Understand one of the 5Es: the transfer of wealth and power from the West to the East

October 20, 2009 · Posted in Bad Credit Loans · Comments Off 

If you are like me, you probably have been hit hard by this financial crisis.

 

There is a lot of uncertainty in the air.

 

Conventional wisdom is not working any more.

 

Many are seeking to understand this turmoil and are wondering what they should be doing to not only survive, but thrive, during these turbulent economic times.

 

I recently published an article where I introduce a framework, called the 5Es, as a way to understand the magnitude and drivers of the change underway in the global economic landscape.  These changes are causing stress and anxiety for all of us along with the feeling that a financial rip tide is sweeping us out to sea.

 

As Steve Forbes likes to say, increasing our financial education and the resulting empowerment from this improved financial literacy are the keys to a recovery from this financial crisis.

 

In that spirit, I am going to describe one the 5Es, “the transfer of power and money from the West to the East” … use this description as a way to understand a key driver of the turmoil being experienced by many in the West and as a way to have your eyes open to the new alternatives that can be used to create wealth.

 

Let me start by providing an excerpt straight from my previous article … “from west to East … there is a transfer of wealth and power underway to the Asia Pacific region, especially China.  The USA is currently the world’s largest economy however it is estimated that China will be the world’s largest economy by the middle of this decade.  A lot of churn and turmoil is associated with this change.”

 

Some examples of this transfer follow.

 

From an auto market perspective, China and India caught and passed the US, the European Union, and Japan in 2008 as the world’s largest auto market.  And, the gap has even widened during this recession … while the heads of the US auto makers were in Washington pleading with the US Gov’t for a bail out

 

Cars don’t run in a vacuum.  They need roads, gasoline stations, and gasoline … all of this requires a lot of building materials and oil.  Just think about oil for a minute (as a reminder, Energy is another one the 5Es in the evaluation framework).

 

The U.S. consumes up about 25 barrels of oil per person per year. The oil consumption in China and India is tiny compared with the consumption in the US. China is at 1.5 barrels of oil per capita annually. And India barely registers.

So one can only imagine that as these economies grow and take up more of a share of the global economy, their oil consumption will rise exponentially.

 

Although China already has more than 160 cities, with each having a population of greater than one million (the U.S. has nine, the U.K has two), it still consumers half of all the world’s cement as it strives to build 97 new airports, 500 additional coal fired plants, and 30 nuclear plants in the next decade.

 

As a result of this build-out, just imagine what it takes to house, feed, and cater to the needs of China’s 1.3 billion people … it is no small task.

 

Commodities that are in demand in China, yet in short supply in China, include agricultural commodities like soybeans and potash, copper, natural gas, uranium, bauxite (important in making aluminum), chromium (a steel additive) and manganese (important for making stainless steel).

 

As far as keeping your eyes open to alternative wealth creating strategies, it boils down to investing in what these economies need, but don’t have.

 

In previous articles, I wrote that many of us are evaluating alternative wealth creating strategies outside of the US Dollar … outside of dollar-denominated assets … perhaps emerging markets … perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants … perhaps precious metals, water rights, oil, natural gas, potash mines, or gold mines … things hard to build, difficult to replace, and costly to substitute … definitely not financial stocks, definitely not retail stocks, definitely not commercial property.

 

I trust this article provides a little more insight as to why emerging markets with a demand for things that are in short supply (such as oil, food, water, precious metals, and potash mines) represent alternative wealth creating strategies.

 

In addition, a good book to read would be “Asia Rising” by Jim Rohwer.  This book provides a good read as to the economic success of the East and Southeast Asian countries and some insight as to lessons the West can learn from this prosperity in terms of breaking the paralysis of special-interest politics.

 

The world is changing dramatically and the emerging markets will potentially provide some light at the end of the tunnel.

 

I will continue to build upon the “transfer of wealth and power from the West to the East” theme of “the 5 E’s” framework, and the other Es in the framework (these are Energy, decline of (USA) Empire, Experiment with paper money, and Economic cycle) in future articles and updates at my blog which is at http://aspenIbiz.blogspot.com . 

Early in his career, Mike was an engineer with a large aerospace company. For many years, he was with a “marquee” consulting firm where he worked extensively with clients all around the world and became know as an American globalist. Most recently he has been providing technology, business, and management advisory services as a self-employed entrepreneur.

