金融體系危機
n 2010夏天英國銀行的困獸之鬥
n 2010冬天聯準會有破產之虞
n 圖一：今年全球各國新增的債務
n 圖二：美國政府未來四年赤字持續創紀錄
n 圖三：美國人舉債生產比持續探底
GEAB N°44 is available! Global systemic crisis / USA-UK - The explosive duo of the second half of 2010: Summer 2010 - The Bank of England battle / Winter 2010 - The Fed at risk of bankruptcy
- Public announcement GEAB N°44 (April 16, 2010) -
Just as LEAP/E2020 anticipated many months ago, and in contrast to
the reports coming out of the media and the « experts » during these past few
weeks, Greece really has the Eurozone behind it to give support and credibility
(especially concerning good management in the future, the only guarantee of an
escape from a damnable cycle of growing public deficits (1)). There will not
be, then, any Greek default of payment even if the commotion over the Greek
situation really is an indication of a growing awareness that money to finance
the huge Western public debt is becoming increasingly difficult to find: a
situation now « untenable » as a recent report of the Bank of International Settlements
underlined.
The fuss made over Greece by the English and US media in particular tried to
hide from the majority of the economic, financial and political players the
fact that the Greek problem wasn’t a sign of an upcoming Eurozone crisis (2)
but, in fact, an early warning of the next big shock of the global systemic
crisis, that is to say a collision between, on the one hand, the virtual
British and US economies founded on untenable levels of public and private debt
and, on the other hand, the double wall of borrowing, maturing from 2011
onwards, combined with a global shortage of available funds for refinancing at
low rates.
As we have explained since February 2006, at the time of our anticipation of
its imminent arrival, one mustn’t forget that the current crisis has its origin
in the collapse of the world order created after 1945, of which the United States was the support, assisted by the United Kingdom.
Also, in order to understand the real effect of events caused by the crisis
(the Greek case, for example), it is useful to relate their significance to the
structural weaknesses which characterise the heart of the world in full
meltdown: so, for our team, the « Greek finger » doesn’t cite the Eurozone as
much as the explosive dangers of the exponential financing needs of the United
Kingdom and the United States (3).
2010 projected sovereign debt issuance (Total: 4.5 trillion USD) - Sources: IMF / Hayman Advisors / Comcast, 03/2010
Subscribers should be aware that during a period when financing
requirements exceed available funds, as is the case today, the sheer amount as regards
sovereign debt issuance is more important than the ratios (amounts in relative
value). This is shown by a very simple example: if you have 100 Euros and you
have two friends, one « poor », A, who needs 30 Euros and the other « rich »,
B, 200 Euros. Even if B can pledge his expensive watch, worth 1,000 Euros, to
you, whilst A only has a 20 Euro watch, you can’t help B since you haven’t
sufficient funds available to fulfill his financing requirements; however, in
discussing a pledge and interest, you can decide to help A. Putting it in this
perspective thus invalidates all the arguments based on the debt ratio: in
fact, according to their logic, you would obviously help B, because his debt
ratio is clearly more favourable (20%) than A’s (150%). But in the world of the
crisis, where money is not available in unlimited quantities (4), the theory
hits the wall of reality: wanting to do something is one thing, being able to
do it is another.
So then, LEAP/E2020 asks two simple questions:
. who will be able/want to help the United Kingdom
after the 6th May when its political chaos will inevitably expose the advanced
meltdown of all its budget, economic and financial parameters?
The financial situation is so serious that the technocrats running the country
have devised a plan, submitted to the parties contesting the next General
Election, in order to avoid risking a power vacuum which could lead to a
collapse in Sterling (which is already very weak) and British treasuries
(Gilts) (the Bank of England having bought 70% of those issued over the last
few months): Gordon Brown would remain Prime Minister even if he loses the
election, unless the Conservatives were able to garner sufficient votes for
outright victory (5). In effect, with an economic and political crisis as a
backdrop, the polls lead one to think that the country is turning to a « Hung
Parliament », without a clear majority. The last time that happened, in
1974, was a kind of political preliminary to IMF intervention eighteen months
later (6).
