At the Crossroads of Three Roads of Global Chaos

[Tony Gosling]

The Systemic Global Economic Crisis: At the 
Crossroads of Three Roads of Global Chaos
http://www.globalresearch.ca/index.php?context=va&aid=22862

by GEAB
Global Research, January 19, 2011 - Global Europe Anticipation Bulletin

This GEAB issue marks the fifth anniversary of 
the publication of the Global Europe Anticipation 
Bulletin. In January 2006, on the occasion of the 
first issue, the LEAP/E2020 team indicated that a 
period of four to seven years was opening up 
which would be characterized by the “Fall of the 
Dollar Wall”, an event similar to the fall of the 
Berlin Wall which resulted, in the following 
years, in the collapse of the communist bloc then 
that of the USSR. Today, in this GEAB issue, 
which presents our thirty-two anticipations for 
2011, we believe that the coming year will be a 
pivotal year in the roll out of this process 
between 2010 and 2013. It will be, in any case, a 
ruthless year because it will mark the entry into 
the terminal phase of the world before the crisis (1).

Since September 2008, when the evidence of the 
global and systemic nature of the crisis became 
clear to all, the United States, and behind it 
the Western countries, were content with 
palliative measures that have merely hidden the 
undermining effects of the crisis on the 
foundations of the present-day international 
system. 2011 will, according to our team, mark 
the crucial moment when, on the one hand, these 
palliative measures see their anesthetic effect 
fade away whilst, in contrast, the consequences 
of systemic dislocation in recent years will 
dramatically surge to the forefront (2).

In summary, 2011 will be marked by a series of 
violent shocks that will explode the faulty 
safety devices put in place since 2008 (3) and 
will carry off, one by one, the “pillars” on 
which the “Dollar Wall” has rested for decades. 
Only the countries, communities, organizations 
and individuals which, over the last three years, 
have actually undertaken to learn the lessons 
from the current crisis to distance themselves as 
quickly as possible from the pre-crisis patterns, 
values and behavior will get through this year 
unscathed; the others will be carried away in the 
procession of monetary, financial, economic, 
social and political difficulties that 2011 holds.

Thus, as we believe that 2011 will, globally, be 
the most chaotic year since 2006, the date of the 
beginning of our work on the crisis, in this GEAB 
issue our team has focused on 32 anticipations 
for 2011, which also include a number of 
recommendations to deal with future shocks. Thus, 
this GEAB issue offers a kind of map forecasting 
financial, monetary, political, economic and 
social shocks for the next twelve months.

If our team believes that 2011 will be the worst 
year since 2006, the beginning of our 
anticipation work on the systemic crisis, it’s 
because it’s at the crossroads of three paths to 
global chaos. Absent fundamental treatment of the 
causes of the crisis, since 2008 the world has 
only gone back to take a better jump forward.

A bloodless international system
The first path that the crisis can take to cause 
world chaos is simply a violent and unpredictable 
shock. The dilapidated state of the international 
system is now so advanced that its cohesion is at 
the mercy of any large-scale disaster (4). Just 
look at the inability of the international 
community to effectively help Haiti over the past 
year (5), the United States to rebuild New 
Orleans for six years, the United Nations to 
resolve the problems in Darfur, Côte d'Ivoire for 
a decade, the United States to progress peace in 
the Middle East, NATO to beat the Taliban in 
Afghanistan, the Security Council to control the 
Korean and Iranian issues, the West to stabilize 
Lebanon, the G20 to end the global crisis be it 
financial, food, economic, social, monetary, ... 
to see that over the whole range of climatic and 
humanitarian disasters, like economic and social 
crises, the international system is now powerless.

In fact, since the mid-2000s at least, all the 
major global players, at their head of course the 
United States and its cortege of Western 
countries, do no more than give out information, 
or gesticulate. In reality, all bets are off: The 
crisis ball rolls and everyone holds their breath 
so it doesn’t fall on their square. But gradually 
the increasing risks and issues of the crisis 
have changed the casino’s roulette wheel into 
Russian roulette. For LEAP/E2020, the whole world 
has begun to play Russian roulette (6), or rather 
its 2011 version, “American Roulette” with five bullets in the barrel.


