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


spunko

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High inflation is going to be a horrible shock to the construction industry. Some builders will be caught out at first, particularly when bidding for projects with long build times (ie 1 year +). Those that avoid going bust will then be super cautious when bidding (putting up tender prices) or more likely will want the fluctuation clauses in the standard contract to  apply. This then shifts the risk to the employer and means that project budgets will struggle to be controlled.

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To get people to use digital central bank currencies, existing fiat will first need to be made worthless. Otherwise, you end up like Argentina, with it's official and blue exchange rates.

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geordie_lurch
27 minutes ago, AWW said:

To get people to use digital central bank currencies, existing fiat will first need to be made worthless. Otherwise, you end up like Argentina, with it's official and blue exchange rates.

Yep - is that not what they are doing with all the printy printy with the current 'money' that has no intrinsic value?

What if your universal basic income has to be paid direct to your new digital pounds wallet - how will you refuse?

For everyone else, what if they offered to write off upto 100k of your existing 'old' pounds debt if you move over?

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Yellow_Reduced_Sticker
2 hours ago, DurhamBorn said:

One of the big themes of this thread was about companies who could front run inflation.Put up prices quicker than costs.A prime example of this was Royal Mail putting up stamps by 11% this week.Now of course letter volumes have tanked,but being able to put prices up that fast while workers wages will go up 2% and warehouse/offices/vans etc are depreciating at a set rate means rising free cash.Notice as well very little media attention.In normal times the press would of been all over this,but now its just a passing story.Telcos should be next in line.Regulators are backing off because they know the country needs investment and the companies now have leverage.

Back in the thread Harley mentioned how present generations are going to to taught about push inflation the above is an example.

 
YEP even with them jacking up prices their shares today up to year high of £3.22 ...good job i NEVER took any notice of those nitwits at Motley Fool...
 
Back in September Motley Fool were saying AVOID RMG, yet if ya bought back then ya'd DOUBLE bubble even if you sold today!
 
Motley Fool REALLY are a bunch of bloody FOOLS! :P
 
I 'm NOT selling RMG until I've creamed the BIG FAT dividends over the next decade AND shall wait till they hit £19.69 ...in 2029 then maybe, just maybe... i'll sell!:D
 
ACTUALLY now i've written the above i better sell in the morning cos they will probably COLLAPSE back to £1.37 !!! :oxD
 
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4 hours ago, Knickerless Turgid said:

How is the wine going to make its way to China?

Drink it before getting on a plane then go to the toilet the other end.

Sorted.

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8 minutes ago, Noallegiance said:

Drink it before getting on a plane then go to the toilet the other end.

Sorted.

you could evaporate it in one country then condense it in china after its blown over there. The same wind could drive a wind turbine in china as well.

10Pcs Small Colorful Windmill Toy Plastic Pinwheel Wind Spinner Windmill  Garden Party Decoration Children Outdoor Activities Toy|Windmill| -  AliExpress

 

you could use something like this to make heat to evaporate it and also a bit of wind to send it on its way;

DaTan Combined-Cycle Power Plant Expansion, Taoyuan, Taiwan

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8 minutes ago, leonardratso said:

you could evaporate it in one country then condense it in china after its blown over there. The same wind could drive a wind turbine in china as well.

10Pcs Small Colorful Windmill Toy Plastic Pinwheel Wind Spinner Windmill  Garden Party Decoration Children Outdoor Activities Toy|Windmill| -  AliExpressyou could use something like this to make heat to evaporate it and also a bit of wind to send it on its way;

 

Just tell your mate that there was a trend in China whilst I lived in HK to take good red wine and mix it with coke (the drink).  The more expensive the wine, the more impressive.

 

So he'll be helping destroy good wine...

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7 minutes ago, Cattle Prod said:

Goehring & Rosenwacjg have recently been highlighting how out of whack the gold oil ratio is.

somethings gotta give and I'm not sure it's going to be the gold price.............

CP,have you got a take on DXY here?Do you see oil price rises as supply deficits compounded by dollar weakness,or do you see the dollar weakness compounded by supply deficits? does it matter?

I've been unerved by Kaplans call on DXY strength,I jsut don't see it,Looking to backtest my thesis as @Loki sobservation earlier.

