Hugh Hendry vs Liam Halligan

Im 100% with Halligan.
Is it just me or does Hugh Hendry come across as a complete a$$hole ?

I’m with Hendry on this. Halligan is a typical product of the professional econ universe. Has not quite worked out yet that this is all about stopping irreparable damage to the system rather than trying to fix it. We can kill the zombies later when the system has stabilized but until then we throw everything at the problem and pray that enough of them stick to get us through the crisis.

Those who think that the threat of serious inflation is the problem really dont understand what is going on.

I think Halligan is referring to Britain when he warns of serious inflation ahead. There is virtually no prospect of serious inflation in Ireland or many other countries in the next few years (barring collapse of Euro). But, in Britain its different. They’ve devalued the Pound by 35pc versus the Euro since mid-2007. I think that is very likely to lead to serious inflation there (apart alltogether from all the other things they’ve done). At the depth of the recession, inflation (excluding mortgages) is still 3.0% in Britain (0.1% here and 1.2% in Eurozone). But, that’s after their cut in VAT. If it wasn’t for that, it would be 4.0%. They’ve said they’ll restore the VAT cut on 1st January 2010. Plus, oil prices and cother commodities should be bouncing back a bit by then (if not to 2007 levels). Plus, the effects of the 35pc devaluation will be coming through. French wine, German cars, Italian clothes, holidays in Europe, etc etc, all these will have to rise in price in Britain to compensate for the 35pc devaluation of the Pound. I think 8% to 10% inflation in Britain in Spring 2010 is quite possible.

Thanks AoB.
You have answered my critical question.
Time to set up some pricewatch trends on second hand cars I am interested in the UK and be over there as the inflation factor kicks in.

best vid i’ve seen yet on the hyperinflation/ deflation debate.

thanks for posting

My previous post seems to be confirmed by today’s inflation figures in Britain. Against all predictions, the inflation rate (excluding mortgages) rose to 3.2% in February from 3.0% in January. Nearly everyone forecast it would fall to 2.6%. I’m sure Halligan will be commenting on this next Sunday. It would be over 4%, if it weren’t for the artificial reduction of about 1% resulting from the VAT cut, which has to be restored next January. If they have an underlying 4% plus inflation rate in the middle of a recession, when oil and commodity prices are rock bottom, what’s it going to be next year when hopefully the recession will be lifting, and probably oil and other commodity prices will be rising (even if not to early 2008 levels)?

Looks like the sterling devaluation is kicking in. Price rises mostly from imported goods (food mainly).

Edit - Mervyn King has also broken ranks a little and said no more stimulus:

guardian.co.uk/business/2009 … or-banking

FT Alphaville - Deflation Avoided, phew