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Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse
Things are getting downright scary in emerging markets. Just ask Bill Gross:
Gross: Emerging Market currency debacle. Deflationary winds becoming stronger. Risk assets at risk.
— Janus Capital (@JanusCapital) August 6, 2015
Or have a look at this week’s headlines:
- UK rate hike fears recede, emerging markets on edge
- EMERGING MARKETS-Currencies retreat on talk of a Fed rate hike
- Lost Decade in Emerging Markets: Investors Already Halfway There
- Some Greek Lessons for Emerging Markets
- Currencies in Freefall Handcuff Bankers From Chile to Colombia
And on, and on.
One particularly alarming case that we’ve been keen to document lately is that of Brazil which, you’ll recall, is "up shit creek without a paddle" both figuratively and literally. For one thing, as Goldman recently noted, there’s not a single period in over a decade "with a strictly-worse growth-inflation outcome than that of 2Q2015." In other words, "since 1Q2004 there has not been a single quarter in which we had simultaneously higher inflation and lower growth than during 2Q2015."
And here is what that looks like on a scale of 100 to -100 with 100 being "high growth, low inflation" and -100 being "stagflation nightmare":
This helps to explain why CDS spreads have blown out to post-crisis wides.
For those who favor a more qualitative approach to assessing an economy’s prospects, don’t forget that the Brazilian economy recently hit its metaphorical, and literal, bottom when AP reported that, with the Brazil Olympics of 2016 just about 1 year away, "athletes in next year's Summer Olympics here will be swimming and boating in waters so contaminated with human feces that they risk becoming violently ill and unable to compete in the games."
So that’s Brazil, and while not every EM country is coping with the worst stagflation in 11 years while simultaneously trying to explain away rivers of raw sewage to the Olympic Committee, the combination of slumping commodity prices and the threat of an imminent Fed liftoff are wreaking havoc across the space. Consider the following from Bloomberg for instance:
Central bankers in commodity-dependent Andes economies aren’t even considering interest-rate cuts to revive growth, even as prices for oil, copper and other raw materials collapse.
That’s because the deepening price slump is also dragging down currencies in Colombia and Chile -- a swoon that’s fanning inflation and tying policy makers’ hands. Fixed-income traders have now ratcheted up cost-of-living expectations for Colombia and Chile after their tenders sank more than 10 percent in the past three months.
"It’s causing a headache," Luis Oscar Herrera, the chief Andean region economist at BTG Pactual SA, said by telephone from Santiago. "All the Andean countries have headline and core inflation above their target ranges."
In an interview with local newspaper La Tercera published Sunday, Chile central bank President Rodrigo Vergara said rate cuts are completely off the table as the sinking peso fuels price acceleration. That’s even after Chile’s economy shrank 0.07 percent on a seasonally adjusted basis in the first five months of the year, buffeted by the nosedive in copper prices. Chile is the world’s biggest exporter of the metal, which has tumbled 26 percent in the past year.
In other words, central bankers are grappling with slumping export-driven economies and FX-pass through inflation or, more simply, bankers are caught between a "can’t cut to boost the economy" rock and a "can’t hike to tame inflation" hard place.
"Inflation [in Colombia] stood at a monthly 0.19% in July, a print above market consensus (0.11% MoM) and our forecast (0.15% MoM) [which] goes in-line with a materialization of the foreign exchange pass-through to inflation in a month where the COP depreciation against the USD stood at 10.9%," Citi said earlier this week, adding that "the transmission still looks small and this has prompted some analysts to consider that there is a delayed pass-through effect which should materialize in the months ahead." In other words: it’s about to get worse.
More broadly, "developing-nation currencies have fallen to their lowest levels since 1999, and bonds denominated in those currencies have wiped out five years’ worth of gains," Bloomberg notes.
Tying it all together, Morgan Stanley says that Brazil has taken "center stage as the great EM unwind takes hold." In short, "a triple unwind of EM credit, China’s leverage and easy US monetary policy" has tanked the space and although Morgan thinks we may be more than halfway through the cycle, the bank "remains wary of new risks, naturally."
Yes, "naturally," because this is the same Morgan Stanley which just two weeks ago predicted that based on the forward curve, the rebound in crude prices will be so bad as to have no parallel "in analysable history." Needless to say, that doesn’t bode well for commodity currencies and neither does a Fed rate hike. So in this environment, who is most exposed? Morgan Stanley endeavors to explain. Here’s more:
Who’s Most at Risk?
Brazil remains at the centre of the Great EM Unwind. Its salutary but now lukewarm macro adjustment implies a lower risk of a sharp and deep recession that could have turned the second derivative of growth positive sooner. A recession at home when Fed-related volatility shows up could create significant financial volatility.
Turkey and South Africa remain at risk because they have shown very little adjustment. Indonesia’s macro adjustment continues, particularly now, and this should continue to reduce its exposure and vulnerability.
Commodity exporters – particularly Russia and Colombia – remain under pressure, driving fundamentals weaker towards a possible change in their model of growth.
And here's the complete breakdown by risk factor:
But wait, there's more. The bigger picture problem (i.e. looking beyond the current downturn in commodities and the looming Fed hike) for EMs revolves around slumping global trade, a topic we've discussed at length (here, for instance). As WSJ notes, the downturn in trade which many had assumed was merely cyclical, may in fact be structural and endemic:
Central to this emerging-market slump is the unprecedented weakness of world trade, which has now grown by less than global output for the past four years, unique since World War II. Apart from a brief recovery in 2010, global trade volumes since the start of the global financial crisis have fallen well below the levels in the 1990s and early 2000s.
