How can people protect their euros from Quantitative Easing?

realitykeeper

Now that the Irish and other euro zone governments are going to devalue our euros, by buying their own bonds with magic money, how should people with savings protect the value of their euros?

Obviously leaving savings in the falling euro is now a bad idea. Also, like bees to honey the speculators are piling into Euro zone equities. The problem there is that equity markets are already overpriced because of the low interest rates - so the euro zone stock market is already a super-bubble. And, even if you do buy equities in the euro (or other FIAT currency), any gains in share prices will be vulnerable to a collapse in the FIAT currency they are held in as well as the share prices themselves.

So if equities are a bubble and the euro is falling, is gold a safe investment for the long term? Are emerging markets worth investing in?

Thoughts and theories please.

OMD

realitykeeper wrote: »

Now that the Irish and other euro zone governments are going to devalue our euros, by buying their own bonds with magic money, how should people with savings protect the value of their euros?

Obviously leaving savings in the falling euro is now a bad idea. Also, like bees to honey the speculators are piling into Euro zone equities. The problem there is that equity markets are already overpriced because of the low interest rates - so the euro zone stock market is already a super-bubble.

So if equities are a bubble and the euro is falling, is gold a safe investment for the long term? Are emerging markets worth investing in?

Thoughts and theories please.

Well the obvious thing to do is exchange your Euros for another currency, probably the dollar. The problem is you are now too late. The devaluation has already taken place and the Euro is already at a 10 year low against the dollar

realitykeeper

OMD wrote: »

Well the obvious thing to do is exchange your Euros for another currency, probably the dollar. The problem is you are now too late. The devaluation has already taken place and the Euro is already at a 10 year low against the dollar

... a lot of people do not realize it but the dollar is massively overpriced as are US equities. Look at all the QE they have been subjected to over that last few years. Consequently, the "recovery" in the US economy is an illusion. The thing is, the EU and US have to toggle their QE programs because if they both do it at the same time, then the failure of QE as a policy will be too obvious.

It will be interesting to see what happens when the US have to begin QE4, more than likely the EU will temporarily pause its own QE program when that happens.

This is why I think non QE, emerging markets look interesting, i.e. not the EU, not the US and not Japan. The world is bigger than the EU, US and Japan.

FreudianSlippers

OMD wrote: »

Well the obvious thing to do is exchange your Euros for another currency, probably the dollar. The problem is you are now too late. The devaluation has already taken place and the Euro is already at a 10 year low against the dollar

The Dollar would probably have been one of the worst things you could buy.

OMD

FreudianSlippers wrote: »

The Dollar would probably have been one of the worst things you could buy.

What is your basis for that considering that the dollar is at a 10 year high against the Euro?

BMmeow

what about exchanging euros for the british pound?

FreudianSlippers

OMD wrote: »

What is your basis for that considering that the dollar is at a 10 year high against the Euro?

Look at realitykeeper's post directly above mine.

catbear

They're trying to suspend deflation so your euro will be neutral. The drop in oil prices is only starting to filter through. What's more important in Ireland is how do you save what euros you do have from further stealth taxes that feed an unaccountable bureaucracy where politicians are never prosecuted.

OMD

FreudianSlippers wrote: »

Look at realitykeeper's post directly above mine.

That doesn't explain why "The Dollar would probably have been one of the worst things you could buy".

Anyone wanting to protect Euros from QE effects has left it far to late as I previously said. The smart money would have bought dollars a year ago when it became obvious the ECB would have to use QE. In that time the Euro has effectively devalued against the dollar by 25-30%. Therefore as I said this would have been the smart thing to do.

I find your comment totally nonsensical that "the dollar would have been the worst thing to buy".

The Corinthian

OMD wrote: »

That doesn't explain why "The Dollar would probably have been one of the worst things you could buy".

Interesting view on this here.

realitykeeper

OMD wrote: »

Anyone wanting to protect Euros from QE effects has left it far to late

The QE program has only just begun in the euro zone. It is true the euro has already priced in some of the QE but the price fall to date is because of sentiment more than fundamentals. In time, the Euro will truly be worth less because of QE but at present its low value is only because traders are aware of the coming QE program and have priced in the effects of some of the coming QE in advance.

OMD

realitykeeper wrote: »

The QE program has only just begun in the euro zone. It is true the euro has already priced in some of the QE but the price fall to date is because of sentiment more than fundamentals. In time, the Euro will truly be worth less because of QE but at present its low value is only because traders are aware of the coming QE program and have priced in the effects of some of the coming QE in advance.

Only time will tell. I disagree.

tralalala

Shares of companies who can raise prices or property.

Both are generally overpriced but some are not, the markets are not in bubble territory

Brian Shanahan

realitykeeper wrote: »

... a lot of people do not realize it but the dollar is massively overpriced as are US equities. Look at all the QE they have been subjected to over that last few years. Consequently, the "recovery" in the US economy is an illusion. The thing is, the EU and US have to toggle their QE programs because if they both do it at the same time, then the failure of QE as a policy will be too obvious.

