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

[Harley]

2 hours ago, DurhamBorn said:

Middle men will be removed yes.Execs pay doesnt really matter.The macro is really all about how much the state takes and spends from the private sector.The private sector is going to get a lot back by putting prices up.You take 4% council tax increase eh,have a 15% increase on your corned beef.The workers in the supply chain will all have a 6% pay increase.

Its the reverse of what happened the last 25 years to 40 years.The state sucked up all the benefits of the dis-inflation,and the private worker none.Prices stayed down for everyone,but the state workers and bennies saw their incomes increase so they got most of the gains from the private sector.

The inflection point is crossed now and we will reverse that.The pro single mum is going to have to pay more for her basics,increasing faster than her bennies,and pass it back to the lad flogging on in the warehouse on nightshift for less money than she gets for doing nothing.This is just the start lots more dislocation to come,but this thread has done its job so far helping us leverage the situation.The irony yesterday as i watched the news about fuel shortages and BP sent me a big fat wedge of cash on an entry 7% yield.

 

And Labour will bleat while giving a big FO to their former constituents who actually generated the wealth.  And the Cons will just enact another con.

[Harley]

1 hour ago, King Penda said:

I’m expecting free training for the unemployed on a large scale

More of our money to the rotted education sector who long ago captured the "Administration".  Nice idea maybe, badly executed guaranteed.  So bad in say schools atm they now just want to self assess people rather than test them.

[Harley]

2 hours ago, Animal Spirits said:

But who will be serving our coffee in Pret, who would be selling us our sandwiches in Pret??? Shazza will have to.

Who adds more value, a seasoned lorry driver or a seasoned journalist?  Who gets paid better, a lot better?

I helped a mature HGV driver out this week.  A bit lost and about to make a big mistake.  I went out to help.  A decent bloke (OK I've had some baduns on the road) and I felt good.  And no, I was not reading the Guardian at the time!

Solidarity.

[Bobthebuilder]

28 minutes ago, Harley said:

This is why, as was posted earlier, I too doubt things will get fixed until the "Administration" has tried everything else and fecked up everything first.  It's what they do.  Here they cave in to the industry which created this situation (with their help) and issue platitudes about "temporary" to cover until the s-show moves on to something else.  Like with the NI increases for the NHS, where's the plan to get us out of this mess and secure the alledged "investment" or more accurately cost?  There are loads of things, given the information posted above, that could be done to help the situation in the intermediate term but nothing is said to counterbalance this (yet again) regressive move.  The "Administrators" are either well out of their depth (of course they are given their backgrounds) and/or captured by vested interests like in so many other areas.  Alas, this needs to break to fix, and the words, even if/when spoken, are just that. These types of issues will just drag on to inflict the maximum pain on the better innocents before any possible fix.  Doing this is all these "Administrators" have proven capable of.  At their best, they will just scorch the earth so something proper can be built by others.  But not in my lifetime.  I proceed doing my own thing as much as I can while trying as hard as possible to ignore yet insulate me and my family from the actions of these perverts.

Spot on Harley.

My experience of government / HMRC at the moment reminds of a teenager dragging their heels and throwing their arms about whilst huffing and puffing. (Harry Enfield's Kevin the teenager comes to mind).

They will reap what they sow, hopefully, they deserve everything they will get imo.

I have just managed this morning to finally log on to my online self assessment tax account, after a year of trying. It has been like dealing with an incompetent child that keeps throwing the paper work all over the floor, time and again, while laughing.

[Harley]

On 23/09/2021 at 11:09, Castlevania said:

Associated British Foods still do. Although they’re a conglomerate, so you get stuff like Primark, Twinings and Kingsmill all thrown in.

Talking of Primark, they are my perfect disinflationary play on so many levels, from constantly moving production to cheaper countries, moving quickly to "capture" fashion trends, cheap transport, etc.  They've played a great game but IMO the walls started to close in on them a few years ago and the bad has only accelerated.  They are my canary - I have a lot of respect for their ability - but they are my bellwether.  The last shoe to drop, as it were? ABF must be pleased with their diversity!

