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

[Hardhat]

As I think I've mentioned somewhere before, I have family with land and they are looking to build on it.

Land is a great investment if you buy and hold. Also great if you want to grow trees, etc. Minimal maintenance if you plant the right species in the right area and don't get a serious drought in the first 5 years. Personally I also love woodland so would be happy to buy woodland or land to plant woodland on (if I had money to spare, this is what I'd like to do with it).

However building on a plot is much more of a hassle. Things like driveway access, utility connections (sewage, electric, gas, internet) etc etc, plus all the council rubber stamps needed, architect fees etc, will soon start to build up. Ever watched "Grand Designs?". There's a reason they always go over budget, and it's not just because they're pretentious.

Not to say it isn't worth it, it's just not the cheapest way you can get somewhere to live. There are also very interesting "Kit" houses, like the German Huf Haus, that might bring build time and expensive "unknown unknowns" down considerably.

Still, a good deal on a parcel of land, freehold, is a great investment imo.

Also, getting some land and using it to grow / produce something is the foundation of economies worldwide. If you're looking to decomplexify your investments, there's not much more basic you can go 

[Majorpain]

@Cattle Prod

https://www.zerohedge.com/energy/oil-spikes-saudi-output-headlines

You were right, Saudi's blinked first.  1M barrels a day cut, lowest production since 2002.

[PaulParanoia]

47 minutes ago, JMD said:

Very interesting site, that puts 'our' government house-arrest policy and its trashing of the economy, into perspective...

http://inproportion2.talkigy.com/

Most sobering fact for me: Asian flu killed 80,00 in the UK back in 1969, yet no panic-policy was enacted. Also, that particular epidemic took over 2-months to land on our shores, and yet still there were no panic measures put in place.

It's good to see they have updated the site.  The graphs were starting to look a bit out of date on there.  The updated version is not as convincing as the previous version of the site.  I see they have started to combine England and Wales to get a 'good' graph.  They are also having to compare Covid to Hong Kong Flu from 1969, instead of the last ten flu seasons.  Their graphs no longer support the 'slam dunk' convincing argument which they used to.

I still agree with their overall message though.

[Starsend]

Just been done over by CMC who I've had a spread betting account with for many years. Only ever used occasionally.

Went long on WTI Cash a week or two ago. Only a small bet which is currently underwater. They changed the annual holding cost from the usual single digit interest rate to 225% overnight and pegged the instrument to the December contract (completely different). They sent out an email which was basically gibberish. Lots of other people complaining.

I'm only a couple of hundred pounds down and I'd normally forget it and leave it until it turns a profit but the holding costs seem designed to force you to close the position at a loss or ensure that CMC don't lose out if/when the prices bounces.

With CMC they are effectively taking the other side of the trade and also setting pricing/holding costs etc so it seems clear that you're going to get all sorts of monkey business with them.

Decided to close my account with them but would really like a more honest platform I can use where you don't get the dishonest behaviour. Does anybody have any recommendations? Do you get the same bullshit with a CFD account?

 

 

[DurhamBorn]

19 minutes ago, Starsend said:

Just been done over by CMC who I've had a spread betting account with for many years. Only ever used occasionally.

Went long on WTI Cash a week or two ago. Only a small bet which is currently underwater. They changed the annual holding cost from the usual single digit interest rate to 225% overnight and pegged the instrument to the December contract (completely different). They sent out an email which was basically gibberish. Lots of other people complaining.

I'm only a couple of hundred pounds down and I'd normally forget it and leave it until it turns a profit but the holding costs seem designed to force you to close the position at a loss or ensure that CMC don't lose out if/when the prices bounces.

With CMC they are effectively taking the other side of the trade and also setting pricing/holding costs etc so it seems clear that you're going to get all sorts of monkey business with them.

Decided to close my account with them but would really like a more honest platform I can use where you don't get the dishonest behaviour. Does anybody have any recommendations? Do you get the same bullshit with a CFD account?

