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Martin H. Barnes

lines on the record: 102
first: 2016-10-07
most recent: 2016-10-07
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“So we've got this slow recovery, but it is an economic recovery. We're kind of growing a trend. And to try and force it higher by creating distortions at asset markets, trying to restart a credit cycle when debt levels are already still too high might not be the right thing to do. And maybe we should just accept, look, we're in a slow recovery. That doesn't mean that government shouldn't do anything and just sit back. We've got issues of inequality and as parts of the economy, they're depressed. There's a lot we could do in the US and overseas to make policy more growth friendly without relying on monetary policy, tax reform, obviously. I think regulations have become a big burden on a lot of small businesses. So we could do things to try and get a better economic outcome without just continuing to rely so much on monetary policy. The financial markets and economists.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it's a sort of hair shirt part of me that would argue, I think, that, look, we had 30 years, three decades of rapid credit growth, and I'm talking in the private sector here, which in a sense stole growth from the future. And this is payback time”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. They've been in central banks generally, and I wouldn't just pick out the Fed. Obviously, the ECB are just getting increasingly desperate to try and get economic growth higher and doing more and more desperate things. It's unfortunate that I'm one of those who would agree that monetary policy has been asked to do more than it should have been asked to do. Meaning that there's”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“A little less, but you know, the economy was kind of still looking a bit dodgy. And yeah, that was probably okay. QE3, not so much. I think that was probably not necessary.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well. Most people would pat them on the back, and I would too for their actions during the downturn. If credit intermediation that is totally frozen, the global economy just shuts down. And it did. You all saw the stories about the ships backed up into Singapore Harbour. They couldn't be unloaded because there was no trade credit, etc., etc. So they had to do whatever was necessary to free up.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you just treated it as always one big giant public sector and their overall public sector debt is actually quite low in China. So let me.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what people have. Are you worried about the case of China is the very rapid increase in their corporate debt ratio, the BIS have warned about it, the IMF have worried about it. It's not that the level of debt even is that high. I mean, there's other countries, overall debt in China is still not as high as it is in other countries. It's just gone up so fast, so quickly. The question there is how much of it is kind of within the quasi-public sector, because you've got a lot of state-owned enterprises, a lot of it is local authorities. related to local authorities, activities in the real estate sector. It could all be socialized The Chinese government has the capacity to socialize it all. Meaning they can absorb.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just the Japanese people internally financed. Well, the Bank of Japan has actually been buying all the net issuance. They've got a very aggressive QE program. That they're buying. But prior to that, their postal savings bank was buying pretty much huge numbers of bonds. And their real bond yields, of course, they've had mild deflations, so their real bond yields were higher than their nominal yield. So bonds actually weren't as unattractive as their low nominal yields would have suggested. Um. And the stock market crash in Japan. I mean, the Nick Eye peaked at close to 40,000 in 1989. So here we are many years later amongst friends. So the retail investors of Japan have been out of the stock market for a very long time. So they're probably happier owning bonds than these risky things called equities. They've had no trouble.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So Japad financial system is effectively closed in a way in the sense that it doesn't rely on foreigners. Because I'm not sure any foreigners would buy it.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“If your interest rate's always close to zero. So financial repression is really about keeping the costs of your debt down and perhaps through regulatory pressure is forcing people to buy your debt as well in terms of sovereign debt. So you can do that by forcing pension funds or banks to buy government debt, higher capital ratios. So financial repression is artificially keeping down interest rates. We're speaking with...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what's the end game? Is it default? Is it inflation? Can you grow out of it? I think it's going to be hard to grow out of it. Nobody wants to default unless you're Greece, perhaps. Maybe inflation is the end game, but... Nobody really wants to truly inflate it away. So if you can get rid of your debt, you just make it easy to live with. And how do you make it easy to live with? You have very low interest rates. And you can sustain extraordinarily highly...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fed criticism. I've used it in the context of how do we deal with high levels of debt. BCA over the years, debt has been a big part of what we write about. I think we were the ones that created the debt supercycle term. I joined in 87. We'd have read been using it for probably 10 years, at least before that. And the debt super cycle was just a story about ever rising levels of debt, et cetera, et cetera. I think that is over now. But I still get asked probably more than any other question when I visit clients, what was the endgame year of all this debt, whether it's private debt, government debt. How do we ever get rid of it? And it is interesting that debt to GDP ratios have continued to rise pretty much everywhere, even though people are trying to deleverage. You cannot easily deleverage when growth is weak.