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    Senior Member AirborneSapper7's Avatar
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    Global Systemic Crisis – EU victim of collapse of dollar

    GEAB N°38 is available! Global Systemic Crisis – The European Union at a crossroads in 2010: an accomplice or a victim of the collapse of the dollar?

    - Public announcement GEAB N°38 (October 16, 2009) -

    The major trends at work in the 4th and 5th phases of the global systemic crisis (the decanting phase and the global geopolitical dislocation phase) are unveiling every day (1). Everyone has now realized that the United States is being swept into an uncontrollable spiral involving widespread insolvency of the country and gross incompetence of the U.S. elite in implementing the necessary solutions. The foretold US default is well underway as exemplified by the falling dollar and the flight of capital from the country: only the name of the liquidator and the recognition of the bankruptcy are still missing, but it shouldn’t be long now. Following the example of its leader, the Western bloc (which Japan has undertaken to move away from, implementing completely new political, economic, financial and diplomatic policies (2)), is in total decay symbolized by NATO’s coalition in Afghanistan (3).

    According to LEAP/E2020, in 2010, the European Union having four strategic core requirements, will be compelled to take a number of urgent decisions in a context of a fast collapse of the Western camp that could be summed up as the US Dollar’s fate. The decisions taken by the EU will define the role the Europeans will be playing in the post-crisis world: either they start to appear as key-players in recasting tomorrow’s world and bring forward their own vision of the future, seeking the partners they need with no exceptions; or they remain the willing victims of a sinking Western Bloc, blindly following Washington's descent into hell. In the first case, the EU fulfills its historic purpose of restoring the Europeans’ command over their collective destiny; in the latter, it would just prove to be the Western equivalent of the Comecon (4), a futureless appendix of the protective superpower.

    Heavy trends are already visible which, according to our team, have began to push Europe in a number of predictable directions. However, the intellectual weakness of Europe’s present political leadership (in the EU and member-states alike) compels us to soften our forecasts.

    In all cases, since the EU is the world’s largest economic and trade power (5), the continuing development of these trends will soon impact directly on a large number of major economic, financial, and strategic factors: exchange rates, commodity prices, growth, social systems, budget balances, global governance…

    In this 38th issue of the GEAB, besides ‘strategic and operational recommendations to survive the crisis’ and their ‘crisis-related country-risk anticipations for 2009-2014’, our team has decided to analyze these four requirements to which the EU will be compelled to find answers full of consequences:

    1. Addressing the failure of the monetary system based on the USD and not becoming helpless when 1EUR=2USD
    2. Avoiding exploding budget deficits like those in the US and UK
    3. Responding to the aggravation of the Iran/Israel/USA crisis and war in Afghanistan by defining a specific European position
    4. Learning to deal independently and constructively with the new key players of the post-crisis world: China, India, Brazil and Russia in particular.

    It impossible to envisage waiting later than 2011 to deal with everyone of these crucial aspects (crucial for both the Europeans and the rest of the world). Just imagine what would happen if the Europeans remained passive beyond 2010, while faced with these four requirements:

    1. If the Europeans are content to watch the Dollar sink, their exports to the US and the dollar-pegged countries will fall dramatically, exacerbating the economic and social crisis in the EU.
    2. If the Europeans, their leaders in particular, are content to let public deficits swell, like France is currently doing, the Eurozone will soon become prey to profound disagreements between Northern and Southern Europe.

    3. If European leaders are content to follow the Israel/Washington line in dealing with Iran’s nuclear issue and to fall in behind the Obama administration regarding Afghanistan, they will soon be faced with growing public dissatisfaction which they are not prepared nor in a good position to face, a guarantee of serious political instability in every member state.

    4. If the Europeans are content to refuse independently debating the interests they have in common with the Chinese, Indians, Brazilians and Russians, they willingly deprive themselves of any means to bring forward their perspective on the previous three issues, as no significant move can be accomplished without them (6).


    Historical change in China-India share of global GDP (1500-200 - Sources: Bloomberg / Gluskin Sheff - 2009

    According to our researchers, 2010 is certainly a crucial year for the Europeans and their collective future. The relationship of the EU, and particularly of the Euro, with the dollar will be decisive for the Europeans, as much as for the Dollar and the global monetary order altogether. Not that the Europeans chose the year (2010) or the subject (the Dollar) (the leaders of the Euroland would certainly prefer to go on with their « business as usual »), but History is very ironical in calling the US “alliesâ€
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    Senior Member AirborneSapper7's Avatar
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