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

[Majorpain]

11 hours ago, sancho panza said:

IKN wrote a great piece on selling Peru.

Basically,a hard elft Marxist will win the coming residential run off.spelling doom for the mining industry in Peru.His advice was to sell Peru,quickly.

I have.BVN,Tinka,and Regulus gone.Tiny loss overall but I'll sit back and watch the car crash without being involved.

Senate is likely to stay right wing, so its not a clear cut car crash.  Also, if you look at the guys history he has was actually running for office with a centre-right party in the 2000's, possibly a Corbyn like negative media effect in play?  Im keeping an eye on it but things are never quite as bad as they seem, being well diversified has meant ive decided to hold on for the minute.

[M S E Refugee]

3 hours ago, jamtomorrow said:

https://www.reuters.com/technology/colonial-pipeline-halts-all-pipeline-operations-after-cybersecurity-attack-2021-05-08/

Top U.S. fuel pipeline operator Colonial Pipeline shut its entire network, the source of nearly half of the U.S. East Coast’s fuel supply, after a cyber attack on Friday that involved ransomware.

The incident is one of the most disruptive digital ransom operations ever reported and has drawn attention to how vulnerable U.S. energy infrastructure is to hackers. A prolonged shutdown of the line would cause prices to spike at gasoline pumps ahead of peak summer driving season, a potential blow to U.S. consumers and the economy.

"This is as close as you can get to the jugular of infrastructure in the United States," said Amy Myers Jaffe, research professor and managing director of the Climate Policy Lab. "It's not a major pipeline. It's the pipeline."

Colonial transports 2.5 million barrels per day of gasoline, and other fuels through 5,500 miles (8,850 km) of pipelines linking refiners on the Gulf Coast to the eastern and southern United States. It also serves some of the country's largest airports, including Atlanta's Hartsfield Jackson Airport, the world's busiest by passenger traffic.

The company said it shut down its operations after learning of a cyberattack on Friday using ransomware.

"Colonial Pipeline is taking steps to understand and resolve this issue. At this time, our primary focus is the safe and efficient restoration of our service and our efforts to return to normal operation," it said.

While the U.S. government investigation is in early stages, one former official and two industry sources said the hackers are likely a professional cybercriminal group.

The former official said investigators are looking at a group dubbed "DarkSide," known for deploying ransomware and extorting victims while avoiding targets in post-Soviet states. Ransomware is a type of malware designed to lock down systems by encrypting data and demanding payment to regain access.

Colonial said it had engaged a cybersecurity firm to help the investigation and contacted law enforcement and federal agencies.

The cybersecurity industry sources said cybersecurity firm FireEye (FEYE.O) was brought in to respond to the attack. FireEye declined to comment.

U.S. government bodies, including the FBI, said they were aware of the situation but did not yet have details of who was behind the attack.

President Joe Biden was briefed on the incident on Saturday morning, a White House spokesperson said, adding that the government is working to try to help the company restore operations and prevent supply disruptions.

 

The Department of Energy said it was monitoring potential impacts to the nation's energy supply, while both the U.S. Cybersecurity and Infrastructure Security Agency and the Transportation Security Administration told Reuters they were working on the situation.

"We are engaged with the company and our interagency partners regarding the situation. This underscores the threat that ransomware poses to organizations regardless of size or sector," said Eric Goldstein, executive assistant director of the cybersecurity division at CISA.

Colonial did not give further details or say how long its pipelines would be shut.

The privately held, Georgia-based company is owned by CDPQ Colonial Partners L.P., IFM (US) Colonial Pipeline 2 LLC, KKR-Keats Pipeline Investors L.P., Koch Capital Investments Company LLC and Shell Midstream Operating LLC.

"Cybersecurity vulnerabilities have become a systemic issue," said Algirde Pipikaite, cyber strategy lead at the World Economic Forum's Centre for Cybersecurity.

"Unless cybersecurity measures are embedded in a technology's development phase, we are likely to see more frequent attacks on industrial systems like oil and gas pipelines or water treatment plants," Pipikaite added.

