The End of Empires

Is the end of an empire a good thing or a bad thing? It’s certainly an uncertain thing. That’s the observation all speakers have shared at the ‘After America’ investment symposium. And it might sound like a melodramatic conclusion to reach after several hours of speeches, but it is actually useful.

Delegates have learnt that not only is the world springing some of the most impactful economic surprises on them and their wealth, but political changes are bubbling away too. For better and worse. Every time in history that there has been a major political transition, there has been a lot of money made and lost.

Did you miss out on the rise of the British Empire and its industrial revolution? How about the rise of the US empire as it took over from the Brits? And are you now willing to miss out on whatever’s next?

Diggers and Drillers editor Dr Alex Cowie reckons China is the next bully on the block. And bullies make better friends than enemies, especially from a distance. That’s why Alex continues to look for the ASX-listed companies sitting on anything that China needs. Iron, coal, rare earths and the like. And he’s wearing the tie to match – a table of periodic elements tie. Alex’s tale of the Rim of Fire and the way you can make money off it has delegates filling their notepads.

The worry with China is that it may want more than economic power. That’s what Dr Monk warned delegates about. Negotiating your way between an empire in decline and an empire on the rise is no easy task for Australians. The intelligence and national security worlds are abuzz with the implications of Chinese power and how to deal with it.

Should the world bow to China’s rise – America making an exit stage left? Or perhaps we should haggle over the prizes like voting rights at international trade organisations? Does the world need to band together in the face of a new threat, or does it need to gleefully anticipate a more balanced world?

Dr Monk threw some answers into the ring and then drilled holes in them. It seems like nobody is even pretending to know the answers to the questions China poses. You have to wonder what the Chinese would like for themselves. And how will their country change from the inside?

Dylan Grice of French bank Société Genéralé was supposed to be the most knowledgeable speaker about the likes of economics, financial markets and investing. Sure enough, he decided to give his speech on the fact that we just don’t know what America’s decline will look like. Dylan took delegates through a series of economic booms and busts of the past and pointed out that we can’t even agree on what happened afterwards, let alone beforehand. So what hope do we have?

Well, first of all, it’s enjoyable to poke fun at those who claim to know the reasons for everything. And Dylan certainly took Ben Bernanke and Paul Krugman to task. In fact, the two of them have taken a beating from all the speakers.

Dylan also pointed out that there are some things we can know. The most interesting was that demographics are playing an underrated role in the world economy today. Japanese GDP per person has risen to a similar extent to America’s, if we recall Dylan’s claim correctly. It hasn’t experienced a lost decade, but a lost generation of workers.

This has enormous implications for Europe today. Dylan blames Japan’s terrifying sovereign debt situation on the fact that Japanese policy makers couldn’t accept the changes that come with its demographic problems. They wanted to make GDP grow at all costs, including the destruction of the government’s balance sheet.

But if you want answers, Dylan says he goes to the people who question their conclusions before concluding them. That’s real knowledge. Anyone who doesn’t tell you that they don’t know for sure (and doesn’t tell you when they have been wrong in the past) is the wrong person to ask what happens next.

Slipstream Trader Murray Dawes’s presentation was all about how you should trade so that being wrong is a cheap mistake and being right is a much higher impact event. Dashing back and forth between the two screens in the room, Murray took viewers through how he finds and evaluates trades. Then he applied his methodology to past examples and one present one.

This morning, Steve Keen made an unscheduled appearance. And promptly tore to shreds the prospects for Australia’s economy and its housing market. We’ll tell you more about his powerful presentation tomorrow.

Australian Small-Cap Investigator editor Kris Sayce told everyone who would listen that he doesn’t really care about economic crises and empires in decline. And that got everyone listening. In fact, the whole conference is a phony, he told a captivated audience. Why? Because countries aren’t innovative. People are. And people are everywhere. The trick is finding those people, not the countries they live in. And even the times they live in don’t matter much to Kris. Successful companies are commonly founded during the toughest of times.

Kris wants to find the innovators who will shrug off the economic and political environment because of the power of their ideas and products. Going by the nodding heads, delegates were inclined to join in the search.

More tomorrow…

Nickolai Hubble
for Markets and Money

Nick Hubble
Nick Hubble is a feature editor of Markets and Money and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about Markets and Money, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to Markets and Money for free here. If you’re already a Markets and Money subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Markets and Money emails.

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3 Comments on "The End of Empires"

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Did you miss out on the rise of the British Empire and its industrial revolution? How about the rise of the US empire as it took over from the Brits? And are you now willing to miss out on whatever’s next?

How old do you think I am ?



De Guernon

Joe…..7years from your comment. It is a rhetorical question

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