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Saxobank Warns China Is Exporting Deflation (And It's Not Going To Stop Anytime Soon)

Tyler Durden's picture


With global growth expectations for 2014 having just collapsed to new lows...



...and on the heels of mixed inflation data last night in China (and stubbornly low-flation in Europe), Saxobank's Steen Jakobsen explains in this brief clip how, thanks to massive over-building and now over-capacity, China is in fact exporting its deflation to the rest of the world - most problematically Europe.


What is more worrying for all the optimists, Jakobsen argues that both the Eurozone and China are at the centre of a slowing world economy which will see stagnation for the immediate future and ECB action, or lack of it, can't do a thing to change the status quo.


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Fri, 05/09/2014 - 19:40 | 4745163 tmosley
tmosley's picture

Why doesn't he just say that they are importing inflation?

Oh, because he's an idiot. Carry on.

Fri, 05/09/2014 - 19:46 | 4745173 SAT 800
SAT 800's picture

Probably because importing inflation, which they've been doing for twenty years has no relation to exporting deflationary pressure on foreign trading partners; which is a new thing; and hence newsworthy. Why did you type this note/ just to prove that you're clueless?

Fri, 05/09/2014 - 19:50 | 4745181 CrashisOptimistic
CrashisOptimistic's picture

And that is that.

Exported deflation restricts growth.  Low growth puts downward pressure on US T yields.

Fri, 05/09/2014 - 20:04 | 4745211 Manthong
Manthong's picture

Pretty soon I expect Harbor Freight will be paying people to take their stuff away.

Sat, 05/10/2014 - 12:52 | 4746183 LawsofPhysics
LawsofPhysics's picture

Growth in what?  Plastic shit from China that we don't need?  Financial "products" of mass destruction?  Fuck em both.

There is no such thing as "deflation" for most people.  Don't believe me?  Name one society/currency that collapsed/died because their purchasing power was too strong.

Sat, 05/10/2014 - 16:33 | 4746717 blunderdog
blunderdog's picture

Monetary deflation's rough on the banking system, and as you should well-know, that's the only thing that matters today.

Maybe if we just synchronize the USA's inflation exports with China's deflation exports, everything should be just fine.

Fri, 05/09/2014 - 19:52 | 4745189 SafelyGraze
SafelyGraze's picture

it is all about the nouveau de-quantity theory of money:

the more of it you print, the more you deflate prices

because the increased supply of currency makes it more valuable relative to goods and services that are decreasing in quantity

which happens to be part of the nouveau de-supply and de-demand theory of de-pricing


Fri, 05/09/2014 - 20:11 | 4745224 knukles
knukles's picture

Just what I needed, a KrugHug
I was just reading a great escapist novel (just wanted a good story) at around 0200 dark windy hours about alien abductions and turned a page and in the book and there, someone had left an old, and I mean old, black and white print, all washed out, dog eared, etc, of a little girl in a high chair with a very disturbing look on her face.
I'm not sure what is creepier.... that photo or an imaginary KrugHug

Fri, 05/09/2014 - 20:18 | 4745251 Yen Cross
Yen Cross's picture

 "Krug Hug". You should patent that knuks.

Fri, 05/09/2014 - 20:37 | 4745290 SafelyGraze
SafelyGraze's picture

that disturbed little girl in the photo ..

you know who she is


Fri, 05/09/2014 - 20:40 | 4745300 Yen Cross
Yen Cross's picture

 OHH GawDD. Barf. You tricked me!

Fri, 05/09/2014 - 21:21 | 4745394 willwork4food
willwork4food's picture

Quick, go outside and thow up everything in your stomach..purge yourself. Everything will be OK.

Fri, 05/09/2014 - 21:57 | 4745435 knukles
knukles's picture

Safely, that is just plain fucking wrong.  I mean it ranks right up there with shit like waterboarding.
Next Muzzie terr they wanna make talk, should rub her minge with bacon and make him....

The Lord is gonna strike you down, bro.

Fri, 05/09/2014 - 20:41 | 4745303 shovelhead
shovelhead's picture

I'd hide, knuks.

