Monday, 21-04-08 05:01

When you talk about the coming Depression, what type of depression? Do you mean the deflation kind of depression? If you mean that, I think you are wrong. Most financial commentators focuses on Ben Bernanke and the Fed. The Fed alone does not have the power to fight deflation. They will enlist the help of the US government. When you put the two together, the end result is hyperinflation.

Still not convinced? Take a read at http://cij.inspiriting.com/?p=337 That article explains it far better.

Tuesday, 25-03-08 23:21

The only flaw in Wolfgang's argument is this: The politicians of the United States will never accept a depression. Indeed, they will not even accept a corrective recession. They have and will always opt for inflation. To fend off recession, Congress will fight the fiscal fight (pork-barrelling and grandstanding comes natural to them) and the Fed will use it's helicopter tactic of printing more money to drop on the problem du jour. I wish we could trade the whole lot of them for the fiscal conservatism of Germany's elected officials and Bundesbank--but perhaps in a democracy you get what you deserve.

My advice: Bet on inflation in the US. Always inflation. I am using an inclusive definition of assets and true consumer prices, and am paying no attention to the falsifications printed as 'headline inflation'.

The US citizen is frequently demeaned as an improvident non-saver, but what we are seeing there is simply learning behavior. The lesson has been taught, and the lesson has been learned, that our elected officials and Fed governors (since the legendary Paul Volcker) have no qualms about turning our currency into trash. Best thing to do is get leveraged. I am a disgruntled bond owner, myself. Can't get over the saving habit.

Tuesday, 25-03-08 17:16

I'm french : in france we have the 35 h/week but we have the best productivity in the world so don't say 35 h is a problem !
Thanks

Wednesday, 19-03-08 15:37

It was HBOS (Halifax Bank Of Scotland) that was rumoured yesterday to be in trouble. The other big bank in Scotland is RBS (Royal Bank of Scotland). As a result of Herr M.'s little error (ein Tippfehler?), the RBS may tomorrow be rumoured to be in trouble too (and wondering why).... Kleiner Fehler, grosse Wirkung....

As to a depression in the USA, Americans may have to brace themselves and adjust to a lower standard of living for years to come, since it will be extremely difficult to sell US debt in Europe and in other parts of the world. But banks will move on to fresh pastures - in the Orient where growth is unstoppable. Deutsche Bank, for example, is greatly increasing its already huge amount of office space in Singapore.

Interestingly, one hears/reads every day in the German-language media about German firms rapidly increasing their presence in the BRIC regions. But they are also expanding manufacturing operations in the USA to counteract the effects of the weak dollar on German exports. This means , imo, that German - and Swiss, like the announcement yesterday from Ernst Tanner, CEO at Lindt & Sprüngli - companies believe the USD and the US economy will remain weak for a long time to come.

Saturday, 15-03-08 14:12

Dear Mr Münchau,

I have found this interesting comparison (via Barry Ritzholtz: http://bigpicture.typepad.com/comments/2008/03/cpi-2008-vs-198.html) between US CPI in 1980 and 2008:

http://www.marketoracle.co.uk/Article4018.html

This jumped to my attention: "of the 9.5 percentage point difference between the 13.9 percent rate of inflation in 1980 and January's 4.4 percent rate, shelter accounts for a full 5.1 percentage points" (shelter was calculated through real home ownership costs, not through rents!).

By the way, your commentaries on Spain have been too catastrophic-prone lately (as you may know, Rajoy used them in the last TV debate). Isn't there some schadenfreude going on?

Best regards,