http://www.leap2020.eu/GEAB-N-23-is-available!-Global-systemic-crisis-End-of-2008-Pension-funds-go-off-the-rails_a1428.html?PHPSESSID=1eb71fc27f511fddfad9698dfe7320d1
 

"The US financial system, and that of a large part of the world, is
lethally hurt. US banks have no more money; it is as simple and
dramatic as that. Contagion will now enter a second phase of
development, generating a new series of bank failures by this summer."
 

GEAB N°23 is available! Global systemic crisis – End of 2008: Pension
funds go off the rails
- Public announcement GEAB N°23 (March 16, 2008) -

According to LEAP/E2020, by the end of 2008, a formidable debacle will
affect pension funds all over the world, endangering the entire system
of capital-based pensions. This financial calamity will bear a
particularly dramatic human dimension because it will come at the
precise moment when the first wave of baby-boomers phase out of the
labour force in the US, EU and Japan: pension fund revenues are
collapsing at the very moment when they should be making their first
large series of payments to pensioners. In this 23rd edition of the
GEAB, our team anticipates the evolution of the upcoming pension fund
crisis, details which countries are the most exposed (in particular in
Europe) and provides a number of operational and strategic
recommendations to face the situation.

Meanwhile, in the present issue (on subscription), LEAP/E2020
anticipates what the global systemic crisis (now obvious to everyone)
will bring along in the next few months, as regards in particular to
the negative side effects of the US Federal Reserve's bank loans
currently contributing to weaken even more the US financial system,
and as regards also to bank exposure in the US and in the most exposed
European countries. Simultaneously our team analyses the effect of
today's US economic and financial crisis on the probability and
consequences of an attack on Iran by Israel and the US before the next
US presidential election.

In any event, with the announcement of an emergency plan to save the
US 5th largest private bank, Bear Stearns (1) (preluding to its being
sold or its failing in the coming weeks), it turned out that a large
financial institution indeed went bankrupt in the first quarter of
2008, as anticipated by our team in GEAB N°19 (2).

Meanwhile, the US dollar resumed plummeting against Euro, Yen, Yuan;
gold soared over 1,000 USD per ounce, oil reached 110 USD per barrel,
global stock markets lost 20 percent in three months, and the Fed's
most recent attempt to stop the financial crisis through a 200 billion
USD bank loan plan has already proved to fail... the bases of the
financial and economic order that prevailed in the last decades are
collapsing under our eyes, at an increasing pace… all the signs of a
systemic crisis are gathered (3).

The whole world is now aware that we are faced to a crisis of
unprecedented scope and nature. This level of awareness enables our
team to refine some of their anticipations. About currencies for
instance, our team undertook to review their estimation of the value
of the US dollar against the three other strategic currencies - Euro,
Yen and Yuan. LEAP/E2020 now estimates that the EURUSD exchange rate
will reach 1.75 at the end of 2008 (instead of the 1.70 estimation
made in 2006); the USDYEN rate should fall down to 90 and the USDYUAN
down to 6 (4).
 
 

Faced to the extent of the Very Great US Depression currently
unfolding (6), LEAP/E2020 is glad that the US authorities took into
consideration the numerous protests (7) and decided to maintain the
publication of US economic indicators on the website
EconomicIndicators.Gov. In such difficult times, it is important that
statistical information on the US economy remains easily available to
everyone. The money of a great number of private and public,
individual and collective operators depends on this transparency.

In the same sense, the Federal Reserve of Atlanta distributes for free
a DVD entitled « Crisis Preparedness: Reconnecting the Financial
Lifeline » and designed to help operators of all kinds to anticipate a
crisis and get prepared to it (8). In the perspective of a collapse of
the real economy in the US (expected to happen in September 2008
according to LEAP/E2020's anticipations (9)), these official advices
take a special meaning. For instance, like we have been repeating for
months, the DVD keeps saying that in the event of a severe crisis «
Cash becomes king », whether the crisis is linked to a natural
disaster or a human-made one, as shown by the fact that US insurers
have already lost more money because of the subprime crisis than
because of the Katrina hurricane, though the worse natural disaster in
the history of the US (10).
 

To finish with, graphics such as the one above illustrate in a
striking manner that the situation is infinitely worse that what the
cleverest leader (and they are not many) can imagine. It shows that
the US financial system, and that of a large part of the world, is
lethally hurt. US banks have no more money; it is as simple and
dramatic as that. Contagion will now enter a second phase of
development, generating a new series of bank failures by this summer,
as anticipated in GEAB N°20, entailing a dislocation of the global
financial system in the second semester of 2008.