Wednesday, April 18, 2007

Knowing nothing, the way to Barcelona?.

I`m not sure about the copyrights to this article, but it looks like the EU funded it, so maybe it is free to citizens, or no?

I found it over at "Iraq", but there seem to be quite a few similar threads "floating around".
Maybe the Russians or the Iranians are closer to Europe than is measured in miles.
Clinical and concise I`d call it. still at least there is no mention of the war in Iraq, or the olympic games, or global warming, the war on drugs, just following the money, that`s all.
Painfully feasible, as some might say, and a predictable agenda, as others may well have forecast.

After reading it, I think I`ll go for a walk, spring is almost sprung, and the trees are slowly showing their bonnets.

A Chronicle of America's Very Great Depression – Two growing trends: A historical reversal of global financial balances / An implosion of the US society

- Public announcement GEAB N°14 (April 16, 2007) -

America's 2007 Very Great Depression has indeed begun; and represents the US dimension of the phase of impact of the global systemic crisis LEAP/E2020 anticipated early 2006, knowing that the US are the central pillar of the global order created after 1945. The structural weakening of the US is therefore both the cause and consequence of the global systemic crisis, international trends directly influencing the US domestic situation. At this stage, LEAP/E2020 researchers identify that two aspects of this « very great depression » are now established and emerge clearly from the current statistical, economic, financial and strategic chaos:

I- A historical reversal of global financial balances: For the first time since 1913, the US lost their status of world's largest financial centre

II- An implosion of the US society: The middle class is sacrificed between the endless collapse of housing prices and a revenue disparity ratio now above that of 1928.

All along the year 2006, LEAP/E2020 described many times the characteristics of the on-going global systemic crisis. On various occasions, our team highlighted the link existing between this crisis and the place of the US on the international arena, given that today's world is to a large extend shaped up by forces inherited from the after-WWII, characterised by the fading away of Europe and the ascent of USSR and USA. The collapse of USSR between 1989 and 1992 then left the US unrivalled until today, this country thus literally becoming the keystone of our current global system. The global systemic crisis initiated in 2006, one extensively detailed by LEAP/E2020 along the GEAB's various issues, and which entered its phase of impact in 2007, is hitting the US full stride, with two trends of high historical velocity now appearing: on the one hand, a fast change in the US relative position on the global scale; and on the other hand, a radical reorganisation of US society's internal balances that prevailed since 1940/1950.

I- A historical reversal of global financial balances: For the first time since 1913, the US lost their status of world's largest financial centre
LEAP/E2020 already described many of the trends at work in the decreasing role of the US in the field of international trade or in the field of wealth production. For instance, GEAB N°6 detailed the now dominant place of the EU (1) in the external trade of oil-producing countries: « One just needs to know that in 2005 the EU represented more than 50% of Russian foreign trade, 65% of Algerian foreign trade, 31% of Iranian foreign trade (followed by Japan with 12%), 78% of Norwegian foreign trade, more than 55% of the foreign trade of Gabon, more than 40% of Nigerian foreign trade, more than 50% of the Congo foreign trade, 20% of Saudi Arabian foreign trade (against 16% only in the United States), nearly 30% of the foreign trade of Kuwait (against 11% only in the United States) and more than 20% of the foreign trade of the United Arab Emirates (against only 6% in the United States) ». In the decades following 1945, the US held this first place by far; and not only with regards to oil-producing countries.

This example, as well as the fact that China has now surpassed the US as first importer in the EU (2), illustrates clearly a historical trend of which another facet was recently identified by the British consultants Absolute Strategy Research (ASR): according to the findings of Thomson Financial, at the end of March 2007, European financial markets surpassed in value their US counterparts. Such a change constitutes a major systemic break, putting an end to a century-long tendency initiated during the first World War. According to Ian Harnett (managing director of ASR and former UBS-Warburg's Head of European Strategy) who identified this change, it is indeed a « seismic tremor » for the global financial markets as it shows a displacement in the centre of gravity of the global financial sphere out of the US and towards the Old Continent. For instance, at the end of March 2007, European markets (including Russia) totalled up €11,819 billion against €11,760 billion only for US markets. In the past few years, they grew by 160% while US markets only grew by 70%. Of course the US dollar's depreciation contributed to strengthen this trend (3).

According to the LEAP/E2020 team, the trends at work in this disruption of global financial markets' hierarchy are profound and sustainable: relentless and durable decline of the US currency, decreasing share of the US in international trade and the production of global wealth, geographic remoteness of the US compared to the « Old Continent's » Eurasian economic centres, impoverishment of the US consumer, collapsing competitiveness related to collapsing quality of education, … Due to these reasons, the trend identified by Absolute Strategy Research will amplify throughout the year 2007 and the whole decade. The consequences for financial and stock players are considerable, as they turn upside down all reflex actions acquired for nearly a century. LEAP/E2020 will come back later in GEAB N°14 on the practical consequences of this seism for market players.

