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BirdGuano
12-19-2008, 01:57 PM
http://www.leap2020.eu/GEAB-N-30-is-available!-Global-systemic-crisis-New-tipping-point-in-March-2009-When-the-world-becomes-aware-that-this_a2567.html

Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis'
GEAB N°30 (December 16, 2008) -


Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis'

LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.:

• the length of the crisis
• the explosion of unemployment worldwide
• the risk of sudden collapse of all capital-based pension systems

A whole range of psychological factors will contribute to this tipping point: general awareness in Europe, America and Asia that the crisis has escaped from the control of every public authority, whether national or international; that it is severely affecting all regions of the world, even if some are more affected than others (see GEAB N°28); that it is directly hitting hundreds of millions of people in the “developed” world; and that it is only worsening as its consequences reveal throughout the real economy.

National governments and international institutions only have three months left to prepare themselves to the next blow, one that could go along severe risks of social chaos. The countries which are not properly equipped to cope with a surge in unemployment and major risks on pensions will be seriously destabilized by this new public awareness.

In this 30th issue of the GEAB, the LEAP/E2020 team describes these three destabilizing processes (two of them are described in this public announcement) and gives recommendations to cope with the surge in risks. In addition, this issue also provides the opportunity to make an objective assessment of the reliability of LEAP/E2020's anticipations and specifies a number of methodological aspects of the analytical process used.

In 2008, LEAP/E2020's success rate reaches 80%, and even 86% when it comes to strictly socio-econimic anticipations. In a year of major upheavals, our team is altogether quite proud of this result.
http://www.leap2020.eu/photo/1148470-1477248.jpg?v=1229459285

The crisis will last at least until the end of 2010

Evolution of the US money base and indications of related major US crisis periods (1910 – 2008) - Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic

Analysis
As we already explained in GEAB N°28, the crisis will affect in different ways the different regions of the world. However, and LEAP/E2020 wishes to be very clear on that aspect, contrary to the dominant stance today (coming from those experts who denied the fact that a crisis was coming up three years ago, who denied that it was global two years ago, and who denied the fact that it was systemic six months ago), we anticipate that the minimum duration of the decanting phase of the crisis is 3 years (1).

It shall be finished neither in spring 2009, nor in summer 2009, nor at the beginning of 2010. It is only towards the end of 2010 that the situation will start stabilizing again and improving a little in some regions of the world, i.e. Asia and the Eurozone, as well as in countries producing energy, mineral and food commodities (2).

Elsewhere, it will continue; in particular in the US and UK, and in all the countries depending on their economy, where the duration could approximate a decade. In fact these countries should not expect any real return to growth before 2018.

Moreover no one should imagine that the improvement at the end of 2010 will correspond to a return of high growth.

The recovery will take long. For instance, stock markets will take a decade to return to levels comparable to 2007, if they ever return to that. Remember that it took twenty years before Wall Street resumed its 1920 levels.

Well, according to LEAP/E2020, the present crisis is deeper and longer than in the 1930s. The general public will gradually become aware of the long-term aspect of this crisis in the coming three months and this situation will immediately trigger two tendencies carrying with them socio-economic instability: fear of the future and enhanced criticism towards leaders.

The risk of sudden collapse of all capital-based pension systems
Finally, among the various consequences of the crisis for dozens of millions of people in the US, Canada, UK, Japan, Netherlands and Denmark in particular (3), there is the fact that, from the end of the year 2008 onward, news about major losses on the part of the organizations in charge of managing the financial assets supposed to finance pensions will multiply. The OECD anticipates that pension funds will lose 4,000 billion USD in 2008 only (4). In the Netherlands (5) as well as in the United Kingdom (6), monitoring organizations recently blew the whistle asking for an emergency contribution reappraisal and a State intervention. In the United States, growing numbers of announcements call for contribution increases and benefit reductions (7), knowing that it is only in a few weeks time that most of these funds will start calculating their total losses (8). Most of them are still deluding themselves about their capacity to build up again their capital after the markets turn around.

In March 2009, when pension fund managers, pensioners and governments will become simultaneously aware of the fact that the crisis is there to last, that it coincides with the « baby-boomer » generation’s age of retirement and that the markets will not resume their 2007 levels until many long years (9), chaos will flood this sector and governments will reach the moment when they will be compelled to nationalize all these funds. And Argentina, who took this decision a few months ago already, will appear a pioneer.

