On September 30th, ECRI publicly announced that the U.S. is tipping into a recession, a call the Institute had announced to its private clients on September 21st. Here is an excerpt from the announcement:
Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.
ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down — before the Arab Spring and Japanese earthquake — to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.” (Read the report here.)
For a close look at this movement of this index in recent months, here’s a snapshot of the data since 2000.
During the 19th century, the sun never had a chance – the British Empire spanned the globe soaking it up 24 hours a day. Eventually, the Empire grew too big, became too bloated, and had too many interests in too many places. Its eventual decline should have surprised no one.
Next up to rule the World was America. Millions of eager immigrants flooded the New World and planted the seeds which created the most powerful empire since the days of Julius Caesar. Yet as all good things must come to an end, so to will the American Empire.
While nobody is exactly sure when the transition will occur, America’s bloated debt problem and unfunded future liabilities all but ensures the day will come. And when that day arrives, we are confident the US Dollar will be worth considerably less than it is today.
However, a funny thing happened on the way to USD devaluation – Europe is getting in the way. Thanks to a disastrous handling of Europe’s debt crisis, Ben Bernanke and the US Federal Reserve will become the recipients of billions of Euros, Swiss Francs, British Pounds and other currencies resulting in a strengthening of the USD.
All money needs a home. And due to its status as the World’s reserve currency, the USD becomes the home of choice for everyone during times of crisis. As the debt crisis in Europe rolls into Rome, everyone everywhere should fully expect the USD to strengthen as a result.
As we come to the end of the second half of 2011, it is evident that 15,000 billion in ghost assets have gone up in smoke since last July, just as was anticipated by LEAP/E2020 (GEAB N°56 ). And, according to our team, this process figures to continue at the same rate throughout the year to come. Indeed we estimate that, with the introduction of a 50% discount on Greek government debt, the global systemic crisis has entered a new phase: that of the generalized discount on Western public debt and its corollary, the fragmentation of the global financial markets. Our team believes that 2012 will bring an average discount of 30% of total Western public debt (1), plus an equivalent amount in loss of assets from the balance sheets of worldwide financial institutions. Specifically, LEAP/E2020 anticipates the loss of 30,000 billion ghost assets by early 2013 (2), with an acceleration in 2012 of the partitioning process of the global financial market (3) into three increasingly disconnected currency areas: Dollar, Euro, and Yuan. These two phenomena feed into each other. They will also be the cause of a sharp decline of 30% on the part of US currency in 2012 (4), as we announced last April (GEAB N°54 ), which will occur amidst a sharp reduction in demand for the US dollar and the worsening of the US governmental debt crisis. The end of 2011 will therefore see, as anticipated, the trigger of the European debt crisis detonating a US bomb.