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 […]
Tag Archives | 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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
A major debate is underway in Eurozone financial markets about the imminent approach of deflation. As the chart above shows, Eurozone inflation has ben falling steadily for the past 2 years. Yet most still fail to recognise that today’s demographics make this development more or less inevitable. The Financial Times has kindly printed the blog’s […]
There were never any excuses from policymakers during the BabyBoomer-led SuperCycle from 1983 – 2007. The Chairman of the US Federal Reserve, Alan Greenspan, came to be styled ‘The Maestro’. Whilst the Governor of the Bank of England argued that his efforts had created the NICE decade of Non-Inflationary Constant Expansion. Central bankers came to be seen as wise […]
The mainstream media rather ignored a key event last week, namely that the Democrat leader of the US Senate signalled he would not try to pass Fast Track Authority to allow the President to conclude new trade deals with the EU and Pacific countries. Nobody seems to want to face the unpalatable truth, that this […]
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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.
Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.