Reggie Middleton at the Emirates Palace in Abu Dhabi
The petrodollar rich nation of Abu Dhabi, outside of having an extremely rich and Arabic culture, is in the possession of the unique opportunity to capitalize on the plight of the EU and affected nations of the coming Eurocalypse. Fresh back from my fact finding trip through the UAE, I noticed the MSM had the headline Abu Dhabi Royals Involved in RBS Talks. In short, RBS, the 83% British taxpayer owned debacle of a bank is again in search of capital, but this time shrouded in the haze of the government selling off a portion of its stake at a significant loss.
RBS was heavily levered in rapidly depreciating toxic assets as a result of its ABN Amro purchase, and its executives obviously failed to subscribe to BoomBustBlog, for they took a royal (pun fully intended) Greek bathing on their Greek bond investments. Remember, I warned of an explicit Greek default two years ago and like simple arithmetic dictated, defaults came:
As a matter of fact, I warn those who do not subscribe to the BoomBust, this song is not yet over... Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth!
That being said, cash rich nations such as the UAE see gold in them thar hills. Personally, I doubt if the hills are made of gold, but there is definitely some gold buried within, even if it is at $1,700 per ounce. I would instruct my clients to go on an asset buying binge from the banks, developers and asset management funds versus attempting to buy the funds directly, or better yet use structured assets to gain exposure to said troubled assets. Many banks, like RBS, will get hit more than once from borrowers such as Greece. As queried many times on this blog, "What do you think, pray tell, happens when the liquidity starved, capital deprived, over leveraged banks fail to roll over all of that underwater EU mortgage debt?"
Investors seeking safety in Germany, the UK and France may truly be in for a rude awakening!
Reggie Middleton Featured in Property EU, one of Europe's leading real estate publications
Those who wish to download the full article in PDF format can do so here: Reggie Middleton on Stagflation, Sovereign Debt and the Potential for bank Failure at the ING ACADEMY-v2.
Go to 14:35 in the following video for one such idea...
Spitting the truth regarding Greek bailouts on CNBC (I'm the second guest)...
It's not just CRE and RE assets that are available via fire sale, as clearly outlined two years ago in our subscriber (click here to subscribe) report Greece Public Finances Projections see pages 5 and 6 following...
The MSM chimed in on this concept two years later... Greece Makes Asset Sales Look Bad, but Are They?
And though all of these countries have felt the heat from the markets, Greece has become almost synonymous with the deep crisis at the heart of the euro zone, which has hollowed out its appeal to investors.
"It is not clear Greece has the luxury of doing anything in an optimal way; they are basically burning the furniture just to get by," Bill Megginson, Professor of Finance at the University of Oklahoma, told Reuters.
"But other countries, especially where the crisis seems to have abated a bit, like Italy and Spain, they could and they probably will." Greece came up with plans for asset sales to convince its lenders it was serious about reforming its uncompetitive economy and also to raise funds to pay down its debt mountain.
But the EU and IMF, which pushed Greece for bolder and more detailed plans as to how it would deliver on its promises, have become increasingly frustrated with the country's repeated failure to meet targets.
Despite a reluctance to sell assets in such poor market conditions, Greece - which aims to raise 19 billion euros ($25 billion) from privatizations by 2015 - has begun ramping up its efforts, including inviting bids for state-owned natural gas company DEPA and the management rights to its Olympic broadcasting complex.
It plans to put stakes in betting monopoly OPAP and refiner Hellenic Petroleumup for sale by May, Greece's chief privatization official said.
But its tight timeframe and ambitious targets, already scaled back from 50 billion euros, suggest it will struggle to meet its price expectations.
Funded by like minded strategic capital sources, there are a plethora of delicious assets for the picking across the EU and UK. Now may be a tad bit premature to jump, but it is a good time to start priming the pump. All who are interested in ideas such as these should feel free to contact me.