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3/7/2006 4:26:20 AM

Updated 02/24/06

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Journal Story Describes the End of the World As We Know It
Harvard professor’s connection of current events to pre-World War I ignores mountains of good economic news.

By Dan Gainor
August 4, 2005

     The economy is growing at 3.4 percent, unemployment is at a mere 5 percent, inflation is less than 3 percent and even The New York Times says “Economic Indicators for June Show U.S. on Sound Footing.” So what’s an investor to do?

     If you listen to Harvard history professor Niall Ferguson, there is only one answer:


     Ferguson’s theories about impending global doom were written up in the Aug. 4 Wall Street Journal and also appeared in The Washington Post, which has a deal to rerun Journal stories. Rather than focus on the ongoing strong economic news, the Post ran a piece about the dangers of World War III that was buried on the back of the Journal’s C section. That was one of only two Journal stories the Post ran in its Business section.

     The article painted an incredibly gloomy picture. According to Ferguson, “Globalization could end in our time, not with a whimper but with a bang.” Ferguson’s big difficulty, according to the Journal, is how to design “a perfect portfolio for coping with the outbreak of World War III.” That portfolio, the article said, includes gold to protect against a “sense of exaggerated security,” according to Ferguson.

     The story, written by the Journal’s Michael R. Sesit, described “the uncanny similarities between the current era of globalization and the original one of roughly 1880-1914, which first harnessed the powers of global communications and swift transport to link the world economically.” According to Sesit, “That ended with the June 28, 1914, assassination of Austrian Archduke Franz Ferdinand and the onset of World War I.”

     Both papers included a handy graph that listed the “similarities” between the two eras. Oddly enough, good economic news was bad news to Ferguson. “Deregulated capital markets” and “low inflation” were two things the different time periods had in common. In addition, Sesit’s article mentioned that “Stock market volatility was abating” as another similarity. Apparently, these positive economic indicators foreshadow a global tragedy, if Ferguson’s projections are followed.

     Several other items on the list would probably appear no matter what modern time period was chosen, including: “new regional powers with global aspirations,” “growing great power rivalry,” and “state-sponsored terrorism.”

     While the chart claimed that “proliferation of war” is not a reality now, unlike 1880-1914, and that “expansion of democracy” is a reality, it disregarded these major factors. Ferguson, who professes knowledge of history, also ignored ongoing conflicts in Afghanistan, Iraq, the Sudan and elsewhere.

     Since good economic news is apparently bad to Ferguson and scary to both the Post and Journal, here are a few additional goodies to send them running for the hills or out stocking up on gold:

  • According to the July 30, 2005, Washington Post,”the U.S. economy expanded at a healthy pace, the government reported yesterday.”
  • The Aug. 2, 2005 Los Angeles Times reported that “The U.S. factory sector grew more than expected in July, heralding a strong start for the economy in the third quarter…”
  • And the Aug. 3, 2005, New York Times quoted Pierre Ellis, senior economist at Decision Economics in New York, saying “The June gains in personal spending and income point to a pretty firm close to the second quarter, which puts the economy in a good position at the start of the third quarter. The underlying trend of growth is fairly solid.”
  • Unlike 1914, several states have the ability to devastate whole cities or even countries with nuclear bombs. That might influence most nations’ willingness to embrace World War III.
  • Even the famous “Doomsday Clock,” a relic of the Cold War, called “the world's most recognizable symbol of nuclear danger.” has seen far worse times. The clock now stands at seven minutes to midnight. Five other times in the clock’s history, it has been worse, including as recently as 1988.


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