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


spunko

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7 hours ago, Talking Monkey said:

Although in the next cycle there will be opportunities I think it will be in pockets, I doubt we'll get the huge finsec wave of jobs that provided literally 100s of thousands of well paid jobs down south. As for the Wakefields of the North will they continue on as jobless benefit shitholes, I cannot see them being revitalised

Wakefield should not.

Look at the map. Its not some mining toen, shoved in the far corner of the country.

Its slap bang in with 1h commute of 3m people  - yawk, leeds sheffield, ull, manc etc.

 

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9 hours ago, spygirl said:

Wakefield should not.

Look at the map. Its not some mining toen, shoved in the far corner of the country.

Its slap bang in with 1h commute of 3m people  - yawk, leeds sheffield, ull, manc etc.

 

I do find it incredible that the North has cities like these that have been rundown since the closing of the mines. When you think of their history/legacy (industrial revolution), and midway and shortest land distance between two major ports (Liverpool, Hull) these should be the `power houses` of British economy the way they formerly were...it just goes to show the mismanagement (read incompetence) of successive governments given such a great asset...it seems however good/guaranteed the opportunity our leaders screw it up!

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14 hours ago, Democorruptcy said:

Trim back the public sector?

As if council tax isn't bad enough, suggesting the council also apply a local income tax:

https://www.hl.co.uk/news/2019/11/11/new-council-income-tax-is-best-way-to-plug-multi-billion-pound-gap-in-social-care-says-ifs?

If you think that the finsec is easily automated, the parts of the public sector that suck in huge salaries are even easier.

Make benefits contribution based and poof! loads of LA jobs go as they stop having to deal with the idiots.

 

 

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3 minutes ago, MrXxxx said:

I do find it incredible that the North has cities like these that have been rundown since the closing of the mines. When you think of their history/legacy (industrial revolution), and midway and shortest land distance between two major ports (Liverpool, Hull) these should be the `power houses` of British economy the way they formerly were...it just goes to show the mismanagement (read incompetence) of successive governments given such a great asset...it seems however good/guaranteed the opportunity our leaders screw it up!

No, slightly more complex.

You are dealing with a huge shock - everyone in a town works for X corp. Them poof!, noone does.

A change like that will make the local population spin for 10 years.

However, what compounds th problem is the benefit system esp. propping up housing via HB.

Go to the US. Places where large shocks have happened, housing is cheap.

Thats not so in the UK.

Housing in places like boro and wakefield should cost pennies. Its very high relative to wages.

That stops new people coming in, regenrating. And it encourages people to hang around on benefits, getting housing paid for them.

 

 

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5 minutes ago, spygirl said:

No, slightly more complex.

You are dealing with a huge shock - everyone in a town works for X corp. Them poof!, noone does.

A change like that will make the local population spin for 10 years.

However, what compounds th problem is the benefit system esp. propping up housing via HB.

Go to the US. Places where large shocks have happened, housing is cheap.

Thats not so in the UK.

Housing in places like boro and wakefield should cost pennies. Its very high relative to wages.

That stops new people coming in, regenrating. And it encourages people to hang around on benefits, getting housing paid for them.

 

 

Well there was cheap housing but who sold it off as a bribe (vote winner)?....agree with your other sentiments though, but what sort of government allows its own industrial base become decimated?...was it that the products lacked quality? no, we are still able to `hold our own` in these stakes...is it that the industry is redundant?...no, foreign asset holders are able to run them in the UK...did we lack protection?...likely, especially when government orders went overseas...

We once had the finest industrial training in the world but this was allowed to falter for the sake of short-term profits and political gain...

...instead of `fighting for the scraps on the  lower tables` (repairs/servicing of substandard Asian produced products) we should have remained at the `top table` playing a game we could have won (producing quality and refusing to touch anything that we hadn't made).

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3 minutes ago, MrXxxx said:

Well there was cheap housing but who sold it off as a bribe (vote winner)?....agree with your other sentiments though, but what sort of government allows its own industrial base become decimated?...was it that the products lacked quality? no, we are still able to `hold our own` in these stakes...is it that the industry is redundant?...no, foreign asset holders are able to run them in the UK...did we lack protection?...likely, especially when government orders went overseas...

We once had the finest industrial training in the world but this was allowed to falter for the sake of short-term profits and political gain...

...instead of `fighting for the scraps on the  lower tables` (repairs/servicing of substandard Asian produced products) we should have remained at the `top table` playing a game we could have won (producing quality and refusing to touch anything that we hadn't made).

