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

[Jesus Wept]

7 hours ago, SpectrumFX said:

 

Fixing isn't always a good idea though. You're basically making a long term bet on interest rates going up. A guy I used to work with fixed at 5%. This would have been around 2010. That's not gone well for him.

That was me. 

Do we work together @SpectrumFX?

We ‘10 year fixed’ at 4.59% in May 2009.

Paid the fucker off completely in December 2020.

Reckon if We hadn’t fixed We would have cleared it 5 years earlier. All told it cost us a lot more than on a variable rate. 

Ah well...... managed to buy at the low but got stung on the payments. 
 

It was all front loaded interest as well at the beginning. 

 

 

[MrXxxx]

1 hour ago, MrXxxx said:

Agree, but in this case it would be more as not only are you paying the interest each month, but you are also paying off some of the capital...hence why the `cheap` monthly option used to be interest only with an endowment premium to pay off the capital at mortgage term end (supposedly!).

Ignore, I can see my thought process/understanding was incorrect...thanks to those who `corrected` me gently! :-)

[King Penda]

4 hours ago, Talking Monkey said:

I've a similar view with the nuance that if you do have a mortgage then have it paid off by roughly mid to 2/3s the way through the cycle, as lord knows what crazy stunts will be pulled at end cycle. 

Overpay by 10% a year it’s a nice safety net that’s if there are no penalties 

[sancho panza]

15 hours ago, wherebee said:

The big challenge we will have now is - do we sell our oilies once they have doubled, plan for a BK, and pick up on the drops, or do we hold and not worry about bail ins, capital loss, and timings?

I have already topsliced about 30k of profit (think of that!) but am torn between the two routes above.  Same with GDXJ - I topsliced when it hit 57 (good timing) but if it hits 75 I will be seriously tempted to take it all.

I think either/or WB.

I'm going to try and game it,but if I don't plan B is sit tight.We're loaded to the gills(probabaly inadvisedly so) wth oilies,but when we entered the trades,Plan B was on the table.Has to be.I'm not the greatest market timer by any stretch.

At the sort of prices most of us are in these oilies at,they're long term buy n hold.

You can alawyas doa  bit of both.I jsut don't sense that the oil run up is done yet.

[DurhamBorn]

Did a bit on sterling today,my target price is $1.4723 ,CAD,YEN and EURO all up against the dollar into summer.

Not advice etc.

[sancho panza]

 

 

12 hours ago, dnb24 said:

what’s the view on here with regard mortgages- I’m split between waiting for the melt up to end and a correction occur to jumping in at low rates now- of course dyor and natch - but appreciate other peoples views.

 

 

I think there are a few consdierations.If you're buying somewhere that you can keep long term,ie long enough to take you into the infaltionary run,then a 10/15 year from a decent size insitution makes a lot of sense.Then inflation will pay your debt.

If it's something you might need to offload within 5-10 years,then I personally would think harder on it.Noone can exactly predict the future,but the last thing you want to be doin is offlaoding into the argest detb deflation since GD1.

We rent,not ideal,but then our spare cash goes into the pension pot and helps pay the rent if needed.But then I'm not neceesarily attached to Leicester like I was maybe ten years ago.

I do think a decent size dislocation is coming in msot places south of Leeds/Sheffield.

I was looking at LE2 for the crash thread.Popualtion of 44,000 hosueholds and transactions of 53 inJanuary thus far.Average salary £21k or so,average hosue price according to transactions data £310k.t's seriously hard to

It's seriously difficult taking those price signals at face value.There isn't the volume.Pre 2007,average Jan transactions was circa 130.

 

11 hours ago, Ellandback said:

He prefers fixed rate over variable but long term he sees a hyperinflationary environment where banks could trigger obscure clauses to break mortgage contracts, above video is set to him answering a question about the benefit of long term fixes.

I was reluctant to post this on the thread but I recommend watching the whole thing - prior to CV I would have dismissed this guy as peddling blackpilled bollocks - but not anymore.

I haven't got the time to watch it,but the T+C's of msot  mortgage contracts contain a host of clauses that could give rise to concerns.

The ones that would worry me the msot are the LTV clauses,whereby banks can demand more capital if your LTV drops belwo the level at which you took out the mrotgage.

Generally speaking though banks are keener to repo properties with equity than not.

 

I also think more genereally,it makes sense to take mrotgages with systemic institutions like HSBC.In a panic,the govt will bail these first.The less improtant last.