PUMP PRICE WORRIES

The American Automobile Association said a prolonged outage of the line could trigger increases in gas prices at the pumps, a worry for consumers ahead of summer driving season.

 

A shutdown lasting four or five days, for example, could lead to sporadic outages at fuel terminals along the U.S. East Coast that depend on the pipeline for deliveries, said Andrew Lipow, president of consultancy Lipow Oil Associates.

After the shutdown was first reported on Friday, gasoline futures on the New York Mercantile Exchange gained 0.6% while diesel futures rose 1.1%, both outpacing gains in crude oil. Gulf Coast cash prices for gasoline and diesel edged lower on prospects that supplies could accumulate in the region.

"As every day goes by, it becomes a greater and greater impact on Gulf Coast oil refining," said Lipow. "Refiners would have to react by reducing crude processing because they've lost part of the distribution system."

Oil refining companies contacted by Reuters on Saturday said their operations had not yet been impacted.

Kinder Morgan Inc (KMI.N), meanwhile, said its Products (SE) Pipe Line Corporation (PPL) serving many of the same regions remains in full service.

PPL is currently working with customers to accommodate additional barrels during Colonial's downtime, it said. PPL can deliver about 720,000 bpd of fuel through its pipeline network from Louisiana to the Washington, D.C., area.

The American Petroleum Institute, a top oil industry trade group, said it was monitoring the situation.

Ben Sasse, a Republican senator from Nebraska and a member of the Senate Select Committee on Intelligence, said the cyberattack was a wakeup call for U.S. lawmakers.

"This is a play that will be run again, and we're not adequately prepared," he said, adding Congress should pass an infrastructure plan that hardens sectors against these attacks.

Colonial previously shut down its gasoline and distillate lines during Hurricane Harvey, which hit the Gulf Coast in 2017. That contributed to tight supplies and gasoline price rises in the United States after the hurricane forced many Gulf refineries to shut down.

It might appear a little conspiratorial but someone somewhere doesn't seem to like Oil Pipelines.

[nirvana]

On 09/05/2021 at 12:03, PrincessDrac said:

I'll see what the Asian markets open up at Gold and Silver tonight

they've both 'broken out' I'm holding on.....I'm tempted to look at the value of my Silver ETF but I won't....it gets silly if you check your portfolio too often.....the hardest part of trading is sitting on your hands 

[sancho panza]

1 hour ago, Majorpain said:

Senate is likely to stay right wing, so its not a clear cut car crash.  Also, if you look at the guys history he has was actually running for office with a centre-right party in the 2000's, possibly a Corbyn like negative media effect in play?  Im keeping an eye on it but things are never quite as bad as they seem, being well diversified has meant ive decided to hold on for the minute.

Thanks for that input MP.

@PrincessDrac please consider MP's input here,better knowledge of PM miners than my humble self.dyodd as ever.

I'm a contented seller,picked up some Yamana/Eldorado with the proceeds,so it's a swap around trade for me.

I'm hoping to pick BVN back up in time-hopefuly at a much lower price.

[nirvana]

14 hours ago, Animal Spirits said:

I did not know Keynes and Hayek went to Cambridge together until after watching this.

whoa whoa whoa!  Keynes was a closet gay apparently, dunno about Hayek

That 'movie' you've linked, within 30 seconds you've got that Yankee fascist corporatist geezer* saying 'very few people have been harmed by globalisation' ahem, it's fucked EVERYTHING up! I don't believe in 'climate change' but I do realise the planet is being destroyed by corporatists and the human movement to make everyone fat and make animal species extinct...soz going a bit off topic but c'mon you know it's true! 

