GEAB: The Breakdown of the International Monetary System is Underway!

• Will we see a monetary system collapse this year? Highly likely. There does not seem to be any way the world can avoid this. Despite all the rhetoric of the G20 on 2 April, nothing of significance was set in motion. Just some trumped up actions to paper over the cracks and Gordon Brown’s manipulation of stimulus data to make himself look good. The MSM just followed along and continued the propaganda.
   
• The key question is how will China, Japan, Middle East petrodollar countries, Russia….etc… get out of their USD denominated holdings? How will the world abandon the USD world reserve currency system and USD trading system without hurting itself? There is no easy way out of this. Many countries will get hurt ie: economic collapse, when their USD denominated reserves become toilet paper.
   
  

  Quarterly Chinese foreign exchange reserves growth - Source: People’s Bank of China / New York Times, 04/2009

• Global Europe Anticipation Bulletin (GEAB) explains :
   
  The next stage of the crisis will be determined by a Chinese dream. Indeed, with what dream can Beijing dream well, according to Washington, in the “Dollar trap” of its 1.400 billion credits made out in US Dollars (1)? According to the American leaders and their procession of media experts, to continue to be a prisoner and even to reinforce this prison condition by buying always more Bills Treasury and Dollars US (2).
   
  However, does everyone know with what dream a prisoner dreams? With escaping of course, leaving its prison. Also, for LEAP/E2020, there is not any doubt that Beijing seeks without slackening from now on (3) to get rid, as fast as possible, this mountain of “toxic” credits which became the US Treasury Bills and the American currency under which the richness of 1 billion 300 million Chinese (4) is imprisoned. In this GEAB N°34, our team thus details the “tunnels and the galleries” that Beijing has dug discreetly for several months in the economic system and world financier in order to escape from the “Dollar trap” by the end of the summer 2009. At the bottom of suspension of payment of the United States, a period will then open in which “every man for himself” will become the rule of the international game, in the same line of G20 of London whose final communique reads like the “chronicle of an announced geopolitical dislocation”, as LEAP/E2020 analysed in this number of Total Europe Anticipation Bulletin.
   
• The reality of a upcoming global monetary collapse has still not sunk in for everyone. Actions are taken quietly behind the scenes to dispose of their USD denominated holdings by China. They cannot afford to be seen publicly as selling their US$2T in USD denominated holdings as it will cause a massive panic and they will end up as the biggest loser. But mark my words, the conclusion is inescapable, there is no permanent way of hiding this massive disposal. Massive panic will come and it will be every many for himself.
   
• What were the key powers in the G20 doing at the 2 April meeting? GEAB adds :
   
  Behind “set of easily deceived” Londoner, where each one claimed to believe that an “historical” international collaboration (5) was in action, one in fact notes a deep division of G20: the Americans and the British (followed by flexible Japan) hopelessly try to preserve their control on the world financial system, while blocking or by diluting any significant reform giving a more important capacity to the other actors of the system, without having enough power to impose their objectives.
   
  The Chinese, the Russians, the Indians, the Brazilian ones … try to rebalance the international monetary and financial system in their favour, but without being able (or perhaps even without really wanting (6)) to impose such a reform. Europeans (and when this term is used, an EU without the United Kingdom, it implies more and more that they) prove incompetent on their side to slice between the only two only options which are offered to them: to sink with the United States and the United Kingdom by copying their policies or to basically call into question the current world system monetary and financial in partnership with the Chinese, the Russians, the Indians and the Brazilian ones. They are not able any more to follow Washington and London in their reproduction of the last policies which already did all bankruptcy (7), but they do not dare to manage to prepare the future.
   
  Europeans will take a major responsibility if, in the short temporal window which remains (less than six months from now on), no major action is undertaken to avoid the long crisis and tragedy which will last more than one decade (8). They have at the same time technical know-how to help with the success of an international currency founded on a basket of the principal currencies and a political method which makes it possible, as well as possible, to manage the various strategic interests of all the countries, as those whose currency would be behind the new international currency of reference. However, there exists today an obvious incapacity of the leaders of the EU (and in particular of the euro area) to assume these responsibilities, as so finally they preferred to see the Western system finish by breaking (while proclaiming the opposite) rather than to fight to make a bridge of it towards a new world system: that it is a choice (what LEAP/E2020 does not believe) or which it is the simple result of the pusillanimity [cowardliness] of European leaders selected for their docility (with respect to Washington and of the large European economic and financial operators), in all the cases, their neutrality is very dangerous for planet since it prevents the launching of an effective process making it possible to avoid a long and tragic crisis (9).
   
• However much we wish for a turn around in the US economy, it is wishful thinking. The MSM is becoming a propaganda tool of the ruling elite. The economic data dished out and revised frequently cannot be trusted. What is next for America ?
  

  US tax receipts on corporate income (1930 – 2009) - Sources: US Department of Commerce / Saint Louis Federal Reserve (Q2-Q3 2009 projection by EconomicEdge)

  …..  our researchers develop more their anticipations on the possible forms that the American suspension of payment will take by the end of the summer 2009, and from April 2009 (principal month of collection of the tax incomes in the United States) will be impossible to mask (10).
   
  The suspension of payment by the United States in the summer 2009 is indeed a topicality increasingly more extreme from now on with the public deficit completely out of control on the back of explosion of the expenditure (+ 41%) and of collapse of the revenues from taxes (- 28%), like LEAP/E2020 anticipated more than one year ago: for only March 2009, the federal deficit was assembled to nearly 200 Billion USD (much above the most pessimistic forecast), that is to say not under half of the deficit recorded for the whole of the year 2008 (11). And the same phenomenon is repeated on all the levels of the public structure of the country: federal state, federate states (12), counties, cities (13) … everywhere the revenues from taxes disappear involving in an accelerated way the worldwide in an overdrawn spiral that nobody (Washington in first chief) controls any more.

• The casualty will be the USD. The FedRes can print lots of it out of thin air but cannot guarantee it will be worth anything. America is heading towards economic collapse like Argentina 2001-2002. Be prepared!

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