Credit deflation and the reflation cycle to come (part 2)

[planit]

3 minutes ago, sancho panza said:

I read the article and the reason I found it informative was that it highlighted,albeit as you point out,in a non peer reviewed study,the possibility that people who've been vaccinated can catch still catch covid. @Lightscribedid misinterpret what was in it but you can link to peer reviewed studies and misinterpret what's in them.I'd assume that anyone who's read the article and marked the post informative has similarly read the article.

You've assumed that I marked Lightscribe's psot informative without reading the article from what I can see.

The whole issue of peer review is important,hence one might attach more significance to those that are. However,much like official inflation figures,some anecdotal evidence can potentially give you an insight that's not possible .In terms of peer review,I'm still waiting(as is the world of Lockdown sceptics) for Prof Neil Ferguson to publish the computer model he used to create his original wildly inaccurate covid fatality predictions in 2020 for peer review.

With a vaccine you are less likely to catch Covid AND less likely to pass it on. This has been confirmed by studies in Israel etc.

Vaccinated people less likely to transmit coronavirus

I haven't checked these figures but hopefully it demonstrates the point.

If there is an 80% efficacy for the virus then there is only 20% chance of catching it.

On top of that if there is a 50% less chance of passing it on if you do catch it then the propagation of the virus falls by 90% due to the virus (0.2 x 0.5). This is a huge drop and more than enough for herd immunity solely from the vaccine (ignoring the 30% of the population that have already had the virus and the 25%[guess] who are naturally immune).

 

[JMD]

2 hours ago, Agent ZigZag said:

Looking in from the outside I am of the opinion that there is a huge agenda being played out. Governments around the world simply do not know what to do with the current system that we have in place, that is running out of road. 

I agree 100%, and think this is the main reason for all the mixed messaging/cack-handed policies we have seen from the start of the 'pandemic'. For example, Boris Johnson did a 360 u-turn last February, where within a two-week period he went from saying closing pubs is not the 'British way', but then implemented a succession of 2/3/4-month lockdowns. I get it that he is a chaotic politician (understatement), but the rest of the cabinet have also imo been very conspicuous by their absence, what do they really believe i wonder?

I sometimes fantasise that a senior politician stepped forward and 'went rogue' to spill the truth beans, but in reality i think that it is too late for any such act to make a difference - the public are now fully on board and simply wouldn't take any notice. In fact, i believe there would even be wild calls for the 'wicked-witch' to be burned at the stake, so far down the rabbit hole we have now gone!!! (excuse the muddled metaphores)

[Harley]

1 hour ago, feed said:

Follow the money

When does the furlough scheme end? The furlough scheme is currently set to run until September 30.

Furloughed employees will continue to receive up to 80% of their pay for hours not worked while the scheme continues:

From July, the government will contribute 70% and employers will have to pay 10% for hours not worked
In August and September the government will pay 60% and employers 20%

Unless it's extended again, i wouldn't expect to see real change in behaviour before October 

Another lockdown? Watch what Rishi does.

To me, the odd furlough extension to September immediately made me think of a project go-live being delayed.  Maybe they are not ready yet to pull the switch to whatever they have in store for us financially.  Systems not ready, data not ready, users haven't been fully "trained", change managers saying user acceptance not quite there yet, technical issues, testing not going well etc, etc?

[Rave]

1 hour ago, Cattle Prod said:

They all want this gravy train to continue of course, so will push things negatively. The latest 'vaccines aren't bringing down infections, lockdowns are' bollocks from Boris speaks to his. That, or his is trying to cover his arse for stupid lockdown policies. Maybe the lawyers have woken up and had a word with him?

 

Chris Snowdon has done an interesting twitter thread on this:

 

He's a noted opponent of the nanny state so I'm inclined to take him at face value, but obviously I wouldn't want to be seen to be doing an 'appeal to authority' so please everybody continue to DYOR .

My own personal stance is that once everybody has been offered a vaccine (whether they have accepted it or not) then lockdowns must end and everyone must decide for themselves whether to chance it.

And my own personal stance on the vaccine was that, as someone who is not eligible for any government support payments of any type, and given that the vaccine appears to be safe enough by my own standards, then it was in my interest to take it simply because I'm "self employed" and I stood to lose money if I had to stop working through illness. I will not use a vaccine passport in this country on principle (though I would get one if it enabled me to travel abroad, since it doesn't seem unreasonable to me for countries to try to stop foreigners potentially bringing the virus in).

