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

[wherebee]

14 minutes ago, jamtomorrow said:

New SEEDs up. Good read as ever, although with much repitition of points already covered so I won't paste much, just this choice quote:

"... we can infer that discretionary consumption will fall sharply, as soon as the credit-based, growth-predicated financial system falls apart. This is going to be extremely unpopular, and can be expected to shift the basis of political debate towards economic issues and away from all non-economic topics of debate"

To me, this quote echoes something @DurhamBorn has said all along, which is that the politics follows the macro, not the other way round.

Looked at that way, today's woke menace culture war bollox makes sense: it's the political equivalent of credit-funded over-consumption, pointless rampant discretionary politics for the fag end of the discretionary age.

They say you should be careful what you wish for, but is it possible some real economic problems might do us some good?

https://surplusenergyeconomics.wordpress.com/

agree 100%.  Once you are wondering where the rent money comes from, you reject strongly any time spend on what gender identity you choose to be

[Chewing Grass]

9 hours ago, Hancock said:

Place im working at the moment hires workers via an agency and gifts them £9 and a few pennies per hour.

Lets see, where I work Company 'A' needs to do something so gets Partnership 'B' to fund Joint venture 'C' to get Company 'D' to Pay Agency 'E' via Accountancy Co 'F' to Pay Me.

That's five hands in the trough, whereas decades ago Company 'A' did most of the work itself.

There is enough fat in what's charged to what is paid the worker for each of the five companies to make 8.5% on average (not the agent or accountant) which is enough to give me a 50% payrise if they weren't there.

[Majorpain]

10 hours ago, Transistor Man said:

Are you just taking the cost RR say they will be? They haven’t built one yet. 

You have a good point. 

France got very good at building reactors, building at scale:

50 built in 15 years or so.

If you really go for it, the price will tumble. 

They say £1.8bn for 5th, I've gone for £2bn average for all, at that sort of price point there should be some serious interest from abroad.  They do however have plenty of experience of PWR's, and the construction partners also have a pretty good amount of offsite manufacturing experience, so it wont be pain free (Laing O'rourke would rather forget their offsite trial Scottish hospital job!) but has a good success chance.

[Mapper]

10 hours ago, wherebee said:

You can't have small nuclear rigs in a multi-cultural society.  end of.  You probably couldn't even have them in japan due to the doomsday cults.  Maybe iceland?

That is a very good point. In previous times, I had had flights of fancy about households having their own mini nuclear reactors in the future.

Regardless of the safety aspects of running such a piece of kit, you really couldn't trust anyone not to make a weapon out of it.

What a world we live in!

[Transistor Man]

25 minutes ago, Majorpain said:

They say £1.8bn for 5th, I've gone for £2bn average for all, at that sort of price point there should be some serious interest from abroad.  They do however have plenty of experience of PWR's, and the construction partners also have a pretty good amount of offsite manufacturing experience, so it wont be pain free (Laing O'rourke would rather forget their offsite trial Scottish hospital job!) but has a good success chance.

Everyone claims a low cost upfront.

The fundamental problem I have is,

from the engineering and the physics of the reactor, 2 * 500 MW PWRs should cost more than 1 * 1000 MW. To build and operate. 

There are economies of scale, and diseconomies.

I can think of manufacturing reasons why a smaller pressure vessel with smaller forgings will be easier, but not that much easier, due to how the scaling will go. It might be that this is the largest forging that can be done in Sheffield. I’m not sure. 

I’m not against the reactor. I hope they build them.

But I don’t think it’s really a SMR, and I don’t see where the cost savings come from. Other than if the state order a significant number, and they move along the learning curve. 

Westinghouse have been through this. No one was interested in their AP600 design, so they scaled it to make the AP1000, and started selling them.

[DurhamBorn]

1 hour ago, jamtomorrow said:

New SEEDs up. Good read as ever, although with much repitition of points already covered so I won't paste much, just this choice quote:

"... we can infer that discretionary consumption will fall sharply, as soon as the credit-based, growth-predicated financial system falls apart. This is going to be extremely unpopular, and can be expected to shift the basis of political debate towards economic issues and away from all non-economic topics of debate"

To me, this quote echoes something @DurhamBorn has said all along, which is that the politics follows the macro, not the other way round.

Looked at that way, today's woke menace culture war bollox makes sense: it's the political equivalent of credit-funded over-consumption, pointless rampant discretionary politics for the fag end of the discretionary age.

They say you should be careful what you wish for, but is it possible some real economic problems might do us some good?

https://surplusenergyeconomics.wordpress.com/

Thats right,and hardly anyone understands that the macro leads the politics.All this woke rubbish is just a result of too much free money.Governments who cant say no to any cry story.Last year that idiot footballer worth millions cheered for wanting NMW workers on nightshift in some shit hole to pay more tax and have higher inflation to give to benefit claims most of who will have a hugely bigger income that that NMW worker.