 

 

I use to use Cityindex,but very very rare i short anything now,and i never trade long with leverage at all.Looks like they are trying to force people out of the trades,maybe they have big liability if oil run higher by December

[JMD]

1 hour ago, PaulParanoia said:

It's good to see they have updated the site.  The graphs were starting to look a bit out of date on there.  The updated version is not as convincing as the previous version of the site.  I see they have started to combine England and Wales to get a 'good' graph.  They are also having to compare Covid to Hong Kong Flu from 1969, instead of the last ten flu seasons.  Their graphs no longer support the 'slam dunk' convincing argument which they used to.

I still agree with their overall message though.

PaulParanoia, sorry but I am unsure what point you are making (is it the lies, damn lies, etc mantra?).

I would add that of course comparisons and statistics are refined/changed to help prove ones own theory. But their central 'argument' remains - that current policy is a complete overreaction and that the measures enacted will cause more harm than the disease itself.

But which (whose?) 'numbers' are the most relevant? Keep it simple I say. The ONS own stats show that under 65 year olds represent 'only' 7% of deaths, and of those under 65's, the majority suffered from co-morbidities, the detailed figures are yet to be released. And of course 'dying with' and 'dying of' CV19 may be two totally different things. Also, contrast the immediate much publicised deaths, with as yet uncounted future deaths (all experts predict these) due to withheld treatments or reduced NHS funding (due to recession/more austerity), and the true scope of this self inflicted tragedy begins to reveal itself.    

Too be clear its not about (economic) wealth vs health for me. For example, from the outset I wanted the old and other vulnerable should be protected 100% (mobilise the armed forces even, isn't it continually referred to as a war), and after all we did know the risk groups from the start. But really, most of this carry-on couldn't be made up. First, we had the Scottish health adviser forced out for contravening own pandemic rules. Then our own chief virologist, Neal Ferguson (Imperial college model), and architect of the virus-spread model (this was the 'worst case' scenario model; e.g. the alternative Cambridge model was far less 'exagerated') and adopted by our government, but couldn't even obey his own rules and resigned last week. I ask, do these experts even believe their own theories, the evidence to me says not.

[Starsend]

26 minutes ago, DurhamBorn said:

I use to use Cityindex,but very very rare i short anything now,and i never trade long with leverage at all.Looks like they are trying to force people out of the trades,maybe they have big liability if oil run higher by December

Thanks DB, I'll take a look at CityIndex. Yes, I think they've fecked up and probably stood to lose a lot of money so they think they can jack up holding costs and change the price to track something different. Mental.

[BadAlchemy]

I bought about 4 acres of broadleaf (coppice) woodland several years ago, partly as a way of getting some of my hard earned cash out of the banking ponzi but also because my wife and I had been interested in the idea for some time. If you like the outdoors and are the practical, self sufficient sort (most people on this thread, I'm guessing) then you can certainly look after a small woodland. Excellent fun and gives you a real connection to nature that cannot be surpassed.

I got mine from the woodlands.co.uk site. In the southeast, prices were about £10K per acre. In less 'rip-off' parts of the country they could be as little as £5K per acre. Best to get something local to you (no more than 20 miles away?) otherwise the travelling to/from it could become a drag and you might lose interest. You'll probably want to avoid any which are designated as 'sites of special scientific interest' or have any tree protection orders on them which might restrict what you can do with it or obligate you to manage it in some particular way. With mine there is no obligation on me to actively manage or coppice the woodland, except for maintaining a 400 metre long stretch of fence (which I recently repaired/replaced for a minimal cost of £300 and a couple of weeks work... should be good now for at least 10 years) and keeping a drainage channel/ditch clear so water can run off from the neighbouring farmer's field (I just dig out autumn leaf fall and strim back any overgrowth once every year or two). Simple.

Other than that I just cut down a couple of trees each year for firewood and sometimes a storm will bring one or two down so I can cut those up instead. I probably save only about £200 a year on heating bills (someone with a more heat efficient home and multiple woodburners rather than a single open fire place would do better than I do). I spend that saved £200 on public liability insurance so the cost of ownership is net zero. Some people may not bother with the public insurance but I don't risk it.. I believe you are liable even if a trespasser injures themselves on your own private land... FFS!

You'll definitely need some basic tools (£1K to £2K outlay for decent kit that lasts) such as chainsaw, brushcutter... possibly a petrol fence post drill and a 'Tirfor' winch for pulling down hung up trees or trees which fall onto your neighbour's land. Get yourself proper PPE of course and just teach yourself everything. It's easy and great fun.

