Geab Nr56 en

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To anticipate is to foresee in order to act
Contents
June 16, 2011 Special Summer 2011
1- Perspective
Global systemic crisis Last warning before the Autumn 2011 shock, when $15 trillion of financial assets go up in smoke
We estimated in 2009 that the world had about 30 trillion USD in ghost assets. Almost half went up in smoke in the six months between September 2008 and March 2009. For our team, it's now the other halfs turn, the 15 trillion USD of ghost assets remaining, purely and simply vanishing between July 2011 and January 2012 (page 2) . The detonating mechanism of European government debt (page 4) . The process of the US debt bomb explosion (page 8)
2- Telescope
In search of a new post-crisis global balance - EURO-BRICS Summit in 2014 or 2015: The agenda takes shape
Today, on the eve of the second half of 2011, which will be the stage for the global systemic crisis second major shock, combining an economic, financial and monetary crisis and global geopolitical dislocation , LEAP/E2020 had the opportunity to directly address the central issue on the likely agenda of such a Euro-BRICS summit thanks to the first seminar on this topic which brought Europeans, Brazilians, Russians, Indians, Chinese and South Africans together (page 12)
3- Focus
Strategic and operational recommendations
. Ghost assets: How to avoid your assets being part of the 15 Trillion USD which goes up in smoke in the next few months (page 19) . Gold and precious metals: More than ever, its the physical that counts! (page 19) . Financial markets: Confirmation of the red alert (page 19) . Western housing markets: The 2015 big collapse begins from 2012 (page 20)
4- The GlobalEurometre
Results & Analyses
Generally, on the eve of the second half of 2011, we note a widespread rise in pessimism amongst Europeans as regards the economic and financial environment (page 24)
5- Special subscribers announcements

Transatlantic conference, Houston (Texas, USA), 3-4 October 2011
Reserved for North American and European subscribers (page 26)
1 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

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1- Perspective
Global systemic crisis Last warning before the Autumn 2011 shock, when $15 trillion of financial assets go up in smoke
On December 15, 2010, in the GEAB N50, LEAP/E2020 anticipated the explosion of Western government debt1 in the second half of 2011. We were then describing a process that would start with the European government debt crisis and then set fire to the heart of the global financial system, namely US federal debt2. And here we are with this issue at the start of the second half of 2011, with a global economy in complete disarray3, an increasingly unstable global monetary system 4 and financial centres in desperate straits5, all this despite the thousands of billions of public money invested to avoid precisely this type of situation. The insolvency of the global financial system, and of the Western financial system in the first place, returns again to the front of the stage after just over a year of political cosmetics aimed at burying this fundamental problem under truckloads of cash. We estimated in 2009 that the world had about 30 trillion USD in ghost assets. Almost half went up in smoke in the six months between September 2008 and March 2009. For our team, it's now the other halfs turn, the 15 trillion USD of ghost assets remaining, purely and simply vanishing between July 2011 and January 2012. And this time, it will also involve government debt, unlike 2008/2009 where it was mostly private players who were affected. To gauge the extent of the coming shock, it is worth knowing that even US banks are starting to reduce their use of US Treasury Bonds to guarantee their transactions for fear of the increasing risks weighing on US government debt6. For the financial worlds players, the Autumn 2011 shock will literally be the ground giving way beneath their feet, since its really the foundation of the global financial system, the US Treasury Bond, which will plunge sharply7.
1 2
Including the fact that private investors (especially banks) would be required to contribute to resolve the Greek debt problem. Without forgetting, of course, US local muni debts. 3 The United States is falling back into recession. Europe is slowing as is China and India. The illusion of a global recovery is now truly over. It is precisely this very disturbing situation which explains why large companies hoard their cash: they dont want to find themselves, like 2008/2009, dependent on banks which are short of liquidity themselves. According to LEAP/E2020, its worthwhile SMEs and individuals giving careful thought to this situation. Source: CNBC, 06/06/2011 4 James Saft renowned columnist for Reuters and The New York Times, is even on the point of wishing "good luck to dollar hegemony". Source: Reuters, 05/19/2011 5 The stock exchanges know that the "party" is over with the end of Quantitative Easing in the US and the return of the recession. And financial operators no longer know how to find profitable and not too risky investments. 6 Source: CNBC/FT, 06/12/2011 7 Even Saudi Arabia is now publicly concerned, with Prince AlWaleed referring to the "US debt bomb". Source: CNBC, 05/20/2011

US Federal debt and forecasts (2000-2016) (in billions USD) - Sources: US Treasury/ Berruyer / GEAB, 06/2011
In this issue, we discuss the two most dangerous aspects of the Autumn 2011 shock, namely: . the detonating mechanism of European government debt . the explosion process of the US bomb in terms of government debts At the same time, in the context of the acceleration of the rebalancing of global power relationships, we introduce the anticipation of a fundamental geopolitical process for the holding of a Euro-BRICS summit by 2014. Finally, we focus our recommendations on the means of avoiding being part of the 15 trillion USD in ghost assets that will go up in smoke in the coming months, with a special mention for developments in real estate in Europe whose collapse we used to anticipate for 2015 will start in fact as early as 2012. In the public announcement of this GEAB issue, we introduce a portion of the anticipation on the detonating mechanism of European government debt.

European Central Bank balance sheet holdings (red: asset backed securities / light blue: public sector bonds / green: bank bonds / dark blue: other corporate bonds / beige: other securities) - Sources: Spiegel / BCE, 05/2011
The detonating mechanism of European government debt

The Anglo-Saxon financial operators have played sorcerer's apprentice for the last year and a half and the first headlines in the Financial Times in December 2009 on the Greek crisis quickly became a so-called "Euro crisis". We will not dwell on the vicissitudes of this enormous chicanery with a news item8 orchestrated from the City of London and Wall Street, as we have already devoted many pages to it in a number of GEAB issues throughout this period. Suffice it to say that eighteen months later the Euro is doing well while the dollar continues its downward spiral against major world currencies; and that all those who bet on the collapse of the Eurozone have lost a lot of money. As we anticipated the crisis favors the emergence of a new sovereign, Euroland, which now allows the Eurozone to be much better prepared than Japan, the United States or the United Kingdom9 for the Autumn 2011 shock ... even if it ends up, quite reluctantly, playing the role of detonator. The "bombardment" (since we must call things by their proper name)10, interspersed with breaks of several weeks11, to which Euroland has been subjected during all this time, in fact had three consecutive major effects, two of them far from the results expected by Wall Street and the City:
The latest example: the June 4th anti-austerity protest in Athens who had painstakingly assembled less than 1,000 protesters, while the Anglo-Saxon media again made headlines of this proof of rejection by the Greek population ... conjuring up thousands of demonstrators. Sources: Figaro, 06/05/2011; Financial Times, 06/05/2011; Washington Post, 06/06/2011 9 The Telegraph of 06/07/2011 writes, for example, that since 1980 the UK spent 700 billion more than it earned. Much of that sum accounts for the 15 trillion USD in ghost assets which will disappear soon. 10 We can see the exhaustion of the "end of the Euro" dialogue by the fact that Wall Street is now reduced to get Nouriel Roubini to intervene regularly to attempt to try to give credibility to this fairy story. Poor Roubini, whose forecasting work neither foresaw the global crisis, nor ever exceeded six months, finds himself reduced to having to foresee the "end of the Euro" in the next five years, or at least a fundamental reform of the Eurozone potentially leading to increased European integration. We quote the author from his recent speech at a Singapore conference repeated in the Figaro of 06/14/2011. So if we summarize Nouriel Roubinis prediction there would be an end to the Euro in 5 years, unless in fact the Euro is strengthened through the permanent establishment of a "new sovereign", Euroland. What forecasting! Beyond the effect of an eye-catching announcement, which consists of saying that within five years (an infinitely long time in a time of crisis, and Roubini spoke of much shorter maturity dates only a few months ago), one thing or the other can happen. Thank you Dr. Roubini! It's hard to try to forecast and to work for Wall Street at the same time. But indeed, you must take your part in the general (vain) attempt to convince Asians not sell dollar-denominated assets in favor of those in Euros. 11 When the Anglo-Saxon experts and media really cant invent anything more to justify keeping the Euro crisis as a headline.

