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

[JMD]

2 hours ago, Nomad said:

I see house prices are still going up, crazy. Where I live on the south coast, they seem to be sold within weeks of being put on the market. Now more fuel is being added to the fire by lenders re introducing 95% mortgages, won't be long before we see the 120% mortgage returning (link is from a 2011 article).

https://www.lovemoney.com/news/11068/the-new-120-mortgage

Is this madness ever going to stop?

You ask will the 'madness ever stop'. I think shared equity, between buyer and government is where we'll end up. But it will be something far more insidious and shocking than what that term conjures up today. Initially such shared ownership mortgages will be offered by the banks, with government offering the lending backing/insurance, but ultimately the phased withdrawal/demise? of the banks will allow government to 'step up' and gradually take control of the nation's housing wealth. It will bolster the government's balance sheet, and provide it with a nice problem to have really. I think this type of policy falls in line with what Russel Napier believes will happen - that is governments taking bigger and bigger share of the economy.                                  The thing is, if Western governments do go toward controling 60%+ of economy in GDP terms, Scandinavian countries are already approx at this high gdp level, plus the increasing trend of companies going private, what I would ask in all seriousness is what will be left for us - dosboders - to invest in?                                      @DurhamBornperhaps you disagree with the above, but I wonder does your model (perhaps not a relevant risk currently?) say anything about the squeezing out of the retail investor, and how we might need to play this investment-wise later in the cycle?

[Hancock]

1 hour ago, Fully Detached said:

IMO no, not until we reach total collapse or a debt jubilee

There wont be a debt jubilee as thats how TBTP make their money.

A debt jubilee would involve the debt that bank owes people and companies being wiped out also ... ie deposits in their accounts.

There can and will be a house price correction without such extremes.

[Fully Detached]

2 minutes ago, Hancock said:

There wont be a debt jubilee as thats how TBTP make their money.

I think TPTB value power over money. I agree that a debt jubilee or total economic collapse would be extreme but I've seen just about every non-extreme catalyst come and go and the bloody HPI just keeps on coming.

[Noallegiance]

Not an intentional thread derailment - just a musing:

European Super League money grab another sign of impending financial craziness. $billions available to shell out to top clubs.

I feel it's not a coincidence that the plan has been there a little while, but liquidity has now been pushed through the system to the hedge funds running these things resulting in showering football club assets in toilet paper with the queens head on.

These are clearly now far from 'normal times'.

The fabric of things is unravelling.

 

[Bricormortis]

10 minutes ago, Noallegiance said:

 

European Super League money grab another sign of impending financial craziness. $billions available to shell out to top clubs.

I feel it's not a coincidence that the plan has been there a little while, but liquidity has now been pushed through the system to the hedge funds running these things resulting in showering football club assets in toilet paper with the queens head on.

These are clearly now far from 'normal times'.

The fabric of things is unravelling.

 

Reminds me of the Martin Armstrong article  shown on this thread a few pages back. He said his magic beans or whatever the flip he uses were telling him this year would see increased fracturing of structures generally iirc. 

[DoINeedOne]

13 hours ago, Green Devil said:

 

Definately worth a watch if you have a spare 1h18mins.

Prob the smartest guy in the room. 

Great video downloaded and saved...

[Barnsey]

 

[DurhamBorn]

3 hours ago, JMD said:

You ask will the 'madness ever stop'. I think shared equity, between buyer and government is where we'll end up. But it will be something far more insidious and shocking than what that term conjures up today. Initially such shared ownership mortgages will be offered by the banks, with government offering the lending backing/insurance, but ultimately the phased withdrawal/demise? of the banks will allow government to 'step up' and gradually take control of the nation's housing wealth. It will bolster the government's balance sheet, and provide it with a nice problem to have really. I think this type of policy falls in line with what Russel Napier believes will happen - that is governments taking bigger and bigger share of the economy.                                  The thing is, if Western governments do go toward controling 60%+ of economy in GDP terms, Scandinavian countries are already approx at this high gdp level, plus the increasing trend of companies going private, what I would ask in all seriousness is what will be left for us - dosboders - to invest in?                                      @DurhamBornperhaps you disagree with the above, but I wonder does your model (perhaps not a relevant risk currently?) say anything about the squeezing out of the retail investor, and how we might need to play this investment-wise later in the cycle?

