Euro crisis faces another stage?

Graham_Devon

HAMISH_MCTAVISH wrote: »

People wishing for deflation are wishing for increased unemployment and lower wages.

Who's "Wishing for deflation"?

No one. No one at all.

Though if it's going to happen, surely we can discuss it without pointing the finger and saying "you are wishing that innocent people lose their jobs".

What do you plan to defer buying?

IronWolf

But what will they defer buying? A lot of consumer spending is on electronics nowadays, wasn't so in the past.

Electronics? Well they already deflate hugely as soon as you've purchased, doesnt put peope off. Food? Well cant really def that. Energy? Same. Entertainment? Cant see that happening.

So its really only clothes and random junk that I can think of being effected.

Generali

IronWolf wrote: »

But what will they defer buying? A lot of consumer spending is on electronics nowadays, wasn't so in the past.

Electronics? Well they already deflate hugely as soon as you've purchased, doesnt put peope off. Food? Well cant really def that. Energy? Same. Entertainment? Cant see that happening.

So its really only clothes and random junk that I can think of being effected.

People earn a very real living selling 'random junk'.

Graham_Devon

Generali wrote: »

People earn a very real living selling 'random junk'.

I doubt the buyers of "random junk" will be thinking about the inflationary or deflationary effects on their "junk" purchases though, will they?

I can't imagine going to the fair and saying to the kids "sorry son, that hook a duck game may be 20p cheaper next year, you're gonna have to wait".

System

:laugh:

Deflation nothing to worry about then. Phew!

Generali

Graham_Devon wrote: »

I doubt the buyers of "random junk" will be thinking about the inflationary or deflationary effects on their "junk" purchases though, will they?

I can't imagine going to the fair and saying to the kids "sorry son, that hook a duck game may be 20p cheaper next year, you're gonna have to wait".

Right but when the family doesn't go to the fair at all because Dad's crapping himself because he's no longer getting the overtime he needs to pay the bills perhaps the bloke who takes the money for the duck man loses his job.

The same with the barmaid at the local cafe and the girl who sweeps the floor at the local salon and the woman who sprays perfume on bits of cardboard and the bloke that earns a bit of cash on the side driving a taxi on the weekends......

HAMISH_MCTAVISH

Graham_Devon wrote: »

if it's going to happen,

It won't.

Central banks have all the tools they need to prevent it, and not even Germany would let the Eurozone slide into sustained deflation.

As paranoid about inflation as the Germans are, even they understand deflation is worse.

The ECB will act.... As always, it will take time to get it past the Germans, but they will act.

Graham_Devon

Generali wrote: »

Right but when the family doesn't go to the fair at all because Dad's crapping himself because he's no longer getting the overtime he needs to pay the bills perhaps the bloke who takes the money for the duck man loses his job.

The same with the barmaid at the local cafe and the girl who sweeps the floor at the local salon and the woman who sprays perfume on bits of cardboard and the bloke that earns a bit of cash on the side driving a taxi on the weekends......

Same can be said for inflation outstripping wages, and people cutting back and recessions in general.

Same can also be said, and has been said by Carney last week, warning that as people get themselves into ever more debt to buy a house, they have less to spend in the economy.

It's not something unique to deflation.

See no one is stating what THEY would refrain from buying should deflation take hold. Easy to say people will refrain from buying stuff, but harder to come up with what that "stuff" is due to it possibly being cheaper at a later point.

mayonnaise

Generali wrote: »

Right but when the family doesn't go to the fair at all because Dad's crapping himself because he's no longer getting the overtime he needs to pay the bills perhaps the bloke who takes the money for the duck man loses his job.

The same with the barmaid at the local cafe and the girl who sweeps the floor at the local salon and the woman who sprays perfume on bits of cardboard and the bloke that earns a bit of cash on the side driving a taxi on the weekends......

Yes, but house prices maybe will come down, so they will all live happily ever-after in this deflationary nirvana...:cheesy:

CLAPTON

The issue seems to be to being discussed the 'wrong' way round.

The issues isn't the consequences of deflation as such but the causes and then the consequences.

In the EU the primary cause of deflation isn't cheap energy or a flood of cheap goods from the far east (as per 2000s) but the lack of demand in the EU.

That lack of demand for goods and services means there is no incentive for producers to invest or take on more staff; indeed the opposite happens; to reduce the amount of staff, reduce hours and reduce hourly rates of pay.

Clearly those in secure jobs who maintain their income are better off.
However those with insecure or no jobs will become increasingly worse off and demand will fall further.

Unemployment will increase and GDP will fall further.

For people with declining incomes then their debt burden will increase.

At a country level, declining GDP will increase the tax burden and will increased the debt repayment burden.