What is the connection between a Canadian real estate bubble, an Australian real estate bubble and an Israeli real estate bubble? Why are North American and Japanese equity markets rising into a bubble type formation? It all began In 2008 and continued in December of 2010. It began with the economic mismanagement of George Bush and continued with the intellectual arrogance of Barack Obama. But most of all, it began in the Spring of 2010 when a Tunisian set himself alight and started what today is termed "The Arab Spring". Wow! So let's follow the money.
In 2008 an economic bubble burst endangering the world banking systems. The American public fired the GOP and replaced them with a socialist leaning president. What could be easier than dealing with a burst credit bubble? Thats easy...create an even larger credit bubble. Its called "cheap (easy) money". Armed by a wave of popularity, swagger, rolled up sleeves and superior intellectualism, Barack Obama decided the time was right to spread democracy to the Middle East. Declaring that Mubarak and Assad "have to go" and cheered on by the liberal media Mr Obama set off a chain of events that have led to instability across the planet. The civil wars in Syria, Yemen, Iraq, Sudan and Libya have led to a trickle of refugees which now has turned into a flood. Russia, trying to amplify the impression of power (lets face it sanctions + oil price = weakness) has intervened in Syria and hopes to face down US and Turkish interests in the area.
Europe in all its social glory opened the gates to millions of refugees from the different battle arenas, naively believing (like American liberals) that these folk are Westerners wearing different clothing. Nothing could be further from the truth. Europe knowingly imported millions of potential insurgents who know no better than violence of all types to achieve their goals. These refugees threaten Europe not only physically, but financially. They are enhanced by the Islamic threat to Russia and the Balkans. When one adds the above credit bubble to the mixture, it is easy to see why the money is running from Eurasia and seeking safe geopolitical havens.
Australia is a great example of a geopolitical haven. A continent far from the maddening crowd, to coin a phrase and physically safe from an impending explosion. Despite a 0.5% contraction in GDP, real estate prices in Oz are booming. The same goes for Canada. Nice and safe, plenty of water, land and raw materials. And of course, real estate markets are booming as anxious and fearful funds seek safety and security. Even Central banks are getting in on the act. Fear leads to diversification of assets. The Central banks of Japan, Switzerland and the ECB, amongst about 23% of all nations worldwide are purchasing stocks. Its amazing how physical and financial fears effect human nature. Add Brexit, Trump and the wave of an anti-establishment revolution and we have the makings of a new and fearful community running in all directions.
As for Israel, the boom continues. Israel is secured by a line of steel and arguably the best air force on the planet. Shouts of Heil trump in the US and the rise of anti-semitism worldwide have only led to more demand for Israeli real estate.
Choose your poison folks. One thing for sure is that the the stable world we once knew is no longer....and it all began in Spring.
“There are decades where nothing happens, and there are weeks where decades happen.” - Lenin
You should be careful what you wish for, as the reasons for war get confused. One person can be very clear in their motives, but others can have different agendas -
Dougray Scott
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