Comments on: You Can Profit from this Country’s Devaluation

By: Dominick

Dominick — Wed, 15 Jul 2009 14:40:27 +0000

Simon-First let me congratulate you on your new daily missive. I love your direct no-nonsense approach, especially in your response to questions. At the last Casey Summit you mentioned you were working on an update to Doug’s ‘International Man’. Is that still in the works, and when might it be published?-Dominick

By: Dean

Dean — Tue, 14 Jul 2009 22:14:51 +0000

“Me” is right. Swedish banks (Swedbank and Parex in particular) have a lot of exposure in Latvia, Estonia, and Lithuania. If Latvia loses the peg, all the Baltics could go. One could go short or sell puts on these two banks. For more passive investing, you can short the Sweden ETF (iShares EWD). One potential wild card may be that Sweden just assumed the EU presidency (rotates among EU members). They will likely try to influence the continuation of dumping EU money into Latvia to protect themselves.

By: Rado

Rado — Tue, 14 Jul 2009 21:03:59 +0000

Borrow in Lats, change into Euros and wait. Of course, you have to consider the high interest rates in Latvia. Timing is essential. Or instead of waiting, try selling the euros on the unofficial market.

By: Me

Me — Tue, 14 Jul 2009 20:27:53 +0000

Short the Swedish banks that are most heavily invested in the area. The markets will likely not take kindly to a devaluation regardless of the amounts of capital that they are able to squirrel away. Another point I’d like to make is a devaluation has the very real potential to cause a domino panic across Eastern Europe with the Euro coming into question. Not good for the Euro.

By: Mary

Mary — Tue, 14 Jul 2009 20:16:53 +0000

Hi Simon:

Since you asked for questions here are several. Myth or otherwise the
information coming out is that in fact 32 countries have suffered aerial
spraying for 10 or more years. Do you know of any countries that the
New World Order is not spraying? This fact was recently admitted by the
USA government in a couple of New York papers. It is no longer conjecture. Is there anywhere left short of leaving for the
moon, where the air, water and food is safe and where one can enjoy liberty? Perhaps in the new world one must become a travelling gypsy.
How would one go about this? I have subscribed to Beyond Borders
consistently from the beginning.

By: S. Marriott

S. Marriott — Tue, 14 Jul 2009 15:50:02 +0000

Well, that’s not a bad summary of the situation here, although like many others coming from a conventional economic reasoning perspective, you fail to mention one very important thing: There is a flourishing “grey” economy here. Always has been. Now it is more active than ever. Normal figures don’t show how people manage to live despite the carnage. It’s as old as time and the Latvians and Russians here are well-practiced at it. They had 50 years of practice during the shortages of Soviet times, and they are returning to those old practices now. So much commerce is “under the table” that it will never be measured and reported. Yes, things are looking bleak for those who have lost their jobs and can’t pay their debts. But people are managing. This makes it bad for the banks, of course, but before we breathlessly predict the apocalypse, just remember that the total Latvian GDP could be covered by less that one month’s earnings from Goldman Sachs.

Anyway, I breathlessly await tomorrow’s episode of “The International Man” to see what this money-making opportunity is. Perhaps it’s to change all your Lats to something else, anything else, and await the devaluation and then change back to buy deeply discounted assets. We’ve been thinking this for almost two years. We’re holding mostly Euros, some dollars, some Aussie dollars, a few GBP’s and just a bit of Lats rolling each month at 10%. Prices are falling everywhere. The 30-50% “discounts” in the stores are becomming the default price. This is pleasing to those of us sitting on a small mound of cash averaging almost 8% in insured deposits. Still, we are tiring of the cold dark winters after five years and are headed to warmer climes. The Wife and I will be heading to Wellington NZ later this year for her M.A. studies in information management. Just as Fall begins to turn, we’ll get another Spring and Summer in the Antipodes.

Cheers,

S. Marriott

By: Bob

Bob — Tue, 14 Jul 2009 15:23:11 +0000

Simon,

Just got back from Panama with the fam and had a great time. Met with Augusto, sharp guy. The city is not our cup of tea but Boquette was sleepy, beautiful, and should be a great buy in 18-24 months, dollar notwithstanding.

I’m committed to finding a crib but in the meantime I’m internationalizing my teenage daughters as two are in Boquette (14, 16) and the other is in Seoul (17). All are taking intensive language courses for the summer

Actually this is an area I think your readers would like to hear about as you have more than just a few gray hairs out there who want to know how to best prepare their kids or grandkids for the future. This question came up twice at the Las Vegas conference.

Let me know if you’d like an article or two as I could share what I’m doing with the girls. For example the oldest daughter took eight weeks intensive Spanish last year in Buenos Aires while I looked at the city and Doug’s place in Cafayate. This year she got TESL certified so she can pay her own way as an English tutor in Seoul while taking intensive Korean. Can you tell I’m a proud papa or what?

Let me know if the article(s) would be of interest, regardless keep up the good work as some of us are actually acting on your advice and not just living through your experiences.

With best regards,

Bob

By: Vran

Vran — Tue, 14 Jul 2009 14:55:46 +0000

I believe the same thing is going to happen to Croatia within the next 12months