragmatists. A nationwide purge of orthodox Maoists was carried out, and the Gang of Four, led by Mao's widow, Chiang Ching, arrested. The new leaders freed more than 100,000 political prisoners and reduced public adulation of Mao. Political and trade ties were expanded with Japan, Europe, and the U.S. in the late 1970s, as relations worsened with the USSR, Cuba, and Vietnam (4-week invasion by China, 1979). Ideological guidelines in industry, science, education, and the armed forces, which the ruling faction said had caused chaos and decline, were reversed (bonuses to workers, Dec. 1977; exams for college entrance, Oct. 1977). Severe restrictions on cultural expression were eased.

Europe. European unity moves (EEC-EFTA trade accord, 1972) faltered as economic problems appeared (Britain floated pound, 1972; France floated franc, 1974). Germany and Switzerland curbed guest workers from southern Europe. Greece and Turkey quarreled over Cyprus and Aegean oil rights.

All non-Communist Europe was under democratic rule after free elections were held (June 1976) in Spain 7 months after the death of Franco. The conservative, colonialist regime in Portugal was overthrown in Apr. 1974. In Greece the 7-year-old military dictatorship yielded power in 1974. Northern Europe, though ruled mostly by Socialists (Swedish Socialists unseated in 1976 after 44 years in power), turned more conservative. The British Labour government imposed (1975) wage curbs and suspended nationalization schemes. Terrorism in Germany (1972 Munich Olympics killings) led to laws curbing some civil liberties. French "new philosophers" rejected leftist ideologies, and the shaky Socialist-Communist coalition lost a 1978 election bid.

Religion and politics. The improvement in Muslim countries' political fortunes by the 1950s (with the exception of Central Asia under Soviet and Chinese rule) and the growth of Arab oil wealth were followed by a resurgence of traditional religious fervor. Libyan dictator Muammar al-Qaddafi mixed Islamic laws with socialism and called for Muslim return to Spain and Sicily. The illegal Muslim Brotherhood in Egypt was accused of violence, while extreme groups bombed (1977) theaters to protest Western and secular values.

In Turkey, the National Salvation Party was the first Islamic group to share (1974) power since secularization in the 1920s. In Iran, Ayatollah Ruhollah Khomeini, led a revolution that deposed the secular shah (Jan. 1979) and created an Islamic republic there. Religiously motivated Muslims took part in an insurrection in Saudi Arabia that briefly seized (1979) the Grand Mosque in Mecca. Muslim puritan opposition to Pakistan Pres. Zulfikar Ali-Bhutto helped lead to his overthrow in July 1977. Muslim solidarity, however, could not prevent Pakistan's eastern province (Bangladesh) from declaring (Dec. 1971) independence after a bloody civil war.

Muslim and Hindu resentment of coerced sterilization in India helped defeat the Gandhi government, which was replaced (Mar. 1977) by a coalition including religious Hindu parties. Muslims in the S Philippines, aided by Libya, rebelled against central rule from 1973.

The Buddhist Soka Gakkai movement launched (1964) the Komeito party in Japan, which became a major opposition party in 1972 and 1976 elections.

Evangelical Protestant groups grew in the U.S. A revival of interest in Orthodox Christianity occurred among Russian intellectuals (Solzhenitsyn). The secularist Israeli Labor party, after decades of rule, was ousted in 1977 by conservatives led by Menachem Begin; religious militants founded settlements on the disputed West Bank, part of biblically promised Israel. U.S. Reform Judaism revived many previously discarded traditional practices.

Old-fashioned religious wars raged intermittently in Northern Ireland (Catholic vs. Protestant, 1969- ) and Lebanon (Christian vs. Muslim, 1975- ), while religious militancy complicated the Israel-Arab dispute (1973 Israel-Arab war). The Camp David Accords in 1978, negotiated by Egyptian Pres. Anwar al-Sadat, Israeli Prime Min. Menachem Begin, and U.S. Pres. Jimmy Carter, facilitated the landmark 1979 Egypt-Israel peace treaty, but increased militancy on the West Bank impeded further progress.

Latin America. Repressive conservative regimes strengthened their hold on most of the continent, with a violent coup against the elected (Sept. 1973) Allende government in Chile, a 1976 military coup in Argentina, and coups against reformist regimes in Bolivia (1971, 1979) and Peru (1976). In Central America increasing liberal and leftist militancy led to the ouster (1979) of the Somoza regime of Nicaragua and to civil conflict in El Salvador.

Indochina. Communist victories in Vietnam, Cambodia, and Laos by May 1975 led to new turmoil. The Pol Pot regime ordered millions of city-dwellers to resettle in rural areas, in a program of forced labor, combined with terrorism, that cost more than 1 million lives (1975-79) and caused hundreds of thousands of ethnic Chinese and others to flee Vietnam ("boat people," 1979). The Vietnamese invasion of Cambodia swelled the refugee population and contributed to widespread starvation in that devastated country.

Russian expansion. Soviet influence, checked in some countries (troops ousted by Egypt, 1972), was projected farther afield, often with the use of Cuban troops (Angola, 1975-89; Ethiopia, 1977-88) and aided by a growing navy, a merchant fleet, and international banking ability. Détente with the West—1972 Berlin pact, 1972 strategic arms pact (SALT)—gave way to a more antagonistic relationship in the late 1970s, exacerbated by the Soviet invasion (1979) of Afghanistan.

Africa. The last remaining European colonies were granted independence (Spanish Sahara, 1976; Djibouti, 1977) and, after 10 years of civil war and many negotiation sessions, a black government took over (1979) in Zimbabwe (Rhodesia); white domination remained in South Africa. Great power involvement in local wars (Russia in Angola, Ethiopia; France in Chad, Zaire, Mauritania) and the use of tens of thousands of Cuban troops were denounced by some African leaders. Ethnic or tribal clashes made Africa a locus of sustained warfare during the late 1970s.

Arts. Traditional modes of painting, architecture, and music received increased popular and critical attention in the 1970s. These more conservative styles coexisted with modernist works in an atmosphere of increased variety and tolerance.

Revitalization of Capitalism, Demand for Democracy: 1980-89

USSR, Eastern Europe. A troublesome 1980-85 for the USSR was followed by 5 years of astonishing change: the surrender of the Communist monopoly, the remaking of the Soviet state, and the beginning of the disintegration of the Soviet empire. After the deaths of Leonid Brezhnev (1982) and 2 successors (Andropov in 1984 and Chernenko in 1985), the harsh treatment of dissent and restriction of emigration, and the Soviet invasion (Dec. 1979) of Afghanistan, Gen. Sec. Mikhail Gorbachev (in office 1985-1991) promoted glasnost and perestroika—economic, political, and social reform. Supported by the Communist Party (July 1988), he signed (Dec. 1987) the INF disarmament treaty, and he pledged (1988) to cut the military budget. Military withdrawal from Afghanistan was completed in Feb. 1989, the process of democratization went ahead unhindered in Poland and Hungary, and the Soviet people chose (Mar. 1989) part of the new Congress of People's Deputies from competing candidates. By decade's end the Cold War appeared to be fading away.

In Poland, Solidarity, the labor union founded (1980) by Lech Walesa, was outlawed in 1982 and then legalized in 1988, after years of unrest. Poland's first free election since the Communist takeover brought Solidarity victory (June 1989); Tadeusz Mazowiecki, a Walesa adviser, became (Aug. 1989) prime minister in a government with the Communists. In the fall of 1989 the failure of Marxist economies in Hungary, East Germany, Czechoslovakia, Bulgaria, and Romania brought the collapse of the Communist monopoly and a demand for democracy. In a historic step, the Berlin Wall was opened in Nov. 1989.

U.S. "The Reagan Years" (1981-88) brought the longest economic boom yet in U.S. history via budget and tax cuts, deregulation, "junk bond" financing, leveraged buyouts, and mergers and takeovers. However, there was a stock market crash (Oct. 1987), and federal budget deficits and the trade deficit increased. Foreign policy showed a strong anti-Communist stance, via increased defense spending, aid to anti-Communists in Central America, invasion of Cuba-threatened Grenada, and championing of the MX missile system and "Star Wars" missile defense program. Four Reagan-Gorbachev summits (1985-88) climaxed in the INF treaty (1987), as the Cold War began to wind down. The Iran-contra affair (North's TV testimony, July 1987) was a major political scandal. Homelessness and drug abuse (especially "crack" cocaine) were growing social problems. In 1988, Vice Pres. George Bush was elected to succeed Ronald Reagan as president.

Middle East. The Middle East remained militarily unstable, with sharp divisions along economic, political, racial, and religious lines. In Iran, the Islamic revolution of 1979 created a strong anti-U.S. stance (hostage crisis, Nov. 1979-Jan. 1981). In Sept. 1980, Iraq repudiated its border agreement with Iran and began major hostilities that led to an 8-year war in which millions were killed.

Libya's support for international terrorism induced the U.S. to close (May 1981) its diplomatic mission there and embargo (Mar. 1982) Libyan oil. The U.S. accused Libyan leader Muammar al-Qaddafi of aiding (Dec. 1985) terrorists in Rome and of Vienna airport attacks, and retaliated by bombing Libya (Apr. 1986).

Israel affirmed (July 1980) all Jerusalem as its capital, destroyed (1981) an Iraqi atomic reactor, and invaded (1982) Lebanon, forcing the PLO to agree to withdraw. A Palestinian uprising, including women and children hurling rocks and bottles at troops, began (Dec. 1987) in Israeli-occupied Gaza and spread to the West Bank; troops responded with force, killing 300 by the end of 1988, with 6,000 more in detention camps.

Israeli withdrawal from Lebanon began in Feb. 1985 and ended in June 1985, as Lebanon continued torn by military and political conflict. Artillery duels (Mar.-Apr. 1989) between Christian East Beirut and Muslim West Beirut left 200 dead and 700 wounded. At decade's end, violence still dominated.

Latin America. In Nicaragua, the leftist Sandinista National Liberation Front, in power after the 1979 civil war, faced problems as a result of Nicaragua's military aid to leftist guerrillas in El Salvador and U.S. backing of antigovernment contras. The U.S. CIA admitted (1984) having directed the mining of Nicaraguan ports, and the U.S. sent humanitarian (1985) and military (1986) aid. Profits from secret arms sales to Iran were found (1987) diverted to contras. Cease-fire talks between the Sandinista government and contras came in 1988, and elections were held in Nicaragua in Feb. 1990.

In El Salvador, a military coup (Oct. 1979) failed to halt extreme right-wing violence and left-wing terrorism. Archbishop Oscar Romero was assassinated in Mar. 1980; from Jan. to June some 4,000 civilians were killed in the civil unrest. In 1984, newly elected Pres. José Napoleon Duarte worked to stem human rights abuses, but violence continued.

In Chile, Gen. Augusto Pinochet yielded the presidency after a democratic election (Dec. 1989), but remained as head of the army. He had ruled the country since 1973, imposing harsh measures against leftists and dissidents; at the same time he introduced economic programs that restored prosperity to Chile.

Africa. 1980-85 marked a rapid decline in the economies of virtually all African countries, a result of accelerating desertification, the world economic recession, heavy indebtedness to overseas creditors, rapid population growth, and political instability. Some 60 million Africans faced prolonged hunger in 1981; much of Africa had one of the worst droughts ever in 1983, and by year's end 150 million faced near-famine. "Live Aid," a marathon rock concert, was presented in July 1985, and the U.S. and Western nations sent aid in Sept. 1985. Economic hardship fueled political unrest and coups. Wars in Ethiopia and Sudan and military strife in several other nations continued. AIDS took a heavy toll.

South Africa. Anti-apartheid sentiment gathered force in South Africa as demonstrations and violent police response grew. White voters approved (Nov. 1983) the first constitution to give Coloureds and Asians a voice, while still excluding blacks (70% of the population). The U.S. imposed economic sanctions in Aug. 1985, and 11 Western nations followed in September. P. W. Botha, 1980s president, was succeeded by F. W. de Klerk, in Sept. 1989, who promised "evolutionary" change via negotiation with the black population.

China. During the 1980s the Communist government and paramount leader Deng Xiaoping pursued far-reaching changes, expanding commercial and technical ties to the industrialized world and increasing the role of market forces in stimulating urban development. Apr. 1989 brought new demands for political reforms; student demonstrators camped out in Tiananmen Square, Beijing, in a massive peaceful protest. Some 100,000 students and workers marched, and at least 20 other cities saw protests. In response, martial law was imposed; army troops crushed the demonstration in and around Tiananmen Square on June 3-4, with death toll estimates at 500-7,000, up to 10,000 dissidents arrested, 31 people tried and executed. The conciliatory Communist Party chief was ousted; the Politburo adopted (July) reforms against official corruption.

Japan. Japan's relations with other nations, especially the U.S., were dominated by trade imbalances favoring Japan. In 1985 the U.S. trade deficit with Japan was $49.7 billion, one-third of the total U.S. trade deficit. After Japan was found (Apr. 1986) to sell semiconductors and computer memory chips below cost, the U.S. was assured a "fair share" of the market, but charged (Mar. 1987) Japan with failing to live up to the agreement.

European Community. With the addition of Greece, Portugal, and Spain, the EC became a common market of more than 300 million people, the West's largest trading entity. Margaret Thatcher became the first British prime minister in the 20th century to win a 3rd consecutive term (1987). France elected (1981) its first socialist president, François Mitterrand, who was reelected in 1988. Italy elected (1983) its first socialist premier, Bettino Craxi.

International terrorism. With the 1979 overthrow of the shah of Iran, terrorism became a prominent tactic. It increased through the 1980s, but with fewer high-profile attacks after 1985. In 1979-81, Iranian militants held 52 U.S. hostages in Iran for 444 days; in 1983 a TNT-laden suicide terrorist blew up U.S. Marine headquarters in Beirut, killing 241 Americans, and a truck bomb blew up a French paratroop barracks, killing 58. The Achille Lauro cruise ship was hijacked in 1986, and an American passenger killed; the U.S. subsequently intercepted the Egyptian plane flying the terrorists to safety. Incidents rose to 700 in 1985, and to 1,000 in 1988. Assassinated leaders included Egypt's Pres. Anwar al-Sadat (1981), India's Prime Min. Indira Gandhi (1984), and Lebanese Premier Rashid Karami (1987).

Post–Cold War World: 1990-99

Soviet Empire breakup. The world community witnessed the extraordinary disintegration of the Soviet Union into 15 independent states. The 1980s had already seen internal reforms and a decline of Communist power both within the Soviet Union and in Eastern Europe. The Soviet breakup began in earnest with the declarations of independence adopted by the Baltic republics of Lithuania, Latvia, and Estonia during an abortive coup against reformist leader Mikhail Gorbachev (Aug. 1991). The other republics soon took the same step. In Dec. 1991, Russia, Ukraine, and Belarus declared the Soviet Union dead; Gorbachev resigned, and the Soviet Parliament went out of existence. The Warsaw Pact and the Council for Mutual Economic Assistance (Comecon) were disbanded. Most of the former Soviet republics joined in a loose confederation called the Commonwealth of Independent States. Russia remained the predominant country after the breakup, but its people soon suffered severe economic hardship as the nation, under Pres. Boris Yeltsin, moved to revamp the economy and adopt a free market system. In Oct. 1993, anti-Yeltsin forces occupied the Parliament building and were ousted by the army; about 140 people died in the fighting.

The Muslim republic of Chechnya declared independence from the rest of Russia, but this was met with an invasion by Russian troops (Dec. 1994). After almost 21 months of vicious fighting, a cease-fire took hold in 1996, and the Russians withdrew. In 1999 Russia forcibly suppressed Muslim insurgents in Dagestan and entered neighboring Chechnya, again fighting to gain control over separatist rebels there. Yeltsin resigned office Dec. 31, 1999, to be replaced by Vladimir Putin (elected in his own right, Mar. 2000).

Europe. Yugoslavia broke apart, and hostilities ensued among the republics along ethnic and religious lines. Croatia, Slovenia, and Macedonia declared independence (1991), followed by Bosnia-Herzegovina (1992). Serbia and Montenegro remained as the republic of Yugoslavia. Bitter fighting followed, especially in Bosnia, where Serbs reportedly engaged in "ethnic cleansing" of the Muslim population; a peace plan (Dayton accord), brokered by the United States, was signed by Bosnia, Serbia, and Croatia (Dec. 1995), with NATO responsible for policing its implementation. In spring 1999, NATO conducted a bombing campaign aimed at stopping Yugoslavia from its campaign to drive out ethnic Albanians from the Kosovo region; a peace accord was reached in June under which NATO peacekeeping troops entered Kosovo.

The two Germanys were reunited after 45 years (Oct. 1990). The union was greeted with jubilation, but stresses became apparent when free market principles were applied to the aging East German industries, resulting in many plant closings and rising unemployment. West German chancellor Helmut Kohl, a Christian Democrat, lost power after 16 years, in Sept. 1998 elections; Gerhard Schroeder, a Social Democrat, took over. Czechoslovakia broke apart peacefully (Jan. 1993), becoming the Czech Republic and Slovakia. In Poland, Lech Walesa was elected president (Dec. 1991) but was defeated in his bid for a 2nd term (Nov. 1995).

NATO approved the Partnership for Peace Program (Jan. 1994) coordinating the defense of Eastern and Central European countries; Russia joined the program later that year. NATO signed a pact with Russia (1997) providing for NATO expansion into the former Soviet-bloc countries; a similar treaty was set up with Ukraine. The Czech Republic, Hungary, and Poland became members in Jan. 1999; in that year NATO celebrated its 50th anniversary. Efforts toward European unity continued with adoption of a single market (Jan. 1993) and conversion of the European Community to the European Union as the Maestricht Treaty took effect (Nov. 1993). Agreement was reached for 11 EU members to participate in Economic and Monetary Union, adopting a common currency (euro) for some purposes in Jan. 1999.

An intraparty revolt forced Margaret Thatcher out as prime minister of Great Britain, to be succeeded by John Major (Nov. 1990); 7 years later, Major suffered an overwhelming defeat at the hands of the new Labour Party leader, Tony Blair (May 1997). The divorce of Prince Charles and Princess Diana, followed by the death of Diana in a car accident (Aug. 1997), made headlines around the world. Talks on peace in Northern Ireland that included participation of Sinn Fein, political arm of the IRA, led to a ground-breaking peace plan, approved in an all-Ireland vote (May 1998). In Dec. 1999, Northern Ireland was granted home rule under a power-sharing cabinet. In Scotland voters overwhelmingly approved establishment of a regional legislature (1997), and in Wales voters narrowly approved establishment of a local assembly (1997). In a historic innovation, the Church of England ordained 32 women as priests (Mar. 1994).

Middle East. In Aug. 1990, Iraq's Saddam Hussein ordered his troops to invade Kuwait. The UN approved military action in response (Nov. 1990), and an international military force, led by the U.S., bombed Iraq (Jan. 1991) and launched a land attack, crushing the invasion (Feb. 1991). After Iraq accepted a cease-fire (Apr. 1991), U.S. troops withdrew, but "no-fly" zones were set up over northern Iraq to protect the Kurds and over southern Iraq to protect Shiite Muslims. The UN imposed sanctions on Iraq for failure to abide by the cease-fire. Iraq's reported failure to cooperate with UN arms inspectors seeking to eliminate "weapons of mass destruction" led to repeated air strikes by the U.S. and Britain.

The last Western hostages were freed in Lebanon, June 1992. Israel and the Palestine Liberation Organization signed a peace accord (Sept. 1993) providing for Palestinian self-government in the West Bank and Gaza Strip. Prime Min. Yitzhak Rabin and Foreign Min. Shimon Peres of Israel and Yasir Arafat of the PLO received the Nobel Peace Prize for their efforts (1994). Six Arab nations relaxed their boycott against Israel (1994), and Israel and Jordan signed a peace treaty (Oct. 1994). Rabin was assassinated (Nov. 1995) by an Israeli opponent of the peace process. After new elections (May 1996), Benjamin Netanyahu as prime minister adopted a harder line in peace negotiations. Arafat was elected to the presidency of the Palestinian Authority (Jan. 1996). A long-delayed interim agreement (the Wye Memorandum) on Israel military withdrawal from part of the West Bank was reached Oct. 1998. A Labour government under Ehud Barak took power after May 1999 elections, but further progress in peace negotiations proved elusive.

King Hussein of Jordan died (Feb. 1999), to be succeeded by his son Abdullah.

Asia and the Pacific. Hong Kong was returned to China (July 1997) after 156 years as a British colony, and Macao reverted to Chinese sovereignty (Dec. 1999) after over 400 years of Portuguese rule. Both were to retain their legal and capitalist economic systems for 50 years. Jiang Zemin, general secretary of the Chinese Communist Party, assumed the additional post of president of China (Mar. 1993) and emerged as the key leader after the death of leader Deng Xiaoping (Feb. 1997). China released from prison—and exiled—some well-known dissidents but continued to be criticized for detentions and other alleged widespread human rights abuses. In Nov. 1999 the U.S. and China signed a landmark pact normalizing trade relations.

After years of prosperity, Thailand, Indonesia, and South Korea in 1997 began to suffer economic reverses that had a worldwide ripple effect. These countries received billion-dollar IMF bailout packages. In Indonesia, protests over mismanagement led to the resignation of Pres. Suharto (May 1998) after 32 years of nearly autocratic rule. Abdurraham Wahid was elected (Oct. 1999) in the country's first fully democratic elections. In a referendum (Aug. 1999), East Timor voted overwhelmingly for independence from Indonesia; pro-Indonesian militias then rampaged through the territory, but a multinational peacekeeping force was allowed in (Sept. 1999) to help restore order. In South Korea, former dissident Kim Dae Jung was elected president (Dec. 1997). Two previous presidents, Roh Tae Woo and Chun Doo Hwan, were convicted of crimes committed in office but were given amnesty by the new president.

In Japan members of a religious cult, released the nerve gas sarin on 5 Tokyo subway cars, killing 12 people and injuring more than 5,500 (Mar. 1995). Tamil rebels continued their armed conflict in Sri Lanka. In Afghanistan the Taliban, an extreme Islamic fundamentalist group, gained control of Kabul (Sept. 1996) and, eventually, most of the country. In North Korea, longtime dictator Kim Il Sung died (July 1994), to be succeeded by his son, Kim Jong Il. In the same year the country signed an agreement with the U.S. setting a timetable for North Korea to eliminate its nuclear program. The country also suffered a severe drought, and widespread starvation was feared.

India was beset by riots following destruction of a mosque by Hindu militants (Dec. 1992); Indian army troops repeatedly clashed with pro-independence demonstrators in the disputed Muslim region of Kashmir, exacerbating relations with Pakistan. Uneasy relations between India and Pakistan reached a new level when both nations conducted nuclear tests in 1998. Conflict in Pakistan between government and the military led to a bloodless coup (Oct. 1999).

Africa. South Africa was transformed as the white-dominated government abandoned apartheid and the country made the transition to a nonracial democratic government. Pres. F. W. de Klerk released Nelson Mandela from prison (Feb. 1990), after he had been held by the government for 27 years, and lifted a ban on the African National Congress. The white government repealed its apartheid laws (1990, 1991). Mandela was elected president (Apr. 1994), and a new constitution became law (Dec. 1996). Thabo Mbeki, the ANC's candidate to succeed Mandela, was overwhelmingly elected president in June 1999.

In Nigeria, Gen. Olusegun Obasanjo was elected president (Feb. 1999), to become the country's first civilian leader in 15 years.

The decades-long rule of Mobutu Sese Seko in Zaire came to an end (May 1997) at the hands of rebel forces led by Laurent Kabila; an ailing Mobutu fled the country and soon after died. Kabila changed the country's name back to Democratic Republic of the Congo; conditions remained unstable.

After the presidents of Burundi and Rwanda were killed in an airplane crash (Apr. 1994), violence erupted in Rwanda between Hutu and Tutsi factions; hundreds of thousands were slain. The conflict spread to refugee camps in neighboring Zaire and Burundi. Factional fighting also erupted in Somalia after Pres. Muhammad Siad Barre was ousted (Jan. 1991). The UN sent a U.S.-led peacekeeping force, but it was unsuccessful in restoring order. Some soldiers of the peacekeeping force were killed, including 23 Pakistanis (June 1993) and 18 U.S. Rangers (Oct. 1993). The UN ended its mission (Mar. 1995) with no durable government in place. Liberia endured factional fighting that lasted almost 5 years and claimed over 150,000 lives; a cease-fire was concluded in Aug. 1995. The World Health Organization reported (1995) that Africa accounted for 70% of AIDS cases worldwide.

A 16-year civil war appeared to end in Angola (May 1991) when the government signed a peace accord with the rebel UNITA faction. But despite the inauguration of a national unity government (Apr. 1997), insurgents continued to fight and gain territory. Namibia officially became independent in Mar. 1990. Claimed by South Africa since 1919 and placed under UN authority in 1971, it had long been a focus of colonial rivalries. In Algeria, the army cancelled a 2nd round of parliamentary elections (Jan. 1992) after the Islamic party won a first round. Islamic fundamentalists then began a terrorist campaign that, along with killings by pro-government squads, eventually claimed thousands of lives. A peace plan was worked out with the militants in 1999.

North America. The North American Free Trade Agreement (NAFTA), liberalizing trade between the United States, Canada, and Mexico, went into effect Jan. 1, 1994. In Canada, the Progressive Conservative Party suffered a crushing defeat in general elections (Oct. 1993), and liberal Jean Chrétien became prime minister. The map of Canada was altered in Apr. 1999 to create a new territory, Nunavut, out of an area that had been part of Northwest Territories.

In the United States' 1992 presidential election, Democrat Bill Clinton defeated Pres. George Bush, but in 1994 congressional elections Republicans gained control of Congress. Clinton reached agreement with Congress on measures to eliminate the federal budget deficit. Clinton won reelection in 1996; the new administration was plagued by scandals but remained popular amid continued economic prosperity. In Dec. 1998 Clinton was impeached by the U.S. House on charges related to the Monica Lewinsky scandal; he was acquitted by the Senate in Feb. 1999.

The U.S. Army and Navy were torn by sexual scandals involving abuse of women personnel. The United States suffered embarrassment with the discovery of espionage by CIA agents (Aldrich Ames, Harold Nicholson).

In Mexico, Ernesto Zedillo of the ruling PRI party was elected president (July 1994) after the party's first candidate was assassinated. The country soon faced a crisis affecting the value of the peso, but recovered with the help of a bailout package from the U.S. A peasant revolt spearheaded by the Zapatista National Liberation Army erupted in the state of Chiapas (Jan. 1994) and was suppressed.

Central America and the Caribbean. In Haiti, Jean-Bertrand Aristide was elected president (Dec. 1990) but was ousted in a military coup after 9 months in office. The UN approved a U.S.-led invasion to restore the elected leader; shortly before troops arrived, a delegation headed by former U.S. Pres. Jimmy Carter arranged (Sept. 1994) for the junta to step aside for Aristide, who served until 1996. In Nicaragua, Violetta Chamarro defeated Daniel Ortega in the presidential election (Feb. 1990), thus ousting the Sandinistas. In Panama, U.S. troops invaded and overthrew the government of Manuel Noriega (Dec. 1989), who was wanted on drug charges; Noriega was captured Jan. 1990. On Dec. 31, 1999, Panama assumed full control of the Panama Canal, in accord with a treaty with the U.S. In El Salvador (1992) and Guatemala (1996) the governments signed agreements with rebel factions aimed at ending long-running civil conflicts.