 

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Look at the tail end of gold and M2........that's uncanny.It's as if someone telegrpahed the move to GLD buyers(insto demand shot up ahead of covid iirc).Calling @Errol

Oil is keeping up with CPI...jsut.

Gas below CPI in the US...................

I was thining earlier of offloading top ladders in big oilies but looking at these charts maybe not.

SOmething is about to go badly wrong for the CB's methinks.

image.thumb.png.ef7cadf8c969bc40a1ecaebbd96fb0f5.png

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8 minutes ago, sancho panza said:

I've been unerved by Kaplans call on DXY strength,I jsut don't see it,Looking to backtest my thesis as @Loki sobservation earlier.

 

Do you mean my 91 post? That was almost the lowest of the day (90.98 at one point I think xD) and it's clearly making lower lows

Maybe Kaplan will be right in the phase after 88

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6 hours ago, sancho panza said:

Its been weakening markedly the last few days.Any particualr reason?

 

Off topic

image.thumb.png.9a927c27ec878160f80e9453e0bb3b1c.png

Yes,because everyone thought it was going up,,,,apart from us B|

"money" is priced against assets.The extra liquidity,the money stock has increased and at the same time assets got cheaper.With a lag that liquidity moves from fiat into assets/commods/goods.Dollar being the reserve moves against assets really not other currency.

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14 hours ago, sancho panza said:

and another.You do jsut wonder who's got these assets sat on their balance sheet marked to model.

You'd be amazed how long they can carry on like that.

CRE premises near here managed by this lot has gradually emptied of tenants over the past *10 or 15 years*: https://fi-rem.com/

Huge number of empty units, plenty of prospective tenants, you'd think the invisible hand would find a price that puts the units to productive use. But no: landlord simply won't meet the market, and meanwhile the premises slip into dereliction.

The landlord can't accept a lower rent because then even the most compliant of auditors will make them run the rule over the rest of the portfolio, and that would bring the whole leveraged house of cards down. So they extend, pretend and, I suppose, hope something will turn up - epic-scale Micawberism.

And I imagine this will continue until such time as the premises are either too derelict to remain standing, and the property empire literally collapses, or "investors" (seems like they're positioned for pension money these days?) pull the money, either because they have a moment of clarity and get wind of the precariousness of their investment, or (more likely) because they want to chase rising yields in other asset classes.

Short answer: that local microcosm makes me think the wider phenomenon of over-optimistic valuations could conceivably carry on at least until yields/rates rise later in the cycle. That's assuming the buildings don't fall down first, or national regulators don't force them to revalue.

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14 minutes ago, kibuc said:

Hochschild Mining Chair Looks To Offload 12% Stake

In case anyone was looking for an entry :)

 

I topped up yesterday at 240p.

Fuckety fuck!

Some FOMO got to me. Do I get a prize for worst timing ever?

xD:CryBaby:

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45 minutes ago, jamtomorrow said:

You'd be amazed how long they can carry on like that.

CRE premises near here managed by this lot has gradually emptied of tenants over the past *10 or 15 years*: https://fi-rem.com/

Huge number of empty units, plenty of prospective tenants, you'd think the invisible hand would find a price that puts the units to productive use. But no: landlord simply won't meet the market, and meanwhile the premises slip into dereliction.

The landlord can't accept a lower rent because then even the most compliant of auditors will make them run the rule over the rest of the portfolio, and that would bring the whole leveraged house of cards down. So they extend, pretend and, I suppose, hope something will turn up - epic-scale Micawberism.

And I imagine this will continue until such time as the premises are either too derelict to remain standing, and the property empire literally collapses, or "investors" (seems like they're positioned for pension money these days?) pull the money, either because they have a moment of clarity and get wind of the precariousness of their investment, or (more likely) because they want to chase rising yields in other asset classes.

Short answer: that local microcosm makes me think the wider phenomenon of over-optimistic valuations could conceivably carry on at least until yields/rates rise later in the cycle. That's assuming the buildings don't fall down first, or national regulators don't force them to revalue.

Excellent story and wider point.  Everything these days seems marked to model rather then reality, even a virus,

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10 minutes ago, BadAlchemy said:

I topped up yesterday at 240p.

Fuckety fuck!

Some FOMO got to me. Do I get a prize for worst timing ever?

xD:CryBaby:

No, I bought a few days ago.. 

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