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

[jamtomorrow]

18 minutes ago, JMD said:

Very interesting the question you pose regarding extracting more value from a barrel of oil. Is this I wonder what @DurhamBornhas previously suggested regarding the oil companies potentially buying up the energy producers? Or am I oversimplifying what your saying? ...makes me wonder what fantastic future cash machines the oilies might become, maybe I should buy some more!!!

The "what if" I find interesting is that thin green line running into electricity generation from petroleum.

If one day it makes sense to deliver more energy to transportation end users down that line, what are the implications? Is it even necessary to use distillates? Is wellhead generation a possibility? What would that mean for the structure of O&G markets?

[Harley]

People who worry about the cost of copper and other commodities and the lack of a grid build out are assuming everyone will have an equivalent EV.  Maybe.  Or just maybe they'll be reserved for the apparatchiks and well to dos.  It's mass transit for the rest of you.  And no worry if you live non-urban - time for another clearance as in the past.

[JMD]

3 hours ago, planit said:

You have just demonstrated why the transition can't work with low oil prices. The cost of energy is higher with all the alternatives so they (market forces or regulation) will make oil cost enough to make the transition happen.

 

As briefly mentioned elsewhere, the politicians and enviro movement are playing with fire because the population of the world will starve without energy. The current world population (and growth) is supported with energy costing what it has over the last 20 years. If energy cost twice as much it will upset this balance the the results could be disastrous. 

 

I know most sensible people would choose to save people rather than choose CO2 emissions behind which the science is not conclusive but there is a delay in the system, by the time people realise they have messed up it will take 2-7 years to fix it. You can't build a nuclear plant in 12 months etc.

 

I hope it won't come to any of this but when you have a situation where energy projects are not carried out because banks are under pressure not to lend it is incredibly dangerous.

I agree that there is a real risk of global energy shortage due to short sighted environmental policies. But if that happened, might those 'modular nuclear reactors' (Rolls Royce, etc) be big part of the solution? They are designed to be deployed quickly and can be used individually or combined/scaled into x1000 I believe in order to replace say an entire power plant. Or is this new nuclear tech rather like the driverless car and mostly hype? (Ie will happen one day but still many challenges ahead)

[Loki]

3 minutes ago, Harley said:

People who worry about the cost of copper and other commodities and the lack of a grid build out are assuming everyone will have an equivalent EV.  Maybe.  Or just maybe they'll be reserved for the apparatchiks and well to dos.  It's mass transit for the rest of you.  And no worry if you live non-urban - time for another clearance as in the past.

Unfortunately this sounds all to likely, but it will be for our own good.

[Harley]

3 hours ago, M S E Refugee said:

 

Thanks for that.  I had no idea Domininc was back up.  I had to previously settle for his radio voice overs!  Plus a recent pleasant and motivational interview on RealVision released to us non-subscribers back on May 8.

[Hancock]

1 hour ago, DurhamBorn said:

Over 50% of the population already have no incentive to work.In my home town 83% of income comes from benefits and state and council wages and pensions.

People would work,it just means working would actually deliver increased living standards.Right now it doesnt.

I read earlier theyre starting a pilot scheme for UBI in Wales.

I suppose in a way our glorious leaders and the wealthy have had UBI for millennia.

[Hancock]

4 hours ago, M S E Refugee said:

 

So this is why HOC has been falling.

[Hancock]

17 minutes ago, Harley said:

Thanks for that.  I had no idea Domininc was back up.  I had to previously settle for his radio voice overs!  Plus a recent pleasant and motivational interview on RealVision released to us non-subscribers back on May 8.

Pity he didnt make the jump from HPC to here, since HPC owners went mental with their anti-Brexit narrative.

[M S E Refugee]

I do find it fascinating that the only way the environmentalists can save the environment with their Green energy is by destroying the environment of a Third World Country. 

[JMD]

2 hours ago, planit said:

It's a fair point but and worth working it through.

Part of the problem is that Solar and wind have up-front energy costs. So to get the solar panel to power the fridge you need energy.

So does the farmer use the energy to plough his field or does he put the energy into the solar panel as he can have a 'free' powered fridge in 2 years time.

 

So the answer is that if the problem doesn't get too bad too quickly (the gradient of the change matters hugely here), then the higher energy prices will make solar a good economic choice.

But if the energy squeeze is worse then energy prices will be so high that the farmer can't afford to plough his field and also can't afford the cost of the solar panel.

Then in this scenario the energy holders (people already with solar panels or wind farms) have all the power. 

 

There would need to be some kind of donation or control of energy prices and use so poor countries don't starve. Remember that if our economy tanks because of sky high energy prices, the poor countries get hit twice. 

Once by us not buying their goods and services and secondly because the energy cost is a higher percentage of their income so they can't afford it. 

