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‘After America’: The World Reset

Saturday, 17th March 2012 moneymorning.

Your reporter may be the only person to sleep five minutes away from the Sydney Opera House and spend less than five seconds looking at it. We couldn’t afford to miss a moment of ‘After America’.

On our second night in Sydney we managed to escape to a restaurant with some of the crew. We took separate cabs. The first got there in about five minutes. The second got there in about 40. After the meal, Sound Money. Sound Investments editor Greg Canavan said he would like to take a slow walk back to the hotel. We said it might be slower to take another taxi.

Aussie Housing and Gold

The second day started the way day one ended: at full speed.

Steve Keen had half an hour and didn’t waste a minute. If US Fed Chairman Ben Bernanke had any credibility with the attendees before they came, it was hard to see how he could after they left.

If there was agreement on one thing, it’s he’s the wrong man for the job. Steve Keen said the economic model Bernanke uses practically ignores debt completely. That’s why he didn’t see the crisis coming - he wasn’t even looking. There are plenty of others using the same model. Hopefully not your investment advisor!

Keen had a lot of charts saying why Australian house prices are going to go down. A lot of the squiggly lines representing Australia looked high, but pointed low. He said there isn’t going to be much going up in general anytime soon at all. Just the tempo of the show, as far as we could tell.

Diggers & Drillers editor Dr. Alex Cowie wanted to talk about gold and China. Those two are going to be talked about in the same breath for a while to come. China produces gold. China imports gold. China wants gold. China can’t get enough of gold. There are a lot of reasons why this is so. There are a lot of investing opportunities surrounding this - but you need to factor in a lot more than supply and demand.

Conflicting Views on China and The World

David Thomas, a futurist who specialises in the BRIC countries, painted a positive picture of these emerging markets. If there is going to be growth, he argued, it’s going to come from the BRICs. It was a nice thought, but it couldn’t last, because Satyajit Das was next and he said the opposite. He also stole the show.

Das somehow managed to crack jokes while giving a full tour of the financial system today. He could crack wise so often because so much of it is a farce. We can’t help but steal one line… ‘The world doesn’t need an economic review - it needs a psychiatric one’. Actually we’re going to steal another one. Das said, central banks and politicians are holding an experiment. And we’re the rats.

Das showed how this was so. From Europe to China to America and finally, all the way down here to Australia. He echoed Dan Denning when he said the economic crisis would keep merging into a political one before eventually hitting the core of the system itself: the United States. He echoed Greg Canavan when he said China wasn’t going to solve anyone’s problems, especially ours. We still can’t work out how he got so many gags into such a worrying story.

The investment takeaway was to make sure you had your priorities in the right order: capital preservation, income, then capital gains. That sounded familiar. It was. Kris Sayce had said the same thing.

We want to watch Das’s presentation again. And we will. We just hope the DVD comes out quicker than expected. Alex Cowie joked in his presentation that he should have called his newborn daughter ‘espresso’ because she keeps him up all night. Maybe that’s what Das should call his presentation, too. It’s going to keep me up.

But he doesn’t call it espresso. He calls it The Great Reset. The world is in for a whole lot of volatility, social and financial. The good news is you can prepare - if you know what’s coming.

After America has certainly prepared us for that.

Callum Newman
Roving Reporter, ‘After America’.

This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.

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