The June 2009 issue of the [B]Absolute Return Letter[/B] arrived in my email box yesterday, with the following cover letter:
[I]Dear Clint,
Our conviction remains high that the global economy will stage a recovery later this year but, unfortunately, we remain equally convinced that this will prove temporary. The main culprits are US property prices which are doing more damage to the purchasing power of US consumers than generally perceived. The poorest two thirds of US households are effectively bankrupt and the wealthiest one third are facing substantial tax hikes. This combination is lethal for US consumer spending, and what is poisonous for US consumers is bad for the global economy. We are therefore facing several more years of sub-par economic growth unless countries with high savings such as Germany can persuade their people to spend more.
Absolute Return Partners LLP is a London-based financial advisory firm, catering to institutions and high-net-worth individuals, and their Letter is supposedly restricted to those so-called “qualified” organizations and individuals. I can tell you, from years of reading the Absolute Return Letter, that there’s nothing in it that will get you into financial trouble, even if you don’t “qualify” according to their net-worth threshold.
I discovered the Absolute Return Letter through John Mauldin, who is a Dallas-based hedge-fund adviser, and manager of the Millenium Wave Fund. John writes the newsletters titled [B]Thoughts From the Frontline[/B] and [B]Outside the Box[/B], on a wide range of economic topics. In his Outside the Box letter, he frequently quotes, re-prints, or links to his British associates, Absolute Return Partners. If you find the Absolute Return Letter worthwhile, you might want to check out John Mauldin’s letters, as well. You can start by going to: johnmauldin.com
Yes, thank you Clint. Interesting reading and somewhat depressing also.
I didn’t agree with everything though. Saying that Germany’s saving is as big a part of the problem is just silly.
Sure, US spending has helped the economical boom in recent decades, but most likely things would have gone better if US households had been more careful not to spend money they didn’t own. Common economical sense.
There must be a balance between savings and loans or else things will always end in tears sooner or later.
As someone living pretty close to Germany, I can’t say that they’re unwilling to spend. I sensed that the writer was undeservedly defensive of the US, which in my not at all equally financially educated mind seems wrong. There’s no way of getting around the fact that the US government has allowed this path to be walked all way to and over the edge of the cliff. I for one certainly do not gloat about that, as it hurts us all. All the same, don’t blame the Germans for something the US caused - WWII is over you know
I guess what this all translates to is [I]the big chance[/I] for China to push the US down from the position as world economical engine. Personally I prefer to have the US in that role, but I’m not so sure my will be done in this.
I also regularly read Johns material and also subscribe to his monthly conversations with high profile figures in the financial world. Highly recommended if somewhat depressing at times like this. His overall view is that Europe is in a far worse mess than the USA
