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

[JMD]

4 hours ago, sancho panza said:

My Mum was satying buy M&S a while back.her reasoning was that the low end will blossom and eventually Waitrose will give up the ghost,Sainsburys/Morrisons/Asda will start to compete with the lwoer end and M&S will hoover her pals up.

There's a logic to it.

Yes, interesting thesis from your Mum that does make sense to me. Food is a very crowded market currently, especially nowadays with the Lidle/Aldi newcomers.

Am i right in saying M&S are mainly on the high-street? Perhaps they should head 'out-of-town' (not in the Jack Hargreaves TV show sense!) and become the go-to high-end food/clothes/home/luxury goods brand... and then go head to head (medieval..!!) with the John Lewis/Waitrose partnership, and the other high street laggards... oops, i'm getting a far too carried away with this CEO strategising!!  

[MrXxxx]

18 hours ago, reformed nice guy said:

https://www.bbc.co.uk/news/business-58303679

"Prisoners to plug worker shortage in meat industry"

Seeing things like this is a good sign to me. If the government is wanting to empty jails to get people chopping meat, irrespective of how their knife wielding skills are, then it should bode well for wage inflation

It said Covid, Brexit and perceptions over career paths had caused a looming "recruitment crisis"

Oh, so nothing to do with paying a pittance and so you can get the labour then?!...you can encourage almost anyone to do any job (police force included) if you make the incentive worthwhile.

[Hancock]

24 minutes ago, MrXxxx said:

It said Covid, Brexit and perceptions over career paths had caused a looming "recruitment crisis"

Oh, so nothing to do with paying a pittance and so you can get the labour then?!...you can encourage almost anyone to do any job (police force included) if you make the incentive worthwhile.

Govt are still paying best part of 2 million to sit at home on most their wages.

https://www.gov.uk/government/news/numbers-on-furlough-fall-to-lowest-level-since-start-of-pandemic

[DurhamBorn]

4 hours ago, MrXxxx said:

It said Covid, Brexit and perceptions over career paths had caused a looming "recruitment crisis"

Oh, so nothing to do with paying a pittance and so you can get the labour then?!...you can encourage almost anyone to do any job (police force included) if you make the incentive worthwhile.

Im amazed at how much our prediction on this is coming true.My partner works for the council.Half of her bosses in her service have now put in to retire.Nice 18 months sat in the garden doing nothing,now dont fancy coming back.My partner is out in the community.They are hugely short staffed but cant get anyone.Advert running for months.Only once candidate was suitable,they need 12.They didnt turn up the first day.Younger staff leaving,pension isnt as attractive when the age is going to 68.

Myself,3 job offers today.3,in a day.All desperate for people,all nowhere near on pay.To top it off i even got a message from a company i worked for last year,i just ignored them.They had 30 new staff when i went there,two left now of those,in a year.

Down the road and up the road we have two new massive Amazon centres 2000 jobs between them,more over crimbo.They are now offering £1000 sign on bonus for pickers.Thats right,pickers.

https://www.dailymail.co.uk/money/news/article-9922683/Amazon-offers-1-000-joining-bonus-new-warehouse-workers.html

The crap factories around here who used to treat temporary workers like shit now cant get any.Amazon pay better etc.The poles have gone home,and the new immigrants will never work a day in their lives.

Companies are waking up to what happens when a dis-inflation cycle ends.The facts are instead of a race to cut costs and screw workers,its going to be a case of put wages up and swallow the margin loss or increase prices.

This will end up meaning some sectors can increase their prices because people need the service and its starting from a low level.

£1 an hour more is £27 after tax extra wages.£112 a month.10% increase in the phone bill is only £2.70 a month.

 

 

[Hancock]

1 hour ago, DurhamBorn said:

Companies are waking up to what happens when a dis-inflation cycle ends.The facts are instead of a race to cut costs and screw workers,its going to be a case of put wages up and swallow the margin loss or increase prices.

This will end up meaning some sectors can increase their prices because people need the service and its starting from a low level.

I dont think the management are capable, or think low level manual workers deserve a wage they could just about survive on, but not enough to buy a house.

Whats gone on in the last 25 years has taken us back to the Victorian levels of inequality.

But there are plenty of office/admin staff who aren't needed, along with shareholders getting less profit, and management having to take a cut in pay.

