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Your comments on strategies for a scenario of severe financial and energy crisis are, as always, very interesting. I would just ask that, even if using an anonymous pseudonym, you post them as comments rather than sending private emails. I believe this is the best way for us all to share ideas – some of which are excellent – whilst reserving emails for personal enquiries, so that this forum doesn’t become overloaded. Having said that, let’s analyse our strategies and yours.

Seeking opportunities in turbulent times. This is how we like to analyse future strategies. Although seeking opportunities means exactly that – that is, making investments that carry a certain degree of risk in pursuit of the potential gains that a crisis scenario often offers. For this reason, given that inherent risk, we must seek out opportunities with caution. Without jeopardising the bulk of our assets, and using only those assets earmarked for this purpose, following a thorough analysis and planning of our PGR. Now that this point has been clarified, let’s move on.

It is quite true, however, that the times ahead may not be as turbulent or difficult as they appear today, and that many of today’s views may turn out to be ridiculous, alarmist exaggerations. Some people, in fact – mainly politicians and bankers – predict just that. It is possible that the credit crisis will be played down and that the worst is now behind us. That, through the natural evolution of social customs or who-knows-what, may time restore confidence in credit, this being the best medicine (or rather the best painkiller – which relieves but does not cure, I would say) for a return to the dangerous and fragile normality of years gone by. It is also possible that the dreaded peak oil that it is a false alarm and that, despite being unable to replace our dependence on oil with anything else, we will continue to extract barrels at somewhat more moderate prices for several decades. Or why not? Perhaps in a few years’ time we will find a viable, cheap and globally accessible alternative energy source. I, too, sincerely hope so, Fernan2. In that case, the current analyses and strategies would be useful, but we wanted this to be an exercise in reflection, considering the hypothesis that we might actually find ourselves in serious trouble.

In that potential worst-case scenario, it is wise to have at least some strategy in place to deal with the possible prolongation and intensification of the current financial and/or energy crisis. The first thing we must reconsider in such a negative scenario is the structure of our assets that need to be protected and the proportion we are willing to risk. And, of course, we must redefine our risk aversion – in fact, redefine our ad hoc risk tolerance. How would we protect the majority of our assets, and where would we look for opportunities? That is undoubtedly the million-dollar question, but we’re going to try to offer some guidance – just as you have done – which may prove useful in the process of each individual analysis. Obviously, it goes without saying that every PGR must be tailored entirely to each individual’s assets, personality, family, idiosyncrasies and circumstances. Having said that, and bearing in mind all the risks involved in offering guidelines without knowing the potential reader inside out, we are going to make some dangerous generalisations (much to the delight of some), assuming a net worth of at least €3 or 4 million:

As regards cash holdings, to begin with, the traditional reliance on banks should be reviewed in favour of a more rigorous selection of institutions and a lower concentration of risk organisation. I’m not quite as convinced as ManuelMad that tax havens are the ideal refuge, but I do agree that, in principle, they should be less affected by the credit crisis. Furthermore, the part we need to shield, one should steer clear of fixed-income securities and lean more towards sovereign bonds, with maturities not exceeding the medium term. ManuelMad commented that he would steer clear of sovereign fixed-income securities, but given such a scenario, we believe that a safe-haven currency and countries least affected by the oil shortage would be safer than corporate alternatives. Perhaps our view of both crises is less bellicose than yours. As for gold as a safe haven, which Manuel also mentions, a 40% allocation to a precious metal strikes me as an excessive concentration of assets in something whose return can only be expected from speculative appreciation. It could be a good investment, but bear in mind that we’re talking about the amounts set aside for protection; as for assets that can withstand certain risks, we’ll find significant investment opportunities (with the potential to gain or lose) in commodities, financial debt «distressed» (not to be confused with the «Distressed Wealth Strategies«), etc.

