The Case for Going Global Is Stronger Than Ever

Jeff Little

Aug. 10, 2011, 7:03 p.m.

Good quote from the article:

“History shows that one of the single biggest drags on any economy is something I call overcapitalized infrastructure. What this means is that, dollar for dollar, there is so much money available that investments become a process of overallocation or overcapitalization. Or both.”

Another nail in the coffin-lid that tax cuts on the rich are a necessary part of economic stimulus.

Keith Springer

Aug. 9, 2011, 10:24 a.m.

Tums or Tequila for the market today? After the last several days, most investors have needed both! I still don’t believe that the S&P downgrade of U.S. Treasuries has anything to do with the drubbing we’ve taken. It’s simply a cry for help to the Federal Reserve for more stimulus. Clearly QE Mini-Me isn’t enough. I expect a full blown QE3 and the market will rally.

In the bigger picture, everything I wrote about in my book, Facing Goliath: How to Triumph in the Dangerous Market Ahead, is coming true… and faster than I had expected, but that’s the nature of a crisis of confidence. Investors need to take this book to heart, in order to protect their finances. When it’s time to Face Goliath, you better be ready or you’re going down!

Regards - Keith Springer
President of Springer Financial Advisors

Ernest M Kraus

Aug. 7, 2011, 3:48 p.m.

John:
Yet I see that the world is still willing to purchase our debt with the comments that ” it’s still the safest ” on the planet.
I look at China with a growing “middle class” and read that China is now outsourcing due to what they consider excess labor costs.
I look at countries that are exploring and harvesting mineral wealth while I see a president and his followers doing everything they can to through roadblocks at our own development.
Finally, I wonder about middle class in those quoted countries being the equivalent of $6,000 per year. Just what can one buy?
I see these countries trying to attract tourists because it’s a source of income that does not requier manufacturing.
Ernest M Kraus, President
Me anddelCano Travel consultants

James Slater

Aug. 7, 2011, 10:21 a.m.

Excellent update on the state of global capital markets in developing and emerging markets:

http://www.businessinsider.com/212-trillion-mckinsey-2011-8#global-equity-capitalization-remains-below-peak-1

Glen Austin

Aug. 6, 2011, 10:39 p.m.

Wow, amazing analysis with a simple, even Biblical conclusion.  “The borrower is servant to the lender”  Proverbs 22:7

The de-leveraging of the West will impact markets globally, but it is certain that the countries with the lowest debt, and holding the most foreign debt, with the best labor force, will be the ones to emerge out of the global recession the fastest.

The U.S. has been a tragedy in education for 30 years, held hostage by Teacher’s Unions, a requirement for “no child left behind”,  a culture of entertainment, idleness, and stupidity.  Graduates from Chinese and Indian schools are two YEARS ahead of their best/brightest peers in America.  We deserve what we get.

There are pockets of brilliance, ideas and companies in the U.S. that blossom, then flourish worldwide, but I would argue these are the exception, rather than rule.  We have to find those, invest in them, and find the best in each emerging market as well.

The U.S. as a whole needs a big lesson in humility, at the governmental, and the local level, and we’re about to get it.  Go BRICs!!!!  Go QID!!!!

Russ Robelen

Aug. 6, 2011, 7:32 p.m.

The piece by Keith Fitz-Gerald makes many good points and presents some very interesting data.  However, after all his advice to stay away from the US, Europe and Japan he feels compelled to add this caveat:

In closing, I want to leave you with one more thought.
Even though we have talked extensively about why the case for emerging markets is stronger than ever, I am not a big fan of abandoning the U.S., which is what some of my colleagues advocate.
The United States is a nation filled with resilient, clever people; and despite the fact that the chips are down, I wouldn’t bet against it.
We will find our way through this mess, even though the path we must take isn’t clearly defined nor brightly lit … yet.
Best regards for great investing,

Tell me where these resilient, clever people reside, surely not in Washington.

Charles Yaker

Aug. 6, 2011, 2:14 p.m.

Nice article. While S&P downgraded the US for the wrong reasons I wonder if AA is still too high. While the US can’t default involuntarily it can decide to default if it wants. Given our political situation that is a real risk. Furthermore the “moral hazard” that exists by our failure to bring the people responsible for the recent Recession to Justice including some people at S&P replaces the “rule of law” with the “rule of men” and such an environment is not a safe place to invest. ( I guess the same could be said of China).

as for Michael Bell’s amusement I would add funeral suppliers if Medicare get’s cut in November.

ivar laegreid

Aug. 6, 2011, 1:48 p.m.

Outstanding!

Howard Brickman

Aug. 6, 2011, 12:17 p.m.

There is an opportunity to start to fix a number of the US growth issues with the implementation of a moon landing style transition from our traditional liquid petroleum based transportation system to fully utilizing the new natural gas supply that is available in previously “too expensive to produce” formations.  We import 12M barrel/day @ $100 = $1.2B/day x 365 = $438B/year.  By replacing 1/2 of the off-shore purchases with domestic natural gas that shifts $219B from the Import column to the Industrial Production column for a net increase in GDP of $438B.  GDP would then increase by approximately 3% assuming that there is NO additional economic activity stimulated by the development of the fueling infrastructure and conversion of vehicles to natural gas.  There is also the potential of a greatly reduced cost of distribution since natural gas pipelines currently exist throughout the US.  Which could greatly reduce the number gasoline and diesel tanker trucks required since the existing nationwide natural gas distribution system could actually meter the purchase with the individual users and at fueling stations. 

If they are going to start up the presses again maybe this would be a useful target.  There would be so much potential money to be made that a great deal of the cash currently sitting on the sidelines would fly towards the companies involved in the conversion process. And perhaps millions of jobs would be created to build and service this new economic activity.  But never mind we wouldn’t want any of the stimulus spending to actually have a long term positive impact that could fuel growth, reduce unemployment and improve the environment.

James Slater

Aug. 6, 2011, 11:06 a.m.

While emerging markets may offer long term investment opportunity, at present, there appears to be a high correlation of the world markets in the negative direction.  Deleverging may not be confined to developed markets.

http://advisorperspectives.com/dshort/charts/markets/international/world-markets-update.html?world-indexes-since-090309.gif

http://advisorperspectives.com/dshort/charts/markets/international/world-markets-update.html?world-indexes-since-2000.gif