1. at first (December 2009 - May 2010), it removed the European currencys sense of
invulnerability formed in 2007/2008, introducing doubts about its durability and more precisely putting the idea that the Euro was the natural alternative to the US dollar (or even its successor) into perspective
2. then (June 2010 - March 2011), it conducted Euroland leaders to start work at "top speed" on
all measures to safeguard, protect and strengthen the single currency (measures which should have been taken many years ago). In so doing it has revitalized European integration and reinstated the founding core at the head of the European project, thus marginalizing the United Kingdom in particular12. At the same time it has boosted increasing support for the European currency from the BRICS, headed by China, which after a moment of hesitation became aware of two fundamental points: first Europeans were acting seriously to face up to the problem and secondly, given the Anglo-Saxon determination, the Euro was obviously an essential tool for any attempt to exit the "dollar world"13.
3. Finally, (April 2011 - September 2011), it is currently compelling the Eurozone to start
reaching for the sacrosanct private investors to make them contribute to solving the Greek problem especially via voluntary repayment rescheduling (or any other form of cuts in expected profits)14. As one can imagine, if the first blow really was one of the objectives pursued by Wall Street and the City (besides the fact of turning attention away from the United Kingdom and United States massive problems), on the other hand the other two had effects totally opposite to the desired outcome: to weaken the Euro and reduce its attractiveness worldwide. Especially since a fourth series is gearing itself up which will see, by early 201215, the launch of a Eurobond mechanism, enabling the sharing of a part of Euroland countries debt issuance 16, and the inevitable growing political pressure17 to increase the share of the private contribution in this broad process of restructuring18 the debt of the Eurozones peripheral countries19.
12
But also Sweden whose elite continue to live in the world after 1945, that in which they have been able to enrich themselves by taking advantage of the problems of the rest of the continent. As regards the United Kingdom, the City continues to try in vain to avoid going under the control of the European authorities as we see from this Telegraph article of 05/30/2011. The funniest in this article is the image chosen by the newspaper: a European flag in tatters. Yet its really the City which is losing its historic independence in favor of the EU and not the opposite. It is a glaring illustration of the inability to understand the events unfolding in Europe through the British media, even when its the Telegraph, otherwise excellent in terms of its coverage of the crisis. 13 Hence their motivation to buy Euroland debt. Source: Reuters, 05/26/2011 14 Sources: YahooActu, 06/13/2011; Deutsche Welle, 06/10/2011; Spiegel, 06/10/2011 15 The crisis will not allow Euroland to wait for 2013, the projected date for revising the system adopted in May 2010, to resolve this discussion. 16 Various options are being studied but most likely all organized around a system of dual tier government debt issuance: an issue carrying Eurolands common signature (and, therefore, a very low interest rate) in respect of an amount up to a maximum percentage of each states GDP (40%, 50%, 60% ... its for Euroland leaders to choose); beyond this threshold, the issue is only guaranteed by the single signature of the State concerned, rapidly involving very high rates for the less serious students in the class. 17 In this regard, it is regrettable that the international media are more interested in a few thousand Greek demonstrators (see further in this issue for a glaring example of the huge difference between the true numbers and those of the Anglo-Saxon media) supposed to embody the refusal of European austerity and Eurozone weakness rather than the Greeks actual expectations through this Greek intellectuals open letter which accuses not Euroland, but their own political and financial elite of being unable to respect their commitments and calling for the upgrading of the Greek politico-social system with that of the rest of Euroland. Source: L'Express, 06/09/2011 18 As regards the word "restructuring", over which the articles or broadcasts of economists and financiers of all kinds rave at length, our team wishes to bring a clear and simple accuracy to it: it is obvious that part of the Greek debt belongs these 15 trillion USD ghost assets that will evaporate in the months to come. No matter the word used, "restructuring", "default"..., as we indicated in previous GEABs, Euroland will organize a process that will cause the least powerful or most exposed creditors to lose significantly on their Greek exposure. This is called a crisis, and its exactly what we are going through. And the "national interest" always works in the same way. But anyway, at this point, the problem will be moved to the United States, Japan and the United Kingdom and nobody will pay attention to the Greek case where the amounts are ridiculous in comparison: Greece, 300 billion; USA, 15 trillion dollars. 19 And the upcoming review by the Karlsruhe Constitutional Court of Appeal against the European Stabilization Fund if it doesnt call into question judgments already given, will increase the pressure in Germany that the private sector should have a stake in the solutions, thats to say losses. Source: Spiegel, 06/13/2011

Progression of Greek debt and its structure (in Billions (red : expiring debt ; green : budget deficit ; violet : EU loans ; brown : IMF loans ; blue : other - Sources : Le Figaro / SG CIB, 05/2011
And with this fourth series one enters the heart of the contagion process that will trigger the US federal debt bomb. Because, first, in creating a global media and financial environment ultra-sensitive to the issues of government indebtedness, Wall Street and the City have revealed the unsustainable size of US, British and Japanese government deficits 20. This has even forced the rating agencies, faithful watchdogs of the two financial centres, to engage in a mad race to downgrade countries ratings. It is for this reason that the United States now finds itself under the threat of a downgrade, as we had anticipated, even though it seemed unthinkable to most experts only a few months ago. At the same time, the United Kingdom, France, Japan... also find themselves in the rating agencies crosshairs 21.
20
A simple calculation allows us to measure the difference between the current Greek problem and the US crisis in the background: banks in particular will be forced to take a charge of between 10% and 20% of the cost of the Greek debt bailout, being between 30 and 60 billion . That's what "excites" the rating agencies about European banks these days. The explosion of the US federal debt bomb will at least impose a cost of similar proportions on the banks and other institutional holders of this debt. Therefore, in this case we are talking about (which is a conservative estimate because the very nature of US Treasury Bonds use involves a larger private contribution) amounts between 1,5 and 3 trillion USD. This is consistent with our estimate of 15 trillion in ghost assets which will disappear in the coming quarters. 21 Sources: Reuters, 06/08/2011; Le Monde, 06/11/2011; FoxNews, 05/30/2011

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 7 Remember that these agencies have never forecast anything of importance (neither subprime, nor the global crisis, nor the Greek crisis, nor the Arab Spring, ...). If they downgrade willy nilly today its because they have been caught at their own game 22. Its no longer possible to downgrade A without affecting Bs rating if B is no better off. The "assumptions" on the fact that its impossible for any particular state to default on its debt have not withstood three years of crisis: this is where Wall Street and the City have fallen into the trap which threatens all aspiring sorcerers apprentices. They have not seen it would be impossible for them to control the hysteria kept up over Greek debt. So today its the US Congress, with the bitter debate on the debt ceiling and massive budget cuts, that the consequences of the misleading articles in recent months about Greece and the Eurozone enlarge. Once again, our team can only stress that if history has any sense, its certainly a sense of irony. And the sorcerers-apprentices havent finished paying for their mistakes because the global banking system will be the first victim of a Greek debt restructuring. The Greek, French and German banks which are the most exposed to Greek debt will be directly affected by the losses that this debt rescheduling represents. The Western banking sectors structural state of insolvency (just look at the balance sheets of the Fed, ECB, Bank of England and the Bank of Japan to see that this sector is supported at arm's length by central bank liquidity), in a time of global economic recession 23 (into which we are entering in this second half of 201124) will cause a domino effect starting with banks in Euroland and then spreading to all Western banks. Consider the case of Ireland, whose government has simply taken over the bankrupt banks (as in the United Kingdom for that matter) and where US and British banks are over-exposed: how long between a Greek rescheduling and panic about Irish banks? Less than a week according to our team. And a week more before Wall Street and the City are again carried away by the storm.
22
And one of the consequences of this game is that the Europeans are preparing not only to severely regulate the rating agencies methods, but they will quite simply create competitors to Anglo-Saxon agencies, as the Chinese have already done whose Dagong agency believes that the United States has entered a process of defaulting on its debt. By losing the monopoly on measuring risk, Wall Street and the City will thus lose their ability to make or lose fortunes. Sources: CNBC, 06/02/2011; YahooNews, 06/10/2011 23 Nearly two years ago we wrote that the Feds Quantitative Easing programmes would be unable to revive the US economy, and the moment this became a reality United States creditors would enter into "panic mode" just like the financial markets which are based on the belief in the unfailing dynamics of the US economy. We have arrived at this point. As Mohammed El-Erian, CEO of PIMCO, emphasized on Bloomberg on 06/02/2011: "The Fed has failed to sustain US consumption", which is what US retail sales figures (even though "corrected" to the upside) for May 2011 confirm, since they are down for the first time in a year. Sources: MarketWatch, 06/14/2011; CNBC, 06/01/2011 24 Even China and India are now showing growth which is strongly running out of steam. See chart below.

