Thursday, June 04, 2009

Barron's interview with Niall Ferguson

For those who missed it, Niall Ferguson was the featured interview in the latest issue of Barron's magazine.

Ferguson shared his thoughts on the global economy and offered a historically reasoned view on whether or not we face another Great Depression-style downturn. Here are some excerpts from that interview:

"Barron's: Is the worst over for the global stock markets and the economy?

Ferguson: It may look that way, but appearances can be deceptive. The stock market has actually tracked almost perfectly its downward movements between 1929 and 1931. Now that doesn't mean that we are going to repeat the Great Depression. I don't think we will, because the policy responses have been different.

It would be excessively optimistic, however, to conclude from a relatively small set of green shoots in the economic data that we are all going to live happily ever after. It is certainly way too early to say the Obama administration is right that the economy is going to grow at 3% next year and 4% in 2011. I find that scenario as implausible as a rerun of the Great Depression...

When will the recovery come?

Nobody has the faintest idea what next year is going to look like. It isn't clear yet that this is just a common recession. This is probably more like a slight depression. We won't see a big V-shaped bounce. Much of the consumption growth in the decade up to 2007 was fueled by things like mortgage-equity withdrawal. That game is clearly over. Strip that out, and you are looking at an annual economic-growth rate in the U.S. closer to 1½% to 2% than 4%."

Check out the full interview (non-subscribers can look for the full piece next week) for more of Niall's thoughts on the economy, arguments over banking regulation and deregulation, gold, and investing the Rothschild way.

Related articles and posts:

1. Niall Ferguson: The Ascent of Money (PBS) - Finance Trends.

2. Niall Ferguson: Paul Krugman is wrong - Business Insider.

3. European nations "as bad as Argentina": Ferguson - Bloomberg.