The following chart from the sdw facility of ECB shows that Greek deflation dynamics are ongoing and strengthening:
Ever since mid-2012 both the core inflation (HICP excluding energy and seasonal food) and the services inflation are in negative territory at an accelerating pace. Current core inflation figures stand at -2% while services at -3.5%. After dropping to -5%, durables goods inflation now reads -3.5% showing relative signs of stabilization.
In general, core/services inflation rates of (negative) 2-3.5% can only suggest a very wide output gap which is certainly not an indication of imminent return to positive GDP growth rates. Furthermore, recent GDP figures show that nominal GDP/income continues to fall at close to -6% with the improvements in volume statistics being only the result of higher deflation (GDP deflator is now close to -2.5%). These are the typical elements of a debt deflation cycle with real debt burden increasing compared to a falling nominal income which eventually results in an increase of NPLs and debt-to-GDP readings and also to lower economic activity since consumers start to postpone purchases (especially of durable goods) in anticipation of lower future prices.
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17 Δεκεμβρίου, 2013 στις 13:33
avrailas
Credit deflation, copying from Wikipedia:
» In a credit-based economy, a slow-down or fall in lending leads to less money in circulation, with a further sharp fall in money supply as confidence reduces and velocity weakens, with a consequent sharp fall-off in demand for employment or goods. The fall in demand causes a fall in prices as a supply glut develops. This becomes a deflationary spiral when prices fall below the costs of financing production, or repaying debt levels incurred at the prior price level. Businesses, unable to make enough profit no matter how low they set prices, are then liquidated. Banks get assets which have fallen dramatically in value since their mortgage loan was made, and if they sell those assets, they further glut supply, which only exacerbates the situation. To slow or halt the deflationary spiral, banks will often withhold collecting on non-performing loans (as in Japan, and most recently America and Spain). This is often no more than a stop-gap measure, because they must then restrict credit, since they do not have money to lend, which further reduces demand, and so on».
Does the above ring any bell…?
Aπο την εισηγητικη εκθεση του προυπολογισμου 2014, σελ 20-21.
«Λογω της συνεχιζομενης υποχωρησης του πληθωρισμου, τα πραγματικα επιτοκια των τραπεζικων δανειων παρουσιασαν ανοδο (!), ιδιαιτερα τα πραγματικα επιτοκια των επιχειρηματικων δανειων, το πραγματικο επιτοκιο διαμορφωθηκε το Σεπτ. 2013, στο υψηλοτερο επιπεδο απο την εισοδο της Ελλαδας στην ευρωζωνη (!!!!!!!!!!)»
Περιμενοντας την αναπτυξη…με το ιστορικο υψηλο κοστος δανεισμου στην μετα ευρω εποχη.