Industrial production in China (red) and India (green) (2006-2011) - Source: Marketwatch / Factset China / India Stats, 06/2011
But all this is still in the European detonator mechanism. Lets move on to the US bomb because thats where a major historical turning point will play out.
The process of the US debt bomb explosion

Indeed, if Bear Stearns was the forerunner of Lehman Brothers forerunner and the near collapse of Wall Street rescued at deaths door by the US government and the Fed, then the Greek debt crisis is the forerunner of the crisis in US Treasury Bonds ... that nobody can escape25. Indeed the political, media and financial trap has now closed on the Washington/Wall Street couple: even US Treasury Bonds now create concern. Until now, even if the dollar had lost all credibility as a strong currency, its counterparty in financial asset, the Treasury Bond, remained the platform of global finance. No need to repeat the mantra of those who think that tomorrow will be like yesterday, and Treasury Bonds cant waver: market size, ease of transaction, ubiquity26..., these arguments were valid, but in a specific environment: absolute confidence in the US economy and finance. When the environment changes dramatically the relevance of the arguments change too. One example suffices to show why the buyers of US Treasury Bonds are worried, to the extent of getting rid of them at a faster pace, like China (see the chart in this issue): to see the debtors prominent leaders publicly mention that they are interested in the idea of some form of technical default is a situation in its own that prevents any creditor from sleeping peacefully. However, its precisely the content of the discussions currently underway in Washington and a major part of US public opinion.
25
In this regard, remember Ben Bernanke, and many leaders, promised that the subprime crisis would remain limited, then it would have no effect outside the real estate sector, then it would remain confined to the finance, then it wouldnt affect the global economy. Replace sectors by country names, and you'll be surprised at the resemblance to the current period. 26 Its also ironic that the only way to avoid a European explosion which is too strong for the Western banking system is the creation of Eurobonds and thus the establishment of a market that will compete directly with US Treasury Bonds. It just goes to show that when history begins to change course, it leaves few alternatives.

Chinese holdings of US Treasuries Bonds (in Billions USD) (10-2010 / 03-2011) - Sources: US Treasury / Merk Investments, 05/2011
From mid-July 2011, the pressure will mount on the rating agencies to reflect reality in their warnings of "firmness" vis--vis US (and British) debt. The US political debate will increasingly escalate due to the clear relapse of the countrys economy into recession27 and leaders inability to move forward on the issue of the debt and budget cuts. And the discovery that the federal debt, as calculated by the US Treasury, will exceed US GDP (ratio of debt / GDP = 102%) in 2011, and not in 2014 as it forecast only a year ago28, will contribute strongly to the escalation of domestic and foreign panic. Statements of all kinds, the adoption of "martial" positions will multiply around this explosive issue, increasingly destabilizing the historical consensus on the reliability of T-Bonds, and prompting investors to seek any kind of alternative. And in this field, one should never underestimate the inventiveness of financial operators. If there is a demand, they will find it. The Federal Reserve will be pushed to try a further revival of the US economy falling back into recession, but due to the domestic ultra-sensitivity of the debt issue the Fed will see itself politically and domestically prevented from launching any attempt at QE3 or a more discreet equivalent. The Fed, as indicated in previous GEABs, is now fighting for survival. It is far from the "all-powerfulness" displayed in autumn 2008. And internationally, pressure from the rest of the world will be extremely violent this time if, in spite of everything, the US decides to run the printing press29.
27 28
Peace to the US recoverys soul CNNMoneys title of 06/08/2011 Source: CNNMoney, 06/08/2011 29 It is interesting to hear that the fallen god, Alan Greenspan, says he is terrified by the imbroglio of the debt ceiling and deficit control to the extent of recommending a tax increase. Unfortunately the countrys political, economic and financial situation now makes such a solution impossible. Greenspan should have made this assessment ten years ago. To govern is to foresee, and not scream in terror when the unthinkable happens. Source: CNBC, 06/03/2011

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 10 In the context of a growing distrust of Treasury Bonds, we are rapidly approaching a "strike" in the purchase of such securities by the worlds principal buyers. The consequences will be immediate: the collapse of US Treasury Bond prices, rising interest rates to attract buyers. The chart below shows a projection of the annual per capita expense of US debt interest. One can see the rapid take-off. Yet it is based on interest rates of around 5%. We estimate these rates could rise to over 12% in a few weeks, once the crisis in the market for Treasury Bonds is triggered, causing asphyxia in the United States financing capabilities30. Always remember that when a crisis is triggered, events unimaginable a few weeks earlier suddenly become reality31. These last three years have provided many examples.
US government debt annual interest costs per capita (in USD 2005) (1900-2016) - Sources : US Treasury/ Berruyer / GEAB, 06/2011
30
Japan and the UK will be drawn into this downward spiral since they are heavily dependent on the US financial sector and major holders of US Treasury Bonds. Regarding China, our team is convinced it has already begun to diversify out of the dollar and TBonds and much earlier than it leads one to believe. Indeed it wouldnt make sense given the increasing accusations for almost two years at the highest levels of Chinese power that market for U.S. Treasury Bonds is a fraudulent pyramid ("Ponzi scheme") and that little is being done to avoid what always happens with this type of financial set-up . 31 Here, LEAP/E2020 wishes to draw attention to a process that we mentioned in the past and which confirmed, month after month, its status as an "aggravating factor" in a widespread crisis of confidence in assets denominated in US Dollars. This is the question of the exact amount of United States gold reserves. Spurred on by Ron Paul, and with the growing interest of the US media, we are now on the verge of the start of a public debate on the country's financial situation on an issue which a year ago was limited to conspiracy theorists and goldbugs. CNBC on 06/14/2011, echoing the questions of Ron Paul and noting the confused statements of US officials, who, moreover, continue to refuse any independent audit by the administration, is now clearly positioned on the side of those who question the existence of these reserves. The fact that there is no evidence of the presence of these reserves at Fort Knox since 1974, nor any visit by members of Congress authorized since that date, fuels the controversy. Bear in mind that the early 1970s is precisely the time when the dollar had to abandon the gold standard for lack of sufficient reserves. One can be sure that this issue will have an increasing impact in the US public debate, and then globally, forcing the US authorities, within six months to a year, to find more credible answers than those currently provided. Given the general context, it is very likely that these responses will cause a further loss of confidence in the dollar and T-Bonds.

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 11 To conclude on this US bomb, our researchers consider that October 2011 is the most likely for its explosion. This, in fact, will be a particularly difficult time for the federal budget and follow a European autumn full of difficult decisions concerning Greece: two parameters that can hasten events. But, as we will see, the instability in the global system has become such that the slightest misstep in economic, financial, monetary and strategic matters by major player can trigger this series of events.

