tag:blogger.com,1999:blog-39474982011-04-22T05:34:35.926+02:00Deflation UpdateBlow by blow coverage of the seemingly inexorable drift into deflation of the OECD worldEdward Hughnoreply@blogger.comBlogger1141100tag:blogger.com,1999:blog-3947498.post-1159541779732750752006-09-29T16:55:00.000+02:002006-09-29T16:56:19.736+02:00Is The Deflation Alert About To Sound Again?Time to dust the rust off this blog I think.Using a footballing analogy, all the economic defences seem to be 'ballwatching' at the moment, and looking at the inflation issue. But the recent fall in oilprices, and the developing slowdown seems to be resurrecting a danger that many felt was long dead: deflation.Look at this from Singapore:Singapore's inflation rate fell to an 11-month low in Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1145001396563215512006-04-14T09:42:00.000+02:002006-04-14T09:57:40.933+02:00Richard Fisher and the Output GapI've been posting about this topic from time to time on Bonobo Land ), and about how our idea of a national output gap may be somewhat quaint and outdated in a globalised world. "The global output gap" idea of Borrio and Filardo is an interesting one. To a great extent I go along with Dallas Fed President Richard Fisher's argument that in a globalised world the idea of a national output gap is Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1145000421245849942006-04-14T09:28:00.000+02:002006-04-14T09:40:21.256+02:00Globalisation and inflation: New cross-country evidenceThe header refers to the title of a paper by two economists at the BIS (and this paper was the reason I was rumaging around the BIS site and came up with my last post. Basically New Economist has the details in his post How has globalisation affected inflation?. Basically NE suggests that "this chapter (in the latest IMF WEO), How Has Globalization Affected Inflation? (PDF), provides "robust Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1144999592024365622006-04-14T08:32:00.000+02:002006-04-14T09:27:47.633+02:00Research on DeflationWell, I'm back, after nearly two and a half years of absence, starting to limber up on the whole question of deflation again. Toady I thought about doing this after looking at this paper from two economists at the Bank of International Settlements: Claudio Borio and Andrew J Filardo, Back to the future? Assessing the deflation record. Here's the abstract:The rhetoric of deflation has become moreEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1068315745069262192003-11-08T19:22:00.000+01:002006-03-30T09:48:00.496+02:00This was my Day-to-Day Weblog on Deflation during the US deflation alert of 2002-2003. Since I am by no means convinced that this issue is compltely over the blog remains here in suspended animation, pending developments which might make its resussitation worthwhile. More Detailed in-depth commentary, analysis and links on the deflation phenomenon can be found on the Deflation Page on My WebsiteEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1068314778803906322003-11-08T19:06:00.000+01:002003-11-08T19:06:40.186+01:00Staggering Rise in US Labour Productivity
US labour productivity may have risen at an astounding 8.5% in the third quater, at least that's what Bloomberg are telling us. Following close on the heals of a 7.2% growth in GDP for the same quarter these numbers clearly are incredible: frighteningly so. It is clear that something pretty important is happening, but I fear we may need to wait for the Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1068314179701811762003-11-08T18:56:00.000+01:002003-11-08T18:56:40.403+01:00The 'Lump of Structural Reform' Fallacy
I must have had a hard week, since I find myself leaning more and more on Joerg for inspiration. But I really do think he has a good point. Structural reforms are being converted into something quasi-physical, that need to be handed round and round...........and round. Apart from making ourselves all extremely dizzy, isn't there something rather Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274916511543612003-10-27T18:15:00.000+01:002003-10-27T18:15:42.513+01:00Only Known Export Jobs: Part I
This, it seems, is going to be the title of a new series here. The title is plagiarised: former US Treasury Secretary Paul O'Neill (or was it GWB himself, help, someone?) once said of Argentina that it was a country with no known export industry, and it didn't seem to care. This was before the crash. Well I'm now throwing the jibe back: the only unambiguously Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274823218160562003-10-27T18:13:00.000+01:002003-10-27T18:13:48.716+01:00Sending the Jobs Back
As I have said before, many people in Europe seem very complacent about this situation. Seeing the problem as one of call centres and the like, they feel vaguely re-assured that linguistic difficulties will mean that they are protected. But let me suggest another possibility. Having this backroom-office at its disposal, UK companies may become slightly more competitive Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274671081276322003-10-27T18:11:00.000+01:002003-10-27T18:11:16.623+01:00The Information Revolution and the Pele/Ronaldo Effect
My Money Files Column
The Information Revolution and the Pele/Ronaldo Effect
One of histories deeper mysteries might revolve around what these two topics have in common, short of the fact that they are flying round my head at the time of writing. Let's see if I can find a connection.
To start at the begining: one of the information Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274607254786522003-10-27T18:10:00.000+01:002003-10-27T18:10:12.796+01:00Strong US Third Quarter GDP Anticipated
A fairly Upbeat piece on the US economy from Caroline Baum in Bloomberg today, even if her immediate prognosis is downbeat: she thinks - as does nearly everone else - that the third quarter GDP numbers will be high, but that they will fall back in the fourth. Nothing really controversial here. She is however fairly positive on what this will mean for Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274553819826452003-10-27T18:09:00.000+01:002003-10-27T18:09:19.373+01:00IS the US Importing Productivity?
