Aurelia Butler

In a miraculous, parting-of-the-Red-Sea moment, Japan’s bookshops have set aside shelf space for a genre of literature that has, appropriately, generated roughly zero demand for the past three decades: inflation and what to do about it. Titles such as Inflation Japan: the Coming Era of Endless High Prices and A World of Inescapable Inflation, strike a common, cautionary and grandiose tone. In the judgment of these works, Japan’s late 2021 entry into a sustained, 20-month stint of consumer price increases after years of stagnation and deflation represents not only a profound economic shift but a psychological, social and epochal one too. On balance, that feels about right. Japan’s experience with deflation was weirdly protracted and weirdly pernicious. If it is now truly over, there is an awful lot of weirdness to work out of the system even as the country is braced for inflation to become the next problem.Beijing, meanwhile, may decide that Japan’s inflation-linked publishing phenomenon is worth a particularly close study as the two economies pass on the stairs: Japan swatting deflation’s last tentacles off its ankles just as China seems to be stumbling resignedly into its embrace. China’s descent into deflation was confirmed last week as part of a wider onslaught of tough economic news from the economy that generates over a third of global growth. Alarmingly high youth unemployment, weak property prices and a heavily indebted corporate sector are all hurting demand, and were the backdrop against which weak consumer prices turned mildly but undeniably negative in July. For some, this crossover provided yet another data point in what has become a compelling intellectual exercise: comparing Beijing’s economic challenges now with those of Tokyo in the early 1990s years of its “lost decades” and concluding — as Moody’s economist Stefan Angrick does — that they are “eerily similar”. The list of the similarities, and the question of whether ageing China will now replicate Japan’s woes over a similarly protracted timescale, can look persuasive.The bursting of Japan’s late 1980s asset-price bubble produced a cohort of troubled banks and indebted companies of a type that China is now accumulating. The threat of so-called balance sheet recession, which defined Japan’s lost decades, now appears to loom heavily over corporate China. As their Chinese counterparts are to some extent doing now, businesses in Japan 30 years ago became unwilling to borrow or invest as they paid down debt, and ultimately convinced their workforces to lower expectations of serious wage growth.Japanese households lost the confidence to spend; competition destroyed pricing power; demand weakened and deflation ensued. China, in the eyes of those who see Japanification, is now experiencing the same.But are fears of a long, Japan-style deflationary descent for China misplaced? Economists at Citibank and elsewhere cautioned investors against reading too much into a single month’s consumer price data, particularly since plunging pork prices may have been the single biggest culprit. But the risk of this becoming longer term is still there, and the longer it remains, the more Japan’s experience is relevant. Because however important and helpful the analysis and advice in all those newly published inflation books may be, the biggest revelatory value is that they need to be written at all. Many of them offer advice on how to invest for an era where doing nothing no longer works. The way in which Japanese households have allocated the majority of their savings to cash — and come under little pressure to adjust that — is among the most embedded behavioural consequences of deflation that may now unwind quite suddenly.These books are written as guides, in effect, for inhabitants of a country that has suddenly become economically foreign to them. China should see that as a measure of how deeply entrenched some habits of living with deflation can become, and how far beyond early projections it can take to end it.But a second, important, revelation lies in the tone the books necessarily strike. Inflation may still be a good distance from being a bad problem for Japan, but it can — and probably should — be cast as a worse one than deflation ever was.Beijing, meanwhile, knows this perfectly well, which is why it may be comparatively relaxed about even quite a long joust with falling prices. In 30 years, deflation as a crisis caused barely a flicker of serious public unrest in Japan: inflation can spark trouble [email protected] More