[MrXxxx]

8 hours ago, DurhamBorn said:

Im amazed at how much our prediction on this is coming true.My partner works for the council.Half of her bosses in her service have now put in to retire.Nice 18 months sat in the garden doing nothing,now dont fancy coming back.My partner is out in the community.They are hugely short staffed but cant get anyone.Advert running for months.Only once candidate was suitable,they need 12.They didnt turn up the first day.Younger staff leaving,pension isnt as attractive when the age is going to 68.

Myself,3 job offers today.3,in a day.All desperate for people,all nowhere near on pay.To top it off i even got a message from a company i worked for last year,i just ignored them.They had 30 new staff when i went there,two left now of those,in a year.

Down the road and up the road we have two new massive Amazon centres 2000 jobs between them,more over crimbo.They are now offering £1000 sign on bonus for pickers.Thats right,pickers.

https://www.dailymail.co.uk/money/news/article-9922683/Amazon-offers-1-000-joining-bonus-new-warehouse-workers.html

The crap factories around here who used to treat temporary workers like shit now cant get any.Amazon pay better etc.The poles have gone home,and the new immigrants will never work a day in their lives.

Companies are waking up to what happens when a dis-inflation cycle ends.The facts are instead of a race to cut costs and screw workers,its going to be a case of put wages up and swallow the margin loss or increase prices.

This will end up meaning some sectors can increase their prices because people need the service and its starting from a low level.

£1 an hour more is £27 after tax extra wages.£112 a month.10% increase in the phone bill is only £2.70 a month.

 

 

Yep, the more automated/technically driven the business the better...robots don't expect wage rises or go on `sickies`. The difference is, the employers of such have to pay their engineers properly other the business falters...perhaps we are finally realizing that being an engineer is not a `dirty word`, and deserves more respect/salary than some chav estate agent?!

[King Penda]

15 hours ago, DurhamBorn said:

 

The only number i really care about is that to avoid bankruptcy,or what would be considered bankruptcy in a Fiat money system the government now needs the base of everything to inflate up 30%.Thats the level where tax will increase faster than spending without any changes.In the UK i see a 2.1x affect on inflation,so a 63% cycle inflation rate.

Spending will plummet and saint Marcus of rashford will be crying think of the kiddies.

[King Penda]

8 hours ago, DurhamBorn said:

Im amazed at how much our prediction on this is coming true.My partner works for the council.Half of her bosses in her service have now put in to retire.Nice 18 months sat in the garden doing nothing,now dont fancy coming back.My partner is out in the community.They are hugely short staffed but cant get anyone.Advert running for months.Only once candidate was suitable,they need 12.They didnt turn up the first day.Younger staff leaving,pension isnt as attractive when the age is going to 68.

Myself,3 job offers today.3,in a day.All desperate for people,all nowhere near on pay.To top it off i even got a message from a company i worked for last year,i just ignored them.They had 30 new staff when i went there,two left now of those,in a year.

Down the road and up the road we have two new massive Amazon centres 2000 jobs between them,more over crimbo.They are now offering £1000 sign on bonus for pickers.Thats right,pickers.

https://www.dailymail.co.uk/money/news/article-9922683/Amazon-offers-1-000-joining-bonus-new-warehouse-workers.html

The crap factories around here who used to treat temporary workers like shit now cant get any.Amazon pay better etc.The poles have gone home,and the new immigrants will never work a day in their lives.

Companies are waking up to what happens when a dis-inflation cycle ends.The facts are instead of a race to cut costs and screw workers,its going to be a case of put wages up and swallow the margin loss or increase prices.

This will end up meaning some sectors can increase their prices because people need the service and its starting from a low level.

£1 an hour more is £27 after tax extra wages.£112 a month.10% increase in the phone bill is only £2.70 a month.

 

 

Amazon won’t fuck about if that does not get staff they will put it up again and get recruitment guys in job centres.they have a rule that you can’t do more than 60 hours a week for more than 4 weeks in a row.I surpose they could bin that the pay is 50% more after 40 hours and double pay after 50.nights also pay more

[DurhamBorn]

2 hours ago, MrXxxx said:

Yep, the more automated/technically driven the business the better...robots don't expect wage rises or go on `sickies`. The difference is, the employers of such have to pay their engineers properly other the business falters...perhaps we are finally realizing that being an engineer is not a `dirty word`, and deserves more respect/salary than some chav estate agent?!

