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

[DurhamBorn]

Noticed today house prices are starting to really move up here.Any decent 3 bed semi that comes up is selling very quickly.I suspect what we expected is starting to play out as southerners sell up and move north.It should show up in house prices increasing north by more than south,then south in outright falls.Roadmap said an inflation pulse would see this happen and looks like its started now.

[Lightscribe]

1 hour ago, Hancock said:

Reminds me of Trivial Pursuit.

We’ll see no doubt eventually. But maybe it is on a grand scale, only you’re not playing. 

[DurhamBorn]

1 minute ago, mh9000 said:

Are these employers going to be to considering moving plants overseas to the EU workers (or further afield) if govt won’t give the visas?

 

 

I dont think so.We have cost push inflation and that means transport costs etc eliminate anycost advantages,inflation hammers extended supply chains,the dis-inflation that they gained from is a pendulum now swinging the other way.Plants returning from the east will easily outdo any going to Europe as well.

[Hancock]

46 minutes ago, Lightscribe said:

We’ll see no doubt eventually. But maybe it is on a grand scale, only you’re not playing. 

Oh they want me to play, but my willingness to fight, and tell authority to get fucked all my life means ive opted out of their shitty game. 

I'll have my kids school fees set aside by the end of August to pay for her to attend until end of summer 2024, 150k in a SIPP, soon to have 250K in inflationary shares ... and a soon to be sourced new fund to buy a house in BKK.

Not to mention a job where i can work several a year for 30k, of which i'll have to save another £45k in school fees to pay for school up until aged 16.

Im trying to get my head around it, but at age 46, It would seem i'm almost able to cash my chips in and live the good life (though frugal), and get my kid a top end education. (more importantly kids happy)

Not bad for someone with a dreadful work ethic, that can't work for a boss, making me unemployable for a PAYE job, uneducated, ex-con, thats raised a kid alone. 

[sancho panza]

4 hours ago, Bobthebuilder said:

This is much the same as happens in any recession, people leave cities as the work dries up because they cannot afford the rent etc. It is one of the best times to be working in a city as the demand goes through the roof for the remaining services and not to many people about to do the work. 2008-2013 was a money making machine in London for good trades, I made more money then than in any other boom time period when everyone and their dog is grabbing the coins.

Same with office based firms, I have no doubt some young go getter types are planning to start business in say London and they will outperform the WFH lot, probably cost them their jobs.

A Cornish sea view is good for the soul, but it don't pay the bills.

random anedotal here Bob but a mate was jsut at Wells by the sea(never heard of it),somehwere down south.Says the local pub landlord is paying bar staff £12-50 an hour as people jsut won't work for less.SHortage of local kids....

 

[Sasquatch]

1 hour ago, DurhamBorn said:

Noticed today house prices are starting to really move up here.Any decent 3 bed semi that comes up is selling very quickly.I suspect what we expected is starting to play out as southerners sell up and move north.It should show up in house prices increasing north by more than south,then south in outright falls.Roadmap said an inflation pulse would see this happen and looks like its started now.

When we bought our new house a couple of months ago, there were 6 other houses in the village on the market. Two more came up for sale in the next month, making 8 in total. They've all sold. I'm actually quite surprised as some had been for sale for quite a while. However it does fit into your theory of money moving northwards. The last one to sell, had been on the market for a week and will easily have achieved the highest asking price ever for the location. And there was me thinking we paid too much for ours.....

[sancho panza]

On 04/06/2021 at 19:14, planit said:

@sancho panza

 

Since I will do an exam on this next week I will have a go

I assume the 2 figures come from different places so they are a measure of different things, a bit like space in a car with one person measuring the storage space and the other the seating space, they are for different things.

 

So the 2 things are:

a) the share price market cap

and

b) the 'Equity' section on the "Statement of financial position".

 

Extra note:

These days there are financial instruments that could be classed as equity or liability and would therefore be allocated to the relevant section on the balance sheet. So there could be a type of loan with benefits that needs to be stuck in the equity section making the Equity bigger and the liabilities smaller.

You can read here if you want [too much] more information.

 

Here is what happened at the last BP agm, really interesting as the shareholder was peeved but as Looney points out, BP has no choice in this allocation.

I hope I am correct and this helps.

Intersting points there Planit.for me they both measure the rough market value of the company.The more realistic is the market cap as that's what people in the trade think it's worth.Thats my point really.

Barclays(or Nat West whatever) are claiming shareholder equity of £40 bn but Mr Market says £20bn.....

The other point you make is bang on and one I hadnt pondered ie the treatment of hybrids.Amazing find in that BP AGM....really does make you realsie the importance of spray n pray investing when these go wrong as they sometimes do.

