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


spunko

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38 minutes ago, geordie_lurch said:

I'm surprised no one has posted this here yet...

https://www.bbc.co.uk/news/business-54506853

 

Shouldn't happen, if 0.1% interest rates don't stimulate the fiat system, then its time to admit that monetary policy is "bust" for the level of debt in that system.

Only show in town left is government spending, and there are plenty of things to cost effectively spend on at the minute.

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Democorruptcy
37 minutes ago, Barnsey said:

And how about this for a chaser!

 

There's also been talk of taking a reduced pension payment earlier:

Quote

 

The rise in state pension age to 66 has reignited calls for people to be given the option of drawing it earlier, but on a reduced income.

Increased unemployment and caring responsibilities among older people during the Covid-19 pandemic mean the idea should be looked at again, say some pension experts.

Older people who want to delay taking the state pension can receive hikes in payouts for doing so, and a similar flexibility should be offered to those who would prefer drawing it earlier than 66, they argue. 

https://www.thisismoney.co.uk/money/pensions/article-8810399/Should-people-allowed-draw-state-pension-early.html?

 

 

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2 hours ago, JMD said:

That resource fund is a particularly good one in my opinion.

Personally, I use these types of fund to 'steal' ideas from. For example, perhaps take a look at the fund's annual report for its full portfolio breakdown, fund is on page 42...(its got yellow cake to whitehaven coal, those guys have certainly done their research!)

https://documentscdn.financialexpress.net/Literature/F5E3A9D342455B7177496EBBBEBDF96F/111994124.pdf?__hstc=204257039.b2d8efc636c6432f5e71d01222ea9b99.1602495516607.1602495516607.1602495516607.1&__hssc=204257039.1.1602495516619&__hsfp=2329393404

 

Yes really good.Iv just been through it and nice to see good holdings in things like Nutrien,OCI etc.Id be happy to hold that fund.

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44 minutes ago, Majorpain said:

Shouldn't happen, if 0.1% interest rates don't stimulate the fiat system, then its time to admit that monetary policy is "bust" for the level of debt in that system.

Only show in town left is government spending, and there are plenty of things to cost effectively spend on at the minute.

Exactly and its coming,its clear the economy cant supply the demands on it.It needs a huge fiscal injection,not monetary.Consumer isnt the answer,governments need to invest to kickstart an industrial cycle.Looking at copper etc China understands this and has started.India should follow,then a sweep across the world.

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@Barnsey i cant wait until later in the cycle when the US long bond starts its yield climb.These politicians wont know whats hit them when they see they have no control over rates.Input prices will be rising fast,food,energy,metals etc.

We will be laughing in the north though,go long Redcar xD

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A memo on house price propping must have gone out over the weekend. 

The following is text from an L&C Mortgages communicate:

Deposit size requirements increase

Over the last few months mortgage lenders have reduced their offerings of high Loan to Value (LTV) mortgage deals. This is particularly affecting first time buyers who typically have a smaller deposit than those who’ve owned a property before. Due to the uncertainty of the market, lenders consider these high LTV deals more risky.

One high street lender is currently requesting a minimum of 20% deposit, which could be quite a stretch for some first time buyers. While there are a few 90% Loan to Value deals on the market, they come with restrictions, such as where the borrower lives and their type of employment.

Possible solution? A joint mortgage!

A joint ownership mortgage is a mortgage you take out with someone else, whether that’s a partner, friend, family member, or business partner, with both parties jointly liable for the mortgage.

There are lots of reasons why joint ownership mortgages are an attractive option. Often buying with someone else makes owning a home more affordable, and by pooling your resources for a larger deposit you might be able to buy a better property than if you were buying on your own. Or with a bigger deposit you could have a lower Loan to Value (LTV) ratio, meaning more mortgage deals are available to you and you could get a much better rate on your loan.

There are two different available options when it comes to joint mortgages: joint tenancy or tenants in common. Each option has its strengths and weaknesses, so you’ll need to consider carefully which is most appropriate based on your individual circumstances. Read our guide to find out more.

Recap: Why are mortgage applications currently experiencing delays?

Many factors have led to an increased demand for mortgages including:

  • Pent-up demand to move following lockdown (for example people wanting more space or a change in location).
  • The Chancellor’s Stamp Duty holiday in effect until 31st March 2021 which has created increased demand.
  • Difficulties in doing on-site valuations under COVID-secure guidelines, which has meant less valuations can be completed in usual timescales.
  • Lenders have removed most of their higher Loan To Value mortgage deals, which has made it much harder to get a mortgage with a small deposit.

This has led to all mortgage lenders having a large backlog to work through and the whole mortgage industry being subject to delays.

