News Letter 5844-045
19th day of the Tenth month 5844 years after creation
January 17, 2009
Shabbat Shalom Brethren,
This is the second article I wanted to share with you. This is a European based think group, and we are being warned that the current financial crisis is going to last 10 years before we come out of the mess we are currently in.
GEAB NÂ°30 is available! Global systemic crisis â€“ New tipping-point in March 2009: ‘When the world becomes aware that this crisis is worse than the 1930s crisis’
– Public announcement GEAB NÂ°30 (December 16, 2008) –
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 NÂ°28); that it is directly hitting hundreds of millions of people in the â€œdevelopedâ€ 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 teal ise altogether quite proud of this result.
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 â€“ 2008) – Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic Analysis
As we already explained in GEAB NÂ°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, were 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 Â« baby-boomer Â» 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 NÂ°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?
(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 NÂ°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 NÂ°30.
Mardi 16 December 2008
This chart is taken from October 2008 and can be seen at http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s[id]=SBASENS&s[transformation]=pc1
Please go to the above link to this chart from the St Louis Bank of the Federal reserve. I regret I am not able to upload it here for you to look at.
This chart is from October 2008. It compares the crisis at that time to the Great Depression of the 1930’s and the War years of the 1940’s. What I want you to consider is just how big the Great Depression was and how dramatic the war years were.
This next chart is taken from December 2008 and again I am unable to upload this chart so please take a look at it thought this link https://research.stlouisfed.org/fred2/fredgraph?graph_id=12298&category_id=0
The first one we looked at was in October. Now this one is for December of 2008. Notice how much the Federal reserve has now lent the banks. Notice how it is making the Great Depression and the war years of WW II shrink in comparison.
This chart is from December 2008 Now look at it and hold your jaw before it hits the ground. http://research.stlouisfed.org/fred2/series/SBASENS
Brethren we are in for many of years of hardship. Pray for your brethren
by Martin D. Weiss, Ph.D.
The ugly data that poured forth from official sources last week demonstrate, beyond a shadow of a doubt, that the jobs situation in the United States is an unmitigated disaster.
Unemployment is far worse than the pundits dreamed possible just a few months ago the highest official unemployment rate since 1993, the lowest weekly hours worked since 1964, the most jobs lost in a year since 1945!
Unemployment is actually 13.5% ” nearly double the narrowly defined unemployment rate ” if you include job seekers who have given up looking or who have been forced to accept part-time work.
Unemployment is snowballing. Layoffs beget consumer cutbacks, and consumer cutbacks beget more layoffs – a classic vicious cycle that’s gaining momentum.
Unemployment is hitting hard in January! A new, larger, wave of layoffs, postponed during the December holiday season, is hitting right now as we speak.
So if you think the announcement of 7.2% unemployment is shocking, wait till you see what’s coming next.
Millions more jobs will be lost. At the same time, retired Americans will suffer an across-the-board decline in investment income. And people of all walks of life will be scrambling to replace that money.
Remember the reason I am showing you this information. As unemployment increases, tax revenue decreases. As tax revenues decrease, compounded by the government paying out unemployment insurance. Thus each government looses their source of providing funds which are needed to pay civil servants who maintain the sewage and water treatment plants and collect the garbage at the same time as they are paying out an increasing amount to people who are now unemployed.
Lastly, fresh off the wires this Friday evening Jan 16,2009
Bank of America posts massive $1.79 billion loss in last three months of 2008 … slashes dividends … accepts $138 billion emergency lifeline …
Citigroup reports total losses of $18.7 billion in 2008 â€” $8.29 billion in the fourth quarter ALONE …
New phase of bank crisis beginning … soaring unemployment, plunging stocks, canceled dividends, and sinking investment income ahead …
FREE VIDEO BRIEFING – 7 Startling Forecasts for 2009 to help you survive … and to help keep money flowing to you no matter how much worse this great financial famine becomes CLICK THIS LINK http://webcast.streamlogics.com/audience/index.asp?eventid=81655519&stage=2 to watch it now!
( I would like you to listen to the information they share about the economy, I am not endorsing or recommending you become involved in the investment plan they are promoting. Just listen to the discussion on the economy. It is these things that are going to lead into the third and fourth curse of Lev 26. Get ready)
Just when everyone thought we’d seen the worst of the carnage in the U.S. banking system …
Despite the $350 billion in TARP funds Washington already spent to save the big banks …
Despite Treasury Secretary Paulson’s emphatic assurance to CNBC’s Maria Bartiromo that the banks are no longer in danger just a few days ago …
And regardless of the $138 billion ADDITIONAL lifeline he’s just been forced to throw Bank of America yesterday …
A new, more virulent strain of the bank panic contagion is now hitting Wall Street!
Just this morning, Bank of America posted its first loss in 17 years “a whopping $1.7 billion in October, November and December” and cut the dividend it pays to stockholders.
Plus, Citigroup, which had already received $45 billion in government handouts, posted its fifth straight multi-billion dollar quarterly loss – $8.3 billion in the last three months of 2008, bringing its total losses for the year to a staggering $18.7 billion!
No wonder Obama’s advisers have freely admitted that they see an increasingly grave banking crisis beginning to unfold! No wonder they have scrambled to gain control over the second $350 billion in bailout funds! And no wonder …
The Great Financial Famine of 2009
Is Spreading Like Wildfire!
After the prior phase of this great banking crisis struck last fall, U.S. job losses surged, bringing the total number of paychecks lost by U.S. families to 2.6 million for 2008.
The stock market had a nervous breakdown with stocks plunging as much as 1,000 points in a single trading session and the Dow crashing by nearly a third in less than 30 days.
Reeling from the carnage, many companies delayed, postponed or even cancelled dividend payments to investors and the Fed slashed interest rates, cutting yields on other income investments.
But now, it’s looking like last year’s disaster was little more than a dress rehearsal for the new phase of the banking crisis that’s beginning now!
This new phase of the banking crisis is compelling new evidence of the great “financial famine” we warned you about in yesterday’s “7 Startling Forecasts for 2009” emergency briefing: At least a full year in which every source of income and profits you count on is in extreme danger.
That’s why we’ve urged you to consider a new strategy to get yourself and your family through this disaster: A practical way for you to keep money flowing to you no matter how intense this crisis gets and no matter how long it lasts.
And it’s why we’ve decided to leave the recording of “7 Startling Forecasts for 2009” online for a short time: It is absolutely essential viewing for you if you’re concerned about your income and investments in the year ahead.
Just turn up your computer speakers, and click this link to watch this crucial video while it’s still online.
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Jupiter, FL 33478
Joseph F Dumond