South America. Alberto Fujimori was elected president of Peru in June 1990 and, despite his suppression of the constitution (1992), was reelected in 1995. Peru succeeded in capturing (Sept. 1992) the leader of the Shining Path guerrilla movement. Leftist guerrillas took hostages at an ambassador's residence in Lima (Dec. 1996); one hostage was killed during a government assault rescuing the rest (Apr. 1997). Peronist Pres. Carlos Saúl Menem served as Argentina's president for much of the decade (elected 1989, reelected 1995), imposing stringent economic measures; he was succeeded in 1999 by Fernando de la Rúa.

Former Chilean Pres. Gen. Augusto Pinochet continued to head the army until Mar. 1998; he was arrested in London (Oct. 1998) on human rights charges but was judged medically unfit for trial and returned to Chile (Mar. 2000).

In Brazil, Fernando Henrique Cardoso was elected president (Oct. 1994) and reelected in 1998 amid a growing economic slump; the IMF announced a $42 billion aid package (Nov. 1998). The first UN Conference on Environment and Development, or Earth Summit, was held (June 1992) in Rio de Janeiro, with delegates from 178 nations.

Terrorism and Crime. Terrorism, often linked to Mideastern sources and with the U.S. as object, continued. A terrorist bomb exploded in a garage beneath New York City's World Trade Center, killing 6 people (Feb. 1993). Bombings of a U.S. military training center (Nov. 1995) and a barracks holding U.S. airmen (June 1996), both in Saudi Arabia, killed 7 and 19, respectively. Bombs exploded outside U.S. embassies in Kenya and Tanzania, Aug. 1998, killing over 220 people; the U.S. retaliated with missiles fired at alleged terrorist-linked sites in Afghanistan and Sudan. The Alfred P. Murrah Federal Building in Oklahoma City, OK, was destroyed by a bomb that killed 168 people (Apr. 1995).

Science. The powerful Hubble Space Telescope was launched in Apr. 1990; flaws in its mirrors and solar panels were repaired by space-walking astronauts (Dec. 1993). U.S. space shuttle Atlantis docked with the orbiting Russian space station Mir (June 1995) in first of several joint missions in a spirit of post-Cold-War cooperation. In Nov. 1998 first component for a new International Space Station was launched into space from Kazakhstan.

Scottish scientist Ian Wilmut announced (Feb. 1997) the cloning of a sheep, nicknamed Dolly—the first mammal successfully cloned from a cell from an adult animal.

Opening a New Century: 2000-2004

Terrorism. In Oct. 2000, 17 American sailors were killed aboard the USS Cole in Aden, Yemen, when a small boat exploded alongside it in a terrorist attack. On Sept. 11, 2001, hijackers crashed 2 jetliners into the twin towers of the World Trade Center in New York City and another into the Pentagon outside Washington, DC; a 4th crashed in a field in Pennsylvania. The attacks, which destroyed both towers and damaged the Pentagon, killed about 3,000 people, including all 265 aboard the planes. Saudi exile Osama bin Laden and his al-Qaeda terrorist network, based in Afghanistan and backed by the Taliban government there, emerged as responsible for the attacks. A U.S.-led military campaign launched in Oct. 2001 ousted the Taliban, and a transitional government was installed (Dec. 2001), although al-Qaeda remained active in some areas of Afghanistan and elsewhere, and Bin Laden remained at large.

Among incidents elsewhere, a bomb exploded in a truck outside a synagogue in Tunisia (Apr. 2002), killing 17 (including the driver). A car bomb on the Indonesian island of Bali (Oct. 2002) killed about 200, mostly foreign tourists; Muslim extremists were arrested. Chechen guerrillas seized a Moscow movie theater (Oct. 2002); more than 100 hostages were killed in a subsequent raid by Russian troops. A terrorist explosion in Moscow subways killed 39 (Feb. 2004), and 89 died when 2 Russian planes were destroyed apparently by bombs (Aug. 2004). Chechen guerrillas took over a Beslan, Russia, school; 330 hostages, many students, and 31 guerrillas were killed in the standoff (Sept. 2004). The bombing of an Israeli-owned hotel in Kenya (Nov. 2002) killed 13 (including the 3 bombers). Suicide attacks against Western targets in Riyadh, Saudi Arabia (May 2003), killed 34 people (including 9 attackers). Suicide bombings in Istanbul, Turkey (Nov. 2003), hit two Jewish synagogues and British targets, killing about 60 people in all. Four commuter trains were bombed in Madrid, Spain, killing 202 (Mar. 2004); elections held a week later ousted Spain's premier.

War in Iraq. The U.S., with Great Britain, launched an invasion of Iraq (Mar. 2003), aimed at ousting the dictatorial regime of Saddam Hussein. Troops took control of Baghdad and other cities, and Pres. Bush declared major combat ended, May 1, but insurgents caused continuing casualties among troops and civilians. Searches for weapons of mass destruction, cited as major grounds for the invasion, yielded no evidence. Saddam Hussein was eventually captured (Dec. 2003), as well as other regime leaders, to be put on trial by Iraqis. An interim gov't was installed (June 2004). Evidence that U.S. soldiers at Abu Ghraib prison in Iraq abused detainees arose in Apr. 2004. U.S. military deaths topped 1,000 (Sept. 2004) as attacks by insurgents continued; despite threats by insurgents, Iraqis turned out in large numbers to vote in national elections (Jan. 2005).

Middle East. Violence between Israelis and Palestinians escalated, with suicide bombings by Palestinians and retaliation by Israeli armed forces, the peace process languished. Likud leader Ariel Sharon was elected prime minister of Israel (Feb. 2001). In reponse to Palestinian suicide attacks that killed 26, Israeli forces stormed the compound of Palestinian leader Yasir Arafat (Mar. 2002), keeping him confined there until early May. Arafat died in a Paris hospital (Nov. 2004) and was succeeded by Mahmoud Abbas following elections. The U.S., Russia, UN, and European Union formally initiated (Apr. 2003) a "road map" plan for Israeli-Palestinian peace negotiations, but little progress was made. Syrian Pres. Hafez al-Assad died (June 2000); succeeded by his son. Iran was censured (Dec. 2003) by the UN Intl. Atomic Energy Agency for covering up aspects of its nuclear weapons program.

Europe. In Oct. 2000, Yugoslav strongman Slobodan Milosevic yielded power to Vojislav Kostunica, who had declared himself president in the face of anti-Milosevic protests after a disputed election. Milosevic surrendered to Serbian authorities; in Feb. 2002 he went on trial for war crimes allegedly committed during 1990s ethnic conflicts in the Balkans. The first-ever Concorde jet crash, near Paris, killed 113 people (July 2000). The Russian nuclear sub Kursk sank in the Barents Sea, killing 118 crew members.

By early 2002 the euro was the common currency in 12 European Union nations. The EU admitted 10 Eastern European nations (May 2004). Some 35,000 people across Europe, including over 11,000 in France, reportedly died in 2003 summer heat waves.

Russia. The Russian nuclear sub Kursk sank in the Barents Sea (Aug. 2000) killing 118 crew members. Vladimir Putin, reelected in Mar. 2004, signed legislation ending popular election of governors (Dec. 2004).

Asia. South Korean Pres. Kim Dae Jung and North Korean ruler Kim Jong Il held a summit meeting and agreed to seek peace and reunification (June 2000), but tensions rose after North Korea admitted conducting a covert nuclear weapons development program (Oct. 2002). Nepal's King Birendra and other Nepal royals were shot to death inside the palace, apparently by Crown Prince Dipendra, who then killed himself (June 2001). Chinese Pres. Jiang Zemin and Russian Pres. Vladimir Putin signed a friendship treaty (July 2001). With Jiang's retirement Hu Jintao was named as China's new Communist party chief (Nov. 2002) and president (Mar. 2003).

North Korea withdrew (Jan. 2003) from the Nuclear Nonproliferation Treaty; multi-nation talks were held in Beijing (Aug. 2003) about the status of its nuclear program. Pakistan and India restored diplomatic ties (May 2003) and declared a cease-fire in disputed territory (Nov. 2003). Pakistani Pres. Gen. Pervez Musharraf twice escaped assassination by Islamic militants (Dec. 2003). Afghanistan held its first presidential elections and selected Hamid Karzai (Oct.-Nov 2004). A massive tsunami in the Indian Ocean (Dec. 2004) devastated parts of Indonesia, Thailand, India, Sri Lanka, and other Asian and African nations and left some 200,000 dead.

Africa. The 13th International AIDS Conference, held in Durban, South Africa (July 2000), focused on ways of controlling surging AIDS rates in developing countries. Ethiopia and Eritrea signed a peace treaty (Dec. 2000). Laurent Kabila, president of the Democratic Republic of the Congo, was shot to death by a bodyguard (Jan. 2001). Liberian Pres. Charles Taylor went into voluntary exile (Aug. 2003) as part of a deal to end a 14-year-old civil war; other accords were reached aimed at ending civil wars in Angola (Apr. 2002) and Côte d'Ivoire (Jan. 2003).

A peace agreement in the Dem. Rep. of Congo (Apr. 2003) did not end violence there. Civil war between the Muslim-led government and rebels from Christian areas in Sudan continued, with massive casualties. Sudanese government-backed militias (janjaweed) in the Darfur region were accused of displacing 2 mil. people in acts bordering on genocide. Zimbabwean Pres. Robert Mugabe pulled his country out of the Commonwealth (Dec. 2003) after the group reaffirmed suspension of Zimbabwe for alleged fraud in the 2002 election. Libya agreed (Dec. 2003) to abandon programs pursuing weapons of mass destruction.

Americas and the Caribbean. Vicente Fox of the center-right National Action Party (PAN) was elected president of Mexico (July 2000), in a historic defeat for the long-supreme Institutional Revolutionary Party (PRI). Peruvian Pres. Alberto Fujimori stepped down during his 3rd term (Nov. 2000), amid scandal, and did not seek reelection. In Jan. 2001, George W. Bush was inaugurated as U.S. president, after one of the tightest and most controversial elections in U.S. history; he was reelected in Nov. 2004. Venezuelan Pres. Hugo Chavez regained power after 48-hr. coup (Dec. 2002). Argentina's record default on International Monetary Fund loans resulted (Sept. 2003) in a $12.5 billion debt-refinancing agreement. Haiti was wracked by anti-govenment protests (leading to the resignation of Jean-Bertrand Aristide in Feb. 2004).

Paul Martin succeeded Jean Chrétien as Canadian prime minister (Dec. 2003) after he was elected to lead the ruling Liberal Party. He lost his majority in June 2004 but remained prime minister of the minority government.

Space. The U.S. space shuttle Columbia broke up on reentering Earth's atmosphere Feb. 1, 2003, killing all 7 crew members.

International. Negotiators from 178 countries agreed to adopt the Kyoto Protocol, calling for a reduction of greenhouse gases in developed nations (July 2001).

Major Gods & Goddesses of Ancient Egypt

Name	Relations	Sphere or Position	Emblem/Attribute
Ra (Re)/Atum/Amon	Self-created	The sun, creation	Hawk
Thoth (Djeheuty)	Son of Ra	The moon, wisdom, writing	Ibis/baboon
Ptah	Creator of Atum	Creation, craftsmen	----
Osiris	Brother of Set(h) & Isis	The underworld (dead), fertility, resurrection, vegetation	Bull
Isis	Sister/consort of Osiris	The underworld (dead)	----
Set(h)	Brother of Osiris	Evil, trickery, chaos	Boar, pig
Horus	Son of Osiris & Isis/ Ra & Hathor	The earth	Falcon
Hathor	Consort of Ra	Motherhood, love	Cow
Anubis	Son of Osiris	Embalmer & judge of the dead	Jackal/dog

Major Norse Gods & Goddesses

Name	Relations	Sphere or Position	Emblem/Attribute
Odin	Father of the Aesir (gods)	War and death, poetry, wisdom, magic	Spear, mead, ring/One-eyed
Thor	Son of Odin	Thunder, lightning, rain; champion of the gods	Hammer, belt
Njord	Father of Freyja & Freyr	Wind and sea, wealth and prosperity	----
Frigg	Wife of Odin	Marriage and motherhood, home	----
Freyja (Freya)	Daughter of Njord	Fertility, birth, crops	Necklace
Freyr	Son of Njord	Agriculture, sun, rain	Magic ship, golden boar
Tyr	Son of Odin ?	Justice, war	Spear/One-handed
Heimdall	Son of nine giantesses	Watchman of the gods; keen sight & hearing	Horn
Balder (Baldur)	Son of Odin	Light, purity	----
Loki	Son of giants; father of Hel (goddess of death), Jormungand (serpent encompassing the world),Fenrir (the wolf).	Malicious trickster	----

Major Gods & Goddesses of the Classical World

Greek	Roman	Relations	Sphere or Position
Aphrodite	Venus	Daughter of Zeus & Dione	Love
Apollo	——	Son of Zeus & Leto	Healing, poetry, light
Ares	Mars	Son of Zeus & Hera	War
Artemis	Diana	Daughter of Zeus & Leto	Hunting, chastity
Athena	Minerva	Daughter of Zeus & Metis	Wisdom, crafts, war
Cronus	Saturn	Father of Zeus	Titans' ruler
Demeter	Ceres	Sister of Zeus	Agriculture, fertility
Dionysus	Bacchus	Son of Zeus & Semele	Wine, fertility, ecstasy
Eros	Cupid	Son of Ares & Aphrodite	Love
Hades	Pluto	Brother of Zeus	The underworld, death
Hephaestus	Vulcan	Son of Zeus & Hera	Fire
Hera	Juno	Wife & sister of Zeus	Earth
Hermes	Mercury	Son of Zeus & Maia	Travel, commerce, gods' messenger
Hestia	Vesta	Sister of Zeus	The hearth
Pan	——	Son of Hermes & a wood nymph	Forests, flocks, shepherds
Persephone	Proserpina	Daughter of Zeus & Demeter	Grain
Poseidon	Neptune	Brother of Zeus	The sea
Rhea	Ops	Mother of Zeus	The earth
Uranus	Uranus	Father of Titans (elder gods)	The heavens
Zeus	Jupiter	Son of Cronus & Rhea	Ruler of the gods

The Seven Wonders of the Ancient World

These ancient works of art and architecture were considered awe-inspiring by the Greek and Roman world of the first few centuries bc. Later classical writers disagreed as to which works belonged, but the following were usually included:

The Pyramids of Egypt: The only surviving ancient Wonder, these monumental structures of masonry, located at Giza on the W bank of the Nile R above Cairo, were built from c 2700 to 2500 bc as royal tombs. Three—Khufu (Cheops), Khafra (Chephren), and Menkaura (Mycerimus)—were often grouped as the first Wonder of the World. The largest, the Great Pyramid of Khufu, is a solid mass of limestone blocks covering 13 acres. It is estimated to contain 2.3 million blocks of stone, the stones themselves averaging 2 tons and some weighing 30 tons. Its construction reputedly took 100,000 laborers 20 years.

The Hanging Gardens of Babylon: These gardens were laid out on a brick terrace 400 ft square and 75 ft above the ground. To irrigate the plants, screws were turned to lift water from the Euphrates R. The gardens were probably built by King Nebuchadnezzar II about 600 bc. The Walls of Babylon, long, thick, and made of colorfully glazed brick, were also considered by some among the Seven Wonders.

The Pharos (Lighthouse) of Alexandria: This structure was designed about 270 bc, during the reign of Ptolemy II, by the Greek architect Sostratos. Estimates of its height range from 200 to 600 ft.

The Colossus of Rhodes: A bronze statue of the sun god Helios, the Colossus was worked on for 12 years in the third cent. bc by the sculptor Chares. It was probably 120 ft high. A symbol of the city of Rhodes at its height, the statue stood on a promontory overlooking the harbor.

The Temple of Artemis (Diana) at Ephesus: This largest and most complex temple of ancient times was built about 550 bc and was made of marble except for its tile-covered wooden roof. It was begun in honor of a non-Hellenic goddess who later became identified with the Greek goddess of the same name. Ephesus was one of the greatest of the Ionian cities.

The Mausoleum at Halicarnassus: The source of our word mausoleum, this marble tomb was built in what is now SE Turkey by Artemisia for her husband Mausolus, king of Caria in Asia Minor, who died in 353 bc. About 135 ft high, the tomb was adorned with the works of 4 sculptors.

The Statue of Zeus (Jupiter) at Olympia: This statue of the king of the gods showed him seated on a throne. His flesh was made of ivory, his robe and ornaments of gold. Reputedly 40 ft high, the statue was made by Phidias and was placed in the great temple of Zeus in the sacred grove of Olympia about 457 bc.

Diesel Hits 4.25. Huge ENVI profits off this captive market

I've seen dozens of environmentally responsible technologies that may one day make a fortune in profits...but few have the short-term profit potential as I've found with Enviro Resolutions (PK: ENVI).

I'm projecting a fast 475% profit from ENVI as 690,000 buses are considered for diesel engine upgrades using the company's exclusive EPA-compliant exhaust-scrubbing muffler.

This astonishing muffler eliminates up to 95% of pollution from diesel exhaust…making it the only bolt-on technology I've found that meets rigid new EPA emissions standards while using standard diesel fuel.

What's more, this is not an idea on drawing paper. The technology has been tested and proven under the most challenging conditions. The product…it's in its third generation of refinement!

And as you'll read later in this report the company's next target, coal-fired industrial plants, could be worth billions more as America makes use of its most abundant fuel resource.

Put coal in the mix and your looking at a small company with multi-billion dollar market potential. I'm forecasting longer-term ENVI share prices in the $38-$40 range...that's a 3000% profit climb!

I'll start with what drives ENVI's 475% growth potential in 2008...

American school and public transportation buses create an immediate opportunity for Enviro Resolutions. Even a fraction of this market could send ENVI shares flying.

The driving force behind these projections is diesel fuel expense. Effective this year, EPA diesel told refiners to slash the acceptable maximum sulfur content and added as much as 5 cents to the cost of over-the-road fuel.

Though that may not sound like much to you, it's huge. American schools and public transportation now face hundreds of millions of dollars in new unavoidable operating costs!

Even the EPA knows it whelped a monster!

Adding insult to injury, the new fuel is hard on older engines. Maintenance costs rise and engines wear out sooner.

Following its heavy-handed edict, the EPA now spends millions of Federal grant dollars to subsidize bus engine or vehicle replacement.

The EPA has already awarded or announced over $19 million in grants for new school bus engines…at an estimated cost of $6,000+ per vehicle!

However, with a new engine installed, the bus still must use the expensive new fuel. The high cost of fueling remains unchanged.

Talk about a captive market! Diesel fleet operators have no choice but to use the new fuel...and pay the high price...unless they reduce pollution another way.

In the coming months, especially as the cost of the new diesel fuel flies past $4.50 a gallon, you could see an explosion of demand for Enviro Resolutions diesel-scrubbing muffler...690,000 buses hit by skyrocketing premium diesel fuel costs.

The revenue potential this year: staggering!

1,000 shares of ENVI could quickly return $4,750 profit!
5,000 shares of ENVI bought today could return $23,750 profit!

This is no fluke. I've already spotted a number of triple-digit winners for my readers and these proven results have made my newsletter, Intelligent Investor Report, one of the top investment newsletters in the world today. (Later in this report, I'll tell you how successful!) And like my newsletter, Enviro Resolutions (ENVI) also proves it can deliver on its promises.

Already tested and proven in real world use!

The Enviro Resolutions (ENVI) muffler is more than a great idea…it's a proven product!

In a monumental anti-pollution test, the Enviro Resolutions muffler virtually eliminated smoke from the stack of the Vancouver ferry! (See photos on lower right.)  Lab results confirm that the Enviro Resolution muffler eliminates up to 95% of diesel exhaust pollutants, well within the guidelines set forth by the EPA.

Two years ago the Greater Vancouver Regional District (GVRD) conducted an experiment for its fleet of 1,000 diesel buses. Instead of fueling them with #1 grade diesel, they switched to #2 grade diesel for one year and saved $700,000.

Saving six to seven figures each year in fuel costs could push bus fleets into Enviro Solutions (ENVI) exhaust-scrubbing mufflers immediately! Share prices in ENVI could hit triple-digit gains in a flash!

It's time to make money on ENVI!

I know the signs of winning potential and my 475% profit projection for Enviro Solutions (ENVI) is a no-brainer. I strongly recommend you get in now at any price up to $4.75.

Diesel fumes are not just an American issue…internationally, the problem is even worse…and Enviro Resolutions has already been contacted for its solution!

Overseas, diesel exhaust is even more serious a problem. Global bus sales are 5.6 times those of North America alone. The international market for retrofits could easily be in excess of $12 billion.

In a recent conversation with Enviro Resolutions management, they announced that they are receiving inquiries from Europe, Africa, South America, Indonesia, Asia, and India.

When I first began looking at ENVI, I made my profit projection based on U.S. Market potential. The global market for pollution-reducing diesel bus retrofits is simply enormous...and the U.S. government is helping make it happen!

I was floored when I saw this news published Septmeber 7, 2006 by the US State Department through its America.gov website.

"United States, India Cooperating To Cut Vehicular Air Pollution."

"Grant will help Indian partners reduce toxic emissions from trucks, buses."

In the report it states:

"The United States Trade and Development Agency (USTDA) has awarded a $296,000 grant to the city of Pune, in India's Maharashtra state, to implement innovative measures that reduce vehicular air pollution."

"The grant will fund a project to retrofit diesel-fuelled buses with technologies designed to reduce toxic emissions..."

Even the Feds are behind this idea!

Here at home though, the story gets even better...

Clean burning coal...America's salvation from imported oil!

If you think diesel exhaust clean up is big...think about cleaning up coal...and the money that can be made doing it.

Even conservative estimates put usable U.S. coal reserves at a 100-year supply. Some estimates are as high as 250 years! To make that energy useful in America, Enviro Resolutions reports that "...much of our combined expertise center[s] around cleaning the effects of coal-fired power plants"...targeting the top coal pollutants: Sulfur dioxide and Nitrogen oxides.

A Bush administration proposal would require [coal burning] utilities to cut their emissions of Sulfur dioxide and Nitrogen oxides by 70% after 2015.

The implications are enormous.  With Enviro Resolutions allowing coal to meet green energy standards…the demand for its scrubbers could drive ENVI shares to the moon.

That kind of growth potential makes ENVI a "must buy" right now.

I'm thrilled to have discovered ENVI early. Accordingly, I've propelled Enviro Resolutions (ENVI) to the front of my green energy picks for 2008.

Let me assure you, green energy is paying off big in my book.

Once the Enviro Resolutions (ENVI) scrubber gets traction in the market, I see huge potential in scrubber sales and corresponding profit in ENVI.

This is an early-stage company ready to move now. These simple facts make a compelling case for ENVI shares today. From what I know…

It's protected by three key patents

There is no competition for meeting EPA requirements

The scrubber is inexpensive and requires no significant maintenance

Give this some thought and you'll quickly recognize the potential in ENVI shares.

Put a new class of money-makers in your portfolio this year!

Enviro Resolutions (ENVI) isn't the only company I've found with an enormous green energy potential. As America (and the world) ramps up new green energy technologies, you could earn a fortune from the changes.

My publication, the Intelligent Investor Report (IIR), digs deeply into all important energy sectors to flush out emerging leadership. Top stocks to buy in these companies could one day be worth a fortune and I want to help you find them now.

But I want you to be prepared for another thing…keeping what you make.

That won't be so easy in 2008 through 2010.

There's a monster trend taking form in global economics that will eat you alive…if you are unprepared! The world is awash in cash. That leads to one thing…

You must know how to beat a global tsunami of INFLATION!

I've been railing against this situation for years…and the implications are huge. Global money supplies are soaring at a rate of 14% OR MORE.

This is absolutely horrible!

Despite U.S. "strong dollar" chatter and Fedspeak, the value of paper money is being trampled. Central banks are on a rampage to inflate money supplies…and that leads to one thing…price inflation!

This ugly phrase is about to become the biggest portfolio buster since the Great Depression…only this time, it won't be deflation, but inflation that victimizes the unprepared.

Today, we have a Fed committed to doing everything it can to prevent a deflation, which means Fed Chairman Bernanke is making good his promise to throw money from helicopters, inflating the money supply and devaluing the dollar.

And don't think for a minute that international investments will fare better. Central banks of nearly every major currency are rapidly inflating their currencies to keep pace with the dollar.

In this kind of economic environment, traditional "safe" investments can become enormous losers. For those of you who want to learn more about how to deal with these issues, I urge you to consider a subscription to Intelligent Investor Report.

Once a month, I address those issues in Intelligent Investor Report along with publishing a list of small-, mid-, and large-cap picks that have made so much money in the past for my readers that my newsletter now ranks as one of the top newsletters published in the world today! 

Before I explain more about the money being made from my newsletter, focus your attention on what you need to know above all else…

Inflation means one thing for certain: YOU SNOOZE…YOU LOSE!

I'm telling my readers to get ready now, the double-digit inflation heading our way turns everything upside down. You face significant exposure to losses even if you stick with traditionally safe positions.

To learn how to protect your wealth from the ravages of runaway inflation…I urge you to subscribe now to Intelligent Investor Report.

Each monthly issue in 2008 will direct you toward the kind of investments that safeguard your wealth. In fact…you can make big money in an inflationary economy using the profit-making ideas I publish in Intelligent Investor Report.

As I reported to my readers in November and December…I've compiled my recommendations for 2008 that will make big profits off the devaluation the dollar.

As I see it today, these investments will be rising 50% to 100% per year…making 2008 one of the best years on record for making money in the market!

You do not want to miss this!

Subscribe now to Intelligent Investor Report to get all my 2008 recommendations…just $8 a month!

My readers will be prepared for the opportunities ahead…just like they were over the last two years. Had you been and IIR subscriber in that time frame, you could have pocketed record-setting gains from 54 different picks that included: 

Centurion Energy (CUX) up 416% in 7 months

Pan Am Silver (PAAS) up 120% in 6 weeks.

Fidelity Select Energy (FSESX, Fund) up 59.87% in 5 months   

Evergreen Solar (ESLR, Nasdaq) up 93.06% in 4 months.

Force Protection (FRPT, NYSE) up 1,400% in 24 months.

US Global Resources (PSPFX, Fund) up 62% in 12 months

That's why I say with utmost confidence: "You will make a fortune from the best stock market with returns like these!"

Of 63 stock recommendations in the Intelligent Investor Report in 2006, 54 were up -- most by 20% to over 180% (that's not a misprint). In 2008, our average pick was up over 50% by October!  By any benchmark of comparison…IIR is one of the world's most profitable financial newsletters.

You can get picks of this caliber 12 times a year sent directly to your email address for a fraction of what others might charge for such profit-packed picks and opinions.

learn more about subscribing to Intelligent Investor Report

With 47% average stock returns in 2006 and 2007 (winners and losers included) plus great editorial content, the Intelligent Investor Report will be your most valuable resource in profitable investing and building your wealth.

And don't forget the stellar stock recommendation I've given you today! Enviro Resolutions (ENVI) could easily become my best stock recommendation of the year and I urge you to take a position now.

Of Pickens, Babies & Bathwater

I've heard all kinds of remarks since T. Boone put the brakes on one of the world's largest planned wind farms last week.

Hardly any of them have been good, most of them are even using this to signal the death of renewables.

The death of renewables? Phooey.

This is the death of T. Boone's grandiose wind plans. Nothing more.

He's still in the wind business per his own admission. He's still going to employ the $2 billion worth of GE wind turbines he's already purchased. He's just not using them all at one giant wind farm, mostly due to Texas' lagging in building out transmission.