2- Telescope
In search of a new post-crisis global balance EURO-BRICS Summit in 2014 or 2015: The agenda takes shape
More than two years ago now, LEAP/E2020 initiated the first anticipations on the holding of a Euro-BRIC summit (BRICS since 2011). This event, which in 2009/2010 seemed totally unlikely to most experts in international relations, was in fact considered by our team as an essential bridge to be crossed for any future post-systemic crisis global balance. The profound trends leading to the crisis seemed to us to be promising for this major reorganization in international relations, characterized by a reconciliation of the balances of the world before the European colonial period and that derived from that same colonial period of which the "transatlantic" twentieth century was only the latest incarnation. Today, on the eve of the second half of 2011, which will be the stage for the global systemic crisis second major shock, combining an economic, financial and monetary crisis and global geopolitical dislocation32, LEAP/E2020 had the opportunity to directly address the central issue on the likely agenda of such a Euro-BRICS summit thanks to the first seminar on this topic which brought Europeans, Brazilians, Russians, Indians, Chinese and South Africans33 together. Announced to the GEAB readers last February, this brainstorming conference took place in Moscow at the Institute of European Studies of the prestigious MGIMO (Moscow State Institute of International Relations), on the 23rd and 24th May 201134. The lessons of this first Euro-BRICS working session on the issue of the agenda for a future summit bringing together the leaders involved are remarkably rich. Our team considers that four of them in particular deserve the full attention of European and BRICS policy makers and participants:
The richness, variety and novelty of the Euro-BRICS exchanges initiated on this occasion contrast with the poverty, uniformity and triviality of traditional exchanges between Europeans and each of the BRICS countries individually, or even between Europeans and Americans within the framework of the transatlantic relationship of the last twenty years35 The absence at the core of international relations in recent decades of an equivalent dialogue between the European network, multi-national, structured and institutionalized (and even semistate like at Euroland level) and the rapidly developing multi-national BRICS network The shared sentiment of a potential power of influence unmatched in world affairs with a EuroBRICS dialogue directly representing half the planets inhabitants, 3.5 billion people; and four continents indirectly (Asia, South America, Africa, Europe) The critical convergence on many key issues concerning global governance and the major global challenges of the coming decades
These points seem essential to us because they determine what follows on from LEAP/E2020s anticipations on a future Euro- BRICS summit: its something to identify a strong trend, to anticipate that it leads to a crossroads that can steer the world towards a better or, on the contrary a catastrophic, postcrisis situation according to the choices made, and its something else to see in practice that those involved in this potential trend are able to interact constructively, or are even positively surprised by the advantage of such a dialogue once begun. One of the initial consequences of this situation is that LEAP/E2020 now expects the first for Euro-BRICS summit to be held in 2014 and not 2015. In fact, in such a promising environment for dialogue, the deepening of the crisis by the end of 2011 and the election of leaders in a number of countries involved, particularly in the Eurozone, will speed up the process.
32 33
See GEAB N55 The latter were only observers via their diplomats 34 See the programme and the participants on the Europe2020 website. 35 Even the US-EU summits are of no interest to anyone since nothing of interest is discussed there. Once regular summits, they have become "summits when necessary" since the "incident" in Madrid in 2010 that saw Barack Obama "snubbing" his European counterparts. Since then one cant say that need has increased these meetings, on the contrary. Source: EUObserver, 03/27/2010

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 13 Before going further, let's clarify whats covered at this stage by the term "Euro" in the Euro-BRICS dialog. In the beginning36, LEAP/E2020 believes that this wont be the EU but rather Euroland. Germany, by voting with the BRICS at the UN Security Council over the attack on Libya, has already opened the door. The elimination of Nicolas Sarkozy in the first round of French presidential elections, as anticipated in the GEAB N 49, and the impossibility of Dominique Strauss-Kahn now standing as a candidate, ensures that the future French president37 will return to traditional French foreign policy, refusing subservience to Washington and promoting a pro-active European policy at global level. It is, therefore, around the Franco-German core38, and more generally Euroland, which knows that the BRICS constitute the most important external support for the Euro39, that the European axis of Euro-BRICS dynamics will be built 40. A sign of such a development: at the Moscow seminar, the Europeans were mostly "Eurolanders". Very quickly (towards 2012), once the process has got under way, the Euro candidate countries, thats to say almost everyone except the United Kingdom, will join the Euroland heart of the Euro-BRICS talks. The EU institutions in Brussels, in particular the European Commission where the Anglo-American influence of the past two decades is rapidly waning, will be divided on the subject and will try to slow the process down without daring to oppose it publicly. One can count on the common diplomatic service, where the "old Atlanticists" are over-represented41, to go into overdrive to this effect42. But even within the European institutions and especially in their immediate environment (economic lobbies in particular), the pressure is rising in the opposite direction: businesses as well as major European investors want to get closer to BRICS as quickly as possible. As a powerful Euroland institutional investor recently pointed out: with an average of 8% to 10% growth over the next decade in the BRICS and 1% to 2% in the US at best, the discussion is already over for European economic and financial circles 43. The politicians will have to bring their "beliefs" up to date very quickly44.
36
At least during the preparation of the first Euro-BRICS summit (2011-2013). Then, the summit having become inevitable, it is highly likely that the entire EU (including the UK) rushes to "be there". 37 Or a female president. 38 Of which the German-French-Russian summits of these last two years is a forerunner. With the current idea of involving Poland (a future Euroland member), these could easily serve as a matrix for the future Euro-BRICS summit. 39 And even if some most openly Atlanticist parties came to power in Spain, Portugal or Greece, the vital nature of Chinese purchases of their government debt will be a major imperative for them joining in a Euro-BRICS logic. 40 The European Central Bank, which knows just how much the BRICS support is necessary for the Euro, currently and in the future, will be part of this core. 41 Source: Le Figaro, 12/28/2010 42 But the diplomatic ineffectiveness of the tool in question condemns it to having virtually no impact on the issue.
43
We should never forget that, when one wants to anticipate European choices, its almost always commercial choices: the five hundred year period which we are now leaving, that of European global expansion, was first conditioned by commercial choices. Politics, religion, civilization were always far behind this decisive motivation. The historical period which is beginning will follow the Europeans same basic impulse. 44 It is indeed very different from the pre-2008 context, from which most of the current major European leaders have come. At the time, economic circles only had eyes for the United States and its "economic and financial miracle".

