The Rupture of the International Currency System is Confirmed
Global Research, April 16, 2009
GEAB N°34, Summer 2009
Public Official statement GEAB N°34 (April 15, 2009)
The next stage of the crisis will be determined by a Chinese dream. Indeed, with what dream can Beijing dream well, according to Washington, in the "Dollar trap" of its 1.400 billion credits made out in US Dollars (1)? According to the American leaders and their procession of media experts, to continue to be a prisoner and even to reinforce this prison condition by buying always more Bills Treasury and Dollars US (2).
However, does everyone know with what dream a prisoner dreams? With escaping of course, leaving its prison. Also, for LEAP/E2020, there is not any doubt that Beijing seeks without slackening from now on (3) to get rid, as fast as possible, this mountain of "toxic" credits which became the US Treasury Bills and the American currency under which the richness of 1 billion 300 million Chinese (4) is imprisoned. In this GEAB N°34, our team thus details the "tunnels and the galleries" that Beijing has dug discreetly for several months in the economic system and world financier in order to escape from the "Dollar trap" by the end of the summer 2009. At the bottom of suspension of payment of the United States, a period will then open in which "every man for himself" will become the rule of the international game, in the same line of G20 of London whose final communique reads like the "chronicle of an announced geopolitical dislocation", as LEAP/E2020 analysed in this number of Total Europe Anticipation Bulletin.
GRAPH Quarterly evolution of the increase in Chinese monetary reserves - Source: Central bank from China/NewYork Times, 04/2009 [note they're cutting back]
Behind "set of easily deceived" Londoner, where each one claimed to believe that an "historical" international collaboration (5) was in action, one in fact notes a deep division of G20: the Americans and the British (followed by flexible Japan) hopelessly try to preserve their control on the world financial system, while blocking or by diluting any significant reform giving a more important capacity to the other actors of the system, without having enough power to impose their objectives. The Chinese, the Russians, the Indians, the Brazilian ones ... try to rebalance the international monetary and financial system in their favour, but without being able (or perhaps even without really wanting (6)) to impose such a reform. Europeans (and when this term is used, an EU without the United Kingdom, it implies more and more that they) prove incompetent on their side to slice between the only two only options which are offered to them: to sink with the United States and the United Kingdom by copying their policies or to basically call into question the current world system monetary and financial in partnership with the Chinese, the Russians, the Indians and the Brazilian ones. They are not able any more to follow Washington and London in their reproduction of the last policies which already did all bankruptcy (7), but they do not dare to manage to prepare the future.
GRAPH The collapse of the international business does not have any precedent - annual Evolution starting from the quarterly rates (curve in continuous feature: evolution in progress/curve in small dotted lines: forecast according to the historical correlation) enters the COM [trade]
Europeans will take a major responsibility if, in the short temporal window which remains (less than six months from now on), no major action is undertaken to avoid the long crisis and tragedy which will last more than one decade (8). They have at the same time technical know-how to help with the success of an international currency founded on a basket of the principal currencies and a political method which makes it possible, as well as possible, to manage the various strategic interests of all the countries, as those whose currency would be behind the new international currency of reference. However, there exists today an obvious incapacity of the leaders of the EU (and in particular of the euro area) to assume these responsibilities, as so finally they preferred to see the Western system finish by breaking (while proclaiming the opposite) rather than to fight to make a bridge of it towards a new world system: that it is a choice (what LEAP/E2020 does not believe) or which it is the simple result of the pusillanimity [cowardliness] of European leaders selected for their docility (with respect to Washington and of the large European economic and financial operators), in all the cases, their neutrality is very dangerous for planet since it prevents the launching of an effective process making it possible to avoid a long and tragic crisis (9).
Thus, in this GEAB N°34, our researchers develop more their anticipations on the possible forms that the American suspension of payment will take by the end of the summer 2009, and from April 2009 (principal month of collection of the tax incomes in the United States) will be impossible to mask (10). The suspension of payment by the United States in the summer 2009 is indeed a topicality increasingly more extreme from now on with the public deficit completely out of control on the back of explosion of the expenditure (+ 41%) and of collapse of the revenues from taxes (- 28%), like LEAP/E2020 anticipated more than one year ago: for only March 2009, the federal deficit was assembled to nearly 200 Billion USD (much above the most pessimistic forecast), that is to say not under half of the deficit recorded for the whole of the year 2008 (11). And the same phenomenon is repeated on all the levels of the public structure of the country: federal state, federate states (12), counties, cities (13) … everywhere the revenues from taxes disappear involving in an accelerated way the worldwide in an overdrawn spiral that nobody (Washington in first chief) controls any more.
GRAPH Evolution of the tax incomes of companies in the United States (1930 - 2009) - Sources: US Department off Trade/Federal fund of Saint Louis (2° Estimate and 3° quarters 2009 by EconomicEdge) [falling revenues]
In this GEAB N°34, our researchers also lean on the "mystery of the rate of gold". For yellow metal, our researchers (not of gold, but of information) identified some very interesting tracks to include/understand why (14), whereas the gold purchasers are legion and in many countries one announces shortages of supply parts or gold ingots, the course of yellow metal does nothing but oscillate around the same pivot since months.
