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

[DurhamBorn]

1 hour ago, Harley said:

Utilities have been a concern to me but not for the reasons you cite, which are probably valid too.  My concern is approached via their financials and wondering if they have much room, your comment about regulation being a double wammy.  IMO the government will have to control the price of essentials to prevent people kicking off and that may include some form of nationalisation.  Maybe I should be less concerned about them not coming up in my screens.  Some say they are the new bonds (the old ones being increasingly unfit for purpose).

One big difference.Their debt is fixed mostly,but they can increase prices with inflation.In the UK the price of most things people have to buy is very cheap,apart from council tax.I think council tax will be the real test.I often wonder how rich the UK would be without the state sucking so much away.

[Rave]

1 hour ago, JMD said:

I used to think LVT was an interesting concept/tax. But do you think it is still relevant? Todays economy and profits are not derived from land, agriculture as once was the case. Housing will be more and more provided by government so private landlords will become pretty niche. Personally I think the retail banks, currently on life support, will have their plug pulled this cycle. As I think their role will be vastly diminished by government crypto, etc. Btw, am not trying to pull apart your argument, and would be interested in your thoughts.

Not at all, I am happy to respond. Decl: I am a member of a Georgist political party and stood as a candidate for them at the last election (losing my deposit in the process, of course). I also am conscious of not wanting to crap this thread with discussions of tax policies that are unlikely to be implemented; I may well start a separate thread on Georgism if there's any appetite for continuing the discussion.

And so to answer your question: people live in homes built on land; factories, warehouses, shops and offices are built on land. Access to land on which to live, and create value through work, is completely central to the functioning of the economy. And the fact that usable land in the UK is so bloody expensive is a huge drag on our economy. Because people from the Duke of Westminster all the way down to BTL slumlords are able to simply own land and derive an oncome from it means that they can, essentially, parasite a living from people who actually create wealth; and it means that capital is diverted away from investment in productive endeavours towards useless land speculation.

In fact now is a particularly opportune time to try and get discussion of LVT into the mainstream, because it appears that governments are going to be investing heavily in infrastructure. If the government builds a major road, then land that is close enough to that road to be blighted by it loses a little value, but a large swathe of land just beyond that rises in value because with the improved access it's now far more useful as a site for development- and any existing properties on the land also rise in value. The same is true of railways, broadband infrastructure, power, the lot. If you don't have a land value tax then the government is essentially using taxpayers money, which comes from everyone, to benefit the lucky few who own the land surrounding the new infrastructure. If you taxed that value uplift with an LVT then new infrastructure would be essentially self funding. LVT would also end the farcical situation where landowners can essentially 'win the lottery' by getting planning permission for housing on their land- that value would be captured for everyone by the LVT.
 

3 hours ago, DurhamBorn said:

Agree,Labour want a UBI by getting shot of the tax allowance,but thats crazy and defeats the object.The answer as you say is a LVT.The beauty of one of them as well is you can use it to leverage wildlife policy etc.Keeping 50 sheep on 1000 acres would be done away with and native woodland planted etc if you tier the payments.The grouse shooting estates wont like it though of course.

I'm not sure that grouse shooting estates would be particularly badly hit; it's the Duke of Westminster and the Church of England who should be shitting themselves at the prospect! Scrubby moor that is only good for grazing sheep or shooting grouse isn't actually worth a huge amount, and so wouldn't attract a great deal of LVT. 

[Democorruptcy]

3 hours ago, Rave said:

 

It would be, not to put too fine a point on it, completely fucking insane to implement a UBI without also implementing a Land Value Tax. Without LVT, the UBI will flow pretty much in its entirety to landlords/banks. @Barnsey

That's why I think there's bound to be UBI. There won't be a LVT but they might possibly add a new higher council tax band only for very large properties and up all the other bands at the same time.

[UnconventionalWisdom]

Fidelity going out of oil/fossil fuels. All these pension funds dumping are probably going to cause all the pension funds to dump- they just follow what everyone else is doing. 