Even in Wakey, the majority of housing was privately owned - even if it was NCB.

I have no issue with council housing being sold off.

The rise in HB - and rents and housing - was all under that cretin Brown.

The idiots in their welfare unit set LHA to be in the top 30% decile, resulting  rents went up n up.

Slow n late reforms by Gidiot means that HB acts as a downward pressure on rents now.

 

 

 

 

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On 10/11/2019 at 23:19, sancho panza said:

Please don't mlaugh but most of my SCS records are pen on paper.I work a lot of paper.Rough notes with portfolio holdings.When one of the kids gets to my study and scrwawls al over my papers I keep saying I need to start working on a PC but using paper helps me organiose my thoughts.Our 3 year old doesnt care and anythign thats needed for setting up his doctors surgeries and shops get used and destroyed .....It takes me a lot of time to upload them onto the thread.I may have time wed but I may not.

Notes for work and investments i have tried everything to keep organised Private blogs, note apps, other apps nothing beats pen and paper so for now i just have a folder with saved articles and notes organised, Also its been shown that with pen and paper we are more creative and also take in stuff in better, notes are scruffy but work sometimes i struggle with perfectionism trying make everything neat and organised but have realised paper and pen is better

As for uploading online i use Dropbox as a backup you are able to scan documents with your phone and upload to different folders

One other solution that a friend of mine has and loves is an iPad Pro with pen an expensive solution but you can freely write and scribble just like on paper

 

 

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Vodafone results out today , cut the dividend to 4.5c which is a bit disappointing.

 

StockMarketWire.com - Telecom company Vodafone booked a first-half loss owing to an adverse court ruling in India, but upgraded its earnings guidance for the full year as sales inched higher.

Net losses for the six months through September amounted to €1.89bn, compared to losses of €7.80bn on-year, including discontinued operations.

Vodafone's Idea business in India was hurt by a court ruling there ordering the industry to pay back fees to the government.

Organic adjusted Ebitda rose 1.4%, which Vodafone said reflected €0.2bn of operating expense savings in Europe and common functions.

The company upgraded its annual adjusted Ebitda guidance to €14.8bn-to-€15.0bn, up from previous guidance of €13.8bn-to-€14.2bn.

Revenue rose 0.4% to €21.9bn, benefiting from the acquisition of Liberty Global's assets in Germany and Central and Eastern Europe.

Organic service revenue rose 0.3% as growth returned in the second quarter, after it fell by 0.2% in the first.

Vodafone said the return to growth was supported by improvements in South Africa, Spain and Italy, with a 'solid 'retail performance in Germany and strong commercial acceleration in the UK.

The company declared an interim dividend of 4.50c, down 7% on-year.

It also tweaked its free cash flow guidance to around €5.4bn, compared to 'at least' €5.4bn previously.

Pro-forma financial leverage was expected to be around 3.0 times at year-end, excluding the INWIT transaction.

Vodafone said it planned to reduce leverage towards the lower end of its 2.5 times-to-3.0 times range within the next few years.

'I am pleased by the speed at which we are executing on the strategic priorities that we announced this time last year,' chief executive Nick Read said.

'This is reflected in our return to top-line growth in the second quarter, which we expect to build upon in the second half of the year in both Europe and Africa.' Story provided by StockMarketWire.com

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6 hours ago, spygirl said:

No, slightly more complex.

You are dealing with a huge shock - everyone in a town works for X corp. Them poof!, noone does.

A change like that will make the local population spin for 10 years.

However, what compounds th problem is the benefit system esp. propping up housing via HB.

Go to the US. Places where large shocks have happened, housing is cheap.

Thats not so in the UK.

Housing in places like boro and wakefield should cost pennies. Its very high relative to wages.

That stops new people coming in, regenrating. And it encourages people to hang around on benefits, getting housing paid for them.

 

 

Agree certainly with the cost of housing being cheap in similar cities in the US that have experienced similar, but would argue the deselation even worse there without the benefit system.  Not arguing for or against just pointing out that I get the feel that a lot of these post industrial / single employer regions really do get forgotten about in the US and are almost post apocalyptic.  

Maybe rather than life support it's better to let the places die I don't know but pretty grim especially if you happen to live there.  The other thing these places in the US seem to outshine the UK is in local corruption thinking all the local mayors like say Detroit etc that bleed the corpse for what they can then end up in jail year or two later.

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Good results from Vod.They are starting to increase profits even in a deflationary period.Small amounts,but they should grow much faster as inflation arrives.Crucial they cut into the debt though before rates start to move higher.Profile is fine on the debts,but they need to pay if off as it comes due rather than roll it all over.

