Which countries stand to hurt the most from plunging commodity prices? That’s easy: the same countries who benefited the most as prices rose 2001-2011. Unfortunately most of them, like Canadians, became over-confident during the boom and went deeply into debt. Now they will struggle over the next several years during the ‘payback’ period. ‘Twas ever thus. Universal life lesson to be learned for future cycles: use boom periods to pay down debt and build up savings. Not the opposite.
Deltec Chief Investment Officer Atul Lele discusses his outlook for commodities. Here is a direct video link.
For those who would like a recap on the reasons behind current trends, I explained it in detail in this interview last January. The Canadian financial index is the next part of the story to reprice, and that seems to be now underway. Look out below. Canadian bank shares and REITS fell more than 50% in both of the last two US recessions. This time could potentially be worse. Believe it or not…
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