Monday, Jan 25, 2010
For the deflationists at HPC
Market Oracle: Obama Hits the Banks that Hit Stocks and Commodities, UK Inflation Soars
''Deflationist in the UK have suddenly fallen silent for now though I can see the cogs turning in their heads looking for possible explanations for being WRONG but still being right at the same time! Which means that they DO NOT UNDERSTAND what Inflation or Deflation is i.e. the direction of general prices in an economy which means the Consumer Price Index (CPI). ''
Posted by hpwatcher @ 09:46 AM (941 views) Add Comment
13 Comments
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1. Crunchy said...
HYPERINFLATION FOOD SHORTAGES.
Some of us don't change with the wind. I wonder why.
2. fallingbuzzard said...
oh dear, mistaking effect for cause. lets see what the data say in three months time.
3. hpwatcher said...
oh dear, mistaking effect for cause. lets see what the data say in three months time.
More inflation probably, but let's wait and see.
4. mountain goat said...
Disappointing, he has little to say for someone who SHOUTS so loud that he is RIGHT and others are WRONG.
Most so-called deflationists don't have this view as fixed for eternity. We had a first bout of deflation, the trend turned again for a while in CPI and house prices (but not debt deflation which is still accelerating) and a larger bout probably about to happen. Eventually in a few years time (2015?) enough bad debt will have been cleaned out to go back to sustained growth.
As has been discussed here over the past few days the UK M4 money supply contracted strongly in December. This should give pause for thought, as to where it comes from. Was it just a statistical outlier or perhaps the BoE eased up on QE when it saw the CPI trend turning up in November?
5. fallingbuzzard said...
Month on month figures from now on will be very interesting. I wouldn't worry too much about year on year inflation because that's happened, but it will be possible to harp on about high (2%-5%) inflation until the end of this year even with trend in the opposite direction.
6. hpwatcher said...
As has been discussed here over the past few days the UK M4 money supply contracted strongly in December.
So we have got an apparent decrease in the M4 money supply, but an increase in prices......Damn those statistics!
7. techieman said...
"Which means that they DO NOT UNDERSTAND what Inflation or Deflation is i.e. the direction of general prices in an economy which means the Consumer Price Index (CPI). ''
Didnt think it was worth reading the article after that, read it and was proved right or should that be "RIGHT"?
Apologies to Doggett over the weekend - misunderstood your point. In fact since copying and pasting seems to be so en vogue, I'll just quote yours if i may
"@ Techieman
You misunderstood what I intended to say (not surprisingly, since I didn't express myself very clearly).
The intention was merely to say that I thought the use of 'technically' was unnecessary, since inflation IS an increase in the money supply. However, on reflection I suppose that we're now more or less obliged to use it, so widespread is the assumption that 'inflation' is synonymous with 'rising prices'."
8. hpwatcher said...
Didnt think it was worth reading the article after that, read it and was proved right or should that be "RIGHT"?
I thought you didn't like it when someone posts an opinion and failing to back up with evidence?
9. techieman said...
Only when they consistently do that, and have not provided any evidence previously :-). Nice try!
Anyway Doggett's explanation i have quoted as to what inflation really is speaks for itself.
10. techieman said...
... and in any case most of the article concerns market moves. I disagree with him on most which is odd because i normally think he's pretty good. As to why and how i disagree Ive been posting that recently- in real time.
Going forward could i be wrong? .... of course. BUT if i am my wealth will probably be adversely affected. I believe that's called putting your money where your mouth is.
11. techieman said...
see here : http://theinflationist.com/stocks/nadeem-walayat-marketoracle-bullish-forecast, where he is pretty good. But lets be fair Roubini isnt a trader is he, no hes an economics lecturer, so its normally very easy for someone to prove them wrong because they dont realise the game is stacked against them, and its not just about being right or wrong its ALL ABOUT TIMING.
Its clearly a mater of record (on here) that i am a bear who expected a much longer and bigger bounce than most, in both equity and property markets.
Thats not because i am an economics guru, because if i were then i probably wouldnt have thought that there would be a bounce - see Roubini's calls on that chart on the link. Its just because i am used to how markets behave (or more accurately mis-behave). I can tell you this much, that the equity markets will (and maybe have already) start to fall before we see a proper turn around in economic numbers.
You on the other hand HPW never recognise you could be wrong. I always plan for being wrong, but always expect to be right. And if i am wrong? Well i am pretty nimble and have no pride of position and so I will change my position quite quickly. Who am i to go against the underlying market moves? No-one! Whereas im afraid your ego stops you from unbiased analysis.
Yes deflationary arguments are difficult because they never happen, so the odds are on your side for continued inflation. In reality deflation is a long shot which i am betting on. The herd follows the conventional thinking like sheep.... and what happens to sheep???? They get slaughtered.
Go ahead bite the sound out of that one HPW :-).
12. techieman said...
and finally... http://www.24hgold.com/english/news-gold-silver-ftse-100-index-stock-market-forecast-2009.aspx?contributor=Nadeem+Walayat&article=1792696670G10020&redirect=False
the forecast was between 4091 and 5126 for year end 2009. A thousand points spread and still 500 points shy!! And he has a go at Dr Doom!!
To be fair you cant really do that (its very difficult to call an exact number 12 months in advance (infact its guesswork), the best you can probably do (at a stretch) is say its going to be an up year or a down year) - and you could say he got the basic shape right, but why bother at all? And then if you are going to attempt it at least admit you are wrong. In my experience, the only way to find significant tops and bottoms is by allowing patterns to develop in conjunction with overbought / oversold indicators. You cant do that if there arent any.,.. and you cant force it because it happens to be the 1st January!!! So if someone says will the market go up or down this year i say F*ck knows.
But i called for a top and recorded it here and explained why about a week ago, so now yes i can say i think it will go down this year, and that that will probably correlate with falls in HPs. Of course thats not certain and if it does take out the 5600 ftse level, then i will admit i am wrong and look for the next sensible place.
Same with HPs - saying they will go up this year or down this year ....Why because its a calendar period? You can say that once you see "something" that gives you confidence that the market has turned, but why would that correspond to an arbitrary date of say 1st January,,, ridiculous.
13. braindeed said...
8. hpwatcher said...
I thought you didn't like it when someone posts an opinion and failing to back up with evidence?
.....just for a second, it appeared that the recent mocking, had caused you to reflect on your own lack of empiristic dialogue.....of course it was Tetchie's acknowledgement of the strength of another’s argument, that you seized upon, out of context.
You'd do well to stretch your mental agility - try finishing that three piece jigsaw you got for Christmas.