First of all, ETFs, like most investment pools, charge an annual management fee – typically disclosed as the “Management Expense Ratio”. As we all know, the fee is expensed out of the fund, which means that if all else stays the same, the value of the fund will slowly decay by the MER every year automatically. The flip side is that this is an inherent bias favoring the short side. If you are short an ETF, you are essentially getting paid an annual fee for doing nothing.

Let’s look at a simple example. Let’s say you are bearish on the Eurozone and would like to bet against the Euro spot rate. Why go through the trouble of opening an FX account and sell Euro there, when you can instead short the Euro currency ETF (FXE), where you will get paid the fund’s MER of 0.40% on top of speculating on Euro’s demise? Perhaps by habit. But as long as FXE is not trading at a significant discount to NAV, there is no reason why one would choose to short the underlying rather than the fund.

These single asset ETFs are godsend. Yes, regular mutual funds charge management fees as well, but none have the ease of shorting like ETF. The same situation applies for any single currency ETFs, as well as precious metal ETFs and commodity ETFs. Oh – did I mention those crazy commodity ETFs?

That brings us to the second reason why exchange traded funds provide such great shorting opportunities. By now it is clear that contango – a phenomenon where contracts for delivery of commodities far in the future are priced higher than contracts for delivery in the near future – is the bane of futures-based commodity ETFs.

A prime example is The US Oil Fund (USO), where the objective is to track the WTI oil price by holding future contracts of the nearest delivery. Of course, the fund doesn’t actually have the means and storage space to take delivery on several million barrels of real oil. So as the contracts approach delivery date, the fund is forced to roll them to the next delivery date by selling the existing contracts and buying the following month’s contracts, thus paying the difference caused by contago (AKA “roll yield”).

Other futures traders know this, and they are able to profit from front-running USO by buying next month’s contracts ahead of the fund, thus exacerbating the fund’s cost of rolling the contracts. At inception, USO started out with near 1:1 ratio to the price of oil, but after years of underperformance, it is now trading at around $38, a staggering 57% discount to the actual oil price.

Now I am by no means advocating shorting oil at this point in time or ever in the future. But if your own macroeconomic view and investment strategy dictate that you should short it, why on earth would you not select USO as the vehicle for implementing your strategy?

This article is not an exhausive list of the short-comings of ETFs. There are other good examples, like those leveraged short Treasury funds such as ProShares UltraShort 20+ Year Treasury (TBT). It may sound counter-intuitive, but after all that MER, margin costs and other risks of leverage, I would not be surprised if shorting the short Treasury fund performs better than simply going long on real Treasuries! A poorly structured fund works to the advantage of the short-seller – being traded on an exchange just makes the short position simpler to implement.

Don’t get me wrong – I am not against all ETFs, because some do add value for investors and have a place in the investment universe. For example, emerging and frontier market funds provide access to markets that would otherwise be difficult for the public. An actively managed ETF provide a cheap way to access the skills of a particular fund manager. Even funds that simply replicate an index save investors time and effort from assembling the components themselves. All these types of funds add value that justifies the MER.

But single asset ETFs, like the one on the Canadian dollar (FXC)? Not so much.

Boy I can’t wait until these jokers start offering single stock ETFs. Or better yet, an ETF on a single-stock-future!

This is actually somewhat expected, because even most of our policy makers do not have the proper educational background to understand what they are dealing with and how the fiat currency system really works. Ben Bernanke and his contemporaries are, in fact, learning on the job. It is no secret that they (as well as a lot of the doomsday prognosticators aka finance columnists out there) were educated by textbooks and schools of thought formulated during an era of gold standard with fixed exchange rates. An updated conceptual framework is required for good decision-making in a modern economy.

The best framework for describing our system of fiat currencies is the Modern Monetary Theory. MMT basically shatters everything we learned from our Macro Econ textbooks, because the old conventional thinking evolved out of an obsolete economic model. In a world where free-floating fiat currencies are the norm, the conventional model does not apply. PragCap has a good write-up on it.

The theory itself is actually not very modern – the first iteration of it was formed in the 1920s and it was called Chartalism. It is currently experiencing a quiet revival because it most accurately explains and predicts what we are now observing in our modern economies. Unfortunately it has not yet become a mainstream school of thought.