As for cash exposed to a certain degree of risk, we would consider investing in prime property in the USA. The depressed property market and an attractive exchange rate make this market one worth considering. Even today, we advise many of our clients on the benefits of selling some of their properties in Spain at market prices, in order to take advantage of these opportunities across the Atlantic. Some of you might say that to sell in Spain at the moment, you have to «to sell at a loss«. But it’s not actually that it’s cheap, but rather its actual market price – there is no other. And the opportunity cost may be much higher than the drop in price we have in mind moored. Generating rental income from property in the US $ with rates of return that we haven’t seen in Spain for many years seems to us to be a sound strategy at present, even as the financial and energy crises worsen. That is certainly true Dalamar, that the American model of typical towns The Truman Show where people used to commute 100 miles from home to work, are no longer viable for the average household. In fact, it is this type of housing that has suffered most from the property and mortgage crisis in the US. In Spain, some people will certainly feel the pinch, but we never started from such low petrol prices as they do there, and the cost of travelling by private car has always been factored in in Europe.

As for the portion of cash that is also subject to risk, we would consider investments in equities. Depending on the proportion of total assets and the level of risk we are willing to take, current options include emerging markets. But beware: in the event of a severe energy crisis, their domestic consumption (in China and India), low wages and sluggish GDP growth could take a dramatic turn for the worse. Depending on the severity of the crisis, these markets are only worth considering as long as energy costs do not skyrocket to the point of stifling them. Nevertheless, their extreme volatility should prompt us to exercise caution regarding the volumes invested at present. Another, less volatile option – and one that is indeed compatible with a world where oil is prohibitively expensive – would be the blue-chip companies Americans, but only those who are least affected by a rise in energy prices and its impact on transport costs.

Assuming fuel prices remain significantly higher than they are at present, it seems that one sector that might be spared this problem is the telecommunications or technology sector. The bubble of 2000 is now sufficiently distant and has been sufficiently deflated for the conditions to be in place for it to recur, and this time with less hype and more substance. Furthermore, the challenges facing physical transport could lead to a particular boom for these companies. A portfolio in this sector could be a sound long-term strategy in such a scenario. I agree with Alejandro and Paco, although the sector is so broad that finding the gems amongst all the chaff would not be easy. I would even go so far as to say that, given current energy prices, this investment strategy would already be advisable.

I think a lot of things would change, Tom, the needs might be very similar for a while, but what we really ought to adapt straight away is the way we meet them.

Thank you for your thoughts and analysis of this hypothetical financial and energy scenario. I hope you’ll continue to contribute high-quality content to this blog, as you always do.

We simply wish to offer a brief reminder of the crisis that was clearly looming just a year ago. Some people were still unaware of the crisis that was bearing down on us, whilst others were predicting catastrophes marking the end of civilisation and/or the system. Amidst talk of capital controls and the collapse of the global economy, our perspective was that the financial outlook for the average citizen was deteriorating.

Sadly, it seems time is proving us right. For the time being, the credit crunch and the energy crisis are more than enough to harm billions of people. Dear Virgin Mary, dear Virgin Mary, let me stay just as I am…:

Crisis? What crisis?

«Money doesn’t bring happiness, but it creates a feeling so similar that it takes a highly skilled expert to tell the difference.»

Woody Allen.

Si no conseguimos frenar la escalada del precio de la energía, no sólo se resentirán los estómagos de los países más necesitados y las economías de los países del primer mundo, también supondrá un frenazo a nuestra cuestionada globalización. Y por tanto afectará a la propia evolución de nuestra civilización como tal.

El proceso de globlización iniciado en las últimas décadas, comenzando con la implantación comercial de internet a nivel mundial y siguiendo con los desplazamientos de mercancías y de personas low cost, se verá comprometido en la medida en que el coste energético se multiplique.

