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Why?A: The economy is looking less dark so people are taking away the Japanese deflation scenario.
Jens Weidmann, the president of the Bundesbank, told an audience of German co-operative banks yesterday: "To say it very clearly: the European Central Bank council does not expect a deflation scenario". But the very fact that Weidmann, who is known for his fierce anti-inflation stance, felt forced to make such a strenuous denial was revealing.
Now, if theres any country in which the deflation scenario is possible, its Japan right now.
I don't think we'll get into a deflation scenario in 2009.
Greenspan and his board got caught up in this cockeyed deflation scenario.
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Remarkably, the European Banking Authority's latest stress test for the eurozone's banks does not contemplate the possibility of deflation in its adverse scenario.
Britain and China had better brace themselves for an even greater deflation shock wave under this scenario.
The Federal Reserve Board's cut in the target federal funds rate to 1% suggests they fear deflation, not stagflation, the worst scenario of all what we had during 1982.
However, the pace of deflation already gripping Japan makes the gradual scenario less likely by the day.
This phenomenon was also observed in the BOOST paper where it was suggested to be due to the LD among the SNPs simulated (i.e. correlated tests) because no FPR deflation was observed in the NULL simulation scenario using 1000 random SNPs (Wan et al., 2010).
Substitute stimulus for Great Society and years of possible "stag-deflation" for stagflation, and you have a scenario in which the Obama's overwhelming majority could collapse as quickly as LBJ's.
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Justyna Jupowicz-Kozak
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