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Alvaro Spain
10-21-09, 04:33 AM
Hello everybody,

I apologize if this post is placed in the wrong forum or if something similar has been already posted somewhere. My request is something, I think, that many european subscribers would be interested in knowing.

In my case I know itulip.com since 1998. I am a spaniard, and I owned an internet company at that time, and Eric Janszen voice was the only one that reflected my own viewpoints (terrible overvaluation of the internet concept). So I was lucky enough to sell my company in 1999, in a cash only transaction.

I keep most of the money that I received then, and have been placing it on short term treasuries, because I didn't like the stock market bubble and the housing bubble that we also had in Spain. Now things are getting clearer (even if they are bad and can become worse) and I would like to invest my money.

I have the highest confidence and respect in EJ viewpoints. My problem is, I am just a computer programmer, I don't know almost nothing about economy, and I live in Europe. If I lived in the US, I would have invested in gold, as EJ has recommened, but I haven't done so because gold rises mostly against the dollar and I don't really know what can happen against the euro.

So what I would like, and I believe that many europeans subscribers here would also like, is an opinion about what would be a good investment in euros. Energy? Emergent markets? Commodities? What? I don't have the slighest notion of economy, but I have common sense, and perhaps this will be enough to understand the investment. Could EJ tell something to his european followers?

Many thanks,

Alvaro

jk
10-21-09, 06:39 AM
although gold has been rising more against dollars than euros, i think you should still consider having a significant allocation to it.

the question you need to ask yourself is whether the ecb can continue to take a hard line in the face of growing difficulties in spain, greece, and so on, and in the face of the rising euro pricing out european export-oriented industries, witness recent complaints coming from france. if you believe the dollar must go down in value, measured against- say- commodities, then ask yourself whether the euro can continue to rise to a similar degree, squeezing european exports more and more.

if the dollar must decline, and the euro is manipulated in some way to protect european industry, that means the euro will decline against commodities as well. so i would say gold and other commodities are the only store of value.

as a thought experiment: would you recommend than an american just put all his assets into euros as a way to protect himself? why not? also why isn't janszen's recommended allocations just 100% in euros?

finally, i would add that paper currencies are first, and foremost, paper. the ecb will eventually be forced to soften its support.

Diarmuid
10-21-09, 07:24 AM
although gold has been rising more against dollars than euros, i think you should still consider having a significant allocation to it.

the question you need to ask yourself is whether the ecb can continue to take a hard line in the face of growing difficulties in spain, greece, and so on, and in the face of the rising euro pricing out european export-oriented industries, witness recent complaints coming from France. if you believe the dollar must go down in value, measured against- say- commodities, then ask yourself whether the euro can continue to rise to a similar degree, squeezing European exports more and more.



From the telegraph - I am sure you are not looking for mainstream analysis but maybe something useful in there for you - I agree though, would not be surprised to see some form of QE from the ECB in the near future; if the dollar continues its decline.



Euro at $1.50 is 'disaster' for Europe

France has given its clearest indication to date that the surging euro is a threat to Europe's fragile recovery and will not be tolerated for much longer.



<!-- Make sure there is no whitespoace at the end of the bline --> By Ambrose Evans-Pritchard (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/)
Published: 8:20PM BST 20 Oct 2009
Comments 39 (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6389779/Euro-at-1.50-is-disaster--for-Europe.html#comments) | Comment on this article (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6389779/Euro-at-1.50-is-disaster--for-Europe.html#postComment)

http://i.telegraph.co.uk/telegraph/multimedia/archive/01506/EuroBurn_1506214f.jpg Money to burn: France has said the increasing value of the euro is threatening the economic recovery on the Continent Photo: PA