You are allowed to fell up to 5 cubic metres of trees per calendar quarter without a felling license which is more than enough if all you want is firewood to heat your own home.
Make sure you get the sporting/shooting rights on the land when you buy it. My vendor held back at first.. he used to charge people to shoot in his woodland and I think he thought he'd somehow be able to carry on doing that after he sold it to me. Either that or he didn't trust that I wouldn't accidently shoot one of his horses or something! I insisted and got the rights added. Country folk and farmers are crafty buggers you've got to watch them...

I have not heard of there being a right to stay in a caravan indefinitely based on the size of the land. I believe it was that you are allowed to live on the land for no more than a month out of each year... we can't have people escaping the property and council tax ponzis now can we.

As a bonus, during this lockdown, I have found that firewood and timber are designated as an 'essential supply chain' so I've been driving to my woods to bring back firewood that I cut before the lockdown started ( have got a 'letter of comfort' about it in case I got stopped by police). Really useful and helped save my sanity!

Sorry to go off-topic and don't know if any of this is useful but as a few here were talking about it....

[DurhamBorn]

Very interesting @BadAlchemy .I love nature so im really interested in getting some so that i can simply get it as good as i can for wildlife.I agree on having the insurance,couple of hundred quid is worth it,and it actually comes in handy,you can use it to have market stalls etc.A great inflation hedge you can enjoy sounds perfect.

 

[Agent ZigZag]

The forum is like reading the Field to farm book at the moment. I like this out of the box thinking and information people have on such matters. keep it up everyone as there is always something new to learn.

[Bricormortis]

Saudis feeling the pressure. VAT rate triples.

https://uk.reuters.com/article/us-health-coronavirus-saudi-economy/saudi-triples-vat-rate-in-austerity-push-to-counter-oil-slump-virus-idUKKBN22N05M

[janch]

We haven't talked about transports recently.  I guess at the moment they're not in a good position but in Shares magazine Go Ahead GOG are tipped as a good one for the future.  It seems the contract doesn't depend on passenger numbers.

Disclosure I own some

A STOCK FOR A LOW GROWTH ENVIRONMENTIn a low growth and persistently low interest rate world, earnings growth of any kind will probably trade at a premium, while defensive earnings unrelated to the growth in the economy will also be sought.Around 90% of Go-Ahead’s (GOG) revenues are derived from contracts where there is no management contract rather than the old one which saw the franchise operator’s revenue primarily generated through passenger fares.Around 90% of Go-Ahead’s revenues are now derived from contracted markets where there is no direct revenue risk from changes in travel demand.The company has been cutting costs and has suspended the dividend. It has £110m of cash and £134m of unutilised facilities, with net debt of £306m.The Government has provided £167m of funding to bus operators for at least 12 weeks. When the lockdown ends and business eventually goes back to relative normality, Go-Ahead will be in a good position to reinstate dividends, which have grown around 4% a year over the last five years and provided an average yield of 5%.direct revenue risk from changes in underlying travel demand. The transport company was recently awarded a new contract to keep running the Southeastern rail franchise which runs to October 2021.

[PaulParanoia]

1 hour ago, JMD said:

2 hours ago, PaulParanoia said:

Their graphs no longer support the 'slam dunk' convincing argument which they used to.

I still agree with their overall message though.

PaulParanoia, sorry but I am unsure what point you are making (is it the lies, damn lies, etc mantra?).

The earlier version of InProportion2 had graphs which (to me) clearly showed that Covid was no worse than seasonal flu when compared to the last 5 to 10 flu seasons.  IMO, they were making a 'slam dunk', water tight argument that lock downs are an overreaction which any one looking at them with a logical mind would clearly agree with.

If you updated those same graphs with the latest data, you'd now see that Covid is worse than previously quoted flu seasons.  As such, the site owners have started comparing Covid to the Hong Kong Flu instead of the last 5 to 10 years.  While I still agree with their conclusions, the evidence based on the new set of graphs is simply not as strong as it was with the old set.  This doesn't invalidate their argument or say they are doing the 'lies, damn lies and statistics' thing, but simply reflects the evolving situation.   