Stephen Roach raises some time honoured measurement problems about the current US productivity 'spurt'. The statistics in question are labour productivity statistics. The growth of oursourcing may be having the consequence of distorting the labour productivity statistics upwards. By how much we do not know. The labour component of the outsourced work may not beEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274471387122802003-10-27T18:07:00.000+01:002003-10-27T18:07:56.966+01:00America's 'Productivity Advantage'
Brad had an interesting post some time back that I never got round to commenting on. Now's my opportunity:The French--and the British (I know: I've shopped in Britain)--are deprived of the opportunity to buy in the equivalent of CostCo and WalMart, and deprived of the opportunity to get lots of good stuff cheap by shopping at high-volume retailers who have Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274394935912202003-10-27T18:06:00.000+01:002003-10-27T18:06:40.530+01:00Better US Jobs Data
Well, labour market numbers in the US are certainly improving this month. Remember, a number more like 350,000 new signings over a sustained period is what is required for stable jobs growth. But the market is picking up steam. Let's hope it stays that way. And remember, there are any number of 'hiccups' out there just waiting to hit. Ricardo Caballero describes the US Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274325336648012003-10-27T18:05:00.000+01:002003-10-27T18:05:30.936+01:00Where are All the Manufacturing Jobs Going?
Well the answere seems to be 'nowhere', and fast, if you accept the arguments Caroline Baum advances in this article. And I'm sure in one sense she's right. Global employment in manufacturing is probably on the way down. There is more: one point she doesn't note about the China syndrome, is that as areas like Guandong grow, wages rise, and the reallyEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1067274246318483752003-10-27T18:04:00.000+01:002003-10-27T18:04:11.936+01:00The Indian IT Impact
Will India overtake the US in IT? An interesting question, and Andy Grove answers in the affirmative: by 2010!Observing that India and China are 'key threats' to continued American dominance in important high technology sectors, Intel Chairman Andrew S Grove has said India could surpass America in software and tech-service jobs by 2010. India's booming software industry, Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065963567703370032003-10-12T14:59:00.000+02:002003-10-12T14:59:27.066+02:00US Trade Balance With China Deteriorates
Latest data on the US trade deficit shows the balance with China continues to deteriorate. I have a feeling we will be hearing more about this. For the rest, we shouldn't draw too many conclusions, August is definitely an 'untypical' month.The US trade gap with China widened to a record high in August even as America's overall deficit unexpectedly shrankEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065706121673257222003-10-09T15:28:00.000+02:002003-10-09T15:28:41.543+02:00Driving the Next Wave of Job Creation
Stephen Roach has a very important post today. Really here he gets hold of the central question for the future of the US economy. All the deficits in the world are supportable, if you can pay your way. But it is precisely this capacity to make the pay back which is put in question by the existence of IT-enabled outsourcing. As Roach continually reminds us, Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065706071708982832003-10-09T15:27:00.000+02:002003-10-09T15:27:51.500+02:00More US Labour Market Data to Chew On
Uncertainty over the state of the US labour market continues. Confounding those who felt that the household survey might be flagging a rather better than expected tendency, this latest Labour Department warning seems, on the face of it, to confirm the establishment data. We are talking about last year's data here, so it is difficult to draw andyhard and Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209718763828362003-10-03T21:35:00.000+02:002003-10-03T21:35:18.436+02:00US Economy: The Slippery Road to Recovery
My Moneyfiles Column
The US economic data we are seeing this week are a very mixed bag indeed. New claims for unemployment continue to hover round the 400,000 mark, new factory orders declined by 0.8% in August , consumer confidence falls to its lowest level since the start of the Iraq war, and yet apparently we are to believe we are on the vergeEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209610383418472003-10-03T21:33:00.000+02:002003-10-03T21:33:30.080+02:00Irving Fisher on Debt Deflation
Deflation and the value of the dollar are two of the topics on the US economy agenda, so I am grateful to Lloyd at Macro Mouse for sending me two links. One an interview with Richard Duncan on the dollar, the other a student essay which really does present an extremely well-argued presentation of Irving Fisher's theory of Debt Deflation.Irving Fisher Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209511879365582003-10-03T21:31:00.000+02:002003-10-03T21:31:51.610+02:00This Seems Nearer the Mark
At last a report on the US economy which seems nearer to my own impression. Of course, just because I agree with it doesn't make it right.The U.S. economy faces at least another year of tepid growth despite a growing number of predictions that a stronger recovery is around the corner, according to a forecast released on Wednesday. The widely watched survey issued by Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209448785320392003-10-03T21:30:00.000+02:002003-10-03T21:30:48.520+02:00Currency: Going up anyone........Not Just Yet, After You Please
Now the Economist is joining the curency debate. The G7 message was meant for China, but got lost in the post, and has ended up being delivered to Japan:Why does Japan want a cheap yen? A history of mercantilism may be part of it. A cheap yen is one way to capture lucrative export markets. But Japan also hopes that selling yen and Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209374387098522003-10-03T21:29:00.000+02:002003-10-03T21:29:34.130+02:00Steeling Jobs
This piece from the Washington post puts an interesting light on the 'new protectionism' US style. The tarriffs help, logically, the steel industry, but the general impact on the economy is negative. In a politically driven economy it all depends on where the votes are I suppose. But please don't let them give me all that cant about believing in free markets, this preaching, it Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209331849349702003-10-03T21:28:00.000+02:002003-10-03T21:28:51.613+02:00Will The Dollar Continue its Decline?
