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Société Générale tells clients how to prepare for potential 'global collapse'

Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.

 

By Ambrose Evans-Pritchard
Published: 6:12PM GMT 18 Nov 2009

Comments 176 | Comment on this article

Explosion of debt: Japan's public debt could reach as much as 270pc of GDP in the next two years. A bullet train is pictured speeding past Mount Fuji in Fuji city, west of Tokyo Photo: Reuters

In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.

 

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• 'Debt levels risk another crisis'

"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.

Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).

The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.

Inflating debt away might be seen by some governments as a lesser of evils.

If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.

The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time.

SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar.

Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons.

SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis.

Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried,"

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So the Left resorts to extreme measures of thier own to serve thier Agenda ! Groups like Acorn spring up as a way to forge signatures, Fake Registrations for voting and LIE to the public that they have not done what they are accused of ! Cheating to get thier way and win the "Game" ! Ha Life and deatg, servitude and Freedom are NOT Games !

The End of ProhibitionWhy gay marriage, getting high, and going to Cuba will soon be legal.

By Jacob WeisbergPosted Saturday, Oct. 31, 2009, at 7:06 AM ET

"I think this would be a good time for a beer," Franklin D. Roosevelt said upon signing a bill that made 3.2-percent lager legal again, some months ahead of the full repeal of Prohibition. I hope Barack Obama will come up with some comparably witty remarks as he presides over the dismantling of our contemporary forms of prohibition—laws that prevent gay marriage, restrict cannabis as a Schedule I Controlled Substance, and ban travel to Cuba. "You may now kiss the groom," perhaps, or—a version of the comment he once made about smoking pot—"I inhaled—that was the point."

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Prohibition now is different from Prohibition then. When the 18^th Amendment went into effect in 1920, it was a radical social experiment challenging a custom as old as civilization. Its predictable failure—the gross insult to individual rights, the impossibility of enforcement, the spawning of organized crime—came to an end when Utah, of all places, became the 36^th state to ratify the 21^st Amendment in 1933. Today prohibition is a byword for futile attempts to legislate morality and remake human nature.

Our forms of prohibition are more sins of omission than commission. Rather than trying to take away longstanding rights, they're instances of conservative laws failing to keep pace with a liberalizing society. But like Prohibition in the '20s, these restrictions have become indefensible as well as impractical, and as a result are fading fast. Within 10 years, it seems a reasonable guess that Americans will travel freely to Cuba, that all states will recognize gay unions, and that few will retain criminal penalties for marijuana use by individuals. Whether or not Democrats retain control of Congress, whether or not Obama is re-elected, and whether they happen sooner or later than expected, these reforms are inevitable—not because politics has changed but because society has.

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In 2008, Barack Obama carried Virginia by 6%, and the Democrat stronghold of New Jersey by 14%.

Last week? New Jersey's GOP candidate for governor Chris Christie bested incumbent Democrat Jon Corzine by 4 percentage points, and in Virginia, Republican Bob McDonnell defeated his Democrat opponent by 18 points -- that's a 24% turnaround!

 Barack Obama won election last year, aided by his claims of moderation and transparency, and the huge cover he received from the adoring liberal media. Many Americans gave the relatively unknown first term Illinois senator the benefit of the doubt, and are now coming to regret it.

Instead of centrist policies, they have seen an extreme far-left assault on private enterprise and personal liberties. From pork barrel "stimulus" to unprecedented government spending and debt, and auto company takeovers to the present attempt at a socialist seizure of health care.

In New Jersey and Virginia, the voters have realized their mistake -- and sent a clear message to the Obama Democrats. When polled in both states about their votes for the Republican candidate, 68% and 74% respectively agreed that they were sending a message to the Obama team that they were "unhappy with the direction they are taking Washington and the country."

But are the Democrats listening? Not a chance. Instead, despite losing in two states where Democrats had controlled the governor's mansion for years, Nancy Pelosi arrogantly declared "We won!" Then she and her leftist followers dismissed the clear will of the people and rammed their socialist health care takeover scheme through the House of Representatives on Saturday.

