Brian Holmes on Tue, 15 Jul 2008 15:58:13 +0200 (CEST)

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Re: <nettime> Paulson's face

Stefan Heidenreich wrote:

> don't bet on inflation too early. Stagnation & Inflation
> (stag-flation, as we had it in the 70s) might be in the making.

Well, first I do agree that all one's predictions tend to be wrong (and 
why shouldn't they when the "experts" themselves are so clueless?), so I 
am willing to hear anyone's ideas! Because the subject is simply 
fascinating, due to the way it animates so many millions of people 
around the world.

As to stagflation, my view is that we're already in it. Most economies 
(except the new powerhouses like China) are going into recession if they 
are not already there, and I read somewhere recently that double-digit 
inflation is already a reality in a dozen or so developing countries, 
which must be painful for them....

> But with the consumer (US & Europe) going belly up, there is not too
> much room for a price spiral, esp. if you look at the fundamental data
> in the oil market (as demand-supply).

Ahem, but so far, historic price increases in the West haven't dented 
the upward curve of oil, which seems to be obeying both the classic 
war-uncertainty scenario and also the whole new demand from the 
above-mentioned powerhouses. As for the wages and incomes, they are 
going up in the countries where things are made, not, for once, in the 
countries where they are consumed. The world-economy perspective, so 
difficult to attain, is now the only one that matters.

> Overal money growth M1,M2 and M3 slowed down, despite all the injected
> Federal cash, as banks deleverage & cut credit lines in order to
> survive.

Mmm, I like the way you quote those numbers and since I am such a rank 
amateur in these matters, can I ask where you get them?

> Next to come is a big bank being bad, the credit card mess & according
> to Soros maybe the CDS debacle. Then, as the discussion goes, we might
> see all the hot money, that enters China right now, being on the run
> again.

It's a wild ride, I most heartily agree!!!

all the best to you and yours,


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