Wednesday, 29 July 2009

Katainen: Deflation is, but not in social benefits..

While government aims to be careful with its purse strings, Katainen promised that social benefits would not suffer.

When the prices come down, usually it would mean that some principle subsidies will come down also but I propose that all of those social benefits and subsidies would stay as they are at the moment and not decrease,” he explained

So Katainen, the Finnish Finance minister is acknowledging Deflation... you can't hide this a sense it is hapenning in a very slow motion - price, almost all prices that are not controlled are decreasing (by the way, price that do not currently decrease is highlighting some kind of price fixing i.e alcohol, food, restaurant price and even hotel price...people prefer not to sell than reducing their price but for how long?)

At the end it's a matter of time - the massive credit expansion that started in the beginning of the 80's is now deflating - it will take maybe thousands of current Finnish stimulus to stop this debt deleveraging - so at best they could only mitigate the effect but not stop it...


Anton said...

"Fitch has affirmed the ratings of OP-Pohjola Group and Pohjola Bank's at
Long-term Issuer Default (IDR) AA-, short term IDR F1+. The Outlooks on the
Long-term IDRs have been changed to Negative because of the potential effects
of the sharp downturn in the Finnish economy on Pohjola Bank and the entire
OP-Pohjola Group, which operate mainly in Finland."

interesting reading ... so on the long term the prospect are pretty poor...

Anonymous said...

Looks like you were wrong, prices are raising and there is demand for housing i Finland. If Finland had a bubble it should have burst, ergo there is no bubble!