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UnconventionalWisdom
6 hours ago, Barnsey said:

And how about this for a chaser!

 

Bloody hell. When will young people wake up and put a stop to this rubbish.

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6 hours ago, geordie_lurch said:

I'm surprised no one has posted this here yet...

https://www.bbc.co.uk/news/business-54506853

 

It's more looking for an excuse not to follow Europe.

US calls all the shots but chooses to keep Fed range up to 2%. It's well aware that lowering rates too low is counter productive as people living off yield shut down spending and save more. And the banks get destroyed by low rates.

ECB which is too full of 'expert's to be pragmatic is burning down its banking sector in a Canute like manner to 'save' economies from an ageing population n high regulation. 

The BoE us somewhere in between. The Uks banking n finance sector is way too big to be destroyed without negative effect on tye wider economy.

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5 hours ago, DurhamBorn said:

@Barnsey i cant wait until later in the cycle when the US long bond starts its yield climb.These politicians wont know whats hit them when they see they have no control over rates.Input prices will be rising fast,food,energy,metals etc.

We will be laughing in the north though,go long Redcar xD

Pretty much.

China disinflation gone. Now China will be pushing for a real return as its population rapidly ages.

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12 minutes ago, spygirl said:

Pretty much.

China disinflation gone. Now China will be pushing for a real return as its population rapidly ages.

Do they get old quicker over there?

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Democorruptcy
2 hours ago, Noallegiance said:

Possible solution? A joint mortgage!

A joint ownership mortgage is a mortgage you take out with someone else, whether that’s a partner, friend, family member, or business partner, with both parties jointly liable for the mortgage.

There are lots of reasons why joint ownership mortgages are an attractive option. Often buying with someone else makes owning a home more affordable, and by pooling your resources for a larger deposit you might be able to buy a better property than if you were buying on your own. Or with a bigger deposit you could have a lower Loan to Value (LTV) ratio, meaning more mortgage deals are available to you and you could get a much better rate on your loan.

There are two different available options when it comes to joint mortgages: joint tenancy or tenants in common. Each option has its strengths and weaknesses, so you’ll need to consider carefully which is most appropriate based on your individual circumstances. Read our guide to find out more.

 

They could call them 'mates mortgages'!

Michael Green in 2011:

Quote

 

Housing Minister Grant Shapps will today call on lenders to offer ‘mates mortgages’ so younger first time buyers can club together and take their first step on the property ladder.

https://www.gov.uk/government/news/grant-shapps-calls-for-more-mates-mortgages-to-help-struggling-first-time-buyers

 

 

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4 minutes ago, Noallegiance said:

Is it like the theory of relativity? If you only have one kid at 20 then by the time it's 20 you'd be 85?

One child was enforced from 1980, starting restricting kids for people mainly born in 50s n 60s.

You've had 40 years of 2 people yilding one kid. The figures are much worse as girl babies were being killed, so about 3 people yield 1 kid.

Then that kid grows at gets married and has one kid in the early 90s, who has one kid in 2010

50s 80s  00s

6 ->1

           -> 1 

6-> 1

 

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2 hours ago, UnconventionalWisdom said:

Bloody hell. When will young people wake up and put a stop to this rubbish.

Once this policy is in place, there should be a wealth tax on pension pot in case people had hesitation on whether to spend it on property immediately.

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UnconventionalWisdom
2 hours ago, Democorruptcy said:

They could call them 'mates mortgages'!

Michael Green in 2011:

 

They tried to throw the kitchen sink at HPI. Why would anyone attach themselves to someone else for so long with so much at stake. I suppose i could also repost on the dosbods thread :D

18 minutes ago, kibuc said:

Once this policy is in place, there should be a wealth tax on pension pot in case people had hesitation on whether to spend it on property immediately.

I would laugh but they would prob attempt it

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23 hours ago, Viceroy said:

HIs latest podcast - https://www.howestreet.com/2020/10/alberta-usa-vs-alberta-canada-martin-armstrong-peter-downing/

He questions why politicians like Boris would be so draconian on the people with lockdowns as it guarantees Boris would never be re-elected by said people - unless they plan to get rid of future elections communist-style, or they've been paid off and can live very, very comfortable lives once they're out. Lukashenko (Belasrus) recently stated the IMF offered him a bribe of $940million to impose covid restrictions and lockdowns & crash the economy.

 

I have a contact who had some business with Bozza when he was Mayor and he predicted Boris would dissappoint a lot of traditonal tories.He missed out the rest of the population.

Boris does indeed seem on a path to electoral poverty of his own making.Occams razor dictates that the cause is incompetence rather than anything darker in motive.However,I do think that Boris's efforts to rule by decree will have inspired a lot of wannabee dictators that their dreams really could come true.

