Newsgroup: it.politica.internazionale
Titolo: GlobalEurope Anticipation Bulletin N°2 (marz 2006)

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EUROPE 2020 ALARM / Global Systemic Rupture
March 20-26, 2006:
Iran/USA - Release of global world crisis
      The Laboratoire européen d'Anticipation Politique Europe 2020 
(LEAP/E2020) now estimates to over 80% the probability that the week of 
March 20-26, 2006 will be the beginning of the most significant political 
crisis the world has known since the Fall of the Iron Curtain in 1989, 
together with an economic and financial crisis of a scope comparable with 
that of 1929. This last week of March 2006 will be the turning-point of a 
number of critical developments, resulting in an acceleration of all the 
factors leading to a major crisis, disregard any American or Israeli 
military intervention against Iran. In case such an intervention is 
conducted, the probability of a major crisis to start rises up to 100%, 
according to LEAP/E2020.
      An Alarm based on 2 verifiable events
      The announcement of this crisis results from the analysis of decisions 
taken by the two key-actors of the main on-going international crisis, i.e. 
the United States and Iran:
      --> on the one hand there is the Iranian decision of opening the first 
oil bourse priced in Euros on March 20th, 2006 in Teheran, available to all 
oil producers of the region ;
      --> on the other hand, there is the decision of the American Federal 
Reserve to stop publishing M3 figures (the most reliable indicator on the 
amount of dollars circulating in the world) from March 23, 2006 onward [1].
      These two decisions constitute altogether the indicators, the causes 
and the consequences of the historical transition in progress between the 
order created after World War II and the new international equilibrium in 
gestation since the collapse of the USSR. Their magnitude as much as their 
simultaneity will catalyse all the tensions, weaknesses and imbalances 
accumulated since more than a decade throughout the international system.
      A world crisis declined in 7 sector-based crises
      LEAP/E2020's researchers and analysts thus identified 7 convergent 
crises that the American and Iranian decisions coming into effect during the 
last week of March 2006, will catalyse and turn into a total crisis, 
affecting the whole planet in the political, economic and financial fields, 
as well as in the military field most probably too:
      1. Crisis of confidence in the Dollar
      2. Crisis of US financial imbalances
      3. Oil crisis
      4. Crisis of the American leadership
      5. Crisis of the Arabo-Muslim world
      6. Global governance crisis
      7. European governance crisis
      The entire process of anticipation of this crisis will be described in 
detail in the coming issues of LEAP/E2020's confidential letter - the 
GlobalEurope Anticipation Bulletin, and in particular in the 2nd issue to be 
released on February 16, 2006. These coming issues will present the detailed 
analysis of each of the 7 crises, together with a large set of 
recommendations intended for various categories of players (governments and 
companies, namely), as well as with a number of operational and strategic 
advices for the European Union.
      Decoding of the event "Creation of the Iranian Oil Bourse priced in 
Euros"
      However, and in order not to limit this information to decision makers 
solely, LEAP/E2020 has decided to circulate widely this official statement 
together with the following series of arguments resulting from work 
conducted.
      Iran's opening of an Oil Bourse priced in Euros at the end of March 
2006 will be the end of the monopoly of the Dollar on the global oil market. 
The immediate result is likely to upset the international currency market as 
producing countries will be able to charge their production in Euros also. 
In parallel, European countries in particular will be able to buy oil 
directly in their own currency without going though the Dollar. Concretely 
speaking, in both cases this means that a lesser number of economic actors 
will need a lesser number of Dollars [2]. This double development will thus 
head to the same direction, i.e. a very significant reduction of the 
importance of the Dollar as the international reserve currency, and 
therefore a significant and sustainable weakening of the American currency, 
in particular compared to the Euro. The most conservative evaluations give 
?1 to $1,30 US Dollar by the end of 2006. But if the crisis reaches the 
scope anticipated by LEAP/E2020, estimates of ?1 for $1,70 in 2007 are no 
longer unrealistic.
      Decoding of the event "End of publication of the M3 macro-economic 
indicator"
      The end of the publication by the American Federal Reserve of the M3 
monetary aggregate (and that of other components) [3] , a decision 
vehemently criticized by the community of economists and financial analysts, 
will have as a consequence to lose transparency on the evolution of the 
amount of Dollars in circulation worldwide. For some months already, M3 has 
significantly increased (indicating that « money printing » has already 
speeded up in Washington), knowing that the new President of the US Federal 
Reserve, Matt Bernanke, is a self-acknowledged fan of « money printing » 
[4]. Considering that a strong fall of the Dollar would probably result in a 
massive sale of the US Treasury Bonds held in Asia, in Europe and in the 
oil-producing countries, LEAP/E2020 estimates that the American decision to 
stop publishing M3 aims at hiding as long as possible two US decisions, 
partly imposed by the political and economic choices made these last years 
[5]:
      . the 'monetarisation' of the US debt
      . the launch of a monetary policy to support US economic activity.
      . two policies to be implemented until at least the October 2006 « 
mid-term » elections, in order to prevent the Republican Party from being 
sent in reeling.
      This M3-related decision also illustrates the incapacity of the US and 
international monetary and financial authorities put in a situation where 
they will in the end prefer to remove the indicator rather than try to act 
on the reality.
      Decoding of the aggravating factor "The military intervention against 
Iran"
      Iran holds some significant geo-strategic assets in the current 
crisis, such as its ability to intervene easily and with a major impact on 
the oil provisioning of Asia and Europe (by blocking the Strait of Ormuz), 
on the conflicts in progress in Iraq and Afghanistan, not to mention the 
possible recourse to international terrorism. But besides these aspects, the 
growing distrust towards Washington creates a particularly problematic 
situation. Far from calming both Asian and European fears concerning the 
accession of Iran to the statute of nuclear power, a military intervention 
against Iran would result in an quasi-immediate dissociation of the European 
public opinions [6] which, in a context where Washington has lost its 
credibility in handling properly this type of case since the invasion of 
