What Niall Ferguson thinks now





There's nothing like a long-running equity rally, a return to something resembling normalcy in the credit world and fresh signs of economic recovery to lift the gloom of a dreary late November day.

Sure, there are still occasional rough waters. Take last week, when weaker than expected U.S. housing stats, a downbeat profit report, downgrades in tech land and yet another warning from an inflation-fearing central banker reminded jittery investors it's not only free-spending governments that need a sound exit strategy. Tomorrow, we'll undoubtedly hear that U.S. consumers are still suffering from a shortage of confidence, which tends to happen when jobless rates keep rising...

... Far be it from me to rain on that parade. I'll leave that task to one of the world's best known and least cuddly of doom-and-gloom bears - Harvard University financial historian Niall Ferguson.

"I don't think it's possible to infer from the stock market rally anything resembling a sustained recovery," the peripatetic professor says in an e-mail exchange. He rightly notes that at least half (and probably much more) of the third-quarter U.S. economic growth of 3.5 per cent stemmed from one-off government measures and that the consumer remains tapped out.

"The stock market rally has been largely due to near-zero interest rates and a weaker dollar. In foreign currency terms there's been no rally." ...

... Prof. Ferguson, whose most recent timely best-seller, The Ascent of Money, is now out in paperback, does some hedge-fund advising on these big global themes.

He claims no expertise as a market forecaster. But when coaxed, the historian in him comes out...


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