This. For one thing, to expand on realitykeeper's point, there is strong data showing that the recent resurgence in US and UK stock exchanges is simply down to the extra money sloshing around because of the two countries' QE efforts, and not due to either any extra real money in the system, nor to increased performance of SE listed companies (in fact most companies have essentially stayed still since the crash in terms of real performance). And once the QE spigot is turned off then the stock markets will collapse, owing to the fact that the banks and the rich will no longer have free money to play in the speculative bubble.

billyknowsbest

The euro has weakened considerably recently. I heard an economist on the radio explain that this is partly the result of QE. A greater supply of euros, depreciating its value.If this is so how come the pound sterling never weakened when the Bank of England had QE on at full blast?

catbear

billyknowsbest wrote: »

The euro has weakened considerably recently. I heard an economist on the radio explain that this is partly the result of QE. A greater supply of euros, depreciating its value.If this is so how come the pound sterling never weakened when the Bank of England had QE on at full blast?

It did, remember when the £ blew out to €.92c?

billyknowsbest

Catbear,
When did that happen? According to the ecb website over the last ten years
the minimum was 1.02 and that was in December 2008, yet the Bank of England started QE in March, 2009??

catbear

billyknowsbest wrote: »

Catbear,
When did that happen? According to the ecb website over the last ten years
the minimum was 1.02 and that was in December 2008, yet the Bank of England started QE in March, 2009??

My mistake, I was remembering when the € blew out to 92p back in 08 as I had bought a load of stuff on line at the time.
I think people fled the pound after banks fell in the UK, QE was then instigated.

billyknowsbest

Still on QE- it pushes up asset prices but lowers their yield- how come?

Eugene Norman

billyknowsbest wrote: »

Still on QE- it pushes up asset prices but lowers their yield- how come?

Money has to go somewhere.

Brian Shanahan

billyknowsbest wrote: »

The euro has weakened considerably recently. I heard an economist on the radio explain that this is partly the result of QE. A greater supply of euros, depreciating its value.If this is so how come the pound sterling never weakened when the Bank of England had QE on at full blast?

Because at the time everybody was at it. The US was using QE, the UK was, and the EU was. IIRC the current QE round by the ECB is actually it's third attempt to stimulate the economy by printing money and giving it to the rich (though it is in fact by far the largest round for the ECB).

You'd think that the rest of the world would have learned from Japan's example in the nineties.

Eugene Norman

Brian Shanahan wrote: »

Because at the time everybody was at it. The US was using QE, the UK was, and the EU was. IIRC the current QE round by the ECB is actually it's third attempt to stimulate the economy by printing money and giving it to the rich (though it is in fact by far the largest round for the ECB).

You'd think that the rest of the world would have learned from Japan's example in the nineties.

They did. They learned to use QE.

Sterling was artificially kept down by QE -- after all the EZ was a basket case, wasn't and isn't certain to survive, and yet remained it's position re sterling.

catbear

Eugene Norman wrote: »

They did. They learned to use QE.

Sterling was artificially kept down by QE -- after all the EZ was a basket case, wasn't and isn't certain to survive, and yet remained it's position re sterling.

Give me an example of an economy that isn't a basketcase?

Eugene Norman

catbear wrote: »

Give me an example of an economy that isn't a basketcase?

The UK. Although it could do with better productivity.

View

Eugene Norman wrote: »

The UK. Although it could do with better productivity.

The UK is running an "Excessive Deficit" along with the economic laggards in the EU such as Ireland, Greece etc. That's hardly grounds for jubilation.

Brian Shanahan

Eugene Norman wrote: »

The UK. Although it could do with better productivity.

This is an economy whose anaemic growth numbers is due solely to two reasons, a) the South East is experiencing a government primed housing bubble (no prizes for guessing how that'll end), and b) the City of London is the world's biggest offshore tax haven and has recently been pump primed by a chancellor who is a trust fund baby eager to make it easier for him to pay less taxes on his offshore tax evading money. In fact the general economy is so bad that the total industrial output of the UK hasn't stopped falling since the crash.

That's the exact definition of a basketcase economy. And it's due to the economic strategy most of the world is following.

billyknowsbest

UK- basketcase part two- 700,000 British workers are on zero-hours contracts

gallag

billyknowsbest wrote: »

UK- basketcase part two- 700,000 British workers are on zero-hours contracts

That's like 1.2%

gallag

Brian Shanahan wrote: »

This is an economy whose anaemic growth numbers is due solely to two reasons, a) the South East is experiencing a government primed housing bubble (no prizes for guessing how that'll end), and b) the City of London is the world's biggest offshore tax haven and has recently been pump primed by a chancellor who is a trust fund baby eager to make it easier for him to pay less taxes on his offshore tax evading money. In fact the general economy is so bad that the total industrial output of the UK hasn't stopped falling since the crash.

