Mass evictions and a new mortgage crisis in Europe - another warning sign for expats

A new austerity driven mortgage crisis may be on the horizon in Europe. The Financial Times reports today that Ireland faces a new mortgage crisis that could trigger mass evictions and jeopardise the stability of the country's recovering economy. The FT reports that the struggling mortgage holders in Ireland face the threat of eviction following Dublin’s decision to lift a ban on house repossessions. "The contentious change of policy on repossessions was sought by the troika of international lenders – the EU, European Central Bank and the International Monetary Fund – which had warned that the escalating mortgage crisis was jeopardising Ireland’s fragile economic recovery."  A couple of weeks ago, the Mirror had reported that the UK Government’s welfare cuts will suck £19 billion a year out of the UK economy citing a study by the Sheffield Hallam University. According to the study Northern families in Blackpool, Middlesbrough, Liverpool and Glasgow will be hit hardest – and wealthy southern areas such as Surrey will see the smallest financial loss further exacerbating the North South divide. This serves as an advance warning of the shape of things to come (see video) and expats are urged to make investments in assets denominated in the right currencies and to have investments in the right locations and to have the right assets in their portfolios.

Jim Rogers, famous commodities investors cautions on investing in India and points to upcoming war due to water

UR6ZR6UN9U9W Legendary Quantum Fund manager (along with George Soros) and commodities investor Jim Rogers is short Indian equities and has categorically declared that India while an exciting place to visit is not a place for him to invest in. In an interview with Bloomberg last week, Mr. Rogers proceeded to urge the Indian Government to figure out somehow how to run a country pointing to the non-convertibility of the Indian currency, the Rupee on the international markets. He has also blamed the restrictions on foreign investors as another reason why he feels the Indian government does not know how to run an economy.



As posted in an earlier blog post, this view on the Indian macroeconomic environment is reflected in investors moving their capital out of India and I believe it is only a matter of time before the current bubble in Indian equities which has built up again since the last pop in 2007 will burst again in the near future perhaps quite dramatically. Mr. Rogers also pointed out about the possibility of an upcoming war due to shortages of water resources in India and Pakistan. I have previously blogged about this possibility of a war between India and Pakistan in the near future as well.

Robert Prechter, Socionomics expert fears a historic sentiment so extreme it happens "only once in centuries"

Robert Prechter did not invent the Elliott Wave principle, a technical tool for analysing markets  but he certainly has made it famous in Socionomics and through its use in making his market calls which he gets right occasionally. He also writes books and publishes a periodical called the Elliott Wave theorist. An article in the latest (April 2013) issue of the Elliott Wave theorist had me sitting up and taking notice because of a claim it makes that is so outrageous it at least deserves mention, well, in a blog piece anyway. In this article, Mr. Prechter argues, that not a single investment market – be it bonds, stocks, real estate, commodities or precious metals – stands anywhere near a major bottom today, this claim is ok so far, I agree with this part. Its the next statement that is jarring "Every one of them continues to show characteristics of being on the left or right side of a historic top of sentiment so extreme as to occur on average only once in centuries". Mr. Prechter has cited the example of Cyprus when the debt pyramid imploded: "the only valuable asset is cash; if you have it, you are king; if you don’t, you could starve." Either this is fear-mongering designed to sell more of Mr. Prechters' books and periodicals or perhaps there is a genuine warning about an impending implosion in all the investment markets in the near future. Mr. Prechter himself readily admits that he mistimed this call three years in a row but now seems fairly convinced that this "once in centuries" implosion is lurking around the corner.

British Baby boomers need to plan for loss of entitlements as they age

YC45W73DVK8Z Fareed Zakaria, who has his own syndicated show on Sundays on CNN had an interesting take on changing population demographics in the US and their political effects a couple of weeks ago (see video). Last year, Mr. Zakaria wrote a similar article in Time magazine, on the works of Mr. Pete Peterson, a banker and private equity billionaire. In that article Mr. Zakaria presented Mr. Petersons' overriding concern that the long-term outlook for the US economy in the form of massive structural deficits as the baby boomers start retiring in large numbers should be tackled by massive austerity and debt reduction programs. Mr. Peterson apparently confided to Mr. Zakaria, "I want to strengthen the safety net for the poor. But to do so, we have to reform entitlements, because they are simply not sustainable in their current form," Peterson says. "The elderly population is doubling, and health care costs are rising rapidly." His foundation is making the control of health care costs its No. 1 priority. "But we need to start making changes soon, because the longer we wait, the more painful will be the eventual changes".

The exact same arguments apply in equal measure to aging Britons looking for safety nets in their advancing years. Given the current debt load of the UK, it is inevitable that pensions and entitlements will take a hit in the coming years. All the more reason to have QROPS, QNUPS or offshore bonds to plan for a more secure retirement in the face of  eroding state benefits.