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

[Loki]

1 hour ago, DurhamBorn said:

.I see very few woke people who arent on the government payroll ,employed or welfare.Its doing massive damage

ESG is also infesting the oilies, I know we hope it actually works in our favour, but no sector is immune from some form of it

1 hour ago, DurhamBorn said:

The worry is that the BOE keeps printing to fund government even with high inflation.

How would you see that playing out, I assume my initial thought of GBP hyperinflation is too simplistic 

[sancho panza]

7 hours ago, JMD said:

Hmm, you point out that in future there may be 'no money to fix' the NHS, plus you mention flu this winter potentially crippling the NHS. Interestind as i've actually been thinking recently on such things and what may play out near term this winter. Especially given health chiefs are estimating 60,000 flu covid deaths this coming year, are we being softened up?... I wonder, is a clumsy cataclysm within the NHS being engineered? Off topic thoughts, not meant as a  discussion point.

corrected for you.

NHS is crippled already.By the demand as much as the supply.

7 hours ago, DurhamBorn said:

Instead of dealing with the hard political choices,the west,and Japan,who are actually leading this are merging more and more the monetary CBs with the fiscal governments.That is why you see governments throwing money at anything and everything rather than debateas the CBs buy the debt and monetise it all.

China is close to the point where it can use its own population to consume more,and that will force up prices in the west even more because western currency will fall in value relative.

I sometimes used to look at the reflation ahead and think the outcomes expected were maybe outliers,but if anything my models are likely underscoring the inflation and dislocation ahead.

For ordinary people, they are walking directly into a distribution cycle that would be difficult at it is.If you add one the  insane energy transition costs and maybe tax increases on things like council tax,its going to very nasty.

If we refer back to your previous psots on every household in India getting a fridge,that spells doom long term for the lifestyles of many in the West.Persoanlly I think we're heading into a period where we'll be competing more directly for resources that we've taken for graned fro decades ,like say cheap oil.ALl these greenies  think that it's a choice not to use oil,what if they can't afford to buy it? Adn what will they do when they find they can't live without it?

 

One of the reasons the US indutrialized so capably in the 1900's was the size of it's domestic market.what happens when the chinese decide to keep all the cheap tat for their domestic markets?

As ever,besides the basement dwelling communtiy,msot people are looking west not east

[sancho panza]

6 hours ago, Castlevania said:

The London riots were quite interesting. They were largely non-violent (I did see someone get punched in the back of the head for no reason, but that was it) and mainly kids out on the rob. No police present. 

The response was to use CCTV to arrest absolutely everyone they could identify stealing, be it as little as a bag of rice from Tesco, and put them in prison. It was very heavy handed, but a really good deterrent.

They were very lucky some kids werent burned in their beds iirc

[MrXxxx]

https://www.msn.com/en-gb/money/other/make-pensioners-pay-national-insurance-to-help-fund-social-care-says-sir-andrew-dilnot/ar-AAMf87g?li=AAwnS0s&ocid=mailsignout

 

Was it not our very own @DurhamBorn who postulated such a scenario about 6-12 months ago?

[Loki]

35 minutes ago, sancho panza said:

They were very lucky some kids werent burned in their beds iirc

A furniture store that was over 100 years old burned down too I think.  I went to pick up a motorbike with a mate a week or so after. 

[JMD]

3 hours ago, DurhamBorn said:

Inflation is RPI ish and yes a base increase.I got that from my best guess about how much dis-inflation there had been below trend.If they push ahead with the energy transition though i think it might be higher .I think China and Russia,but China has many more friendly actors in unis etc and a lot of this woke crap is coming from that area.I see very few woke people who arent on the government payroll ,employed or welfare.Its doing massive damage,but also the fact the government roll over on almost everything.The worry is that the BOE keeps printing to fund government even with high inflation.

I agree that China today does have the money wealth to bribe individuals/institutions, but I think it is Russia that has been working (woking!?) away at subverting the West for many decades... The below video is from 1980 and refers to strategies happening from the 60's....  perhaps the ex KGB spy is merely channeling Chomsky, and exaggerating in order to earn a crust from lectures, etc? However, I think he is broadly accurate and specifically correct in saying that subversion can only happen if the host country allows it to happen (my view is that Germany last century was responsible for inflicting a mass moral hemorage upon the West, and this along with the chaos inducing post ww11 post-modernist thought (which started in French universities), provided an open door for the types of subversion detailed in the video). Worth the hour duration time to watch I think.                                                                                                                                                                   

 

[Mapper]

10 hours ago, DurhamBorn said:

They are winning a fantastic war already though,because surely this woke and cancel culture stuff must be coming direct from their agents and plants across the west

They hardly need to use agents these days. Look how vehmently the youth of the west defend Tik Tok.

