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

[JoeDavola]

9 minutes ago, Castlevania said:

I thought pubs were open now?

Also, where are the seats in front of the fine establishment?

Not in NI. Not open till Monday.

You can barely see the seats but they're between the window and the queue. There's not many at all.

[SpectrumFX]

39 minutes ago, JoeDavola said:

Not in NI. Not open till Monday.

You can barely see the seats but they're between the window and the queue. There's not many at all.

Even in Wales we're now allowed to drink inside pubs. I'm doing it right now.

[JoeDavola]

8 minutes ago, SpectrumFX said:

Even in Wales we're now allowed to drink inside pubs. I'm doing it right now.

Well to be fair, Northern Ireland (population 1.8 million) does have one person in the country on a ventilator with covid (according to official data) and only 500,000 people double-jabbed.

So.....ya know. Still have to be careful. Apparently.

[Castlevania]

23 minutes ago, SpectrumFX said:

Even in Wales we're now allowed to drink inside pubs. I'm doing it right now.

Did it cost £5 a pint?

[King of Fools]

On 21/05/2021 at 07:21, Stinky Wizzleteats said:

 In the podcast i referred to upthread Dominic Frisby speculated that China would use their gold reserves to launch a gold-backed government crypto 

BBC are currently playing Inner City Blues by Marvin Gaye and these lyrics leapt out at me:

Inflation no chance
To increase finance
Bills pile up sky high
Send that boy off to die

“Standards of living, they’re rising daily”.

Roxy Music - In Every Dream Home A Heartache 

[SpectrumFX]

35 minutes ago, Castlevania said:

Did it cost £5 a pint?

I don't know. I forgot my wallet, so my wife had to pay.

[MrXxxx]

Some useful content/pointers for the forthcoming BK?

 

[Bobthebuilder]

Italy win. Good call I think db.

[DurhamBorn]

On 21/05/2021 at 14:16, DurhamBorn said:

Italy,France should do well especially with the Jury and is a danger,Ukraine also should do really well,UK will be bottom 3 i think,garbage as usual,

Well i said Italy and France and that was the 1st and 2nd and UK last as expected.Havent been on the thread much as i win my pocket money every year of Eurovison so that comes first for a month,but another very good year.Iv only lost once in 11 years.This year wasnt a huge win,but very happy given how competitive it was.

[DurhamBorn]

49 minutes ago, Bobthebuilder said:

Italy win. Good call I think db.

Yes ,was very hard year and only a 4 figure win when usually a 5,but very happy especially as i said France was the danger and they were 2nd and of course UK last,were were utter garbabe.

[arrow]

A Vodafone led consortium has won a contract to install and supply Ethiopia with 5g. The US "helped" the Vodafone consortium win the auction by giving it below market interest loans as part of the US foreign aid program. Also, Vodafone was helped by US political pressure on Ethiopia. 5g manufacturers like Nokia, Ericsson and Samsung are also being "helped" by being given cheap finance. So, good news for shareholders to get cheap debt. Africa is dominated by Huawei and Zte equipment. It also shows how the US is countering China's belt and road policy.

 

U.S.-China Tech Fight Opens New Front in Ethiopia
A U.S.-backed consortium beat a Chinese-backed one for a multibillion-dollar contract to build Ethiopia’s 5G-capable network.

A U.S.-backed consortium beat out one financed by China in a closely watched telecommunications auction in Ethiopia—handing Washington a victory in its push to challenge Beijing’s economic influence around the world.

The East African country said Saturday it tapped a group of telecommunications companies led by the U.K.’s Vodafone Group PLC to build a nationwide, 5G-capable wireless network. The group had won financial backing for the multibillion-dollar project from a newly created U.S. foreign-aid agency.

The agency offers low-interest loans, but the financing comes with a condition: The money won’t be used to buy telecom equipment from China’s Huawei Technologies Co. and ZTE Corp. Washington considers both a spying threat, an accusation the companies deny.

The losing bidder was South Africa’s MTN Group Ltd. , whose proposal was financed in part by a Chinese investor.

The telecom license auction in Ethiopia took on wider geopolitical significance amid heightened competition between the U.S. and China over key technological pursuits, from the rollout of 5G to chip manufacturing.

“The U.S. and China are fighting a proxy war in Ethiopia for influence,” said Zemedeneh Negatu, chairman of Fairfax Africa Fund LLC, a U.S.-based investment firm that focuses on Africa.

After all but shutting out Huawei in the U.S., Washington has become more assertive about challenging Beijing’s economic footprint overseas. It is using new financial tools to win influence and ensure that strategic assets in foreign countries stay in friendly hands.

