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Attali on ‘The Next Financial Crisis’

Paris, July 28, 2017 (EIRNS)—Jacques Attali, the would-be oracle of France, spoke on July 26 of the coming financial crash. Attali, who had been President (1981-95) François Mitterrand’s éminence grise, but who always knows what direction the wind blows, used his Wednesday column in L’Express to remind readers that the 2007 financial crisis was not solved and that everything indicates that the tsunami is coming back. These excerpts are taken from Attali’s own English translation on his website.

He addressed problems which get little attention, "as if, as time goes on, the problem will disappear of its own accord." Among those he includes the problems of migration,

"which will have to be solved one day, and one that is talked about even less today than others: the next global economic and financial crisis.

"Indeed, it is as if today we thought that there would never be an economic and financial crisis again. And that such a risk can be definitely ruled out.... Growth seems to be back everywhere. Unemployment is being reduced.... Prudential legislations learned the lessons from previous crises and created the conditions for further enhancing the resilience of international banks.....

"And yet how absurd it would be to assume that, in today’s unrestrained and untamed globalization, financial crises could be ruled out forever. All the more so as the signs of an upcoming crisis are indeed present.

  1. "First, public and private debt are higher than ever.... Both public and private debt of the 44 most affluent countries have reached 235% of GDP compared with 190% of GDP in 2007. In particular, U.S. student loan debt and Chinese banks’ debt are wildly out of control. Without even counting ensuring the payment of future pensions that retirees will assert their right to one day, and that is not accounted for.

  2. "Companies’ share valuations are out of proportion. And what’s more, the most recent mergers or acquisitions are increasing at an exponential rate out of proportion with the profits that these firms will ever make. And it is those valuations, totally artificial, that have caused the absence of concerns about their i: the amount of debts.

  3. "Banking regulations in the United States, set up in the aftermath of the 2007 financial crisis, will be slim down, giving U.S. institutions a competitive advantage over their competitors and forcing them to take on new risks in this area, thereby adding to the overall debt load.

  4. "Neither global growth, nor inflation will top the bill now or in the future to swallow such debts. A month from now, a year from now, ten years from now, lenders will realize that their debts are worth nothing, and they will start to panic and become fearful. It will be triggered by a more or less minor incident in Italy, the United States, China or the Middle East.

"Central banks will stop behaving like legal Madoffs and reduce the free money they now give to banks. Governments and corporations will see a massive increase in the cost of borrowing and for some massive savings will be expected, or else they will go bankrupt. The crisis will come back, and along with it unemployment and reduced purchasing power."

Of course, he offers no solution—only cutting the debt and imposing "internationally applied financial legislation." A Glass-Steagall reorganization of the western financial system does not exist in his world view—but he certainly knows the collapse is coming.