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


spunko

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Bobthebuilder
1 minute ago, Barnsey said:

To clarify:

The new mortgage scheme is not restricted to first-time buyers or new-build homes, but there will be a £600,000 limit.

Yeah I saw that on the so called bbc. The Times headline grabbed me though, Sunaks interview was with the Financial Times.

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Chewing Grass
6 minutes ago, Barnsey said:

reinvigorated the market for high loan-to-value lending

What a disingenuous way of saying unaffordable lending.

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geordie_lurch
1 hour ago, ThoughtCriminal said:

I'd like to listen in on that call to the broker: "Hello. I'd like to short western civilisation please". 

 

🤣🤣🤣

If they are a decent one they would just send you to buy BTC like the other smart people who have bought it as insurance for such reasons ;)

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As a long term renter within the M25 I'm already priced out so makes no difference if they get more expensive ,past the point of caring. The only thing that brings me to the table is a crash or good fortune.

I wont be happy if my rent rises too much but then as I'm already competing against others who have their rent paid for by the state I will have to cut my cloth accordingly when my rent goes above the current level I can service or accept. 

Quite nice to now be able to look at this bullshit and shrug my shoulders rather than let it bring my mood down.  

 

 

 

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1 hour ago, Bobthebuilder said:

I noticed in the shop this morning that The Times front page said "mortgage help for first time buyers".

Yes the ‘help’ that absolutely no one wants.

Browse the comments of the FT or even the Daily Mail you’ll actually find boomers nowadays that think things have got a bit silly and the continued pump of the HPI bubble isn’t a good idea.

That should ring all kinds of alarm bells. However, why get angry? It’s all part of the longer term plan. May as well sit back and watch it all implode. 
 

26CB9CBD-5C01-4466-B01D-6CB7103E4A55.gif

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Yadda yadda yadda
4 hours ago, Rhines said:

Hi, I read this thread everyday but don't post as it's a still over my head a lot of it sadly.

My multinational employer has just announced a payrise of 1%. I keep reading people screaming about cash being trash etc which I get but for the time being I'm definitely going to be poorer and it feels like we are quite a way off people being able to demand pay increases if that happens at all. I have a house deposit I am worried about and stress over housing.

Wage inflation seems the real danger of when I might get left behind, will the reflation companies that have been able to pass on costs to customers lead the way in pay rises? There's a danger I get left behind by further speculation but that's happened already and I believe affordability is at it's limits. Wage inflation will really finish me off.

Just wondered if there are early indicators to look for or a point in the cycle it would happen, feels like there is going to be pain first and we are a few years away at least?

Thanks

Someone might come up with a better answer than this but I'll give it a go.

Most of the private sector hasn't had regular annual pay increases. Whilst inflation is under 2% employers can get away with that. At 5% people will leave to look elsewhere. They won't be able to afford to stay. Keeping skilled staff will require pay rises. Yes those businesses that are closer to the inflation will be able to raise wages first.  International businesses are likely to be raising wages quickly in the USA. If they're doing that it will be easier to get wages increases here.

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On 25/02/2021 at 22:49, Hancock said:

Ive a big bank balance, and a Derv Astra ... if that doesnt get them moist then nowt will.

Don't forget your pizza oven...that's the final 'knee trembler'! :-)

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1 hour ago, Yadda yadda yadda said:

Someone might come up with a better answer than this but I'll give it a go.

Most of the private sector hasn't had regular annual pay increases. Whilst inflation is under 2% employers can get away with that. At 5% people will leave to look elsewhere. They won't be able to afford to stay. Keeping skilled staff will require pay rises. Yes those businesses that are closer to the inflation will be able to raise wages first.  International businesses are likely to be raising wages quickly in the USA. If they're doing that it will be easier to get wages increases here.

Thanks Yadda, I guess the people more willing to move jobs are often doing it because of pay and are generally more savvy with achieving increases, market rates etc anyway.

People are reporting some hefty increases in prices already (perhaps more because of opportunity than costs increasing by that much) but it could be a while yet before the private sector will be giving big pay rises on mass in annual reviews. Especially if companies aren't seeing any change in their results. 

I'm just interested in timings, I have fairly low expectations pay wise I am more worried about the impact of other people getting them and house prices :-) At this point in time anyway.

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9 hours ago, Harley said:

Riddle of the day:

How come investing in polluting energy companies is immoral but investing in BTL, depriving the young security and a stake in society, is not?

Answer to follow (really!).

Cute, that was the society that was.

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18 minutes ago, DurhamBorn said:

 

italian-00-flour-from-1kg-1kg-or-case-10x1kg-case-10x1kg-19461-p.jpg

Just ordered 10KG of the blue from Amazon for £18 ...but i also recommend the Mutti sauce ... just the plain Classico stuff, it is delightful.

image.png.d11b30f63cdb8895b5e732cdd00bbfe5.png

image.png.d378c69252d2b83f4c666b7872fd09d3.png

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6 hours ago, Bobthebuilder said:

Have you had a look for a back burner on the wood burner? My Gas safe inspector has one, he says he hardly uses any gas at all in the winter, combined with wet solar to top up in the summer. Expensive to install is the only downside.

Yes, I did, when specifying the install.  Various site issues and I naively thought I'd go renewables! 

Thankfully hot water oil usage is relatively minor and oil is needed for the brute force btus for quick heating (especially as the property was initially only used at the weekends).  And other such factors. 

I'm in a far better position to assess things now I've lived here long enough.  Oil will always be key but the additions I mentioned will fine tune things, especially to my room usage, etc and make things more comfortable (eg. conditioned air).  

