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  • GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "Ver

    GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "Very Great Depression"

    January 17, 2007

    According to the LEAP/E2020 team, the year 2007 will witness the sliding of the US into the Very Great Depression , i.e., the rare historical conjunction of a severe economic depression, a strategic collapse and a major political and social internal crisis, at the centre of the phase of impact of the global systemic crisis. Housing crisis, financial crisis, economic crisis, trade war, military escalation and political crisis are the six aspects described in GEAB N11 along the following lines:
    1. Negative personal saving rates and declining home prices on a national scale: Two major US economic indicators hit lowest level since the 1930 crisis
    2. "Roller coaster" US interest rates in 2007: Up in spring and down in fall
    3. The US financial sector has already entered bankruptcy: Today Ownit, Mortgage USA Lenders,… tomorrow Ameriquest, Wells Fargo, HSBC Finances?
    4. Middle East: To conceal its failure in Iraq, the Bush administration is preparing a Shiite-Sunni intra-Muslim war, while Israel gets ready to launch tactical nuclear weapons on Iran's nuclear programme
    5. China and Russia's move to drive the US out of central Asia and to accelerate the dollar fall
    6. Emerging markets, mortgage risk: In 2007, risk is back on financial markets… and it will be a heavy bill after many careless years
    In this announcement, LEAP/E2020 chose to make public abstracts of the aspects 1 and 4 for our readers to get a glimpse of the scope of the unfolding depression. But before we enter into the detail of these aspects, we must explain the reasons why uncertainty as to the future prevails throughout financial analyses in this beginning year. According to the LEAP/E2020 researchers, the main reason relates to the concept of “Fog of Statistics.”

    The slide into recession provokes a "Fog of Statistics" used to raise doubts about whether or not the Titanic is sinking


    The passage from 2006 to 2007 perfectly has illustrated the global systemic crisis' stepping into a phase of impact, as anticipated by LEAP/E2020. Just like in any change, the passage by zero is characterized by a "fog of statistics" where indicators point in opposite directions and measurements provide contradictory results, with margins of error sometimes wider than the measurement itself (1).

    It is a typical situation in wrecks that the ship gets flooded while the engines are still running. Feelings get muddled, information becomes contradictory. For instance, the Titanic is already doomed to sink but first-class passengers are still dancing, convinced by the officers that a disaster is impossible.

    Regarding our planet in 2007, the on-going wreck is that of the US, that LEAP/E2020 has decided to call the "Very Great Depression," firstly because "The Great Depression" already refers to the 1929 crisis and the years after; and secondly because, according to our researchers, the nature and scope of the upcoming events are very different (subscribe with iTulip discount code 754HT7 for more details).

    And the authorities' soothing declarations of this beginning year will not change much to the course of events. Let's just remember the announcements made at the beginning of 2006 and compare them with the current ones…

    Negative personal saving rates and declining home prices on a national scale: Two major US economic indicators hit lowest level since the 1930 crisis


    When at the beginning of 2006 the US Federal Reserve and the whole of the financial and economic players and media were negating the existence of a real estate bubble (and formally rejected any risk of crisis in this sector), the collapse of prices had in fact already begun leading the US housing market to its most severe crisis since the 1930s (analysts now refer to the "2007 housing depression") (2) characterized by a yearly decline in home prices throughout the entire US territory (3). And the downturn in the US housing is not over, though official statements try to conceal the truth. Even CNN is aware of it and denounces the disconnection between figures describing a mitigated reality and a real housing market sliding into depression (4). In a very interesting study published by Merrill Lynch at the end of December, the home buying index in University of Michigan's survey fell down to 41 (from a previous 45) (5). The market is doomed to decline further by lack of buyers (6).


    Home equity loans in the US - Source The Economist

    After the negative personal saving rates, the yearly drop in home sales is the second key economic data hitting the lowest level since the Great Depression in the 30s, over less than a year (subscribe with iTulip discount code 754HT7 for more details).

    Middle East: To conceal its failure in Iraq, the Bush administration is preparing a Shiite-Sunni intra-Muslim war, while Israel gets ready to launch tactical nuclear weapons on Iran's nuclear programme


    Less than a year ago, the US government praised the election in Iraq and the new Iraqi government, and denied risks of conflagration in the country. Meanwhile civil war had already started, leading to today's escalation of the US military in the region and to the premises of a major political crisis in the US itself.