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let me ask you so when you set these we won't raise rates till the unemployment rate hits six and a half percent How dumb was that”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would like to think that they should be able to say look, you know, this is what we want to do. We're trying to get inflation at two, a decent economy. We will keep policy at the appropriate level for as long as necessary. And then just shut up.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think they're just wrong to do that I think they talk too much in their effort to create transparency and guide markets have just created confusion.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the market was a whole industry of economists analyzing the weekly money supply numbers to figure out what the Fed was doing. So that was... To a peak. I mean, no sense. But they have gone way too far in the other direction. I don't think they should be publishing these dots.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Their views on what's going on right now should be as good as anybody else, as should be better because they, you know. You know, these regional presidents talk to their local business, contacts, etc., etc. The problem is that the models that they have relied on have led them astray, and that goes back to what I said about the IMF forecasts. A mortal, you know, the world, the past is not as good a guide to the future as it used to be. And models are all based on the past. So they've been led astray by the models. I think they... Wrongly bought into this forward guidance commitment strategy. I think that's been a mistake. Isn't that transparent?”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We need our monetary policymakers to do better than us. We are not raising our lowering interest rates, they are. So I would like them to know more than me”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wouldn't say, but you used to have that image anyway so that you go to the Fed and there's so much more knowledgeable and smarter than you. Well, I learned pretty early on that actually that is not the case. They may have lots of inside information and micro stuff, but when it comes to the really big questions, you know, when's housing going to peak or why are businesses? They have no more idea than you or I. And that's kind of cool because it means that your view is just as good as their view and they're actually quite interested to know what you think. So I thought that was good. It kind of levels the playing field. So I could have conversations with the Fed and my views were just as good as theirs. But then I thought, oh my God, this is not good because I don't know what's going on. I need them to know. And the fact that they don't know any more than me, but yet they're controlling monetary policy was really scary. And I think we have learned that their forecasting record has not been great.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Tell us that I first started visiting Fed People in 1979. I was still living in the UK at the time, but part of my job was to follow the US, of course. So I just started coming over to the US and visiting the Fed. And I was fortunate enough, strangely, to get to go to Jackson Hole 18 times. I think there's not too many people managed that. And I used to go and visit governors. fairly close to people like Don Cohn, etc. Pretty early on talking to the fed, visiting the fed, I learned something that made me feel good and bad at the same time. You know, we have this, the Fed is this aura of omnipotence around them. They've got all these smart people, they know what's going on.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“This has been an absolutely awful, awful global recovery. And I think you can explain it. The IMF knowing that recoveries were week after financial recession, but they still got it horribly wrong. And nobody in September 2011, by the way, was seeing TMF, oh, you guys are too optimistic. It's never going to be that good. That was a bog standard consensus view. So what's the problem? We underestimated the dead weight of debt. We underestimated just the legacy of that bad financial downturn. We underestimated how cautious businesses would be about capital spending. And I guess we had a lot of fiscal austerity plus a whole series of shocks like the euro crisis.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And look at their latest projections, and we'll get some new ones in a couple of weeks. And basically, it's a line that goes straight down. They're now saying 3% for this year. It looks like the jaws of death, you know what I mean And it's not just a one year forecast error. They've got every year wrong. So you can plot all the intervening forecasts that it's just got every year was revived down, down, down. So it's the most egregious forecasting error I could ever imagine because it persisted for five years. And you can blame lots of one-off things, euro crisis, earthquakes in Japan, labor government shutdowns of the US, et cetera.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Got bought into the idea that recoveries are weak after financial recessions. One of the charts I love to show I use every time I give a speech or visit clients and it's a total damnation of my profession, if you like. And I don't have a copy with me to show you, but it's incredible. You look at what the IMF was forecasting for global growth. In September 2011, they do the big forecasting grounds twice a year, but the big one is in the fall to coincide with the IMF meetings. So September 2011, global growth was, they were saying it's around 4% at the moment. And it's going to get steadily better. So by now it was going to be five. They were forecasting close to 5% for 2016. Way wrong. So it's basically a line going up.