Current crisis not as bad as 1930s
Viewing the current market crisis through the prism of the 1930s depression is too pessimistic, according to Bob Cunneen, senior economist at AMP Capital Investors.
Cunneen made the comments at Fiducian Financial Services’ annual client briefing on Tuesday. Governments have learned from the mistakes of the depression, he said, and the economy had advanced enough to avoid the same errors. Signs of change in world economic policy and institutions, and a new US president who was committed to a fiscal stimulus package for the US economy, were encouraging signs that the world would not repeat the errors of the 1930s, when governments denied a recession was taking place.
Governments that were moving rapidly by cutting interest rates and introducing fiscal stimulus packages would see their economy recover and financial system stabilise, Cunneen said.
However, he warned clients had to be wary of their emotions when investing their money, and to “think of the next 10 to 12 years, not 10 to 12 months”. Long-term strategy was about reasoning, not emotion, Cunneen said.
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