PART TWO: The world crash and the Great Depression
The era of collective illusions ends
Everyone is waiting for recovery. It will not
come. The coming months will see the stock markets collapse completely, resulting in their final fall the actual savings. The crowds had believed in
spontaneous generation of wealth. The debt had become the rule in the private and public sectors. The system s'implose.
The public can not see the crash coming
"The world has gone to the economic crisis of the century," said Ryoji Musha recently, strategist at Deutsche Bank in Japan, the U.S. magazine Forbes. Stock markets are engaged in a tailspin.The global economy rolls inexorably towards disaster. Yet all was so long ago. Financial advisers spoke of "long term" the trend "is still rising." The proof? The graphs of "performance" of the past five years upward. The stock market seemed a good way to earn money. They spoke little risk. And if a customer suspicious évoquât the 1929 crash, the counselor reassured him without difficulty "1929 could not happen again. Financial techniques have made great progress since then ... the central banks fully control the business cycle ... remember the 1987 crash and imagine if you had bought when prices were low. " Everything is so simple: it was enough to "invest long term" and it was sure to win.
It seemed accepted that wealth now born by spontaneous generation.
Of all the illusions group whose history has been prodigal, that of the affluent society and its corollary, the welfare state, more than all the others never do so many people are misled in the hopes ofenrichment as unrealistic, maintained by political leaders as an absolute unconsciousness. But any illusion has its price. The note arrived, and it is very salty.
Ignorant of the disaster in progress, the public remains "bullish."and waits patiently for the return of rising stock markets and economic recovery. Waiting for the train of eight hours. But there are trains that never arrive. Later, the economic disaster will have reached its peak, becoming visible to all, the dominant thought (opinion shared by many on a subject) "will make his face" and then announce the end of capitalism. There is no example in the history of mankind, where one dominant thought is expected and anticipated a turn political, cultural, economic and financial decisive.
The collapse of the welfare state
The twentieth century will, in the eyes of future historians, the peak power of the masses. He saw capitalism compete based on an individualistic view of life, and socialism, collectivism inspired. It was one of the great collective hallucinations, social-nationalist and social-economic development. This was the era of demagogues and political utopias, mass demonstrations. And the era of the great financial bubbles: bloated state budgets, the stock markets. With, in the end, economic disaster, political and social.
The great bear market in progress indicates an expression of a radical change in the global economic system. For the first time since the thirties, the savings fall simultaneously. This is the great global deflation, or the collapse of an economic system based on credit, which financed the unlimited distribution of wealth held by the welfare state. This system came to an end.
Capitalism has been a misunderstanding. This is the production of wealth, mobilizing the energy and creative individual who is its strength, not its corollary consumption (although humans may need and effort and consumption). Capitalism focuses on the action, a factor of development and freedom. He weaves a laurel wreath to the contractor. The latter is demonized by socialism collectivism. Who insists, he, on consumption "fair distribution" of wealth among members of the group, provided by the welfare state. It tends to turn people into passive consumers and dependent. Russia from 1917 to the modern social democracy of the years 1970-1980, Europe and the United States, has established a continuum. Result: the economic burden of the welfare state and the systematic use of leverage generally poured into excess, out of control. Thus developed the bubble necessary to finance the paradise of the masses.
In the early 80's, the "trend" of increasing concentration of secular power in the hands of centralized welfare state has suddenly ended in favor of self-employed and private businesses.Globalization has also thwarted the control and confiscation by the welfare state of the property of producing rich elites who have settled elsewhere, beyond the reach of the state spoiler. The economic efficiency of the States is now sanctioned by market realities.
The bureaucratic caste in power have lost their monopoly. The financial position of states is followed by hundreds of thousands of computers that do not consider that the facts and figures.Russian ruble, Argentine or Mexican pesos, currencies of the Asian tigers: bankruptcy filings have multiplied by the weight of mounting debts. The masses of the affected countries have found themselves ruined. In Europe and the United States, the opinion still thinks sheltered from the economic shock caused by the explosion of the global debt bubble generated by welfare states.
In 1998, Alan Greenspan, chairman of the Federal Bank of the United States (the Fed), said: "it is unthinkable that the United States can remain an oasis of prosperity in a world that would experience an ever-increasing tension." In economics, the miracle of "debt forgiveness" does not exist. Ludwig von Mises, eminent economist of the Austrian School, wrote: "the fables Santa Claus School WELFARE are characterized by their complete lack of understanding of the problems of capital. ... Someone who does not take into account that the capital goods available (real wealth) are available in limited quantities ... .. is a fabulist. " The governments themselves have mastered the art of believing the crowds that riches are infinite: the voter has lost all sense of reality.