Our victories last week are a great start, but as long as the radical Obama-Pelosi liberals are determined to force their socialist agenda on the American people, our work isn't done.

You can help our Party spread the word about the Obama-Pelosi Democrats' disastrous, arrogant plans, and help us recruit the commonsense, conservative Republican candidates today who will defeat them in next year's crucial mid-term elections.

Please make a contribution of $25, $50, $100, $500 or $1,000 to the Republican National Committee today, to end the Democrats' Congressional majorities and cut Barack Obama's term in half.

URGENT PETITION!  (Even if you've signed before, you can sign again & we'll re-fax.)   Please select, sign, and WE WILL FAX your petition automatically to ALL 100 U.S.  SENATORS right away (saving you hours of labor!)  Please forward widely. We've now sent nearly 700,000 faxes to the Senate. Can you help reach 1 Million? Surprise: Anti-Jesus Pro-Allah Judge David Hamilton Will Get Senate Vote Make the 17 phone calls listed below, today, to these key "undecided" Senators. The Washington Times just reported "a move seems to be afoot" in the Senate to allow a debate and full Senate vote on whether President Obama's Anti-Jesus Judge David Hamilton should be confirmed to the 7th Circuit Court of Appeals.  You may remember him as the Judge who ruled it's illegal to pray "in Jesus name" but totally legal to pray to Allah on the floor of the Indiana Legislature.  His foolish ruling in Hinrichs v. Bosma was overturned (thanks in part to our legal aid to the Indiana Attorney General).  He also ruled to hasten the abortion of unborn children, but that bad ruling was also overturned. Now Obama wants to reward Hamilton's anti-life anti-Jesus prejudice with promotion to the same appeals court that overruled him.   On Thursday, Senator Harry Reid's (D-NV) staff confirmed that Hamilton is "on the calendar" A VOTE IS POSSIBLE THE WEEK OF THE 9TH. So please auto-fax all 100 Senators to filibuster Hamilton.  Senator Jeff Sessions (R-AL) wrote a letter to all Republicans on 30 Oct, asking for help in opposing Hamilton, who the Seventh Circuit Court rebuked for repeatedly "abusing his discretion," and for a speech Hamilton gave saying the judge's primary job is "write footnotes in the Constitution" for his own activist causes.  To support Sessions and Sen. James Inhofe (R-OK) who called for a filibuster, back in April & May 2009 we sent nearly 700,000 fax petitions to the full Senate against Hamilton, and we successfully persuaded all Republicans to unite against Hamilton, earning all 7 minority votes to block him in the Judiciary Committee.  But all 12 committee majority Democrats voted against Jesus-prayers, and so forwarded Hamilton to the full Senate, where his nomination sat quietly without action for seven months, until now... SO PLEASE SELECT HERE TO SIGN AND WE'LL AUTOMATICALLY FAX YOUR PERSONALIZED PETITION TO ALL 100 U.S. SENATORS, OPPOSING THE ANTI-LIFE, ANTI-CHRISTIAN JUDGE DAVID HAMILTON. On 4 June 09, the Judiciary committee voted 12-7 along strict party lines, to forward the nomination of Judge David Hamilton, the anti-Jesus Judge, the same judge who issued controversial rulings banning public prayers offered "in Jesus name," (but allowing prayers to Allah), and hastening the abortion of unborn children.  This vote came after we'd already sent nearly 600,000 faxes to the entire Senate opposing Hamilton, proving some Republicans listen to the voice of the people, and some Democrats remain deaf to our petitions. Now this anti-Jesus Judge Hamilton will face the full Senate, and the threat of filibuster by the pro-faith, pro-family Senator James Inhofe (R-OK).   To stop Hamilton, we need 40 strong Senate votes to stand with Senator Inhofe, to uphold his filibuster.  If we fail, Hamilton will be promoted to the 7th Circuit Court of Appeals, the same court that overruled his aggressive, anti-life, anti-liberty decisions for years.  So we've identified 17 key undecided Senators, from which we need just 7 votes to successfully defeat Hamilton's nomination, (see list below).   