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18/01/2009 When the national debt is not safest?
This week we have attended several facts that we would have to see like a flection point at the time of where we would have to invest our money. These are:
- Standard & Poors, one of the cuestinadas agencies of rating that did not predict the scandals of Lehman, Enron, Worldcom,… but that if they warned of the problems of Argentina, Russia,…
- Forecasts of the Spanish government of substantial worsening of the macroeconomic data.
If we analyzed each of them in particular, we would be whereupon the rating agencies have been mistaken with the qualification of companies but not in the case of countries. A country with AAA (maximum credit qualification) has never broken. This must to that the companies are in force by the countable Principle of Company in Operation, this is a company that closes and it is eliminated by parts, bond much less that its debt; the companies have value by their capacity to generate income not by the value of their assets. If a company loses money, will have to catch it in the market to compensate. In the case of the countries the capacity to emit debt to finance its deficit is that to go to the market to catch money to compensate what it is spent of more. As the countries have more facility to catch money by their credibility, they take more in impagar and for that reason the rating agencies usually guess right more because they have more time to fit his qualifications.
If to Spain they lowered to his rating that to him it would suppose that all, the country and therefore all the companies that are in would have to pay more interests by their loans. If we consider that we are a country tremendously indebted as we saw in EREs in the financial organizations, which we would have to do is to begin to spend less to pay those interests.
What Spain is doing is right the opposite, to increase the cost public to try to compensate the smaller activity of the deprived sector, but as the income via taxes are lowering what we do is to have to request more given money. This could put to us in a spiral of:
more cost >-> less rating >-> more interests >-> less rating >-> more interests
The greater danger is not more than a point arrives in which there is not money to pay all those interests is necessary to declare itself in suspension of payments (now contest of creditors).
Nevertheless, seeing the more habitual forums of investment we were that all we continued ourselves fixing to:
- To invest in Santander, that is Spain and the United Kingdom, two of the affected countries more of the crisis
- To think about when the floors recovered and buying some chollo. It is not phrase mine, but the chollos of today will be the ruins of the future. Nobody knows what is the price of balance, because nobody even knows when the economic adjustment in Spain, the United Kingdom and the USA will last.
- To essentially buy national debt via Letters of the Treasure or through other routes as we saw in European National debt.
- Whichever it covers the Bottom to me with Guarantee of Deposits that after all is a state guarantee of which according to S&P we would have to stop considering unconquerable.
About extraordinary situations we would have to think of extraordinary form. The best guarantees of the past can be best in the future, so we leave to a side banks, floors and the national debt and we do not enter another type of investments Gold and other raw materials, works of art,… but mainly to invest in companies with activity industrial, electrical, oil, pharmaceutical, feeding, distribution,… because a Bond of Carrefour to 2 years is still just like to make in a bank a fixed term to 2 years (without guarantee of the clear Bottom of Guarantee of Deposits) but with the guarantee of Carrefour instead of the one of the bank.
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