PALOOKAVILLE FINANCIAL
capitulation day
+250...
...people may think that...
...here in palookaville...
...we are firmly in the...
...deflationary camp...
WE DON'T DO CAMP
...eyes on the road...
...ears to the wall...
...watch out for Mr Inbetween...
..."It all depends upon unit labour costs and the state of demand in the economy. In fact, pay here seems to have responded more quickly to the economic downturn. Average earnings growth actually turned negative earlier this year. Although this was primarily due to the impact of sharply lower bonuses in the City, the figure was also boosted by continued strong pay growth in the public sector. And that can't last. In the private sector not a day goes by without another company announcing a freeze or even a cut in regular pay.
capitulation day
+250...
...people may think that...
...here in palookaville...
...we are firmly in the...
...deflationary camp...
WE DON'T DO CAMP
...eyes on the road...
...ears to the wall...
...watch out for Mr Inbetween...
..."It all depends upon unit labour costs and the state of demand in the economy. In fact, pay here seems to have responded more quickly to the economic downturn. Average earnings growth actually turned negative earlier this year. Although this was primarily due to the impact of sharply lower bonuses in the City, the figure was also boosted by continued strong pay growth in the public sector. And that can't last. In the private sector not a day goes by without another company announcing a freeze or even a cut in regular pay.
So the upshot is that the deflation danger is not yet old hat. People are watching the wrong thing. Don't look at the short term twitchings of the RPI or CPI but rather at the behaviour of wages and salaries.
Of course, if the Chancellor is right and by the end of this year the economy is bouncing back strongly, then the deflation danger, like all the others, will quickly melt away as the strengthening economy eventually boosts employment prospects, pay rates harden and firms are more able to push prices up. But if you want to back that particular horse, I would strongly advise you to put your money on each way."
...Roger Bootle...
Mortgage Meltdown, More Pain To Come
..."What can't be paid back will be defaulted on. Consumers with no job have no chance of paying back those debts. Many others who could, won't (because it is in their best interest to walk away). The Alt-A and Option ARM defaults are going to be massive.
Think this leads to inflation? Think again."
...mish...
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