It looks like the trouble in the Euro zone doesn’t want to end. The always balanced Dutch seem to have joined the fray as of late, and now seem like they’re falling in line with countries such as Ireland, Greece, Spain and Italy… European countries that have failed to bounce out of the previous recession and seemingly are mired in another recession that beckons their return.
The global economy, particularly in first world nations is now at the point that we are undeniably all linked. Our economies essentially function as a union. There is no way to get around the challenges in Europe because these economic challenges make business growth for American companies who service the people of Europe a challenge.
That housing prices in America can somehow be affected by the Dutch recession seems a little weird to those who do not follow global economics; however, the reality is that the global economy makes the debt of one nation a burden to another nation. Until the global leaders of this world are able to unwind some of this debt we’ll likely have challenges finding stable footing in providing a bedrock for assets such as our homes.
No, I certainly do not mean that sitting out this major shift in global wealth is a time to sit on the sidelines. It’s not. It is looking more and more likely that we’ll be dealing with a global balancing act for the next decade or two. There is simply no sitting this out because it looks as though it will go on for some time.
But there are reasonable approaches that we can take:
1) Realize that the global markets are in flux, and that employment is not where we want it to be in this nation. Approach any asset allocation with the understanding that the asset may lose value in the short term. Assets are not hot stocks!
2) Consider a balanced portfolio. How heavily invested in real estate should you be? Some people poor essentially all their income and savings into homes. In a global economy like this, that may not make sense.
3) Sit down with a financial advisor and work with this professional to better a long term approach to wealth creation in a time that promises to offer seismic shifts for at least the next handful of years or so.