Hace alguna generación el consumo de fruta tropical más allá del mismo trópico era imposible. En un futuro inmediato, si la energía sigue encareciéndose, pasará de ser habitual a prohibitivo. La pregunta que podemos lanzar es la siguiente: ¿Es malo que volvamos a consumir sólo productos autóctonos de temporada y deje de haber en el primer mundo de todo y siempre? Mi respuesta sería, depende: Para los países desarrollados en general, no tiene porqué ser dramático, ni siquiera negativo, que sólo se consuman productos de temporada propios y que se deba volver a diversificar la producción autóctona para cubrir las necesidades regionales. En ese caso sólo se importarían productos lejanos necesarios como por ejemplo medicamentos, eso sí a precio de oro (negro, claro). Pero este mismo fenómeno sería pésimo para el mundo no desarrollado, ya que condenarlos a producir sólo para su mercado autóctono significa la extinción de sectores de población incalculables. Imaginar un país emergente o incluso sub-desarrollado sin posibilidad de exportar porque los costes del transporte les arranca de raíz su competitividad, es escalofriante. No obstante, lógicamente los costes del transporte no repercuten igual en un producto grande, pesado y barato que en uno pequeño, ligero y caro. Es decir, por ejemplo el encarecimiento de la energía no afectará tanto al transporte de videocámaras como al de bicicletas, aunque ambos productos sean chinos.

Si alguna ventaja tienen esos países con economías paupérrimas, es precisamente su mano de obra barata que hace atractivos sus productos al primer mundo. Pero en el momento en que cueste lo mismo o menos una sudadera made in Italy, Spain o France que otra (de probable peor calidad) made in Indonesia, Korea o Taiwan, nuestro mundo al que ya nos habíamos acostumbrado, será otro. Deberíamos abandonar la producción especializada que hemos venido evolucionando en el pasado final de siglo, para volver a la producción diversificada por la ausencia de globalización mercantil. El escenario con el que nos veríamos obligados a lidiar con un petróleo desbocado y sin alternativa presente es, cuando menos, inquietante. Sin duda un panorama involutivo a todas luces (con el permiso de los anti-globalización).

Sin embargo, el fenómeno de la globalización es algo difícilmente reversible, sólo un evento que afecte a todo el planeta y de gran calibre como un agotamiento energético, puede frenar (que no parar o eliminar) dicha globalización. Espero que después de haber constatado el peak oil hace tres o cuatro años, y antes de llegar a un agotamiento que vaya más allá del simple encarecimiento del crudo, hayamos sido capaces de desarrollar una alternativa realmente viable y global. De otro modo sí que podemos ver peligrar el hasta hoy vertiginoso ritmo de la globalización.

Metiéndonos en Economía-Ficción, aunque me temo que menos fictícia de lo que parece, vamos a imaginar el escenario de un coste energético insostenible y sostenido. Es decir, que nos pilla el toro (si es que no nos ha pillado ya) y nos vemos abocados a un mundo con los trazos que hemos definido, y además durante décadas. Que no somos capaces de encontrar una alternativa energética barata, abundante y global como lo era el petróleo hasta hace unos años. Imaginemos pues que el comercio internacional se ve modificado drásticamente en consecuencia, y que las industrias y las economías se tornan sensiblemente menos globales. Sin embargo a pesar de este escenario, los mercados financieros seguirían disfrutando del esplendor de los movimientos de la información, y casi ajenos a los problemas de los movimientos de las mercancías y personas. Planteemos algunas cuestiones interesantes: ¿Qué sucederá entonces con las inversiones financieras? ¿Qué estrategias de inversión deberíamos crear para que nuestro patrimonio siguiera una correcta progresión en un escenario de crisis energética drástica?

Sería muy revelador leer vuestros comentarios al respecto, sobre todo si no se reducen sólo a la compra de derivados de petróleo, claro 🙂

Quizás si empezamos a pensar cómo serían nuestras inversiones en ese escenario de economía-ficción, encontraremos alguna directriz interesante y aprovechable para el escenario real actual. Una estrategia de inversión a largo plazo podría necesitar hoy del análisis de esta situación futura.

La globalización de los mercados financieros no necesita petróleo y, de la mano de internet serían los grandes beneficiados de la incapacidad de movimientos físicos causada por la ausencia de energía barata. Y no cabe duda de que, en dicho escenario, las cotizaciones de equities, commodities, RF soberana o corporativa, y en definitiva cualquier producto creado por los financos, se vería profundamante alterado en sus respectivas cotizaciones. ¿Estáis pensando en el mismo sector que yo? ¿Quizás incluso en las mismas empresas?

