Why the Greek Debt Crisis Doesn’t Matter

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Peter Macfarlane was asked to comment on the Greek/European debt crisis and the Obama jobs plan for the latest edition of Q Wealth Report, available to our paid up members. His answer was that both are basically irrelevant. Here is an extract from the latest QWR:

You wouldn’t believe how many e-mails I receive from readers asking for comments on this or that event. Unfortunately, however fascinating the topic, it’s usually difficult for me to reply, because the questions are very open-ended. For example, a typical question would be, “Peter, what do I think of the future of the Norwegian Krone in relation to the Euro debt crisis?” There is no one line answer to that.

My view is, and always has been, that we have to look at the big picture and the small picture. Forget about the medium picture. I leave the medium picture for the wild forex speculators.

The big picture is that the ‘rich’ economies of the world, and in particular their fiat currencies, are in serious trouble. The purchasing power of the world’s super-currencies – the dollar, the euro and the yen – is going down the toilet. All the central bankers talk to each other on an almost daily basis with a view to maintaining “stability”- which means they should go down the toilet at roughly the same rate so the populace doesn’t notice.

Despite many protestations to the contrary by politicians, second and third tier western currencies like the Canadian, Aussie and NZ dollars, the pound sterling, and even the Swiss Franc, have far too much interdependence on the super-currencies. That is why, for example, the Swiss National Bank decided to try to fix its currency to the Euro recently. I do not think you can seek salvation by holding these currencies, except perhaps as part of an overall diversification strategy.

The other side of the big picture is the rise of emerging economies. China, a nation of peasants that is nominally communist, is playing a major role in keeping the US afloat and even stocked up on Spanish debt recently. The biggest industrial employer in the UK is an Indian company. Brazil’s economy and currency is so far ahead that Brazilian millionaires are snapping up Florida property like there’s no tomorrow.

This big picture scenario is neither a prediction, nor an invitation to debate. It is indisputable fact – what has already happened, is happening now, and will continue to happen.

The ‘medium picture’ is the short term changes. It’s easy for people to get caught up in this, because it’s what is pumped out to us by the mainstream media 24/7.

One week Obama’s new jobs plan supports the dollar while the Euro goes down because the Greeks have spent all their money again. So what? Who cares? Next week there will be some bad news from the US, some good news from Europe, and the euro will be ‘up’ again. It is all a distraction from the big picture.

Most of the media is US-owned, and I think it’s for this reason that there is a pro-dollar bias in this kind of reporting. The US economy is just as much of a disaster zone as the European one, if not worse. At least Europe is not spending so many billions fighting wars. In fact, if you are going to lump together Europe as one economy (which has its pros and cons, that I won’t go into here) you might as well just lump in the US while you’re at it and refer to the “western” economy.

If you are a forex trader – ie someone who wants to make short term profits off currency movements – you need to pay attention to this medium term stuff for sure. But if you are like most of our readers, simply looking to protect your hard-earned assets for the long term, this medium picture stuff is irrelevant. You should try to block it out of your mind, because it only serves as a distraction from the real big picture.

Most forex traders are banks, and they make money when currencies move. Doesn’t matter which direction. They just need turbulence in the markets to make money and be happy. The politicians are happy with this turbulence too, because it distracts voters from the big picture.

I should clarify here that I’m not saying this is good or bad. I’m saying it’s the way it is, and if you want to protect your assets and be successful you had better accept it. I do not subscribe to the view that ‘evil speculators’ are responsible for the world’s problems, nor do I believe that one political party or other is responsible. Bankers are just businessmen like you and I, looking to make a buck.  It was politicians, of all colours, that created these problems over decades.

This brings us to the small picture, and it is here that you should be concentrating your thoughts and your strategic planning. The small picture is you in the global economy. Once you understand the big picture, the small picture is easy. ‘Buy farmland and gold’ says investment guru Marc Faber.  What I tell people is a play on the old real estate agent’s refrain. What matters most when buying property? Location, location and location. How do you protect your assets in uncertain times? Diversification, diversification and diversification.

That’s what the Q Wealth Report is about. We give you practical, step by step guidance on the small picture – practical advice that you can implement easily.

It’s also this small picture we’ll be talking about in Hong Kong next month at our Q Wealth Symposium. How to invest in precious metals outside the financial system. How to invest in farmland without getting your boots muddy. How to use offshore legal structures to diversify assets across different sovereign jurisdictions or ‘flags.’ Trustworthy people you can contact to implement these solutions. And most importantly, how you can do this right away – because every day you delay, the politicians and bankers are eroding your assets. So if you know you need to do something, but are not sure what, join us in Hong Kong next month. There is no time like the present!

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