Its one of the reasons the companies with high fixed assets depreciating at a fixed level and debt fixed are such good investments in these cycles.They have already paid for most of what they need to operate or bond holders have at 3% coupons or less.Companies with high staff levels etc have an ongoing cost that is increasing fast.

Shelves are going empty now and its not just Brexit etc.People are deciding to do less or choose when to work.Employers who think they can carry on as before are in huge trouble.

[Barnsey]

 

[Hancock]

22 minutes ago, Barnsey said:

 

Isn't it more a case whats happening in America and what the FED does that matters, and this time we have to copy.

[Barnsey]

6 minutes ago, Hancock said:

Isn't it more a case whats happening in America and what the FED does that matters, and this time we have to copy.

Certainly a big part, but we've been doing better on the virus front of late which removes that "excuse" to keep things easy to an extent.

[Hancock]

Just now, Barnsey said:

Certainly a big part, but we've been doing better on the virus front of late which removes that "excuse" to keep things easy to an extent.

I believe Friday is the day when Powell speaks up about the FED's intentions.

[Starsend]

12 hours ago, DurhamBorn said:

Im amazed at how much our prediction on this is coming true.My partner works for the council.Half of her bosses in her service have now put in to retire.Nice 18 months sat in the garden doing nothing,now dont fancy coming back.My partner is out in the community.They are hugely short staffed but cant get anyone.Advert running for months.Only once candidate was suitable,they need 12.They didnt turn up the first day.Younger staff leaving,pension isnt as attractive when the age is going to 68.

Myself,3 job offers today.3,in a day.All desperate for people,all nowhere near on pay.To top it off i even got a message from a company i worked for last year,i just ignored them.They had 30 new staff when i went there,two left now of those,in a year.

Down the road and up the road we have two new massive Amazon centres 2000 jobs between them,more over crimbo.They are now offering £1000 sign on bonus for pickers.Thats right,pickers.

https://www.dailymail.co.uk/money/news/article-9922683/Amazon-offers-1-000-joining-bonus-new-warehouse-workers.html

The crap factories around here who used to treat temporary workers like shit now cant get any.Amazon pay better etc.The poles have gone home,and the new immigrants will never work a day in their lives.

Companies are waking up to what happens when a dis-inflation cycle ends.The facts are instead of a race to cut costs and screw workers,its going to be a case of put wages up and swallow the margin loss or increase prices.

This will end up meaning some sectors can increase their prices because people need the service and its starting from a low level.

£1 an hour more is £27 after tax extra wages.£112 a month.10% increase in the phone bill is only £2.70 a month.

 

 

What I don't get though is where have all these people gone? I mean presumably they were there and working pre-covid.

Is a combination of things? Brexit and their supply of slave labour being interrupted, older people getting a taste of freedom and deciding to downgrade/retire early? Seems to me that this isn't enough to explain the big labour shortages we're reading about - unless actual millions of EU slaves have gone home.

If it's caused by EU slaves going home then this whole thing is temporary. The Government will be getting angry calls from their mates at the head of big companies demanding they find them some more slaves. The Government will start scouring the world again. I predict that wages will be being screwed down again within a year or two.

 

[Noallegiance]

 

[DurhamBorn]

59 minutes ago, Starsend said:

What I don't get though is where have all these people gone? I mean presumably they were there and working pre-covid.

Is a combination of things? Brexit and their supply of slave labour being interrupted, older people getting a taste of freedom and deciding to downgrade/retire early? Seems to me that this isn't enough to explain the big labour shortages we're reading about - unless actual millions of EU slaves have gone home.

If it's caused by EU slaves going home then this whole thing is temporary. The Government will be getting angry calls from their mates at the head of big companies demanding they find them some more slaves. The Government will start scouring the world again. I predict that wages will be being screwed down again within a year or two.

 

I think its a mixture.The main one is benefits.Universal credit claims nearly doubled during lockdown.People now know why the towns are full of people every day because they dont work.Lots of these people will of decided they dont need to work,or a nice part time job will do.Or one in the couple work instead of two etc etc.

Then Brexit,there are less Poles etc who worked in the factories.

Then selling high value southern houses and retiring further north.Lots doing that.

