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

[Loki]

First impressions are: most of those cars look newer than mine, and I see matey had enough money to cover his arms in sleeve tattoos but not enough to put away for a rainy day...

The Ford F150 at the head of the queue is at most 5 years old!

[DurhamBorn]

1 hour ago, sancho panza said:

Yowzer!!!!!!!!!!!!!!!!!!!!

via daily shot

 

 

Infrastructure spending ramping in Chinois.

I think we might see -16% in 2nd quarter.However UK and Europe have large state sectors so we might see a lower loss than the US,but then a slower recovery.

China has got a head start after infecting the rest of the world.Other governments will do the same soon.The race is starting to re-industrialise economies.

CBs need to keep printing though,US close to right sizing,but Europe nowhere near,they need around $6 trillion.BOE said it wouldnt print then printed £200 billion 3 days later ,we probably need at least another £300 billion over the next 18 months.

[gibbon]

3 hours ago, sancho panza said:

 

 

 

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  The Labor Department said Thursday 6.6 million people applied for first time unemployment benefits.

  (William Luther | Express News)
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What I see: Thousands of Mexicans with poverty complexes who'll take any shit as long as it's free queue up in their expensive SUVs for free shit. Long as they don't have to get out their car of course.

Exactly the same thing would happen here, offer a load of free food within minutes there would be a queue far as the eye could see full of EEs, Asians, Somalis, Pakis etc wanting their gibs and will happily queue up for 3 hours for £1.32 of free food.

[M S E Refugee]

43 minutes ago, gibbon said:

What I see: Thousands of Mexicans with poverty complexes who'll take any shit as long as it's free queue up in their expensive SUVs for free shit. Long as they don't have to get out their car of course.

Exactly the same thing would happen here, offer a load of free food within minutes there would be a queue far as the eye could see full of EEs, Asians, Somalis, Pakis etc wanting their gibs and will happily queue up for 3 hours for £1.32 of free food.

We live in strange times where the modern day poor have many expensive material things as well as being morbidly obese.

[Loki]

10 minutes ago, M S E Refugee said:

We live in strange times where the modern day poor have many expensive material things as well as being morbidly obese.

Turns out calories aren't fungible - they are malnourished 

[NogintheNog]

12 minutes ago, M S E Refugee said:

1 hour ago, gibbon said:

What I see: Thousands of Mexicans with poverty complexes who'll take any shit as long as it's free queue up in their expensive SUVs for free shit. Long as they don't have to get out their car of course.

Exactly the same thing would happen here, offer a load of free food within minutes there would be a queue far as the eye could see full of EEs, Asians, Somalis, Pakis etc wanting their gibs and will happily queue up for 3 hours for £1.32 of free food.

We live in strange times where the modern day poor have many expensive material things as well as being morbidly obese.

The common clay of the new 'west'....

 

[MrXxxx]

6 hours ago, sancho panza said:

Makes you glad to bein the UK with a better social security framework.

Some of the comments on the Mish site are quite though provoking.

https://moneymaven.io/mishtalk/economics/thousands-of-desperate-people-flood-food-bank-lines--N6NZ4KZqk2WQmczYXKhQA

https://www.expressnews.com/news/local/article/Thousands-hit-hard-by-coronavirus-pandemic-s-15189948.php

 

April 9, 2020

In perhaps the most sobering reminder yet of the economic fallout caused by the coronavirus pandemic, the San Antonio Food Bank aided about 10,000 households Thursday in a record-setting giveaway at a South Side flea market.

 

“It was a rough one today,” said Food Bank president and CEO Eric Cooper after the largest single-day distribution in the nonprofit’s 40-year history. “We have never executed on as large of a demand as we are now.”

Thursday’s drive-thru at Traders Village was the fourth such event for the Food Bank since March 31.

Thousands of people in cars gather at Traders Village to get food from the San Antonio Food Bank on Thursday, Apr. 9, 2020. This was the Food Banks largest distribution to date.

(Kin Man Hui, Staff Photographer | Express News)

Over that desperation-filled 10-day span, the agency has fed about 15,500 households, with each distribution drawing more than the first. Cooper said the Food Bank is planning two more giveaways for next week, possibly on Tuesday and Friday, but he’s not sure it can get them done without help from “the National Guard or somebody.”

