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

[AWW]

23 minutes ago, DurhamBorn said:

This £50k loan for Ltds is nuts.Disgusting actually.A factory worker could take half a lifetime to save £50k,yet a Ltd can have it for free then go under.

 

Am I correct in that there is nothing to stop a Ltd Co taking the loan, paying it out as a dividend to the director, then going bust?  I wouldn't do it myself, but I'm sure there are plenty who will, if there's no way to claw it back.

 

[ThoughtCriminal]

7 hours ago, AWW said:

Gold or silver? I've used Atkinsons for reasonably large orders of gold coins before (although your hypothetical £30k will only get you two tubes of gold Brits at the moment!).

I don't see why silver would be a problem - but £30k is three monster boxes, or 40-odd kg of the stuff - make sure you don't put your back out ;-)

Did you get any discount? I’ve considered buying around 10k worth in one pop, but price seems to be same as buying individual coins.

[Chewing Grass]

16 minutes ago, Sideysid said:

I quite like old crowns too. Like this one from 200 years ago. I find it fascinating the amount of hands it must have been through. Survived wars, recessions, depressions, pandemics, kind of ironic with what we’re facing now.

IIRC when I looked at Victorian Silver Crowns their value was not eroded between something like 1830 and 1890 in that they retained their purchasing power in relation to goods, so much so it made hoarding them a reasonable practice rather than using a bank.

[Chewing Grass]

2 minutes ago, AWW said:

Am I correct in that there is nothing to stop a Ltd Co taking the loan, paying it out as a dividend to the director, then going bust?  I wouldn't do it myself, but I'm sure there are plenty who will, if there's no way to claw it back.

If there's no comeback I'll do it what with IR35 'n' all as the government is turning my 25 year business to bollocks anyway.

[AWW]

5 minutes ago, ThoughtCriminal said:

Did you get any discount? I’ve considered buying around 10k worth in one pop, but price seems to be same as buying individual coins.

I seem to remember getting 1% for the number of coins I bought, but it was quite some time ago.

[AWW]

5 minutes ago, Chewing Grass said:

If there's no comeback I'll do it what with IR35 'n' all as the government is turning my 25 year business to bollocks anyway.

My five minutes on Google says that directors can be held liable for company debts if they gave a "personal guarantee" when the loan was taken out. However, for Bounce Back loans, lenders are not permitted to take out personal guarantees - and anyway, it's the government (well, us mugs who pay tax) who are on the hook for a default.

[ThoughtCriminal]

2 hours ago, Craig said:

Yeah, it's the latter. Lots of gym members trying to source weights to keep pumping during lockdown. There's many examples of manky, rusty weights being sold on Gumtree etc for ludicrous prices. 

I removed an asbestos garage roof a few weeks back and they had 150kg of bog standard metal home gym plates with few bars. Knowing how expensive they are I offered him cheeky 50 quid for them. Refused to take money and gave me them. 

 

Sold them for 450 quid on gumtree. Inflation in action. lol

[ThoughtCriminal]

1 hour ago, Bobthebuilder said:

Just got off the phone to a mate who runs a ltd company down here in London, tells me guys with shit companys doing £500 a week have all got the £50k loans and i kid you not,, are looking at buying BTLs in Durham. I laughed, but you couldnt make it up.

Exact same experience today. 
 

Girl in Newcastle I know runs a cafe. Hubby decided he prefers cock and left her with over 40k debt in loans and cards. Volvo on finance, keeps horses and tries to run with the posh crowd. 

 

Applied for and received a 50k bounce back loan yesterday. Absolutely ZERO intention of paying it back, and more to the point, couldn't even if she wanted to.

 

What a shit storm these loans are going to create.

 

 

[sancho panza]

On 27/05/2020 at 23:51, DurhamBorn said:

Noticed tonight as well some bottom ladders in potash have now nearly doubled.This thread was full of people from nowhere saying everything was going to zero when those ladders were being bought.I also noticed Sibanye's price.Is anyone still holding big holdings from the bottom?.

 

Our tranche 2 buys Nov 18 included Sibanye around the $2-50 level.Not sold any yet.We bought HMY at that time as well and have held that holding.I sold top ladders in GFI/HMY last week to spread it into NCM and BVN.Still more to go (there was a fair bit of profits in them) but looking for the right trade and there's not much value left in the sector. Your psot has made me get my notes out and it's interesting -for me-to see how many of those Nov 18 trades are still with us-KGC/SAND/Integra/Alexco/Alamos/Gold resource

We've still got Barrick/Anglogold/GFI/NGD/IAM from tranche 1 April/Jun 2017.

We'll rpbably sell them all in a oner.

On 28/05/2020 at 12:43, Shamone said:

What does the hive mind think about HSBC? Hasn’t been this low since 1996.

96.

[ThoughtCriminal]

39 minutes ago, Sideysid said:

Yes problem being is to convince my daughter to sell her ‘unicorn’ 10oz ones when silver reaches $200 an ounce. She’s quite adamant that she’s never selling. 