What is more, the boost to the global economy from trade has been weakening: A dollar of trade today delivers less than half the boost to global output that it did between 1986 and 2000, according to the World Bank. For emerging-market economies, which have historically been highly dependent on exports, this presents a major challenge.
Until recently, most investors assumed this slowdown was primarily cyclical and trade would pick up as developed markets in the U.S. and Europe recovered.
But it is now clear that there is also a significant structural element to the weakness in trade, reflecting changes in the global economy.
This structural shift in the pattern of global trade has profound implications for the economic models of many emerging markets. Trade has been one of the main engines of higher living standards. In the past, they could rely on currency devaluations to improve their competitiveness and help pull their economies out of the mire. But this time may be different: There may no longer be the demand for what they produce.
So where does all of this leave us? Well, that remains to be seen, but if we truly are in for a prolonged period of lackluster global demand and depressed trade, we could begin to see a wholesale shift in which the markets formerly known as "emerging" quickly descend into "frontier" status and after that, well, cue the "humanitarian aid" packages.
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Buy the dip?
BTFD OF COURSE!!!........BUYBUYBUY.......stick your head in the noose......they won't pull the lever on you.....heheheheheheh
If its not in the bottom of the lake ...or river..it should be defendable in your posession.
Paper promises from liars are worthless.
RIPS
"Risk assets at risk." Lulz. Thanks cpt. obvious WTF do you think they call them risk assets MFer?
A little late grossy, tyler and his fanboys have been screaming global market meltdown for 6 years now.
You're pretty snotty for a nube poster, but correct.
Lots of stick saves and not the charting types.
http://www.indra.com/8ball/front.html
Evidently, Gross failed to receive Barry's email .... " Everything is Awesome ! "
Buck Farry !
Sitting as I am in an EM (India) I can tell you things are NOT GOOD here.
Every trick they have uesd in the west is now being used here.
Just one example, from Today, Indian Pension funds will be playing the stock markets. They could only invest in fixed income securities till recently.
Of course they are spinning the "potential returns" story, but all is it is setting up another money spigot for a failing model and market...
Like that....
None of this data bodes well for gold. It just doesn't. We are in a deflationary dead-zone. I can see gold dip to less than 300.
>> I can see gold dip to less than 300.
I hope so. I'll certainly be buying it if it does!
But unlike ZH the thing he predicted actually did happen and occurred sooner than he predicted (Bunds short of a lifetime). So the EM meltdown could happen sooner than he thinks.
"There may no longer be the demand for what they produce"
That's all you have to understand from the article.
Safes, lakes, and rivers won't work. Defending yourself is the only option, otherwise...
"Tell me where your gold and silver are or I will beat you over the head with this $5 wrench until you tell me where it is hidden."
With less than 1% of the population owning any substantial amount of precious metals, I think I'll accept the odds of some thug trying to guess who owns gold/silver...and weapons.
Search out the Argentinian story on how their collapse in 2000 played out. My takeaway was that thin gold rings, 10 or 12K were the king of street currencies. Large gold coins are too much gold and can't be used for trade / barter situations. Look into cheap wedding rings as another stash.
The moment you cash in a gold coin to buy something, everyone in a hundred mile radius will know mate :P
Fortunatelly, your Mongolian and Ecuadoran bank balances are secure, as those institutions have been thoroughly vetted by Mr. Simon Black himself.
Safe as houses! Or at least BoA.
This is vicious or a virtuous circle depending on where you sit.
Commodities blow out, which hurts commodity currencies, strengthens USD and blows commodities out further.
Capital flight into USD and into UST is going to take enormous hold for 2015/16.
Just as the Fed looks to exit UST.
The EM's would be in better shape except they bought into the bullshit all the big players have been spewing for years..."You fucked up, you trusted us".....
+100 for Otter Flounder reference
IMO, the EM FX toilet flush will really begin after the Fed puts into effect the rate hike. Dola up, everythinig else down
Peru data point: Sales for us are doing just fine.
Nope. Dollar will have a momentary rise as capital comes here (looks like it could be past tense at this point) and then goes back once the U.S. Markets crack. Sovereigns don't have much US denominated debt, only their citizens/corporates. They won't try to prop up dollar, they are all incentivized to see the dollar fall to take pressure off indebted businesses with USD loans. Given huge balance of payment imbalance the U.S. Has with rest of world, the dollar will collapse
"Buy the dip?"
I got the chips
Dear zero hedge,
neighbor's house is on fire, shit's exploding, three cars are on fire, and two trees nest to my fuckin' truck are endangerd.
I'll comment tomorrow some time. We're a bit busy here.
[edit] Holy fuck! This guy had some serious ammo!!!!
I welcome the Mayhem...bring it.
I'm pro-mayhem.
Mayhem - Elderly, women who live alone, handicapped , children, beautiful young girls and the few good men who try to be heroes will pay the high cost of the mayhem. The men...prison labor or quick death. Do you understand the situation you are in such a hurry for? This is why we maintain infrastructure. To protect them...unless you like stepping over the remnants of the night before, when no one is looking...to see the bruised, bloodied dead bodies on your way to the office.
good insight and it is important to keep these "visuals" in mind going forward.
So, Bill, tell me how you're not going to profit again from this call. Inquiring "investors" want to know.
Why BTFD oc course :)
grab the short end, missed the big move on the long end. flight to a stinking pit soiled shirt...
guess it beats an oily greese rag...
so... where to invest in human aid?? sounds bullish.....