8 hours ago, Animal Spirits said:

A stronger Renminbi and more capital inflows into China. That would also depend on how much control the CCP is willing to release in its efforts to become less reliant on the USD.

It should also mean they are less able to implement mercantilist trade policy reflected in the large trade imbalance with the USA where as we know, it is mostly recycled into USD assets. Large surpluses are usually the result of supressed wages/domestic consumption relative to the productive output of the economy.

The Chinese economy also has the same problems as other countries, its built on near 300% debt to gdp.

Check out the channels episodes on the history of Afghanistan as well, The Graveyard Of Empires.

The shit they are pulling in the South China Sea is terrifying, but you mention it to most people and they say "Uhh?"

Objectively, I sometimes think China is playing a blinder. 

We will (might) wake up in a few years and China will own almost everything in the region and barely a shot fired.

[geordie_lurch]

9 hours ago, JMD said:

I agree that China today does have the money wealth to bribe individuals/institutions, but I think it is Russia that has been working (woking!?) away at subverting the West for many decades... The below video is from 1980 and refers to strategies happening from the 60's....  perhaps the ex KGB spy is merely channeling Chomsky, and exaggerating in order to earn a crust from lectures, etc? However, I think he is broadly accurate and specifically correct in saying that subversion can only happen if the host country allows it to happen (my view is that Germany last century was responsible for inflicting a mass moral hemorage upon the West, and this along with the chaos inducing post ww11 post-modernist thought (which started in French universities), provided an open door for the types of subversion detailed in the video). Worth the hour duration time to watch I think.                                                                                                                                                                   

 

Adam Curtis's film on such matters is very educational - iPlayer link at https://www.bbc.co.uk/iplayer/episode/p04b183c/hypernormalisation or YouTube version below

 

[reformed nice guy]

I remember in 2007/2008 the "cash for gold" adverts started to spring up everywhere.

I saw this one today:

https://www.dailymail.co.uk/money/saving/article-9794787/Should-look-Tallys-gold-linked-account-beat-inflation.html

[DurhamBorn]

12 hours ago, Loki said:

ESG is also infesting the oilies, I know we hope it actually works in our favour, but no sector is immune from some form of it

How would you see that playing out, I assume my initial thought of GBP hyperinflation is too simplistic 

We wont get hyperinflation,but we would get sustained high inflation.The UK is lucky in that we are very well placed for renewables.Scotland is the windiest place in Europe and there is a chance we will be exporting energy in the future.That wont solve the massive structural deficits the government is allowing.You only have to look at my close.I have 4 houses of retired police on pensions,2 pro single mothers,1 pro invalidity (those 3 are all renting from family members who bought the houses,all 3 ex council workers on pensions and getting the housing benefit).Most of the others work for the government or council.

[Castlevania]

11 hours ago, sancho panza said:

They were very lucky some kids werent burned in their beds iirc

That was one furniture shop in Croydon. 

I watched the shops in Clapham Junction get ransacked. It wasn’t violent.

Anyhow, the fact that everyone they could identify went to prison, I think has acted as a big deterrent for any future trouble. That kid with the Tesco value bag of rice got from what I recall two years in a youth detention place.

[Sugarlips]

Is this real or have we officially crossed the rubicon?

 

[arrow]

3 hours ago, Castlevania said:

That was one furniture shop in Croydon. 

I watched the shops in Clapham Junction get ransacked. It wasn’t violent.

Anyhow, the fact that everyone they could identify went to prison, I think has acted as a big deterrent for any future trouble. That kid with the Tesco value bag of rice got from what I recall two years in a youth detention place.

Looting is violent. I don't believe they did an oceans 11 style operation. During the riots eight lfb fire engines had their windscreens smashed, two fire cars were attacked, ten firefighters injured, police were shot at,  186 police officers were injured, 14 people were injured by rioters, and there were murders. Richard Mannington Bowes was murdered. The people convicted had their convictions overturned.

[RickyBacker]

3 hours ago, reformed nice guy said:

I remember in 2007/2008 the "cash for gold" adverts started to spring up everywhere.

I saw this one today:

https://www.dailymail.co.uk/money/saving/article-9794787/Should-look-Tallys-gold-linked-account-beat-inflation.html

I know this one well... Traded as a company called 'Lionsgold' on the AIM market. Shares were temporarily suspended by the CEO Cameron Parry as they attempted to change the business to 'Tally Money' . I still have the shares in my portfolio with an exclamation mark and a zero valuation reminding me of my 'investment' decision.
This was maybe three or four years ago... lol, maybe there is still a chance I may get something back!

[JMD]

4 hours ago, geordie_lurch said:

Adam Curtis's film on such matters is very educational - iPlayer link at https://www.bbc.co.uk/iplayer/episode/p04b183c/hypernormalisation or YouTube version below

 

Yes certainly educational and worth watching, though I am always highly averse to image driven docs. In fact I always feel bit 'dirty' after watching Curtis, like I've been manipulated? ...what me cynical, you bet I am!