Monthly progression of the FAO food index (2010) 
and the price of principal foodstuffs (2009/2010) 
(base 100: averaged over 2002-2004) - Source: FAO/Crikey, 01/2011
Soaring commodity prices (food, energy (7),...) 
should remind us of 2008 (8). It was indeed in 
the six months preceding Lehman Brothers and Wall 
Street’s collapse that the previous episode of 
sharp increases in commodity prices was set. And 
the actual causes are the same as before: a 
flight from financial and monetary assets in 
favour of “concrete” investments. Last time the 
big players fled the mortgage market and 
everything that depended on it, as well as the 
U.S. Dollar; today they are fleeing all financial 
stocks, Treasury bonds (9) and other public 
debts. Therefore, we have to wait for a time 
between Spring and Autumn 2011 for the explosion 
of the quadruple bubble of Treasury bonds, public 
debt (10), bank balance sheets (11) and real 
estate (American, Chinese, British, Spanish,... 
and commercial (12)), all taking place against a 
backdrop of a heightened currency war (13).

The inflation induced by US, British and Japanese 
Quantitative Easing and similar stimulus measures 
of the Europeans and Chinese will be one of the 
destabilizing factors in 2011 (14). We will come 
back to this in more detail in this issue. But 
what is now clear with respect to what is 
happening in Tunisia (15), is that this global 
context, especially the rise in food and energy 
prices, now leads on to radical social and 
political shocks (16). The other reality that the 
Tunisian case reveals is the impotence of the 
French, Italian or American “godfathers” to 
prevent the collapse of a “friendly regime” (17).

Impotence of the major global geopolitical players
And this impotence of the major global 
geopolitical players is the other path that the 
crisis can use to produce world chaos in 2011. In 
effect, one can place the major G20 powers in two 
groups whose only point in common is that they 
are unable to influence events decisively.

On one side we haves a moribund West with, on the 
one hand, the United States, for whom 2011 will 
show that its leadership is no more than fiction 
(see this issue) and which is trying to freeze 
the entire international system in its 
configuration of the early 2000s (18), and on the 
other hand we have Euroland, “sovereign” in the 
pipeline, which is currently mainly focused on 
adapting to its new environment (19) and new 
status as an emerging geopolitical entity (20), 
and which, therefore, has neither the energy nor 
the vision necessary to influence world events (21).

And on the other side are the BRIC countries 
(with China and Russia in particular) who are, at 
the moment, proving to be incapable of taking 
control of all or part of the international 
system and whose only action is therefore limited 
to quietly undermine what remains of the 
foundations of the pre-crisis order (22).

Ultimately, impotence is widespread (23) at the 
international community level, increasing not 
only the risk of major shocks, but also the 
significance of the consequences of these shocks. 
The world of 2008 was taken by surprise by the 
violent impact of the crisis, but paradoxically 
the international system was better equipped to 
respond being organized around an undisputed 
leader (24). In 2011, this is no longer the case: 
not only is there no undisputed leader, but the 
system is bloodless as we have seen above. And 
the situation is aggravated further by the fact 
that the societies of many countries in the world 
are on the verge of socio-economic break-up.


US petrol prices (2009-2011) - Source: GasBuddy, 01/2011

Societies on the edge of socio-economic break-up
This is particularly the case in the United 
States and Europe where three years of crisis are 
beginning to weigh very heavily on the 
socio-economic and therefore political balance. 
US households, now insolvent in their tens of 
millions, oscillate between sustained poverty 
(25) and rage against the system. European 
citizens, trapped between unemployment and the 
dismantling of the welfare state (26), are 
starting to refuse to pay the bills for financial 
and budget crises and are beginning to look for 
culprits (banks, the Euro, government political parties
).

