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

[leonardratso]

1 hour ago, harp said:

Yep. Had 3 valuations, all slightly lower than his offer. So on the face of it it looks good. We have both said we’ll skip searches to get in before the 31st March. My only concern is accepting 100k cash. Not even sure that’s legal? Market valuation for my would still be fine, so who would know? 

bitcoin it

[Noallegiance]

More meaty than Twitter:

 

[Hancock]

3 hours ago, harp said:

Yep. Had 3 valuations, all slightly lower than his offer. So on the face of it it looks good. We have both said we’ll skip searches to get in before the 31st March. My only concern is accepting 100k cash. Not even sure that’s legal? Market valuation for my would still be fine, so who would know? 

No way would i take £100k cash, go via a solicitor.

[Errol]

 

[TNS]

1 hour ago, Hancock said:

No way would i take £100k cash, go via a solicitor.

Bank and hmrc be up your ass instantly too 

[Castlevania]

1 hour ago, Errol said:

 

Vodka?

[Hardhat]

32 minutes ago, Castlevania said:

Vodka?

 Their music industry is thriving as well

 

[Hunty]

8 hours ago, JMD said:

Hunty, what's the AV 2.65 figure? BP touched 196 briefly, so can't be your average price, or can it?

The price of a pie in Nicaragua, Panama and Dominica is ~ £5.15.

In Mexico and Honduras it's £2.70; in Jamaica and the Bahamas it lies at around £2.20, and the cheapest at £1.88 can be found in Granada.

What's the average pie cost?

These are the pie rates of the Caribbean.

[Dogtania]

6 hours ago, Lightscribe said:

But still even if the service economy moves more local, the question still exits however with who is going to take up the swathes of in un-sellable city centre accommodation (houses hacked up into multiple HMOs etc) if there no demand. The sell off starts in the cities and it ripples out to the rest of the country IMO.

That is of course without some major government intervention.

Jumping in mid conversation but you hear from different sources glimpses of what maybe is being pursued by some parties.  Basically intelligent connected city living, with a demise in rural dwelling.

Things like 'rewilding' I heard again somewhere yesterday.  Fits in with the climate play too.  

I'm sure there can also be all manner of grants and incentives to push this along.  There are large commercial buildings - office space - that until last year were fully utilized and occupied in my city.  Now on the market.  A few low ball bids from developers wanting to turn into flats.  I know as I work in one and anecdotal but collegue knows one of the companies tendering.

I'm sure it won't happen overnight ie people moved from rural to city but surely it wouldn't take too many years to do it without force, just a bit of cohersion (reduced services, when people die off their land is not put up for sale but requisitioned/ reserved for the gov or big corp.)

[Yadda yadda yadda]

26 minutes ago, Dogtania said:

Jumping in mid conversation but you hear from different sources glimpses of what maybe is being pursued by some parties.  Basically intelligent connected city living, with a demise in rural dwelling.

Things like 'rewilding' I heard again somewhere yesterday.  Fits in with the climate play too.  

I'm sure there can also be all manner of grants and incentives to push this along.  There are large commercial buildings - office space - that until last year were fully utilized and occupied in my city.  Now on the market.  A few low ball bids from developers wanting to turn into flats.  I know as I work in one and anecdotal but collegue knows one of the companies tendering.

I'm sure it won't happen overnight ie people moved from rural to city but surely it wouldn't take too many years to do it without force, just a bit of cohersion (reduced services, when people die off their land is not put up for sale but requisitioned/ reserved for the gov or big corp.)

It is diabolical that these people think they can push us into this way of living without discussion let alone consent.

[Loki]

1 hour ago, Yadda yadda yadda said:

It is diabolical that these people think they can push us into this way of living without discussion let alone consent.

Just another inclosure act. @Dogtania's understanding of it is something i would be happy with it all works for the best but i have my doubts (once it's gone it's gone, there will be no going back) although i am a horrible cynical bastard

 

 

 

[sancho panza]

On 15/02/2021 at 08:02, MrXxxx said:

Thanks SP, so if the assets (say houses) are revalued higher they can lloan more, and if we have a HPC they are in the equivalent of negative equity.

AS wherebee says below,it's a huge ponzi scheme ,worsened yb the Basel accords which effectively allows banks to game leverage higher under the smoke created by risk weighting.

On 15/02/2021 at 08:23, wherebee said:

It's worse than that.  Because each bank treats a deposit as 'clean', irrespective of whether it was, in fact, borrowed from a bank in the first place, the leverage balloons.

In short, once banks were allowed to leverage up on lending to houses, it was always going to end in tears.  The old building society approach of real money backing each loan (up until the 80's) was the only way to allow lending on houses if you didn't want to fuck the country.  But... that would mean less money for the landowners and politicans...