PS:  I think the (lack of) online debate was a red herring.

[Harley]

12 minutes ago, Bobthebuilder said:

They will reap what they sow, hopefully, they deserve everything they will get imo.

Alas, they will take us down first.

[DoINeedOne]

14 minutes ago, Bobthebuilder said:

Spot on Harley.

My experience of government / HMRC at the moment reminds of a teenager dragging their heels and throwing their arms about whilst huffing and puffing. (Harry Enfield's Kevin the teenager comes to mind).

They will reap what they sow, hopefully, they deserve everything they will get imo.

I have just managed this morning to finally log on to my online self assessment tax account, after a year of trying. It has been like dealing with an incompetent child that keeps throwing the paper work all over the floor, time and again, while laughing.

i spent 3 years arguing about the amount owed for a company that was not even running or had a bank account, they threaten debt collect, fines, interest, and i also received letters from debt collection agencies worded to scare but also not actually saying they will

We could, may etc...

Anyway after 3 years of back and forth sending letters recorded to make sure they got them i randomly received a letter updating what i owed £0, no fucking apology or anything 

Another interesting fact i read the other day the UK tax rules runs into best part of 12,000 pages

Hong Kong around 250 pages 

some of the islands around the UK 1 page lol

[Harley]

3 hours ago, DurhamBorn said:

Middle men will be removed yes.Execs pay doesnt really matter.The macro is really all about how much the state takes and spends from the private sector.The private sector is going to get a lot back by putting prices up.You take 4% council tax increase eh,have a 15% increase on your corned beef.The workers in the supply chain will all have a 6% pay increase.

The economics say yes while the current politics on balance probably say no.  We'll get the political economy, as always (aka a "buggers muddle")!

PS:  Council tax up by 5% to cover their graft?  No problem, more graft through price controls and subsidies to the "needy".  The answer to more graft and regulation seems to be more graft and regulation.  Bread and circuses.

[dnb24]

@DurhamBorn

wage inflation- £30/hour cabbage picking.

I used to get paid £28 per day doing same job- 20years ago

https://metro.co.uk/2021/09/24/cabbage-pickers-offered-62000-salary-by-veg-firm-amid-uk-staff-shortage-15311969/

[Harley]

5 minutes ago, dnb24 said:

@DurhamBorn

wage inflation-

https://metro.co.uk/2021/09/24/cabbage-pickers-offered-62000-salary-by-veg-firm-amid-uk-staff-shortage-15311969/

The Netherlands is a massive veg producer with what I assume is a relatively small workforce.  But then I often hear about all the clever techniques, including automation, they adopt.  "Adopt"!  I mean "invest" (TBC, UK static caravans for overseas labour does not count as an investment but that's an interesting end to end discussion!).

[Noallegiance]

I'm hanging in there!

"InfraStrata PLC - London-based strategic infrastructure projects company - Says it has applied to Companies House to change its name to Harland & Wolff Group Holdings PLC, following its purchase of Harland & Wolff in 2019. Says it is now at its final stage of full reactivation of all its yards, which involves building a multi-year backlog for its facilities across its five key markets: defense, cruise, and ferry, commercial, renewables, and energy. Explains the name change will "better reflect its ambition in expanding its core business and the significant development of its shipbuilding and fabrication activities,"

Chief Executive Officer John Wood says: "We are delighted to make this announcement today, signalling the end of upgrade and reactivation phases. With the new national shipbuilding strategy due to be released in the autumn and the government's 10-point plan for a Green Industrial Revolution, we have confidence that the shipbuilding and fabrication business will deliver substantial value to all our stakeholders as we enter this exciting new stage of building our multiyear backlog of projects."

