Euroland facing a Dollar plunge

The global systemic crisis will provide a serious test for Euroland and will determine whether the Euro is sustainable or not. The significant fall of the Dollar will automatically induce a strong upward pressure on the Euro against this currency, and against others linked to the Dollar (the Chinese currency namely). The situation will provoke an immediate and significant fall of the competitiveness of European companies exporting towards the Dollar zone, with a negative impact on European exportations, accompanied by an immediate aggravation of unemployment in the Euro zone.In this situation, some countries will be tempted to get away from the Euro in order to avoid difficulties. However this centrifugal force will be opposed by the level attraction of the one and only zone of monetary stability that Euroland will provide. If a conflict between these two opposite trends develops within Euroland, it will be even more perceptible in non-Euroland member EU-countries.

In this regard, Euroland leaders should be concerned with the need of new member-states (all of them future members of Euroland) of a solid anchorage. These countries will be the most exposed to instability and the situation will impose clear perspectives as well as efficient protection mechanisms for their currencies. In parallel, the case of the three ‘non-Euroland but EU-15 members’ – Denmark, Sweden and the UK – will soon emerge as these countries will be in a rather tricky situation. Denmark and Sweden will most probably express a desire to join Euroland which will not be opposed by public opinions. The British case is more complex because, as detailed previously in this issue, the UK is closely intermingled with the Dollar zone and their amount of assets in US Dollars is very superior to those of the rest of the EU (about a third of Europe). In this condition, and in the case of such a crisis, their economic and financial situation is difficult to anticipate, further than predict that their situation will be the trickiest of all European countries. The City has been playing for decades the role of Wall Street’s side-channel. A financial and monetary crisis affecting the Dollar would therefore be catastrophic for the London financial centre.

- a scenario of « anchorage » of the new Member states, going as far as considering their fast entry in Euroland in case of emergency; Italy was accepted while it did not comply (by far) to the requested criteria; there is no reason then why it would not be possible to integrate the 10 new Member-States to Euroland, if the situation imposed it.
- a scenario of fast negotiation-integration with Sweden and Denmark.
- and a more random scenario, analysing the possibilities regarding the United-Kingdom.
In the framework of such a crisis, UK’s entry in Euroland should be based on the definition of monetary, financial and economic fundamentals clearly compatible with the Euro zone, otherwise the UK would import in Euroland its Dollar-related instability. Euroland leaders should start today working on the elaboration of these indispensable conditions.

This work of anticipation highlights the fact that the Euroland governance will be the decisive element for the Euro zone to cross as safely as possible this severe world crisis. Today already, within the EuroGroup and the ECB, a work group should start to elaborate the above mentioned scenarios in order to avoid being taken by surprise when the crisis is released. The Euroland needs a real Plan B because the Europeans know that a Plan A solely is not enough.

In parallel, Euroland leaders should set up two instruments to gain partial control over the course of events:

1) A light, but politically visible and legitimate, institution of economic steering of Euroland - the Euroland Secretariat - totally distinct from EU institutions, even physically (neither Brussels, nor Luxembourg, nor Strasbourg), in order not to be affected by the current rejection of EU institutions. Its first objective would be to regain the Europeans’ confidence, and to show that their democratically elected « heads » are commanding… and that the “commands” are efficient. The Euroland Secretariat will be this instrument and it will enable to define the common economic, industrial and social answers to the negative effects of the crisis.

2) A legitimate and democratic political authority which can only be a « Euroland Summit » regularly held, one every four months, capable of orienting, piloting, reassuring and reacting rapidly.

Moreover Euroland leaders, politicians and central bankers, together with their Asian, Russian, oil-producing countries’ counterparts, should consider to design the strategy required to get out of the Dollar-era in good order.

Like for any human construction, it is when difficulties arise that will be measured the Euro’s capacity to keep up to its promises of stability and protection of the hundreds of million Europeans sharing or about to share it. Failure would be simply be the end of the EU project.

Copyright © LEAP/E2020 (Laboratoire Européen d’Anticipation Politique)

June 2006 : Beginning of phase 2 of the global systemic crisis: the phase of acceleration

Seven concrete consequences for economic and political players and decision-makers

Last February, LEAP/E2020 anticipated that a global systemic crisis was to be triggered at the end of March. Today, three months later, LEAP/E2020 can anticipate that the initial phase of this crisis is about to be finished and that, as soon as the beginning of June 2006, the crisis will enter a phase of acceleration. Before detailing the main features of this new phase (described in GEAB Nr5 ), LEAP/E2020 would like to clarify the 4 different phases of a global systemic crisis.