 

That's a really good point in bold WB.

I think once govt/regulators lost any semblance of control over the leverage ratio,then it was game over,it was always going to end in tears.

On 15/02/2021 at 10:32, Harley said:

I can feel some education coming my way!  I thought with a 5% reserve ratio on £10 deposits the bank can lend out £9.50.  The multiplier effect across the system will make this higher but each bank will need to retain 5%.  Except in the US where because of Covid that was reduced to 0% (on all term deposits)!

And precisely what assets can be held to meet that 5%?  A weighted risk formula across asset types applies?  What I do know is banks borrow bonds from ETFs, etc in exchange for their higher risk equity holdings in order to meet these capital requirements!  This borrowing is limited and collateralised with bank equity holdings valued at say 125% of the bond loan value - a 25% of equity margin if that makes you feel comfortable!  Suddenly that safe bond ETF doesn't feel so safe?  You buy bonds but potentially own a slug of equity.  Not all ETFs, etc lend out their holdings though.

Happy to be corrected though as Basel, etc not my thing as I don't need to open the bag as the smell is bad enough!

PS: Presumably my disconnect is not allowing a percentage of the bank loans as capital.  That is the multiplier effect is also in house as well as in the system.

 

First of all,my apologies,I maybe didn't think too much about the technicalities of my reply to MrX(haven't thought about cash reserve lending in a while).You are right as I understand it.However,the key theme is the same that £10 cash deposit begets £10 of cash depotis and £90 of loans.It's also key not to conlfate Basel rules with the notion of cash reserve imho,they are inherently differnt

under the old cash reserve system,10% reserve

customer A puts £10 deposit inBank A,creates loan of £9 and keeps £1 back in reserve but maintians the liability to CUstomer A of £10. ergo £10 has become £20as in £10 cash and £10 fractioanl reserve money

customer B takes laon for £9 and puts it with bank B who create loan for £8.10 and kep back £0.90 reserve

Now banking system has £10 cash and £17.10 in loans and o and on

 

 

the end of cash reserve lending was jsut jsut a tacit acceptance by the authorities that the banks had been gaming th system for years.Steve keen wrote this super paper in 2009 giving the evidence that banks had been creating loans ahead of depostis for years.SOmething that wasn't wifely accepted until recently.

https://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/

Ref basel,I don't know anything aobut the ETF loans and it's beena while since I've stduied the wiehgitngs ssytem,the key take home is what I've highlighted in bold.You don't necessairly need to understand why it stinks,jsut that it does and it's suicide to eat it .

The bit I find alarming relates -amognts many things-to how the banks get to decide what risk weight a loan carries and then get to sue their own-presumably skewed data-to jsutify it.Gving them an inherent advantage over smaller banks that have to use more standradized approaches.

very much bringing us back to what @wherebee says about the deposits being presumed clean.

ANd that's before you consider the banking system are underpinned by -in the west at least-by huge fiscal deficits.Take the UK,take away the fiscal deficit and the hosuing market collapses.it's absurd by any measure.

 

[Peakrider]

8 hours ago, harp said:

Yep. Had 3 valuations, all slightly lower than his offer. So on the face of it it looks good. We have both said we’ll skip searches to get in before the 31st March. My only concern is accepting 100k cash. Not even sure that’s legal? Market valuation for my would still be fine, so who would know? 

If they give you cash first, how would they prevent you being able to pull the plug on the sale? Or if you transfer title for the property first, how would you make sure they don’t then say ‘what cash?’

[sancho panza]

 

On 15/02/2021 at 21:57, Harley said:

I had a weekly trade signal on HOC a few weeks back.  Currently long.  CEY too but passed and it's now down which is odd but turning now on the daily.

Must admit Harley,we sold a few goldies in Spet/Aug timeframe.Getting interest in repurchasing but hoping there might be more of a sell off yet.

NCM/GOLD/AU

 

On 16/02/2021 at 20:22, Vendetta said:

These twats are always in the know.....

“Hargreaves sold 550 million pounds of shares last February, weeks before markets tumbled on anxiety over the economic repercussions of the coronavirus pandemic.” (From the attached article).

Bit like the Foxtons guy selling up in 2007.

[sancho panza]

On 16/02/2021 at 18:16, AWW said:

What do we reckon? 1.5% then carnage?

My predictions/parameters for triggering a move to UST's below in bold

On 03/09/2020 at 13:27, sancho panza said:

Of the last three recessions,each has been preceded by a 50% + rise in the oil price.

As per our recent discussion on dollar weakness,one of my triggers for selling dollar hedges and buying dollars is a rising oil price.Hence,for where we are now,we're set for BK psot an oil price rise past $80 or so(and/or copper>$3.60,GSR <45,DXY<85,cable>$1.65,UST>2%).May sound ambitious but I see a key part of fed not being able to print HAS  to be heighenting infaltion expectations of which I think oil rising will play it's part.As long as the Fed can print the credit event/BK is unlikely.

