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Utterback Talks Black Swans, Fiscal Policy

September 20, 2012
By: Rhonda Brooks, Farm Journal Seeds & Production Editor
p12 Are Black Swans on the Horizon

Market expert Bob Utterback says there's only a 20% chance of a black swan event in the short term, but he's concerned about current government fiscal policy.

By definition, a black swan event is an uncertain or unknown problem on the demand side that hits the marketplace at the worst time possible, says Bob Utterback, president of Utterback Marketing and Farm Journal economist. He references the market correction in July 2008 as one example.

During this fall election season, the current administration is pulling out all the stops to keep the marketplace on stable footing. While that’s a benefit now, it could turn into a problem later.

"If you have too much stimulus before an election, you can have issues post-election, like in December through February," Utterback says.

Utterback says he believes there is roughly a 20% chance that farmers will experience a black swan event during that timeframe. Of more concern to him is what large, unchecked growth during the next two years could create.

"If we don’t get spending under control, we’ll have a problem," Utterback reports. "We need to get our fiscal house in order."

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