Saturday, 19 July 2008

Inflation - the warning signs are everywhere

I feel like screaming, really I do. The complacency about inflation is nothing short of criminal.

US Bonds slide on inflation concerns

When bond prices go down, yields go up. The benchmark 10-year note yields are 4.09 percent; up from 3.93 percent. Inflationary expectations are rising, and long term interest rates are responding.

UK money supply increases faster than expected

This story has been largely ignored, yet it is probably the most important economic news in a month. The money supply continues to go rapidly, and this means more inflation in the future.

German June PPI Inflation Fastest Since March 1982

The warning signs are everywhere. Prices are now growing at their fastest rate for a generation, and central banks are doing nothing about it.

Mexico Central Bank Raises Rate on Inflation Concerns

The Mexicans seem to understand the problem.

Underwriters May End Up Owning 7 percent of HBOS

It looks likely that shareholders are steering clear of the rights issue. This is very bad news for the government and the Bank of England. In future, banks will find it very difficult to find underwriters willing to help out in recapitalization efforts.

Freddie looking to raise an additional $5.5 billion in capital

I can't see investors queuing up to participate in this offering.

Bermondsey takes over as home of the artworld

The property pages of the Times have a surreal quality. The editors and writers simply don't live in the same world as I do. Today, we are told that SE1 looks set to follow Hoxton as London's arty crossover area. Frankly, I am not even sure what an "arty crossover area" might be.

Chavez Pleads for Investment as Falling Output Fuels Inflation

The Bolivarian revolution betrayed; Chavez cozies up to the Oligarchs. After he started to nick their assets, they stopped investing. Now, he wants them back. My favourite story of the day.


Patrick Crozier said...

Hmm. UK money supply growth still high? But didn't I read an article in the Telegraph saying it was collapsing?

Who to believe?

I err towards "Run for the hills!" but I'm not quite sure.

Patrick Crozier said...

It was this article by the way.

Mark Wadsworth said...

What P says.

I have seen loads of articles explaining at great length why inflation is the likely outcome of all this, and just as many articles explaining at great length why deflation is the most likely outcome that I am still not convinced either way.

Anonymous said...

Thanks for a tremendous site with great information. Your graphs and comments are great.
As somebody who believe that deflation must be coming to the UK, as borrowing is collapsing, asset prices are collapsing and the various arguments etc. , who, are the mysterious borrowers (apart from the government) still capable of causing credit expansion ? I have an open mind that there might be some with negative interest rates, or state sponsored public theft, but who could they be? Any ideas ?