The U.S. Should Brace Itself for a Financial 'Perfect Storm' in November 2011

Global Systemic Crisis - Fourth Quarter 2011: Implosive Fusion of Global Financial Assets (Excerpt)

September 16, 2011

GEAB - As anticipated by LEAP/E2020 since November 2010, and often repeated up to June 2011, the second half of 2011 has started with a sudden and major relapse of the crisis. Nearly USD 10 trillion of the USD 15 trillion in ghost assets announced in GEAB N°56 have already gone up in smoke. The rest (and probably much more) will vanish in the fourth quarter of 2011, which will be marked by what our team calls "the implosive fusion of global financial assets".

It’s the two major global financial centers, Wall Street in New York and the City of London, which will be the "preferred reactors" of this fusion.

And, as predicted by LEAP/E2020 for several months, it’s the solution to the public debt problems in some Euroland countries which will enable this reaction to reach critical mass, after which nothing is controllable.

But the bulk of the fuel that will drive the reaction and turn it into a real global shock is found in the United States. Since July 2011 we have only started on the process that led to this situation: the worst is ahead of us and very close!

In this issue N°57, we have chosen to address, very directly, the great manipulation organized around the Greek crisis and the Euro whilst describing its direct link with the implosive fusion process of financial assets worldwide.

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Greek crisis and the Euro: Itemizing the huge manipulation in progress

But let’s come back to Greece and what is beginning to be a "very repetitive old story" which, as we have already explained, returns to the front of the media stage every time Washington and London are in serious difficulties).

Moreover, coincidentally, the summer has been disastrous for the United States, which is now in recession, which has seen their credit rating cut (an event deemed unthinkable by all the "experts" only six months ago) and exposed their political system’s state of widespread paralysis to an astonished world, all whilst being incapable of putting any serious measure in place to reduce their deficits.

At the same time, the United Kingdom is sinking into depression with riots of uncommon violence, an austerity policy that fails to control budget deficits whilst plunging the country into an unprecedented social crisis, and a ruling coalition that doesn’t even know why it governs together against the backdrop of the scandal of collusion between political leaders and the Murdoch empire.

No doubt, in such a context, everything was ripe for a media relaunch of the Greek crisis and its corollary, the end of the Euro!

If LEAP/E2020 had to summarize the "Hollywood style" or "Fox News" scenario, we would have the following synopsis:

"While the US iceberg is ramming the Titanic, the crew leads the passengers in search of dangerous Greek terrorists who may have planted bombs on board!"

In propaganda terms, it’s a known recipe: it’s a diversion to allow:

• First of all, the rescue of the passengers one wants to save (the informed elite who know very well that there are no Greek terrorists on board) since everyone can’t be saved; and


• Then, hide the problem’s true nature for as long as possible to avoid a revolt on board (including some of the crew who sincerely believe that there really are bombs on board).

Focusing on the background, we must emphasize that the "promoters" of a Greek crisis presented as a fatal crisis for the Euro have spent their time repeating it for almost two years without any of their forecasts coming to pass in any shape or form (except to continue talking about it).

Facts are stubborn. Despite the media outcry that should have seen off many economies or currencies:

• The Euro is stable, Euroland has come on in leaps and bounds in terms of integration and is about to break even more spectacular new ground,


• The emerging countries continue to diversify out of US Treasury Bonds and buy Euroland debt, and


• Greece’s exit from the Euro zone is still completely beyond consideration except in the Anglo-Saxon media articles whose writers generally have no idea of how the EU functions and even less of the strong trends that drive it.

[...]

The fourth quarter 2011 marks the end of two key examples of the world before the crisis

The implosive fusion of the fourth quarter will thus directly result from the encounter between two new realities that contradict two basic conditions of existence of the world before the crisis:

1. The one, born in Europe, consists of now rejecting the idea that private financial operators, of which Wall Street and the City are the embodiment par excellence, are not fully responsible for the risks they take. Yet for decades, this was the prevailing idea that fueled the tremendous growth of the financial economy: “Heads I win, tails you bail me out”. Even the existence of large Western banks and insurance companies has become intrinsically linked to this certainty. The balance sheets of major players on Wall Street and the City (and of many large Euroland and Japanese banks) are unable to withstand this tremendous paradigm shift.


2. The other, generated in the United States, is the proven end of the US engine of global growth against a background of the country’s complete political paralysis which, de facto, will end 2011 as Greece ended 2009: the world discovering little by little that the country has a debt it can no longer support, that its creditors are unwilling to lend, and its economy is unable to cope with significant austerity without plunging into a deep depression.

   In some ways, the analogy can be taken further: just as the EU and the banks, from 1982 to 2009, lent freely to Greece ... and without pressing for accounts, over the same period, the world has lent freely to the United States believing its leaders’ promises about the state of the economy and the country’s finances. And in both cases, the money has been wasted in real estate booms with no future, in extravagant crony politics (in the US cronyism is Wall Street, the oil industry, health service providers) and in unproductive military spending. And in both cases, everyone discovers that in a few quarters you can’t fix decades of recklessness.

The politico-financial "perfect storm" of November 2011

So, in November 2011 the United States will brace itself for a politico-financial "perfect storm" that will make the summer problems look like a slight sea breeze. The six elements of the future crisis have already come together):

1. The "super committee" responsible for deciding budget cuts on which there was no agreement this summer will prove incapable of resolving the tensions between the two parties.


2. The automatic budget cuts required to be made in the absence of agreement will result in a major political crisis in Washington and increasing tensions, especially with the military and the recipients of social benefits. At the same time, this "automatic function" (a real abdication of decision-making authority by Congress and the United States Presidency) will generate major disturbances in the functioning of the state system.


3. The other major rating agencies will join S&P in downgrading the US credit rating and diversification out of US Treasury Bonds will accelerate, in the knowledge that the United States now depends primarily on short-term financing.


4. The inability of the Fed to do anything but talk and manipulate stock markets or gasoline prices in the United States, now makes any last-minute "rescue" impossible.


5. Over the next three months the US public deficit will increase dramatically as tax revenues are now already in the process of collapsing under the impact of the relapse into recession. In other words, the increased debt ceiling voted in a few weeks ago will be reached well before the November 2012 elections ... and this is information that will spread like wildfire in the fourth quarter of 2011 ... reinforcing all investors’ fears to see the United States follow Euroland’s example over Greece and force its creditors to take heavy losses.


6. Barack Obama’s new plan in the fight against unemployment will have no significant effect. On the one hand, it’s not up to the challenge and, for this reason, can’t rally the country’s energies; and on the other, it will be cut to pieces by the Republicans who will only keep the tax cuts... The only result of which will be to increase the country's debt even more.

So for LEAP/E2020, it's a combination of all these elements at the end of 2011 that will trigger this major financial shock ... a kind of final shock thrusting the planet out of the world before the crisis for good. But the world after is still to be built because many futures are possible, beginning 2012. As Franck Biancheri anticipated in his book, the period 2012-2016 forms an historical crossroads. One must try not to mistake the Path!

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