II- An implosion of the US society: The middle class is sacrificed between the endless collapse of housing prices and a revenue disparity ratio now above that of 1928
A remarkable work conducted by Thomas Piketty and Emmanuel Saez on the evolution of high revenues in the US (4), shows that the revenue disparity ratio is now comparable to what it was on the eve of the Great Depression at the end of the 20s. According to this work, the revenue ratio between the richest 0.01% richest and the poorest 90% lingered around 170/180 all along the years 1950 to 1980, and lept to 880 in 2005, i.e. about the same level (891) as in 1928. The chart below clearly illustrates the return of the US society to the level of income disparity that prevailed during the pre-1929 period.

US top decile total income share
According to LEAP/E2020, beyond the mere economic analyses, such a situation corroborates the idea that 2007 will signal the entry of the US into the « Very Great Depression » because it conveys tremendous social and political tensions, already illustrated by the amount of foreclosure evictions (5) that the economic recession will multiply even further. The US society is being split into two groups, one poor and the other very rich, with the middle class about to fall in the poor group.

Thus, according to our researchers, the on-going economic trends, because they relate to heavy historical trends affecting all social and economic balances for many decades (cf. GEAB N°11, 12 and 13), convey a increased devastating impact. As we indicated in the previous issue of GEAB, the 1929 crisis happened in a historical context of US ascent. Underlying fundamental trends were therefore favourable to the United-States. The current depression takes place in the opposite historical context. In April 2007, as we pass by the tipping point of the global systemic crisis, trends speed up and their impact intensify and become visible to each and everyone.

The recent example provided by Circuit City Stores, second largest U.S. consumer electronics retailer, leaves no hope for the contrary. Indeed, at the end of March, the company announced that it would lay off 3,400 sales workers, or 8.5 percent of its in-store staff, due to excessive salaries (10-11 USD per hour) and hire an equivalent amount of lower-paid workers (8 USD per hour) (6) : downgrading the middle class to the lower class, this type of process also presents the statistical advantage to raise employment figures.

In GEAB N°14, LEAP/E2020 will describe four other trends that will preside over the coming quarter:

1. On-going explosive contagion of the subprime crisis to other types of home loans and other sectors of the economy

2. The return of stagflation: Towards a US growth falling beneath 1 percent by this summer

3. Sharp increase in US public deficit by mid-2007

4. Intensification of the geopolitical oil crisis in May 2007 – Iran and Venezuela on the frontline: Oil on the rise (100 USD) and Dollar on the fall (1,50) by summer 2007

Will there be music in Spain tonight?

The blackthorn and elder are well in leaf, with the thorn showing an early flower, whereas the oak has just in the last few days begun to caress the sun with her leafen fingers, the ash still a little reticent.
The birds sing well these past few weeks, the jackdaws and crows are busy searching out twig and moss.

Friday, April 06, 2007

No title.

So there it is, shame we can`t all see things in the same light
However, remembering the old adage, of not throwing out the baby with the bathwater, here is a quote from the current Dalai Lama.

'Your prime purpose on earth is to help one another. If you can't help one another at least don't hurt one another.' - Dalai Lama

Because we shouldn`t forget that whilst religious organisations have often abused the unwary, and exploited the innocents, there have been those whose lives and works have indeed been exemplary, not all have sought the velvet cushions and golden thrones of hiearchal rule.

"A cat is worth a groat (four pence). At birth she is worth a penny, two pence after she has opened her eyes, and a groat if she has caught a mouse. "

Suprisingly the above was an actual law in Wales, during the tenth century (A.D.), there were few principal laws in Wales, not many of them relating to religion.

The King at that time, Hywel Dda, or "Hughie the good", was particularly fond of hunting and feasting,(and beautiful women).
He saw little use for a kingdom that would require a large percentage of its` people to be engaged in law and religion.

Instead he preferred a kingdom of mountains, oaken forests, well-ordered farms and healthy flocks of sheep, fit and hardy goats, herds of full-fleshed cattle, happy pigs, contented chickens and ducks, wild boar, pheasants, fat geese and granaries that were full, with surplus for those in need.

He also decreed that women could own property, and that all children, who were born "outside" of marriage had all the rights of those born "inside" marriage.

He did once, it is said, visit the Vatican, but there are conflicting stories as to the purpose of his trip...But that is another tale.

Ah well, since then have been some changes. (Click on the "No title", for an insight into the laws and the man who wrote them, more than ten centuries past, and ruled that in his land, women would be equal to men.)

Note: I have slightly amended this post, since first writing. Especially the link at the title, which now shows a slightly more balanced insight into tenth century Britain.)