Wednesday, Feb 14, 2007
Another bug in the system
The Economist: Japan's Currency: Carry On Living Dangerously
Looks like this is being swept under the carpet
Posted by inflation is eating my savings @ 01:36 PM (138 views) Add Comment
14 Comments
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1. talking rot said...
I gave up reading the Economist some years ago. I charted the patterns it recognised and the predictions it made against what eventually happened. "Dial D for Deflation" was a classic; as was a great article in 2002 which hypothesized the UK's house price bubble would burst in 2004 (whoooops).
I can't say I'm impressed with this article; strong on comment/opinion but doesn't offer an alternative arguement.
2. talking rot said...
I should add that "Dial D for Deflation" was NOT linked to Japan but was linked to the US and UK.
3. inflation is eating my savings said...
>I gave up reading the Economist some years ago. I charted the patterns it recognised and the predictions it made against what eventually happened. "Dial D for Deflation" was a classic; as was a great article in 2002 which hypothesized the UK's house price bubble would burst in 2004 (whoooops).
I agree with your general criticisms of the Economist- however, these predictions failed largely because the US and UK responded to necessity, went to war and printed money to try and pull us away from deflation. Predictions are predictions only. But errors are often only in timing- without this feeling, we probably wouldn't be posting on this site.
In terms of a general round-the-world news digest, it pains me to say it, but I haven't found a better mainstream publication.
4. talking rot said...
inflation is eating ...
Yeah, OK I agree the Economist is better then most although its accuracy is debatable. Considering the article, the intellectual arguement would be better if an alternative position had been given. I think the Economist is not strong in this respect - hence I gave up reading it. What do you reckon the alternative is?
5. The Capitalist said...
Try the Daily Reckoning. For economics try Marc Faber's website (google him). For excellent news digest The Week (owned by the witty poet and entreprenuer Felix Dennis).
For money and savings Money Week (Ed. is merryn Somerset webb - also writes Sunday Times).
Bull not Bull website for intelligent comment on the USA by USA hacks.
Andy Kershaw radio 3 for music
radio 7 for everything else - sorry going beyond the brief.
6. inflation is eating my savings said...
Check out this one- puts a very different perspective on things........
http://www.schnews.org.uk/
7. japanese uncle said...
A few years ago, I received a phonecall from the Economists marketing staff, asking me "It seems that you have not applied for the renewal of the fixed term subscription. May I remind you of that?" My answer was "You supported Bliar's illegal aggression in the middle east, which is why I stopped reading your magazine", which cleared a bit of my frustration. This is one sophisticated form of propaganda wearing the guise of high brow, academic forum, which in reality is totally under the influence of the House. Now we hear a noise again in the Libdem saying Ming Campbell is too frail; Leadership for Chris Huhne!! And ladies and gentlemen Huhne worked for the Economist. So after all it proved, dirty work of stabbing Kennedy by Ming, and the fruits will go to Huhne. Because the House wants to see exactly the same as in the US politics. No ideological conflict. Whichever way, the political decision will be in favor of the House. Democratic process is just a nominal alibi. Hail to the new leader Huhne and the glory of the Economist Newspaper!
8. japanese uncle said...
Having said that, this particular article is telling an element of truth, I appreciate. Japan's IR should be at least in excess of 3%, the yen then would probably appreciate up to the level of 105/dollar and 200/pound, which is a fair rate at the moment in my very personal judgment.
9. Nohpc said...
Japanese Uncle - rates of 3% would almost definately plunge Japan back into deflation and recession. If you can give me one good reason why it would not do this I would be interested. They are struggling with rates at near 0% so why one earth you think their economy would cope at 3% I cannot imagine.
10. paul said...
JU has a point that if the yen is so seriously undervalued, the only way it can be "rescued" is raising interest rates to a level that reflects its actual value.
This is the hangover from deflation, because it alters the public and corporate mindset completely. That deflation was a result of a generation-long recession. That recession was the result of a property market crash which was ... inevitably .. a result of overpriced housing costs.
I was talking to some Japanese bankers the other day who confessed that the UK doesn't appear to have learned from Japan's mistakes.
11. waitingfor hpc said...
no hpc you seem obssessed with the idea that we must keep rates low at any cost to further the boom? and sod the onward effects for the whole economy and the prosperity of future generations?
If Japan is struggling (I read reports that is now growing slowly) , like the USA is struggling & the UK will struggle, should we all have 0% rates? What then? This is an imbalance in markets for a wealthy country, how many Japanese car makers do you see supplying cars on our roads - and look at the % of liquid assests the Japanese hold?
Japan had a housing boom - just like ours - and unlike ours they still have a manufacturing industry and are pulling through. We in the Uk may not be so lucky. Incidently I do not believer that IR's will be the only main push for the UK - I work in Britsh manufacturing and we have been in recession for years - but now it is unbearable - all comapnies are outsourcing to cheaper cost bases. That is large & small companies. And it is now flowing to service industries as I thought it would - it can all be done in cheaper countries - and still NL put taxes up!
We are already on the road to recession - it is just on the horizon.
12. sovietuk said...
WFHPC, I agree completely the UK economy is now a ramshackle flimsy 'chancer' economy living on borrowed time and if figures were calculated honestly probably already in recession. Japan on the other hand has a much brighter future. After yesterday's Unicef report about things being a complete social failure here as well I would say that there is not much to cheer about.
13. The Capitalist said...
UK plc only surviving by the work of our forefathers creating an empire and spreading the language which is the lingua franca for global business, and happening to be in the right time zone for the markets...otherwise we are the under achievers bar none!
14. Andy said...
The main page article " Next stop Iran" is also interesting, after printing "Why we should go to war with Iraq" in 2005, i would have thought the economist would take a more dovish approach - but this times it's edging its bets - straight down the middle.
I think there's a lot of disgruntled people in the Bush administration looking at this very seriously (and they've got 2 years to do it). Leadership tends to be driven by a hawkish approach, given that the administration made a complete disaster out of Iraq they will be trying to turn in into some kind of advantage. One stark advantage to draw is that Iraq is right next door to Iran, with Iraq under the tenureship of the US (including US hardware/surveillance ops/knowledge of terrain and climate) this makes a great opportunity for Bush to go for Iran - its a military generals dream come true, however the US can't stay in Iraq for ever so the chance of an early war looks more likely.
This is speculation for sure, but so is oil price and its influence on inflation (economist predicting 50% chance in 2 years that's quite an substantial amount for someone who was left with egg on its face)