“Our staff and our volunteers, I don’t know if we can keep up the pace that the demand is requiring,” he said. “We’ve got to debrief and figure things out, but we just can’t feed this many people at one time without probably the Guard or somebody helping us.”

 

“We tried to qualify people on site,” Cooper said. “There were a few folks who showed up that didn’t qualify…but then there were those who showed up and said, ‘I heard this was happening. I didn’t know I had to register, but I need food. I am a hotel worker and I was laid off.’ Those are the stories we heard from a lot of people who showed up.”

Thursday began with 1 million pounds of food on hand at Traders Village delivered by 25 tractor-trailer rigs. But with so many unexpected thousands and food running out, Cooper made the call to the Food Bank warehouse to send in more trucks loaded with food.

“The fishes and loaves went from 5,000 to 10,000, and there really wasn’t much left over,” Cooper said.

“It was a bit of a miracle that we were able to get done what we got done.”

With the Food Bank requiring preregistration and the distributions held in different parts of town, officials believe there were few repeat recipients.

“It fosters accountability,” Food Bank spokesman Michael Guerra said of the registration process. “We have $1.5 million worth of food here today, so we have to be good stewards of that.”

People wait at Traders Village for the San Antonio Food Bank to begin food distribution.

(William Luther, Staff | Express News)

The majority of vehicles began lining up to enter the parking lot at Traders Village well before dawn for the 10 a.m. kick off, although at least one person arrived at 6 p.m. Wednesday and camped out overnight near the security guard station.

By 6 a.m. Thursday, the parking lot was full, with vehicles neatly lined up to make their way to stations where volunteers packed trunks with bags of beans, canned goods, fresh produce, milk and other supplies.

• 

  The Labor Department said Thursday 6.6 million people applied for first time unemployment benefits.

  (William Luther | Express News)
• 

  People wait Thursday, April 9, 2020, at Traders Village for the San Antonio Food Bank to begin food distribution.

  (William Luther | Express News)

“It looked like prairie dogs out there, with all the people standing on top of their trucks, trying to get an eagle-eye view of the line to see how much longer they had to wait,” said Brian Billeck, marketing manager at Traders Village.

 

Billeck became emotional when talking about some of the people he saw in line.

“I saw some of our employees and vendors, and it brought me to tears,” Billeck said.

“It just breaks your heart. It’s not what you want to see.”

Yolanda Benavides, 63, described the aid from the Food Bank as being delivered by “angels from heaven” but admitted she had mixed feelings about receiving aid.

READ MORE: COVID-19 pandemic feels a lot like the Great Depression

“This hurts because I’ve always given and now we are on the other side,” said Benavides, who is disabled and cares for four grandchildren ages 6 through 17 with her husband, a recently laid off charter-bus driver.

“It would be rice and beans without this,” Benavides said.

The distributions are much-needed, officials say, but are seriously straining the Food Bank’s resources, so much so that Cooper has said he fears its warehouse could be empty in three weeks.

With thousands out of work due to the coronavirus pandemic restrictions, demand at the Food Bank is off the charts.

 

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On the supply side, it has been more difficult for it to gather food because grocery stores have less surplus to donate due to panic buying depleting the shelves day after day. Restaurants who regularly donated food are now closed, shutting off yet another usually reliable Food Bank source.

To bridge the gap, the Food Bank is seeking $12 million worth of help from the state, filing a State of Texas Assistance Request with the Department of Emergency Management last week.

 

Still, Cooper said, the goal is to give families “the biggest grocery basket possible by way of their trunk” at the drive-thru distributions.

“We are now at a level where we are having to buy food, and dollars are going very quickly,” Cooper said. “The $12 million from the state will help us stock our shelves with peanut butter and soups and chili and stew and rice and beans and corn and green beans and all of those staple items families need in their pantry to nourish their family.”

About 400 volunteers, aided by traffic control performed by San Antonio police, helped distribute the food Thursday.