Note: I fully agree that lock downs are an over reaction. 

[Castlevania]

2 hours ago, Starsend said:

Just been done over by CMC who I've had a spread betting account with for many years. Only ever used occasionally.

Went long on WTI Cash a week or two ago. Only a small bet which is currently underwater. They changed the annual holding cost from the usual single digit interest rate to 225% overnight and pegged the instrument to the December contract (completely different). They sent out an email which was basically gibberish. Lots of other people complaining.

I'm only a couple of hundred pounds down and I'd normally forget it and leave it until it turns a profit but the holding costs seem designed to force you to close the position at a loss or ensure that CMC don't lose out if/when the prices bounces.

With CMC they are effectively taking the other side of the trade and also setting pricing/holding costs etc so it seems clear that you're going to get all sorts of monkey business with them.

Decided to close my account with them but would really like a more honest platform I can use where you don't get the dishonest behaviour. Does anybody have any recommendations? Do you get the same bullshit with a CFD account?

 

 

If too many people take the same bet and they can’t hedge in the underlying market they usually increase the “funding” (in inverted commas because it’s completely made up) charge quite considerably. When bit coin was going to the moon the funding charges were similar. The flip side is that if you go short then they’ll pass on most of that to you. The idea is to reduce their exposure by either getting people to close out their positions or getting people to take the other side of the bet.

[DurhamBorn]

@Vendetta love these short term buy and sell advice from brokers.Macro tourists the lot of them Mosaic might 10x or more by the end of a reflation and im not selling any before 2028.China has just signed a potash deal with Belarus that is low and that will by why Mosaic is down,however Russia are saying at that price China can sing and they might not supply and that it means supply will lead to a shortage ,as it will in a few years,just as inflation starts to run as well.Perfect.

https://www.mining.com/uralkali-slams-potash-deal-between-belarus-and-china/

https://www.uralkali.com/press_center/press_releases/item43121/

These people buy or sell think the long term is 6 months.The big wins from this sector will come to those who hold for the cycle.If the prices stay down or go lower il be directing divis to get more.

[DurhamBorn]

26 minutes ago, Vendetta said:

I agree. 5 year hold minimum.

-10% on opening - an opportunity to buy. 

-7% now - so buyers taking the opportunity.

Apart from NDR and SDF fo you favour any other companies in the potash/fertiliser sector? AAL & VALE have the large cap and a wider exposure to metals as well. 

 

 

Not really,its a difficult sector to get a big spread in.I own a few K+S but their balance sheet is a mess.BHP have a fantastic future mine,huge prospect,but they are on a go slow building it.

[DurhamBorn]

59 minutes ago, Cattle Prod said:

Just in from Hargreaves, Government has said "we won't penalise you if you want to blow your LISA, and we kind of hope you do"

 

Understandable that they want some easy liquidity, but what's next, more pension freedoms?

I hope they move the pension age down to 50 for draw down.Before this they wanted to keep people working as long as they could and were looking to increase the age to 58 from 55.I guess now like you say they would rather get spending into the economy and younger people back in work.They could link it to adding NI to income tax so pensioners pay it as well.

[sancho panza]

13 hours ago, CVG said:

Water. We don't talk about water much. SP, this was in an article from Moneyweek in 2018 - any idea what the current position is?

"Early this year Cape Town's four million residents were keeping an eye on dam water levels with an obsessiveness usually reserved for Twitter, as local academic Hedley Twidle puts it in the Financial Times. Daily water consumption was restricted to just 50 litres per person per day about a third of average UK usage. "Day Zero" the date the city's rapidly evaporating reservoirs were expected to reach critical levels was months away.

At that point, the taps were to be shut off and about a million households would have to queue at water-collection points for daily rations of just 25 litres. Following an unprecedented drought, Cape Town was on course to become the world's first city to run out of water."

The article goes on to talk about rising worldwide demand, water wars, infrastructure investment ("Others say even more spending is needed, with estimates ranging from $6.7trn by 2030 to $22.6trn by 2050"), etc. I wont cut and paste the whole article, but the following were the investment suggestions:

"The water stocks to buy now

 

Water is probably the most decomplex of trades besides oxygen.....it's jsut whether there are viable ways to play it.For me you need to be able to 'spray n pray' a sector and be pretty sure you'll get the uplift.Potash and oil are easier in that respect than water as it's not worht transporting.Water plays in the UK face different issues to water plays in Africa.