I quite like old crowns too. Like this one from 200 years ago. I find it fascinating the amount of hands it must have been through. Survived wars, recessions, depressions, pandemics, kind of ironic with what we’re facing now.

That’s the fascination with an object like that. The stories it could tell, the things it’s seen. Marvellous.

[Bobthebuilder]

1 hour ago, Sideysid said:

“Ear mate, that £50k loan bruv, theres ouses up norf that are £25k bruv, buy two innit! Bricks and mortar only go up bruv. Licence to print money son!!“

That was it pretty much, they could not see a down side to it. I will repeat, shit ltds, laminate flooring laying companies with next to no work waking up the next day to £50k in the bank with no intention of paying it back.

[S Brule]

24 minutes ago, AWW said:

Am I correct in that there is nothing to stop a Ltd Co taking the loan, paying it out as a dividend to the director, then going bust?  I wouldn't do it myself, but I'm sure there are plenty who will, if there's no way to claw it back.

A company can only pay out dividends from accumulated profits. Any amounts paid over that are called 'illegal dividends'. It's not actually a criminal offence but the director/shareholder will owe it back to the company. When they then declare themselves bust, they have to appoint a liquidator who'll spot this straight-away and make them pay the money back to the company. They don't have to appoint an insolvency practitioner if the company is solvent (in the hope nobody will spot what they're doing ) , but if they've a small crappy ltd co and just taken on a £50,000 government loan then that probably won't be the case. Besides, if they get caught trying to hide this, they'll get their balls put through a wringer, haha.

[sancho panza]

On 28/05/2020 at 14:08, Cattle Prod said:

this investigative article point to bigger political issues in or around Gazprom? Probably. But the political risk is in the price already, this is why you can buy it on a PE ratio of 3.8

 

On 28/05/2020 at 16:26, JMD said:

Don't watch all of video - it is a bit too chummy between these two. However, the part between 32:00 - 40:00 did make me laugh because it illustrated that, even though their world is so different from us 'ordinary folk' and they definitely don't need the money, the current banking environment is such that it is literally throwing money at people like ex-fund manager Hugh Hendry and his Bahamas luxury holiday let business. Not having a go at him, good luck to him, but it does show how crazy things have gotten. I didn't recognise Hugh Hendry at first, as had previously only seen him in his previous form with suit and tie. He is now semi-retired, living on his private island in the Bahamas.

 

Hugh lost a lot of moeny for people in the run up to shutting Eclectica.Not that I disagreed with a lot of what he said.He was a very eloquent bear.

10 hours ago, DurhamBorn said:

This is mainly due to Fed action,the more the systemic risk,the more they engage,when the VIX hits those levels we have been at full pumping levels.Its a long way off but i suspect this might not work at the end of the next cycle during high inflation.When things start to collapse then the CBs cant engage in pumping and PMs will likely fall very hard and keep falling.I think inflection points are really key and really difficult.For instance,we are now at the inflection point from dis-inflation,that is clear from a macro point,but as these things are so rare,maybe 5 a century (in and out are two) its very difficult to  road map the lags,especially in financial markets.What i see though on cross market work is that very large parts of the market suffered capitulation selling during March,especially that weekend where BP hit £2.20 etc,cyclical stocks got destroyed with across the board drops from highs of 60% to 90%.

It could be the markets from here have seen the lows in many areas,but the hot sectors havent (and they have huge market caps).It could also be the case that falls/damage from here is companies going under,a quick derivative unwind,or debt for equity swaps.

 

The selling in March was something to behold and it says a lot about some of the prices we sank too.

CP said some time back the bottom of the market will be signified by the FANG stocks being on the floor and March showed us clearlymwhe they strat selling off,everything wil go with them initally.

I persoanlly think we've seen the XOM low through past 2022 jsut like the miners rose through 2001 bear,so will the oilies.

[Chewing Grass]

6 minutes ago, S Brule said:

A company can only pay out dividends from accumulated profits. Any amounts paid over that are called 'illegal dividends'. It's not actually a criminal offence but the director/shareholder will owe it back to the company. When they then declare themselves bust, they have to appoint a liquidator who'll spot this straight-away and make them pay the money back to the company. They don't have to appoint an insolvency practitioner if the company is solvent (in the hope nobody will spot what they're doing ) , but if they've a small crappy ltd co and just taken on a £50,000 government loan then that probably won't be the case. Besides, if they get caught trying to hide this, they'll get their balls put through a wringer, haha.

Thank fuck for that, I won't bother, I hate paperwork and bureaucracy.

 

[Lightscribe]

19 minutes ago, ThoughtCriminal said:

That’s the fascination with an object like that. The stories it could tell, the things it’s seen. Marvellous.

I like to think it cost me £20 for a tiny piece of history that will always have intrinsic value too as they have had for 1000’s of years. Most nowadays would blow that on a pizza delivery or a couple of spins of the fruit machine, when in those times that piece of silver was probably a days work.

