the turbulent decade that lies ahead

The emergence of the economic crisis in the global village has resulted in new challenges for governments and institutions mired in confusion and disbelief, drawing a scene of crisis and instability that will end global shape in the next decade, as the l phenomenon of economic globalization has made all the rational elements of the economy are interrelated due to the consolidation of oligopolies, technological convergence and corporate tacit agreement so the economic crisis is global and binding. In reaching that crisis, (whose first sketches are already profiled and finish drawing the next five years), have contributed the following:

Replacing the economic doctrine of Equilibrium States budget deficit for the endemic practice of mimicry, adopted households and businesses, and public and private agencies contributing to the demise of a culture of saving, chronic indebtedness, excessive reliance on Foreign Financing.

Establishment of compulsive consumerism in developed countries, aided by the incessant bombardment of advertising, the irrational use of plastic cards, granting instant credit with interest and bloody invasion of a flood of manufactured goods of dubious quality and prices without competition from emerging countries.

Suicidal policy of major global banks in granting credit and subprime: Immersed in the vortex of the expanding global economy of the past decade and in order to optimize their bottom line, ignoring the most basic act of prudence standards credit, becoming mere speculative brokers and neglecting the allocations for the provision and Insolvency Fund and combined with lack of supervision by the monetary authorities of the credit ratings of banks, will result in the subprime crisis in the U.S.. UU., followed by a continuous drip of bank insolvencies, a severe contraction in bank loans and an alarming lack of monetary liquidity and confidence in financial institutions

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Paranoid obsession of the stateless multinational or transnational corporations to maximize profits, due to the insatiable appetite of its shareholders, by requiring steady increases in dividends. To do this, do not hesitate to borrow dangerously, for the sake of gigantism, and hostile takeover bids by strengthening the policy of relocation of companies to emerging countries, in order to reduce production costs (given the huge differential in wages and the lack of rights employment of workers), causing a severe impact on the footwear and leather goods, textiles, sports equipment, appliances, low and medium range and auto ancillary industries in developed countries, labor and starvation resulting in the return next decade unemployment rates not seen since the Second World War.

Brutal increased consumption of raw materials and finished products from emerging countries, because of their spectacular growth of annual GDP over the past decade helped by the intervention of speculative brokers, has led to a spiral of price increases impossible assumed by the First World economies, (unable to reverse them in the final product price, given their high production costs), and as a result of the above, there has been a significant loss of competitiveness, stagnating exports and increase of Current Account Deficits and Foreign Debt, drawing a five-year stage in which the return to economic protectionism, with the consequent contraction of world trade and subsequent settlement to economic globalization.

To this is added the risk of outbreak of the current stock market bubble, the daughter of the euphoria of Wall Stretto (and by extrapolation from the rest of world stock) following the results of so-called "stress test" of financial institutions carried out by the U.S. administration, the arrival of small and medium investors following the bursting of the housing bubble, the dramatic lowering of the income of Mutual Funds and Fixed Income and especially the return to the city’s brokers chasing speculative Virtual bargains after the collapse of oil prices and agricultural commodities.

Genesis of the bubble:

Bounded rationality: The disconnect with reality on the part of investors would take to justify the irrational exuberance of the markets (creating a virtual world financial speculation had nothing to do with the real economy) and extrapolating the current returns as a right for life which together with the loss of credibility of rating agencies like Moody’s (by not have predicted the current crisis), contributes to the market to remain insensitive to cut the rating of companies listed on the bag.

Speculation: The process encourages Speculative buying in the hope of substantial gains in the future, causing an upward spiral away from any factual basis and the price of assets is thus able to reach stratospheric levels until the bubble has just burst (crash) due massive sale of assets and the absence of buyers, causing a sudden and sharp price (up to limits below their natural level), leaving behind a trail of debts (stock market crash)

Uncertainty about the level ground of securities: An investor is willing to pay a price for an action if he reports money in the future, so that the value of this action is the total expected cash flows. The ground level of world stock markets (which converge at the minimum benefits and multiplier effects), would be located within the band of 6000 and 7000 in stock markets as the Dow Jones, Nikkei or the Ibex 35, due to increased virulence and depth that has the economic crisis and, far from the current ceiling that recall stratospheric values in October 2008.

Overweight of the green shoots of the economy: The euphoria of Wall Stretto (by extrapolation and the rest of world stock) following the results of the so-called "stress test ’of financial institutions conducted by the U.S. administration and dripping negative economic data below the most pessimistic forecasts would have helped the gestation of the legend of the green shoots or binladens (so called because although there is no one has seen). It would thus produced a change in market expectations, there are now convinced that the bailout policies (Support Program for troubled assets (TARP) carried out by the government and the successive reductions in interest rates of Fed and other central banks have eased the liquidity problems of financial institutions.