Here's some data the media and the uninformed seem to be forgetting about.

Of Pickens, Babies & Bathwater

First of all, let us not forget that the turbines for Pickens's giant 4,000 MW wind farm weren't even scheduled to be delivered until 2011.

Let us also not forget that even though the large farm is being canceled (or delayed), Pickens is still going to use the 687 turbines he's already purchased by building "three or four smaller wind farms, at a cost of some $2 billion."

Lastly, let us not forget that we're in the middle of a capital calamity. Bear Stearns is gone. Merrill is gone. Chrysler is gone. So are countless other businesses, brands, pensions, and plans.

Is it that shocking that renewable energy plans are slowing as well?

Renewable energy is a lot of great things, but it's not recession-proof.

Was this bad press a psychological blow for cleantech? Absolutely.

Is it the end of the industry and its profit potential? Absolutely not.

In reality, this is simply Boone being Boone, pursuing business as usual. The recession put a bump in his road, and he's nimbly navigating around it.

According to the billionaire, "We're going to be active in the business. It's not that we've gotten out of the business or anything like that."

And according to the spokesperson for his BP Capital Management firm, "Boone still remains committed and focused on developing wind energy in the United States. The timing is not as aggressive as he originally outlined because of the collapse of the capital stock markets and because of the steep downturn of natural gas prices."

So, I have two questions:

Is there a major industry that hasn't been stymied by the drying up of easy capital?

How does adapting to the current business environment signal the end of an industry?

Let's just take this for what it is, fallout from the recession.

And by all means, let's not through the wind baby out with Pickens's bathwater.

Wind Blowing Strong

Indeed, it seems the Pickens event was enough to give naysayers a few last breaths in recent days.

I've even heard it put as bluntly as "Nobody gives a fu** about the climate right now."

I'll let the G8 comment on that. Just last week those leaders agreed "to limit global warming to 2 degrees Celsius and cut its greenhouse gas emissions by 80 percent."

Oh, and the House just passed massive climate legislation as well.

And while I'll concede that climate change has taken a partial backseat to economic turmoil, the energy problem certainly hasn't. It's often overlooked that we're pursuing, investing in stocks market, and trying to expand renewable energy - not renewable climate change mitigation techniques.

That said, wind energy is actually looking quite strong.

Recent reports from major European turbine producers like Vestas, Gamesa, and Nordex all point to a second-half recovery for wind financing. Most have nearly signed enough contracts to meet their 2009 fiscal sales and revenue guidance, with July and August being typical months for large wind orders.

And after this recession, wind energy will emerge even stronger.

29 of our 50 states have passed and signed into law some form of a renewable portfolio standard. That means the increased use of renewables is being mandated by law. Some five other states have similar voluntary measures, the House has passed a national version, and the Senate is about to consider it.

There is no legislation on the table to mandate the use of any non-renewable fuel.

Also going unnoticed are the tools being used to combat this recession on a global scale. In the rush to pass stimuli, renewable energy has emerged as the frontrunning combatant.

Since late last year, hundreds of billions of international dollars have been pledged to boost the use of cleantech as a path to economic prosperity.

Taking those funds into consideration, the wind business has never looked stronger. In the U.S., wind energy capacity is now forecast to double by 2011 (with or without T. Boone) from 25,369 MW installed at the end of 2008 to nearly 56,000 MW. It will triple by 2013 and quadruple by 2015.

That's just in the U.S.

In China, a recent $15 billion initiative will double their use of wind energy in the next year from 12,000 MW to nearly 30,000 MW. This is part of a bigger Chinese cleantech program that will spend $290 billion by 2020.

When it comes to global totals, the use of wind energy will double by 2013 and triple by 2016.

No non-renewable energy source will see that type of growth in the coming years. Period.

To Infinity and Beyond

This last fact is also often overlooked or misused to decry renewables.

Yes, renewables currently only account for a fraction of global energy use. But this isn't a bad thing. It means there is plenty of room to grow.

Renewables are the ground floor. Fossil fuels are slowly vacating the penthouse.

This is why the growth numbers are so astounding. . . and the stock investment potential so high. When you start at 0.1% of the energy mix, it's easy to double, triple, quadruple, and more.

The upside is a century long.

It means renewables have everything to gain and traditional energy sources have everything to lose.

And losing they are, even if Pickens is the one making headlines.

You see, while one wind farm cancellation dominated headlines last week, it went largely unnoticed that the 100th coal plant was canceled since 2002.

Not the first. . . the 100th. It certainly seems worse for coal than wind.

Because while states are passing laws to increase the use of renewable energy, Los Angeles said last week that it will stop using coal-fired power altogether by 2020. What's more, according to Reuters, "No utility-scale coal power plants operate in California anymore, and the state has banned new contracts for imported coal power."

So, for a quick exercise in logic:

T. Boone still wants to build his wind farm and pursue wind energy, but a lack of financing and transmission capacity have forced him to alter (not cancel) his plans.

100 coal plants have been cancelled in the past 7 years. And there's a movement, led by California, to ban their future use altogether.

For which industry is this news worse? You decide.

How to Play the 2000% Bump in Japan's Solar Market

Japan's renewable energy market is at a crossroads.

Japanese installed wind power capacity actually dropped from March 2008 through the same month this year, after an underwhelming increase in 2007.

New regulations are partly to blame, since the government now requires wind turbines to meet the same safety standards as tall buildings ― despite wholly different surroundings.

Overall, the world's #2 economy ranks a woeful #20 in the latest Ernst & Young Renewable Energy Attractiveness Index. For wind power specifically, it's even lower down the ladder, despite being the world's fourth-heaviest greenhouse gas (GHG) emitter and home of the Kyoto Protocol.

But in solar power, Japan ranks third in the world for installed capacity, behind only Germany and Spain. . .

And those countries adopted Japan's feed-in tariff model for stimulating their own homegrown solar sectors!

Now, with silicon prices cratering and government support for the sector increasing, we're seeing Japan become a magnet for foreign solar power investment.

Taiwan's AUO Makes a Big Bet on Japanese Solar

The government's pumping $9 billion worth of stimulus into the market, pushing demand for solar panels in Japan up for the first time since 2006.

Prime Minister Taro Aso said on June 9 that solar power and electric cars will play a key role in lifting Japan out of the economic muck and into robust growth. The PM foresees a cleantech industry worth 50 trillion yen (about $510 billion) by 2020.

He wants solar power generators installed at roughly 37,000 public schools in the next three years, a move which would keep PV production lines humming along steadily through 2012 and beyond. The total increase would boost Japanese solar production twentyfold by 2020.

Yet, Aso knows that such a rich future for Japanese solar won't be fueled solely by domestic money. . .

Taiwanese technology company AU Optronics (NYSE:AUO), a maker of LCD flat-screen televisions, just announced it would take a 51% stake in M. Setek, a Japanese solar material supplier that's been around since 1978. That move is both opportunistic and optimistic, given today's silicon market conditions.

Raw material providers like M. Setek are hurting from silicon prices that have dropped sharply in the past year, from nearly $1.50 per pound to just above 50 cents today. Though current levels are closer to the 5-year baseline, the boom-bust cycle we've seen in the global economy and energy investment over the past two years has had a severely destabilizing effect on upstream firms.

In the current environment, other Asian solar material providers are issuing shares ― China's ReneSola (NYSE:SOL) is selling $100 million of new stock ― and tapping fresh lines of credit.

But M. Setek found a buyer in AU Optronics, and investors like it. AUO shares have gained since the $125 million private-placement deal was announced.

And AUO isn't alone ― other internationally listed companies are also pouncing on Japan's stimulus-fed solar consumer surge and could expect a market premium for their efforts.

Canadian Solar to Sell Chinese-made Cells in Japan

Canadian Solar (NASDAQ:CSIQ) announced just this week that it will target 12,000 kilowatts of yearly solar cell sales in Japan from its Chinese production base.

With the government paying up to $785 per kilowatt for rooftop photovoltaic (PV) installations as part of its $9 billion rooftop solar stimulus package, CSIQ is smart to turn towards the Land of the Rising Sun.

As Nick Hodge has pointed out in recent reports from Wall Street's Renewable Energy Finance Forum, clean energy financing flows are shifting fast and furious these days.

Low silicon prices, though they hurt producers' balance sheets, are enabling governments to get more bang for their stimulus bucks (or yen), which in turn will boost sales at vertically-integrated solar power companies.

Negative Job Growth Fuels Impending Super Shocks...

You can still make money. That's the good news.

In fact, you can still make a lot of money during the coming bust.

You could even get very rich following the seven steps I'm about to reveal.

Even after billions more in bank losses...even as foreclosures continue to soar...even as stocks on Wall Street fall apart. In fact, in spite of those things. With a lot less risk. And plenty of confidence that you're doing the right thing.

How?

Let's get this out of the way first.

I've been in the business of financial analysis for the last 14 years. I've never seen a market more dangerous for your money than what we're looking at right now. But I've also never seen one more ripe with opportunity.

That's why I'm writing you today.

I run a team of experts ― top financial writers, banking insiders, former traders and fund managers, a military resource expert, commentators who've appeared on CNNMoney, Fox, and Bloomberg TV, and in Barron's, The Wall Street Journal, and Time ― and I asked them to pull together a secret "safety net" strategy you can use to survive and even thrive in the rough times ahead.

They've found at least seven ways you can do this, even if the markets continue to tank...even if stocks continue to fall...even if the entire world economy goes up in flames.

Including...

Two extremely low-risk plays that can easily double every dollar you put in, between now and the end of this year.

Two more "five-bagger" moves that give you the ultimate hedge against another wave of multibillion-dollar bank write-downs and worldwide blowouts in the credit market.

A shockingly reliable 15% dividend "paycheck" plan you can lock in today, without the same kind of risk so-called "AAA" bonds offer these days.

A nearly goof-proof "profit parachute" that goes up when stocks fall.

And a way for you to make as much as 10 times your money as inflation shreds the U.S. dollar and sends gold and oil prices through the ceiling.

You're going to get all seven of these steps free, in the Strategic Financial Survival Library, which you can gain exclusive access to starting on Friday, April 25.

But I'll give it to you, no questions asked.

First, though, you have to do something for me.

You have to agree to give me the next five minutes. Just so I can show you what's got me and my colleagues so worried. And then you have to let us show you how to protect yourself ― and sleep better ― during the devastating string of five financial "super-shocks" ahead.

It's that simple.

Here's where we'll begin...

Market Super-Shock #1:The NEXT New "Property Time Bomb"Nobody Dares to Talk About. . .

Unless you live under a rock, you've heard the sob stories.

Banks lent out money ― a lot of money ― to people who couldn't pay it back. And now they're in trouble. Last year, an average of 50,000 homes per month went into foreclosure.

That number could jump to 200,000 per month by this spring.

But even if you're SICK TO DEATH of hearing about "subprime," get ready.

Because there's an even bigger new property bust on the horizon that could be even worse for stocks...worse for banks...and worse for the U.S. economy...than the current collapse in housing prices. I'm talking, of course, about a complete crash in...

Commercial property.

See, the banks didn't just dole out billions of dopey loans to unqualified homeowners. They also shelled out big money to build strip malls, "big box" stores, fast-food shops, movie theaters, office parks, warehouses, parking garages...and the whole network of businesses that sprung up around all those new "McMansion" boomtowns.

But with the bust, those businesses are going broke.

Applications to build new homes are off by 43%. Foreclosures hitting 37-year highs. And the glut of unsold homes has left more than 17.4 million U.S. houses completely empty.

Who's left to go to the strip malls? Nobody.

Think broke homeowners will go to more movies...or less? How about eating out at all those new chain restaurants? And with no job, who needs an office complex? Shopping? Forget about it.

And no customers means no need for the commercial businesses to support them. Apartment building sales are half what they were just since June 2007. Banks are withdrawing funding. And the cost of commercial mortgages has soared, in lock step with the rise in subprime defaults.

Bloomberg says we could see the worst drop in commercial property since the 2001 recession. Morgan Stanley is calling for a 15% drop over the next two years.

Already, real estate investment trusts (REITs) that deal in commercial property have gotten slammed. But don't mistake that for a buying opportunity. Because in this case, commercial property REITs could fall even further.

In fact, many of these commercial property REITs still have yields trading way below 10-year Treasury notes. If the yield spreads rebalance to historical averages, some of these REITs could easily fall by half or more.

Even Bloomberg has started dropping hints, saying, "U.S. commercial real estate prices may fall as much as 15% over the next year." In fact, sales in commercial property may hit their steepest decline since 2001. The current owners just can't find buyers.

"There are so many deals falling apart," says David Lichtenstein, head of a New Jersey group that manages over 20,000 apartments and 30 million square feet of retail space, "People who can get out are getting out."

Here's the big, big problem: Fannie Mae and Freddie Mac might be able to keep people in their houses in lieu of foreclosure by renegotiating terms down, and down again (for a while, anyway).

But getting bank funding for unneeded strip malls is a whole different story.

Put another way, if Ben Bernanke thinks he has a problem now with crashing home prices, wait and see how scared he gets when commercial real estate blows apart. How likely is this? My colleagues and I think it's pretty much a done deal. It's not a matter of if, it's a matter of when.

Especially thanks to...

Market Super-Shock #2: A New $2.48 Trillion "Black Hole" That's About to Swallow up American Borrowers

Fortune calls it the "bomb" in American wallets. It's the secret shame of millions of Americans. It's also another massive, looming market threat that's at least as big as the recent gut-wrenching housing bust...and many times bigger than the write-offs we've seen with banks.

What's this second enormous shock?

A mind blowing $2.48 TRILLION in looming consumer credit debt.

See, while houses went bust, millions of Americans could no longer draw off home equity to pay for all those flat-screen TVs, SUVs, and other toys essential to the good life. So they turned to their old friend the credit card.

Credit card debt alone has hit a record $915 billion. That's already bigger than the estimated $900 billion locked up tight in subprime loans. And remember, on credit card debt, you're talking interest rates three�five times higher.

And that's just the start.

Because after plastic, piles of other consumer installment debt have piled up. We're talking life on the layaway plan. Just how much? Total consumer debt stands at a mind-blowing $2.48 TRILLION. That's more than China makes in a year. It's more than the entire United Kingdom's GDP. And more than the GDPs of Italy, France, Canada, Spain, Brazil, or Russia.

Only they're making that money. We just owe it. And in huge numbers, millions more house-broke or unemployed Americans have stopped paying off their credit balances. Just like defaults on mortgages, defaults on other consumer credit are expected to soar.

Card issuers like American Express, Citigroup, Capital One, Bank of America and Washington Mutual are already bracing for a 20% explosion in credit card defaults over the months ahead.

Can you guess what happens next?

Explosive Credit Card Debt: Sliced and Diced for Disaster

Consumer buying drives 70% of the U.S. economy. Without it, we're toast.

Yet that's exactly where we're now headed.

In just the last five years, household debt is up 24%. Nearly half of all American households spend more than they make each year. And 60% don't even have more than three months of savings stored up. Not even fact-fakers in Washington can pretend that's good news.

No matter how you slice it, "no shopping" is a big economic problem.

But here's the thing: "Slicing" is exactly what banks and other investors have been doing.

See, just as they did with mortgage debt, banks and other credit card issuers have "sliced" up all those credit loans and sold them back to Wall Street. And then Wall Street sliced them all up again, packaging them as "safe" debt and selling them to the very people who run your retirement funds.

I'm sure you see how far and fast this can spread...

The Shell Game You Cannot Win

As more credit card carriers default, those securities plunge in value...compounding already deep bank losses...and even more losses for investors in hedge and pension funds and anybody else who happens to be elbow deep in this muck.

Yet millions of Americans will stay on the treadmill, desperately trying to keep up.

Even as dollars get weaker. Even as jobs disappear to Asia. Even as housing values reverse and Wall Street threatens to explode in fireworks unlike anything we've ever seen.

"Across the nation," says one report from The Associated Press, "Americans are increasingly unable to stretch their dollars...as they juggle higher rent, food, and energy bills. It's starting to affect middle-income working families."

Paychecks are lasting half as long. Some families skip meals. Wal-Mart reports empty aisles before regular paydays. Supermarkets say more and more customers come in to buy only the bare essentials.

Sixty-five percent of Americans say a recession is likely next year, says a Bloomberg poll. Fifty-one percent say the economy is doing "poorly."

Yet on Fox, they say, "No worries." In Washington, they say, "We can fix this," and then try to buy us off with tax rebate checks that barely cover the cost of a new iPod. Everybody wants you to turn a blind eye. Everybody wants you to pretend it will all go away. But don't you believe it.

I Urge You to Not Be Fooled

In the old Soviet Union, the comrades used to say, "Nothing is ever more certain than when it has been officially denied." But you can only fool some of the people for so long.

Mall traffic is down. Last year's holiday sales were flat. Car sales are still off. Ford and GM, once the most important companies in the world, are actually flirting with bankruptcy. Even Chrysler just laid off 23,000. Meanwhile, foreign investors are running from the U.S. dollar.

How "fine" does that sound to you?

You don't need to look far for the real truth. As recently as 2000, you paid only $273 for an ounce of gold. Today, you're paying more than $900. Back then, you also paid only a little over $1 for a gallon of gas. Today, get used to paying more than $3. Back then, even a barrel of oil cost only $22. Now we pay well over $90 per barrel.

Meanwhile, in downtown Oakland, Calif., half-finished condo projects dot city streets. Builders couldn't afford to finish them. Not far away, foreclosure rates have tripled. And the number of bank-owned properties in other areas is up 10-fold. How "healthy" is that?

I'm disgusted. And you should be too. But don't let government statistics lie to you any longer. Gold, oil, and the collapsing worldwide faith in the U.S. make it plain: We are a nation in financial trouble. And we're only heading deeper.

Think the politicians can help? Don't bank on it. Brace yourself for roaring tax hikes. And forget bottom-fishing for bargains. To save us, the Fed is killing the dollar. Now everything will cost more than it ever did.

How bad could this get? Pretty bad.

Oil at $125. Gold at $1,250. Could you be paying as much as $5 per gallon for gas by the end of summer? Absolutely. We're in for rough economic seas and crushing market conditions for as far as the eye can see.

That's why I URGE you to take steps right now to protect yourself. You'll find a complete set of those must-take steps in the Strategic Financial Survival Library.

You just have to give me your permission.

Just don't wait too long...

Market Super-Shock #3: The Boneheaded "Bailouts" That Could Soon Cost You Everything

Remember Katrina? How about the war on drugs? The war on AIDS? The war on terror and the war in Iraq? Bureaucrats love to "fix" problems they can't fix and make promises they can't keep.

The latest are a string of "bailouts," tax rebates, and foreclosure "forgiveness" programs that are supposed to save America from going into a tailspin. But it's all too little, too late, and just too plain stupid to work.

These are multitrillion-dollar problems.

Families are flat broke. Jobs are gone. Stocks have tanked. Giving everyone a $600 advance on their tax rebates...or 30 extra days to come up with the mortgage money they don't have...won't do squat. Worse, the fix could even compound the problem.

Take the Fed.

Central banking is, for the most part, a fraud.

At best, it's a guessing game.

Instead of wiping out bad decisions, the Fed's radical policy of slashing rates and printing more dollars has only redistributed the losses to the most innocent bystanders ― namely, the savers and dollar-earners.

Look, the Soviet Union was all about central planning. And that didn't work. Are we supposed to believe somehow that central planning will work differently here, just because it's Washington this time that's mismanaging our national wealth?

We're told we shouldn't worry. Meanwhile, total credit in the U.S. has grown from 150% percent of GDP to an eye-popping 340%! Americans carry so much debt now that if Bernanke were to raise interest rates even to 10% ― which he should ― people would flay him alive.

Meanwhile, the White House wants to blow $3 trillion this year. No wonder China is dumping our dollars. Even as it lures away our factories. Even as it makes new deals with Europe, leaving America in the dust.

Geez...remember when people used to take responsibility for their mistakes?

How Banks and Bureaucrats Will Try to Skip out on the Blame

When Paul Volcker stepped up to the plate in the late '70s, he had guts.

Oil prices were high then, too. So was gold. And the dollar was in deep trouble. Inflation ran as high as 13.5%. Volker, as the new chief of the Fed, roped in the money supply and cranked up interest rates, blowing a decade of monetary mismanagement out America's tailpipe.

Don't hold your breath for a hero today.

Treasury Secretary Hank Paulson is looking out for his banking buddies. Ben Bernanke is looking out for his buddies on Wall Street. Politicians on the campaign trail and Congress are just looking to buy the election.

The Fed has injected a combined $207 billion in bailout cash so far. With more on the docket. That's four times the pile of cash unleashed just after Sept. 11, 2001. And guess what. It hasn't helped.

The big banks keep on revealing even bigger losses. Remember the knockout punch delivered by the S&L crisis in the 1980s? This is bigger. More than 2,500 banks, thrifts, credit unions and mortgage companies wrote a combined $1.5 trillion in subprime loans during the peak of the boom.

When George W. Bush's dad threw $150 billion at the S&Ls, it helped spark a three-year recession. What happens when Washington tries to defuse a multitrillion dollar time bomb?

I urge you not to count on anyone else to save you. You need your own sort of private, personal protection. The Strategic Financial Survival Library will protect and grow your wealth during the hard times ahead. But first...

I Should Introduce Myself

My name is Addison Wiggin.

For nearly 15 years, I've studied markets, economies, and opportunities just like the ones we're talking about right now. I take today's debt crisis so seriously, I've co-written a book about it ― Empire of Debt, which became a No. 1 New York Times best-seller.

I also helped write another book you might have heard of, Financial Reckoning Day. That one also topped the best-seller list. And then there's my third book, The Demise of the Dollar...and Why It's Great for Your Investments.

I've even just helped put the wraps on our feature-length documentary on this, I.O.U.S.A. Look for it coming soon to a theater near you. I'm telling you this because I want you to realize these are informed predictions.

And I've had the chance to spread my message in interviews on Forbes, ABC Money Matters, CBS Sunday Morning, Fox, Bloomberg, CNNMoney, MotleyFool.com, TheStreet.com, Money, The New York Times Magazine...plus another 350 different local and national radio programs across the U.S...

But today, I want to share it with you in a different way.

One I've never tried anywhere else ever before.

See, I've made lots of connections over the years. And with the help of those connections, I've pulled together a huge global network of some of the smartest and most prophetic market analysts working today.

Bankers and business owners, former analysts and corporate insiders, other best-selling financial writers, a top military expert and petroleum geologist, fund managers...it costs nearly $30 million per year to keep this group running, but it's worth every penny.

These are the kinds of people who can help you make a fortune, even during the rough-and-tumble markets ahead. In fact, among them, they're already piling up a stunning track record.

For instance, one of my guys ― Dan Amoss ― has made some market picks that as of right now are up 130%...246%...117%...even 529%. Another member of our little alliance, Byron King, runs the research service that The Hulbert Financial Digest ranked the "No. 1 Performer of the Last Five Years" in 2005 and again in 2006.

And it's no wonder, with gains like 104% on the INVESCO Energy Fund...108% on Norsk Hydro...118% on AngloAmerican...147% on BG Group...and as of this writing, another 226%, 145%, 198%, 453%, 568%, and 687% so far on open positions that I can't name (because it wouldn't be fair to their paying subscribers).

And their current readers love it. On one move, reader Bruce Barker made 8% gains in less than 24 hours...another, Charles Beck, made a fast 64% on Northgate and another 140% on Tocqueville Gold...reader David Durham, who reported 100% gains on natural gas calls in just six days, even wrote, "Perhaps a Nobel Prize for resource trading should be awarded!"

My point is this.

There's money out there to be made. But in times like these, all the headlines and the opportunities have a way of getting jumbled. Overwhelming.

That's why, for the first time ever, my circle of colleagues and I have decided to join forces and share with you what � up until now ― we've only talked about behind closed doors....

What You'll See and Hear From Behind Closed Doors

Maybe you've heard the name of our special service Strategic Investment before.

But even if you have, that's about all you'll find familiar.

Strategic Investment, well known as one of the longest-running and most respected market research resources in the industry, has grown with the times.

Today, what you'll discover is not at all a conventional newsletter. It's not a conventional trading service. Instead, it's the market research resource in which we lift the veil on what we're thinking and talking about with each other behind closed doors.

Things we've never revealed before that represent our thinking on dozens of trends and hundreds of opportunities you'll want to know about.

In every monthly report, you get the best new moneymaking ideas from the best analysts in my group. I'll give you the big-picture breakdown. And then my team will tell you what it's looking at right now.

When I talk about my team, I mean the names of greats you might know already, like Chris Mayer and Dan Amoss...Byron King...Eric Fry...Greg "Gunner" Guenthner...Christopher Hancock...and others.

Individually, they've helped lead their readers to gains like 23%, 29%, 53.4%, 48% and 71% on shares in China and the Far East...along with 121% on Companhia Paranaense...109% gains on Orient-Express Hotels...145% on Imperial Sugar Co....232% on Agrium...109% on Leucadia National Corp....and 114% on Brookfield Asset Management...

Together, in the new Strategic Investment, I personally believe they'll be able to give you even more. Including hands-on, easy investment strategies and simple stock plays; safe income-generating bond plays; moves on booming commodities and against shifting currencies; new market alternatives; and all kinds of other ideas

Think of it as a way to both get to know what our insiders talk about behind closed doors...and get a quick overall picture of what our whole network sees taking shape in the world of making money in the markets.

Here's what I consider the best news...

Right now, I'm going to invite you to try our brand-new Strategic Investment free for up to a full year. There's no risk. In fact, your free trial subscription comes with my full "wealth protection" guarantee.

And you can easily get started with exclusive access to Strategic Financial Survival Library I told you about earlier. You can access it as soon as we release these time-sensitive reports starting Friday, April 25, 2008. I'll give you all those details in just a moment. I just hope you'll decide to take me up on this while there's still time...

Market Super-Shock #4: The Secret Embarrassment That " FAS 157" Will Force Wall Street to Reveal

Last year, banks admitted losing billions.

But if you think we've seen the last of it, you'd better brace yourself for U.S. general accounting rule "FAS 157." This is the regulation that now says banks can no longer hide what are called "level three" assets.

What's a "level three" asset?

Stocks, bonds and all the investments you've already heard of are what are called "level one" investments. "Level two" includes some of the less-traded mortgage-backed investments that started blowing up late last year.

The five biggest brokerage houses and the biggest universal banks ― Citigroup, J.P. Morgan Chase and Bank of America ― have over $4.1 trillion of these level two assets alone.

That's almost 10 times the combined share value of all five of these huge firms. Imagine how much money vaporizes if these tricky level two assets fall even 5% in value.

But here's the biggest risk.

At the top tier ― "level three" ― you've got the hidden investments that almost never trade. These are the huge derivative positions, the private equity investments and enormous slices of the mortgage market. Banks don't talk about them. The market doesn't put a price on them.

So the only way for accountants to figure out what they're worth is...to guess.

It's called "mark to model" pricing. It means each firm can basically set the value of its own assets, using its own formula. Kind of like "deciding" how much your bank account, your car or your house is worth, but without asking anybody to check your math.

And that's exactly the problem.

Until recently, financial firms like Goldman Sachs, Morgan Stanley, Lehman Brothers, Bear Stearns and Merrill Lynch...could pretend those hidden assets were worth plenty. But with law "FAS 157" cracking down, that's getting harder.

Especially since many of these hidden "level three" assets are based on failing subprimes, collapsing lenders and defaulting consumer debt.