“The good Lord says help they neighbor,” said C.J. Littlefield, an 80-year-old senior citizens coordinator at the Ella Austin Community Center, in explaining what motivated him to volunteer.

https://www.expressnews.com/news/local/article/Thousands-hit-hard-by-coronavirus-pandemic-s-15189948.php

Q. How poor are these people if they can afford to `run` a car?...I know this is the US where gas (petrol) is much less taxed but you still have to insure/maintain it...

[M S E Refugee]

On 11/04/2020 at 14:37, Loki said:

could you all give me your thoughts on selling some of my holdings if we get a bounce up which sounds like it could be followed by the real 'big kahuna' as they say on this thread.

I understand the system enough to know this is not technically a part of it, but i am not interested in short term trading calls as such, rather simply maximising the amount i can invest in the reflation stocks going forward. So simply selling RDSB at peak to buy more RDSB when it drops again.  Or would top slicing still be the preferred strategy, accepting the lesser potential gains?

At least i should get one round of divis in before the next fall! 

http://www.thecompoundinvestor.com/article-archives/

[Hardhat]

I take it none of you have been to the states. A car is pretty much an essential over there and very easy to come by. People will buy a car before they buy food, clothes etc. Poor Americans appear to have a good standard of living, may even be overweight, but that's because their diets are shockingly poor. A lot more to it than meets the eye.

[Loki]

40 minutes ago, M S E Refugee said:

http://www.thecompoundinvestor.com/article-archives/

That's this evening's reading lined up, thanks for that!

[JMD]

2 hours ago, M S E Refugee said:

We live in strange times where the modern day poor have many expensive material things as well as being morbidly obese.

But is it really 'strange'? Universal suffrage means people are encouraged to 'vote themselves' more and more resources. The irony is that this behaviour now puts democracy itself at risk. And i'm not attempting to fearmonger here.                                                                                                                                                                                                           I think the Chinese curse (who else would it be!?) of 'may you live in interesting times' is so apt. Recent weeks have shown me how shockingly compliant we in the West are. Campaigners and activists - both left and right - have melted away. We here on this blog are preparing for the economic consequences of the next cycle. But I admit to be now awakened, and more than a little scared, of the coming political consequences.

[JMD]

Did people notice how very bullish Pres. Trump was, for many weeks, that Corona was nothing much to worry about? His initial advisers must have told him to reject plees for shutdowns. I now see that the US appears to have hit it's pandemic peak earlier/lower than expected and that the Corona virus will not be anywhere near as bad as predicted. I'm not ignoring the tragic deaths suffered there, rather just drawing attention to the obvious - to me anyway - change of scientific advisers, and subsequent tone change and worried speeches of Trump, and then rapid turnaround and introduction of shutdown policy changes.                                                                                                                                  The power of advisers perhaps, but if only we also could have access to Trump's financial advisers! I wonder what his investment portfolio looks like, fully prepped for next cycle no dought?

[M S E Refugee]

1 hour ago, JMD said:

Did people notice how very bullish Pres. Trump was, for many weeks, that Corona was nothing much to worry about? His initial advisers must have told him to reject plees for shutdowns. I now see that the US appears to have hit it's pandemic peak earlier/lower than expected and that the Corona virus will not be anywhere near as bad as predicted. I'm not ignoring the tragic deaths suffered there, rather just drawing attention to the obvious - to me anyway - change of scientific advisers, and subsequent tone change and worried speeches of Trump, and then rapid turnaround and introduction of shutdown policy changes.                                                                                                                                  The power of advisers perhaps, but if only we also could have access to Trump's financial advisers! I wonder what his investment portfolio looks like, fully prepped for next cycle no dought?

I don't think he dabbles in Stocks just real estate that's why he wants this sorted as quickly as possible as has a lot of money invested in leisure and hospitality through his Golf courses.

Although those looney leftists reckon he will make a fortune through investments in Pharma after singing the praises of Hydroxychloroquine.

[Funn3r]

7 hours ago, gibbon said:

What I see: Thousands of Mexicans with poverty complexes who'll take any shit as long as it's free queue up in their expensive SUVs for free shit. Long as they don't have to get out their car of course.

