Monday, January 5, 2009

D.. d.. d.. deflation – talk of deflation is not going away

Fall in oil price may trigger UK deflation

"It is very possible that a further fall in the international oil price will spark deflation that will further damage a global economy that is already stumbling into 2009,"

Posted by v stor @ 09:30 AM (708 views)
Please complete the required fields.



7 thoughts on “D.. d.. d.. deflation – talk of deflation is not going away

  • “if oil stabilises around $40 a barrel”

    If.

    The post-speculative correction now looks played out. Output has been trimmed, and high cost sources of oil such as that from tar sands will be going into mothballs.

    Global demand may have reduced a little, but not by a large percentage. As sources of cheap oil continue to shrink, a rebound – perhaps to around $75 – looks likely.

    Reply
    Please complete the required fields.



  • talk of deflation is scaremongering specifically intended to allow governments to print more money and steal from savers. Wealth transfer. There is no danger of deflation. There is no need to print more money.

    Reply
    Please complete the required fields.



  • I agree with the comments at #1 and #2

    Reply
    Please complete the required fields.



  • i agree with 1 but not with 2. Oil looks set for a rebound imo. A long story but we shall see.

    Reply
    Please complete the required fields.



  • techieman – I agree with you – but don’t see how that makes my comment at #2 impossible. In fact, I don’t understand how an increase in the price of oil, as you suggest, would lead to deflation?????

    How many years has it been since the uk experienced deflation? Well surely for the whole of that time we have experienced inflation. Even at low rates 2 or 3%, over a number of years this all adds up. How much did a loaf of bread cost 100 years ago? Well surely the difference in price between then and now is all inflation. And surely deflation would only be taking us back to where we were. In fact – how can deflation be a problem? It’s not – only because the long term inflation is caused by printing money – which is exactly why inflation is set to rocket. Because the idiot brown is turning on the printing presses.

    Reply
    Please complete the required fields.



  • On the contrary, I think the limited trading over Christmas and New Year has set up another in a long sequence of dead-cat bounces. There will be a short rally, then the downward trend will continue. It will keep going until all the bad trades are wiped out, and considering there are nine years’ worth of bad trades, that’s a heck of a lot of them.

    We’re looking for houses to drop to pre-1999 prices, why should we not expect commodities markets to do the same? My (rhetorical) bet’s on $10 oil some time this year.

    Reply
    Please complete the required fields.



  • Deflation is exactly what is occuring.

    Deflation in house prices
    Deflation in car prices
    Deflation in food prices as oil has gone back down from $150 (irrespective of a normalisation back up to $75 – it has been at that level or more for 2 years, so that would not represent an increase to the consumer, as the decrease to $40 has not been priced in to products yet).
    Deflation in food and all product prices as shops try to win custom as spending goes down
    Deflation in wages. Been sacked yet? Had to take a pay freeze or pay cut? I know 9 people that have been made redundant and 5 that have had to take pay cuts. Think they’ll pay extra for anything this year?

    Money printing cannot combat the volume of deflation in the short and even medium term. Money printing and also imported inflation due to currency devaluation will have to outweigh the deflation – this will take some time. Inflation may result, perhaps severely, but give it a year or two until it actually materialises.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>