"The euro at $1.50 is a disaster for the European economy and industry," said Henri Guaino, right-hand man of President Nicolas Sarkozy.
The currency has risen 15pc in trade-weighted terms since March, equivalent to six quarter of a percentage-point rises in interest rates. It briefly flirted with $1.50 against the dollar on Tuesday before falling back on intervention fears.
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What concerns European policymakers most is the lockstep rise against China's yuan. Beijing has clamped the yuan firmly to the weak dollar for over a year, quietly benefiting from the export advantages. It accumulated $68bn (£41bn) in reserves in September alone as a side-effect of holding down the currency. Fresh reserves are mostly being invested in eurozone bonds, pushing the euro higher.
French finance minister Christine Lagarde said it was intolerable that Europe should "pay the price" for a dysfunctional link between the US and China. "We want a strong dollar, and we have reiterated it again in the strongest manner," she said after this week's Eurogroup meeting. China's trade surplus with the EU reached €169bn (£154bn) last year.
Europe and Japan are now the last two blocs standing as everybody else lets their currencies fall, or takes active measures to hold down the exchange rate -- with "beggar-thy-neighbour" echoes of the 1930s.
Brazil has become the latest country to intervene, resorting to controls to cap the real after its 42pc rise against the dollar since March. It is imposing a 2pc tax on flows into bond and equity markets. Finance minister Guido Mantega said the move was to head off an asset bubble. Critics called it a "desperate move" that would distort markets.
Hans Redeker, currency chief at BNP Paribas, said the strong real is "eating away" at Brazil's manufacturing base. "They are not willing to take any more of the adjustment burden as long as China and other surplus countries do nothing," he said.
Switzerland is openly intervening to hold down the franc in order to stave off deflation. Canada and New Zealand have talked down their currencies. Britain and Sweden have opted for stealth devaluations.
Korea, Thailand, Taiwan, the Philippines, Indonesia and Russia have all been buying dollars to stem their currencies' rises. The effect is to perpetuate the imbalances that led to the credit bubble from 2004-2007 and ultimately caused the financial crisis. Reserve accumulation fuels asset booms because it creates a wash of liquidity and drives down global bond yields. Asia clearly needs to sharply revalue against the West to right the system.
Professor Michel Aglietta from Paris University says the euro is 40pc above its purchasing parity of level $1.07 (a low estimate), citing it as the reason why Peugeot and Renault have shifted annual production of one million cars to Eastern Europe since 2004.
Airbus is moving plants offshore, building A320 jets in China. It is relying heavily on US contractors for its A350 jet. Fabrice Bregier, Airbus chief financial officer, said the current exchange rate is "becoming very difficult for all industrial companies which have their costs in euros. We can only appeal to monetary authorities to see to it that there is stability in exchange rates."
The European Central Bank could take some of the steam out of the euro by signalling a less hawkish policy. It may be pressured into doing so. EU ministers have the final say on exchange rate under Maastricht, though they have never used this power – publicly.
What is missing is a unified front of EU governments. Italy has been remarkably quiescent, given its export slide. Germany has a higher pain threshold for a strong currency after gaining competitiveness by squeezing wages. But there are limits even in Berlin. The IWK institute says the danger point for German exporters is $1.45.
Jean-Claude Trichet, ECB president, has stepped up his rhetoric against "disorderly" currency moves, warning that authorities on "both sides of the Atlantic" were monitoring the markets. He made an unscheduled appearance on Monday to drive home the point. The body language is changing.

jpatter666
10-21-09, 08:07 AM
From the telegraph - I am sure you are not looking for mainstream analysis but maybe something useful in there for you - I agree though, would not be surprised to see some form of QE from the ECB in the near future; if the dollar continues its decline.


Given that many East European country loans are in Euros and one of EJ's stock crash scenarios was a East European default, I wonder how this is affecting them. Anyone have any insights?

FrankL
10-21-09, 09:47 AM
Given that many East European country loans are in Euros and one of EJ's stock crash scenarios was a East European default, I wonder how this is affecting them. Anyone have any insights?

Latvia is currently on the verge of a currency devaluation, as it's economy is contracting like mad due to their euro peg. Michael Hudson has some interesting comments on the situation, as he's giving advice to the Latvian government how to deal with the Swedish banks that have provided loads of loans to Latvia in euros. See interviews with him e.g. on Max Keiser (http://maxkeiser.com/2009/10/17/ote23-on-the-edge-with-max-keiser-and-michael-hudson/#more-3306)

No idea about the other Baltic states and countries like Ukraine, which apparently are also on the verge of bankruptcy.

Jay
10-21-09, 10:09 AM
finally, i would add that paper currencies are first, and foremost, paper. the ecb will eventually be forced to soften its support.
No, they are electrons first and foremost! ;)

Everyone will be forced to QE at some point. Down the rabbit hole!

xela
10-21-09, 11:17 AM
Gold in Euro since 1999 (buy and holds don't get much better then this):
http://gold.approximity.com/since1999/Gold_EUR.html

GRG55
10-21-09, 09:02 PM
although gold has been rising more against dollars than euros, i think you should still consider having a significant allocation to it.

the question you need to ask yourself is whether the ecb can continue to take a hard line in the face of growing difficulties in spain, greece, and so on, and in the face of the rising euro pricing out european export-oriented industries, witness recent complaints coming from france. if you believe the dollar must go down in value, measured against- say- commodities, then ask yourself whether the euro can continue to rise to a similar degree, squeezing european exports more and more.

if the dollar must decline, and the euro is manipulated in some way to protect european industry, that means the euro will decline against commodities as well. so i would say gold and other commodities are the only store of value.

as a thought experiment: would you recommend than an american just put all his assets into euros as a way to protect himself? why not? also why isn't janszen's recommended allocations just 100% in euros?

finally, i would add that paper currencies are first, and foremost, paper. the ecb will eventually be forced to soften its support.