Wolves and rabbits
Research in Economics conclude that the economy consists of living systems in which the individuality of each player is important, and show two groups of traders, or investors, depending on the time scale: the rabbits characterized by myopiaextreme impulsivity and risk aversion and that the direction of the market completely escapes them, wolves, far fewer understand the psychology of rabbits, scan the market with wisdom, lay traps: they are predators.
The laws that govern the dynamics of human systems, such as economics and finance, have nothing to do with the desires of men and morals. Men are not the identical atoms of a gas that is humanity. As in sports, the best are ultra-minority. Over seven years, only 10% of financial professionals do better than the market index, and over 10 years, they are only 5%. "The idea of successful entrepreneur and product is precisely that which did not come to mind of the majority" explained Ludwig von Mises "It's not a good average forecast that, by itself, provides profit, a forecast is better than others. The prize goes as dissidents, those who do not let themselves be carried away by the multitude. "
Contrary to the thought that the collective interest can not be well defended by the state, market, meeting all selfish interests, is more than the sum of its parts. It provides the information necessary for effective economic actors, regulates the inevitable excesses. "It is governed by the fundamental economic forces, which are affected by the current political system ..." recalls the trader Victor Sperandeo, US-based.
The Crash overdose credit
In 1965, the almost mystical belief in the affluent society stormed the West. As the casino player to pathological optimism, the masses took the pleasure principle to the principle of reality, and the lavish spending erected into a system of government. Over time, the bubble expands social public sector swells public finances, the texts of laws, regulations and documents, and exacerbates réunionnite. The increasing complexity of completing paralyze the state. Elections are played on the economy "needs" is unlimited, the pace of spending accelerated faster than the growth of the real economy. These economic policies that are demanded of keynésiasnisme, went beyond the recommendations made by Keynes in the twenties. He carefully explained to the leaders of the time how to use the volume of credit: it is a throttle injecting liquidity into the economy. But do not use it to excess and invited decision-makers do not use this process that "exception and go slowly." But for politicians every election is exceptional.
Basically, the controller controls two injectors: interest rates, the level of reserves. If rates go down, economic actors borrow for their projects consumption or investment. And we go back rates to prevent a runaway machine (which translates into higher prices).
The level of reserves is that the Central Bank requires each bank to guarantee loans. If it's 100%, we can lend only up to his property. Add the value of your home and your savings and you have the amount you can pay your co-worker. "But it's risky," you say. Exact. You take the risk. If your colleague comes a great night and you said "I am ruined, then erase the debt," it takes you in its fall. This is exactly what the financial mean by "systemic risk". Here, the system is simple: two cells, you and your neighbor. In reality, the financial system become multinational, has a large number of cells, and works exactly on the principle of insurance: When claims are not too many, so good.
Economic depressions always start with a cascade of bank failures suddenly become uncontrollable. In 1931 it was after the bankruptcy of a bank and a Viennese German bank. In 1997, the "crash" of the currencies of Asian Dragons Southeast began with the insolvency of a Japanese bank. The bankruptcy of Mexico, Argentina, Brazil and all other countries were the result of speculation to the maximum leverage of credit, to "stimulate" the economy.
But who is the real culprit? John Kenneth Galbraith, a disciple of the welfare state, says it is: the public naive and greedy banks that allow too much leverage, credit and companies. All private sector. As is often the real culprit is not worried! But who is the big boss who in the shadows pulling the strings? Well it is the States that operate through banks and ministries of Finance, on behalf of the "public interest". They alone have the power to inject the volume of monetary liquidity necessary to achieve the formation of a bubble, and at the same time sufficient to lower the level of bank reserves to a shock can easily spread to all system.
The soundness of a financial institution is not related to its scale size. It depends only on the ratio of risk with which it operates.The strongest banks in the world are all, without exception, small scale, with excellent control of risk.
Unlike 30 years, the international financial and economic system is now global. This is a pyramid of billiard balls on top of which are the United States. The current strategy is that whenever a country is bankrupt, it does not solve the underlying problems, too politically painful, but it blows subsidizes international credits distributed by the IMF or World Bank or from country to country .This system apparently humanitarian institutionalizes a begging in which everyone finds his account.