[afly]

1 hour ago, DurhamBorn said:

The locals here will unload to the idiots like they did last time,then mostly went back and took the boilers and copper out as they kept a spare key.

This £50k loan for Ltds is nuts.Disgusting actually.A factory worker could take half a lifetime to save £50k,yet a Ltd can have it for free then go under.

Government dont care though,its all about liquidity and getting money into the economy.

 

Put max tax free dir loan amount into premium bonds. Not much money in it but risk free and somewhat comical to get money from gov using gov money.

It does seem crazy, anything stopping my other biz charging my bbl comp a monthly service fee until bust?

[Harley]

Market dip next week given Trump's latest anti-China words and actions today?

[afly]

54 minutes ago, AWW said:

Am I correct in that there is nothing to stop a Ltd Co taking the loan, paying it out as a dividend to the director, then going bust?  I wouldn't do it myself, but I'm sure there are plenty who will, if there's no way to claw it back.

 

Divs not what they used to be. 20% corp tax to pay before you start and then amounts > £2k per annum attracting quite heavy taxation. Used to be more like 30k until the "party of business" cut it

Worse if you're also in receipt of actual investment divs outside of a tax wrapper as they count too

[Loki]

7 minutes ago, Harley said:

Market dip next week given Trump's latest anti-China words and actions today?

Keep an eye on the tea leaves!

https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

[AWW]

1 hour ago, S Brule said:

A company can only pay out dividends from accumulated profits. Any amounts paid over that are called 'illegal dividends'.

Hmm, I'll just have to pay it to the missus as salary. At least she'll get some furlough money when the second peak comes...

[JMD]

1 hour ago, sancho panza said:

Hugh lost a lot of moeny for people in the run up to shutting Eclectica.Not that I disagreed with a lot of what he said.He was a very eloquent bear.

SP, did you watch the last 20 mins? Where the pair do some live strategising and invent a possible trade, well a trade for a hedge fund to do... tbh I only understood a quarter of it, but I think you might appreciate it more and enjoy it.

[JMD]

12 hours ago, sancho panza said:

The real irony is that people like my Dad consdier themselves liberals and yet struggle to allow people to have opinions that offend their myopic sense of right and wrong.

That's refelcted in their philosphy these days and possibly explains why they keep failing at election time due to the inherent structural contradictions in the way they think they're perceived and the way they are perceived by the public.

Imho there are large political vacuums ina lot western coutnries

Political vacuums and vacuous politicians! Not a good starting place given the difficulties that lie ahead. Liberal politics has enjoyed its elevated position for many years, but only because it occupies the sacrosanct, mostly unchallengable soft middle ground. But the West was fooling itself because this type of Liberal pallid compassionate approach doesn't work in reality, instead it proved to be an arogant lazy position to take (fukishima's end of history). The theory was that the West had resolved the great global ideological conflicts and that the societal and economic problems were well on their way to being solved. The reality was that economic systems and other public institutions were breaking down, had lost trust, or were being accused even (usually without evidence) of elitism/structural racism! Moreover, the Chinese and the newly emerging middle-east problems were not even recognised. And this 'denial' was all-pervasive, for example, no sooner had the US 'empire' won the cold war than its electorate/policy makers immediately wanted to take a back seat from being world policeman. So instead of reelecting GW Bush, Clinton was elected followed by a succession of even more narrowly focused on domestic issues presidents, mostly or totally disingaged from international affairs. 

[jamtomorrow]

9 hours ago, AWW said:

Am I correct in that there is nothing to stop a Ltd Co taking the loan, paying it out as a dividend to the director, then going bust?  I wouldn't do it myself, but I'm sure there are plenty who will, if there's no way to claw it back.

 

As others have said, you can only pay divis from profits. A Director's Loan is the other possible mechanism, but they'll need to pay it back pronto otherwise HMRC will consider it for tax from a few different angles.

And if you owe a Director's Loan to a Ltd that goes bust, you effectively end up owing it to the creditors of the company. If this does turn into a political scandal, you can imagine how the banks/gov might use that hold to make some naughty piggies squeal, to show that "something is being done". Let's hope so.

[jamtomorrow]

This came by, *seems* like a summary/explanation of the founding thesis of this thread. Nice graphs: https://www.lynalden.com/fixing-the-debt-problem/

Conclusion: buy silver

[sancho panza]

6 hours ago, JMD said:

SP, did you watch the last 20 mins? Where the pair do some live strategising and invent a possible trade, well a trade for a hedge fund to do... tbh I only understood a quarter of it, but I think you might appreciate it more and enjoy it.

not had time,jsut off nights and catchign up with my reading as well as trying to get some cpaital back into the goldies.

I'll have a look tonight.It wasa sadness for me to see Hugh give up his bearishness and go bull.'last bear turns bull' etc.

Witha  lot of these fund managers though,wehn you examine their records they're not as slick as you think.