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

[Noallegiance]

11 hours ago, JMD said:

Haulage sector is saying UK is short 60,000 hgv drivers. They say 15,000 EU drivers went home last year (because Covid) but won't return because can earn more in Europe. The other shortfall is partly historic and partly due to a backlog of hgv testing because of lockdown (again because Covid). They had a haulage owner saying he had recently increased wages by 25%.                                                                                                         Very inflationary of course. But the other thing is that the building industry has been talking of even bigger numbers in terms of required numbers of trained people their own sector needs. And this is before the anticipated next cycle national infrastructure big build has even gotten underway.                                                               I find these developments very striking. So might this mean that unemployment will not be a policy concern for government over say the next 5/8 years? (After then all bets are off if we get monetary collapse!!) I ask because last year out of work actors/cabin crew were forced to take up new careers as electricians/nurses - btw, those were actual examples I remember seeing reported. Good for them I say, but my point is if they can change careers - so drastically - then surely most other unemployed can also do similar?.... I'm thinking the challenge will be around the government effectively managing people into the right jobs, plus as @DurhamBornfrequently comments, coming down very hard on the work-shy/benefit claimer culture.

I used to class 2 lorry drive. Still have the licence but don't do it. The risk, responsibility and hours for £11-£14 per hour is nowhere near worth it.

[Harley]

Never thought of this until I heard it yesterday - Western energy consumption figures skewed by outsourcing to the East.  And what happens if that changes?

[DurhamBorn]

16 minutes ago, Harley said:

Never thought of this until I heard it yesterday - Western energy consumption figures skewed by outsourcing to the East.  And what happens if that changes?

The Scottish share makes us rich? .My work experience when 14 at school was a local factory that made fake fur coats,the best thing about it was the women kept grabbing between your legs "see if your ready for plucking",,but the next best bit was working with the boiler man.Shoveling coal into the boilers for a bit then going around opening all the valves etc.The energy produced from coal was amazing in that stand alone system.I guess until gas most energy consumption in the UK was off grid with coal.

[Castlevania]

50 minutes ago, Harley said:

Never thought of this until I heard it yesterday - Western energy consumption figures skewed by outsourcing to the East.  And what happens if that changes?

Yeah. The net zero targets don’t include the energy used in shipping stuff have way across the globe.

[Transistor Man]

3 hours ago, jamtomorrow said:

I have the same reservations, somewhat - the reality is we live in an energy-information economy (and maybe that's just an entropy economy?). Still, must have been a big undertaking developing and refining the SEEDs model, can't imagine how much harder it would be to reformulate it in terms of entropy.

Have you looked at Exergy Economics?

From what I remember, Your thinking seems along the lines of what this attempts to deal with. 

The grade or quality of energy is accounted for, during conversion processes, via second law of thermodynamics, and information theory - I guess.

I looked into it a little when working on cogeneration. I can’t remember too much, but it looked interesting. Also, we discuss something similar in electronics .... via Landauer principle. 

https://www.researchgate.net/profile/Steve-Sorrell/publication/329787826_Exergy_economics_New_insights_into_energy_consumption_and_economic_growth/links/5c1aba83458515a4c7eb05c0/Exergy-economics-New-insights-into-energy-consumption-and-economic-growth.pdf?origin=publication_detail

 

 

https://www.nasa.gov/sites/default/files/atoms/files/40_gilbert_uses_of_exergy_in_systems_engineering.pdf

 

[Harley]

1 hour ago, Castlevania said:

Yeah. The net zero targets don’t include the energy used in shipping stuff have way across the globe.

I was thinking of the actual making of stuff, but defo it's transportation too.  More of the big con.  Like getting kids to slave away extracting lithium and then dealing with all the waste on the return of stuff while the western virtue signalers virtue signal.

[Boon]

https://www.bbc.co.uk/news/business-57712618

Right on cue. I wonder if they'll price match?

Could be that others would follow; if it is simply a means to earn yield on cash this is surely quite an easy way to go about it. Why bother selling products and all the hassle that entails to return a tiny percentage? Car dealerships spring to mind, they have a net margin of 1% yet own lots of land, supermarkets as well -the Morrisons deal I think reflects lots of unlocked potential in terms of land.

Big companies already own their land, in some cases it might be as simple as converting a disused premises into loads of flats.

Kind of also reflects the 'you'll own nothing, and you'll be happy' prediction. If BTR went into oversupply and rents for these apartments cratered, it could very well be that the young people don't own them, and they'll be happy about it.

[Castlevania]

14 minutes ago, Boon said:

https://www.bbc.co.uk/news/business-57712618

Right on cue. I wonder if they'll price match?

