On a personal note...

Thank you to readers for their feedback to Monday's Daily Reckoning. We were expecting some outraged hate mail at our scepticism. Instead it was only thoughtful and often sad stories from people who had to personally experience the issues we raved about.

Now, on to more controversy...

It's incredibly frustrating to watch stocks around the world mimicking each other. Where are the opportunities supposedly present in the Australian stock market if it does nothing more than copy every other stock market? Since when is every share deemed so similar that a Spanish bailout matters to all of them?

If the synchronisation of asset markets bothers you, you should have become a property investor. With one very important caveat. Only property investors with an international scope are set to avoid the stock market's copycat antics. That's because property has defied its fellow asset classes. Around the world there are property bubbles forming, bursting and taking a breather. It's time to buy, hold, sell or investigate property somewhere in the world. Today's Daily Reckoning puts some names to each of those opportunities.

But first, why is the synchronisation of stock markets happening in the first place? Well, those stock markets supposedly reflect the wider economy's performance. So the business cycle does matter to the stock market. Half of our speech at the After America conference in March was dedicated to the idea of synchronising business cycles. The reasoning went a little like this:

Monetary policy causes the business cycle, and monetary policy around the world has synchronised. Therefore, the business cycles around the world have synchronised. This leads to the risk of a very severe collapse in the global economy.

Usually, business cycles in different parts of the world offset each other. The booming countries get rich and buy the exports of the struggling countries. That's why business cycles are often called trade cycles. The imports and exports are a telltale sign of a country's economic boom or gloom, and they offset the extremes of the booms and busts.

But this dampening effect is lost if business cycles synchronise. There's no booming country for the struggling country to export to. The booms get more awesome and the busts more destructive. The boom from 2003 to 2007 and the bust that has followed is a perfect example. The whole world boomed together and busted together. Except Australia of course. We didn't even get a recession. Not that our stock market didn't take a beating, which confirms that the synchronisation of stock markets outweighs even economic fundamentals!

Anyway, what's ironic about this is that property - the key asset which boomed and then busted in 2007, causing mayhem - is in fact exempt from this synchronisation. There are still property bubbles forming and popping all around the world. Regardless of the wider synchronisation of stock markets, bond markets (of comparable risk) and commodity markets.

Property, if you're a global investor, seems to be a haven of opportunities as well as a battlefield of disasters. The two go together of course. But it seems that all stock markets are either opportunities or disasters at the same time. Property markets seem to move a little more independently.

So what are the opportunities and the disasters?

Daily Reckoning readers will recall the boom in German property that's been going on. We wrote about it last month. Having missed out on the run up to 2007, the German property sector is now going bananas over absurdly low interest rates from the ECB. And the story has accelerated since we wrote about it. Several desirable places to live (if you limit yourself to living in Germany) are up 60% in the last three years according to the Financial Times. Berlin is up 300% on a per-square-meter basis since the beginning of the crisis.

Sound familiar to anyone? Of course, Europe adds its own twists. Castles priced in the tens of thousands are available!

As for buying in, this bubble looks to be well underway already. It's tough to pick how long it will continue to inflate, so we're going to put Germany's real estate market in the 'missed opportunity' bin.

Here in Australia, the property boom is unravelling. There's a glut in apartment supply in Melbourne. And a glut in land supply is set to strike soon, according to Tuesday night's news stories. Our favourite part of the property segment featured a former government advisor. He chastised the government for opening up land corridors for development when prices and demand were falling. Doesn't that tell you a lot about the cozy relationship between government policy and house prices? Speaking of which, slack lending standards, it turns out, are commonplace in Australia. Dan wrote about how this was once denied by the powers that be, and how the truth got out, in his article about Australia's sub-prime mortgage market.

This bubble has already popped. The question is how bad it will get. For a property investor, this is exciting to watch, as opportunities will be in the making.

China is close behind Australia when it comes to property implosions. People will one day debate which bubble was more epic. What's surprising is that there are so many similarities. Debt and government meddling come in many forms, but they so often end in a property bubble. China's version of opening land corridors for development is to force land owners to begin building on their land. Soberlook blog quoted China Daily on the bizarre policy:

'The central government has issued a regulation requiring mainland property developers to pay a 20 percent land vacancy fee if they leave land vacant for over a year.'

Isn't it weird how government policy once inflated the bubble with debt and is now bursting it by providing an oversupply of housing?

America's real estate markets remain in the 'to do' folder for property investors. Which doesn't mean buy, it means investigate. There are some whopping rental yields and interest rate deals available, but prices may fall further. The government is still the major force in the mortgage market, which hints at instability. Peter Schiff of financial crisis predicting fame caused a bit of a ruckus at a congressional hearing on government involvement in the mortgage market. You can watch a video of how bizarre and Orwellian things got here. It's a perfect insight into Washington and what happens when it clashes with reality. It will probably make you realise why America's housing market isn't quite ripe for the plucking.

So we've covered an inflating housing bubble, two popping housing bubbles and one market that is starting to look like an upcoming buy. But where are the current opportunities?

Let us know at letters@dailyreckoning.com.au

That's a bit cruel, but it's the most honest answer we could give with any degree of certainty. Daily Reckoning founder Bill Bonner keeps himself busy with several international property investments. Argentina, France and Nicaragua feature, as long time Daily Reckoning readers will know from Bill's stories of building with mud bricks, falling off roofs and dealing with French building regulations. We're not so sure about those three countries when it comes to buying property, but then again that's Bill's speciality when it comes to investing. He only buys into lost causes, because they end up being a pleasant surprise.

How about investing in one of Europe's crisis stricken countries? According to The Age, Melbourne's Greeks are investing in Greek property (in Greece). What's funny is that such investment is described by the newspaper as 'aid' and some sort of patriotic duty. If only the government applied the same logic to investments in Australia when tax time comes.

By the way, the section of the article with the subhead 'prices plunge' elaborates how Greek property has fallen 3.7%, 4.7% and 5.1% - all of which are less than the pace of Australia's house price correction and far less than Melbourne's. Anyway, investing in those countries would be a good idea if the problem facing them wasn't a sovereign debt crisis and a banking crisis. That makes things just a bit too risky, for the moment.

Amidst all this talk about overseas property, don't forget currency risk. With massive money printing going on and the very existence of the Euro being questioned, currency risk is extremely real and relevant. For example, if the Eurozone breaks up, the stronger nations are likely to see their currencies appreciate. A German property denominated in Deutschmark might do better than the one next door denominated in Francs.

Taxes and tax treaties are another factor you need to keep in mind. You will want to avoid double taxation and the like. All this can come with insurmountable paperwork and costs.

So, long story short, here's the takeaway from today's Daily Reckoning (and it's not a prediction for where the next property bubble will form). If you're considering escaping Australia's high cost of living and rather scary investment outlook, why not take some of your money with you and invest in a property you plan to live in?

We're working on a report on where you might like to consider at the moment. And our tentative top pick just happens to tick the boxes when it comes to property investing as well.

Until next week,

Nickolai Hubble.
The Daily Reckoning Weekend Edition