I'm guessing this will keep them low over the next half a year. Come spring the pent up demand for travel and living will explode and prob kick start their rise. (Just my 2 cents).

https://www.thisismoney.co.uk/money/markets/article-8900357/Fund-titans-blacklist-BP-green-shift-profits.html

[Democorruptcy]

2 hours ago, Harley said:

Utilities have been a concern to me but not for the reasons you cite, which are probably valid too.  My concern is approached via their financials and wondering if they have much room, your comment about regulation being a double wammy.  IMO the government will have to control the price of essentials to prevent people kicking off and that may include some form of nationalisation.  Maybe I should be less concerned about them not coming up in my screens.  Some say they are the new bonds (the old ones being increasingly unfit for purpose).

The share prices of the utilities edged up as the Tories looked more likely to win the election. When they won so handsomely I thought they were a safe bet. The Tories are really making a mess of things though and who knows what they might do 'windfall tax' rather than nationalise? I doubt Keir Rammer would be as keen to nationalise as Corbyn.

[JREWING]

Guys.

Just for example.

Bp.

Ex Div Date Thursday 5th November.

Record date the following date.

What's the latest date using the HL portal you could buy the share to qualify for a dividend.

I ask as I notice it takes two or three days to complete a trade before you can withdraw the cash.

If you brought say on Wednesday. Would it be too late to be recorded as the owner by the Friday. As to complete the trade.

Cheers for any feedback.

[Barnsey]

Here we go!

Translation: it's happening but we'll let you voice your inferior opinions anyway to make it look like we give a ***t

[Rave]

1 hour ago, Democorruptcy said:

That's why I think there's bound to be UBI. There won't be a LVT but they might possibly add a new higher council tax band only for very large properties and up all the other bands at the same time.

 

Haha yes, the fact that it's complete lunacy doesn't mean that it won't happen  .

[Harley]

3 hours ago, JMD said:

Might it be that 'First they came for the utilities...'!!! 

Funny, I nearly posted that too.

[Harley]

3 hours ago, DurhamBorn said:

One big difference.Their debt is fixed mostly,but they can increase prices with inflation.In the UK the price of most things people have to buy is very cheap,apart from council tax.I think council tax will be the real test.I often wonder how rich the UK would be without the state sucking so much away.

Their ability to up prices could change in a blink.  People had no money going into covid but kept quiet and could borrow 'cause they had a future with earnings in it.  People will have even less coming out of it and it's now OK to openly talk about it and ask and get stuff.  We're all bennie seekers now!  The government will need to provide the "bread" and not just the current circus.  Subsidised essentials (as provided by their mates) - an alternative form of UBI.  Saw it in French Polynesia years ago.  Utilities will be near the top of the list?

[Harley]

4 hours ago, JMD said:

For the type of next cycle, asset owing companies we talk about here that sounds a good idea. Can you give a couple examples of companies with 'good' Price to tangible asset value ratios? I suppose a good/bad ratio depends very much on the sector you are looking at?

Yes it does.  It's the basic materials company with the ratio of a software company or alternatively a negative ratio that alarms me!  Data to follow tomorrow all being well.  But from memory, BATS and IMB failed but Japan Tobacco and ano passed on that single metric.  There we go, Asia again!  Good to get some background on both companies for a bit of context. 

PS:  Not that I'm recommending it.  Defo looks like it belongs in the "cash cow" segment so depends on what you want.

[Underwhelmed]

He just doesn't give up:

 

[sleepwello'nights]

18 minutes ago, Underwhelmed said:

He just doesn't give up:

 

I'm keeping my fingers crossed that his prediction is correct. 

[Harley]

2 minutes ago, sleepwello'nights said:

I'm keeping my fingers crossed that his prediction is correct. 

I'll buy when the last bull turns bear!  This man is vexing me!

[leonardratso]

Hunters doing that old EU trick, didnt work so lets double down until it does.

Im hoping his timing is just off and that it all kicks arse just as the last pension fund pulls the plug.

[Noallegiance]

4 hours ago, Barnsey said:

Here we go!

Translation: it's happening but we'll let you voice your inferior opinions anyway to make it look like we give a ***t

Force people to use digital = See! You chose digital! Here, have more of it.