Retail investors are being squeezed and its always been so.There will always be things to invest in though because a retail investor can be quicker than almost anyone else.

Take BT

This thread highlighted the cycle was turning in its favour, @sancho panza even had it as the best value telco in his coma scores,we moved and i went in hard on that one,very hard,many at 95p.60% up and now the big banks who were saying sell then now start to see what we saw back then.Now i see what they see now.I agree with them.The point is though we understand the leads and lags on these macro road maps and thats the critical thing.

https://www.sharecast.com/news/broker-recommendations/bt-in-line-for-major-rerating-jp-morgan-says--7872894.html

As for the oilies,its sentiment still as the narrative is oil is dead,even Wood Mackenzie is saying $30 a barrel and falling by 2030 and $10 by 2050.

I think they are wrong.I think oil use will be just a little less than now by 2050 and inbetween i think the big oilies will cash flow in 5x their market caps and maybe a lot more.I HOPE Bp etc can stay down for as long as possible,i want them buying back shares at £3,not £4,£5 etc and i hope when they said at least 60% of cash flow after the div on buybacks they also use the other 40% as well until there is at least a £4 at the front of the share price.

As for the goldies ,im not a chartist and usually use ladders and not advice etc,but iv being buying Yamana Gold.

[stop_the_craziness]

13 minutes ago, Barnsey said:

 

BRIT coin?  Jesus, that twat really is the reincarnation of Wanker Blair, stupid soundbites and all.

[DurhamBorn]

16 minutes ago, Barnsey said:

 

Imagine where they can simply add as many digits as they want.Take your money in the press of a button.I take it your gold and silver isnt for sale anytime soon Barnsey 

[geordie_lurch]

33 minutes ago, Barnsey said:

 

They have been working on it and exploring it for YEARS!

A webinar on it all from April 2020: https://www.bankofengland.co.uk/events/2020/april/cbdc-discussion-paper-webinar and then back in May 2018: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2018/broadening-narrow-money-monetary-policy-with-a-central-bank-digital-currency.pdf

They are just getting the general public ready now to be forced onto it

EDIT: Jeez, just noticed one of the guys who worked for them on it early on is now "Leading on digital identity and cross-border payments at BIS Innovation Hub Singapore" - BIS being Bank of International Settlements

If you don't know who BIS are look into them... seems their plans for 2021/22 are online here: https://www.bis.org/topic/fintech/hub/programme.htm

 

[Barnsey]

4 minutes ago, DurhamBorn said:

Imagine where they can simply add as many digits as they want.Take your money in the press of a button.I take it your gold and silver isnt for sale anytime soon Barnsey 

Struggling to get inflation velocity to take off?

"How's about 100 Britcoins expiring at midnight in 7 days for the following retail sectors..." etc

[janch]

3 hours ago, Noallegiance said:

Not an intentional thread derailment - just a musing:

European Super League money grab another sign of impending financial craziness. $billions available to shell out to top clubs.

I feel it's not a coincidence that the plan has been there a little while, but liquidity has now been pushed through the system to the hedge funds running these things resulting in showering football club assets in toilet paper with the queens head on.

These are clearly now far from 'normal times'.

The fabric of things is unravelling.

 

The implications on the finance are explored in the Shaun Richards blog today:

 

https://notayesmanseconomics.wordpress.com/

 

Seems they need to do it because they have so much debt!

as Swiss Ramble puts it.

If we include other debt, such as the amounts owed to staff, tax authorities, suppliers and other creditors, the total debt of the 12 clubs signing-up to the European Super League is a staggering £7.4 bln.

[jamtomorrow]

36 minutes ago, Barnsey said:

Struggling to get inflation velocity to take off?

