Campbell Comments On: "Is This 1931 All Over Again? Krugman, Roubini and Ferguson Think So!" (+2K Views)

Why read: It is foolish not to consider the possibility of depression, particularly in the face of the preponderance of commentary over the past many months that rampant inflation is on the horizon. [Here I review, analyze and comment on one such article on that possibility.] Words: 697

So says Ian R. Campbell in edited excerpts from one of the components of his subscription service* which is presented here with his kind permission for posting on www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in any article re-posting to avoid copyright infringement.

Featured Article: An article published yesterday:

• reports a number of economists, some of them particularly well known (and who the article infers “normally find little common ground”), are now considering whether we are about to see a repeat of the “economic catastrophe of 1931” – citing Niall Fergusson, Paul Krugman and Nouriel Roubini among others;
• reports Bradford DeLong and Barry Eichengreen, both economics professors at the University of California – Berkeley, said in a recent book preface “The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening”;
• cites unemployment, youth unemployment, and financial instability and distress as ‘widespread’ as some of the reasons economists and others may be expressing the view that depression may be possible;
• links to two other articles well worth reading, namely: George Soros warns euro at risk if this week’s summit fails and Berlin Is Ignoring the Lessons of the 1930’s.

Commentary: The featured article attributes views to the referenced economists…as expressions of stronger views…than currently is the case. That said:

• Ferguson and Roubini are of a mind that the specter of early 1930’s world economic conditions is not as surprising as having it reported that Paul Krugman may, in certain circumstances, be in such a mind-space; and,
• Krugman, a Nobel Prize winner, seems to believe that most country economic issues can be solved by Central Banks printing more money…. [read Krugman: Central banks aren’t doing enough]

Krugman’s position, expanded from what one might simplistically take from the article headline, and as set out in the second above-referenced article, is:

“The fundamentals of the world economy aren’t, in themselves, all that scary; it’s the almost universal abdication of responsibility that fills me, and many other economists, with a growing sense of dread.”

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Observations: The economic conditions cited in the article are nothing new, and should be well known to anyone who wakes up in the morning and has even minimal economic curiosity. [As I see it:]

1. There is little question that each day it seems one or more incremental pieces of poor economic news are reported from somewhere in the ever more globalized world.
2. There is also little question that people who have an interest in what is going on in the world economically generally are more concerned with possible consequences than they were even three months ago.
3. There is also little question that more and more people are waking up to believe that it is important they take an interest in what is going on economically in the Eurozone in particular, but in the world economy generally:
4. Could we be re-visited by an early 1930’s scenario? Of course we could.
5. Importantly, each country has [it’s] own unique financial ‘cliff’ but, in a globalized financial markets and economies world, …contagion factors may come into play in an important way among countries.
6. Will we be re-visited by an early 1930’s scenario? Quite possibly, but not certainly, and only after those governing:
   • finally reach ‘their countries own financial cliff’,
   • have, by then, failed to introduce programs that result in real and meaningful economic growth, and
   • have nowhere to go but over that cliff.
7. How far from here is the edge of the respective cliff for each country that is now in financial difficulty? That is the $64 (now no longer $64) question. Depending on the country, they could be years away or months away. It is unlikely any are as yet days away.
8. How far away [from] the edge of the cliff each country is…dependent upon the evolving functionality of each country’s government where, particularly in the United States, many of those governments currently are deadlocked or simply ‘stalled’.

Conclusion: Don’t hold your breath and be…[overly] worried as each country in financial difficulty works to ‘herd its cats in its own barn’, and globally, [as] all governments work to ‘herd all the cats in the barnyard’.

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

NOTE: Related articles on the subject of a possible future depression can be found here.

Other Insights by Ian Campbell:

1. Campbell’s Challenge: Stop Being a Lemming! Contradictory Points of View are Imperative – Here’s Why

It is all too easy to look for like-minded persons who continuously reinforce one’s own views – a clear form of ‘lemmingism’, to coin a new word. Instead, one should make an effort to recognize both reader and writer biases when reading and thinking about things found on the Internet in social media websites and blogs. [Let me explain my views on that further.] Words: 720

2. Campbell: Balanced Opinions Regarding Gold & Silver are Paramount – Here’s Why

If you hold, or are considering holding, physical gold or silver or both, [it is imperative that you] read as many ‘balanced opinions’ as you possibly can with respect to ownership of each. [Here’s why]. Words: 337

3. Campbell’s Challenge: ‘Think for Yourself’ When Reading This Article on Gold!

It doesn’t take a rocket scientist to figure out that the technical picture for gold has been rapidly deteriorating…and a look at the longer term charts makes it clear that we have just witnessed a head and shoulders formation that has dramatically failed. The chip shot on the downside for gold here is $1,500 [maybe even] $1,450. Bring a double dip scare for the economy into the picture, which I expect to see this summer, and $1,100 is a possibility. If you get a real stock market crash in 2013, as many analysts are predicting, and you’ll get another chance to buy at $750. [That being said,] long term, I still like gold and expect it to hit the old inflation adjusted high of $2,300 during the next hard asset buying binge – but remember also that long term, we are all dead. Words: 900

4. Campbell’s Critique: Some Gold Prognostications are Well Based, Some Much Less So – Here’s a Comparison

When forecasting, many economists and commentators fail to focus on the dramatic change in inter-country dependence in our ever more globalized world…and fail to let the actual markets influence their views. Below I critique two articles, rationalizing what they see for the price of gold for the balance of 2012. Words: 730

5. Is Gold the Ultimate Inflation Fighter It Is Claimed to Be?

Below is a synopsis of, and comments on, a very well balanced article on physical gold which is rather rare in this day and age. The article challenges everyone who owns gold, or is considering owning gold, to think for themselves, and then come to their own conclusions as to whether physical gold is, indeed, the ultimate inflation hedge that it is so often claimed to be. Words: 800

6. It’s Crucial to Challenge ‘Commentator Credibility’ When Evaluating Gold ‘Mining’ Companies – Here’s Why

Every day now there is Media and Internet commentary on the current prices at which gold mining stocks are trading. Some of this commentary is excellent, some seems to be written from a “vested interest’ perspective and some is very simplistic. [This article discusses unstated underlying assumptions that some commentators base their views on, endeavours to provide a greater understanding of the gold ‘mining’ sector and influences on pricing of sector stocks and what investors need to do before investing in said sector.] Words: 2030