I rarely refer to other publications as a means to explain better, i.e. simpler, more eloquent, better researched because it is not often I find someone’s work to be totally in line with a visionary investment process of asset allocation.

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I am inserting a link to a report by Collins Stewart, a reputable British firm with excellent researchers and reporting skills (compared to mine) when it comes to nailing down a topic:

The Debt Issues in the US and Europe.
Rather than simply rehashing media views in stereotypical fashion, the author describes knowledgeably and with thoughtful insight where we are in this ongoing saga. Moreover he does not shrink away from outlining the rather stark consequences if we continue to “kick the can down the road” while sticking our heads in the sand. PLEASE TAKE 5 MINUTES OUT-TIME TO READ IT. I would be very surprised if you don’t find it of real insight and value.

Of course, in the short term – everything, the debt problems,the need for political and media spin and investor sentiment would become a lot easier to manage if we wholeheartedly embrace our chances at improving our incomes, earnings, tax receipts etc. The author comments tongue in cheek: “… try kickstarting the Greek economy GOOD LUCK!”

The Chinese Premier, Wen Jiabao, is quoted as saying that there is more value in self confidence than in investing in gold. He probably meant well. Such a spirit works in Asia. But then there are the confidence tricksters who tell you that confidence can be bought, – with borrowed money.

In the end it boils down to this: we must accept that there are limits as to how much debt is helpful (=good debt) within a given GDP, and when it becomes a serious handicap in the same way that personal loans become unmanageable when servicing them exceeds our income (=bad debts)! That is the quintessential message of financial planning!

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sourced from Christopher Chantrill web page: US Government Spending

But debts in general – and their highly creative derivative product lines in particular – are exceeding the imagination of even the most stone-faced accountant. Common sense is calling for rules and framework surrounding their use as otherwise we will be forever at the mercy of excess liquidity on the one side, and on the other side, deliberate, potentially destructive attacks on economic systems and countries by – almost anybody with the necessary clout and access tools. But as the author of the report lamented, there is lack of leadership and vision to create and maintain such a framework. Furthermore, the problem is no longer limited to the US only, it has started to permeate every developed market.

In the meantime, financial markets are all over the place again, topped by a veritable gold rush. ” For how long” is an obvious question that I don’t dare to answer just yet, lest you try and hold me to it…