    The confrontation between a Democratic-led Congress and the Bush administration started as soon as the newly elected Congress took office in January, as anticipated by LEAP/E2020 in the September issue of GEAB (GEAB N7). And it is only the beginning: the approaching 2008 presidential election will radicalize the two camps starting in spring 2007. Pro-Israeli Democrats on the one hand and a pro-Zionist Bush administration on the other hand will result in placing the Israelo-Iranian crisis on Washington's agenda sometimes in the next three months. Once G. W. Bush has realized that sending 20,000 more troops to Iraq does not prevent civil war from extending (on the contrary), and in a context of growing economic depression and political conflict at home, he will find that engaging into a new military adventure in the Middle-East is the only “political solution.” As his Israeli counterpart, Ehud Olmert, is also in great need of "revamping" his image of strong leader, all conditions are gathered for an escalation against Iran.

    According to the LEAP/E2020 team, it is clear that if the US accepts the idea of a military confrontation with Iran, it will take place in spring 2007 in the form of: 1/ a tactical nuclear attack by Israel on Iran's nuclear facilities, and 2/ a ground conflict on the Iraqi soil disguised as a new Shiite-Sunni intra-Muslim war (7).

    This scenario is consistent with the war-monger decisions of G. W. Bush who disregards completely the diplomatic advice of the Baker-Hamilton Commission and the wishes of the newly-elected Democratic Congress (as anticipated by LEAP/E2020 in GEAB N9 and GEAB N10). It is also consistent with the incestuous relation between this Administration and the big financial and oil lobbies, as not only is it a military, General Jack Keane, who conceived the "new" plan for Iraq, but he invented it in cooperation with an academic from the American Enterprise Institute, Frederik W. Kagan (8). But above all, this retired Army General heads a consulting firm, is senior consultant to KKR and sits at the board of various major US groups such as the Insurance company Metllife, the armament group General Dynamics or the security company Allied Security Holdings (9). Allied Security Holdings is one the largest private security firms in the US; General Dynamics is the sixth largest armament company in the world; and KKR, Kohlberg, Kravis Roberts & co., is one of the largest investment funds in the world, which for instance paid the highest fees (837 millions US$) to large private banks they take advice from (such as Goldman Sachs, which we know maintains tight relations with the Bush Administration – see previous issues of GEAB) (subscribe with iTulip discount code 754HT7 for more details).

    Notes:
    (1) As identified by LEAP/E2020 about the US employment estimations in December 2006 or about the US retail sales' forecasts in November 2006. See December 2006 US employment data: An information of mass deception, hiding a strong decrease of US employment and Santa Claus knows... the real figures of US retail trade in November 2006 . For instance, concerning retails sales in the US in November 2006, the “revised” (but not yet final) figure that came out on January12, 2007 is 0.6% instead of the 1% initially declared. Wait for a few weeks and see what will become of the 167,000 jobs created in December 2006 once the fog of statistics starts to clear.
    (2) Source : “The real estate depression of 2007”, Alex Gabor, OpEdNews, 06/01/2007
    (3) Source : Standard and Poor's / BusinessWeek, 04/01/2007
    (4) Source : Housing market pain not revealed by stats , CNN Money, 11/01/2007
    (5) Source : Merrill Lynch, 22/12/2006
    (6) Any result below 50 indicates a market contraction; the farther below 50 the figure, the worse the situation.
    (7) Sources Exit US, Enter Saudi in Long Intra-Muslim War , Claude Salhani, WhiteHouse Chronicle, 30/11/2006 and Washington Times, 02/12/2006
    (8) Source : The Redhunter, 19/12/2006
    (9) Source : Metlife


    The preceding represents the opinions of the LEAP/Europe 2020, not of iTulip, Inc., its owners or other affliates.

    Copyright iTulip, Inc. 1998 - 2007 All Rights Reserved


    All information provided "as is" for informational purposes only, not intended for trading purposes or advice.
    Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer
    Last edited by FRED; 01-18-07, 01:17 AM.

  • #2
    Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

    Oh geeze, glad I got my boots on :eek: Guess to find out the ending I will just cue up my DVD player and watch " The Perfect Storm " , foreword by Big Al Gore .
    I one day will run with the big dogs in the world currency markets, and stick it to the man

    Comment


    • #3
      Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

      that's a pretty heavy msg from a european think tank with a rep to maintain. anyone here subscribe to the service? is it any good?

      Comment


      • #4
        Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

        Originally posted by metalman
        that's a pretty heavy msg from a european think tank with a rep to maintain. anyone here subscribe to the service? is it any good?
        i decided to subscribe to the service after reading their publicly available piece on the implications of a euro = 1.5 $u.s. since they send you the prior 6 issues with your initial subscription, i've now read 8 of their bulletins. i had planned last weekend to write a little review of the service, and if i have a chance i will do so this coming weekend.

        it's greatest value lies in getting a view from somewhere other than the u.s. it's overall economic model of what is happening and will happen is quite compatible with the itulip model. it also adds a geopolitical overlay, seeing the u.s. as a declining power within the global system.