After all the fire and fury in the currency markets yesterday, things are much calmer today. I have the impression that everyone is convinced that the dollar needs to come down substantially, but that nobody believes it is actually going to happen. Chinese reticence, Japanese dithering, and euroland alarm are amongst the various reasons one could think of. Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209263686281312003-10-03T21:27:00.000+02:002003-10-03T21:27:43.460+02:00Global Turning Point?
Following the G7 decision in Dubai, the financial markets are more than a little nervous . Stephen Roach, in contrast, is so ebullient you would almost say he was apocalyptic:An unbalanced global economy has finally come to its senses. At the just-concluded G-7 meetings in Dubai, the world’s major industrial economies have endorsed the basic premise of global Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209134012339092003-10-03T21:25:00.000+02:002003-10-03T21:25:33.820+02:00The Deflation Meter is Ticking Away
If the mood in the financial markets were anything to go by, the US recovery is a done deal. Why do I remain so skeptical? Because K says there's an Argentina type crisis lying in wait for us somewhere up the river? Not at all. This may, or may not happen, but it won't happen now. So why the doubts. Well of course there are the employment numbers (as long Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209061139897072003-10-03T21:24:00.000+02:002003-10-03T21:24:20.960+02:00What Happened in Cancun?
Now the dust is settling, this seems to be a useful question to be asking. The economist seems to think the intransigence of the EU and Japan was over agricultural issues , for Public citizens Global Watch it was the whole model of globalisation that came under fire. For Dsquared "the good thing about the Cancun collapse is that it allows us to get the measure ofEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065209004044787042003-10-03T21:23:00.000+02:002003-10-03T21:23:23.883+02:00Your Questions Answered
Kevin Drum now has the full transcript of the Krugman interview posted. Among the more notable extracts:Train wreck is a way overused metaphor, but we're headed for some kind of collision, and there are three things that can happen. Just by the arithmetic, you can either have big tax increases, roll back the whole Bush program plus some; or you can sharply cut Medicare Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1065208929802870822003-10-03T21:22:00.000+02:002003-10-03T21:22:09.650+02:00How Not to Defend Your Lifestyle
Mats asked a question on the comments section of SemiDaily Journal that merits an answer. Mats' question:Edward writes - "The manufacturing jobs are not the problem. The numbers to watch are the services ones, and not the low end cleaning and age-care, but the high value end. If the US cannot produce growth there then there could be a big problem." - and I Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063567329009253612003-09-14T21:22:00.000+02:002003-09-14T21:22:09.010+02:00US Economy Roundup
Various bits and pieces of data as the week draws to a close. The main news of the day is probably the slight drop in consumer sentiment. At the same time producer prices, excluding food and energy, are not only tame, but hovering nervously round the !% inflation mark. August retail sales didn't rise as much as expected, but the big news of this week is undoubtedy the Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063567236858689082003-09-14T21:20:00.000+02:002003-09-14T21:20:36.870+02:00Spectral Imaging
A spectre, it was once said, is haunting Europe. Fastforwarding a little, perhaps it would be more appropriate to say that at the present time there is a spectre haunting the entire OECD. But this spectre - surprise, surprise - is not, at least this time round , a demographic one. It is for all that a no less revolutionary one. The spectre I have in mind has little in common Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063567156056645092003-09-14T21:19:00.000+02:002003-09-14T21:19:16.046+02:00Fiscal Endgame
The world bank in it's Global Economic Outlook raised an interesting question last week:the scope for substantial further macroeconomic stimulus is rapidly dissipating. Fiscal deficits threaten to become part of the problem instead of part of the solution, especially since a quick reversal of the deficit is not anticipated. The U.S. general government budget position (including Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063567081582530902003-09-14T21:18:00.000+02:002003-09-14T21:18:01.583+02:00If the Manufacturing Leakages Hit Services.........
OK, maybe I've been hitting Roach a bit too hard recently, so here's an area in which he really is in a class of his own:There can be no mistaking the extraordinary external leakages now evident in the US economy. Even in the face of rebounding domestic consumption, incremental product is being sourced offshore at the cost of disenfranchisingEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063566983066891012003-09-14T21:16:00.000+02:002003-09-14T21:16:23.083+02:00On the New Productivity Paradox
Well, the latest round of revised productivity numbers certainly puts the productivity question firmly back on the agenda, and the surprise jump in job losses in August only adds to the connundrum. Interestingly Stephen Roach has a strange take on this today: US workers are both working more and less hours. The are implicity working more because 24/7 Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063566749480872332003-09-14T21:12:00.000+02:002003-09-14T21:12:29.486+02:00Deficits: Part of the Problem or Part of the Solution?
