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Latvia Joins Greece In Deflation As EU Inflation Slumps

Tyler Durden's picture





 

Inflation slowed in 24 (of 27) EU nations in April to leave the average EU rate at 1.4% (versus 1.9% in March). Greece entered deflation in March for the first time in 45 years and Latvia consumer prices fell 0.4% in April (versus +2.8% a year ago). This notable plunge, while 'helpful' for the average spender in the short-term, is a problem, as Bloomberg's Niraj Shah notes, sustained falling prices will increase the nation's debt burden. At the other end of the spectrum, Romania and Estonia both have inflation running above 4% and 3% respectively. Of course, none of this serial 'depression' matters, since Draghi has your back and Hollande says "the crisis is over."

 

 


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Fri, 05/17/2013 - 14:48 | Link to Comment Seize Mars
Seize Mars's picture

LOL. Yeah deflation, that's it. Jesus what is this, yahoo news? Gotta love the new and improved zerohedge. Fuck it I'm out for today, I'm going over to livejasmin.

Fri, 05/17/2013 - 15:28 | Link to Comment astoriajoe
astoriajoe's picture

when no has any money to buy stuff, retailers tend to discount a bit more heavily.

Fri, 05/17/2013 - 15:42 | Link to Comment negative rates
negative rates's picture

I love I got your back and the crisis is over.

Fri, 05/17/2013 - 15:33 | Link to Comment Edward Fiatski
Edward Fiatski's picture

What's so hard to comprehend? Credit & demand contraction -> deflation.

Doesn't matter if there are numbers in the trillions on some CB balance sheet, if money velocity fucked -> economy fucked.

Fri, 05/17/2013 - 15:46 | Link to Comment garypaul
garypaul's picture

I'm no expert on this, but it seems obvious to me that if you exclude energy and food from the inflation index, and those prices rise, then of course people have less mone to buy other things. In other words, the inflation index is measuring inflation in reverse (the higher energy and foods spikes, the lower the CPI reading). Talk about ingenious scams. Wow.

Fri, 05/17/2013 - 15:53 | Link to Comment BraveSirRobin
BraveSirRobin's picture

You have to remember where all those trillions have gone and are going. They are not going to consumers or worker's wages - they are going to backstop derivative counter party losses and failed collateralization in the financial system.

Fri, 05/17/2013 - 17:16 | Link to Comment Quinvarius
Quinvarius's picture

Velocity drops when you print money very fast.  The calculation is not really useful in the environment.  It needs a stable money supply because the last part of the eqaution is to divide by th emoney supply.  Double the money suppply in a day and you halve the velocity starting that day.   We have hyperinflation of the money supply.  It is ruining the calculation.

The numbers on a central bank balance sheet represent money they created spent into the economy.  It isn't money locked up.  It is money they created and spent.

We have a shitty economy.  That is a fact.  But I am not willing to say we have either deflation or credit contraction.  The US government is merely getting all the credit while the money supply expands. 

Fri, 05/17/2013 - 20:58 | Link to Comment Element
Element's picture

comment of the week QV

Sat, 05/18/2013 - 18:52 | Link to Comment e-recep
e-recep's picture

not all of that printed money goes into main street economy, that's why hyperinflation is yet to be seen. the government has to and does spend its share but the primary dealers mostly park the money in assets and cause bubbles.

the velocity of money really does drop due to heavy printing and any business owner and manager watching his business figures can tell that. the drop of the money velocity means increase in unemployment. the slower the money, the higher the unemployment.

so i don't see any problem with the usefullness of the money velocity graph. it is valid. the main street money is fucking not moving. the baltic dry index verifies it, too.

Fri, 05/17/2013 - 20:41 | Link to Comment hmmtellmemore
hmmtellmemore's picture

OMG Inflation!  Get the wheelbarrows out!  Keep on stackin'!

OMG, Deflation!  Unpayable debt!  Printing to the Moon to pay it off!  Keep on stackin'!

Welcome to Zerohedge.

Fri, 05/17/2013 - 14:53 | Link to Comment BTFDemocracy
BTFDemocracy's picture

At least it is anti-QE. Latvia's debt burdain isn't that heavy compared to rest of civilized world.