Fucking criminals.

[leonardratso]

crude wti to $34

[JREWING]

22 minutes ago, leonardratso said:

crude wti to $34

Any newbies watching this thread.

Your entry points on a silver plate this coming week. Enjoy you new wealth...

[JMD]

5 hours ago, Rave said:

Not at all, I am happy to respond. Decl: I am a member of a Georgist political party and stood as a candidate for them at the last election (losing my deposit in the process, of course). I also am conscious of not wanting to crap this thread with discussions of tax policies that are unlikely to be implemented; I may well start a separate thread on Georgism if there's any appetite for continuing the discussion.

And so to answer your question: people live in homes built on land; factories, warehouses, shops and offices are built on land. Access to land on which to live, and create value through work, is completely central to the functioning of the economy. And the fact that usable land in the UK is so bloody expensive is a huge drag on our economy. Because people from the Duke of Westminster all the way down to BTL slumlords are able to simply own land and derive an oncome from it means that they can, essentially, parasite a living from people who actually create wealth; and it means that capital is diverted away from investment in productive endeavours towards useless land speculation.

In fact now is a particularly opportune time to try and get discussion of LVT into the mainstream, because it appears that governments are going to be investing heavily in infrastructure. If the government builds a major road, then land that is close enough to that road to be blighted by it loses a little value, but a large swathe of land just beyond that rises in value because with the improved access it's now far more useful as a site for development- and any existing properties on the land also rise in value. The same is true of railways, broadband infrastructure, power, the lot. If you don't have a land value tax then the government is essentially using taxpayers money, which comes from everyone, to benefit the lucky few who own the land surrounding the new infrastructure. If you taxed that value uplift with an LVT then new infrastructure would be essentially self funding. LVT would also end the farcical situation where landowners can essentially 'win the lottery' by getting planning permission for housing on their land- that value would be captured for everyone by the LVT.

Thanks Rave, don't want to derail the thread, but did want to reply. I did a lot of reading about lvt, Georgism, a few years back. I was against large-capitol dominating a sector, speculation, etc, as those elements are anti-competitive and squeeze out the small business and individual from getting/earning their fair share. However, I think the same problems exist across the board in sectors such as banking, derivative money markets, international business/trade. And that was my earlier point about land being only part of the problem today, and something I believe Henry George would have applied himself to if he were alive today in order to create a real wealth producing 'human sized' free market across all economic areas. It's not that I don't see any hope for future solutions. Instead my attention has moved onto the crypto world which is far bigger than just bitcoin, where for example, the rentier economy you refer to could be removed by having smart-contracts between individuals. Many commerce apps and infrastructures are being developed, and political/social areas of life can also be served by the crypto realm. It offers the prospect of having a true P2P economy. It's a libertarian concept, but crucially where both the left and the right are attracted to, and of course the younger generations seem to be fully onboard. I respect you for standing at election time, but overall I think the crypto concept is an easier sell, definitely not a fad. 

[Rave]

@JMDI agree that George would now concern himself with other types of rent seeking as well as land speculation.

I call myself a Geo-Libertarian, as I'm for small government, free markets and individual rights. I just think that everybody needs a place to live, and so nobody is truly free if they're forced to pay rent to someone else just to exist. Land is still the central issue, the foremost problem; and you need only look at the price of housing in this country to see ample evidence of that. The only way to resolve that problem fairly is for everybody to be asked to pay rent to everyone else for the land they occupy for their sole and exclusive use. That way everyone is equally very slightly unfree in that everyone is forced to pay a bit of LVT; in reality though, anyone happy to live in an undesirable area would pay very little, while people who want to live in central London would pay a lot. I don't see how crypto/smart contracts etc. solve the land problem (though I've hodled a couple of bitcoins for over 9 years and hope that sooner or later they will solve my own housing problems  ).