All the trends described above are already at work. Their combination and the public becoming aware of the consequences they could entail, will result in the great collective psychological trauma of Spring 2009, when everyone will realize that we are all trapped into a crisis worse than in the 1930s and that there is no possible way out in the short-term.

The impact on the world’s collective mentalities of people and policy-makers will be decisive and modify significantly the course of the crisis in its next stage. Based on greater disillusion and fewer beliefs, social and political instability will settle down worldwide.

Finally, this GEAB N°30 presents a series of 13 questions & answers designed to enhance savers'/investors'/decision-makers' capacity to understand and anticipate the next stages of the global systemic crisis:
1. Is this crisis different from the previous crises which affected capitalism?
2. Is this crisis different from the 1930s crisis?
3. Is the crisis as serious in Europe or Asia as in the USA?
4. Are the current actions undertaken by public authorities worldwide sufficient to curb the crisis?
5. What are the major risks still weighting on the world financial system? And are all savings equal in front of the crisis?
6. Is the Eurozone a true protection shield against the worst aspects of the crisis and what should the Eurozone do to improve its protection status?
7. Is the Bretton Woods system (in its 1970s last version) currently collapsing? Should the Euro take the place of the Dollar?
8. What can be expected from the next G20 meeting in London?
9. Do you think that deflation is right now the biggest threat to economies worldwide?
10. Do you think that the Obama administration will be able to prevent the USA from sinking into what you called the ‘Very Great US Depression’?
11. In terms of currencies, beyond your anticipation of the Dollar resuming its collapse in the very next months, do you think that the UK Pound and the Swiss Franc are still currencies with an international status?
12. Do you think that the CDS market is about to implode in the coming months? And what could be the consequences of such a phenomenon?
13. Is there a ‘US Treasury Bonds Bubble” about to burst?

---------
Notes:

(1) It can be useful to read on this crisis a very interesting contribution by Robert Guttmann published in the 2nd half of 2008 on the website Revues.org, supported by the Maison des Sciences de l'Homme Paris-Nord.

(2) As a matter of fact, commodities have already started contributing to boost the market of international sea transport. Source: Financial Times, 12/14/2008

(3) It is in those countries that capital-based pension systems were most developed (see GEAB N°23) but is also the case of Ireland. Source: Independent, 11/30/2008

(4) Source: OECD, 11/12/2008

(5) Source: NU.NL, 12/15/2008

(6) Source: BBC, 12/09/2008

(7) Sources: WallStreetJournal, 11/17/2008; Phillyburbs, 11/25/2008; RockyMountainNews, 11/19/2008

(8) Source: CNBC, 12/05/2008

(9) Not to mention the effect of an explosion of the US T-Bond bubble on pension funds. See Q&A, GEAB N°30.

Misty
12-19-2008, 02:24 PM
I was wondering what this group is and I picked this off the link given above:


Practical details about GEAB...



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Available in: Français, English, Deutsch, Español

Frequency: Monthly - 10 issues a year published on the 16th of each month (interruption in July/August)

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This is less than cheerful, to say the least. Is this a doomer group or a middle-ground group or what?

Does this mean that equities are a good buy now? :blink: :D

sandyd
12-19-2008, 02:32 PM
I think we will close one IRA....just in case.....and keep an eye on this to close the other next year.....

BirdGuano
12-19-2008, 04:29 PM
This is less than cheerful, to say the least. Is this a doomer group or a middle-ground group or what?


Hard to say. My French is rusty and I don't speak Dutch.

BirdGuano
12-19-2008, 04:31 PM
I think we will close one IRA....just in case.....and keep an eye on this to close the other next year.....

Unfortunately I've heard this similar meme in differing locations, and from different sources over the past 6 months.

One of them was a Venture Capital meeting.

24 month painful economic disaster, where it's pure survival mode, 5 years to regain our footing, followed by at least 10-15 years to re-claw our way back to growth.

Sigh....

sandyd
12-19-2008, 04:42 PM
24 months as bad as or worse than GDI?

BirdGuano
12-19-2008, 04:54 PM
24 months as bad as or worse than GDI?

I think that will depend on geography.

Not all places will fare equally.

rryan
12-19-2008, 04:56 PM
Unfortunately I've heard this similar meme in differing locations, and from different sources over the past 6 months.

One of them was a Venture Capital meeting.

