Avoid the BRC Fund

James Gschwind, USN/SW Ret

Gulf Breeze Fl

Last year many scoffed when I mentioned that I did not trust the new capitalism the Peoples Republic of China had found opening its’ doors too western investment. Events have and continue to prove me right on every turn.

The BRC (Brazil Russia China) fund was created last year by New York Bank as a conduit for all who were eager to get in on the foreign investment gravy train that recently turned bust on them.

The Chinese consistently put road blocks up to any effort by foreign investors to liquidate and repatriate their profits out of the country and have continued to meddle in their own currency adjustments. Why haven’t they taken the lesson from the Asian Tigers of the 90s who nearly bankrupted the global economy with their meddling. This refusal to allow market forces to prevail within their own currency I stated last year would result in a major correction of the newly formed Chinese market. Sure they made half hearted attempts such as diversifying with the Euro vice keeping their currency totally pegged to the US dollar but it was not enough. When one considers that they hold 1 trillion dollars in US debt, they cannot avoid dependence on the dollar and they cannot afford to allow the US economy to take any downfalls at all. With this in mind they continued down the same path others had taken in the 90s even with stringent warnings from international economists believing their economy was too strong to be subject to the whims of international trade that the Thai, Korean, Malaysians, Indonesians were subject to in the 90s.

This overconfidence recently was rewarded by a huge drop in their own market with a subsequent correction in the US markets where they were heavily invested.

What size disaster does it take the average investor and citizen to wake up to the danger of overinvesting the the Chinese economy? This recent correction was a small taste of what may happen. I will repeat my earlier warnings to “be wary” of this deceptively attractive Chinese investment bandwagon. If you must invest at least diversify by not placing your precious nesteggs in the BRC fund as all the countries in this investment fund have proven volatile to say the least.

Be careful and avoid these foreign investments at all costs, this was only a small tremor, the major quake is still around the bend.