That's the exact definition of a basketcase economy. And it's due to the economic strategy most of the world is following.

Imf seems to think the UK is doing well, did they not say the rest of the EU should follow the UK'S lead?

catbear

gallag wrote: »

Imf seems to think the UK is doing well, did they not say the rest of the EU should follow the UK'S lead?

I could be wrong but I remember the IMF heralding Ireland as an example of process in 04. At least they put their money with their mouth with a bailout.

Brian Shanahan

gallag wrote: »

Imf seems to think the UK is doing well, did they not say the rest of the EU should follow the UK'S lead?

The IMF think people dying in water riots in countries like Ecuador is also a good thing, and families hunting around bins in countries like Argentina or Greece too. So I wouldn't be trusting what they think.

Eugene Norman

Brian Shanahan wrote: »

This is an economy whose anaemic growth numbers is due solely to two reasons, a) the South East is experiencing a government primed housing bubble (no prizes for guessing how that'll end), and b) the City of London is the world's biggest offshore tax haven and has recently been pump primed by a chancellor who is a trust fund baby eager to make it easier for him to pay less taxes on his offshore tax evading money. In fact the general economy is so bad that the total industrial output of the UK hasn't stopped falling since the crash.

That's the exact definition of a basketcase economy. And it's due to the economic strategy most of the world is following.

You are probably right but I was thinking short term.

catbear

Brian Shanahan wrote: »

The IMF think people dying in water riots in countries like Ecuador is also a good thing, and families hunting around bins in countries like Argentina or Greece too. So I wouldn't be trusting what they think.

Ireland has homelessness problems yet we don't blame outsiders for our own failings, we don't say Irish homelessness is Greece's fault because of their debts or Germany's fault because or their surplus.

Eugene Norman

catbear wrote: »

Ireland has homelessness problems yet we don't blame outsiders for our own failings, we don't say Irish homelessness is Greece's fault because of their debts or Germany's fault because or their surplus.

However greeces collapse is in part outside their control. CF Lehmans.

catbear

Eugene Norman wrote: »

However greeces collapse is in part outside their control. CF Lehmans.

Are you saying all the countries were forced to run up debts beyond means?
Nobody in Ireland can blame outsiders for building ghost estates on floodplains.

Eugene Norman

catbear wrote: »

Are you saying all the countries were forced to run up debts beyond means?
Nobody in Ireland can blame outsiders for building ghost estates on floodplains.

Nobody was "forced" to do anything. However if a central bank keeps interest rates low it creates asset bubbles. They are there to stop that. Furthermore if economists tell non-economists that everything is ok then why wouldn't people build and buy ( full disclosure, I didn't because I actually understand economics. Hatip London and Dublin house prices are overvalued).

The responsibility for high level macro economics lies with economists. Central banks kept prices low, the bankers invented all kinds of absurd derivatives and insurance to roll up sub prime loans into "collateralised" securities that weren't worth the paper they were printed on and the bank and industrial economists attacked the few academic economists who cried wolf.

This is the 5th time I've had to explain the recent past. Victors make history? Controlling the narrative by controlling the press makes history, more like.

Brian Shanahan

Eugene Norman wrote: »

You are probably right but I was thinking short term.

So am I. In the main analysis, the worlds economies are ****ed within five years unless serious reigning in is done of the malefactors who created the last crash, and the malefactors who continue to evade their duties to pay taxes.

Unfortunately the needed remedial action won't happen because politicians are owned by those committing the crimes.

View

Eugene Norman wrote: »

Nobody was "forced" to do anything. However if a central bank keeps interest rates low it creates asset bubbles. They are there to stop that.

The ECB is there to keep inflation low. It is up to the member states to ensure their domestic fiscal policies guard against asset bubbles such as our property one. Instead we had tax-policies that encouraged increased investment in property.

It is absurd to suggest that interest rates should have been raised all over the Eurozone to counter-act our property obsession - indeed, had they done so, we'd have screamed our heads off and been outraged at a move to over-ride our domestic decision making.

catbear

To add to Views comment it was widely acknowledged after the 2002 election that the retention of section 23 property investment was a vote getter. Even though its main aim had been for urban regeneration it now had become popular as a general tax dodge.

FISMA

realitykeeper wrote: »

Now that the Irish and other euro zone governments are going to devalue our euros, by buying their own bonds with magic money, how should people with savings protect the value of their euros?

Put your money where your mouth is...

realitykeeper wrote: »

...Today, Russia is thriving and the west is in decline...

Buy rubles!

I swindled the NSA

realitykeeper wrote: »

is gold a safe investment for the long term?

Ive never got this fascination some people have with gold.

Gold prices fluctuate too and one still needs some trustworthy person/organisation to look after their little stash of gold and protect it from predators.

realitykeeper wrote: »

a collapse in the FIAT currency

How many commodity backed currencies are there in the world today and how trustworthy are the relevant governments not to start running the printing presses when the $h1t hits the fan ?