To support Senators Inhofe and Sessions, and stop Hamilton, we first 40 solid votes by  any good conservatives or moderates, so please call both of YOUR STATE Senators, whom you might call to ask him to OPPOSE AND FILIBUSTER Judge David Hamilton, at 202-225-3121.  We have carefully identified 17 undecided Senators, who should especially receive your blast-faxes in the coming days. WE MUST TAKE ACTION TODAY.  So please sign our fax-petition (even if you already signed it before), but then PLEASE MAKE 17 PHONE CALLS TODAY to each of the undecided Senate votes here, asking to oppose and filibuster Judge David Hamilton, because he ruled it's illegal to pray in Jesus name, but legal to pray to Allah: x Ben Nelson, D-NE 202-224-6551               y George Voinovich, R-OH 202-224-3353 x Bill Nelson, D-FL    202-224-5274              y Judd Gregg, R-NH 202-224-3324 x Kay Hagan, D-NC 202-224-6342               y Richard Lugar, R-IN  202-224-4814 x Mark Pryor, D-AR  202-224-2353                y Olympia Snowe, R-ME  202-224-5344 xz Blanche Lincoln, D-AR 202-224-4843      y Susan Collins, R-ME  202-224-2523 z Chris Dodd, D-CT  202-224-2823                xy Kit Bond, R-MO 202-224-5721 z Barbara Boxer, D-CA 202-224-3553               z Kirsten Gillibrand, D-NY 202-224-4451      z Michael Bennet, D-CO  202-224-5852    z Roland Burris, D-IL 202-224-2854              z Byron Dorgan, D-ND 202-224-2551 (x = Lives in the South.     y = Voted for Sebelius.     z = Facing re-election in 2010.) But remember, 100 emails = 10 phone calls = 1 fax in political capital, since the Senate staffers must handle each paper and usually write a reply. So please join our automated fax-petition campaign first, WE WILL ESPECIALLY FAX THE 17 ABOVE.  Then please forward this email to your friends in the states with Senators listed above, and to all pastors in all 50 states. SO PLEASE SELECT HERE TO SIGN AND WE'LL AUTOMATICALLY FAX YOUR PERSONALIZED PETITION TO ALL 100 U.S. SENATORS, OPPOSING THE ANTI-LIFE, ANTI-CHRISTIAN JUDGE DAVID HAMILTON.   ANTI-JESUS, BUT PRO-ALLAH? Judge Hamilton wrote: "The injunction orders the Speaker...that the prayers should not use Christ's name or title or any other denominational appeal...If those offering prayers in the Indiana House of Representatives choose to use the Arabic 'Allah'...the court sees little risk that the choice of language would advance a particular religion or disparage others." In other words, Judge Hamilton ruled the words "Jesus" or "Christ" or "Savior" are illegal words, prohibited for public speech, banned by the First Amendment, which somehow prohibits freedom of religious expression, and makes Christian prayers ILLEGAL, but prayers to Allah are TOTALLY LEGAL in a public forum. (What crazy version of the First Amendment is he reading?) Thank God, we took action in 2007 and provided legal arguments to the Indiana Attorney General who appealed to the 7th Circuit Court and WE WON a 2-1 decision overruling Hamilton, restoring the right to pray "in Jesus name" in Indiana.  But if President Obama succeeds in promoting Hamilton to the same court that overruled him, that good reversal will be in jeopardy.   We're now the leading national voice against Hamilton, and we're getting traction toward a successful Senate filibuster that can stop Hamilton's confirmation, much to the horror of many liberal groups (including the National Abortion Rights Action League who is actively campaigning FOR Hamilton).   But together, we can be a louder voice.  SO PLEASE SELECT HERE TO SIGN AND WE'LL AUTOMATICALLY FAX YOUR PERSONALIZED PETITION TO ALL 100 U.S. SENATORS, OPPOSING THE ANTI-LIFE, ANTI-CHRISTIAN JUDGE DAVID HAMILTON.   Judge Hamilton is the worst of Obama's 15 new liberal appeals court appointees. The 7th Circuit Court of Appeals covers Wisconsin, Indiana and Illinois.  