The World Bank Global Economic Prospects 2004 is now available. Of particular note is the spotlight put on China and India, who are significanty out-performing the rest of the world in economic growth this year, their economies are expected to grow at up to 8 percent and 6 percent respectively this year. Today I will post a few extracts. Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063566681338480022003-09-14T21:11:00.000+02:002003-09-14T21:11:21.350+02:00Job-Loss Recoveries
Brad has an extremely useful piece about the current recovery. It seems Okun's law doesn't work too well these days:We used to have considerable confidence in Okun's law: that an extra one percentage point rise (or fall) in the unemployment rate over a year would reduce (or boost) that real GDP growth by an extra 2.5 percent over that year because a rising (or falling) Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063566570442081742003-09-14T21:09:00.000+02:002003-09-14T21:09:30.443+02:00Escaping From Global Deflation
There is nothing especially fresh in the link you will find below. In fact I'm looking around for material on deflation and I came across this piece from Rogoff back in July. However it does have the virtue that he tries to address the problem of general deflation, recognises that collective devaluation won't work, and suggests a strategy of collaboration betweenEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1063566495280543792003-09-14T21:08:00.000+02:002003-09-14T21:08:15.276+02:00Rogoff on Global Disinflation
The Jackson Hole papers have now been posted . Among them is a highly relevant and interesting one by Ken Rogoff about global disinflation and globalisation. As Rogoff indicates the last decade has seen an enormous reduction in the level and volatility of inflation almost across the board. The million dollar question is why. Clearly improvement in cenral bank Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1062505452143960522003-09-02T14:24:00.000+02:002003-09-02T14:24:12.143+02:00Jobs and the US 'Recovery'
Brad has a piece about initial unemployment claims in the US. According to Brad 357,000 seems to be " the weekly initial unemployment insurance claims number below which the unemployment rate is falling rather than rising", at least during the late 90's. So the magical 400,000 loses some of its magic. But maybe this also qualifies the expression 'jobless recovery' a Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1061633324127630032003-08-23T12:08:00.000+02:002003-08-23T12:08:44.166+02:00US Economy: 'Condemned to Grow'
It would happen, wouldn't it. One day after I stick my neck out far enough to say I think the equity markets are looking overpriced, and ready to take a knock, we get a string of very positive looking data, and off we go again. Well that's good, it's chastening to get humbled from time to time, but then, the game isn't over yet, not by a long stretch.
First it Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1061633267302385992003-08-23T12:07:00.000+02:002003-08-23T12:07:47.343+02:00Europe on the Japenese Road Map
Strong article from Anatole Kaletsky this. I wouldn't go along with his tongue in cheek optimism about the UK and the US, but on the danger of what he calls the media cliché of Germany being the prinicipal deflation candidate (I think you will find I was saying this here and on Bonobo Land long before it became fashionable to do so) I think he is bang on target. Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1061633182863371172003-08-23T12:06:00.000+02:002003-08-23T12:06:40.990+02:00An Unwelcome Fall in Inflation
Some extracts from, and a link to, the recent Ben Bernanke speech which has caused all the fuss. The implicit output gap argument seems sound enough to me, I also think he's right to trace the current disinflationary pressures backwards and look again at the productivity/inflation situation during the 'new economy' boom. What this effectively means is that the Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1061633111511726592003-08-23T12:05:00.000+02:002003-08-23T12:05:11.480+02:00Mind the Gap, One More Time
I don't know whether I'd go so far as Stephen Roach, who titles his latest MSGEF piece 'long live the output gap', since it's the existence of this gap that gives the strongest indication of the disinflationary pressure facing the US economy (perhaps I prefer the infamous 'mind the gap' of the London Tube). But quibbles aside, this piece from Roach is very timely andEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1056881115327990762003-06-29T12:05:00.000+02:002003-06-29T12:05:14.530+02:00US Recovery, Perhaps the Only Thing Left is Hope
Eddie doesn't seem to be getting much rest in Singapore these days. Now he's taking time out to examine the US recovery situation and the role of tech investment.THERE'S a lot to hope for, it seems.
The Iraq war is over and the Sars virus subsided quicker than expected. There's relief all round. As United States Federal Reserve chairman Alan Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1056881038079535802003-06-29T12:03:00.000+02:002003-06-29T12:03:57.293+02:00Things in Germany are Hotting Up
Two pieces from the FT today give a clear indication that we could have a long hot summer, followed by an even longer cold winter opening up in front of us. First the growing crisis in Germany's life assurance industry:Germany's financial regulator on Thursday night sent a life assurer into insolvency for the first time in more than 50 years, after losing Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-1056880936815204692003-06-29T12:02:00.000+02:002003-06-29T12:02:16.046+02:00Should the Fed Have Gone Further?
The Economist asks the question that is on everybody's minds, and seems to come to the conclusion that, like the rest of us, on balance they're not sure. Its finger crossing time, but with plenty of downside risk.So should the Fed have gone further, or will the latest rate cut do the trick? Answering that question is difficult, partly because there is some doubtEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-958238542003-06-19T13:41:00.000+02:002003-06-19T13:41:04.310+02:00Crossing the Gate of Deflationland
Right, I believe putting your money up on the table time is getting near. What is happening now in Germany is clearly a turning point of a kind. The big ship has struck rock, water is coming in, and no-one really knows how to plug the leak. Of course, suggestions abound, mainly of the structural reform kind. Others commentators suggest more aggressive Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-958237042003-06-19T13:30:00.000+02:002003-06-19T13:30:32.623+02:00One Swallow Doesn't Make a Summer
Before everyone gets up on their seats and starts cheering, it would be well to bear in mind that in the same way that one swallow doesn't make a summer, one months good news on the US deflation front doesn-t mean the alert's over. Certainly looking at the US stock market this week you would think the recovery was, by now, a foregone conclusion. The reality is Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-958236762003-06-19T13:28:00.000+02:002003-06-19T13:28:41.246+02:00Hong Kong: Plumming the Bottom of Deflation
Some pretty depressing news from Morgan Stanley's Denise Yam looking into the realities of deflation, Hong Kong Style.Consumers are heading to shopping malls again as SARS is brought under control. Tourist groups are arriving again. Is it business as usual already? Far from it. Business volumes may be seeing a noticeable rebound, but the top and Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-958236182003-06-19T13:24:00.000+02:002003-06-19T13:24:48.773+02:00Whither Goes the 'Coalition of the Willing?
