Juggling Dynamite

The 48-minute segment below explains how the world has come to the present capital deficiency crisis and why financial markets and an aging population are more at risk today than in past cycles.  I have been speaking and writing about these themes for over 15 years; it is good to hear another analyst connect the dots well.

Downsizing and de-risking are due to be the dominant themes of the next decade+.  This offers great opportunity for the prepared, but also great pain and shock for those who are caught flat-footed.

Time will soon show once more, that most financial advisors and asset managers are conflict-full, discipline-free speculators, toxic to the financial health of their clients over time.  Valuable financial management can only come from a fiduciary focus on the recipient’s individual facts, goals, timelines and best interests, with the strategic allocation flexibility needed to navigate through the real-time capital and business cycles at hand.

In this hard-hitting Real Vision special, Raoul Pal presents the single most important financial topic of a generation — the Baby Boomer retirement crisis. He asks the hard questions: Can you afford to retire? How will the coming crisis impact your life? What risks are you unknowingly taking with your retirement? Moreover, will the insufficient retirement savings of the largest generation in history cripple the economy? Raoul also explores how savvy retirees might avoid — and even profit from — the threatening crisis. In addition, Raoul also offers a glimpse of a brighter future, in which smart millennials take control of their own financial destiny and side-step the crisis.  Here is a direct video link.

I am just finishing Taleb’s fifth book in his Incerto, “Skin in the Game”, which covers key insights on how and why the levered and lawless financial world has become a monster undermining global strength and stability.  Taleb is more articulate on paper than in conversation, but this segment is still worthwhile.  As higher rates and shrinking cash flows swamp the unprepared, the largest casualties-in-waiting remain real estate, corporate debt, and equity prices.  The concerted hit to balance sheet assets will reveal years of mal-investment and insufficient saving rates, and be life-plan altering for many.

Nassim Nicholas Taleb, scientific advisor at Universa Investments, discusses the factors causing global fragility, hidden liabilities in global markets, and what he sees as safe trades in the current market.  Here is a direct video link.

Extremely high shelter prices exact a compound cost for years thereafter in the form of lost discretionary cash flow for other spending, debt servitude and lost savings for other needs.

The US housing bubble that peaked last cycle in 2006 was epic and financially devastating for the masses, the highly levered financial system, the economy and government budgets in the 12 years since and counting.

Unfortunately, over the last decade, Canada has managed to eclipse the U.S in a who has the ‘worst housing market’ contest.

This does not bode well for our economic strength and soundness over the next decade or so.

See more here: Canada v.s. USA:  which housing market has it worse.

The graphic on the left offers a succinct comparative glimpse.