[wherebee]

33 minutes ago, DoINeedOne said:

i spent 3 years arguing about the amount owed for a company that was not even running or had a bank account, they threaten debt collect, fines, interest, and i also received letters from debt collection agencies worded to scare but also not actually saying they will

We could, may etc...

Anyway after 3 years of back and forth sending letters recorded to make sure they got them i randomly received a letter updating what i owed £0, no fucking apology or anything 

Another interesting fact i read the other day the UK tax rules runs into best part of 12,000 pages

Hong Kong around 250 pages 

some of the islands around the UK 1 page lol

Every tax authority in every country I have worked in except Australia has got things badly wrong, to the point of threatening legal action right up to the point where they went 'oh yeah, you are right, you DIDN't owe us a shitload' and disappeared with no apology or explanation.

[Phil]

1 hour ago, dnb24 said:

@DurhamBorn

wage inflation- £30/hour cabbage picking.

I used to get paid £28 per day doing same job- 20years ago

https://metro.co.uk/2021/09/24/cabbage-pickers-offered-62000-salary-by-veg-firm-amid-uk-staff-shortage-15311969/

At £30 ph, how much would a cabbage cost, at the end of the chain? Oh do FO.

Just now, Phil said:

At £30 ph, how much would a cabbage cost, at the end of the chain? Oh do FO.

Not you DB, obviously.

 

[JMD]

15 hours ago, DurhamBorn said:

Although the government will allow some temporary VISAs its obvious they understand the situation on wages and welfare.If wages dont increase by 20% faster than welfare less and less will work in the private sector and the economy will implode.They are right to do so as the cycle will do it anyway,but its very good to see them saying it.We will leverage the returns from this inflation.Bond holders will end up paying for this with a roughly 25% to 30% real loss in the first half of the cycle with an outlier of 60% real loss.

On Friday night, a senior government source said: "We believe in British workers being paid properly and we will not give in to big businesses who want to change immigration rules to drive down wages."

Must say its macro insights like this, not to mention your specific forecasts DB because you have been predicting much of this re the job market for several years, that make this thread I think so invaluable.                                                                                

[JMD]

15 hours ago, Starsend said:

I understand that but still not convinced. They've been happy trying to increase GDP (and hence the tax take) by adding more workers for decades. Old habits die hard.

Getting millions of single mums off of benefits or even reducing them much is going to be extremely difficult, never mind to the point where people working are better off than them. They'll be screeches about the children the moment they try. Entire system is too fucked to fix imo. Collapse the only way.

My takeaway is that - I don't think these recent government initiatives are about staving off collapse. For me these policy reversals (made through gritted teeth im sure) probe to me what dire straights were in - but far far more crucially - that governments know this also.

[Loki]

4 minutes ago, Cattle Prod said:

I think my work here is done!

That was just a figure of speech right?

 

[JMD]

16 hours ago, Yadda yadda yadda said:

I feel like a broken record talking about this. It is common sense that work should be rewarded a lot more than not working. People want fairness, as much as possible. Communism fails because there is no reward for effort. Fear is the only driver available, you don't also have the carrot. It is something working people just intuitively know. For a huge chunk of the population there has been no point in working because you could get as much or more money by applying for the right benefits. We have a system that is close to communism. It stifles motivation. It must stifle innovation too. Except for creative benefits applications. The people taking the decisions, writing the newspapers and running businesses are happily above all this. They're completely out of touch and haven't a clue what is going on. They don't understand why a warehouseman deserves more money than a shelf stacker.

It is a ridiculous state of affairs and it is now multigenerational. People are brought up to fear work not to aspire to work their way up. I don't know what it is like to be brought up in a household where the parent(s) moan about their benefits being insufficient or under threat. I can't imagine there is much thought of getting a skill. The only way out is for their lifestyles to reduce. Up to now the likes of me and most who will read this have been abused by having money taken from us to fund this. No safety net for those who do the right thing.