Since most cases never reach the Supreme Court, the federal appellate circuits often provide the last word on cases affecting life and liberty. READ THE FACTS: The Judicial Confirmation Network quickly opposed Hamilton's nomination, stating that "President Obama's first nominee to the federal appeals courts -- specifically the appeals court based in Chicago -- is an ultra-liberal named David Hamilton who is a former fundraiser for ACORN and former leader of the Indiana chapter of the ACLU. He was nominated to the district court bench by President Clinton even though he had no judicial experience and was rated as 'not qualified' by the American Bar Association." Now newly promoted Judiciary Committee ranking minority Member Senator Jeff Sessions (R-AL), agrees with pro-faith Senator James Inhofe (R-OK), that we should oppose and filibuster Hamilton's nomination to the 7th Circuit. Thanks in part to our public pressure, the Republicans and Sessions have twice succeeded in delaying Hamilton's committee votes, saying "This a complex area of the law, I'll admit, but it's time for the federal court to get their heads straight on proper separation of church and state issues."  PLEASE SELECT HERE TO SIGN AND WE'LL AUTOMATICALLY FAX YOUR PERSONALIZED PETITION TO ALL 100 U.S. SENATORS, OPPOSING THE ANTI-LIFE, ANTI-CHRISTIAN JUDGE DAVID HAMILTON. ANTI-LIFE BUT PRO-ABORTION? In 2003, Judge Hamilton struck down part of an Indiana law on abortion. The reasonable law had required abortion clinics to simply give women information about alternatives to abortion in the presence of a physician or nurse, 18 hours before the procedure, until Hamilton ruled to hasten abortions. But thank God, the 7th Circuit Court also reversed Hamilton's bad decision in that case. If confirmed now Hamilton will sit on that 7th Circuit Court (the same court that frequently overruled him) with tyrannical power to rule the heartland of Indiana, Illinois, and Wisconsin with his anti-life, anti-liberty, anti-Christian agenda. WE CAN WIN THIS BATTLE!  We've already sent nearly 700,000 faxes to the full Senate, and we're getting results!  On April 1st and again on April 29th, Senator Orrin Hatch led all Republicans to walk out of the Senate Judiciary Committee, in protest against the Democrat "rush job" to confirm Judge Hamilton.  Senator Jeff Sessions said he was troubled by Hamilton's ruling against a sectarian prayer to open the Indiana House of Representatives.  Even Senator Arlen Specter expressed concern about Hamilton while serving as a Republican, but after switching parties he broke his promise to not become a "rubber stamp" for the Obama Administration, and voted to confirm Hamilton anyway. But will any Democrats oppose the anti-Jesus Hamilton? But first, take action right now! I pray you will not hesitate, but sign the petition and WE WILL FAX your petition right away, automatically to all 100 U.S. Senators. PLEASE SELECT HERE TO SIGN AND WE'LL AUTOMATICALLY FAX YOUR PERSONALIZED PETITION TO ALL 100 U.S. SENATORS, OPPOSING THE ANTI-LIFE, ANTI-CHRISTIAN JUDGE DAVID HAMILTON.

God Bless you, in Jesus' name, Chaplain Gordon James Klingenschmitt

bigkahuna9 at 9:24AM on Nov 13th 2009

I will worry about Michelle Bachman inviting people to protest after you worry about Congress and Natzi Pelosi trying to force legal citizens to buy anything much less health insurance under threat of jail or fines. Or when Charlie Rangel Geitner and other tax cheats are put in jail, fined or booted from office, or AG Holder jails the thugs who were intimidating voters at polling locations and had charges dropped. Or when the govt/ pres VP Natzi Pelosi and others does its constitutionally appointed job and stops illegal immigration or stops spending tax dollars on alll the wasted garbage they have no business spending it on or puttin us in debt No matter D or R after name. Now lets get back to Osama Bin Obama and his pantywaist deciisions on Afghanistan.. They can shove healthcare and Cap and Tax. ANy bill the morons vote on without reading is a when a bill bouncing their butt to the curb should be enacted. And if the health bill is good enough for the masses of sheep they look at us as is good enough for Congress, the unions, and ALL federal and State employees. Until then NAzti and Harry and Barry SHOVE IT !