Page 4 of
5 CREDIT BUBBLE
BULLETIN Reflation
contemplation By Doug
Noland
January 30 - Bloomberg (William Bi):
"Vegetables prices in southern China have surged
since the worst snowstorms in decades disrupted
water and electricity and shut highways, the
National Development and Reform Commission said.
Prices of staples including cabbages, radishes and
eggplants have gained more than 50% since
mid-January, when the bad weather started, with
some prices doubling ..."
Japan
Watch February 1 - Financial Times (Lindsay
Whipp and David Pilling): "Japan's wages dropped
at their fastest pace in 3½ years in December,
fuelling concern that higher corporate profits are not
being felt in workers’
pockets in spite of six years of growth. Wages
fell 1.9% as small and medium-size companies were
unable to pay higher winter bonuses because of the
increased cost of raw materials and oil."
Asian Bubble Watch February 1 -
Bloomberg (Shamim Adam): "Inflation is
accelerating in Asia as South Korea, Indonesia and
Thailand join regional counterparts in reporting
rising prices that are making it harder for their
central banks to follow the US in cutting interest
rates. Consumer price gains in Sri Lanka exceeded
20% in January, while those in Australia reached
levels not seen in 16 years. Inflation is
accelerating even as China, India and Australia
today reported a slowdown in manufacturing in
January."
February 1 - Bloomberg (Seyoon
Kim): "South Korea's inflation accelerated in
January at the fastest pace in more than three
years as costs of industrial goods and fuel rose
following a surge in crude oil prices. The
consumer price index rose 3.9% from a year earlier
..."
January 28 - Bloomberg (Yu-huay Sun):
"Taipei fruit prices jumped 70% from a year
earlier because typhoons reduced supplies by about
a fifth, the China Times reported ..."
January 28 - Bloomberg (Glenys Sim):
"Singapore's overall concern in 2008 is inflation
on the back of high oil prices and rising food
costs, the Business Times reported, citing Tony
Tan, deputy chairman of Government of Singapore
Investment Corp."
India
Watch February 1 - Bloomberg (Kartik
Goyal): "India's exports rose to $12.3 billion in
December from a year earlier as companies shipped
more gems, machinery and fuel products to overseas
markets. Shipments increased 16% ... Imports
advanced 18.1%."
February 1 - Bloomberg
(Anil Varma): "Indian banks' loans rose 203.3
billion rupees ($5.2 billion) in the two weeks
ended Jan. 18 ... Credit climbed 22.5% in the 12
months ..."
January 31 - Bloomberg (Kartik
Goyal): "India's economy expanded 9.6% last fiscal
year, the fastest pace since 1989, as rising
incomes spurred demand for cars, mobile phones and
motor-bikes."
Unbalanced Global Economy
Watch January 31 - Financial Times (Ralph
Atkins): "Eurozone inflation has soared to a
14-year high of 3.2%, adding to the European
Central Bank's case a hardline stance on future
interest rate moves. The unexpected rise from 3.1%
in December suggests that the 'hump' in inflation
caused by higher energy and food prices will prove
larger and longer-lasting than anticipated by the
ECB. January’s rate was the highest since the
Frankfurt-institution took responsibility for
monetary policy in the region in 1999."
January 28 - Bloomberg (Gabi Thesing):
"Money-supply growth in the euro region cooled in
December more than economists forecast, led by a
slowdown in overnight deposits. M3 money supply
... rose 11.5% from a year earlier, after gaining
12.3% in November ..."
January 30 -
Bloomberg (Peter Woodifield): "Tenant demand for
UK offices, shops and warehouses is falling at the
fastest rate in five years, led by a decline in
central London, according to the Royal Institution
of Chartered Surveyors."
February 1 -
Bloomberg (Fergal O’Brien): "Irish house prices
fell for a 10th month in December, capping the
property sector's worst performance in at least a
decade. Prices fell 1.5% from November ... For the
full year, prices fell 7.3% ..."
January
30 - Bloomberg (Christian Vits): "German retail
sales fell for a fourth month in January as
surging inflation eroded spending power, according
to the Bloomberg purchasing managers' index ...
'Pressure on disposable incomes from rising food,
fuel and utility bills continued to exert a
downward influence on consumer expenditure,' NTC
said ... German households curbed spending after
inflation accelerated last year to the fastest
pace since records began in 1996, driven by a
higher sales tax and rising energy prices."
January 29 - Bloomberg (Thomas Mulier):
"Swiss watch exports increased 16% last year, the
fastest pace in 18 years, as a surging Chinese
stock market fueled consumption in Hong Kong."
