andrewducker (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
andrewducker) wrote2007-11-20 08:14 am
andrewducker) wrote2007-11-20 08:14 am
Currency
Yesterday I was asked by ![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
octopoid_horror "What currency -is- now the safe option...? Is it the Euro? Yen? Or do we all go back to putting everything into gold?"
which elicited the following response:
There has never been a safe long-term currency.
Dollars were the safest from after the 70s oil-shock until the necons got hold of the budget. Nowadays the Euro is stable, with the Yuan having the most possibility over the long term. Sensible investors will avoid the Yuan for mid-term investments because frankly their system of government isn't reliable. They could decide tomorrow to abandon the move to capitalism. They'd be stupid to do so, but they _could_, because they're so autocratic. This makes people nervous, as does their government being so opaque. Also, their capital controls are nowhere near strong enough, and I don't trust their stock market valuations as far as I could throw them. Huge possibilities, lots of danger for careless investors.
The Euro is frankly liable to be stable for the next while because the EU isn't high growth, but is managing to avoid making too many bad decisions at once, and has different countries pulling in enough different directions to keep them fairly central.
If I was holding currency reserves I'd have 70% in Euros for stability, with 30% in pacific rim countries best placed to take advantage of China's growth.
Oh, and obviously I wouldn't trust Russian money in the slightest. Frankly the whole of the ex-USSR is being held together by sheer force of will right now, and the second a power struggle kicks off it's all going to fall apart. Putin's doing well enough, and has strong supporters that realise that the price of destabilising the country isn't worth more power, but all it's going to take is one mad idiot and it's all going to go to hell. Frankly the country is too large to be governed centrally without cracking down on dissenters brutally.
octopoid_horror "What currency -is- now the safe option...? Is it the Euro? Yen? Or do we all go back to putting everything into gold?"which elicited the following response:
There has never been a safe long-term currency.
Dollars were the safest from after the 70s oil-shock until the necons got hold of the budget. Nowadays the Euro is stable, with the Yuan having the most possibility over the long term. Sensible investors will avoid the Yuan for mid-term investments because frankly their system of government isn't reliable. They could decide tomorrow to abandon the move to capitalism. They'd be stupid to do so, but they _could_, because they're so autocratic. This makes people nervous, as does their government being so opaque. Also, their capital controls are nowhere near strong enough, and I don't trust their stock market valuations as far as I could throw them. Huge possibilities, lots of danger for careless investors.
The Euro is frankly liable to be stable for the next while because the EU isn't high growth, but is managing to avoid making too many bad decisions at once, and has different countries pulling in enough different directions to keep them fairly central.
If I was holding currency reserves I'd have 70% in Euros for stability, with 30% in pacific rim countries best placed to take advantage of China's growth.
Oh, and obviously I wouldn't trust Russian money in the slightest. Frankly the whole of the ex-USSR is being held together by sheer force of will right now, and the second a power struggle kicks off it's all going to fall apart. Putin's doing well enough, and has strong supporters that realise that the price of destabilising the country isn't worth more power, but all it's going to take is one mad idiot and it's all going to go to hell. Frankly the country is too large to be governed centrally without cracking down on dissenters brutally.
no subject
But yeah - knowing what to buy, and holding it for the right period of time, is very tricky.
no subject
To be honest you want large population base and unpunished growth, which leaves basically the euro as the safest bet.
Now I just need to get my brain around the tax problem of investing in the Euro.