But it’s super important that it does, because in one fell swoop Modern Monetary Theory explains

1. Why the periphery EU countries are having fiscal troubles;
2. Why the same troubles did not occur to the Japanese government after 2 decades of extreme deficit spending and monetary easing;
3. Why they also will not happen to the US – the US government is in no risk of default, and in fact it is debatable whether they have dished out enough stimulus;
4. The hyperinflation/doomsday scenario is not destined to happen, therefore gold and other precious metals are in a speculative bubble.

Without being too technical, I will try to summarize the MMT basics in this article. Essentially, the following assumptions hold true for all major developed economies outside the eurozone (i.e. US, Canada, Japan, UK, Australia etc.):

• a) Money is not physically backed by any commodity or pegged to any foreign currencies.
• b) The government is the sole issuer of money.
• c) The government has the power to maintain the legal tender status of money (through a functioning taxation and court system).
• d) The fiscal and monetary arms of the government effectively work as a single unit.

Assumption (d) is VERY important and this is where it breaks down for the EU, because while they have a monetary union via ECB’s euro, they do not have a fiscal union on the “federal” level. In other words, the arm of government that spends most of the money (e.g. national governments like Ireland and Greece) does not have the power to print money (euro).

These countries cannot monetize their euro-denominated debt, which arbitrarily forces them into the same constraints that regular households and private enterprises experience everyday – the need to balance budget, the need to fund expenditures with income. In fact, MMT predicts that the current arrangement of the European Union is not sustainable, and they will have to either break-up or pursue a greater federal union in order to synchronize their monetary and fiscal policies.

However, in a true Modern Monetary System (e.g. US, Canada, Japan, UK, Switzerland), the government does not behave like a private household/enterprise. The government has no obligation to balance revenue and expense – in fact it can spend on deficit forever, with the only ceiling being the economy’s ability to produce (aka Inflation). But more on that later – first we have to see that all domestically denominated government debt is an illusion under MMT.

In economies such as US where (d) is true, the government never actually “owe” money in the traditional sense, because they are also the ones who can print money. A recent example is the Federal Reserve’s QE2, where on the surface they created money to buy US Treasuries from the private sector in the open market. When all is said and done, $600 billion of treasury bills will appear as “Assets” on the Fed’s balance sheet, and the same $600 billion is already on the US Government’s balance sheet as “Liabilities”.

In all practicality, this is a wash. It is just an accounting illusion, and the government, when view as a single unit, no longer has any real obligations. All that happened was a transfer from the government’s printing press (indirectly via the private sector) to the Treasury Department which funded the government’s spending. A government who issues debt in the same currency as the money it prints will never have a debt problem.

Naturally then, the next question is why would a society accept fiat money as a storage of value/unit of exchange, when the money can be haphazardly printed by the government and not be backed by any tangible commodity?

A fiat currency is not just backed by “faith” as some would have you believe. In assumption (c), having a stable government implies that we have an army and/or a police force strong enough to maintain a functioning tax and court system. Meaning, the government can force you to surrender a portion of your livelihood every April as taxes, and you must pay them in the form of their currency, or they jail you. This creates instant demand for the currency – even if you choose to transact all of your private businesses in gold, you must convert a pre-set percentage of your income to the currency at least once every year.

Likewise, the courts can rule that plaintiffs and defendants settle damages in the form of the government’s currency. The accused pays in money and the victim must accept money as compensation for the damages. The government has the power to make sure the courts’ rulings are enforced.

And just like that – because the government declares by fiat that their currency is legal tender , the currency has intrinsic value as long as the government is functioning and has a loyal arm force that maintains the integrity of money. This is not a matter of faith. And because of this de facto intrinsic value, the private sector also chooses to transact in money themselves, even for transactions where the government is not directly involved.

So to recap what we know so far: the government does not need to “balance their budget”, they can print money and then spend it, and the private sector accepts it because they will need it because the government has the power to tax for it. Fine, you say, but what is the upper limit of money that can be printed and spent?

The ultimate limiter is inflation. Inflation does not happen automatically when we expand the monetary base, especially when the velocity of money is declining (for example, when the private sector is deleveraging). Even if both the base and the velocity of money expand, inflation only happens when the money pushes the economy to operate near maximum capacity, such that it cannot produce more goods at stable prices. A bigger amount of money chasing a limited amount of goods causes prices of those goods to go up.

This is not happening in the developed world right now. Unemployment is high, and factories are operating at below capacity. In addition, much of the production work is being offshored to developing countries, which expands the available pool of labour and productive capacity even further. With so much slack capacity, an economy simply adapts by producing more goods to match demand when there is more money going around. Inflation will not kick in until we are at near full employment and full capacity utilization. The corollary is: the government should expand the money supply until we are closer to full employment.

