What brings us to 2011?
Here's a question that everyone ask themselves, and almost no one does give an answer which will be validate by the days which will come.
I will try to make some light into this darkness which represents the future.
1. 2011 brings a fast rise of the price of raw materials, oil, food etc.
Why?
Because there are no trust in others assets and this is the last “safe-considered” investment. A similar movement it was also in 2008. When the investors began to flee from the real estate investment, it was generated a migration to the sure values – oil. That pushed the price of the oil in 2008 at 150 dollars the barrel. In 2008 the money migration was generated doing the loss of confidence in the price of the houses. The real estate crisis began much earlier than September 2008. Official, it begun in 2007 and in April 2008 the number of the persons who had loosened the houses had increased dramatically.
Now the situation is similar, but there are some differences. I will explain.
A lot of countries are practically in bankruptcy. (Greece, Ireland, Portugal, Spain). And for this reason the investors lost the confidence into the bonds emitted by these countries or others countries in a similar position. And this money goes where? This money goes into commodities, raw materials, food in general tangible values. But it is a difference between 2008 and 2011. In 2008 the main refugee of the money was oil. Now the refuge is the food! Again the same question: Why?
Because the oil consumption can sometimes drops in the recession period (see the period after September 2008). But food consumption is more stable. And the second reason is that the price of oil affects seriously USA. But food price no. Therefore we assist at an increasing of social and political movements (see Tunisia and recently Egypt).
The picture shows how the food price is going to increase.
Source: http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/
So, what we expect from 2011?
1. In the spiral of bankruptcy will strike bigger countries: United Kingdom, France.
2. An avalanche of social movements
3. Falling of the US dollar
4 75% Possibility of a new crisis
In the next post I will show how it will be the evolution of real estate market: prices, mortgage rate.