USA AID. Let's deliver some syphilis
It's over boys, The Blessed Virgin Mary has called not one, but two black swans:
http://www.locutions.org/2015/03/6-the-two-economic-events/
http://www.locutions.org/?s=stock+market
If She says anything remotely sounding like, 'short the phonebook', run for the hills!!!!
PFO
Yeah.. And if His Noodliness says "Spare Thine Parmesan"
We're in really hot Pasta sauce!!!
http://www.venganza.org/
Thank God she's not saying " WE'RE ALL OUT OF BEER!!"
'threat of imminent Fed liftoff'? 'unwind of loose US monetary policy'?
whatever, Tylers, this whole shitshow has US funny money at its core and you've just joned the chorus of Wall Street analysts falling over themselves with glee to talk about other people's problems
if I have to read another article about how China is screwed because they save and invested too much (if misdirected), while it's just peachy in America because all we do is consume, my last vestige of sanity may be lost ...
China neither saved, nor "invested" capital. They ran the same 3 card monty debt game as everyone else. The difference is, they don't have reserve currency status. China is fucked because of too much funny money, like the rest of us.
Systemic indeed.
so, am i understand that the fed(merica) is fucking over the world with zirp. makes me think they are doing this intentionally and i also wonder who has had enough of this financial gamemanship and the resulting human tradgedy. we shall find out, cause one of these nations might just take matters into their own hands, just guessin...
Buy USD$$$$$
No.
I buy dollars they weigh one troy ounce,the constitutional dollar.
Where in the hell is Nuland - anyone know?
She's too busy sucking Netanyahu's dick at the moment.
Clinton Foundation.... bullish
Thanks for mentioning The Clinton Foundation.
The Clinton Foundation may not represent the salvation of humanity that we all once hoped, but it sure as hell is a perfect sign of the times... and fucking hilarious too.
"Give money to the Clintons. For a better tomorrow."
btw - something doesn't add up. they are losing 10.9% per month against the usd but inflation there is only 0.19% per month? don't think so.
gross doesn't know shit anymore. ever since he stopped "shaking hands with the gubbermint" [sic] and the fed dealt him out of the inside information game he looks downright dipshitty.
Fitzcarraldo
I'm an old man and not as sharp as I once was - please help me out here.
In Mexico (today) I can get 3.62% on something like a 1 year CD. I'm lucky if my US cash is earning 0.10%.
If the Fed raises rates by 0.25% in Sept. should I move my monies from Mexico to the US ?
Let me take a shot here...
Today, most countries are screwed. Keep some in Mexico (if you are living there), some in US, some elsewhere.
You do not know which bag of yours will be stolen or will be gone. So keeping a little bit everywhere is a decent strategy. And some in gold and some in a home if you have a need to own one.
It is impossible to predict what's coming! Interest rates have become tools for Govts to find band aid solutions before the whole thing collapses. We seen in various countries how Govts raise rates until they collapse or until they implement capital controls.
US has been manipulated as a 'safe have' due to their USD which is in collapse mode. US can NEVER pay back the USD 18 trillion it has borrowed from everyone around the world including its own citizens. All US bankers including ALL CEO's are CROOKS!
How and when will this Ponzi end is anybody's guess!
I believe the end of US ponzi may be nearer than many believe.
I am beginning to believe that a major event may occur next month...so let us see what this Sept brings to us! We have already seen some signs of MASS lay offs, oil and energy sector plunging, now media and biotechs also decllining along with Tech! There will be no safe haven! Least of all in the US.
Multiple locations is the way to go.
If you were sarc....ing, then I apologise for my non humorous response! :)
I really appreciate your posts, you've taught me much and helped me a lot. I followed the advice you shared here earlier this year re: Hong Kong Dollar and I am very happy I did so.
Thank you very, very much.
+1 from a member of the silent masses.
I agree. I really appreciate the people who take the time to post thoughtful responses. Thank you.
Hey both...thanks for the appreciation.
I am glad to make so many friends and share my knowledge at the same time.
We are not going to take the knowledge with us so best is to share it with fellow travelers and spend time to explain a point of view and have a healthy discussion AND make friends!
I still believe that HKD will break the USD peg, but time maybe too soon since CHF just happened in Jan 2015. HKD has seen very slight pressure come off with a small decline in real estate prices and stocks but a very large decline in tourism and retail/luxury good sales lately.
This is a double whammy blow to HK where incomes are declining yet prices remain high. Deposits continue to remain high in HK and stock prices prices as well as real estate is the highest in the world for the masses. This is a politically disastrous recipe and cannot last long. Now with the business going down, people gradually will be unable to afford the inflation, stocks or housing!
I expect HKD peg to be removed which depends on many variables including China's backing and could come along later this year when China's currency is included by the IMF in it's SDR or perhaps next year. However, any major market collapse could accelerate it in Sept too.
This message came from the Chinese Govt to the HK authorities on July 15, 2015:
It is time to peg the HK dollar to the renminbiWorst case we don't lose anything! Best case, we make a decent gain! And diversify at the same time!
+1000, Dubai.
Very unpredictable. For example, what if the South China Sea conflict gets serious? Don't you think Uncle Sam would freeze all those RE assets the Chinese have here? Look how they are squeezing Putin/Russian assets worldwide.
All these crazy things nowadays are not that crazy, but they are almost impossible to predict.