That shit is right out of Steven King. You're gonna start seeing that little kid every where you go.

You're gonna start wishing for an alien anal probe instead of creepy kid.

Fri, 05/09/2014 - 21:42 | 4745425 Wahooo
Wahooo's picture

That girl is going to walk right out of that picture and be standing at the foot of your bed when you wake up. You'd better have some chocolate chip cookies and milk handy.

Fri, 05/09/2014 - 19:57 | 4745196 tmosley
tmosley's picture

Wow, you sure do know a lot.  I bet you have a PhD in Economics from Harvard AND Princeton.  Probably a Nobel prize, too.

China has been selling cheap goods for paper of dubious value forever.  This is absolutely no different than the situation a year ago.  The collapsing competitiveness of the West has nothing to do with China.  It is caused by their own policy.  China just does what it has always done, provide cheap goods in return for debt (ie power over debtor nations).  

Sat, 05/10/2014 - 13:25 | 4746232 malek
malek's picture

Do you really believe that bullshit distinction?

And then as the cherry on top suggesting that the others are clueless.

Fri, 05/09/2014 - 20:03 | 4745208 lordbyroniv
lordbyroniv's picture

6 years later...and STILL the same fucking inflation / deflation debate.


Kill self.



Fri, 05/09/2014 - 19:41 | 4745165 SAT 800
SAT 800's picture

As I've said before; Saxobank has good credibility. It has a world class on-line trading platform where you can do currency crosses or silver or gold, paper only, for trading; but it 's also an old successful Bank headquartered in Denmark that's extremely unlikely to make any silly moves. Sometimes their analysis is even right; a lot compared to UBS, for instance.

Fri, 05/09/2014 - 19:44 | 4745170 navy62802
navy62802's picture

Oh you mean like the US has been doing for the past 5 or 6 years?

Fri, 05/09/2014 - 19:45 | 4745171 Make_Mine_A_Double
Make_Mine_A_Double's picture

If the Chicoms are exporting deflation and we're exporting inflation they should meet somewhere around Hawaii and cancel each other out.

Deflation? Really? Anywhere? Been to Euroland lately. It is fuck all expensive - worse than here. Asia? I just got back a few weeks ago - ain't no deflation there.

USSA? Shit, I'd say real annual inflation on a real basket of goods (not the 'typical' CPI basket of hammers, dildos and sofas) is somewhere in the ball park of 7-10% annually.

We will have a 'come to Jesus' moment this year. There is no way the middle class can hold the line against these increases.


Fri, 05/09/2014 - 19:50 | 4745186 Milton Waddams
Milton Waddams's picture

I use the vending machine in our little watercooler room as a measure of inflation - across the board $0.10 to $0.25 increases in garbage, gut-wrenching "snacks." That's a 10% to 25% increase. The average COLA adjustment, er "bonus," was just shy of 2%.

Fri, 05/09/2014 - 20:10 | 4745226 RaceToTheBottom
RaceToTheBottom's picture

I bet you size of the "snacks" are getting smaller, too.

Fri, 05/09/2014 - 20:15 | 4745242 knukles
knukles's picture

Try groceries in CA.  We have been hit hard within the last 2 or so months.... All of a sudden prices skyrocketed...
You all had been talking about this for a long time, but for some reason, the Big Increases had not yet shown up here.
I know.
I do the grocery shopping in my family.
Otherwise there's no stuff like HagenDas, potato chips or beef... just all sorts of green shit that's no more useful to mankind than garnish.

Fri, 05/09/2014 - 20:21 | 4745255 FredFlintstone
FredFlintstone's picture

With a name like Knuckles I assume you are a tuff guy, but when I hear grown men use the word groceries it makes me cringe. I take pride in taking 10 minutes to find 1 item at the store. In my world men don't shop for groceries or bitch about the price of food.

Sorry, but otherwise you are a cool guy.


Fri, 05/09/2014 - 20:45 | 4745313 RaceToTheBottom
RaceToTheBottom's picture

Grub sounds so much more macho....

