Thursday, November 19, 2009

How to be rich in these times of crisis?

Just listened to today's interview with James Galbraith, and to quote some of it from Yahoo Finance:

Disappointing reports this week on housing starts and foreclosures, as well as the index of leading economic indicators, have cast a bit of a pall on the "robust recovery" story, putting a crimp in the stock market's ascent in the process.

What the optimists are missing is the impact the housing bust is having on both American's ability to borrow and banks willingness to lend. The resulting credit contraction will prevent this recovery from following the path of those following prior post-war recessions, he says.

IMO, Is there real recovery on the stock market in the US? What are my ideas?

1. Yes. Wall Street will be doing great. But they will not be translated to real jobs within the US because top US companies have mostly outsource their production to developing countries in Asia. Do not expect strong job recovery in the USA soon. Unless new policies, new technologies, new industries are set up, for newly adapted and newly skilled Americans.

2. We are now in transition to a world economy (Asean pushing it among themselves) + Japan, Korea, China, Australia with India getting in, at least in the Pacific Asia. Jobs will go to places/countries that will provide cheaper labor force etc. Capital then will follow, and a strong consumer base in these countries will eventually be developed.

3. A massive transfer of wealth and technology to developing countries in a decade or two.


The price of the unskilled will level off across continents. The rich will be richer, and the poor will get poorer wherever they may be - the difference would be on the level of safety net and social security that governments will provide to its unemployed.

Money can be made if you are a savvy investor. Safe bets as always are: metals particularly gold, oil, gas, and various companies banking and investing in developing countries particularly in Asean countries.

Good luck.