Exactly the same thing would happen here, offer a load of free food within minutes there would be a queue far as the eye could see full of EEs, Asians, Somalis, Pakis etc wanting their gibs and will happily queue up for 3 hours for £1.32 of free food.

That's really cold man. These are probably middle class JAM people "just about managing" who can keep the plates spinning under normal circumstances. Their jobs have folded in the blink of an eye and they have absolutely no savings or buffer.  What can they do, you can't sell your F-150 overnight and buy potatoes.

[Loki]

4 minutes ago, Funn3r said:

That's really cold man. These are probably middle class JAM people "just about managing" who can keep the plates spinning under normal circumstances. Their jobs have folded in the blink of an eye and they have absolutely no savings or buffer.  What can they do, you can't sell your F-150 overnight and buy potatoes.

 

How about driving a car and saving the cash so you have a buffer

[Hardhat]

7 minutes ago, Loki said:

 

How about driving a car and saving the cash so you have a buffer

 

What we're seeing here is classic debt deflation as we've been discussing on the thread for years. Why are people queuing up at food banks in their brand new cars? It's simple, it's because they could never really afford those cars, but with rates being so low, the car companies sold them on HPC to the poorest in society. What does that mean? It means that they will never get the cost of the car back now, so the debt they have lent out to the poor people who took the car loans will never be paid back. That's debt deflation in action - there is no longer enough money in the consumer class to have a car and food. You can see that clearly in the photo above. They're not "Mexicans", they're Hispanic Americans, almost 20% of the population. They ARE the American consumer. It doesn't matter if one or two of them have saved some money, most of them haven't and could never afford to anyway, they've been living paycheck to paycheck for years whilst companies give them products on hire purchase that will never get fully repaid. The new cars are not the problem, they are just a symptom. When you see people queuing for foodbanks in brand new SUVs, it's easy to think "stupid people", but if you've been following this thread at all, you will zoom out and see the forces at play that have put these people in the position of having a brand new SUV but needing to use a food bank. Life in the US really is that precarious at this point in the cycle. No wonder they are printing.

[Noallegiance]

25 minutes ago, Hardhat said:

 

What we're seeing here is classic debt deflation as we've been discussing on the thread for years. Why are people queuing up at food banks in their brand new cars? It's simple, it's because they could never really afford those cars, but with rates being so low, the car companies sold them on HPC to the poorest in society. What does that mean? It means that they will never get the cost of the car back now, so the debt they have lent out to the poor people who took the car loans will never be paid back. That's debt deflation in action - there is no longer enough money in the consumer class to have a car and food. You can see that clearly in the photo above. They're not "Mexicans", they're Hispanic Americans, almost 20% of the population. They ARE the American consumer. It doesn't matter if one or two of them have saved some money, most of them haven't and could never afford to anyway, they've been living paycheck to paycheck for years whilst companies give them products on hire purchase that will never get fully repaid. The new cars are not the problem, they are just a symptom. When you see people queuing for foodbanks in brand new SUVs, it's easy to think "stupid people", but if you've been following this thread at all, you will zoom out and see the forces at play that have put these people in the position of having a brand new SUV but needing to use a food bank. Life in the US really is that precarious at this point in the cycle. No wonder they are printing.

Otherwise known as the subconscious surrender of choice and responsibility.

Just because one can, doesn't mean one should. It's been one of my life rules for longer than I can remember.

But I guess most people living in a Socialist paradigm don't get that until it's too late.

[TheCountOfNowhere]

38 minutes ago, Hardhat said:

 

What we're seeing here is classic debt deflation as we've been discussing on the thread for years. Why are people queuing up at food banks in their brand new cars? It's simple, it's because they could never really afford those cars, but with rates being so low, the car companies sold them on HPC to the poorest in society. What does that mean? It means that they will never get the cost of the car back now, so the debt they have lent out to the poor people who took the car loans will never be paid back. That's debt deflation in action - there is no longer enough money in the consumer class to have a car and food. You can see that clearly in the photo above. They're not "Mexicans", they're Hispanic Americans, almost 20% of the population. They ARE the American consumer. It doesn't matter if one or two of them have saved some money, most of them haven't and could never afford to anyway, they've been living paycheck to paycheck for years whilst companies give them products on hire purchase that will never get fully repaid. The new cars are not the problem, they are just a symptom. When you see people queuing for foodbanks in brand new SUVs, it's easy to think "stupid people", but if you've been following this thread at all, you will zoom out and see the forces at play that have put these people in the position of having a brand new SUV but needing to use a food bank. Life in the US really is that precarious at this point in the cycle. No wonder they are printing.

