International experts foresee collapse of U.S. economy


Richard Moore
Belleville Intelligencer

International experts foresee collapse of U.S. economy

Posted 9 days ago

And you thought that I had a gloomy outlook on the economy. Now the bad news 
pops up everywhere.

Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist 
at Banque AIG in London, who claims that the likelihood of a Great Depression is
growing by the day.

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. 
Nouriel Roubini of the New York University's Stern School of Business, who, in 
12 steps, outlines how the losses of the American financial system will grow to 
more than $1 trillion - that's one million times $1 million. That amount is 
equal to all the assets of all American banks.

Every day now, thousands of people all over the U.S. and Great Britain are 
walking away from their homes - simply mailing their house keys to the banks - 
as housing bailout plans fail.

With unemployment growing, the next phase will hit commercial real estate making
the financial institutions the unwilling owners not only of quickly depreciating
houses, but also of empty strip malls and even larger shopping centres.

The next domino to fall will be credit card defaults, and after that... who 
knows? There are so many exotic funds out there, with trillions of dollars in 
paper - or rather computer-screen money - all carrying assorted acronyms, and 
all about to disintegrate into nothingness. Over the next couple of years, 
scores of banks that have thrived on these devices, based on quickly 
disappearing equities, will fail.

The most frightening forecast so far comes from the Global Europe Anticipation 
Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. 
Its prediction is quite specific.

Where my warnings never spelled out an exact date, this think tank has it pegged
precisely. Here are its very words:

"The end of the third quarter of 2008 (thus late September, a mere seven months 
from now) will be marked by a new tipping point in the unfolding of the global 
systemic crisis.

"At that time indeed, the cumulated impact of the various sequences of the 
crisis will reach its maximum strength and affect decisively the very heart of 
the systems concerned, on the front line of which (is) the United States, 
epicentre of the current crisis.

"In the United States, this new tipping point will translate into - get this - a
collapse of the real economy, (the) final socio-economic stage of the serial 
bursting of the housing and financial bubbles and of the pursuance of the U.S. 
dollar fall. The collapse of U.S. real economy means the virtual freeze of the 
American economic machinery: private and public bankruptcies in large numbers, 
companies and public services closing down."

The report goes on to say that we are entering a period for which there is no 
historic precedent. Any comparisons with previous situations in our modern 
economy are invalid.

We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 
1970s oil crises or 1987 stock market crisis.

What we will have, instead, is truly a global momentous threat - a true turning 
point affecting the entire planet and questioning the very foundations of the 
international system upon which the world was organized in the last decades.

The report emphasizes that it is, first and foremost, in the United States where
this historic happening is taking an unprecedented shape (the authors call it 
"Very Great U.S. Depression").

It continues to predict that, although this crucial event is global, it will be 
the beginning of an economic 'decoupling' between the U.S. and the rest of the 
world. However, non 'decoupled' economies will be dragged down the U.S. negative

Concerning stock markets, the GEAB anticipates that international stocks would 
plummet by 40 to 80 per cent depending where in the world they are located, all 
affected in the course of the year 2008 by the collapse of the real economy in 
the U.S. by the end of summer.

The European authors of this report - it appears simultaneously in French, 
German and English - state that they simply and without prejudice try to 
describe in advance the consequences of the ominous trends at play in this 
21st-century world, and to share these with their readers, so that they can take
the proper means to protect themselves from the most negative effects.

So there you have it. Three reports from three different sources, all well 
regarded, and all pointing to a disastrous fall-out from our monetary moves.

This and earlier columns can be seen at Comments to 

Copyright © 2008 Belleville Intelligencer

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