Transitory inflation retires but does not recede

His reappointment as conductor of the world’s monetary orchestra safely in the bag, US Federal Reserve chairman Jay Powell let us know that the current bout of “transitory” inflation was a little more than that.

“It is probably a good time to retire that word”, he told the world.

As euphemisms go, it may not acquire the notoriety of the Nixon White House’s description of a previous statement as “inoperative”.

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South Korea as the global exemplar? Think about it

Self criticism is a Good Thing.  It’s usually kinder than the external version, and you get a chance to revise your argument.

So what to make of the mea culpa in the Financial Times from Jim O’Neill – the man self-credited with coining the BRIC (Brazil, Russia, India and China) acronym back in 2001.  Does he succeed in his mea recta?

Back then he argued that:

“since these countries were likely to continue their striking gross domestic product growth over the next decade, we urgently needed them to play a bigger role in global governance.”

Continue reading “South Korea as the global exemplar? Think about it”

Zero Covid is dead – official

“Government instructions to stockpile food are seldom a sign that all is well.” 

That’s how the Financial Times kicks off its editorial: Zero-Covid countries have run out of road.

Measures in support of a Covid elimination policy, like this, quickly become destructive once elimination is not possible.  The FT states bluntly:  

“Buying time made sense during the wait for vaccines.  Now, though, buying time buys nothing”.

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It will be a good day when Judith Curry is better known than Greta Thunberg

The world climate revival meeting in Glasgow ended with Alok Sharma (the UK’s minister to COP26, as well as the presiding chief priest) in tears over a last minute word change.  The countries which have built more coal fired capacity, more quickly, than just about anyone else in history (that’s you China and India) would only agree to phase its use “down”, rather than “out”.

Despite the (quite literal) imprecations of hellfire, the only truly substantive outcome of the conference may be the Chinese government’s practical suggestion that the world should aim for a global temperature increase of 2°.  (Bill Gates also chipped in some climate realism, noting that 1.5° was probably unachievable.)

Continue reading “It will be a good day when Judith Curry is better known than Greta Thunberg”

Planes, trains and automobiles – and also by foot, sail, cycle – and metal ball

So COP26 kicked off in Glasgow during the weekend. But it’s hard to get too enthused about an international jamboree if you’ve been involved in organising one. 

The striving by the in-group to pre-cook an outcome which can be pitched as ‘successful’; the breathless blow-by-blow media coverage; the travelling circus of groupies, civil society and protesters.  The Times reports on those making the pilgrimage to Scotland’s famously tough city, including “a Greek actor … on the final leg of a 2,000-mile run from Athens to Glasgow”. Which certainly sounds more attractive than the journey from Germany in a “human-sized hamster ball” – although the latter may have protection and shelter benefits.

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The IMF is still optimistic.  Someone needs to be

Britain’s latest irritation is a shortage of drivers.  What could it be: foreign truckers repatriating to Bulgaria post-Brexit; a shortage of motorway lavatories?  

The Daily Telegraph thinks it might also have something to do with the backlog of 56,144 licence applications that built up during Covid.

Which persists because staff at the licensing agency don’t want to go to the office.  And management can’t let them handle personal data at home.  An upsurge of strikes certainly isn’t helping either.

Not everyone responded with due gravity.  When the government issued a friendly reminder to existing licence holders, one German-qualified holder let it be known: 

I’m sure pay and conditions for HGV drivers have improved, but ultimately I have decided to carry on in my role at an investment bank”

Welcome to the post-Covid world.  Not just in Britain – supply disruption, rising inflation and interest rates creaking upwards are global phenomena.

The IMF has issued a double adverb warning for central banks to be “very, very vigilant” over inflation risks.

The job of markets is to adjust.  This is how economic growth happens.  

And after a global disruption of supply and demand on the scale of the 1970s oil price shocks, or the exit from controls after the second world war, it looks like there is lots of adjustment to be done.  

Which is perhaps one reason the IMF is a little less optimistic in its latest World Economic Outlook:

“The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July forecast.”

It says:

“The downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.”


“The fault lines opened up by COVID-19 are looking more persistent—near-term divergences are expected to leave lasting imprints on medium-term performance.”

No wonder it feels:

“Policy choices have become more difficult, with limited room to maneuver.” 

Which is worth some reflection.

Politicians everywhere might feel that their policy choices have always been more difficult, particularly after the global financial crisis.  But for the last ten years, they have had the benefits of low interest rates, rising house prices and easy debt increases.

Now they are reliant on the workers and businesses in the private sector to deliver the necessary productivity growth, while also absorbing the costs of more regulation (that’s you climate change) and higher taxes.

While keeping the workers (when they are working) at Britain’s licensing agency happy.

The IMF is optimistic. Policy choices may be getting more difficult yet.

Perhaps most difficult in those countries where government policy has so far been most successful in cushioning voters against change.

With MMP the politicians have to decide what Germany has decided

Voters in the German federal election on Sunday had the opportunity to sweep away the detritus of 16 years of compromises from retiring Chancellor Angela Merkel.  

The Green party led in the opinion polls by a good margin earlier in the year.  Only a few days ago, the Guardian dared to dream of a red-blooded left-wing coalition between Social Democrats, Greens and the former communist Left Party united by desire for higher taxes, more pernickety controls and a slug of anti-Americanism.

In the end, the German voters did what they have done for much of the post-war era, giving victory to the parties of the right (acknowledging that these labels seem to be less meaningful these days).

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