Harvard Professor/Economic Historian Niall Ferguson wrote recently that he is of the opinion that, while all the fiscal and monetary government stimuli undertaken by many of the governments of the world’s developed countries since 2007 may have averted a second Great Depression, they will, most likely, still experience a “slight” depression. Campbell reviews the rationale behind Ferguson’s position and then presents his view that, as he sees it, most developed countries will face, instead, “a form of” Stagflation where the prices of non-durable goods (food, energy, and basic consumables) inflate, but the price of durable goods (long-term assets such as houses, cars, refrigerators, etc.) deflate. Campbell’s commentary makes for a very thought-provoking read. Words: 922
|Ian R. Campbell, FCA, FCBV (stockresearchportal.com/) makes the following comments in his Today’s Economic & Resource Stocks Commentary* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included so as to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.[Campbell’s commentary emanates from an article by Mike Dolan in the Financial Post entitled ‘Permafunk, Japanization, Long Depression: Which is This?’ in which he presents and comments] on views expressed by… Ferguson that:|
The article says that anecdotal rules of thumb suggest ‘depression’ to be a circumstance where a peak to trough drop in a country’s… real GDP… is more than 10%, or where a recession lasts more than 3 years. By way of a reference point, the article says that in the 18 month U.S….recession of 2008/2009 U.S. real GDP dropped 5%.
…My sense of [Ferguson] is that he didn’t get to be a Harvard professor by being stupid, and he certainly is articulate. Like everyone I ‘follow’, I [reflect on their] observations and opinions and weigh them in my own thinking [and] in Ferguson’s case, I listen and think harder than I do in the case of some others. That said, my comments on the foregoing are as follows:
I have discussed Stagflation previously in these commentaries – for example see ‘Inflation – Stagflation?‘ (April 25, 2011) – reading time 4 minutes, and ‘Inflation or Stagflation?‘ (April 13, 2011) – reading time 1 minute. I have read and reviewed a lot of ‘stuff’ since April 25, and so far nothing has altered my view as to where we, in the developed countries, are headed. You might want to visit my prior commentaries and think about whether you agree or disagree with me.
I think all of the foregoing is worth your time to think hard about, and then reach your own conclusions. I urge you to increasingly think about what people say, and then determine if what they say makes sense to you – as contrasted with thinking about what others say about the people that say things.
Other Commentary by Campbell:
Canada’s size, political structure and culture will enable it to – properly governed – be more resilient to worldeconomic problems than any other developed country. [For one thing] we don’t have the extent of political polarization that… [is currently the case] in Washington…and now exacerbated to new levels in these difficult economic times – and that will, in my view, cause the U.S. to continue down an increasingly rocky economic road. [Below I put forth Canada’s economic advantages and disadvantages.] Words: 1026
I read an article yesterday about the price of physical gold…that I think is worth bringing to your attention [not only because of what was conveyed but who was the source of the comments made and the great credibility of those comments given his] immediate access… to people he knows in high-level positions [and] can, and no doubt does, interact and share views with on a daily basis. [Let me explain more fully.] Words: 840
Is physical gold the best available ‘safe-haven’ or is it the U.S. dollar – or perhaps even U.S. Treasuries? Words: 793