Finally, a large holding of our oillies with their divs should help with future costs. I like the synergy!  

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17 hours ago, Talking Monkey said:

SP quick one do you see barrick sub 15 in the next few weeks or in the BK.

There's a seller's mood and the cahrts are pointing down$15 is distinctly possible imho.

We've got two barrick holdings $13&$15 from 2017/18.At $23,I was considering a wee options trade.At $18,a bigger options trade.At $15,possibly more stock and a big options trade.

Barrick currently on a p/e 14.28.At $15 it's 11.48........................free cash flow yield of 10% currently,12.6% at $15 ona year like 2020.

If I see the BK coming we'll sell and then in the aftermath,we'll be backing up on these.

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reformed nice guy
11 minutes ago, Harley said:

Yes, I did, when specifying the install.  Various site issues and I naively thought I'd go renewables! 

Thankfully hot water oil usage is relatively minor and oil is needed for the brute force btus for quick heating (especially as the property was initially only used at the weekends).  And other such factors.

An option is to connect the radiator circuit to the back boiler as well. Iv got oil burner, 2 stoves with back burners, radiators, underfloor heating, solar heat tubes and water tank on the same system. All linked together with a central mixer (cant remember its proper name) and a pump on each system. Today the sun was hot so put the pump on that drives it into the mixer along with the pump that drives the water tank to the mixer.

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11 hours ago, DurhamBorn said:

The government scheme will likely lead to falling house prices,not rising because demand for renting will start to fall and continue to fall.The government here is trying to move billions of future housing benefit cost by getting peole to own instead.There is actually little risk to government as long as these are 25 year repayment mortgages.The first 5% is the buyers risk,then each year around 2% of the capital is repaid slowly increasing.In 5 years 15% will be paid off.

This policy is simply designed to trap younger people into working longer,and remove a large percentage in future from housing benefits.Of course this fails if they are allowed to use the system over and over,or if it is a one off.

In other news 

https://www.telegraph.co.uk/business/2021/02/27/soaring-prices-fuel-hopes-new-commoditiessupercycle/

This is why you need to work on a roadmap and do cross market work.While everyone was selling oilies the roadmap was clear increased green spending was a route likely to be used at the end of the dis-inflation and that would see a big increase in energy demand.This thread was full of people when BP were £2 and Repsol Euro6 saying they are going to nothing,im down 10% etc.Whipsawed by sentiment rather than put in some effort.

Of course its highly likely the market will have to shake out people,but most funds have already dumped the sector.

It sticks with me thinking about the agency workers in my last job doing the line supply on £9 an hour with NEST pensions.That woke idiot women in charge sold all their inflation hedges at the bottom.Iv often thought contrarian investing with a macro strategy would fade away over time as information became more available,yet it seems not.The opposite.

Copper is doing so well because China will be spending hard on its power system.40% of Chinas copper use goes on its power system.That means with a lag power demand is about to increase in China,likely from the middle of this year.Maybe the start of the great natural gas bull.

I think the real fly in the ointment with these schemes is that they work until they don't.

Already you've the shrewder BTLers gently exiting the market.What ahppens if the UK starts to depopulate.All govt sums are based on rising  population.

there's a lot of recent arrivals who are marginally attached to the UK and whilst some will argue that the benefits system wills top people leaving,that relies on sterling trading above $1.10.Life here gets pretty poor thereafter,as does the govt.

So many people seem to beleive that these structural deficits can continue indefinitely,that it contrarianest basement dwellers even dare question it.But I think the govt is going to be severely limited in terms of welfare spending 2023 on.

6 hours ago, ThoughtCriminal said:

Half mask respirator 50, was 22. Some covid inflation there but, fuck me...... 😳

Roll of polythene 40, was 30

Bags 50, was 42

 

Box of tape 30, was 25 

 

Anyone else in trades etc noticing materials rocketing? 

Price of kidnapping gone up?

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2 hours ago, Yadda yadda yadda said:

Someone might come up with a better answer than this but I'll give it a go.

Most of the private sector hasn't had regular annual pay increases. Whilst inflation is under 2% employers can get away with that. At 5% people will leave to look elsewhere. They won't be able to afford to stay. Keeping skilled staff will require pay rises. Yes those businesses that are closer to the inflation will be able to raise wages first.  International businesses are likely to be raising wages quickly in the USA. If they're doing that it will be easier to get wages increases here.

The current UK hosuing market relies on an eternal virtuous circle of a stable jobs market,willing borrowers,willing banks ,lower and lower rates,rising fiscal deficits and cable stable above parity.

Somethings gonna give at some point and it won't be pretty.

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ThoughtCriminal
23 minutes ago, sancho panza said:

 

Price of kidnapping gone up?

You just gave me a great idea for a sideline.......... 

 

Anyone need someone "scared" with a fake kidnapping? 

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1 minute ago, ThoughtCriminal said:

You just gave me a great idea for a sideline.......... 

Anyone need someone "scared" with a fake kidnapping? 

Aye my mates Rishi, Boris and Hancock, you can scare them by pushing them off the cliffs of Dover, thats a good level of scariness.

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ThoughtCriminal
10 minutes ago, Hancock said:

Aye my mates Rishi, Boris and Hancock, you can scare them by pushing them off the cliffs of Dover, thats a good level of scariness.

I'd bury those fuckers alive for free 

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Bobthebuilder
12 minutes ago, ThoughtCriminal said:

You just gave me a great idea for a sideline.......... 

 

Anyone need someone "scared" with a fake kidnapping? 

Be careful who you poke, some sleeping bears can be a bastard when they need to act.

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