The three periods of the impact phase


- Abstract GEAB N°8 (October 16, 2006) -



The three periods of the impact phase
LEAP/E2020 believes this impact phase will develop in three stages:

. first period (from three to four months, from here until March 2007) with the multiplication of “accidents” or “sector crisis”, within a background of increasingly negative news coming from the centre of the global system in implosion: the United States. Some dominant characteristics: end of the “financial markets euphoria”, realignment of players projections with the real evolution of the economy, multiplication of “accidents” such as that of the Amaranth “hedge fund” because of the general reversal of projections, aggravation of the tensions around Iranian and North Korean nuclear activities, restart of the fall in the US Dollar, confirmation of stagflation in the United States, double paralysis of the US authorities (political, with a congress probably opposed to the president; monetarist, with a Fed wedged between a recession and a fall in the Dollar). This first period will primarily affect the United States and values or players directly related to the American economy or financial system.

. second period (approximately six months, until autumn 2007) which will confirm a negative development of the US economy divergent with the two other large world poles. One indeed sees an increasing parting in ways of the economy of the Euro zone from the US economy. With only 7% of its foreign trade made with the United States, the Euro zone becomes less and less dependent on the evolution of the economy on the other side of the Atlantic. Only some sectors remain strongly dependent on US demand. In fact, the American impact on the European economy now primarily relies on the Euro-Dollar parity developments which can affect the competitiveness of the European exports (aeronautics, agriculture, armament for example) towards other zones, Asia in particular. During this second period, the accelerated fall of the Dollar will also be played out with respect to the Asian currencies (Yen included) and should thus remain relatively neutral for the Eurozone’s principal exports (apart from the USA but these are now marginal). The impact on the Asian economies, and in particular China, will also constitute an important factor to appreciate the breadth of this second period of the systemic crisis world impact.
It should see a 50% fall of the American middle class living standard, with as background the collapse of a large number of American financial institutions (1), and will feed an increasing political volatility in the United States, which should turn radically towards an offensive protectionism (and this even if the Republican Party maintains control over the Congress next November). The process of globalisation incarnated by WTO will be frozen for many years and bilateral agreements will become a standard (2). On a strategic level, NATO will start considering the need for a fundamental reform under the pressure of Europeans while Iran will have progressed further towards becoming nuclear power while affirming its position of dominant regional power in the Middle East.

. third period (of approximately six months, ending around the end of 2007) will be characterized by increasing pressure of all world players, facing imbalances of any nature, to re-think the global system taking into consideration new emergent power forces, of which China, Russia, the energy producing countries and Euroland (hard core of the EU) as main beneficiaries. The American authorities who will come out of the 2008 presidential election will have to prepare themselves to deal with the dramatic consequences of the impact phase on their country. And this period will open the fourth and last phase of the global systemic crisis known as “decantation” where new global systemic balances will be set up.

USA - Share of capital income earned by top 1% and bottom 80% - Source Itulip
USA - Share of capital income earned by top 1% and bottom 80% - Source Itulip

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Notes:

(1) … involving of course their partners of the other financial markets in London, Tokyo, Paris, Frankfurt.

(2) While the Doha cycle is totally paralysed, there are currently more than hundred bilateral agreements being negotiated on the planet. Sources : Bilaterals and Wikipedia

Mardi 10 Avril 2007

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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