ECB economy euro europe Markets south korea

Markets Scream For Stimulus As Deflation Comes For South Korea, Japanification Grips Europe

Monetary, fiscal... whatever you've got.

If you're inclined to couch everything in hyperbolic terms, Mario Draghi faced a veritable "rebellion" at the latest ECB meeting. "Rebellion" is probably a bit strong, considering we're talking about monetary policy deliberations, not the storming of any ramparts, but regardless, there was dissension. But the latest read on inflation seemingly underscores the extent to which Europe is trudging slowly down the road to Japanification, which ostensibly makes the case for more monetary easing, in line with the new package of measures announced last month. Flash September CPI printed just 0.9% YoY, missing estimates and falling further away from the central bank's target. The core read was 1%. It was the first time core eclipsed the headline rate since 2016. Final PMIs for Europe out Tuesday confirmed the gloomy picture painted by the initial estimates, which, you're reminded, included a 123-month low on IHS Markit's factory gauge for Germany and similarly underwhelming (if not wholly disastrous) reads on French manufacturing and services. The irony, as ever, is that while the ongoing deceleration in both inflation and growth across the pond will be cited as "evidence" in favor of
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5 comments on “Markets Scream For Stimulus As Deflation Comes For South Korea, Japanification Grips Europe

  1. babeinwoods says:

    “Germany unveils $60 billion plan to fight the climate crisis”

  2. vicissitude says:

    For some reason, this comment resonates like a loud gong, i.e., markets are unwilling to accept how useless QE-type stuff has been and thus to not be willing to accept the current state of institutions Too Big To Fail (whom all failed a decade ago). The BIG question is, if central banks haven’t helped economies and if corporations have not re-invested in future growth and if we have really stupid and corrupt people and parties running the show, is there any chance that things will be ok?

    If lowering the interest rate from 5.25% to essentially zero had little impact on the economy in 2008-09, why should we think that lowering rates by 0.25% will have any observable effect? Large corporations are still sitting on hoards of cash: it’s not a lack of liquidity that’s stopping them from investing.

    https://cgt.columbia.edu/news/stiglitz-trumps-deficit-economy/

    • Anaximander says:

      Indeed, you get at the essence of this rentier economy. Ironically, this model does seem to have self-sabotage baked in, in one way or another. The lack of investment in workers or the future at some point has to redound back to corporate toplines, because ultimately they need consumers, 90% of whom are close to insolvency, to continue to buy their, in many cases, non-essential products.

      • George says:

        You and Viciss…. are spot on …So what part of idiotic does the rest of this system not get..?? Equities edge higher , likely not for long but I have said that before….

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