Thanks a lot for your +. I don't believe any nation today can engage with China in an adversarial manner. Because China is THE ONLY country in the WORLD with the ability to buy the BIGGEST company or assets in the world. They typically wait for a Portuguese bank or Turkish bank or a Volvo or Motorola to go bust and then buy. Or they go to Venezuela, Pakistan or Africa when everyone has left and buy resources from them instead of looting or creating enormous costly wars (like US/NATO did with Afghanistan, Iraq, Libya, Ukraine etc).
Wars do not benefit anyone except the aggressor and many a times even the aggresor has a good chance to lose like US has lost in Afghanistan, Iraq or Vietnam or Cuba or now in Iran. Even Romans and Spanish empires went bust due to costly and unnecessary wars.
I highly recommend to watch this speech at a debate in Oxford, London where the speaker who lost the election to Ban Ki Moon for the UN Chief elections in 2006, has held several Cabinet Minister positions in the recent past in India and is a MP in India who spoke eloquently on how British robbed their colonial countries and hence led to Britain's industrlalization while de-industrializing all other countries that led to the rise of Britain through massacres, looting and all sorts of crimes against humanity. https://www.youtube.com/watch?v=f7CW7S0zxv4
I do not believe that US has the gaul to freeze ANYTHING of China. Just imagine, all our computers, iPhones, clothes, furniture, shoes, most things in Wal Mart, half of world's steel and cement i.e. EVERYTHING that we use in our daily lives comes from China. We will lose more or US will lose more than China will ever! Because China barely has 25% and declining holdings of US bonds. China has bought real assets with valid legal contracts. If US freezes even one dollar of assets of China, there will be no war, but China will simply cut them lose.
US will be adrift ,longer than Tom Hanks ever was, for decades to come!
I don't think any of this will occur because this is like MAD - Mutually Assured Destruction and China has a lot less to lose than the US. US cannot handle such an enormous impact on its economy and does not have the capacity to increase its industrial infra or factories at a time when it's economy is in the longest recession ever! All economic data that comes out of US is FAKE and serves only a political purpose.
US has been completely unsuccessful to squeeze Russia, IMO. Because, think, Russians have dramatically reduced their overseas spending, have given above 90% rating to Putin, are not only selling their real estate in London, Dubai, Thailand, NY, Italy, Spain and globally but also NOT buying any more. This has caused damage to London as well as Dubai where top end properties have started declining again (Russians are not the only reason but are having a big impact on luxury goods, Real estate etc globally). And finally, the Russians have been asked to bring their billions back to Russia through carrots like tax amnesty and some nationalistic pride prodding and they have all followed through. and brought billions back into Mother Russia.
Things are crazy, impossible to predict, but there are lot of trends worldwide such as:
1. Rise of China and its rising Middle Class.
2. Opening of Iran and rise of their power supported by their resilience to stand upto America for 35 years!
3. There is also a decline of EU and Japan because of their old population accelerating their decline, with the youth leaving the countries on top.
4. There is a global tough scenario for jobs for youngsters who cannot grow, get promoted or rise regardless of their education. This will cause major unrest like we saw in HK and lately in Athens, previously in NY etc. i.e. everywhere.
5. There is a rise of terrorism worldwide benefiting the MIC and security agencies.
Unfortunately, most are negative trends. The only positive is the rise of China and the survival and very rare growth of people within their own national borders.
In a few years from now, the world will be a lot worse than we have seen in the past few years and this is totally (as I have believed for the last 4-5 years) due to over population and declining resources (be it food, jobs, water, land etc). this is disastrous because this is the first time in history perhaps where we are not fighting each other over land (Roman or Spanish or French empires) and control (like slavery or colonialism) but just for bare survival and basic food and peace!
The saddest part is that no one will be able to control the coming wars where there will be faceless enemies and Govt's will just try to control within their national boundaries causing mass upheavals and movements at a time when we all depend on each other for so much. Good example is the rising polarization in US between rich and the poor as well as between the whites and the people of colour. even in India, there is growing polarization between Hindus and Muslims. In Middle East and Pakistan is between Christians and Muslims.
China is the only nation along with Russia who can seen it coming and have the capacity and determination to control the outcome! Hence, they, both are preparing themselves and are continuosly INSULATING themselves (financially or dependency on exports or imports of any raw materials or finished goods as much as possible). While we depend on them for many things but they don't depend on us for much. Plus, they can handle a crush on their currencies or GDP or empty factories or empty malls and empty buildings unlike any of our Govt's.
Let us compare what has happened in Detroit when it became empty a decade ago with an empty city in China. There is no crisis, no problems, no unrest in China while Detroit is not only bankrupt but the police have warned that we can only enter at our own risk.
This is the consequence of a society which has disintegrated and then the Govt does not have the cash to monitor and control the situation nor the determination or capacity to control the outcome due to lack of resources.
thanks, good stuff. what about claims that there are "thousands" of uprisings and riots by chinese peasants?
When? Where?...any links you have?
Did you know 15,000 farmers commit suicide in India per annum! That is more than 41 per day on an average!
http://www.rt.com/news/261673-india-gmo-cotton-suicides/
indian farmers suicides
I don't believe ANY country can have more distress than India though I am sure there is some pockets of distress in China too.
This is what is going on in China:
China’s Great Uprooting: Moving 250 Million Into CitiesI think Taiwan gets overlooked as a good diversity option. Most think its currency is undesirable, but it has more than held its own against the USD this year. Its economy is largely linked to production in China, but it also has a good ballance of domestic producers as well as a strong consumer economy. It has a high savings rate and one of the best gold-held-per-currency-issued rates in the world. I think it's definately worth 5 or even 10% of someone's hedge. I'm sure it will take a big hit when the SHTF but likely won't fair as badly as most
It is indeed possible to predict what's coming.