Could be that others would follow; if it is simply a means to earn yield on cash this is surely quite an easy way to go about it. Why bother selling products and all the hassle that entails to return a tiny percentage? Car dealerships spring to mind, they have a net margin of 1% yet own lots of land, supermarkets as well -the Morrisons deal I think reflects lots of unlocked potential in terms of land.

Big companies already own their land, in some cases it might be as simple as converting a disused premises into loads of flats.

Kind of also reflects the 'you'll own nothing, and you'll be happy' prediction. If BTR went into oversupply and rents for these apartments cratered, it could very well be that the young people don't own them, and they'll be happy about it.

Tesco already has a house building arm.

[Option5]

2 minutes ago, Castlevania said:

Tesco already has a house building arm.

So do IKEA.

[Hardhat]

In a way I think corporate landlords would be a good thing and certainly better than private.

But my issue in general is the turn towards the middle and working class of this country becoming tenant classes.

With the asset ownership of the two above classes overwhelmingly in property, it wouldn't be hard for a coalition of corporate landlords to squeeze those classes increasingly out of ownership and into permanent rental.

[JMD]

14 hours ago, sancho panza said:

I ahvent posted this in the sceptics thread because it's not really relevant to the discussion,but when you see kids doubling dwon on debt to then not get a job,you have to concede that we might be looking at  deflationary vortex

It never ceases to amaze me that getting an even bigger debt for a qualification that pigeon holes you even more than the first degree which couldn't get you a job,makes sense for some people.

https://lockdownsceptics.org/2021/07/03/cancelled-placements-push-recent-university-graduates-to-study-panic-masters/

With many work placements and internships cancelled last year due to lockdown, and a good deal of employers not bothering to get back to failed applicants, thousands of recent university graduates have rushed to study “panic masters” courses. The Observer has the story.

Universities including UCL, Cambridge and Edinburgh, told the Observer they were seeing substantial increases, ranging between 10 and 20%, in the number of U.K. students applying to study for postgraduate degrees in the autumn.

Mary Curnock Cook, an admissions expert who is chairing an independent commission on students, said the rise is due to “a collapse in confidence in the graduate employment market”. There is a backlog of applications from graduates who struggled to secure roles last year or whose placements were cancelled, she said.

“That’s what’s causing this idea of the panic master’s,” she said. “A lot of what I’m hearing is people getting stressed about making tons of applications and not even getting acknowledgement. It’s a stain on employers that they’re not treating their applicants with common courtesy.”

Dan Barcroft, Head of Admissions at Sheffield University, said postgrad study has been especially popular among undergraduates planning to remain at the university, with application numbers rising by 35%. “People are choosing to stay in education at a time of economic turbulence,” he said. …

Last year top graduate employers cut vacancies by nearly a half, although some jobs have been reinstated this year. There are particular shortages of entry-level roles in the industries that have been worst affected by the pandemic, including travel, hospitality and retail.

A recent survey of more than 2,000 students by advice service Prospects showed that over a third of university finalists are changing their career plans due to the pandemic, while two-thirds who are planning postgraduate study are choosing to do so to switch career path.

Nearly half of university students said they felt unprepared for the job market, citing a lack of experience, vacancies and their skills as the main barriers. 

Worth reading in full.'

 

as for that last bit,Im 50 and stil feel unprepared for the job market.

I had always suspected that 'education, education, education' might be code for Degree, Hons Degree, Masters...!!!                                                                                                                                                                            As an aside I think that the state education system (weapons of mass instruction/Gatto) will continue to be shunned by an increasing minority in the next cycle, and especially so when online degrees become a reality. 

[JMD]

6 hours ago, jamtomorrow said:

I have the same reservations, somewhat - the reality is we live in an energy-information economy (and maybe that's just an entropy economy?). Still, must have been a big undertaking developing and refining the SEEDs model, can't imagine how much harder it would be to reformulate it in terms of entropy.

Yes, energy-information economy sounds far more descriptive. It is also very useful term because it helps highlight the fact that we don't own our own data. That is to say that many huge online companies survive - and gain more and more power - by using our data to sell products and 'influence' us,  yet we don't have any say or understanding of what's happening. We have become online serfs - anyone not appreciating this is seriously in denial. (Ie even ex-presidents can be silenced)                                                                                                                         Jamtorrow please could you elaborate more on what you mean by 'entropy economy'? I kinda understand that extracting fossil fuels increases entropy. But for the information/digital economy my - very basic understanding - is that If say a company move online... profits usually increase/marginal costs decrease so I assume that overall company utility has increased, therefore a more 'effective' company means that entropy has decreased?                                                                                                                                                                          I guess I'm using loose terminology above, however I note that many commentators in the crypto space have begun talking about entropy and tbh it turns me off a bit because the topic sounds pretentious, but perhaps maybe that's just my bad because I don't understand it?

[JMD]

6 hours ago, Noallegiance said:

I used to class 2 lorry drive. Still have the licence but don't do it. The risk, responsibility and hours for £11-£14 per hour is nowhere near worth it.