It may be awkward for many people to admit, but MMS (or fiat currencies) is indeed superior to all prior monetary systems because it creates flexibilities that did not exist before, and we as a society need to accept this as general knowledge. A modern government taxes and/or issues debt primarily as instruments for injecting and removing stimulus, not as means to “finance” public expenditures or “balance the budget”. In a recession, the government can spend without regard to deficit, in order to compensate for the drop in private consumptions; in a boom, the government can curb spending and raise the cost of borrowing (reduce the money supply) to avoid excess inflation.

Ultimately, money is a man-made illusion. Our policies should be designed to control this illusion in such a way that facilitates full employment and low inflation, thus enhancing real long-term prosperity of nations.

Obviously, this conversation took place over dinner so I researched absolutely no hard data to back all of this up. But that doesn’t make it not true. Not that I would do it even if I had the time, because why do any fact-checks when it already makes such perfect sense based on what we intuitively know? That, and I’m lazy. Moving on…

First, let’s define what I was trying to explain, because I don’t think this phenomenon is isolated to culinary. In fact, in almost all competitive arenas, male dominates. Not only do men dominate in physical sports due to their stronger physique (another phenomena explained by evolutionary biology), but also in all other non-physical and very diverse fields. The world’s top chess players, poker players, hedge fund managers, mathematicians, music composers, painters, and yes, cooks, are predominately men.

There will always be exceptions – there may be several women here and there who emerge on top in a particular competitive field. But they are exceptions to the rule and the general trend is clear. Where there is a trend, there usually is an explanation…

Back in the prehistoric days, polygamy, or in particular, polygyny (where one man mates with many women) was common. Similar to the societal structure of gorillas, each of our alpha males has more than their fair share of women in their harem. Due to the roughly equal number of men and women, and alpha males take more than their fair share, there are not enough women for the rest of the males, which means there are the “beta males” who stay bachelor for most of their lives (unless they are able to overthrow one of the alphas).

This winner-takes-all arrangement, mediocrity is severely punished by a lack of mating opportunities. Because it was not enough for a man to be average, or “sort of” good – he had to be outlandishly successful to stand out. And when he does, he wins big (by having multiple women) at the expense of other men (who go home with none).

In the polygynic mating game where the male faces this all-or-nothing pay-off, he is rewarded by having a single-minded focus at being exceptionally competent and competitive, at the neglect of perhaps other more mundane tasks. His extreme dedication is rewarded by creating a huge spike in one area. This explains why we have more men who are dedicated to a single task (e.g. playing competitive Starcraft) so much that they would starve themselves or forget about personal hygiene. We also have *six times* more male savants than female savants in the world.

On the other hand, females can afford to be more all-rounded (no pun) due to this arrangement, because on average each woman will share an alpha male with other women, and the mating success of the female depended less on standing out above others. This allows them to (traditionally) perform less competitive, more nurturing, but nonetheless necessary functions of the society, such as child bearing, nursing, teaching, home-keeping etc.

So, this was our biological legacy. Importantly though, our shift to monogamy (1 man, 1 woman) in the modern society has softened some of the edge. We can now afford some mediocrity in men because women come to expect a one-to-one relationship, which means not every woman can stay hooked up to an alpha male, and this, in time, will cause the competitive gap between male and female to narrow. Our old instincts, for the time being, remain in our genes, which is probably the best and only explanation why most profession cooks, who are so dedicated to their craft, and become so well regarded that they can serve at a top-tier restaurant, are men.

Each share of GLD is backed by about 1/10th of an ounce of gold, and each share of SLV represents roughly 1 ounce of silver. Base on current market prices, one ounce of gold has the equivalent value as a bag of 65 to 70 one-ounce silver coins.

Now, consider that a geological analysis of the Earth’s crust shows that silver is only 17.5 times more abundant than gold. In fact, over the last 4500 years of history the average price ratio between silver and gold is pretty close to that number. Back in the days when metals are still money, you could exchange 1 gold coin for 16 silver coins.

What this means is that gold is severely overvalued versus silver, and the gap will revert over time, regardless of whether precious metals as a group rise or fall.

This is all before we consider the industrial usage of silver. Our silver supply gets used up in various industrial applications, whereas almost every ounce of gold we ever dug out of the ground throughout human history is still in existence today.

