Tuesday, November 16, 2010

Gary Shilling's New Book: The Age of Deleveraging

big picture agriculture

John Mauldin summarizes Gary Shilling's new book, "The Age of Deleveraging: Investment strategies for a decade of slow growth and deflation" in his latest article hosted over at Pragmatic Capitalism.

Shilling, in his book, lists nine reasons for a decade of slow growth globally, predicting growth of around 2% or less, and agricultural investors and farmland investors should take heed that included in that scenario he predicts low commodity prices. Included in his investment recommendations are high dividend yielding stocks and North American energy companies (but not subsidy dependent renewable ones).

"The good life and rapid growth that started in the early 1980s was
fueled by massive financial leveraging and excessive debt, first in
the global financial sector, starting in the 1970s, and later among
U.S. consumers. That leverage propelled the dot-com stock bubble in
the late 1990s and then the housing bubble."

"But now those two sectors are being forced to delever and, in the
process, are transferring their debts to governments and central
banks. The federal budget deficit leaped from $187 billion in the
12 months ending December 2007 to $1.3 trillion in the 12 months
ending August 2010, but it had little net effect on the economy
as private sector retrenchment more than offset the deficit jump."

source: The Age of Deleveraging