Global Foreclosure

Niall Ferguson’s term for the potential boom in distressed assets and bankrupt companies.

In a detailed and downbeat interview with Canada’s Globe and Mail, the economic historian gave a gloomy prediction for the world economy:

This is going to be the beginning of a whole new investment strategy in which companies that can’t roll their debt over end up being sold at bargain basement prices, or broken up and their assets sold at bargain-basement prices, in very, very large numbers. And it doesn’t take a lot of imagination to see that the buyers will be sovereign wealth funds or other entities in surplus countries.

The world divides in two, the debtors and the creditors. The debtors … (U.S., Europe) … are going to have to sell of their assets. Call it theglobal foreclosure. They’re going to be selling their assets cheaply to those who have the surpluses. This is not going to be like the Chinese buying Blackstone at the top of the market.

It’s revenge of the sovereign wealth funds. They got burned. And this time, no more Mr. Nice Guy.