*he was the VP who they made a movie about, forgotten his name....will google

EDit: DICK CHENEY that's the cunt! 

edit again: that's right.... him and Donald Rumsfeld (probs felt his secretaries arse too!) right pair of right wing tools 

Anyway Vice is a great movie, Christian Bale

[nirvana]

On 09/05/2021 at 00:36, DurhamBorn said:

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

Good call, cable just tagged 1.41

It's true the markets are listening to our great oracle 

[DurhamBorn]

Just now, nirvana said:

Good call, cable just tagged 1.41

It's true the markets are listening to our great oracle 

Braz Real should run up on the $ and cable as well 

[nirvana]

4 minutes ago, DurhamBorn said:

Braz Real

thanks but I don't trade Braz...got enough on my plate as it is 

Joking apart cable is on a crazy run since the employment numbers announcement on friday afternoon....either

a) the algos are using it as an excuse

b) something has changed ie less likelihood of US IR rise blah blah so DXY bombs lower

c) i'm overthinking it  Just follow the money flow

[sancho panza]

cross psot from property crash thread.

 

 

More on this from Wolf ST.Nick Corbishley

Demand for flats is collapsing,some flats are moving at losses of 67% on purchase price,

https://wolfstreet.com/2021/04/30/bank-of-england-frets-about-banks-as-flammable-cladding-crisis-crushes-prices-at-low-end-of-housing-market/

The BoE is assessing if contagion from this scandal could spread to the broader housing market and cause a new financial crisis.

By Nick Corbishley for WOLF STREET:

The Bank of England is now fretting about the impact the UK’s flammable-cladding crisis could have on broader home prices in the UK and what that means for banks. New data shows that affected properties — and there are up to 1.3 million of these flats — sell for as little as one third of what the owner had paid.

The BoE is concerned about the banks that sit on loans backed by those properties and is assessing whether contagion from this scandal could spread to the broader housing market and cause a new financial crisis.

The BoE’s Prudential Regulation Authority (PRA) has surveyed mortgage-lenders on their exposure to leasehold flats with fire risks. And it is asking lenders for regular updates.

With banks refusing to offer mortgages on apartments in these buildings, and with cash buyers demanding crippling discounts, even selling the unit is not really an option.

In the wake of the fire at the Grenfell Tower of June 2017, which resulted in the deaths of 72 people, up to 1.3 million leaseholders in the UK discovered that the buildings in which they own their flats may have also been rigged with flammable cladding and insulation materials.

The “freehold” — the building and the land — belongs to somebody else, usually the developer, a financial entity the developer sold it to, or a large landowner such as the Queen or the Duke of Westminster. They are able to extract annual rent on those assets.

Under leasehold law, owners of the flats are liable for the costs. Over the past 12 months, apartments in many multi-occupancy buildings, even those of four stories or fewer, have required a so-called external wall system (EWS1) form in order to qualify for a mortgage. But many of the buildings are still waiting for inspection, leaving their occupants trapped in financial limbo, in buildings that may also be a firetrap.

Up to 1.3 million flats, including in thousands of recently built structures, are currently unmortgageable. These properties are at the low end of the housing ladder. And they are all but impossible to sell, without plunging their current leaseholders into a deep loss. That this low end of the housing market is beginning to seize up as lenders refuse to offer mortgages on any multi-occupancy buildings that pose even the slightest fire risk is threatening to disrupt the entire property market.

Now attention is turning to the potential impact this could have on the wider financial system. A study by the Leasehold Knowledge Partnership (LKP), cited by The Times, has found that of the flats in buildings with fire risks that had gone to auction since December 2019, about 80% failed to sell at all, or sold at discounts of up to 67% from the price the owner had originally paid.

For example, a one-bedroom flat in Manchester failed to sell last month despite being listed for half the £330,000 its owner had paid in 2017. In another example, a two-bedroom flat at The Decks, an award-winning design with flammable cladding, sold at auction for £52,000 last year, 62% lower than the price its owners had paid (£134,450) in 2008.

In many cases, the additional debt will sink leaseholders deep into negative equity, meaning they will still not be able to sell their apartment without incurring a significant loss even after the cladding and insulation have finally been removed.

