A grim global outlook but make hay while the sun shines .. : Alex Cheema IFA

There is alot to be confused about for anyone trying to understand the global economy these days, and we do live in a global economy. We live in times where things like Quantitative Easing happen on a regular basis but the long term effects of it are not understood.

My view on the markets is simple, as long as the Fed, ECB, BoE, etc. continue to print money, buy bonds on a massive scale and provide cheap financing to banks, markets will continue to rally.

However, the market is systemically very sick and we should be living through one of the worst recessions ever.

Each time Quantitative Easing is used it becomes less and less effective. A good analogy for the market & QE is that of a drug addict & the drug. The drug addict being the market and the drug being QE. For so long as the drug addict is high he will behave like a madman (markets rally) but if he doesn’t get his fix he will collapse, possibly die or at least become very sick (market crash). Not only this but each time the drug is used (QE) it becomes less and less effective until it is no longer effective … this is the time when markets could crash and when we could be subject to a 1920s style or worse depression.

Global Banks have trillions of dollars of worthless ‘assets’ on their balance sheets, if they wish to sell them or insure them against loss where do the assets end up..? The answer mostly is, on Government balance sheets paid for by taxpayers like you and I. Who then will bail out the Governments when they fail… Italy, Ireland, Greece, Spain, Portugal, Cyprus, etc. Supranationals will! Who will bail out Supranationals when they fail .. ? It is a zero sum game people and it must end somewhere.

So, I hear you say what is there to be upbeat about, this is all so depressing!!! Well, ‘make hay while the sun shines’, you too can take advantage of these predictable market conditions whilst QE continues to work, be quick on your feet and you can make the most of these trends but know that there is a finite life to the game, a time when QE will not work and markets will tumble… prepare yourselves for this fact.

Do not be downbeat, with the right information, tools and advice you can make the most of today and with the right information, tools and advice you can be prepared for tomorrow..

If you want to hear more please sign up for my news letter.

By Alex Cheema, BSc, MSc, MSc, DipPFS

One Response

1. Contrived currency devaluation | Alex CheemaAlex Cheema 14/05/2013 at 9:54 am | Permalink [...] http://www.alexcheema.com/a-grim-global-outlook-but-make-hay-while-the-sun-shines/ [...]

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