Article Source:http://www.articlesbase.com/wealth-building-articles/understand-one-of-the-5es-the-transfer-of-wealth-and-power-from-the-west-to-the-east-1352052.html

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Consider using these 5 E-valuation factors to avoid a financial rip tide: learn to thrive, not just survive, in these trying economic times

October 13, 2009 · Posted in Bad Credit Loans · Comments Off 

These are frustrating economic times.  Stress and anxiety is high.  We all want to know what is happening out there in our economy and business landscape.

 

Is the de-leveraging over or is there more downside to come?  What is causing all this turmoil to occur?  How do we survive?

 

Let me suggest two key themes to consider in addressing these questions.

 

1) Obtain more financial education to understand; increase your financial literacy to comprehend; and search for alternative strategies to create wealth.  Steve Forbes says “financial education and the resulting empowerment is the key to recovery from this ongoing financial crisis.”

 

2) Use the 5 E’s that are presented below as an evaluation framework to understand the scope, magnitude and drivers of this change.  Stay calm and position yourself to thrive not just survive.  Here is an example of a situation that frequency occurs in the summer time around popular beach destinations.  Rip tides occur and some one not from the area drowns.  Many tourists are panicked, full of stress and anxiety, and stay out of the water for fear of what might happen to them … all they want to do is survive.  Yet the locals understand what is happening and how to work their way out of a rip tide and not just survive but thrive and have a great day at the beach.

 

Now, let me describe the 5 E’s of this evaluation framework.  A few years ago I became aware of this framework as I was increasing my financial literacy and it helps me stay calm, understand the drivers of the change, and open my eyes to consider alternative wealth creating strategies as conventional wisdom is not working.

 

1 – Energy is no longer cheap.  We have reached point of peak oil … meaning easy stuff to find and drill has occurred.  While more oil is being found, it will be very expensive to explore, drill, pump, and distribute the oil to customers.  So more and more of our budget will be used to pay for energy hence on of the interests in alternative energy sources.

 

2 – from west to East … there is a transfer of wealth and power underway to the Asia Pacific region, especially China.  The USA is currently the world’s largest economy however it is estimated that China will be the world’s largest economy by the middle of this decade.  A lot of churn and turmoil is associated with this change.

 

3 – the (USA) Empire is peaking out.  The cost of having so many troops in so many parts of the globe and the cost of increasing the size and services of the government at home in the United States, is a key part of causing the country to go broke.

 

4 – the Experiment with paper money is running its course.  This is known as fiat currency where your money is not backed by anything tangible like gold.  When the central bank has the ability to increase money supply by printing more money, you get inflation and all the horrors associated with this activity.  You might not know this but the current federal reserve system is the USA’s fourth attempt at a central bank and each of the previous attempts did not end nicely … most likely neither will the current experiment with this central banking system.

 

5 -  the Economic cycle of the past 25-30 years, based on easy to obtain money through loans at a low cost (ie low interest rates) is over.  The growth, expansion, and consumer society that we now say is the basis for our economic system is over.  Something new will take its place.

 

By understanding that you can swim at a calm pace, in a diagonal from the current that is pulling you out to the open sea and knowing that you soon will be out of the rip tide, you will be able to go on and have a great day at the beach … you will have learned to thrive not just survive.

 

It is the same type of situation with our financial crisis.  Obtain education in order to understand what is happening in the context of this E-valuation framework.

 

Stay calm knowing that conventional wisdom, the stuff we learned and grew up doing all of our life, is not working anymore.  So find and pursue alternative wealth creating strategies to get out of the financial rip tide; think out of the box; plug-in and get on with our economic lives.

 

As an example of alternative wealth creating strategies … consider investments in non dollar-denominated assets … perhaps emerging markets … perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants … perhaps precious metals, water rights, oil, natural gas, potash mines, or gold mines … things hard to build, difficult to replace, and costly to substitute … definitely not financial stocks, definitely not retail stocks, definitely not commercial property.

 

In addition, a good book to read would be “The Bull Hunter” by Dan Denning.

 

I will continue to build upon “the 5 E’s” framework and introduce alternative wealth creating strategies to consider like emerging markets, oil rigs, precious metals and potash mines, in future articles and updates at my blog, over the next few weeks (see link below).

Early in his career, Mike was an engineer with a large aerospace company. For many years, he was with a “marquee” consulting firm where he worked extensively with clients all around the world and became know as an American globalist. Most recently he has been providing technology, business, and management advisory services as a self-employed entrepreneur.

Article Source:http://www.articlesbase.com/wealth-building-articles/consider-using-these-5-evaluation-factors-to-avoid-a-financial-rip-tide-learn-to-thrive-not-just-survive-in-these-trying-economic-times-1332209.html

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