The scale of the crisis is big, but it’s still unclear how big. For the moment, the rest of the UK’s housing market is buoyant, with average prices rising 7.1% compared to a year ago. But the bottom layer of the housing market is seizing up as lenders refuse to offer mortgages on any multi-occupancy buildings that pose this type of fire risk.

Yet even as all of this is happening, new data suggests that three-quarters of cladding systems being installed on new medium-rise buildings completed in 2019 and 2020 still used combustible materials. The government had proposed banning the use of such materials in these buildings but hasn’t actually followed through with legislation. The data – from an analysis by non-combustible insulation manufacturer Rockwool of figures from construction database Glenigan – also shows that 112 other potentially high-risk buildings had been built with combustible rainscreen systems during the same period. By Nick Corbishley, for WOLF STREET.

[DurhamBorn]

14 minutes ago, nirvana said:

thanks but I don't trade Braz...got enough on my plate as it is 

Joking apart cable is on a crazy run since the employment numbers announcement on friday afternoon....either

a) the algos are using it as an excuse

b) something has changed ie less likelihood of US IR rise blah blah so DXY bombs lower

c) i'm overthinking it  Just follow the money flow

Its all about liquidity flows DXY needs to go down another 5%ish ,maybe 7%

[sancho panza]

 

[Castlevania]

22 minutes ago, nirvana said:

thanks but I don't trade Braz...got enough on my plate as it is 

Joking apart cable is on a crazy run since the employment numbers announcement on friday afternoon....either

a) the algos are using it as an excuse

b) something has changed ie less likelihood of US IR rise blah blah so DXY bombs lower

c) i'm overthinking it  Just follow the money flow

Scottish elections out of the way. There’s a little bit of a relief rally from the SNP not doing quite as well as some had feared.

[nirvana]

Christ I have been reading Lyn Alden for a while BUT that Gold video, christ she's a fookin bloke!!! And that mouth 

Right I'm bored of holding a bag of HZM that is going nowhere so whereto? gold or crypto?

hmmm hmmm I'm thinking crypto, get the gambling cards out again 

whoa whoa whoa, that bloke in the vid says Gold is following 'broad money supply'...what a load o cock! Gold has been flatlining and money growth is to the moon! Bit like crypto? n'est ce pas 

What was I saying before 'follow the money'! I don't think too much of it is going into Gold

Right I'm convinced, don't care about the rest of you 

edit:

Dear Lyn

sorry for calling you a bloke, you're even clever than I thought, good luck with your Gold investments 

Cheers

PS Lyn says 

I used to think that if you don't eat, you just keep getting hungrier and hungrier, which frightened me. So, I decided to try a 3-day fast, with just water.

As it turns out, once you cross a certain point of not eating, the body starts to tap into its own body fat for fuel more readily. If you go long enough, your brain starts running on ketones instead of glucose, which is known to suppress hunger in many people, and give you a sense of alertness.

Many people fast during religious or spiritual experiences, partially because it creates a sense of mental clarity and even mild euphoria. I was less hungry on day 3 than I was on the first day, and I still occasionally do 1-day fasts

[DurhamBorn]

@nirvana gold goes before the liquidity not after as you well know given your a top chartist ,and silver is the real inflation hedge,gold is more a systemic risk asset,so it rises more on the risk in the system and the amount of capital available to buy it.If i was  billionaire id want more in gold,but ordinary up to a couple of mill it would be mostly silver.

I wouldnt buy gold here,id buy the likes of Yamana,massive copper deposits on the books as well.

[nirvana]

8 minutes ago, DurhamBorn said:

your a top chartist

you're too kind sir! funny I was just taking a screenshot of some crypto chart, like a 5min chart lol......I try to 'invest technically' but cos I'm a bellend my emotions always get in the way...it's fun trying though! 

[Loki]

21 minutes ago, DurhamBorn said:

I wouldnt buy gold here,id buy the likes of Yamana,massive copper deposits on the books as well.

