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  1. Wealth
February 18, 2009

The Noah Group

By Spear's

Outline of a Noah Road Map for 2009

Those present: Jonathan Arter, Dick Fox, Evelyn Garriss, Bill Houston, Lacy Hunt, Marc Nuttle, Martin Pring

This is based on contributions from Lacy Hunt, Martin Pring, Evelyn Garriss and Jonathan Arter.

Lacy Hunt’s work shows that Irving Fisher, not Milton Friedman, provides the key to the present recession/depression arguing that debt, not lack of liquidity is the true cause.

This means that governments’ policies of crowding out the private sector to save enterprises is incorrect and that the policy for banks should be to let them fail after protecting the depositors; this also applies to other firms such as the motor industry.

Prognosis: There will be a long period of negative growth while the debt unwinds from the economy.

Martin Pring’s work suggests the potential for a stockmarket rally.

Evelyn Garriss reported that the sunspot cycle is looking like the early 1800s when the Dalton Minimum make it progressively cooler. At the same time the La Nina is building up in the Pacific to cause the South West Coast to remain dry, flooding in southern China and SE Asia and there is continuing volcanic activity in Kamchatka and in the Aleutians.

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Prognosis: there are likely to be food shortages this year in the US denying the ability to export. At the same time there could be rice shortages in SE Asia. The La Nina, low sunspots and volcanic action will make the center of the large continents progressively cooler.

Jonathan Arter’s work suggests there will be a near term stockmarket rally but that commodities led by gold and energy will rally in Q3 2009.

Prognosis: this supports Evelyn’s view that there will be a supply-side rally in many commodities.

Overall Prognosis

The basic argument has been provided by Lacy Hunt that sees no remedies being enacted on both sides of the Atlantic to alleviate a grinding deflation that will last many years.

<p> However, in parallel with this is a confluence of climatic events that were not present in the 1930s described by Evelyn Garriss. The manifestation of this is shown in Jonathan Arter’s work.

In the view of Bill Houston we are entering an exceptionally dangerous period which will pauperise many in the middle classes who believed they had wealth in their homes, savings and pension provisions.

It is his personal view that this, plus the plight of many unemployed is the source for potential civil disturbance.

The downturn may be partly alleviated by conflicts in Asia that will spur re-armament and help to relieve the downturn. It is also his personal view that the Noah Group has to move from reporting to provide solutions.

Please feel free to add your comments below and contribute to the debate.

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