24 month painful economic disaster, where it's pure survival mode, 5 years to regain our footing, followed by at least 10-15 years to re-claw our way back to growth.

Sigh....

I have to jump in here---soem VC's may be in for a few years of pure survival based simply on the nature of what they do but 10-15 years of decline or non growth?

never happen. Someone will pull a a rabbit out of a hat somewhere and we'll continue some fucked up way of dong things but there will be recovery and growth within a couple years.

If not there will be wars as for many reasons and these will be somewhat supported as they will aid in culling excess population and get the unemployed off the streets..

With that as the alternative i am betting on the rabbit/hat scenario.

Fattail
12-19-2008, 05:22 PM
Most of the economic "growth" of the last 25 years was based on cheap money,deficit spending, a declining savings rate, Greenspan/Bernanke puts on the stock market, and in the last 10 years easy and expanding credit brought about by declining credit standards, which makes a great deal of the perceived "growth" an illusion.

Growth will return once we remove the excess capacity from our economy brought about by the above mentioned stimulants. This means the fall will be much farther than in a normal recession because of the artificial elevation of the previous economic expansion.

Growth will return but at a much slower pace, how soon depends on how fast we reach the bottom, and the powers that be are doing everything they can to slow the descent.

BirdGuano
12-19-2008, 05:36 PM
With that as the alternative i am betting on the rabbit/hat scenario.

Let me know how that works out for you...:beer:

There is currently no "rabbit" to replace that part of the economy which is consumer driven.. around 70%, of which 30% of that 70% will have DISAPPEARED by Q1 of 2009. Zip. Nada.

There is currently NO replacement engine to propel growth, or even a "next bubble" on the horizon.

While that may change, it would be akin to a positive black swan event... and at least as highly improbable as a negative black swan event.

sandyd
12-19-2008, 09:46 PM
24 month painful economic disaster, where it's pure survival mode,

I was thinking about this and talking with my DH, and the question is:

survival mode for a VC is different than for me or you in some ways.....are they saying they just wanna preserve capital and not lose any for the next couple of years....not a physical survival where they worry about their next meal?

Thanks....

BirdGuano
12-19-2008, 10:34 PM
survival mode for a VC is different than for me or you in some ways.....are they saying they just wanna preserve capital and not lose any for the next couple of years....not a physical survival where they worry about their next meal?


These guys are multi millionaires, some billionaires, so they are not worried where their next personal meal comes from.

They are talking about their portfolio companies, literal physical survival for their portfolio companies, conserving cash, literally where the "next meal" for their companies will come from for two years... where the cash comes from so their companies don't "starve".

Oh and BTW it's not just Venture Capital.

Here's a summary of an internal memo from FEDEX:
http://biz.yahoo.com/bw/081218/20081218005200.html?.v=1

FedEx is now implementing a number of additional cost reduction initiatives to mitigate the effects of deteriorating business conditions, including:

* Base salary decreases, effective January 1, 2009:
o 20% reduction for FedEx Corp. CEO Frederick W. Smith
o 7.5%-10.0% reduction for other senior FedEx executives
o 5.0% reduction for remaining U.S. salaried exempt personnel
* Elimination of calendar 2009 merit-based salary increases for U.S. salaried exempt personnel
* Suspension of 401(k) company matching contributions for a minimum of one year, effective February 1, 2009>>

sandyd
12-19-2008, 11:23 PM
Hey....it's good to know they are NOT prepping for Mad Max then!

Two years of yuck and then even a slow grind upward is improvement over some predictions.
Thanks.....

:)


Oh and I guess none of them used Madoff? :tt2: (Or they might wonder about their next meal.....)

BirdGuano
12-19-2008, 11:26 PM
Hey....it's good to know they are NOT prepping for Mad Max then!


Actually some of them ARE. A few have stated this publicly if you look hard enough in the trade media.

Several are my threat management clients, thus the dinner invitation in the first place.

:D

The private conversations are much different than the powerpoints.

sandyd
12-19-2008, 11:54 PM
So....take away my one bright moment of hope...go for it. :chocolate:


Hmmmm...... I can see de Becker having a real feel for some people being in more danger and him having more business.....even I have some pretty gruesome wishes at times...............people who know how to put that anger into action will be dangerous to some if this train wreck goes too far out of control. IMHO

And Celente is like Mad Max on acid......I admit, I keep hoping he is full of brown goo and not chocolate.

