1 Aug 2011, 11:25pm
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  • August 2011
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  • I’m being run down by Bears!

    I’m generally bearish on the Western economies. I’m probably bearish on the word economy, I think peak oil is beginning to overtake industrial civilisation. At the moment, however, it’s getting crowded in Bear camp.

    Now the US debt shenanigans are still not sorted, and Club Med is still in the mire. The markets are beginning to fry up Angela Merkel’s breathtaking arrogance in saying she’d fix it, but they can wait til she’s had her month’s vacation. Even Monevator toyed for a fleeting moment with going long on tin hats. I think that normal service has been resumed and he’s back to his chipper self. He was missing the first credit crunch after a while, well, it was a BOGOF offer, here’s part two to get along for the ride 🙂

    What’s up with this pack of bears that’s suddenly overtaken me? Guys, companies appear to be making shed-loads of money. In the long run we’re probably all going down, but I think this pack of bears has got the timescale wrong. It’s the 10-20 year timeframe where I’m really bearish.

    Yup, we’re goingto take a bath on the Euro and perhaps on something nutty from the US.  I’m getting ready to get in there and buy in this one. I’ve had a one-year interest free purchase credit card deal which is due in a month and I was going to pay it off with the cash from the associated savings account. I’ve actually transferred this balance to a 0% for a year deal, and paid £120 for the privilege (ie the total deal was 3%, since they charge you 0% + 3% handling fee, which is a 3% interest rate in my book) so that I could be in a position to fully fund my ISA for this year ahead of time using the savings account.

    The crap may not happen, and I may not ISA this cash, in which case NS&I may help me defray some of the interest handling fee. I don’t normally pay credit card institutions interest but in this case I view this as insurance to be able to buy into any opportunities that arise. Sometimes you gotta pay for opportunity.

    There are just far too many johnny-come-lately bears in the camp for my liking these days. I don’t know why companies are becoming a lot more profitable. I saw that in  valuations and dividends before I saw it in articles like this one which seem to indicate it is happening in the US as well.

    I’m not saying everything is hunky dory – there’s still a lot of debt around, and anybody who isn’t part of the rich feral elites is getting slaughtered in the crossfire. I can shelter from some of the increased tax part of that, as I can get my outgoings low enough to save a decent amount pre-tax but I can’t dodge the the increased inflation.

    There’s going to be a lot of sturm und drang. I am starting to buy some stocks, but in itsy-bitsy pieces. iii (and Halifax) offer a batch purchase where you can buy shares for £1.50 dealing fees instead of the usal £10, so I can spread my intended purchase into five pieces and still come in okay. It’s a worthwhile insurance against buying in too early or late. October is always a good month for a stock-market rumble. Spreading myself over the next few months up to Christmas should give me some chance to get some of the dips – maybe it’ll all be dip.

    And yes, the Big Bad Debt micght gets us, the United States may default and the notion of the riskless asset be lost to the world. There’s always the chance of the Big One striking. History has a lesson, though you need balls of steel to use it. German stockholders saw their investments plunge to a hundredth of their value in the hyperinflation of the Weimar Republic. It might not have felt that bad because of the ramapant inflation, changing the figures so it will have been less of a hit in numerical terms.

    They did come back, so if you can hold your head as all around are losing theirs… In an extract from the Telegraph’s article “What’s left to trust in the world of money” they don’t even mention gold –

    If nothing is done, the façade will eventually break; that’s the point at which to run for the hills. Food, property, energy – these are the things that retain value when money dies.

    It’s the old ghost of Bretton Woods. With the dollar as the reserve currency the rest of the world gets to sponsor a little bit of Americans’ lifestyle. The rest of the world lives with that in exchange for a stable reference point, the fulcrum with which Archimedes could move the world. Maybe no reference point is stable. We exchanged that for the balance of trust when we found that the Gold Standard was choking the increasing amount of wealth that was created by the nascent Industrial Revolution. It also conveniently helped Nixon pay for Vietnam…

    It doesn’t have to mean Armageddon – there hasn’t been a stable reference point for four decades 😉

     

     

     

     
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