Here is the report from the EPJ mole, who attended the entire conference:
I should tell you the conference was quite interesting. It's an annual conference organized for the most important clients of Rothschild private banking to give them a sort of "heads up" about upcoming economic events.
The most important conclusions I have, based on conversations I had and the conference speakers, are:
1.- The EU will form a fiscal and banking union and sovereignty in Europe will effectively be gone. That said, the elites are afraid of popular backlash and recognize this may be stopped in the voting booth if it's not shoved through ASAP.
2.- China is totally screwed.
3.- Iran. There will be no war. In 2013 Ahmadinejad will go quietly and allow the democratic process to occurr. The Ayatollah will eventually go. Problem solved.
It really was amazing, how much they said agreed with the analysis I read on EPJ.
Anyway here are my notes, feel free to use anything you want:
Notes of Rothschild Conference
June 21-22, 2012
The conference began with a brief introduction of the Rothschild family. I found especially amusing their motto of "Humanism with Capitalism". Yeah, right.
Ex-Prime Minister of Slovakia (Until March, 2012)
Especially emphasized was the conflict between "responsible" and "irresponsible" EU countries and the need to keep them on the same page to avoid relations from deteriorating even further.
Her conclusion was that the crisis has mispriced risk (I'd say the "mispricing of risk" was what led to the crisis) has led to these "lost years" and she used the example of the constant devaluation of the Spanish Peseta, pre-Euro, as an example of what the EU must be empowered to prevent (Hmm, wonder how?).
He conclusion was an ardent call for "More European Union" as the only way to prevent wars from breaking out within Europe.
Head of Equities and Strategy, WOOD & Company
His message was loud and clear. His speech was a fervent lobby for centralization of power in Europe. He claims the EU needs a "Real Central Bank" with "real central bank powers". However, according to Robinson, most important is the creation of a strong fiscal union. He recognized that the electorate (i.e. the people) still have the power to stop this at the voting booth, and the fear that the "people" would stop this was notable in his voice, but he also clearly stated his belief that the elite will try and push this fiscal union through ASAP. Though perhaps the election of Hollande was a slight setback, it's nothing that can't be overcome, the Greek election was the real worry and the pro-centralization forces have been greatly bolstered by the result of the recent Hellenic elections.
Head of the Emerging Markets & Commodities Division, Edmond de Rothschild Asset Management
EPS growth is non-existent, but GDP continues climbing.
Between 45% - 58% of GDP consists of State investments in "Structure". I.e. Housing..., Railways, Stations, Ports, etc.
Conclusion. There is phantom GDP growth occurring in China. He repeatedly implied major economic problems could soon become reality, if reforms are not instituted soon. The investment level in "structure" is far too high (duh) artificially inflating growth numbers.
2.- Other Emerging Markets
Invest in "Consumption" in China.
In Indonesia is high on Mitra Adiperkasa.
In Mexico very hot on Asur, airport operators, and Banorte, the healthies commercial bank.
Keppel Corp is very solid
Oil wil go up.
American Author, Journalist and Businessman, Bejing
This guy was entertaining. Very down on China's outlook.
Some choice excerpts:
"The hangover is coming" especially with 58% of the GDP made up of gov't investment.
The Communist Party is like General Electric + Secret Society; i.e. they promote internally, do every thing inhouse, and suffer from bitter infighting and cliques.
"The current Chinese Model doesn't work"
Banks control the State Owned Enterprises, which comprise 50% of the economy, and are stopping the reforms, which would consist of curbing useless investment in infrastructure and housing.
Chinese demographics are about to get very, very bad due to success of one child policy.
"China, reform or die"
Macro-Economist - Executive Director, Goldman Sachs Asset Management
My impression was she was the least realistic speaker of the bunch. A lot of things she said just don't make much sense when looking at the reality of our current economic and political climate
The world is 62% developed, 25% in growth and 13% emerging or frontier.
The growth countries are:
Mexico, Korea, Turkey, Indonesia, Brazil, Russia, India, and China
The "Next 11", are the countries that Goldman Sachs lists as having the best growth potential. These countries are:
I don't know if I buy this list. There are several failed (Pakistan) or near failed (Egypt) or about-to-be-war-torn (Iran) countries on mentioned as the next growth phenomenons.
"China will grow 7.5% until 2020" though it will "ease" its growth rate in Q3 and Q4 2012. China's economic growth is equivalent to creating a "Greece every 11 1/2 weeks".
Spain is undervalued. It's Cyclically Adjusted Price to Earnings Ratio is 4.7, down 74% from its previous average of 18.1
Russia would be another excellent buy, if it weren't for corruption.
Russia's CAPE is 5.8, down 60% from historic averages, and is one of the strongest economies currently, with a budget surplus and an 8% Debt/GDP ratio.
Historian and journalist, specialist in international relations
"Double check everything Goldman Sachs says because a lot of it is bull shit"
The BRICs (Brazil, Russia, India, China) are on their way down. The possible exception is Russia as it is a mature economy with strong figures.
Mexico will grow due to increasing North American links and investment, and the eventuality of a de facto "North American Union" (even if its existence is not explicit).
Turkey and Indonesia are better than China. There is a "turning point coming in China"
RMB will be forced to be convertible and begin a free float exchange rate. Chaos could ensue.
Pakistan is a failed state (calling out Goldman Sachs BS)
In Iran there will be no war. Ahmadinejad will leave peacefully next year and allow democracy to flourish. The Ayatollah will eventually be gone and the conflict with the west will be resolved.
Spain. Banks have been saved by Latin American activity. They need to export more to save the economy.
The EU will be create a "banking union" and common budgetary policy (i.e. fiscal union). It must in emerging markets to recover and begin to flourish again (as Germany does already).
"History and Economics are two branches of the same science, human science"
"Macroeconomics is BS, not applicable to real life