A global systemic crisis develops following a complex process where 4 phases can be distinguished, overlapping one another:

. in the first so-called “trigger” phase, a variety of until then un-related factors, start converging and interacting in a way that is perceptible mostly by careful observers and central players

. in the second “acceleration” phase, a large majority of players and observers suddenly become aware that a crisis is there and that it has already begun to affect a growing amount of the system's components

. in the third so-called “impact” phase, the system starts to transform radically (implosion and/or explosion) under the strain of cumulated factors, simultaneously affecting the whole system

. in the fourth and last “decanting” phase, the features of the new system born from the crisis begin to appear.



In the present situation, LEAP/E2020 estimates that the initial trigger-phase is about to finish and that, during June 2006, the world will enter a phase of acceleration of the crisis.

Indeed, in less than three months, many certainties as to the future were turned upside down (« inescapable » dollar-denomination, « return » to cheap oil, « peaceful » solution to the Iran/USA conflict, « sustainability » of the US real-estate bubble, US « domination » over two other key global players – China and Russia,…) and a great number of indicators now point at converging directions, all of them sources of unbalance for the current system (vertiginous rise in gold and precious metals prices, escalation of inflationary pressures, increase of the interest rates, EURUSD approaching 1.30, large amounts of central banks' reserves being switched to Euros, rise of Asian currencies, stock market and currency crises developing in various areas in the world, growing amounts of articles published in the international and national press using words such as « krach, crisis, collapse, risk, conflict, … » ).

According to LEAP/E2020, this « trigger-phase » can be seen as a « learning » phase for the system's players. Some of them properly anticipated the evolution and bet on a breakdown of dominant trends. While they still seemed marginal and irrational to the majority a few weeks ago, they now appear to have « won » when the majority has « lost » following the system's “normal” trends. This “lesson” conveys cumulative effects and soon considerably strengthens all breakdown tendencies, resulting in switching from trigger-phase to acceleration-phase. It also reinforces the conviction of the strategic players who got involved into breakdown policies (or who anticipated the breakdown), and weakens in a sustainable way all regulation capacities of the system now faced to a soon generalized crisis of confidence. Well, in the current system, one inherited from WWI and transformed by the fall of the Iron Curtain, whether it is in the financial, economic, monetary or strategic sector, everything relies on the trust granted by each of us to one central player (the US ) and to the different components of its might. The passage from phase 1 to phase 2 marks the collapse of this trust, sector by sector.

LEAP/E2020 therefore estimates that these sectoral losses of confidence will converge in the course of June 2006, and induce the acceleration of the crisis process. The acceleration should elapse over 3 to 6 months and convey seven concrete consequences:



1. accelerated collapse of the Dollar
2. internal social and political crisis in the US
3. Iran/USA/Israel military conflict
4. increased global inflation
5. stop of the process of trade and economic globalisation
6. accelerated emergence of new regional/continental « blocks »
7. rebalancing of world assets' comparative value.


The passage to phase 3 (so-called « impact-phase ») of the global systemic crisis process will occur when at least four of the previously mentioned factors will have taken place. Simultaneously, it is possible, during the acceleration-phase already, to distinguish some of the tendencies that will shape up the future global system, and therefore to start initiating the decisions and policies likely to prepare a post-crisis future.

These are the analyses developed by LEAP/E2020 in the 5th issue of its Confidential Letter, the GlobalEurope Anticipation Bulletin .

June 2006 – Beginning of phase 2 of the global systemic crisis: the phase of acceleration

Seven concrete consequences for economic and political players and decision-makers


Last February, LEAP/E2020 anticipated that a global systemic crisis was to be triggered at the end of March. Today, three months later, LEAP/E2020 can anticipate that the initial phase of this crisis is about to be finished and that, as soon as the beginning of June 2006, the crisis will enter a phase of acceleration. Before detailing the main features of this new phase (described in GEAB Nr5), LEAP/E2020 would like to clarify the 4 different phases of a global systemic crisis.

