- Joined
- Aug 30, 2007
- Messages
- 13,879
There is a lot of talk about the Euro lately.
Spain and Greece are struggling financially, closely followed by (also catholic) Ireland, Portugal and Italy which alone has over $2T in debt.
When I was a teenager growing up in N-Europe we traveled to Spain frequently. Why? Great beaches, crystal clear water, great weather, and of course, it was very cheap. Inexpensive hotel rooms or condos, right by the beach, excellent food and wine for less than 4 DM (2 Euro's). Like Mexico today for Canadians, who can go to Palm Springs, Arizona or Hawaii, but often choose Mexico instead. Same reason.
That advantage is currently lost in S-Europe. Spain, Italy and Portugal are not so cheap anymore. N-Europeans might as well stay home or go to Austria or the North-Sea with similar beaches, better quality and similar prices.
I believe first Greece, then Spain, Portugal and Italy, perhaps Ireland will leave the Euro. That makes total sense. All those countries have abdicated their monetary powers to the ECB, controlled by Germany and France. A great benefit for N-Europeans, especially Germany, but at the expense of S-Europe.
I was in Austria a few months ago: the economy is booming. Low, low unemployment, soaring real estate prices (higher than Vancouver or GTA for similar properties, btw), a construction boom without end, labour shortages. Why is that? Because the Euro is cheap and getting cheaper, allowing exporting nations like Austria, Germany, Denmark or the Netherlands to thrive at the expense of their unemployed S-European brethren.
How can they compete? In the past, before the Euro, in the 1980's and 1990's, they could lower the currency and sell wine, hotel rooms, airplane parts, manufacturing labour, washing machines, olives or entire cars at far, far lower prices and had a humming economy. But they can't anymore. N-Europeans benefit at S-Europeans expense. Lutherans 1 vs Catholics 0. Call it what you may, but the Euro zone will split. The earlier politicians and citizens realize it the better.
So, don't buy that Greek island quite yet. Buy it in Drachma in 2014 or so, then wait for the Greek currency to appreciate and the economy to grow! That's why I do not invest in Germany, as I believe the Euro will further deteriorate. Then, once the S-European neighbors are gone from the Euro, wait for the Euro to strengthen ` likely from a low of par to the US or Canadian $. Maybe by 2014 or 2015.
Imagine Mexico, US and Canada having one currency, the North American $. Mexico's industry and tourism would suffer tremendously, and Canada would have an even lower unemployment rate.
The Mexican peso is around 14 peso per US $, which used to be around 9 or 10 .. a 40-50% loss of purchasing power or exporting strength. That is what will happen to the Greek Drachma, Italian Lira and Spanish peseta when they are re-introduced, and their pain will be over while N-Europe's pain will start due to a strengthening currency and far lower exports.
In the mean time, as a Canadian, invest at home, in growing regions with job growth, not too levered, with some decent cash-flow but with value appreciation in mind as that is where the bulk of the profit will come from if you can hold long enough. Go to Europe (or Mexico) on vacation instead with your hard petro Canadian dollars. The Euro is at $1.20 this week .. wow .. down 30% from a few short years ago.
Canada - the Switzerland of North-America - where people with means from other countries park their $s, in stocks, bonds and real estate, such as a S-American firm my partner Scotty and I met last week.
Spain and Greece are struggling financially, closely followed by (also catholic) Ireland, Portugal and Italy which alone has over $2T in debt.
When I was a teenager growing up in N-Europe we traveled to Spain frequently. Why? Great beaches, crystal clear water, great weather, and of course, it was very cheap. Inexpensive hotel rooms or condos, right by the beach, excellent food and wine for less than 4 DM (2 Euro's). Like Mexico today for Canadians, who can go to Palm Springs, Arizona or Hawaii, but often choose Mexico instead. Same reason.
That advantage is currently lost in S-Europe. Spain, Italy and Portugal are not so cheap anymore. N-Europeans might as well stay home or go to Austria or the North-Sea with similar beaches, better quality and similar prices.
I believe first Greece, then Spain, Portugal and Italy, perhaps Ireland will leave the Euro. That makes total sense. All those countries have abdicated their monetary powers to the ECB, controlled by Germany and France. A great benefit for N-Europeans, especially Germany, but at the expense of S-Europe.
I was in Austria a few months ago: the economy is booming. Low, low unemployment, soaring real estate prices (higher than Vancouver or GTA for similar properties, btw), a construction boom without end, labour shortages. Why is that? Because the Euro is cheap and getting cheaper, allowing exporting nations like Austria, Germany, Denmark or the Netherlands to thrive at the expense of their unemployed S-European brethren.
How can they compete? In the past, before the Euro, in the 1980's and 1990's, they could lower the currency and sell wine, hotel rooms, airplane parts, manufacturing labour, washing machines, olives or entire cars at far, far lower prices and had a humming economy. But they can't anymore. N-Europeans benefit at S-Europeans expense. Lutherans 1 vs Catholics 0. Call it what you may, but the Euro zone will split. The earlier politicians and citizens realize it the better.
So, don't buy that Greek island quite yet. Buy it in Drachma in 2014 or so, then wait for the Greek currency to appreciate and the economy to grow! That's why I do not invest in Germany, as I believe the Euro will further deteriorate. Then, once the S-European neighbors are gone from the Euro, wait for the Euro to strengthen ` likely from a low of par to the US or Canadian $. Maybe by 2014 or 2015.
Imagine Mexico, US and Canada having one currency, the North American $. Mexico's industry and tourism would suffer tremendously, and Canada would have an even lower unemployment rate.
The Mexican peso is around 14 peso per US $, which used to be around 9 or 10 .. a 40-50% loss of purchasing power or exporting strength. That is what will happen to the Greek Drachma, Italian Lira and Spanish peseta when they are re-introduced, and their pain will be over while N-Europe's pain will start due to a strengthening currency and far lower exports.
In the mean time, as a Canadian, invest at home, in growing regions with job growth, not too levered, with some decent cash-flow but with value appreciation in mind as that is where the bulk of the profit will come from if you can hold long enough. Go to Europe (or Mexico) on vacation instead with your hard petro Canadian dollars. The Euro is at $1.20 this week .. wow .. down 30% from a few short years ago.
Canada - the Switzerland of North-America - where people with means from other countries park their $s, in stocks, bonds and real estate, such as a S-American firm my partner Scotty and I met last week.