[sancho panza]

On 05/06/2021 at 05:04, Castlevania said:

Loan book accounting for distressed debts is very backward looking. The market seems to be pricing in significant write downs. I haven’t checked in a while but Barclays used to trade at a discount to RBS, despite having a stronger presence in credit cards (the high interest rates charged, more than cover the credit risk over the cycle) and a big investment bank that should make money regardless of the credit/economic cycle.

That was my view CV(although without the nuance or udnerstadning).I started using this Dowd Buckner ratio last year when I read their paper and I must sya it really does explode a lot of the myths with regard to bank accoutning and it's amazing how it really does pull back the covers on what they're claiming the business is worth

Looks like SE Asia exposure and credit cards are doing worse than the banks that are overextended to UK mortgage borrowers.

Truly,they are as deep in the mire as 2006/7.

Barclays 31.3/1,349=2.3%

RBS 24.3/799=3%

HSBC 91/2,984=3%

Stan Char=15.6/789=1.9%

[Yadda yadda yadda]

28 minutes ago, sancho panza said:

random anedotal here Bob but a mate was jsut at Wells by the sea(never heard of it),somehwere down south.Says the local pub landlord is paying bar staff £12-50 an hour as people jsut won't work for less.SHortage of local kids....

 

Wells is that posh that it is called Wells Next The Sea rather than by it. North Norfolk coast. Doesn't surprise me that local kids there won't work behind the bar for less.

[sancho panza]

On 06/06/2021 at 09:31, DurhamBorn said:

 

The risk of course moves over to the asset side of things as you boost the base money up.I had and have a distribution cycle kicking in with that kind of liquidity lift.People will soon need to start selling assets to finance life as they dont produce enough income.

Fed prints and it enters the economy through the financial system,the pipes,so assets gain first.Later though those assets are sold down as the money is then passed to people  providing goods and services.

As iv said one of my main takes from my roadmap is that over the next decade 60/40 40/60 type pensions will be a disaster and anyone just entering drawdown now could see their pension empty over the decade,or at best reduce to much lower levels.

 

The bit in bold and then some DB.

Just had a bit of a run in with my LL.Nothing major.But it suddenly dawned on me how little he's making every month with Section 24,repairs(my kids wreck everything even if it's tested as kid proof),jsut had to stick scaffolding up for the roof and all of it financed by what is a current 3% gross yield.And then there's the mortgage financed at about 3%...........

By the end of it,I was feeling bad about the guy.And he doesn't even know his main home is on the line if he defaults on my house..I suspect he's running at barely any profit and that's before rates rise for BTLers.

The outlook for him and so many with these 60/40 funds is jsut pistpoor in a rising inflationary environment..

Sold EQNR today after a lot of thought.Proceeds with get recycled into some inflation hedges.

As ever thanks to DB and all those basement dwellers who've educated and enlightened me in equal measure and helped me fight the machine.

[sancho panza]

.

[Starsend]

7 hours ago, sancho panza said:

US rig count nowhere near where it needs to be.

Debating selling EQNR to pile back into some of the laggards.It's $23 today,so higher than pre covid.First big oilie sale of the campaign thus far.

https://rigcount.bakerhughes.com/static-files/559d8d90-b5de-4911-b383-a08a0785764a

The Canadian mid tiers are cheap.

[Sugarlips]

2 hours ago, sancho panza said:

The bit in bold and then some DB.

Just had a bit of a run in with my LL.Nothing major.But it suddenly dawned on me how little he's making every month with Section 24,repairs(my kids wreck everything even if it's tested as kid proof),jsut had to stick scaffolding up for the roof and all of it financed by what is a current 3% gross yield.And then there's the mortgage financed at about 3%...........

By the end of it,I was feeling bad about the guy.And he doesn't even know his main home is on the line if he defaults on my house..I suspect he's running at barely any profit and that's before rates rise for BTLers.

The outlook for him and so many with these 60/40 funds is jsut pistpoor in a rising inflationary environment..

Sold EQNR today after a lot of thought.Proceeds with get recycled into some inflation hedges.

As ever thanks to DB and all those basement dwellers who've educated and enlightened me in equal measure and helped me fight the machine.

Surely the drip drip of inflation must be waking a few of the sharper LL’s up to the fact that they finally need to sell assets at market (rather than just kite flying) just to retire debt before the ‘slowly then all at once’ inevitable happens?

[Mapper]

Looking at the difference between the business headlines on RT and the BBC reveals something about people's perspectives.

