If you were a subscriber to the GEAB, you would have read what will follow as early as October 16, 2007:

As described previously by LEAP/E2020, the epicentre of the global systemic crisis is in the US, collapsing pillar of the global order. For this reason, the impact of this crisis is a lot more violent and enduring than anywhere else in the world.

For instance, the bursting of the housing bubble is provoking the sudden impoverishment of millions of American citizens whose houses are foreclosed: each month, foreclosures double (1) leading dozens of millions of US citizens (women and children who live in the foreclosed houses) to end up on the street (2) or to find new homes in the worst conditions (3).

The ongoing recession creates unemployment concealed by the official statistics (the same statistics which negated that a housing bubble was bursting or that there was subprime crisis as long as they could) but nevertheless driving millions of Americans (the same ones most often) to the street. This being so, the crisis is beginning to hit middle classes (4) sometimes even above that (as in the case of the Wall Street layoffs).

The drop of house prices today affects all the categories of US households who used their house mortgage to finance their lifestyle (i.e. a large majority of Americans). They are now rushing on their credit cards (at a prohibitive cost) to avoid downgrading too much their “way of life” (5), but it is a short term solution (6).

Throughout the country already, local authorities started to reduce public services by lack of sufficient fiscal income. States are beginning to wonder (7). The federal government solely, speaking with the voice of G.W. Bush, demands more money for its wars and refuses to extend social protection to poor children.

Social unrest has in fact started and it aggravates each day (8). LEAP/E2020 wishes to remind that without a general social protection, the impact of an economic recession in the US is socially terrible. The magnitude of this crisis, combining housing collapse, economic recession, inflation of consuming goods and imported energy via USD weakness,… all this together with a political blockade in Washington provide the background for a « regime crisis ».

The army is the only institution in the US with a strong credibility. Dozens of millions of US citizens depend on it for their jobs, studies, contracts,… It is one of the only national backbone of the country. Its generals receive media coverage. They criticize more and more the political class accusing it of betraying the people and the army. The recent success of former US commander in Iraq General Sanchez using this rhetoric is eloquent about the state of mind in the country (9). The warm welcome of today’s US commander in Iraq General Petraeus by the Congress during an audition on the situation in Iraq completes the image: as highlighted by various commentators, it looked like a victorious Roman general welcomed by a Roman senate at beck and call. The militaries are now those in charge of making all the important decisions concerning the war in Iraq. Let’s wait and see what they will do with the Turkish case. No one in the political class, including among the democrats, dares to criticize the military chiefs despite the fact that they are more than mere “victims” of “irresponsible policies” in the Iraqi rout.

For this now central component of the US political system, the financial and economic crisis is becoming a problem, because in a context of unpopular wars in Iraq and Afghanistan and of economic recession in the country, the probable election of a Democrat to the presidency in one year time would entail a significant reduction of the budget allocated to the defence. And this is simply unacceptable for the last structuring force of the country.

The « Very Great Depression » is already triggered in the US and, according to LEAP/E2020, it will result before the end of 2009 in a regime crisis in the US, where the army will play an important role.

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Notes:

(1) « US home foreclosures double », Financial Times, 11/10/2007

(2) « Subprime tidal wave », Wall Street Journal, 12/10/2007

(3) « Subprime crisis good, bad, deja vu for trailer parks », Reuters, 10/10/2007

(4) « Working families need help to afford the basics », MarketWatch/DowJones, 10/10/2007

(5) « Le fossé riches-pauvres s'est creuse de 2004 à 2005 aux Etats-Unis », Yahoo/Reuters, 12/10/2007

(6) « Boom times for dentists, but nor for teeth », New York Times, 11/10/2007

(7) « State budget : revenues fall, projected deficit soars », Sacbe, 10/10/2007

(8) « The American Dream turns into a debtor's nightmare », Los Angeles Times, 08/10/2007

(9) « Ovation for Sanchez, Iraq ex-commander », Boston Globe, 22/09/2007

Dimanche 24 Août 2008

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Global systemic crisis – USA 2012/2016: An insolvent and ungovernable country - 16/12/2011

Global systemic crisis: Second half of 2011 - European context and US catalyst - Explosion of the Western public debt bubble - 01/12/2011

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Global systemic crisis – First half of 2012: Decimation of the Western banks - 16/10/2011

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When Athens aims to hide London and Washington - 01/09/2011

Global Systemic Crisis - The Decade 2010 – 2020: Towards a knockout victory by gold over the Dollar - 01/09/2011

Systemic global crisis - 2011: The ruthless year, at the crossroads of three roads of global chaos - 11/08/2011

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Global systemic crisis: Second half of 2011 - European context and US catalyst - Explosion of the Western public debt bubble (full version) - 27/07/2011

GEAB N°61 - Contents

- Published on January 16, 2012 -

Global systemic crisis - 2012: The year of the world’s great geopolitical swing
This GEAB issue makes it six years that the LEAP/ E2020 team have shared their anticipations with their subscribers and readers of their public briefing on the development of the global systemic crisis each month. And, for the first time, in the January issue which presents a summary of our anticipations for the year to come, our team anticipates a year which will not result solely in a worsening of the world crisis but which will also be characterized by the emergence of the first constructive elements of the “world after the crisis”… (page 2)
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USA 2012: on the way towards the tragedy of QE3
Today, US financial policy is confronted by the sovereign debt crisis of which it will be the ultimate victim in 2012. As LEAP/E2020 anticipated, the 2011 European debt detonator has truly ignited the 2012 American sovereign debt bomb, even if the media coverage desperately tries to make us believe the opposite. The massive sale of US Treasury Bills by the planet’s major central banks in the second half-year 2011 perfectly illustrates this situation incidentally… (page 7)
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ANTICIPATIONS 2012 - ‘20-UP AND 15-DOWN’, THIRTY FIVE KEY TRENDS FOR 2012
Up or Down? The United States' political paralysis; The City and Wall Street ; The rise in interest rates; The forfeiting of value to Wall Street and the City; The value of Chinese reserves; The Pound Sterling (and Gilts); Euroland as new European sovereign; The USA-China “little cold war”; Italy; The importance of the US Dollar in world trade transactions; Rating agencies; The “great European public borrowing” (GEPB); MerkHollMont; Ron Paul; The number, size and influence of Western banks; The continuation of gold’s return in the international monetary system; Recessflation; Sarkozy, Cameron, Netanyahu and Medvedev; The BRICS maturing as a pro-active world player; Turkey’s exit from the Western camp; The Tobin Eurotax; Secular and pro-Western forces in the Muslim world; Growth; The usefulness of the G20; Lawsuits against those managing banks and hedge funds; The splitting of the world monetary system into three zones: Dollar, Euro, Yuan; The widespread downgrade of Western public debt; Peoples' anger; The Euro crisis; The EU as the principal incarnation of Europe; QE3 as the ultimate weapon for saving the US economy; The US’ capacity for military intervention; The West as a community of relevance and values; Scottish independence; Le détroit d'Ormuz et un nouveau contexte de crise au Moyen-Orient ; L'indépendance de l'Ecosse; The Straits of Hormuz and a new context of the Middle East crisis (page 19) (page 19)
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The GlobalEurometre - Results & Analyses
We are seeing a strengthening in the majority considering that common European solutions to the crisis are more effective than national ones (80% in January versus 77% in December)… (page 33)
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