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

[MrXxxx]

5 hours ago, Barnsey said:

It would be dangerous of me to take that view @MrXxxx as I’d probably go loopy thinking about just how much rent I’ve paid over the years (£100000 over last 8 years in our previous damp, no central heating, mice infested, crumbling 60’s kitchen, 1 bed in SW London, and probably somewhere around £140000 in total over the 14 years I’ve been with my better half). Renting has given us flexibility, and we've had ok landlords over the years. 

But I’ve continued to rent as many others bought, expecting a crash back in 2016, and here we are 4 years later with activity apparently picking up after the biggest economic shock in a very long time. This in itself simply can’t be possible, which makes me think I’m too early, but how prolonged will a 20% decline in nominal prices be? 2 years perhaps? That’s another £15000 in rent, around 8% of asking price.

BOE forecast -16%, Aviva -12%, CEBR -13%, could and probably will be worse, but over how long I ask myself, and what crazy monetary madness will be conjured up by everyone to prevent falls going much further than that? #jaded
 

By relocating to the Midlands we’ve almost halved our rent so I’ve reduced the sense of urgency, and we’re happy in this flat for the time being, but when you’ve waited for your own place for so long, it’s hard to see the wood for the trees, especially when reasonable and calculated expectations for a correction continue to be demolished. They learned a lot from the previous crash about scale and speed.

Pre-COVID I was aiming for 15% off anyway as this isn’t a massively bubbly area (big part of planning the relocation), if I can get 12% off and a years rent saved, secure a low fixed rate for the full term or 10 years at least, then I’m pretty much there. If we stayed in the SE then goodness knows how I’d feel right now, but the frustration was enough for me to leave a job I was happy in behind, drag the missus away from her friends, and struggle to settle into the new job, definitely not been easy but I’m sure it’ll pay off long term and fingers crossed my other half seems to be doing ok up here too. Thankfully prior to our 8 year stretch in London we had moved around quite a bit.

Thanks everyone for your advice, really helpful, I’ll be implementing it in the weeks and months ahead the best I can.

I empathise! :-)...Lots of fair points but...

1. Do you have to buy now? I.e is your landlord a PITA or selling up/are you unhappy where you are?

2. What is the real cost of still renting where you are NOW I.e not SE and including loss of investment opportunity costs by buying?

3. BoE forecasts?...these are the people that said we won't be going sub-zero rates and then a week later sold bonds at -0.3...my Nan is a more reliable forecaster and shes been buried for 15 years!

If you were 100% you would have just done rather than asking on here...for that reason I think you know the answer that is right for you.

[DoINeedOne]

17 minutes ago, ThoughtCriminal said:

Have Gazprom paid their dividend yet?

Think they go ex-dividend around July

 

[MrXxxx]

5 hours ago, BearyBear said:

If they ever wanted to steal something tangible, they will rather target real estate or pensions. Some dollar-hungry countries may nationalise gold mines but that's a different story.

Or a bail in...hence their enthusiasm for a cashless society.

[Harley]

4 hours ago, Majorpain said:

Hong Kong, Taiwan and now an Indian border skirmish.

The Chinese are starting to bang the war drums just a little.

Restless populace.  SOP.

[Loki]

Anecdotal: Polymetal may be worth a look, as their autoclave system is more environmentally friendly and as we move away from China (and their lack of environmental protection) this could be worth watching.

[Harley]

Lagarde saying something about this being twice as worse as 2008?  Where did I hear that before?  Oh yes, to justify lockdown.  She's coming for your hard earnt?  

[BearyBear]

USD and EUR are crazy today, at least Gold is steadily dropping and it has just broken two important trendlines.

https://alhambrapartners.com/2020/05/26/getting-a-sense-of-the-economys-current-hole-and-how-the-governments-measures-to-fill-it-dont-add-up/

Good article though not that thrilling as WolfStreet. Jeff Snider is predicting another stock market drop next month or September/October as according to his theory, quarter ends are usually vulnerable. It played quite well in March.

[JMD]

5 hours ago, Cattle Prod said:

Yes, it's very interesting how it connects with so many people. I've read some Jordan Petersen, it's astonishing that he sells out medium sized arenas of ordinary folk...to hear a lecture! People really are hungry for intelligent discourse as you say.

'So what your saying is...' you like JP? (I know, silly joke). Anyway, I think the Dark Web is probably the most interesting cultural phenomenon to have arrison in the last decade or so, the discussions they have are also extremely informative. I don't know if its the start of an underground movement for change, lets see. 

Actually, I tripped over JP's university 101 type lectures some years ago (the Pinnochio one is good... yes really!) and was fascinated to see how his fame/notoriety grew. His fight against 'compelled speech' (yes the concept is as creepily '1984' as it sounds) in Canada was epic. He is a rather stiff character, but his audiences of mostly young men are apparently frequently moved to tears due to his simple message of 'buck up your ideas and clean your room'. I expect all this sounds soooo strange for those not familiar with him, but the take away for me is that JP seems to filling a 'belief void' for those who attend his lectures (btw, he is definitely no cult figure). Of course feminists are extremely suspicious of him, not helped I bet by the fact that his biggest followers are 20-something sons of single mothers, but that's probably a sign of him being on the right track.