Many of us here make hundreds of millions of dollars a year from predicting what you say is impossible.
To predict correctly; what and when it is going to happen is impossible.
Hedge accordingly.
...and we'll need those hundreds of millions of dollars to buy bread...
DubaiBanker - thank you for your thoughtful response.
Yes we are retired in Mexico and own a home here. Perhaps 2/3 of our savings are in the US and 1/3 here.
We have ties to Germany - care to suggest a 3rd location for diversity ?
You are welcome, my dear friend dive!
I know people here on ZH believe China is going to collapse but I will suggest you to buy some Chinese yuan, say 10% or maybe even 20% of your cash. You will earn higher returns. You can use a fund from Mexico, if any are available to invest in money market of China. Ask your bank whether in US or Mexico or enquire from at least 1-2 brokers in US/Mexico. I suggest this one: http://www.bloomberg.com/quote/FULLFIC:KY
But any fund will do till the time it invests, in CNH or even USD but into 'onshore' China. There are a few other options as well. This fund is owned by Govt of Singapore and is ok but even if Singapore fails or gets worse, the assets in the fund are separate from the owner and the state and should not be lost even if Singapore were to go bust!
Germany, you must consider and just leave a decent chunk because unless you leave a decent chunk you may forget it in few years down the road. EUR is very cheap, have you considered buying a small home, it will cost EUR 50k to EUR 100k for an apartment in South of Spain? You may use it to rent or just leave the money parked in it. Chances are south of Spain will recover in few years from now and you can use it as a vacation home when you visit Germany. If you dont wish to buy a property then please ignore this idea. I believe Spain will do very well especially in real estate and especially in south of Spain partly due to growth and partly due to the weak EUR and partly due to massive tourism there in the summers etc.
I can further suggest to have an account in Singapore or HK. Again, like Germany you shall have to leave a decent chunk else you may forget it in a few years down the road.
Living in Mexico and US, you may also check out a Canadian bank in Toronto or anywhere in Canada which will be helpful. But do use a large one, Top 5 and prefer the RBC because they are the most 'international' of them all and the largest in Canada.
I do not expect you to consider all of the above. But do choose whichever one suits you best and at least do one to start with and take it from there.
If you need any help in Canada or Singapore do let me know. In Germany, can help but you must know someone there or best is to visit....Avoid Deutsche if you can...rest are all ok.
If you are a US citizen, you will have troubles opening an account everywhere because of this silly FATCA law that has been created by the US Govt to direct all Swiss illegal money straight back to the US. It may last another few years but the consequences are that almost no bank outside the continental US will be happy to open your account. In that case, Canada may be the only option and perhaps you can use some German address proof to also open in Germany!
Also, keep as much money as possible in USD (until you see USD declining or the whole world collapsing, dont believe anyone unless it actually happens and is in the front page news) or CNH and convert into MXN only when necessary. They should continue to weaken. HKD is also great but unless you have online accounts, it may not be possible with most North American and Latin American banks.
Hope this helps, Adios, Amigos! Until next time...
Wow ! I'm going to need to re-read your response a few more times.
It is responses such as your's that I started reading ZH yearr's ago.
Thanks again.
I think much of what Mr. Banker suggests is basically common wisdom from ordinary times. Diversify, et al.
But here are some additional factors for you to keep in mind.
1) Would I trust this guy (bank, government, country, whatever) with my wallet while I was out of town?
2) How fast can I get my assets out of their clutches and into something far, far away. If the answer is more than a few nano-seconds, you need to reassess the safety of the investment.
3) Don't sleep on your investments. Nobody else cares whether you get wiped out or not. You have to watch your money like a hawk and yank it at the very first whiff of trouble, no matter how much profit you may be foregoing.
I'm not a big Confucius guy, but here is one that has always stayed with me:
"Confucius say: A wise man is prepared to abandon his luggage once or twice in a lifetime."
Don't walk the plank through inattention or greed.
foolish man give wife grand piano. wise man give wife upright organ
The phallic references are... extensive. ;-)
What's better than a rose on a piano? Tulips on an organ.
man who run in front of car get tired
man who run behind car get exhausted
man who walk sideways through turnstile at airport go to bangkok
One problem I had with foreign banks, when I had a GF from outside of the USA a long time ago, is currency exchanges can be a killer when I exchanged USD to the currency to her country, and vice versa when she came here.
Thus, if one has a favorable rate in a CD in country X, when it is converted to USD, the gains made on the CD may be totally wiped out, and more.
Tarabel, Common sense is the most uncommon thing in this world.
It has become more uncommon ever since the media was taken over by the same class that rules all of us.
It is not just about diversifying but also about mentioning the specific countries, that in my opinion, are relatively better off. I provided a specific answer to a specific question based on individual circumstances of dive.
on a friday afternoon the president of mexico stated to the press, that they were not going to devalue the mexican peso. they devalued that weekend, and by the time it stabilized it was 10 to 1. no dollars could be withdrawn from accounts held by americans. my grandfather was the proud owner of lots of pesos then, but they were paying a good rate of interest.
Thank you for an inteligent and articulate post.
Spain is a nice country, but I doubt it will recover as long as it is in the euro.
Hi Shodge,
I am referring specifically to South of Spain, Costa Del Sol area only in Malaga.
