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from The Great Debate UK:

Deflation? It’s inflation you need to watch

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-- David Kuo is a director at the financial Web site The Motley Fool. The views expressed are his own. --

david-kuo_motley-foolWhat are consumers supposed to make of the latest inflation numbers? Do we have inflation, deflation or a bit of stagflation?

Truth is, it depends on who you are and what you do with your money. The Retail Prices Index or RPI tells us that prices today are exactly the same as they were a year ago. The Office for National Statistics reported that RPI was unchanged at 0%.

But be very careful when bandying around the term “prices”. The RPI includes elements of housing costs. So it is better to talk about the cost of living rather than prices. Prices have risen compared to a year ago, but the total cost of living as measured by RPI has fallen because of the disproportionately large drop in mortgage costs as a result of lower interest rates.

Tumbling markets – where will it end?

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Stocks went in a tailspin again today as banking stocks tumbled after AIG posted a record loss and HSBC announced Britain’s largest ever rights issue.

Banking stocks led the FTSE decline after HSBC’s plan of a deep-discount rights issue and embattled life insurer AIG announcement of a $61.7 billion quartely net loss, the biggest in U.S. corporate history.

from Global Investing:

A dish best served cold

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Alain Grisay, the softly spoken CEO of F&C Investments, was in a wry humour at F&C’s annual press seminar for European journalists on Thursday.

Fresh from his bout with the UK’s Treasury Select Committee on the causes of the banking crisis, and enjoying a respectable set of fourth quarter figures, Grisay is in the rare position of having come through the storm with his house intact. “We have just gone through an unrequested market stress test that confirms our model works,” he said. “We were able to report resilient results for the year and took the market by surprise."

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