USA: Is it really number one?
I’ve mentioned diversifying out of US dollars (USD) since the temporary upward blip in the long term decline of the currency caused by flight rather than fundamentals. Prior to that with the AUD approaching parity with the USD I recommenced US investors avoid unhedged exposure to Australian equities. I know we all hate someone saying I told you so, so let me stress that I’m not a currency expert, but this guy is. Bill Gross in his June missive said “Holders of dollars should diversify their own baskets before central banks and sovereign wealth funds ultimately do the same.”
Let me start with a story. My partner was on a business call to the US the other day. The educated professional on the other end of the call asked her if we, Australia, celebrated July 4th? This sort of myopic arrogance is even worse than the other dirty little US habit of drinking Coke like it’s water; while the US is important on the world stage it is not the world.
Every time I have suggested on message boards that the US may not be the greatest place on earth I have faced a deluge of incensed replies. It appears the average North American is convinced theirs is the best country on earth in every single way. Blinkered nationalistic thinking is dangerous for your financial well being.
Australian markets have outperformed US markets over every reasonable time frame. We laugh at your 10% average, or whatever it is. Who would bother investing for a 10% return we jest. I think it’s 13.5% to 10%, which as y’all know is huge.
Australia has it all. Good banks, the resources, plenty of land, excellent free education and health systems. Melbourne where I live is regularly in the top 1-3 cities in the world. Some recent survey I read placed Australia third in happiness, I think the US was like 2000th or something.
Like you we have a eloquent but seemingly empty late boomer running the show. Unlike you we all pretty much ignore him and just keep having a good time and thankfully the Chinese or I guess ultimately Nth America keeps picking up the tab.
While Americans are fretting about energy Australians are wondering how to cash in our 1000 years worth of gas. We’ll probably sell it to you and use our even more bountiful geothermal energy. Oh, you’d prefer uranium, well we can help there too. And you want to store your nuclear waste as well. How about the most geologically stable country around which happens to have plenty of empty space, unless you worry about a few indigenous people. Yes I know you’ve already spent a quadrillion dollars on some storage plan over there, but come on we all know that’s never gonna happen.
The Chinese offered us a million each to piss off and give them the country. It got to a referendum, but was rejected as there wasn’t enough eskies available to transport all the cold beer we could buy with that. So now the Chinese are buying Australian one ship at a time. It’s just lucky for us they don’t remember where the British tested their nuclear bombs.
I jest the Chinese are smarter than..well me at least. They play the long game and are merely using our countries as a stepping stone to their own internal consumption. Some commie once said a truly successful capitalist country can only sprout from a communist country..or something like that.
China is mildly worried about the US inflating out of debt, but only mildly. They lend you a dollar, which was yours to begin with, so you can buy a dollar more of shitte which costs them 50 cents to produce, they collect a couple 50 cents and lend you another dollar and on it goes. They don’t really care if they only get back 50 cents as it was all yours to begin with anyway. All the time the western world finances their development and ends up owing them money. It’s comical. They play go and we play..I dunno..with ourselves. The funniest thing is I still get the impression many people look down on them. Ohh look at us we have democracy. Aren’t we great. And it only costs 11% of federal receipts to have our democracy govern us and oh another 54% to defend the right to pay that 11%.
The good news is America is an incredibly resourceful place, full of many intelligent people and it has bounced back every other time things have looked bad. It seldom pays to think it is different this time. Though a little hedge wouldn’t hurt.
In the coming weeks I’m going to explore some of the Australian investment opportunities available for Americans to gain diversification. I’ll list the best Australian financial sites and Australasians bloggers I read. Hopefully I have time to list some of the fund managers worth keeping an eye on and even more.