To me it's somewhat surprising that people who consider themselves left wing are in favour of a UBI. If you collect all the rental value of land as tax, the government would have a considerable sum of money. I would say that the left wing way of doing things would be to use that money to fund the existing functions of big government; schools, healthcare, welfare etc.; whereas the right wing way would be to distribute it as a UBI and let people sort themselves out. Clearly I favour the free market approach, but if Labour under Corbyn had followed through on their discussions and made implementing a LVT a manifesto commitment I absolutely would have voted for them, because I'm so convinced that the LVT itself is what solves most of the problems.

[Harley]

8 hours ago, UnconventionalWisdom said:

Fidelity going out of oil/fossil fuels. All these pension funds dumping are probably going to cause all the pension funds to dump- they just follow what everyone else is doing. 

I'm guessing this will keep them low over the next half a year. Come spring the pent up demand for travel and living will explode and prob kick start their rise. (Just my 2 cents).

https://www.thisismoney.co.uk/money/markets/article-8900357/Fund-titans-blacklist-BP-green-shift-profits.html

Ah, just read it, so not being woke, just concerned about making money as the companies shift to a low carbon footprint.  That's reassuring!

[Harley]

4 hours ago, leonardratso said:

Hunters doing that old EU trick, didnt work so lets double down until it does.

Im hoping his timing is just off and that it all kicks arse just as the last pension fund pulls the plug.

Indeed.  it would be nice to know more about the thought process and assumptions to understand caveats and drivers.  Clearly any model is based on assumptions, that the govt will do certain things at certain times in this case.  But this is privileged information.  He's probably right looking at it from the outside and a few months in a ten year roadmap is nothing.  There are the pre-arranged dominos and then there's the first one to fall.  Believers just have to be patient, position, and find something to occupy themselves with until then.  Patience, a hard skill, is the money maker in this game.  It's very frustrating when things don't move as fast or slow enough compared to our thinking.  Alas, I've been right more times than I've been patient.

[DurhamBorn]

2 hours ago, Harley said:

Indeed.  it would be nice to know more about the thought process and assumptions to understand caveats and drivers.  Clearly any model is based on assumptions, that the govt will do certain things at certain times in this case.  But this is privileged information.  He's probably right looking at it from the outside and a few months in a ten year roadmap is nothing.  There are the pre-arranged dominos and then there's the first one to fall.  Believers just have to be patient, position, and find something to occupy themselves with until then.  Patience, a hard skill, is the money maker in this game.  It's very frustrating when things don't move as fast or slow enough compared to our thinking.  Alas, I've been right more times than I've been patient.

At Fidelity David would of provided a macro road map and the stock pickers would decide what to do with it.He is a cycles guy based on liquidity and is probably one of the best in the world in understanding Fed action and the leads/lags.Short term calls arent his thing,so im surprised he is making them more and more,though its end of cycle stuff so probably trusts the calls more.Iv always found for the ordinary investor its far better to focus on building out a portfolio over time at what you think are cheap or very cheap entry points guided by the likely cycle ahead.

For instance,i think Shell will return £21 minimum up to £30 over the cycle,share increase and dividends.So £9.40 + £21 

BT i think will return £2.40 (so £3.41 a share total price) minimum increase and dividends.

Thats based on an inflation road map.I have a lot of confidence across my portfolio most will hit by 2028/30,i have zero confidence,nor care if they go up or down in the short/short medium term.

 

[Democorruptcy]

12 hours ago, Panda said:

Guys.

Just for example.

Bp.

Ex Div Date Thursday 5th November.

Record date the following date.

What's the latest date using the HL portal you could buy the share to qualify for a dividend.

I ask as I notice it takes two or three days to complete a trade before you can withdraw the cash.

If you brought say on Wednesday. Would it be too late to be recorded as the owner by the Friday. As to complete the trade.

Cheers for any feedback.

Send them a message and ask. Then if you follow their advice but don't get on in time, you have grounds to complain.

[Democorruptcy]

10 hours ago, Rave said:

 

Haha yes, the fact that it's complete lunacy doesn't mean that it won't happen  .

It depends who the lunacy favours. Help to Buy is lunacy, taxpayers covering bank losses so they lend more, so builders can charge more and push prices up, when people already couldn't afford to buy. In a low rate environment, so it's harder for people to form capital for a deposit.