The thesis is super it's working out a decomplex way to play the decomplex trade.

 

As soon as you start trying to pick through the raft of small to medium size companies that are in some way a play on water shrotage,then it's on it's way to becoming a complex trade.I'm open to any ideas if wanyone has suggestions.It's super idea but one one that's fraught with more political risk than oil,which is saying somethign.

Very similar in principle to solar from an invesment point of view imho.

12 hours ago, spygirl said:

That's the full default.

You are getting v high levels of non payment.

The current student loan system and HE sector wont survive the first cursory analysis of the numbers.

Of course our fearless, probing press are ... just asking pointless virus questions everyday.

Useless.

Labour cant or wont raise the issue as the solution is to scale back I.e halve HE sector, so poof! That's a large part of its vote base.

 

I read a while back,they sold off a load of the inital 90's debts to thrid parties.

Which should worry anyone who's managed to evade the British govt and build a nice stockpile of assets abroad or a hosue in Australia.

11 hours ago, TheCountOfNowhere said:

£5 for a cabbage...people start growing their own cabbages.  So they still need potash ?

 

I look at the food we're growing in the garden.Scratching the surface Count.Potash is used in the large scale food prosduction for the 7bn on the planet.

decl:longgggg.

[Shamone]

12 hours ago, spygirl said:

That's the full default.

You are getting v high levels of non payment.

The current student loan system and HE sector wont survive the first cursory analysis of the numbers.

Of course our fearless, probing press are ... just asking pointless virus questions everyday.

Useless.

Labour cant or wont raise the issue as the solution is to scale back I.e halve HE sector, so poof! That's a large part of its vote base.

 

I believe my age group were one of the first to have student loans. They weren’t much, a grand or so a year. I never earned much so never had to pay it. Got sold on a number of times, the last one some dodgy PO Box number in the Welsh valleys. Schmucks. It’s been cancelled now.
 

[reformed nice guy]

Just as DB predicted - boomers having to sell assets to stay afloat:

https://www.bbc.co.uk/news/business-52596273

[sancho panza]

 

8 hours ago, Cattle Prod said:

I'm thinking of tapping up local farmers. They are very possessive of their land, but they often have an acre or two they don't use. And everyone loves cash. 15-20k acre around me though it seems, jesus. They are being marketed as future rezoning opportunites though, the sooner that dies the better. Here is one about 10 miles from me:

https://www.uklandandfarms.co.uk/rural-property-for-sale/south-east/surrey/guildford-ptlmgfml/

Woodland seems to be a bit cheaper. Think I'll wait for the housing market to take a kicking, at least take that element out of the price.

 

 

Housing market has destroyed the 1-10 acre market as virtually every seller sticks in a clawback clause(or whatever it's called) in case you get planning.Then they all want top dollar even if it's miles from anywhere.

Some farmers are more practical but those lots can be huge.

With a bit of luck,we'll get a downdraft in the hosuing market and the probates will jsut want their cash as things drop in value.

7 hours ago, JMD said:

Very interesting site, that puts 'our' government house-arrest policy and its trashing of the economy, into perspective...

http://inproportion2.talkigy.com/

Most sobering fact for me: Asian flu killed 80,00 in the UK back in 1969, yet no panic-policy was enacted. Also, that particular epidemic took over 2-months to land on our shores, and yet still there were no panic measures put in place.

I post this not because covid19 is so fascinating (its not), but because as I and others have alluded to from the beginning, there is 'something' more going on here than a flu outbreak... perhaps sinister/perhaps not, perhaps merely a sign of our catastrophising times, or an example of our ineffective political leadership, along with our alarmingly nodding donkey press and exceedingly accommodating opposition parties. Whatever it is thats going on, it points to great changes ahead, new forms of leadership and new far reaching policies. All things predicted by this great blog of course. 

