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

[DoINeedOne]

5 minutes ago, Cattle Prod said:

Yes, you would have to have everything in place long before people realise what is going to happen. Capital controls don't take long to go into operation. @Harley is way ahead of the game on this one, and I am about 4-5 years about being where I want to be. But the key thing is: I don't need much. A bit of land, woods, access to fishing, a house with it's own water and heat, I'd live quite happily with very little money. If I have extra, I'll probably buy forestry. I'll always have gold and silver physical, I'll be passing it on to my son.

For me i need to work out where i want to be UK or abroad then start to research areas to slowly move to and put things in place

[Majorpain]

https://www.france24.com/en/20200518-live-macron-and-merkel-present-joint-covid-19-recovery-plan-for-eu

Quote

Macron and Merkel called for the creation of a 500-billion-euro ($543 billion) recovery fund able to offer grants to the countries and regions hardest hit by the coronavirus crisis.

The leaders of France and Germany also said they were proposing to authorise the European Commission to borrow money on financial markets in the European Union's name, while at the same time respecting EU treaties.

They are taking their time, but could there finally be some movement on common debt?    End of May for a proposal, agreement mid June when the wheels properly start falling off?  Nothing like a bit of staring into the abyss to speed things along.

Cunning way of getting round ECB minefield by borrowing straight from financial markets in EU name???!!

[JMD]

2 hours ago, jamtomorrow said:

That does seem like the "remorseless logic" endpoint of the automation era.

Kinda mind-blowing to imagine a future where reward for work is no longer a useful or viable way of sharing out resources in the economy. "Work" as a moral virtue is perhaps the most ingrained of all, and hard for many/most to look beyond.

Jamtomorrow, great point you raise there. I don't think these are 'mere' philosophical questions. Instead I think those are key questions to ask in order to help predict/frame the type of policies that may start to be implemented in say 10 years time.  

Yes, 'work' as a moral virtue might be a crucial civilising factor for most people, the absence of which may cause huge social problems. Then again, the removal of the money/reward system (removing moral hazard, etc) might make society more moral? These are deep questions. Will society degrade, or might it in-fact improve? I don't know, but I do know that such a transition will require very wise and very skilled leadership.     

Unfortunately, we don't have wise leaders, so we will probably go down the (depressing/dreary) transactional route. i.e. Perhaps our own Western governments will just end up implementing something similar to the Chinese 'social credit system'? 

[Errol]

7 hours ago, jamtomorrow said:

Massive incentive and opportunity for automation to affect how this plays out.

China is the world leader in automation, robotics and green energy technology. They are perfectly placed to benefit the most.

[Majorpain]

11 minutes ago, Errol said:

China is the world leader in automation, robotics and green energy technology. They are perfectly placed to benefit the most.

They can't, the resulting mass unemployment would be kryptonite to the CCP.  They don't keep all the unproductive state owned enterprises going for no reason, 1.4 billion people is a bit of handicap in that regard!

I think Japan is still the world leader in automation and robotics, FANUC is bombproof and they have some interesting factory assembly lines around.

[sancho panza]

On 17/05/2020 at 08:40, 5min OCD speculator said:

I don't see this happening.....

If you look at the DXY make up, its over 50% Euro.....the ECB are more likely to pursue NIRP than the FED...

the other major DXY components are YEN (again they like NIRP) and the shitty £ 

So I don't see the DXY going anywhere personally.....(check out another thread I just created for my views on 'Banana Britain' )

It's a real issue,Where do you go aside from the dollar.

Could be PM's are baout tog et a rocket under them.History says a weak dollar phase should be inbound but I'm struggling ewith the logic

DXY dropped Jan 06 to April 08

On 17/05/2020 at 10:08, jamtomorrow said:

This discussion making me wonder whether we're about to see simultaneous inflation and deflation on a grand scale. The mother of all Cantillon Effects, if you like.

CB-driven inflationary wave rolling over the markets right at the same time as debt deflation really gets its skates on in the so-called "real" economy.

Real economy looks nailed-on for falling turnover -> shrinking capital base -> mass deleveraging come Autumn. And I can't see how the CB wave gets to the real economy fast enough to hold it back.