Gold is currently trading with a fat speculative premium – a premium driven mainly by fear of the fiat money system come crashing down. This fear is overblown, but even in the off-chance that Armageddon does happen and we all go back to buying things with metals, silver coins will be more liquid than gold coins. With silver currently at $17.5/ounce and gold at $1200/ounce, you’re more likely to carry around silver for your weekly grocery shopping.

Either gold will fall or silver will rise until the ratio is closer to the historic mean. For an aggressive investor, long silver short gold will prove to be a very profitable trade. For less aggressive investors or funds that have restrictions on short-selling, either get out of precious metals or replace gold with silver for your precious metal diet.

(1) GLD has an expense ratio of about 0.40% per annum. Which means GLD will lose value at 0.40% per annum even if the value of gold stays the same; And if you are on the short side, it is functionally the same as receiving 0.40% per year. Unlike stocks and mutual funds, gold is a non-cashflow producing asset – it will never pay a positive dividend, which means there will never be anything that offsets the 0.40% in fees you’ll have to pay if you’re long or you’ll “earn” if you’re short. Granted, 0.40% is nothing to write home about even in the current near-zero interest rate environment, and it will easily get swamped by any capital gain on gold, but it does move the needle slightly in the short’s favor.

(2) In a doomsday scenario, you have a much better chance of keeping your physical gold than your paper gold. One of the reasons for investing in gold is that it is viewed as the money of last resort when the existing governments/financial institutions/fiat currencies fail. Although most paper gold instruments are backed by actual gold stored in a warehouse somewhere, you will experience counterparty risk on doomsday if you own them. A look at the prospectus of SPDR GLD, we see that it has World Gold Trust Services as its sponsor, BNY Mellen Asset Servicing as its trustee, and HSBC as its custodian. When disaster strikes and one of these institutions fail, it’s unclear how much gold you will be able to claim for your GLD shares.

In another scenario where US Government bans the ownership of gold to save its currency (as they did indeed in the Great Depression), you will have a much better chance of running to another country with your private, physical, stash than to try to claim your gold from a trust. But riddle me this – if you are short the GLD ETF, what happens when the government confiscates all their gold?

(3) Paper gold is exposed to fraud and accounting risks. There could be inaccurate accounting or out-right fraud at the trust/trustee level. Or some dishonest employees at the custodian could have stole some gold for themselves. Or, the custodian may have tight controls, but one of the sub-custodians that the custodian subcontracted to may not. It will be a stretch to say that all of the many precious metal ETFs and funds out there have perfect accounting and controls. If there is anything Bernie Madoff taught us, it’s that there is risk of fraud in the most established of institutions – and this is magnified with paper gold because there can be so many intermediaries between you and your physical gold.

I cannot predict the precise movement of gold the same way I cannot predict the next pai-gow hand at a casino. But what we do know beyond a doubt, is that the odds are stacked, and the house always wins in the long run.

Disclosure: short GLD

The good news is it is possible. Warren Buffett once said, “Observing correctly that the market was frequently efficient, they went on to conclude incorrectly that it was always efficient. The difference between these propositions is night and day.” And I tend to agree that, if one is willing to bring intensity to the game, it is possible to earn excess return, or alpha.

But in the end the quest for alpha is a zero-sum game. By definition, the average investor cannot earn more than the average. Each dollar you make in excess to the market is taken from other investors who are earning below average return, and how much you make is depended on the edge you have over the other investors.

I believe that regardless of what your investment strategy is, incorporating these 5 basic tenets below will give you an edge over an investor who is not, all else being equal. They should form the foundation of any winning active strategy with a long-term horizon. Without further ado…

Read Wide

Have a wide variety of interests, and get into habit of reading anything that’s remotely relevant. I am not referring to simply browsing financial websites. Of course, “reading deep” in terms of doing rigorous research on the companies/sectors/asset classes you are investing in should go without saying. But if you are only reading the same things as the rest of the investing community is reading, you are more likely to think the same things as well. “Reading wide”, or seeking information beyond the normal realm of investing, increases the opportunity for synergizing outside information into an investment thesis, and you can never tell beforehand where you will come across relevant information. Also, having interests outside of investing gives you a better chance at noticing major trends ahead of the curve. For example, if you were a computer geek back in the 80s or early 90s, you might have bought the Microsoft stock ahead of the rest of the community.

