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charleshughsmith
Positioning Yourself for the Devolution of the Euro
Tuesday, September 20, 2011
Executive Summary
- Expect dramatic downward volatility as the crisis worsens this year, forcing new and more dramatic ‘fixes.’
- What the best options are for capital when seeking to avoid a euro devaluation.
- An interim period of stabilization is likely, as markets digest the impact of these ‘fixes.’
- Further downward movement is then anticipated if fundamental issues aren’t addressed (which they likely won’t be).
- Why timing and vigilance are everything for the attentive investor.
Part I – The Fatal Flaws in the Eurozone and What They Mean for You
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Positioning Yourself for the Devolution of the Euro
One of the clichés of investing is, “There is no bad investment; there is only bad timing.” While we all know there are indeed bad investments, the point about timing is still valid: In certain situations, timing is the difference between a good and bad investment.
The European crisis may well be just such a situation. Until the structural imbalances are truly resolved and not simply papered over for purposes of perception management, then investments denominated in euros will remain at risk.
If the systemic flaws are not resolved, a risky investment (i.e., assets held in euros) could become a disastrous one. If the imbalances are eventually addressed on a structural level, assets denominated in euros or the follow-on currencies may become relatively attractive.
For investors, the key characteristic of the Eurozone crisis is its unpredictability. Anyone claiming there is “zero probability” of a Eurozone breakup is indulging in false precision. Nobody knows what will happen, as the E.U. and the euro are unique experiments without easy historical precedents. All that can be said with any certainty is that toothless reforms, empty compromises, and ballooning bailouts cannot fix structural flaws, and those are essentially all that’s been offered to date.
Despite the unpredictability of the Eurozone’s debt and currency crises, we can sketch out one potential timeline which would suggest an evolving, flexible investment strategy.
Positioning Yourself for the Devolution of the Euro
PREVIEW by charleshughsmithPositioning Yourself for the Devolution of the Euro
Tuesday, September 20, 2011
Executive Summary
- Expect dramatic downward volatility as the crisis worsens this year, forcing new and more dramatic ‘fixes.’
- What the best options are for capital when seeking to avoid a euro devaluation.
- An interim period of stabilization is likely, as markets digest the impact of these ‘fixes.’
- Further downward movement is then anticipated if fundamental issues aren’t addressed (which they likely won’t be).
- Why timing and vigilance are everything for the attentive investor.
Part I – The Fatal Flaws in the Eurozone and What They Mean for You
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Positioning Yourself for the Devolution of the Euro
One of the clichés of investing is, “There is no bad investment; there is only bad timing.” While we all know there are indeed bad investments, the point about timing is still valid: In certain situations, timing is the difference between a good and bad investment.
The European crisis may well be just such a situation. Until the structural imbalances are truly resolved and not simply papered over for purposes of perception management, then investments denominated in euros will remain at risk.
If the systemic flaws are not resolved, a risky investment (i.e., assets held in euros) could become a disastrous one. If the imbalances are eventually addressed on a structural level, assets denominated in euros or the follow-on currencies may become relatively attractive.
For investors, the key characteristic of the Eurozone crisis is its unpredictability. Anyone claiming there is “zero probability” of a Eurozone breakup is indulging in false precision. Nobody knows what will happen, as the E.U. and the euro are unique experiments without easy historical precedents. All that can be said with any certainty is that toothless reforms, empty compromises, and ballooning bailouts cannot fix structural flaws, and those are essentially all that’s been offered to date.
Despite the unpredictability of the Eurozone’s debt and currency crises, we can sketch out one potential timeline which would suggest an evolving, flexible investment strategy.
by
Chris Martenson
Why Commodities are the New Safe Haven
Wednesday, September 7, 2011
Executive Summary
- Prices have already risen dramatically with the money supply.
- An increase in money velocity will ratchet up the trajectory in prices dramatically.
- Are we likely to see more or less moneyprinting from the Fed?
- Why commodities, beyond the precious metals, are becoming the next safe haven.
Part I – Commodities Seem Set to Rocket Higher
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Why Commodities are the New Safe Haven
Condition #3: Preference To Hold Money Persists
What does one do with Money of Zero Maturity (MZM)? Well, you can save it in a money market fund, keep it at your bank, or you can spend it. The rate at which it is being spent, relative to the economy, is measured in terms of its velocity.
The faster people are spending the same money chasing a relatively fixed amount of goods and services, the higher the rate of inflation goes. The mental image you should have here is someone in Germany in the 1920’s being paid with a wheelbarrow full of cash that they push as quickly as they can to the nearest store (literal veloicty of money, as it were).
Right now, the velocity of MZM is near its historic lows (only recently set in 2009), keeping inflationary pressures relatively low — for the time being.
Why Commodities are the New Safe Haven
PREVIEW by Chris MartensonWhy Commodities are the New Safe Haven
Wednesday, September 7, 2011
Executive Summary
- Prices have already risen dramatically with the money supply.
- An increase in money velocity will ratchet up the trajectory in prices dramatically.
- Are we likely to see more or less moneyprinting from the Fed?
- Why commodities, beyond the precious metals, are becoming the next safe haven.
Part I – Commodities Seem Set to Rocket Higher
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Why Commodities are the New Safe Haven
Condition #3: Preference To Hold Money Persists
What does one do with Money of Zero Maturity (MZM)? Well, you can save it in a money market fund, keep it at your bank, or you can spend it. The rate at which it is being spent, relative to the economy, is measured in terms of its velocity.
The faster people are spending the same money chasing a relatively fixed amount of goods and services, the higher the rate of inflation goes. The mental image you should have here is someone in Germany in the 1920’s being paid with a wheelbarrow full of cash that they push as quickly as they can to the nearest store (literal veloicty of money, as it were).
Right now, the velocity of MZM is near its historic lows (only recently set in 2009), keeping inflationary pressures relatively low — for the time being.
by
Chris Martenson
A growing number of individuals believe our economic and societal status quo is defined by unsustainable addiction to cheap oil and ever increasing debt. With that viewpoint, it's hard not to see a hard takedown of our national standard of living in the future. Even harder to answer is: what do you do about it?
Charles Hugh Smith, proprietor of the esteemed weblog OfTwoMinds.com, sees the path to future prosperity in removing capital from the Wall Street machine and investing it into local enterprise within the community in which you live.
"Enterprise is completely possible in an era of declining resource consumption. In other words, just because we have to use less, doesn’t mean that there is no opportunity for investing in enterprise. I think enterprise and investing in fact, are the solution. And if we withdraw our money from Wall Street and put it to use in our own communities, to the benefit of our own income streams, then I think that things happen."
Charles Hugh Smith: Why Local Enterprise Is The Solution
by Chris MartensonA growing number of individuals believe our economic and societal status quo is defined by unsustainable addiction to cheap oil and ever increasing debt. With that viewpoint, it's hard not to see a hard takedown of our national standard of living in the future. Even harder to answer is: what do you do about it?
Charles Hugh Smith, proprietor of the esteemed weblog OfTwoMinds.com, sees the path to future prosperity in removing capital from the Wall Street machine and investing it into local enterprise within the community in which you live.
"Enterprise is completely possible in an era of declining resource consumption. In other words, just because we have to use less, doesn’t mean that there is no opportunity for investing in enterprise. I think enterprise and investing in fact, are the solution. And if we withdraw our money from Wall Street and put it to use in our own communities, to the benefit of our own income streams, then I think that things happen."
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