Thursday, Nov 12, 2009

Here it comes......

City Wire: Uk set for inflation

Self explanatory

Posted by chrisch @ 08:40 AM (1330 views)
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1. stillthinking said...

Is there a way to read this without registering, like for FT articles?

Thursday, November 12, 2009 09:40AM Report Comment

2. 51ck-6-51x said...

The UK set for big inflation shock, warns Schroders bond manager
By Angus Foote | 13:02:39 | 11 November 2009

Inflation will arrive much more quickly – and reach a much higher rate – than most people currently realise, says bond fund manager Nick Gartside.

Gartside is Schroders’ head of global fixed income and manager of the Schroder ISF Global Bond and ISF Strategic Bond funds, which he took over late last year. He believes politicians have set out to produce inflationary conditions as a way of reducing government debt.

‘It’s my view that policymakers and governments are deliberately creating inflation,’ he said.

‘Governments are running huge deficits. If you have 4% inflation, that inflates away a lot of that debt.’

Aiming for a manageable inflation rate as a means of reducing debt is, Gartside believes, misguided. ‘You never get that dream scenario of a little bit of inflation. Inflation’s like pregnancy: you’re never a little bit pregnant. What policymakers have done is deliberately create the conditions for inflation.’

The stance taken by central banks has not helped – with one exception. ‘The ECB have handled this by far the best. I think the ECB is now exiting.’

There has been much debate about whether inflation or deflation is the more likely scenario. But Gartside points out: ‘no-one knows how you get out of deflation.’ Japan, in fact, has still not managed it after struggling for years to do so.

‘We’ll get inflation much higher and much more quickly than people think,’ he warned. That means inflation will become a reality during 2010, he predicted.

The UK will be hit harder than most European economies, as a weak currency will ‘suck inflation in,’ Gartside said.

Against this background he expects a shortage of inflation-linked bonds and along with emerging market debt and high yield credits, inflation protection is one of his three key themes for the future.

Over the past three years the ISF Global Bond fund has returned 24.8% in dollar terms, while the average fund in the bond global sector has returned 20.2%.

Thursday, November 12, 2009 09:49AM Report Comment

3. stillthinking said...

Thanks. "Inflation is like pregnancy"...

Thursday, November 12, 2009 10:45AM Report Comment

4. smugdog said...

Cash in the Bank will not be a good place to be. Pounds becoming Pennies

Thursday, November 12, 2009 12:41PM Report Comment

5. mountain goat said...

Zero Hedge take on this.

...To be sure, opening the stimulus and liquidity spigot is sure to boost any economy as a one-time event. The bigger questions are i) how long can artificial stimuli be applied; ii) what happens to the new baseline level once the temporary "sugar high" is removed; iii) how does a Central Bank have any confidence that it can time the success of output gap reduction/stimulus and liquidity measure tightening, contrary to all empirical evidence. There has not been one case study in the history of monetary tightening that the Federal Reserve has not goofed without steamrolling into inflation territory. And with trillions in dollars waiting on the sidelines to be unleashed into the monetary base, and one can see why hyperinflationists are very concerned. Deflationists will, of course, counter that all such worries are offset by the tens of trillions in consumer wealth loss, and the inverted capitalization pyramid. The problem for the UK is that with its much smaller economy (compared to the US) its margin for error is even smaller than that of Ben Bernanke.

But that threat has not stopped an unjustifiably optimistic Mervyn King to mouthing off on the prospects of his recovery efforts (the cable pounding that has results on this low volume day is further proof of how realistic the UK economic "miracle" is perceived to be)...

Thursday, November 12, 2009 12:55PM Report Comment

6. mountain goat said...

From another comment on Zero Hedge I have paraphrased:

"What do you call lovers who practice the pull-out method of birth control?


Let's raise a glass to Merv who hopes to pull out of stimulation before it's too late.

Thursday, November 12, 2009 01:05PM Report Comment

7. mountain goat said...

And we don''t become a little bit pregnant

Thursday, November 12, 2009 01:09PM Report Comment

8. This comment has been removed as it was found to be in breach of our Blog Policies.


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