Tag Archives | deflation

Deflation Dec13

An oil price fall would tip the world into deflation

The blog found it hard to believe, when it started to research for Boom, Gloom and the New Normal, how little information existed on basic facts such as population size and annual births.  Some countries such as the UK and Japan have data going back a century.  But they are the exceptions: US annual data […]

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55 plus – a new market

The blog’s analysis about the inevitability of slowing demand and deflation was warmly received at Euromoney’s latest Global Bond Investors’ Congress.   Far fewer of this year’s attendees still believed that central banks could return the Western economy to SuperCycle growth levels. Thus its concept of the 3 Normals received a most enthusiastic response. This week has seen even greater interest develop […]

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Bond investors embrace the 3 Normals

Sometimes the blog gets lucky with its timing.  That was certainly the case when it spoke to the world’s leading bond investors last week.  Just an hour before, they had been shocked by news that US GDP had fallen by 2.9% in Q1, far worse than earlier estimates.  And nobody believed the official excuse that […]

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FT

ECB gives a figleaf for politicians to hide behind

It is impossible to overstate the seriousness of today’s threat from deflation.  Policymakers refuse to accept that demographic change can create an economic impact.  Instead, they want to believe that increasing debt can somehow stimulate growth. The Financial Times has kindly headlined the blog’s letter on this subject as its lead letter. June 10, 2014 […]

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European policymakers no longer able to ignore deflation

A year ago, European policymakers and central bankers were dismissive when the blog suggested deflation was a far bigger threat than inflation – when it was speaking at the world’s major conference for bond investors.  Later this month, the blog expects a different response when returning to speak at the same conference. Last week, the European Central Bank (ECB) was forced to […]

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Network effect leaves central banks fighting the real world

The blog first learnt about the network effect in the late 1990s, during the successful launch of the eBusiness platforms CheMatch and then ChemConnect.   Its Silicon Valley colleagues patiently explained that markets tended to move in predictable stages, once a new concept or product was launched: Everyone would initially jump on the bandwagon, not wanting […]

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Ageing populations create repayment risk for government bonds

Government bonds in the larger, wealthy countries of the West have traditionally been regarded as being “risk-free”.  Most countries have failed to pay their debts at some time in the past, but it hasn’t happened in the post-War period for the major economies, and so investors have forgotten this can happen. This situation may well change […]

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“It’s worse than 2007, because then it was a problem of the developed economies”

William White was the only central banker to publicly warn of the risks to the world economy long before the Crisis, when he was chief economist of the Bank for International Settlements (the central bankers’ bank).  He also warned of the problems that would be caused by their stimulus programmes as early as September 2009. A blog […]

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China’s credit cuts will send seismic tremors around the world

Monday’s Interesting Quotes post highlighted how China’s leadership clearly recognise they have a massive debt problem, as detailed in the blog’s recent Research Note. Further evidence for this was provided by yesterday’s bank lending figures, which showed total lending down 19% versus March 2013 at Rmb2.07tn ($333bn), and the lowest increase in money supply since 2001. This makes […]

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Japan’s debt now $80k for every man, woman and child

Question:  Why will Starbucks reduce the menu price for its venti green-tea frappucino in Japan next Tuesday, when the price is actually going up? Answer:  Because the government hopes the lower menu price will fool people into thinking the price has gone down It is, of course, a nonsense.  And no doubt most Japanese will be quite annoyed that […]

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