Politically bail outs look a certainty if a debt deflation occurs but that very much depends on whether sterling is holding or not.A crashing currency might mean all the options of the last decade are off the table.

Last year I psoted an excelent paper by Prof Kevin O'Dowd and Dean Buckner regarding leverage ratios in UK banks and currently,they think the banks are more elveraged than 2006.

If anyone has some recent T+C's it would be great to read them.

[sancho panza]

11 hours ago, Castlevania said:

Almost all mortgages are repayment ones nowadays. So the delta isn’t one to one. An increase from paying 2% to 3% on an interest only mortgage is indeed a 50% increase in payments. On a repayment mortgage it depends how many years you have left to pay, with a longer term meaning less of an impact as lower capital repayments will offset some of the pain. 

I think given volumes are so low,that you have to empahaize the improtance of the marginal buyer in thsi market.Taking LE2 as a prime example,locals are miles away from stepping in at the bottom.Meanwhile a ot of BTLers are paying tax on revenues fully this year.It wouldn't tkae much ti potnetially swamp such a dry market

[JMD]

6 hours ago, Lightscribe said:

Short term no I’m not a hodler as I expect crypto to take a major crash along with everything else. Long term most definitely yes. I think we may have much higher to go for the next few months with the S&P funds.

I’ve been posting on this thread with updates of my BTC/LINK trading for a couple of years now. By the metric I’m sure you can work out I’m going to have to deal with gathering my records for tax (or move to Portugal)  so it will take a while. I’ll continue to gauge it. Also some banks won’t accept deposits from crypto exchanges. Santander is ok last time I looked but plan and test your exit route.

My aim is to cash out before the BK (don’t we all) but leave some money aside on the exchange to put it all in LINK (BTC, ETH, QUANT, XRP and BNB too if they fall enough) on low buy orders in GBP (most certainly not Tether USDT as that will go bust). I’ll then put this on a hardware encrypted wallet away from any exchanges as quickly as possible. I expect exchanges to limit withdrawals and some will go the way of Mt Gox. As I said before it’s all or nothing for me as my original investments withdrawn.

Crypto will most definitely survive all this however, otherwise we all wouldn’t have the blockchain technology to be able to look forward to this...

 

 

 

Thanks Lightscribe. Lots for me to think about.                                                                                                                   As regards the video, the real scary part for me is the way in which NBC chooses to report the whole China social credit story. The report seems so detached and ambivalent, even throwing in a 10-20 year timeline at the end of the video to prevent their viewers from worrying too much(?). I notice they also kept using the term of 'discrediting' citizens to keep them in line, I wonder if that is a direct translation from the Chinese? Anyway if/when we do get our own similar system here in the West, appears very much like we will be getting our own tech driven/updated form of puritanism... hmm, we've certainly been there before, but there's that history repeating/cycle again!

[sancho panza]

7 hours ago, DurhamBorn said:

I think buy 8% of mortgage in silver.If the above happened silver will 12x minimum,sell silver pay off mortgage.Banks have very few on long rate deals,most people are dumb and prefer to go for shorter fixes to say a few quid a month.Banks are more likely to remove all deals and simply go standard variable only.Shift risk,or be well rewarded for holding it.

I think when you look at this idea it makes a lot of sense if you wish to hedge the solvency of the banking system-I would if I were going to take out a mortgage.

Some banks may be ready to blow but then again they may not.If they blow,then PM's are going sky high.Luke Gromen was saying a while back PM's are final payment.It's hard to see a scenario in which banks collapse and PM's don't rocket.

If the banks don't collapse then you're 10 year fix is good.

6 hours ago, JMD said:

Castlevania, (not stalking your posts, promise!) ...I can't locate a nice graph of the internet, but I always thought that in very simple terms, during the first years of any duration/length repayment mortgage, borrower repayments are almost entirely comprised of interest payment. Only after approximately two thirds way through the term of the mortgage are repayments 50/50 interest/capitol payment, with the last few years being almost all capitol payment. Not trying to be being pedantic, but doesn't this mean that newly taken out mortgages would very much be affected by interest rate adjustments by the bank if they could force such increased rates on their customers?

This piccie is a 30 year Fannie style fix.Still makes the point.