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13 hours ago, spygirl said:

I have no issue with council housing being sold off.

The rise in HB - and rents and housing - was all under that cretin Brown.

I do, the whole basis of social housing was to provide affordable housing for those who a) couldn't afford to buy, and b) to reduce their exploitation via the private sector. It was not to allow those same people to then profiteer from the system...

...and then once they had (and spunked their profits on holidays and cars), to then become reliant on HB in a private sector that could dictate rates, knowing full well that there was insufficient social housing to act as a `govenor` on prices.

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On 10/11/2019 at 23:48, sancho panza said:

image.png.f3f9ee1e03addb92a208463d1b09f354.png

image.png.2bb7e14588edb0874459450e5b62c2b3.png

image.png.6a97819f5d04463e06138eb90157a338.png

Just to check that my understanding is correct: is smaller=better for this ratio? 

Except that EBITDA doesn't include expenses, so New Gold may show a high EBITDA and therefore low TEV/EBITDA but overall position is probably a loss (net earnings are negative)

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11 hours ago, Bear Hug said:

Just to check that my understanding is correct: is smaller=better for this ratio? 

Except that EBITDA doesn't include expenses, so New Gold may show a high EBITDA and therefore low TEV/EBITDA but overall position is probably a loss (net earnings are negative)

Lower multiple means your paying less money for more output, EBITDA includes running costs so New Gold is priced at a big discount (for good reasons).

I prefer Market Cap to total Resource, but that also has different drawbacks so its really about finding a measure that wont be too wrong for the current situation.

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9 minutes ago, Majorpain said:

Lower multiple means your paying less money for more output, EBITDA includes running costs so New Gold is priced at a big discount (for good reasons).

I prefer Market Cap to total Resource, but that also has different drawbacks so its really about finding a measure that wont be too wrong for the current situation.

There's no single measure that will tell you definitely which stocks are good value. With New Gold, for example, they may seem cheap by both measures you mentioned, until you take a look at their FUBAR balance sheet.

TEV/EBITDA is backward-looking by nature, so WDO looks expensive as its price partially includes future production from Kiena.

First Majestic is super-duper expensive, no doubt about that, but I guess it's a premium you pay for owning one of very few intermediate miners that haven't delivered any nasty surprises recently. Personally I'm massively reducing atm and I might end up selling the whole lot.

Fortuna Silver = China, thanks but no thanks.

And so on. Might use it as a starting point but by no means a "be all - end all" kind of measure.

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Posted on GE thread.

Should also be posted here.

https://surplusenergyeconomics.wordpress.com/2019/11/11/158-an-air-of-unreality/

Growth, output and debt – coming clean

If you were to believe official figures, British economic output increased by 11% between 2008 and 2018, adding £212bn (at 2018 values) to recorded GDP. This in itself is far from impressive and, since population numbers increased by 7% over that decade, left GDP per capita just 3.6% ahead.

Even these uninspiring figures flatter to deceive. Over a decade in which GDP has increased by £212bn, debt has risen by £890bn, meaning that each £1 of recorded “growth” has been accompanied by £4.18 in net new borrowing.

This, to be sure, is an improvement over the 2000-08 period, which witnessed a reckless, credit-driven bubble in which debt increased by £5.63 for each £1 of “growth”. But the UK economy remains excessively dependent on continuing increases in debt.

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1 hour ago, Loki said:

Is a debt-driven economy even an economy? With the root of the word being econ as in economic 

Yes,all market economies are debt driven.The problem now is the debt issued by the treasury/CBs isnt going into productive assets and investment its going on welfare spending.In the UK there is very little point working if you have 2 children unless you can get £40k a year.The left have got themselves into all areas of the state,so the only answer will be inflation.Of course as always happens those who suffer the most from left centred policy are the poor.The teachers,uni staff etc are protected with inflation linked pensions.

The economy is sending a clear signal,it doesnt have the productive capacity to cover the spending pledges on it.So massive industrial spending/growth,or deflation.Once we are deeper into deflation printing will go mad and fire up a reflation.

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36 minutes ago, DurhamBorn said:

Of course as always happens those who suffer the most from left centred policy are the poor.The teachers,uni staff etc are protected with inflation linked pensions.

But by the very nature that they are middle income earners (and unlikely to ever be unemployed), they are likely to be putting more into the system during their working lives, and taking less out through tax benefits I.e wtc...and as for their pensions, SP will be the same as everyone else and (for unis) their benefits in PP will be paid by their fellow, younger colleagues as with all pensions...although you could argue that this is via student loans via the taxed.

