Jan

23

From Impact Phase of the Global Systemic Crisis: Six Aspects of America’s « Very Great Depression »

According to the LEAP/E2020 team, the year 2007 will witness the sliding of the US into the « Very Great Depression », i.e., the rare historical conjunction of a severe economic depression, a strategic collapse and a major political and social internal crisis, at the center of the phase of impact of the global systemic crisis. Housing crisis, financial crisis, economic crisis, trade war, military escalation and political crisis are the six aspects described in GEAB N°11, along the following lines:

1- Negative personal saving rates and declining home prices on a national scale: Two major US economic indicators hit lowest level since the 1930 crisis

2- « Roller coaster » US interest rates in 2007: Up in spring and down in fall

3- The US financial sector has already entered bankruptcy: Today Ownit, Mortgage USA Lenders … tomorrow Ameriquest, Wells Fargo, HSBC Finances?

4- Middle East: To conceal its failure in Iraq, the Bush administration is preparing a Shiite-Sunni intra-Muslim war, while Israel gets ready to launch tactical nuclear weapons on Iran’s nuclear program

5- China and Russia’s move to drive the US out of central Asia and to accelerate the dollar fall

6- Emerging markets, mortgage risk: In 2007, risk is back on financial markets … and it will be a heavy bill after many careless years

Victor Niederhoffer comments:

The boy wonder had to bail out the NYSE and all its luminaries in 1907 from bankruptcy, even going to the extent of ending his bacchanalia on his yacht in Europe to cover his shorts at the urgent request of the bereft blue bloods at the exchange who had previously shunned him on New Street. I believe the decline in 1907 was an order of 70% or so on NYSE from the peak. Since that time, there have been a number of big declines in '07 years including 1987. The Education of a Speculator had a simulation showing that the declines in '07 years were inconsistent with randomness. Of course as mentioned many times, something that is statistically significant has nothing to do with its predictivity. I noted that three of the last four '07 years have been up, and I wouldn't put an iota of weight on such numerology although I would hope that others might be bearish because of such spurious seasonality.


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