Former vice-president of the New York Stock Exchange, Georges Ugeux blows the alarm on the level of explosive over-indebtedness of industrialized countries.
The former number two of the New York Stock Exchange is formal. We must prepare for an unprecedented global financial crisis before the end of 2020. At age 74, the current president and Belgian boss of the consulting firm Galileo Global Advisors, Georges Ugeux, blows the alarm and decrypts the reasons in his latest book "The Descent into the Underworld of Finance" *.

Even more devastating than the one that shook the planet in 2008, this crisis would this time not be caused by the bad investments of the banks but by the extremely high level of the indebtedness of the States. He explains what makes him fear the worst.



Ten years after the 2008 crisis, what makes you say that we are going into the wall?

GEORGES UGEUX. For years, states have been able to take on debt in excessively favorable conditions and have not deprived themselves of it. So much so that countries like Italy, France, the United States and Japan have reached a debt level that is no longer sustainable. The amount of global public debt now stands at $ 63 trillion (€ 55 trillion), including $ 10 trillion (€ 8 800 billion) from Europe, $ 10 trillion Japan and $ 22 trillion (US $ 19 trillion) from the US ... As interest rates rise - as is already the case - budget deficits increase and threaten rating of these countries and their ability to refinance without exploding. It's arithmetic. This is what makes me say that by the end of 2020, we will experience a financial tsunami. What happened to Lehman Brothers is lilliputian next to what lies ahead!

What would be the spark?

I do not know the trigger ... Central banks and governments may trigger it by their action. By realizing the dangerousness and the level of their government bonds, some of these players may start selling them and start the spiral that will raise interest rates and we know the rest.

What solutions do you recommend?

We must get out of denial. Central banks must absolutely stop borrowing easy money. Governments must have better fiscal discipline. And we must test the gradual rise in interest rates as the United States has done to urgently exit negative rates. I am convinced that when you have extremely low rates, moving them one way or another has no impact on the decision of an entrepreneur or household to invest.

France is shaken by the crisis of yellow vests, how do you interpret it?

We are living in a perversion of capitalism where companies manage to get states to do just about anything they want while they do not contribute much to the needs of the state. Typically, a device, the CICE (Tax Credit Competitiveness Employment), set up under the chairmanship of François Hollande, has allowed to grant 40 billion euros to businesses. And while we had asked the Medef to commit to creating a million jobs, nothing has been done ...

The government has however put on the table 11 billion euros, was it a mistake?

What happened on the Champs-Élysées is not a problem of money. The problem is that an entire middle class feels completely disconnected, that its vote serves no purpose, that the president, theoretically elected from a left-wing government, pursues a right-wing policy. Emmanuel Macron played with fire. What sins is more the sequence of measures launched by Emmanuel Macron than the measures themselves ...

What do you mean ? Should not remove the wealth tax (ISF)?

Yes, of course. ISF is a tax aberration not because it taxes the rich but because it taxes the stock of wealth that is impoverished, which is useless. It should have been replaced by an additional tax bracket, a fifth tranche imposed at 55% from 1 million euros of income for example. If the citizen feels that the tax system is unfair, he becomes desperate and that is what we are witnessing with the Yellow Vests crisis.

Your speech denotes from a banker ... Would you be a left banker?

No, besides I'm no longer quite a banker but a financier. I saw finance evolve and I lived my way from Damascus in 2008, seeing how irresponsibly the banks had acted and my critical eye was sharp. Because, let's be clear, we are lying to the citizens.