So what happens when the real truth comes to light?

Like Enron, but With Parting Gifts

When the public finds out just how many hidden "level three" investments are worth nothing close to what the banks have said they're worth, brace yourself. Because the bank losses that have rattled Wall Street already will feel like a day in the park.

Here's the worst part. Remember when Enron's bosses hid $2.7 billion in losses and people went to jail? That won't be what happens here. Just look at what happened, for instance, back when Merrill Lynch revealed a $7.9 billion loss on subprime bets in 2007.

It fired its CEO, Stanley O'Neal, but not without giving him a hefty $161.5 million parting gift first. The same happened for ex-Citigroup CEO Chuck Prince, who walked with $140 million. Even as $17.5 billion disappeared from Citigroup's books in just six months. And $34.6 billion vaporized from Citigroup's outstanding shares.

What if you were an investor? With Merrill Lynch, for example, every $10,000 invested as recently as last January is now worth only $6,100. Does that sound fair? And as I said, there's more in the pipeline. Citigroup alone is posting $2.227 trillion in liabilities. This is more debt than any other bank in the U.S. It could be more debt than any bank in the world.

If the stated value of Citigroup's assets drops just 5.4%, that would make Citigroup ― the world's largest bank ― insolvent. How well would that play on Wall Street? Not very.

Nobody is sure how much more of this gunk is stuck in the gears. It's all still hidden. But it won't be for long. Get ready for LOTS more eye-popping "confessions" just like these, all headed our way over the next few months...

Deutsche Bank has announced that it, too, will pay for stupid subprime bets ― including up to $3.1 billion on leveraged loans, structured credit products and mortgage-backed securities

Both Morgan Stanley and Credit Suisse announced layoffs within their home loan divisions. Together, the firms will fire about 1,000 employees

Bank of America has not only shut down its wholesale mortgage business ― it's also watched its investment bank profit fall 93%, to $1.33 billion, in the third quarter

Bear Stearns saw profits sink 61%. Two of its big hedge funds blew up. And now, of course, the rest of Bear Stearns has 'blown up' too ― now that it's been liquidated for $2 per share and soaked up by competitor J.P. Morgan

Lehman Brothers shut down its subprime mortgage unit BNC Mortgage in August. It'll slash 1,200 jobs as part of that move. And it, too, has also quietly taken several mega-million-dollar write-downs.

Morgan Stanley also just cut 600 jobs.

These aren't strip mall savings and loans we're talking about. These are the world's biggest financial institutions. And they're claiming they have no idea what to expect over the months ahead!

How confident does that make you feel?

The Slow-Motion "Black Monday" Ahead

Here's a picture for you: If the market today falls as fast and as far as it did in 1987, you'll see more than 3,000 points erased from the Dow alone. In a single day.

Could it happen?

Banks hold the same blue chip shares you'll find parked in your retirement fund. When the "level three" losses get declared, those same banks might have to start dumping those shares to raise cash. And that could send these blue chips...along with most of the rest of the stock market...into full-scale collapse.

I urge you to take the seven steps outlined for you in your free Strategic Financial Survival Library. You can send for it as early as tonight, using the link I'll give you in just a moment.

Inside, you'll find a way to lock in dividend payouts as high as 15%...plus at least two ways to make up to five times your money on an unraveling stock market...and at least one way to make up to 10 times your cash as the dollar falls apart.

These time-sensitive reports are getting the finishing touches right now. You'll be able to read them starting Friday, April 25th.

Plus, I'll rush you a private password right now. This password will give you full access to our Strategic Investment members-only Web site. And then we'll start sending you our revealing Strategic Investment issues and updates.

Free for up to a full year. And backed by a full "wealth protection" guarantee.
How does that work?

I'll show you how, just minutes from now. As you'll see, I'm so convinced this special seven-step library of reports offers you the best way available anywhere to strip risk from your portfolio...I'm even willing to stake my reputation on it.

But first, let me share just one more reason why I'm urging you to get ready...

Market Super-Shock #5: How at LEAST $4 Trillion More in Worldwide Wealth Could Be About to Disappear

How far could all this really go?

How deep will the final damage be, thanks to this "perfect storm"?

The feds say the investment banks alone could lose $100 billion. Even an economist for Moody's says losses could reach $225 billion. And one of Goldman Sachs' own economists says that's too conservative still, with the tally rallying up to a $400 billion blow.

Well, gee, a few hundred billion here...a few hundred billion there...and now you're talking some real money! But did we mention? The hedge fund industry alone has ballooned to over $1 trillion. Plenty of that is tied up in these mortgage-backed securities, too.

And what happens if total housing wealth ― $21 trillion and falling ― drops another 15%, to 20%? Now you're talking as much as $4 trillion in housing "wealth," gone just like that. Vanished. At a time when 70% of boomers say they're counting on their homes as their key "retirement asset." Ouch!

If the stock market or bond market slips another 10%, that's another $5.1 trillion or $4.5 trillion, respectively...also gone. Plus losses in the value of the dollar itself. Total stocks, property and other wealth of Americans ― priced in dollars ― is about $50 trillion. If the dollar drops just 10% more, as it did in 2007, that's another $5 trillion up in smoke!

At $10 trillion down and sinking, I haven't even mentioned what a crash in the $480 trillion derivatives market could do. Let alone the fact that an estimated $200 trillion of that is parked with major U.S. banks!

I say "estimated" because nobody knows how many derivatives anybody owns, let alone how much of those are deeply tangled up in the subprime affair. It's unregulated, burbling below the surface...like poisoned groundwater.

Computers manage it because the sums are too big...and the money relationships too complicated...for any one human to track. What happens if the computers make a mistake?

That's exactly what happened with Long-Term Capital Management. I'm sure you remember. It had "perfect" computer models. But when interest rates swerved, the computer didn't anticipate it. Like the Titanic, which nobody thought could sink, the hedge fund collided with a $4.6 billion loss in less than four months.

Remember, that was a $4.6 billion problem. Still, seven months of stock market turmoil followed. Financial stocks plunged 34%. Other sectors lost 20�30%. What happens with today's hedge fund and derivatives market, cresting as high as $480 trillion?

As I said, some of the world's biggest financial firms ― Citibank, Bear Stearns, J.P. Morgan, USB, Goldman Sachs, the Bank of China and HSBC ― have huge exposure to the world derivatives market.

And remember, these are often the "Enron" type of investments ― hidden off the books where you can't see them. These toxic leveraged instruments could easily be sharing shelf space with your own capital, right now!

Recently, Goldman Sachs lost 30% in a single week in its global equity fund, thanks to confounded computer "quant" programming. Morgan Stanley traders lost $390 million in a single day for the same reason. The computers couldn't compute the level of panic selling in the market.

Wouldn't you rather trust a much safer, more predictable, guaranteed approach? That's exactly what I hope you'll let me give you in the free Strategic Financial Survival Library...where you'll find seven powerful solutions like these inside...

Financial Survival Strategy #1: The Money "Hedge" That Could Yield 400% as the Economy Slows Down

You don't have to go broke during a recession. In fact, you can make a fortune. Especially if you're "hedged" directly against the one kind of company that gets hit hardest in a slowdown.

No, not the retailers. Or the builders or restaurants or even manufacturers. They all suffer, but the one kind of company that really unravels...is the same one that does most of its work unseen, while you sleep.

I'm talking, of course, about trucking and transport.

That's right. Planes, trains, and automobiles. Specifically, the ones that keep our food shelves full, supply parts to our factories and keep the clothes racks jammed at your local shopping mall.

Think about it.

Almost every business you can think of feeds off this network. But when demand dries up, the network dries up too. Like an artery drained of blood. How can you turn that downturn into profit? Well, you could easily short many of these companies individually for gains.

But we've come up with an even better way.

It's a single simple move that you can make with one five-minute phone call. Once it's in place, it's like having a proxy hedge against the entire recessionary collapse. As the economy falls, your holdings should go up in value. And doing it the way I'll show you, you can make multiplied gains of as much as 400% or higher...even on a small downward move.

How?

Read all about it in the first free report I want you to have. It's called The Triple-Edged Housing Hedge: Three Solid Layers of Protection Against the Next Wave of Falling Property Prices.

You'll find it in the Strategic Financial Survival Library we talked about.

Here's something else you'll find inside...

Financial Survival Strategy #2: A Second Special "Hedge" That Should Take off as Junk Bonds Blow Apart

Where do companies with "junk" credit ratings go to borrow cash?

To the "junk" bond market, of course. And as credit gets tighter...as lenders go bust...and as the market runs from corporate debt, never knowing when it could blow up...

You'll also see huge pressure on the downside against junk bonds. And remember, these days, even companies like General Motors and Ford can get demoted to "junk" status.

Here's a way to own a kind of bond market bust "insurance" for when they go up in flames. And by the way, this next move is a totally new kind of investment opportunity ― specifically designed to take off like a rocket should bonds collapse.

And here's more good news. On this second money survival strategy, risk is especially low, compared with the potentially high rewards.

You can also read all about this second wealth-hedging move in your free copy of The Triple-Edged Housing Hedge: Three Solid Layers of Protection Against the Next Wave of Falling Property Prices, the first of five free reports I'll give you in your Strategic Financial Survival Library.

In this same free report, you'll also get...

Financial Survival Strategy #3: Five Times Every Dollar Invested as Commercial Property Goes Bust

Imagine if you could have seen the bust coming in crashing housing stocks.

Crashing builders...self-destructing mortgage lenders...imploding banks. Not only could you have quickly pulled your money out of harm's way, you also could have made a mint playing with a short or put option against those crashing shares.

Some of these stocks fell by as much as half or more.

How much could you have made on those falling shares? A well-placed put option could have given you as much as four or even five times your money.

Of course, housing has already tanked. That opportunity is long gone.

But here's your second chance. An even bigger bubble has shaped up in commercial property...and much of it was financed with the same kinds of dopey loans that brought the housing market crashing back to Earth.

What happens when heavily borrowing businesses start defaulting on their loan payments, too? We'll most likely see another wave of wipeouts. But we'll also see another chance for you to get rich on more collapsing shares.

My colleagues and I have a perfect play lined up. It's another "five-minute" move that takes almost no time to set up, very little upfront to get started, but possibly five times every dollar invested for anybody who gets in now.

You can read all about this third move in your free copy of The Triple-Edged Housing Hedge: Three Solid Layers of Protection Against the Next Wave of Falling Property Prices, the first special report I've included in the Strategic Financial Survival Library I'll send on Friday, April 25th.

Here's another move you can make very easily...

Financial Survival Strategy #4: Lock in a 15% Dividend "Paycheck" as Markets Fall and Energy Prices Soar

Your next FREE report in the Strategic Financial Survival Library is called The Dividend "Paycheck" Strategy: How to Lock in Yields Income as High as 15% or Higher.

This second powerful report shows you how to lock in a steady flow of passive dividend income, even as banks go belly up and the market collapses...while hedging your wealth against falling dollars and soaring energy prices.

I call it our dividend "paycheck" strategy, because this money-growing move pays you steady yields running as high as 15%. And since it's hinged on rising oil and gas, the share values themselves should also go up.

You couldn't even get this on the U.S. market until 2005. Before that, the share values alone had already shot up 250%. Meanwhile, just holding this would have cut your losses against the falling dollar by 45% ― meaning the real gain is even higher.

My colleagues and I are convinced it's just starting its run.

This is one you could easily wind up holding for the long term.

You can read all about it in your free copy of The Dividend "Paycheck" Strategy: How to Lock in Yields Income as High as 15% or Higher, the second of the five reports you get in the free Strategic Financial Survival Library I'd love to send you.

Just follow the steps at the end of this letter to send for your full set.

But before you do, there's more...

Financial Survival Strategy #5: The Single Best "Profit Parachute" Play to Make as Financial Stocks Hit Bottom

Think of it as the ultimate revenge against Wall Street greed.

See, even as financial stocks continue to crash and burn...you can get rich.

How? There's another potential 400% gainer detailed in the third free report I want you to have, The Single Best "Profit-Parachute" Play to Own as Financial Stocks Fall Apart.

It shows you how, as more hidden losses come to light, financial stocks will fall even farther than they have already. In a nose dive that you can play in reverse, actually making money as the share prices race toward the bottom.

Here's a bonus: To "save" the markets ― and especially his old friends at the financial companies ― Fed Chief Ben Bernanke will have no choice but to kill the market for U.S. Treasuries.

That's why, inside your free copy of The Single Best "Profit-Parachute" Play to Own as Financial Stocks Fall Apart, we've also included a second "parachute" move specially designed to take off as Treasuries go bust.

Both moves are very clearly explained in your free copy of this third report, included as part of the Strategic Financial Survival Library you get starting on Friday, April 25, 2008 ― at no charge ― if you agree to my Strategic Investment free trial offer.

You'll find the details at the end of this letter.

Either I can mail you printed copies of each of these reports or I can give you a code and a Web site where you can download them immediately, five minutes from right now. Your choice.

Just let me hear from you soon.

While there's still time to make money-growing moves like these...

Financial Survival Strategies #6 and #7:  Double-Barreled Protection ― and up to 900% Returns ― As the U.S. Dollar Gasps Its Last

Look, even the lunkheads in Washington know they can't destroy the dollar forever.

But that doesn't mean they're not going to try ― after all, throwing piles of cash onto the bonfire is the only way they figure they can prop up the markets and economy.

It's inflate or deflate...and given the choice, they've picked inflation.

That means every dollar you hold gets weaker. But what if you could make as much as 10 times your money as the value of the U.S. dollar falls apart?

You can find out how in the fourth free report I want to send, called simply The "Dying Dollar" Protection Strategy. Inside, you'll find two classic hedges against the plunging purchasing power of U.S. cash. As cash gets weaker, these two moves go up. That's how it should work if my colleagues and I are right about the shocking facts we show you inside.

Both these hedges have climbed since last July. So this is something you'll want to move on sooner, rather than later. But here's the real bonus: There's a third crashing dollar" play you'll find inside.

If the dollar dips as low as we expect it to...and gold hits the heights it could easily hit...this third special hedge could soar to as much as 10 times today's current value.

Could it happen?

Keep in mind that while greenbacks have plunged in value by almost half since 2000, gold has tripled already. But there's plenty more move left.

Read more about it in your free copy of The "Dying Dollar" Protection Strategy, included as the fourth FREE report in your Strategic Financial Survival Library.

There's still more. But let me save time by summing this up...

Everything You Get With Your Emergency Financial Survival Kit

As soon as I get your permission, you'll be included as one of the select few to have access to the Strategic Financial Survival Library...starting on Friday, April 25th.

Strategic Survival Tool #1: The Triple-Edged Housing Hedge: Three Solid Layers of Protection Against the Next Wave of Falling Property Prices Including...how to make up to 400% gains on the coming commercial property bust...how to multiply money during an economic slowdown...and the one fund to own as junk bonds go bust.

Strategic Survival Tool #2: The Dividend "Paycheck" Strategy: How to Lock in Yields Income as High as 15% or Higher Lock in dividend "paychecks" that regularly return as much as 15% on your money...with potential to soar higher as energy prices go up. Added bonus: The shares can also soar ― by as much as 250% in the recent past.

Strategic Survival Tool #3: The Single Best "Profit-Parachute" Play to Own as Financial Stocks Fall Apart As already-battered financial stocks race to the bottom, this one play could skyrocket. And here's an extra: As a desperate Fed kills the Treasury market, own this "inverse mirror" fund and watch it go up.

Strategic Survival Tool #4: The "Dying Dollar" Protection Strategy Inflation eats savings, but these three moves could rebuild them again, many times over ― including one move that could give back as much as 10 times every dollar invested.

And then, there's one more bonus report...

Bonus Strategic Survival Tool #5: The Ultimate Safety Net: Cashing in on the New Nikkei Boom Ahead. If you feel as if today's gloom will never end, don't give up yet. See, what we're going through now...Japan went through almost 17 years ago. Property prices fell as much as 90%. Japanese shares went up in flames. Even pushing interest rates to zero made no difference.

But Japan is finally on the brink of recovery. Japanese consumers have started spending again. They're borrowing and rebuilding the economy, too. Getting back in now could be like getting into U.S. shares just before the recovery in the 1980s.

In this fifth free bonus report, The Ultimate Safety Net: Cashing in on the New Nikkei Boom Ahead, you can read all the details. How good could it get? If my team is right, this could be an easy double for anybody invested.

And of course, all five of these special investing reports are yours free ― no charge ― as part of your complete Strategic Financial Survival Library.

But there's still more...

Because when you respond and reserve your free reports library, I'll rush you a password to the private, members-only Strategic Investment Web site. Using this password, you can log onto the site...look over the archives...and read all the updates and urgent news bulletins. As many times as you like, around the clock.

This password is yours free to use for as long as you're a subscriber to our revolutionary research advisory service, Strategic Investment.

What's more, you'll also immediately get ― if you don't have one already ― a free subscription to our celebrated Whiskey & Gunpowder, the irreverent, hard-hitting e-mail newsletter that deals with everything from market picks to the big macroeconomic picture and its effect on your money.

Plus, I'll immediately let you in on our coveted Agora Financial Executive Series, an exclusive benefit that we give only to our valued paid readers.

This series puts you on the limited distribution list for our famous Rude Awakening letter and our relatively new 5 Min. Forecast. The Rude Awakening gives you inside access to many of Agora Financial's best and most profitable specific market recommendations. And The 5 Min. Forecast gives you a lightning-quick, lighthearted analysis of financial news...all summed up expertly in a bulletin that you can read in five minutes or less.

And finally, of course, you'll start getting weekly Strategic Investment e-mail updates too, directly from "inside" our elite network.

What we talk about face to face in our meetings we'll share with you.

It's that simple.

How to Get a Full Year of Strategic Investment . . . Free

All this is just my way of saying thank you for giving our all-new Strategic Investment a try. But I'll make it even easier for you. What I'd like to do ― since this new version of Strategic Investment is so different from anything we've ever done before ― is invite you to try a full year of this new research service...absolutely free.

A full year of money-protection strategies. A full year of the private Web site access. A full year of the weekly e-mail alerts. And of course, your access to the five new reports in the free Strategic Financial Survival Library we've talked about. You can read them starting on Friday, April 25.

Here's how this works.

All you do is let me know you're ready to get started. And then I send you everything. Look it over and see if this new service is something you can use. Read the reports. Check out the Web site. Give any recommendations we share with you a spin, if you like, and see if they work for you.

Regular issues of our "behind the scenes" research newsletter, Strategic Investment, will start to arrive in your mailbox. Dig in, soak up the details, test our analysis for yourself. See if it's for you, and then any decisions you'll make are entirely up to you. No pressure from me or the rest of my team whatsoever.

Normally, when we release a research service like this one, we would charge $99 for one year. But to celebrate this entirely new opportunity, that's not what we're going to do.

Instead, we're going to slash those costs 50%, effectively giving you half your subscription absolutely free.

So sign on for one year and you pay only $49 for the first six months...and you get the second six months completely free.

Doesn't that sound like a fair deal?

Here's one more thing...

My Ultimate "Wealth Protection" Guarantee

Anything could happen over the coming months.

My team and I could be all wrong. Maybe the "bailouts" will work. Maybe time will prove Bernanke is a genius. And the stock market will soar as the American economy stages a surprise rebound and house prices fly through the ceiling.

Maybe, just maybe...birds could start hoarding bananas and monkeys could grow wings.

But I doubt it. So let's do this instead...

I'm so certain we're right about what I've just showed you...and about the seven "safety net" moves we reveal to you in the Strategic Financial Survival Library...I'm going to make you an unprecedented "ultimate wealth protection" guarantee. It works like this...

Give our new Strategic Investment a try for a full year. If you're not absolutely convinced everything my team and I share is what you're looking for, simply cancel ― even up to the very last day, after the arrival of your very last issue ― and I'll give you a full refund.

Everything, including all 12 months of issues and all the special reports in your Strategic Financial Survival Library, is yours to keep. No questions asked.

Yes, I'm saying that I'll take you on your word, at the end of the full subscription period, on whether or not you enjoyed everything we send you. I'm trusting you to the full extent of your subscription.

Because I'm that convinced that 12 months from right now, you'll find such huge value in everything we've sent, you won't dream of canceling. All the risk is on me.

It's that simple.

I sincerely hope you'll take me up on this and give our all-new Strategic Investment service a try. Why not start by just letting me send you the full Strategic Financial Survival Library at my expense. And then you can be the judge.

Just click the button below to find out how.

There's no telling what event, exactly, will trigger the next leg down...but there's also no question in my mind that you can come out of this safely, if you just let us show you how.

Like you, I like to believe in the ingenuity of humanity. Over time, hope wins out. But it wouldn't hurt to make sure you didn't suffer needlessly in the meantime, right?

Just reply now for your free access to the Strategic Financial Survival Library. Then read the first few issues of Strategic Investment. Once you get started, you'll have plenty of time to make up your own mind.

But I need to hear back from you now, beforehand, while there's still time.

Three More Chinese Stocks to Buy Now

Have you been doubling your money -- or better -- as stocks have rallied in the past several months? Readers of the Oberweis Report are cashing in handsomely - even as the overall stock market has fallen sharply from June 15 recovery highs.

Bear markets are brutal, no doubt about it. But when stocks recover, you have a great chance to make absolutely ridiculous profits -- if you own the right stocks at the right time.

Like Warren Buffett, Jim Oberweis, editor of the Oberweis Report, knows to be greedy when others are fearful and fearful when others are greedy. Right now, says Jim, "Greed is good!" Also like Buffett, Oberweis understands the importance of spotting fundamentally sound companies trading at bargain prices.

Results do not lie! When the market was falling apart last fall and panic prevailed, Jim Oberweis surveyed the damage for quality small-cap stocks with accelerating growth in sales and profits.

Check out the stocks Jim recommended...and the returns through July 1, 2009:

Pegasystems (PEGA) @ $12.99 on 9/28/08: +111%
Green Mountain Coffee Roasters (GMCR) @ $36.30 on 11/30/08: +148%
Neutral Tandem (TNDM) @ $14.71 on 11/30/08: +113%
ArcSight, Inc. (ARST) @ $8.01 on 12/31/08: +155%

Besides these four stocks, Jim Oberweis was also recommending that his readers buy into shares of a longtime favorite stock that he'd added back on May 28, 2006: Chinese Internet portal Baidu.com (BIDU). Jim told subscribers to buy BIDU at $79.45 and in less than 18 months, shares of the Chinese Web portal were above $400 for a quick 400% gain!

BIDU touched down at $100 in late December and Jim Oberweis told readers to buy it again because Baidu.com's sales and profit growth was still accelerating. By June 1, Baidu.com had rallied to $286 for a 5-month gain of 186%! One month later, its held its gains.

Is BIDU near $300 still a buy or is the bounce over? Click here for the new issue of the Oberweis Report with Jim's latest buy/sell/hold call on Baidu.com and three more Chinese growth stocks that look a lot like BIDU did three years ago.

In March 2005, Jim recommended his subscribers buy Ctrip.com (CTRP), a Shanghai-based online travel agent whose shares traded on NASDAQ for $9.71.  Still bullish, he went on to mention the stock on Forbes.com in November 2006 at about $28. The stock got up to $70 in May 2008, a gain of 620%!

Is Ctrip.com (CTRP) still a buy at $40? Click here to begin your subscription to the Oberweis Report for a complete model portfolio with all of Jim Oberweis' current buys and sells.

Jim is not a guy who suddenly has a hot hand.

Corona, CA-based Hansen Natural is the maker of the Monster brand of energy drinks and juices. Its sales exploded thanks to a surge in demand for Monster. Hansen's amazing success was not news to subscribers to The Oberweis Report.

Jim Oberweis recommend buying Hansen in June 2004 at a split-adjusted price of $2.37 per share. One year later the stock traded at $12 and it peaked at $70 when Jim urged readers to cash in their gains.

Forbes has been so impressed by Jim's ability to find undervalued growth stocks that we have recently made him our official Small-Cap stock columnist in Forbes Magazine. He's been red-hot going way back, and before Jim, his father has been putting up mind-blowing market-beating returns since 1976. Since The Oberweis Report's inception, its model portfolio has gained 36,691%. That would have turned a $10,000 into nearly $3.7 million today!

Take a look at some of the other timely recommendations Jim gave to his subscribers:

• Central European Distribution Corp. (CEDC) - recommended at $1.28 in April 2001, currently trading around $25 after getting as high as $77. . . a 1,462% gain!
  
• aQuantive, Inc (AQNT) - recommended at $6.29 in April 2003 . . . When Microsoft bought AQNT for $60 a share earlier this year, Oberweis readers posted a gain of 854%!
  
• ValueClick, Inc. (VCLK) - recommended at $3.14 in March 2003, and sold in May 2008 for a 540% gain!
  

Now may be the perfect time to make money in small-cap growth stocks. Why? Small-cap growth stocks outperform all other stocks over the long term and during economic recoveries, small-caps typically lead the market.

I invite you to test drive the Oberweis Report investment newsletter.  Included in your subscription will be Jim's model portfolio of small- and mid-cap growth stocks and his TOP 3 CHINESE STOCK BUYS

Investing in the Over the Counter Bulletin Board

Most investors are weary about the Over the Counter Bulletin Board (OTCBB). That's understandable, considering the amount of bankruptcies, shell companies, and de-listings that occur in over-the-counter markets. But there is a very large misconception that is widely shared among investors: that no over-the-counter company has to report current financial information. That is the case with the Pink Sheets, but not so with the OTCBB.

You see, before 1990 the over-the-counter securities market was a wild-west show. Not complete lawlessness, but close to it. So that year, the SEC started the Over The Counter Bulletin Board as part of the Penny Stock Reform Act. The OTCBB's main purpose was to bring more quotation and last-sale information. By 1999, the OTCBB had evolved to the point where every company had to report regular financial information. This sets it apart from others, specifically the Pink Sheets, which don't have reporting requirements.

There are absolutely no requirements for Pink Sheet companies. They don't have to file regular and current financial information (although a recent classification system is slowly changing that), they don't have a strict minimum market cap requirement, and they certainly don't have to pay the couple hundred thousand dollars just to be traded on a major exchange.

The OTCBB, on the other hand, is a much stricter form of the Pink Sheets. Over the Counter Bulletin Board companies have to keep up with regular financial reporting. This truly makes all the difference in the world.

Here's an example:

Company A is traded through the Pink Sheets, and Company B is on the OTCBB. Both companies issue press releases claiming to be "transitioning their businesses". Company A really just slumps into a shell company state, because no one has to know what's actually going on over there. Whereas Company B has to file regular quarterly earnings. If it doesn't the OTCBB will add a dunce cap (or in this case the letter "E" to the end of the company's ticker), which immediately tells investors that the company isn't showing enough corporate responsibility. This can make or break that investment. People invested in Company A are out of luck. Company B investors can get out before the going gets too tough.

But, that doesn't explain why OTC companies are even worth investing in. There are two reasons to get involved in the OTC market…

The main reason most OTCBB investors keep trading these securities is the profit potential. Obviously, a $300 billion Blue Chip can't double in size too easily. That doesn't give investors too much to work with. A $3 million company can double in size overnight without flinching. Which would you rather have in your portfolio?

The second reason is also a pretty clear one. Because many of these tiny companies are working on a much smaller scale, overall general market attitude has a very small effect on them. There are almost never any big institutional investors or large mutual fund managers pulling money in and out of these companies. These two groups of investors are more interested in macro market sentiments than what individual companies are doing. So, in bear markets, it's quite possible to have a bunch of these OTCBB companies take off.

