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Niall Ferguson Video on Current World Fiscal Conditions and Likely Outcomes.
Old 05-24-2010, 06:41 PM   #1
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Niall Ferguson Video on Current World Fiscal Conditions and Likely Outcomes.

Event Multimedia: Fiscal Crises and Imperial Collapses: Historical Perspective on Current Predicaments

On the flight to "safety" into US Treasury debt: "US treasuries are a safe haven in the way that Pearl Harbor was a safe haven in 1941-safe, but not for long."

A great video for fans of careful historical analysis, or of posh British accents.

Ha
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Old 05-24-2010, 07:02 PM   #2
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That's a cheery message, eh?
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Old 05-24-2010, 07:13 PM   #3
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I'm just a cheery guy these days.

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Old 05-24-2010, 07:32 PM   #4
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His answer to the final question from the audience, "Where should the individual investor put his money", was interesting. In no particular order, he said invest in Norway (no mention of widows), Canada, and India, and begin to think of measuring your worth in barrels (of oil) and ounces (of gold).

As I said, a very cheery message about the decline of the US and most of Europe.
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Old 05-24-2010, 07:37 PM   #5
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Hmmm....I think I'm cheery. Everyday I'll laugh at least a half dozen times. C'mon over to bbbamI land...
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Old 05-24-2010, 08:44 PM   #6
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That's just reality... The old phrase "Reality Sucks" comes to mind...

I wouldn't under estimate the Fed and the lengths they will go to to keep the bond auctions going though...

Great link to a small peek at the inner workings of the elite...
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Old 05-26-2010, 10:57 AM   #7
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Very interesting talk. Canada seems like a good place to be over the next few decades. I suspect his conclusions are inevitable.
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Old 05-26-2010, 11:10 AM   #8
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Very interesting talk. Canada seems like a good place to be over the next few decades. I suspect his conclusions are inevitable.
I wouldn't argue about his thoughts on Canada but I believe there are only two inevitables in life and Niall only briefly touched on one of them (taxes).
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Old 05-27-2010, 08:15 AM   #9
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I wouldn't argue about his thoughts on Canada but I believe there are only two inevitables in life and Niall only briefly touched on one of them (taxes).
Yes. It seems many of these presentations start with a desired sensational outcome and work backwards, fitting facts to the thesis where necessary and making stuff up where needed.

Here is an example of how Ferguson concludes that either inflation or default are "inevitable" . . .

Quote:
Cut, print, or default. Ladies and gentlemen, history affords only one example of a country that managed to get itself out from excessive debt-to-GDP burden without either inflating or defaulting. The only case that I can find is Britain after 1815. . . . So that just leaves two options: printing; or alternatively default.
And yet here is what the IMF says in their February 2010 paper "Strategies for Fiscal Consolidation in the Post-Crisis World" (1)

Quote:
over twenty advanced and thirty emerging economies have experienced large fiscal adjustments (i.e., adjustment in the structural primary balance of at least 5 percent of GDP) at least once over the past four decades (Tables 5a, 5b, and 6); ten advanced economies and twelve emerging economies experienced fiscal adjustments larger than 10 percent of GDP. In addition, as shown in Figure 6, most of those countries were able to contain significantly the growth of annual primary spending, which averaged just over 1 percent in both advanced and emerging economies during the fiscal adjustment period.
Difficult, yes. But the adjustment needed is hardly unprecedented. And failure is hardly "inevitable".


(1) The IMF estimates that fiscal adjustments between 5-10% of GDP (depending on country) are needed for countries to bring their Debt / GDP ratio below 60% (i.e. reduce debt, not just stabilize it).
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Old 05-27-2010, 08:57 AM   #10
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You may be right re inevitability indeed I hope you are. However, the performance of the developed countries' politicians of late give one pause for concern. Agree about your point re fitting the facts to a thesis. This is rampant today.
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Old 05-27-2010, 11:09 AM   #11
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You may be right re inevitability indeed I hope you are. However, the performance of the developed countries' politicians of late give one pause for concern. Agree about your point re fitting the facts to a thesis. This is rampant today.
It is rampant because it is rewarded.

Who sells more books (gets paid more for speeches). The guy with the title "Fiscal Crises and Imperial Collapses; Why the U.S. is Screwed" or "Large, but manageable, fiscal challenges"? It would be nice if there was a penalty for promoting erroneous forecasts, whether Dow 30,000 or "The Coming Economic Depression". But as it stands, there is only upside. Being wrong, even massively wrong, has no downside.

And I'm less pessimistic on the political front then many here. Internationally we've seen austerity budgets now from Greece, Spain, Italy, Portugal and the U.K. Domestically, federal deficits are becoming a potent electoral issue. It's hard to imagine we simply ignore the problem, as is assumed by those projecting financial collapse.
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Old 05-27-2010, 11:58 AM   #12
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Quote:
Originally Posted by Gone4Good View Post
It is rampant because it is rewarded.

Who sells more books (gets paid more for speeches). The guy with the title "Fiscal Crises and Imperial Collapses; Why the U.S. is Screwed" or "Large, but manageable, fiscal challenges"? It would be nice if there was a penalty for promoting erroneous forecasts, whether Dow 30,000 or "The Coming Economic Depression". But as it stands, there is only upside. Being wrong, even massively wrong, has no downside.

And I'm less pessimistic on the political front then many here. Internationally we've seen austerity budgets now from Greece, Spain, Italy, Portugal and the U.K. Domestically, federal deficits are becoming a potent electoral issue. It's hard to imagine we simply ignore the problem, as is assumed by those projecting financial collapse.
But it's different this time...

It'll be interesting to see, if the midterms go the way I suspect they will, if the new crop of congresscritters can/will do things differently, or if they'll get caught in the sausage grinder they profess to hate.

It'll also be interesting to see how things go if/when the severe austerity measures many are clamoring for occur. May be good longer term, but the short term pain inflicted might change some minds...
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Old 05-27-2010, 12:17 PM   #13
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Teddy Roosevelt said something like
"75% of the problems you see headed your way, will be somehow derailed before they get to you."
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Old 05-27-2010, 03:10 PM   #14
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Spanish politicians approve 15B Euro austerity plan

Quote:
Spain's programme is intended to reduce a deficit of 11% of GDP to 6% by 2011.
This amid 20% unemployment in Spain.

Oh, and prior to the crisis, Spain was running budget surpluses, not deficits. I know its not the popular narrative, but Spain's case shows that this isn't entirely a story about overspending politicians. There is more going on that that.
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