A global systemic crisis develops following a complex process where 4 phases can be distinguished, overlapping one another:
. in the first so-called “trigger” phase, a variety of until then un-related factors, start converging and interacting in a way that is perceptible mostly by careful observers and central players
. in the second “acceleration” phase, a large majority of players and observers suddenly become aware that a crisis is there and that it has already begun to affect a growing amount of the system’s components
. in the third so-called “impact” phase, the system starts to transform radically (implosion and/or explosion) under the strain of cumulated factors, simultaneously affecting the whole system
. in the fourth and last “decanting” phase, the features of the new system born from the crisis begin to appear.

In the present situation, LEAP/E2020 estimates that the initial trigger-phase is about to finish and that, during June 2006, the world will enter a phase of acceleration of the crisis.
Indeed, in less than three months, many certainties as to the future were turned upside down (« inescapable » dollar-denomination, « return » to cheap oil, « peaceful » solution to the Iran/USA conflict, « sustainability » of the US real-estate bubble, US « domination » over two other key global players – China and Russia,…) and a great number of indicators now point at converging directions, all of them sources of unbalance for the current system (vertiginous rise in gold and precious metals prices, escalation of inflationary pressures, increase of the interest rates, EURUSD approaching 1.30, large amounts of central banks’ reserves being switched to Euros, rise of Asian currencies, stock market and currency crises developing in various areas in the world, growing amounts of articles published in the international and national press using words such as « krach, crisis, collapse, risk, conflict, … » ).

According to LEAP/E2020, this « trigger-phase » can be seen as a « learning » phase for the system’s players. Some of them properly anticipated the evolution and bet on a breakdown of dominant trends. While they still seemed marginal and irrational to the majority a few weeks ago, they now appear to have « won » when the majority has « lost » following the system’s “normal” trends. This “lesson” conveys cumulative effects and soon considerably strengthens all breakdown tendencies, resulting in switching from trigger-phase to acceleration-phase. It also reinforces the conviction of the strategic players who got involved into breakdown policies (or who anticipated the breakdown), and weakens in a sustainable way all regulation capacities of the system now faced to a soon generalized crisis of confidence. Well, in the current system, one inherited from WWI and transformed by the fall of the Iron Curtain, whether it is in the financial, economic, monetary or strategic sector, everything relies on the trust granted by each of us to one central player (the US) and to the different components of its might. The passage from phase 1 to phase 2 marks the collapse of this trust, sector by sector.

LEAP/E2020 therefore estimates that these sectoral losses of confidence will converge in the course of June 2006, and induce the acceleration of the crisis process. The acceleration should elapse over 3 to 6 months and convey seven concrete consequences:

1. accelerated collapse of the Dollar
2. internal social and political crisis in the US
3. Iran/USA/Israel military conflict
4. increased global inflation
5. stop of the process of trade and economic globalisation
6. accelerated emergence of new regional/continental « blocks »
7. rebalancing of world assets’ comparative value.

The passage to phase 3 (so-called « impact-phase ») of the global systemic crisis process will occur when at least four of the previously mentioned factors will have taken place. Simultaneously, it is possible, during the acceleration-phase already, to distinguish some of the tendencies that will shape up the future global system, and therefore to start initiating the decisions and policies likely to prepare a post-crisis future.

These are the analyses developed by LEAP/E2020 in the 5th issue of its Confidential Letter, the GlobalEurope Anticipation Bulletin.

Juin 2006 - Entrée dans la phase 2 de la crise systémique globale : la phase d’accélération

Sept conséquences concrètes pour les acteurs et décideurs économiques et politiques

LEAP/E2020 a annoncé, le 15 Février 2006, le déclenchement d’une crise systémique globale pour la fin du mois de Mars suivant. Aujourd’hui, à la mi-Mai 2006, Leap/E2020 est en mesure d’annoncer que cette phase initiale de la crise systémique globale est presque terminée et que dès le début Juin 2006, la crise va entrer dans sa phase d’accélération. Avant d’en décrire les principales caractéristiques (qui sont détaillées dans le GlobalEurope Anticipation Bulletin N°5), LEAP/E2020 juge néanmoins utile d’expliciter le mode de développement d’une telle crise systémique.

Une crise systémique globale se développe selon un processus complexe qu’on peut découper en quatre phases qui peuvent se chevaucher :
• une première phase dite « de déclenchement » qui voit soudain toute une série de facteurs, jusqu’alors disjoints, converger et se mettre à interagir et qui reste essentiellement perceptible pour les observateurs attentifs et les acteurs principaux.
• une deuxième phase dite « d’accélération » qui est caractérisée par la prise de conscience brutale par la grande majorité des acteurs et observateurs que la crise est bien là car elle commence à affecter un nombre rapidement croissant de composantes du système.
• une troisième phase dite « d’impact » qui est constituée par la transformation radicale du système lui-même (implosion et/ou explosion) sous l’effet des facteurs cumulés, et qui affecte simultanément l’intégralité du système.
• et enfin, une quatrième phase dite de « décantation » qui voit se dégager les caractéristiques du nouveau système issu de la crise.