Then lots of people who had some time off thinking sod it iv got enough im retiring.

In my own town it seems the older workers who were mostly hard working shift work etc are retiring.The young are mostly on benefits with boyfriends who work away sometimes etc but not arsed as they have the welfare backup.

Wages are going to have to go up,and i mean a lot,maybe 30%,and welfare is going to have to come down relative by a lot.There doesnt seem any understanding in government though,so it might need the BOE to stop printing.

 

 

 

[Barnsey]

1 hour ago, DurhamBorn said:

I think its a mixture.The main one is benefits.Universal credit claims nearly doubled during lockdown.People now know why the towns are full of people every day because they dont work.Lots of these people will of decided they dont need to work,or a nice part time job will do.Or one in the couple work instead of two etc etc.

Then Brexit,there are less Poles etc who worked in the factories.

Then selling high value southern houses and retiring further north.Lots doing that.

Then lots of people who had some time off thinking sod it iv got enough im retiring.

In my own town it seems the older workers who were mostly hard working shift work etc are retiring.The young are mostly on benefits with boyfriends who work away sometimes etc but not arsed as they have the welfare backup.

Wages are going to have to go up,and i mean a lot,maybe 30%,and welfare is going to have to come down relative by a lot.There doesnt seem any understanding in government though,so it might need the BOE to stop printing.

 

 

 

We recently used a very big name rubbish removal firm to take the old kitchen away, lorry driver told me he's going through a new recruit pretty much every week. Workload to pay ratio not worth it Vs benefits of staying at home, on benefits. Disinflation has permitted quite a comfortable lifestyle for many Vs the alternative.

[Barnsey]

2 hours ago, DurhamBorn said:

Then lots of people who had some time off thinking sod it iv got enough im retiring.

In my own town it seems the older workers who were mostly hard working shift work etc are retiring.The young are mostly on benefits with boyfriends who work away sometimes etc but not arsed as they have the welfare backup.

U.S. perspective:

 

[sancho panza]

2 hours ago, DurhamBorn said:

Wages are going to have to go up,and i mean a lot,maybe 30%,and welfare is going to have to come down relative by a lot.There doesnt seem any understanding in government though,so it might need the BOE to stop printing.

 

 

 

It's getting interesting ref your higher wages call and also David Hunter's long term tlak of a move to socialism

On 12% of the vote ,a hard left candidate took over the Unite union-threats of withdrawing support from Parliamentary labour.

Uk political realignment becomes more likely.

key thing here is that noone votes in these elections.The only choice is normally between hard left or harder left.The actual membership is much more moderate.

Either way,it reinforces the rising wages/fiscal spending theme.

https://news.sky.com/story/unite-leftwinger-sharon-graham-on-course-to-become-unions-first-female-leader-pulling-off-surprise-victory-12389942

Unite has 1.2 million members and is the Labour Party's biggest donor. Ms Graham has previously said there will be "no blank cheque" for Keir Starmer if she becomes general secretary, but "if Labour do what they're supposed to do to defend workers they will have no problem with me".

[sancho panza]

26 minutes ago, Barnsey said:

We recently used a very big name rubbish removal firm to take the old kitchen away, lorry driver told me he's going through a new recruit pretty much every week. Workload to pay ratio not worth it Vs benefits of staying at home, on benefits. Disinflation has permitted quite a comfortable lifestyle for many Vs the alternative.

For a lot of people,the whole point of working is to buy a hosue,and have some choices.

Current house prices in msot of teh UK pretty much disincetivize working especially when UC/WTC mean you can do 16 horus a week and rent the same place as if you worked 50 hours.....................

 

[sancho panza]

End of an era :the never ending upside in office space ends in voids and non payers

Banks that are leveraged at 30:1 plus start looking at their belly buttons.

https://wolfstreet.com/2021/08/24/end-of-the-era-of-voracious-corporate-appetite-for-office-space/

End of the Era of Voracious Corporate Appetite for Office Space

by Wolf Richter • Aug 24, 2021 • 52 Comments

Formerly temporary, now persistent work-from-home turns into slow-motion nightmare for office landlords.

By Wolf Richter for WOLF STREET.

 

The longer this goes on, the less likely is any return to the old pre-pandemic normal, even as some bosses dread the possibility that the old way of managing people and valuing work may become obsolete.