[reformed nice guy]

Had a glance at the BBC news and Tesco posted a 7% rise in revenue but 20% drop in profit.

Some of that will be expanding out their home delivery operations but you would have hoped that they had already written down a lot of that infrastructure already.

UK productivity stats also down.

A sign of things to come and another indicator for coming inflation

[Rave]

16 minutes ago, sancho panza said:

You've assumed that I marked Lightscribe's post informative without reading the article from what I can see.

 

I intended no such implication, apologies if it came across that way. I had no way of knowing whether you had clicked the link and read the article for yourself. There was always every chance that by tagging you and the others I was simply teaching granny to suck eggs  .

[Hancock]

4 minutes ago, Rave said:

He's a noted opponent of the nanny state so I'm inclined to take him at face value, but obviously I wouldn't want to be seen to be doing an 'appeal to authority' so please everybody continue to DYOR .

 

 

He is a Blairite a neoliberal or whatever his breed are labelled as.

He has just locked the entire nation down for what looks to be a minimum of 15 months, and is now trying to force people to take his quickly knocked up vaccine ..... he is the most authoritarian PM in the history of these Isles.

[planit]

I had a thought today and feel free to critique -

It is regarding the spending boom which I believe will take markets by surprise at some point.

Everyone agrees that there is a lot of increased savings and there are people who have not gone out as they are scared.

 

What I believe is that these two points are correlated so the more scared someone is, the more chance they have higher savings.

I don't think the correlation is huge but enough to make early spending potentially less than expected which misguides so later spending grows much faster than expected.

 

My outlook has been pushed back over the last month, I see a slow increase in confidence and opening up over the summer and a late boom this year. BK might be pushed back to next year as I can't see it happening whilst people are in a spending boom. There might well be a big tech-led market rout soon but I feel a BK needs a bit more real-world substance behind it.

 

[sancho panza]

22 hours ago, Wheeler said:

I've been watching the actual figures for the past couple of months and it is clear that CPI is accelerating. Obviously the US Fed will try and spin it as temporary but a month on month increase of 0.62% isn't impacted by last year's base effect! There have been 5 months now where the percentage increase over the previous month has increased:

My prediction is it will show year on year CPI of 4% next month and 4.8% the month after. We could be on for 6% by October with the Fed talking about tightening, just in time for the BK.

 

For thsoe fishing for BK instigators,I think inflation wins over Lockdowns/Covid related issues.The reality is that as long as the CB's can print,govts can carry on as they have.the moment they can't we enter a new,much more worrying phase when the cracks that started showing in 2008 can't be papered over.

19 hours ago, Lightscribe said:

Even here in the UK, the government statistics for reactions and fatalities are all readily available and yet get no mention. These are from January to March and I suspect these will naturally increase the more they are rolled out to a wider range of people with pre-existing conditions etc and second doses are administered.

https://www.gov.uk/government/publications/coronavirus-covid-19-vaccine-adverse-reactions/coronavirus-vaccine-summary-of-yellow-card-reporting#annex-1-vaccine-analysis-print

Recent studies also show that those with both Pfizer doses are more eight times more at risk to the South African variant than unvaccinated. 

https://www.foxnews.com/health/israel-covid-19-study-south-africa-variant-pfizer-vaccine.amp

I can quite easily see a suspension of the vaccine rollout in western counties leading to the BK. I think eventually a continuous updatable mRNA vaccine program will be put in place instead.

Problem is if the big blast off of opening the global economy doesn’t happen, it could be the trigger to blast it the other way.

 

The thing is that we've known for some time anecdotally that there have been problems with adverse vaccine reactions.The gov.uk link states 126,000 fatalities from covid.

Interesting report,thanks for psoting

As you say,it's more the perception amongst the public than anything else.

From the govt research.

'The MHRA has received 302 UK reports of suspected ADRs to the Pfizer/BioNTech vaccine in which the patient died shortly after vaccination, 472 reports for the Oxford University/AstraZeneca vaccine and 12 where the brand of vaccine was unspecified. The majority of these reports were in elderly people or people with underlying illness.'