Have a butchers at

https://lockdownsceptics.org/

super site.easy reading,makes the sceptics case.some amazing condemnation of Fergusons code in there

https://streetwiseprofessor.com/code-violation-other-than-that-how-was-the-play-mrs-lincoln/

https://chrisvoncsefalvay.com/2020/05/09/imperial-covid-model/

 

5 hours ago, Starsend said:

Thanks DB, I'll take a look at CityIndex. Yes, I think they've fecked up and probably stood to lose a lot of money so they think they can jack up holding costs and change the price to track something different. Mental.

I've used IG in the past and found them very good.

have a look at trading options instead,then you don't have issues with margin requirements

2 hours ago, Vendetta said:

 

Apart from NDR and SDF fo you favour any other companies in the potash/fertiliser sector? AAL & VALE have the large cap and a wider exposure to metals as well. 

 

 

I see you've got msot of these.I coma scaled the sector last year for the safer plays.As DB says SDF has a balance sheet issues but they're only excessive by the standards of the sector.

https://www.investing.com/equities/k-s-ag-financial-summary

by comparison

https://www.investing.com/equities/nutrien-financial-summary?cid=1057244

[sancho panza]

50 acres woodland for sale at £125k....Leicestershire.

https://www.uklandandfarms.co.uk/rural-property-for-sale/east-midlands/leicestershire/64298_adz180073/

Looks like a lot of work........

[reformed nice guy]

On 03/01/2020 at 23:37, sancho panza said:

 

Coma scale scores on which I based our purchase from the SOIL ETF.dyor natch Tdog

Nutrien 18

yara 17

SQM 18

IPL 19

ICL 17

K+S 17

 

To save some people some time...

[sancho panza]

I don't know anythign about thsi site or source of info,but looks very interesting re covid.

 

[Viceroy]

On 29/04/2020 at 06:55, sancho panza said:

''I was expecting the sort of correlation which I think people have seen with Kondratiev cycles and major conflicts.'

A point I would make here,is that with all cycles work you have to adjsut for average lifespans.Kondratiev lived in a time and a place where many died at 40-50. I think it's signifcant that it was only after the people who'd been young men and women during the Great Depression left public office in the main,that you got the repeal of Glass Steagall in 1998.It's not a coincidence.

Not been here much and just caught up on reading- i've been recovering from a major op, a bizarre experience during NZ lockdown, but the care (public system) I received was top notch.  Was told it's the best time to be having one - all specialist docs were on call as they had not much to do and the nurses told me they were bored. All good now.

 

Armstrong also has his view on the K wave which i thought might be another point of view looking at cycles and how they work. I'm not biased to any one person and try to read as widely as possible. Interesting to read your thoughts re generational change, definitely something to take into consideration.

 

https://www.armstrongeconomics.com/armstrongeconomics101/understanding-cycles/understanding-time-the-kondratieff-wave/

'The basis of Kondratieff’s argument came from his empirical study of the economy’s performance of the USA, England, France, and Germany between 1790 and 1920. Kondratieff took the wholesale price levels, interest rates, production and consumption of coal, pig iron, and lead for each economy. He then sought to smooth the data using an averaging mathematical approach of nine years to eliminate the trend as well as shorter waves. Kondratieff thus arrived at his long-wave theory suggesting that the economic process was a process of continuous waves of boom and bust.

The problem with his data was that it properly reflected the beginning of his study. But as the Industrial Revolution took place, agriculture, which was 70% of the economy in 1850, fell to 40% by 1900 and eventually to 3% by 1980. His model failed because there was a cycle to the economy as well which he did not take into account. We moved from a commodity based system, to industrial, and then to primarily service industry. As we move further down this road, we can see that economic growth has declined for government has grown too big and is now consuming 40% of GDP compared to less than 10% at the beginning of his work. Government reduces GDP it produces nothing. Then we now have the internet displacing jobs in stores (service industry) just as the invention of automobiles displaced the horse and buggy. There is a cycle to change or innovation as well and this is absent from the K-Wave....we can even see from the chart, that his original wave varied greatly both in time duration 47 to 63 years, as well as intensity. Moreover, Kondratieff himself explained the cause was shifts in production, war, and great booms and busts in the discovery of gold. So the K-Wave offers no reliable method to forecast the economy, yet it stands as a testament to the existence of a complex business cycle.'