The scenes of mob rule in our cities will I fear trickle on until George Floyd's funeral on Tuesday. I will refrain from comment today as the near-riots are still too fresh.
It was AEP who nudged my thoughts. I take his column with a pinch of salt, but he is right to anticipate problems from our response to the crisis. People are saving and paying down card debt, using the furlough splurge as an opportunity to retrench. Consumer demand is down, and the whole supply side constrained by the virus closures. In the autumn this will turn into full blown recession as unemployment will rise to maybe 10%. And all the while we're printing money by the tanker-load and pumping it into assets that are inflated like a Peking duck. The stock market should be crashing, so should property prices. Well, what do you think will happen when too much money chases too few goods?
It may of course be a cunning plan. There are three ways of dealing with debt; pay it down, inflate it away or default on it. Inflation of 5% - 10% a year for three or four years would certainly make a massive dent in the national debt, but would leave millions of ordinary folk in dire straits. The effect on the Euro nations would be the same, as AEP writes
Prof Polleit said the ECB is walking in the steps of the German Reichsbank in the early Twenties. “We’re not heading for hyperinflation of course but in some ways it is similar. The Reichsbank started buying a little, and then a bit more, until they realised that it was out of control,” he said.So here's a question for you. If anyone has a few bob in the bank, what should they buy with it now, to ensure they're one of the speculators that does well, rather than one of the paupers?
Weimar inflation was a diabolic disturbance of the settled social order. Speculators made fortunes overnight. Diligent law-abiding citizens were pauperised, losing their bank savings and paper securities. The sense of injustice drained the Weimar Republic of its legitimacy.
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| Source: Zerohedge |
16 comments:
Companies that make water purification products, respirators, bunker builders, safety (personal and property) equipment etc...in USA gun manufacturers (still going strong)
I think it depends on the timescale you would be looking at for a return.
There's no question that a sharp recession is coming with all that entails. Tough it out savings/investments wise or try to second guess?
The Eurozone, now that's a different matter. Break up is a real possibility and it is when new currencies are issued that it becomes interesting.
Maybe the pound and UK gilts, stocks etc might become a haven. Oh for a crystal ball!
I might have said this previously but I do feel weirdly optimistic for the medium and longer term.
Bit of a tangent I know but even this "black lives matter"tantrum doesn't particularly bother me (and not just because of where I live).
It's identical pretty well to project fear/sneer/smear and I assume is driven by the same Britain haters. And I suspect, like project fear, they have crawled from under their rock based on a belief that the bubbles they inhabit somehow represent a wider constituency.
These blowflies will soon, I suspect, have a rather juicier carcass to feed on.
A private island.
At the very least no one should be keeping anything more than the bare minimum in their bank accounts - enough to service standing orders for example.
The first recourse to the banks is a bail 'in' and no amount of government guarantees will convince me that money is safe in a bank account when all that they can guarantee is to further inflate its worth towards zero.
Many would point to PMs as the safest place to be but try purchasing any physical.... we are very close (it would seem) to an explosion in value which in itself would give the impetus a total collapse needs to get going.
Covid has been a distraction well past its usefulness and the importance (eye roll) of black lives seems far more paramount to gullible supporters than the lives of their own families/friends. Even the government have been caught with their pants down - how can they talk seriously about masks when people take actions that Government simply cannot act against? The hypocrisy is so large it hurts. What next? A collapse of the power grid? A black flag event to me you gasp? Certainly, whatever they have in store next will have to surplant the existing 'disasters'.
Warnings of pending collapse/disaster have been on the cards for decades yet we STILL don't know when 'they' are going to pull the plug - but pulled it will be and at a time to suit THEM and a time to blindside 'you'.
I wonder how the situation would have been had we still had a right to bear arms? I know a lot of people that would sleep a lot more comfortably in the knowledge they could protect themselves and their possessions from what is about to hit them.
Look around you - see how many eyes are 'bulging' and ask yourself how hot the water has to get bofore you wake up.
Don't be a speculator. California gold rush miners were speculators and almost all were ruined. Bitcoin and gold enthusiasts are speculators and might make money, or might equally likely be ruined.
