At last some common sense from George !
Well done for joining the party George [ I have been saying this for 5 years] But an Oxford education will get you there eventually !
Europe now spends more than any other country in the World on social security.
The slight pick up in employment in Europe – don’t be fooled – all government-funded jobs [ probably costs Europe about 50,000 Euro’s a year [ minimum] to create a 30,000 a year Euro job] – now Europe has to create some private sector jobs – and HERE IN WE SEE THE PROBLEM
If you have a minimum wage, a maximum working week, bureaucracy, high taxes and a dislike for democracy and a free market – then you haven’t got a cat in hells chance of competing with India, China, Russia, Brazil – so no private sector jobs will be created and the Governments of Europe will have to keep on borrowing money to create an illusion of growth.
Problem is that when interest rates rise [ and my God will they] – it will send every European nation into a bankrupt state unable to afford its massive social bills and its illusion of prosperity
It’s all very simple and a 5-year-old could work it out – Even George has worked it out at last !
Europe is heading for a disaster as long as it persists with its ridiculous one size fits all approach.
In terms of what this means for financial markets – well at the risk of sounding like a broken record lets re-iterate true value on a few European instruments;
DAX = 2000
Eur/USD = 50 Cents
Spanish IBEX 35 = 1000 [ and boy is that over-valued still]
George has worked it out – when will those lowest in the food chain [ economists and Asset managers] finally get it ?
I filled my car up with fuel yesterday – from empty to full – it cost me £88
The very same car cost me £67 to fill up 2 years ago.
That’s a 30% increase
Every time I go shopping, pay a bill, eat out, go to a football match , utilise any service, go to a restaurant – prices are so expensive [ and rising] its amazing.
Yet UK inflation has today fallen – finally – to 2%
Similarly in Spain – as bad debts soar, borrowing soars and as the country continues to make nothing, do nothing and export nothing – we today learn that Spanish GDP grows at the fastest pace in years.
I just wanted to be on record – right here , right now saying 3 things;
1. The Spanish and UK Governments are living in a new World where they can say what they want and their populations have become so weak and pathetic that nobody really cares about the truth anymore !
2. If you are an economist and believe these numbers and buy into the “it’s all going to be okay” argument – you are PERHAPS slightly deluded ?.
3. As a trend follower in financial markets – I follow trends ! Actually long Global stocks including Spain and the UK – No sour grapes here – just astonishment at the absolute lack of balls of anyone out there to challenge the nonsense we are being fed in these economic numbers.
If you disagree please email me on email@example.com
I would love to know what it is I am missing – I suspect I am missing nothing at all !
As Global debt levels [ personal, Government, Corporate] escalate beyond all levels ever seen to new historic highs and as Global growth continues to slow perhaps those economists who are at least blessed with at least one or two brain cells [ if you know any please let me know] are still to work out that we are heading for a major catastrophe when the penny drops that the whole Global financial system is built on a house of cards with nothing real underneath it except more debt !
Meanwhile economic conditions continue to deteriorate in Europe, credit conditions worsen/ tighten and the strong Euro continues to put a dampener on any export lead growth from Europe [ my targets of Euro / Usd = 50 cents will remain as long as gravity and maths continue to work].
So happy new year – expect the fed to exit 2014 printing more money than they were in late 2013 as it becomes apparent that without QE the whole system will self-implode.
You have been warned !
I was utterly gobsmacked last night [ in fact I have been for weeks] when David Cameron appeared on the National News [ From China] talking about further budget cuts as the Government “Fixing the roof whilst the sun is shining”.
Of course as we all know the UK economy is “growing” at 0.8% and that puts it ahead of all Western World economies at present – an ideal opportunity for Cameron/ Osborne/ The Media to talk about the much improving situation in the UK – It’s not totally there just yet but whilst we are on the road to complete recovery and fixing the roof whilst the sun is shining would seem to be sensible economic management?
Small problem though ?
Cameron talks of “putting money aside now as a safeguard in the future” ! What money are you referring to Dave ? We are trillions in debt and borrowing more still ? UK household debt this week hit £1.4 Trillion [ surpassing the number last seen in September 2008 and a new record high], UK Credit card debt has hit a new all time high and quite frankly to talk of an improving UK economic situation is an insult to a five-year old with a basic understanding of money[ notwithstanding Economists, Central Bankers, Governments and Academics - Like Ben Bernanke - all of whom are still slumbering in a Keynesian piss pot of debt and un-sustainability].
