Will the Global Economy Be Sucked Into a Black Hole?

So, in this GEAB issue, LEAP/E2020 sets out the list of the seven key factors of this double shock without modern historical equivalent:

In addition, this GEAB issue contains an anticipation of the cumulative impact of the crisis and the Internet on European retail trade, predicting a loss of 2.5 million jobs by 2015.

This issue also contains the first of a series of three anticipations on the risks of a social explosion in Europe, the United States (GEAB N°68) and China (GEAB N°69). We decided begin with Europe which, according to our researchers, should experience “times of riots in the first half of 2013”, with of course big differences between European countries.

Also, you will find two GEAB Indices in this issue, the GEAB $ Index and the brand new GEAB € Index, which will henceforth appear three times a year.

And, of course, there is the GlobalEurometre which takes the pulse of Europeans’ views on key subjects.

This month our recommendations concern currencies ($, €, £, Yen, Yuan), gold, energy and basic foodstuffs, stock exchanges and life assurance.

Finally, you will find information on the programme for the third Euro-BRICS seminar organized in Cannes by LEAP, in partnership with the MGIMO on September 27th/29th, 2012 and a GEAB subscriber special offer for the online training in political anticipation organized by our partner FEFAP.

The best proof is the Fed’s September 13th decision to maintain its Operation Twist programme of Treasury repurchases by adding to it an unlimited programme (in time and amount) of mortgage backed securities repurchases (40 Billion USD/per month) to try and revive the US property market and, through the latter, employment and consumption. The Fed is aware that this decision will cause a backlash and damaging consequences internationally. In fact it has been hesitating for months ahead of a new QE3 (6). But, in trying to avoid a socio-economic implosion and a stock exchange collapse on Wall Street ahead of the November 2012 elections (7) whilst trying to save its own credibility under heavy attack from the Republican camp, it chose “Psychological Easing” rather than “Quantitative Easing”.

The Fed is increasingly becoming the key player in the US property market, thus persisting in confusing the problems of liquidity and solvency. US households don’t have any more money to buy or build houses (8). Mortgage interest rates won’t change anything here. Only Wall Street, for a certain time, will be able to continue surfing on record levels until one “beautiful morning” everything collapses due to a sudden awareness that the real economy is sinking into depression.

Indeed all the signals are already on red: employment isn’t moving up, the jobs created are paid very much less than those lost (9), poverty is exploding throughout the country (10), … and the US multinationals (11) have increased announcements of falling profits for the second half of 2012 and 2013, returning to the levels of 2008/009, typical of a recession period (12).

It only took just a year for all the perverse effects of the 2011 Western attack on Libya to appear: from the assassination of the United States ambassador to Libya to the anti-US riots throughout the Moslem world, frankly one can’t deduce a successful policy of “accompaniment” of the Arab revolutions.

The fierce Russian and Chinese will to support the Syrian regime against Western and Gulf monarchies’ attempts to overthrow it (19) has not only wrecked any positive dynamics at the UN Security Council but has turned itself into a test of US power in the Middle East.

Finally, it’s the whole of East and South-East Asia (Japan, Taiwan, Philippines, South Korea,…) which, through the conflicts over numerous small islands, is in the process of testing the American capacity to stay put, face to face with China (20), an Asiatic power. And they are evaluating in real time what remains of US power in the region. By the beginning of 2013, their conclusions will recombine the alliances and allegiances inherited from the Second World War.

And even the “back-yard” of the United States (according to the Monroe doctrine), namely Latin America, has undertaken to collectively face multi-decade US geopolitical positions: the exclusion of Cuba from trans-American fori and questioning of the war on drugs, the pillar of US interventionism in Latin America for more than forty years (21).

Let’s quote Europe also as an anecdote, since Euroland’s accelerated integration de facto constitutes an ousting of US influence at the heart of European construction. Beginning in 2013, the IMF (i.e. Washington) will certainly be never invited again to deal with intra-Euroland problems as it is the case today with Greece. Even as regards defence, the surprise announcement of a possible BAE Systems – EADS merger, with EADS as the major shareholder (22), illustrates the end of an era when defence had to be transatlantic with the United Kingdom in charge. Whereas, from now on, BAE Systems is fighting for its life (23).