The future looks extremely grim

[Iberian Red]

As you all know I am a supreme optimist and silly Billy is a total pessimist. However even I cannot see a way out of this upcoming problem.

The Eurozone is about to embark on QE and lower interest rates to try and stave off deflation and all this will do is increase the value of Sterling and export their deflation to us.

We have a huge 6% current account deficit and our deficit on trade with the Eurozone is the biggest of any country. A strong pound and a weak euro will make that deficit worse as our exports become more expensive and our imports become cheaper. This will put our rate of inflation under severe pressure and push us into deflation along with the Eurozone.

It gets worse. Our total indebtedness as a country (household, business and government debt) is massive. Just about the worst in Europe. Combined with a strong pound and deflation this scenario would give us stagnation and make it very difficult for us to pay our huge debts. This is a nightmare scenario for our economy and will make the previous devastating bust look like a picnic in the park.

I'm beginning to hope that Labour win the general election (things are that bad). They will then get the blame and won't be electable again for a generation.

In the meantime do whatever you can to protect your investments. Pay off as much debt as possible. Get into gold now. The price is going to soar.

As always with these situations there are going to be winners and losers. Take my advice and be a winner like what I am.

So what have you done to protect your investments? 

Just picturing a gold bar under your matress!

There's more chance it's a gold coloured box with a nine inch Arab strap inside it.