We have had some very mild times politically over the last thirty years post cold war.The economics as laid out by Dr Tim Morgan,shows there's a clear market mechanism leading to the worst of times predicted by David Hunter.

9 hours ago, Majorpain said:

Shouldn't happen, if 0.1% interest rates don't stimulate the fiat system, then its time to admit that monetary policy is "bust" for the level of debt in that system.

Only show in town left is government spending, and there are plenty of things to cost effectively spend on at the minute.

But what do the govt stimulate.I offer a Wolf piece regarding another industry with a begging bowl out.QUite where the US govt is going to draw the line,I don't know.

But these loans-if they go upside down-look like they're enough to all the headwind out of any nascent US recovery.Where's the credit growth going to come from?

https://wolfstreet.com/2020/10/12/two-san-francisco-hiltons-add-to-woes-of-hotel-commercial-mortgage-backed-securities-special-servicing-rate-of-hotel-cmbs-spiked-to-26/

Two Hilton hotel properties in San Francisco – the Hilton San Francisco Union Square, the Bay Area’s largest hotel with 1,921 rooms, and the Hilton Parc 55, both in the Union Square area – owned by hotel-REIT, Park Hotels & Resorts [PK], have now been added to the huge pile of hotel properties seeking relief on their mortgages that have been packaged into mortgage-backed securities (CMBS). Both hotels are still closed, though some other hotels in San Francisco have reopened.

When mortgages that were packaged into CMBS get in some sort of trouble and borrowers ask the loan servicer for relief, they’re added to the servicing watch list, and these two properties were now added to that watch list, according to the San Francisco Business Times. The mortgage backed by the two Hilton properties is still current, but the borrower, Park Hotels & Resorts, has asked the servicer, Wells Fargo, for relief.

But the delinquency rate of hotel properties ticked down, to a still astronomical 22.9%, as some delinquencies were “cured” because the delinquent loans were granted forbearance, and were therefore no longer considered delinquent, though no payments needed to be made

The two Hilton properties in San Francisco that have now been added to the watch list are backing a $724 million loan, taken out by Park Hotels & Resorts Group, according to the San Francisco Business Times. Back in 2016, when the mortgage was packaged into the CMBS, the property of the Hilton San Francisco Union Square was valued at $1.02 billion and the Hilton Parc 55 at $540 million.

When the mortgage is sent to special servicing, it will be reappraised, under current conditions. According to a report by Wells Fargo, reappraisals of hotel properties have been brutal. For example, a Crowne Plaza hotel property in Houston was reappraised 46% lower than its appraisal in 2014 when the loan was packaged into a CMBS. The Holiday Inn La Mirada in Los Angeles was marked down by 27% from its 2015 appraisal. The Holiday Inn in Columbia, Tennessee, was marked down by 37%. That’s the range or current hotel markdowns: -25% to -50%.

Park Hotels & Resorts was spun off by Hilton Worldwide Holdings [HLT] in early January 2017, and started trading on the NYSE. Park Hotels lists 60 hotel properties in the US, including six hotels in San Francisco (two Hiltons, a Hyatt, a JW Marriott, a Le Meridien by Marriott, and the Adagio by Marriott). Four of these six are still closed.

 

 

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8 hours ago, DurhamBorn said:

@Barnsey i cant wait until later in the cycle when the US long bond starts its yield climb.These politicians wont know whats hit them when they see they have no control over rates.Input prices will be rising fast,food,energy,metals etc.

We will be laughing in the north though,go long Redcar xD

I was looking at US 30 year at 1.6%.............it's like who would lend money at these levels....??Obviously a captive market ie pension funds compelled to buy long term securities.

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3 hours ago, spygirl said:

It's more looking for an excuse not to follow Europe.

US calls all the shots but chooses to keep Fed range up to 2%. It's well aware that lowering rates too low is counter productive as people living off yield shut down spending and save more. And the banks get destroyed by low rates.

ECB which is too full of 'expert's to be pragmatic is burning down its banking sector in a Canute like manner to 'save' economies from an ageing population n high regulation. 

The BoE us somewhere in between. The Uks banking n finance sector is way too big to be destroyed without negative effect on tye wider economy.

it's the old velocity discussion we had with @Harley.The assumption of CBers was that driving rates lower would force spending,a total lack of udnerstanding of behavioural economics and the psychology of savers.Lower rates have pushed velocity down and possibly savings up.

Its amaing how the ECB/BoE can look at lots of coutnries where negatvie rates have had the unintended consequence of doing the exact opposite of wht was hoped,and yet they're prepping for another attempt.Encroyable....

 

Assumption is the mother of all f*** ups.

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