The path leading to the 2014 Euro-BRICS summit

In practical terms, from fall 2011 onward, our team anticipates an increase in informal, high-level meetings between senior civil servants and economic and financial policymakers from Euroland on the one hand and from BRICS individually on the other about a possible Euro-BRICS summit. On the BRICS side, the subject will be addressed simultaneously in discussions between diplomats and economic and political leaders45. Then, under the blow of the deepening crisis and the change in political leadership, especially in Euroland, from the second half of 2012, we will see the first informal diplomatic discussions on a possible summit, supported by individual or joint messages from European and BRICS economic and financial leaders. In 2013, a date and venue will be proposed and adopted so that the first Euro-BRICS summit can be held in 2014. But lets go back in more detail to the four main lessons of this first high-level Euro-BRICS meeting which is reflected in the proposed agenda of the future Euro-BRICS summit at the end of this analysis.
The richness, variety and novelty of Euro-BRICS exchanges initiated on this occasion contrast with the poverty, uniformity and triviality of traditional exchanges between Europeans and each of the BRICS countries individually, or even between Europeans and Americans in the framework of the current transatlantic relationship All the participants in this first Euro-BRICS meeting were struck by the richness of the exchanges, contrary to most international meetings which are an opportunity to repeat speeches, analyses or proposals which have already been heard a thousand times. Undeniably, the BRICS countries bring projects, demands and views of the world that Europeans dont usually hear.
Barely four or five years ago, the Europeans were only holding bilateral discussions with each of the BRICS46, and generally did so unilaterally laying down the limits of the debate even imposing the subject matter (often defined in Washington), at least on large global issues (global governance, climate, trade, economics, finance, ...). Today, after three years of crisis that has left the West in tatters and plunged Europe into a serious crisis, whilst the BRICS are stepping out economically, a discussion with all five BRICS requires from the Europeans modesty, openness, an ability to listen and, consequently, discovery. Its also why crises are useful: the walls which have been destroyed can allow dialogues which were previously impossible. This reality is reinforced by the extreme diversity of the BRICS countries, just as much internally for each of them, as externally between them. It is a "multilogue" as much as a dialogue and it rests, paradoxically, on the historical and linguistic ease of Europeans to speak with most of the BRICS. Apart from China, the other BRICS share, for better or for worse, whole swathes of European history. Or, put in a less Euro-centric way, Europeans share large swathes of history with each of the BRIC countries (China being a separate case). And at the core of the BRICS Russia has, of course, a special place in the rationale of Euro-BRICS cooperation. It is both European (even if outside the EU) and BRICS, its strategic priorities putting the development of the BRICS network in second place ... after Euro-Russian cooperation.
45
Since 2008 the BRICS have established a real system of meetings at different levels on a growing number of subjects: Ambassadors to the Security Council, Ministers of Foreign Affairs and, since the Sanya BRICS summit, also regular meetings of Health, Agriculture and Finance ministers, and officials in charge of National Security, ... not to mention the launching of a twinning towns programme; and finally, the creation of new study centres specialized in the BRICS in several universities. 46 It is interesting to read this Vienna Institute for International Economic Studies (WIIW) report on EU-BRIC trade relations of September 2009 using 2007/2008 figures. While the BRICS concept had hardly made its entry in academic circles, the importance of BRICS trade relations was already being stressed.

BRIC country shares in EU exports and imports in 2000 and 2009 (in %) - Sources: Oehler-Sinai / DG Trade / Eurostat, 05/2011
The absence at the core of international relations in recent decades of an equivalent dialogue between the European, multi-national, structured and institutionalized (and even semi-state like at Euroland level) network and the rapidly developing multi-national BRICS network Because if Europe, whether in EU or Euroland format, can often seem discordant it is, nevertheless, organized. Compared to the diversity of the BRICS and the youth of their network, the Europeans are a homogeneous pivot, especially Euroland. Regarding the BRICS network, there is both a huge need for mutual discovery between its members and a tremendous dynamic aimed at multiplying the points of contact, the processes of linking beyond the diplomatic-political origin of the BRICS. According to LEAP/E2020, 2011/2012 will be transition years at the core of the BRICS network, significantly increasing the critical mass of economic, financial, academic, and political players involved in the BRICS networks.
A network being essentially a tool, the BRICS are in the process of forging this tool in two key areas requiring this expansion of the "social" base of the BRICS network: . a tool for transforming global governance and rebalancing it in their favor; . an instrument to grow the direct links between them, which should no longer be dependent on Western intermediaries. This duality explains the initial feeling of uncertainty ahead of the BRICS concept. This feeling has been largely fueled by the western press which first sought to discredit any geopolitical relevance in the BRICS concept before having to admit in recent months that its now an inescapable reality47. But it is undeniable that everyone, including players from the BRICs themselves, wondered at first how such a harnessing, as gigantic as its heterogeneous, would be able to "go the distance". Then, the growing practical experience of these BRICS meetings established this dual nature of the "BRICS phenomenon"48: . a deliberate medium-term (less than a decade) policy making the BRICS the instrument of radical change in the major balances and mechanisms of global governance invented by the West for its own benefit, . an underlying long term (a generation: twenty years) operation also involving the other sectors of society of each BRICS country, aiming to directly reconnect the key parts of the world-after-the-crisis on patterns which are no longer Western-centred.
47 48
The April 2011 Sanya summit has thus been the first BRICS summit to benefit from major Western press coverage. The rapid growth of intra-BRICS trade is a practical example of this process. Source: Business Standard, 04/15/2011

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 16 The tool thus serves two purposes, with two different expiry dates and will be used by two different types of players. In fact the second objective can also collide with the policy makers will at the origin of the first objective: to establish programmes of regular contact between NGOs, civil society and students from different BRICS countries is not necessarily to the taste of the leaders of each of the five powers. But the coherence of a political-historical instrument is built with time and human action. It is not given in advance. Just look at European unification to be convinced. However, like in the case of European unification, one can identify an existential pressure for the BRICS network: it is necessary for it to be constructive, possibly in an offensive manner (thats to say, "banging on the table" if necessary to be heard), but it cannot be destructive or aggressive. And this is indeed a constant claim by the BRICS players. Beyond their claim, this is simply due to the disparate nature of the strategic interests and motivations of the five countries involved. Their relations with the "West", master of the world in full decline, are not the same: some like Brazil, South Africa and India have complex relations with the West49, while Russia and China have a long history of strategic confrontation with this West. The Euro-BRICS rationale can serve as an intermediary to these two BRICS internal trends since Europe has been, for the last sixty years, nothing else more than the eastern march of this primarily American West (a kind of "little West"), while offering a unique ability, that of being able to be heard by Washington50.
The shared sentiment of a potential power of influence unmatched in world affairs with a Euro-BRICS dialogue directly representing half the planets inhabitants, 3.5 billion people; and four continents indirectly (Asia, South America, Africa, Europe) If the BRICS directly represent three billion people, already 50% of world oil consumption, 75% of the expected economic growth in the next ten years, huge energy, mineral and agricultural reserves, 20% of global GDP (probably 35 % within 10 years) and world trade, 53% of direct foreign investment, etc ..., they are actually even more important than that because several of them are actually the key players of regional and/or continental integration processes, in fact privileged representatives of whole regions or continents: China with the East and South-East Asia, Brazil with South America, South Africa with the whole of the African continent and Russia with a part of Central Asia.
Meanwhile Europe continues to be the worlds leading economic and trade group, the region having both the largest savings51 and the greatest political stability, the economic and trade group with the most multilateral experience and aspiring to global polycentrism for many years. Finally, thanks to Euroland, its the entity that has the only international reserve currency as an alternative to the dollar. Should there be a single link that legitimizes Euro-BRICS dialogue at the highest level, its the Euro. Not only does its international success owe much to the BRICS enthusiasm, headed by China, to diversify their reserves out of the US dollar, but one can say that the BRICs have only been able to appear as a "geopolitical force" because the Euros existed. Without the single European currency Beijing, Moscow, Brasilia, New Delhi... would be condemned to suffer Washingtons unipolar world powerless to do anything other than gesticulate to no effect. It is de facto the Euro, which opened a breach in the "Dollar Wall", a breach that the BRICS have been able to quickly enlarge using their new wealth to stimulate the European alternative to the US currency52.
49 50
A semi-membership mixed with a partial rejection, a legacy of the colonial period. Provided you have something interesting to say ... which is precisely the undoubted added value of Euro-BRICS cooperation. Euroland and the BRICS can topple all the majorities in all the international institutions! This is far from being a detail as one can easily imagine. 51 Therefore the worlds largest sustainable financing capacity. 52 A reminder: early 2006, LEAP/E2020 identified the creation of the Euro as the decisive factor that would allow a shift from the well-defined post-1945 world.