 

 

Those are all very good questions... If we had efficient free markets operating, price discovery, etc, then market corrections and investment adjustments would happen. Not saying those ideas and drivers were ever a panacea, however those days are now in the distant past, and today we have central planning and dumb dogma. Not short sighted silly socialist 5-year plans, oh no - but instead we do have giddy and grandious 2030 and 2050 targets, what's the (tragic) difference I ask?!?

[JMD]

2 hours ago, DurhamBorn said:

It is,and thats why nature based solutions will be the winners in the end.The climate has always gone cold,then warm and always will,mostly the sun.We will probably get to net zero,actually,we will in time,but a great deal of that will be putting carbon back in the ground and trees etc.

The lack of investment will mean huge price spikes later in the cycle.The only question then is if to sell some,all etc or if the companies use the capital to own everything that comes after in the energy space.Nuclear is the real threat to gas etc and the oilies have done an amazing job of helping keep the worlds eyes on wind etc instead.Wind is producing 7% of UK electric today,1.5% yesterday,gas 50%,though to be fair solar is making 11% during the day.

DB, when you say 'own everything that comes after...' are you referring to your thesis that the oilies might buy the energy generation companies? 

[JMD]

2 hours ago, DurhamBorn said:

It is,and thats why nature based solutions will be the winners in the end.The climate has always gone cold,then warm and always will,mostly the sun.We will probably get to net zero,actually,we will in time,but a great deal of that will be putting carbon back in the ground and trees etc.

The lack of investment will mean huge price spikes later in the cycle.The only question then is if to sell some,all etc or if the companies use the capital to own everything that comes after in the energy space.Nuclear is the real threat to gas etc and the oilies have done an amazing job of helping keep the worlds eyes on wind etc instead.Wind is producing 7% of UK electric today,1.5% yesterday,gas 50%,though to be fair solar is making 11% during the day.

Yes exactly the Sun, someone should make a t-shirt with Piers Corbyn 'schooling' Gretta Thunberg!!! 

[reformed nice guy]

2 hours ago, planit said:

There would need to be some kind of donation or control of energy prices and use so poor countries don't starve. Remember that if our economy tanks because of sky high energy prices, the poor countries get hit twice. 

Once by us not buying their goods and services and secondly because the energy cost is a higher percentage of their income so they can't afford it.

I completely disagree. The "white man's burden", now applied to developed Asia, is a load of rubbish.

National interests must come first, so we would take resources that we need in exchange. They would probably decline in population

The west does not 'need' to do anything

[JMD]

49 minutes ago, M S E Refugee said:

I do find it fascinating that the only way the environmentalists can save the environment with their Green energy is by destroying the environment of a Third World Country. 

Your post has been removed by Farce-book for micro-aggressions, judgmentantalism and implied/unconscious racism/s!!!      Please note that your account has been disabled until you have successfully completed the Harry Windsor well being course.

[DoINeedOne]

 

[planit]

1 hour ago, reformed nice guy said:

I completely disagree. The "white man's burden", now applied to developed Asia, is a load of rubbish.

National interests must come first, so we would take resources that we need in exchange. They would probably decline in population

The west does not 'need' to do anything

 

China would do everything in their own national interest without hesitation, they would even take resources by force if needed.  Not sure the west would but I was not referring to developed Asia.

Thinking again after your post just makes the situation difficult, a conflict is more likely now as China would take a different position to the west making any coordinated plan very difficult. You can't divide everything up in a fair way if someone is stealing whatever they need at the same time. At least China will have enough coal power plants.

 

Hopefully the future will be more visible shortly (without Covid hiding true demand) and we can plan effectively. If the Saudis are lying about their potential continuous oil supply rate it is incredibly irresponsible as the world could be relying on it coming on line.

Banning all crypto mining worldwide should free up some extra energy and solve the problem. 

[Errol]

Largest gold miner has highest weekly close in 34 years:

 

[MrXxxx]

On 10/05/2021 at 12:19, sancho panza said:

 

I don't know about others, but as someone who finds economic theory difficult I just find her so good at explaining concepts that I have struggled with previously...she is such a great communicator.

[DurhamBorn]

3 hours ago, JMD said:

DB, when you say 'own everything that comes after...' are you referring to your thesis that the oilies might buy the energy generation companies? 

Yes,or own the producing assets like hydrogen plants.

[Lightscribe]

1 hour ago, PrincessDrac said:

Seems to be effecting Fres aswell. South/Mid American Miners feeling unloved.

US listed miners seeing 4% uplifts last week. Poly and CEY and Fres in stall mode. Maybe next week we'll see some momentum. Gold charts are looking bullish. Might see 2000 by the summer.

