Ever read a headline and have the urge to cackle uncontrollably? Well, I’ve collected a few that I’ve seen recently, summarized below (you just can’t make this stuff up):
It isn’t deflation until we say so
The subject of a Bloomberg article from yesterday, the Bank of Thailand just upped the ante on ivory towers stating that it’s just negative inflation, not deflation.
The MPC viewed that negative inflation this time isn’t a signal of deflation,” Assistant Governor Mathee Supapongse said on Tuesday, because it’s temporary and caused by supply-side issues rather than from declining demand. The central bank sees “negative headline inflation” until the second quarter, and price gains in the first half of the year will be “mildly negative”, he said.
And here is the kicker:
The central bank, which began using headline inflation to guide monetary policy from January, expects it to turn positive from the third quarter, while the rate for the full year may be below an earlier forecast of 1.2%, he said. In an open letter to the finance minister on Feb. 2, the central bank said the negative rate of headline inflation at present “neither signals a deflationary environment nor constitutes risks to financial instability” because the decline in price levels isn’t broad-based, and inflation expectations remain close to the target, while lower oil prices will boost domestic demand.
Currency Devaluations are an Undeclared War
Says David Woo, head of global rates and currencies research at Bank of America Merrill Lynch in New York in a Bloomberg article today.
“There is a growing consensus in the market that an unspoken currency war has broken out,” he said in a report to clients this week. “The reason why this is a war is that it is ultimately a zero-sum game — someone gains only because someone else will lose.”
And just how bad is it? Well…
That leaves Woo, a former International Monetary Fund economist, declaring the war is one of “stealth” and warning the fallout from it is already roiling financial markets in a way undetected by most.
It is these fluctuations [currency volatility] that are threatening to undermine the global economy more than some realize, Woo said.
First, they will make it costlier for companies to take out insurance against currency flows, eating into profit margins of exporters. More volatility may also force companies to focus more on their home markets, further reducing already lackluster international trade. Making foreign direct investments will also be less appealing, forcing up the cost of capital for those countries with current-account deficits.
Woo’s bottom line: “A weak currency might provide a short-term boost to the countries engaging in currency devaluation,” he said. “However, if everyone is playing the same game, all we will end up with is more and higher FX volatility. This in turn will likely exact a toll on global trade and capital flows.”
Zero-sum, huh? There just isn’t any upside is there? I wonder if this is the kind of stuff he tells his boss in order to explain poor performance because it is so fantastic it reminds me a little of the Wizard of Oz… “Lions, and tigers and bears! Oh my!” Dude, if you can’t stand the heat, get out of the kitchen rather than advocate policies that cause humanitarian calamities. (And he must get paid an awful lot if he gets the honor of having a headline on Bloomberg, no matter how ridiculous the content).
Then there are few that are more subtly ridiculous. Herbert Hoover’s brother… err, I mean Jeb Bush, says that the US has the capability to experience twice annual growth of recent years, and should be growing that fast.
My first thought was, “Oh, so maybe he isn’t Herbert Hoover’s brother because to get that kind of growth monetary policy has to…” Then, I went to CSPAN and watched the video. I got as far as his dissing of “Fed stimulus” as some kind of stop-gap and experienced a bout of confirmation bias. He scared the crap out of me with one not-even-full-sentence. If not such a serious matter it would be absolutely ridiculous.
Come to think of it, Jeb Bush kind of looks like Herbert Hoover too… No thanks.
(Sorry no link on Jeb Bush story. It isn’t popping up on the search)
[Update 2/8/15: Found a link to a similar story about Jeb Bush on Market Watch. And here is a link to the actual speech given by J. Bush that is provided by CSPAN in which he commits the act of double-speak, calling for more GDP while dissing “Fed stimulus,” saying that structural reform not Fed stimulus is what will get us there]