Investment Outlook 2012: US still a safe haven despite debt mountain
THE US has become ‘masterful’ at refusing to address its underlying economic issues, including its $16 trillion of debt, leading academic Professor Michael Luger has said.
Despite this position the US is still seen as a safe haven for investors, according to TheBusinessDesk.com’s Investment Outlook 2012 supplement, sponsored by Cheviot Asset Management.
Prof Luger, the American Dean of Manchester Business School believes the US’ hitherto successful policy relying on the spirit of enterprise to solve its economic ills, could run out of steam.
He says: “Because of its can-do culture, its intellectual and scientific infrastructure, its smaller public and welfare sectors, its natural tendency
is to generate growth.
“And like a waterbed, you press down one place, and growth pops up somewhere else. But that waterbed has sprung some leaks and it is becoming harder and harder to keep it from collapsing.”
Nigel Hibbert, a partner at Cheviot Asset Management, the fast-growing wealth management firm’s Liverpool office, says that while austerity measures have been the necessary evil for European economies, this is not the case for Uncle Sam.
He says: “The US is going to worry about its debt another day. It’s universally accepted that the US will look to grow its way out of the current
position.
“In the UK it’’s so important for us to cling to our credit rating, that’s less of a concern and pressure for the US.”
He says it “does not bear thinking about” if the US was not growing, but the fact that it is makes it still attractive.
“The US bond markets are still very resilient, even with the debt levels they are still being viewed as a safe haven. The dollar is resilient and US bond yield and markets are strong. There is still an appetite for US debt, it is still viewed as a global safe haven.”
