Tuesday, 26 August 2008


From the Telegraph -

Most City economists now believe a recession is inevitable - and are focused instead on avoiding depression and deflation. Edmund Conway reports

......"UK consumer spending looks very vulnerable and retrenchment could be both severe and long-lived," he said. "How bad will the UK recession get? It's difficult to know. The fact that excesses in the housing market and in consumer spending look as if they have far to unravel suggests that it is likely to continue well into 2009."

The scale of the debt bubble, however, raises memories of Japan before its lost decade. The Bank for International Settlements recently raised the spectre of deflation in its Annual Report, and it is not hard to envisage inflation dropping back so sharply that it comes in below target, causing consternation to policymakers."

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