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 17 This unintended convergence of destinies, which merely reflects the overlap of the ends of two epochs, that of the post-1945 American world and the world of the European conquest beginning in the XVIth century, is undoubtedly one of the historical advantages of the future Euro-BRICS summit: Europeans, Russians, Chinese, Indians, Brazilians and South Africans really are the required and sufficient forces to rebuild a global governance adapted to the XXIst century53. The big question is, of course, whether they will be able to do it between 2012 and 2017, using the "window of opportunity" identified by Franck Biancheri in his book "The World Crisis: The Path to the World Afterwards". Otherwise, a wonderful opportunity will have been wasted and the world, BRICS included54, will fragment into opposing regional blocs.
The significant convergence on many key issues concerning global governance and the major global challenges of the coming decades It is, therefore, this historic potential, as well as the clear tactical (Eurozone periphery debt crisis) and strategic (trade, investment, research55...) interests which determine the agenda for the future EuroBRICS summit. The latter, far from initiating a process of cooperation, will only formalize at the highest level an already marked reality in almost all sectors. On the occasion of the first Euro-BRICS seminar which focused precisely on this issue of the agenda, the following nine key points were identified:
1. 2.
Reforms of world governance (IMF, Security Council56, WTO, World Bank,) in order to adapt these institutions (their methods as well as their management structures) to the XXIst century Reform of the international monetary system (putting in place a system managing several reserve currencies, global cohesion for the monetary and financial system, better analysis of global systemic risk)
3. Reform of the global management of the Trade and investment duo (rebalancing of the rules protecting national markets)
4. 5. 6.
7.
Initiatives for a world social balance (determined integration of the social dimension, domestically and externally, in major international agreements) Initiatives to reinforce Human security (protection from natural disasters, trafficking in human beings, assuring humans basic needs, food chain security) Initiatives to reign in world finance (limitation on pay and bonuses for financial activities, control of international financial flows) Creation of Euro-BRICS university exchange programmes
8. Scientific and technological cooperation, especially in the fight against global warming, the conquest and management of outer space, the sources of new and alternative energy
9.
Improvement in the global management of peoples migration and mobility
53
In order to understand the strategic scale of this Euro-BRICS cooperation, it is worthwhile reading the excellent work of Iulia Monica Oehler-Sinca in the May 2011 edition of the Romanian Journal of European Affairs. 54 Indeed we shouldnt forget that many of the BRICS countries have strategic interests that can become controversial depending on the global context, more or less confrontational: Russia and China have a major geopolitical issue over Siberia and its riches, India and China experience chronic border tensions; Brazil and Russia, producer countries on the one hand, China and India consumer countries on the other can have very different objectives in terms of commodity prices, The BRICS concept thus has a basic need of a global context of cooperation in order to develop. Another factor which militates in favor of a strong Euro-BRICS cooperation; Europe being a player which traditionally fosters international cooperation. 55 In this regard, the recent health crisis over food in Germany has provided a stunning example of the rapid development of cooperation between Germany and China: its thanks to cooperation with a Chinese laboratory that the sequencing of the incriminating bacteria has been possible. Not long ago, the German researchers partner would have had to have been American. Source: China Daily, 06/03/2011 56 A Euro-BRICS cooperation could help Europe finally understand that it can no longer avoid getting one common seat at the Security Council. Thats also what the world after the crisis is about.

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 18 These issues are all undeniably important in order to organize the world in a sustainable fashion after the crisis. However, several of them would be immediately discarded or emptied of their substance via the framework of summits like the G20 because their effective treatment (thats to say, leading to real solutions and not statements of intent) requires the ability to analyze them without taking into account the conflicting interests of some countries that benefit in a way from the current malfunctioning57, or to be able to overcome some systematic vetoes on certain issues58. Without doubt, many topics will engender strong opposition between Europeans and BRICS; but it is also why it should be discussed, bearing in mind that to solve a problem one must first agree on its existence59. To conclude, remember that the Euro-BRICS potential would be sufficient to generate an irresistible momentum at the heart of the G20, an institution now sinking in impotence through the inability to "call a spade a spade" and unable to put the key issues of global world governance after the crisis on the summits agenda. This future Euro-BRICS summit will allow the peaceful "untying of the Gordian knot" otherwise, a few years later, it will anyway, but much more violently. Remember, in conclusion, that the LEAP/E2020 team is convinced that "history doesnt repeat itself" and that its essential to use the historic window of opportunity which is open in front of us for the next four or five years.
57
This is the familiar problem of the impossibility of implementing serious reform of global financial and monetary system as long as the US and the UK block any attempt to revise the assumptions on which the current system is based which, however, date from an era which is in the process of coming to a close. 58 The social theme is typical of this category since the United States consistently opposes considering the social issue as anything other than collateral damage of an economic and financial rationale. Well, on this subject, the BRICS undeniably have a growing convergence with the European model that attempts to address the social question as the other side of the economic coin. 59 Its almost always the refusal by some players to recognize the existence of a problem that causes the deadlock in negotiations; not the difficulty in resolution once its identified.

3- Focus
Strategic and operational recommendations
Once again, may we remind you that our advice is not for the purposes of short term speculation, nor aiming to make more money, but rather to lose less (or even none at all) because in the midst of a systemic global crisis, it is the only realistic objective.
Attention: This reminder is even truer for the coming months!
. Ghost assets: How to avoid your assets being part of the 15 Trillion USD which goes up in smoke in the next few months There is no doubt that the situation has become very difficult for all asset managers who hadnt already begun, a year or two ago, to exit assets denominated in US dollars (and other related currencies: British Pound, Swedish Kroner, ...) because, now, everyone is looking to do the same thing ... and so it is increasingly complex to find buyers for these potential ghost assets. And what makes the situation very critical is that it's not just US dollar denominated assets which have become very risky (and without a return related to the risk taken). As shown in the following section on real estate, all Western real estate is also in the process of entering this category. Yet it isnt possible for each asset manager to secure its assets by changing them into gold or other precious metals, at least by lack of space to store it all. We must, therefore, think in terms of niche and duration: real estate, non-dollar investments (such as emerging nations for example, or future Eurobonds), commodities, innovative businesses (outside the stock market, in direct investment), art, ... are niches that will see the powerful effects of (re)pricing in the coming quarters. But these effects are neither linear nor simultaneous. This requires that asset management finds a rationale of ability, relevance and "flair" that it lost during the three easy decades we have just seen. A word of advice to asset holders: get rid of your managers who believe that reading mainstream international financial media or repeating central banks press releases will continue to be sufficient to understand the trends at work. Choose those that distance themselves from the prevailing model60, the others will lead you into losses, as they did in 2008. Repeating such a mistake this time would be a fatal error. . Gold and precious metals: More than ever, its the physical that counts! Our team has decided to keep the entire paragraph on this subject from the last two months GEAB issues because it is very clear in light of current events and because it remains valid for the coming quarters. We confirm that gold, silver and precious metals will retain their status as a safe haven investment during the Great Big Failure of the global financial system. But, once again: be careful, no paper gold, no certificates ... only the physical because when the Great Big Failure happens, certificate holders will discover to their great misfortune that there are many more certificates in circulation than actual metal available . To explain this recommendation once again, let's be clear: you must have verifiable possession of your gold (and other metals) in physical form and/or guaranteeing 100% (that's the problem of certificates) that you really are the one and only owner of your assets and that you are able to take possession at any time. . Financial markets: Confirmation of the red alert The current decline is the forerunner of the next half years brutal shocks. Therefore, we maintain our advice to exit the various stock markets as soon as possible. It's easy and effective defence.
60
We remind you that LEAP/E2020 doesnt sell or manage anything and has no intention of changing this policy, a guarantee of its independence in itself a sine qua non for its ability to carry out political anticipation.