For the rest the Government puts a positive spin on the statistics to try and
create the conditions for a victory (or a managed defeat). However the reality
is depressing. British real estate is trapped in a depression which will
prevent prices reaching their 2007 levels for many generations (in other words,
never) according to Lombard Street Research (7). The three parties are preparing
to face up to a catastrophic post-electoral situation (8). According to
LEAP/E2020 the United
Kingdom could well suffer a « Greek (9) »
event with British leaders announcing that the country’s situation is
substantially worse than that disclosed before the election. The numerous
meetings, at the end of 2009, between the Chancellor of the Exchequer, Alistair
Darling, and Goldman Sachs is a very reliable indicator of sovereign debt
manipulation. As we wrote in the last GEAB issue, all one needs to do is follow
Goldman Sachs to know where the next risk of sovereign debt payment default
lies.
US Federal Government financing requirements (2010-2014) (10) (in
trillions USD) – Dark: the federal deficit / Light: maturing debt (future short
term borrowing not included) - Sources: Moodys / S&Ps / Treasury Dpt / New
York Times, 03/15/2010
. who will be able/want to
back the United States once
the British fuse (11) has started burning, causing panic in the sovereign debt
market in which the United
States is, by far, the largest issuer?
Especially since the size of sovereign debt needed corresponds with the start
of the expiry, beginning this year, of a mountain
of US private debt (commercial real
estate and LBO
due for refinancing, amounting to 4.2 trillion USD of private debt expiring in
the United States
between now and 2014 (averaging one trillion USD a year (12)). Purely by
chance, it is the same amount as new global sovereign debt issuance for 2010
alone, of which almost half is by the US Federal Government. Adding to that the
financing needs of the other economic players (households, businesses, local
authorities), the United
States must find nearly 5 trillion USD in
2010 to avoid « running dry ».
Our team anticipates two replies just as stark:
. as regards the United Kingdom, the IMF and the EU, perhaps
(13); and we’ll be watching, from this summer, the « Bank of England battle
(14) » to try and avoid a simultaneous collapse in Sterling
and UK
public finances. In all cases Sterling
will not come out undamaged and the crisis in public finances will engender an
austerity plan of unprecedented size.
. as regards the United States, no one;
because the size of its financing requirements exceeds the capacity of other
players (including the IMF (15)) and, in winter 2010/2011, this event will lead
to the explosion in the US Treasury Bond bubble founded on a huge increase in
interest rates to finance sovereign debt and private debt refinancing needs,
causing a new wave of financial institution bankruptcies. But it isn’t only
countries that can default on payment. A Central Bank can also go bankrupt when
its balance sheet consists of « ghost assets (16) » and the Fed will have to
face up to a real risk of bankruptcy, as analysed in this GEAB issue.
Winter 2010 will, equally, be the stage for another destabilised event in the
United States: the first major elections since the beginning of
the crisis (17) when millions of Americans will probably express their feelings
that they have had a « belly-full » of a continuing crisis (18), which doesn’t
affect Washington and Wall Street (19), and which creates US public debt which
is now counter-productive: a borrowed Dollar now causes a loss of 40 cents (see chart below).
Diminishing marginal productivity of debt in the US economy (in USD) (GDP/Debt ratio 1966-2010) - Sources: EconomicEdge, 03/2010
One may not be in agreement with the answers given by our team to
the two questions asked above. However, we are convinced that these questions
cannot be ignored: no analysis, no theory on world developments over the next
three quarters is credible if it doesn’t provide clear replies to these two
questions: « who will be able/want to?
». From our side, we think the same as Zhu Min, the Deputy Governor of the
Chinese Central Bank, that « the world
hasn’t enough money to buy any more US Treasury bonds (20) ».
In this issue our team has, therefore, decided to make a progress report on the
major risks weighing on the United Kingdom and the United States, and
anticipate developments over the next few months in the growing context of a
"velvet war" between Western powers (financial, monetary and trade
war). We will also disclose a series of recommendations for facing the double
shock of British and US financing needs.
原文（全）連結：
http://www.leap2020.eu/GEAB-N-44-is-available-Global-systemic-crisis-USA-UK-The-explosive-duo-of-the-second-half-of-2010-Summer-2010-The-Bank_a4531.html
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