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Today we on the U.S. and global employment and wage issues, plus credit and the economy in China and a deflation warning.
Speaking Wednesday [29 January 2014] at ETF.com's InsideETFs conference in Hollywood, Fla., the head of Roubini Global Economics and NYU business professor said 2014 was likely to be a good year for stocks and not a disastrous year for bonds, as many fear.
The next seven articles are about employment and wages followed by two articles on the true condition of the Chinese economy and credit markets and concluding with the most ominous deflation/recession warning we have read in years.
"... it is important that any further devaluation of the Australian dollar is not offset by rising wage claims, otherwise Australia's non-mining economy will remain uncompetitive, leading to widespread job losses as the mining investment boom unwinds."
... the strong real income gains experienced over the past decade were an aberration, juiced by the once-in-a-century surge in Australia's terms-of-trade. Income growth going forward will be anemic, which is required to restore Australian competitiveness. Otherwise, Australia faces the prospect of more industry closures and rising unemployment.
"The longer interest rate liberalization is put off, the harder it will to manage a successful move to a more price-oriented financial market."
"The deflation risk is what would occur if there was a shock to those economies now at low inflation rates, way below target. I don't think anyone can dispute that in the eurozone, inflation is way below target."
Credit inflows are drying up; outflows could spring the deflationary trap.
Evans-Pritchard describes China as having a credit bubble problem comparable to the U.S. in 1928, Japan in 1990 and the UK in 2007. This situation is exacerbated, he says, by production costs in China that are now 10% higher for Airbus than in France.
And how is Europe doing?
"Europe has let its defences collapse behind a Maginot Line of orthodox monetary policy. Eurostat data show that Italy, Spain, Holland, Portugal, Greece, Estonia, Slovenia, Slovakia, Latvia, as well as euro-pegged Denmark, Hungary, Bulgaria and Lithuania have all been in outright deflation since May, once tax rises are stripped out. Underlying prices have been dropping in Poland and the Czech Republic since July, and France since August."
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