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Roman Abramovitch

Economic Chaos? 2 Parts To This Document

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Relevant factors of the American economic crisis

LEAP/E2020 anticipate that these two non-official decisions will involve the United States and the world in a monetary, financial, and soon economic crisis without precedent on a planetary scale. The ‘monetarisation’ of the US debt is indeed a very technical term describing a catastrophically simple reality: the United States undertake not to refund their debt, or more exactly to refund it in "monkey currency". LEAP/E2020 also anticipate that the process will accelerate at the end of March, in coincidence with the launching of the Iranian Oil Bourse, which can only precipitate the sales of US Treasury Bonds by their non-American holders.

In this perspective, it is useful to contemplate the following information[7]: the share of the debt of the US government owned by US banks fell down to 1,7% in 2004, as opposed to 18% in 1982. In parallel, the share of this same debt owned by foreign operators went from 17% in 1982 up to 49% in 2004.

→ Question: How comes that US banks got rid of almost all their share of the US national debt over the last years?

Moreover, in order to try to avoid the explosion of the "real-estate bubble" on which rests the US household consumption, and at a time when the US saving rate has become negative for the first time since 1932 and 1933 (in the middle of the "Great Depression"), the Bush administration, in partnership with the new owner of the US Federal Reserve and a follower of this monetary approach, will flood the US market of liquidities.

Some anticipated effects of this systemic rupture

According to LEAP/E2020, the non-accidental conjunction of the Iranian and American decisions, is a decisive stage in the release of a systemic crisis marking the end of the international order set up after World War II, and will be characterised between the end of March and the end of the year 2006 by a plunge in the dollar (possibly down to 1 Euro = 1,70 US Dollars in 2007) putting an immense upward pressure on the Euro, a significant rise of the oil price (over 100$ per barrel), an aggravation of the American and British military situations in the Middle East, a US budgetary, financial and economic crisis comparable in scope with the 1929 crisis, very serious economic and financial consequences for Asia in particular (namely China) but also for the United Kingdom[8], a sudden stop in the economic process of globalisation, a collapse of the transatlantic axis leading to a general increase of all the domestic and external political dangers all over the world.

For individual dollar-holders, as for trans-national corporations or political and administrative decision makers, the consequences of this last week of March 2006 will be crucial. These consequences require some difficult decisions to be made as soon as possible (crisis anticipation is always a complex process since it relies on a bet) because once the crisis begins, the stampede starts and all those who chose to wait lose.

For private individuals, the choice is clear: the US Dollar no longer is a “refuge” currency. The rising-cost of gold over the last year shows that many people have already anticipated this trend of the US currency.

Anticipating… or being swept away by the winds of history

For companies and governments, it is crucial to integrate now action plans in today's decision-making processes, which can contribute to soften significantly the "monetary, financial and economic tsunami" which will break on the planet at the end of next month. To use a simple image – by the way, one used in the political anticipation scenario « USA 2010 »[9] -, the impact of the events of the last week of March 2006 on the “Western World” we have known since 1945 will be comparable to the impact of the Fall of the Iron Curtain in 1989 on the “Soviet Block”.

If this Alarm is so precise, it is that LEAP/E2020’s analyses concluded that all possible scenarios now lead to one single result: we collectively approach a "historical node" which is henceforth inevitable whatever the action of international or national actors. At this stage, only a direct and immediate action on the part of the US administration aimed at preventing a military confrontation with Iran on the one hand, and at giving up the idea to monetarise the US foreign debt on the other hand, could change the course of events. For LEAP/E2020 it is obvious that not only such actions will not be initiated by the current leaders in Washington, but that on the contrary they have already chosen "to force the destiny" by shirking their economic and financial problems at the expense of the rest of the world. European governments in particular should draw very quickly all the conclusions from this fact.

For information, LEAP/E2020's original method of political anticipation has allowed several of its experts to anticipate (and publish) in particular : in 1988, the approaching end of the Iron Curtain; in 1997, the progressive collapse in capacity of action and democratic legitimacy of the European institutional system; in 2002, the US being stuck in Iraq’s quagmire and above all the sustainable collapse of US international credibility; in 2003, the failure of the referenda on the European Constitution. Its methodology of anticipation of "systemic ruptures" now being well established, it is our duty as researchers and citizens to share it with the citizens and the European decision makers; especially because for individual or collective, private or public players, it is still time to undertake measures in order to reduce significantly the impact of this crisis on their positions whether these are economic, political or financial.

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Add to this also the pending Japanese interest rate increase and we have quite a nice trigger!

HPC2006

The scale of the potential recession LEAP/E2020 are referring to is akin to that of the Great Depression - it's not just 'quite a nice trigger' for a HPC but potentially a global economic catastrophy...

Essentially the point made is that the economic up spiral, which globalisation has allowed to become synchronised, means more countries than ever are in a similar pattern and that this more than 10 year up trend now has the possbility to go into reverse. LEAP/E2020 make the point that debt trading is fundamental to the current economic system and that the US using monetary policy to reduce its comparitive debt margins may serious devalue the dollar and more importantly reduce confidence in the currency itself.

With so many countries invested in dollar based bonds or even in the US property and stock markets it is quite reasonable to assume there will be an exit rush from US markets in the very near future - this in turn will influence other investors in many countries to have recduced confidence, which therefore means their countries will become involved in the US down spiral...

Mainland USA is far more self sufficient than many EU countries in terms of food, manufacturing and infrastructure... which means a dollar devalation wont make the relative cost of living rise too far in the US. For countries like the UK which rely heavily of imported goods a devaluation of sterling compared to other currencies could be truly disasterous.

Typically indicators before a large recession of this kind include inverse yield curves, rising unemployment, stagnant growth/GDP, a rush to gold and precious metals, increasing raw materials costs i.e. Oil, and of course tends to follow a period of fundamentally unsustainable growth - bascially the UK and much of the world economy as it stands today.

- Pye (Property Speculation Ninja :ph34r: )

Edited by pyewackitt

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Is it possible for a seasoned poster such as Dr Bubb to translate this into simple English?

I am somewhat concerned at the doom scenario being painted.

By the way I have been living in various rented properties for the past 10 years.Will 2006 be the year I buy??

Any advice please.

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By the way I have been living in various rented properties for the past 10 years. Will 2006 be the year I buy?? Any advice please.

Is that a joke? :unsure:

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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