I sold some Fres last week when it went to 940 as I had too much of an allocation so freed up some profit for elsewhere. It has risen from the low 800s last month in which I loaded up so it has been moving along with the silver price.

I don’t think Fres will be affected by politics as much as other South American miners as it’s the largest silver miner in the world, too much money to be made by the government. 

[Bobthebuilder]

On 13/05/2021 at 13:11, DurhamBorn said:

Got some beautiful steak mince reduced in Sainsbury's yesterday,loads of it as well.Only a few in at 2pm,but they all walked past it,no doubt ashamed to be even close to a yellow sticker .Iv gone all upmarket,but its always a happy day when BAT sends me a big fat divi.

Ah see, I knew this was on the cards.

Shopping at Lidl/ Aldi is fine for the bottom feeder but if you want to really cook you need good ingredients. A meal is only as good as the quality you put in. THE INGREDIENTS ALWAYS WINS.

Sold all my Tesco a while back but Sainsbury's I will hold. Flight to quality and all that.

[sancho panza]

On 13/05/2021 at 09:53, planit said:

Look at the oilies, the share prices are half what they were but profits are currently more than they were preceding the crisis. This is without pricing in any boom recovery where everyone has to catch up on 2 years of holidays in one go.

It's hard waiting and I keep revisiting my hypothesis to look for holes but I always come back to the same conclusion that everything will have gone haywire by October.

Also, not saying it will definitely happen but when the dip in prices from last summer comes out of the inflation figures people will likely relax, just at the point they shouldn't. I haven't done any work on the figures but there should be at least 2 months in a row of declining inflation figures. The market crack up boom needs this relaxation.

 

Couple of great lines there P.I was chatting to a frien with a manufacturing/importing business and they were saying sizeable dislcoations occuring in supply chains ie can't get stuff in without big delay and price hikes,can't get it distributed as shortage of pallets/drivers apparently.

Bascually saying if  supply chains get totallyshut down, it's very hard to get them up and running without pricing abnormalities occuring at pressure points and that those pricing quirks in themselves create further instability in the supply chain.

Particualryl think the underlined bit is pertinent here,people will realx at exactly the point they shouldn't.

At the moment all I hear is people saying prices are 'hot,' because theyve had 40 years of disinflation,they're msitaking inflation for reflation.

 

On 13/05/2021 at 09:57, Harley said:

So what's everyone doing?  Me: 35% equity allocation atm.  Will sell a third of each long term hold on a signal from the monthly data (which I watch weekly).  Will buy that back on a subsequent buy signal.

We're about 15% cash,3% options ,80% oil/gold miners/potash/telecoms in that order.

On 13/05/2021 at 12:51, Bobthebuilder said:

It is an estate of 650 homes on hydrogen trails in Gateshead, everything on site I presume. They have been running 80% gas to 20% Hydrogen mix for a while. They now have houses running on 100% Hydrogen using current infrastructure so, the same gas pipes, meters, regulators etc, new boilers though.

Fascianting info there Bob,many thanks for posting.Well signposted for basement dwellers over the last year but nice to see you confirming from teh coal face.

On 13/05/2021 at 19:41, Noallegiance said:

Anybody got any idea what inflation will do to the second hand car market? Mine may soon die. Wanna get an idea if it's worth continually getting repaired or buying another one.

Think we'll see spikes in used as people  move away from the dodgy finance deals and onto cars they will one day own.

I probably need a bew car but given how much time I spend on it(given it's relative lack of importance in my lfie),I'm hoping my 11 plate will do another winter.

Sadly at work,I don't have the oldest car.There's on eyoung lad with a proper beat up 06 plate peugeot while all the other recent grads are PCPed up.

Potential basemnt dweller right there.

[sancho panza]

On 14/05/2021 at 07:18, MrXxxx said:

Well either benefits are too generous or salaries offered are too low...give people an incentive to work, either positive or negative, and they will.

its more that the cost of living is too high and the salaries too low.

I honestly don't know how they find staff for care homes,when teh very act of performing that amazing job puts you on the road to penury.

[wherebee]

2 hours ago, sancho panza said:

its more that the cost of living is too high and the salaries too low.

I honestly don't know how they find staff for care homes,when teh very act of performing that amazing job puts you on the road to penury.

I'm expecting to have to look after my father in law when he gets infirm; one reason we have spare rooms here is for that future.  The model of extended family looking after you in your final years is common in almost every society except the west for the period 1970-2020.

[MrXxxx]

3 hours ago, wherebee said:

I'm expecting to have to look after my father in law when he gets infirm; one reason we have spare rooms here is for that future.  The model of extended family looking after you in your final years is common in almost every society except the west for the period 1970-2020.

`We` don't want the inconvenience of them, but we want the convenience of what they have (inheritance) :-(