[JMD]

On 16/07/2021 at 13:15, Barnsey said:

Moneyweek podcast with Russell Napier, worth 35 mins of your time if available!

https://widget.spreaker.com/player?episode_id=45705807&playlist=show&cover_image_url=https%3A%2F%2Fd3wo5wojvuv7l.cloudfront.net%2Fimages.spreaker.com%2Foriginal%2Fe0a4c80dee55b0deb88f54c9137fdcac.jpg

Touches at the end on buying property in the cheaper parts of the UK (mentions Hartlepool, Ellesmere Port and areas around Freeports) with long term fixed debt, given rising inflation and levelling up agenda, rising wages etc (cc: @DurhamBorn) 

Message to Russel Napier (?!) - ie after listening to the podcast and also some of Napier's other recent interviews - it is perfectly obvious he visits here! So come on fella, maybe post here annonimously, but please consider giving 'something back' to this (@Durhamborn) thread!!

[planit]

9 hours ago, Cattle Prod said:

But my point is I do see a pattern. Gold correlates incredibly well to real rates. I think the sentiment is mostly n the breakevens element, and gold fairly mechanically tracks that, particularly on the positive side. I think where gold lags is negative sentiment, sure. Then as sancho points out the safe haven element didn't happen during this time interval.

Yes standard pro licence, though it's become more annoying of late!

I wasn't trying to say there wasn't a pattern, I completely agree with all the points you made regarding the correlation but you asked about the places where it diverges. It was these parts I was referring to.

 

Could you explain why it is annoying? I was thinking about paying which was why I asked.

[geordie_lurch]

2 hours ago, JMD said:

Yes certainly educational and worth watching, though I am always highly averse to image driven docs. In fact I always feel bit 'dirty' after watching Curtis, like I've been manipulated? ...what me cynical, you bet I am!

I know what you mean and feel Curtis is a little too 'establishment' to trust but at least that film should give most reason to pause and rethink what they have grown up with.

[arrow]

The carbon cost of green energy isn't researched in any great detail by the msm. So, I though this piece by cnn on biomass was quite unusual. I've linked to the full article and snipped passages that I though were interesting. Who would've thought that european greens are evil polluters and racists.

"In 2009, the European Union (EU) pledged to curb greenhouse gas emissions, urging its member states to shift from fossil fuels to renewables. In its Renewable Energy Directive (RED), the EU classified biomass as a renewable energy source — on par with wind and solar power. As a result, the directive prompted state governments to incentivize energy providers to burn biomass instead of coal — and drove up demand for wood.

the American South emerged as Europe’s primary source of biomass imports.

relying on biomass for energy has a punishing impact not only on the environment, but also on marginalized communities — perpetuating decades of environmental racism in predominantly Black communities like Northampton County, where Macklin and his family have lived for generations.

Burning wood is less efficient than burning coal and releases far more carbon into the atmosphere, according to almost 800 scientists who wrote a 2018 letter to the European parliament

In 1996, scientists at the United Nations devised a method to measure global carbon emissions. To simplify the process and avoid double counting, they suggested emissions from burning biomass should be calculated where the trees are cut down, not where the wood pellets are burned.

The EU adopted this methodology in its Renewable Energy Directive, allowing energy companies to burn biomass produced in the US without having to report the emissions.

“It doesn’t change the physical reality,” said Tim Searchinger, senior research scholar at Princeton University. “A law designed to reduce emissions that in reality encourages an increase in emissions … has to be flawed,” he said, referring to Europe’s directive.

Ultimately, Europe is not reducing emissions by burning American trees — it’s just outsourcing them to the United States.

North Carolina has been “ground zero” for the wood pellet industry, said Danna Smith, co-founder and executive director of the environmental advocacy group Dogwood Alliance. One hundred and sixty-four acres of the state’s forests are cut down by the biomass industry every day, according to an analysis by Key-Log Economics.

The population of Northampton — which, according to CNN’s analysis, has one of the highest numbers of major air polluters per capita in the state — is predominantly Black, underscoring long-standing concerns over environmental racism."

https://edition.cnn.com/interactive/2021/07/us/american-south-biomass-energy-invs/

 

 

[arrow]

Africa is not happy with the Western Elite's green agenda which is in reality a scheme to keep Africa in poverty. 

 

"The African Energy Chamber has called for the region's countries to boycott companies shunning the continent's fossil fuels sector as part of net-zero ambitions, highlighting the growing concern of energy-hungry African nations over the shift to clean energy by most Western producers.

