GEAB No 39: States faced with 3 brutal options in 2010

[picasso moon]

http://www.leap2020.eu/GEAB-N-39-is-available!-Global-systemic-crisis-States-faced-with-three-brutal-options-in-2010-inflation,-high-taxation_a3995.html 
11/16/09.  For what it's worth. Interesting that they(is there more than one person in this group?) have turned sour on European prospects, even in Germany.
States will have no other alternative in 2010 than raise taxes to match their huge public deficits, let inflation soar to diminish the relative weight of their debt, or else file for bankruptcy. Some of these countries (the US, UK, Ireland, Argentina, Latvia, or even Spain, Turkey, Dubai or Japan) could be confronted to two, see all three, options at the same time. ...
Central banks continue to supply financial markets with liquidity, hoping that at some point their huge quantitative effort will result in some qualitative surge in the real economy. In the US and UK particularly, as they continue to pretend that the crisis does not reflect a general problem of insolvency (of banks, consumers, public organizations and companies), they “wait for Godot” and create the conditions for soaring inflation, and collapsing currencies and public money. ..
LEAP/E2020 wrote in February and March 2009 that, if the international monetary system was not completely reconsidered before summer 2009, the world would inevitably move towards a situation of global geopolitical dislocation, some sort of a worldwide “very great depression”, centered on the collapse of yesterday’s world’s pillar, the US. That’s where we are now (19). Even tampered figures (20) can no longer hide the level of deterioration of the global economic and social situation nor the descent to hell of the US economy and society. This reality is clearly appearing and will be obvious to everyone by the beginning of the second quarter of 2010. In this GEAB N°39, like every month, our team tries to anticipate the main trends so that everyone, personally or professionally, can get ready for a difficult year in 2010, a year when yesterday’s recipes will prove their inefficiency in curbing the global systemic crisis.

[PseudoPhil]

Link fixup again...

http://www.leap2020.eu/GEAB-N-39-is-available%21-Global-systemic-crisis-States-faced-with-three-brutal-options-in-2010-inflation,-high-taxation_a3995.html

[ninakat]

Higher taxes, inflation, and/or bankruptcy. Yep, that about covers it. Inflation is always the choice of the elites though, since it's really the stealth "tax."

[NYALB]

Inflation is always the choice of the elites though, since it's really the stealth "tax."

As a big debtor I welcome this choice.  Bring on the 10,000% inflation.

[Seahorse]

These guys have as accurate a record as the webbots.  Geeze.  They've screamed economic crash since at least 2005.  They last predicted an all out crash for this summer.  No credibility with me.

[I_Heart_Petrobilia]

Worth checking out:
One of the footnotes in the original article has a link to this other interesting piece by Michael Klare, on the USA's fading as a superpower : http://www.tomdispatch.com/post/175131/michael_klare_the_great_superpower_meltdown

[picasso moon]

Thanks for catching that, I_Heart_Pertobilia, i actually meant to call attention to that item but forgot.
And thanks for fixing the link, PseudoPhil, that damn ! again.

Seahorse: I've not assigned them high credibility in the past, i'm still skeptical myself as they (?) never really indicate what analytic method is used in their analysis. Just thought it was interesting that they've given up on the EU, apparently.

[Bruce]

With all the economic hardships so many are facing, guess April the 15th may have a new meaning for many..................................Bruce

[Paysan]

These guys have as accurate a record as the webbots.  Geeze.  They've screamed economic crash since at least 2005.  They last predicted an all out crash for this summer.  No credibility with me.

So you think there was no economic crash since 2005 ? 

As i read on this forum, it may not be really obvious until you are personnally hit.

For example in GEAB 39 they predicted about Dubai. I think they have the good data, based on that they forecast but they are not mediums.

[roccman]

These guys have as accurate a record as the webbots.  Geeze.  They've screamed economic crash since at least 2005.  They last predicted an all out crash for this summer.  No credibility with me.

yeah, but being early by 5 years is better than being late by 5

most everyone that "got it" 5 years ago understood that PO will be defined by economic collapse

well

here we are

[PonyBoy78]

Inflation is always the choice of the elites though, since it's really the stealth "tax."

As a big debtor I welcome this choice.  Bring on the 10,000% inflation.

That's what I'm hoping at this point, but I haven't secured a home loan yet (despite sterling credit, this still makes me nervous ).  It'll be about 1 year from now, so I'm praying that things hold-together until then.  Barring a major unexpected collapse event, I'm hoping that the system's complexity (and government maneuvering) means that collapse will take time.

[yellowrocker]

So, we are given the 3 options of inflation, higher taxes, or default on debt.

Analysis:

Higher taxes will not happen to a large degree. Oh there will be SOME increase in taxes, but this is fluff for the media dogs. If taxes are raised substantially, then we can just crawl back into our deep, deep recession hole and start digging.

Default on debt will not happen. People talk a lot about how this will hurt foreigners, but it will hurt Americans even more. According to Treasury records, about 36% US debt is owed to the US govt (social security trust fund), 28% is owed to foreign holders, and the remaining 36% is owed to pension plans, mutual funds, individuals, etc. Of the foreign holders of debt, some is used in the oil trade business and some is actually owned by Americans who have parked money in offshore accounts to do business outside the US. So if the US decides to not pay a particular holder of debt (like the UK for example), the US govt will never ever ever sell new debt. And then there's the domino effect of UK going bonkers when they wake up and realize (realise for the Brits reading this) they have been swindled. (BTW - why does the UK govt suck up so mightily to the US govt?)

That only leaves inflation..... Inflation is a good choice for politicians because they are not the bad guys. It's those evil corporations that keep raising prices on stuff you need. And if most other countries are also pursing inflationary policies, the US will be in good company.

So, my vote is for inflation.

[bearmarketLOL]

I don't doubt that eventually they will get it right as far as timing the ultimate crash goes. But im glad that just because they say 2nd quarter 2010 doesn't mean its guaranteed that it will crash then. On the other hand... this can they are kicking is getting really heavy, and I think their toes are starting to bleed pretty heavily.

[NYALB]

Inflation is defiantly the most politically safe.  It would also help out the housing and real estate industry if everyone's mortgages become worth less.  This would put an end to the forecloses.

[Arraya]

Yeah, nice moderated inflation would be politically preferable, like we've had for decades.  However, that is not possible.  The choice is between bone crushing deflation and very destructive inflation.  TPTB don't benefit from a Weimar redux, unless they want to lose the "P" portion of PTB