Could it get *that* weird?

I think the chances of outright deflation a la Japanese are sub 5%.Chances of a move to outright inflation similar.It's odds on we're going to face credit deflation mixed with price inflation.ANd this is pecualir because we should be facing both price and credit deflation logically,but the pecualir aspects of globalisation unwining post covid make it more and more likely we'll see some price rises particualrly in commodities even without the dollar weakening.

On 17/05/2020 at 11:44, Barnsey said:

I expect this to gain MUCH more traction in weeks ahead as workers are forced back into their day jobs, just not good economic sense perhaps to maintain such a generous furlough scheme?

 

I don't really like to dwell on politics but aside from the fact they've handled it better than Rebecca Long Bailey/Corbyn would have done,I think the Tories have had a disastrous Covid.

This post says a lot.

[sancho panza]

On 17/05/2020 at 16:39, kibuc said:

My problem with those companies is that they are either 

1. Shit

2. Too big

3. Not really silver miners

4. All of the above

I'm looking at Avino and I can see that they get more then half of their revenues from copper (more like 70% in Q1 2020). Great Panther and Coeur are a pinnacle of shit management, plus Coeur has a strong zinc & lead component. Endeavour literally run out of ore in their primary mine last year etc etc. First Majestic, PAAS and Fortuna are the only ones I'd feel comfortable holiding, and Fortuna is the only one from this list I actually hold at the moment.

But the market doesn't seem to care, and when silver popped up 5% on Friday, Avino rocketed up 30%. I can scream at the sky all I want, but maybe it's better to join the dumb marker than be clever and broke.

Edit: Apologies @DurhamBorn if it came across as a criticism of your list. Not my intention. I understand that you identified those companies as having the highest beta to silver, I just struggle to find a reason why the market would assign such a high leverage to silver to them as opposed to some other miners much more focused on silver.

It didn't come across as critiscism k we all know what you menat.

It is ironic though that the mulitbaggers of the silver/gold market will be the dog turd companies.When I started investing in PM;s in 2017,in my naevity I boguth Hecla and Couer and a few more.It was only as some of the more learned people on here taught me,I realsied they weren't the shares for me.Still I have a list that includes a lot of those DB mentioned for if we leave the gold miners with some profits and silver hasnt run.

It's like a dream team of dog turd snadwiches with a lot of beta to news of them not going bankrupt.

On 17/05/2020 at 17:35, Democorruptcy said:

If you haven't seen it the RICS market survey for April has some beautiful charts in it 

My concern is lack of supply holding prices up where I might be interested. 

 

Wait out DM,give it time to mature like a good wine.This downtunr has barely begun.

On 17/05/2020 at 18:30, DurhamBorn said:

I agree,all have problems,its just based on past moves compared to silver iv tracked them all for years and thats the beta up until now.I just assume there is a reason the market goes for them,probably because it feels they are battered down for all the bad reasons.I actually think HOC is very undervalued and will be adding that as well.Silver is difficult to target  through the miners and is a terrible sector,until we are in a bull.

I took some profits with sales of top laddeers in Gold fields,HMY and IAM at the start of trading.Sat out waiting the market out but we'll defo be buying back in by friday.HOC was one of my intended targets but the run has brought it into touch with my bottom ladders which made me hesitant.

Agreed on HOC.Looks good,Fres too.

[Errol]

.

 

[reformed nice guy]

On 23/11/2019 at 17:24, reformed nice guy said:

I had a good dive into automation a while ago with a focus on industrial automation rather than trendy "blue sky" companies that want to bring a paradigm shift. I settled for the following to hold for long term:

Kuka - originally German, now owned by Chinese, maker of industrial robotics

Honda

Fanuc - factory automation, CNC machines etc

Rockwell - a big American automation company

Stagecoach - Yup, they are currently trialling driverless buses in at least 2 locations in Scotland

This was the outcome from my research into automation and led me to stumble onto Fanuc

[sancho panza]

12 hours ago, kibuc said:

There's a bidding war going on for Guyana Goldfields, the latest offer from SilverCorp amounts to CAD 1.30 per share 

Guyana was trading at CAD 0.40 before the initial offer came in last month, and closed at CAD 0.94 on Friday.