Just in case you were thinking that Bonobo was getting a bit low on economics content today, here's a really interesting piece from Stephen Roach:On the surface, the policy bet isn't hard to understand. The world's major central banks are now taking dead aim at that once "nonexistent" risk - deflation.......American investors are taught, “Don’t fight Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945338572003-05-18T14:52:00.000+02:002003-05-18T14:52:08.806+02:00The Problem of Excess Dollars and the Current Account Deficit
An interesting argument here from Richard Duncan, about the role of excess dollars in asset booms in Asia, and the subsequent surplus capacity and deflationary tendencies: During the 30 years since the breakdown of the Bretton Woods International Monetary System, the global economy has been flooded with dollar liquidity. InternationalEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945328392003-05-18T14:01:00.000+02:002003-05-18T14:01:12.760+02:00Navigating Unfamiliar Terrain
Useful and timely piece from the FT. Not really an analysis of deflation, but full of timely advice. Of particular note is the suggestion that "he best way to ride out a deflationary meltdown involves liquidating an investment portfolio and burying the cash in the garden".Forget inflation. A greater risk to the US economy and investors' portfolios, Federal Reserve Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945327032003-05-18T13:53:00.000+02:002003-05-18T13:53:32.850+02:00Japan's Deflation Gathering Speed
David Pilling from Tokyo, on how the rate of deflation in Japan is accelerating. Not good news.And just as I was getting used to talking about the 'slow burn' deflation.The rise in the yen isn't going to help any, either.Japanese deflation gathered pace in the first quarter with year-on-year prices falling 3.5 per cent - their fastest drop on record. The fall Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945326832003-05-18T13:52:00.000+02:002003-05-18T13:52:22.306+02:00(N)either the Fiscal Side (N)or the Monetary Side Sould Be Effective.
I grew up on Xmas re-runs of a film called 'the longest day', I have a feeling that as this year's solstice approaches this title may ring through my head on more than one occassion. This week has been a worrying one for Brad . It started on Wednesday after a hard day at the chalk-face struggling with thinking about Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945326542003-05-18T13:50:00.000+02:002003-05-18T13:50:42.653+02:00The Liquidity Trap: A Sticky Problem
Brad has a number of posts this week on the liquidity trap problem (and here and here . Two points occur to me: firstly, is it more than a merely semantic point whether we are 'fast approaching' or "already caught in the orbit" of one; and secondly whether (as Joerg asks me) the name is not a misnomer, wouldn't 'viscosity trap' be a better description?Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945326152003-05-18T13:48:00.000+02:002003-05-18T13:48:35.260+02:00Currencies and Deflation: The Debate Continues
If things continue like this, my guess is that both the intenational currency markets, and the international equity markets are going to get extremely nervous. Having a rising euro which pushes Germany (and Italy!!) into deflation just doesn't make sense as a long term strategy. Nor is a rising yen going to help an already deflation-bound Japan. TheEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-945325342003-05-18T13:44:00.000+02:002003-05-18T13:44:14.173+02:00Why Japan's Slump Matters
Despite the fact that John Snow was cheerfully informing us earlier this week that 'deflation is a monetary phenomenon', some inveterate doubters remain unconvinced. Yours truly for one: I think this view is nonesense. Fortunately from time to time more signs of intelligent life appear on the planet's surface. The author of this piece is a Straits Times columnist Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941153402003-05-10T21:14:00.000+02:002003-05-10T21:14:24.003+02:00On the So-Called Sars Paradox
Here's a really good example of a really bad argument. SARS, apparently, is good for you, economically speaking. Why? Because if SARS means that the supply lines to China are cut, then this will be inflationary as supply fails to live up to the needs of demand. You see, every cloud has a silver lining.
Or does it? Let's think about this for a moment. On this Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941152912003-05-10T21:13:00.000+02:002003-05-10T21:13:00.163+02:00Beware the Bogeyman Cometh
Nothing especially outstanding about this piece: except that it's being written that is. The Yahoo economists are up to the mark again!! (This is only meant as a scarcely veiled hint to those at the Economist to get their act together, and to those taking the decisions at the ECB to start reading Yahoo News - of course, I forgot, we Europeans tend to laff at Yahoo forEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941152502003-05-10T21:11:00.000+02:002003-05-10T21:11:55.090+02:00Is There a Way Out?
War, uncertainty, and disease are a tough combination for any economy. But for a stalling and vulnerable global economy, this confluence of shocks hurts even more. The result could well be a weak recovery or the world's second synchronous recession in three years. This could be a critical tipping point for a low-inflation world that is already on the brink of outright Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941152022003-05-10T21:10:00.000+02:002003-05-10T21:10:33.453+02:00Deflation is very Difficult to Reverse
The economists over at Yahoo seem, as usual, to have grasped the significance of the situation. The times they are a changin', in every sense.Despite a recent slew of sluggish data, the economy should pick up as the Iraq war fallout fades, Federal Reserve chairman Alan Greenspan and his fellow policymakers said. But an emerging menace, deflation, loomed. Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941151652003-05-10T21:09:00.000+02:002003-05-10T21:09:22.366+02:00The Fed's Unprecedented Move
As if to confirm my earlier point about the flagging rate of intelligence down at the Economist, the FT comes in with a hit, which, as is becoming habitual with them, is bang on target. Since both parties tend to cite the opinions of unidentified 'economists' one can only assume that those the FT asks have more idea of what is going on than those consulted by the Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941151322003-05-10T21:08:00.000+02:002003-05-10T21:08:24.390+02:00What the Fed Actually Said
For those with an eye for detail, and for the simply curious, here is the full text of the FOMC declaration:The Federal Open Market Committee decided to keep its target for the federal funds rate unchanged at 1-1/4 percent.
