UK growth slows as fourth quarter GDP growing by just 0.5%, from Reuters:
For 2015 as a whole, Britain’s economy grew 2.2 percent, down from 2.9 percent in 2014, when it was the fastest-growing major advanced economy. The global slowdown means Britain is still likely to have remained near the top of the pack in 2015
Although this spin makes things sound cheery I’m not so convinced that Britain will be able to remain immune from the weaknesses in the global economy.
One of the culprits that the financial press seem to like blaming is China who came out this week to warn George Soros to not mess with their currency:
China warns globalist Soros not to mess with their currency https://t.co/3HjHht2ZHY
— David Thomas (@djthomas) January 27, 2016
When you consider what Soros did to the pound in the UK the authorities in China are right to be worried but it looks a little desperate to single to out Soros in this way.
More worrying for China are the reports this week claiming that China’s debt to GDP ratio has risen to a massive 346%.
China’s public debt has been rising at a fairly brisk pace over the years and the double whammy of slowing growth means people are beginning to take notice.
These issues blend in nicely with what I’m thinking and reading about right now which is the wider context of the global economy:
…the three grand economic experiments launched by the U.S., Japan and China following the Global Financial Crisis… The fate of the global economy depends on the success of these unconventional efforts to boost economic growth. Yet all three ventures are now in danger of failing because none of them addresses the fundamental challenge of structurally slow growth.
In the US it was ZIRP, then QE1, 2 and 3 and then a rate hike cycle at the end of 2015 which has culminated in massive government debt and financial markets that are fearful of another severe recession and the European economy similarly manipulated.
The news last Friday that the Bank of Japan imposed negative interest rates has only heightened my concerns regarding the global economy because the move just looks so desperate.
Bank of Japan join the central banks of Europe, Sweden, Switzerland and Denmark in showing the world that they are running out of ideas as the global economy and the value of currency lines up for a super-body-slam off the top rope.
And speaking of Switzerland – did you see this piece from the Daily Mail this week?
It appears that Swiss econo-loons have proposed implementing a ‘people’s QE’ insofar as their government should pay it’s citizens the equivalent of £1,700 a month regardless if they work or not.
These are all reasons for why I have a large appetite for bonds and alternative investments – basically anything but stocks right now – as the value of the stock market is being manipulated by not just The Fed but by other asylum escapees who run central banks and treasury departments.
The slowdown in the US economy and the reduction in US corporate earnings also makes me a bear right now:
Weakening EPS in the US pic.twitter.com/NEidXxYwPk
— David Thomas (@djthomas) January 30, 2016
Alternative Investments: Gold And A Small Business
My alternative investments of choice this past week (since the start of 2016 exctually) have been
- a private business that produces a high return on investment
- physical gold
The business in which I have a 100% stake has generated positive cash flow from day one and has really made me think as to why I did not start the venture years ago.
Due to the relative newness of the business I’m not able to say yet what it is or does but it’s all above board and as the months roll by and it gets more established then I can share more about it.
As for gold, well I’ve actually managed to get round to getting some and I’m impressed with what I’ve discovered thus far such as being a resident of the UK and investing in British gold coins means that VAT and CGT are exempt under current legal rules.
If you are interested in buying gold my advice would be: shop around.
There are plenty of reputable online gold dealers that you can use to compare prices because believe me they vary considerably.
My experience on the high street in regard to buying physical gold is as to be expected in that prices online are much, much better when you’re prepared to take the time to shop around.
Most of my time this week will be spent tweaking personal finances in an attempt to commit more funds to physical gold accumulation, but the majority of my time will see me make structural changes to the private business I’ve started that will help it to grow over the next twelve months.
The intention is to make the private business the source of investment funds for stocks, bonds and alternative investments over the long term.