What to do About Europe
Iíve received a request
about how to approach moving in the EU given the perceived
problems surrounding Brexit.
Here's part of the email:
1. We have a house in Drome Provencal.... Given
Brexit etc - would it
be worth advertising it on your site for British buyers?
2. We want to move to a house near the coast either in
France or elsewhere in the Med. Do you have any
recommendations in regard to "affordable" coastline
properties. We don't need a popular beach but we love the sea
and walking on the shoreline [grew up on Guernsey!].
I have said for a long time that I dont know whatís going to
happen next. I do know that somewhere along the line there is
going to be a monumental financial collapse. I think it is
likely to come sometime next year, but I wouldnít like to put
money on it. That means Iím not at all sure I can answer
readersí questions any more. That doesnít mean I wonít have a
go. What that does mean is that any investments I make now will
Letís start with some ground rules.
If I am right and a collapse is around the corner then selling
property now would be a good idea, but delay any purchases until
prices have fallen in the ensuing panic.
Mike wants to move to somewhere else in Europe. Well, I can have
a go at suggesting a few interesting spots, but the first
problem is that what is interesting for some is a complete drag
for others. Secondly, I am not at all sure the EU as we know it
will last in its present form. However, one could sell in the EU
right now to UK residents capitalising on the panic already
apparent in the markets.
A neighbour of mine flew back to Portugal monday after the vote.
There were at least four people on that plane coming out to find
properties to buy, and they were motivated by the fear that the
UK will sink rapidly outside the EU. It pays to bet on fear. In
fact, I thought folks would be more likely to vote to stay in
the EU simply through fear of the unknown. Iím glad I was wrong.
I like the adventurous spirit, especially because it tends to
lead to interesting places. Iím also fundamentally a
disruptionist (according to my online dictionary the word
doesnít exist; it should). But never mind what I think. Whatís
the new world order going to look like?
Mikeís problem is two-fold. What parts of Europe would suit his
tastes, and what disruption is about to hit the continent? Letís
look at the second problem first.
I have in a previous article spoken of the fact that the EUís
share of world trade has contracted alarmingly over the past
forty five years. That contraction is getting worse. The zone is
riddled with regulation, restrictive practices, and red tape
that is a drag on business and innovation. It is also weighed
down with debt which is unpayable. In fact, part of the EU ethic
(unstated of course) is that the driver of the engine is
Germany, and the aim of Germany is to control the whole
continent. That control will take the form of lending money to
bankrupt states, and then lending more money till they are so
dependent on outside funding that they lose control of their own
finances, are shut out from the normal forms of finance by
virtue of the ratings agencies classification, so they can only
borrow from the ECB. They will then be subjected to austerity
plans that quite deliberately weaken the countryís economic
base, impoverish the people, and make it utterly impossible for
the country to work itís way out from under the crushing debt.
The ultimate payoff is for the creditor nation to completely
control the debtor nation, and you have a gradually expanding
set of satellite regions all under the domination of the central
You will find that in the ensuing weeks and months Italy in
particular will be making noises about this particular problem.
Their banking system is a collective basket case, and they can
see whatís coming down the line, and they dont like the view.
You also have an unelected power elite who are in the job
because they are addicted to power, and they dont want to see
that power diminished. They are the real rogues. Will they end
up dominating the political situation, or will they ultimately
be crushed? I dont know. If the former, then you have a zone
rapidly escalating its way into a fascist region. That way lies
serious trouble, especially with the main powers wanting to
expand Nato when it should be retired. Too many idiots in Europe
are playing with fire.
Mike wondered whether Portugal would be a good place to settle.
Iíve lived there for fifteen years which means I am in a good
position to dish the dirt on the place. However, that leads to
another set of problems. Do you move there, or do you invest
there? There is a heck of a difference. I would not still be
living in Portugal if I thought it a dreadful place to be. On
the other hand I dont have a penny invested in the country.
I have peddled my beliefs for decades. I dont think many people
listen which is probably why they get in such a mess. I dont
believe in buying in countries which are economically
challenged. Portugal is a basket case. If you choose to live
here, that may be great. If you choose to buy here, IMHO youíre
mad. Look back over past articles where I spell out the maths.
Once again, I used to live in a big house, with land around me,
a river running through the garden, etc, etc. The money tied up
in the place, the cost of running it, and the work involved, and
the worry just wasnít worth it. I now rent, have an easier life
in my old age, can move when I like, have no relationship with
government agencies, no other expenses besides my rent, and I
have the money that would have been invested in the house
invested now in securities bringing me in a very comfortable
income. As one gets older, the income is what counts, and the
less work and responsibility you have, the easier life becomes.
I also remember what Sir John Templeton told me decades ago.
ďWhat counts in life is having the use of things, not in owning
Why would anyone want to pump money into a bankrupt country
which is getting poorer by the decade? Live there by all means,
but dont invest there. I believe the people on that plane to
Faro who are looking for somewhere to invest outside the UK
havenít thought very hard about what they are doing. For Mike,
thatís a good reason for advertising to such people. Do
remember, the fool and his money are soon parted. The world is
full of fools. Fools are the easiest class of person to sell
things to. Go for it.
Okay, weíve sorted that, and now, by implication, we dont want
to knock France, so I will tactfully ignore making any remarks
Italy and Greece are also countries which are financially
challenged. I have reservations about making any comments about
Italy. I find it a confusing country to discuss. It is so full
of opposites. My friend and I were discussing it only yesterday,
and we agreed that the traditional areas so beloved of the Brits
are the best. We especially love the Chianti region, and we
decided that Sienna was the place to be. But that is not to
I have written about Southern Italy and Sicily. One big snag
down there is the lack of English spoken. You really do need to
learn Italian. Also, the tourist season is very short; weeks
rather than months, which does give you large swathes of
coastline which for most of the year are silent and deserted.
That may be a plus for you or a minus.
Italy is also strongly in favour of a renovated EU. Whether that
would come to anything is another matter. Italy is the land of
shrugs. Greece is something else altogether. It is the region
closest to being owned outright by the northern bankers. Once
again, like Portugal, by all means move there, but for pityís
sake dont invest a penny in the place.
Letís change our tack a little, and have a closer look at money.
Where does yours come from? Are you paid in sterling or in
euros? Iím okay. I long ago started telling my readers that
things were getting dodgy, and I have diversified my
investments, and I get paid in dollars, sterling and euros. I
dont care what happens. If one goes up, the other goes down.
There is also the other dichotomy, if sterling goes down, the
exports get cheaper and imports dearer which helps the balance
of payments and puts the country on a firmer footing. On the
other hand it buggers you up if you are a pensioner dependent
upon payouts from the British government because your standard
of living goes down. My neighbour, Grant, who was on that plane
I mentioned earlier, is livid with the Leave vote for precisely
To counter that situation I am going to slightly increase my
euro holdings. I shall be investing in property renovation in
Berlin with a 10% ROI. I am nervous about investing in euroland
because I think the current situation is headed either for a
drastic re-think or a bust-up. Whichever it is, I think Germany
will prosper. However, do have a look at the smart money. Just
check the last couple of months of trading on the Footsie, and
then have a look at the Dax. The nervous traders are in Germany,
not in the UK.
What about the second part of Mikeís query? Where would suit him
best? Iíll approach that question next week.
If any of you have questions about the above, do get back to me,
and if you want any of the points Iíve raised expanded, I will
be happy to do so.