Munchau's words, not mine. I think the allusion is to the presumed inflationary
effects of a dollar collapse and high import prices on the US economy. Opinion
is divided about the extent to which the capital-rich Asian markets have
"decoupled" from the G7 and can serve as autonomous engines of growth to rescue
the older ones from crisis.
----- Original Message -----
From: raghu
To: [email protected]
Sent: Sunday, November 11, 2007 9:15 PM
Subject: Re: [PEN-L] central bank credibility v. transparency
On Nov 11, 2007 5:24 PM, Marvin Gandall <[EMAIL PROTECTED]> wrote:
The world economy can now look forward to confronting four ugly and partly
interrelated shocks at the same time: a US economy heading for the rocks, a
rise in global inflation, a collapse in the dollar's exchange rate and a credit
market crisis.
I don't understand how the "global inflation" relates to the other three.
First of all where is this global inflation? From what I understand it is
confined to the emerging markets. Is there any evidence of US inflation?
(Bernanke keeps referring to "inflation risk" but that's because he has to.)
Japan? Europe?
So what is the significance of this inflation? Does the market really expect
emerging economies to continue growing while the G7 slows down? Or is it a
temporary phenomenon caused by movements in hot money away from US assets?
-raghu.
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