When the risk of insolvency increases, the safety of the banking system can only be achieved by raising the level of reserves.Now, where are we? From a high of 26% in 1948, the Fed has been lowering the level: 16.5% from 1975 to 1988 and 12% in 1990. After the great bear market of the loss fall of 2001, Greenspan decided to further increase the risk by reducing the reserves to a record 10%. Yet as the browser reduces the sail when the storm is in sight, the rule is that when market volatility increases, the "pros" of finance reduce the size of their position and reduce their risk exposure. A good trader commented: "When you see a guy who knows his job doing this kind of thing that is seriously in trouble." For the American analyst James U.Blanchard III, official methods of calculation does not represent reality. He said the monetary system of debt actually operates at a level below 2%.
Hell of financial markets
What is known of systemic risk? No. And much more. We thought we knew. The study of critical phenomena shows that when a system is overworked, there is first a slow accumulation of internal tensions, and a few warning signs, and suddenly the system jumps abruptly from one state to another. In nature, there is nothing linear. And no medium can not account for risk. A rare event does not mean impossible, and it has the potential to destroy the whole system, if you based your survival, financial or otherwise, on an average.
The American analyst Peter Bernstein shows that everything has been great in the history of the West is the result of the confrontation with the risk. Market, the big traders are obsessed with risk. For they have learned to their cost, it does exist. And that the errors that result in financial losses for them abysmal, are inevitable.
The harassment of farmers by the State
The common belief is that public affairs are conducted with a "risk control" at least equivalent to that of private. It is off the mark: the public sector is, too, on a system driven by political and financial credit, which denies the very existence of risk, and that simply making the same mistakes without serious challenge.
The irrational plays a role as important as the logic within large public sector institutions. States are able to put themselves in situations as vulnerable as those of companies like World.com, Enron and Vivendi. The only difference is that they can make money or confiscate wealth and thus resist any longer.
But it also takes time to destroy the real economy, the companies, producers of wealth. It is a living organism: it depends on the size, condition and administered doses of poison. More wealth is confiscated, more government regulations increase, the more the company spends individual time and compensates by going into debt. Costs rise, profits and the degrees of freedom necessary for the company to adapt quickly to change, decrease. The pressure of international competition has caused profit margins to very low levels, while the debt has been increasing. At least 25% of companies operate with a frightening level of risk. For these companies, the loss of some commands is all that separates them from bankruptcy.
The entrepreneur, the capitalist, not more enriched. The welfare state there before, and he will save his family will forfeit 50% -60%. It breaks the ability of the individual to take risks, to project into the future. It's a slow corrosion, and the rise of the risk it entails, the survival of the entire economic system. The individual enrichment is no longer possible, the players fit and the economy reached its final stage: the casino economy, illegal employment and undeclared work. Companies who can evacuate the country.Others fail. "Switzerland and all tax havens are responsible for our misfortunes," say the politicians.
In the 60s, the confiscation by governments represented on average 20%. It happened already with load limits recommended by Keynes. In the "general interest" confiscations increased to 28%, 35%, the machine is good. Governments continue: 39% 43% 47%. The simultaneous rise of financial markets is seen as a sign of strength. All is well. "The fundamentals are good." The opinion confuses the bubble with the health of the real economy.After the crash, the black box indicate 50% average for Europe and the United States.
The needs of humanity is limitless, the confiscation of the wealth produced by capitalism is not enough: States must borrow from the market. In turn, the public debt is ball of snow and now represents 60% of GDP, of all wealth produced annually in Europe, the United States 51% and 143% in Japan. More debt increases, the risk of failure increases if the market downturn.The rule applies to individuals, businesses and governments. The welfare state needs credit to survive. It "stimulates" the economy, repeating the experts. For sure. And if you take too much you shoot.
Antagonism between political leaders and central bankers
Politicians and central bankers regularly clash: the first ever claim of economic recovery shots decreases in interest rates, for re-election. The latter are reluctant: they know that excessive credit facilitation leads to bankruptcy.
Policies always promise any
A very rare exceptions, policies do not know about the economy.In terms of public finances, these are some senior officials from finance ministries and central banks that are "turning the shop."Their job is to try to brake a little expenditure of the State, and continue to make it work chugging along in the midst of turmoil increasingly violent world due to globalization. But policies, themselves, struggling on the front lines on the face of misery.They need constant economic recovery, at all costs.
