I have been fortunate in my career to have met a number of investing legends. At the top of that list is Felix Zulauf.
Felix is an advisor to a fund that one of my office colleagues raises assets for. We were fortunate that Felix was in NYC yesterday briefly for a Barron’s conference (he has been a roundtable member for 20 years). Afterwards, he swung by the office and spent some time discussing the situation in Europe and elsewhere with us.
• We are in a spiral caused by mass credit creation, excessive borrowing, reckless spending, and a enormous credit crisis. The end result is inevitable, and most likely unavoidable.
• The Europeans have created their own credit crisis, and it is attributable, in part, to the creation of the EU. The EU is following a path similar to what the US went through n 2008-09.
• There will be yet another bailout in the US and QE3 (or more) — but not until the situation gets much worse; That refers to both the market and the economy.
• There was a window for an Austrian economics solution, but that opportunity has passed. Worse still, imposing Austrian economics on weak countries here and now will only make the situation worse, causing a recession or making any contraction worse.
• Equities remain in a long term secular bear market dating back to 2000, one that is unlikely to end before 2017.
• Multiples will compress over this time period. Look at more than P/E — consider Price to Sales as well.
• Of all the currencies in thew world, the US Dollar is the least ugly. That says less about the Greenback than it does about the Euro and Yen.
• The Eurozone was problematic since its inception. You cannot have a monetary union but not simultaneous fiscal union.
• Policy makers inevitably punish savers.
• Germany is the creditor to the rest of Europe. Given their history, their biggest concern is hyper inflation, while nations like Greece, Italy and Ireland are facing deflation
• Watch for rising populism in response to economic turmoil. It is already happening in Europe, and will eventually come to the US.
• The political situation in Europe is unlikely to improve until the crisis is much worse. The same is likely true in the US.
• There will be an eventual repricing of all currencies.
• Greece may very well will leave the Euro, but Italy is probably to big to do so.
• Countries that can print & devalue their own currencies get to invite tourists, stimulate economy, and climb out of their morass. Tied to the Euro, they simply cannot.
• There is no currency that will retain its value over the next decade except Gold. Every other currency is in a race to print and devalue, inflating away the debt.
• There is no price target on Gold, but he expects higher prices, and perhaps significantly higher prices over the next decade.
All told, a fascinating discussion.
Interview with Felix Zulauf
This post originally appeared at The Big Picture and is reproduced with permission.
10 Responses to “Felix Zulauf: The Die Is Cast”
Good day! I could have sworn I’ve been to this site before but after checking through some of the post I realized it’s new to me. Anyways, I’m definitely glad I found it and I’ll be book-marking and checking back frequently!
Howdy! I know this is somewhat off topic but I was wondering if you knew where I could locate a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having difficulty finding one? Thanks a lot!
What you have here it is a great article. But first of all I must salute all the visitors. Hello there. After this I must say that I m thinking to post http://www.economonitor.com/blog/2011/10/felix-zu… on my Facebook profile. I will do this because at last I found what I was looking for. What you say here is really good post. In the second I saw this tittle, EconoMonitor : EconoMonitor » Felix Zulauf: The Die Is Cast, on google search I was very glad. I think I found something that have the same ideea here http://www.toplevel-traduceri.ro, I’m not sure but I thing it was the same. Thank you
You must take part in a contest for one of the best blogs on the web. I’ll suggest this web site!
There are some fascinating closing dates on this article however I don’t know if I see all of them center to heart. There may be some validity however I will take hold opinion until I look into it further. Good article , thanks and we want extra! Added to FeedBurner as well
This it is a great piece of information this is the reason why I post a link to you in one of my site your link is here . But first of all I must say all every one. Hy. And second I must say that I have post http://www.economonitor.com/blog/2011/10/felix-zu… on my Hi5 profile. And this because at long last I found what I was looking for. What you say here is really very good post. When I saw this tittle, EconoMonitor : EconoMonitor » Felix Zulauf: The Die Is Cast, on google search I was very glad. It is possible I found something that have the same ideea here http://www.toplevel-traduceri.ro/traduceri_rapide…, I’m not sure but I thing it was the same. Thank you
Hey would you mind letting me know which hosting company you’re working with? I’ve loaded your blog in 3 different internet browsers and I must say this blog loads a lot faster then most. Can you suggest a good hosting provider at a reasonable price? Kudos, I appreciate it!
Hi! Someone in my Myspace group shared this site with us so I came to take a look. I’m definitely enjoying the information. I’m book-marking and will be tweeting this to my followers! Fantastic blog and outstanding design and style.
Neat blog! Is your theme custom made or did you download it from somewhere? A theme like yours with a few simple adjustements would really make my blog jump out. Please let me know where you got your design. With thanks
This is a really interesting analysis of the situation. Wish it were talked about more here in the states.