Iraq, will prevent the European governments from making any thing else than 
follow their public opinions. In parallel, the rising cost of oil which 
would follow such an intervention will lead Asian countries, China first and 
foremost, to oppose this option, thus forcing the United States (or Israel) 
to intervene on their own, without UN guarantee, therefore adding a severe 
military and diplomatic crisis to the economic and financial crisis.
      Relevant factors of the American economic crisis
      LEAP/E2020 anticipate that these two non-official decisions will 
involve the United States and the world in a monetary, financial, and soon 
economic crisis without precedent on a planetary scale. The 'monetarisation' 
of the US debt is indeed a very technical term describing a catastrophically 
simple reality: the United States undertake not to refund their debt, or 
more exactly to refund it in "monkey currency". LEAP/E2020 also anticipate 
that the process will accelerate at the end of March, in coincidence with 
the launching of the Iranian Oil Bourse, which can only precipitate the 
sales of US Treasury Bonds by their non-American holders.
      In this perspective, it is useful to contemplate the following 
information 7: the share of the debt of the US government owned by US banks 
fell down to 1,7% in 2004, as opposed to 18% in 1982. In parallel, the share 
of this same debt owned by foreign operators went from 17% in 1982 up to 49% 
in 2004.
      --> Question: How comes that US banks got rid of almost all their 
share of the US national debt over the last years?
      Moreover, in order to try to avoid the explosion of the "real-estate 
bubble" on which rests the US household consumption, and at a time when the 
US saving rate has become negative for the first time since 1932 and 1933 
(in the middle of the "Great Depression"), the Bush administration, in 
partnership with the new owner of the US Federal Reserve and a follower of 
this monetary approach, will flood the US market of liquidities.
      Some anticipated effects of this systemic rupture
      According to LEAP/E2020, the non-accidental conjunction of the Iranian 
and American decisions, is a decisive stage in the release of a systemic 
crisis marking the end of the international order set up after World War II, 
and will be characterised between the end of March and the end of the year 
2006 by a plunge in the dollar (possibly down to 1 Euro = 1,70 US Dollars in 
2007) putting an immense upward pressure on the Euro, a significant rise of 
the oil price (over 100$ per barrel), an aggravation of the American and 
British military situations in the Middle East, a US budgetary, financial 
and economic crisis comparable in scope with the 1929 crisis, very serious 
economic and financial consequences for Asia in particular (namely China) 
but also for the United Kingdom [8], a sudden stop in the economic process 
of globalisation, a collapse of the transatlantic axis leading to a general 
increase of all the domestic and external political dangers all over the 
world.
      For individual dollar-holders, as for trans-national corporations or 
political and administrative decision makers, the consequences of this last 
week of March 2006 will be crucial. These consequences require some 
difficult decisions to be made as soon as possible (crisis anticipation is 
always a complex process since it relies on a bet) because once the crisis 
begins, the stampede starts and all those who chose to wait lose.
      For private individuals, the choice is clear: the US Dollar no longer 
is a "refuge" currency. The rising-cost of gold over the last year shows 
that many people have already anticipated this trend of the US currency.
      Anticipating. or being swept away by the winds of history
      For companies and governments - European ones in particular - 
LEAP/E2020 has developed in its confidential letter - the GlobalEurope 
Anticipation Bulletin -, and in particular in the next issue, a series of 
strategic and operational recommendations which, if integrated in today's 
decision-making processes, can contribute to soften significantly the 
"monetary, financial and economic tsunami" which will break on the planet at 
the end of next month. To use a simple image - by the way, one used in the 
political anticipation scenario « USA 2010 » [9] -, the impact of the events 
of the last week of March 2006 on the "Western World" we have known since 
1945 will be comparable to the impact of the Fall of the Iron Curtain in 
1989 on the "Soviet Block".
      If this Alarm is so precise, it is that LEAP/E2020's analyses 
concluded that all possible scenarios now lead to one single result: we 
collectively approach a "historical node" which is henceforth inevitable 
whatever the action of international or national actors. At this stage, only 
a direct and immediate action on the part of the US administration aimed at 
preventing a military confrontation with Iran on the one hand, and at giving 
up the idea to monetarise the US foreign debt on the other hand, could 
change the course of events. For LEAP/E2020 it is obvious that not only such 
actions will not be initiated by the current leaders in Washington, but that 
on the contrary they have already chosen "to force the destiny" by shirking 
their economic and financial problems at the expense of the rest of the 
world. European governments in particular should draw very quickly all the 
conclusions from this fact.
      For information, LEAP/E2020's original method of political 
anticipation has allowed several of its experts to anticipate (and publish) 
in particular : in 1988, the pproaching end of the Iron Curtain; in 1997, 
the progressive collapse in capacity of action and democratic legitimacy of 
the European institutional system; in 2002, the US being stuck in Iraq's 
quagmire and above all the sustainable collapse of US international 
credibility; in 2003, the failure of the referenda on the European 
Constitution. Its methodology of anticipation of "systemic ruptures" now 
being well established, it is our duty as researchers and citizens to share 
it with the citizens and the European decision makers; especially because 
for individual or collective, private or public players, it is still time to 
undertake measures in order to reduce significantly the impact of this 
crisis on their positions whether these are economic, political or 
financial.
      LEAP/E2020's complete analysis, as well as its strategic and 
operational recommendations intended for the private and public actors, will 
be detailed in the next issues of the GlobalEurope Anticipation Bulletin, 
and more particularly in the econd one (issued February 16th, 2006).
      1. These decisions were made a few months ago already:
      . the information on the creation by the Iranian government of an oil 
bourse priced in Euros 
(
http://www.mehrnews.com/en/NewsDetail.aspx?NewsID=260851
 ) first appeared 
in Summer 2004 in the specialised press.
      . the Federal Reserve announced on November 10, 2005 that it would 
cease publisging the information concerning M3 from March 23, 2006 onward :
 