 

RT Top 5 Business Stories

Dumping the dollar: Russia gets ready to shift currency liquidity to the euro

AMC stock soars over 20% as Reddit-fueled rally extends to another week

China’s vast foreign reserves grow to $3.22 TRILLION

Russia-China trade turnover soars nearly 25% since beginning of 2021

Oil slips from 2-year peak on prospect of higher Iranian exports & OPEC+ discipline

 

BBC Top 5 Business Stories

Donald Trump calls Bitcoin 'a scam'

What's happening with foreign travel?

The fight to find work: ‘I’ve applied for 200 jobs’

Economy faces 'long Covid' if debts not tackled

'Five-day office week will become the norm again'

 

This is where you get the "Nobody saw it coming!" cries from.

[wherebee]

1 hour ago, Sugarlips said:

Surely the drip drip of inflation must be waking a few of the sharper LL’s up to the fact that they finally need to sell assets at market (rather than just kite flying) just to retire debt before the ‘slowly then all at once’ inevitable happens?

If I was a LL with adequate income to cover the mortgage, I'd hang onto property in a non-urban hellhole.  Property always does OK in an inflationary era compared to cash.

[Lightscribe]

7 hours ago, Hancock said:

Oh they want me to play, but my willingness to fight, and tell authority to get fucked all my life means ive opted out of their shitty game. 

I'll have my kids school fees set aside by the end of August to pay for her to attend until end of summer 2024, 150k in a SIPP, soon to have 250K in inflationary shares ... and a soon to be sourced new fund to buy a house in BKK.

Not to mention a job where i can work several a year for 30k, of which i'll have to save another £45k in school fees to pay for school up until aged 16.

Im trying to get my head around it, but at age 46, It would seem i'm almost able to cash my chips in and live the good life (though frugal), and get my kid a top end education. (more importantly kids happy)

Not bad for someone with a dreadful work ethic, that can't work for a boss, making me unemployable for a PAYE job, uneducated, ex-con, thats raised a kid alone. 

And good on you too. That’s pretty much why we’re all here I suspect. The game is rigged, we all know that. It’s just the case of setting up our chips to opt ourselves out of the game as early as possible and be able to support ourselves.

They need the masses to be reliant on the governments for everything in order for the 4th industrial revolution to be implemented. No doubt the majority will from the get go. It’s just the case on how they coerce stragglers like us on here to fall in line.

[MrXxxx]

21 hours ago, nirvana said:

right 'EV bashers', check this out, it's the future! Actually, who fancies a laugh, I'll set up a gofundme, if I get enough dosbodders to back me then I'm off to China to buy one of these and see how far I can get driving it back 

$4500 new and only $1.56 for 100km.....beat that with your carbon monoxide belching shit boxes 

https://www.bloomberg.com/news/articles/2021-06-04/china-s-top-ev-maker-stakes-its-future-on-a-4-500-mini-car

I've found the website, I quite like the green one 

https://www.wuling.com/evmcr.html

You are Mr Bean and I claim my £5!

[MrXxxx]

12 hours ago, Hancock said:

I doubt Boris or his gang know what side of the bed they're predicted to get out of in the morning.

The one thing about UBI which i cant get my head around is, how can we in Britain be gifted enough money to survive on ... yet workers in most of the rest of the planet have to continue to graft their bollocks off for shite housing, minimal education, health care, social security and barely enough food to survice etc...

Not even our property market can work hard enough to gift us this kind of easy money.

Perhaps we will become the latter of the two scenarios you have pointed out about...."The poor man of Europe", but as we Brexited we can't even `suckle on that teat` the way others have done!

[Green Devil]

35 minutes ago, Lightscribe said:

And good on you too. That’s pretty much why we’re all here I suspect. The game is rigged, we all know that. It’s just the case of setting up our chips to opt ourselves out of the game as early as possible and be able to support ourselves.

They need the masses to be reliant on the governments for everything in order for the 4th industrial revolution to be implemented. No doubt the majority will from the get go. It’s just the case on how they coerce stragglers like us on here to fall in line.

Surely its easier to opt out at 18, sort yourself out a bird and an extended family and go on welfare? Working for a living dont pay. By my reckoning you can retire 50 years younger and have guarateed inflation busting returns from day one. 

[MrXxxx]

9 hours ago, mh9000 said:

Are these employers going to be to considering moving plants overseas to the EU workers (or further afield) if govt won’t give the visas?

 

 

If the businesses need the employees the government will give the visas, and will deflect public with some bull£hit story (or another distraction) that they will swallow.

