Trusted German Newspaper Asks: "Will the Financial System Collapse?-

iSPYETF

Have you ever gotten tired of the same old financial news coverage dispensed by the likes of CNBC, Fox, Wall Street Journal, Reuters, and other US media outlets?

I’m not saying it’s bad information, but like eating the same meal over and over again, the same slant on financial developments could become a bit stale.

In my last trip to Germany I made a conscious effort to pick up and read a number of reputable German finance/economy magazines. 

I’ll write more about interesting tidbits discussed in the German financial media in the coming days, but here’s more detail about a headline that caught my attention?

“Is A Financial Collapse Approaching?” 

This question was featured on the front page of the September 4 edition of the Focus Money magazine. 

As a contrarian investor, my first thoughts were that prominently discussing the odds of a financial collapse minimizes the chances of just such an event. But this changed after I read the article.

Focus magazine asked legendary emerging markets investor Mark Mobius for his feedback on various investment themes. The MIT educated Mobius is 77 years old and heads the emerging markets team for Franklin Templeton.

Tapering Yes – Collapse No

Mobius expects Bernanke to start tapering, but says that this will have virtually no effect on stocks (VTI) as liquidity remains in the system (although he admits QE’s role in driving up stock prices).

Mobius asserts that banks (KBE) have cleaned up their balance sheets and will funnel more money in the real economy. “The fear of tapering is overdone – it will barely affect stocks,” he says. 

Mobius believes that QE by the Bank of Japan will be successful and ultimately affect world markets (EFA). In fact, liquidity provided by the BOJ will make up for the liquidity withdrawn by the Federal Reserve.

Time to Buy US Stocks?

Focus magazine: "As an emerging markets (EEM) specialist, would you recommend buying US stocks?"

Mobius: "Diversification is important and investors shouldn’t put all their eggs in one basket, but it’s certainly a good idea to buy US stocks (SPY)."

A Bear in Bull’s Clothing

The financial collapse headline and Mobius’ views struck a cord with me as I see the odds of a major market top forming around current prices greater than 50%.

After reading the Focus Money article it became clear that – according to Mobius – there is no risk of a financial collapse. From a contrarian point of view that’s more bearish than bullish.

Mobius has strong opinions about other emerging markets issues, such as:

1) China’s government completely (as in 100%) controls its banks and has the ability to successfully implement any and all financial policies.

2) The most attractive place to invest is Africa, in particular Nigeria.

I don’t agree with Mr. Mobius’ outlook, but he does offer a perspective not available to many US investors.

Two other shocking forecasts are featured in Germany’s Handelsblatt, Germany's leading economy and finance newspaper. 

The front page of an August edition touts another gold rush caused by China (I didn't agree with that one).

For more information read: According to Reputable German Newspaper, New Gold Rush Lies Ahead.

The September 10 issue of Handelsblatt includes a special guest contribution by Hank Paulson, the former Treasury Secretary. He warns of another financial 'firestorm.' More details about the vulnerability of the financial system (as Paulson describes it) here: Hank Paulson Warns of Another Financial Crisis.

Simon Maierhofer is the publisher of the Profit Radar Report.

Follow Simon on Twitter @ iSPYETF.



More From iSPYETF

Rates

View Comments (0)

Recommended for You