Printing is masking the fact that the host cant sustain the parasites on it.The government has made far too many promises,from the coppers on massive pensions at 50,to the single mother with 3 kids with made up ailments.

The macro pendulum swings as it has always done.Right now its reaching the point where we enter a distribution cycle.

This thread is really about keeping ahead of that macro curve.I see making a beautiful pizza for £1.20 where over the road get one delivered for £10 the same as buying Mosaic.

As Harley rightly warns though,the government is the huge problem and risk to us.If council tax keeps going up 5%  year for instance at some point it will take everything.

[DurhamBorn]

When pricing nuclear remember to base it on $200 oil and gas treble where it is now.Those are the minimum prices this cycle will see,$300 oil and 5x gas price are outliers and maybe.

[Majorpain]

28 minutes ago, Transistor Man said:

Everyone claims a low cost upfront.

The fundamental problem I have is,

from the engineering and the physics of the reactor, 2 * 500 MW PWRs should cost more than 1 * 1000 MW. To build and operate. 

There are economies of scale, and diseconomies.

I can think of manufacturing reasons why a smaller pressure vessel with smaller forgings will be easier, but not that much easier, due to how the scaling will go. It might be that this is the largest forging that can be done in Sheffield. I’m not sure. 

I’m not against the reactor. I hope they build them.

But I don’t think it’s really a SMR, and I don’t see where the cost savings come from. Other than if the state order a significant number, and they move along the learning curve. 

Westinghouse have been through this. No one was interested in their AP600 design, so they scaled it to make the AP1000, and started selling them.

Question is how much of the cost is the reactor and how much is Construction?  They have the largest crane in the world working on Hinkley point C, with millions of hours of labour going into the site.  

There is also what has torpedoed many of the other potential reactors, finding £22bn of funding is a massive stretch, £2bn is a much more manageable chunk.  So they may not be as good, but having one you can fund and build is better than one you cant finance!

[nirvana]

right 'EV bashers', check this out, it's the future! Actually, who fancies a laugh, I'll set up a gofundme, if I get enough dosbodders to back me then I'm off to China to buy one of these and see how far I can get driving it back 

$4500 new and only $1.56 for 100km.....beat that with your carbon monoxide belching shit boxes 

https://www.bloomberg.com/news/articles/2021-06-04/china-s-top-ev-maker-stakes-its-future-on-a-4-500-mini-car

I've found the website, I quite like the green one 

https://www.wuling.com/evmcr.html

[Transistor Man]

42 minutes ago, Majorpain said:

Question is how much of the cost is the reactor and how much is Construction?  They have the largest crane in the world working on Hinkley point C, with millions of hours of labour going into the site.  

There is also what has torpedoed many of the other potential reactors, finding £22bn of funding is a massive stretch, £2bn is a much more manageable chunk.  So they may not be as good, but having one you can fund and build is better than one you cant finance!

Would Sizewell C be cheaper if it was 4* 800 MW? Or 8 * 400 MW?

We don’t know. But the idea of the EPR reactor design is: no, it wouldn’t be. 

Its possible that the size is working against them. It’s a big reactor.

But I think they are really struggling on cost because it’s all new and they haven’t been building them.

Sizewell B was a huge success. On time, on budget. The mistake was not moving the consortium on to do Wylfa B and the others. But Dash for Gas happened. 

[invalid]

1 hour ago, jamtomorrow said:

New SEEDs up. Good read as ever, although with much repitition of points already covered so I won't paste much, just this choice quote:

"... we can infer that discretionary consumption will fall sharply, as soon as the credit-based, growth-predicated financial system falls apart. This is going to be extremely unpopular, and can be expected to shift the basis of political debate towards economic issues and away from all non-economic topics of debate"

To me, this quote echoes something @DurhamBorn has said all along, which is that the politics follows the macro, not the other way round.

Looked at that way, today's woke menace culture war bollox makes sense: it's the political equivalent of credit-funded over-consumption, pointless rampant discretionary politics for the fag end of the discretionary age.

They say you should be careful what you wish for, but is it possible some real economic problems might do us some good?

https://surplusenergyeconomics.wordpress.com/

 

I have often thought that much of the wokeness/benefits/pandering we see in todays society in the UK is a sign of excess wealth money credit.

Thinking about, we are lucky enough to be living in an age where even the poorest (in the UK anyway) can afford frivolous luxury's. Most take it for granted and its all relative, five bed homes, holiday in the carribean when there are many simple things that are luxury's:

- Owning pet cats and dogs

- Dying hair blue

- Crap tatts

- Paying (feeding and housing) healthy people to do nothing other than breed

 

 

 

[Lightscribe]

1 hour ago, DurhamBorn said:

Thats right,and hardly anyone understands that the macro leads the politics.All this woke rubbish is just a result of too much free money.Governments who cant say no to any cry story.Last year that idiot footballer worth millions cheered for wanting NMW workers on nightshift in some shit hole to pay more tax and have higher inflation to give to benefit claims most of who will have a hugely bigger income that that NMW worker.