Spain has many advantages:
1. It is the only European country with a natural language advantage unlike no other in EU with Latin America as well as Philippines. This is the reaosn that the Santander bank from Spain is the largest bank by market cap today in EU.
2. Tourism is booming and Spain has last year replaced France as the No 2 destinaton in the world. This has happened first time in history to my knowledge that France has dropped and Spain has risen.
3. Hotels are showing up with new investments across Spain. Abu Dhabi invested billion euros in Real Madrid while China invested billion in Atletico Madrid. Ford invested over USD 2.6 billion in Spain as well. Even the Spanish owner of Zara used the option to buy 2 buildings in Madrid that he had been renting for many years. A Chinese bought a top Madrid building for USD 300m last month.
4. Exports of Spain are rising rapidly.
5. 61,000 foreigners bought property in Spain last year and activity has risen for the first time to above pre crisis levels.
6. Plus the weak EUR is helping them attract more money than ever before. Most Global Private Equity players have invested billions in the last few years purely into Spain, and nowhere else in EU. This is secretive news so they won't like me mentioning here! :)
I believe the above cannot be said of any other nation in EU.
Hence, my belief, that South of Spain will do well over the next few years.....
"The Next Financial Crash. “The Writing is on the Wall”. Don’t Say “You Weren’t Warned"
"It was said after the last financial crash that “no one could’ve seen it coming”. This was not so back then and is not so today.
If you were looking for the truth in 2007, the average investor had ample warning from many sources warning of what was to come.
The warnings are now much louder, far easier to hear and coming from some mainstream and even “official sources”. Are you listening?
After the biggest financial and social crash in history occurs, “they” will say you were warned! Who are “they” and how exactly were we warned? For several years and in particular the last 12 months, the IMF (International Monetary Fund) and the BIS (Bank for International Settlements) have been issuing warning after warning. They have truly warned us as I will show you. Do I believe they did this out of the goodness of their hearts? No, I believe it has been in “c.y.a” fashion followed by their laughter because the sheep have and will sleep through it all until it’s too late."
http://www.globalresearch.ca/the-next-financial-crash-the-writing-is-on-...
There is no where to run with a central bank that has dealt with the US fed.
The situation is much like McDonalds franchises, the US has also exported the exact same model of monetary policy and banking the same way for 100+ years. Exactly the same organisation. Exactly the same processes. Exactly the same method of capital management. And not unlike McDonalds, all of those central banks are networked tightly together using USD as the worthless paper bridge to manage a hegemonic trade between their 'partners' across the globe. All of them sharing the same fatal flaw, USD. A fiat currency managed with the same care as a ponzi scheme. People might as well be trading bags of gravel and pocket lint to maintain an economy for the value any of it has been engineered to have.
At this point there just isn't anywhere to run in the scenario that the USD revalues to 0. This also includes any future price action regarding gold or silver. All PM's have been so broken by the same central banking regime in order to avoid providing metrics or insight to real inflation/economic distribution. They have been rendered worthless as a store of value, or as currency in any central banking collapse situation. Not even land, unless a person is personally tending it, is worth much in that case scenario.
The fact is by the spread of all central banks worldwide, they are all tied together by the same toxic fabric and manage all the credit that is produced centrally. Once the largest of them falls by it's own terrible mismanagement. It will, not might, will crush every other fiat currency under it by the way it's all been designed. In the next steps coming forward, all the old dynasties will be crushed in a single swat with the power of math and the jerry built piece of shit banking beast that was sloppily constructed as poor test.
For everyone that works for a living, it is very important that people understand how to tighten their belts, have a sense of humour and understand how their local regions operate along with their strengths. Consider the idea that once financial credit is gone, the only value left is merit to make serious financial decisions that need materials/labour/time will shape how any future projects happen going forward.
The biggest change will obviously be the war machine. Without money, they don't run. It is more than likely without credit, all those swords will be beat into plough shares once it becomes obvious where the gaps are in productive distribution and the fact that the oil universe runs on credit...and food. Better move faster, I doubt anyone's bullets or nukes will dodge the starvation that happens once it shits the bed.
besides that interest rate do they give any narco gifts when you buy the cd?
Be mindful of foreign exchange rate risk during the term of the CD... in order for you to get that CD, you'll have to convert USDs to Pesos at today's exchange rate. If, at the end of the CD term, the Peso has fallen more against the USD than you earned in interest, you will get back less USDs when you exchange it back.
Thank you. We buy our Mexican 'CD's with Pesos. I am very mindful of the exchange rate when we move our dollars to Pesos (and we have gotten 'killed' recently). Our goal was to have enough Pesos to live on the rest of our lives - and a charity gets the dollars left in the US upon our demise. Hopefuly we will spend down our pesos rather than ever have to convert them back to dollars.
no. do your homework and figure out where your money will be SAFE. it is not clear if money in US banks will be safe - if there is another banking crisis in the USA. i am NOT saying this will happen. But you have to believe that they have plans to handle all possibl outcomes, if it does occur. Don't get yourself into a situation like the people in Greece. Your primary concern should be the safety of your money. I'm not sure that Mexico is the safest location either. Check other places as well - offshore banks. Keep most of your money in a very safe location, where the ONLY person who can get their hands on it - is you. and then if you want to chase higher interest rates, set aside some money ... and do some research. good luck.
I know zip about the Mexican peso or economy. From where I stand, you'd be better off looking at a bank deposit in Australia or NZ, which pay comparable rates, are indeed available to non-residents, and are probably less likely to blow up in your face that a Mexican bank deposit. The AUD (and NZD) may have further to fall against the USD, but longer term, I personally rather hold AUD than Pesos. YMMV.
