Skip to main content

Stagflation threat looms (over Bush and Blair)

Stagflation seems to be a hot topic lately. I guess everyone's looking around and seeing a return to the 1970s, or at least a lot of people are starting to draw parallels between that decade and the present.

An article in The Australian looks at the economic situation in the US and argues that a coming stagflation will spell trouble for President Bush and his ally, Tony Blair (thanks again for the sweater, mate). From, "Honeymoon's over for Bush and Blair as stagflation threat looms":

In the past three years the US has been enjoying an unusual combination of low inflation and rapid growth. This happy combination cannot continue much longer.

In the months ahead, either inflation will continue to accelerate or economic growth will have to slow abruptly, to the point where unemployment starts rising and businesses start going bankrupt.

US voters could soon get a taste of higher inflation and higher unemployment, bringing back memories of "stagflation", a simultaneous attack of stagnation and inflation, an ugly buzzword that has hardly been heard for 15 years.

Oh, interesting to note that the author is not exactly buying into the US' inflation reporting either. See this tidbit:

Inflation, far from being confined to a few rogue sectors such as energy and housing, is spreading rapidly through the US economy.

Indeed, the Fed's own calculations show that more than half the goods and services in the typical American's basket have risen by more than 3.5 per cent in the past 12 months. On the definition of prices used in Britain and Europe (which includes fuel but excludes housing), inflation in the US is now running at a truly alarming 4.8 per cent.

The Fed could, of course, keep changing its definition of core inflation. By removing from the consumption basket any item that is going up, a central bank can always prove that inflation remains under control.

So whaddya think?

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.

Moneyball: How the Red Sox Win Championships

Welcome, readers. To get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter.

The Boston Red Sox won their fourth World Series titleof the 21st century this week.

Having won their first Series in 86 years back in 2004, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it?

Quick background: in late 2002, team owner and hedge fund manager,John W. Henry(with his partners)bought the Boston Red Sox and its historic Fenway Park for a reported sum of $695 million.

Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship.

This brings us to one of my favorite scenes from the 2011 film, Moneyball, in which John W. Henry (played by Arliss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pitt) over to Boston with an excellent job off…