Dans le cas de l’actuelle crise systémique globale, LEAP/E2020 considère désormais que la phase initiale, de déclenchement, est en train de se terminer et que courant Juin 2006, le monde va entrer dans phase d’accélération de la crise.
Ainsi, en moins de trois mois, tout un tas de « certitudes » sur l’avenir se sont trouvées bouleversées (domination « inéluctable » du Dollar, « retour » à un pétrole bon marché, solution pacifique du conflit Iran/Usa, durabilité de la « bulle immobilière » américaine, « domination » des Etats-Unis sur les autres acteurs mondiaux clés que sont la Chine et la Russie, …) et un grand nombre d’indicateurs pointent désormais dans des directions convergentes et déséquilibrantes pour le système actuel (montée vertigineuse du prix de l’or et des métaux précieux, montée des pressions inflationnistes, remontée des taux d’intérêts, approche de la barre de l’Euro à 1,30$, transformation en Euros d’un montant croissant de réserves des banques centrales, montées des monnaies asiatiques, crises boursières et monétaires dans plusieurs régions du monde, multiplication depuis un mois environ d’articles dans la grande presse internationale et nationale mentionnant les termes « krach, crise, effondrement, risque de conflit, … » ).

Cette phase de déclenchement joue en fait, selon l’équipe de LEAP/E2020, le rôle de période d’ « apprentissage » pour les acteurs du système. Certains ont correctement anticipé les évolutions et pariés sur la rupture avec les tendances censées dominer le système. Et alors qu’ils paraissaient marginaux et inconscients aux yeux de la majorité des acteurs il y a encore quelques semaines, ils apparaissent désormais comme ceux qui ont su « gagné » alors que le plus grand nombre commence à constater qu’il a « perdu » en suivant les tendances « normales » du système. Cet « apprentissage » a des conséquences cumulatives et renforce ensuite considérablement, et très rapidement, les tendances de rupture en cours. C’est ce phénomène notamment qui induit le passage de la phase de déclenchement à celle d’accélération de la crise. Par ailleurs, il renforce également les convictions des acteurs stratégiques qui se sont engagés dans des logiques de rupture (ou qui ont anticipé les ruptures) d’avec le système en place ; tout en affaiblissant durablement les capacités de régulation du système puisqu’il fait désormais face à une crise de confiance en voie de généralisation. Or, dans le système global hérité de l’après Seconde Guerre Mondiale et transformé par la Chute du Rideau de Fer, que ce soit dans le domaine financier, économique, monétaire ou stratégique, l’essentiel repose sur la confiance accordée par tous à un acteur central (les Etats-Unis) et aux différentes composantes de sa puissance. Le passage de la phase 1 à la phase 2 marque l’effondrement de cette confiance domaine après domaine.

LEAP/E2020 considère donc que c’est au cours du mois de Juin 2006 que ces pertes de confiance sectorielles, en voie de généralisation dans chaque secteur, devraient converger pour produire l’accélération du processus de crise. Cette accélération, qui devrait s’étendre sur 3 à 6 mois, aura notamment sept conséquences concrètes essentielles :

1. L’effondrement accéléré du Dollar
2. Une crise socio-politique interne aux Etats-Unis
3. Un conflit militaire Iran/Usa/Israel
4. Une inflation mondiale accrue
5. La rupture du processus de globalisation commerciale et économique
6. L’émergence accélérée de nouveaux « blocs » régionaux/continentaux
7. Un rééquilibrage de la valeur relative des actifs mondiaux.

Le passage à la phase 3 (dite « d’impact ») du processus de crise systémique globale interviendra lorsqu’au moins quatre des facteurs précités seront avérés. Parallèlement, au cours de cette phase d’accélération, il est ainsi déjà possible de discerner certaines tendances qui façonneront le futur système global, et donc de commencer à engager les décisions et les politiques qui préparent l’avenir post-crise.

Ce sont ces différentes analyses que LEAP/E2020 développe dans l’édition N°5 de son GlobalEurope Anticipation Bulletin.