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“He did that research while still at the IMF. So they actually published stuff on financial recessions are different, recoveries are weak. They knew that at the IMF long before the 0708, right, right. So the IMF...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely Perspective. Yes, absolutely. But it's actually been worse than that. So this isn't just. So Rogoff was the chief economist at the IMF for a while.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“On a more typical economic cycle, if you had looked at what the unemployment rate had done, what overall employment had done, you would have thought median family incomes would have done much better than they had, but as you pointed out, we're still below levels of... 10 years ago. So, yeah, they picked up last year. Great”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So again, that's consistent with the slowest recovery on record. And although we have created a lot of jobs and brought the unemployment rate down, a lot of these jobs presumably are lower wage jobs or people shifting from high wage jobs to lower wage jobs, full-time to part-time. And that's kept family incomes.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Your question gives the answer in a sense, that broader unemployment rate is still very high. A 10% unemployment rate implies that there's a lot of underemployment. So you have a lot of people who would like to be working full-time, who would like better paying jobs. So there is still... Slack in the labor market and underemployment as one component of slack and I think you have a large number of people who have been forced to take jobs that are below their skill well below below what they would like”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's pretty good in North America, well, the US particularly, you've created a lot of jobs, the unemployment unemployment rate. Is back down to what most people would have called full employment anytime within the last 10 years. But if the labour market was really tight, you would have expected wages to be growing much more strongly than they have been. So that suggests that we're not there yet in terms of a tight labour market. So I guess uncomfortably I have to side with Janet Yellen on this one. Which is something I know.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some crazy number. But it should. I mean, their growth model should be a less commodity intensive growth model going forward than it's been in the past, but it will continue to be a big player. And you've got India, you've got a bunch of other emerging economies that all want to industrialize more. So the commodity story is an EM story for sure. Not just China. And things like auto ownership, home ownership, things that are commodity intensive are still at pretty low levels in a lot of countries like Vietnam and India compared to Western levels. And you've got to assume they want to get to where we are. So commodity demand will go up. The issue is supply. There's a big move in supply that cause it. you know the big moves in in commodity prices”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not hugely impactful for oil, but has been massively significant for metals where in some cases Orient itself away from manufacturing, construction, more towards services. This is a long, slow process. They still have half the...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wouldn't be a bull of commodities. No, they're not going to fall forever and you can have short-term moves. But, you know, the very long-term, and BCE we love long-term stuff, you do a 200 year chart of real commodity prices. just trained steadily down and any spikes are short of wars, supply disruptions, etc. So is that a story of...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're just finding endless supplies. What was it a few weeks ago, a couple months ago? Wasn't it they found enormous reserves in Texas, the biggest field? Right, just it just seems.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Price cap on oil. So you don't see oil Anytime in the next couple of years. I've said some short tubed geopolitical stuff. And what about”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Still the same, you have a geopolitical overlay with oil that you don't have with other products, but it's still the same story. And of course, because of shale, it's changed things. I guess most people believe that once you get into the 50s, 55 and above shale becomes very competitive again. You can turn shale on and off much more quickly than deep water oil. Oils capped. Shale puts a cap.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Guess what as prices went, it became more attractive to find the stuff. So the supply responded as it always does, and then we ended up with too much supply and then prices went down. The bull markets tend to be much shorter than the bear market. So we had 10-year bull market followed by 20-year bear market historically has kind of been like that. If that is still true, prices were only pretty early stage of a bear phase. There's still quite a lot of supply out there. Oil's a little bit different. Still a ton of...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“to prices and sometimes these cycles are really long so we had a 20 year bear market if you like in commodities from the early 80s into the early 2000s to the point where prices got so low Open a copper mine, are you nuts? So we starved the resource sector of resources. Who wants to be a mining engineer when you can be an investment banker? Who wants to open a copper mine? So when demand picked up, particularly driven by China, the supply just wasn't there. Price, so then we had this powerful bull market, 10-year bull market.