Stuff is getting cheaper and the economy is growing. Yaaay
http://www.zerohedge.com/news/2013-05-17/which-eu-economies-are-growing

Fri, 05/17/2013 - 14:50 | Link to Comment Jason T
Jason T's picture

"The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.1 Likewise, the economic effects of a deflationary episode, for the most part, are similar to those of any other sharp decline in aggregate spending--namely, recession, rising unemployment, and financial stress."

Ben Bernanke Nov. 2002

Fri, 05/17/2013 - 14:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

No fiat has ever died/collapsed and no world war has ever been fought because of "deflation".  If my currency has greater purchasing power, all the better to cover my input costs and stay in business.  Let me guess, "home prices cannot drop" either.  End the Fed.

Fri, 05/17/2013 - 15:37 | Link to Comment disabledvet
disabledvet's picture

Really? I mean "World War II" does come to mind actually. "and speaking of Hitler" is it me or does Germany seem to be doing a better time via the whole war reparations thing this time around or what?

Fri, 05/17/2013 - 15:54 | Link to Comment LawsofPhysics
LawsofPhysics's picture

I am a farmer, if you can find any still alive, I think you better find one from the Germany of that time and ask them why they only wanted PMs and not paper fucking promises.

Fri, 05/17/2013 - 17:25 | Link to Comment Quinvarius
Quinvarius's picture

"The sources of shitty economy are not a mystery. A shitty economy is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.1 Likewise, the economic effects of a shitty economy episode, for the most part, are similar to those of any other sharp decline in aggregate spending--namely, recession, rising unemployment, and financial stress."

Ben Bernanke Nov. 2002

I had to fix all the typos where Bernanke stupidly suggested deflation was a bad economy and not a contraction of the money supply.

 

Fri, 05/17/2013 - 17:47 | Link to Comment chubbyjjfong
chubbyjjfong's picture

That actually makes it easier to understand. Replacing the term 'deflation' with 'shitty economy' should be introduced into tertiary establishments curriculum immediately.  

Fri, 05/17/2013 - 14:52 | Link to Comment fonzannoon
fonzannoon's picture

OT but the yen keeps selling off and treasuries are selling off right with them. I wonder where it stops.

Fri, 05/17/2013 - 14:53 | Link to Comment Fuku Ben
Fuku Ben's picture

Maybe they could take lessons from the US or China on how to measure and present their information so that everything seems ok

Fri, 05/17/2013 - 14:53 | Link to Comment Temporalist
Temporalist's picture
UK wages fall in the year to March

"In the three months to March average wages – that’s with bonuses by the way – rose by 0.4 per cent. That was the lowest growth rate since the period March to May 2009.

Just remember inflation, as measured by the CPI, was 2.8 per cent in March.
So once again, workers are worse off. It is hard to see how the UK can see sustainable growth while wages relative to inflation are falling."

http://www.investmentandbusinessnews.co.uk/economic-news/uk-wages-fall-i...

 

 

Fri, 05/17/2013 - 14:58 | Link to Comment Inthemix96
Inthemix96's picture

Temporalist,

I take it your from these parts?  Just before christmas last year we were hit by a 16.1% increase in gas and electric charges.

Inflation is through the roof round these parts, it takes about (for my family anyway) £150 a week on shopping, now thats not buying top of the line swag neither mate, and with two older kids at high schools it sharp mounts up.  I lived better ten years ago, and then increasing the fucking gas and lecky by that much?  We are being squeezed mate, until the pips squeak.

Inflation is flying high friend, and shows no sign of slowing down.

Fri, 05/17/2013 - 15:07 | Link to Comment falak pema
falak pema's picture

inflation of capitalistic inputs like energy to save money construct, deflation of local labour components, thats biflation...

Bottoms up and tighten belts! 

Fri, 05/17/2013 - 15:21 | Link to Comment Inthemix96
Inthemix96's picture

Fair play falak,

But when you have an eight month winter like we just had, and you work outside for a living (ie, not making much thanks to the weather) a 16.1% increase in heating is a blow thats hard to stomach.

