It’s already over. The longest day
of the year. Look at it another way. Summer just began.
Yet each day, in the full glory of summer’s heat,
minute by minute we creep towards the darkness and the
cold. Tomorrow the sun will rise a little later and set
just a bit before. The tunnel is at the end of the light!
That’s life and perhaps that’s
the way it is with freedom. Just this month the papers
have screamed with erosions of our freedom. First, we discovered
that our phone calls are bugged by the government. Next
we read how the feds want web site servers to keep our
email. Then just this week the Supreme Court gave easier
access to no knock searches by the police.
None of these really matter on their own…but
neither does the few minutes of daylight each day. Then
suddenly we discover winter is here.
Fortunately on that coldest day, the sunlight
begins to lengthen. The key is surviving and growing during
the harsh times.
This is true in financial markets as well.
Look at GM. Last week their credit rating was downgraded
by S&P to B- from B. Moody’s downgraded the company
to Caa1. This step was taken after GM was forced to provide
security in connection with the extension of a credit facility.
The company was under pressure and the security provision
increases risk to unsecured bond investors.
Imagine mighty GM an American bastion
talking about bankruptcy. In the US most of us were raised
in Chevys. Now all they have are junk bonds, not to mention
an unfunded pension.
This did not happen all at once but little
by little, minute by minute. These things creep up on us.
This is true as well with inflation and
a falling US dollar. Minute by minute American debt rises
and the purchasing power of greenbacks and American savings
and income erode.
One way to protect against inflation is
to hold strong currencies. For example we recently analyzed
the major currencies and determined that the Swedish kroner
may be strong. See the dollar dive series at spottingtrends.com/currency/currency_trends_13.htm
Jyske Bank now reports that the Swedish
krona has been flexing its muscles and has probably not
reached a stable level yet. They recommend holding long
SEK positions and during any weakening of the kroner to
add positions. The Swedish economy is strong, growth has
improved, and there is also improved consumer and industrial
House prices are rising at a fair pace,
and given the rising inflation rate, the Riksbank has long
signaled that Swedish interest rates must go higher so
short term bonds and money market positions make the most
sense. You should check with your financial planner to
see if holding kroners makes sense for you. You can get
more details on how to invest in kroner from Thomas Fischer
at Jsyke Bank. His address is firstname.lastname@example.org
Until next message, good investing and
health to you.