In the economy at large, artificially-fabricated liquidity is leading to a devaluation of currency, a trend that is both worrying and dismaying for investors or any individual with positive savings. But on the constructive end this means that there is an opportunity for increasing meaningless currency to be replaced by a return to economic sense and basic values, Saxo Bank Chief Economist Steen Jakobsen pointed out during a Business Lunch Forum hosted recently by Capital Club Dubai, the region's premier private business club and a member of the ENSHAA group of companies. Jakobsen, who is responsible for compiling Saxo Bank's annual Outrageous Predictions, in his speech on "The world is at zero interest rate. Who wins and who loses? - A macro-look at the market and economies…", likened the progression in the economic sphere over the past few years to the process that a political crisis undergoes, stating that in any political crisis there are three basic phases; first denial, then protest and finally a mandate for change. He said the period of denial is the time when everyone was looking at everybody but themselves to find who or what was responsible for the crisis has passed and that individuals and entities were moving on to the protest phase. People the world over want new solutions, different options to what was available before. But although there is a great deal of talk about austerity measures and reform, not nearly enough real change is taking place yet, leading to a rise in social tension. He stressed that both the denial and protest phases were a necessary and natural part of the progression leading to the point where a true mandate for change becomes possible. Jakobsen said it is the third change phase that yields the greatest opportunities and as such he advocates aggressive investment policies. He advised that investing in areas that are under pressure provides the largest margin for profit, urging investors to not underestimate the value of human capital, especially that of the youth. He cited the example that many of the European countries that are currently undergoing difficulties have extremely high rates of unemployment amongst their youth, but simultaneously have very high numbers of qualified and educated young individuals - a resource that is being fundamentally underutilized. He also stressed that following old tried and tested investment routes were no longer a viable option, saying that "you don't want to invest in a stock market that has property, banking, and telecommunication companies as its main players - what you want to find is a stock market with high levels of technology, innovation, and a research and development focus." He said that the global economy is still in a real state of crisis and that the international political environment - especially where economic matters are concerned - is out of control. He referred to what he called the "pretend and extend" policy, where governments extend to buy time and pretend to be credible. Historically many nations have gone bankrupt and emerged even stronger.
