Comments on: Paul Krugman is wrong

By: Spencer Brod

Spencer Brod — Tue, 14 Jul 2009 19:38:51 +0000

I have just return from a scouting trip in California and have been to Riga several times in the last ten years. I would agree with you comments about Latvia, but have difficulty drawing similar conclusions with California because of the following differences. California has a large diverse economy with unique competitive clusters versus Latvia’s small emerging economy with immature/obsolete industries. Being a state within the US is far different from being a new entrant member of the European Union. Recognizing that there are far reaching structural issues in the US economy and that further currency devaluation is a high probability, I would be hesitant to write off the US economy. It would not at all surprise me if the US leads a recovery relative to its developed economy peers lead by economic power of California.

Is it a good time to invest in California? I can only say that I was surprised that valuations of prime real estate and business assets had fallen relatively little. The huge drop in real estate values that you read about occurred in non-prime inland areas and this could be a silver lining in a recovery. The California lifestyle will always appeal to the wealthy (except tax burden wise) which is one reason why prime real estate has not decreased dramatically and now that occupancy costs are more affordable, especially in those areas which require economic development, it is a more competitive place to live for normal folk.

By: Keith

Keith — Tue, 14 Jul 2009 04:45:21 +0000

Hi Simon,

My grandfather moved to the US from Latvia around WWI. Do you know if Latvia has a citizenship program similar to Lithuania, and if they do, would the same benefits apply to it?

Thanks!

By: Steve Loy

Steve Loy — Tue, 14 Jul 2009 03:04:26 +0000

Your logic is impeccable. Your theory on California may very well prove out to be like Latvia. Therefore, what opportunities do you foretell in California? What if the Obamanation sends a care package to CA? Will the Swedes go down with Latvia? To be honest I am very impressed with your “for sure bets”, like $17 silver calls in 2011! All this other is just guessing but interesting. Thanks

By: Polonius

Polonius — Tue, 14 Jul 2009 00:40:07 +0000

Is Krugman right? What is this, Simon, a trick question? When HAS he been right? The guy appears to be an idiot savant imbued with impeccable Keynesian socialist academic credentials at the expense of any common sense whatsoever.

Neither a lender nor a borrower be.
Polonius

By: Jon Wilson

Jon Wilson — Mon, 13 Jul 2009 22:09:44 +0000

Paul Krugman is wrong. I suspect that this will be a case study of what happens if the crash is “allowed” to happen. I am sure they would like to inflate their problems away, but the reality is, that this avenue is closed to them. I believe the population is unlikely to scream about what they are entitled to, and will instead endure the bad, and bounce back with vigor once the bad investments and loans based in foreign currencies are washed out of the system. The people can still remember what it was to live in the “Soviet Sphere” and the difficult times of transition. They have first hand experience of what happens when a government runs economy, society, etc.

Contrast that to Argentina – or even California – where it is assumed that the government is the solution of first and last resort, and a decent standard of living is considered and inalienable right.

As long as the IMF does not come in to offer “help”, I would not be surprised to see Lithuania recovering while Europe continues to decline.

By: Jack Meligan

Jack Meligan — Mon, 13 Jul 2009 22:03:49 +0000

Simon,

Can you comment on the Panamanian attorney we met at the Casey Conference in Las Vegas last March? I am talking to them about incorporation and the Panamanian Investment Foundation (PIF). He seems competent. I guess I am wondering if you were responsible for his attending, and whether you still recommend him.

Any comments or experience with the PIF?

Thanks for all the excellent information in the IM.

JLM

By: Stephen Mandell

Stephen Mandell — Mon, 13 Jul 2009 21:43:52 +0000

This is what is supposed to happen when a bubble burst: deflation all around.
It sure looks like a buying opportunity shaping up to me.
My grandfather was a Litvak (yep). Came to the US in 190?
Married my grandmother a Galitziana. (yep).
Had a son here and little tike, me.
I’d love to get citizenship and buy me a piece of the old homeland.
Any ideas?
Steve