Printing is masking the fact that the host cant sustain the parasites on it.The government has made far too many promises,from the coppers on massive pensions at 50,to the single mother with 3 kids with made up ailments.

The macro pendulum swings as it has always done.Right now its reaching the point where we enter a distribution cycle.

This thread is really about keeping ahead of that macro curve.I see making a beautiful pizza for £1.20 where over the road get one delivered for £10 the same as buying Mosaic.

As Harley rightly warns though,the government is the huge problem and risk to us.If council tax keeps going up 5%  year for instance at some point it will take everything.

That’s exactly my fear. The house always wins. That’s why I’ve invested in every angle possible in the hope that something remains relatively unscathed, whilst the prudent suffers evermore for the sake of the feckless.

It’s the same reason why we have the petitions and sob stories of IO mortgage prisoners. Complete idiots that have managed to miss decades situated in their favour, with no thought or care to even try position or support themselves. Always someone else’s fault, and what is someone else going to do about it.

I just can’t see a way that the government will allow the majority of the state supported masses in the UK to suffer, whilst leaving ISAs, pensions and assets untouched.

Yes of course they’ll be higher taxes for the middle ground, as they’re the perceived ‘wealthy’ painted by the media on anyone on over £50k+. This is despite the fact that after tax, playing the game to max limits on tax credits and not declaring taxes in self employed sole traders nets much more. 

Problem is, is there even enough PAYE workers left to get ever more squeezed, especially in an inflationary environment?  I don’t think there is, especially out of this pandemic with no one wanting to work anymore, furlough then extends directly into UBI. 

All I can see is a grab of assets left, right and centre.... for the greater good and all that, we have to make sacrifices for what makes ‘Britain Great’ etc etc, all the while the real ‘wealth’ lies untouched in tax havens.

 

[Heart's Ease]

17 hours ago, Barnsey said:

 

Max Keiser being Max Keiser. He's consistent, I'll give him that.

Had a walk around Trawsfynydd last year. I'm a sucker for an information board and they had a few scattered around giving the history of the power station. Mum started her first job at English Electric in 1960 (Kidsgrove), so I was pleased to be able to take a snap of this behemoth (steam turbine?) to show her which had been plonked in the grounds. A bit of history.

 

[JMD]

3 hours ago, jamtomorrow said:

@DurhamBornhas said all along... politics follows the macro, not the other way round.

Looked at that way, today's woke menace, culture war bollox makes sense: it's...  pointless rampant discretionary politics for the fag end of the discretionary age...     is it possible some real economic problems might do us some good?

Jamtomorrow, please excuse my edit of your post (ive hacked it a bit, but after doing so i couldn't put it back!).

But, yes i think so (eg. Camille Paglia, a lefty in fact, has said our current sexual 'naval gazing'/crises of confidence, etc, is what happens at tail-end of empires, roman, etc. I've posted her video on here up thread).

My broad framework is Howe's Forth Turning (until someone produces an even better metaphor for our times). However, although it doesn't quiet mean that 'Christmas is cancelled!', it will probably mean that given the theory says Millenials are the generation sent to save us - we should expect increasingly autocratic/moralistic(puritanical?) behaviors from our new political class... i.e. the Levellers they aint!

...not saying this is defo going to happen, but i find it a useful thesis (oh, and please excuse my historical analogies, just my A-level history peeping through!!).

 

[CVG]

This site will have been linked to before, but it's always worth a reminder for any folks new to the topic.

FIRE - Financially Independent, Retire Early

https://www.mrmoneymustache.com/2012/03/22/selling-the-dream-how-to-make-your-spouse-love-frugality/

In the end, it's all about aggressively driving up your Savings Rate.

[JMD]

2 hours ago, wherebee said:

Once you are wondering where the rent money comes from, you reject strongly any time spend on what gender identity you choose to be

I know the point your making. However, i think those individuals you mention will still have the same awful hang-ups, more-so probably, and suicides might even increase (i'm simplyfying their plight, imo those people have been abused by our manipulative media, both entertainment and news).

But the interesting macro element here is that despite all those new 'personal despair stories' happening, the MSM will 'curiously' find those type of stories suddenly 'uninteresting'... the media agenda would have moved on, it was ever thus! 

[Lightscribe]

13 minutes ago, CVG said:

This site will have been linked to before, but it's always worth a reminder for any folks new to the topic.