The long-term consequences, it is not their business. To U.S. Senator William Greider that cold, had launched during the years of interest increases from 1979 to 1984: "It's up to you to do something to reduce it (to stimulate the economy)," Paul Volcker , Fed chairman, replied, "It may not be as simple as you suppose, Senator ...". In July 1984, when Volcker announced that he relaxed the pressure on rates, the markets rise again, and soon surpassed the record high of 1966. The crisis was over.
The patient continued to lose weight
Politicians thought that now the real economy was out of danger: they increased taxes regularly, and the patient continued to lose weight. Meanwhile the evil-investment activities in chronically loss-subsidized by the state or local government, became a social way: "It creates jobs." With Mitterrand was elected in 1981, the welfare state became the "state of grace." In fact, the United States and the Europeans had just narrowly avoided a currency crash. Apart from a small minority of specialists, no idea of the inevitable bankruptcy of the credit-based systems. Africa and South America, except Chile, never recovered, they still continue to sink to the IMF and the World Bank, capital supplied by the United States and Europe themselves in debt. The system of the horse becomes global financial credit.
Greenspan the "Grand Wizard"
In 1987, Alan Greenspan, the "Grand Wizard", takes control of the Fed. As soon as we installed directorial chair, in October, Wall Street crash: 24% drop in one day. Twice in 1929. the West was shocked. Nobody talked about the root cause of his agony: states trying to save the dream office. Trying to delay the inevitable, Greenspan opened the throttle wide liquidity. But the real engine of the economy had already undergone Western structural damage too great. The fuel of monetary liquidity flooded the market, giving the crowds thirteen years of illusions of wealth.
The latest Global Capital allows welfare states, still afloat, to continue to finance the growth of debt. With the "new economy" companies no longer need to make profits, they were enough of their debt. On both sides of the Atlantic, speculation became a way of reasoning. Everyone is enriched and borrowed money. At that time, the wave of collective beliefs reached its climax: "new technologies", "new economy", the "new solidarity" persuaded the Western masses, that the era of prosperity for all began."Irrational exuberance" said Greenspan, who was concerned about the future. But the Federal Bank did not control anything.The collective illusion opened in Moscow by Lenin ended his run secular Wall Street.
The policy of lowering interest rates to stimulate the economy has been misused for too long. Deflation reigns. The U.S. economy falters in turn. Soon, the collapse of currencies. This economic crisis is much worse than that of 1929.
After the illusion, the collapse
Throughout history, there is not a single example or a collective illusion will not go until the final collapse: no one can do nothing against the mysticism of erratic social group that denies reality.
Dr. Kürt Richebächer, German, head of economic studies of Dresdner Bank, responsible for investments totaling billions of dollars, then a member of management is one of the leading world specialists in finance. Paul Volkner, who has a great friendship and esteem, very familiar with his prophecies of the inevitable crash reasoned world, always set without the slightest concession to the "economically correct". Volkner said, "I sometimes think that the task of the presidents of central banks is to try to prove that Kurt is mistaken."
The fantasy of control
In March 2000, the largest bubble in history broke out. The United States and Europe would join the rest of the world on the long road of deflation. To date, the main economic and financial organizations and Western States had not a clue what was going on. The economic growth forecasts for 2001 by the OECD were +3.5% +3.1% United States and Europe. The miserable reality will be a 0.5% growth in the United States and 0.6% in Europe.Kurt Richebächer, "For the first time, the economy has slowed sharply by itself, without any tightening of credit." As an overworked motor that makes the soul, the economic system had changed status. Of himself.
This time, there will be no economic depression, as Alan Greenspan will not make the mistake of the Fed at the time who had increased interest rates. No, he is going to fall, which will "stimulate" the economy "boost" the economy. Quite the fantasy of control: we want to control nature as a machine. It does not exist. The English philosopher Francis Bacon said, "we can not command nature except by obeying her." The whole planetary system based on credit and unlimited wealth, is the product of human beliefs: a virtual system. The anti-matter of economics based on reality.
The American economic engine off turn
"I'm not on my desk a great book that I would open for a solution to every problem," says Alan Greenspan. He too has noticed the look perfectly new and brutal economic downturn. "For the first time in history," says Kürt Richebächer, "the economy and the market continued to fall against the monetary liquidity. The Fed cut rates to an unprecedented series of 11 interventions ... and it did not stimulate the economy. This kind of pattern reversal is unprecedented since the war. " The truth is that after the bubble burst, the economy changes state and moves to the deflation.With the offset due to the inertia of the system, the full effect of the eleven interventions of the Fed should feel from late summer 2002. At that time the business cycle of four years could also turn up. Before continuing the downward trend, a tentative recovery is entirely possible. There is no straight line in nature.