http://www.federalreserve.gov/releases/h6/discm3.htm
      2. By examining Table 13B of the December 2005 Securities Statistics 
of the Bank for International Settlements entitled International Bonds and 
Notes (in billions of US dollars), by currency ), one can notice that at the 
end of 2004 (China not-included), 37.0% of the international financial 
assets were labelled in USD vs 46,8% in Euros ; while in 2000, the 
proportion was contrary with 49,6% labelled in USD for 30,1% only in Euros. 
It indicates that the March 2006 decisions will most probably accelerate the 
trend of exit-strategy from the dollar.
      3. Monetary aggregates (M1, M2, M3, M4) are statistical economic 
indicators. M0 is the value of all currency - here the dollar - that exists 
in actual bank notes and coins. M1 is M0 + checking accounts of this 
currency. M2 is M1 + money market accounts and Certificates of Deposits (CD) 
under $100,000. M3 is M2 + all larger holdings in the dollar (Eurodollar 
reserves, larger instruments and most non-European nations' reserve 
holdings) of $100,000 and more. The key point here is that when the Fed 
stops reporting M3, the entire world will lose transparency on the value of 
reserve holdings in dollars by other nations and major financial 
institutions.
      4. See his eloquent speech on these aspects before the National 
Economists Club, Washington DC, November 21, 2002
      (
http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm
 
 )
      5. It should be noticed that the upward trend of the Dollar in 2005 
was mostly the result of an interest rate differential which was favourable 
for the US Dollar, and of the "tax break on foreign earnings" Law (only 
valid for 1 year) which brought back to the US over $200 billion in the 
course of 2005.
      (source : CNNmoney.com
 
http://money.cnn.com/2005/10/05/news/economy/jobs_overseas_profits
 )
      6. As regards Europe, LEAP/E2020 wishes to underline that European 
governments are no longer in line with their opinions concerning the major 
topics, and in particular concerning the European collective interest. The 
January 2006 GlobalEurometre clearly highlighted the situation with a 
Tide-Legitimacy Indicator of 8% (showing that 92% of the panel consider that 
EU leaders no longer represent their collective interests) and a Tide-Action 
Indicator of 24% (showing that less than a quarter of the panel thinks EU 
leaders are capable of translating their own decisions into concrete 
actions). According to LEAP/E2020, public declarations of support to 
Washington coming from Paris, Berlin or London, should not hide the fact 
that the Europeans will quickly dissociate from the US in case of military 
attack (the GlobalEurometre is a monthly European opinion indicator 
publishing in the GlobalEurope Anticipation Bulletin 3 figures out of which 
2 are public).
      7.(source : Bond Market Association, Holders of Treasury Securities: 
Estimated Ownership of U.S. Public Debt Securities ;
 
http://www.dailykos.com/story/2006/1/28/122315/558
 )
      8. The United Kingdom indeed owns close to 3,000 billion $ of credits, 
that is almost three times what countries such as France or Japan hold. 
(source Bank of International Settlements, Table 9A, Consolidated Claims of 
Reporting Banks on Individual Countries )
      9. Cf. GlobalEurope Anticipation Bulletin N°1 (January 2006)
      © Copyright Europe 2020

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