MI Conference Keynote: Enjoy the Next 20 Years—But Prepare for What Comes Later!
Posted by bpascoli-chicago | 25 Jun 2012
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If you rely on the mainstream news media to help you assess the U.S. economy’s health, Alan Beaulieu wants to bring you out of your depression. As president of ITR Economics, which regularly analyzes the GDP health of developed and developing countries, he suggests you put your crying towel away and buy yourself something. And if you have to borrow money, do it—as long as your company’s fiscally healthy.
This is the message he left with attendees at a strategy session conference held yesterday, sponsored by Industry Week magazine and the Italian Trade Commission, and held at The Inn at St. John’s, near Detroit.
“The ability to borrow is a competitive advantage,” he said. “Invest in yourselves while competitors can’t keep up. That’s the new way to compete. Borrow enough until you can’t sleep at night.”
Of course that last remark was tongue in cheek, but he was dead serious that the recession everyone just got through left them a gift in disguise: positive cash flow at low interest rates. He’s confident that the global economy for the next six years will be busy.
“This is a vibrant recovery for manufacturing, and there are solid economic reasons,” he said. “Bank liquidity is a big one. Banks have $1.5 trillion in excess capital reserves. That’s larger than the GDP of Canada. Businesses have over $2trillion in cash. That’s lots of economic potential. Right now consumers are spending, banks are lending and government is providing stimulus.”
Beaulieu expects interest rates to remain stimulative through 2013, after which the cost of borrowing will rise. So in the next year, he suggests you load up on the debt for expansion sake, buy new equipment, find the right employees, and finance it all at the lowest interest rates you’ll see for the next 20 years.