Another Dark Web 'member' is Brett Weinstein, he of Evergreen College fame (which links to my 'the left is eating itself' comment, please look up Evergreen if you don't know the story, it will show how crazy things have gotten). (btw, his brother Eric is MD of Thiel Capital (yep, Peter 'PayPal Thiel) but if anything Eric is the more interesting brother of the Dark Web fraternity).

Anyway, not wanting to necessarily go down the Corona rabbit-hole again!, but this podcast just happens to be about Corona and its interesting how these academic left-wing biologists view the whole shebang. Yes, its a bit dry, but is refreshingly honest, and definitely not something you'd see on the BBC, or any MSM for that matter, far too triggering!  

 

 

[JMD]

4 hours ago, PaulParanoia said:

The director of Public Health of the World Health Organization (WHO), María Neira, said on Monday that the models they are working with are "increasingly" ruling out a second important wave of the coronavirus.

thanks PP, that's a surprise statement by the WHO, I really thought that they would drag this saga out as long as possible. re Corona, you might be interested in my reply above to Cattleprod.

[TheCountOfNowhere]

Anyone looked at 

 

Tata Motors Limited Fully Paid Ord. Shrs

NSE: TATAMOTORS

[BearyBear]

Hertz +160% wow  

[TheCountOfNowhere]

8 minutes ago, BearyBear said:

Hertz +160% wow  

I wish I'd accidentally bought some of those now :-| 

[Sasquatch]

25 minutes ago, TheCountOfNowhere said:

I wish I'd accidentally bought some of those now :-| 

I doubt that Count. Surely you would have gone for hurtz, a lovely company run by millennials pleased to provide advice on life's troubles and charge you an arm and leg for it. 

[MvR]

1 hour ago, JMD said:

Anyway, not wanting to necessarily go down the Corona rabbit-hole again!, but this podcast just happens to be about Corona and its interesting how these academic left-wing biologists view the whole shebang. Yes, its a bit dry, but is refreshingly honest, and definitely not something you'd see on the BBC, or any MSM for that matter, far too triggering! 

Agree, they're a good listen.  I can't help but chuckle though every time I listen to them after some internet wag ( maybe here, but maybe not ), described their presentation style as "like the most boring date ever".  It does and all..  

[Wheeler]

This short article by Don Durrett may be of interest to the gold and silver miner investors amongst us.

https://www.gold-eagle.com/article/gold-and-silver-majors-mid-tiers-take-your-pick

 

 

[Shamone]

17 hours ago, DurhamBorn said:

https://www.rightmove.co.uk/property-for-sale/property-80124379.html

Thats two doors away from where i bought my first house in 1992.I paid £27k

Thats come up today for £35k,so lets say it goes for £32k (probably less)

I bought my house after a crash not before.Inflation adjusted that £27k would be £61,905 now

So that house has gone up £5k in 28 years nominal.Inflation adjusted only it should be double the price,so in 28 years its halved in price.

Property only ever goes up.

Two up two down terraces have no demand these days apart from landlords in the north,but its interesting.

 

 

That’s amazing.

[leonardratso]

3 minutes ago, Shamone said:

That’s amazing.

looks overpriced to me.

Mind you i often go shoplifting in sainsburys and still feel ripped off as i leave.

[Shamone]

9 hours ago, Barnsey said:

It would be dangerous of me to take that view @MrXxxx as I’d probably go loopy thinking about just how much rent I’ve paid over the years (£100000 over last 8 years in our previous damp, no central heating, mice infested, crumbling 60’s kitchen, 1 bed in SW London, and probably somewhere around £140000 in total over the 14 years I’ve been with my better half). Renting has given us flexibility, and we've had ok landlords over the years. 

But I’ve continued to rent as many others bought, expecting a crash back in 2016, and here we are 4 years later with activity apparently picking up after the biggest economic shock in a very long time. This in itself simply can’t be possible, which makes me think I’m too early, but how prolonged will a 20% decline in nominal prices be? 2 years perhaps? That’s another £15000 in rent, around 8% of asking price.

BOE forecast -16%, Aviva -12%, CEBR -13%, could and probably will be worse, but over how long I ask myself, and what crazy monetary madness will be conjured up by everyone to prevent falls going much further than that? #jaded
 

By relocating to the Midlands we’ve almost halved our rent so I’ve reduced the sense of urgency, and we’re happy in this flat for the time being, but when you’ve waited for your own place for so long, it’s hard to see the wood for the trees, especially when reasonable and calculated expectations for a correction continue to be demolished. They learned a lot from the previous crash about scale and speed.

Pre-COVID I was aiming for 15% off anyway as this isn’t a massively bubbly area (big part of planning the relocation), if I can get 12% off and a years rent saved, secure a low fixed rate for the full term or 10 years at least, then I’m pretty much there. If we stayed in the SE then goodness knows how I’d feel right now, but the frustration was enough for me to leave a job I was happy in behind, drag the missus away from her friends, and struggle to settle into the new job, definitely not been easy but I’m sure it’ll pay off long term and fingers crossed my other half seems to be doing ok up here too. Thankfully prior to our 8 year stretch in London we had moved around quite a bit.