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 20 . Western housing markets: The 2015 big collapse begins from 2012 Three trends are now converging, enabling to anticipate a collapse in property prices (of at least 30%) in 2015 in most Western markets which have risen sharply in the last ten years: . The first trend is demographic, and therefore inescapable in such a short term: the retirement of the core of the baby boomers. . The second is tied to changing interest rates in most Western countries which, as a result of the Western solvency crisis and the failure of the policy of liquidity injections, will rise sharply. . The third is related to the inability, for lack of available public funds, of Western states to counteract the two previous trends. Apart from a few micro-markets in the "globalized" zones of some cities or regions (a few areas of London, Paris, ... or some locations on the Mediterranean coast in France and Italy in particular), all Western European and US housing markets will be affected. An analysis of the Parisian and French markets illustrates the demographic effect particularly well (and this is a relevant example in the European context as, due to the strong French birth rate compared to the rest of the EU, the demographic trend will be lighter). LEAP/E2020 therefore considers that the trends described here in a French context are similarly applicable and in the same proportion to all following Western markets: France of course, USA 61, Canada, Australia, Netherlands, Sweden, Finland, Denmark, Ireland, Belgium and Japan62.
French residential property price indices (1992 2010) - Source: INSEE / Notaires, 05/2011
61 62
The fall of US real estate, and therefore the base of middle class wealth in the country, hasnt yet finished. Spain, Portugal and Greece, like the Central and Eastern European countries, are not following the same strong trends. On the one hand, their housing bubbles already began to explode three years ago; on the other hand, they havent a sociologically equivalent generation to the "baby boomers" because of their historically different paths in 1950/1980 (fascist or communist dictatorships). Germany has not experienced residential real estate frenzy comparable to its neighbours and the tradition of renting has stayed alive. In this country, it's more commercial real estate that will be the weak point.

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 21 Therefore, we can expect a strong market correction in 2012, then a significant decline for several years. For example, the price per m2 in Paris in 2015 is expected to be around 5,500/m2, a decrease of 30% compared to the current price. The principal factors at play are: - End 2011 Beginning 2012 a further powerful fall of the world economy mainly due to the state of the US economy (and more generally the Western economies) and the dollar. Since states, because of their dire financial situation, will be unable to respond with massive support schemes this time, the crisis will be on a much bigger scale and longer lasting than in 2008. The drop had then been about 10% in six months in Paris: as prices are now even higher, we can expect at least an equivalent drop in the first six months of 2012. - Second half of 2012 . in an attempt to revive the economy, the ECB key rate should be reduced to almost zero; moreover interest rates on French and German treasury bonds should be low due to their safe haven status (and despite these states debt levels). However, all that would not be enough to revive the housing market because the banks, no longer having confidence, will tighten loan conditions and we will witness a breakdown in credit. . The state cannot initiate a real policy supporting the residential market because it no longer has the means: solutions will sonsist of closing tax loopholes, phasing out of the Scellier measures (measures disputed by the Socialist Party as well as Europe), eliminating tax deductions on interest (from 31 December 2010), etc ... We can assume that some help will be decided but it will be minimal, especially since the current regime, very favorable to property owners, will probably no longer be in power: the myth of "everyone an owner" is coming to an end and any aid eventually given will partly go to tenants. Thus the fall, hardly slowed, wont stop: one can expect a further fall of 8% in the second half of 2012. - 2013-2014 . The downward trend, not having been abated since the beginning, feeds the fall (psychological effect and real estate inertia). . Many investors should flee the market: in fact, either they sought a safe haven - and they have already bought and a market in free fall is not really a refuge -; or they hoped to make a capital gain and market conditions will dissuade them. They certainly wouldnt be looking to make a big return because prices are ridiculously high compared to rents (one cant expect a net return of over 2.5% per annum at present, most likely 2%). . Many baby boomers are retiring today and leaving Paris for the South: from 56 years old, households are net sellers on average (cf the charts below). - From 2015 The strong growth in the proportion of households aged over 56 years (due to increased life expectancy but especially the aging of the "baby boomers"), increasing the proportion of households potentially vendors, will exert irresistible pressure to the downside on prices.

First chart: Number of dwellings bought or built, and sold, in France by households, according to the age of the head of the household (2006) - Source: CGEDD, 2011 Second chart: French population annual growth forecasts (2007-2040) - Source: INSEE, 2007

user: markrose2411@yahoo.co.uk email: markrose2411@yahoo.co.uk download time: June 17, 2011, 1:06 am 23 After having fallen in 2012 with the crisis, oil prices should start rising and new energy constraints would deter buyers for old property. All these criteria show that we should see acceleration to the downside: to assess the amount, one can refer to the period 1991-1998 when prices lost about 5% per year (see the chart for 1965 to 2010 prices above). This is an order of magnitude which seems quite realistic. The fall will probably be more marked in 2013 with the impetus from 2012: 8% or 10% in 2013 seems more credible. With a decrease of 5% per year until 2015, prices are still well above their long-term trend: the pace shouldnt slacken. We thus arrive at a fall of approximately 30% by the end of 2015. However, it is from this date that the "generational effect" of an excess of supply over demand 63 will start to play out in full, certainly pushing to an increased fall for the next five years. To complete this analysis, we must clarify anticipations on interest rates. Here, France is subject to the same developments as the whole of the European market. As for the United States and Western countries outside Europe, either the rate increases have already taken place, or they will take place in the coming quarters due to similar constraints. The bondholder market will consequently follow the progression of government bond interest rates which can only portend gloom! The whole issue of government debt monetization remains the main debate (pending) since the subprime meltdown in 2008 and the collapse of the US real estate market in 2009. If French government debt was 81.5% of GDP in 2010 (78% in 2009) being 1,574 billion for a GDP of 1,900 billion, it will be 90% by 2012. By then, the other major Eurozone states will have a government debt of 80% for Germany, 70% for the Netherlands, 100% for Belgium, 75% for Spain, 94% for Portugal, 120% for Ireland and 157% for Greece, an average of more than 100% of GDP for these eight states! Just like the United States with the loss of confidence in T-Bonds, Europe will have to face a widespread rise in the cost of money to finance its debt. If the bond market is around 6% (being optimistic!) at the end of 2011, it will undoubtedly be in excess of 8% next year and at 12%/15% before 2015. Initially, we will have mortgage interest rates around 8% -10%, even higher, leading to a collapse of the market in France and similar Western countries. And this will a priori affect everything backed by underlying real estate. Here, then, is another part of the 15 trillion in ghost assets in the process of disappearing. The collapse of the housing market means a fall in principal residences as much as in rental housing (social or not). It also means lower profits for banks/insurers and developers. A contraction in the housing market a fortiori implies a fall in bank refinancing: being major real estate investors, they will see their assets fall at least 40% in value which will result in an increase in short-term rates as compensation.
63
A smaller and poorer generation of buyers facing a large number of "baby boomer" sellers and with high expectations on price. The perfect recipe for a crash.

4- The GlobalEurometre64
June 2011 GlobalEurometre - RESULTS
GlobalEurometre 06-2011 1. Do you think that the Eurozone economic governance will be established by the end of 2011? 2. Do you feel that your countrys government is reflecting your peoples expectations regarding the European construction? 3. Do you think that anti-democratic forces are on the rise in the European Union? 4. In the coming months, would you change your Euros for one of these currencies: US Dollar, Japanese Yen or British Pound? 5. In the coming months, would you change your Euros for gold? 6. Do you think that the European Central Bank will continue to increase its main interest rate in the coming six months? 7. Do you think that inflation is back in your country? 8. Are you afraid of losing your job in the coming six months due the global crisis? 9. Are you afraid of losing money in the coming six months due to the global crisis? 10. Do you think that the US Dollar will collapse against all major world currencies in the coming six months? 11. Do you think that the US can avoid implementing austerity measures in the coming twelve months? 12. Do you think that Western public debts will be fully paid back to their debtors? 13. Do you think that UK is engulfed into simultaneous political, economic, budgetary and monetary crisis? 14. Do you see concrete signs of economic improvement in your country? 15. Do you think social and political unrest will rise your country?
Yes % 19 3 88 (89) 0 56 63 (57) 91 (83) 37 79 (68) 81 (80) 15 6 92 (90) 11 82 (72)
No % 70 (63)65 96 (90) 12 97 (99) 28 (45) 30 7 44 (54) 17 3 82 (86) 93 (89) 6 86 (79) 14
Dont know % 11 1 0 3 16 7 2 19 4 16 3 1 2 3 4
64 65
Each month, GEAB surveys a panel of 200 European opinion leaders In blue, last months result

