------ Forwarded Message > From: Sardar <sar...@spiritone.com> > Date: Wed, 18 Nov 2009 19:12:38 -0800 > To: Sardar <recon1968br...@yahoo.com> > Subject: Soceite Generale - Get Ready For Global Collapse > > Soceite Generale - Get Ready > For Global Collapse > By Ambrose Evans-Pritchard > 11-18-9 > > > > Explosion of debt: Japan's public debt could reach as much as 270pc > of GDP in the next two years. A bullet train is pictured speeding past Mount > Fuji in Fuji city, west of Tokyo Photo: Reuters > > > In a report entitled "Worst-case debt scenario", the bank's asset > team said state rescue packages over the last year have merely transferred > private liabilities onto sagging sovereign shoulders, creating a fresh set > of problems. > > Overall debt is still far too high in almost all rich economies as a > share of GDP (350pc in the US), whether public or private. It must be > reduced by the hard slog of "deleveraging", for years. > > "As yet, nobody can say with any certainty whether we have in fact > escaped the prospect of a global economic collapse," said the 68-page > report, headed by asset chief Daniel Fermon. It is an exploration of the > dangers, not a forecast. > > Under the French bank's "Bear Case" scenario, the dollar would slide > further and global equities would retest the March lows. Property prices > would tumble again. Oil would fall back to $50 in 2010. > > Governments have already shot their fiscal bolts. Even without fresh > spending, public debt would explode within two years to 105pc of GDP in the > UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state > debt would reach $45 trillion, up two-and-a-half times in a decade. > > (UK figures look low because debt started from a low base. Mr Ferman > said the UK would converge with Europe at 130pc of GDP by 2015 under the > bear case). > > The underlying debt burden is greater than it was after the Second > World War, when nominal levels looked similar. Ageing populations will make > it harder to erode debt through growth. "High public debt looks entirely > unsustainable in the long run. We have almost reached a point of no return > for government debt," it said. > > Inflating debt away might be seen by some governments as a lesser of > evils. > > If so, gold would go "up, and up, and up" as the only safe haven > from fiat paper money. Private debt is also crippling. Even if the US > savings rate stabilises at 7pc, and all of it is used to pay down debt, it > will still take nine years for households to reduce debt/income ratios to > the safe levels of the 1980s. > > The bank said the current crisis displays "compelling similarities" > with Japan during its Lost Decade (or two), with a big difference: Japan was > able to stay afloat by exporting into a robust global economy and by letting > the yen fall. It is not possible for half the world to pursue this strategy > at the same time. > > SocGen advises bears to sell the dollar and to "short" cyclical > equities such as technology, auto, and travel to avoid being caught in the > "inherent deflationary spiral". Emerging markets would not be spared. > Paradoxically, they are more leveraged to the US growth than Wall Street > itself. Farm commodities would hold up well, led by sugar. > > Mr Fermon said junk bonds would lose 31pc of their value in 2010 > alone. However, sovereign bonds would "generate turbo-charged returns" > mimicking the secular slide in yields seen in Japan as the slump ground on. > At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold > down yields by purchasing more bonds. The European Central Bank would do > less, for political reasons. > > SocGen's case for buying sovereign bonds is controversial. A number > of funds doubt whether the Japan scenario will be repeated, not least > because Tokyo itself may be on the cusp of a debt compound crisis. > > Mr Fermon said his report had electrified clients on both sides of > the Atlantic. "Everybody wants to know what the impact will be. A lot of > hedge funds and bankers are worried," he said. > > http://www.telegraph.co.uk/finance/economics/6599281/Societe- > Generale-tells-clients-how-to-prepare-for-global-collapse.html > > > > Disclaimer > > Donate to Rense.com > Support Free And Honest > Journalism At Rense.com Email > Article Subscribe To RenseRadio! > Enormous Online Archives, > MP3s, Streaming Audio Files, > Highest Quality Live Programs > > > MainPage > http://www.rense.com > > > This Site Served by TheH > http://www.rense.com/general88/gener.htm
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