Recent readings on production and employment, though mostly reflecting decisions made before the conclusion of hostilities, have proven Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941150312003-05-10T21:04:00.000+02:002003-05-10T21:04:53.983+02:00Am I Feeling Responsible or Irresponsible Today
Back to the problem of 'dynamic inconsistency' ( see post from yesterday below) and the deficit. I have been trying in recent days ( here and here ) to provoke some discussion and controversy based on the argument that you shouldn't always take things at fact value. The pretext for this argument is a paper by Gauti Eggerston ( Committing Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941149632003-05-10T21:03:00.000+02:002003-05-10T21:03:06.810+02:00More on the Irresponsibility of Being Responsible
Maynard has again come to the rescue by giving me some (as is usual with him) intelligent feedback on my preposterous suggestion that maybe a superficial reading of the US deficit situation was missing something. Firstly Maynard's response: When I first saw your comment in Brad's weblog I was confused, and
thinking about it since then has not Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941149042003-05-10T21:01:00.000+02:002003-05-10T21:01:32.390+02:00A Commitment to Higher Inflation
I'm not getting much feedback on my Bush the actor pretending to deficit spend irresponsibly argument (hint, hint!). Today there are two US professional economists areguing the case for an open comittment to inflation. Of course they're using a fairly orthodox inflation targeting argument of the kind I don't really swallow (not in its simplistic monetarist for Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941148472003-05-10T20:59:00.000+02:002003-05-10T20:59:47.390+02:00Ken Rogoff on Inflation Targeting
The Chief Economist at the IMF becomes an inflation targetting evangelist in today's FT. Normally I give an unequivocal welcome to the breath of fresh air Rogoff has brought to IMF economics, but here I can't help feeling he is way off target. He seems to miss the deflation problem entirely and treat the interaction of political and economic objectives as if Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941148012003-05-10T20:58:00.000+02:002003-05-10T20:58:14.766+02:00On the Comparative Advantage of Being Young
Joerg has written to me raising some interesting points, among them:
"You also have a page with graphs done by Ray Kurzweil which show how fast things get faster, i.e., the degree of acceleration inherent in technological progress. This points to accelerating growth and thus an offsetting effect in terms of overall future growth. In my view, Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-941147542003-05-10T20:56:00.000+02:002003-05-10T20:56:55.756+02:00Committed to Being Irresponsible
Brad Delong has posted the latest information on the US Deficit ( here ) but I'm afraid the smart money says we're all missing something here. Reading the comments there lead me to recommend the following paper by none other than Gauti B. Eggertsson, and appropriately enough entitled "Committing to being Irresponsible"
ABSTRACT
This paper explores the Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-929421032003-04-20T21:24:00.000+02:002003-04-20T21:24:46.576+02:00If Demographics is the Problem, What's the Solution
In the comments column of Brad Delong's blog Amit Dubey asks the following:So if demographics is the problem, what's the solution? And how should other countries handle it e.g. a big tax hike now in order to fund government consumption when demographic inflection hits? I don't think "immigration" is a good answer, because then what do India Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-919994442003-04-04T21:31:00.000+02:002003-04-04T21:31:59.343+02:00'D' Day Preparations Down at the Fed
So just in case 'it isn't just the war, stupid', the Fed does seem to be moving ahead vigourously with battle plan 'B'. (I sure hope George Bush finds the time in his crowded agenda to let himself be briefed on this one). Obviously all the talk of war has put everyone in a macho mood. After Krugman's allusions to the 'Baghdad is for boys, the real men want toEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-919992962003-04-04T21:29:00.000+02:002003-04-10T16:47:36.000+02:00Japan Deflation Continues
Despite the recent oil price rise, Japan just registered its 23 consecutive month of retail sales decline. Japan's nationwide retail sales have fallen 0.2 percent in February from a year ago, their 23rd straight month of decline. The drop compares with 2.6 percent fall in January and a 3.4 percent decline in December, the Ministry of Economy, Trade and Industry (METI). Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-914330162003-03-26T21:48:00.000+01:002003-03-26T21:48:45.390+01:00BoE Paper Gives Thumbs Down to British Deflation
According to the latest paper to come out of the Bank of England, deflation is unlikely to be a major problem in the UK. Unless, of course, there's a housing crash. We'll see.A general price deflation in which interest rates fall to zero is 'highly unlikely' to hit Britain, according to a paper published by the Bank of England today. Interest Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-914328432003-03-26T21:45:00.000+01:002003-03-26T21:45:42.606+01:00When Money is No Longer Liquid
I have spent part of this morning reading the latest Bank of England 'deflation watch' piece published in the latest edition of the quarterly review. In the midst of a relatively serious summary of the recent debate I find the following quote which really has set me thinking: "when we say that cash is more liquid than other assets we mean that it can, for example, Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-914327602003-03-26T21:44:00.000+01:002003-03-26T21:44:26.090+01:00What Type of Deflation in Japan?
