Western economic meltdown...

[TheOldMan]

So now there is saber rattling regarding Iran. Another War?! Really?!

Maybe that's someone's idea of boosting the western economies ... another Middle Eastern war!

 

I hope it doesn't materialize, but the war drums are beating, just like they did before the Iraq debacle began.

[chris2004]

Speak for yourself!

 

The "western economic meltdown" we witness now is only a part of a larger process which started in the seventies (the visible part was the oil crisis), has accelerated in the 80ies and 90ies with the explosion of global trade and which will last until western countries will have reached more or less the same average standard of living as China/Brazil/Russia.

 

Currently, the general public is worried about Greece, but Greece is just "peanuts".

Economists are worried about Italy and Spain.

 

1- The 1000 Billion EUR rescue package is not enough, because the needs are about 1400 Billion

2- Italy and Spain will need about 60% of the total NEEDS (i.e. 840 Billion)

3- Italy and Spain are planned to contribute about 30% of the agreed 1000 Billion package

 

Can everyone see the problem?

 

One of the current situation's advantages is that it is relatively easy to do money on FX now. For example, buy AUD against CHF until December, the CHF being bound to the EUR, it will get sucked down while offering a borrow rate of 0.5%... hihihi.

 

P.S.

Property has been a safe harbor over the past centuries, but what we are experiencing now is a huge systemic break. Maybe the "value" of real estate won't fall to much, but there will be few buyers and many many people will not have enough money to rent!

The most impacted income classes will be the medium and higher medium income classes, in other words 3 and 4 room dwellings.

On the tax side, expect the government to rip you off at every opportunity. I know, I know... but what I mean is that they will do it even much more than now, LOL. And property will be targeted first.

I can only advise everybody with savings or property to get rid of it or make it "disappear" and to reinvest in assets that won't lose so much value.

 

So if you can't have savings or property what assets won't lose value ?

[manarak]

So if you can't have savings or property what assets won't lose value ?

 

If you have significant savings, the first step is to make them disappear, because otherwise the government will steal them to cover politicians' mistakes. Create an offshore company and store your money there.

 

Then about investments, I would say that almost all investments that are available in your country or within the western world are rotten because either the crisis will affect their value or performance or because they will be preyed upon by the taxman. The few exceptions might be:

 

Investment into industries (stocks) that will continue to be needed no matter what happens.

Many people will pay the bills from these industries using money they get from welfare.

- energy

- food

- healthcare for the elderly

Wait for P/E levels of 5 to 7 and invest.

Telecom companies may also be interesting, because people will not stop to phone, and several companies are valued very low at the moment, while paying high dividends (between 6 and 10% dividend yield).

 

FX, Bonds and Gold

These are volatile investments and may require constant management.

- You can always count on gold to soar when problems arise. For example, it rose from 1200 to 1300 (now) with the EURO problems. about 7% in 2 weeks, not bad eh? Just be sure to unload the gold when the crisis calms down a bit. That being said, I'm pretty sure Gold will hit the 2000 USD mark, this year or in the first quarter next year.

- Bonds: Bonds are like an investment in FX with higher interest. Look for a currency with stable or positive outlook against your home currency and with high interest rates. In 2009, the Brazilian Real was such a currency, it could be had at less than 0.30 EUR in Jan 2009 and has around 12% nominal interest. It rose to 0.46 EUR in 2010. So an investment in BRL in jan 2009 until mid 2010 would have yielded about 62% in EUR, not counting any additional coupon returns if this investment had been in BRL bonds.

Today, BRL runs at 0.42 EUR (more than +1% today, BTW) and has a stable outlook in my opinion and could be a good investment with high return, but there are risks associated with it, so I wouldn't put all my money into BRL.

 

Just keep in mind that you cannot rely on EUR, GBP or USD to maintain their buying power - the western sphere is fucked in the long term. Your biggest enemy is inflation. Disregard official inflation indexes. These indexes were made for the poor and include the cost of renting a home, so if the rent is down (=your income) and the rest is up, you are fucked while the index stays stable!

Rather look at historical prices for food, brand consumer electronics, healthcare...

 

Other than the above, "safe" investments will mainly be found in the non-western world.

Classic investment advice applies.

 

You can seriously consider offshore real estate in developing countries (not Thailand), or in funds specializing in that, but carefully check the funds management principles first, the fund should be small enough to be able to chose individual buildings as opposed to throwing big money at big projects.

You might get triple gains from that: rent + value increase + FX increase

Timing is important, FX rate and domestic housing market.

[manarak]

A current trading idea is to wait until the EUR falls to nearly 1.20 against CHF (at 1.23 now), and then to buy EUR/CHF.

Since the Swiss National Bank has sworn to keep the CHF under 1.20 EUR by all means at her disposal, the EUR should then soon rebound a little.

A rebound from 1.21 to 1.22 means 10.000 CHF profit for 1 million EUR.

Very little downside risk due to the SNB's pledge.

Edited November 9, 2011 by manarak

[jocky king]

Western Economic Meltdown !! Every clouds has a silver Lining , I Took advantage of Western Economic Meltdown last year and made a profit of nearly €7000 within nine months when i traded in €30,000, in currency exchanges between Thai Bahts and the Euro.. €30,000 electronically to thai bank in November 2009 for €1=50.50 bahts, Electronically back to Irish Bank for 41 bts for a euro in july 2010...

Edited November 9, 2011 by jocky king

[spinmeright]

For those who have difficulty understanding whats going on with the current economic situation .

Here is a video explaining everything

 

 

 

 

Edited November 10, 2011 by spinmeright