An except from Franck Biancheri's new book titled, "World Crisis: The Path to the World Afterwards" states:
"The (current) financial and economic crisis....marks the end of the world order established after 1945." In 1991, the Soviet Union dissolved, and since fall 2007, we've "witness(ed) the accelerated decomposition of the 'Western pillar' with" America advancing disintegration.
After decades "spent living in the myth of an 'ended history' in which" Western ideology was triumphant, "it is almost impossible to imagine 'a world after' " without Washington/Wall Street dominance, "where 'Anglo-American' would not necessarily mean 'modern,' and where the dollar would no longer be king."
Neither our media or leaders "imagine the unimaginable." They're "too busy trying to make us 'forget the unforgettable,' in particular, the socio-economic consequences of the crisis throughout the world." It creates problems and "unprecedented opportunit(ies) to rebuild a 'world after,' provided" challenges can be seized and dangers avoided. One thing's certain. New world ways will supersede the old's, for better or worse. Buckle up. Things may get bumpy along the way.
Nearly daily from Canada, economist David Rosenberg provides some of the best. He offers far different commentaries than corporate-sponsored deception, extolling a recovering economy, claiming clear sailing ahead, and hiding how Western workers are harmed.
A recent Rosenberg chart analysis compared America's economic decline/malaise to Japan's since the late 1980s. He began quoting St. Louis Federal Reserve Bank President James Bullard last July saying:
"The US is closer to a Japanese-style outcome today than at any time in recent history." Perhaps ever, in fact, given the level of past excesses, creating a monstrous debt overhang.
Rosenberg's visual analysis showed a frightening post-bubble decline in both countries by the numbers:
Worrying concerns in it include:
Before his summer 2007 death, noted economist Kurt Richebacher titled his 2004 commentary: "Property Bubbles: Beware of Property Bubbles," explaining:
the certainty that they all "end painfully, housing (ones) in particular. They're an especially dangerous (type) asset bubble because of their extraordinary debt intensity." Extracting wealth (through refinancing) from rising valuations, and "heavily entangl(ing) banks and the whole wealth financial system as lenders" assures a bad ending eventually. Moreover, the longer excesses continue, the worse the outcome and greater amount of time needed to recover.
As a result, property bubbles have historically been the main cause of major financial crises. In Japan and America alone, their banking systems experienced "calamitous effects....through a horrendous legacy of bad loans" that continue to plague both countries - besides others, notably China with a far greater housing bubble than America's at its peak.
In 2010 alone, China built up to 15 million units. In 2006, America's bubble peak, only 2.5 million were completed. At the end of the 1980s, Japan had a monstrous housing bubble. China's current one rivals it, but so far it hasn't burst. Richebacher's warning, however, bears repeating: "Beware of Property Bubbles." They all end badly.
After decades of spectacular growth, China passed Japan in Q II 2010 to become the world's second largest economy. At its present pace, it will surpass America as early as 2030, but it still has a long way to go. Nonetheless, China stumbling will impact Asia and other regions, especially where economies are weak.
In his January Investment Outlook, he notes four major factors of concern:
Mindless deficit spending has a price, including "higher inflation, a weaker dollar and the eventual loss of America's AAA sovereign credit rating." It's just a matter of time, Gross warning: "Fear your head - fear your head."
On 60 Minutes in late December, banking analyst Meredith Whitney predicted from 50 - 100 "significant" municipal bond defaults in 2011 (in cities, towns and counties, not states), totaling "hundreds of billions" of dollars.
The 2008 US record so far is $8.2 billion. Defaults at multiples of that total would greatly impact the economy.
Forecasting trouble, financial expert/investor safety advocate Martin Weiss believes:
As a result, an American Greek Tragedy possibly looms "in more ways than one." A million or more public workers may lose jobs as Washington and deficit-burdened/budget-strapped states, cities and local communities seek ways to cut costs. Way one is reducing staff levels, the largest expense. Others include debt and pension obligation defaults with trillions of dollars of liabilities at stake.
Public pensions, if fact, face a trillion dollar crisis. Orin Kramer, New Jersey State Investment Council chairman believes they're underfunded by over $2 trillion, citing independent research he commissioned.
Separate, so-called OPEB (other post-employment benefits) obligations, are underfunded by at least another $530 billion, according to the congressional Government Accountability Office's November 2010 estimate, saying the figure is extremely conservative. Others put it at from $1 - $3 trillion. The combination of economic weakness and mounting debt obligations may mean inevitable debt and public pension defaults, as well as growing numbers of municipalities declaring bankruptcy because Washington won't help.
At issue is a federal/Wall Street scheme to reengineer governments, downsizing them for profit at public worker expense through lower pay, fewer benefits, and lost pensions to protect as many debt holders as possible. Also to force cash-strapped states, cities and communities to sell public assets cheap so banks and other corporate raiders can grab them at fire sale prices.
On January 7 in testimony before the Senate Budget Committee, Fed chairman Bernanke said:
"We have no expectation or intention to get involved in state and local finance." States "should not expect loans from the Fed," nor help from the Obama administration and Congress in discretionary budget austerity mode.
In their March 2010 "Trillion-Dollar Pension Crisis Looms Large Over America" article, writers Paul Ingrassia and Imogen Rose-Smith suggested "pension fund accountants might consider" asking:
"What's the difference between General Motors and California," or Chicago, New York or Los Angeles? Unlike GM, they haven't gone bankrupt so far, nor have they defaulted on their pension obligations. Given today's crisis, with troubled communities across America faltering, anything is possible anywhere anytime.
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This story was published in the Baltimore Chronicle on January 15, 2011.