In a 2001 study published in the Journal of Alternative Investments, a four �year period of Over the Counter Bulletin Board trading was studied for a risk to return ratio. The interesting conclusion they came up with was that OTCBB top stocks didn't reflect what the general market was doing at that time. There were some years of extreme bullish overall sentiment, which can be defined as a solid return on the S&P, and the overall OTCBB market lost a lot of money. On the flip side of that, years of extreme bearishness in the S&P, along with the major exchanges, showed positive returns for many OTCBB companies.

So whether you are a safe-bet kind of investor or a fly-by-the-seat-of-your-pants type, there is still a place for you, just off the major exchanges.

Looking Out for Number One

Ireland is nearly broke. Its debt was downgraded a couple weeks ago.
Unemployment is near 14%. Deflation is at 5.4% -- the highest since the Great
Depression of the '30s. And it's not over. It's "too early" to talk about recovery,
says Finance Minister Brian Lenihan.
 
It's too early in England too. Financial Advisor Peter Hargreaves says that talk
of 'green shoots' gives rise to illusions. People think they see the light of dawn
when the sun is still going down. And forget about a V�shaped recovery.
There won't be any simple bounce-back. Nor even a W-shaped double
decline. "There could be a quadruple dip in my opinion," he said.
 
And what about California? This week's Economist magazine gives us a new
measure for California' budget deficit -- $26 billion, up from the $24 billion
last reported in this space. A widely published photo shows Arnold
Schwarzenegger smoking a cigar...apparently confident that the state's
problems will work themselves out somehow.
 
Of course they will. They always do. But not necessarily the way people hope.
 
California is the world's 8th largest economy. It can print IOUs when it runs
out of money. But there's no law that says banks have to take them. They
stopped taking them last week...which leaves the Golden State in a jam.
 
What is ailing California is ailing the entire United States of America �
and much of the rest of the world, especially that part of the world that
speaks English. Politicians have promised too much...without being willing to
raise the money to pay for it all. Solution: spend less. Or tax more. Or a little of
both.
 
Hey, Arnold should have asked us. It's so simple.
 
But wait. California is a democracy. And the democracy is a flim-flam. As
we've explained in these reckonings: there are two parts to it. One part is like
professional wrestling � full of bullying, humbug and hollow gestures. One
group wants to stop its neighbors from smoking. Another wants a flag with
yellow trim. Still another wants revenge on a neighbor because it feels
disrespected. There is no accounting...or predicting...what direction the mob
will take.

The other part of democracy is more rational. The citizen wants to know not
what he can do for his government, but what he can get out of it.
 
This second part is a time bomb. Once citizens realize that they have the
power to vote themselves the contents of someone else's pocket, the system
is doomed. They don't let up until they've bankrupted it.
 
A man may vote for a candidate who promises a yellow flag. No harm done.
But when he votes for the candidate who promises more "benefits" at someone
else's expense, he is on the road to Hell.
 
"Democrats in the House propose setting a 1% extra tax on couples earning
more than $350,000," reports the Financial Times this morning. The money is
to be used to pay for other peoples' health benefits.
 
If you earn less than $350,000, you feel that you are getting something for
nothing. But that money � had it not been confiscated � wouldn't have
disappeared. It would have been put to work in one way or another � added to
the nation's capital formation, lent to the government, used to buy a new car or
take a vacation. Instead, it is to be sucked out of the benefits of the willing
economy and used to give people something they couldn't afford or didn't
want to pay for themselves.
 
In order to get elected, politicians have to promise more and more of these
'benefits.' There is no backing up...no turning around. Even when the
government is clearly headed to bankruptcy. If a politician hesitates, some
other clown will just take his place. He may even be overcome � in a weak
moment � with a desire to level with the voters. He may imagine himself going
on TV and putting it to them straight:
 
"Look, we'd like to continue these programs; but we don't have the money."
 
Then, he comes to his senses: 'I might as well say I've fallen in love with a
woman from Argentina...or a man in a public bathroom; either way, I'm dead,
politically.'
 
Now, Dear Reader, you may object. 'The American political system draws
forth the best and the brightest from the entire nation of 300 million," you may
say. "Surely these people are capable of doing the right thing for the good of
future generations."
 
They are surely capable of making rational decisions. But what is rational for
them � ducking serious issues...nourishing the illusion that voters can get
something for nothing -- is fatal to the republic.
 
Of course, the same thing could be said for a business...as well as a country.
Why did GM go broke? It was the largest company in the world. It could pick
and choose the very best managers ...the smartest businessmen...the greatest
investors...the most far-sighted engineers... the most wonderful of the
wonderful. Surely, these fellows could add and subtract, right? Surely one of
them noticed:
 
"Hey...if we keep adding costs, we're not going to be competitive any more.
And if we're not competitive, we're not going to be able to sell cars at a profit.
And then, we're going to lose money and go broke.'
 
How come the best talent money could buy couldn't change course at
GM? How come all those smart people in the California legislature can't
balance the budget? Well, that's just the way it is. An institution matures...and
the parasites take it over.
 
Retirees, executives with their golden parachutes, the halt, the lame,
employees, managers, hangers on, lawyers, accountants, businessmen...
everyone has an interest in keeping the hustle going. The executive wants his
bonus...the retiree wants his pension...the lawyer wants his retainer... All can
see that the old place ain't what it used to be. They all know that the gravy
train won't go on forever...but that just makes them more eager to get it while
the getting's good. So they jiggle the numbers so each quarter doesn't look so
bad...jive the news so it sounds almost as if the institution had a future...and
they juke up the whole system so that no one even mentions that they're going
broke.
 
GM "sets out on a fresh start," says the Financial Times. "From this point on,"
says its top man, "our efforts are dedicated to customers, cars..." and repaying
the feds.
 
What were they dedicated to before they had to turn to the feds for money?
Answer: to looking out for number one.
 
What are they dedicated to now: refer to the question above.
 
This from our old friend, Adrian Day:
 
"I've been called a cynic―and worse―but, as Winston Churchill told us, if
you don't know the future, look to the past. So if we want an idea how long the
government might be subsidizing GM and Chrysler, let's look to the
experience with railroads. In 1970, Penn Central, America's largest rail
company, filed for bankruptcy, and Congress created Amtrak. The government
passenger rail monopoly was confidently expected to be paying its own way by
1974. Well, 38 years and $33 billion later, it has still to turn a profit. So this
year, congress has voted another $14 billion for the next five years."
 
From our perspective � because we hate taxes and we like trains � it would
have been better if the railroads had gone broke...and been bought up by
whomever could make a go of them.
 
And from our perspective � because we hate taxes and we like cars � it would
be better if GM had been allowed a death with dignity. Then, other
automakers could have salvaged the wreck for spare parts.
 
Of course, this formula applies to all the crippled banks, bankrupt households,
reckless insurance companies, greedy Wall Street...and all the rest of the
flotsam and jetsam of the Bubble Epoque.
 
As Yu Faz, who anticipated the 'laissez-faire' economists by 500 years, said:
"A man lives under the roof of his own making. If it falls on his head, so be
it..."
 
Dan Amoss, over at Strategic Short Report has been implementing a strategy
that flourishes while Wall Street and investors are gripped with panic. Right
now couldn't be a better market environment to test this strategy…and for six
months, you could do just that…free of charge. Act now…this offer ends at
midnight tonight. 
 
Now, for more news from The 5 Min. Forecast:
 
"The mainstream is aghast at Goldman Sachs," writes Ian Mathias in today's
issue of The 5 Min.
 
"The investment bank is expected to announce a $2 billion profit in its second
quarter earnings announcement tomorrow. The New York Times is wondering
how Goldman 'could have rebounded so drastically only months after the
nation's financial industry was shaken to its foundations.'
 
"We're wondering… just $2 billion?
 
"GS is an 'investment bank,' after all, and we hope it did a little investing
during the biggest snap-back rallies of our lifetime. During the second quarter,
the S&P 500 rose 15%. 433 of its components registered a gain, including
Goldman, which shot up 33%. From a January bottom, GS stock has more than
doubled.
 

 
"Goldman is one of the world's biggest underwriters too… a fortunate place to
be in the second quarter, one of the grandest periods of dilutive best stock offerings
in history. On top of that, it got a $10 billion taxpayer lifeline, and a market
value of $74 billion, and recently issued $28 billion in ultra-cheap FDIC-
backed debt.
 
"So only $2 billion? Yawn… for the most politically connected bank in the
world during the most rabid rebound rally since the Great Depression, we're
not surprised. We suspect the second half of 2009 will be much more
interesting."
 
Our friends at The 5 aren't the only ones who think the second half of 2009 �
and 2010 � will be a very interesting (and turbulent) time for investors. Rob
Parenteau at The Richebacher Letter has some note-worthy forecasts on what is
coming around the corner over the next year or so…and you'll want to start
getting prepared now.
 
And back to Bill, with more opinions:
 
The Financial Times interviewed our friend Hugh Hendry, of Eclectica Asset
Management. Excerpts:
 
"I've never known a moment where a trade has become so crowded. And that
trade would be this absolute certainty that the future is going to result in
inflation. And not just any old inflation. People are using quite severe
language. And there are notable contrarians and commentators who are
comparing America's monetary policy with Zimbabwe. And they're not just
saying inflation, they're saying hyperinflation.
 
"Prices today...are falling, in America and in the British economy, and indeed
across Europe. That never happened in the 1960s, 1970s, 1980s. 1990s. That's
a new phenomena. It's almost as if we have this flood and yet people are
buying fire insurance, and that's quite � you couldn't make this stuff up.
 
"When Japan hit the turbulence which we're experiencing now � when they hit
it twenty years ago, their public finances were very similar to the public
finances we had in the UK going back a year or so, and the US, where gross
public debt was no more than 40% of GDP. Now over the last 20 years, the
Japanese have fought crisis after crisis by expanding the public sector debt.
They've issued trillions, literally trillions of yen, and debt is now approaching
two hundred percent of GDP. What's happened to government bond yields?
They've gone down.
 
"Here we are with the most profound collapse in industrial production, world
trade, since the 1930s. That is not an exaggeration, that is reality. Okay? And
yet today ...they only proposed to grow the money supply at the rate at which
it's expanding just now � it's expanding at like nine percent just now...history
will determine that their steps were modest, and they were massively
overwhelmed by this hysteria, which raised interest rates."
 
We can't find the passage...but one thing in what Hugh said stuck in our brain.
He said the inflation narrative was "too easy to articulate" and too
persuasive.
 
That's what's been bothering us too. It's too obvious. The feds print money.
Prices go up. People who own gold get rich.
 
Well, the fed is printing money, but as Hugh points out...probably not enough
to offset the economic collapse. Are prices going up? No, they're going down.
 
Should you be long or short bonds? The dollar?
 
We suspect Hugh is right. In the short run, you should probably be long
both. The correction has been underestimated. It will be worse than most
people realize. Since a correction is fundamentally deflationary, the dollar
should rise.
 
But here at the Daily Reckoning, we're not smart enough to invest in the short-
run. We never know how short short is. And we fear having our short positions
when the long run finally arrives. So, we'd prefer to take the long-run position
from the get-go. In the long run, we have faith in the feds. They may not be
very good at causing inflation. They may have underestimated the downward
tug of the correction. But give them time. They'll keep emitting their
I.O.Us...and keep propping up their dead institutions with make-believe
money...and keep handing out their bonuses and benefits...
 
...until the country goes broke.

Profit from Soda Stocks

There's a new trend in the beverage industry. More and more consumers are moving away from traditional soft drinks like Coca-Cola to healthier alternative drinks.

But Coke executives aren't just going to stand by as their market share erodes. In May, the soda giant paid more than $4.1 billion for Glaceau, maker of the newly popular drink vitaminwater. It's the company's largest acquisition to date.

So it's no surprise that I have been working to uncover several new investment ideas within the alternative beverage industry. Look no further than relative newcomers Jones Soda and Hansen Natural. The former is a small cap, and the latter is a bit bigger, with a $3.5 billion market cap.

And there's one tiny natural soda company that's just come on the market that we've had our eyes on. It's much too small and illiquid to even recommend to you, but we felt this was still a relevant story on an important industry…

Beverage Stock -The Penny Stock Soda Revolution

This is one of the only hippies I'd hand $1 million over to, let alone $8 million…He eschewed private equity guys and declined venture capital offers.

This is no average hippie. In fact, he's not even your average small-business entrepreneur. How many people can figure out on their own how to raise $400,000 from a small corporate offering registration and then do an IPO of a then-19-year-old gourmet soda business?

Well, Chris Reed can.

He's the self-labeled hippie and natural health fanatic behind Reed's Inc. (REED:OTCBB). The company is best known for producing arguably the best ginger-brewed sodas in the world.

It's leveraged the ginger niche into sodas featuring six different ginger flavors, along with ginger ice cream and candy.But with the rising levels of childhood obesity and Americans on health kicks, isn't the soda business one to avoid? Yes and no…

It's actually been a very good time to hold shares in giant-cap Coca-Cola. The soda-producing Buffett mainstay has been performing beautifully lately. First-quarter 2007 results were just released, with earnings beating what Wall Street had modeled and sales outdoing first quarter of last year.

Give the credit to new products like Coke Zero and international markets.

But there's a black cloud hanging over Coke.

It's declining soda sales in North America. In fact, this year's first quarter brought a 3% drop in soda revenue in this key market, and fingers are being pointed at Americans' tastes running toward healthier alternatives like bottled waters, drinks with vitamins and traditional hot beverages.

Coke has warned that sales for the rest of this year will probably not reflect any major turnaround just yet in North America.

But for small-cap investors, there are ways to play soda stocks for 2010 and ways to profit from the companies that are giving Coke some headaches…

Beverage Stock -Gourmet Soda: The New Giant-Killer and Savior

So-called "gourmet soda" growth is the story here. A few years ago, you could only buy Jones Soda products at record stores, surf shops and tattoo parlors. Now this maker of so-called "alternative" sodas with pure cane sugar has bottles in Starbucks, Target and 7-Eleven. The packaging is pretty distinctive - customers send in personal photos to Jones, and the best get printed on the soda labels.

Hansen markets itself as a natural soda maker and also markets bottled smoothies and various energy drinks. The company dates back to the 1930s, when the Hansen family was a juice supplier to the Hollywood film industry.

What these two companies have in common financially, though, is tremendous top- and bottom-line growth. Jones has averaged 20% revenue growth for the past seven years, with earnings making the turn to the plus side in 2003, and posted 254% net income growth just last year. All the while, Jones has been consistently expanding margins, as well. Bigger brother Hansen has been even more impressive. Sales have grown an average of 31% over the last seven years, with last year posting a 94% jump. But that wouldn't be impressive without a jump in profitability…and Hansen hasn't disappointed. Earnings have grown an average 53% for the last seven years.

The Beverage Marketing Corp. has the carbonated soda pop business pegged at $65.9 billion in total annual sales last year. But traditional soda growth has been spotty and lackluster for many years this decade.

While Jones' and Hansen's products are called "sodas" and are definitely competing for Coke and Pepsi consumer dollars, industry insiders refer to these niche drink companies as "New Age beverages." And this segment hasn't been sliding in recent years. The most recent data we have show that this is an almost $17 billion industry at the wholesale level, and growing.

Investors have noticed, too. Jones is up 103% in just the last two months alone. Hansen is up 281% since June 2005.

Beverage Stock -Reed's Is Set to Be the Next Big Soda Performer

While Reed's is trading at close to double its IPO price from January 2007, there is still growth left to come from what is considered a sexy penny stock for 2010 with good fundamentals.

Sodas are still the biggest segment in the entire beverage industry. And of course, the old giants in the business are still the giants: Coca-Cola and Pepsi are clearly still at the top, followed by Cadbury Schweppes and the lower-profile Cott and National Beverage.

Today, we enter the niche soda producers. They're smaller and have focused product portfolios. They convey exclusivity, and while typical sodas compete on price, the niche category is not afraid to put a premium-priced product into the channel. This is an exercise in psychographic pricing, in which you may or may not actually get value for your soda-paying dollar.

In the case of Reed's, it plays on history, as brewed drinks, like the brewed ginger drinks, were around well before sodas existed. It also plays upon the health benefits of ginger, an angle most mainstream soda players don't even touch. In fact, playing up the health benefits of products people intuitively feel are unhealthy is working well for several companies of late. Hershey's, for example, has been marketing its dark chocolates as potent antioxidants.

It's Chris Reed's passion for natural health that led him to ginger. The former chemical engineer was taken by ginger's ability to remedy motion sickness and its anti-cancer properties. But none of the ale on the market was actually made with real ginger. So Reed set off to brew his own.

In the late 1980s, Chris Reed rented out space at a small brewery and made a small batch of ginger beer. He bottled the concoction himself with a funnel, and even glued his own labels that read "Reed's Ginger Brew." He then hit the streets, where he peddled his product to local grocery stores and cafes. Little did he know his small venture would turn into a fiercely growing $55-million enterprise.

Within a couple of hours, all of the stores had sold out. After 18 months, Reed's Ginger Brew became a national brand.

Beverage Stock -A Price Run That Will Continue

Reed's has been public only since January of this year, so we have limited trading data to go on as far as liquidity. This $55-million company is currently trading at about $8.50 per share. Volume so far today has been about 22,000, and average volume numbers for the last three months have yet to be posted. Its spread is not terrible - no 18-wheelers will fit through this one, fortunately. It's about 24 cents at the moment.

The company's rapid growth should continue, as well. Reed's Ginger Brew is outselling natural soda leader Hansen at Whole Foods, Trader Joe's and Wild Oats stores. And believe it or not, this has all been possible, for the most part, through organic growth.

For the first 15-plus years of its existence, Chris Reed allowed his soda company to grow passively. Store reps would approach him at trade shows, or distributors would seek him out for new deals. His ginger brews had a growing cult following, so he let the business come to him.

However, now that the firm has gone public, Chris Reed is looking to take a more active approach to growing the brew business. He's seeking out new deals with major supermarkets and other mainstream stores. And you can bet that when he does land his brews in some of the bigger chains, it's going to have a major impact on the bottom line.

Beverage Stock -Is It Worth Double the IPO Price?

IPOs are typically priced about 18% below their intrinsic values. At least that's what the market tells us about 24 hours after new issues are priced and begin trading. We've all seen it - most of the time when a new offering goes public, its shares shoot through the roof.

Sixteen percent of IPOs don't jump at all on the first day. REED was pretty much one of those…However, the company has since become a media darling, and the best stock for 2010 has rocketed. Don't get scared of the run-up. And don't anchor yourself to the bygone days of $4 a share.

Hansen started trading over the counter on Nov. 8, 1990, before moving to the Nasdaq. Jones has been trading OTC since 2000 and on the Nasdaq since November 2005. Both provide good bases for comparison for REED.

Don't be misled into thinking that since these companies have been around for so long that they're not in an initial growth phase. Beverage companies like these can be making respectable sums and growing furtively without much notice, but when they go public, it's well and truly "off to the races" time.

Let's take Hansen (HANS). This one ticks off all the boxes for being in initial growth mode, despite its roots being established in the 1930s. Earnings growth is very high: 214% in 2004 and 199% in 2005, to be exact. Capital investment is higher than it has been in previous years. Profit margins, in the 17% range, are much higher than the paltry 3% net margins we saw as recently as 2003. Free cash flow right now is negative, not so much from capital expenditures as from high-dollar acquisitions. Return on equity is high, greater than the stock's required rate of return. Dividend payout is zilch. All of these factors are stereotypical for an initial-growth-stage company.

Jones Soda (JSDA) - same thing across the board, but the size of this company is much more in line with Reed's. These two companies make interesting comparisons for Reed's.

They are clearly the models for our ginger company, and Reed's should follow along a similar path.

But let's face it. This is a risky proposition. "Speculative" should be the operative word for Reed's. It's a great business with a great portfolio of products, no doubt, but it's got a little over a million-and-a-half bucks in cash in the company coffers. And at the current rate, it is being burned at about $250,000 each quarter, so there's not much cushion here, and it's our biggest risk. That's about six quarters in cash left, if the company doesn't accelerate the burn rate. At the end of 2006, Reed's had $1.4 million in borrowings, and it has the ability to borrow a total of about $2 million under currently negotiated lines.

Assuming additional financing is tapped into and/or cash flow levels surpass our estimates for the next two years, we've modeled a consistent turn to profitability by 2009. And our discounted cash flow forecast, as usual, is based on some fairly softball assumptions. First, we're modeling 15% revenue growth per year - less than half of what Hansen has achieved and 7% less than Jones. We think operating margins long term will trend toward what Hansen has achieved, and we're also sharing its beta coefficient as a proxy for risk. All of this points to a $10 value for Reed's today.

The company itself is forecasting 2007 sales to rise 20-40%. Our 15% is a long-term average, so we'll need several strong early years like this to justify our $10 target. Jones and Hansen prove that it can be done, and the beverage market is clearly moving in Reed's favor.

Based on their underlying businesses, Jones and Hansen have tangible P/E values of between 13-16 times trailing earnings. Typically, Hansen trades at about 23 times, pretty much with the industry. Today, it's up around 43 times. Jones trades anywhere from 50-100 times, and is currently riding high at 111.1 times the last 12 months' earnings. So there is a lot of growth factor baked into Jones, with a good bit as well in Hansen. In a market sell-off, both of these names would be very attractive even around the 30 range, and I think that's ultimately where you'll see Reed's settle when it starts to post consistent earnings.

Is the Market Bound for Another Bottom?

There's a debate brewing on Wall Street right now — it's a fight over which way the market's headed after it makes its way out of its current rut.

Tuesday morning on CNBC's Squawk on the Street, anchors Mark Haines and Erin Burnett featured commentary from Phil Roth, Chief Technical Analyst at Miller Tabak. Roth explained that investors shouldn't be fooled by the recent rally we've seen since the market hit its March 9 low of 666.79 — until top stocks market test their current levels, we could be seeing a bear market rally that could easily give back some of those gains.

CNBC's Mark Haines was outraged. "The market's moved more than 20% higher off the lows… 20% or more is a bull market. The benefit of the doubt has to go to the bull market," exclaimed a frustrated Haines after Roth discounted the anchor's opinion.

Who's right?

Forget about what's happening on TV — to make an informed opinion, we need to check out a chart…

Above is a look at the S&P 500 from last summer (before the market crumbled beneath us in October) to present. What's initially clear from the S&P's price action is the fact that between market bottom on March 9 and May 8 the movement was almost exclusively up.

That's no surprise given just how oversold the market was in March.

Ever since then, the market has traded flat, bouncing around in a channel, and making investors sitting on gains from the last few months very nervous.

What should make investors more nervous is the potential for a bearish "head and shoulders" pattern forming on the S&P right now…

If the S&P decisively breaks through the shoulder level above, we could easily see a drop to around 852 before it encounters any kind of support. Luckily, the downside risk is relatively shallow right now, but that could change alongside market conditions.

This week, we've seen a slew of negative reports that seem to indicate the economy isn't quite as strong as many investors thought — jobs numbers were dismal on Monday alongside slipping oil prices for starters. As earnings season kicks off, good income numbers could be the only thing that keeps us from tumbling further…more on that in a minute…

Taking on Multiple Timeframes

One of the strongest technical confirmations of where the market's going can be found by looking at multiple timeframes. While things look nasty on the 12-month chart we looked at above, how are things positioned shorter-term?

Over the course of the last two months, the bulls have clearly been losing ground through two increasingly drastic downward movements. That seems to suggest that our medium-term downtrend is holding in "bear mode."

While the possibility that we'll experience a new market bottom is doubtful at present, the possibility that the best stock market will continue to fall over the course of the next month or two is quite likely.

Making Money with ETFs

Even though things look unappealing for most companies' share prices right now, there is a glimmer of hope for investors who want the rally to continue. 

It's earnings season, and strong numbers from a few of Wall Street's darlings could do a lot to change investors' fortunes. Right now, the economy's fundamentals are weak, and earnings expectations are muted. If big names on Wall Street can beat analyst expectations, it's quite likely that the market can put the brakes to its slide.

That said, there are plays to be made regardless of where the market's going — and ETFs provide one of the best ways to pull down gains right now.

ETFs — or Exchange Traded Funds — are essentially baskets of securities that trade on major exchanges. Think of them as mutual funds that trade like top stocks for 2010. But unlike mutual funds, ETFs can get you a part in almost any market imaginable… Even commodities like gold and oil, and emerging market stocks for 2010.

I'll let you in on some interesting ETF strategies in the coming weeks. Until then, I'll continue to keep you updated on what's going on in this wild market.

The 1 Place Where New Money Is Coming Online

Telecoms are the way to go. Here's the proof...

Ernst & Young's new report, Africa Connected, points out that 70% of the continent's population south of the Sahara is still living in rural areas. As a result, creating fixed-line service throughout Africa is way too steep a hill for international operators to climb.

But when it comes to beaming text messages, transactions, and of course phone calls over long stretches of unpopulated land, companies like South Africa's MTN are already on a path to profit.

Mobile phone subscriptions across Africa jumped by 41% in 2008, and foreign direct investment (FDI) in the space is healthy.

Between 2002 and 2007, E&Y says, the mobile phone market in Africa grew by 49.3%, versus just 27.4% for all of Asia.

That growth carries through to stimulate top stocks to buy like MTN Group (OTC:MTNOY), which is up 48% in the past six months. MTN is capitalizing as its continent-wide operations expand and new users in the 21 countries where the group does business move in and up the value chain.

New cell phone customers generally come in with lower ARPU (average revenue per user), an industry term that helps companies pinpoint a balance between new service and increasing cost.

Ernst & Young projects African telecom market growth will be best in the world between 2008 and 2013.

That includes low-ARPU subscribers and pre-paid customers as well as high-ARPU ones who are being retained through enhanced services like voice mail and picture messaging.

Behind sub-Saharan Africa is the Middle East, another region where far-flung tribesmen are now increasingly able to move goods and money to and from big cities using the power of a handheld phone.

More than a handful of Middle Eastern countries are expected to achieve double-digit annual growth rates in their telecommunications industries over the next few years, even despite ongoing concerns about developed-country growth.

Check out this chart of the SPDR Middle East and Africa ETF (NYSE:GAF) vs. the S&P 500 and the iShares Europe 350 ETF (NYSE:IEV). GAF, with 10% of its holdings in telecom companies, wallops the old guard economies head-to-head.



That regional growth edge is something you can't ignore if you want to make money in this market and fight negative numbers coming out of Washington and Brussels.

Telecoms: Linchpin of the African Economy... and a Powerful New Trend

When it comes to telecoms, local growth trends in the Middle East and Africa even buck new IMF forecasts for those areas, which were bumped down at the beginning of July.

That's because telecoms pack a lot of punch.

For every 10% surge in phone penetration (access), emerging markets can see GDP increase by 1.2%.

The mobile phone, as it turns out, has become the linchpin of the African economy.

But there's another trend emerging quickly. It's being unspooled, as a matter of fact, across the sea floor to Africa's shores.

Four new submarine broadband cables are set to deliver Africa unprecedented telecommunication speed and enable Africa's telecom operators to bring in more ARPU than ever.

We're talking about a quickly unfolding future in which continent-wide high-speed data coverage will boost economic growth and make transactions more secure.

Eastern African nations like Rwanda, which was torn to shreds by ghastly ethnic violence less than two decades ago, are in talks to link up to systems with names like EASSy (Eastern Africa Submarine Cable System) and SEACOM.

To Africa's north, France Telecom is extending a cable system more than 14,000 km (about 8,700 miles) from the Mediterranean down through over 25 countries and all the way to South Africa.