Hi Noallegiance, I knew there were some hgv license holders on here!                                                                               I didn't mention before, but the hgv shortage is also leading to all kinds of dislocatons. Some councils don't have the hgv drivers to operate their full refuse recycling services, so have told residents to take their rubbish to local tips if they want it recycled, else the advise is to just put their plastics, etc in with their general waste for normal bin man collection. (Don't tell Greta, Oh the humanity of it!!)

[JMD]

6 hours ago, Harley said:

Never thought of this until I heard it yesterday - Western energy consumption figures skewed by outsourcing to the East.  And what happens if that changes?

Yes, this is what the environmentalists have been arguing and stamping their feet about for long while - that the carbon reductions made so far have been the low hanging fruit, and that in any case much western production (and therfore emmisions) happens abroad and is never measured in the first place. This is why I think the 2050 targets are unachievable. However those same climate reports also do realise this, because they contain a second target date of 2100 which is curiously never mentioned. Funny that!!                                                                                                         Plus the other aspect not normally mentioned is that getting the world to net zero is not sufficient, because the carbon itself hangs around in the atmosphere for hundreds of years. So sequestration tech will also be needed to remove that carbon else it will continue to warm the planet (according to the theory). My thoughts on this is that sequestration tech is the real answer to the whole problem, and that all the other manipulative government policies look suspiciously/obviously like a mere power grab. 

[jamtomorrow]

5 hours ago, Transistor Man said:

Have you looked at Exergy Economics?

From what I remember, Your thinking seems along the lines of what this attempts to deal with. 

The grade or quality of energy is accounted for, during conversion processes, via second law of thermodynamics, and information theory - I guess.

I looked into it a little when working on cogeneration. I can’t remember too much, but it looked interesting. Also, we discuss something similar in electronics .... via Landauer principle. 

https://www.researchgate.net/profile/Steve-Sorrell/publication/329787826_Exergy_economics_New_insights_into_energy_consumption_and_economic_growth/links/5c1aba83458515a4c7eb05c0/Exergy-economics-New-insights-into-energy-consumption-and-economic-growth.pdf?origin=publication_detail

 

 

https://www.nasa.gov/sites/default/files/atoms/files/40_gilbert_uses_of_exergy_in_systems_engineering.pdf

 

Not looked into exergy, no - thanks for the pointer @Transistor Man, a nice chunky add for the reading list!

To be fair to SEEDs, I believe there is some attempt to account for the "quality" of different energy sources, but I think that's as far as it goes.

[Hancock]

3 hours ago, Hardhat said:

In a way I think corporate landlords would be a good thing and certainly better than private.

But my issue in general is the turn towards the middle and working class of this country becoming tenant classes.

With the asset ownership of the two above classes overwhelmingly in property, it wouldn't be hard for a coalition of corporate landlords to squeeze those classes increasingly out of ownership and into permanent rental.

Problem i have with this, is if people are spending money on rent all their working life ... then they have sweet FA to put into the actual economy.

The reason for printy printy and endless borrowing is to make up for this short fall.

[jamtomorrow]

1 hour ago, JMD said:

Jamtorrow please could you elaborate more on what you mean by 'entropy economy'? I kinda understand that extracting fossil fuels increases entropy. But for the information/digital economy my - very basic understanding - is that If say a company move online... profits usually increase/marginal costs decrease so I assume that overall company utility has increased, therefore a more 'effective' company means that entropy has decreased?

Purely casual speculation on my part as to whether there might be an even better lens than energy alone for understanding macro at the centuries scale. I did a bit of engineering thermodynamics in another life, so it seems natural to reach for entropy when you find yourself trying to reconcile energy and information.

That said, it does seem like if there's such a thing as economic entropy, then the aggregate entropy in the economy has surely increased over the last couple of decades of rampant consumerism, as we've gone through the economic equivalent of burning the furniture to stay warm. In that sense entropy seems analogous to the eroded capital backbone DB sometimes talks of.

[Hancock]

Centrica -

https://www.telegraph.co.uk/business/2021/07/04/centrica-ready-put-16bn-hydrogen-storage-site/

Utilities giant Centrica is preparing to press the button on a £1.6bn overhaul of its Rough gas storage site in the North Sea so it can store hydrogen instead of methane.

The FTSE 250 owner of British Gas says repurposing the site roughly 18 miles off the coast of Yorkshire could create 3-4,000 jobs during construction and help develop the market for hydrogen to help meet climate goals.

Greg McKenna, managing director of Centrica Business Solutions, said the company is waiting for clarity on the Government’s strategy around hydrogen and what subsidy guarantees will be given to help the hydrogen industry scale up, before knowing whether to progress.

He said: “If we could get a decision this year, I think we could be up and running by 2025/26.