Morgan Stanley's Takehiro Sato draws our attention to a debate in Japan that is not without importance. The debate became public through the delcarations of BoJ Policy Board member Kazuo Ueda in an opinion article that appeared in the Nikkei Shimbun on March 17. In the piece he questions the Bank’s official stance toward the Non Performing Loan (NPL) problem. Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-914326422003-03-26T21:42:00.000+01:002003-03-26T21:42:47.263+01:00Deflation Alive and Well in the Czech Republic
Many observers seem to treat deflation as if it were a problem which was exclusively focused on Japan. In fact the problem is much more generalised, and seems to be spreading rather like that horrible pneumonia problem. Today some news from the Czech Republic. The seasoned deflation observer will note that the principle pillars of policy are Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-908641432003-03-17T18:22:00.000+01:002003-03-17T18:22:49.293+01:00The Conventions of Unconventional Policy
With the 'soft patch' getting softer and pressure once more rising on the Fed to lower rates, Stephen Cecchetti again asks the dreaded 'D' question: what should we do if and when we hit zero. His answer is not to panic, since, he tells us, policymakers have studied and prepared a set of unconventional options and are convinced that they will work. Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-908640892003-03-17T18:21:00.000+01:002003-03-18T16:39:42.000+01:00US Life Expectancy on the Rise
Nothing particulary surprising or shocking in the latest US CDC report. American life expectancy rose in 2001 to 77.2 years from the 77.0 years reported in 2000. This is good news all round. Except that is, for the actuaries. You may be surprised to learn that most pensions related calculations assume a tapering-off and not a continuation (much less an Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-908640012003-03-17T18:20:00.000+01:002003-03-17T18:20:27.280+01:00Unless We Slide into Japan Style Deflation....
I'm afraid my thoughts coudn't be more distant from those expressed by Paul Krugman this week. Of course I find the way the US deficit is ballooning scary, and of course I think the Bush administration isn't thinking clearly about the future, but I can't buy the 'inflation scare' argument. Of course, Paul is intelligent and he adds the 'caveat Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-908639302003-03-17T18:19:00.000+01:002003-03-17T18:19:11.013+01:00Why All the Fuss About Deflation
Deflation is a generalised and sustained fall in prices, with the emphasis on generalised and sustained. At any given time, especially in a low-inflation economy like that of our recent times, prices of some goods and services will be falling. Price declines in a specific sector may occur because productivity is rising and costs are falling more quickly in that Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-908638322003-03-17T18:17:00.000+01:002003-03-17T18:17:18.560+01:00Housing: On Bubble Business Bound
Does the current housing market constitute another case of bubbleitis. This week it's the turn of the Economist to worry. They look at all sides of the argument, and as usual these days stay firmly on the fence. Certainly the evidence for the existence of a bubble is unclear. Three cases, however, do stand out: the UK, Spain and Australia. Others like the US, Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-908637362003-03-17T18:15:00.000+01:002003-03-17T18:15:57.030+01:00To Monetise or Not to Monetise, That is not the Question
Curious how almost everyone who's anyone in New York or Washington thinks that the Japanese problem has a monetary solution, while almost everyone who's anyone in Tokyo disagrees. This time it's the turn of Morgan Stanley's Robert Alan Feldman.Is it too late for Japan? The monetization is now complete along the yield curve. European Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899478142003-03-01T10:38:00.000+01:002003-03-04T12:59:28.000+01:00The Durably Deflationary World
Now Morgan Stanley's Eric Chaney argues the point: Europe is risking a very close call with generalised deflation. Top of the 'at risk' list: Germany. Gee, their boss, Stephen Roach, is really getting through to them.From 1973 to the late-1990s, a popular macro game between industrialised economies was to export inflationist pressures. The strong-dollar policy in Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899476292003-03-01T10:30:00.000+01:002003-03-01T10:30:53.390+01:00Rinban Revaluation No Solution For Japan's Deflation
Once more Andy Xie argues the point, and once more I feel he is right: fixing deflation in Japan is not about making things worse in China:Japan is obsessed with China for the wrong reason, in our view. Its leaders are increasingly looking at China’s economic growth and Japan’s economic decline as a fairness issue, i.e., “the renminbi is too Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899457262003-03-01T09:03:00.000+01:002003-03-01T09:06:38.000+01:00Japanese Reality-Check
Whatever the merits or otherwise of recent economics and finance appointments, whether in the US or Japan, a reality check reveals one thing: things ain't gettin better, and fast.The pernicious deflation that has plagued the Japanese economy showed no signs of alleviating in January while unemployment hit a postwar high, underlining the challenges facing Toshihiko Fukui, Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899456442003-03-01T09:00:00.000+01:002003-03-01T09:00:11.076+01:00No Let Up in China's Deflation
Arguing that, in the case of deflation in China, its not over till its over, Andy Xie explains that massive surplus labour and capital supplies in China mean that deflation can be expected to continue, with the global PPI being driven from China. I agree with him. China’s CPI possibly rose in January from a year ago. This would be the first positive year-on-year Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899456132003-03-01T08:58:00.000+01:002003-03-01T08:58:38.343+01:00Taiwans Deflation Continues
While the world continues to pore over the tealeaves and debate the future of the German economy, most commentators continue to treat deflation as a purely Japanese phenomenon. Deflation also exists in other Asain economies, notably China, and........Taiwan. (NB Also, and with reference to yesterdays Joanthan Anderson post, don't miss the China factor here).Taiwan’s Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899455472003-03-01T08:56:00.000+01:002003-03-01T08:56:23.856+01:00One Recession Away
Well the weekend's finally come round again, and with it another Friday post from Stephen Roach. This week it's deflation he's worried about, and in his view the US is just one recession away from deflation. As he argues, many see the recent spike in producer prices as evidence of a receding deflation danger - others (such as yours truly), however, argue that it provides whatEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899454782003-03-01T08:53:00.000+01:002003-03-01T08:53:25.810+01:00Play It Again Alan
After a second look, and a few hours reflection, it seems to me there is plenty of meat to chew on in the Greenspan speech, and that after the Iraq problem has found its place in history the problems of the budget deficit may return time-and-time again to haunt the American presidency. Particularly worthy of note is his advocacy of an accrual based accounting system - one Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-899451972003-03-01T08:42:00.000+01:002003-03-01T08:42:22.873+01:00Japan Back in Reverse Gear
More bad, bad news from Japan.The economy has begun, once again, to contract. You could call it the incredible shrinking economy, were it not for the fact that humour seems to be out of place here, and that these results may give us a pointer to what's in store for the rest of us if I'm even halfway right about the root cause. Apart from the downturn, also worthy of Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-888989522003-02-11T07:51:00.000+01:002003-02-21T21:49:59.000+01:00China: The Internet of the Decade?