BirdGuano
12-20-2008, 12:09 AM
The USA isn't Seoul which riots at the drop of a hat, or the 3rd world like Somalia.... yet, but reality says we are ALL just 9 meals from anarchy.

Don't stress.

Do what you can do and keep your mouth shut, and you're ahead of the rest of the crowd.

Most of this will be out of your control.

Your reaction isn't.

sandyd
12-20-2008, 12:20 AM
90% true....there is that biological thingie to deal with tho....it's like...I see a woolly mammoth charging at me and guess what?


Yeah....:panic:

Sometimes I think I should not read or talk to anyone about how he is charging at us.

*sigh*

Chatted with 3 old guys (70-85yo) today about Argentina....and yeah, they hope it isn't coming here but none are feeling optimistic....

I can't even go out in public anymore without the subject coming up....even at the Library...they talked about which branches are closing-none here yet but LA is putting the word out, I hear......

Fiddlerdave
12-20-2008, 05:26 AM
Let me know how that works out for you...:beer:

There is currently no "rabbit" to replace that part of the economy which is consumer driven.. around 70%, of which 30% of that 70% will have DISAPPEARED by Q1 of 2009. Zip. Nada.

There is currently NO replacement engine to propel growth, or even a "next bubble" on the horizon.

While that may change, it would be akin to a positive black swan event... and at least as highly improbable as a negative black swan event.This is so true. I wish people who talk about growth had some idea where it would come from. If AI read one more article abiout that tiny Gutter something or other company,exporting more, I think I'll scream.

What is going to replace a million or two high pay financial jobs that are NEVER coming back, alone???

The bottom is two years away, at least. And indetermined when any improvement begun, five years after that, if we are lucky. That;s how long it takes to build manufacturing infrastructure, if you have the money to invest.

Our one hope is foreign investment building here, We won't keep any profit, but then there would be low pay jobs.

EVERYONE should start thinking about where they will get health insurance when you lose your jon or you companh cuts it, particularly if you have health problems. Any health problems at all. The health ins. companies are cherry picking only the finest, most risk free cherries.

Susie
12-20-2008, 05:42 AM
Unfortunately I've heard this similar meme in differing locations, and from different sources over the past 6 months.

One of them was a Venture Capital meeting.

24 month painful economic disaster, where it's pure survival mode, 5 years to regain our footing, followed by at least 10-15 years to re-claw our way back to growth.

Sigh....

And we thought we were prepping for birdflu.

frodo
12-20-2008, 07:14 AM
Sorry possums. The very rich got into commodity farming a few years ago. That's why you don't hear the farmers screaming about economic conditions at the moment.

They will keep shtum, and I'm in there with them.

rryan
12-20-2008, 10:09 AM
Let me know how that works out for you...:beer:

There is currently no "rabbit" to replace that part of the economy which is consumer driven.. around 70%, of which 30% of that 70% will have DISAPPEARED by Q1 of 2009. Zip. Nada.

There is currently NO replacement engine to propel growth, or even a "next bubble" on the horizon.

While that may change, it would be akin to a positive black swan event... and at least as highly improbable as a negative black swan event.

BG---I realise it could go the other way and have put myself in a position and location to ride out most anything indefinitely.

However, having watched the impending "end of all things" all my life and witnessed what many of the scenarios did I don't believe we'll see the whole thing come crashing down.

TSHTF for people every day whether the economy is good or bad and sometimes it happens for more people than usual but that is normal.

I look back at 80's real estate crash, the S&L debacle and oil plunge in Texas and it WAS armageddon there for all practical purposes.

Yet we are still here.

l

sandyd
12-20-2008, 11:21 AM
rryan we are still here and for awhile it was even better for many....bigger homes, bigger and nicer cars, toys like boats.....I'm betting that those days are over for many, many years....say...50....

No rabbit out of the hat to get us back to the wild bubble days.....I expect within 10 yrs new jobs will pop up--the pay will just be half or less of what we used to think our work was worth. It will probably buy enough food, clothing and shelter (not the big house though) for families to get by and even save some.

BirdGuano
12-20-2008, 12:10 PM
I look back at 80's real estate crash, the S&L debacle and oil plunge in Texas and it WAS armageddon there for all practical purposes.

Yet we are still here.



Humans will continue to exist, even with BirdFlu Susie :D

But the suffering will not be equally distributed.

Your goal should be to remain behind the crest of the wave, and not in the crashing water ahead of the wave.

YMMV.