"if I have to read another article about...yada yada yada"
Then don't read it. Who's twisting your arm?
Did you know two thirds of the people who actually PICK who is on the Federal Reserve board are the CEOs of BANKs?
Yes, thats right!!! Guys like Jamie Dimon and Lloyd Blankfein are the people who actually pick who will be on the Federal Reserve board.
They are benevolent people, interested only in YOUR welfare.
Did u know that the Fed is a consortium of "Private Bankz?"
- Ned
Well, I always did want to go to Brazil on vacation!
ummmmm, hate to state the obvious but is there a better time to drop your link to US$?
Where is that AIIB and BRIICS Bank facility? And come on now, China may have overinvested in its' vacant cities but is that not better than, as comparison to US, overinvesting in Lloyd and Jamie's Salary and Bonus via the Off Bal Sht BS?
Who do YOU think will laugh last?
Imagery.
All of these problems are occurring because international banking conditions placed on global lending and trade. You are never going to resolve these issues until Third-World countries can have direct ownership of their productive capacity and cycle the profits back into the local population and restore the real economy.
If I correctly interpret Michael Hudson's Trade, Development and Foreign Debt, then these problems result when transnational corporation own the productive export facilities in Third World countries and when the profits do not cycle back into the incomes of the local population, but most are transferred out of the country for investments of the transnational corporations. Local productive expansion never happens because the feed back loop of profits back into the local economy never happens. The need for importing raw commodities falls off a cliff because of these structural systems forced on third world countries by international bank conditionalities. Local farming is crushed by conditionalites placed on the countries by international banks as International Agribusiness undercuts local prices through the benefit of farm subsidies in the US and other western countries, which runs local farms out of business and consequently the local farming economy collapses. So countries once able to feed themselves are structured into one fruit or vegetable mono-cultures for export by Agribusiness corporation. Farmers end up working for the corporations that export these mono-cultures and when that crop fails the population eats mud cakes.
EXCELLENT Point! Here is one examle.
International Paper has plants all over Brazil. They buy wood (from eucalyptus trees) and tun it into high-quality paper. This paper product feeds the laser printers that operate all over the world. But WHAT does Brazil get for this? Nothing but the basic price for their wood. Thre's no feedback that "feeds the value" of the business operation back into the country that produces the commodity.
ISSUES like this are why "third world countries" are struggling to pay their debts. The first world sytem just milks them of their resources, and then feeds them debt.
I don't think that IP has repatriated local profits to the US.
Ideally it should be used for local diversification or improved efficiencies if the capitol can't come home with out a scalping, never mind a government haircut.
The facts are unknowable.
Brazil needs to jack up the price of wood.
If IP does not buy at the appointed price, the Brazilians can lock up the IP bosses!
Exactly as i see it Atticus. The globalization of production and sales wiped out the local markets. It destroyed any healthy integration of material supplies, refining and finishing in local economies.
Of course, we can add in the constant blood-letting of using a debt currency. It will always suck the blood of production, feeding the banks and their master.
No! No! No!
The BRICS bank and the AIIB will solve this problem.
/sarc
Glaringly missing. Argentine Peso, Bolivian Boliviano
I watch the blue market rate. Was 10 peso/USD last New year; now it is 15 peso/USD.
I might go back this year. Flights should be cheaper.
Was there 2 months ago. Even with blue market rates things weren't all that cheap. Much better in Bolivia
What us the VAT Tax?
nothing like the feeling of holding a nice fancy sheet of paper stating you own %X in company Y, a nice pie chart showing your spread in mutual funds, government bonds and real estate in some slightly worse than north Korea fucktard of an "emerging country" that just shat its pants...
exit the madhouse if you have any hint of sanity left..... acquire some Bullion .. stack and relax...go back in when the dust settles
www.teamramgold.com
We are all in for one hell of a shock my friends, we are all about to see a system that has fucked us over for the entire lifespan of every fucker posting here, collapse.
The wankers who think they can sit and collect interest on the back of your hard work are going to find owt what the value of your collective labour really means, including theirs. Lets just see if the rent seeking fucking parasites can do something with a positive return, rather than living off of the productive folk who make this fantastic rock we call home tick.
I would wish you lot luck, but as I think you know, you dont need it, you lot will be alrite, and thats just the way it is.
Think on GCHQ, tell B.Liar when his security detail have to fend for their own, so does he, and Inthemix is watching, waiting, looking for the point this cunt 'Will' repent. No one here gets owt alive, including him, and including you cunts protecting him. And more to the point, neither do I.
Lets go have some fun my ZH friends, this 'Is' the moment we have been waiting for...
Lets give these cunts some war
;-)
Cheers Mate!
In the Mix, gotta love an intelligently indignant englishman use his "mother" tongue to such good, lashing effect....
Nice rant 96, as usual. Keep em comin'.
Click [here] to see me watching it on the teevee.
Buy WHAT dip? I haven't actually seen one yet.
Its the writing on the wall.
If the commodity to WS stocks divergence; in great part fueled by the Chinese slowdown and INSPITE of the cheap oil price that should help China rise if there weren't the shadow bank hangover; means that Saud's Oil plays jeopardising the shale finance/RE market chain of America/Canada/UK/Australia anglo combine, will now shake the FED experiment to its foundations...
As something has to give. Both UK/FED find it difficult to raise interest rates and so the USD spike is gonna be the only refuge in Oligarchy town. EM currencies will take the brunt.Their export markets now weak their imports more expensive from DC. Their debt/gdp getting worse.
