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Auvest Capital: It ain’t over yet

Auvest Capital: It ain’t over yet

Auvest Capital, a global investment firm, has done some research and thinking on what’s next for the world economy. Kipp took a look at the findings, and is pretty freaked out.

March 8, 2011 2:15 by



Kipp is not given to overreaction and moments of uncontrollable panic, but if we were this is pretty much the time that we’d lock ourselves in a motel room with a shotgun,  a bottle of -ahem- non-alcoholic beverage, two tubs of Vicodin, a half litre of anti-freeze and two of those friendly Russian ladies from the hotel bar in Barsha. For, if we were prone to over-reaction, we’d be thinking: ‘The end could well be nigh’.

Fortunately, we’re a bit more rational than that, and we know that we don’t need to panic. Well, not yet anyway. But why would imaginary-panicky Kipp currently be behind a barricaded door crunching up pain meds and weeping quietly? Well, it’s all down to the latest report from Auvest Capital. The clever bods there are predicting a revolution in the global economy, and given Kipp’s experience of how well the global economy handles change, we’ll be forgiven for expecting some very dark days ahead if they’re right.

But first, let’s get back to Auvest. Auvest Capital Management is a global alternative investment firm that offers investment management, advisory and research services, primarily to large institutional clients.

Auvest has been working on a ‘large internal research project’ for more than a year. Kipp likes to think of them working out of some Bond-villain bunker surrounded by shark tanks. From that research, they have spun out a new report grandly entitled “The End of

Financial Vandalism: Moving Forward to the Real Economy”. The report looks at the period pre 2007 and analyses key drivers of growth during the 25 years before the financial crisis. It then takes a view on the post crisis environment where major demographic changes now underway will dramatically alter the world.

As you might imagine for an economic research report looking at the mess we’re in, there’s an awful lot you don’t want to read, so we’ll get straight to the good stuff. The report suggests that the current crisis will last until the middle of this decade, and is unfolding in acts. Act one was the collapse of highly leveraged entities (Lehman, AIG etc). Act two and governments stepped in to take the bullet and bailout highly leveraged giants, in the process screwing up their own balance sheets.

Act three is where we are now, “with liquidity induced inflation from the developed world’s loose monetary policies creating social instability in emerging markets which will force interest rate hikes and a consequent asset price correction [translation: we’re screwed]. The developed world is importing this inflation from the emerging markets and central banks (especially the European Central Bank and the Bank of England) may be forced to raise interest rates.”



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