But amongst the emerging powers too, the violent 
transition which constitutes the crisis is 
leading societies towards situations of break-up: 
in China, the need to control expanding financial 
bubbles is hampered by the desire to improve the 
lot of whole sectors of society such as the need 
for employment for tens of millions of casual 
workers; in Russia, the weakness of the social 
security system fits badly with the enrichment of 
the elite, just as in Algeria shaken by riots. In 
Turkey, Brazil and India, everywhere the rapid 
change these countries are seeing is triggering 
riots, protests and terrorist attacks. For 
reasons that are sometimes contradictory, growth 
for some, penury for others, across the globe our 
diverse societies tackle 2011 in a context of 
strong tensions and socio-economic break-up, 
which have the making of political time bombs.

It’s its position at the crossroads of three 
paths which thus makes 2011 a ruthless year. And 
ruthless it will be for the States (and local 
authorities) which have chosen not to draw hard 
conclusions from the three years of crisis which 
have gone before and / or who have contented 
themselves with cosmetic changes not altering 
their fundamental imbalances at all. It will also 
be so for businesses (and States (27)) who 
believed that the improvement in 2010 was a sign 
of a return to “normal” of the global economy. 
And finally it will be so for investors who have 
not understood that yesterday’s investments 
(securities, currencies,...) couldn’t be those of 
tomorrow (in any case for several years). History 
is usually a “good girl”. She often gives a 
warning shot before sweeping away the past. This 
time, it gave the warning shot in 2008. We 
estimate that in 2011, it will do the sweeping. 
Only players who have undertaken, even 
painstakingly, even partially, to adapt to the 
new conditions generated by the crisis will be 
able to hang on; for the others, chaos is at the end of the road.

Notes:

(1) Or of the world that we have known since 1945 
to repeat our 2006 description.

(2) The recent decision by the US Department of 
Labor to extend the inclusion of the measure of 
long-term unemployment in the US employment 
statistics to five years instead of the maximum 
of two years until now, is a good indicator of 
the entry into a new stage of the crisis, a step 
that has seen the disappearance of the 
“practices” of the world before. As a matter of 
fact, the US government cites “the unprecedented 
rise” of long-term unemployment to justify this 
decision. Source: The Hill, 12/28/2010

(3) These measures (monetary, financial, 
economic, budgetary, strategic) are now closely 
linked. That’s why they will be carried away in a series of successive shocks.

(4) Source: The Independent, 01/13/2011

(5) It’s even worse because it was international 
aid that brought cholera to the island, causing thousands of deaths.

(6) Moreover Timothy Geithner, US Treasury 
Secretary, little known for his overactive 
imagination, has just indicated that “the US 
government could once again have to do 
exceptional things”, referring to the bank 
bailout in 2008. Source: MarketWatch, 01/13/2011

(7) Moreover, India and Iran are in the course of 
establishing a system of exchange “gold for oil” 
to try and avoid supply disruptions. Source: Times of India, 01/08/2011

(8) In January 2011 the FAO food price index (at 
215) has just exceeded its previous record set in May 2008 (at 214).

(9) Wall Street banks are currently unloading 
their US Treasury bonds as fast as possible 
(unseen since 2004). Their official explanation 
is “the remarkable improvement in the US economy 
which no longer requires us to seek refuge in 
Treasury Bonds”. Of course, you are free to 
believe it, like Bloomberg ’s journalist on 01/10/2011.

(10) Thus Euroland is already taking big steps 
forward along the path described in the GEAB N°50 
with a discount in the case of refinancing the 
debts of a member state, whilst Japanese and US 
debt are now about to enter the storm. Sources: 
Bloomberg, 01/07/2011; Telegraph, 01/05/2011

(11) We believe that, in general, global banks’ 
balance sheets contain at least 50% ghost assets 
which in the coming year will require to be 
discounted by between 20% to 40% due to the 
return of the global recession combined with 
austerity, the rise in defaults on household, 
business, community and state loans, currency 
wars and a pickup in the fall of real estate 
prices. The American, European, Chinese, Japanese 
and others “stress-tests” can still continue to 
try and reassure markets with “Care Bears” 
scenarios except that this year it’s “Alien 
against Predator ” which is on the banks’ agenda. Source: Forbes, 01/12/2011

(12) Each of these real estate markets will fall 
sharply again in 2011 in the case of those which 
have already started falling in recent years, or 
in the case of China, which will begin its sharp 
deflation amid economic slowdown and monetary tightening.