[Mapper]

3 hours ago, JMD said:

Thanks Lightscribe. Lots for me to think about.                                                                                                                   As regards the video, the real scary part for me is the way in which NBC chooses to report the whole China social credit story. The report seems so detached and ambivalent, even throwing in a 10-20 year timeline at the end of the video to prevent their viewers from worrying too much(?). I notice they also kept using the term of 'discrediting' citizens to keep them in line, I wonder if that is a direct translation from the Chinese? Anyway if/when we do get our own similar system here in the West, appears very much like we will be getting our own tech driven/updated form of puritanism... hmm, we've certainly been there before, but there's that history repeating/cycle again!

Did the Chinese government watch Black Mirror and get their ideas, or was it the other way around?

[nirvana]

6 hours ago, DurhamBorn said:

Did a bit on sterling today,my target price is $1.4723

WOW...is that based on the amount of dollars that the FED will print?

those of you looking to pay off your mortgage early, watch out for the bitch*, I mean wife, I paid mine off early and then I got royally fooked.....it was a bloody nice house too 

*your mrs might not be too bad but they all talk shite and scheme over social media and a few glasses bottles of wine so if she has a few bitches for mates you could be in big trouble that way...

[wherebee]

38 minutes ago, nirvana said:

WOW...is that based on the amount of dollars that the FED will print?

those of you looking to pay off your mortgage early, watch out for the bitch*, I mean wife, I paid mine off early and then I got royally fooked.....it was a bloody nice house too 

*your mrs might not be too bad but they all talk shite and scheme over social media and a few glasses bottles of wine so if she has a few bitches for mates you could be in big trouble that way...

so, so important.  

you don't have to worry about protecting your wife from other men - it's other women that can ruin a decent relationship; misery loves company.

[MrXxxx]

6 hours ago, sancho panza said:

I think when you look at this idea it makes a lot of sense if you wish to hedge the solvency of the banking system-I would if I were going to take out a mortgage.

Some banks may be ready to blow but then again they may not.If they blow,then PM's are going sky high.Luke Gromen was saying a while back PM's are final payment.It's hard to see a scenario in which banks collapse and PM's don't rocket.

If the banks don't collapse then you're 10 year fix is good.

This piccie is a 30 year Fannie style fix.Still makes the point.

So eyeballing it, only when you get to year 20 does interest start to have a smaller contribution (impact?) than principal.

[Lightscribe]

1 hour ago, nirvana said:

WOW...is that based on the amount of dollars that the FED will print?

those of you looking to pay off your mortgage early, watch out for the bitch*, I mean wife, I paid mine off early and then I got royally fooked.....it was a bloody nice house too 

*your mrs might not be too bad but they all talk shite and scheme over social media and a few glasses bottles of wine so if she has a few bitches for mates you could be in big trouble that way...

Luckily my partner has pretty much zero interest in materialism. As long as she can have my card and spend in Primark she’s happy.

But just in case... have assets that they can’t see the point of or have no interest in, chunks of metal, cars, watches, digital sky coins and yes rare Lego! 

[nirvana]

2 minutes ago, Lightscribe said:

But just in case... have assets that they can’t see the point of or have no interest in, chunks of metal, cars, watches, digital sky coins and yes rare Lego! 

she'l take the lot bro.......I fucked it up big time by sticking it all in a flash house (and some flash cars) rather than listening to myself about buttcoin 10 years ago....anyway I'm on it now with daughter no 1, getting prepped to kill the shitcoin market 

[nirvana]

13 hours ago, Lightscribe said:

most certainly not Tether USDT as that will go bust

how can it go bust? it's linked to USD.......do you use kucoin?

@TinglesI see you lurking  you're a smart cookie, what exchanges are you using? what's your thoughts on exchange vs decentralized?

[Lightscribe]

6 hours ago, JMD said:

Thanks Lightscribe. Lots for me to think about.                                                                                                                   As regards the video, the real scary part for me is the way in which NBC chooses to report the whole China social credit story. The report seems so detached and ambivalent, even throwing in a 10-20 year timeline at the end of the video to prevent their viewers from worrying too much(?). I notice they also kept using the term of 'discrediting' citizens to keep them in line, I wonder if that is a direct translation from the Chinese? Anyway if/when we do get our own similar system here in the West, appears very much like we will be getting our own tech driven/updated form of puritanism... hmm, we've certainly been there before, but there's that history repeating/cycle again!

Just thought I’d reiterate something. When I say about keeping anything on an exchange I mean a decentralised exchange (like Binance has one). You will not have a hope in hell of withdrawing or placing low orders to buy crypto in the result of a crash.

