Secular Stagnation Part 1 – Paul Krugman’s Bicycling Problem

“What’s really happening fast is the demographic transition, with Europe very quickly turning Japanese.” Paul Krugman – For Bonds, This Time is Different Ever since Larry Summers gave his game-changing speech at last autumn’s IMF research conference the back-and-forth flow of arguments about secular stagnation has been almost non-stop (indeed Larry himself now has a […]

ECB Policy Outlook: ‘Firmly Anchored’ Inflation Expectations Mean No Postponement of Purchases?

This article from former European Central Bank board member Jürgen Stark (Doomsayers risk a self-fulfilling prophecy) has been occasioning a lot of commentary over the last week or so. According to Stark, the current deflation debate “lacks three important points: an in-depth analysis of the forces driving inflation down; a clear distinction between “benign disinflation” […]

The Growing Mess Which Will Be Left Behind By The Abenomics Experiment

According to wikipedia, “overdetermination is a phenomenon whereby a single observed effect is determined by multiple causes at once, any one of which alone might be enough to account for (“determine”) the effect.That is, there are more causes present than are necessary to generate the effect”.  In this strictly technical sense Japan’s deflation problem is […]

A Simple Chart Illustrating Why Japan Style Deflation Is Now More Or Less Inevitable In Spain

Here’s one simple chart which illustrates why I think Japan style deflation is now more or less inevitable in Spain. Curiously it comes from the Ministry of Employment and illustrates the relation between the movement in average wages caused by actual movements in the real wage and those caused by what is known as the […]

Could Mario Draghi Implementing QE at the ECB Possibly Help Matteo Renzi Raise the Italian Deficit?

What a convoluted title! Still, the lack of formal elegance might just be compensated for by its communicative efficacy. The aim of the above header is to link two names in people’s minds, both of them Italian: Mario Draghi and Matteo Renzi. Naturally the idea is not original, the FT’s Peter Spiegel  recently published an […]

For the Three Amigos, It’s Time to Face Their El Guapo

President Obama  is on his way to join Canadian Prime Minister Stephen Harper and Mexican President Enrique Pena Neito in the bustling city of Toluca, Mexico, for the 2014 North America Leaders Summit. The meeting could not come soon enough for the “Three Amigos.” In the 1986 movie, “¡Three Amigos!,” Steve Martin’s character explains how […]