(13) The Japanese economy is, moreover, one of 
the first victims of this currency war, with 76% 
of the CEOs of 110 major Japanese companies 
surveyed by Kyodo News now reported being 
pessimistic about Japanese growth in 2011 
following the rise in the yen. Source: JapanTimes, 01/04/2011

(14) Here are several instructive examples put 
together by the excellent John Rubino. Source: DollarCollapse, 01/08/2011

(15) By way of reminder, in the GEAB N°48 we had 
classified Tunisia in the category of countries 
“with significant risks” in 2011.

(16) No doubt, moreover, that the Tunisian 
example is generating a round of reassessment 
amongst the rating agencies and the “experts in 
geopolitics”, who, as usual, didn’t see anything 
coming. The Tunisian case also illustrates the 
fact that it’s now the satellite countries of the 
West in general and the US in particular, who are 
on the way to shocks in 2011 and in the years to 
come. And it confirms what we regularly repeat: a 
crisis accelerates all the historical processes. 
The Ben Ali regime, twenty-three years old, 
collapsed in a few weeks. When political 
obsolescence is involved everything changes 
quickly. Now it's all the pro-Western Arab 
regimes which are obsolete in the light of events in Tunisia.

(17) No doubt this « Western godfather » 
paralysis will be carefully analyzed in Rabat, 
Cairo, Jeddah and Amman, for example.

(18) A configuration that was all the more 
favorable because it was without a counterweight to their influence.

(19) We will return in more detail in this GEAB 
issue, but seen from China we are not mistaken. Source: Xinhua, 01/02/2011

(20) Little by little Europeans are discovering 
that they are dependent on centres of power other 
than Washington. Beijing, Moscow, Brazilia, New 
Dehli,
 Source: La Tribune, 01/05/2011; 
Libération, 12/24/2010; El Pais, 01/05/2011

(21) All Japan's energy is focused on its 
desperate attempt to resist the attraction of 
China. As for other Western countries, they are 
not able to significantly influence global trends.

(22) The US Dollar’s place in the global system 
is a part of these last foundations that the BRIC 
countries are actively eroding day after day.

(23) As regards deficit, the US case is textbook. 
Beyond the speeches, everything continues as 
before the crisis with a deficit swelling 
exponentially. However, even the IMF is now 
ringing the alarm. Source: Reuters, 01/08/2011

(24) Moreover, even the Wall Street Journal on 
01/12/2011, echoing the Davos Forum, is concerned 
over the lack of international coordination, 
which is in itself a major risk to the global economy.

(25) Millions of Americans are discovering food 
banks for the first time in their lives, whilst 
in California, as in many other states, the 
education system is disintegrating fast. In 
Illinois, studies on the state deficit are now 
comparing it to the Titanic. 2010 broke the 
record for real estate foreclosures. Sources: 
Alternet, 12/27/2010; CNN, 01/08/2011; 
IGPA-Illinois, 01/2011; LADailyNews, 01/13/2011

(26) Ireland, which is facing, purely and simply, 
a reconstruction of its economy, is a good 
example of situations to come. But even Germany, 
with remarkable current economic results however 
can’t escape this development as shown by the 
funding crisis for cultural activities. Whilst in 
the United Kingdom, millions of retirees are 
seeing their incomes cut for the third year 
running. Sources : Irish Times, 12/31/2010; 
Deutsche Welle, 01/03/2011; Telegraph, 01/13/2011

(27) In this regard, US leaders confirm that they 
are rushing straight into the wall of public 
debt, failing to anticipate the problems. Indeed, 
the recent statement by Ben Bernanke, the Fed 
chairman, that the Fed will not help the States 
(30% fall in 2009 tax revenues according to the 
Washington Post on 01/05/2011) and the cities 
collapsing under their debts, just as Congress 
decides to stop issuing “Build America Bonds” 
which enabled States to avoid bankruptcy these 
last few years, shows a Washington blindness only 
equal to that which Washington demonstrated in 
2007/2008 in the face of the mounting 
consequences of the “subprime” crisis. Sources: 
Bloomberg, 01/07/2011; WashingtonBlog, 01/13/2011
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