Everyone remembers the old joke, “Why did the elephant wear dark glasses?”, and the answer, “So that she wouldn’t be recognised”. A new version popped into the blog’s mind this week, when finishing its new Research Note on the impact of China’s new policies on the global economy: “Why did nobody notice that China was the ‘elephant […]
Tag Archives | deflation
Demographics drives demand. If it doesn’t, then its hard to think what does. So forecasting economic growth depends on two key variables: If you have lots of young people in your adult population, then you should have fast growth If you have lots of older people, then you will be lucky to have any growth […]
Investing in today’s financial markets is relatively easy. You simply have to believe that governments in the US, Japan and Europe will continue to provide plenty of free cash to investors as part of their Recovery Scenario of a quick return to ‘normal growth’. It doesn’t matter whether the investor believes in the Scenario, the driver is simply the fear of […]
The last in the blog’s series on things that we think we know, but may not, looks at the prospects for inflation. A new survey this week of the world’s wealthiest individuals summed up the consensus view: “If there are two factors that make the rich stand out, on this survey, it is their fear […]
The blog’s new series on the likely demographic impact on the world’s Top 5 economies today moves across NEA to focus on Japan – the world’s 3rd largest economy ($6tn). As the chart shows: It has seen life expectancy (red column) increase by a third since 1950, to reach 82 years today At the same time, its […]
Milton Friedman received a Nobel Prize for economics in 1976, partly on the basis of his analysis that ‘inflation is everywhere and always a monetary phenomenon’. It sounds an appealing insight, but of course it is wrong. The reason is that it confuses cause and effect. The above chart presents a different view, highlighting the […]
The mention of deflation in the above front page headline of Friday’s Financial Times will not have surprised blog readers. But it appears that not enough people in the European Central Bank read the blog, as the FT went on to report the ECB’s sense of ”shock” at the thought that deflation could now be just around the corner. This highlights the enormous […]
Newton’s 3rd Law of Motion states, “To every action there is always an equal and opposite reaction“. Thus the forces of two bodies on each other are always equal and are directed in opposite directions. Policymakers forgot this Law in their response to the 2008 financial Crisis. Instead they believed that cutting short-term interest rates in the major economies to zero, […]
“More buyers than sellers” was financier JP Morgan’s famous reply, when being asked why stock prices had risen. The same, of course, is true of inflation. During the 1970s, there were large numbers of Western BabyBoomers, and relatively few older people producing the goods that these young people wanted to consume. So inflation rose sharply, to […]
Sometimes a picture really is worth 1000 words. This is certainly true with the above chart, showing China’s producer price index since 2008: • It highlights prices up 10% at the peak of the export boom, before the H2 2008 crash • Then it shows the short-lived recovery after China’s massive lending boom • Finally, […]
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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 as 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.