Fri, 05/09/2014 - 20:47 | 4745321 shovelhead
shovelhead's picture

Pretty harsh judgement there, boyo...

He pushed a fat kid out of his way last week.

That's gotta count for something.

Fri, 05/09/2014 - 20:53 | 4745335 FredFlintstone
FredFlintstone's picture

Its all in good fun. I am a caveman. Wilma does all of the shopping. I don't know the price of anything at the grocer.

Fri, 05/09/2014 - 21:26 | 4745401 willwork4food
willwork4food's picture

Lol caveman. You ever been hungry in your life? Ever been wondering if you'll survive without begging for help? Obviously not. I FUCKING LOVE going to the grocery store and shopping goods for my family with real money that I've earned. It's a blessing, not a curse dude.

And my dick is bigger than yours.

Fri, 05/09/2014 - 21:31 | 4745406 FredFlintstone
FredFlintstone's picture

I do have a small dick and I get hungry every hour or so. I can beg. A real man doesn't have time to waste doing women's work. :)

Fri, 05/09/2014 - 22:31 | 4745485 willwork4food
willwork4food's picture

Thx for that. Guess it's all in life's experiences each one of us is handed.  I remember vivedly, going with my roommate (sharing a working van down at the beach) to the local plasma center in downtown San Diego back in the early 80s donated my plasma and getting a free cup of chicken soup & $8. We got an extra $5 every 3rd time..or was it the 5th?. It took and hour or so. A little time after we had enough money to actually go to the local grocery store and buy real food, a little beer and it was heaven. I have never forget that moment in time and I hope I never will forget the gratitude I gave God for that.

Sat, 05/10/2014 - 07:39 | 4745809 FredFlintstone
FredFlintstone's picture

Good story. I am too much of a wuss to even donate blood. You are more a man than I.

Fri, 05/09/2014 - 22:43 | 4745505 Miffed Microbio...
Miffed Microbiologist's picture

God I know what you mean Fred. When the guys and I ( the lone woman in the group) slaughter chickens, they chop their heads off, rip out the guts and hand them to me to pluck. I'm always eventually alone with a big pile of birds and they're off drinking beer slapping each other on the back. They won't even toss me a cold one. I guess they think that wouldn't be becoming to a lady.


Sat, 05/10/2014 - 12:26 | 4746149 FredFlintstone
FredFlintstone's picture

Leading the world in Men Pushing Shopping Carts?

Sat, 05/10/2014 - 22:20 | 4747325 MeelionDollerBogus
MeelionDollerBogus's picture

Ya, well in the real world we can't all have enough land to be farmers & in the real world farmers won't have anything to sell if we were, so this grocery-store setup actually means we can do non-farm work yet still get farm food and farmers can use economies of scale, safely, to produce excess food at a lower cost making better use of their land. Everyone's better off this way or we'd all be farmers.
That means very few people to be doctors because a lot of medicinal advances require labs & labs require a lot of other kinds of workers, and in this day and age that includes robotics, computers, a lot of assistants, a lot of manufacturing.
We are all better off just looking at food cost in real energy+time terms as well as related advances which includes transport, containers, medicine.

By all means I hope you are happy doing it all on your own and by all means I want the skills & the means but I would never suggest the world's a better place, that men should all be "real" men who do not, will not or can not use a grocery store, because the total global implication is actually not a good one.

Sat, 05/10/2014 - 10:33 | 4745939 sessinpo
sessinpo's picture

With all the money that has been massive printed, you should have 1000% increases.

Fri, 05/09/2014 - 21:52 | 4745431 greygoo
greygoo's picture

"Shrinkflation" is the term I believe.

Sat, 05/10/2014 - 22:22 | 4747330 MeelionDollerBogus
MeelionDollerBogus's picture

honestly I'll suggest that's a poor measure. The price of the delivery & maintaining the machines is all factored into base cost and then a huge markup is applied, bigger than stores, for the small amounts doled out per coin. It's the laziness factor being priced in. If you buy the same snacks at a bulk-barn store you can get tons more & bring your own.