Laziness is a Virtue

I could have said “Patience is a Virtue”, but this one is a little less cliché. I want to emphasize that it is good to be lazy when it comes to actual trading (but not when it comes to doing the prep work, which you definitely should not be lazy on). One of the longest running conundrum is that the average investor does significantly worse than the market average. On the surface, this statement sounds ridiculous – it is like saying the average NBA player shoots worse than the NBA average. But the former statement is, in fact, true, and the single biggest reason is that the average investor loses out by paying too much commissions and short-term taxes from over-trading. Avoid over-trading, and not only will you beat the average investor, you will probably beat the majority of the professionally run active mutual funds.

Once again quoting Warren Buffett: “Lethargy, bordering on sloth, should remain the cornerstone of an investment style.” So go ahead, procrastinate, and refrain from trading until the real opportunities arise, which leads to…

Expect Ridiculousness

The securities marketplace is part of Extremistan, the home of Black Swans.

“Black Swans” are very extreme events that have huge consequences, and Extremistan is a place where these types of events happen a lot more often than predicted by statistical normality (the Bell Curve).

What this means is don’t buy something merely because it is attractive. History has proven over and over that Black Swans live in the financial markets, thus it pays to keep your ammo dry to prepare for them. If you ever hear yourself saying, “holy s#!+, I can’t believe this market/commodity/condo/stock just dropped so much,” first, review the fundamentals. If they are still sound, you are probably witnessing a great buying opportunity. But if an investment merely seems interesting, add it to your watchlist, and then wait for that “holy s#!+” moment. You might miss a few opportunities this way, but the excess return you earn more than compensates, and more importantly, if you wait for Black Swans, you are less likely to get hit by the wrong side of one.

The flip side is also true: if it feels about right to sell a stock at $7, wait for it to go to $10! Markets often overshoot. This also works very well with the “lazy” tenet. Time and time again events have occurred in the markets that are beyond our normal range of expectations, so err on the side of inaction until the ridiculous happens – it probably will eventually.

Keep Your Options Open

It is usually not wise to have 0% exposure or fully leveraged exposure. You should always have a handful of positions ready to be sold if the market surges, and a handful of positions in your watchlist ready to be bought (and unused capital to buy them with) if the market moves against you. But, wait for the extreme moves.

Don’t be married to a particular idea. By necessity, you should have more investments that you want to buy than investments you actually end up buying. This is because, if you are following the previous tenet properly, you are not just going to invest in something merely because it is attractive; you are sitting there waiting for an extreme event to happen so you can get in at fire sale price. It is wise to monitor a large variety of choices because you never know where a Black Swan will land. “Luck favours the prepared” – position yourself such that you can take advantage of opportunities that come up.

If a particular investment runs away from you, don’t chase it; instead, make all the potential investments on your watchlist “compete” for your limited capital. This is similar to how one can do well in the dating scene – always keep a lot of options open so that your prospects are the ones doing the chasing and proving themselves to you.

Put Your Eggs in a Basket and Watch It

Diversification is a double-edge sword. The more diversified you are, the closer you are to earning the average market return, which is a terrific way for an amateur to invest and forget, and I recommend to anybody who do not wish to spend a lot of time managing money to not put all your eggs in one basket. But diversification won’t help you win the alpha-generation game you signed up for. Again by mathematical definition, you cannot beat the market by buying the market. To add value for your portfolio or your clients’, you will need to concentrate your eggs in some kind of basket (or a small set of baskets), and watch that basket. This is the mirror image of the previous tenets: read wide and keep a lot of options open, but invest rarely, make big concentrated bets, and get to know your holdings very, very well.

Adapted from Dr. Peter Hammond’s book:
Slavery, Terrorism and Islam: The Historical Roots and Contemporary Threat

Islam is not a religion, nor is it a cult. In its fullest form, it is a  complete, total, 100% system of life.

Islam has religious, legal, political, economic, social, and military components. The religious component is a beard for all of the other components.

Islamization begins when there are sufficient Muslims in a country to agitate for their religious privileges.

When politically correct, tolerant, and culturally diverse societies agree to Muslim demands for their religious privileges, some of the other components tend to creep in as well.