Thanks everyone for your advice, really helpful, I’ll be implementing it in the weeks and months ahead the best I can.

It takes courage to uproot your life and a partner’s. Hope you are happy in the Midlands. All good luck to you.

[Don Coglione]

17 hours ago, DurhamBorn said:

https://www.rightmove.co.uk/property-for-sale/property-80124379.html

Thats two doors away from where i bought my first house in 1992.I paid £27k

Thats come up today for £35k,so lets say it goes for £32k (probably less)

I bought my house after a crash not before.Inflation adjusted that £27k would be £61,905 now

So that house has gone up £5k in 28 years nominal.Inflation adjusted only it should be double the price,so in 28 years its halved in price.

Property only ever goes up.

Two up two down terraces have no demand these days apart from landlords in the north,but its interesting.

 

 

That is an eye-opener.

On the other hand, the first house that I bought in South Manchester in 1992 for around £50k (also a 2-up, 2-down, albeit fairly large and in very nice condition) would have sold for close to £400k pre-WuFlu.

[MrXxxx]

20 minutes ago, leonardratso said:

looks overpriced to me.

Mind you i often go shoplifting in sainsburys and still feel ripped off as i leave.

It because you don't `steal one, get one free`!

[Democorruptcy]

9 hours ago, Barnsey said:

Pre-COVID I was aiming for 15% off anyway as this isn’t a massively bubbly area (big part of planning the relocation), if I can get 12% off and a years rent saved, secure a low fixed rate for the full term or 10 years at least, then I’m pretty much there.

As a lifelong gambler I look at upside/downside. If your target was -15% then a -12% offer makes sense. Why wait for a -15% that might not happen, an offer accepted at -12% is real. If you were buying a million or multi-million pound property then the percentages would make a lot of difference. I don't think you are so if there was an overshoot on the downside then it's largely offset by rental costs. Another consideration is if you need work doing, it may cost more later on. Obviously you need to make sure this on/off the market house doesn't have issues and it's got to be one you are looking at longer term.

Disclosure: I viewed a property on at £320k when it was reduced from £350k last May and thought at £250k it would be a decent buy but I assumed it was too large a drop for them. Checking the sold price later it went for £250k and I'm pig sick I didn't make the offer! I'm still no fixed abode 

[TheCountOfNowhere]

18 hours ago, DurhamBorn said:

https://www.rightmove.co.uk/property-for-sale/property-80124379.html

Thats two doors away from where i bought my first house in 1992.I paid £27k

Thats come up today for £35k,so lets say it goes for £32k (probably less)

I bought my house after a crash not before.Inflation adjusted that £27k would be £61,905 now

So that house has gone up £5k in 28 years nominal.Inflation adjusted only it should be double the price,so in 28 years its halved in price.

Property only ever goes up.

Two up two down terraces have no demand these days apart from landlords in the north,but its interesting.

 

 

I musta missed this one.    And that's the asking price !!!

I've been having a run in with a couple of the posters on TOS you couldn't lose on a house you bough since 2005.  They are either EA trolls or as thick as an EA.  Not sure which.

I used to work in Stoke now and again and there were 100's of houses like that for those sorts of prices, no one wanted them at any price. 

 

https://www.rightmove.co.uk/property-for-sale/property-92435918.html

£35K...not gone up really in 25 years

Finally found correctly valued house

 

https://www.rightmove.co.uk/property-for-sale/property-70744914.html

[sleepwello'nights]

25 minutes ago, TheCountOfNowhere said:

I musta missed this one.    And that's the asking price !!!

I've been having a run in with a couple of the posters on TOS you couldn't lose on a house you bough since 2005.  They are either EA trolls or as thick as an EA.  Not sure which.

I used to work in Stoke now and again and there were 100's of houses like that for those sorts of prices, no one wanted them at any price. 

 

https://www.rightmove.co.uk/property-for-sale/property-92435918.html

£35K...not gone up really in 25 years

 

So if a monthly rent of £300 is achievable a 10% yield could be got.

[ThoughtCriminal]

I see David Hunter is now saying that it doesn’t matter what the Fed does from here on in as it’s too late.

Deflationary collapse dead ahead he thinks.

 

I know you probably think he’s wrong DB, but IF he’s right, what if anything, is the best move for us minnows?

[DurhamBorn]

2 minutes ago, ThoughtCriminal said:

I see David Hunter is now saying that it doesn’t matter what the Fed does from here on in as it’s too late.

Deflationary collapse dead ahead he thinks.

David might change on that yet,the Fed is still engaged and a lot depends on the makeup of the falls.Its not a given that everything will fall from here,there could be big sector rotation.There is probably massive debt liquidation ahead,but some sectors might be lifting at the same time.Its a very very tricky period.Making big money was easy during the collapse in March because the Fed started to engage and you dont fight the Fed.Easiest time to make money in any cycle.The next 6 months though is going to be really tricky.