So the real economic situation in the UK is ? We are in debt up to our eyeballs in amounts bigger than anything ever seen in history and joy – it’s Christmas and I’m sure massive amounts of cheap Chinese crap will be bought in the shops [hence increasing credit card debt even more] and that at least should give us all a warm fuzzy glow about our economic prospects going forward right?
If that don’t work then a report published yesterday indicating that UK citizens are currently spending £48 Billion a year on online gambling and slot machines [ isn't that the UK benefits budget? I don't mean the size of it - I mean that's where most of the benefits actually go] – then at least we can rest assured someone may hit the jackpot and maybe that will save us all !
The Western Economy is slowly but surely recovering = Quite possibly the biggest load of bullshit I have ever heard
When the real recession hits you wont need me to tell you we are in it !
Interesting article by Richard Madigan in the F.T today talking about how the U.S equity market is still okay / fairly valued and not too far ahead of itself. The SP500 is valued at about 15 [ forward earnings/price multiple] and this is consistent with historic valuations – good point Richard !
However this article is a classic example of the inability of people out there to “think outside the box” and understand that history is now irrelevant.
Well Richard Madigan’s article translates like this to me;
Co – Pilot to Pilot – ” Sir we are heading directly toward a huge tower block and will surely crash”
Pilot to Co Pilot – ” Don’t worry sonny – historically that tower block wasn’t there”
The point is this.
When you are 18 trillion in debt, own 34 % of your entire bond market yourself (and are buying 0.3 % of it a week to give off a false impression that all is okay] , when there is no growth in the economy – only a bubble of more debt – when your own solution is to encourage consumers to go out and load up their credit cards with more debt by buying cheap imported crap from China and when you create a massive divide between rich and poor by inflating equity market valuations so only the richest 1% of Americans benefit – Then and only then do you have to remind yourself that a 15 times valuation is utterly ridiculous and in fact a 7 times valuation is still way too high.
Assumptions are everything and if you assume over the next 20 years the U.S economy will shrink [ yes that's right shrink] as a result of the final bursting of the current credit bubble [ way bigger than 2008] then where does that leave the SP500 ?
I’d say 60-80% overvalued at current levels
Go on the German Equity Market
At a time when Europe continues on its path to [at best] Socialism and as many predict shows all the early stage warning signs of the next Soviet Union [ Even Gorbachev is warning of that] – its good to see the big round number of 10,000 now firmly on the horizon.
As the World heads towards a much more competitive state with the Chinese, Indians, Africans, South Americans, Russians all now vying for your business – willing to do it much cheaper and much more efficiently – Europe continues raising taxes, and hugely increasing its level of bureaucracy within the framework for business to operate. As noted last week France is becoming a basket case something even the rating agencies can recognise – and Germany – well Germany of course is picking up the bill for what has gone before and what is still to come.
Germany of course, that profited so well from the dispersion of Government hand-outs in Europe for the last decade [ and with no chance of that happening going forward] is of course just another illusion and another equity market built on one thing and one thing only – the likelihood of European money printing.
The DAX will, I’m sure cross 10,000 as bubbles we know go on way beyond the point we expect them to. But make absolutely no bones about it – based on real economics and the likelihood of the re-emergence of a huge European crisis far bigger than the last few years – the Dax is well and truly overvalued at 2000.
Who am I to question its meteoric rise but only another fearful voice on the crowd that knows the decimation of the Western monetary system that awaits when the Financial experiment started by “very” dangerous men like Ben Bernanke end’s.
In this article published on Zerohedge – Mark Faber echoes my thoughts that the current bubble created by Global debt will not end with a crash – oh no – if only it were as simple as a crash. He argues, as I do, that this one is going to end with the utter destruction of the entire Western capitalist system – that’s how bad things are.
Also joining this list of “smarter” money warning of the same are Nassim Taleb – a list that also includes most people in possession of a brain cell or two that can see that when you create huge asset bubbles, increase the huge divide between the “have’s” and the “have-nots” and when you have no escape plan and no real experience of the real World – only an academic theory / experiment – then you will only get one end result