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Talking Monkey
40 minutes ago, DurhamBorn said:

Yes,all market economies are debt driven.The problem now is the debt issued by the treasury/CBs isnt going into productive assets and investment its going on welfare spending.In the UK there is very little point working if you have 2 children unless you can get £40k a year.The left have got themselves into all areas of the state,so the only answer will be inflation.Of course as always happens those who suffer the most from left centred policy are the poor.The teachers,uni staff etc are protected with inflation linked pensions.

The economy is sending a clear signal,it doesnt have the productive capacity to cover the spending pledges on it.So massive industrial spending/growth,or deflation.Once we are deeper into deflation printing will go mad and fire up a reflation.

DB doesn't the inflation linked stuff means yet more debt gets taken on until the whole thing is unsustainable and collapses into a heap. Is inflation really the answer to tptb

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35 minutes ago, DurhamBorn said:

Yes,all market economies are debt driven.The problem now is the debt issued by the treasury/CBs isnt going into productive assets and investment its going on welfare spending.In the UK there is very little point working if you have 2 children unless you can get £40k a year.The left have got themselves into all areas of the state,so the only answer will be inflation.Of course as always happens those who suffer the most from left centred policy are the poor.The teachers,uni staff etc are protected with inflation linked pensions.

The economy is sending a clear signal,it doesnt have the productive capacity to cover the spending pledges on it.So massive industrial spending/growth,or deflation.Once we are deeper into deflation printing will go mad and fire up a reflation.

Thanks durhamborn.  I've asked you something similar to this before, but I only just figured how to ask exactly what I meant.

Do you think that the economy will ever fix the societal/demographic issues that face this country

(Let alone most of the west -  'Off topic' on any given day has an over view of what I mean! I try and stay away as this place in an oasis of calm discussion for me. Sometimes the call of the 'You might have missed this' bar is too much though)

Don't feel bound to answer in purely financial terms - I found your tales of your past interesting, and welcome any thoughts you have.

Or to use a tired analogy, are we in this thread given to the fact that the ship is going down, and trying to build a life boat while the party carries on inside?  

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1 hour ago, Talking Monkey said:

DB doesn't the inflation linked stuff means yet more debt gets taken on until the whole thing is unsustainable and collapses into a heap. Is inflation really the answer to tptb

It will collapse,at the end of the next cycle,not this one.Inflation is the only answer they will get.They want some,they will get lots.

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1 hour ago, Loki said:

Thanks durhamborn.  I've asked you something similar to this before, but I only just figured how to ask exactly what I meant.

Do you think that the economy will ever fix the societal/demographic issues that face this country

(Let alone most of the west -  'Off topic' on any given day has an over view of what I mean! I try and stay away as this place in an oasis of calm discussion for me. Sometimes the call of the 'You might have missed this' bar is too much though)

Don't feel bound to answer in purely financial terms - I found your tales of your past interesting, and welcome any thoughts you have.

Or to use a tired analogy, are we in this thread given to the fact that the ship is going down, and trying to build a life boat while the party carries on inside?  

The economy will always fix the problems but we will find new problems to replace them.I dont shit in the garden anymore and my windows dont freeze up on the inside.There are no demographic problems in the scale of things.Its a bigger problem 20% of the population are unemployable to be honest.We arent looking at total collapse of society,just a nasty financial dis-location.Rates at 8% will hurt whoever they hurt.

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sleepwello'nights
3 hours ago, DurhamBorn said:

 

The economy is sending a clear signal,it doesnt have the productive capacity to cover the spending pledges on it.So massive industrial spending/growth,or deflation.Once we are deeper into deflation printing will go mad and fire up a reflation.

And yet when it comes to war governments can mobilise the economy to become ever more productive. Makes you wonder if that ingenuity could be harnessed in times of peace for more lasting benefit.,

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2 hours ago, DurhamBorn said:

The economy will always fix the problems

Just as a matter of historical record, this isn't the case. Empires and currencies always fail - without exception. I'm sure the French before the revolution were all sitting around saying 'Don't worry, the economy will fix itself'. The Romans were probably the same. I could go on.

And when the challenger to an existing Empire takes the stage, the conflict has always - without exception - lead to large-scale warfare and massive destruction.

History is not linear. We don't get to just carry on with everything getting better and the same systems in place for ever. Things die. Economies die. Nations fall.

Sure, the human race will endure, but the costs may be prohibitive (see WWI, WWII etc).

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