And the fact is that the mother of all crises no la concibiría sin la madre de todas las oportunidades.

Hay que encontrar un modo de preservar a las generaciones venideras de la avaricia o inhabilidad de las presentes.

Napoleón Bonaparte.

Wealth, fortunately, is mostly redistributed naturally. That is to say, the wealthy spend surpluses more easily in favour of the less wealthy. This quasi-universal law exists in countless areas: From the rich man who lives at a rate that means the livelihood of many families around him; to the football club of the G14 which pays a huge sum for a player from a mediocre club, thus helping to balance the latter's damaged balance sheets.

Almost always the increase in wealth leads to an increase in spending, consumption, investment and/or whatever we want to call it, with many different collaterals benefiting from it. Some of us call this relationship a kind of Win-Win, but sometimes it becomes a parasitic relationship. Some will say that the rich get richer and the poor get poorer, because of the exploitation of the former by the latter. In that case we would enter into the controversy of who is the parasite and who is the host. But the class struggle is not the main reason for this reflection, so we will ignore this polemic and consider (fairly or not) that the rich is the host and the poor the parasite when it is not a Win-Win relationship.

Not all parasitic relationships are trophic, In other words, they involve an increase in monetary resources that feed the parasite. Sometimes the benefit obtained from the rich or powerful translates into protection from third parties, influence, leisure, business, prestige or other very diverse advantages that have little or no relation to money.

Another example of wealth redistribution would be philanthropic giving. Perhaps mostly residual in volume, but look at the large donations that do occur from time to time. For example, Warren Buffett's recent donation of 37,400,000,000′-$ to charitable foundations (when you read all the zeros, it's more impressive, isn't it?). These types of philanthropic acts are the most straightforward and direct way to redistribute wealth. The most radical and at the same time laudable form of Win-Win decompensated or voluntary parasitism on the part of the host. In the face of an altruistic attitude of this calibre, the balance of the two «win» or the «damage»The "parasite as a passive subject" is something that, happily, escapes us from the traditional analysis of the relationship between wealth and poverty.

Some may criticise such acts as merely laundering the conscience of the rich. I prefer to think that laundering or not, we are dealing with effective redistributions of wealth that honour the human race. NGOs (some) will not only redistribute mere resources but also encourage small forms of autonomous wealth creation, e.g. wells, dams, schools, etc. At this point I cannot fail to mention Vicent Ferrer and its copy Foundation, to which I personally have a couple of splendid ties.

Philanthropy, trade, business, leisure, influence.... whether the relationship between the rich and the poor is parasitic or Win-Win, it tends to compensate to a greater or lesser extent for the distribution of wealth.

But lately there is something that has me a little worried. I am not sure that the hands that have accumulated an enormous amount of wealth since the beginning of the new century have the same profile as the rich to which we are traditionally accustomed. I am basically referring to the Chinese and above all to Arabs (natural and legal persons) who are accumulating astronomical amounts of money day after day. Let us bear in mind that money has always been in the hands of Westerners in the past, either through the merits of their own civilisation or through the plundering of third worlds, but that is how it has traditionally been. But the holders of great wealth have changed in the last decade, in the last couple of years, I dare say. And perhaps the way they spend or pass on their wealth to the rest of the planet is not the traditional way either.

The great billionaires of the last century, as long as modern economics has been called that, have always been Westerners. Great businessmen who have amassed their great fortunes in industry, business or even commerce. Diverse men, of course, but all of them of Western culture. Only in the late 20th century did we see some Japanese multi-millionaires whose culture is far removed from Western culture, but they were short-lived and much less significant than today's great fortune-makers. My personal opinion is that many huge fortunes created in the last few years, which are growing at an unprecedented rate, are being formed without the commitment, effort and perseverance of traditional Western multi-millionaire businessmen. It is only an impression, true, but if these new fortunes of unimagined volumes have been formed in a somewhat passive way by their holders, their future objectives will undoubtedly be different from the traditional ones as well.