Johannesburg-based MTN, the continent’s largest telecommunications company and a longtime customer of Huawei and ZTE, said it made its bid in partnership with China’s Silk Road Fund, which has investments from Beijing’s China Development Bank and the Export-Import Bank of China.

Backing the Vodafone bid was the International Development Finance Corp., or DFC. The U.S. government-funded agency was created in December 2019 with a goal of offering alternatives to cheap Chinese financing for foreign infrastructure projects.

Ethiopia’s government, which wants foreign investment and competition to improve its often-patchy cellular service, had the option of accepting both bids, only one or none. “This marks the beginning of a new era in our country,” the Ethiopian Communications Authority tweeted Saturday after announcing the winning bidder.

The DFC in late 2020 approved offering up to $500 million in U.S. loans if the Vodafone-led group won the bid. It isn’t obligated to move forward with the transaction, however. The U.S. has separately been pressing Addis Ababa to let humanitarian groups access Ethiopia’s Tigray region, where a violent conflict has led to what the U.S. calls ethnic cleansing.

Ethiopia late last year sent in federal troops, accusing the dominant political party there of trying to divide the country. A representative for Prime Minister Abiy Ahmed didn’t respond to a request for comment.

The DFC said Friday, before the auction results, that it is working closely with other U.S. government agencies to monitor the situation in Tigray and “will carefully consider its impact on any potential financing of the Vodafone consortium.”

Should the financing go ahead, the U.S. loans would carry interest rates well below those of commercial banks. The idea is to help the carrier buy equipment from non-Chinese suppliers, such as Ericsson AB, Nokia Corp. or Samsung Electronics Co. Their equipment is often more expensive than Huawei or ZTE hardware, according to wireless executives and U.S. officials.

U.S. law also prohibits its loan from being used to buy Huawei or ZTE equipment, though one person familiar with the matter said it is possible the Vodafone-led bid could still buy some Chinese gear because of the project’s size and cost.

In the past two decades, Ethiopia has developed commercial bonds with Beijing, signing loan agreements with Chinese lenders that total $13.7 billion between 2000 and 2018, according to the China Africa Research Initiative at Johns Hopkins University. About $3 billion of that went to telecom-infrastructure projects with ZTE and Huawei.

Ethiopia, meanwhile, is also an important U.S. strategic ally because of its location near the Red Sea, on the Horn of Africa. The U.S. has tried to neutralize terrorist groups, including al Qaeda and Islamic State, in the region.

 

 

[jamtomorrow]

8 hours ago, Bobthebuilder said:

Italy win. Good call I think db.

Yup, good call. I do hope Franz Ferdinand get their riffs back at some point

[jamtomorrow]

Lovely thread from Tavi overnight:

I won't paste it all here, except to pull out his observations on the thing that's been niggling me, namely: this is not the 20's or 70's, labour is not organised the same way, doesn't capture as much of the economic surplus as it used to, isn't as critical to production, and doesn't *appear* to have anything like the same bargaining power.

That being the case: how, and how quickly, will changes to cost of living get transmitted to wages this time round? Tavi thinks there are parallels with Spanish Flu:

"Back then, workers revolted against their employers by demanding materially higher wages and salaries. 
 
In fact, one out of five people in the US labor force was engaged in a strike. 
 
We believe a similar trend is brewing in the US today.

Large restaurant chains such as McDonalds and Chipotle are already experiencing pressure from employees to increase pay and provide more appropriate work conditions. 
 
We think it is a matter of time until further protests emerge in other parts of the economy."

So back to the 70's after all?

[Barnsey]

Paywalls but you get the idea...

 

[invalid]

 

Posted the above on the other thread but thought it worth putting here as well.

Cost of energy is a fundamental input cost.

Household bills going up, by a lot and costs for every UK business and manufacturing will be going up as well. Some business may have long term locked in prices so there will be a lag but its heading downstream and will get there eventually.

[dnb24]

4 hours ago, arrow said:

Ethiopia, meanwhile, is also an important U.S. strategic ally because of its location near the Red Sea

Interesting piece- Ethiopia is a key player  in the area, they’ve kicked the US military out in 2017 for trying to determine a regime change, the TPLA have significant influence in the USA despite being Marxist and the the US have pushed in the past to get the TPLA back into power much to the chagrin of the Ethiopian government. This caused Ethiopia to turn to China since then and China developed a key naval base near Djibouti. 
interestingly the TPLA are very astute in using psychological and technological tactics- and hold significance influence in Washington despite their relative size- I wonder if this is what drove the yanks to put up the cash for this.