Fri, 05/09/2014 - 20:39 | 4745289 navy62802
navy62802's picture

The truth is that the US is exporting deflation. If the Fed had not stepped in with incredibly inflationary measures during the 2007/2008 crisis, the US would have experienced crippling deflation.

On their face, the measures that the Fed took to prop up the economy are blatantly and massively inflationary. The takeaway is that without such massively inflationary measures, we would have surely seen deflation on a magnitude equivalent to the magnitude of the inflationary measures taken by the Fed. It's kind of like 1 + (-1) = 0.

And to be sure, I do not agree with the Fed's actions. However, I'm just pointing out the way that I see it. I personally would rather have seen a crippling correction and then a healthy recovery rather than a false one on the back of Fed policy. I further believe that the Fed's actions are simply a delay and that we will eventually face the brunt of the 07/08 crisis at some point in the future. Only the effect will be magnified with time.

Fri, 05/09/2014 - 21:05 | 4745356 Bazza McKenzie
Bazza McKenzie's picture

What is this "crippling" deflation of which you speak?  You have bought the Fed Kool-aid.

Economies don't contract because prices are falling, though sometimes prices fall when economies are contracting.  They also fall when productivity is increasing and the supply of money is stable.

The Fed did not "prop up the economy".  It caused the transfer of wealth from savers to big banks and other borrowers.  That theft is invalidly counted in government GDP calculations as a positive contribution to GDP.

A "correction" would have been crippling only to big borrowers (banksters, government, overleveraged investors) not to the rest of the community.  Instead all of those who should have paid a price for their bad behaviour were bailed out by the Fed and the US government at the expense of everyone else.  Just rampant corruption and theft.

Sat, 05/10/2014 - 10:52 | 4745976 Tom_333
Tom_333's picture´s the increasing taxation that is making everything more expensive. Taxes to garner funds to fight the deflation. So now we have deflation and rising taxes. And so have you. U.S. taxe rates are going to be the new moonshot.

Fri, 05/09/2014 - 19:52 | 4745175 Yen Cross
Yen Cross's picture

 China exporting inflation?  That's a laugh!

  Why then is PBoC locking down REPO facilities?

  China plans for North Korean regime collapse leaked - Telegraph

Fri, 05/09/2014 - 19:49 | 4745176 I Write Code
I Write Code's picture

Lower prices for goods does not comprise deflation, especially when they stole the jobs from the US to make the stuff in the first place - there's no money left to buy the goods, so they HAVE to decrease prices.

Somebody wake up Ricardo and have him update that old screed.

Fri, 05/09/2014 - 21:36 | 4745413 Robinhood
Robinhood's picture

I happen to take this as great news! Contrary to public opinion China makes some very fine products, that work and are helping me make a living. If they are deflating? I'm backing up the truck or docking the ship. They work, they work every day and they afford me the opportunity. As a small business I have delt directly with big co's in China and I'm treated with way more respect than by US co's, this is a real problem.

Another problem is that the preception of China and its products is based on the whore importers called Walmart, Homedepot et al who pressure the Chinese manufacturers to produce to their price point. If you want shit they will produce it for you, it's shouldn't be their problem if they deliver what Walmart, HD, et al purchase.

The one thing I can say with repect to the Germans is that they price things so high that only they can afford to buy them. Thank you China!!!!

Sat, 05/10/2014 - 09:14 | 4745874 ParkAveFlasher
ParkAveFlasher's picture

I think you just drew a line between deflation and substitution.  Substitution shouldn't be deflationary because you would need to consume more cheap product for the same general effect, thus multiplying the transaction activity which is naturally inflationary.  Even though the price is lower, you require more frequent replacement-type usage to net the same qualitative effect.  There is unit volume offset to the lower price.  A new problem then becomes consumers growing wary of consuming. Once you play price games with goods and services, and I do this for a living, you open a Pandora's box of effects, mostly harmful to a marketplace.

