European car sales recently hit a 20-year low, with German car sales plunging almost 10% for the most recent month.
The large German bank, Deutsche Bank, is reported to have less than 2% capital, so it’s levered almost 60 times (when Bear Stearnrns went under it was levered over 40 times), exposing the bank and the country to significant risk.
Germany’s main trading partners are experiencing either slowing or outright contracting economies.
Meanwhile, the German stock market is near all-time highs.
Spanish home prices fell another 6% last year. Spanish unemployment is near 30%, with youth unemployment over 50%. Spanish loan default rates are skyrocketing.
Meanwhile, Spanish governrnment bonds keep going up in price, down in yield.
In the U.S., median wages are declining. Taxes are rising. Healthcare costs are increasing. Education costs are through the roof. Most of the new jobs created are low wage and part time. And the central bank must print hundreds of billions of dollars a year to boost people’s confidence (and the bank’s profits).
Meanwhile, U.S. equity markets are at all-time highs.
If these sorts of fact sets leave you scratching your head, you are not alone…
These are the sorts of things I wrestle with regularly, and write about often. I know that contradictions can exist in life, and can even last for years, but it doesn’t make handling them on a day-to-day basis any easier.
The problem is that, just like everyone else, I have to make financial decisions, and life decisions, knowing that all of these contradictions exist. How the conflicts resolve can have a huge effect on how good my decisions prove to be.
If Germany is able to hold together the euro and weather the downturnrn of its trading partners, then investing in the country could be pretty smart. But, if instead, the weight of the world finally becomes too great and pulls the country lower, then investing now would be buying the top of the market.
As for Spain, it’s much the same. Can it work through its issues and once again become the darling of the euro zone, or is it bound for years of a flat and falling economy?
The list goes on and on, and eventually reaches back here at home, in the U.S., where the decisions become more personal.
Should my kids study health care related topics? Should they disavow anything that has to do with finance? Should they buy homes in the next few years?
The success or failure of each decision clearly lies in how the contradictions of today play out. And therein lies the rub.
No one knows for sure what’s coming, so we must do our best to estimate how things will change in order to make the best decisions we can. There are no do-overs, no mulligans.
That’s why, in order to build a framework for figuring out where things are headed, we continually develop and challenge our own research. We look at demographics and economic trends from as many different angles as we can. Then we add in the views of others, both those that support our point of view and those that disagree, so that we can build as complete a picture as possible to use in decision-making.
And this is where you come in.
After we’ve done all these things, we communicate this information with readers and audiences. You.
We use books, reports, interviews, newsletters and updates to get our research across.
While each of these formats has its own positives and negatives, there is one way of communicating that stands out – talking face to face.
When we meet people… when we have the chance to bring together many people who are seeking out answers to the same sorts of questions… when we bring together researchers who are in the business of providing points of view… well that seems to be the best way to spark great conversations and bring the most clarity to our otherwise cloudy world.
I say all of this because we have scheduled just such a meeting for this fall, and we are excited about the line-up of speakers, as well as the already strong demand for seats. It appears that many people share our search for answers, and want to make the best decisions they can in these crazy financial times.
If you don’t see central banks printing trillions of dollars as a path to financial healing…
If you don’t think the Japanese can save themselves by sacrificing their consumers…
If you don’t think that Greece will repay its debts by firing all of its workers while raising taxes…
Then join us.
At our conference, the Irrational Economic Summit, November 6 – 8, we’ll walk through this world turnrned upside down, and provide a vision as to how these contradicting situations will resolve.
Joining us for a few days in Californrnia could help you make some of the best financial decisions of your life… and avoid some of the worst!
Reserve your seat now. They’re going fast.
Ahead of the Curve with Adam O’Dell
If you’re looking for an example of a rationality-challenged market… look no further than gold.