2008: Full global impact phase of the Very Great US Depression
- Public announcement GEAB N°21
One year ago, LEAP/E2020 anticipated that the year 2007 would mark the US entry into what our team then called “the Very Great US Depression”. At that time, the dominent spirit was overwhelmingly euphoric. The word « subprime » was still unknown among the general public and experts estimated that the US housing crisis would bear no consequences for the rest of the US economy (and they simply refused to very idea that it could have the least global impact).
In the course of 2007, facts however proved that a global systemic crisis was indeed throwing down all the principles the global economy was based upon since 1945; and that, along with the GEAB's analyses in September 2007 (GEAB N°17), the seven sequences of the impact phase of the global systemic crisis would simultaneously reach climax in the course of the year 2008.
One aspect, and a catalyst, of this global systemic crisis is the United States' stepping into an unprecedented (1) socio-economic crisis in 2007, hitting hard on households (2) as a result of the housing bubble burst and of their increasing insolvency, soon followed by financial operators' insolvency, due to the pure and simple evaporation of USD hundreds of billion-worth in assets.
In 2008, in addition to these two types of US players, companies will be hit as are caught in the crossfire between credit crunch and the collapse of housedold consumption, as well as public organisations whose fiscal revenues crumble. From now to this summer in particular, the financial crisis triggered by the US subprime mortgage loans will turn into a much wider-ranging crisis involving the implosion of the Credit Default Swaps (CDS) market. This will represent a now tipping point in the impact phase of the global systemic crisis (see detailed analyses in the rest of this announcement and in the GEAB N°21 - upon subscription).
Asia, Europe and emerging countries in 2008 – Direct but mitigated impact of the Very Great US Depression: Recession, stagflation and Western financial institutions taking control
Simultaneously, the diving of the US into the Very Great Depression will bear a full direct impact on global economy altogether:
. The Eurozone will step into a perdio of stagflation while the rest of the EU (UK in the first place) will be sucked up in a recessionary process. Denmark (and probably soon after Sweden) are preparing to join the Eurozone, as Prime Minister Fog Rasmussen (3) clearly expressed who recently resurrected the idea of holding a referendum on the Euro. These two countries are aware that the Eurozone will not cause any difficulty to their joining (under the Treaty, Sweden should in fact already be part of the Eurozone because it is required to adopt the Euro at a certain time) (4).