Sunday, December 21, 2008

When the world becomes aware that this crisis is worse than the 1930s crisis'

I wanted to share this most recent newsletter from LEAP/2020 with you all..
I left a link to their site previously , but here it is again.
This report was released last week Dec 16/08
I have read it twice now. It ain't pretty. The picture it paints is bleak.

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 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 – 2008) - Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic Analysis
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, 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 « 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.


  1. Depressing isn't it?

    Ironic how just a few years ago mentioning this fact of a global economic meltdown earned one the esteemed title of 'tin-foil-hatter'.


  2. It's not easy anymore but you really should try and find someone of Russian, Polish, Ukrainian or German descent that survived the Bolshevik revolution and then Stalin’s purge. It ain't pretty.

    No it ain't pretty but it's really something that people should hear, they should hear just what people in power are capable of doing to the population, the population of any country when their positions of power are threatened. This is not just something that can happen in that nebulous place called over there, or back then, or in the old country. No it can and will happen right here and it matters not if you’re living in the US or Canada or Briton or anywhere of a hundred different countries. It will happen and it will be terrible….

    I really mean this, find someone who had their feet on the ground during those times and LISTEN to them, and I mean REALLY LISTEN to them, their stories will all be the same.

    I know this not only because my family hailed from that place and time but most of the older generation in the community that I grew up in came from there as well. I listened to them and I heard that of which they spoke, or at least I thought that I had listened and heard, perhaps I should have listened more closely, when they told me that it not only could but would happen here and for the very same reasons.

    Those reasons were and still are the insatiable thirst for power by a very small group of villains and more importantly the people’s complacency. It’s the same all over again, same villains, same complacency the complacency of the working stiff who say’s “hey I work my ass off to make ends meet, I take my kids to baseball games when I can afford to, I pay my taxes, I try to be a good person, what more do they want from me?”

    Well I will tell you what more they want of you, They want EVERYTHING, they want all you have and then they will take that of which you could only dream, Your Freedom. And then they will take your very lives.

    So if your asking how bad will it get, just ask someone who was there, ask them now before they are all gone. They DO have things to say that you REALLY should listen to, and goddamit listen to them until you hear what they are saying and then listen some more.

    Listen when they tell you what it’s like to see 60 million people starve to death. Listen to them when they tell you what it’s like to see your family, friends and neighbors shot wholesale.

    Listen to them when they tell you that they were the lucky ones, they were the ones who survived and at least had a place to run to that was better. That place was HERE wherever that is. Where will you run, where will you go, and what will you do when you get there to that place, that place that is just as bad as the place you left and will they let you in?

    This time will be different insofar as this time it will be Bad everywhere, it is almost time for the culling of the herd to begin.

    Soooo how will you go? How will you and yours go into that long cold night? Will you go standing on two feet, and with a defiant scream. Or will you go silently while standing on all fours…. like a sheep?

    Personally I prefer the former…. But that’s just me, and I really need to get a drink now.

  3. oh, yes, the dreaded tin foil hat.

    seems the tin foil crowd has been the more accurate of the bunch haven't they

    well the best revenge is being right isn't it?
    Or is that the best revenge is being smart, right and good looking also??

    what ever?
    revenge it's sweet.

  4. silverfish: boy I need a drink too.
    nah I ain't much for drinking.

    anyway, when the shit hits, notice, I didn't say if, I said when.

    we are doing are darndest to stay alive.

    I know there has been so much bad in the past that anyone would have to be foolish and naive to think, that it could not happen again.

    I won't put myself in that category, but as usual, you give me much food for thought.

    Per favore kind sir, enjoy yourself.
    I tell my hubby, you are loved and being loved is a good thing.
    I shall tell you the same.
    Though I think you know that.

    The resiliency of humanity always amazes me... and I keep that in mind.