December 2006 - Dollar-Real Estate-Stock Markets: US consumer's insolvency, a catalyst of the impact phase of the global systemic crisis

Par franck biancheri

The American mid-term elections have now passed and, only a week later, as announced by LEAP/E2020 in GEAB N°8 of last October 15, the “euphorisation” of US voters/consumers and world financial players seems to have already passed wit them. The development process of the global systemic crisis has resumed its course, artificially stopped last July due to the upcoming mid-term elections, as shown by the recent changes in the Dollar’s value and by the latest US economy indicators. In parallel, a series of topics which had curiously disappeared from the pages of financial media these last months is reappearing, such as the end of the “carry-trade” based on the Yen [1], increasing fears of the risk of implosion of the market for derivatives and “hedge funds” [2] and of course the uninterrupted fall of US real estate [3] with its procession of negative consequences on American growth[4] (all these developments generating from now on increasing reflection as to the health of the US banking sector, one depending more and more on unsound debt [5]). For the team of LEAP/E2020, all these trends, which mark the beginning of the impact phase of the global systemic crisis, have a common catalyst, and that is the insolvency of the US consumer in the framework of a generalized degradation of the quality of credit to all US financial and economic operators [6].