        they believe the euro is going to $1.70 this year. of course in early 2006 they said the euro was going to 1.5. then in the spring of 2006 they said 1.3 to 1.7, then in the fall they said it would hit 1.3, and it in fact closed the year above 1.3. so the predictions shift a bit over time.

        they have a public opinion survey which shows that the leadership of the euro countries is out of touch with the populace. at the same time they think the euro will strengthen. the decline of the u.s. economy will drag down the dollar, they say, and also the loonie and the pound because those countries are so economically entwined with the u.s. this sounds plausible to me vis a vis the loonie, but i'm not sure the uk is so dependent on the us economy.

        there's an additonal amusement value to their bulletin: it is clearly written in french and then translated by someone who is not quite fully fluent in english. it is not yet clear in my mind whether it's worth the cost, i.e. whether it has significant value and adds much beyond what is publicly available. it definitely adds information though - for example, the real estate write up includes information about what's happening in spain and france, for example.
        Last edited by jk; 01-18-07, 10:26 AM.

        Comment


        • #5
          Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

          Originally posted by jk
          i decided to subscribe to the service after reading their publicly available piece on the implications of a euro = 1.5 $u.s. since they send you the prior 6 issues with your initial subscription, i've now read 8 of their bulletins. i had planned last weekend to write a little review of the service, and if i have a chance i will do so this coming weekend.

          it's greatest value lies in getting a view from somewhere other than the u.s. it's overall economic model of what is happening and will happen is quite compatible with the itulip model. it also adds a geopolitical overlay, seeing the u.s. as a declining power within the global system.

          they believe the euro is going to $1.70 this year. of course in early 2006 they said the euro was going to 1.5. then in the spring of 2006 they said 1.3 to 1.7, then in the fall they said it would hit 1.3, and it in fact closed the year above 1.3. so the predictions shift a bit over time.

          they have a public opinion survey which shows that the leadership of the euro countries is out of touch with the populace. at the same time they think the euro will strengthen. the decline of the u.s. economy will drag down the dollar, they say, and also the loonie and the pound because those countries are so economically entwined with the u.s. this sounds plausible to me vis a vis the loonie, but i'm not sure the uk is so dependent on the us economy.

          there's an additonal amusement value to their bulletin: it is clearly written in french and then translated by someone who is not quite fully fluent in english.
          thanks, jk.

          hey, ej... jk says you think about the USA like a French guy!

          Comment


          • #6
            Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

            The US financial sector has already entered bankruptcy: Today Ownit, Mortgage USA Lenders, tomorrow Ameriquest, Wells Fargo, HSBC Finances?
            There are some good points made above, but this statement seems to be sensationalizing the issue without evidence. If 200 tech startups go bankrupt this year, will Google, Microsoft, and IBM all go bankrupt?

            Maybe in the full report there are some numbers to back up why HSBC, Wells, and Ameriquest will go bankrupt. And I definitely have a serious eye towards what is going on with the banking industry and how it may affect me personally. But to me, this reeks of comparing pets.com to Google, and that is just not an appropriate comparison when trying to make the case for something. Taking the absolute worst businesses in any industry and comparing them to the leaders of that industry to back up your point that an entire industry or the entire economy is going to blow up is, to me, inflammatory and not logical.

            Comment


            • #7
              Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

              wells is/was far and away the biggest subprime originator according to data from q2 and q3 of '06. hsbc was #3, ameriquest #9. i think you'd have to look at the size of their other businesses to really determine how vulnerable this makes them. but,for example, in q3 wells originated $23billion in subprime. #2 was new century at $13.8b.

              Comment


              • #8
                Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "Ver

                Wells Fargo

                FY2005 numbers:

                Revenue: $40.5B
                Operating Income: $15.16B
                Net Income: $7.6B

                If Wells underwrote $23B in sub-prime and indeed 25% or more go bust...and assuming Wells didn't foist this off on some other entity...I would think it would hurt but not kill them.

                It would seem, however, to potentially be a Citibank-Latin America Loan-type writeoff event.

                HSBC - at least the financial data attached to their depository receipts - is roughly half of Wells in size.

                Comment


                • #9
                  Re: GEAB N11: Impact phase of the Global Systemic Crisis: Six aspects of America's "

                  Originally posted by c1ue
                  Wells Fargo

                  FY2005 numbers:

                  Revenue: $40.5B
                  Operating Income: $15.16B
                  Net Income: $7.6B

                  If Wells underwrote $23B in sub-prime and indeed 25% or more go bust...and assuming Wells didn't foist this off on some other entity...I would think it would hurt but not kill them.

                  It would seem, however, to potentially be a Citibank-Latin America Loan-type writeoff event.

                  HSBC - at least the financial data attached to their depository receipts - is roughly half of Wells in size.
                  the $23b in sub-primes from wells was for a single quarter.

                  Comment

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