Even in the U.S., broadband access is increasingly seen by policymakers and consumers alike as more than an infotech accessory � home broadband adoption increased by a full 9% from the end of 2007 through this spring, a new Pew research poll shows.

France Telecom (NYSE:FT), Vodafone (NYSE:VOD), and smaller European players like Portugal Telecom (NYSE:PT) are all easy-to-trade plays on world-leading African telecom growth. . .

Angola, where PT operates, is enjoying annual GDP growth of 20%, and mobile penetration there more than doubled from 2006 to 2008!

Dial in to your favorite one and make sure your portfolio has at least one best stock for 2010 to tap the powerful African telecom growth trend.

The Real Story Behind the True Gold Bull Market

Alan Greenspan stood before the House Committee on Banking and Financial Services and said, "Central banks stand ready to lease gold in increasing quantities should the price rise."

That is exactly what the gold carry trade consists of. It is the process in which central banks lease out gold bullion to be sold on the open market to suppress prices.

Here's the thing: The large majority of these transactions take place on the London Bullion Market (LBM). This is an over-the-counter (OTC) market in which there is little-to-no transparency. A number of organizations have conducted studies on the amount of gold lending that takes place. Some of the organizations include Gold Fields Mineral Services (GFMS), the World Gold Council (WGC), and Virtual Metals (VM). As a result of the lack of transparency, the numbers reported in regard to gold leasing vary slightly from one another. For the sake of argument, I will be using the most conservative figures reported.

This may be the most significant piece of the gold bull puzzle that will push gold to $2,000 and beyond. I will dig in and share my in-depth research with you, starting with how the process is carried out, then going into the market impacts of the gold carry trade, and concluding with the future of the market for gold leasing.

How Does the Gold Carry Trade Work?

Gold leasing takes three different forms: direct leasing, central bank swaps, and forward hedging.

Direct Leasing

I am going to run through this in a simple step-by-step process. Central banks don't directly take their bullion to the market and lease it out. They use a vehicle called a bullion bank (BB).

Although bullion banks are numerous, some of the more well known are Barclays, Goldman Sachs, JP Morgan, Bank of America, UBS, and Citibank.

The central banks loan gold to the BBs at a rate of approximately 1%. The BBs take it to the LBM and sell it on the open market. The BBs take the cash from selling the bullion and in turn buy Treasuries.

So if the story were to end here, the bullion banks would just walk away with a net 4% return. But it doesn't end, because they only have the leased gold for a certain length of time. They eventually have to give the gold back to the central banks, but now they are at risk of price swings in a very volatile market.

The answer to their problem is to go long the futures market. Essentially, they buy futures contracts to hedge their risk. In other words, they secure gold for delivery at a specific price, on a specific date in the future. Once they buy their futures contracts, it doesn't matter what the price action of gold is.

In a perfect scenario, after the gold lease rate and price risk hedging, the bullion bank will walk with a modest 1�2% gain. The central banks will receive a return on their gold, keep the price of gold suppressed in order to keep real inflation suppressed, and get a boost in the demand for Treasuries. It's a win-win situation for both the bullion and central banks.

Gold Swaps

Gold swaps are very similar to direct leasing. The difference is that gold swaps usually take place between two central banks. These types of transactions occur in two different forms.

The first is very simple. Essentially, two central banks swap gold reserves and then carry out the action of direct leasing of each other's gold. The reason for this is that it just adds more confusion for the accounting of the leased gold.

The second is slightly different. This transaction occurs when one central bank exchanges gold for currency with another central bank. Like gold leased to the BBs, a future date and price are set for the redelivery of the gold back to the initial central bank.

The IMF says of this type of gold swap, "Typically, both parties will treat the transaction as a collateralized loan." Or the CB leasing the gold doesn't remove the gold from its balance sheets, and the CB receiving the gold doesn't add it to its balance sheet. As far as accounting goes, no transaction has even taken place. The gold market is flush with new supply and would beg to differ that a transaction hasn't taken place.

In other words, the CB receiving the gold loans it out on the market while it is still on the balance sheet of the initial central bank. One might refer to this practice as double-counting the reserves.Forward Hedging

Forward hedging is a form of gold leasing practiced by gold producers. The most famous of these is Barrick Gold, but there are many other producers who partake in forward hedging.

Forward hedging is when a producer presells gold on the spot market that has yet to be extracted from the earth. Most of the buyers want delivery of physical gold. So the producer leases gold from a CB, with the idea that it will pay the CB back with future production.

The problem is that these producers often sell their gold at suppressed prices on the spot market and they often sell more gold then they can produce.

On the note of Barrick, did I mention that it has recently been sued for price fixing and price manipulation of the gold market? Barrick and its bank JP Morgan have admitted to price manipulation and that they have worked with the central bank in this process.

Implications of the Gold Carry Trade

The gold carry trade has one main goal, and that is to add huge amounts of supply to the market in order to suppress the price of gold. Although there are other added bonuses along the way for the participants, the main reason for suppressing the price of gold is so the world doesn't know the true value of worthless fiat currencies.

I would like to use some statistics to inform you as to the implications of gold leasing on the market for gold. Remember that I will use the most conservative numbers I could find.

In 2005, according to GFMS, gold leasing was estimated to have added 2,970 tonnes of supply to the market. In that same year, jewelry demand was 2,700 tonnes, world investment was 736 tonnes, and official central bank sales were 656 tonnes. Over the last 10 years, average mine production has run at an estimated 2,500 tonnes per annum. So the amount of leased tonnage exceeded all of the above-mentioned statistics.

Remember that central banks are not required to report at all on their transactions of loaned gold. So those 2,970 tonnes of extra supply were also counted in central bank reserves, or they were double-counted.

Central banks are the largest holders of gold tonnage, estimated to have around 30,000 tonnes. So they have loaned out approximately 10% of their total reserves.

How Long Can This Go On?

If you are looking at this in a practical way, you probably came up with the exact questions I did when I first started to read about the gold carry trade. When the gold enters the market via a BB, it all has to be bought back at the end of the lease contract. Doesn't that put us back at square one with the amount of supply in the market negating any long-term implications?

The answer would be yes if there were just a couple of transactions. But there are several gold leasing contracts signed every day. All the supply is constantly being recycled in and out of the market and there is always fresh gold being leased into the market.

The length of a gold leasing contract can extend anywhere from one month to several years. This allows for the central banks to analyze these markets and best time their transactions and how long they will be, in order to suppress the price of gold.

So can this go on forever? Definitely not, and the implications of the gold carry trade coming to end will bring with it the most spectacular price actions ever seen in the gold market.

Let me tell you why the gold carry trade will not be sustainable forever. It's very simple. All we have to do is look at the step where bullion banks have to buy back the gold sold on the spot market in order to pay back the central banks.

In order for this to be profitable for the BBs, the price of gold has to experience very limited gains during the time the gold is leased out. Or the price of the futures contract purchased by the BB has to be near enough to the price of gold when the bullion bank initially unloaded the leased bullion on the spot market. If the price of gold heads too high, it will not be profitable for BBs to partake in being the intermediary for such transactions.

All we have to do is look at the fundamentals for gold and we realize very quickly that the price of gold is definitely going to go higher one way or another, which will disallow future leasing in the gold market. You are probably well aware of the fundamentals: Every one of the major economies of the world printing money at a rate of over 10% per annum; the Mount Everest of debt from both budget and trade deficits; an inevitable recession here in the U.S.; the inability of the U.S. to raise interest rates, due to the complete mess of the housing market; rising energy costs putting downward pressure on the U.S. dollar and increasing inflation in every other aspect of the economy; mine supply at historic lows; a possible U.S. policy that would include trade protectionism against China; and, last, but definitely not least, a U.S. Federal Reserve whose main goal is to create credit by keeping interest rates below the rate of inflation (negative real interest rates).

Fundamentals are fundamentals, but there has been some action in the International Monetary Fund (IMF) recently on this very topic. Before I go any further, I just want to let you know that I don't trust the IMF any further than I can throw it. And I don't really expect any timely results from its actions. What is important is that the notion of the gold carry trade is coming forefront. Here's what's going on in the IMF.

Hidetoshi Takeda of the IMF's statistics department recommended in early 2006 that all loaned gold be excluded from the central bank's reserve figures. The IMF's committee on reserve assets considered Mr. Takeda's paper and came to the conclusion that a new definition of gold reserves excluding loaned gold needs to be officially documented. It also stated that unallocated gold loans should be disallowed. Nothing recommended in Mr. Takeda's proposal was rejected. Full details of his report can be read here: http://www.imf.org/external/np/sta/bop/pdf/resteg11.pdf

The IMF continued its research regarding the issue and made another report with a similar conclusion. What does this all mean? Well, the IMF is currently working on another official proposal to be worked through the system making it necessary to make all loaned gold public information and to exclude loaned gold from reserve accountings. The IMF currently "encourages" central banks to record gold loans/swaps, but does not "require" the recording.

If everything goes perfectly, and I don't believe that it will, we could see these actions implemented by the IMF at the end of 2008. As I said, it seems like a far reach, but the more people become aware of the gold carry trade, the sooner it will come to an end. And I don't like to put my bets on the IMF to make progress with in the accounting of leased/swapped gold, but it DOES have the power to change how central banks report the reserve holdings of gold.

The eventual unwinding of the gold carry trade, whether it be from the IMF or just market fundamentals, will bring amazing action to the gold market. Remember that gold leasing didn't begin until after the precious metals run from 1979�1980. For the bull market in gold to continue, it will need to overcome the barriers set by central banks' leasing of gold. But when this does occur, the floodgates will open and we can expect to see the price of our favorite yellow metal skyrocket.

Gold Baron's Precious Secret

Loophole.

It's one of the hottest, most overused political terms around.

... The "carbon pollution loophole"... the "gun show loophole"... AIG's "offshore tax loophole"... you name it, there's a loophole for it...

But no matter how cheapened the term gets, there's one "loophole" that you need to know about - especially in today's financial climate.

You see, as foolish government spending continues to unintentionally strengthen and skyrocket gold prices, our international metals guru, Greg McCoach, recently shared with me a powerful investment "loophole" of his own...

... One that allows everyday investors to collect double the gains made by gold.

That's right. Double the gains!

Attached for your convenience, you'll see exactly how it works, and most importantly, how you can start taking advantage of it today!

With gold prices temporarily pulled back, there's no better time to secure your position, before the next rally shoves prices as high as $2,000/oz - making you an absolute fortune!

A few weeks ago, I found myself shivering inside a taxi, speeding along the snow-covered roads 35 miles northwest of Denver, Colorado.

No luggage. Just a ski jacket, my laptop, and an address.

This was going to be a quick trip. Out and back.

You see, the day before, I received an urgent call from my colleague and legendary gold investor, Greg McCoach.

He excitedly told me that he uncovered something "huge" that he needed to share with me. And according to Greg, the phone just wouldn't do.

Not that I minded. When he calls, I know that timing is absolutely critical.

In fact, you could say that over the years he's mastered the art of entering markets at precisely the right moment.

It goes all the way back to 1998...

When gold traded at 20 year lows (or $258/oz)... mines were shutting down daily... and no one thought it would ever rally again like it did in the '70s.

That's not the way Greg saw it. The truth is, he knew the market was on the verge of skyrocketing. And he was prepared to take full advantage of it... by risking it all and becoming a physical gold dealer.

It was the first of many brilliant moves that's defined his one-of-a-kind career.

Timing just doesn't get any better than that.

That is, until you see the dozens upon dozens of mining and exploration top stocks to buy he uncovered over the years that rapidly raked in several hundred - even thousand - percent gains.

He's single-handedly made scores of everyday investors millionaires - without breaking a sweat.

One such lady, Sarah M., named her RV - that she purchased in full, after a single one of Greg's stock recomendations paid her several hundred percent gains - after him!

In fact, his unparalleled knowledge of geologic formations matched with his ability to scrutinize a company - from the top brass right down to the janitor - that makes him one of the most sought-after analysts in the business today.

He literally travels the world, just looking for the next, perfect opportunity.

I could go on for hours.

But the point is, when Greg calls to tell me that he's found something "huge", I know fortunes will be made.

And from what I gathered after just a few minutes on the phone with him, it was clear that THIS play could Trump them all...

Rare Gold Investment That Returns Near-Magical Gains

What I'm about to share with you is no coincidence.

It's not a temporary trend, either.

Instead, it's a money-making phenomenon so powerful that our team of researchers spent eight months investigating its validity.

Take a look and you'll see why:

First, let me say that these charts are NOT duplicates.

The one on the left represents the closing price of physical gold over the past six months. The one on the right is the investment he's ecstatic about. Now, at first, they appear virtually identical. And they should... one is directly based on the other.

But that's where the similarities end. How so? Just check out the two charts again... only this time, with gains attached:

From September 10 of 2008 until September 22nd, physical gold prices soared 19.65%... but the diamond in the rough we uncovered soared an astonishing 45.46% - more than doubling the gains gold attained!

This is hardly a single incident, either. From January 14th to January 30th, gold prices surged again by 15% - making physical metals holders increasingly wealthy. But investors who knew about this precious gem raked in an astonishing 31% over the same time...

And again from February 9th through February 20th, gold jumped another 10%... while Greg's gold play launched 21%!

In fact, every time gold jumps just one percent, this stock launches two!

It's because of this phenomenon that Greg calls this play the "Doubling Effect."

I know. It looks crazy. And I don't blame you.

In fact, when I first heard about this opportunity, I couldn't believe it either.

Scratch that - I thought Greg had been drinking a little too much Makers Mark.

After all, how could an investment exist, directly related to gold prices, that pays you DOUBLE the gains gold makes?

... a 25% gain pays you 50%... a 50% gain doubles your money... and so on!

It seems completely illogical.

Truth is, before Greg could show you an opportunity this powerful, he needed to know exactly what he had. He also needed to know how and when would be the best time for hungry investors like you to start taking advantage of it.

I'll give you the full details of how it works below. First, let me show you...

How Capitol Hill could make you filthy rich

Imagine for a moment, that you knew about certain factors - already in place - that would cause the price of gold by... say... as soon as next month to start skyrocketing.

Even better, you knew you were facing a "bottom" in gold prices... and that this imminent surge could last a couple of years.

Taking advantage of this one-of-a-kind investment at the right time, you'd be able to ride the coming wave and easily collect a fortune - safely pulling in twice the gains gold makes.

Best part is, unlike other investors who are buying expensive futures contracts or even physical gold, you don't need a lot of money to get started. In fact, you can begin collecting "The Doubling Effects" with just $25.

All you need to know is when...

Well, thanks to the boys on "the Hill," we don't have to look for any crazy trends around the corner, pore through complicated computer models, or rely on so-called overpaid experts to tell you when gold prices are going to surge.

Truth is, all you have to do is thank the combined +$700 billion bailout from Uncle Sam.

In fact, it's because of the banking industry's last ditch efforts to stay afloat that we're now staring straight at the largest inflationary period in years.

And it'll blow wide open...

You see, broke USA doesn't really have the cash on hand for this unprecedented funding... and if you think for a second that every single employed American is going to be taxed an additional $5,000 this year to pay for it - in an already stretched thin economy... think again.

In reality, the only option that the Fed has is to print more (and I hate to call it this) Monopoly Money.

That much cash is already set to send an inflationary shockwave across the entire nation.

As I'm sure you know, when there's inflation - even the rumor of inflation, the gold price does something beautiful... it skyrockets.

And the proof that gold's already revving its engine is all around us...

• The private sector's recently gobbled up in excess of $30 billion worth of T-Bills - enough to guarantee a negative return - over fears of the coming economic crash.
• On top of T-Bills, investors seeking safer investments are buying so much physical gold that bullion dealers as well as producers can't keep up.
• Recently gold prices have steadily soared almost 14% - with another 50% surge expected in the near term.

And that's just for the short term. I haven't even mentioned the juiciest part.

History To Repeat: Why Gold Prices Could Super Spike To $5,000...Making you a massive fortune along the way!

Right now, gold sells for around $1,000 an ounce.

But what if you knew about the factors at play, happening this very moment, that could soon make the $1,000 mark look like pocket change?

Heck, with the investment tool we uncovered, with gold at $1,000, you'd be turning every $5,000 into $7,500.

Now, just to get an idea of what to expect in the future, after 2009's inflation already has you sitting on a mountain of cash, let's take a quick look at our last massive gold super spike...

During the great gold bull market of the 1970s, the average monthly gold price increased from under $35 to over $675 an ounce... representing a 1,833% gain.

If today's gold bull market makes similar moves forward, gold prices could skyrocket well past $5,000 an ounce.

Now gold prices at $5,000 may seem like a stretch, especially considering the metal hasn't had much strength over $1,000. Nevertheless, $5,000 gold is absolutely possible. Here's why:

How a Gold Bull Market Works

Every major gold bull market in modern history has consisted of three main stages:

1. Currency Devaluation Stage

2. Investment Demand Stage

3. Mania Stage

During these three stages, gold prices typically rise in a parabolic upswing, which ultimately results in a sharp, skyrocketing price spike. (Take a look at the 1970s gold bull market chart above, as an example of this phenomenon.)

So far in today's gold bull market, we've seen evidence of the first two stages:

During the first stage of a gold bull market, prices increase because of currency devaluation.

So far in this bull market, a dramatic drop in the value of the U.S. dollar against other world currencies has lifted gold prices over the past 7 years - breaking the $1,000 per ounce mark. In fact, this devaluation is evident in the 42% drop of the U.S. Dollar Index between the summer of 2001 and spring 2008.

And now, thanks to the massive banking bailout that we can't REALLY pay for, we're about to add some TNT to an already highly-explosive situation.

In the second stage, gold prices continue to grow due to increased investment demand. Attracted by the modest gains of the first stage of the gold bull market, investors begin to buy gold as an investment, which further snowballs the price of gold higher.

And with today's screaming demand for physical gold, the introduction of gold ETFs - and similar products - investment demand has had incredible strength since the beginning of this gold bull market, growing in terms of both tonnage and dollar demand.

Again, the first and second stages of a gold bull market generally return considerable gains. In fact, gold prices in this bull market have increased as much as 306%.

Of course, with the investment tool that I'm about to show you, that modest 306% return could have stuffed your pockets with more than 600% gains!

Don't worry if you missed it. Truth be told, it's the third and final stage of a gold bull market that can turn everyday investors into instant millionaires.

How the mania stage of a gold bull market could hand you several thousand percent gains in very... very short order

Everyone knows there's no rush like a gold rush. And a speculative mania can kindle an inferno of popular greed that rivals that of the Conquistador's legendary lust for gold.

During the third stage of a bull market, mania buying finally turns gold's parabolic upswing into a blistering price spike.

Make no mistake, mania stage already started. And this time, it's happening across the entire globe...

Earlier this year, the U.S. mint suspended sales for its American Eagle 1 ounce gold coin.

The South African Rand Refinery, makers of the infamous Krugerrands, admitted that they were temporarily bone-dry.

Australia's Perth Mint announced they were no longer selling gold to citizens.

Germany's Bundesbank refuses to sell their gold to the public, claiming it as a strategic asset required for the confidence and stability of the euro.

The World Gold Council recently reported an all-time quarterly record ($32 billion) for gold as investors seek refuge from global financial meltdown. That's an astounding 45% increase from the previous record - ever.

And this rapidly spreading shortage is only the beginning of what is bound to launch gold prices to levels of mass hysteria... making those on top of the wave filthy, filthy rich.

Now let me tell you how you can...

Double your gold profits with this unique investment tool

Earlier this year, one of the world's leading international investment managers launched a new, one-of-a-kind investment vehicle designed to double the monthly return of gold prices.

Mind you, this investment has been all but ignored by media since its launch. Gold, after all, has never been understood or appreciated by the mainstream, despite its historic economic significance.

Still, for every 1% increase in the price of gold, this new gold investment vehicle delivers a positive 2% return!

There's no investment club to join. You won't have to open a special account to get in on the action. It trades on the NYSE. Plus, it's completely liquid... and easy to add to any stock account you own right now.

To top it off, as you already know, now is the time you want to be in gold!

Yes, gold prices have pulled back some, as the U.S. dollar found strength as a result of foreign buying.

And it's likely that the U.S. dollar will continue to remain strong in the short-term, subsequently holding back the price of gold.

But it simply won't last long.

Sooner or later the U.S. dollar will collapse. It's imminent.

In fact, we're already uncovering tons of evidence to prove that it's already started.

And it's launching the mania buying stage to previously unthinkable levels...

... Making this new gold investment vehicle a true "no-brainer."

Now, very briefly, before I get into the details of how you could start collecting DOUBLE gold's profits, let me introduce you to the man behind the curtain...

Secrets of a Mining Speculator

His name is Greg McCoach.

And for the past eight years, while other investors played stale blue chips (some of which straight up collapsed), he's been showing home-run investments to people just like you, year after year.

You see, in January of 2000, he set out to create the most profitable mining investment advisory service the world's ever seen - the Mining Speculator.

Greg didn't want to waste time with top stocks for 2010 that dawdle on their way up the ladder. His investors are in it for one reason - to become filthy rich.

Since starting, he's found some of the most undervalued stocks on the planet.

He's shown thousands of everyday investors across the world how to secure their positions just before the biggest gains occur. And this goldmine of a gold investment is no different.

He literally scours the earth for these opportunities as protection against the financial uncertainties that have engulfed the U.S. and world markets. As the saying goes:

"Periods of great crisis also offer great opportunity."

Right now - without question - the best opportunities for investors to protect themselves against the coming financial reckoning are with precious metals and in particular, with this gold investment that promises double the returns.

In addition to the picks in the metals sector, Greg dishes out the most accurate and truthful - sometimes painful - economic commentary that we can find to help investors just like you sift through the massive amount of disinformation put out by the mainstream media.

And just so you can form a better picture for what I'm talking about, below I've added a few excerpts from past investment alerts that have helped hist tight-knit group uncover some of the most explosive plays in the market - well before anyone else catches wind...

December, 2005, the dollar vs the strength of gold:

"First we have gold over $500 an ounce and oil is back over the $60 a barrel level. Both appear like they will continue to go higher... These things are significant because in the happy picture of America's finances and the world economy, they shouldn't be [that high]. If everything were so rosy then these things certainly would not be happening."

January, 2006, a housing and foreclosures warning... long before the bubble burst:

"We will see more personal bankruptcies than we have seen in recent years as an alarming number of consumers that opted for interest only and adjustable rate mortgages are faced with an ugly reality, and no chapter 7 bankruptcy protection."

February, 2006, as the Dow first broke 11,000:

"We are [soon entering] a period where investments in precious metals will severly out-perform those in the general market. More importantly, investments that typically have been good performers in the past few decades, (i.e. money in the bank, T-Bills, bonds, and blue chip stocks), now have great risk associated with them. Most investors of course don't see it this way, but I believe they will soon learn for themselves the hard way."

November, 2006, when other "experts" were calling gold's ceiling at $720:

"I expect that in the year 2007, we will start to see a major run for the exits away from the dollar. How bad this gets is anybody's guess, but the bottom line is that this will be incredibly bullish for gold and should take the yellow metal to new all-time highs. Most likely over $1,000 an ounce."

I could go on all day. But the point is, as you can see, some of what Greg has to say is shocking and, frankly, hard to swallow. However, as you can see, all of these events have happened or are happening now. And many investors like you are now sitting on massive fortunes.

Bottom line, some people just don't have the stomach for the index-busting gains from the opportunities they set themselves up for so early. If you think this isn't for you, don't worry. It's not for everyone.

But if you think you can handle it, and want to not only protect your wealth from this economic insanity but also profit like you never imagined, I want to give you a fresh copy of Greg's latest report.

It's called, "How to Double Your Gold Profits: The World's Only Investment Vehicle Yielding Double the Monthly Return of Gold Prices." And I want you to have it for FREE.

How to get started doubling your gold profits

All you have to do is take a risk-free $25 trial of the Mining Speculator advisory.

Mining Speculator isn't your normal investment advisory. It is, however, the definitive resource for investors seeking profits-and protection - in a gold and precious metals bull market with no end in sight.

It's where investors burned by the financial crisis are now turning... as a safe-haven alternative to the agenda-guided mainstream financial media. Truth is, in the Mining Speculator portfolio, Greg disqualifies 99.9% of the gold, mining and precious metals plays out there.

But when he's fully 100% behind a company, like this rare gold opportunity, you'll get the trade recommendation in a moment's notice. He tells you what to buy, when to sell, and when to hold... so you can enjoy the greatest gains possible.

Plus, you'll also receive - every month - profit producing research, including my special Mining Speculator reports and urgent updates, as well as unrestricted access to the Mining Speculator site... all for just twenty five bucks every three months... or $79 a year - that's less than $0.22 a day!

In other words, for less than a pack of Bazooka Joe, you can begin receiving your copy of the Mining Speculator advisory, in addition to getting a free copy of Greg's special report, "How To Double Your Gold Profits: The World's Only Investment Vehicle Yielding Double the Monthly Return of Gold Prices."

The companies you'll learn about and what heo shares with you today have the potential for payoffs, so large, you may never go back to your broker for advice again. Let Greg help you make those returns.

But I can't promise the deep discounted price I'm offering will remain that low for long. Because of the surging popularity, we're talking of hiking the price several hundred dollars more per year.

And in all honesty, it would be a fair move. In fact, I've seen other services boasting a fraction of the returns Greg's delivered to investors like you over the years (charging as much as $5,000.)

However, locking in a one-year membership guarantees that you receive the Mining Speculator at that low rate even after other people could be paying more.

And, if you're not completely satisfied with the quality of service and commentary he offers, simply cancel before 30 days and I'll refund every penny!

That's it! Not a single question asked!

How many other services have you seen that offer you a refund this good?

Plus, if you decide to cancel, you can keep my newest research report, "How to Double Your Gold Profits: The World's Only Investment Vehicle Yielding Double the Monthly Return of Gold Prices." It's yours FREE.

But like I said, gold's already started surging. And it's not turning back any time soon.

Biding Time Ahead of Earnings Onslaught

Friday the market did what it has done pretty much since Wednesday. It is moving flat and laterally ahead of the earnings onslaught. Investors are basically biding their time until companies come out with their earnings and tell us what to expect for the future. There was no definite trend on the day. Friday was a lot like one of the time trials this year in the Tour de France: it was up, it was down, and it covered a lot of ground, but in the end did not go anywhere. It was a volatile session that basically closed flat with the indices bracketing the zero line.

There was quite a bit of news on Friday. Chevron posted a profit warning, and Chevron is in the energy sector so that weighed heavily on the energy top stocks to buy. Of course they have already been hit rather hard over the past three weeks, so there was not a lot of additional damage done. It was just like throwing another wet blanket on top of the sector.

Corporate bond sales data came out, and they are tumbling. They improved over the spring, assisted by all of the Fed facilities that it had put in place. As seen over the past month, corporate bond spreads have widened and sales have tumbled. That makes some sense when you consider that CEOs - the insiders - are selling at the fastest rate in two years.

SU (Suncor Energy, Inc.) 
The market was primed for a downturn last week and we set up some nice plays to take advantage of that.

SU is a tar sand stock and as it is expensive to extract the best stock really tracks the price of crude. Just so happens the dollar is strengthening and worries of a double dip in the world economy are teaming up on the price of oil. Thus they are teaming up on the price of SU.

Put SU on the report on 6-24-09 as it rebounded from a break of the 50 day EMA just two sessions prior. It bounced up to the 50 day and stalled; if it fell back we looked to buy some puts and ride the next leg lower.