I aint a rich bloke mate, and at this rate, I will be poorer before I am richer.  We cant go on like this, fuck me I cant go on for much longer like this, please someone give me a touch of deflation in anything??????

We cant be much further from breaking point as we are now falak, the numbers just dont add up.

Fri, 05/17/2013 - 15:36 | Link to Comment falak pema
falak pema's picture

I feel for you Inthemix, I know what it is to be back against the wall. Even tho I'm not there myself.

These shills who run the world have ripped off all safety nets from the bottom 'salt of the earth' people, those who live and die for a dream and will break their backs to save the next man. I was brought up to believe that and this crazy world has destroyed all decency and its the worst cut of all, as hope dies in fragile bones with it, the bones that make a nation.

All I can say is hang in and remember that what is good in life is our decency; they can't take that from us to our dying breath.

Small consolation but its what the innocent felt when they faced the firing squad, all thru the ages.

The stuff dreams and fortitude are made off. 

Fri, 05/17/2013 - 15:54 | Link to Comment Inthemix96
Inthemix96's picture

Thank you falak.

We here are made of sterner stuff, we will prevail, I know it sounds like a cliche and a form of platitude but believe me, we will see this through, I aint at rock bottom but we are being crushed here while the pols on our money believe that folk only 'Deserve' £53 quid a week to live on while the man who said it IDS is on at least £6000 a week of our money.  How fucked up is that?

If he can live off 6 grand a week of the same money a poor fucker has no say in the matter who has become un-employed because of the shit consecutive labour, conservative governments have caused on us and ruined our economy how can he justify living on less than £60 a week when he recieves £6000 from the same pot?  These fuckers are not far away for paying for their collective crimes against humanity, and crimes against common decency and fair play.

Dont feel for me falak, I put it down large there and just wanted to get a point across, life is unfair, these fuckers make it worse and the poor fuckers who know nothing pay the price of these bastards decisions.

Take care mate.  Look after you and yours.

 

Fri, 05/17/2013 - 15:48 | Link to Comment Fuh Querada
Fuh Querada's picture

The Wank of England makes the Federal Reserve look like an amateur in paper currency inflation. Example: since 1960 the GBP has lost 95% of its purchasing power even using the official inflation numbers

Just one site with such figures

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflat...

Fri, 05/17/2013 - 14:56 | Link to Comment ejmoosa
ejmoosa's picture

I continue to think we ask too much of the words inflation and deflation.  They are being used to describe both the affects of monetary policy and the affects of change in demand and supply.

 

The prices could be falling because of a drop in demand.  They might have fallen even further were it not for an increase in inflation.  How can we know this?  If the prices had fallen far enough, demand would have returned.  But the prices are still inflated beyond the point where demand for those goods and services will kick in.

Fri, 05/17/2013 - 14:57 | Link to Comment giggler123
giggler123's picture

So they're OK for loo roll then?

Fri, 05/17/2013 - 15:02 | Link to Comment falak pema
falak pema's picture

where is Orly?

She always said that the dominant trend today in terms of consumer product prices is deflation.

Inflation of money, deflation of finished good prices under third world labour arbitrage pressure.

And as for commodities, under laws of biflation ...play it by ear! 

 

Fri, 05/17/2013 - 15:03 | Link to Comment NihilistZero
NihilistZero's picture

Also don't forget the deflation of "rentier" assets as the proles wages have been in a deflationary spiral for a decade plus.  All the central banks of the world are caught in the same liquidity trap.

Fri, 05/17/2013 - 15:35 | Link to Comment Fuh Querada
Fuh Querada's picture

she eloped with Marc to Marcet

edit: after stocking up on skinned chicken breasts at $1.40 a shot

Fri, 05/17/2013 - 15:45 | Link to Comment negative rates
negative rates's picture

Broken neck in a car wreck chasin currency yield.

Fri, 05/17/2013 - 16:07 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Didn't you hear, she just picked up some gold in Miami.