This is not at all a question of cultural, religious or even racial discrimination. It is only a reflection that leads me to think that wealth is no longer in the hands of our western culture, as it has always been historically until a few years ago. And the next question I ask is: What are the consequences of this phenomenon: will the traditional redistribution of wealth change?

It is as if in an eternal game of Monopoly, tacitly, the winners would cyclically return the banknotes to the bank so that the game would never end. And suddenly, the winners would have a new profile and question whether they will return their wealth to continue the game forever or not. The question I dare not ask myself is what will happen to our game if the nouveau riche decide to break with tradition.

Quizás los términos que más éxito han tenido desde los inicios de este blog son los de Financos e Inversópatas. Ambos me parece que son (somos todos) de alguna forma responsables de la situación a la que ha llegado nuestra economía.

Sin ir más lejos, el abuso de titulizaciones de RF nos ha llevado a la actual crisis de crédito. Pero también el abuso de estructurados y sobreestructurados sobre derivados, ha llevado a más de uno a la ludopatía financiera. Pero además con el agravante de que un ludópata puede prohibirse a sí mismo el acceso a bingos y casinos, pero jamás conseguirá que le prohiban la entrada a una entidad financiera con flamantes carteles atractivos que le incitan a lo peor.

La responsabilidad, a mi entender, es del todo compartida. Del mismo modo que la telebasura sólo tiene cabida si existe oferta y demanda. Es decir, «profesionales» de la comunicación que se rebajan a ello, y también demanda de televidentes con poco cerebro que consumen estos bodrios.

En fin, os dejo con la entrada original de hace un año, donde se intuía ya algún tipo de crisis inminente:

Financos e Inversópatas. Un cóctel explosivo.

«El dinero es algo muy singular. Le da al hombre tanta alegría como el amor y tanta angustia como la muerte.»

John Kenneth Galbraith (1908-2006)

Sé que no os impresionarán las cifras económicas que a continuación os voy a mencionar. Son datos reales y públicos a los que nuestra mente se ha acostumbrado muy rápidamente. La cascada de cifras negativas que salen a diario nos hacen insensibles a su significado, pero cada una de ellas tiene, no sólo significado sino repercusión macroeconómica que desemboca en afectaciones de bolsillos personales.

No olvidemos que al final de la cadena económica estamos las personas y los datos terminan traduciéndose en bienestar o malestar individual. El dinero, el trabajo, los ingreso, los gastos… todo se ve afectado de una forma u otra, tarde o temprano, por esas cifras económicas que nos llueven constantemente, y que desde hace unos meses son pésimas. La globalización en las comunicaciones hace que veamos imágenes detalladas e inmediatas de catástrofes naturales al otro lado del planeta, pero no dejan de ser fenómenos locales de los que la globalización sólo nos informa. Pero en economía la globalidad no sólo nos informa sino que también nos afecta directamente. Acostumbrarnos a oír y leer cifras económicas negativas y curtir nuestros sentidos, como si se tratara de la noticia de la inundación de un remoto país en el telediario de las tres, no nos evitará la afectación personal.

Este mes de mayo 2008 las solicitudes de ejecuciones hipotecarias en los EE.UU. han aumentado un 48% respecto al mismo mes del 2007. Si contabilizamos también los avisos oficiales de incumplimientos, 261.255 familias han faltado a sus obligaciones hipotecarias, o sea casi uno de cada mil habitantes de la primera potencia económica mundial. En los últimos 29 meses siempre ha aumentado la cifra interanual de ejecuciones hipotecarias. En concreto éste último mes 1 de cada 483 hogares ha sido ejecutado promediando todo el país, pero hay estados como Nevada donde la proporción es 1 de cada 118 hogares. También California y Arizona están sufriendo la terrible resaca de embargos después de la borrachera hipotecaria de los últimos 8 años.

