Time to take some lessons from Zimbabwe?
In this issue:
» Buffett's key lieutenants earn more bad press
» Another US$ 100 bn blow in the offing for Euro zone
» India Inc's credit quality at its peak
» Stronger signs of asset bubble in China
» ...and more!
------------ Exclusive Access To Equitymaster's Stock Portfolio (Only till 5 PM Tomorrow) ------------
Over a year back we made a commitment to our members that we will invest our own money in every recommendation we make under ValuePro, our stock recommendation service where we aim to multiply money 4x - 6x over 5 - 10 years.
This portfolio now has 8 stocks in it... and it is on course to meet its target.
Now, we want you to have exclusive access to it. And that too for free.
But you must hurry... this opportunity is available only for the next few hours... Just read on for full details...
----------------------------------------------------------------------------------
00:00 |
![]() |
|
Important to point out here that Zimbabwe's misery was kicked off by the country's central bankers' obsession with printing money. Even if that meant introducing currencies of ridiculous denominations. What later arrested the nation's economic fatality was the decision of a saner Finance Minister to allow use of more stable currencies like the US dollar and the Euro.
In February 2011, the annualised inflation in Zimbabwe stood merely at 3%. This is even as the nation's GDP growth is nearing 9% for the year. But more importantly, its inflation rate is now lower than that of US, UK, India and China. This is not to suggest that countries with higher inflation rates could see YoY price rises in 8 digits soon. But that money printing is not a solution to economic problems. On the contrary it can lead nations to precarious circumstances. For economies that have even the slightest hints of a currency crisis this is a wakeup call. Zimbabwe's solution of using more stable currencies could prove useful to safeguard their economic sovereignty. Meanwhile, investors would do well to hedge their risk with the currency that has upheld its stability for centuries i.e. gold.
Which currencies do you think could remain most stable in the long term? Let us know your views or post them on our facebook page.
01:20 |
Chart of the day | |
![]() |
01:55 |
![]() |
|
The similarities though end just here. Unlike Sokol, Munger's investment in BYD was many years old and he had also informed Buffett about the same. What further worked in favour of Munger was the fact that he played no part in Berkshire's discussion on the BYD deal. In light of all this, it seems fairly obvious that Munger did follow the protocol and in no way was seen pushing against the limits. Sokol, we believe has actually done more damage to his reputation rather than benefit from using Munger as a precedent.
02:35 |
![]() |
|
The ongoing banking crisis has engulfed the euro zone and has kept investors wary about the health of European banks. They are worried about the amounts that already indebted governments may spend to keep local financial institutions afloat. As a result, there are fears that existing bank and government bondholders could see the value of their investments slashed. So all in all, the crisis in Europe is far from over. It will take a while before the region can concentrate on boosting up its ailing economies.
03:15 |
![]() |
|
Crisil does not expect this to happen since India's economy is being bogged down by a lot of pressure factors. This includes rising inflation which has led to a hike in interest rates and rise in commodity prices which has led to increased input costs for India Inc. Plus, the movement of oil prices in the wake of the revolutions in the Middle East will be another factor to watch out for. All in all, in the medium term at least India Inc. will have to brace itself for some challenges.
03:40 |
![]() |
|
Without an increase in water supply, higher GDP levels may be impossible to reach. After Jim Rogers, this opinion has now come from Mr Ahluwalia, Deputy Chairman of the Planning Commission. You may be wondering what water has to do with GDP growth. But, the scarcity of water has huge ramifications. It is a necessary resource for agricultural outputs and various industrial uses. It is used in power plants, as a solvent in manufacturing plants and even in oil refineries. Pollution and inadequate sanitation have already contaminated India's water supply. Well, without serious remedy efforts on this front, it looks like India will be prone to more frequent water cuts, and water related diseases, damaging its growth prospects.
04:15 |
![]() |
|
However, the bigger question worrying global economists with regards to China is "What happens next?" As reported by a leading gaily, the Chinese government would no longer concentrate on monetary tightening once inflation comes down to 4% levels. As a result, it would start to relax the monetary measures. And this would lead to an influx of money in the system. With deposit rates as low as 3.25%, the people would start to put this money in alternate investment assets. And this would eventually lead to new asset bubbles in the economy.
04:40 |
![]() |
|
04:50 |
Today's investing mantra |
Today's Premium Edition.
Recent Articles
- All Good Things Come to an End... April 8, 2020
- Why your favourite e-letter won't reach you every week day.
- A Safe Stock to Lockdown Now April 2, 2020
- The market crashc has made strong, established brands attractive. Here's a stock to make the most of this opportunity...
- One Stock that is All Charged Up for the Post Coronavirus Rebound April 1, 2020
- A stock with strong moat is currently trading near 5-year lows.
- Sorry Warren Buffett, I'm Following This Man Instead of You in 2020 March 30, 2020
- This man warned of an impending market correction while everyone else was celebrating the renewed optimism in early 2020...
Equitymaster requests your view! Post a comment on "Time to take some lessons from Zimbabwe?". Click here!
6 Responses to "Time to take some lessons from Zimbabwe?"
Manoj Kumar
Apr 8, 2011Only those which are backed by central banks and governments ready to protect its value with stringent actions like raising of interest rates as and when needed, perhaps like our very own Rupee.
Pawan
Apr 7, 2011The 5 minute wrap is very useful covering hot business/economy issues across globe. Day is in-complete day without going thru this wrap.
Also if you seriously implement "investing mantras" in your investment strategies, there will be more gain in portfolios.....Happy investing
Anupam Garg
Apr 7, 2011Every method has its pros and cons. 8 times, 8 times RBI has changed the policy rates & yet not much sense of control over inflation seems apparent. And pegging your currency to foreign currency like China doesn't sound like a good option either (as the present condition of China shows which is buying huge amount of dollars so as to promote exports). The gold standard was also rejected after the great depression.
One can't completely shun the idea of money printing. Excess of anything is obviously bad but only a good blend of monetary measures can save the economy.
If u keep postponing actions fearing the worst possible scenario (like zimbabwe), then even corrective actions taken later may not do much good.
Edward
Apr 7, 2011Our Authorities are not doing much to preserve water. You have heavy rains resulting in floods and then very soon you have shortage of water and that too clean water. Water being a priceless commodity and very essential for survival of life needs to be looked at by taking proper measures to conserve forests and vegetation, provide and educate people on rain water harvesting, store excess rain-water through reservoirs. The drinking water should also be kept free from harmful chemicals and bacteria. Re-cycling of water for sanitation purposes and desalination of sea-water has not been looked at. The concerned authorities should provide the basic infrastructure to make this possible as these steps are a must in the longrun to avoid a catastrophe.
devendra
Feb 2, 2013If needed drastic steps should be taken for better economic status, without worrying for voter decline for betterment of the country.