The overall recovery in commodity prices could reflect a change in the trend of economic conditions in the global arena. The price of these products rose 11 percent on month-to, being the price of oil which reported the biggest monthly rise (27.3%), followed by soybeans (increases of 13%) and wheat (12%).
In the new upward trend of agricultural products not only influences the recovery of oil, but also play some temporary factors, such as bad weather conditions (drought, lack of humidity and low temperatures) recorded in the main producing areas of the world and the return of the speculation of the hands of investment funds.

End of the upward rally: Investors have started to feel dizzy height and question the state of solvency of the companies. (Given the high indebtedness of the same in some cases exceeding 200% in relation to its value added 2009). Thus, companies listed on the Spanish stock exchanges have financial commitments of EUR 276.532 million (representing 3.1 times the gross profit they’re getting this year) and is expected to lower the percentage of business performance that used to dividends and the number of companies that shared the same.

Possible stock market crash Continued instability in the financial system that financial institutions will need more capital requirements (estimated amount of over $ 850,000 million), due to the existence of toxic assets that must be purchased by the bad banks ( bad banks) or continue leaking bank interventions, practices that involve both a loss of free competition. and could increase the risk of stagnation of the U.S. economic crisis

Also, do not be ruled out higher interest rates by the Fed, ECB motivated by the fact that yield differentials between the public debt issues between the various first world countries have increased in recent months (as leading to more expensive and more difficult to obtain external financing) and the risk of a possible scenario of deflation caused by the severe contraction in domestic consumption caused by the collapse of oil prices and basic foodstuffs in 2008 and first quarter of 2009, price increases, which would have an immediate impact on mortgages and bank loans, thus choking broad economic strata and a dramatic increase in delinquencies and foreclosures of homes and business premises and coupled with the surge in oil prices could lead to episodes of stagflation and produce a new stock market crash.

The crash would have a beneficial effect of forcing companies to redefine strategies, adjusting structures, restore its finances and restore its credibility in the market (as happened in the stock market crisis of 2000-2002) and as collateral damage the ruin of millions of small investors are still dazzled by the lights of the stratosphere, the financial starvation of the firms and the consequent ripple effect on the declaration of bankruptcy and the brutal restructuring of key sectors of the economy (with increases in unemployment rates to levels not seen since the time World War II) and the continuation of the economic crisis until the second half of 2011.

Coupled with this, the high cost of agricultural commodities for food (wheat, corn, rice, sorghum and millet) and the increase bestial of these products in world markets that had the tip of iceberg in 2007, will presumably "in crescendo over the next decade and reached its zenith in the 2018 horizon. In reaching that crisis, (whose first sketches and are profiled and finish with crudely drawn at the end of the decade) have contributed the following:

Economic Development suicide of Third World countries to grow too fast and mega tourist macrourbes and the consequent reduction in agricultural acreage.

Changing consumption patterns emerging due to the dramatic growth of the middle classes and their purchasing power and the weak dollar and the collapse of oil prices with the consequent diversion of speculative investment in material markets primas.A It join the increasing use by first-world countries predatory technologies (biofuels) that under the label BIO friendly countries will not hesitate Environment engulf huge amounts of maize originally destined for feeding for the production of biodiesel, coupled with unusual droughts and floods in key global barns.

Moreover, the collapse in oil prices during the five years 2008-2013 (despite successive cuts in production by OPEC) due to the severe contraction of world demand and the flight of speculative brokers, make it impossible to producing countries get competitive prices (hovering around $ 90) that would enable the necessary investment in energy infrastructure and generating new farms, so do not be ruled out a possible narrowing of the global production of crude oil on the horizon of 2018.

This presumably will cause psychosis supply shortages and dramatic increases in oil prices that will be reflected in a wild soaring freight transport and agricultural fertilizers, which together with the application of restrictions on exports of major world producers to ensure self-sufficiency will eventually cause shortages in global markets, increasing prices to stratospheric levels and the consequent global food crisis affecting especially the Antilles, Mexico, Central America, Colombia, Venezuela, Egypt, India, China, Bangladesh and Southeast Asia, preying particularly virulent and Sub-Saharan Africa and spend the people trapped in the starvation of the current 1,000 million to 2,000 million estimated by analysts.

GORRAIZ GERMÁN LOPEZ