It ended up taking SU a big longer to fall. It rallied up through the 50 day the next session and then stalled out, moving laterally for two more sessions. It was still below a key resistance level so we simply moved our buy point higher, tracking the movement of the best stock in the pattern. On 7-1 it gapped higher and tapped that resistance only to roll over and closed back down below the 50 day EMA.

That is when we moved in. We bought some August $30 strike put options for $2.55, quite reasonable and with a relatively low implied volatility level as well as a -63 delta we stood to make a nice gain as SU fell back. It gapped lower the next session, dropping 3.5%. Gapped lower again Monday, losing 5.8% though it did bounce off the session low at some support at $26. That was our initial target level so we sold half of our position for $4.70, banking 84%, not bad for less than 4 sessions in the trade. We did not sell it all because SU can break that support and really tank; it often pays big dividends to let a part of your trade run with the trend despite hitting a near term support or resistance level. We will be attentive, however, as SU slid laterally the next four sessions, holding that support.

RIMM (Research In Motion Ltd.) 
We also saw a good setup in RIMM ripe for a quick gain. RIMM had sold off mid-June, breaking the 50 day EMA and then sliding laterally, unable to break through after a modest rise up to that level to start July, bumping up against the 50 day. We put it on the report 6-29 as it was bumping up against that level. If it broke lower from there we would enter some put positions to ride a resumption of the breakdown.

It gave us the entry on 7-2 as it gapped lower, rallied back to bump the 50 day, and then rolled back down. We bought some August $70 strike put options at $4.85; not bad as AAPL puts for example cost over twice as much. RIMM lost a bit of ground the next session, but the move lower started Tuesday as RIMM lost $2.31 (-3.3%). Wednesday the market made its early dump lower and RIMM dumped lower with it, losing 3 points on the low ($65.62). That was our initial target, however, and we sold half of our position for $8.20, banking 69% in 4 sessions. RIMM bounced Thursday then was flat Friday. Again we are keeping part of our position in the event RIMM breaks lower again, a likely probability given its more serious support is down at $60, another six and one-half points lower and a really big gain.

VSEA (Varian Semiconductor--$25.79; +1.01; optionable): Chip equipment 
After Hours: $25.79
EARNINGS: 07/30/2009
STATUS: Ascending triangle. Very strong volume the past two sessions as VSEA gapped off the 50 day EMA (23.80), used by VSEA as support on the last test in its 10 week pattern. First really solid pattern after VSEA moved up off its initial base from October to March. Strong action and looking to move in on a continued move higher. If it tests back to start the week, all the better; we can pick it up as it continues higher off that test. Very solid.
Volume: 1.704M Avg Volume: 934.294K
BUY POINT: $25.91 Volume=1.1M Target=$31.45 Stop=$24.10
POSITION: UES KE - Nov. $35c (60 delta) &/or Stock

CLR (Continental Resources--$23.49; -0.42; optionable): Oil and gas exploration 
After Hours: $23.40
EARNINGS: 05/07/2009
STATUS: Head and shoulders. CLR broke lower Monday, breaking down from a 9 week head and shoulders pattern. Sharp break lower on strong volume, bouncing off 22 on the week lows. It rebounded back to some resistance at 24 where the 200 day SMA (23.74) resides as well. Looking for CLR to break lower again from here, continuing the push lower. This would be the third push lower since it peaked in June, and that still gives us plenty of room to make some good money. A move to the initial target lands a 45%ish gain.
Volume: 1.325M Avg Volume: 1.146M
BUY POINT: $23.32 Volume=1.2M Target=$20.02 Stop=$24.27
POSITION: CLR UE - Sept. $25p (-51 delta)

 

Insiders Sell the Rally

Green shoots or yellow weeds. That's the battle being waged on Wall Street these days.  However, for the people who should know the answer to this eternal question the verdict is already in.

According the "insiders" now is the time to sell top stocks-not buy them.

That's because according to InsiderScore.com, CEOs, directors and senior officers have accelerated their sales to the highest level since June 2007, two months before credit markets froze.

In fact, insiders of S&P 500 companies have been net sellers of their own top stock for the last 14 weeks even as the broader markets have delivered the biggest stock rally in 71 years.

"If insiders are selling into the rally," Joseph Keating, the chief investment officer of RBC Bank said, "that shows they don't expect their business to be able to support current stock-price levels." Instead he told Bloomberg, "They're taking advantage of this bounce and selling into it."

That is something to keep in mind as you break out the magnifying glass to search for those green shoots.

After all, to quote an old Englishman, lilies that fester smell far worse than weeds.

A few weeks ago, we launched the "Fifty-Trade Gauntlet" with one goal in mind...

... to give investors like you the opportunity to challenge us and put our research to the ultimate test - absolutely risk free... even put ourselves on the hook for $2 million if we can't deliver!

In fact, it was so popular that even in this market, seats rapidly sold left and right!

The good news is that there are still a handful of spots open.

And even though the deadline has passed, because of a flood of opportunities Ian sees opening up , we're reopening enrollment for the "Fifty-Trade Gauntlet" until the last few spots are claimed!

That means there is still time for you to join what is already looking to be the most profitable circle of investors this year!

But I have to admit, you'll need to hurry.

Since we first invited you to enroll in what could be the most aggressive offer we ever made, investors have been securing their seats left and right. And time to join is rapidly running thin.

Not that anyone who's already claimed their seat is complaining...

Thomas B. wrote us less than 24 hours after the "Gauntlet" started:

"Wow. Joined yesterday and bought FAS call at $2.00. Got the alert today to sell half. I chickened out and sold all at $3.10. No worries as I will take the 60% gain and wait for Ian's next move. Holy am I impressed!"

Then, on Tuesday, April 14, 2009, within minutes of Ian closing another trade - open for only six days and pulling in 338% gains - even more started pouring in.

Richard G. was among the first:

"Thanks for the great recommendation Ian! Waited patiently on an entry point and got in at $2.69 last Thursday, and exited half my position this morning for a hefty 346% gain! Paid off my subscription fee plus a whole lot more! Can't wait for our next new opportunity!"

... And this one came in a minute later from Mark C:

"I almost hurt myself doing a double-take when I glanced at the daily profit & loss column of my trading software this morning. The profit I made on a small position in DNDN has paid for the subscription for years to come! I bought the options at $1.01 and sold at $6.60. Those are the returns I like to see. You're spoiling me, keep it up!"

They were just two out of the dozen or so that poured in immediately after Ian closed his latest trade in the biotech sector.

It was a play hardly any trader caught - even highly talked about financial celebrities that did see it shunned it. Yet this "no-brainer," as Ian would call it, rapidly turned every $5,000 into more than $21,900!

It's just 1 of the 64 similar big winning plays he successfully uncovered since May 2008... totaling 4,343% in gains since he launched his market-crushing advisory!

And that's the way it should be!

In fact, Ian's so confident that he'll find dozens more over the next few months that we've decided to up the gains for you - or cough up the dough!

But this offer's only good until the few remaining seats are gone.

In all honesty, considering how fast they've been going, today could be your last opportunity to challenge us. But I can promise you this:

If you do enroll and we don't hand you 50 double-digit trades by Tax Day, 2010, $1,000 is yours. It's that simple.

I know it might seem a little ballsy - given the market's volatility - but from our perspective, not only do you deserve a guarantee that strong, it's a "dare" of sorts that we simply can't lose!

You see, Ian has a few tricks up his sleeve to uncovering these gems for you. In fact, that's how...

Ian's Already Opened And Closed 84 Trades For Investors Like You... Since May 2008

That's right. Since May 2008, even as the market continued to crumble, Ian's opened and closed 84 trades... 64 of which have been double-digit winners!

Read that again: 64 Double-Digit Winners! Here's a list of the latest ones...

In fact, each of his plays - winners including losers - averages a 82% gain!

And here's the biggest kicker, his tight-knit group of investors (of which I'll show you how to become a part of) only holds each one of these trades for about 11 days.

Sometimes... like when he issued a put on Morgan Stanley for a rapid 71% gain... it's a matter of hours.

That means on average, his investors more than triple their money every 30 days!

In other words, imagine turning $5,000 on March 1st into $18,619.38 by April 1st.

Honestly, I can't think of a single other investment opportunity on the planet that could deliver those gains... especially in today's unpredictable market.

His latest closed trade, for example, a biotech company called Dendreon just went absolutely ballistic!

That's an official 338% gain - inside of six days!

And according to Ian, thanks to the crashing of more institutions by the day, he's finding more and more of these knock-em down winners than he knows what to do with.

And in just one minute, I'll show you exactly how you can get started putting our research to the ultimate test by taking the "Fifty-Trade Gauntlet."

But first, let me quickly share with you Ian's biggest secret to success in this or ANY market. You see...

Ian Never Pigeonholes Investors Into Just One Sector Or Style Of Trading

To put it simply, you can't - no matter what - focus on one sector or industry in this economy if you want to make any serious money - or money at all.

The truth is, with the way things are going, the successful investors - the guys still churning gains like they're picking fish from a barrel - are the ones looking at the big picture.

They're not falling victim to investor's tunnel vision or "it'll come back... eventually" syndrome.

No. They're analyzing the past and current trends for everything and ANYTHING that could POP tomorrow - no matter where it is.

Be it energy top stocks to buy, banking and financials, precious metals, technology stocks, retail, fast food, you name it, and they're covering it.

For example:

They were the investors who knew, as the financial sector's collapse was set in stone and mass layoffs across the U.S. ensued, many Americans - seeking protection - would set the firearms industry ablaze.

And here's Smith & Wesson compared to the Dow:

I don't care what your opinion on the mass buying is. The fact remains that both of these companies are absolutely on fire. And every investor who saw it coming is sitting on a small fortune right now.

And they're not just looking for opportunities where companies are poised to go up. These slick traders are cashing in on the flocks of companies whose share prices are dropping like birds at a Nebraskan pheasant shoot.

They're successfully turning this "crisis" into the biggest cash-cow of their investment careers. Collecting gains of... 70% in a single day as American Express declines... 38% inside of 6 days as Equity Residential prices slid... 68% in 12 days as Prudential Financial tumbled... etc.

The list goes on... for about five pages. But you get the idea.

And the amazing part is, these investors aren't taking super-risky "short" positions or margin calls where they need to cover their losses for the full value if things don't pan out.

In fact, all they need in most cases is a few hundred dollars to get started.

That's because they're taking advantage of one of the least understood - yet most profitable - investment tools around... options.

And in this market, options plays are where the big, rapid gains are coming from.

In fact, Thanks To Not Being Pigeonholed And Open To Playing Options, Just Loosely Following Ian's Trading Advice For The Past 4 Months Could've Rapidly Turned $5,000 into $31,357.08

This is where his trading philosophy of puts and calls excels.

It's also preciesly why you need to be trading stocks right now instead of strictly investing in "buy and holds." You see, with the right trades...

You don't need to start with a lot of money to make a fortune in the market... You don't need to have all your savings tied up in multiple investments for several years either... You don't even need to find dozens of trades every year.

In fact, even though Ian's opened and closed 84 trades since May 2008 - each averaging a 82% gain - all you needed to make more than six-times your initial investment was to loosely follow four of them.

Take the following REAL scenario for example:

Trade #1

On January 5th, Ian shot this amazing alert to his readers:

It's really nice to have such great readers. And I'm not just saying that to butter you up. My inbox is usually full this time of week with plays you want me to look at.

Just yesterday, for instance, one of you e-mailed me about SunPower (SPWRA) downside, but I missed recommending it, because the e-mail was opened so late in the day... and Yahoo e-mail sometimes doesn't work so well.

But that doesn't mean there aren't more opportunities to go short the solar market. Sure, solars got a nice pre-Obama inauguration run, but the party may be over as the group faces weak consumer demand and poor credit markets.

JPMorgan seems to agree, recommending a sell of solar top stocks for 2010 on expectations of bottoming later in the year. They also warned investors not to expect a recovery in solar stocks on a broad economic rebound, as "solar subsidies may have peaked in 2008 when Germany and Spain primarily drove demand."

Worse, JPMorgan mentioned that a tight credit market "bring the alternative energy industry to a screeching halt if access to capital is not made more available."

One company that could continue to fall nicely for us is Energy Conversion Devices (ENER), which we'd recommend playing the short side with. The best way to play this is to buy March 2009 25 puts (EQIOE) up to $4.60.

Again, this entry price is being set high so that all of you can get in.

Good Investing,

Ian L. Cooper

Options Trading Pit

The timing was perfect. Take a look at what happened to the share price shortly after he issued the put.

Amazing!

And just eight days later, they sold their positions for a rapid 38% gain, turning every $5,000 into a cool $6,900.

Trade # 2

Then, on February 3rd, he issued this urgent alert:

Wynn Resorts (WYNN) just broke below double bottom support. At this pace, it could test lows not seen since 2005. As we said earlier, casino stocks are acting like they're going to continue falling hard, as Las Vegas media talk about how Vegas travel numbers are way off thanks to a pullback in discretionary spending.

Two weeks later, like clockwork, his readers dropped out of WYNN after collecting a generous and quick 26% gain.

Now every $5,000 his investors loaded in were worth $8,694... from just two trades!

And it didn't stop their either.

Trade #3

The very next day, he urged his traders to buy puts on Prudential, saying...

We've got a falling knife on our hands, and the stock is looking as if it'll re-test the $13 level before (hopefully, for us) plunging to the single digits.

It was dead on.

Less than two weeks later, his group of investors (which you can now become a part of) were cashing out after collecting 57.5% gains.

By this time, everyone was sitting on $13,693.05 - from just $5,000 and three trades!

Trade #4

Once again, the very next day, on March 10th, he alerted his investors to a call in the financial sector of all things!

The recommendation was simple - and a little ballsy. But he knew what he was doing.

Buy June Calls on Financial Sector SPDR.

Within ten days, the simple option paid out 129%

In other words, investors following Ian's advice on these four trades since the beginning of the year turned every $5,000 into $31,357.08.

A $10,000 stake would be worth more than $62,714.17 - within four months!

Of course, as you can imagine, you don't even need that much to start enjoying the rapid gains that Ian's been showing his investors for almost a decade now!

And I haven't even mentioned the big winners that Ian's been raking in!

Gains like, 242% gains from Coca Cola in 39 days... 113% gains from JA Solar inside of 7 days... 208% gain from Lehman Brothers within 4 days... 157% from iShares in 6 days... you get the picture.

All in all, if you include every trade he's issued over the past five months, Ian's made his investors...

... Twelve Times Their Money - In Five Months!

Imagine how quickly you can compound your wealth with gains that large - gains that fast - again and again.

That's the sort of hit-and-run excitement you'll get when you take us on in the "Fifty-Trade Gauntlet" by enrolling in the Options Trading Pit. You can make a fortune in several rapid trades.

And starting today, we're going to give you at least 50 more of these monsters, by April 15th, 2010.

But Just How Can I Be So Confident That You'll Make At Least 50 Double-Digit Trades That I Can Risk Putting $2,000,000 On The Line?

Here's why: Ian Cooper has spent the better part of the past decade perfecting the art of trading options for triple-digit gains.

Over that time, he's shown thousands of investors exactly how to exploit carefully targeted market sectors for lightning-fast short-term gains... gains that prove to be several times larger than simply buying stocks alone.

It's his phenomenal track record of triple-digit, short-term winners that put Ian in such high demand from mainstream outlets such as Investor's Business Daily and Forbes... and on investment shows such as Money Matters with Barry Armstrong and On the Money with Mike Stein.

Truth is, people who follow Ian Cooper's advice make an immediate killing almost every time he alerts them!

And while millions of Americans have been in an absolute panic over our current financial crisis... Ian and his readers have been consistently raking in some amazing gains.

In fact, the volatility we've seen in the markets over the past twelve months is actually perfect for options traders like Ian. It "turbocharges" the profit opportunities and delivers winners much faster than in the "old days" of two years ago or more.

And the beauty of it all is that Ian's readers are just everyday Americans like you and me who have refused to become victims of the U.S. financial crisis... and have decided to take their investment future into their own hands.

People like Neil M., who recently used one of Ian Cooper's recommendations to collect $4,195 after a single trading day...

Or Bruce H., who collected an extra $5,000 inside 13 days by following Ian's advice...

Or Brian A., who, after months of following Ian's recommendations, turned an initial $10,000 into an astonishing $450,000!

And thanks to the massive fluctuations in the markets, for Ian and his readers, the fast money's rapidly turning into the easy money.

That's why I'm not the least bit worried about him being able to deliver to you at least 50 trades by Tax Day of next year.

But before I share with you how to get started today - and the clock is ticking - let me quickly reiterate what it is that makes Ian head and shoulders above virtually every other options trader around. You see...

Not a Single Recommendation Is Released Unless It Has the Potential for Short-Term Gains of 100% or More

So what is Ian Cooper's "secret" to making a killing for his readers with carefully selected options trades?

The truth is... there is no secret - just some good, old-fashioned, roll-up-the-sleeves research and analysis.

And fortunately for you - Ian handles all of the heavy lifting.

He sifts through general market analysis. He looks at the bigger picture. He finds what sectors will benefit from any situation. Then he scrutinizes hundreds of potential opportunities for his readers to invest in.

Once the initial analysis is complete, Ian then incorporates four specific indicators, including Bollinger Bands, W%R, candlesticks, and the news.

Using just these four, Ian can call for tops and bottoms on indices, as well as individual stocks.

And that's just the beginning.

After sorting through hundreds of opportunities each week, Ian identifies the "best of the best" using his time-tested methods of analysis. Then... Ian goes one step further, insisting on providing his readers with only those opportunities that have the potential for explosive growth.

Imagine - instead of only pulling in marginal gains on top stocks 2010 that do well, say an 18% gain in 23 days, you could be sitting on 140% gains on the same stock during the same period!

All thanks to the "magic" of options trading.

Now I know what you're thinking.

Isn't Options Trading Highly Complicated?

The truth is, it's actually much easier than you might think. And Ian goes to great lengths to explain to his readers every step of every trade.

And to make certain you know exactly how everything works, Ian has prepared several special reports with easy to understand explanations of all of his jargon so you can follow along with everything he might alert you to.

They're called:

Understanding Options for Maximum Gains... an easy-to-understand guide to successfully profiting from options.

How To Secure Long-term Profits with LEAPS

The Bear Market Baron's Guide to Options... a hands-on guide to making a fortune, even when the markets are crashing.

How To Lock in Huge Gains by Going "Greek"

And every single one of them is yours - absolutely free!

All you have to do is take this rare opportunity to challenge our work... and put it to the ultimate test by signing on to the Options Trading Pit and enrolling in the "Fifty Trade Gauntlet."

But before you scroll down and click the subscribe now button, I have to warn you...

This fast-paced trading is unlike anything else that we offer. And it certainly isn't for everyone.

In other words, as a result of this ridiculous market we're in right now - Ian is issuing alerts rapidly... and as you've seen, sometimes they're only open for a day or two.

So it's impeditive that all members of the "Fifty-Trade Gauntlet" are able to act quickly to get the biggest gains.

In and out. Take the profit and run. That's precisely the game plan that's made this service an incredible success in the first place.

And that's exactly how we're able to make such a bold offer.

Of course, if the number of trades bothers you - maybe over 100 this year - then this service simply isn't for you.

But if you're like most Americans and want to gain more than all the money that you've lost in this market back, I urge you to join now.

An Exclusive Options Opportunity Unlike Any Other

Unfortunately, the number of investors who can sign up for our Options Trading Pit and take us on in the "Fifty-Trade Gauntlet" is strictly limited.

In order to make sure every one of our subscribers has the ability to get maximum value out of each recommendation, membership will be strictly limited to 2,000 seats.

And with only a few seats remaining, it's important that you act quickly if you'd like to get in.

Why?

You see, we don't want 5,000... 10,000 people buying the same stock. If we allowed an unlimited number to join, we could easily push the stock up several hundred percent. That would be a disaster.

That's why we have a strict limit on membership.

But if you're one of the lucky investors that lands a spot, you can expect that you'll see at least 50 double-digit recommendations this year in Options Trading Pit. That's a lot of trades. But we don't plan on holding these positions very long. In and out. Take the profit and run. That's what we'll be doing.

And like I said, if the amount of trades bothers you, then I'm sorry, but this service isn't for you.

Lightning-Fast Profit Alerts

One more thing: your trading alerts will be sent to you via e-mail directly from Ian Cooper.

Options Trading Pit is not a fax service - instead, Ian uses e-mail because we want everybody to receive the trade at approximately the same time.

And just so that you don't have to recheck your email 10 times a day, we're also offering Options Trading Pit updates VIA live RSS feeds - so you can get the alerts the split second they're available! (We'll even give you simple, detailed instructions on how to set up and use your RSS feed within a matter of minutes.)

If you're comfortable with what I've shared so far, then I urge you to join us today.

Again, I know this style of trading isn't for everybody. But by signing up for the "Fifty-Trade Gauntlet" by joining the Options Trading Pit, you're elevating yourself into the top tier of the trading community - light years beyond what most unfortunate American investors can handle.

So if you're interested, welcome aboard.

How To Get Ian Cooper's Recommendations Sent Directly To You - Starting Today!

When you fill out the membership form, you'll immediately receive a confirmation and a welcome letter, as well as a link to the Options Trading Pit site, where you'll be able to access every single one of the positions Ian issues... 24 hours a day.

We'll also rush you Ian's latest report, Understanding Options for Maximum Gains.

And that's not all!

As I mentioned a moment ago, if you're able to enroll into the "Fifty-Trade Gauntlet" before the doors close, you'll also receive Ian's four crucial reports.

So just to recap, by signing on today, you're gaining:

Enrollment into the "Fifty-Trade Gauntlet" - your chance to collect $1,000 if Ian Cooper doesn't uncover at least 50 double-digit trades by April 15th, 2010.

Full access to the Options Trading Pit website - giving you full, unrestricted access into every single trade Ian's ever issued and will issue.

Live RSS Feeds just to make sure that you're able to get the latest trades the split second they're released.

4, easy to understand reports where Ian breaks down in human-terms exactly how options trades work with:

Understanding Options for Maximum Gains... an easy-to-understand guide to successfully profiting from options, How To Secure Long-term Profits with LEAPS, The Bear Market Baron's Guide to Options... a hands-on guide to making a fortune, even when the markets are crashing., How To Lock in Huge Gains by Going "Greek"

And, of course, you'll be placed on the e-mail distribution list so you can begin receiving Ian's trade alerts - which can arrive any time of the day, from 9 a.m. to 8 p.m.

Now at this point, I'm sure you're wondering - with the explosive, triple-digit profit potential of every trade recommendation... the chance to collect $1,000, access to Ian's complete trading history with Options Trading Pit... plus his latest reports...

How Could You Possibly Afford A Subscription To Ian Cooper's Options Trading Pit?

First, let me reiterate one very crucial point.

This level of service is highly specialized. And the countless hours it takes Ian to find, study, and recommend just one of the calls or puts he uncovers - as you can imagine - takes a lot of time, expertise, and resources.

He doesn't draw top stocks to buy from a hat. He's not paid by other companies to recommend one over the other.

His secret is that he's an insomniac, sleeping just three hours a night.

The rest of the time, when other traders and researchers rest, spend time with their family, and take vacations, he's intently focusing on the latest news, studying the markets, and developing high-ranking contacts.

That is, however, precisely what it takes in order to hold a track record as clean as Ian's... a portfolio that scores investors like you the greatest option trades the market has to offer.

After all, I can't think of a single other trader on the planet who's collected cumulative gains of 4,343% since May!

And with just one of Ian's most recent trades, you could have turned $10,000 into $22,161 in just seven days. Again... that's just with one trade!

That being said, I've seen other "experts" billing themselves out for several thousand dollars a day - and their trading advice can't tread water next to the winners Ian shows you on a weekly basis.

So I wouldn't feel the least bit guilty charging as high as $5,000 a year for a membership to his advisory.

But I'm not going to go anywhere near that.

In fact, the normal membership price is only $999 a year - only I'm going to make you an even better deal than that.

"Fifty-Trade Gauntlet's" Special Pricing

If you enroll in the Options Trading Pit today, assuming there are still spots remaining, you can save a full 20%, and join for just $799 this year!

I know for many of you $799 is a big lump of money to take down, even considering that many of you have made hundreds of thousands of dollars following our advice.

So here's the deal. We're also offering a quarterly bill program. If you choose that method, you'll be charged just $250 every three months.

It's as easy as we can make it to get you on board.

Please keep in mind - we're capping Options Trading Pit's "Fifty-Trade Gauntlet" at 2,000 investors.

In addition, we want to make sure you're 100% satisfied. So, if for any reason you're unhappy with Options Trading Pit, you can get a full refund at any time before the end of the first month of your membership.

After that, the refund is prorated.

The "Fifty-Trade Gauntlet" Guarantee:

And if you sign on today, and we don't deliver at least 50 double-digit trades by Tax Day, 2010, we'll give you the entire following year absolutely free! That's a $1,000 value we're passing on to you!

Even if only 49 out of 50 reach double-digit gains, you'll still get the next year absolutely free!

But you have to act now. The few remaining seats for the "Fifty-Trade Gauntlet" and special pricing could be sold out in a matter of hours.

IPO Watch: Entropic Communications

In this day and age, we have so many machines―televisions, computers, telephones―to keep us entertained, but there is an increased desire for devices that have content compatibility, which isn't easy.  That's where Entropic Communications comes in.

The company designs semiconductors to handle multimedia home networks. It's a fabless semiconductor company, which means that another company handles the manufacture and distribution of the chips.  This reduces Entropic's capital requirements.  Because semiconductor equipment isn't cheap, the outsourced manufacturing more than makes up for the loss of operating control that goes along with it.  In April of 2007, Entropic acquired RF Magic, which had a complementary portfolio of home networking products.

Entropic's semiconductors are purchased by electronics manufacturers to put in televisions, digital video recorders, modems and other devices that pull video from coaxial cable.  In 2006, Entropic and RF Magic combined drew 31% of their $67.7 million in revenue from Actiontec Electronics, Inc., 23% from Motorola, Inc. (NYSE: MOT) and 11% from CalAmp Corp. (Nasdaq: CAMP).  This customer concentration forms one risk, but that's less worrisome than the risk of cable companies and customers standardizing around a competing home networking technology, such as Ethernet, xDSL, or WiMax.

Neither Entropic (founded in 2001) nor RF Magic (founded in 2000) is profitable, which is no surprise given the early-stage nature of the underlying technologies.  The combined companies raised more then $124 million from five different venture capital firms.  None of these are selling shares on the IPO and they'll control 36% of the company after the IPO, which values their stakes at $275.7 million.  Some shareholders, including some managers and small venture firms, are selling all or part of their holdings in the IPO.  Most of the proceeds will go to general corporate purposes, keeping the company going until its products catch on and it stops losing money.

This is a risky deal.  The company is losing money, and it's unclear if its technology will be the standard for home networking.  (For that matter, it's not even clear if coaxial cable will remain standard, given the customer service record of the average cable operator.)  However, the venture capital firms are waiting to cash out, which is a strong indicator of good results ahead.

Current and recent IPOs:

CreditCards.com (www.creditcards.com; Nasdaq: CCRD; this week; $409.4 million post-money valuation):  Shopping around for the best credit card deal out there?  CreditCards.com is the place to go.  The company makes its money from credit card companies and related marketing firms, which pay a fee for each qualified application received through the site. It's a low overhead business, with most of the expenses going to sales and marketing. In 2006, the company made $18.6 million in net income on $42.9 million in revenue. Of course, both supply and demand for credit is drying up, so 2007 and 2008 might not be so great.

