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Barclays warn of coming 'Inflation Storm'
WTF?_2
Posts: 4,592 Forumite
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnbarclays127.xml
Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".
"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."
Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.
Well, they're not pulling any punches. The question is how much longer governments can get away with telling people that they can't have wage rises even as the cost of living rockets due to their economic policies.
Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".
"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."
Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.
Well, they're not pulling any punches. The question is how much longer governments can get away with telling people that they can't have wage rises even as the cost of living rockets due to their economic policies.
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Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.
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Comments
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I think a few of us have been saying this for a while .. respected execs like this have been very reluctant to tell the truth.. till now it would appear !!.... very scary stuff..
Tim Bond, is the bank's CHIEF equity strategist !! not some no-body... this quote in particular took me..
"They will have to slam on the brakes. There is going to be a deep global recession over the next three years as policy-makers try to get inflation back in the box." .. Not Gloom & doom..just realistic... wake up and smell the coffee people !!! :eek:0 -
Well at least that's inflation taken care of."They will have to slam on the brakes. There is going to be a deep global recession over the next three years as policy-makers try to get inflation back in the box." .. Not Gloom & doom..just realistic... wake up and smell the coffee people !!!Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0 -
Batten down the hatches people - The storm is looming!!John :beer:
Life's too short.........0 -
Ahhhh, these will be the green shoots of recovery then I guess?
Rob0 -
If you havn't overstretched you can sit it out, if you have everthing might blow up.Barclaycard 3800
Nothing to do but hibernate till spring
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We're all doomed0
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and oil is just nudging $143...$142.93:eek:Turn your face to the sun and the shadows fall behind you.0
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Closed down hard at 140.68; hence Dow now green
BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!
THE KILLERS :cool:
THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:0 -
My belief is that the real danger is deflation.
As the amount of money the banks have to lend falls dramatically, money creation drops too. I think that is going to lead to asset and goods price deflation.0 -
My belief is that the real danger is deflation.
Huh?? If deflation is a real danger, then all our problems are over :jAs the amount of money the banks have to lend falls dramatically, money creation drops too. I think that is going to lead to asset and goods price deflation.
Asset price deflation, yes, as the enconomy contracts..but not goods deflation. Goods inflation has a long way to go.I used to have a signature but it disappeared and I just couldn't be bothered writing another, so please feel free to ignore this.0
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