But all that can be worked out. What can’t be worked out is corporate demand for office space, which has been sagging and pressuring the office sector of commercial real estate.

These companies aren’t going to default on their office leases and mail the keys to the landlord. That’s not the issue. They will continue to make their rent payments.

The issue is that these companies have put vast and historic amounts of office space that they lease but don’t need on the sublease market, trying to find tenants for it, and this sublease space comes on top of the space the landlords are trying to find tenants for. But when lease renewal comes, many of these companies won’t renew, and then it’s the landlord’s job to find new tenants.

Office occupancy, as measured by workers actually showing up at the office has fallen for the fourth week in a row, from already dreadfully low levels. Kastle Systems, which provides electronic access systems for office buildings, said today that across the 10 cities it tracks, office occupancy in the week through August 18 had dropped to 31.3% of the level before the pandemic (early March 2020), meaning that occupancy was down by 68.7%:

Office occupancy fell in all 10 metros, but fell by the most in the metros that had made the most progress with their return to the office earlier this year: Austin, Dallas, and Houston. Those three metros had already bumped into the 50% line, but now amid the resurgence of the virus in those cities, had dropped to the 45% range, which is still far higher than in the remaining seven cities.

Office occupancy in the metros of San Francisco and San Jose, which is most of the Bay Area and Silicon Valley, and in New York City dropped to the 19% to 22% range, meaning office occupancy is down roughly 80%. These metros are among the most expensive office markets in the US, and they have turned into epicenters for working from home:

Survey after survey has shown that working from home has become very popular among workers, and that it has become more popular the longer it dragged on, and that many people are willing to take a pay cut if that’s what it takes to keep working from home.

People have organized their lives around it, have bought houses to accommodate two offices, have eliminated the endless and stressful hours of commuting, and the expense of it, and they no longer get slowed down by office chatter and sundry annoyances, distractions, and worthless meetings, and they can get their job done faster, and sometimes better. And some of them have even used the extra time they’re saving to pursue a side gig.

And the benefits of working in an office, the camaraderie, if any, the possibilities (fraught with risks) of finding a date or a mate at the corporate coffee bar, the free gourmet lunches at some companies – all this is receding into the background.

The longer this goes on, the less likely people are willing to go back to the office five days a week, and the idea of going to the office two or three days a week may already be a stretch.

This is a red-hot job market, with “labor shortages” written all over it, and with recruiters aggressively plying their trade trying to lure employees away from one company and send them to another.

Employers are going to have to bend over backwards to attract and retain their biggest assets – productive employees – and they’re having to make room for what employees have gotten used to and have structured their lives around: Flexibility about working from home.  This isn’t going to get suddenly undone next February.

Some bosses are having a hard time with it, and have little enthusiasm for remote work, and they want their people back at their desks where they can be seen and monitored and “managed.” But in a hot labor market, they don’t have the final say in this. The employee does.

For landlords in the office sector of commercial real estate, this may be the end of the era of voracious appetite by businesses for office space.

Office markets, it now turns out, have been hugely overbuilt. Companies have for years leased office space, or even purchased and built office space, that they thought they might grow into some years down the road, but they never actually grew into it, and they were just warehousing empty office space for future use that now isn’t coming, or may be coming to a much smaller extent.

Sure, some companies will sign new leases to expand their office footprint, and new companies are popping up that rent office space, which is now getting a lot cheaper in places like San Francisco. And there will be many renewals, and some of those renewals, as we have already seen, will be for less space.

But the net effect is that there are vast amounts of unused office space out there. The latest and greatest office buildings will have little trouble filling their space if the rent is low enough, amid a flight to quality, though those lower rents might not have been planned for.

Over time, as long-term commercial leases expire, and as companies are upgrading their digs, the vacancies shift to older buildings.

That is already happening in Houston, the worst office market in the US, where the oil bust that started in late 2014 popped the magnificent office bubble. New fancy buildings have come on the market since then, and landlords are luring tenants away from older buildings, as vacancies have skyrocketed to 31% of total office space.

San Francisco is catching up with Houston, after having been one of the hottest office markets in the US through 2018. It takes years for this to wash out, timed with the expirations of long-term commercial leases, giving cities some time to think about alternatives for the vast amounts of aging and now unneeded office space.

