Are we entering an infinate period of stagflation/deflation!?

Slideshowbob

Assuming some logic to this hypothesis:

http://www.youtube.com/watch?v=lDNMjV6sumQ

have we started into a period of stagflation/deflation??!

ardmacha

Are we entering an infinate period of stagflation/deflation!?

No.

johnnyskeleton

Possibly.

It all depends on the levels of quantitative easing that happen in the EU.

The US are possibly headed towards a period of stagflation.

Biflation would be my best bet i.e. property prices continue to slide while other prices start to go back up. Even now we see that some areas have changed little or gone up despite headline deflation.

Slideshowbob

ardmacha wrote: »

No.

Ah grand that sorts that one out for me

Seriously though what's the basis for your positivity?

ardmacha

Seriously though what's the basis for your positivity?

I do not believe that either stagflation or deflation will last for infinity.

Anyhow, apart from anything else in this country stagflation would probably cure a lot of debt problems.

GSF

ardmacha wrote: »

I do not believe that either stagflation or deflation will last for infinity.

Anyhow, apart from anything else in this country stagflation would probably cure a lot of debt problems.

Surely stag flation where prices go up but incomes dont would add to debt problems particularly if interest rates go up and people cannot service those debts?

ei.sdraob

Slideshowbob wrote: »

Ah grand that sorts that one out for me

Seriously though what's the basis for your positivity?

Croke Park Agreement :pac:

noodler

Latest CPI figures show an annual increas in inflation for the first time since December 2008 (in that, in the year Sept 2009-Sept 2010 prices as measurd by the CPI increased by 0.5%).

However, mortgage interest rates were increased by nearly all banks TWICE this year and if mortgage interest repayments are removed then we are still negative on an annual basis.

Its the worst-case scenario in many ways. In a year or less when the ECB startes increasing its main rate then there could be further problems.

ei.sdraob

noodler wrote: »

Latest CPI figures show an annual increas in inflation for the first time since December 2008 (in that, in the year Sept 2009-Sept 2010 prices as measurd by the CPI increased by 0.5%).

However, mortgage interest rates were increased by nearly all banks TWICE this year and if mortgage interest repayments are removed then we are still negative on an annual basis.

Its the worst-case scenario in many ways. In a year or less when the ECB startes increasing its main rate then there could be further problems.

dig deeper into the figures for a clearer picture
inflation is mostly in areas like: education, healthcare, energy and transport
all run and largely influenced by the government and the public sector while the other sectors are still deflating

this has been the case more or less for last year

and no its not good since it shows that while the private sector is getting more competitive the other crowd are not

noodler

ei.sdraob wrote: »

dig deeper into the figures for a clearer picture
inflation is mostly in areas like: education, healthcare, energy and transport
all run and largely influenced by the government and the public sector while the other sectors are still deflating

this has been the case more or less for last year

and no its not good since it shows that while the private sector is getting more competitive the other crowd are not

Well different point altogether but yes.

I would still expect the €4bn (2011) and €3bn+ (2012) adjustments to have an effect on the prices the Government pays though.

ardmacha

inflation is mostly in areas like: education, healthcare, energy and transport
all run and largely influenced by the government and the public sector while the other sectors are still deflating

No doubt in response to calls for the government to reduce its deficit. Would you rather that they put it on income tax?

noodler

ardmacha wrote: »

No doubt in response to calls for the government to reduce its deficit. Would you rather that they put it on income tax?

?

Why should the Government be increasing the prices it pays in these sectors because it is cutting its deficit?

ei.sdraob

ardmacha wrote: »

No doubt in response to calls for the government to reduce its deficit. Would you rather that they put it on income tax?

how would that lead to inflation if anything the cuts in government spending should be leading to deflation, but we are not seeing any of that

you have things backwards today...

ardmacha

Why should the Government be increasing the prices it pays in these sectors because it is cutting its deficit?

It isn't a question of increasing the prices it pays, but the prices it charges.
There is a wide range of government charges, these are not prices as such, but contributions from users. If general expenditure is to be reduced, then these contributions have to be increased.

if anything the cuts in government spending should be leading to deflation, but we are not seeing any of that

Of course we are, there is underlying deflation as shown by the HICP. Pay attention.

ei.sdraob

ardmacha wrote: »

Of course we are, there is underlying deflation as shown by the HICP. Pay attention.

how about you pay attention, the detail is right there on CSO yet again


HICP includes both the private and public controlled segments, the private sector is deflating much faster while anything government controlled is not (See below) hence the negative HICP

Deflation is occurring in sectors not controlled by government, the private sector.
Everything under government control and /or payroll is not deflating if anything things like education, energy, transport keep going up month after month for the last year and longer.
Take energy for example, despite the cost of fuels falling globally the cost of electricity has not comedown here thanks to the semistates and price fixing "to encourage competition" (read subsidise green schemes) and of course lets not forget the ever increasing fuel taxes

its quite obvious that while the private sector is adjusting rapidly to a changed environment the public sector and government are being a large drag on the economy

ardmacha

government are being a large drag on the economy

Of course reducing the public deficit will be a drag on the economy. Tell us something that is not entirely obvious!

noodler

ardmacha wrote: »

Of course reducing the public deficit will be a drag on the economy. Tell us something that is not entirely obvious!

Okay, reducing Government spending should reduce prices in the sectors it dominates.

ardmacha

Okay, reducing Government spending should reduce prices in the sectors it dominates.

Reducing government spending will reduce prices in sectors it procures from e.g. road building. Increased government charges will increase prices in sectors where it charges people.

ei.sdraob

ardmacha wrote: »

Reducing government spending will reduce prices in sectors it procures from e.g. road building.

most of the cuts so far have been in capital spending, and this might be reflected in the construction sector which is imploding eitherway due to the bubble.

anyways we continue to see increases in healthcare and education... so much for "savage" cuts

the end users are being made to pay for things indirectly as illustrated in the figures and recent hospital closures

ardmacha wrote: »

. Increased government charges will increase prices in sectors where it charges people.

and sectors which it directly or indirectly controls, example of energy prices being manipulated and customers ripped off being provided earlier in thread

ei.sdraob

ardmacha wrote: »

Of course reducing the public deficit will be a drag on the economy. Tell us something that is not entirely obvious!

they are being a drag due to the costs (to the end users) of services provided/controlled by the state increasing :rolleyes:

ardmacha

they are being a drag due to the costs (to the end users) of services provided/controlled by the state increasing

No. The costs of the services have been reduced. The charges for the services will increase in order to reduce the proportion of the cost funded from general taxation. It is not rocket science.

Head The Wall

ESB Networks should ensure its distribution costs for domestic consumers will drop by 5.3 per cent next year, by 102 0 per cent for SMEs and by 45 per cent for large energy users, according to the CER.

But this may not bring relief for households and businesses facing an average 5 per cent increase in electricity bills, due to a public service obligation levy sanctioned by the regulator to apply from October.

This is because the distribution costs incurred by ESB Networks for operating the electricity wires and substations that connect homes and businesses to the national grid, are only one of the components that make up the utility bill. Distribution accounts for about 30 per cent of the total costs, while generation accounts for 60 per cent, half of which is fuel.

Furthermore, the reduction will be partially offset by the regulator’s plans to increase the element of the bill covering transmission costs, in order to fund investment in the grid that is needed to facilitate renewables.

Jesus, another increase on the way, they give and then take away again. Who do they think they are trying to fool?

Energy regulator orders ESB to reduce payroll