NEW DELHI (Reuters) -India’s Adani Ports on Saturday said Deloitte’s reason for quitting as auditor of the company was “not convincing or sufficient to warrant such a move” and the global firm had all the necessary information it required to conduct the process. Deloitte decided to resign from the role amid concerns over certain related party transactions flagged in a report by U.S. short seller Hindenburg in January, but the Indian company did not wish to look into them independently, a source told Reuters on Friday. The auditor’s resignation has brought fresh scrutiny of the financial management at Adani Group, led by Indian billionaire Gautam Adani. The group has denied Hindenburg’s allegations made around alleged improper use of tax havens and other business dealings.Commenting for the first time on the matter, Adani Ports said in a statement that in meetings with its leadership, Deloitte indicated concern over a lack of a wider audit role as auditors of other listed Adani companies. However it was conveyed to the auditor it was not within the remit of Adani Ports to recommend such appointments as other entities are “completely independent”, the company said.”The Audit Committee (of Adani Ports) was of the view that the grounds advanced by Deloitte for resignation as Statutory Auditor were not convincing or sufficient to warrant such a move,” Gopal Krishna Pillai, Chairman of the Audit Committee of Adani Ports, said in the statement.”Deloitte was not willing to continue as … auditor and, therefore, it was agreed to amicably end the client-auditor contractual relationship,” he said.Deloitte did not immediately respond to a request for comment. In its letter of resignation, contained in Adani’s stock exchange disclosure on Saturday, it said it was resigning with “immediate effect” as it was not the statutory auditor of a substantial number of other Adani Group companies.”The company did not consider it necessary to have an independent external examination” of certain allegations, which were contained in the Hindenburg report, Deloitte wrote in the letter. Deloitte first pointed out in May certain transactions flagged by Hindenburg and gave only a qualified opinion related to Adani Ports, indicating its concerns. Adani Ports has named MSKA & Associates, an independent member firm of BDO International, as its new auditor, it said in the statement.After the Hindenburg report, Adani group stocks lost about $150 billion in market value, but have since regained by around $50 billion after it paid debt and gained confidence of investors such as Australia-listed investment firm GQG Partners.This month, Adani’s Ambuja Cements said it would buy a majority stake in smaller rival Sanghi Industries for up to $295 million, its first major purchase since the Hindenburg turmoil. More

SAN VICENTE, Argentina (Reuters) – In Argentina’s grains fields and cattle ranches, farmers are hoping upcoming elections will bring political change and an end to years of economic uncertainty, ushering in freer markets with fewer currency controls and export limits.The South American country will vote in open primary elections on Sunday that will give an indication of how general elections in October will go. The ruling Peronist coalition is facing a strong challenge by the conservative opposition.The government, battling an acute shortage of dollars, annual inflation scraping 116%, and a fast declining currency, has imposed strict capital controls, limited some exports, and hiked interest rates to 97%. That has made business difficult in one of the world’s top soyoil and meal exporters and No. 3 corn exporter.”It’s been a tough time for the farm sector and we hope there will be a change to boost production,” Horacio Deciancio, 71, a rancher and head of farming town San Vicente’s local agricultural group, told Reuters from his fields, surrounded by cows.Like many farmers he opposes the Peronists, who the industry has long clashed with over taxes and export controls, and favored the main opposition bloc Together for Change, which has a slight lead in opinion polls. “At least what they are talking about in the political campaign would improve conditions for the sector,” he said.Competing to lead the Together for Change coalition are Buenos Aires city mayor Horacio Larreta and ex-security minister Patricia Bullrich, taking on the Peronist front-runner Sergio Massa, the current Minister of Economy.Larreta and Bullrich have both pledged to remove taxes and limits on exports of agricultural products, as well as eliminate caps on exchange and capital markets, diverging only on how fast those controls could be unwound.”I think Larreta could be a good candidate for what he’s promising,” said Juan Carlos Ardohain in a field he rents in San Vicente for cattle. Currency exchange instability in recent years had inflated his costs, he said.Argentina’s currency controls, which tightly limit access to dollars, have stoked a flourishing black market for foreign currency where greenbacks command over twice the official price, distorting import and export markets.Many farmers, or “chacareros”, from the wide Pampean plains, the engine room of Argentina’s economy, say they will get behind the conservative opposition as they did in 2015, when they helped propel former President Mauricio Macri to power.”What we need are free markets,” Ricardo Firpo, an agricultural producer from the breadbasket province of Santa Fe, said at the annual fair of the Argentine Rural Society (SRA) in capital Buenos Aires.”We need to be able to export what is needed, to work freely, to be able to bring in and withdraw foreign currency, a single exchange rate, lower interest rates,” he said.At a recent event, the head of the powerful SRA chamber sat next to Larreta in a show of support and warned that the farming sector was in jeopardy due to what he called mismanagement of the economy by the Peronist administration.The government blames the country’s economic woes on issues they inherited, as well as the impact of the Ukraine war and a record drought. Massa has promised to steady the economy, but his policies have not directly addressed the farming sector, with whom the Peronists have long had a mutual antagonism.”We think the farm sector can give much more than it is doing now,” farmer Deciancio said.”But if they put their foot on our head, as is happening now, the sector will not be able to come up to breathe.” More