Valuable info thanks mate

[nirvana]

31 minutes ago, DurhamBorn said:

Yamana

blimey that's an interesting chart....it died during the last century and never recovered 

[Animal Spirits]

2 hours ago, nirvana said:

whoa whoa whoa!  Keynes was a closet gay apparently, dunno about Hayek

That 'movie' you've linked, within 30 seconds you've got that Yankee fascist corporatist geezer* saying 'very few people have been harmed by globalisation' ahem, it's fucked EVERYTHING up! I don't believe in 'climate change' but I do realise the planet is being destroyed by corporatists and the human movement to make everyone fat and make animal species extinct...soz going a bit off topic but c'mon you know it's true! 

*he was the VP who they made a movie about, forgotten his name....will google

EDit: DICK CHENEY that's the cunt! 

edit again: that's right.... him and Donald Rumsfeld (probs felt his secretaries arse too!) right pair of right wing tools 

Anyway Vice is a great movie, Christian Bale

The World According to Dick Cheney, for you:

 

[nirvana]

12 minutes ago, Animal Spirits said:

The World According to Dick Cheney, for you:

1hr 50min! you're having a laugh......Dick Cheney and integrity don't go together....and that's a terrible shirt and tie combo 

he's a war monger.......you can't bomb people into freedom and wipe out their ideology in the same way that you can wipe out a race of Native Americans 

[nirvana]

@Animal Spiritshere's one for you...

'policy is designed so things are not gonna get any better'

 

[sancho panza]

21 hours ago, 23rdian said:

Watched this yesterday.

 

I've watched a bit of this and his main point is that according the ZH artivcle hes quotes extensively,the imbalance between loans and deposits is either proof of deflation or inherently deflationary.

I'm a deflationist and have been for 12/13 years in that I believe a credit deflation will at some point hit the banking system and cause a debt deflation a la Irving Fisher.

However,the point this guy repeatedly focuses on is one aspect of a banks balance sheet.

Here's the example used on Wiki.ANZ bank(it's actually 2007 nto 2037 but..).The key thing it establishes is that laons form one part of teh assets of a bank.he highlights laon/deposit imbalances since 2010 as his proof.But the reality is that the bank may have other assets besides it's loans as below.Most likely,given CB's like the BoE are sat on £100's of billons of govt bonds,then likely the reason laons are down is beciasue banks have parked assets at CB's.And why wouldn't rather have the CB as your counterparty than ABC corp?

In itself the point that he's making is that loan demand is down versus deposits hints at a deflationary aspect but I would say the broader point he should be making is that it's proof of declining velocity which is what QE is trying to affect and is most definitely deflationary.

If a debt deflation is to kcik off then we need declining velocity(tick),loan defaults(no),drops in aggregate demand(no) etc etc.

 

 

 

[sancho panza]

17 hours ago, Animal Spirits said:

There have been very few quarters of outright deflation in the US post WW2:

Yes but there are a host of genueine problems with the deflator used for real GDP calcs.

What your saying is actually that there hasn't been many quarters that have seen negative GDP prints in the psot war period.Quite true,but that doesn't mean that there hasn't been a siginifcant deflation in that times in parts of the economy.Got to pickc up kids but I'll be back later.

 

[Yadda yadda yadda]

1 hour ago, nirvana said:

blimey that's an interesting chart....it died during the last century and never recovered 

Zoom in a bit. This is an hourly chart.  I'd have used a one or five minute chart but this looked nicer.

I'm looking at the US listing rather than that Canadian version.

[nirvana]

4 minutes ago, Yadda yadda yadda said:

Zoom in a bit. This is an hourly chart.  I'd have used a one or five minute chart but this looked nicer.

yeah nice breakout bar last week but now it needs to clear April's high...I'm looking at the CAD exchange rate lol

 

[nirvana]

ok I tried to get a quote but I get this message, arsoles, I hate em 

There is currently no online quote available. Please either try requesting another online quote or call us on 0345 373 3479 to deal over the phone. You can also place a limit order (UK securities only)