2 hours ago, Cattle Prod said:

Nice bit of DD there, Rave. I find that when I can be bothered, I invariably find similar stupid uses of statistics and misinterpretations as I've previously done on here. What I imagine is happening is a total feeding frenzy of funding being chucked out by governments, which starving academics and researchers have jumped on, throwing out any old shite. Yet another corruption by throwing unearned money around.

They all want this gravy train to continue of course, so will push things negatively. The latest 'vaccines aren't bringing down infections, lockdowns are' bollocks from Boris speaks to his. That, or his is trying to cover his arse for stupid lockdown policies. Maybe the lawyers have woken up and had a word with him?

They can engineer another lockdown if they want, but I for one won't be participating. I've accepted this bollocks till the vunerable were vaccinated, as it is a real, highly contagious disease and I don't want to infect anyone (though I think they should have been locked down, not the healthy population). Now, I am quite prepared to break the covid laws if they don't take them off the books, get fined, and let it go to court. I can afford to argue my case. All it will take is a few tens of thousands of people doing this to entirely clog up the court system. Civil disobedience from now on. The sword over my head of course is that they will threaten to criminalise me, which would affect my employment, but so be it. I don't want to pay this much tax anyway 

I think you're one of a large number of people that have that perspective and it makes perfect sense.Vulnerable are vaccinated etc.

The issue is that our politcal class have become accustomed to lockdowns for a variety of reasons.Obsessed even.It really does have the feel of them wanting another lockdown,I'm jsut not sure the economy could stand it.

Local elections in May will give an insight as to where we are.I think the govt will do badly,not because people dislike them for the lockdown,rather from a lack of enthusiasm.If the Troies get mullered,then lockdowns are finished.If they don't then they could be back in the winter.

2 hours ago, Agent ZigZag said:

I hold quiet of bit of silver and gold at Goldmoney, an account that I have held and used for a long time. This has suddenly been frozen after I tried to take delivery. I now have to demonstrate a full audit trail of where my income came from going back 15 plus years, employment status, who I am, address etc. The full works under the requirement of money laundering. The daft thing is with all on line finance/banking, share accounts etc, they ask no questions regarding money laundering when you give them your money, but as soon you ask for it back you have to jump through hurdles. It is why I like tangible objects. I want to see it and hold it cutting out the middle man.

Looking in from the outside I am of the opinion that there is a huge agenda being played out. Governments around the world simply do not know what to do with the current system that we have in place, that is running out of road. 

Informative post AZZ.One reason to hold paper gold via the miners.Quite worrying really,when I can't produce 5 years of that data.

[Harley]

30 minutes ago, JMD said:

I sometimes fantasise that a senior politician stepped forward and 'went rogue' to spill the truth beans....

Sajid Javid sort of did during the planning phase!  Did anyone really believe a politician got annoyed with playing politics!

[Harley]

25 minutes ago, reformed nice guy said:

.....

Some of that will be expanding out their home delivery operations but you would have hoped that they had already written down a lot of that infrastructure already.

......

My partner informs me you now need to first fill your basket before booking an on-line delivery slot.  Maybe a new algo to offer slots on the basis of the size of the basket?!

[planit]

Funniest article so far today, I wonder what happens when people start flying :

[Harley]

In a way I'm proud of us all for now really talking about the "political economy", not just the BoE, etc!  Today's posts highlight the tight integration between the two, more than any "pure" economist can comprehend.  I did PPE, but not all in one go, first came the economics, then then politics, and now the philosophy! 

[sancho panza]

8 minutes ago, Rave said:

 

I intended no such implication, apologies if it came across that way. I had no way of knowing whether you had clicked the link and read the article for yourself. There was always every chance that by tagging you and the others I was simply teaching granny to suck eggs  .

No worries.I was surprised,even with such a small sample that people who've been vaccinated could still catch it.Having said that,there's a chance these are false postives depending on the testing protocol.

I knew well before the data came out that there were issues with adverse reactions to the vaccine.I'm not a doctor,but some people with complex medical conditions were being given these vaccines with so much as a GP consultation and then ending up in A&E.As the govt paper says,the bulk of the bad reactions have been in people with pre existing conditions.