DB makes the excellent point that the British workforce, following the return of EU labour, is old. As people retire or just quit there aren't replacements willing to work. The pandemic is a curve ball for the road map as we couldn't of expected such a rapid return of EU workers or an event that would cause people to consider early retirement. Ripping the plaster off might be the best thing. A quick revaluation of wages upwards. Happening in some industries and it needs to spread.

Interesting that you use the term 'abused' when describing how you have been over-taxed by the authorities in order to fund those people who make the choice of being a non-worker. I agree with you btw, moreover I have recently begun identifying as being 'first-nation anglo-saxon'!! ...What obtuse point am I clumsily making you ask? Well my simple point is that all this woke/identity-politics*, socially destructive crap eventually backfires, or 'what goes around comes around' as my stale/pale ignorant (obviously rasist?) ancestors might have said. (*Depressingly even your example of the warehouseman and cashier supermarket 'equal pay claim' is really all about so called social justice/perceived sexism in the workplace)                                                                                                                   (full disclosure: maybe I should get one of those problematic(?) genetic tests done to prove my (past-'lived-experience'!) cultural identity, thing is the results might backfire on me(!), you see im adopted and my aunty always said I looked 'a bit Mediterranean'!? Anyway not advise, please dyor.)

[JMD]

17 hours ago, The Grey Man said:

Bar personal comments, the HGV drivers issue is a classic example as cited here.

The MSM seem shy of talking of the numbers who could do the job here and why they dont.

Plus it's a bigger and more endemic problem than just transport. I hear that Northampton health trust is now restricting chemotherapy services because don't have enough cancer nurses/technicians. NHS treatment has always been rationed, though this is never much admitted, but this is different and relates to sudden structural changes in the job market.                                                                                                                             A 'war time', command economy is coming I tell you... And so useful politically, I predict Boris will scrub half those useless university places and replace with proper job training/apprenticeships, etc. 

[Castlevania]

3 hours ago, Harley said:

The Netherlands is a massive veg producer with what I assume is a relatively small workforce.  But then I often hear about all the clever techniques, including automation, they adopt.  "Adopt"!  I mean "invest" (TBC, UK static caravans for overseas labour does not count as an investment but that's an interesting end to end discussion!).

The Netherlands has a load of Eastern European’s on temporary working visas doing the shit agricultural jobs just like the U.K. the difference is that they can’t rock up and claim a house and benefits for their entire family from day one.

[DurhamBorn]

6 minutes ago, JMD said:

Plus it's a bigger and more endemic problem than just transport. I hear that Northampton health trust is now restricting chemotherapy services because don't have enough cancer nurses/technicians. NHS treatment has always been rationed, though this is never much admitted, but this is different and relates to sudden structural changes in the job market.                                                                                                                             A 'war time', command economy is coming I tell you... And so useful politically, I predict Boris will scrub half those useless university places and replace with proper job training/apprenticeships, etc. 

The BOE has pretty much printed the welfare budget for 13 years.We pay £100 billion a year to people to do nothing at all.Every incentive to do the wrong thing,little incentive to do the right thing.People working 16 hours in NMW jobs are driving around in BMWs and Mercs if they have a couple of kids and one down as ADHD.

The cycle of dis-inflation that allowed this has now ended.We gave Sharon her bennies and an ex farm worker in China did her work for her.Now that is being removed Sharon will have to work.Government doesnt know what to do because they are so scared of the left and the media,but they will have no choice.The cycle is in play now.Command economy will be part of it for certain,because they cant get half the population to give up bennies and work overnight.

 

[Loki]

1 minute ago, DurhamBorn said:

Government doesnt know what to do because they are so scared of the left and the media,but they will have no choice.

They will need to rely on the anti-establishment  (If you look at what the establishment is now)

Interesting times

35 a week and a nuclear family = a revolutionary act.