Otra cifra escalofriante: En España un 10% de las hipotecas superan el valor de los inmuebles hipotecados. No sé a vosotros, pero a mi me dio mucho que pensar, sobre todo si tenemos en cuenta que se obvian muchos peritajes obsoletos que a nadie le conviene actualizar.

Los embargados, o los que lo van a estar, no sólo pierden en favor del banco su mayor o menor porción de vivienda que ya era suya, sino que también ven como el petróleo afecta fatalmente a sus bolsillos. Si esta crisis energética se hubiera producido antes, se habrían ahorrado algunas cuotas de su hipoteca, empeorando aun más los balances de sus bancos acreedores. Dicho de otro modo, el incremento de precios hará que muchos ya no puedan hacer frente a sus créditos, provocando más y más ejecuciones.
Llegados a este punto, si está siendo tan vital el desplome de los intereses en EE.UU. para salvaguardar el sistema financiero lo es aun más, si cabe, la moderación en la escalada energética. Un crudo a 150, 200 o 250 US$ por barril hará inútiles las costosísimas medidas adoptadas por FED, BCE y otros muchos bancos centrales. Los descensos de tipos, las inyecciones de liquidez al sistema… todo se lo llevará por delante la asfixia económica energética y su inflación de primera ronda. El G8 ya advirtió de este peligro el pasado sábado con comentarios inusualmente agresivos.

The distopía petrolífera ha desplazado de los titulares al credit crunch, pero ambas crisis conviven coincidiendo en tiempo y espacio. Y esta convivencia de dos escenarios tan graves es inaudita, histórica y espeluznante. Además existen efectos colaterales derivados de éstas que agravan la perspectiva, como por ejemplo la vergonzosa crisis alimentaria del tercer mundo, causada por la súbita sobreproducción de biocombustible, que se extiende peligrosamente también al segundo mundo.

Algunos no se dieron cuenta de la gravedad de la situación hasta el pasado mes de Enero, cuando la bolsa tuvo un breve periodo espasmódico. Pero como no fue más que un «coitus interruptus» y algunos siguen asociando exclusiva y torpemente la palabra «crack» al de 1929, muchos siguieron (incluso alguno todavía sigue) pensando que si las bolsas no se desploman será porque la cosa no está tan mal.

Los ciclos han desaparecido y el nuevo orden económico global todavía nos resulta caótico. Un caos que comprenderemos con el tiempo. Esta crisis es tan inaudita e histórica que ni siquiera un crack bursátil tradicional nos puede guiar en el camino del actual escenario. Ya desde el pasado verano venimos diciendo que nuestra economía de hoy formará parte de los libros de texto económicos de las generaciones futuras. Pero vamos camino ya de tesis doctoral.

El otro día un director regional de una conocida banca privada española me dijo: «El único motivo que tienen las bolsas para subir, es que no existe ningún motivo«. Frase lapidaria donde las haya, sobre todo viniendo de un cargo como el suyo. Esta crisis es The Big One, sin duda. Quizás nos daría alguna clave releer el artículo de mi colega GFO «Inflacionar o Morir».

Para acabar os dejo con un fragmento del comentario que hizo Manuelmad (lo siento pero no sé dónde linkarte) a nuestro artículo de Mad Max, y que suscribo totalmente:

«Igual vivo en el mundo de la alegría, pero prefiero pensar que los años que tengo por delante van a ser los años de mayor desarrollo tecnológico y cultural de toda la historia, precisamente por la crisis que se nos está viniendo encima.
Hace poco leí a un artículo sobre el milagro de Singapur, un país que no tenía nada y que hasta hace muy poco era tierra de mosquitos y enfermedades. El reportero preguntaba a un empresario como lo habían conseguido, la respuesta fue que la escasez da eficiencia y la eficiencia da riqueza.
Momentos como estos son los que cambian el desarrollo del mundo. Si son para mejor o para peor, eso ya depende de la óptica con la que cada uno lo mire.»

