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Sunday, 26 June 12:57 (GMT -05:00)

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US prospects: depression, disintegration or prosperity?



These days more and more analysts start pondering on the question: What does the future have in store for the USA – the architect of the existing global financial system? Not so long ago http://telegrafua.com/ (Kiev Telegraph) published Valery Boval’s article called “A change in the global financial system: the result of a new geopolitical world model”
Is the USA really on the verge of collapse? Has the US authorities reached the point of no return?






The USA as the global “fire starter”
Do huge external debts lead to wars? According to Mr. Boval, the USA’s external debt puts it at the crossroads. He says that the prolonged economic crisis may end up with the disintegration of the USA or with World War III. We wonder if Japan, the world’s 2nd biggest debtor, is also on the verge of disintegration (of whether it can initiate a major war)?
Further the author says that by starting a war on international terrorism the US gave powerful military alliances the right to interfere with other states’ internal affairs. This statement is true in its essence. The only thing is that it is about the only military alliance - NATO. Moreover, it should be noted that even during the “humane” times of the UN existence the USA and other powers showed little or no respect to other countries’ sovereignty (remember Grenada, Panama, Iraq). The UN either approved the aggression or was simply ignored.  Consequently, the USA’s foreign policy hasn’t changed in essence since then.
The Libyan conflict: Who is to be blamed - USA of France? Valery Boval’s idea of the US aggression against Libya is questionable. The Libyan conflict seems to be a “European project” (a French or British-French one). Washington was trying to curb the ambitions of its NATO fellow-members (even refused to stay in charge of the operation, which was an unprecedented step) and seemed to be secretly supporting Kaddafi. The Arab revolutions in Egypt and Tunis may well have been initiated by Paris, which dreams of being the EU’s major external policy maker. It is not accidental that Nikolas Sarkozy insists on reanimating the old project called “The Union for the Mediterranean” (UfM), which implies gathering 43 countries from Europe and the Mediterranean Basin into an economic community (a multilateral partnership), in order to replace the pro-American “Eastern Partnership” (EaP).
Military intervention creates anti-American sentiments. It is true but public sentiments are not so influential. It is the elites’ stances that are important. Yet, they are mostly pro-American. Moreover, some ethnic groups support the US. For example, the Kosovar Albanians or the Kurds hope Washington will start a war and will help them to gain independence.
Will the US disintegrate?
According to Eugene Olkhovsky, a Canadian expert for Masterforex-V Academy, indeed, when a country with significant military potential starts experiencing major economic problems, it finds itself trying to solve a dilemma: either to disintegrate or to start a war. Another striking example is the USSR. However, it should be noted that the Afghan war didn’t help Moscow and even aggravated the internal crisis. These days there are dozens of states with inflated military budgets, both small (Israel, Armenia, Uzbekistan, Tajikistan, Azerbaijan, Venezuela, Cuba) and large (China, Russia, India, Egypt, Iran). Most of these countries have serious economic problems. However, it doesn’t mean they are about to disintegrate or to start a war. The USA is in better position because all the above-mentioned countries indirectly help the USA to service its public debt.
Moreover, Valery Boval assumes that there are several factors that may lie behind the potential disintegration of the USA: social, national, racial etc. Well, that is ridiculous. The US is a “melting pot”, a mixture of languages, races, social classes. In essence, there is no division into poor/rich or black/white states.
Some people can wait to see the USA disintegrating, but it is a very unlikely scenario because:
·         The US is not an empire
·         It has land borders with only 2 states
·         There is nobody to plan and sponsor the process
What next?
According to Mr. Boval, In 1980s the US abandoned the scientific-technical revolution in favor of financial activities. As a result, the US economy was almost entirely deindustrialized. Now, after decades of gross errors the Americans will have to reindustrialize their economy if they want to survive as a nation. However, Valery Boval is sure that reindustrialization will inevitably lead to a decline in the US quality of life.
Eugene Olkhovsky says it is unclear why the author arrived at such a conclusion:
·         Boval says the US abandoned the STR. What about the computerization, the “Star Wars” program, the cold war? 
·         He says the US stopped investing in hi-tech and innovations. However, Dmitry Medvedev, President of Russia, doesn’t think so after visiting the famous Silicon Valley in California. Moreover, the president called upon the “technically advanced” Russians to follow the example of their American counterparts. And what about the famous brain drain? Does the US really attract only gifted financiers?
·         He claims the industrialization of the US economy will lower the US quality of life. In Russia and China it hasn’t worsened the quality of life. Why is it possible in the US?
US Dollar prospects:
According to the Department of Masterforex-V trading system , the USD index keeps forming an upward retracement.
Until the MF pivot and sloping channel around 1.7210 (as shown below) are broken, the price can form wave b(C ) of Weekly, which will be followed by a strong downswing – wave c(C ) of Weekly. In this case 1.5534 will be the closest level of support. Once the mentioned MF pivot and sloping channel are broken, the price will initiate a potentially reversal upswing – wave A. In this case a bullish FZR will be needed to start a major rally.





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