Buckle up, this is gonna get ugly
Pardon for my recent anglophone absence, but I thought I’d give you a brief heads-up on the market situation:
Crude oil is now at a record 140 US$/barrel, and slowly pushing on 150$.
The ECB - European Central Bank - announced plans on monday to raise the discount rate, which it did today, by 0,25 percentage points, leaving it now at 4,25%. This is following the news that EUROLAND inflation has been far above the target of 2%; in fact, it has gone beyond 4%, which is the higest in 16 years. The rate increase is the eleventh in 3 years. Considering the justified fear of a worldwide economic recession, this will IMO start the crash we’ve been approaching for at least the last year. The rate increase will increase the relative value of the Euro, which again will decrease the relative value of the US dollar, which is already in a very bad shape; it has the lowest exchange rate with other major currencies in a good two decades. This will in turn put pressure on the FED (US central bank) to increase its own discount rate, and that will trigger the crash in the US, which has so far been driven (and kept driving) by aggressive money supply expansion (=inflation) and the real estate/subprime phenomenon (=land speculation).
Put this on top of the US presidential election in the fall, and you’re in for a hell of a ride!
My general advice to people is now to sell off stocks, and again, in general, liquidate US holdings. Get rid of US paper dollars and if possible, buy commodities, gold and other noble metals being the obvious candidate (also beer and popcorn for the show in November). For investment, look to Europe for state bonds, especially Eastern Europe and the Baltic. And… be bloody careful with your money these days.