Germany has its hands full trying to stop eurocontagion. Iran will start pumping making commodities stay low.
No way that the WS asset pump won't cavitate...
"...central bankers are grappling with slumping export-driven economies and FX-pass through inflation or, more simply, bankers are caught between a "can’t cut to boost the economy" rock and a "can’t hike to tame inflation" hard place."
Then why don't they just abolish themselves and let THE FREE MARKET set the price of money...
Free markets don't work. Just ask any Keynesian, and NeoClassical. We need central banks and government to guide economies to be export, or consumption driven, because free markets don't know what to do.
Markets aren't free. That's the problem. Competition is bad for business. Mega-corporations have known that for years, since before Teddy Roosevelt.
Nothing is free.
IOW, Gross is talking his book in the hopes that you will take his trade which is the EXACT OPPOSITE of what he is doing. Criminals like him and Jim Rogers do this---they build up the trust of target groups, allow the trade to move your way awhile, and then BOOM---you lose, then lose, then lose. Rogers did it with Gold, China, and now Russia---Gross is doing the same.
People, don't fall for these criminals in upside-down land. You know the markets are hopelessly rigged, but that should never imply that the top lieutenants in the crime syndicate like Rogers and Gross will not do their part to molest every dime out of you. They have a huge incentive and are paid well to deceive you.
And for those that will come out defending that criminal liar Rogers like you have so many times in the past----think about it! He told you in no uncertain terms to buy Gold, China, and Russia AT THE TOP---now says they are bad investments. What part of deceptive liar do you not get?
IT IS TIME TO SHUT THE MARKET OUT---FORGET ABOUT IT. The markets are hopeless rigged against you. Sure, there will always be the lucky subset that they allow to get lucky so as to try and perpetuate the lie, but the whole system is scientifically designed to steal your wealth. The sad part: you enable it by listening to deceptive liars like Gross and Rogers---STOP! Will it change anything globally? No, but you will be a lot more sane and at least might be able to deprive horrible people like Rogers and Gross from stealing the wealth of people who just wanted to live the dream. Most of you do not comprehend what it means to want to steal money from other for control and power. I suspect most of you just wanted a good education for your children and a dignified retirement. People like Gross and Rogers prey on you. They know you know how to read a balance sheet and understand basic economics. They also now that markets do not adhere to any rules other than those written by the crime syndicate.
Wake up and tune out! Nothing will change either way---but you may find that at least if they steal everything else they cannot steal your dignity. Thugs like Rogers moved to China so that he would not have to face the people he know he was screwing. While Gross’s decisions may differ in specificity, they do not differ in overall malice.
In short, it may be difficult for some of you to really grasp just how dystopian and evil our system has become; you say you get it but then you write or support articles form thugs like Rogers and Gross who ultimately are just straw men designed to earn your trust so the crime syndicate can further rape you. Look at Rogers record---not what he says he did---what he SAYS---from the 1990’s on CNBC to date Rogers, like Prechter and the other criminals that portend to be looking out for you are the absolute WORST PEOPLE to listen to and if you insist on trading do the opposite – at least then you have a chance of making money!
Don't BTFD when governments will have bondholders hold bonds until maturity or possibly longer. It would be unpatriotic to "short sale bonds before maturity" in the illogical minds of statists. Liquidity is drying like California's water supply.
When you see the neighbor trying to sell his SUV for peanut butter will you feed his children or sit there with your case of ammo and not end it for them
easy; feed his children! We've got plenty of beans and rice - and wheat and corn are actual chickenfeed.
The Global Bankers must be shitting their pants right about now. They must realize there is nowhere on the planet they can hide out. A wall big enough to hide behind has never been built. Maybe Antarctica?
You mean to tell me they don't know how to BTFD?
Dear Dr. Paul Krugman: Didn't John Maynard Keynes once write:
...there would bo longer be a pressing motive why one country need force its wares on another or repulse the offerings of its neighbour, not because this was necessary to enable it to pay for what it wished to purchase, but with the express object of upsetting the equalibrium of payments so as to develop a balance of trade in its own favour. International trade would cease to be what it is, namely, a desperate expedient to maintain employment at home by forcing sales on foreign markets and restricting purchases, which if successful, will merely shift the problem of unemployment to the neighbour which is worsed in the struggle of goods and services in conditions of mutual advantage (see Keynes, General Theory - Conclusion).
But you and your compatriots have found another answer: promise a rate hike while printing more money! Ehh - epic fail!
This is exactly what the Americans want. Last man standing after they subjugate everyone else. Their dollar is their weapon of choice these days. Who needs nukes and tanks, but they have those just in case. They take those survivor shows maybe a little bit too seriously.
what they need is FEDIan vix slap sorry slam so that we gonna have new highs
Don’t forget to include Japan in the discussion. Not only has Japan had 2 “lost” decades of economic growth, it is now seeing the results of Abenomics- a flat out financial disaster. In addition, Japan is faced with the Fukushima-Daiichi nuclear disaster, the disaster that keeps on giving. The clean up costs for this mess will run into hundreds of billions of $$ and take a decade or more to complete. It appears that Abe is hoping that the Fukushima disaster will magically disappear. He is also attempting to obfuscate these pressing domestic problems, with bellicose proclamations directed at China. Japan is economically finished.
All the financial/political shit aside, any Olympian that gets off the plane to swim or row in shit gets what they've earned.
All Olympians should go on strike until better working conditions exist.