Here’s how it works:

As long as the Muslim population remains around or under 2% in any given country, they will be, for the most part, be regarded as a peace-loving minority, and not as a threat to other citizens. This is the case in:

United States — Muslim 0.6%
Australia — Muslim 1.5%
Canada — Muslim 1.9%
China — Muslim 1.8%
Italy — Muslim 1.5%
Norway — Muslim 1.8%

At 2% to 5%, they begin to proselytize from other ethnic minorities and disaffected groups, often with major recruiting from the jails and among street gangs. This is happening in:

Denmark — Muslim 2%
Germany — Muslim 3.7%
United Kingdom — Muslim 2.7%
Spain — Muslim 4%
Thailand — Muslim 4..6%

From 5% on, they exercise an inordinate influence in proportion to their percentage of the population. For example, they will push for the introduction of halal (clean by Islamic standards) food, thereby securing food preparation jobs for Muslims. They will increase pressure on supermarket chains to feature halal on their shelves — along with threats for failure to comply.. This is occurring in:

France — Muslim 8%
Philippines — Muslim 5%
Sweden — Muslim 5%
Switzerland — Muslim 4.3%
The Netherlands — Muslim 5.5%
Trinidad & Tobago — Muslim 5.8%

At this point, they will work to get the ruling government to allow them to rule themselves (within their ghettos) under Sharia, the Islamic Law.  The ultimate goal of Islamists is to establish Sharia law over the entire world.

When Muslims approach 10% of the population, they tend to increase lawlessness as a means of complaint about their conditions.   In Paris , we are already seeing car-burnings. Any non-Muslim action offends Islam, and results in uprisings and threats, such as in Amsterdam , with opposition to Mohammed cartoons and films about Islam. Such tensions are seen daily, particularly in Muslim sections, in:

Guyana — Muslim 10%
India — Muslim 13.4%
Israel — Muslim 16%
Kenya — Muslim 10%
Russia — Muslim 15%

After reaching 20% , nations can expect hair-trigger rioting, jihad militia formations, sporadic killings, and the burnings of Christian churches and Jewish synagogues, such as in:

Ethiopia — Muslim 32.8%

At 40% , nations experience widespread massacres, chronic terror attacks, and ongoing militia warfare, such as in:

Bosnia — Muslim 40%
Chad — Muslim 53.1%
Lebanon — Muslim 59.7%

From 60% , nations experience unfettered persecution of non-believers of all other religions (including non-conforming Muslims), sporadic ethnic cleansing (genocide), use of Sharia Law as a weapon, and Jizya, the tax placed on infidels, such as in:

Albania — Muslim 70%
Malaysia — Muslim 60.4%
Qatar — Muslim 77.5%
Sudan — Muslim 70%

After 80% , expect daily intimidation and violent jihad, some State-run ethnic cleansing, and even some genocide, as these nations drive out the infidels, and move toward 100% Muslim, such as has been experienced and in some ways is on-going in:

Bangladesh — Muslim 83%
Egypt — Muslim 90%
Gaza — Muslim 98.7%
Indonesia — Muslim 86.1%
Iran — Muslim 98%
Iraq — Muslim 97%
Jordan — Muslim 92%
Morocco — Muslim 98.7%
Pakistan — Muslim 97%
Palestine — Muslim 99%
Syria — Muslim 90%
Tajikistan — Muslim 90%
Turkey — Muslim 99.8%
United Arab Emirates — Muslim 96%

100% will usher in the peace of ‘Dar-es-Salaam’ — the Islamic House of Peace. Here there’s supposed to be peace, because everybody is a Muslim, the Madrasses are the only schools, and the Koran is the only word, such as in:

Afghanistan — Muslim 100 %
Saudi Arabia — Muslim 100%
Somalia — Muslim 100%
Yemen — Muslim 100%

Unfortunately, peace is never achieved, as in these 100% states the most radical Muslims intimidate and spew hatred, and satisfy their blood lust by killing less radical Muslims, for a variety of reasons.

‘Before I was nine I had learned the basic canon of Arab life. It was me against my brother; me and my brother against our father; my family against my cousins and the clan; the clan against the tribe; the tribe against the world, and all of us against the infidel. — Leon Uris, ‘The Haj’

It is important to understand that in some countries, with well under 100% Muslim populations, such as France, the minority Muslim populations live in ghettos, within which they are 100% Muslim, and within which they live by Sharia Law. The national police do not even enter these ghettos. There are no national courts, nor schools, nor non-Muslim religious facilities.   In such situations, Muslims do not integrate into the community at large. The children attend madrasses. They learn only the Koran. To even associate with an infidel is a crime punishable with death. Therefore, in some areas of certain nations, Muslim Imams and extremists exercise more power than the national average would indicate.

Today’s 1.5 billion Muslims make up 22% of the world’s population. But their birth rates dwarf the birth rates of Christians, Hindus, Buddhists, Jews, and all other believers. Muslims will exceed 50% of the world’s population by the end of this century at their current rate of reproduction.