Inflation Pendulums, Nukes and Shoe Shops

It was only 8 months ago that the world was screaming that deflation was a foregone conclusion and the only way that the world could adjust. At that point we felt that we weren't seeing deflation, we were seeing wealth degradation. Since then of course the whole idea of deflation is as fashionable as building nuclear reactors in earthquake zones. On that subject, Japan's announcement that the calamity is now as bad as Chernobyl has TMM asking if the total amount of radiation is actually a problem. Isn't the area affected more important? There is a letter in this week's New Scientist suggesting that all nuclear power stations be built underground where the benefits of containment, natural shielding and gravity fed water cooling systems is obvious. Is there any good reason why not? What's that Lassie? There are strange men in white coats down the old mine?

But back to that inflation thing. The inflation story has rightly become the pressing theme in the last 6 months but TMM do wonder if we are now near the zenith of the counter swing in this pendulum of inflation expectations, for today saw something remarkable...

...The UK we have just printed inflation figures BELOW expectation...

Well when we say "expectation", it would depend who you talk to as there is a feeling that someones expectations might have been a little too informed to the point where even the ONS is examining the security on the 6.45 football supporters special it uses to ferry its hedge fund locum courier from Cardiff to London.

RTRS-UK ONS SAYS AWARE OF MARKET RUMOURS OF EXACT MARCH CPI RATE BEFORE DATA RELEASE, IS INVESTIGATING.

TMM are eagerly awaiting a follow up along the lines of:

RTRS-UK ONS SAYS IT IS HAPPY WITH THE EXPLANATION OFFERED BY THEIR COURIER THAT HE ONLY PUT IT DOWN WHILE BEING GIVEN A CAN OF TENNANTS EXTRA BY A RATHER ATTRACTIVE LADY.

It was still an eye watering 4% and as most UK residents know the cost of living here has absolutely sky rocketed over the past few years. When married to the slow down in the public sector it has crucified confidence and the consumer has responded accordingly, deciding to rein back on Plasma TV's and bling leading today's BRC retail sales figures to print -3.5%. We fully understand how the high street reflects the mood of the UK public but as we have protested before we don't see it as being a disaster due to "jobs being lost in retailing". That's just evolution and vital to keep the UK from evolving into Frogstar B - The planet in Douglas Adams Hitch Hikers Guide To The Universe.

"Frogstar B was thrown into poverty through an event termed the Shoe Event Horizon. The foundation of the Shoe Event Horizon theory is that when depressed, people tend to look down, and when they look down, they see their shoes. To cheer themselves up, they might buy themselves a new pair. Thus, in a generally depressed society, demand for shoes will rise. In the critical condition, demand for shoes rises faster than the capacity to make good quality footwear. As shoe quality decreases, the demand increases further because shoes wear out faster and need to be replaced more often; as the demand for shoes increases, cheap mass production causes shoe quality to drop even more. What results is a spiral of increasing shoe demand and decreasing shoe quality. Eventually, this destabilizes the economy to the point where it is "no longer economically viable to build anything other than shoe shops", and planetary society collapses".

That sounds familiar enough without even having to substitute "shoe" with "Apple".

We were going to now mention the UK housing market, but having Aussie-housing-ourselves-out it will have to wait. Instead, we will note that the Battle of Spain, which is where the markets expect the European Wars of the Periphery play out its decider, has seen the Chinese doing an impression of the Prussians with Wen as Blucher coming to the rescue with his host of bond purchases. Europe has gone too quiet again. If you think that everything is too pessimistic at the moment then perhaps its worth re-establishing the Optimism clubs of the 1930's, where organised positivism was seen by many as a way out, and by others as a sure sign of economic hard times.

Oh, look. They are back.