My friend wanted to invest his money, and he had no idea what to do!
the Euro crisis have rendered the euro weak and fluctuating,
the sub prime crisis have rendered Real estates a not so attractive investment!
so what to invest in and what is really happening?
The main problem is the dollar, since the 70’s the dollar is no longer backed by gold, and thus the dollar paper became an i owe you paper from the the U.S. federal government! as long as the government financials are healthy, there are no reason to worry, but with the trillions of dollars in debts the situation started to become challenging!
If i write an owe you paper, and you can use this paper to buy whatever you want then you have no problems taking this i owe paper, but the moment this paper is no longer accepted in this or that shop, then you no longer would wish to use it!
It is the situation with the dollar, as long as countries were able to buy oil and other commodities with the dollar it was fine, but once some players in the commodities market started to try to price in euro and other currencies a problem was raised! this problem was also caused by the arrival of the Euro, a strong currency backed by gold!
This meant the US dollar had 2 options either to be backed by a commodity, or make sure others will remain accepting it, and this would be translated by disrupting trust in the Euro currency and making sure that the oil producing nations be afraid of shifting to another payment method!
The actual state of things is that, it is in no one interest to have the dollar fall, China have trillions of dollars in reserve and all other countries also have huge reserves and investments in dollar, if the dollar falls, this i owe you paper will become worthless and they will lose a lot of money! so it is better for everybody to pretend that everything is fine and just see how it goes, meanwhile they are all trying to get rid of their stockpile of i owe you paper!
so on the long term the Euro must stabilize, the best investment in Europe is probably the Real Estate ,
the U.S. economy will probably suffer more and more, till there is a political decision to bring it back to reality!