Wednesday, July 01, 2009

Bloomberg interview with Niall Ferguson

Niall Ferguson speaks with Bloomberg TV in Aspen, CO. A few important points from Niall in this discussion:

· We're living through one of the great financial crises in history, comparable in magnitude to the Great Depression of 1930s or any of the crises of the 19th century.

· After a banking crisis such as this, government debt "has a tendency to explode". Historically, financial crises have seen a debt crisis, followed by inflation.

· Danger of overdoing the parallel with 1930s. We (USA) now have a huge structural deficit and a "mounting public debt". The bigger danger is with longer term inflation and higher interest rates due to reckless efforts to stimulate the economy.

· We still have functioning globalization, and yet this global financial crisis has been met with fragmented, national efforts to thwart the economic fallout.

· Generals are famous (historically) for fighting the last war; similarly, regulators will try to solve the last crisis. These attempts may prevent a repeat of this exact style of crisis, but will give rise to a new set of problems leading to another style crisis. You can't regulate financial crises out of existence.

Enjoy the interview, and see our related posts for more commentary and interviews with Niall.

Related articles and posts:

1. Barron's interview with Niall Ferguson - Finance Trends.

2. Niall Ferguson: "What Price Liberty?" - Finance Trends.