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

[CVG]

44 minutes ago, TheCountOfNowhere said:

This'll make some on here chuckle.  Killer Bunny is back on TOS predicting pretty much what DB has predicted for a couple of years now.

The funny bit was I had to block him on twitter for his tweets about HPCers being idiots, they were all wrong, house prices aren't going to fall, rates are going up.

He's back, self proclaiming he was right all along.

He'll be along her soon enough....

I saw that and thought about replying but he seemed to be so keen to earn a "I told you so" badge

[TheCountOfNowhere]

7 minutes ago, CVG said:

I saw that and thought about replying but he seemed to be so keen to earn a "I told you so" badge

**** of the day award.

[Barnsey]

34 minutes ago, Loki said:

You and me both mate.  We just have to not shoot our load too early 

If we get a dabble into negative rates, a 15-20% house price correction (non bubble areas) and 10 year mortgage fixes go sub 2%, I’m going balls deep and making my one load count.

[BearyBear]

7 minutes ago, Barnsey said:

If we get a dabble into negative rates, a 15-20% house price correction (non bubble areas) and 10 year mortgage fixes go sub 2%, I’m going balls deep and making my one load count.

I'm kind of the same, -20% would be back to 2010 nominal prices in the areas I like so I'll be buying. The only problem I see is the availability of 5/10 year fixes!  

[AWW]

7 minutes ago, Barnsey said:

If we get a dabble into negative rates, a 15-20% house price correction (non bubble areas) and 10 year mortgage fixes go sub 2%, I’m going balls deep and making my one load count.

I'm of the same mindset, however being in bubblicious north London, I want to see a return to 2010 (when SE really disconnected from the rest of the country, and reality), which is about 30% from here.

With recent reductions, the £1.5m+ market is already flat, in real terms, since 2010, and things haven't even got started yet.  It's only a matter of time until the rest of the market catches up.

[DoINeedOne]

4 hours ago, MrXxxx said:

This. I am surprised by in a SHTF scenario how many on this thread are planning to stay in the UK...i was too, but after the recent/current way Covid19 is being handled I am now looking for a future retirement based overseas, primarily on my radar at the moment is Sweden...any others thoughts?

Started a thread a while back about different places but going forward i think the outlook to most will be different now

 

[Boon]

Regarding equities, does anyone have an opinion on Hargreaves Services? They look quite interesting for an upcoming industrial cycle, with a new carbon pulverising plant (I think this is just a posh name for coal). If oil prices hit massive highs, this may be good for it.

On the negative side the business performance has been very mixed with acquisitions and disposals hitting the bottom line. Cash flows are much better than the reported figures with large depreciation charges every year. But at the current share price it trades underneath book value, although a good chunk of that is PPE.

[Sugarlips]

33 minutes ago, Barnsey said:

If we get a dabble into negative rates, a 15-20% house price correction (non bubble areas) and 10 year mortgage fixes go sub 2%, I’m going balls deep and making my one load count.

Well with any luck you’ll get a good deal eventually. Out here Perth is now back at 2006 prices and people seem to have been swimming naked for years just paying the interest but the chickens have come home to roost now.

I bought it for $670,000 … and I'll be lucky if I'm able to sell it for $400,000."

 

The two-bedroom, two-bathroom house in the inner-city area of West Perth has been on the market for five weeks, but Mr Grimes has wanted to sell it since 2017 when his interest-only loan was converted to principal and interest.

"Originally when I bought that place I was getting $895 a week in rent and now I get about $415 a week," Mr Grimes said.

"That coupled with [paying] principal and interest, there has been a big hit to our cash flow."

https://www.abc.net.au/news/2020-05-19/coronavirus-combines-with-end-to-interest-only-home-loans/12252828?section=business

[Craig]

1 hour ago, Knickerless Turgid said:

Or perhaps a Eurovision singer?

1974:

2020:

 

Dammit, she was actually Polish, but going to post anyway... 

[Democorruptcy]

2 hours ago, Loki said:

Not even thinking about it till end of year

• Winter/Christmas desperate sellers
• Job insecurity
• 'Big kahuna' as per Dave Hunter, or sector rotation as per durhamborn.

Either way I expect the volatility will be the house buyer's friend

The longer the lockdown in Wales goes on the more it suits me. Ideally when it's lifted, initially travel would be allowed within Wales but not by people coming from England. That would reduce competition and give us locals more of an advantage.

[Democorruptcy]

1 hour ago, Barnsey said:

Definitely seeing a LOT of previous STC coming back now, stay focused on your chosen markets as it tells a far greater story than media articles. I’d be expecting some of those holiday homes to be sold off too by business owners desperate for liquidity in coming months.