Lastly, our team presents her recommendations to prepare in the next months of the crisis while sticking this month in particular to the saving in general and the life insurances in particular.
(1) If the whole of the Chinese reserves is evaluated from now on to approximately 2.000 billion USD, the share of credits made out in US Dollars is to the maximum only of 70%, which gives approximately 1.400 billion USD. The remainder consists primarily of credits made out in Euros.
(2) Let us not forget that they are in general the same "experts" who predicted these last years that the worldwide economy would profit from the suppression of the regulation of the banks, that the economy of the Internet opened the way with a growth without end, that the US deficits were a sign of force, that the prices of the US real estate would not stop going up and finally that to be involved in debt without restrictions was the modern form of a durable enrichment.
(3) The message on the necessary change of international currency of reference that Beijing addressed to the whole world, and with the American authorities in particular, the day before the top of G20 of London was absolutely not a "trial balloon" nor an attempt without hope of success. The Chinese leaders did not have any illusion on the probability that such a subject would be discussed during this G20. They wanted to force this debate in the corridors of the top in order to transmit a message, a semi-official warning with all the actors of the international currency system: for Beijing, the system Dollar, it is finished. If nobody wants to prepare an alternative system jointly, then, that will be done differently. And their acts, analyzed in this number of the GEAB, corroborate this intention. Moreover, the chance for a political calendar is a scarcity in Beijing, during the same time a book is left, heading "dissatisfied China", which requires a more voluntarist action of the Chinese leaders in order to impose their choices on the international scene. Source: ChinaDailyBBS, 27/03/2009
(4) An original bond to follow this figure in real-time: China Information
(5) It is in fact Angela Merkel which was proof of greatest perspicacity by finding the right word on the nature of the top of G20 in London. She said that it was an "almost historical" meeting; and it is well the word "almost" which summarizes what occurred to London. The leaders of G20 "almost" tackled the crucial questions; they "almost" defined a common program of action; they "almost" managed to launch new economic stimulations and a new world financial regulation; they "almost" prohibited the tax shelters; and they "almost" convinced" the world public opinion. "Almost", but, alas, not really. And that makes a beautiful difference for the continuation of the crisis.
(6) It is indeed the dilemma of the "international play" developed in the GEAB N°33. At a certain time, the interest of the players who go up in power is to leave purely and simply the old play to break Net, to rebuild one which is appropriate to them rather than to fight to transform the old play via a long and dubious transition.
(7) In particular public debt with excess, which is called by Washington and London "stimulus economic".
(8) G20 of London fits directly in the direction of this crisis of long life.
(9) In connection with the EU, the team of LEAP/E2020 wishes to underline the inanity of the "analyses" économico-policies, primarily resulting from eminent economists and experts close to the American Democratic party, which the principal international mediums currently relay, and which are limited to reproach Europeans… for not making like Washington. Paul Krugman at the head, these "large friends" of Europe, who like to think they know much better than Europeans what must be made (and also what it must be because the same ones preach generally also its extension to Turkey, even in Israel and the Central Asia), make a better deal with effectively advising their own party and their new president to avoid the collapse of their country, because it is towards that that it acts from now on. Lastly, and we will not return there any more, it is nevertheless astonishing that a whole of experts, which since years have so much praised the merits of a system which today crumbles under the eyes of all, dare still to give lessons to the rest of the world. The most elementary decency would impose to him, on the international level, the only possible sizable way: silence. In any case, in Europe, this speech, which of course has always its academic and journalistic relays, does not pass any more because it comes one completed time straight. Besides like is pointed out regularly in LEAP/E2020, it is obviously necessary and legitimate to carry a very critical glance on the EU, her leaders and its policies; but to do it only with the criterion of conformity or not with the orientations of Washington (or London) is from now on unacceptable. Obviously, into the image of the financial ones which did not understand yet that a page was turned with regard to their gilded stock-options and their "parachutes", many intellectuals and policy makers did not integrate yet well that their references, their values and their analyses belonged from now on to the past. May they think of the elites of the Soviet block… and they will include/understand how and at which speed a system of thought can become obsolete.
(10) In addition to the fall of the tax incomes, one henceforth attends the United States with the extension of a movement of revolt against the use of the taxes to save Wall Street and against the extent of the deficits envisaged, which blames the whole of the American leading class. Sources: USAToday, 13/04/2009; MarketWatch}, 16/04/2009
(11) Sources: USAToday, 11/04/2009; MarketWatch}, 10/04/2009
(12) Thus in California, the first days of April there is fear the receipts are very much lower than the forecasts, involving a budget deficit multiplied by two for California compared to the forecasts of only a few months ago. At the federal level, a process of the same type is in hand, making from now on possible, according to LEAP/E2020, an annual federal deficit with nearly 3.500 Billion USD, that is to say more than 20% of the GNP of the United States. Source: CaliforniaCapitol, 08/04/2009
(13) The example of these cities which, like Auburn in the area of Seattle, must restrict their main roads with weight-heavy, the fault of means to maintain them is eloquent. Source: SeattleBusinessJournal, 10/04/2009
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The International Monetary System’s Breakdown is Underway