American Public Education (www.apus.edu; Nasdaq: APEI; Nov. 8; $597.6 million market cap):  Despite what you might think from the name, American Public Education is not a K-12 school, nor is it publicly supported. Instead, it operates American Public University and American Military University, private, online institutions that specialize in programs for U.S. military personnel, who have complicated schedules and who travel frequently to remote places.  In the first six months of 2007, the company had 7,400 students, took in $30.2 million in tuition revenues and generated net income of $3.6 million.  The challenge is turnover; the colleges have open enrollment and almost 30% of those who start drop out.

Upcoming IPOs:

NameMedia (www.namemedia.com; Nasdaq: NAME; pricing not yet scheduled; expected to raise $172 million):  NameMedia has just filed its IPO, so it probably won't be priced until after New Year's.  But it's an interesting deal.  The company is an Internet domain-name registrar, brokering existing URLs and handling the purchase of new ones.  It operates BuyDomains.com and Afternic.com and has distribution agreements with such other registrars as GoDaddy.com and Register.com.  Although domain names are less important than they once were, given improvements in search technology, they still matter, and that's why NameMedia is on track to rake in over $40 million in revenue this year.

CampusU (www.campusuinc.com; Nasdaq: CMPS; Dec. 3; $77.3 million post-money valuation):  This e-commerce company started with a website selling technology and software to college students under the www.campustech.com URL.  It's also branching out into other sites with content that might interest students, generating ad revenues.  The problem is that CampusU has constantly lost money, and it's unlikely that college students have content needs that aren't already being met.

The information that you just read came from IPO Watch, a section of SmallCapInvestor.com, which is a destination for individual investors seeking independent information on small and micro capitalization stocks. Daily reporting on Russell 2000 trading, profiles of new companies each trading day (Small Cap Spotlights), the low-down on Chinese Stocks (Check on China)… This is just a small sampling of the ever-changing content that is available for free at SmallCapInvestor.com.  To learn more or to register for free access, please click here.

Small Cap Investor Spotlight : The Heat is ON

by Melvin Pasternak, SmallCapInvestor.com

"Don't use up all the hot water!"

If you've ever uttered this, and many of us have while impatiently waiting to shower in the mornings, then your torrid water saviour might well be LSB Industries, Inc. (AMEX: LXU), formed in 1968.

The Oklahoma City-based small cap has two core businesses: chemicals and indoor climate control, but the key to the company's growth are water source heat pumps (WSHP) and renewable energy geothermal heat pumps (GSP).  Sales of these pumps surged 58% to $134 million in 2006 from 2005 and so far in the first nine months of 2007 have grown 30% from 2006 levels.

WSHP's are conventional cooling and heating units connected to a central HVAC system with a cooling tower and small boiler.  They help move heat from zone to zone in a building and reduce both energy use and cost.  LSB has a 43% U.S. market share for this pump.

Revenues for LSB Industries are split almost equally between the chemicals and indoor climate control segments: For the latter, LSB targets specialized niches of HVAC (Heating, Ventilating and Air Conditioning) building systems. The company enjoys a 41% U.S. market share in hydronic fans coils (air-handling units used in large commercial buildings).  Its installed base of three million units includes placements in such New York City landmarks as Rockefeller Center and the Trump Tower.

In May 2007, Business Week named LSB one of its 100 hottest growth companies.  The next month, the shares were added to the Russell 2000 and 3000 indices, making LXU a "must-have" stock for funds that track these indices.

With a growing emphasis on green energy, LSB is the nation's leading geothermal heat pump supplier with a 43% market share.  Roughly 3/4 of the energy budget for a single-family house is consumed by heating, air conditioning and generating hot water.  A geothermal HVAC system replaces a conventional source such as a natural gas furnace and dramatically reduces heating costs since the earth provides "free" energy.

Geothermal makes use of the fact that the earth absorbs roughly half of all solar energy: in a geothermally heated home, underground loops are installed below the surface, filled with water and sealed.  In winter, water inside the loops absorbs heat from the earth, is compressed, moved to a central unit and sent out to the house as warm air.  The opposite occurs in summer.  The system saves roughly half compared to a standard natural gas furnace and although geothermal is more expensive to install than conventional systems, the payback period is estimated by LSB to be three years.  Aside from use in residential homes, Geothermal can also be used in commercial structures.

Barry Golsen, vice chairman and president of LSB says that the yearly HVAC market in the United States is about six million units.

"Right now there are only about 40,000 units that are geothermal," Golsen says. "That's less than 50%."  His conclusion: there is "enormous upside potential."

In additional to indoor climate control products, LSB runs a chemical division.  While the chemical business is a source of modest profits, it is relatively slow growing.  For the first nine months of 2006, the small cap recorded sales of $201.4 million; this amount increased to only $222.4 million for the comparable period of 2007.

LSB is the leading marketer of concentrated nitric acid in the United States, a product used to create flame-resistant fibres.  It also produces sulphuric acid employed in pulp and paper manufacturing and metals processing.  Customers include such blue-chip firms as International Paper Company (NYSE: IP) and E.I. du Pont de Nemours & Company (NYSE: DD).

Thanks largely to its climate-control products, LSB has shown excellent top and bottom-line growth.  For the first nine months of 2007, LXU's sales zoomed to $451.8 million from $368.2 million, an increase of 23%.  Profits of $42.3 million were an incredible 231% ahead of 2006's comparable figure of $12.8 million.

Wall Street has noticed.  The stock opened for trading in January 2007 under $12 and reached a high of $28.85 on Nov. 5th.  It has since pulled back to the low 20s, but that gain still represents nearly a double.  Despite this advance, the shares are fairly priced.  LSB has a price-to-sales ratio of just over 0.8.  A price-to-sales ratio below 1 is thought of as reasonable.  The trailing P/E ratio is 12.3, which seems downright cheap for a stock whose earnings have nearly doubled thus far in 2007.  LSB has a solid balance sheet with a moderate debt to equity ratio (1.41:1) and nearly doubled its shareholder's equity in the past nine months.

From a technical analysis perspective, the stock is in a very strong uptrend.  A long-term trend-line drawn from the late 2006 low of $4.84 currently intersects the chart near $19.50.  As long as LSB stays above that threshold, the chart is healthy.

While LXU's story is positive, there are, of course, risks.  The company is exposed to the slowing housing market.  A recession would reduce the demand for its specialty chemicals.  Still, LSB Industries (LXU) presents an intriguing combination of solid earnings, reasonable valuation and growth based on the geothermal bandwagon.

Catching Falling Knives

During the past week, the Dow, S&P 500, and Nasdaq Composite each broke down below the neckline of head and shoulders chart formations. Such a break is generally thought to be a fairly strong bearish signal, particularly when combined with weak fundamentals such as in the overall economy including things like high unemployment and low consumer sentiment. While no chart formation or, for that matter anything else, is ever a guarantee of market direction, it can be something that may be helpful if we are aware. I write that because when I make directional trades in a best stock for 2010, I try to make entries that are consistent with the market and sector direction. The idea, for me, is to try to give myself an edge since obviously when a market is rising most top stocks for 2010 can also be expected to be rising and, naturally, the same is true with respect to sectors. The opposite would also be true in that we could expect most top stocks to be down when the market is down. In that circumstance, of course, my bias for directional plays would be bearish.

One of the things I have seen with many traders is that they are so anxious to buy a best stock that they make their entry when the price is on the way down. That phenomenon is affectionately known as trying to catch a falling knife. The problem they face is that no one knows how far "down" actually is. For stocks like Bear Stearns or Enron or Lehman Brothers or a host of others "down" wound up being zero. Back in February or March a friend asked me what I thought about buying General Motors and I shook my head from side to side. But it's GM, he said, it won't go under; it has to come back. We have to remember that simply because it was a good company or simply because a company is good now doesn't mean that the stock price will go up. All too often we confuse a good company with a good stock and the two do not necessarily go together. General Electric (GE), for example, has long been a good, even great, company that traded in the $30 and $40 area. This past March it hit under $6 a share. Those who bought at $25, $20, or $15 on the way down were trying to catch that falling knife. I can hear them saying: "It'll come back." Maybe. Probably. But when?

Instead of catching that falling knife, if we like the fundamentals and like the company, why not exercise a little patience and wait until not only it signals a return to an upward move, but also wait until the market and sector head the right way as well? That movement may miss catching the absolute bottom, but it is just fine in my book to take a bite out of the middle once the market, sector and stock suggest that you have a little edge.

I certainly won't argue with those who try to catch those falling knives because at times their timing is near perfect and among the scars on their hands will fall the knife handle just before things turn. However, a very successful and very experienced trader once told me that we only get one perfect high exit and one perfect low entry in our lives and I know I've had mine so, for me, taking a bite out of the middle is just fine.

Top Stocks For This Week:

MCRI (Monarch Casino & Resort Inc.)
MCRI broke above a resistance Friday and has been moving up for the past three days. I considered an entry on Friday, but was a little concerned in that the upward movement was accompanied by falling volume and that often is a danger sign. Since we are in the midsummer doldrums, that may not be as significant as I would ordinarily suspect. While I like the price movement, I decided it would be worth waiting until next week to make my decision.

DJX (1/100 Dow Jones Industrial Aver)
The Dow Industrials 1/100 Index, along with the Dow, broke down through support and broke through the neck of a head and shoulders. I am looking at the possibility of entering a put debit spread, perhaps buying the Sept 85 puts and selling the Sept 80 puts for a debit around $2.60. The breakeven, excluding commissions, would be around $82.40 and the index stands below that now. The maximum potential return at expiration and assuming no adjustments, again excluding commissions, would be $2.40 or a potential return on risk of just over 92% if the index closed below 80. I should note that I do currently have a debit spread in my own accounts on DJX.

SWK (The Stanley Works) 
SWK gapped up at the open on Friday morning and moved above a resistance level on reasonably high volume. It looks like it may have a couple of bucks to the next upside target, but I am keeping in mind that a bullish move here may be contrary to general market direction so I will keep a fairly tight stop if I enter early in the week.

GE (General Electric Co.) 
Our Success Trading Group members entered a position in General Electric Co. (Ticker: GE) this week. We like GE at its current price for new positions.

Our Success Trading Group has closed 52 Wins in 52 Weeks and over 370 winning trades with a 95% winning track record on our Main Trade Table.

DRI - Darden Restaurants Inc. is currently trading at $32.36. The August $32.00 Calls (DRIHL) are trading at $2.05. That provides a return of about 6% if DRI is above $32.00 on expiration Friday in August.

 

Money Tsunami Capsizes the Global Economy

I was surprised that Barron's reported that the banks show their Total Reserves fell from $896 billion to $848 billion, which is a simple math problem that seems custom-made for my abilities in that regard.

And to prove it, I deftly subtract one from the other and get � voila! � $48 billion, which is not only factually correct, but more than enough to quiet any naysayer saying, "Nay, I say!" as regards my computational skills.

Then, to add that essential touch of surreal whimsy that seems to permeate all things fiscal and monetary these days, I additionally note that not only did Total Reserves go down in the banks by $48 billion to $828 billion, but I will note that Total Reserves one year ago were a miniscule $41 billion! Hahahaha! They fell last week by more than they totaled one year ago! Hahaha!

In fact, Required Reserves are only now starting to rise from "nearly zero" to "slightly more than zero," and banks are now "required" to have a miniscule $56 billion in reserves against their zillions of dollars in assets and liabilities, while meanwhile, a mere couple of lines up on the same Barron's page, the Federal Reserve reports that "Reserves F. R. banks" went down by an astonishing $125 billion last week to $692.6 billion! Wow! Big move!

These huge tsunamis of money, joining all the other tsunamis of money sloshing back and forth around the banks and the world, around and around, getting everything all wet, are not only ruining the patio furniture and making a mess of everything, but are such that even the World Bank has revised its estimates, and now says the global economy will contract by 2.9% this year instead of their previous forecast of 1.7%, which is an error of 41%.

Well, when I show up at an executive board meeting sporting a 41% error on a forecast I made just a few months ago, all I hear is people all demanding that I be fired or killed for bringing the company to the edge of bankruptcy and ruination, which of course I seize upon to show that precision economic forecasting is a ridiculous exercise everywhere you go, especially since economics is, just as the Austrian school of economics always said it was, human behavior with a huge random element, which is not even to mention Taleb's Black Swan Hypothesis of unforeseen catastrophic events making a complete mockery of using bell-curve probabilities to forecast long-term expected results.

It's like expecting, but not getting, what you would expect from the statement from the Federal Open Stocks Market Committee after their recent meeting, which apparently showed that they are incredulous of the generally low level of intelligence of Americans, which they demonstrated when they said, "As previously announced, to provide support to mortgage lending and housing stock markets and to improve overall conditions in private credit stock markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year," which I figure would be $238 billion a month for the remaining six months of the year, which would normally make my heart start fibrillating with fear at the inflationary implications of such irresponsible monetary policy.

My snotty interpretation is that by saying "as previously announced" they mean, "we say again so that you can't say we didn't tell you that you morons are sitting there while we at the Federal Reserve are going to buy up the losses of our friends at a rate of $12,500.00 for every one of the 100 million non-government workers in the USA, which is admittedly a lot of money at $12,500.00 each, but which is almost certainly grossly understated so that we are going to keep coming back for more and more and more! Hahaha! Suckers!!"

Whether or not they meant that, it turns out that I was right, and this is all part of some nefarious plan, as they later slipped in, almost as an afterthought, that "In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn," which made my eyes pop out painfully when I realized that this means that we are suddenly talking about buying up almost $350 billion a month in worthless assets and handing over the cash to the lucky current holders (who are making out like bandits!) of those toxic assets, which means that these guys will suddenly have a lot of cash in their pockets looking for a home, and the prices of something, or some things, are going to go up as this $350 billion of new cash Per Freaking Month (PFM) gets plowed into "investing" in some asset or another.

This is where some people think it gets tricky, but it is not. This is, in fact, the easy part, as all you have to do is buy gold, silver and oil when your government is acting so impossibly stupid.

At least, that is the lesson of the last 4,500 years of history! And like the saying goes, "The race is not always won by the swiftest, nor the battle by the strongest, but that is the way to bet!" which is just another way of saying, "Whee! This investing stuff is easy!"

There's More to Be Gained on the Way Down

What financial crisis? More like financial opportunity.

The more fear in the air on Wall Street, the more excited you'll get once you read about the Fear Factor strategy below…

And until tomorrow at midnight, you can take advantage of this unique strategy for just half price

The Fear Factor Strategy:For every $1 these top stocks tank, you could pocket at least $3… and as much as $7

While the S&P 500 crashed 43.3%… this strategy has bagged average 102.9% returns

Since the start of the financial crisis, the Fear Factor strategy has crushed every asset class ― stocks, bonds, gold, you name it

It's proven to turn $1,000 into $2,619… $3,383… even $5,718

To get in on the next Fear Factor play, you have to act before Midnight on Monday, July 13.

I love it when panic grips Wall Street.

The more fearful they get, the more greedy I get.

Traders can send a retail stock tanking 45%… and you can collect a gain of 238% from the same exact move.

Think about that for a minute.

For every $1 someone else loses on that stock, you pocket more than $5.

Or a bank stock. It gets whacked 39%. You gain 220%.

So for every $1 someone else loses in a panic, you calmly collect nearly $6.

Months before Lehman Brothers blows up, the stock plunges 68%. You bag a gain of 462%.

Every $1 some poor guy loses during that time because he can't keep his head, you make nearly $7 without breaking a sweat.

That's the Fear Factor strategy in action.

Let me explain a bit. I don't profit from other folks' misery.

I simply figured out a way to tell when a company is set to crumble.

And then I show you how to profit from the inevitable fall.

It works for me. It can work for you.

No fuss. No effort.

The Fear Factor's strategy worked time and again since the financial crisis got cranked up.

I've used it to close out just 23 plays in 18 months. And the average return is 103%.

That's right ― it's the same as doubling your money ― 23 times in a row!

Compare that to a 43% loss in the S&P 500.

Every $1 somebody lost on an S&P index fund? You could've made more than $2.

I don't know of any other method that makes more money, more reliably, in this crazy market.

And the concept is so simple:

1. Zero in on stocks set to crash and burn

2. Then execute the Fear Factor strategy

It's proven to work over and over again.

How the "Fear Factor" Makes You Money Whenever You Put It to Work

See, falling top stocks to buy have something I call a Fear Factor Multiplier.

That's not a made-up term. It doesn't describe a common figure like the price-earnings ratio. Or free cash flow. Or anything like that.

Instead, the Fear Factor Multiplier is your key to the profits you can make from top stocks to buy set up for a big fall.

No other analyst uses the Fear Factor Multiplier to generate gains this reliably. There's simply nothing else like it.

I'm thinking of a clothing maker. It has a Fear Factor Multiplier of 2.96.

What does that mean to you? It means every $1,000 invested turned into $1,666 in just over a month.

There's a retailer with a Fear Factor Multiplier of 5.28.

That means $1,000 turned into $3,383 in less than three months.

Lehman Brothers, before it collapsed, had a Fear Factor Multiplier of 6.94.

Translation: Every $1,000 invested turned into $5,717. In 77 days. Less than three months.

And if you had plugged in $10,000, you'd make $57,170!

The broader best stock market? It has a Fear Factor too. It's 2.38.

Every $1,000 invested using the Fear Factor strategy has turned into an average $2,029.

Just days after the start of the financial crisis, I started using the Fear Factor strategy. It exploits Wall Street's panic and paranoia to generate steady, reliable, stress-free gains.

How is the Fear Factor multiplier calculated?

I'll get to that shortly.

Right now, here's the important thing to know. The higher the Fear Factor multiplier… the more money you could have made.

Here's a sample of stocks, their Fear Factor multipliers… and how much money they could have made you following the Fear Factor strategy.

How the Fear Factor Delivers Triple-Digit Gains, Time After Time

What makes the Fear Factor strategy such a winner?

Simple: It exploits the fear that's gripped the markets since August 2007.

That was the month the financial system started going haywire.

Credit markets froze up. Mortgage lenders imploded. Hedge funds melted down.

The Federal Reserve ordered an emergency cut in interest rates on August 17.

And five days after the Fed acted, I told a select group of readers to begin executing the "Fear Factor" strategy.

They targeted stocks in some of the most vulnerable sectors of the economy. Banks. Homebuilders. Selected retailers.

Their first target: The regional bank TCF Financial.

Using the Fear Factor strategy, a $1,000 investment becomes $1,969 in just over eight months. Almost a double!

Even better: Another regional bank, PNC Financial.

The Fear Factor strategy applied to PNC turns $1,000 into $3,220 in just 109 days. Less than four months!

A vulnerable retailer of computer gear called Systemax?

The Fear Factor strategy turns a $1,000 investment into $2,733 in 104 days. Again, less than four months!

Their biggest haul? A bet on the fall of Lehman Brothers.

The Fear Factor strategy applied to Lehman transforms every $1,000 invested into $5,617.

That's the power of the Fear Factor.

I know the Fear Factor multiplier sounds mysterious. But in a few more moments, I'll tell you exactly what it means and how it's calculated.

Now… here's the most remarkable thing about the Fear Factor strategy.

The Fear Factor Strategy In Action…
Money-Doubling Gains Without
Constantly Trading In and Out

You already see how the Fear Factor strategy could have reliably doubled your money since the start of the financial crisis.

You've also seen how individual Fear Factor plays can make you three times, even five times, your money.

But get this. It's been 18 months since I put the Fear Factor strategy into action. And in that time, I achieved these results using the strategy on just 23 plays.

And yet, with 23 plays, I could have doubled your money 23 times. Even after you take a handful of losing plays into account. Average performance through the first quarter of 2009 was a gain of 102.9%.

And, the Fear Factory strategy has blown away stocks, bonds AND gold since I created it.

First, let's compare the Fear Factor track record to the performance of the S&P 500…

The Fear Factor strategy got off to a slow start in late 2007. The S&P held steady, while the Fear Factor strategy generated a modest loss.

But look at what's happened ever since. Every quarter has closed out with average gains of a minimum 72%.

And it's not just stocks that the Fear Factor strategy outperforms by a mile.

Look how it crushes the bond market.

Panicked stock investors have sought "safety" in Treasuries during the financial crisis. But even during bonds' best quarter in late 2008, the Fear Factor strategy did three times better.

How about gold? Gold has held up very nicely as a safe haven during the financial crisis.

But using the 23 plays of the Fear Factor strategy, you could have doubled your money. 23 times! Even factoring in the losing plays, the "Fear Factor" strategy delivered average gains of 102.9%.

Again, that's just with 23 plays over 18 months.

So executing the Fear Factor strategy won't take up a lot of your time.

You won't be on the phone with your broker every day. You won't be tracking performance on the internet every 15 minutes.

And you won't rack up a lot of fees and commissions.

So now you understand the power of the Fear Factor strategy.

Now I'm going to show you exactly how the Fear Factor multiplier is calculated… and how it can mean big, big money in crazy, crazy markets.

The Fear Factor Multiplier Revealed ―For Every $1 These Stocks Tank,You Could Collect $3… $4… Even $7

OK, I've made you wait for a full explanation for long enough.

It's time I reveal exactly what the Fear Factor multiplier is. What it means. And how it translates into the money you make.

It works like this.

For every $1 a stock falls in price, the Fear Factor Multiplier is the amount of money you could have made using the Fear Factor strategy.

So the retail stock I mentioned with a Fear Factor multiplier of 2.96? That was HanesBrands. For every $1 it fell in early summer 2008, the Fear Factor strategy delivered $2.96.

The retailer with a Fear Factor multiplier of 5.28? That's the fabric outfit Jo-Ann Stores. Every $1 it fell in late 2008 delivered $5.28.

Lehman Brothers? Recall its Fear Factor multiplier was 6.94.

So in the late spring and early summer of 2008, every dollar it fell could have meant $6.94 in your pocket. Nearly $7 for every $1 the stock tanked!

Remember, the higher the Fear Factor multiplier, the more money you could have made!

And don't forget the broad market, either. The S&P 500 crashed 43.3% from the onset of the financial crisis through the first quarter of 2009. The S&P's Fear Factor multiplier during this period? 2.38.

So if you invested an equal amount of money in all 23 of the Fear Factor plays over the last 18 months, every dollar would now be $2.38.

So you see the Fear Factor is a powerful strategy that can deliver you big, big profits.

But I have to be absolutely upfront with you.

There's a tragic catch to the Fear Factor. It means there's only one way you can make it work for you and generate reliable money-doubling gains.

Maybe you got excited reading about the Fear Factor strategy. But then you read that it involves options. Scary. Intimidating.

I'm here to put your mind at ease.

If you've never traded options before, Strategic Short Report is the best way I know how ― especially if you're just getting started.

Let me lay out five reasons why.

1. You won't place a lot of trades. That's not what I'm all about. I've generated my money-doubling track record over 18 months with just 23 plays. That's about one play every three and a half weeks. So if you want to get in on the action, this won't take up a lot of your time and energy.

2. You won't have to obsess about the positions. These are usually longer-dated options. That means they don't expire for several months out. So you don't have to check websites four times a day to see how they're performing. Of course you can if you like, but it's not necessary. I give you a comprehensive email update every Friday afternoon.

3. I'm with you every step of the way. Every new recommendation ends with the exact words you can read to your broker if you want to execute the trade. And when it's time to book profits, I'll let you know right away. Once again, you can have the exact words in front of you on your computer screen when you call your broker.

4. You're consistently beating the odds in the options market. Maybe you've read about how 80% of options positions expire worthless. Well, that's true, and maybe that's scared you out of the options market till now. But that's never happened with one of my positions. A handful have lost money. But the biggest loss I've booked through the first quarter of 2009 is 20%. Compare that to…

5. All the money you can make! Go back to those charts showing how the Fear Factor strategy has demolished top stocks for 2010, bonds and gold since the start of the financial crisis. Every $1,000 invested in the Fear Factor strategy is now $2,029. And some of the individual plays have delivered gains of 173%…224%… 238%… 334%… even 461.7%.

I've prepared a special report just for you ― the options newcomer ― ready to use the Fear Factor strategy to double your money in 18 months. It's got everything you need. Who to call, what websites to visit, the works.

It's called The First Timer's Handbook: Using Options to Generate Triple-Digit Fear Factor Profits. It's yours FREE with your subscription to Strategic Short Report. Read on to learn how to get your copy.

The Tragic Catch to the Fear Factor ― and the Only Way You Can Use It to Generate Steady, Reliable Triple-Digit Gains

Maybe you've figured it out already.

The catch is this. The "Fear Factor" strategy isn't something you can do on your own.

You can't just pick a random stock, calculate its Fear Factor multiplier, and execute the Fear Factor strategy if the multiplier looks high enough.

After all, you'd have to know how much the stock was going to fall.

And how much money you could make by applying the Fear Factor strategy.

You could never know those things in advance for certain, but how in the world would you go about estimating the potential?

You'd have to crunch dozens of numbers. Pore over a company's balance sheet and income statement. Study its filings with the SEC.

And you'd have to consider the bigger picture. The Federal Reserve. Monetary policy. Political decisions in Washington. And how all those things affect both the company and the sector it competes in.

Sounds overwhelming.

To understand a company's numbers, you'd need to be a chartered financial analyst.

To understand the bigger picture, you'd need a rock-solid grounding in macroeconomics.

But you don't need any of those things to execute the Fear Factor strategy and bag average gains of 102.9%.

Because I do all of that for you.

All you have to do is read and follow my Fear Factor recommendations.

It couldn't be easier. I've closed out only 23 plays in 18 months.

So it doesn't take a lot of time, or energy, or extra money.

No obsessively checking on your positions eight times an hour. No endless commissions to fork over to your broker.

In a few moments, I'll show you some concrete examples of how I pulled off some of the incredible Fear Factor results ― results that can turn $1,000 into $2,619… $3,383… even $5,718.

I'll walk you through it step-by-step. When you see the Fear Factor strategy in action, you'll see how sensible, how logical, and how understandable it is.

That's because it uses the same common-sense principles that make investors good money during bull markets. Only it turns those principles on their head to make even better money during bear markets.

Most of the time, I recommend my readers do it using put options.

Don't let that scare you off if that's new to you. In a few moments, I'll show you five ways I'll help you use the Fear Factor strategy to make doubler after doubler.

So by now, you're probably wondering about my background. What I bring to the table with the Fear Factor strategy. So allow me to introduce myself.

How I Developed the Fear Factor Strategy… and How It Can Double Your Money 23 Times in 18 Months

My name is Dan Amoss.

And I'm one of those lucky people who feel like they're born to do the work they do.

Everything that's happened in my life has led me to where I am now ― executing the "Fear Factor" strategy to double the money of people just like you.

I developed an early interest in business and finance. So I was admitted to a good school with a good reputation for teaching those things.

That's not unusual. Here's what is.

I started college around the time the dot-com boom started to bust.

My classmates hardly noticed. No offense to them, but they were too busy partying. So they had enough trouble just learning how to read a company's balance sheet and income statement.

For me, it wasn't just enough to ace those things. I got really curious: How did the tech bubble get so big? What were the root causes?

I sought out tons of information in books, in journals, and online. (In fact, I was one of the earliest readers of Bill Bonner's e-letter The Daily Reckoning.)

At this moment, I got a really lucky break. The first of three, actually.

The Three Lucky Breaks That Led Me to Create the Fear Factor Strategy ― and Give You the Chance to Double Your Money Over and Over

See, I majored in business. But I took ec