International Markets are in an unprecedented state of confusion - with casualties and beneficiaries - with fiscal tragedies and investment opportunities. And it is happening rapidly, at a dizzying pace.
Foreign exchange (FOREX) rates are swinging; relative currency valuations are fluctuating; securities exchanges are pin-drop sensitive and shatteringly volatile day-to-day; commodities prices are flying madly about; international asset flight is increasing in volume; wealth is switching form (i.e., running from bonds and currencies and pouring into gold and traditional "hard assets"); sovereign debt ratings are the subject of constant scrutiny by debt-rating agencies (such as Moody's and Standard and Poor's), and by institutional and public investors; and, the disparity between the wealth, or purchasing power, of nations is varying in an undeclared aftermarket all its own --- the result of a confluence of all of these other variables.
The next "Big Thing" might be the game of Planetary Geographical Arbitrage. This is not so much a Lingovation, as it is a logical combination of terms but in an unusual new context.
Planetary Geographical Arbitrage, as I see it from the perspective of The Global Futurist and The Internationalist Page might be simplistically defined as follows:
"Planetary Geographical Arbitrage is an investment strategy whereby the currency or wealth of one country is used, by its holders, to make strategic (i.e., influential or controlling) investments in companies, securities or assets of another country, or of financial instruments which are denominated in, or tied to, the currency of another country."
For example, if Country A has a strong currency and a strong economy, its wealth holders have a window of opportunity (for some period of time, which is not certain) to purchase undervalued (ostensibly) assets which are available in a "fire sale" in a country (Country B) which has a devastated economy and a relatively weak national currency.
The possibilities and implications are tremendous in terms of the global balance of power, and the ultimate re-distribution of true wealth worldwide.
Instead of merely diversifying portfolio assets in the traditional sense, this up-and-coming generation of Planetary Geographical Arbitrageurs will actually be looking at buying, in effect, pieces of other nations if the discount is deemed steep enough. The political implications are just as mind-boggling as the macroeconomic potentials.
This topic is going to be growing bigger and bigger, as the realization of this undeclared market comes into being. Those with the vision to participate in this game will become enormously rich and influential - not only will principals (the investors) be involved, but there is a fortune waiting to made for those individuals and firms able to facilitate these mega-transactions, through brokerage, advisory, or management services.
There will certainly be a great deal to be discussed here. Please stay tuned.
Faithfully,
Douglas E Castle
Other Blogs Of Interest By The Same Author:
The Global Futurist
The Internationalist Page
TNNWC International Management Consulting Services (ICS)
Planetary Geographical Arbitrage
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