You say history doesn't repaert but I'm going to throw some timelines out here.Using monthlies.

Early 90's recession

Oct 1998 Oil bottoms monthly close $13.58,intraday $12.28

July 1990  US recession starts with oil at $20.69

Sept 1990 oil peaks at monthly close $39.51

Oct 1990 oil intraday peak $41.15

Oct 1990 S&P 500 bottoms

March 1991 US recession ends with oil at $19.63

 

Tech Bubble bursting

Dec 1998  Oil bottoms at $10.35,turns up

Mar 2000  US recession starts with Oil at $26.90

Aug 2000 S&P500 monthly peak

Sep 2000 Intraday oil peak at $37.80

Nov 2000 US recession ends-Greenspan put.

Nov 2000 Oil peaks on monthlies at $33.82

Aug 2002 S&P bottoms on the monthlies

 

2008 Recession

Jan 2007 Oil bottoms on the monthlies at $58.14

Oct 2007 S&P peaks on monthlies

Dec 2007 US enters recession with Oil at $95.98

June 2008 Oil peaks at $140-monthlies

Feb 2009 S&P bottoms

June 2009 US recession ends with oil at $69.89

 

2020's recession

April 2020 oil bottoms on the monthlies at $19.56

 

 

 

[Dogtania]

1 hour ago, Loki said:

Just another inclosure act. @Dogtania's understanding of it is something i would be happy with it all works for the best but i have my doubts (once it's gone it's gone, there will be no going back) although i am a horrible cynical bastard

 

 

 

Maybe it would work out best for nature at large Idk.  But the means to the end probably has the bulk of us lowly humans in the way so not sure I'm at all happy with.  

I think I'm in agreement as far as when it's gone it's gone (I'm thinking about laws and liberties).

Sorry don't want to derail this thread... I've become a bit sidetracked about all this other shit going on that I rarely visit the basement these days😕. TBF I've done very well before from setting a few things up thanks to here and opening my eyes etc.  I don't have a great deal so happy to just let some stuff ride for now, as well as keep some other ideas on hand to implement going forward.  Definitely could be more proactive in the educating myself department but -embarrassingly- find the material (finance/ stocks at large) quite dry and harder to get through, rather than say the distraction of watching with wonder and disbelief and trying to make sense (maybe that's the issue) of what appears to be a seismic event in the West since early last year.

 

[sancho panza]

13 hours ago, AWW said:

The headline figure masks some very interesting price action in different areas at different price levels.

Below is LE 2.Huge drop in volume in terraces and flats.Volume is on it's @rse anyway but the drop in flats and terraces in places like LE2 with lots of each is soemthing to behold for the Dow theorists

 

8 hours ago, Cattle Prod said:

Apparently so, but it's nonsense. Saudis only confirmed what they've already said they'd be doing. What it tells me though is that this run up is exhausting and is looking for a reason to correct. I'm hoping for a decent 10-15% correction.

Saudi also released figures today that they exported 6.5mbpd in December, which is only 0.75mbpd less than the pre Covid sustainable average. Yet the market assumes they are holding back 3mbpd off the market. Bullish picture hasn't changed for me, but price has run ahead a bit.

Oilies running behind the oil price,but as I now know,that's not usnual in bulls.

Have to agree on goldies,I've got the slide rule out for the first time in ages.

[Lightscribe]

5 hours ago, Dogtania said:

Jumping in mid conversation but you hear from different sources glimpses of what maybe is being pursued by some parties.  Basically intelligent connected city living, with a demise in rural dwelling.

Things like 'rewilding' I heard again somewhere yesterday.  Fits in with the climate play too.  

I'm sure there can also be all manner of grants and incentives to push this along.  There are large commercial buildings - office space - that until last year were fully utilized and occupied in my city.  Now on the market.  A few low ball bids from developers wanting to turn into flats.  I know as I work in one and anecdotal but collegue knows one of the companies tendering.

I'm sure it won't happen overnight ie people moved from rural to city but surely it wouldn't take too many years to do it without force, just a bit of cohersion (reduced services, when people die off their land is not put up for sale but requisitioned/ reserved for the gov or big corp.)

So instead of leaving the green areas in the cites that they already had and chose to build flats on, they will now add forced pockets of nature that will require continuous and constant maintenance to keep alive to make city living ‘feel’ better. I’m sure Canary Wharf will get some, soulless existence template for WEF 2030 agenda there!