I've said to my Dad -who's 75-that the risk/reward in terms of the vaccine really changes markedly where the death rate ticks up in my opinion(I'm not a doctor) ie 60's/70's.It's difficult for people because the govt have been relatively disingenuous with the data.In teh gov.uk piece @Lightscribe posted here,they talk about 126,000 people dying within 28 days of a covid positive test,which is true but not a particualrly nuanced reflection of the reality.Firstly,there are issues with false positives eg poor Lab conditions(Panorama),cycle counts for PCR etc.Secondly,a number of those may have died as described but did so from other conditions eg heart failure,COPD(which covid would likely exacerbate the symptoms of).ICU admissions at the peak in Jan for MI's(heart attacks) were down 50% plus,strokes down 50% plus-you can see my point.When they state 126,000 died with covid,they didn't provide the crucial context that however many people didn't die of these conditions that did at the same time last year.

The UK's all cause mortality was lower in 2020 than all the years before 2008.New Zealand(poster boy for lockdown) has it's highest all cause mortality figures for 15 years currently which you don't hear in the MSM much.

https://www.gov.uk/government/publications/coronavirus-covid-19-vaccine-adverse-reactions/coronavirus-vaccine-summary-of-yellow-card-reporting#annex-1-vaccine-analysis-print

[sancho panza]

26 minutes ago, Rave said:

 

Chris Snowdon has done an interesting twitter thread on this:

 

He's a noted opponent of the nanny state so I'm inclined to take him at face value, but obviously I wouldn't want to be seen to be doing an 'appeal to authority' so please everybody continue to DYOR .

My own personal stance is that once everybody has been offered a vaccine (whether they have accepted it or not) then lockdowns must end and everyone must decide for themselves whether to chance it.

And my own personal stance on the vaccine was that, as someone who is not eligible for any government support payments of any type, and given that the vaccine appears to be safe enough by my own standards, then it was in my interest to take it simply because I'm "self employed" and I stood to lose money if I had to stop working through illness. I will not use a vaccine passport in this country on principle (though I would get one if it enabled me to travel abroad, since it doesn't seem unreasonable to me for countries to try to stop foreigners potentially bringing the virus in).

you've also got the issue that as self employed,some people may not hire you.Sad but true.That was why my dentist got the jab,to protect his business

[Lightscribe]

1 hour ago, sancho panza said:

I read the article and the reason I found it informative was that it highlighted,albeit as you point out,in a non peer reviewed study,the possibility that people who've been vaccinated can catch still catch covid. @Lightscribedid misinterpret what was in it but you can link to peer reviewed studies and misinterpret what's in them.I'd assume that anyone who's read the article and marked the post informative has similarly read the article.

You've assumed that I marked Lightscribe's post informative without reading the article from what I can see.

In terms of taking the vaccine,I'd agree that everyone has to weigh their risk profile individually.

The whole issue of peer review is important,hence one might attach more significance to articles that are. However,much like official inflation figures,some anecdotal evidence can potentially give you an insight that's not currently available from offically compiled stats .In terms of peer review,I'm still waiting(as is the world of lockdown sceptics) for Prof Neil Ferguson to publish the computer model he used to create his original wildly inaccurate covid fatality predictions in 2020.

 

Completely agree, figures, models and stats have been wildly inaccurate throughout the whole pandemic, especially with the suspect initial figures from China.

In addition I would also like to have access to further studies on why the government acted so irresponsibly in the 50’s by not initiating lockdowns or reviews into why so many older lives were lost to excess winter deaths, despite having such a smaller population.

https://www.bbc.co.uk/news/uk-42324984

 

Surely the answer would be to vaccinate the vulnerable and let them isolate, then let the rest of the younger demographic who are least affected by rhinoviruses, coronaviruses, influenza viruses and their variants to get on with their lives building herd immunity and the economy?

[Harley]

On 12/04/2021 at 21:39, DurhamBorn said:

Your probably looking at holders of the ADRs ,Telefonica Spain own 70% of the equity i think.

Having humbled myself over this, I dare risk more humiliation or maybe redemption!  I looked at the financials for VIV and its parent(?) TEF (Madrid exchange).  Very different.  VIV looks in quite good shape but TEF is more of a basket case regarding debt, etc, or is at least not as good.  Unless TEF somehow impacts VIV (say inter-company loans and guarantees, etc)  VIV seems the lower risk/better value in that respect?