Sat, 05/10/2014 - 22:28 | 4747351 MeelionDollerBogus
MeelionDollerBogus's picture

I'll choose the high quality, high value product every time. I understand if China will produce them. If low quality products are sold by specification of the big-box stores I will avoid the product & the store each time. I have no use for a shit product that dies on the spot. I got an MP3 player for only $40 from Target. It doesn't work. Problem: audio jack is too small to fit the plug and doesn't fit tightly so it's scratchy. If you jam it in too far you get no sound, otherwise it's hanging half way out and will easily get moved or fall out. Worthless to me.

That was my first purchase at target. If they're lucky I'll get something there that's not electronics but I can already see it's not looking good.

Fri, 05/09/2014 - 19:58 | 4745198 rtalcott
rtalcott's picture

Simple solution is a war to destroy all the excess capacity...yeah...there will be some additional damage/consequences but's for the children.

Fri, 05/09/2014 - 20:08 | 4745219 intric8
intric8's picture

Good! We could use some deflation.

Fri, 05/09/2014 - 20:12 | 4745231 RaceToTheBottom
RaceToTheBottom's picture

Imagine the deflation if the chinese products didn't break as soon as you opened them.....?

Fri, 05/09/2014 - 20:22 | 4745257 gatorengineer
gatorengineer's picture

The real deal is that people value non industrial commodities more than currency (unless its shinny and then they are terrified of it).  Food and Oil fall into this category.  Hence you have food and oil related inflation, while everything else is deflating, e.g industrialized commodities.  this is against a tremendous backdrop of HFT and rigged markets. Its amazing they have been able to rig it this long.  The fed will have a place to unload the tbills into anyway.  Not somuch on the mbs stuff.

Fri, 05/09/2014 - 20:29 | 4745268 ebworthen
ebworthen's picture

So let's see the Euro at parity with the Dollar, or lower, and prime rates at 6%.

Heresy, I know.

Fri, 05/09/2014 - 21:09 | 4745361 Yen Cross
Yen Cross's picture



 Ebbie. stay alert.  Enjoy life and explore starting new ideas/businesses, and actually employing people!

Fri, 05/09/2014 - 20:38 | 4745295 german Wunderkind
german Wunderkind's picture

the ecb CAN do something... like buying stuff to make inflation..

they just have to get some solar pannels on every roof in southern europe. that would make sense for everyone in europe

Fri, 05/09/2014 - 20:52 | 4745332 shovelhead
shovelhead's picture

No wonder that portrait of Mao is smiling...

"I eat you noodles WalMart shoppers."

Fri, 05/09/2014 - 21:02 | 4745352 Offthebeach
Offthebeach's picture

If you are elite, getting first dibs on fiat, 0.25 interest money, what do you or your buds care? These are the best of times. Everydsy waking up to Central bankers fellating you. Politicians licking your boot soles, asking if you need a brigade or division killed off somewhere.

These are the getting worst of times, and the TBTF best of times.


Fri, 05/09/2014 - 21:32 | 4745411 Carl Popper
Carl Popper's picture

I have been telling you guys this deflation monster is huge.  Huge!  Janet can qe forevah.  Back up the truck next time we have a huge gold and silver sale

Fri, 05/09/2014 - 21:39 | 4745419 Wahooo
Wahooo's picture

What's wrong with deflation from China? Makes their crap cheap, cheap, cheaper. Now if they could only start exporting gasoline, beef, and vegetables to the U.S.

Fri, 05/09/2014 - 22:31 | 4745483 bugs_
bugs_'s picture

diethylene glycol

now adding deflation to the list R O F L

Here in the Deflationists Lounge we are working on a new ad campaign to encourage people not to think of Deflation as a poison.  Now this.

Fri, 05/09/2014 - 22:31 | 4745484 Youri Carma
Youri Carma's picture

So if the US in facy is exporting inflation and China is exporting deflation to the rest of the world and Europe is importing from both it should all balance out nicely.

In fact I never heard such BS in my live.

Fri, 05/09/2014 - 22:45 | 4745509 novictim
novictim's picture

China is dumping key goods at below cost prices, especially into key electronic markets, in order to destroy long run competition.  This is the game of monopoly.  In the end the consumer will be screwed.