As he said Victor Hugo:

«El futuro tiene muchos nombres. Para los débiles es lo inalcanzable. Para los temerosos, lo desconocido. Para los valientes es la oportunidad.«

The evidence has now convinced even the most optimistic observers, and it is no longer a matter of debate that the era of cheap energy is well and truly over. At least for the next generation. The three conditions necessary for the collapse have now come to pass:

1. A historic rise in energy demand in emerging economies such as China, India, etc.
2. Decline in oil production due to depletion.
3. The lack of sufficiently advanced and widespread alternative energy solutions.

As for the first factor, it is obvious that the main player is China, with 1,300,000,000 people whose government has embarked on this path of state capitalism. Their growing demand has only just begun, and if India follows in their footsteps even slightly, the planet will have to meet the energy needs of a further 1,000,000,000 people. The figures for these emerging economies are so overwhelming that the West and its vanity are left looking powerless and pitiful.

The second factor is perhaps the most worrying, and yet the one that has been most predictable. The zenith or peak oil (although many have seen it as a box-office high) is a evidence for almost 10 years now. But we have stubbornly refused to pay any attention to it until the price per barrel has risen 2.5-fold over the last year and a half. And we say it was predictable because we have seen it rise tenfold over the last decade, as all the expert opinions were all pointing towards the end of the era of cheap oil.

It should be borne in mind that current prices make it possible to exploit fields where extraction costs previously exceeded the required rate of return. But in most of the large, long-established traditional fields, crude oil no longer flows as freely as it once did. Extracting the second half of a field’s reserves is much more costly and slow – very slow indeed. The crude becomes much thicker and must be pumped, and the difficulties multiply. The picture is therefore very different in a young well in a young field, where the liquid gold gushes forth with vigour and barrels flow freely and ceaselessly. The large, traditional deposits are now producing at a snail’s pace, yielding little and at high cost, and despite technical advances, production costs and volumes will never return to what they once were. Just like life itself…

It is true that today’s offshore platforms bear no resemblance to those of a decade ago; today, drilling reaches depths of up to 3,000 metres, whereas in the past, drilling beyond 300 metres was considered a risky operation. Furthermore, the precision of the surveys and, above all, of the drilling operations (carried out at a pre-determined angle and in a pre-determined area with an accuracy of just a couple of metres) means that extraction is much more precise. But the depletion of resources is inevitable and we must to go in search of new cheese, with new flavours that will surprise us, as the well-known fable goes.

The third factor in this perfect storm has a great deal to do with human behaviour. Foresight and long-term planning are virtually non-existent when it comes to humanity as a whole. Not even politicians tend to anticipate problems beyond their own terms of office, and in most parts of the world there is scarcely a political class to speak of. Alternative energy sources are still in their infancy and cannot yet serve as a viable alternative to our dependence on liquid fuel. We will only strive to achieve alternative solutions when they are not alternatives but mandatory measures. Sadly, with a few exceptions, this is how the human race behaves on a global scale.

With the price of a barrel exceeding 140 $, we begin to feel the pinch. Transport is affected; protests, strikes and so on begin. Any palliative fiscal measures that European governments might take will be nothing more than a stopgap. At least not until a decision is taken to generate alternative energy on a massive scale, and to achieve this, the problem must be made a matter of national importance and drastic strategic measures must be taken. Let us hope it is only a matter of time before we set out resolutely on this path, but the sad truth is that we will only do so when the price per barrel becomes sufficiently suffocating.

The world’s poorest people are already suffering the consequences of the sudden, burgeoning production of biofuel, which is driving up the price of the raw materials that form the basis of their diet. A despicable and shameful famine. But there is also the danger that dependence on exorbitantly expensive oil will persist long enough for the damage to the world’s economies to become too severe. The current uncertainty centres on whether we will manage to switch to alternative energy sources in time, before suffering a genuine economic collapse that would be almost impossible to reverse. If not, the energy deficit will prove unbearable for the fundamentals of the world’s major economies, and the consequences of this deterioration could trigger the worst global recession in history. The following chart shows the prediction of certain doomsayers, whose views we are, however, far from sharing:

Personally, I firmly believe that we will be able to preserve these fundamentals and that the First World’s need and instinct for survival (the Third World, unfortunately, cannot do any more) will lead us to find a viable alternative to accompany the multiple crises, hardships and other restrictive measures.