African oil and gas investment has fallen sharply in the past few years, exacerbated by the COVID-19 pandemic and the energy transition away from oil and gas. The outlook for this sector in Africa is looking bleak, as many of the big international energy companies are starting to reduce their upstream footprints and funding sources for smaller oil and gas players dries up.

In a post published on July 13 on its website, AEC, which represents energy companies on the continent, said it is urging African countries to boycott or refrain from working with international companies that discontinue investments and reject the African oil industry.

"Financial institutions that discriminate against Africa's oil and gas industry in the name of climate change are wrong and desperately need to change both their mindsets and actions," AEC said in a statement. "Institutions have insisted on ending oil and gas investments and development, promoting an immediate energy transition which will and continues to prove disastrous for the African continent and its people."

With significant oil and gas reserves, Africa is expected to see a significant divestment of legacy oil and gas assets, as more energy companies pledge net-zero ambitions. This is already having an adverse impact on Africa, which still depends heavily on the energy and commodity sectors.

AEC's outspoken Executive Chairman NJ Ayuk said the role of oil in Africa's energy and economic future is still key for many underdeveloped African countries.

"As the international community moves to boycott investments in the African energy sector, African people and African development stand to suffer," added Ayuk. "The role of oil in Africa's energy and economic future is apparent, and consequently, should be defended as Western elites move to disrupt African progress."

The decline of oil and gas poses economic challenges to Africa, where many governments see fossil fuels as the most cost-effective way to pull millions out of energy poverty and boost state revenues. Africa is already a big player in oil, and it is expected to emerge as a major player in gas markets as a producer, consumer and exporter with gas output in the coming decades.

But financial institutions are coming under increasing pressure to cut their funding for oil and gas businesses because of the large carbon footprint of such projects. The pressure has intensified since the International Energy Agency said in May the world needs no more new oil and gas developments if wants to be on a path to a net-zero emissions energy sector by 2050.

Last year, Equinor dropped its extensive exploration acreage offshore South Africa and this year ExxonMobil pulled out of a deep-water oil prospect offshore Ghana.

Uganda's maiden oil project has also attracted the growing attention of global environmental groups which claim it will harm the climate, local communities, water supplies, and biodiversity. In March, more than 260 charities and organizations from 49 countries called on banks not to participate in loans to fund the construction of the line.

In mid-May, Nigerian Vice President Yemi Osinbajo said Africa needs an "inclusive, equitable, just and multi-dimensional" energy transition, which will not be achieved by completely banning future natural gas projects.

The "shutting off of capital in energy infrastructure" will not result in a just transition and the attitude towards natural gas needs to be looked at from an energy access and energy poverty point of view, according to Osinbajo.

Africa is projected to represent 8%-9% of the global upstream spend between 2012 and 2025, but its share of global production is also expected to decline over the same period, according to AEC's African Energy Outlook 2021 report."

[arrow]

https://www.spglobal.com/platts/en/market-insights/blogs/energy-transition/071621-ic-elena-anankina-spglobal-ratings-russia-energy-transition-esg-hydrogen

A long article which is generally positive about Russia and its energy companies. It also discusses hydrogen

[Animal Spirits]

10 hours ago, Sugarlips said:

Is this real or have we officially crossed the rubicon?

 

Most bond yields had peaked by late Spring and the rise to date has been modest. I wonder what yield the Italian 10 year would be without the ECB's purchases...

Usually you will see spreads widen between the weaker economies in the EZ compared with German Bunds but some of this is suppressed by the ECB's asset purchases. Here is the 2011 EZ debt crisis:

Low bond yields = low growth/inflation expectations, you know the outlook isnt good when nominal yields are negative.

What stood out in March 2020 was the yield spike on the 10 year, liquidating positions for dollars before the Fed stepped in with full on QE again as opposed to the "not QE" after the repo spike in 2019:

 

[Harley]

8 hours ago, JMD said:

Message to Russel Napier (?!) - ie after listening to the podcast and also some of Napier's other recent interviews - it is perfectly obvious he visits here! So come on fella, maybe post here annonimously, but please consider giving 'something back' to this (@Durhamborn) thread!!

Nobody of any note visits this social media backwater where paramedics, builders, number monkeys, boilermen, and purveyors of fire pits imagine themselves to be, just for one moment, oracles of the financial age!  And why should we not.

[Hancock]

1 hour ago, Harley said:

Nobody of any note visits this social media backwater where paramedics, builders, number monkeys, boilermen, and purveyors of fire pits imagine themselves to be, just for one moment, oracles of the financial age!  And why should we not.

He's been wrong for a very long time

https://moneyweek.com/361388/russell-napier-on-deflation

[wherebee]

2 hours ago, Harley said:

Nobody of any note visits this social media backwater where paramedics, builders, number monkeys, boilermen, and purveyors of fire pits imagine themselves to be, just for one moment, oracles of the financial age!  And why should we not.

fuck!  rumbled!