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What to do post Brexit. Real estate in the EU.

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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 Portugal, Spain,
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 be defensive.

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 money-controlling elite.

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 them.Ē

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 about Frexit.

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 everyoneís taste.

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 that reason.

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.


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