Sadly,I got out at $0.64 and felt I was lucky.I waited for a counter bid that never came,sold,then it came.

11 hours ago, Cattle Prod said:

She's been so quiet lately, they put her on a coronavirus panel 

What they don't realise is that green energy cannot compete with oil and gas on an energy density basis, and never will (excepting nuclear which I count as a green energy). It has to compete on price. And low oil and gas prices are devastating for green energies. Greta should be praying for $200 oil, then you'll see the shift happen pronto.

On it's way.

[sancho panza]

8 hours ago, Cattle Prod said:

People are currently being conditioned to get paid for sitting at home, not much of a stretch now to citizen income. So everyone gets an income, while companies have to innovate and automate like hell as you suggest. Everyone is happy! That is until inflation means the government can't print citizen income any more, oops. And per this thread, inflation loving companies such as those we own will have done very well. So the holders of real assets will have done well, while most people will have done not anything except improve their artwork/gardening/protesting/drinking etc. Then the taps turn off, with inflation out of control. The asset holders run for the hills (in my case, that will literally happen), while the indolent mass will erupt. When hard work gives you purpose in life, the opposite gives you...Mad Max?!

 

A thesis similar to Paul Hodges one about Govts can't print babies any more in terms of the demogprapic problems the West faces.

Covid has been a real lesson in how quickly the EU countries overrode Schengen and put their borders up.It's plain for anyone to see.When this gets nasty we'll revert to the age old boundaries and alliances.

When the dolar has finsihed it's last run as the workd reserve,I think things will get unstable ever so quickly.

8 hours ago, jamtomorrow said:

Absolutely this. Automation could prove to be one hell of a cherry on top of the end-of-decade Big Kahuna.

Thinking about this within the inflation thesis (and asking the important question: what will make this rhyme rather than repeat?) ... does automation have implications for how velocity will work out this time? If an ever greater fraction of the production surplus is captured by capital (because automation), at what point does velocity fail to get airborne?

 

Velocity is a function of consumer psychology.Look at a lot of the great inflations and they started running when people feared the money in theri pocket would devalue before their next pay packet came in.Better to buy the cabbage this week rather than wait till next week and only be able to afford a half.

Once infaltion is out of the bag,they won't be able to get it back in this time.

4 hours ago, Cattle Prod said:

Yes, you would have to have everything in place long before people realise what is going to happen. Capital controls don't take long to go into operation. @Harley is way ahead of the game on this one, and I am about 4-5 years about being where I want to be. But the key thing is: I don't need much. A bit of land, woods, access to fishing, a house with it's own water and heat, I'd live quite happily with very little money. If I have extra, I'll probably buy forestry. I'll always have gold and silver physical, I'll be passing it on to my son.

I've thought about thsi a lot and on a tactical level,there are benefits and costs to being way from the main road so to speak

[sancho panza]

3 hours ago, Majorpain said:

https://www.france24.com/en/20200518-live-macron-and-merkel-present-joint-covid-19-recovery-plan-for-eu

They are taking their time, but could there finally be some movement on common debt?    End of May for a proposal, agreement mid June when the wheels properly start falling off?  Nothing like a bit of staring into the abyss to speed things along.

Cunning way of getting round ECB minefield by borrowing straight from financial markets in EU name???!!

Hard to see the Euro getting the bid here.

[nirvana]

Markets have gone nuts today........if this is a taste of things to come, it's worth 'buying every dip' hmmmmmmmm

Absolute BUSTER of a move! Posting more ladies for @Yellow_Reduced_Sticker 

 

[Chewing Grass]

Oooh look, just checked the Standard Life Aberdeen shares that I've never been arsed to sell.

They are worth exactly what they were 10 years ago and are at 40% of what they were 12 months ago.

Bag of shite.