[Majorpain]

3 hours ago, jamtomorrow said:

Lovely thread from Tavi overnight:

Fab with lots of info on the three horsemen of the (inflation) apocalypse, Cost Push, Demand Pull and Currency debasement.  First time in history all are being unleashed at once?

[Lightscribe]

 

[Lightscribe]

Didn't make the upper shoulder to the 99 day MA line as I said yesterday. I then shored up in PAXG (moves inversely to BTC and physical gold backed), and watched the free-fall today. I’ve now bought back in partly with LINK and XRP.

Have to see if this holds now or if we have a continued drop towards $22k. I’m massively up regardless, I hope any who has followed my updates is too.

 

[geordie_lurch]

1 hour ago, Lightscribe said:

 

Ha so they will listen to our thoughts but are going to move ahead with it all anyway as some of us have been warning about for a while! UBI will be next and then maybe your access to any ISAs you have will be dependent on your state digital wallet and if you have been a good citizen 

[Lightscribe]

2 minutes ago, geordie_lurch said:

Ha so they will listen to our thoughts but are going to move ahead with it all anyway as some of us have been warning about for a while! UBI will be next and then maybe your access to any ISAs you have will be dependent on your state digital wallet and if you have been a good citizen 

As I said before, It will all come a lot sooner than people think. 

[reformed nice guy]

I wasnt sure where to ask this but hopefully this is the right place since its higher level.

The idea of helicopter money is from Keynsian theory of increasing demand when things are a bit shit.

If a signficant portion of the population put their "free money" into bitcoin, obscure alt coin, pokemon cards, video games etc then will that lead to a contraction of the liquid money supply? (I dont know which M number)

My reasoning is that in Keynes' time much much more of the retail transactions of the population would have been to small businesses. If the majority now goes to major corps then they will hoard a lot of it as cash so it will not circulate.

[Loki]

10 minutes ago, geordie_lurch said:

maybe your access to any ISAs you have will be dependent on your state digital wallet and if you have been a good citizen

Shit, that is a very good point. If the currency goes CBDC, so do they.

[BurntBread]

25 minutes ago, reformed nice guy said:

I wasnt sure where to ask this but hopefully this is the right place since its higher level.

The idea of helicopter money is from Keynsian theory of increasing demand when things are a bit shit.

If a signficant portion of the population put their "free money" into bitcoin, obscure alt coin, pokemon cards, video games etc then will that lead to a contraction of the liquid money supply? (I dont know which M number)

My reasoning is that in Keynes' time much much more of the retail transactions of the population would have been to small businesses. If the majority now goes to major corps then they will hoard a lot of it as cash so it will not circulate.

My understanding is that crypto doesn't have any utility value. Therefore if (let us say) the Bitcoin cryptography were cracked, and Bitcoin suddenly had no resale value, then the wealth of the nation (in terms of the goods and services that are available) will not have changed. The only effective result is that the previous buyers of Bitcoin have simply gifted their fiat money to the previous sellers.

Thus, neither a crash nor an increase in the price of Bitcoin changes the (broad or narrow) money supply.

Of course, this is true for anything traded; for example, if you own a house outright, with no insurance, and it burns down, this does not change the money supply. However, in this case, it does reduce amount of goods and services in the nation, and therefore can be a cause of inflation (for example local inflation of house prices, as there are fewer houses for sale).

Two slight caveats. Firstly, if someone has borrowed money to buy Bitcoin, and then goes bankrupt if Bitcoin crashes, then we have the usual effect of default on the fractional reserve system, so that the broad money supply contracts as banks lose some of their assets. On the other hand, if someone buys a Bitcoin (which has no utility value), and holds it, then he will consider it a store of value, and so may be more willing to spend more of his saved fiat on other things. Thus an increasing price of Bitcoin can increase the velocity of money. I suppose you could see this as the "Bezzle" effect, if you have no faith in Bitcoin's future.

It is an interesting question about where the newly created money from stimulus cheques goes first (and second ...) and therefore who benefits from the money inflation, rather than being among the many who lose out. Clearly sellers of Bitcoin are among the winners. If big corporations are manipulating crypto prices, then they are hoping to be among the early beneficiaries of the inflation, too. As you say, previously, one might expect the sellers of cars, holidays and household goods to be the prime beneficiaries, but they don't seem to be top of the list, this time round.

[Loki]

@DurhamBorn Do you have any favourite sentiment indicators you are happy to share, if your models use them?  David Hunter has mentioned it but I doubt he would ever share what they are. (Understandably)