Where Turmoil Exists, Opportunity Persists

Last week was tumultuous.  Personally I moved to another country, settled in an apartment, then had to unexpectedly move to another apartment temporarily.  I have also had no less than 3 offers on apartments fall through because I waited just a little too long.

I feel today is the day though.  Of course I am an eternal optimist.  I have an offer on a great apartment in the center of town situated between 2 parks and within a 10 minute walk to anything you could possibly want to do.  I also have a 2nd offer on the table in case this one falls through.

The turmoil in my personal life however is nothing compared to what is going on around the world today.  Nearly every major country is broke.  Completely and utterly broke.

It seems as though a new European country asks for a bailout every other week or so.  The list is getting quite long – Iceland, Ireland, Portugal, Spain, Greece, Italy and now France.  Eventually Frau Merkel and her people are going to say ‘enough is enough’.  Germany cannot bail out all of Europe.

The US is no better.  It may even be worse.  Now that the US treasury debt has been downgraded to AA+ by S&P, the government wants to demonize them saying it’s their fault for crushing the US stock market.

This completely blows my mind.  S&P should have downgraded US debt years ago.  Personally I think the only thing they are guilty of is procrastination.

Now Europe has put a temporary ban on short selling financial stocks in France, Italy, Spain and Belgium.  Yeah, that’ll work.  This now creates a world of problems.  The current shareholders will view this as a sell recommendation and unload shares at fire sale prices.

This of course puts pressure on funds that own the shares to unload as well causing a downward spiral.  You also need to consider the inter-bank lending business.  Many times banks lend to one another for short term loans.  As a hedge, the lending bank will short the stock of the bank receiving the loan.  With a ban in place, this will dry up liquidity in bank-to-bank loans.

Along those same lines, the CME (Chicago Mercantile Exchange) increased the margin requirement on nearly every world currency, silver, gold, and many other commodities.

Honestly, I don’t know who the puppeteer is behind the curtain, but it sure sounds like someone is trying to keep the US dollar from falling through the floor.

For those of you that don’t understand what I mean in the above paragraph, world currency and precious metals (as well as lots of other commodities and financial instruments) trade on the futures markets.  People buy and sell contracts of these things in future months.

In order to buy a contract of Swiss Francs (for example), you must put up a certain amount of money (margin) to control the contract.  If the margin requirement increases then you must put more cash up as deposit.  This means you need to pay more US dollars to control less Swiss Francs.  This artificially raises the value of the US dollar.

All of these things are just intervention into the free market.  Anyone who has been through economics 101 (or read ‘Economics in One Lesson’), should understand than whenever there is intervention in the free markets there is a loss of productivity.

These are just protective measures governments are taking to help salvage their own position of significance.  Of course the biggest fear for any government is that their subjects will discover how utterly useless most government policies and programs really are.

This week I finished reading the book, “The Driver” by Garet Garrett.  The main character in the book, Henry Galt (reportedly the inspiration for the character John Galt in “Atlas Shrugged” by Ayn Rand) is a stock market speculator who took over a railroad and brought it back from the grave.

Galt struggled with crony capitalism and stupid government policies.  He also dealt with predatory taxation on companies that made too much money.  The government decided to tax companies for being ‘overly profitable’ in order to redistribute the wealth.

Does any of this sound familiar?  Ironically the book was written 89 years ago.  It’s a relatively short book with lots of similarities to today’s world.  I highly recommend it.

One thing that struck me in the book was a conversation between Galt and his personal secretary.  They were discussing the news of very high unemployment and the stock market going down the tubes, and Galt stated, “We are still a rich country, and this is still a rich company”.

His point was that it is all relative to your current environment.  Today we may have high unemployment, a volatile stock market, millions of foreclosures, and bankrupt governments, but the reality is that most people still have a place to live, a computer, a TV, a car and food to eat.

Just 200 years ago, if you were unemployed you may go hungry.  Today it just means you have to cut back on your budget for dining out.

I certainly agree that today’s economic situation is dire.  Today we live in what I call, “The Great Reset”.  I have written several articles about this before;

To me this represents a great time in history.  I have never been more excited about the future than I am today.  There will are (and will be) enormous opportunities that emerge from the ashes.  Where turmoil exists, opportunity persists.

This is the time to take personal responsibility and make things happen.  Take charge of your life.  Start that business you have always dreamed of.  Move to that exotic land you have always wanted to visit.  Learn a new language.  Go back to school and get your degree.  Whatever it is that has caused you to say, “one day….” now is the time to get it done.

I mentioned to you a couple of weeks ago about a report I am creating about a backdoor EU residency program.  I am putting the finishing touches on it over the next week and waiting on a bit more information from an attorney friend in Estonia.  This report will provide you with the exact steps and available options on how to acquire residency (not citizenship) in Estonia.

The report will deal with the reasons why you should consider this option, what your options are to acquire residency, and where and how to open a bank account in Estonia.

Estonia is former Soviet bloc country that was admitted to the EU in 2004.  It is a tiny country of about 1.3M people and borders Russia to the east, Latvia to the South and the Baltic Sea to the west.

If you would like to be placed on the early notification list, please drop me a line here.

A couple of weeks ago I hosted a webinar with RJ Palano about investing in residential real estate.  The webinar was fantastic and we were at capacity on the system.  If you are interested in learning more, you can view the webinar here, and email me if you have questions.

I plan to host another webinar with a good friend of mine, Tres Knippa sometime over the next 2 weeks.  Tres and I met a few years ago while completing a Masters in Entrepreneurship from MIT.  Tres is a hugely accomplished floor trader at the CME and has some very interesting insights into the stock and commodities markets.

If you are interested in participating in a webinar with Tres and I, please send me an email to get on the early notification list.

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