June 2011 GlobalEurometre - ANALYSIS
EU Governance: Ongoing rise in the majority doubting that Eurozone economic governance can be put in place by the end of 2011 / Increase in the big gap between peoples expectations and EU leaders actions / Little change in the big majority believing that antidemocratic forces are gaining strength in the EU / Rise in the majority believing that the ECB will continue to raise its main interest rate in the next six months / Rise in the majority believing that inflation has returned to their country / Big fall in the majority who dont fear losing their jobs because of the crisis / Increase in the large majority who fear losing money because of the global systemic crisis / Rise in the large majority noting the lack of improvement in their countrys economic situation / Increase in the large majority worried about social and political unrest in their country We note a continued rise in the majority of respondents (70% in June versus 63% in May) who consider that Eurozone economic governance will not be established by the end of 2011. The paradox remains, therefore, between public perception and the reality of the Eurozones functioning. We see a rise in the very large majority, traditionally discontented with European governments actions in relation to their citizens expectations, to 96% (versus 90% in June). We see little change in the large majority believing that anti-democratic forces are gaining strength in the EU (88% versus 89% in May). We note an increase in the majority of respondents believing that the ECB will continue to increase its main interest rate in the coming six months (63% in June versus 57% last month). As regards inflation, we note a rise in the large majority who think that inflation has returned (91% versus 83% in May). This month, the fear of losing ones job has risen sharply; now only 44% arent worried (compared to 54% in May). Fear of losing money due to the crisis has also risen strongly to 79% versus 68% last month. The recovery continues to remain invisible for a growing majority of Europeans (86% versus 79% in May). We also note a big increase in the majority concerning political and social unrest in their country: 82% now fear this will happen, compared to 72% in May. Generally, on the eve of the second half of 2011, we note a widespread rise in pessimism amongst Europeans as regards the economic and financial environment. EU/Rest of the world relations: No change in the vast majority preferring to keep their Euros instead of $, et / Emergence of a majority of respondents wishing to change their for gold / No change in the large majority expecting a US Dollar collapse in the coming months / Slight fall in the large majority believing that the United States will not be able to avoid austerity measures in the coming months / Rise in the large majority believing that Western government debt will not be repaid in full / Stable, very large majority believing that the UK has entered a widespread crisis At 97% (versus 99% in May) we note a stable near unanimity of Europeans continuing to prefer the Euro instead of the US dollar, Japanese yen and British pound, refusing to think of changing their Euros for these currencies. But this clear confidence in the Euro compared to other paper currencies has changed sharply with the emergence of a new situation evidenced by the appearance of a majority of respondents planning to change their Euros for gold (56% this month versus 45% last month). With 81% of respondents (versus 80% in May) expecting a US dollar collapse in the coming months, we see little change in the very big majority of negative opinion on the future of the US currency. We note a slight fall in the large majority believing that the United States has no time to lose in taking austerity measures in the coming months (82% versus 86% in May). We note an increase in the very large majority of respondents (93% versus 89% last month) believe that Western government debt will not be repaid in full. Finally, we have once again recorded virtually no change in the very large majority of respondents (92% versus 90% in May) believing that the UK has entered a widespread crisis.

5- Special subscribers announcement

Special invitation for GEAB subscribers
Reserved for North American and European subscribers Please note: tickets are limited
Transatlantic Conference
Which Transatlantic Relationship After the Global Crisis?

October 3-4, 2011, Houston (Texas), USA
As part of its work in political anticipation, and in cooperation with the Center for International Studies (University of St. Thomas) and the College of Liberal & Applied Arts (Stephen F. Austin State University), LEAP/E2020 is coorganizing a conference entitled "What will be the shape of the transatlantic relationship after the global crisis? in Houston (Texas) the 3rd and 4th October 2011. The event, for which you will find the program below, will be structured around three roundtables with the participation of speakers from various American universities and thinktanks as well as several European keynote-speakers. The first panel discussion entitled "The World Crisis: The Path to the World Afterwards" will introduce all the discussions from Franck Biancheris analyses, presented in his similarly entitled recent book. At a time when the Atlantic Alliance is going through an unprecedented crisis, particularly illustrated by Robert Gates recent speech on NATO problems, this conference is expected to revitalize serious thought on the future of transatlantic relations as well as open new constructive avenues for future relations between Europeans and Americans. To register, contact Valerie Thibault at: info@leap2020.eu
The goal of the conference is to explore the future of the transatlantic relationship in light of the changes produced by the crisis in global leadership. Since World War II, the alliance between the United States and Europe has been the foundation of diplomatic, commercial, and security policies on both sides of the Atlantic. After the fall of the Iron Curtain, the transatlantic relationship even became the foundation of global security and the core of the globalization process. This relationship, however, was never static. European integration continuously modified the original landscape of the alliance, especially after the introduction of the Euro currency. Since around 2008, major shifts in the balance of power began to emerge spurred by the rapid emergence of new world-level players such as China, Brazil, and India. This global crisis in leadership also directly affected the transatlantic relationship; on the one hand, the U.S. dollar, which became the epicenter of the crisis, led the country into an economic depression whose end is not yet clearly established; on the other hand, the Eurozone is facing crucial challenges to upgrade its governance in order to manage the impact of the crisis on its peripheral members (Greece, Ireland, and Portugal in particular). It cannot be denied that the growing attraction of Asia is impacting the traditional Euro-American partnership. The current crisis in global leadership is of historic magnitude not experienced since WWII. A vastly revised international landscape is on the horizon. This conference seeks to untangle the confusion by addressing how the transatlantic relationship is preparing to accommodate a new era in international politics and commercial development. A set of policy recommendations will be generated that reflects the consensus among the participants. Three topics will be examined through keynote and panel discussions: - The Global Crisis: The Path to the World Afterwards (How has the world changed in the past two decades from the U.S. and EU perspectives?) - The Global Crisis: The Futures of the European Union and United States (What are the likely futures of the U.S. and EU in adapting to the changes in the world?) - The Global Crisis and the Future of the Transatlantic Relationship (In light of the changed international landscape, what is the likely direction of the U.S.-EU relationship?) Event organizers include: the Laboratoire Europen d'Anticipation Politique (LEAP), the Center for International Studies (University of St. Thomas) and the College of Liberal & Applied Arts (Stephen F. Austin State University)


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uk download time: June 17, 2011, 1:06 am 1

To anticipate is to foresee in order to act

5- Special subscribers announcements

1 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

2 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

3 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

The detonating mechanism of European government debt

4 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

5 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

6 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

7 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

The process of the US debt bomb explosion

8 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

9 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

10 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

11 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

12 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

13 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

The path leading to the 2014 Euro-BRICS summit

14 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

15 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

16 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

Improvement in the global management of peoples migration and mobility

17 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

18 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

Attention: This reminder is even truer for the coming months!

19 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

20 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

21 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

22 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

23 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

June 2011 GlobalEurometre - RESULTS

Yes % 19 3 88 (89) 0 56 63 (57) 91 (83) 37 79 (68) 81 (80) 15 6 92 (90) 11 82 (72)

No % 70 (63)65 96 (90) 12 97 (99) 28 (45) 30 7 44 (54) 17 3 82 (86) 93 (89) 6 86 (79) 14

24 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

June 2011 GlobalEurometre - ANALYSIS

25 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

5- Special subscribers announcement

Which Transatlantic Relationship After the Global Crisis?

26 Confidential letter - GlobalEurope Anticipation Bulletin Nr 56 - June 16, 2011

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