The internet, or at least it's information technology component. Well this is the view of Moragn Stanley's Andy Xie. He argues that China's economic impact is so big that it changes relative factor prices globally, and, thus, inevitably triggers a major economic realignment. During the 1990's IT dramatically decreased the unit cost of information and Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-888989122003-02-11T07:50:00.000+01:002003-03-01T08:35:52.000+01:00Asian Deflation Looming?
Another of the under-commented problems facing the global economy is the fact that Asian deflation is not simply a Japanese problem. Deflationary pressures are evident in S Korea, Taiwan, Hong Kong, and even China (where the massive restructuring of the former state owned industries has produced a tremendous downward pressure on Chinese wages). In Taiwan they are Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-884230752003-02-02T16:13:00.000+01:002003-02-02T16:13:05.543+01:00Euro Rise, Curative Therapy or Very Bad News?
The dollar's decline brings with it the euro's rise. But is what may be good news for some bad news for others? Certainly a falling dollar will produce a bit of much-needed inflation in the US, but in the same way will tend to have a deflationary impact in Germany. According to Joachim Fels & Elga Bartsch of Morgan Stanley (here) the euro has Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-880402502003-01-26T09:30:00.000+01:002003-01-26T09:30:22.243+01:00Too Much Saving in Japan?
This piece raises a question which is very much to the point, is there too much saving in Japan? Secondly, if there is, is this structurally related to the demographics of contemporary Japan. This question is very much to the point since most of the current enthusiasm for the appointment of an 'inflation targeting' governor at the Bank of Japan results from a diagnosisEdward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-880402322003-01-26T09:29:00.000+01:002003-01-26T09:29:27.150+01:00Germany in 'Make or Break' Tussle
Or at least that's how Wolfgang Clement the country's economics and employment minister sees it. In an interview with the Financial Times, he said 2003 must be a reform year for Germany. "It will also be decisive in determining the competency and strength of this government. It is a decisive year in all aspects." His declaration came as new data show that the Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-880402072003-01-26T09:28:00.000+01:002003-01-26T09:28:36.930+01:00US Inflation: On the Slippery Slope Down
US consumer prices barely budged in December ending a year in which costs other than energy rose by the smallest amount since 1964. Thursday's report on the Consumer Price Index merely confirmed what Alan Greenspan and many other economists have now been saying for some time: inflation isn't a problem for the American economy. In fact given the uneven Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-880401902003-01-26T09:27:00.000+01:002003-01-26T09:27:27.130+01:00Dollar Up, or Dollar Down
So which way is it this year for the greenback? A bevy of commentators (including the IMF and the OECD) regard the dollar as seriously overvalued. In principle I agree. The real problem is to identify a sound substitute. In this piece Morgan Stanley's Stephen Len argues for the dollar downside effect dominating. (Why is their global economic forum so full of talent, is Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-880401702003-01-26T09:26:00.000+01:002003-01-26T09:26:21.240+01:00Germany Continues its Slide
These days there is little post christmas cheer from Germany. The more data we receive the more the double-dip looks like a done deal. Today's new unemployment figures revealthat seasonally adjusted unemployment rose 28,000 to 4.19m in December, a fresh four-year high. The number of Germans looking for work at the end of last year rose by 200,000 on an unadjusted Edward Hughnoreply@blogger.comtag:blogger.com,1999:blog-3947498.post-880401462003-01-26T09:25:00.000+01:002003-01-26T09:25:21.783+01:00Rinban Rising?
Recent currency market fluctuations, combined with a consensus dollar overvaluation is leading many commentators to frantically search for a currency which might have the possibility of supporting a sustained rise. Clearly this is not the case with the Yen, since almost all proposals for tackling Japanese deflation are accompanied with a recommendation to drop the Yen. At present Edward Hughnoreply@blogger.com