I'd love to see a lot of holiday homes sold off but a lot of people avoiding council tax by classing their holiday home as a business have qualified for a free £10k business grant. The danger is they use that money as a deposit on another. When it first came out I contacted the Welsh governbankment and said they were rewarding property speculators not businesses.  I've tried again in case they top the grant up and suggested no house ever used for residential purposes should get a grant. I don't see a house let for 140 days as a net economic gain when it could be empty 225 days a year!

[DurhamBorn]

44 minutes ago, Barnsey said:

If we get a dabble into negative rates, a 15-20% house price correction (non bubble areas) and 10 year mortgage fixes go sub 2%, I’m going balls deep and making my one load count.

Exactly why i told me son to carry on and buy.He moves in in two weeks.He could of walked,but the house he has got is in a great spot,he paid roughly 2004 price,is slightly cheaper than the HTB new estates here,but is far far superior (1978,big plot,not overlooked at rear,lovely south facing garden) and when they come up in the area they are snapped up very quickly and of course we are one of the cheapest places in the country,he paid £127k for a lovely semi.

I guided him to a 10 year fix at 2.64%,zero fees,10% overpayments allowed,after 5 years no lock in at all but still fixed for 5 years.Thats a stunning deal.

He has £32k of silver at yesterdays prices and will owe about 107k on mortgage.They will over pay about £6k a year and then if/when silver increases they will sell and clear mortgage.So say its 7 years,£42k+ 7 years repayments £17k,mortgage £48k,silver around $25 will clear mortgage.Of course i expect much higher silver prices,so likely they will clear mortgage and have £50k/£100k left over before they are 30 years old.

The interest costs should end up £18k before they pay it off so if they live to 80 interest will of cost £320 a year average or £25 a month so £25 a month instead of £550 a month rent for similar house.

[DoINeedOne]

On 14/05/2020 at 17:08, Cattle Prod said:

I read something recently that India have an area the size of Luxembourg pertmitted, cleared and ready for factories etc.

I think this is very likely, both brownouts and modular nuclear. RR will never be allowed go bust IMO, it's strategically important.

worth a listen to the whole thing but its also what you mentioned at the time stamped part of the video 50:00 ish

Apparently its land set aside for companies wishing to move there factories away from China which is twice the size of Luxembourg

 

[Festival]

My thesis is we are about to see the end of peak London. A combination of COVID 19 and improved tech will increasingly see companies aggressively reduce their central London office presence. Financial services is largely a boomer product other generations need it much less. At the same time  the brightest and best graduates from uni will no longer automatically head to London as a career location and even if they do graduate recruitment numbers are way down on previous years and that will likely continue as it did in the early 80s for a few years given the size of the recession.

We can also see DfT playing hardball of sorts with TfL over funding transport in London and before long the boroughs will start to target property taxes on the rich. This and the poor job market will force many boomers and gen xers to sell up and move further afield where they can work less from the spare bedroom. Given the above buy to let becomes a losing proposition and the banks accelerate the falls by restricting LTV's for homeowners still looking to buy. Also the off peak London travel market is under pressure from reduced incomes and consumption.

I don't think London will go the way of New York in the 60s and 70s (fascinating read by the way) mainly because the politicians are largely still based there and they weren't in New York. I have two grown up kids based there and a third graduating next summer and I am lobbying them to set up elsewhere now that work patterns are facilitating only going to the office once or twice a week max. I'm not sure where people will head in the exodus - market towns, the coast but well away from the South East bubble is my advice. Do others have ideas?

 

[Loki]

Slightly off topic but I'm seeing more references online to The Fed, not in a money printing/stealing wealth context but in the context of The Fed eventually being the owner of everything, in return for issued debt, their only product.

Beyond my pay grade, on the surface it sounds like a reasonable take but as always bound to me more to it than that.

[nirvana]

2 minutes ago, Loki said:

The Fed eventually being the owner of everything

This is exactly my gripe!!! The fed, print money, buy everything! @DurhamBorn seems to agree with it but it'll be destructive in the end! As well as immoral if you ask me!

It's a PRIVATE BANK too FFS!!

[nirvana]

To add more...they are creating a system where there is no price discovery! It's a fake market ie the stock markets at the moment but you'll end up with 'fake markets' everywhere!!!

The government in the UK has created a fake housing market with HTB, now there's a fake job market with this furlough bollocks!!!

IT'S CLOWN WORLD ON STEROIDS 

[DurhamBorn]

6 minutes ago, Festival said:

My thesis is we are about to see the end of peak London. A combination of COVID 19 and improved tech will increasingly see companies aggressively reduce their central London office presence. Financial services is largely a boomer product other generations need it much less. At the same time  the brightest and best graduates from uni will no longer automatically head to London as a career location and even if they do graduate recruitment numbers are way down on previous years and that will likely continue as it did in the early 80s for a few years given the size of the recession.