I'd suggest a balanced and well-diversified portfolio of equities (not individual equities, but ETFs - mutual funds if you absolutely must) and fixed-interest products (quality bonds). Then forget about it. Just leave it, and don't touch, don't peep, don't panic when the social engineers driving the current problems try to make you do just that. Basically, don't try to game the markets. You'll always end up on the wrong foot (it cost me a significant amount - to me - of money to learn that lesson).
Come back in 5 years and you'll be fine. See Black Monday 1987 and the subsequent five years for an example. Also 1992, 2000, 2002, 2007-08, 2010, 2015-16. It isn't different now, no matter how much the BBC tries to convince us that it is.
If sensible investment fails and leaves you broke, then we're all so deep in the shit that it won't matter a jot anyway. We'll be eating rats.
My horizon for any return is 5 years upwards.
This seems very sensible
Physical gold, baked beans, bicycle & machine gun?
More seriously do nothing. No physical plant has been destroyed, this is not WW1 or 2. Some flim flam businesses will go under. Small businesses will have a hard time. Lot depends on how fast things recover or get knocked back.
A lot of business is services hence the fuss about holidays, pubs, leisure. Here the Germans and French and Nordics are well set to ramp up business in the safer warmer climes. They can get the sun loungers warmed up before the Brits are let out of lockdown.
Italy will continue to be a concern but the market for fancy shoes/handbags/tinny cars will come back. Spain should benefit from pent-up demand for sun/sangria. Don't see a Euro crash, it will stagger on. Those who believe in new miracle industries will continue to be disappointed.
Meanwhile Covid is ramping up nicely in Brazil, Mexico, India. Declining rather slowly in the US and UK. A common factor in all these places - chaotic management/tight fistedness/running the assets hot. These three factors amount to problems when something unusual comes along. Look for a slower recovery here.
There is a worry though. Stock markets are still high, possibly too high, not daring to face reality, not wanting to look over the edge as unemployment rises and a second wave comes along. Just in time for Donny to get re-elected. Leading to a second dip in the autumn.
Usefully the Brits can be kept out of Europe and shackled to the US, they are the infected ones. This will provide a useful armlock on Boris as he seeks to negotiate. The plan was to weaken the British and they have done the job themselves. Oh for a sensible disease control strategy back in 2019.
As if by magic. Should have bought those gun shares:
https://www.zerohedge.com/economics/minneapolis-city-council-disband-citys-police-department
Imagine trying to sell your house in Minnneapolis and this happens...
firearms and ammo, good quality tools and machines, physical gold.
learn how to fix things, and the basics of economy. not keynesian economy. real economy.
Invest in anything tangible (that can't be stolen by the state), e.g.:
Physical gold & silver
Good quality machinery (obviously not made in China)
Up to £50k in Premium Bonds (average return is 1.4%)
Avoid electronic or paper "promises" which could be insecure. The state's guarantee is not to be trusted in these strange times.
The initial phase of the recession will be deflationary as huge debt defaults cause the money supply to contract as fast as the central banks print. So cash on deposit is probably safe for the time being.Thereafter inflation is likely to rise and bank failures increase. Gold will be the safe haven, ideally directly owned (e.g. Perth Mint) but if you are reluctant to liquidate ISAs, pensions etc precious metal ETFs (e.g. GBSS, PHSP) will give some exposure and gold miners (e.g. SPGP, a tracker of the biggest quoted gold miners) should also do well. All mentioned trade on LSE in sterling.
I agree with Ed P.
My recent purchases are a Morgan Plus 4 to blast around the Suffolk lanes and a VW Campervan to get to the West Coast of Portugal when the corridor through France and Spain is open. My old wooden boat, moored on the Orwell, my limited skills alive.
Residue of assets already disposed of to son.
Don’t want a property, can’t afford a property. Live in a one bed Council bungalow in a beautiful village. Inflation no worry with index linked Army pension.
The Government will get SFA from me.
Photos of Minneapolis after the riots. The damage is pretty bad.
https://www.dpreview.com/forums/thread/4494037
Don Cox
Physical gold, Index linked bonds (although these could default) and investment grade whisky.
John Redwood, the Brexit chappie, advised investors to sell out of the UK and move money abroad.
Nigel's got his German passport.
A E-P has been predicting the imminent doom of the Euro for the past 20 years ....
Suggests he might be WRONG.....
See also anonymous' very true comments
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