What fuels China's ability to sustain nonprofitable manufacture long enough to bankrupt its foreign competitors?  It is your investment dollars and the leverage-on-leverage-on-leverage China can manipulate through its opaque banking system and financial markets and currency manipulation.  

China is one big Potemkin village and their Potemkin "High Tech Sector" is playing you smart investor folks like the stupid fools that you are.  "Real money" is flooding into China and the Chinese are funneling that back into buying property in Europe and America and Canada.  

And why is China so interested in cashing in on Gold??  Think about it.

'cause at the end of the day, when their bluff is called and their bad debts come due Chinese oligarchs can at least have land in your neighborhood to call their very own and maybe a pot of gold as well.

Could you realistically own and then hold land in China?  Not a chance.  In this game land is the ultimate currency yet we are almost giving it away.

Fri, 05/09/2014 - 23:06 | 4745534 nje
nje's picture

I agree with most your saying, but food is the ultimate currency for two reasons. Firstly, food may come from the sea as well as land therefore land is not needed for food. Secondly, land ownership is only possible as long as nearby populations respect your claim to ownership or the land owner is capable of enforcing his claim to ownership. For an example on the second point, if all hell were to break loose, then prime hunting grounds or fertile lands will become targets for raiding. To beable to enforce ownership of that land an arsenal or militia or both will be needed, and you need need to pay for those goods or services with food.

Fri, 05/09/2014 - 23:19 | 4745552 goldinpenguin
goldinpenguin's picture

China's industrialization policy has brought the farm boys and girls into the city where they are pumping out cheap export goods to the Walmarts of the world, they've got to keep these people working for socio-political reasons which are more important than the factories bottom lines. Like the old vaudeville joke they lose money on each sale but make it up in volume!

If they get price resistance from Walmart customers they cut their prices to try and maintain volume and it's the number employed not the number of units thats crucial. When the losses on these de facto subsidies to export factories forces China to sell not buy US treasuries then things get interesting.

Fri, 05/09/2014 - 23:28 | 4745568 goldinpenguin
goldinpenguin's picture

Speaking of inflation I have a credit card with PenFed that "pays" 1% on purchases and 3% on gas etc but guess what they just deflated my points by 20% when I cash them in, the 1% which is still in the promo is now effectively .8% when I cash in, they still advertise 1%.

Slippery and slimey and a credit union is non profit right, for the benefit of their members, WOW

Sat, 05/10/2014 - 03:59 | 4745732 boooyaaaah
boooyaaaah's picture

So it not about currency vs gold after all

If you sell shoes all thing important relate to shoes

If you raise cattle all things important have to do with grass.


And if you are a banker it's interest and currency and gold. So the man is saying that regardless of how much currency is put in circulation we have deflation. Or falling prices

Is this so bad? True a mortgage a retirement a contract an investment all deal with the future value of current value. And to have less future value than you have now is to default on a mortgage starve in retirement and lose in your investment.

But the successful producers of the world try to produce more for less. It is true that if you sell more and more at a lower price you can add to your overall wealth value. But it's not the same as selling the same amount at a higher price.

The mechanization of farms in the US after WW1. caused more food to be produced at a lower cost but the ability of the consumer to eat so much more at a lower price was limited by world tranportation and the size of a stomach. The result was a collapse of farm prices.

The US of the 20's. is like China of the 2010's.

They became too successful at producing more for less. The goal-- we thought. 

So rather than deal with the facts bankers deal in terms in words that used to mean something. Currency Inflation Deflation. But if there are too many things for sale the price of things drop.


Sat, 05/10/2014 - 06:55 | 4745789 smacker
smacker's picture

Guest articles such as this are premised on the basis that official inflation statistics are accurate. But we all know official stats are complete rubbish, and deliberately so.

How Saxo can predict what's going to happen this afternoon, let alone next month/year, by basing their guesswork on fake numbers is a mystery.

The Eurozone does not have virtually zero % inflation as the EU claims, the UK does not have 1.9%, the US does not have 2%. One look at shop prices in all these countries reveals the truth. A further look at many asset prices (notably property) reveals even more truth.