I remember a certain well-known, short-sighted economic analyst who, at the height of the credit crisis last August, said off the record something along the lines of: «The credit crisis is the worst in history. What else could possibly be worse for the global economy? The oil crisis is an old familiar foe whose consequences are entirely predictable»… They’ll never learn, my dear and much-admired Nassim, they’ll never learn.

Saudi Arabia continues to «reassure» us with its now-familiar line that «there will be oil for everyone», but I was taught to be wary of anyone who claims to have a good hand but refuses to show it; perhaps the good hand is for the Saudis, or perhaps not even that. If information is power, it is clear that the West is very vulnerable in the face of uncertainty over actual oil reserves. And yet the transition to a new energy model is dangerously far from becoming a strategic matter of state. Meanwhile, other short-sighted people are up in arms because a Spanish electricity company might be bought out by another European one «for strategic reasons». Come on, politicians: ‘Strategy’ is written with a capital S. But as I was taught to take personal responsibility for everything that happens, all of us living in the developed world share responsibility for having elected our leaders.

«We must not lose faith in humanity, which is like the ocean: it is not tainted just because some of its drops are dirty.»

Mahatma Gandhi.

Let’s hope that Mad Max doesn’t cease to be science fiction and become a mere caricature of reality dystopian.

Siguiendo con la sana costumbre de releer a toro pasado algunos de nuestros artículos, hoy recordamos los errores estratégicos que cometen la mayoría de patrimonios medios y pequeños, contrastando con las directrices que siguen mayoritariamente los HNWI, o sea los grandes patrimonios bien gestionados.

Como is nuestra vocación en este blog, intentamos trasladar y adaptar estas estrategias a los que podríamos llamar Medium o Low Net Worth Individuals. Como curiosidad podemos releer las reflexiones que hicimos hace un año respecto al panorama inmobiliario y el uso abusivo que se hizo de ese tipo de inversiones. Y también resulta lamentable ver cómo ha evolucionado la RV que fue el refugio de muchos inversores que dejaron de confiar en los inmuebles como valor sólido para sus activos.

Aquí tenéis nuestra entrada original de hace un año:

Strategic mistakes in small and mid-caps. The four variable assets.

We have received an anonymous comment to our article Citisoluciones, the Networking in the service of CitiBank. Rest in peace the financial independence of Kiyosaki. The fact that we are publishing it does not mean that we subscribe to all of its content, but it seems to us to be as raw as it is sadly sincere, and we think it deserves to be read in full and in the form of a post. We have transcribed it exactly as the author wrote it, without changing a single comma:

Anonymous friend, in our article of more than a year ago we said that it was a decent job like any other, but the company is unethical with its customers and also with its employees as you have described very well. It plays with the yearning to achieve financial independence which is much closer in the reading of Kiyosaki, The fact that it is a simple book, despite the fact that it is a simple book, than in that work activity. Especially for potential customers. It is a pity that the author of Rich Dad, Poor Dad has lent (sold) himself to such a game. It dishonours him and harms third parties.

A pyramidal and pseudo-sectarian structure that hunts and captures the circle of influence of the largest number of followers. Unfortunately, far from the demanding formation of a commercial network and far from the search for the well-being of their clients that they so proclaim.

I just want, anonymous friend, to give you lots and lots of encouragement. Without our mistakes we couldn't improve, and I'm sure that without your disappointing passage through Citisoluciones, you would not have written such a sincere, sad and at the same time honestly grateful text. With your foresight, honesty and effort, have no doubt that time will put you in the place you deserve. That's how it usually does with everyone, for better and for worse.

I am sure your comment is appreciated by many.

P.S. Anonymous, please write us a e-mail contact details, We would be delighted to count you among our partners.