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No Light at End of The Tunnel for US Economy

When confidence in banks evaporates for whatever reasons, the consequences will be ugly and there will be massive social upheavals across the globe.

September 20, 2010 (Hamsayeh.Net) - International analyst and economist Matthias Chang in his latest report on the state of global economy warns of an impending financial catastrophe regarding western banking system that's waiting to happen between now and next year. 

Chang explains, one area of major concern is the implementation of a new banking regulation known as Basel III by the Group of Governors and Heads of Supervision which serves as the high end banking watchdog on 12 September 2010 at their headquarter in Basel, Switzerland.  

The new regulation enforces a new rule obligating every major bank to hold a minimum amount of liquidity in its possession as safety net within a five-year period. The new rule is argued to prevent banks from acting too freely as encouraged under the necons during the past several years leading to the current financial crisis started in 2008.  

‘This framework will reinforce the objective of sound supervision and bank governance and address the collective action problem that has prevented some banks from curtailing distributions such as discretionary bonuses and high dividends, even in the face of deteriorating capital positions.’ Quotes Matthias Chang in his article Basel III: The Iron Clad Confirmation That Global Banks At The Edge of The Precipice published on Future Fast forward. 

But according to Chang the western banking system is officially insolvent with no possibility at all to raise a minimum liquidity until after 2007 in the best-case scenario. ‘At this moment, I cannot give a precise time-line as to how long the FED and the global central banks can prolong the confidence game, hoodwinking the public and sovereign creditors that all is well.

When confidence in banks evaporates for whatever reasons, the consequences will be ugly and there will be massive social upheavals across the globe.’ Writes Chang.   

He further explains that when confidence in dollar assets vaporizes, China will be caught right in the middle. The third and final phase of the Global Financial Tsunami will devastate Asian economies and with it, the greatest depression in history will ensue.

More and more analysts have come to the conclusion that Western economies will face  major slumps during the coming months.

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