It will be much worse in 1929
The engine of the real economy is seriously affected in the United States, with corporate debt that exceeds 75% of GDP, and virtually useless in the States European social democrats after thirty years of bad fiscal and bulldozer-investment public sector.Unlike the thirties, there is little left to stimulate. Beyond the figures from the balance sheets, the damage in people's minds are incredible.
The demagogue of the welfare state denies the conspiracy and speaks of "rich", or the half-demagogue offers to its umpteenth "reform" does not matter: no real economy will revive and growsecurely in a hostile environment.
In 1930, the United States balance of payments was positive, the country was a creditor of the world, companies and households with low debt. Today, these benefits have all disappeared, "The recent economic expansion of the United States," said, there is little, Kurt Richbächer, "is the direct result of an unprecedented credit expansion in history. Next to the credit expansion of the last four and a half years, the new debt in the U.S. economy grew by $ 7.200 billion, or 40% reaching a total of 24.428 billion dollars.This represents 363% of current GDP. Looking at the statistics, it is clear that between 1997 and 1998, the credit system of the United States out of control. The new debt in the financial sector increased by 41%, but the debt within the financial system has grown even faster. America is the most extreme case of financial bubble and economic bubble that has ever existed. "
Unlike the United States in the Thirties, the annual balance of payments since 2000, -400 billion dollars. This seems extreme level maintained.
If the Fed wants lower rates to inject liquidity into the economy, it is likely outside of losing control of the dollar's decline under the weight of the deficit of the balance of payments and cause the collapse of the currency . Under such a shock, the international monetary system explodes, and what remains of the Japanese economy and the fragile European economy disintegrates.
To continue the credit system has a constant need to attract ever-vital to his new capital. However, since deflation began his work of "debt forgiveness" capital is more scarce by the day. The savings rate in the United States is virtually negative. Households sink into debt, which reached 77% of GDP, more than the companies (70%) or the public sector (51%).
Meanwhile the last "Earth Summit" illusion flourished collective social economists and politicians advocating generous to tax capital that the world economy has a vital need to continue to live on credit. When the crash is complete, the scapegoat for social politicians is already obvious choice: central banks and speculators.
The Japanese are quietly withdraw their capital
The lender of last resort of the great pyramid of debt is Japan, which placed in treasury notes and bank loans of approximately $ 80 billion in the United States and Europe. We do not shout from the rooftops. But the withdrawal of Japanese capital invested in Europe have already begun quietly to try to stem the collapse in the mother country. The Japanese capital invested in the United States will soon follow the movement, too. Constrained and forced repatriation of foreign capital triggers a chain reaction, due to too low a level of bank reserves imposed by states.
Today there are only three currencies: the dollar, the euro and the yen. These last three currencies are no longer based on the debts of each zone. The bulk of the liquidity created for decades by governments, focused on FOREX international exchange market. The first of the three central banks lose control of its currency, following a domestic incident, will this mass movement that will blow the money market. The three pillars of the credit system will collapse for sure at the same time, blowing all economic activity. The monetary system of the twentieth century, where currencies are no longer connected to any value such as gold, allows states to manipulate with impunity value. States do not repay their debt. The Russian state does not intend to honor its old debts.
The West is about to experience the economic shock the worst in its history: the bankruptcy of the currencies of welfare states.
The secret of financial cycles
One of the most astonishing discovery of econophysicists is that the concept of balance (pillar on which all the traditional thinking of the social economy) simply does not exist. The system goes from one extreme to another and regulates itself as an ecological environment. Only an external shock, as an attempt to control or depletion of resources necessary for its operation, by capital, can trigger a disaster. As in nature!
What to invest? The prediction by Elliott Wave
The American Robert Prechter is the most famous Elliott Wave analyst. The principle of these vague claims that are vague impulse in the direction of the trend is composed of five waves.Three waves of increase, interspersed with two waves of decline.Conversely, the waves of correction consist of three waves: two drop separated by a high wave. The third wave is often the most dynamic. To Prechter, like many traders, the waves observed on the markets are the product of human behavior.
The real start of the economic depression in American households will begin. According to the Federation of American consumers, a quarter of households are "rich-poor" with less than $ 10,000 of immediate cash. They have the highest incomes and more assets. But debt is even more important. For many, redundancy means personal bankruptcy. Companies and individuals fall into deflation which they never imagined existed.