IMHO, what we have is Stagflation. GDP is mostly negative and inflation is alive and well. The reason is almost certainly due to massive levels of debt built up over the last 25 years in all sectors of the economy.

Sat, 05/10/2014 - 10:48 | 4745967 elwind45
elwind45's picture

The inflation is the growth? Its a shell game? You produce it the Fed or its members grab. It and send it to Europe for higher interest and lower dollar? Europe uses this switch to buy up assets through the Fed and parks them because its safer than paying Euro taxes and its a safe haven to boot? Watch the money leave and venture abroad when dollar based interest rates pass European rates and everybody relaxes to the bounty?

Sat, 05/10/2014 - 07:59 | 4745821 Its_the_economy...
Its_the_economy_stupid's picture

The cheap WalMart crap getting less expensive. The stainless steel grills are 40% off the prices from last year. Everything you need to live will cost more, everything you own (and everything else for sale) wsill be worth less....Bitchez.

Sat, 05/10/2014 - 10:35 | 4745942 elwind45
elwind45's picture

It makes it easier to net 25% on sells and nobody asks how much we pay for it? EVER and that point of yours is well A POINT

Sat, 05/10/2014 - 11:11 | 4746007 elwind45
elwind45's picture

Musquito nets

Sat, 05/10/2014 - 09:29 | 4745889 elwind45
elwind45's picture

Does it feel like you are getting your face rubbed in it YET? You will never see it or hear this from a USA bank or multinational. This should be good news to AMERICANS but you will be made to feel bad about it? Slack everywhere except inflation and your income is disappearing? You are being sold put ONE FUCKING JOB AFTER ANOTHER GONE and it will only get worst? After you dumb fuckers bailout Europe you MORONS GET TO HELP CHINA¿

Sat, 05/10/2014 - 09:59 | 4745911 Chuck Knoblauch
Chuck Knoblauch's picture

We already have wage deflation.


Sat, 05/10/2014 - 11:13 | 4746009 chinaboy
chinaboy's picture

I thought it was Europeans, who practically don't produce anything, are the source of deflation and crisis. 

Sat, 05/10/2014 - 11:13 | 4746010 elwind45
elwind45's picture

You say empty buildings I see a gulag and no hope outside of services now off to WAL....!

Sat, 05/10/2014 - 11:48 | 4746086 Quinvarius
Quinvarius's picture

It is so obvious to me that whenever they attempt to mess with the gold price the rest of the global economy tanks.  You cannot mess with the core of global savings and collateral and expect a good outcome.  It doesn't work anyway.

If they had not tried to arrest gold from going to the correct natural value, this depression would be over.  We would have been into the next economic boom.  Savings would be up and money would be flowing.  Then we would have the hard capital and collateral in the system to start another expansion.  It is still going to happen.  But it won't take our banks or their customers with it this time.  The gold was used to buy a couple years for the banks and is gone.  What a waste.

Sat, 05/10/2014 - 15:15 | 4746519 kedi
kedi's picture

The deflation is mostly for the wealthy. Profits are harder to get out, when your consumers are tapped out and slowing consumption. The value of your operations decrease. The lower wealth consumers still see big inflation and increasing debt load. Things have to get cheaper. Margins of everyone get thinner. Especially when compared to their wage growth or shrinkage. Moving manufacturing to low wage, low regulation countries works to inflate profit for a limited term. The GDP soon moves to that country. The consumer countries shrivel. It is such basic math. Combined with stashing cash and accounting away profits, it makes both sides lose out even more. Money has to flow up and then back down through many pockets and businesses. Like blood flow. Cut it off at some point and things start dying and rotting. Poisoning the whole.

Mon, 05/12/2014 - 03:20 | 4750046 eco1
eco1's picture

Not sure how china was guilty already for having exported deflation during the past few years - via low labor cost - and is now still making headlines for exporting deflation - only this time through over capacity - looks like china is the king of deflation - despite all the credit bubbles and massive growth expansion over there - maybe china has finally figured out how to make inflation go away forever - so its a good thing to have china - or else - maybe some of the experts on china have a warped sense of economics -

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