[MrXxxx]

9 hours ago, DurhamBorn said:

Noticed today house prices are starting to really move up here.Any decent 3 bed semi that comes up is selling very quickly.I suspect what we expected is starting to play out as southerners sell up and move north.It should show up in house prices increasing north by more than south,then south in outright falls.Roadmap said an inflation pulse would see this happen and looks like its started now.

So in a few years time I will be posting on here how The South is much cheaper, less multicultural, more yellow stickers, and `The Birds are fitter`....so some of you may like to get in early before the rush starts and the prices climb! :-)

[jamtomorrow]

22 minutes ago, MrXxxx said:

If the businesses need the employees the government will give the visas, and will deflect public with some bull£hit story (or another distraction) that they will swallow.

Amazed it took them this long to cotton on to the endless possibilities for distraction in "the war on woke".

If they play it right and get everyone worked up enough about this latest imaginary bogeyman, they'll be able to do pretty much anything they like for the next 5 to 10 years.

We'll all be too busy getting steaming mad at the woke and leaving messages on the "report a woke neighbour" hotline to pay attention to what they're up to.

[Lightscribe]

1 hour ago, Green Devil said:

Surely its easier to opt out at 18, sort yourself out a bird and an extended family and go on welfare? Working for a living dont pay. By my reckoning you can retire 50 years younger and have guarateed inflation busting returns from day one. 

Which is exactly what I told my nephew and his girlfriend. But they don’t want to listen.

Problem is that they see the rest of the family working in their particular fields and self-employed businesses doing well, and also their mates joining and learning trades etc. Grand plans and aspirations when you’re young and that’s how a society should work.

In the benefit culture however the opposite happens. You have multi-generations playing the game as well as your peers. The mentoring comes from all sides so it becomes a hand-me-down trick of the trade for getting the maximum whilst doing the minimum.

The issue tagged onto all that is that one example leads to battling as saving for a house and making a life for yourself pretty hard. Having a family of your own is a long way down the list of priorities.

The other example is dependent entirely on having the maximum number of kids as possible, often out of family unit and with limited role models. It can also add on other encouraged behavioural factors that increases the parents benefit income. This goes hand in hand with low quality access to education and low quality opportunities, which starts the whole perpetual cycle again.

Although we’re on a population decline like all other developed western nations, you can see where our actual population growth is encouraged to grow from.

 

[Green Devil]

7 minutes ago, Lightscribe said:

Which is exactly what I told my nephew and his girlfriend. But they don’t want to listen.

Problem is that they see the rest of the family working in their particular fields and self-employed businesses doing well, and also their mates joining and learning trades etc. Grand plans and aspirations when you’re young and that’s how a society should work.

In the benefit culture however the opposite happens. You have multi-generations playing the game as well as your peers. The mentoring comes from all sides so it becomes a hand-me-down trick of the trade for getting the maximum whilst doing the minimum.

The issue tagged onto all that is that one example leads to battling as saving for a house and making a life for yourself pretty hard. Having a family of your own is a far down the list of priorities.

The other example is dependent entirely on having the maximum number of kids as possible, often out of family unit and with limited role models. It can also add on other encouraged behavioural factors that increases the parents benefit income. This goes hand in hand with low quality access to education and low quality opportunities, which starts the whole perpetual cycle again.

Although we’re on a population decline like all other developed western nations, you can see where our actual population growth is encouraged to grow from.

 

The way things are going, you're not going to own a home except with a 40yr or 50yr mortgage. In effect you have better security of tenure if you secure a council house and live there. The whole societal system now penalises savers and workers. Its happened for many decades and shows no sign of changing. Save and you get no return or unentilment to hand outs. If i was starting again, id go down the benefits route.

[No One]

29 minutes ago, Lightscribe said:

Which is exactly what I told my nephew and his girlfriend. But they don’t want to listen.

Problem is that they see the rest of the family working in their particular fields and self-employed businesses doing well, and also their mates joining and learning trades etc. Grand plans and aspirations when you’re young and that’s how a society should work.

In the benefit culture however the opposite happens. You have multi-generations playing the game as well as your peers. The mentoring comes from all sides so it becomes a hand-me-down trick of the trade for getting the maximum whilst doing the minimum.

The issue tagged onto all that is that one example leads to battling as saving for a house and making a life for yourself pretty hard. Having a family of your own is a long way down the list of priorities.

The other example is dependent entirely on having the maximum number of kids as possible, often out of family unit and with limited role models. It can also add on other encouraged behavioural factors that increases the parents benefit income. This goes hand in hand with low quality access to education and low quality opportunities, which starts the whole perpetual cycle again.

Although we’re on a population decline like all other developed western nations, you can see where our actual population growth is encouraged to grow from.