[Chewing Grass]

2 minutes ago, 5min OCD speculator said:

Markets have gone nuts today........if this is a taste of things to come, it's worth 'buying every dip' hmmmmmmmm

Absolute BUSTER of a move! Posting more ladies for @Yellow_Reduced_Sticker 

 

They are fake, if she lets go of them they will bottom out and their asset price will implode.

Fnarr.

[nirvana]

Sorry bit childish......on a more serious note, FIBER aka EURUSD, Draghi was a master of manipulating that thing.......I recall watching the press conference in, must have been 2011, when he brought it down from the highs......

On the other hand Lagarde is a bloody disaster and a crook to boot....

[Majorpain]

36 minutes ago, Errol said:

 

China has rapidly become a global leader in automation - dated 2017: https://www.themanufacturer.com/articles/china-breaks-global-records-automation/

 

Per Capita is a lot lower, and they still have a long way to catch up.  The majority of the components will come from Japan/Taiwan/Germany, although they were making headway in that regard, that's where the hordes of students in Western Universities to hoover up intellectual property for China's gain come into play.

6 minutes ago, sancho panza said:

Hard to see the Euro getting the bid here.

Its critical to what happens to the Dollar, and a key reason IMO why its hesitant to properly roll over.  Its very sad watching them try to bend the rules and get the South bailed out, looks like the proposal is ECB > Banks > lend to Eu Commission > Bailout National Governments in some sort of weird legal money laundering scheme to get around the German Courts meddling.

Idiocy like that indicates to me this may well be "a crisis too far" for the Euro, fingers crossed its not because the consequences for UK would be severe even at the best of times.

[sancho panza]

43 minutes ago, Majorpain said:

Per Capita is a lot lower, and they still have a long way to catch up.  The majority of the components will come from Japan/Taiwan/Germany, although they were making headway in that regard, that's where the hordes of students in Western Universities to hoover up intellectual property for China's gain come into play.

Its critical to what happens to the Dollar, and a key reason IMO why its hesitant to properly roll over.  Its very sad watching them try to bend the rules and get the South bailed out, looks like the proposal is ECB > Banks > lend to Eu Commission > Bailout National Governments in some sort of weird legal money laundering scheme to get around the German Courts meddling.

Idiocy like that indicates to me this may well be "a crisis too far" for the Euro, fingers crossed its not because the consequences for UK would be severe even at the best of times.

https://wolfstreet.com/2020/05/17/third-mega-crisis-in-12-years-eurozone-economy-plunges-at-fastest-rate-on-record/

The preliminary GDP in the first quarter for the Eurozone fell by 3.8%, according to Eurostat’s flash estimates (for the entire EU, it fell by 3.5%), “the sharpest declines observed since the time series started in 1995,” Eurostat said. This is despite the fact that most of the region’s lockdowns did not begin until mid-March:

France suffered a mind-watering 5.8% collapse in GDP in the first quarter, the “biggest drop” on a quarterly basis since the Second World War,  according to the country’s INSEE statistics agency. Even in the second quarter of 1968, when France was roiled by civil unrest, mass student protests and general strikes, the economy still shrank by less (5.3%) than it just did. In the first quarter of 2009, when the financial crisis was pummeling Europe’s markets and Greece was beginning to teeter, France’s GDP shrank by a comparatively mild 1.6%.

Spain already had depression-era levels of unemployment before this crisis even began. In the first three months of this year unemployment rose to 14.41%, from an 11-year low of 13.78% in the previous quarter. Given the speed of the slowdown and the scale of economic destruction it has already caused, particularly in the all-important tourism sector, it’s probably just a matter of time before that figure surpasses the 20% threshold for the fourth time in 36 years (chart via TradingEconomics):

To keep its own domestic economy alive, Germany has mobilized €750 billion in grants and loan guarantees to companies, both large and small. But few EU countries have Germany’s fiscal firepower or bureaucratic efficacy. Certainly, Spain and Italy don’t. In Spain, just 20% of small companies that have requested emergency loans have actually received them. In Italy, the government has pledged a whopping €740 billion in crisis funds — just €10 billion less than Germany — but as of the end of April, only €3.1 billion of those funds had actually been released.