[JMD]

15 hours ago, wherebee said:

Well, thought I'd check on my year to date performance, as we're almost at the end of Q3.  realised profits (trading) 41k.  Unrealised 27k.  Dividends 5k (expecting 10k by end of year, now the oilies are set).  All on 150k in.

That's a very good result and way ahead of inflation.  Now, as I said above, it's a case of sitting and waiting with the oilies, miners, and ARB.L as the rollercoaster.  A fair chunk now in cash as well, in case.

Thanks @DurhamBorn.  Still owe you that pint - I'll buy you a rat in the gulag.

Are you intending to buy some ARBK? Newly listed on nasdaq. I saw your question few days back but don't think you got an answer from the thread's crypto community? (Realise this is not a crypto thread, but the sector is a 'speculative hard asset' buy, controversial thing to say I know)

[JMD]

8 hours ago, jamtomorrow said:

This HGV crisis just seems like part and parcel of "the turn", as we've come to know and love it, in the sense that the foundations under low prices for quite a few goods and services have been quietly eroding, and we're now seeing the final collapse.

But it would be a mistake to assume it's as simple as "we'll just be paying more for our transport relative to other goods and services, all else stays the same". The structure of today's economy is dependent on cheap logistics, so whole swathes of the rest of the economy are going to have to change (or disappear? Mike Ashley might be f***ed).

Also structural change within transport and logistics. If labour suddenly takes a bigger slice of the pie for road haulage, that increases the incentive to replace labour with capital. Things like: even bigger vehicles; automation (although still bit early for full driverless); the return of local/regional railfreight terminals.

I agree with you. And do you think the term 'logistics' will suddenly become a dirty word? Me thinks a timely rebranding is pending...

[ThoughtCriminal]

Have what i think is an interesting anecdotal. 

 

I went and encapsulated some asbestos today at a country barn conversion/bungalow halfway between whitby and Scarborough. 

 

Met the builder there and he asked how much we thought they'd paid for it. Shitty bungalow with poor quality barn attached, about an acre of land. 

 

Im reasonably familiar with the area so i said about 300k. 600k! My jaw literally dropped. He said buyers wife wanted it no matter what and they ended up in a four way bidding war. Builder is local and said this is now commonplace in Whitby: houses go up for sale and end up going for 30% over asking after bidding war. 

 

Theres about 200 sqm of absestos covering the entire roof area, barn and bungalow. Someone (not the builder) has previously tiled straight over the asbestos meaning theres now a HUGE weight on the roof, asbestos keeps moisture in and prevents heat escaping so in summer it will be horrendous. How the hell they'll ever sell it is beyond me. 

 

Surely if this kind of thing is happening in somewhere like Whitby then its a canary in the coal mine for the housing market. 

 

DB, CV and others helped clarify my thoughts on selling my house (my thanks to one and all), this is the icing on the cake. Im putting it up for sale next week. 

 

 

 

[JMD]

7 hours ago, working woman said:

Lorry Drivers

My next door neighbours (30ish) both gave up their jobs about 6 months ago to set up a business. They both worked for transport companies, recruiting lorry drivers and have set up an agency recruiting lorry drivers for the supermarkets. They have a lot of experience in this and are doing really well.

They are paying the drivers £15/hr which for a 40hr week is over 30K.  Sounds good, but a mortgage at x 6 salary is 180K, which gets you a grotty 2 bed flat where I live, not enough for a man to be the "bread winner" and raise a family in a 3 bed-semi.  Semi's start at 300K here. 

Wages need to rise or property needs to come down, maybe both. 

Rather than importing labour from abroad - why not encourage retired Ex HGV drivers back onto the road with incentives such as Tax Free Pay on a part or full 3-6 months contract, hours to suit them, until  enough new drivers are trained up. 

Why would people want to move to the UK, in the middle of a pandemic, where you have to jump through hoops to get on a plane and go home to visit family. 

It will be interesting to see what happens.

I must say very astute and forward thinking neighbors you have, almost clairvoyant of them. I wonder, do they have any investment tips?