“You’re talking about a £1.6bn investment which will create thousands of jobs and help roles in the oil and gas industry move into the green economy.”

Hydrogen does not produce carbon emissions when burned so it is expected to be used more widely as the UK overhauls its energy system to try and meet its legally binding target of cutting carbon emissions to net zero by 2050.

However, the extent of its role is unclear as hydrogen is expensive and difficult to produce as well as being inefficient. There is particular debate over how widely it should be used to heat people’s homes instead of electric heat pumps. It is likely to have a larger role in industry and heavy duty vehicles.

 

Centrica decided to close Rough, the UK’s largest gas storage site, in 2017 due to problems with its ageing infrastructure, although it has continued to produce what is left in the field.

Chief executive Chris O’Shea is trying to reshape the company following a 70pc slide in Centrica’s share price under his predecessor Iain Conn.

[XswampyX]

10 minutes ago, Hancock said:

However, the extent of its role is unclear as hydrogen is expensive and difficult to produce as well as being inefficient. There is particular debate over how widely it should be used to heat people’s homes instead of electric heat pumps. It is likely to have a larger role in industry and heavy duty vehicles.

 

[Barnsey]

China PMIs rolling over

 

[nirvana]

13 hours ago, Hancock said:

if people are spending money on rent all their working life ... then they have sweet FA to put into the actual economy

get a grip man! property and land IS the economy, it's called 'rentier capitalism' 

gaining significant amounts of profit without contribution to society......alas Thatcher said there is no such thing as society 

[DurhamBorn]

1 hour ago, nirvana said:

get a grip man! property and land IS the economy, it's called 'rentier capitalism' 

gaining significant amounts of profit without contribution to society......alas Thatcher said there is no such thing as society 

Property and state spending.Its the state spending that has mostly caused the housing problem.Take a lot of BTL.Council workers,civil servants because they know they have a certain pension etc,so they feed capital into BTL.Then they are mostly paid from the tenants getting benefits.Thats doing young working private sector workers over at every point.Then of course tax credits and now UC.Import millions of people and funnel benefits through them to the BTL owners.

Dis-inflation allowed all of this to happen though because CBs can print more and more to fund the structural deficits of the government.The key is when that inflection point is reached where QE has to stop and that is inflation.Of course thats why they fiddle the rate so much and are way understating inflation.

 

[nirvana]

20 minutes ago, DurhamBorn said:

Dis-inflation allowed all of this to happen

I don't see this disinflation argument! OK the definition might be a 'slow down' in the rate of inflation BUT by any measure inflation has been going bonkers for 50 years at least! All caused by TOO MUCH PRINTING! AND the fukkers are always under reporting it so what's gonna make em change that? 

How much have the CBs created recently? The FED and the ECB must have added 20 trillion 'pirate coins' between them alone!!

It's funny when folks mention the gypos, tramps, gimmigrants demographic but how much is the welfare budget compared to that 20 trillion that the one percenter demographic keep begging for more? Clown world in extremus....

[HousePriceMania]

2 hours ago, nirvana said:

get a grip man! property and land IS the economy, it's called 'rentier capitalism' 

gaining significant amounts of profit without contribution to society......alas Thatcher said there is no such thing as society 

https://www.theguardian.com/business/2021/jul/04/john-lewis-plans-to-build-10000-rental-homes-on-its-land-waitrose

 

John Lewis plans to build 10,000 rental homes on its land

....

[DurhamBorn]

6 minutes ago, nirvana said:

I don't see this disinflation argument! OK the definition might be a 'slow down' in the rate of inflation BUT by any measure inflation has been going bonkers for 50 years at least! All caused by TOO MUCH PRINTING! AND the fukkers are always under reporting it so what's gonna make em change that? 

How much have the CBs created recently? The FED and the ECB must have added 20 trillion 'pirate coins' between them alone!!

It's funny when folks mention the gypos, tramps, gimmigrants demographic but how much is the welfare budget compared to that 20 trillion that the one percenter demographic keep begging for more? Clown world in extremus....

Dis-inflation is slowing of inflation,not deflation and since 82 thats what we have had.Without the printing prices would of fallen hard,so yes printing caused prices to be far higher than they would of been,but price increases still slowed and slowed over the cycle.Like you said the printing ended up in land and property like it nearly always does in the end.

In the UK the printing is pretty much the working age welfare budget over the decade.There is nothing wrong with expanding the money supply at 1%/1.5% a year,the problem is that they are printing to fund structural deficits.Thats the point where the gainers are mostly people getting from the government,the losers most of those who arent.

I expect in the UK we are very close to the end of QE,maybe some more smaller tranches then nothing.Government then has a £100billion+ structural deficit and a distribution cycle on its hands.

Of course one answer is to tax hard the 1% and the companies fleecing tax.Will they?.