 

[janch]

3 hours ago, Starsend said:

The Government will be getting angry calls from their mates at the head of big companies demanding they find them some more slaves. The Government will start scouring the world again. I predict that wages will be being screwed down again within a year or two.

There will be some more willing "slaves" arriving from Afghanistan and HK shortly.  Some, especially HKers will probably be hardworking and may take a while to cotton on to the featherbedding benefit culture.

[JMD]

13 hours ago, DurhamBorn said:

Im amazed at how much our prediction on this is coming true.My partner works for the council.Half of her bosses in her service have now put in to retire.Nice 18 months sat in the garden doing nothing,now dont fancy coming back.My partner is out in the community.They are hugely short staffed but cant get anyone.Advert running for months.Only once candidate was suitable,they need 12.They didnt turn up the first day.Younger staff leaving,pension isnt as attractive when the age is going to 68.

Myself,3 job offers today.3,in a day.All desperate for people,all nowhere near on pay.To top it off i even got a message from a company i worked for last year,i just ignored them.They had 30 new staff when i went there,two left now of those,in a year.

Down the road and up the road we have two new massive Amazon centres 2000 jobs between them,more over crimbo.They are now offering £1000 sign on bonus for pickers.Thats right,pickers.

https://www.dailymail.co.uk/money/news/article-9922683/Amazon-offers-1-000-joining-bonus-new-warehouse-workers.html

The crap factories around here who used to treat temporary workers like shit now cant get any.Amazon pay better etc.The poles have gone home,and the new immigrants will never work a day in their lives.

I always enjoy the thread discussions about jobs (present and future). Employment is after all a fundamental driver both for the economic macro and the social fabric of a nation. But what i've found particularly interesting is my recent realisation that it's not all about the 'supply' - there is also a big 'demand' function in play here.

Ok,@DurhamBornhad raised the topic right from start of the thread, that benefits culture had destroyed the work incentive for many low paid workers. However, I had expected an eventual shift away from the benefits disaster as people were eventually encouraged back into work by government initiatives, etc.  

I still think part-time working will become the norm, UBI introduction, disruptive tech destroying jobs, lies ahead... But now realise that its more complex - i.e. i'd never considered that the actual demand for jobs would fall - and moreover, i think government will welcome this happening. The fall in demand is happening across all sectors - from drivers (due to low pay/conditions), to GP's (female gp's mainly want p/t role; males have big pension pots so retire at 50).

I believe governments will actually encourage this change in 'work habits' (might this be their 'low-key' policy sell?). I think it'll help them engineer wealth transfers (property, etc) from the older generation to say the millennials. Of course the government scheme(ing?) won't be transparent, no moving parts to scrutinise - nothing for detractors to attack/or for governments to defend!! Maybe just a vast nebulous property bond market, to help kick the can for next 50 years? ...Anyway fits with my held view that the property sector would be supported and not allowed to fail. Plus i really think there needs to be a government 'Grand Scheme' to help level-up/ease the pain/and offer hope to the masses - the bleak/moral(?) green crises agenda doesn't do any of those things... Just my ramblings, helps me sort my ideas, but welcome thoughts from others.     

 

 

         

[Hancock]

2 minutes ago, janch said:

There will be some more willing "slaves" arriving from Afghanistan and HK shortly.  Some, especially HKers will probably be hardworking and may take a while to cotton on to the featherbedding benefit culture.

My brother lives there and its generally the older generation who have the right to come here, but the younger ones come will do so on the basis of the insane cost of living out there. (HK property bubble eclipses ours)
https://news.sky.com/story/a-hong-kong-familys-journey-to-the-uk-to-escape-chinas-crackdown-on-democracy-12324623

Someone doing well over there isn't likely to upsticks and move to Liverpool like the ones in the above article (he is a bus driver), and those who are well qualified and wish to leave will opt for somewhere freer than this totalitarian shithole!

[JMD]

7 hours ago, King Penda said:

Amazon won’t fuck about if that does not get staff they will put it up again and get recruitment guys in job centres.they have a rule that you can’t do more than 60 hours a week for more than 4 weeks in a row.I surpose they could bin that the pay is 50% more after 40 hours and double pay after 50.nights also pay more

I like the sound of that - proper over-time rates returning to the work place... what next i wonder, 'pro-rata' becoming a dirty word?!