up ... the latest from ... GlobalEurope Anticipation Bulletin (GEAB)
The subprime crisis is nothing but a trigger. Indeed the whole of the
financial bubble based on US debt is bursting, because the US consumer
is battered and the US economy is now in recessflation, as described
by LEAP/E2020 in GEAB N°16 (June 2007). Behind those subprime
mortgages, all US mortgages, car loans, credit cards… are now facing a
dramatic increase in the default rate (the public debt follows the
same trend as the US dollar and Treasuries keep on dropping).In other words, the wisest people in the global banking and financial
sphere (which excludes most of today's large international bank
leaders) know that in the coming six months some entire sectors of
activity and corresponding results will either vanish or experience
record-losses.Given that the real economy is already infected not only in the US but
all over the world, the collapse of the British, French and Spanish
housing markets is next on this year's agenda, while Asia, China and
Japan are about to face the simultaneous collapse of their exports to
the US market and of the value of all their UD dollar-denominated
assets (US currency, treasury bonds, corporate shares, etc…). The
chart above is explicit about which countries will be hit hardest when
the US debt bubble bursts, i.e. Japan, China, United Kingdom and
countries exporting oil in US dollars.Concerning future steps, LEAP/E2020 only has two interrogations: how
many experts, central bankers, financial journalists, politicians
fascinated by America will be able to understand this sequence of
events that questions so deeply their vision of the world? And shall
they understand soon enough, not wasting time expecting « jolts » and
« rebounds » from an America that has not much left to do with
mid-20th century' America.A speed race between reality and theory is now open. All in all, a
systemic crisis always boils down to such a race and the winner is
always reality. Policy-makers, if they are lucid, can avoid a brutal
and frontal collision with facts, thus sparing their populations from
big damages. Throughout the planet, the months to come will enable to
tell the wheat from the weeds in this matter.LEAP/E2020 is convinced that the "US Very Great Depression" announced
for 2007 is indeed next on History's agenda, and that it will have
consequences incommensurable with the 1929 crisis, even though a
number of indicators common to both crises started blinking a few
months ago, and even though 1929 remains the last possible comparison
in modern History (12).