We can also see DfT playing hardball of sorts with TfL over funding transport in London and before long the boroughs will start to target property taxes on the rich. This and the poor job market will force many boomers and gen xers to sell up and move further afield where they can work less from the spare bedroom. Given the above buy to let becomes a losing proposition and the banks accelerate the falls by restricting LTV's for homeowners still looking to buy. Also the off peak London travel market is under pressure from reduced incomes and consumption.

I don't think London will go the way of New York in the 60s and 70s (fascinating read by the way) mainly because the politicians are largely still based there and they weren't in New York. I have two grown up kids based there and a third graduating next summer and I am lobbying them to set up elsewhere now that work patterns are facilitating only going to the office once or twice a week max. I'm not sure where people will head in the exodus - market towns, the coast but well away from the South East bubble is my advice. Do others have ideas?

 

100% agree,it sounds crazy,but its buy Teesside and the Humber,sell London this next cycle.My partner is pestering me to buy a flat on the east coast when the whack arrives,she has family in Scabbie and Brid and they are lovely people and one is a builder.Could do a lot myself and hed sort anything tricky.

https://www.rightmove.co.uk/property-for-sale/property-66873363.html

https://www.rightmove.co.uk/property-for-sale/property-78393886.html

Lots of long lease and freehold available

[Alex]

1 minute ago, Cattle Prod said:

Jesus, those prices!

Same things in Brighton would be five to six times the price, maybe more. That's a nice big disparity to crush.

[DurhamBorn]

1 minute ago, Cattle Prod said:

Jesus, those prices!

Fancy setting up a Ltd and buying up 20 ,no leverage.We could turn Brid into a macro strategists retreat 

[nirvana]

I cycled to Brid once, suffice to say I wasn't impressed.....unemployment will be 50% in these areas when the Fed have finished 

Edit: 'real employment' is probably only 50% now so unemployment could be 70% by then! 

[Loki]

33 minutes ago, 5min OCD speculator said:

This is exactly my gripe!!! The fed, print money, buy everything! @DurhamBorn seems to agree with it but it'll be destructive in the end! As well as immoral if you ask me!

It's a PRIVATE BANK too FFS!!

I think it's a case of don't hate the player, hate the game!  We were bought a long time ago, this is just the ink drying 

[Sasquatch]

39 minutes ago, DurhamBorn said:

100% agree,it sounds crazy,but its buy Teesside and the Humber,sell London this next cycle.My partner is pestering me to buy a flat on the east coast when the whack arrives,she has family in Scabbie and Brid and they are lovely people and one is a builder.Could do a lot myself and hed sort anything tricky.

https://www.rightmove.co.uk/property-for-sale/property-66873363.html

https://www.rightmove.co.uk/property-for-sale/property-78393886.html

Lots of long lease and freehold available

Second one is effectively a flying freehold. Caveat emptor!

Sound idea though.

If we were to sell our house soon, I'd probably have a look at this

https://www.rightmove.co.uk/property-for-sale/property-90634667.html

[nirvana]

29 minutes ago, Loki said:

I think it's a case of don't hate the player, hate the game!  We were bought a long time ago, this is just the ink drying 

Well i suppose I do dislike bankers!  The problem is the ink is just getting warmed up never mind drying!!!

I'm not even worried for myself.....I have offspring who I care a great deal for and I'm worried for their future.....I guess that's why I get 'annoyed' occasionally.....

We all seem to agree it'll end up in a trainwreck, the extent is unknown......and yes the 'roadmap' here is very insightful and thought provoking!

PS I'll take a break for a while.....I know I can be a gobby shit  I'm just looking for answers like other folk. Have fun and good luck!

 

[JMD]

44 minutes ago, Cattle Prod said:

It's perhaps not as dramatic as it sounds! I grew up in a remote place with its own water supply, heating, food. And that's where I'll end up. Most single rural homes in Ireland have their own water supply (either from a natural spring or a drilled well), it's one reason why water charges were never accepted over there! I'm not a paranoid/prepper type, and I'm not too concerned about the collapse of society either, mainly because I'm confident in my own independence, and being able to look after myself and operate in/contribute to a small community. My only concern would be keeping those that cant, the hell away from me. I haven't figured that part out yet. 

CP, your exactly right. I harp on about the practicalities of organising a water supply only because I prefer to keep these type of discussions 'prosaic' and 'civil' - but as you say, unfortunately if/when a collapse did come along, and if water did become a precious resource, everyday life would escalate (degenerate) into being something 'other' than being mere dull or civil.

...I actually think that real preppers (step forward, you know who you are!; btw i'm not talking about those intending to fly off to a NZ farm!) are fully aware of all potential 'sticky issues', and have plans in place along the lines of communes of say 4/5 families/groups, and capitalising on different skill sets - with lets just say - all potential assets/liabilities taken care of (Mad Max / Ramsey Street mashup?!).