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a supply story or something else? What are the first things you learned in economics at school is a supply demand curve and increased supply relative to demand and price falls and vice versa. So we have a massive commodities more than anything else that respond to price signals, raise the price of wheat. What are farmers going to do? They'll grow so much wheat. They'll be giving it away in street corners after the next harvest. Some commodities, the cycles are a bit longer because if you have to find the stuff and dig the mines, etc. Maybe it takes a few years. But commodities...”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you don't notice that, but you sure as heck notice if your parking fees have gone up this week. But there's small amounts of money compared to the price of a refrigerator. So let's talk a little bit”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was a cute way of putting it. Another way of thinking about it is that the things that we spend money on day to day or week to week, month to month tend to have inflation and the things that we only buy occasionally. Fallen price, you know, so refrigerators, TVs.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We don't have absolute deflation, but it feels deflationary in a lot of places, and there's little pockets of inflation. But it's a very different world from the inflationary 70s, of course. For sure. The joke I've heard.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well... Showing that I'm a true economist, I'm going to have to give you the Pen's answer. Okay. I mean, if you're in the manufacturing sector or you're a taxi driver, you would say it's deflation because it's tough, it's competitive. And prices in your business are falling, in some cases may have been falling for a while. If you're a parent paying for your kids' college education, or you've got a lot of healthcare expenses, you just see the world as horrendously inflationary. And if your wife is like my wife, she'll just laugh at you at any suggestion there's deflation because she'll beat you up and tell you how much everything has gone up in price since last time she went to the grocery store. We're not looking in aggregate we are not in a deflationary”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was raining. Right. Oh gosh, I mean, look, I've been there 29 years, and if there was anything I really didn't like, I would have left a long time ago. So I write, and it's always cool when you can come up with a new angle on something. I enjoy writing. I enjoy speaking in front of a crowd of people, giving my views is fun, traveling, visiting, talking with clients. I can't say there's any part of it I don't like.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Although, where you are, I know live in Victoria, British Columbia, but my BCA is based in Montreal, and that's where my job is based.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And very global, by the way, I should point out. Although we're based in Canada for historical reasons, that's just where the company began. Inertia's a very powerful force and we just stayed there. Half of our client base is probably outside North America.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're pretty much all institutional these days, which was not the case when I joined. When I joined. Maybe a third of the clients were high net worth. They're kind of been priced out of. He adopted a different business model. So we're kind of institutional now. It's full range. Everything from finger snapping. Hedge funds, how can you make me money this afternoon to slow moving state pension funds and everything in between”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, BCA is a very interesting, I think it's a pretty unique firm. It's the most unlikely firm because it's based in Montreal, which is, of course, a financial backwater. But it's been around since 1949. It's a pure research firm, doesn't manage money, doesn't trade, there's no proprietary stuff going on. All we're selling is research. So it's 100% focused on trying to figure out where the markets are going. And it's a pretty intense place. When I joined, it was tiny. I was employee number 14. Than 10 times bigger than that in terms of employees. But the focus is still the same. We're still trying to still 30 years later still trying to figure out where the markets are going. So who are the”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I accepted the job before the crash. I accepted the job in August. The last piece of research I wrote. My previous employer, McKenzie, was called after the crash what would happen. And then I moved to Canada in November. So just one month after the crash.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so five years in London with BP, then I came across this opportunity to join this firm called Wood Mackenzie, which is a brokerage firm, research based in Edinburgh, although they traded in London, was with them for 10 years and was headhunted by BCA in 1987. Chance to gosh come to Canada. Why the heck would I want to do that? But After thinking about it, took the move and never looked back, really.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no. I then was with BP for five years and then I. Moved to a brokerage firm in the UK, equivalent of a Wall Street firm. I was an economist with a UK broker firm, which actually got me back to Scotland, which was nice because their research was based in Edinburgh. So it would be like moving from London, sorry, from New York to Boston kind of thing.”
2016-10-07 · Masters in Business · Interview With Martin H. Barnes: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source