I also fear it may bring ‘urban allotments’ with it, I naively thought all the no-lensed bespectacled hipsters in drainpipe trousers with no socks had gone for good to WFH In Cornwall. I thought I’d heard the last of ‘micro greens’ and ‘purple headed tender stemmed broccoli’ on the train. It looks as if that may not be the case.

[Lightscribe]

4 hours ago, Dogtania said:

Sorry don't want to derail this thread... I've become a bit sidetracked about all this other shit going on that I rarely visit the basement these days😕. TBF I've done very well before from setting a few things up thanks to here and opening my eyes etc.  I don't have a great deal so happy to just let some stuff ride for now, as well as keep some other ideas on hand to implement going forward.  Definitely could be more proactive in the educating myself department but -embarrassingly- find the material (finance/ stocks at large) quite dry and harder to get through, rather than say the distraction of watching with wonder and disbelief and trying to make sense (maybe that's the issue) of what appears to be a seismic event in the West since early last year.

I can relate to your comment in some ways. I’ve had no lockdown, so have had to work in London throughout and can see first hand the amount of abandoned, empty retail units. It was like 28 days later at first. You hear the media talk about ‘V’ and ‘W’ shaped economic recoveries and everyone repeating it verbatim like sheep (which we all know is total bullshit) without any realisation to the economic damage this has actually done/will do.

We all knew the economic ramifications that the end of this cycle would being as we expected on this thread. This has all been a ‘unfortunate’ catalyst to hurry it along. It’s also frustrating to hear first hand the MSM peddling blatant lies, (like statistics quoted by the BBC) when the official statistics from ONS are easily available and yet no one wants to look to compare. It’s like we’re all being led up the garden path to a destination that no one wants to go.

I can only say what works for me, keep your eye on the prize and don’t get sucked in. Don’t get demoralised and switch off the TV. My aim is to buy a house down the coast with sizeable plot of land outright and become semi self-sustainable in the next year or so. They can take their interconnected smart cities and shove it up their arse,

[Popuplights]

3 hours ago, Lightscribe said:

have had to work in London throughout and can see first hand the amount of abandoned, empty retail units. It was like 28 days later at first. You hear the media talk about ‘V’ and ‘W’ shaped economic recoveries and everyone repeating it verbatim like sheep (which we all know is total bullshit) without any realisation to the economic damage this has actually done/will do.

Fully agree. I have driven up into central London a couple of times in the last few weeks for my medical appointment, and it is exactly as you described, 28 days later style. Shuttered shops and deserted streets. The only bright spot is that rents will have to fall to fill these spaces, and the bankruptcy of commercial landlords does not actually destroy the properties, so they can come back into use at a much more affordable price point.

[Option5]

17 hours ago, Yadda yadda yadda said:

There will be a lot of pushback against cars as a service.

That's because the main purpose of personal cars for many people isn't transport, it's for showing off. Status symbol.

Unless of course someone offers a "high class" car service with cars that are suitable for posting on Instagram.

[Calcutta]

BK incoming yet? I know the numbers work but as far as I can see the biggest losers now would be Amazon, Google etc and they've just had their candidate win the US election. Surely that's their insurance plan? All these years of what is basically propaganda so that when shtf they can call in favours. 

[BadAlchemy]

Big pullback in K&S (SDF) shareprice today. Down about 13% from yesterday when it touched €10. Something to do with their accounts being investigated by German watchdog...

https://www.stockopedia.com/share-prices/ks-ag-ETR:SDF/news/buzz-ks-drops-as-german-watchdog-examines-its-accounts-urn:newsml:reuters.com:20210218:nL8N2KO2HO/

(Naturally, I topped up on them a few days before this happened!)

[Yadda yadda yadda]

56 minutes ago, Popuplights said:

Fully agree. I have driven up into central London a couple of times in the last few weeks for my medical appointment, and it is exactly as you described, 28 days later style. Shuttered shops and deserted streets. The only bright spot is that rents will have to fall to fill these spaces, and the bankruptcy of commercial landlords does not actually destroy the properties, so they can come back into use at a much more affordable price point.

I cycled up to central London at the weekend. Going up the Mall the only vehicles, other than cycles, were a police car and two police horses. The whole place was all but abandoned.

In contrast the local park was absolutely packed this week, on the one dry day, as the kids are off 'school' and there is nothing else to do.

[Yadda yadda yadda]

6 minutes ago, BadAlchemy said:

Big pullback in K&S (SDF) shareprice today. Down about 13% from yesterday when it touched €10. Something to do with their accounts being investigated by German watchdog...

https://www.stockopedia.com/share-prices/ks-ag-ETR:SDF/news/buzz-ks-drops-as-german-watchdog-examines-its-accounts-urn:newsml:reuters.com:20210218:nL8N2KO2HO/

(Naturally, I topped up on them a few days before this happened!)

German industry appears to lie more than most. Or is it just that they get caught more often?