[Sugarlips]

1 hour ago, sancho panza said:

France suffered a mind-watering 

What’s that if it’s not a Chinese torture treatment? Did they mean mind blowing or eye watering or both? Maybe they saw the above blonde..

[JMD]

8 hours ago, Cattle Prod said:

Yes, you would have to have everything in place long before people realise what is going to happen. Capital controls don't take long to go into operation. @Harley is way ahead of the game on this one, and I am about 4-5 years about being where I want to be. But the key thing is: I don't need much. A bit of land, woods, access to fishing, a house with it's own water and heat, I'd live quite happily with very little money. If I have extra, I'll probably buy forestry. I'll always have gold and silver physical, I'll be passing it on to my son.

That's interesting CattleProd, I didn't realise - unless I have misunderstood - that you are actively preparing for a full prepper-type-situation, ie anticipating/mitigating for societal collapse. I comment because I know I personally wouldnt be capable of executing such an ambitious all encompassing plan and have previously commented same to Harley. Anyway the dilemma (as I see it for me) is that although I'd like to have a plan in place, there unfortunately doesn't appear to be a 'half-way' type solution - because unless you have a water supply, then even having say a gas/oil heater/cooker plus a 6-month food store, then the absence of having an adequate water supply would effectively invalidate all other emergency planning. It's an interesting subject and maybe it also depends what form of social breakdown is expected, ie pandemic, monetary collapse or something else?

[MrXxxx]

13 hours ago, DoINeedOne said:

13 hours ago, Cattle Prod said:

Yes, you would have to have everything in place long before people realise what is going to happen. Capital controls don't take long to go into operation. @Harley is way ahead of the game on this one, and I am about 4-5 years about being where I want to be. But the key thing is: I don't need much. A bit of land, woods, access to fishing, a house with it's own water and heat, I'd live quite happily with very little money. If I have extra, I'll probably buy forestry. I'll always have gold and silver physical, I'll be passing it on to my son.

For me i need to work out where i want to be UK or abroad then start to research areas to slowly move to and put things in place

This. I am surprised by in a SHTF scenario how many on this thread are planning to stay in the UK...i was too, but after the recent/current way Covid19 is being handled I am now looking for a future retirement based overseas, primarily on my radar at the moment is Sweden...any others thoughts?

[MrXxxx]

9 hours ago, Chewing Grass said:

Oooh look, just checked the Standard Life Aberdeen shares that I've never been arsed to sell.

They are worth exactly what they were 10 years ago and are at 40% of what they were 12 months ago.

Bag of shite.

Not a fair comparison, as about three years ago they had a reissue (when SL became SLA) thus diluting the holding...that said, they've not performed brilliant recently ...but still continue to pay a divi....a rare beast in the current climate!

[M S E Refugee]

1 hour ago, MrXxxx said:

This. I am surprised by in a SHTF scenario how many on this thread are planning to stay in the UK...i was too, but after the recent/current way Covid19 is being handled I am now looking for a future retirement based overseas, primarily on my radar at the moment is Sweden...any others thoughts?

Sweden looks like a prime candidate to become a caliphate,probably best avoided.

Croatia has a good climate and an aversion to the religion of peace.

[ThoughtCriminal]

35 minutes ago, M S E Refugee said:

Sweden looks like a prime candidate to become a caliphate,probably best avoided.

Croatia has a good climate and an aversion to the religion of peace.

I’ve always thought that, but in my time rebutting the many attacks on the Swedish Covid strategy, I’ve discovered that the Norrland region of Sweden is two thirds of the land mass, has only a million people in it and is stunningly beautiful being mostly lakes, forest and mountains. It’s also inhabited by actual swedes. 
 

Just need a Swedish wife........

[Majorpain]

9 hours ago, sancho panza said:

In Italy, the government has pledged a whopping €740 billion in crisis funds — just €10 billion less than Germany — but as of the end of April, only €3.1 billion of those funds had actually been released.

Amazing find, that's the critical bit as all that liquidity (for whatever reason) isn't making its way into the real economy yet.  It will be interesting to see what that figure looks like at the end of May, hopefully its significantly higher or companies are going to be in drama and Italy is toast.