[sancho panza]

1 hour ago, DurhamBorn said:

Inflation will decide how long this goes on.Once its over 3% and remains there QE will slow down and then stop.Governments then will be facing a huge structural deficit.Then government will have to hold down spending so inflation can do its work.

 

DB,I'd be interested on your take on the following if you have one.Sorry for the long post but it's hard to cut down.Highlights are mine.

Shaun Richards asking whetehr we will rein in credit rather than lift IR's like the Chinese are doing.

https://notayesmanseconomics.wordpress.com/2021/04/12/china-moves-to-tighten-monetary-policy/

China moves to tighten monetary policy

This morning has brought something which raised a bit of a wry smile. It came from the People’s Bank of China and the emphasis is mine.

At the end of March, the balance of broad money (M2) was 227.65 trillion yuan, a year-on-year increase of 9.4%, and the growth rate was 0.7 percentage points lower than the end of the previous month and the same period last year; the balance of narrow money (M1) was 61.61 trillion yuan, a year-on-year increase of 7.1%. The growth rate was 0.3 percentage points lower than the end of the previous month and 2.1 percentage points higher than the same period last year;

It was the case for many years that China had faster money supply growth than the West. But as you can see it is a fair bit lower now as for example the latest broad money growth in the Euro area is shown below.

Annual growth rate of broad monetary aggregate M3 decreased to 12.3% in February 2021 from 12.5% in January.

There are various contexts here and the first is the 3% difference in broad money growth rate. This matters in terms of monetarist theory because it leads into growth in nominal economic output or GDP with a lag of 18-24 months. So either the Euro area is going to grow faster than China or we will see an inflationary push. These days the inflationary push tends to turn up in asset prices such as house prices rather than consumer inflation especially in the Euro area where its measure ignores owner-occupied housing.

 

Time to Tighten?

Firstly let me apologise to any Western central bankers reading this next bit as it must be discombobulating. Please make sure you are sitting comfortably as we join the China Economic Review..

China’s central bank has asked lenders to rein in credit supply, as the surge of lending that sustained the country’s debt-fueled coronavirus recovery renewed concerns about asset bubbles and financial stability, reported the Financial Times.

New loan growth hit 16% in the first two months of the year. The People’s Bank of China responded in February by instructing domestic and foreign lenders operating in the country to keep new loans in the first quarter of the year at roughly the same level as last year, if not lower, according to FT sources with knowledge of the situation.

The directive could translate into a considerable drop in bank lending, the largest source of financing for the world’s second-largest economy, said the FT.

The policy mechanism of using a quantity measure is one that also differentiates China from the West or at least it did. The reason here is that Western experience was that trying to control lending in one area led to two problems. Firstly that it is a blunt instrument that tends to impact on all lending including that to the real economy and thus affects economic growth. Next that lending for property is hidden via all sorts of machinations so that we get what is called disintermediation where the official measures do not count what the officials think they do.

Is Inflation on the rise?

Late last week brought news of changes as we look up the inflation chain. From the National Bureau of Statistics.

2021 March, the country’s industrial producer prices rose 4.4% , up 1.6% ; industrial producer prices rose 5.2% , up 1.8%

The area pushing this change is below.

Among them, the price of mining and quarrying industry increased by 12.3% , the price of raw material industry increased by 10.1% , and the price of processing industry increased by 3.4% .

This has led to a response this morning.

China will strengthen controls on the raw materials market to help limit costs for companies that have been pressured by a surge in commodity prices, China National Radio reported, citing Premier Li ( @FirstSquawk)

According to Bloomberg the crunch is already impacting students.

Last month authorities effectively shuttered student access to the once ubiquitous online loan industry, a sprawling collection of apps, fintechs and other unregulated lenders. Internet platforms were told to stop offering online loans to students and unwind existing credit. Banks will need to seek regulatory approval before promoting such loans on campus.

The loans look not a little usurious to me.

Historically there were next to no affordability checks on short-term loans to students, where annualized rates are typically between 15% and 24%.

What could go wrong?

 

[Bear Hug]

I am trying to think where I can park my work pension contributions during the BK. 

Not many options, so narrowed it down to cash, UK FI gilts fund or UK indexed gilts fund. 

Does anyone have any views whether cash or gilts are better in such scenario? Unfortunately USD is not an option.

