Tags: Fiscal Cliff | Singapore | China | Taiwan

Democratic Spectacle vs. Real Growth

By Ashish Advani   |   Wednesday, 02 Jan 2013 07:50 AM

The fiscal cliff debate ended the way I had anticipated. I could not have scripted the cliffhanger any more acute than it played out to be. Technically we did go over the cliff, but actually averted it by backdating the acceptance clause.

If you are confused, don’t be. I would be tempted to call this a near subversion of democracy, but that might be considered as unpatriotic.

First, both sides dilly-dallied without any purpose for 518 days to resolve this impasse. Then they scrambled in Hollywood style to work though nights and over New Year’s Eve to harangue about and yet not agree with each other anyway.

Finally, in sheer exhaustion and fear of retribution of the global financial markets (not necessarily because they care for the American people or want to do the right thing), late in the night of New Year’s Eve the Senate passed its bill and then nearly 24 hours later, the House passed the bill as well.

The disheartening part is watching grown men pout and show such immaturity. The whole world is watching and laughing at the spectacle of how the two-democratic party was unable to agree on anything substantive for so long.

As I predicted, the reluctant agreement that has been done actually kicks the can down the road. The next cliffs to come are the debt ceiling cliff around Valentine’s Day and then the real deficit-cutting cliff that will come around Easter.

I am sure they will find another cliff to argue about by Memorial Day and then who knows how many more.

But for now, we have appeased the insatiable financial markets and will watch the euphoric rise to stocks and the decline of the dollar over the next few days. Then the worry clouds will gather again, dissipate when we kick the next can down the road just to gather again soon after that.

I predict a mediocre 2013 as far as real growth and real resolutions to jobless issues are concerned. That debate, unfortunately, is not even being framed, let alone being had.

On the other side, Singapore just announced a strong resurgence in its growth with its fourth-quarter gross domestic product, beating estimates and outpacing growth in the region. Their currency will gain due to real growth, as well as the overall decline in the U.S. dollar due to the dog-and-pony show that our politicians engage in rather than grow the country.

We are also seeing real gains in South Korea and Thailand, as well as Taiwan. I would anticipate some real growth numbers posted there very shortly as well.

I urge you to consider some investments in Asian currencies to enhance your diversification strategy. There are several exchange-traded funds that are available in all regular stock brokerage accounts that make access to such investments a few clicks away.

You cannot go wrong investing in Singapore dollars, the Chinese yuan, Taiwan dollars or the Thai baht.

Next week, I will tell you about the other global spectacle that is Japan.

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