"How's about 100 Britcoins expiring at midnight in 7 days for the following retail sectors..." etc

Mind-boggling how these Central Bankers aren't just sailing directly into a perfect storm for themselves, they're actively making it worse by the day.

The backlash when the next wave of populists get their teeth into this is going to be quite something. 

[planit]

41 minutes ago, DurhamBorn said:

 

As for the oilies,its sentiment still as the narrative is oil is dead,even Wood Mackenzie is saying $30 a barrel and falling by 2030 and $10 by 2050.

I think they are wrong.I think oil use will be just a little less than now by 2050 and inbetween i think the big oilies will cash flow in 5x their market caps and maybe a lot more.I HOPE Bp etc can stay down for as long as possible,i want them buying back shares at £3,not £4,£5 etc and i hope when they said at least 60% of cash flow after the div on buybacks they also use the other 40% as well until there is at least a £4 at the front of the share price.

As for the goldies ,im not a chartist and usually use ladders and not advice etc,but iv being buying Yamana Gold.

I agree with this, it's all great projecting forwards with the current crazy charity-donation-type investing in EV's but when a downturn hits the EV transition will be put back very quickly.

I am intending to recalculate my BP figures again over the next 2 days as I can't believe how cheap they seem. I must have missed something as the markets have them at ~ the same value as before the RNS on the 6th. (I get share price as low multiple of 2021 free cash flow if oil stays at current levels working off the BP projections from Jan)

I might have my portfolio 100% invested in BP before the update on the 27th 

I will be either broke or rich by the 1st May.

 

Seems like BP made loads of money out of Shell by gambling on higher prices whilst Shell hedged at $30.

 

[Green Devil]

42 minutes ago, Barnsey said:

Struggling to get inflation velocity to take off?

"How's about 100 Britcoins expiring at midnight in 7 days for the following retail sectors..." etc

Theres no way the cunts in our government and bankers would give everyone free money in this country, even if it was only valid for 7 days (excepting of course those who arrive on dingies or are on bennies -  and are 'entitled' to these handouts).

[Bricormortis]

Re @janch / Shaun Richards football comments up thread....

The irony is they destroyed the traditional framework of the game of 4 divisions all kicking off at 3.00 Saturday because they wanted to grab more money. And here we are....on the road to making  a football circus for American Pay per View. Hopefully a fans boycott looms. Me I'm happy following the Argyle.

[Bricormortis]

Yamana gold earnings report due 28th April.

[feed]

1 hour ago, DurhamBorn said:

Imagine where they can simply add as many digits as they want.Take your money in the press of a button.

It's slightly more honest than how they take today with inflation, at least people will understand that they're actively losing value over time.  

[DurhamBorn]

1 minute ago, feed said:

It's slightly more honest than how they take today with inflation, at least people will understand that they're actively losing value over time.  

True,but very hard to roadmap it.The irony is i think a digital currency that sees 2% increase in units a year would be fantastic if if was locked at that and couldnt be changed.You could set rates between 1% and 3% to e

 

41 minutes ago, planit said:

I agree with this, it's all great projecting forwards with the current crazy charity-donation-type investing in EV's but when a downturn hits the EV transition will be put back very quickly.

I am intending to recalculate my BP figures again over the next 2 days as I can't believe how cheap they seem. I must have missed something as the markets have them at ~ the same value as before the RNS on the 6th. (I get share price as low multiple of 2021 free cash flow if oil stays at current levels working off the BP projections from Jan)

I might have my portfolio 100% invested in BP before the update on the 27th 

I will be either broke or rich by the 1st May.

 

Seems like BP made loads of money out of Shell by gambling on higher prices whilst Shell hedged at $30.

 

Exactly and as @Cattle Prod shows everyone the price is set at the margins.The beauty about sentiment now is its cutting off investment.Look at Bp .Instead of investing those billions into finding new reserves etc they are instead giving it back to shareholders.In a way the woke brigade are the best friend shareholders in the sector have.They are making sure new capital doesnt enter,so old capital can make all the profit left in the sector.Tobacco was the last big sector to "suffer" the same fate.All those people did with their anti legislation etc was hand me massive wedges of cash and to be blunt a house and 10 years worth or more of retirement,for 1 years salary invested at the time.Incredible.

