While we’re on the subject of conferences and their dry names, let’s mention the Portfolio Construction Symposium that we recently attended.
While we’re on the subject of conferences and their dry names, let’s mention the Portfolio Construction Symposium that we recently attended. The keynote speaker was the marvellously eloquent, thoughtful Niall Ferguson, MA, D.Phil., Professor of History at Harvard University. His topic was “Secular stagnation or inflection point? The post-crisis world in historical perspective.”
Dry? Not at all. Anyone familiar with his PBS series “The Ascent of Money: A Financial History of the World”, from 2008; or his more recent three-part television series “China: Triumph and Turmoil” will recognise that Niall Fergusson really assembles a convincing picture. He focused his talk on the aftermath of the 2008 crisis and the rising populist politics. What’s it all about?
- Despite a number of central banks resorting to negative interest rates and the IMF acknowledging the risk of stagnation, he is optimistic for the global economy.
- There is evidence that the global economy may be at a turning point because commodity demand is strong, labour markets are tightening and both China and the USA are managing their monetary policies in a sensible, stable manner. But he points out there are five key risks, all political, that could derail this global recovery:
- China aborts its structural reform.
- Trump wins the presidency.
- Populists gain in Europe (not only the Brexit groundswell).
- Russians exploit populist gains and increase their power over Europe.
- ISIS continues to gain adherents – using social media.
Trump. Even though economic conditions particularly in US are actually improving, voters are engaged in a kind of delayed backlash against globalisation, immigration and free trade. This is occurring against corrupt political establishments but also happening in other countries such as Britain and Spain.
Ferguson says the closest parallels are not so much the Germany of the 1930s, but the restrictive immigration policies and tariffs that were a source of instability in the late 19th Century.
He reminds us that global free trade actually keeps the peace.
“Don’t shoot people in other countries – they are our customers!”