January 28 - Bloomberg (Jonas Bergman):
"Swedish household credit growth slowed in
December from a five-month high as higher
borrowing costs and slipping real estate prices
crimped demand. Total household lending grew an
annual 10.8% in December, down from 11.9% in
November ..."
January 29 - Bloomberg (Alex
Nicholson): "The cost of goods leaving Russian
factories and mines rose at the fastest annual
pace in almost three years in December as global
energy and metals prices soared. Producer prices
in the world's biggest energy exporter increased
25.1%, up from 22.2% in November ..." January
28 - Bloomberg (Massoud A. Derhally): "Jordan's
inflation rate will probably jump to the highest
in 18 years in 2008 as the government ends oil
subsidies and increases expenditure, Finance
Minister Hamed al- Kasasbeh said. Inflation will
accelerate to between 8% and 9% from 5.4% last
year ..."
January 30 - Bloomberg (Nasreen
Seria): "South African inflation accelerated to an
annual 8.6% in December, exceeding forecasts and
staying above the central bank's target range for
a ninth consecutive month as food and gasoline
costs rose."
Central Banker
Watch January 31 - Bloomberg (Svenja
O'Donnell): "Central banks across the world face a
'minor replay' of the stagflation of the 1970s as
inflation picks up and economic growth slows,
former Bank of England policy maker Charles
Goodhart said. 'All the world's main central banks
now face a more difficult period,' Goodhart ...
'We're going into a sort of a minor replay of the
stagflation we had in the 1970s. Growth has been
declining, productivity has been falling
awkwardly, and there have been supply shocks on
the inflationary side'."
Bursting
Bubble Economy Watch January 30 - Bloomberg
(Bob Ivry): "US spending on housing fell in the
fourth quarter by the most in 26 years as the
housing slump started to curtail consumer
spending. Residential investment, the money spent
on construction, renovation and broker fees
associated with sales, dropped 24% in the period
..."
February 1 - New York Times (David
Barboza): "China's latest export is inflation.
After falling for years, prices of Chinese goods
sold in the United States have risen for the last
eight consecutive months. Soaring energy and raw
material costs, a falling dollar and new business
regulations here are forcing Chinese factories to
increase the prices of their exports, according to
analysts and Western companies doing business here
... Because of new cost pressures here, American
consumers could see prices increase by as much as
10% this year on specific products - including
toys, clothing, footwear, and other consumer goods
- just as the United States faces a possible
recession. In the longer term, higher costs in
China could spell the end of an era of ultra-cheap
goods, as well as the beginning of China's rise
from the lowest rungs of global manufacturing."
January 29 - Bloomberg (Cynthia Cotts):
"US law firm growth will drop by half in 2008
after six years of double-digit growth, according
to a report by a legal consulting firm that cited
a 'perfect storm' triggered in part by the
subprime mortgage crisis. The report yesterday by
Hildebrandt International Inc. and the Law Firm
Group of Citigroup Private Bank predicted industry
revenue growth of 6 to 8% and net income growth of
3 to 5%. Law firms reported revenue growth of more
than 13% in the first half of 2007 and compound
annual growth of about 11 percent between 2001 and
2006 ... The predicted decline is the result of a
'precipitous drop off in structured finance work
triggered by the subprime mortgage crisis, a
decline in M&A and transactional work ... and
a continuing softening of the litigation market
...'."
January 26 - Financial Times
(Daniel Pimlott): "Hard times in the US are
benefiting pawnbrokers as beleaguered consumers
pledge jewels, electronics and other goods in
return for loans with interest rates running as
high as 300% a year. Dave Adelman, president of
the National Pawnbrokers Association, said the
number of loans at US pawn shops had risen 15-20
per cent since October ... Pawnbrokers offer loans
in return for personal items. Customers can buy
back their property for the value of the loan plus
a fee ... On Manhattan's 47th Street, the New York
block through which about 90% of US diamonds are
sourced, some merchants report a sharp uptick in
the amount of jewellery being brought in for sale.
'It's real sad - they don't want to sell,' said
Ruben, a 52-year-old street hawker ... 'They might
have paid $150,000 for a necklace but they will
get back $25,000 or $30,000 at most. But it's
either that or lose their house'."
Latin America Watch January 31 -
Dow Jones: "Bank loans to Mexico’s private sector
grew 24.1% last year..., capping a fourth-straight
year of double-digit loan growth, the Bank of
Mexico said ... After lagging consumer and
mortgage lending for years, commercial lending to
businesses picked up speed in 2007. Direct
performing commercial loans rose 30.5%
year-on-year ... Mortgage loans grew 19.3% ..."
January 29 - Bloomberg (Telma Marotto):
"Brazilian bank lending expanded at its fastest
pace in 12 years in December as record
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