When you get this kind of action what happens is the sentiment stops new players etc,so the established then consolidate together and are then almost certain to share out all the remaining cash flow in the sector until it doesnt exist.Thats an amazing place to invest.The anti smoking brigade etc pretty much said to BAT,Imperial,Japan Tobac,PM etc nobody else will enter the market,so you dont need to invest,can increase your prices higher than the drop off in sales and wink wink with each other.The oil and gas sector is now in a similar place,apart from the fact their are big state actors as well.Imagine an industry where prices increase 5% a year,sales fall 3% a year,your capital investment falls every year.You print free cash.Add in you then buy back shares with some of that cahs flow earnings grow and grow.

The other thing people forget is that cash is there for other things.Like buying bankrupt windfarms when rates increase.

[Loki]

3 hours ago, jamtomorrow said:

Mind-boggling how these Central Bankers aren't just sailing directly into a perfect storm for themselves, they're actively making it worse by the day.

The backlash when the next wave of populists get their teeth into this is going to be quite something. 

People who truly go against the central banks tend to end up dead.

[Lightscribe]

3 hours ago, Barnsey said:

Struggling to get inflation velocity to take off?

"How's about 100 Britcoins expiring at midnight in 7 days for the following retail sectors..." etc

How about taking it further? Individually weighted currency.

Bob smokes 40 fags a day, so for the sake of Bob’s ‘health’, his second packet of fags costs him double. 

Bob can’t pay for a cheeky 200 box of counterfeited/imported either, as cash doesn’t exist. All digital person to person transfers tracked and accounted for on the government blockchain, naughty Bob, he gets fined and his cigarettes purchases suspended.

No dodging the tax man, no underhanded cash in hand payments, the upside to the government is endless.

[Don Coglione]

4 hours ago, Barnsey said:

 

This is the reason I am convinced that governments have allowed the Bitcoin (and wider crypto) bubble to continue to run - they need the concept of cryptocurrencies to reach mainstream acceptance, before themselves introducing an alternative monetary system, based on what will by then have become more familiar technology.

Warnings about the risks of "investing" in cryptocurrencies have recently been released by governments and central banks, so they are already some way down the road. Next step will be to ban all shitcoins, "for you own protection", leading to their obsolescense - but, never fear, your friendly government has come up with an alternative, for the good of us all. Hell, the geeks might even embrace it!

For the record, I hate hill-walking these days.

[JimmyTheBruce]

2 hours ago, Bricormortis said:

Re @janch / Shaun Richards football comments up thread....

The irony is they destroyed the traditional framework of the game of 4 divisions all kicking off at 3.00 Saturday because they wanted to grab more money. And here we are....on the road to making  a football circus for American Pay per View. Hopefully a fans boycott looms. Me I'm happy following the Argyle.

The fans threatened to boycott when all the sports channels upped their prices during lockdown.  It's an empty threat.  I cannot understand why people continue to slavishly follow teams of foreigners who are utterly disconnected from the communities and lives of those who support them.

[Bobthebuilder]

37 minutes ago, Lightscribe said:

How about taking it further? Individually weighted currency.

Bob smokes 40 fags a day, so for the sake of Bob’s ‘health’, his second packet of fags costs him double. 

Bob can’t pay for a cheeky 200 box of counterfeited/imported either, as cash doesn’t exist. All digital person to person transfers tracked and accounted for on the government blockchain, naughty Bob, he gets fined and his cigarettes purchases suspended.

No dodging the tax man, no underhanded cash in hand payments, the upside to the government is endless.

Oi.

Want your boiler fixed? Pay me in tobacco if you want a good price.

Tobacco would become a currency itself in that scenario. Why bother with money? cut out the middle man, go straight to the product/services. Rubbish fiat.