Great post

 

I have a Spanish friend who thought English people are all rich because they all drive fancy cars and live in shiny new houses

 

I explained to him why this was... Subprime debt. 

 

The rich look poor and the poor look rich. 

[Loki]

55 minutes ago, Hardhat said:

 

What we're seeing here is classic debt deflation as we've been discussing on the thread for years. Why are people queuing up at food banks in their brand new cars? It's simple, it's because they could never really afford those cars, but with rates being so low, the car companies sold them on HPC to the poorest in society. What does that mean? It means that they will never get the cost of the car back now, so the debt they have lent out to the poor people who took the car loans will never be paid back. That's debt deflation in action - there is no longer enough money in the consumer class to have a car and food. You can see that clearly in the photo above. They're not "Mexicans", they're Hispanic Americans, almost 20% of the population. They ARE the American consumer. It doesn't matter if one or two of them have saved some money, most of them haven't and could never afford to anyway, they've been living paycheck to paycheck for years whilst companies give them products on hire purchase that will never get fully repaid. The new cars are not the problem, they are just a symptom. When you see people queuing for foodbanks in brand new SUVs, it's easy to think "stupid people", but if you've been following this thread at all, you will zoom out and see the forces at play that have put these people in the position of having a brand new SUV but needing to use a food bank. Life in the US really is that precarious at this point in the cycle. No wonder they are printing.

Would there be a debt deflation without debt?

I want to roll around in a V8 Mustang, but tough tits.  I was taught if you haven't got it don't spend it.

Our own durhamborn drives a diesel Peugeot he spanners himself.

 

[Funn3r]

1 hour ago, TheCountOfNowhere said:

The rich look poor and the poor look rich. 

I live in a small rented granny flat attached to a posh house in a posh area. Walked up the lane today for my 1-daily exercise and for the first time appreciated how grand some of these houses are. I would say 2M pounds upwards. I saw one house which I reckon 3M ish, although let's face it how can you price houses at the moment, and there was an 03 plated Vauxhall in the drive. OK there was one or two mercs and Range Rovers but in general all the same, low profile crap motors. Rich look poor alright.

[Loki]

3 minutes ago, Funn3r said:

 

03 plated Vauxhall i

Cleaner/maid/au pair 

Quote

OK there was one or two mercs and Range Rovers but in general all the same, low profile crap motors. Rich look poor alright.

I don't know what this means.   Well agree RR's are crap cars but low profile? For poor people? wat

[Funn3r]

Just now, Loki said:

Cleaner/maid/au pair 

Not during lockdown on a bank holiday. Maybe I could have explained it better but to me car ownership seems to have turned into poor people blinging the toppest thing they can get credit for, and rich people driving highly downmarket metal. Either because the rich want to avoid credit or just want to avoid drawing attention and to look like they're not rich.

[StrugglingMillennial]

2 hours ago, Funn3r said:

That's really cold man. These are probably middle class JAM people "just about managing" who can keep the plates spinning under normal circumstances. Their jobs have folded in the blink of an eye and they have absolutely no savings or buffer.  What can they do, you can't sell your F-150 overnight and buy potatoes.

Maybe they should have thought about that before they bought the F150.

Just because you have money doesn't mean you have to spend it, if they had put some aside like people used to then things might be different for them.

But thats old fashioned right?

[Harley]

1 hour ago, Noallegiance said:

Just because one can, doesn't mean one should. It's been one of my life rules for longer than I can remember.

#MeToo.  Wish the govt, etc would adopt it too.

[Harley]

2 minutes ago, StrugglingMillennial said:

Just because you have money doesn't mean you have to spend it, if they had put some aside like people used to then things might be different for them.

"It's our money and we don't have to spend it".  Our other rule of living.