Alan Nelson is currently visiting Sydney, Australia to take part in the World Congress of Accountants 2018. This week-long blog series will focus on his thoughts, views and what he's learning down under.
There was a moment towards the end of Niall Ferguson's excellent keynote presentation where the room of 5,000 accountants responded as one. The audience broke out into spontaneous applause.
Reactions like this are why the work of IFAC and events like the World Congress are so important.
Commenting on how heartening he found it to see representatives from so many countries, and particularly from so many developing economies, he shared that his wife is Somali. What came next was clearly a matter close to his heart.
"Accountancy may not sound glamorous," he said, "But it is so important." He went on to explain that the single greatest barrier to growth in developing countries is corruption. If an event like this can further the roll out of international accounting standards, that can make a real difference. If accountants can create a fairer system by laying out the rules of the road, and thereby create a cleaner economic environment and cleaner government, it can have a real significance.
Of course, this was not what he was there to talk about. He was less optimistic on his chosen subject, the causes of the financial crash and the likelihood of a repeat.
There are six causes he listed in his bestseller, The Ascent of Money. However, only one has really been solved - the undercapitalisation of the banks. Of the rest, three have been addressed only partly. The securities market is still as prone to wrongly rated CDOs and there is no reason to believe we would be any better at spotting them. The derivatives market is still there to create contingent liabilities. And the channeling Asia's glut of savings into the US economy may be halted by a trade war but that seems like a pretty dubious tactic.
The final two causes of the 2007 financial crisis - the bubble in the US housing market and the looseness of monetary policy - are in as parlous a state as they were back then.
His conclusion was that we are well set for another crash, and this time we are not in a position to combine the fiscal expansionary policies and monetary easing that kept us out of anything as bad as a Great Depression the last time.
There is some small comfort to come from Ferguson though, whether the news is good, bad or catastrophic, there will still be work for accountants!
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