I think we can predict with a 98% confidence level that the age of US dollar being the only and standard security money is numbered. Of course, this is not something that the US mainstream media is showing hour after hour as breaking news. But you step out of that hemisphere, and signs start becoming evident of the buzz that’s around. With this, there will be many icons that will fall and many assumptions that will be proven wrong, and all of that could lead to a major shock trigger.

My friends and peers could validate that I have been saying this for the last 18 months that the state of dollar and that of the US economy, (and hence, the global to an extent) would get a lot worse before it starts leveling off. I would not use the word ‘better’, because what lies ahead wouldn’t qualify for the use of that word, especially, in the context of levels of prosperity and spending (read: overspending) that we have witnessed in last two decades.

Events in the global economy and especially the financial markets between the summer of 2008 and the fall of 2009 have impacted not just the financial markets, but also the households of millions of common people – professionals, young and old, sellers and buyers, and everyone who matters in the world at large.

Our friend Robert Frisk raised the siren recently in his typical method in one of his recent articles published in the Independent newspaper of UK. According to him, recently Iran announced that its foreign currency reserves would henceforth be held in Euros rather than in the dollars.

Frisk says; “In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese Yen and Chinese Yuan, the Euro, Gold and a new, unified currency planned for nations that are part of the Gulf Cooperation Council, including Saudi Arabia, UAE, Kuwait and Qatar”.

Now, the biggest question arises: Is this the real “New World Order” that has been doing the circulation at dinner room, drawing room and board room tables’ discussions for the last one decade?

Whether Mr. Frisk is on the money or not, (no pun intended), in his revelations and analysis of the US Financial supremacy, the balance is now changing. The fact remains that whatever has happened till now has already triggered movement of balance of power, energy, resources and growth in a non-reversible trend in favour of the Eastern /Far Eastern hemisphere. The issues in the West’s economy, from UK to North America are severe, the debts already built in, and the forthcoming (with healthcare and two continuing wars etc) see no end.  Yes, the meltdown would settle and I am not predicting an apocalypse for the West, for these communities are build on  strong social and technological cultures. But their role as world leaders and there ranking as ‘opportunities unlimited’ for the seekers, is changing fast.

This is not the first time the world has been on the (almost) verge of a depression. We have been told (by economists) that we have had several near depression-style recessions, and a one truly great depression in the last 100 years. But what makes this current crises most impactful is the age it has happened in – the current age of Google and Facebook.

We live in an age where financial, social, market and economic correlation of the modern developing world is near 1.0. This means that information and trade is flowing so smoothly and seamlessly between countries and continents that it creates an immediate trigger effect, should the house of cards starts to fall in one segment of this train. As the global economic crises of this decade unfolded in last 18 months, several financial safe heavens for investors crumbled.

Here are FIVE widely believed (till now) ideas that turned out to seriously flawed in the new economics that has mandated us to trigger necessary changes in our life styles, thinking and plans.

1) Buying and investing in homes using 80% or more debt is the best bet for short and long run:

Not any more. Just ask many owners (read: buyers and sellers) from Pakistan to Dubai, to US, who have been sitting on their devalued invested houses and properties for the last four years in hope that they can get a break-even to bail out. These are the unlucky chaps who bought at the high point. I am not saying that you shouldn’t invest in property… mantra is no or low debt. Home prices could, and do, go down.

World Housing Market Crashes

2) Banks are safe heavens

The old saying, “you can take this to the bank” would now probably be changed to a different analogy. I would strongly urge not to keep all your ‘eggs’ in one bank, of even if you do, keep analyzing the health of the institution and the news coming out of the management and its operations. Someone one even predicted that we could soon be going back to barter style economy if the banks around the world continue to go bust like this.

3) Buy and hold stocks for the long term

I think this notion will have to be redefined and must now be phrased as, “Buy and hold stocks for the mid-term, review your portfolio not across the industries, but across the regions/and countries to ensure you are moving to emerging markets as needed, and then sell and then buy back the correct ones, and then hold for the mid-term. Repeat the cycle every three (3) years.”

4) A retirement (401-k or provident fund) account will pay for your retirement.

How about rephrasing that as “Retirement account could possibly pay for life after retirement but most probably it will not so save and invest in various other ways”.

A peer of mine who calls his 401-K a 201-K now is planning to take out his retirement money next time the markets recover and hold it in gold biscuits… I wouldn’t second guess him!

Ironically, the shortcomings of the retirement system in North America contributed to the housing bubble as many investors tried to supplement their savings by “flipping” homes or otherwise attempting to profit from the boom. Tales of easy money from early flippers helped spark the later-stage stampede that helped push prices to unsustainable levels.

5) Dollar is it!

I’d say Euro it is. No worries with the Chinese Yuan either. I will not promote Pakistani or Indian rupee, though nationalism calls for it, but reality trumps. This is serious stuff, and I strongly recommend that if you are holding any significant amounts of dollars then keep studying the 1-2 year trend, and sell dollar on the next slight upward graph, and hold Euros. Keep in view that there will only be a slight upward trend this time, and a strong possibility that there may not be another time in next foreseeable future after that.

Images: Independent (online), UK; BBC (online); Google Images