Market analysis in terms of waves by Elliott Prechter, shows a continuing bear market down to 1976, or 600 points on the Dow.But if the current market is the degree of "great super-cycle" (that is to say that a cycle ends started around 1780) the goal is the level of 1932, between 381 and 41 points.
The oil market, a rise in the price to $ 57 a barrel is a primary objective.
Finally, the gold on which Prechter was bearish for 20 years, arrived in the early stages of a future bull market, but that could take more time to rush. For him, whatever the short-term fluctuations, there is no doubt that a serious investor can begin to accumulate gold.
And government debt? As soon as the deflationary situation will become serious, the government will realize what is happening and react very violently to save their lives and their power over the currency "in the public interest." A first step will be the temporary suspension of their debts. Prechter is clear of all obligations of the major Western states, and does not recommend that Treasury notes.
The public, he does not know. Not yet. A survey conducted in summer 2002 by John Hancock Financial Services, shows that investors expect an increase of 16% on average for the next 20 years.
This unprecedented economic crisis will be a wave of misery in the world. The West will suffer, but it will be much worse for the Third World because of its extreme structural fragility and concentration of large segments of its population in megacities vulnerable.
The return of the misery in the West
Well-being and physical security installed by decades of economic growth in the West will be brutally challenged by the economic cataclysm.
The fall in business investment will result in waves of unemployment, which will submerge a large part of Western middle classes. Households will suffer the full force of their debt burden.
Retirees, if preferred until then, switch to the impecuniosity. They will less and less help to those of their children who will be thrown out of work while having a family dependent: the ruin of pension funds linked to stock market crash very dry up the payment of funded pensions.
The economic downturn will reduce the revenue of the States.Social transfer policies implemented over the last 50 years will not survive. Especially since these states will increase their budgets for police and military to deal with the general rise in tensions. The hundreds of thousands of immigrants who flocked in Western countries will have their terms abruptly disrupted due to the depletion of social transfers. Urban ghettos, where they live, will be delivered to the misery and chaos.
The third world struck
The impact of this great economic crisis is crushing on a highly urbanized humanity today, the third world more than rich countries. For a century, the rural exodus has continued to grow, concentrating people in cities: 280 of them have more than 1 million inhabitants and 26 megacities (18 in the third world)account for more than 7 million inhabitants. These giant cities of the Third World will be hit hard by the economic crisis that is widening the gap between rich already immense and poor when they catch cold there, they are dying. Income, life expectancy, maternal mortality, poverty, water supply, sanitation basic, are all areas where statistics already very unfavorable compared to rich-country explode due to the economic crisis.
Riders of the Apocalypse
The economic crisis will destroy an already precarious food security in the Third World. Insufficient purchasing power prevents a portion of the population, access to food quantity and quality required. Despite the liberalization of agricultural trade, markets remained highly volatile. The economic crisis will exacerbate this instability. The palliative care provided by humanitarian aid will also be reduced to the bare minimum. When the economic crisis has completely wrecked the financing of cereal imports in the third world, from the vast and fertile plains of North America, Europe, Russia and Australia, the terrible specter of famine and of epidemics come upon him.
Sanitation, vaccination campaigns of WHO, drug supplies, will also suffer. Infectious diseases are growing again and it will grow. The vaccination coverage of various diseases (polio, diphtheria, tetanus, pertussis) also regress. Despair promote violence and war. The plagues gallop together as the Horsemen of the Apocalypse. The figures of morbidity explode.
Faced with the economic crisis, generating insolvency, the plight of underdeveloped economies will be total.
Large city: Hell
The sprawling cities of the developing countries will be of very fast one aspect of Dante: burned corpses in the streets to reduce the risk of an epidemic, derelicts gnawed by hunger and disease, fights, murders and riots. Crowds large tents to emigrate to developed countries to the great terror of them. The apostles of ethnic conflict and the prophets of war will find in these suffering masses and supercharged convulsed audiences they need to satisfy their megalomaniac ambitions.
Soulless mega-cities of the Third World will be the crucible of all follies. These cities blur the landmarks by their immensity (Karachi on a territory the size of Belgium). In this planning without rules, conflicts of all kinds (social, religious, inter-assay) underpinned by the hatred of others, will be brought to the red by the economic crisis. And materials used in combustion boilers gargantuan fanaticism.
It can count on the demographic weight of youth, breeding ground of extremism.