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Is China repeating the mistakes of the US?

My current favourite blogger is Michael Pettis, professor at Peking University's Guanghua School of Management, who, in his latest post, makes a very worrying point below. As an aside, and without wanting to take the 1930s analogy too far, this debate...

Published 27 Apr 2009 17:04 by Asian Chemical Connections

Filed under: US, China, Polyolefins, Business, export dependency, oversupply, Great Depression, deflation, China's economy, overproduction, exporting deflation
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...

Published 22 Apr 2009 13:52 by Chemicals & The Economy

Filed under: Economic growth, Financial Events, Leverage, recession, deflation
Deflation hits the USA

US consumer prices fell for the first time since 1955 last month . Deflation was more common before 1955, and in the 1929-33 period prices fell by c10% a year. The danger of deflation is that it changes the entire psychology of purchasing. With inflation...

Published 16 Apr 2009 9:54 by Chemicals & The Economy

Filed under: Economic growth, Financial Events, recession, consumer spending, deflation
Obama gets tough on US auto industry

There has been plenty of speculation that President Obama's mid-West background might tempt him to take a soft line on the troubled automotive industry. But his comments on Thursday that there has been "a lot of mismanagement of the auto industry...

Published 30 Mar 2009 17:45 by Chemicals & The Economy

Filed under: recession, auto sales, Chrysler, GM, Ford, Fiat, deflation
Another US Treasury Secretary speaks out

James Baker was Treasury Secretary to President Reagan. When he says that the US is "repeating Japan's mistake by viewing our banking crisis as one of liquidity and not solvency", the blog listens. His prescription is stark: "we should...

Published 2 Mar 2009 23:08 by Chemicals & The Economy

Filed under: Economic growth, Currencies, Financial Events, Leverage, recession, US Treasury, deflation, Nicholas Brady, James A Baker III
The cycle of deflation

US fund managers Comstock Partners reported a 50+% gain on their flagship Capital Value Fund in 2008. The logic behind their out- performance is summarised in the chart, which depicts their belief that we are now in a global cycle of deflation. Their...

Published 28 Feb 2009 16:36 by Chemicals & The Economy

Filed under: Economic growth, Currencies, Financial Events, Leverage, deflation, devaluation, Comstock Partners
Knowing what we don't know

At a time of uncertainty, its sometimes helpful just to frame the questions that need to be answered about the future. Pimco, the world's largest bond fund managers, have done just this in two separate analyses. Their answers mirror those advanced...

Published 25 Feb 2009 9:58 by Chemicals & The Economy

Filed under: Economic growth, Financial Events, M & A, Leverage, recession, PIMCO, deflation
Consumers prioritise "needs" versus "wants"

The current recession is the blog's fourth, after those of the mid-1970s, and of the early 1980's and 1990's. It is, however, already different from these, as it is the only one which has led to comparisons being made with the 1930's Great...

Published 22 Feb 2009 11:47 by Chemicals & The Economy

Filed under: Wal-Mart, Economic growth, Financial Events, Leverage, recession, Tesco, Depression, deflation, chemical sales
Roubini on the 2009 Outlook

Prof Nouriel Roubini has long been correctly bearish about the economy, and was one of the first to highlight the deflation risk . In a new interview , he sets out his thoughts for 2009, and concludes: "I don't believe we are going to be in a...

Published 22 Dec 2008 7:24 by Chemicals & The Economy

Filed under: Economic growth, Financial Events, Futures trading, Leverage, recession, Roubini, deflation
"Markets braced for big European rate cuts"

Sometimes a headline says it all. Today's in the Financial Times, "Markets braced for big European rate cuts", showed just how far we have travelled since the first signs of global financial crisis in August last year. Then, a co-ordinated...

Published 4 Dec 2008 13:09 by Chemicals & The Economy

Filed under: Economic growth, Currencies, Financial Events, Leverage, recession, deflation
UK cuts sales tax to fight deflation

The UK's Finance Minister, Alistair Darling, was the first western leader to warn that the current recession was the worst in 60 years . He was also the first to effectively nationalise major banks, to stave off their collapse. Now he has become the...

Published 25 Nov 2008 10:49 by Chemicals & The Economy

Filed under: Economic growth, Oil markets, Financial Events, credit crunch, M & A, Leverage, recession, Alistair Darling, deflation
I will wait for this Lego truck to hit S$100

Yes, that's my target for the truck above, which is actually for 4-11 year olds and my son is only 22 months - but what the hell, don't we all deserve a second or, in my case probably a tenth or perpetual, childhood? And I am trying to teach him...

Published 19 Nov 2008 3:27 by Asian Chemical Connections

Filed under: China, Europe, recycling, Olefins, Polyolefins, Business, Markets, Company Strategy, LyondellBasell, financial meltdown, deflation, Lego, Volker Trautz
Dow warns of need for "radical actions"

Andrew Liveris, Dow CEO, has consistently warned that we are facing a major recession. Today , in a Bloomberg interview, he spells out the need for "radical actions" to "take out capacity". He notes that Dow's volumes are down...

Published 14 Nov 2008 10:56 by Chemicals & The Economy

Filed under: Economic growth, Oil markets, Currencies, recession, Andrew Liveris, Dow, deflation, over-capacity
Survival tips for CFOs

The Financial Times series on surviving the downturn focuses this week on CFOs . It includes advice from Feike Sijbesma, CEO of DSM, who suggests that "you need to see how creditable your debtors are, very quickly", and advises that "maintaining...

Published 14 Nov 2008 9:32 by Chemicals & The Economy

Filed under: Economic growth, Oil markets, Currencies, Financial Events, M & A, Leverage, recession, DSM, CFO, deflation, cash-flow
Bank of England warns on deflation

The UK's Finance Minister said today that interest rates might need to be cut "to an unprecedented zero". And the Bank of England warned there is a real "risk of persistent and damaging falls in prices". Deflation would be a major...

Published 13 Nov 2008 9:49 by Chemicals & The Economy

Filed under: Economic growth, Financial Events, credit crunch, Leverage, recession, deflation

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