Germany exerts significant influence over the ECB, particularly the comparatively "hard line" anti-inflation stance. However, Germany's export oriented economy is imploding, thanks in part to the Euro exchange rate, so it would not surprise if Germany itself backs off from its previous strong anti-inflation stance...and the ECB accelerates the process of devaluing the Euro.

touchring
11-03-09, 02:55 PM
Germany exerts significant influence over the ECB, particularly the comparatively "hard line" anti-inflation stance. However, Germany's export oriented economy is imploding, thanks in part to the Euro exchange rate, so it would not surprise if Germany itself backs off from its previous strong anti-inflation stance...and the ECB accelerates the process of devaluing the Euro.


Can the europeans devalue as fast as the chinese? The Chinese can devalue better than anyone else, 1 million "riot control police" (they call them military police in China and unlike their counterparts in the West, they are armed with assault rifles and machineguns) on standby and ready to squash the rebellions if people take to the streets.

We've seen it happened in Xinjiang and Tibet.

Alvaro Spain
11-03-09, 03:48 PM
Many thanks to everybody who replied,

After some thought, I decided to invest 10% of my liquid money in gold, last week, and I am now glad that I did. The rest stays, for now, in short term treasuries. I am waiting at the study about Peak Oil to take further decisions.

Diarmuid spoke about the growing problems in Spain, Greece, etc. At the risk of sounding stupid, I believe that current spanish government doesn't care too much about those problems, caring instead about how stay in power, mainly manipulating the population (for example they are rising taxes (on capital returns and VAT) next year because "the rich people must pay for the damages"). I am not sure either if the other important political party in Spain would care about our economic and macroeconomic problems.

Because Europe is not a single country, but a collection of quite different countries, it might be possible that other mediterranean countries would also be pursuing a similar "strategy" to ours. The sum of all there "strategies" could be difficult to understand, and appear disfunctional. On the other hand, I consider France and Germany to be serious countries. Who knows what could happen?

Alvaro

ocelotl
11-04-09, 08:54 PM
Estimado Alvaro.

Es bueno saber que dentro de la Península hay gente que se preocupa de la situación actual al punto de informarse sobre las repercusiones globales de esta y actuar en consecuencia. Como bien sabe aquí se ha discutido acerca de las estrategias de manejo económico que se han tomado y sus implicaciones en el futuro. El liberarse de la intervención y los malos manejos por parte de los gobiernos resulta conveniente en prácticamente cualquier momento.

Muchos comentaristas de medios ensalzan las prácticas actuales que han dado la apariencia de que se ha salido en muchos casos de la recesión, pero esto al momento puede sonar tan solo como una ilusión. Las consecuencias del libertinaje monetario que se ha desatado en muchas de las principales economías del planeta aún no se han presentado, y estamos viendo los primeros signos de esto.

Como se ha dicho extensamente en este sitio, el problema estriba en la ficción económica de los artilugios financieros que han inflado artificialmente la economía en muchas áreas y que no responde a un verdadero crecimiento económico en los diversos países en que esto se presenta.

Estamos, como ya bien sabe, entrando desde hace un año a uno de los periodos críticos de la historia de nuestro planeta, y de lo que pase en los próximos 3 a 5 años depende el futuro de la humanidad como la conocemos.

En mi caso, hace ya un par de años tomé la decisión de hacer un traspaso de ahorros importante a metales e inversiones productivas, aún después de que desde que trabajo siempre he ahorrado una parte en plata, lo cual, dado la historia de la moneda acá en el viejo Anahuac, resulta siempre benéfico y conveniente.

Esperamos seguir leyendo sus contribuciones por acá. Saludos.

Jay
11-04-09, 08:58 PM
The one time I miss Lukester is to translate.


Estimado Alvaro.

Es bueno saber que dentro de la Península hay gente que se preocupa de la situación actual al punto de informarse sobre las repercusiones globales de esta y actuar en consecuencia. Como bien sabe aquí se ha discutido acerca de las estrategias de manejo económico que se han tomado y sus implicaciones en el futuro. El liberarse de la intervención y los malos manejos por parte de los gobiernos resulta conveniente en prácticamente cualquier momento.

