For approximately 5 to 6 months we’ve been witness to the most unprecedented market melt down in recent history and I emphasize recent.

As many of us, if not most of us know it began with the subprime crisis in the U.S. and has since become a global phenomenon infecting the real estate, automotive, energy and banking sectors and any other related industries.

Unless I miss my guess (I think it’s a reasonably educated one), the world population is not going to quit eating any time soon and therefore, needs resources such as fertilizer to continue to produce and grow crops and energy in the form of oil to harvest and transport the finished product to market.

When you consider the fact that fossil fuels are non renewable resources and that there are less fish in the oceans than there were even 10 years ago, then at some point in time, the law of supply and demand have to apply. It seems that diminishing resources have become a fact of life today and on the subject of life, can we afford to ignore the future of population trends?

I recently accessed some statistical data which indicated that in1950 the global population was estimated to be about 3 billion. Today it is in the range of 6.7 billion and expected to grow by roughly another 3 billion by the year 2050.

This would suggest to me, significantly increased pressure on ever diminishing resources, the impact of which will be ever increasing prices.

To ignore price and demand in the future is something that I believe would be perilous at best. The macro economics would suggest that while we are currently experiencing excess supply in the automotive industry and residential foreclosures, along with a decline in loans to businesses and individuals, there will be a correction.

In as much as what I have described so far can be defined as long term, in the near term I am advised that the world population is growing at the rate of 60 million people per year or approximately twice the current population of Canada.

I sincerely believe that we are due for some positive stimulus.

Let’s begin with the lowest central bank rates in decades if not the lowest ever.

In addition to that the price of crude has dropped to its lowest levels in five years. In 1990 (19 years ago) the price of a barrel of oil was $40.00 and in 1991 the Dow was at 3000 and at the turn of the century year “2000” Nortel was at $124.00.

The world didn’t end in the year 2000 as some would predict.

Warren Buffet in a recent letter said “America’s best days lie ahead”.

Our standard of living has improved 6 to 7 fold through the nineteen hundreds and there is no reason to believe that it will not continue to improve for decades and centuries to come.

Call it growing pains if you will as the population grows and along with it our knowledge and the encompassing high tech environment in which we live and work today.

When Edison invented the light bulb, people thought that this was as good as it was going to get.

We have come along way over the last century which suggests to me that it is not in our best interests to underestimate the scientific marvels that lie ahead and the economic benefits that will be bestowed upon those that seize the opportunity by choosing optimism over pessimism.

It might also be of interest to note that China is on a shopping spree right now ie. buying oil, copper and nickel.

Do they (the Chinese) know something we don’t?
I am not in the habit of drawing erroneous conclusions; but it seems obvious to me that the pendulum is going to swing the other way and I believe sooner as opposed to later.

Author Michael Gentile, B.A., C.L.U., CH.F.C., C.F.P.
CHARTERED FINANCIAL CONSULTANT