Welcome to your Financial Halloween!

Excerpts from Dr. Enzio von Pfeil's October 31, 2008, appearance on CNBC Asia:

1. The Fed slashed interest rates by 50 bps and indicated that it may cut further if necessary. There's also talk about rate cuts by Bank of Japan tomorrow, and European Central Bank and Bank of England next week. How much do they need to cut? How helpful are these rate cuts in staving off a global recession?
   • Watch out for the coming "Financial Halloween"!
   • You cannot cure an alcoholic’s liver with a couple of aspirin.
   • Yes, interbank rates are down.
   • However, while the sub-prime crisis is built on air, the coming credit card crisis is going to be “built” on hot air, i.e. on vague promises like “trust me”.
   • Besides, the global Economic Time™ has been worsening since Spring of 2006, when we identified stagflation beginning to hit America.
   • Now, everything has gone “on hold”: it's tough to make money in such an environment!
2. Many investors are now bracing themselves for a prolonged global recession. What's your prognosis on the global economy? Just how grim is the global outlook?
   • Worse – because of the internet.
   • Now, financial tsunamis hit hard and fast, vanish and re-appear.
   • A bubble always is in the making – and later “for the taking”.
   • Besides, the policy cookie jar is running on empty…
   • So what happens when the dollar and bond bubbles burst off the back of a credit card crises for which policy makers have no more “cookies” to dish out?
3. China, often seen as the world's last engine of economic growth, has also cut interest rates to help prop up its domestic economy. How susceptible is China to a global recession? If China's growth slows significantly, how will it affect Asia and the rest of world?
   • We never bought this “decoupling nirvana”.
   • The Chinese are humans: they see Wall Street tank, they know that Shanghai will tank.
   • So they, too, fear that their wealth is evaporating.
   • An easy way to see how the rest of Asia gets affected is to ask shippers how their business is doing. Their response is “what business?”
4. Can we make money in the present environment? How?
   
   • You certainly can SAVE money by avoiding holding time deposits at banks – other than if the government has guaranteed these.
   • We still like the yen.
5. Are there any other issues and concerns that you like to highlight?
   • Prepare for the next bubbles to burst: the dollar and bonds.

Comments

[Larry House:]

Will the bursting of dollar and bond bubbles signal that inflation is here or will inflation be the cause of the bubbles bursting?

2008 Oct 30 02:19 PM

[Itsjustal:]

I think you need to just sit and think happy thoughts for a while....

While it isn't good, this is no worldwide depression. It is also a good time to start taking positions in any world class stocks that you've had your eye on.

You can't pick market tops or market bottoms with certainty...but the market bottom is probably around here somewhere....

2008 Oct 30 05:40 PM

[X-15:]

When will the Dollar roll over?

2008 Nov 01 01:02 PM

[phdinsuntan...:]

Enzio is a good economist, but normally good economists are terrible money managers. He still likes the yen, I sold it @ 90 yen/us$. The dollar
will burst? imagine the euro, ok, take this advise, boy some chinese coal,
if you cant make a profit, at least you can spend a warm winter.

2008 Nov 05 09:27 AM