Other thoughts are maybe to put some in emerging markets fund, but guess that could be hit as hard as the rest. 

[Harley]

12 minutes ago, sancho panza said:

you've also got the issue that as self employed,some people may not hire you.Sad but true.That was why my dentist got the jab,to protect his business

Will he be welcoming the unvaccinated?

[Harley]

1 hour ago, leonardratso said:

hey fatty, stop going to the fridge, or if you cant then move the fridge to the next town and away from the settee by at least a mile.

Oh I don't know.  He posted a pic of himself upstairs.  I would!

[Harley]

5 minutes ago, Cattle Prod said:

thanks, that's interesting.

There is a major flaw in his analysis. I don't disagree with him that vaccines are not necessarily correlated with overall death reduction numbers (cases are largely irrelevant and should be discarded). The fact is that we are vaccinating millions of people who don't need to be. Whose immune systems will kill the virus in hours, and never transmit it, or who have already have had it and are already immune. However he gives lockdown as the causative factor in numbers coming down, which is a total assumption. How do we know, if there is no control group? We have never done this before, and the coincidence of dates is just that, coincidence. I'm sure locking everyone away from each other had some minor effect, but personally, I've had a few sniffles and tickly throats this winter (which my healthy immune system promptly killed. How did these viruses get into my system when this seasons dominant virus is supposedly 'locked out'? Doesn't add up. I suspect could make Snowdon's argument replacing the word 'lockdown' with 'seasonality'.

The good ole USA have provided us with a proper experiment with many control groups. There is no statistical difference between lockdown or non lockdown states (or any in between). Lockdown is just bollocks. Viruses are really, really tiny and can't be stopped going about their business.

At the risk of turning this into a pure covid thread, I thought the numbers were coming down even before the last lockdown.  This whole "whateverdemic" has been a lovely lesson in the use and misuse of statistics and the sanctity of pure honest data and a rational mind.  We should be miles better to profit from the markets now, if we're still going to be allowed to!

[sancho panza]

11 minutes ago, Harley said:

Will he be welcoming the unvaccinated?

Absolutely,he's very well connected in the medical community and informed me that a fair few of his contacts in different fields thought the whole lockdown was 'bollocks'.His words not mine.

[nirvana]

53 minutes ago, Rave said:

though I would get one if it enabled me to travel abroad, since it doesn't seem unreasonable to me for countries to try to stop foreigners potentially bringing the virus in).

you can't discriminate against anyone who hasn't been 'drugged up'...... EU resolution 2361 section 7.3.2

But yeah I do acknowledge that the EU is trying to implement 'Digital Green Certificates'

If I was closer to the border I'd have a go at cycling over and see what the cunts have to say about it 

[JMD]

2 hours ago, BurntBread said:

There is something funny about digital currency with a time-limit, which makes me think it's slightly less likely.

Governments love inflation, because it's a tax which working people don't know how to avoid, and typically don't realise it is a tax at all. Once you inflate the money supply, and when things have come back to some kind of equilibrium, then I think the overall result has been to confiscate wealth from two types of people: cash savers and bondholders (for example pensioners). As DB says, this is confiscation of saved labour. Those people who want to avoid the tax can do so by getting out of cash and bonds and into real things (including part-ownership of companies).

By introducing a digital currency with a time-limit, the government would be forcing cash into being just a medium of exchange, rather than a store of value as well. That will actually reduce the pool of people they can steal from through inflation, which is why I'm starting to doubt whether they really want to do this. Admittedly, the theft from bond-holders is much greater than that from cash-savers (not many people have large cash savings, and the leverage from debt is bigger), but it's still removing a part of the benefit (to the government) of inflation, as a tool to farm the population.

Am I making a reasonable point here, or is it just wishful thinking?

I thought the main 'policy reasoning' by governments in regards forcing inflation up, was in order to engineer a soft default on debt? Controlling how/when money is spent - by implementing a digital currency - will make doing this much easier.

Plus, in the event of the above inflation policies not working - and instead we get a total world monetary collapse near the end of the decade - such CBDC's will really come into their own, because they also contain nice long-term features (not bugs), such as real-time monitoring/control facilities... so roll out the CBDC's say over next couple years, allow couple more years to work out how to use them properly 'on/against?' the public', and this brings us to approx. 2028, coincidence or conspiracy, you decide!?!