Tag Archives | deflation

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5 tips for surviving a period of deflation

The blog has been revisiting the Bank of England’s 2008 analysis of the likely impact of the financial Crisis. This reviewed 33 banking crises between 1977-2002 and found that: • The average length of each crisis was 4.3 years • The median loss of GDP was 7.1% • Major crises (such as today’s) caused GDP […]

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Deflation a real risk for the 2011 Budget period

The blog is a great fan of Pimco, the world’s largest bond fund managers. They were the first people to spot the housing bust developing in the USA, and to suggest the scale of the damage it might cause. More recently, they have pioneered the concept of the ‘new normal’. Thus a new analysis by […]

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More words than action at G-20 Summit

When the G-20 met in London in April 2009, they produced a Communiqué containing just 688 words. And as the blog noted in conclusion, there was “no sign of a ‘Plan B’ being developed“, in case the Stimulus measures failed to work. This was still the case last September in Pittsburgh, when the Leader’s Statement […]

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The Greek carriage hits the buffers as the ‘slow motion train wreck’ continues

The blog remains amazed, and worried, by the inability of many of those reponsible for the global financial system to provide the necesary leadership during the current Crisis. They seemingly failed to grasp in March 2008 that Bear Stearns’ bankruptcy was a clear sign that a major global financial crisis was around the corner. Equally, […]

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Wal-Mart’s US sales reduced by deflation

Wal-Mart, the world’s largest retailer with $400bn sales, saw deflation in its core US market last quarter. Prices were down minus 1.6%, even more than the -1% forecast. The cause was lack of confidence amongst shoppers, many of whom are now living “paycheck to paycheck”. The major retailers have an excellent record as forecasters of […]

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Tesco say price-cutting will continue

Q3 comments from Tesco, the world’s 3rd largest retailer, confirm the picture of a more frugal consumer suggested by other majors. On the positive side, they report “a material improvement” in sales “in both Asia and Europe“. And Tesco expect “this trend to continue into Q4 and beyond”. But on the less positive side, CFO […]

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Wal-Mart sees global price deflation continuing

The blog regards Wal-Mart and other major retailers as excellent leading indicators of trends in the wider economy. It was therefore concerned to see CFO Tom Schoewe reporting today that Wal-Mart continues to “operate in a very challenging economy“, where the key driver is to provide “the lowest prices to our customers around the world.” […]

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China exports deflation as it adds capacity

China will pump loans worth $1.3trn into its economy this year, equal to 1/3rd of GDP. Equally, by tying the yuan to the US$, China has achieved a major devaluation against major currencies such as the euro. The result has been that China’s Q3 GDP rose less in “nominal” terms than in “real” terms. Normally […]

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The banks’ plumbing systems appear to be blocked

The blog’s favourite financial journalist, Gillian Tett, has written an excellent article summarising the similarities between today’s problems in the western banking system, and those of Japan’s during the ‘lost decade’ of the 1990′s. Her point is that although central banks are pouring money into the system via ‘quantitative easing’, it is clearly not reaching […]

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Deflation worries hit Europe

Parts of Europe are now following the US lead and seeing deflation. Spain saw prices fell 0.1% last month, for the first time since records began in 1961. In the UK, the retail prices index fell 0.4%, to register the first decline since 1959. Prices have also fallen in Portugal, Ireland and Luxembourg Economists have […]

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