Wednesday, May 12, 2004

More evidence that the big spending Anglosphere continues to fuel the global economy -- and exacerbate global imbalances.

The story in the United States since last week has been bigger than expected employment gains and higher than expected price rises. Now we see the very same thing in the UK. Not only is the unemployment rate in Britain down to 4.7%, the lowest since record-keeping began in 1984. Inflation fears (remember that in Britain anything above 2% is scary!) have also stoked expectations that the Bank of England will raise interest rates yet again. Currently at 4.25%, futures markets are pricing in official rates of around 5% by the end of the year.

Stephen Roach has been preaching re-balancing of the global economy for years. The poor guy must be pulling his hair out -- or what's left of it.

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