FIRE - Financially Independent, Retire Early

https://www.mrmoneymustache.com/2012/03/22/selling-the-dream-how-to-make-your-spouse-love-frugality/

In the end, it's all about aggressively driving up your Savings Rate.

I’d argue that the traditional FIRE method that’s worked for the last decade favourable conditions i.e. low interest rates and trillions of QE blowing up assets and blindly ploughing most of your income into a generic mix of low/medium to high risk funds will no longer achieve the same aim going forwards.

Hats off to WICAO on HPC being able to achieve what he did in the timeframe. But even he admits that he didn’t have a crystal ball to consider any wider economic considerations.

Inflation changes the whole ballgame, just like generic 60/40 pension funds will get ripped a new one. Inflation is already here and is certain, it’s now just a waiting game on the central banks reaction.

 

[planit]

3 hours ago, wherebee said:

agree 100%.  Once you are wondering where the rent money comes from, you reject strongly any time spend on what gender identity you choose to be

More importantly for this thread, you won't be blowing your free government money on Dogecoin

and the politics/emotional effort will move away from begin green and more on fixing the economy*

 

Green funding would drop in this scenario; therefore green funds/green companies will take a hit. Seems like the current situation ends at the next recession. 

The most likely bad scenario continues to be CB's ignoring everything for too long, then panicking, tightening, causing a crisis leading to deep recession. Looks like the earliest now for this is Q1 2022.

 

*If this coincides with much higher energy prices it will be a double negative to green.

[CVG]

42 minutes ago, Lightscribe said:

I’d argue that the traditional FIRE method that’s worked for the last decade favourable conditions i.e. low interest rates and trillions of QE blowing up assets and blindly ploughing most of your income into a generic mix of low/medium to high risk funds will no longer achieve the same aim going forwards.

Hats off to WICAO on HPC being able to achieve what he did in the timeframe. But even he admits that he didn’t have a crystal ball to consider any wider economic considerations.

Inflation changes the whole ballgame, just like generic 60/40 pension funds will get ripped a new one. Inflation is already here and is certain, it’s now just a waiting game on the central banks reaction.

 

I think that where and how you invest your savings is almost a different topic. I think that the upcoming environment will be very exciting with the possibility of terrific gains.

[JMD]

3 hours ago, Chewing Grass said:

Lets see, where I work Company 'A' needs to do something so gets Partnership 'B' to fund Joint venture 'C' to get Company 'D' to Pay Agency 'E' via Accountancy Co 'F' to Pay Me.

That's five hands in the trough, whereas decades ago Company 'A' did most of the work itself.

There is enough fat in what's charged to what is paid the worker for each of the five companies to make 8.5% on average (not the agent or accountant) which is enough to give me a 50% payrise if they weren't there.

Chewing Grass, I don't write this to poke fun at your example... but if i were to be ultra-cynical(?!) i think there may be other layers to your story...   What if there is no actual 'fat' left in our corporate system?

What if your Accountancy 'company F' has merely invented (shell) 'company B'. What if in effect there is no actual 'funding' happening, instead the deal is based on leveraged debt, and 'company D', (owner of Company B, and itself a subsidiary of a private hedge fund) takes most of the profits, after paying back the aforementioned debt (to the hedge fund btw, because the fund lent the money in the first place)!

I think we know this 'Tower of Babel' (Greensill Capital?) structure is happening all around, all the time. I find the financialization of the economy (derivatives, cdo's etc); along with the big 5 accounting firms acting as both accountants and the auditors of their client companies, a terrifying prospect, as all these financial-fudges have to unwind/fall one day.   

[Chewing Grass]

9 minutes ago, JMD said:

What if there is no actual 'fat' left in our corporate system?

You are probably right, I don't think there is.

[nirvana]

20 hours ago, Barnsey said:

 

the market ain't a monolith  if this quickly stop this link loading you'll be able to read it

and yes I agree Max Keiser has turned into something of a loon, he was quite entertaining on Russia Today years ago, even more so now

https://www.bloomberg.com/news/articles/2021-06-07/bitcoin-btc-vs-ethereum-eth-and-defi-there-s-a-big-difference

AND, I'm not particularly a fan of bloomberg but here's another one, that 'Cunt' guy at BOE murmuring about CBDC now........come on, you know it's coming......DeFi is the future 

https://www.bloomberg.com/news/articles/2021-06-07/boe-models-big-shift-toward-digital-currency-bank-reserves

[leonardratso]

garlic bread?

[nirvana]

2 hours ago, leonardratso said:

garlic bread?

help yourself, I gave up white bread, it's shite! 

 

[sancho panza]

US rig count nowhere near where it needs to be.

Debating selling EQNR to pile back into some of the laggards.It's $23 today,so higher than pre covid.First big oilie sale of the campaign thus far.

https://rigcount.bakerhughes.com/static-files/559d8d90-b5de-4911-b383-a08a0785764a