Wallets like Trust wallet, connect to the defi exchange and you can set up orders but the crypto stays on the wallet on your phone. Once the wallet is reconnected and a buy/sell has been carried out, it will then exchange the crypto. As I said the only thing I’d have to transfer to the exchange for is to cash out (who needs fiat going forward anyway )  

If I miss the BK then so be it, so long as I have converted some to GBP to catch those low buy orders in the crash is the most important part for me.

[Lightscribe]

5 minutes ago, nirvana said:

how can it go bust? it's linked to USD.......do you use kucoin?

@TinglesI see you lurking  you're a smart cookie, what exchanges are you using? what's your thoughts on exchange vs decentralized?

USDT is certainly not USD. It’s Tether, a stable coin crypto, 1:1 with the USD and they are certainly not the Fed.

https://www.economist.com/finance-and-economics/2021/02/23/tether-is-fined-by-regulators-in-new-york

[nirvana]

i've started a shitcoin rampers thread in stealth if anyone wants to join in 

19 minutes ago, Lightscribe said:

1:1 with the USD

exactly, it's only bust if US dollars ie this $ ceases to exist but it's the still the worlds reserve currency last time I checked

edit: ahh i'm reading your link cheers....so it's a con like all other 'monetary systems'? quelle surprise 

and that's an interesting comment 

(By contrast, on Coinbase, a smaller but more transparent exchange that is soon to list on the stockmarket, they are mostly paid for with dollars, euros and sterling.)

Disclaimer: I bought coinbase on friday so you all need to get onboard before it rockets back up to 400 bucks 

[Tingles]

1 hour ago, nirvana said:

how can it go bust? it's linked to USD.......do you use kucoin?

@TinglesI see you lurking  you're a smart cookie, what exchanges are you using? what's your thoughts on exchange vs decentralized?

@nirvanaI agree with Lightscribe who is on point with his comments.  As mentioned on a few threads, It is highly important to have strategies to guarantee secure, reliable exchange trade executions during periods of extreme volatility both in terms of selling and buying back in.  Currently using Binance, KuCoin and Uniswap.  Decentralized exchanges preferable both in terms of functionality and philosophy.

Having clear objectives (mine is accumulation) for bull, bear and crash is key.  Also, having structured target buy and sell limits (not necessarily on exchange) is essential as greed control management and timing are just as important as exchange access during high volatility.

Also, generally since the Tether FUD I have been using USDC more in place of Tether when keeping powder dry.  I wouldn't be surprised if Circle tech is deployed as the USCBDC.

Recently I have been very thoughtful about the stages between selling and buying back in.  Particularly regarding gold versus fiat currency and/or stablecoins.

[nirvana]

25 minutes ago, Tingles said:

Binance, KuCoin and Uniswap

thanks for the write up.....do you think coinbase is pants then?

and you're a fan of these? https://www.circle.com/en/

I take it you're a tech guy?

cheers

[Tingles]

36 minutes ago, nirvana said:

thanks for the write up.....do you think coinbase is pants then?

and you're a fan of these? https://www.circle.com/en/

@nirvana  Coinbase Pro and Kraken are fine for GBP pairs but the others mentioned provide a greater choice of cryptos, lower fees and some decentralized exchange facilities. 

Not necessarily a fan, but yes USDC (Circle) is potentially a safer stablecoin option for dry powder than Tether/USDT.  I say this in relative terms as we understand that all of this is just a game of risk management

[Siggy]

3 hours ago, nirvana said:

 

those of you looking to pay off your mortgage early, watch out for the bitch*, I mean wife, I paid mine off early and then I got royally fooked.....it was a bloody nice house too 

*your mrs might not be too bad but they all talk shite and scheme over social media and a few glasses bottles of wine so if she has a few bitches for mates you could be in big trouble that way...

This is a really important point. It's the reason why I'm not trying to pay off the mortgage early on the 'marital' home. It's not a huge amount now (bdw all she knows is the monthly amount) though and as soon as youngest is 16 I will try to pay it off quick.

It's even more important if you think everything is cool and it doesn't apply to your marital situation! Seen so many decent blokes done over who didn't see it coming at all. 

[M S E Refugee]

I went into mainly cash a few weeks ago but I have been redeploying the money back into Mining Shares as I suffer from terrible FOMO, I am putting my faith in the extraordinary David Hunter as he has made some amazing calls recently.

 

[dnb24]

10 hours ago, DurhamBorn said:

my target price is $1.4723

Is that approximately?????!!