Muchos comentaristas de medios ensalzan las prácticas actuales que han dado la apariencia de que se ha salido en muchos casos de la recesión, pero esto al momento puede sonar tan solo como una ilusión. Las consecuencias del libertinaje monetario que se ha desatado en muchas de las principales economías del planeta aún no se han presentado, y estamos viendo los primeros signos de esto.

Como se ha dicho extensamente en este sitio, el problema estriba en la ficción económica de los artilugios financieros que han inflado artificialmente la economía en muchas áreas y que no responde a un verdadero crecimiento económico en los diversos países en que esto se presenta.

Estamos, como ya bien sabe, entrando desde hace un año a uno de los periodos críticos de la historia de nuestro planeta, y de lo que pase en los próximos 3 a 5 años depende el futuro de la humanidad como la conocemos.

En mi caso, hace ya un par de años tomé la decisión de hacer un traspaso de ahorros importante a metales e inversiones productivas, aún después de que desde que trabajo siempre he ahorrado una parte en plata, lo cual, dado la historia de la moneda acá en el viejo Anahuac, resulta siempre benéfico y conveniente.

Esperamos seguir leyendo sus contribuciones por acá. Saludos.

*T*
11-05-09, 05:34 AM
Translation via google:

Dear Alvaro.

It's good to know that within the peninsula there are people who are worried about the current situation to point out about the global impact of this and act accordingly. As you know has been discussed here about economic management strategies that have been taken and their implications for the future. The release of the intervention and mismanagement on the part of governments is desirable in virtually any time.

Many media commentators extol the current practices that have given the appearance that has often emerged from recession, but that the time might sound like just an illusion. The consequences of monetary debauchery has been unleashed in many major economies of the planet have not yet been submitted, and we are seeing the first signs of this.

As mentioned extensively in this site, the problem is economic fiction of financial gimmicks that have artificially inflated the economy in many areas and does not respond to real economic growth in the various countries where this occurs.

We, as you know, coming from a year ago to one of the critical periods in the history of our planet, and what happens in the next 3 to 5 years depends the future of humanity as we know it.

In my case, it's been a couple of years I decided to make a transfer of significant savings and productive investment to metals, even after working since I have always saved a part of silver, which, given the history of money here in the old Anahuac, is always beneficial and convenient.

We hope to continue reading their contributions here. Greetings.

ocelotl
11-05-09, 02:47 PM
Translation via google:

Dear Alvaro.

It's good to know that within the peninsula there are people who are worried about the current situation to point out about the global impact of this and act accordingly. As you know has been discussed here about economic management strategies that have been taken and their implications for the future. The release of the intervention and mismanagement on the part of governments is desirable in virtually any time.

Many media commentators extol the current practices that have given the appearance that has often emerged from recession, but that the time might sound like just an illusion. The consequences of monetary debauchery has been unleashed in many major economies of the planet have not yet been submitted, and we are seeing the first signs of this.

As mentioned extensively in this site, the problem is economic fiction of financial gimmicks that have artificially inflated the economy in many areas and does not respond to real economic growth in the various countries where this occurs.

We, as you know, coming from a year ago to one of the critical periods in the history of our planet, and what happens in the next 3 to 5 years depends the future of humanity as we know it.

In my case, it's been a couple of years I decided to make a transfer of significant savings and productive investment to metals, even after working since I have always saved a part of silver, which, given the history of money here in the old Anahuac, is always beneficial and convenient.

We hope to continue reading their contributions here. Greetings.

My version, with additions and corrections.

Dear Alvaro.

It's good to know that within the Iberic peninsula there are people that worries about current situation to the point to inform themselves about the global repercussions of it and act accordingly. As you well know, it has been discussed here about economic management strategies that have been taken and their implications for the foreseeable future. To free oneself from intervention and mismanagement taken by governments is convenient in practically any time.

Many media commentators extol the actual practices that have given the appearance that the recession is behind on many cases, but this at the moment can sound just as an illusion. The consequences of the monetary debauchery that has been unleashed on many of worlds' major economies have not yet fully arisen, but we are seeing the fist signs of them.

As it has been extensively mentioned in this site, the problem resides in the fictional economy of financial gimmicks that have artificially inflated the economy in many areas and does not respond to a real economic growth in the various countries where this occurs.

We are, as you well know, entering since a year ago to one of the critical periods of the history of our planet, and from what happens in the next 3 to 5 years depends the future of humanity as we know it.

In my case it has been a couple of years since I decided to make a significant savings transfer to metals and productive investments, even after doing savings in silver since I work, which, given the monetary history here in the old Anahuac, is always beneficial and convenient.

We hope to continue reading your contributions around here. Greetings.