Fri, 05/17/2013 - 15:06 | Link to Comment DeliciousSteak
DeliciousSteak's picture

But the crisis is over. It has become the new normal. There won't be any magical, quick recovery now will there? Just pray to your deities, god(s), spirits or whatever that the millions of unemployed youth find something to sustain themselves.

Fri, 05/17/2013 - 15:10 | Link to Comment Fuh Querada
Fuh Querada's picture

Yes, and these are the official figures of course with no hed - f***ing - onic adjustments, and full accounting for shrinking packages, postage stamp -sized toilet paper sheets, quality-trashing and due weighting of food, energy and health insurance.
ZH 2.0 indeed.

Fri, 05/17/2013 - 15:13 | Link to Comment Fuh Querada
Fuh Querada's picture

If this is deflation, then why are real interest rates negative in all of these countries? Because Draghi is screwing savers and seniors just like his buddies Carney and Bernwanke.

Fri, 05/17/2013 - 17:18 | Link to Comment disabledvet
disabledvet's picture

Equities wouldn't be rallying if pricing power wasn't being maintained (unfortunately.) and yes that is Bernanke etc doing that...but with the full backing of YOUR Government as well as "that's what's paying for your everything."

Fri, 05/17/2013 - 15:47 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Inflation & deflation are essentially the same thingy.

 Its just that different people get burned or rewarded.

 

Only France and the UK can benefit from this which is the plan I guess...............compounding the capital goods they already have.

 

The UK gets the cars and France gets the rail capital investment   ....114 ~ km of urban tram lines was constructed in France last year  not including tram trains.............subways & urban rail.

 

More to come this year.............they are laughing all the way to la Gare.

The only question remains......how much is enough and therefore when will they inflate.

 

 

Paris Tramway T6 looks well on the way to completion. (14km)

http://www.youtube.com/watch?v=ZbfZuIM3His

Although this inferior Tram on tires was adopted for corporate socialist reasons.

“Vélizy-Villacoublay is served by no station of the Paris Métro, RER, or suburban rail network. The closest station to Vélizy-Villacoublay is Chaville–Vélizy station on Paris RER line C. This station is located in the neighboring commune of Viroflay, 1.7 km (1.1 mi) from the town center of Vélizy-Villacoublay.”

 

Fri, 05/17/2013 - 16:11 | Link to Comment q99x2
Fri, 05/17/2013 - 17:35 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

All that is wrong with Spain.
It is being pushed into surplus and yet cannot use tokens to pay drivers and techs to run a system which would reduce its oil balance.

Tramway Jaen
2 years after the first Trams ran on its rails………..

Now nothing but traffic.
Go figure – its easy.

 

 

 

 

http://www.youtube.com/watch?v=KzHnXoD7Gjk&feature=player_embedded

Fri, 05/17/2013 - 18:01 | Link to Comment 0b1knob
0b1knob's picture

Oh the horror.  Two out of 20 countries experience deflation.   And by NEARLY 1%.

 

Sometimes I think the only way this crisis will end will be with a massive DEflation.   Just because with every person and government push and planning for inflation, the gods will give us what we least want and most need.

Fri, 05/17/2013 - 18:47 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

They are not good metrics for deflation.

It measures a unit of currency against a basket of goods....crazy.

 

Gross national income per person in Ireland has declined by nearly 10,000 euros per person.

 

If I remember it was 37 ,000 + euros per person back in 2007 and 28,000 in 2011.

Fri, 05/17/2013 - 20:10 | Link to Comment robertocarlos
robertocarlos's picture

How are Eddie's real estate investments doing?

Fri, 05/17/2013 - 18:33 | Link to Comment Poor Grogman
Poor Grogman's picture

The only way deflation can occur at all in Europe is because the "Decision makers" are not directly accountable for its effect on the people.
If each country still had their own ability to print, then the printers would be rolling.

Fri, 05/17/2013 - 18:43 | Link to Comment bentaxle
bentaxle's picture

Cyprus....has inflation? With what? it's all gone!

Fri, 05/17/2013 - 20:08 | Link to Comment robertocarlos
robertocarlos's picture

I have bit of money and a tonne of credit and I ain't buying shit.

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