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

[Transistor Man]

From an industry where cost always drops: 10-20% price increases.

"Taiwan Semiconductor Manufacturing Co. (TSMC) has reportedly notified its customers about substantial incoming chip production price hikes.

The world's largest maker of semiconductors will increase prices for virtually all advanced and popular process technologies in a bid to improve its gross margins.

Meanwhile, augmented quotes will make costs of products like CPUs, GPUs, SoCs, and controllers higher.

TSMC plans to increase prices of wafer processing using its 7 nm and thinner fabrication processes by as much as 10%, whereas prices of wafers processed using 16 nm-class and thicker nodes will increase by 20% for orders set to be fulfilled starting December, reports DigiTimes citing sources among chip developers.

Just like other foundries, TSMC does not disclose its quotes publicly, but the company intends to increase the price of one wafer processed using its 28 nm to 'nearly $3000 staring from January,' the report says."

[sancho panza]

21 hours ago, Noallegiance said:

House of Lords - Quantitative easing: a dangerous addiction? - Economic Affairs Committee (parliament.uk)

I'll be interested to read that tonight.Figure 5 sets the tone for the BK postponed/can kicked from 08...thanks for posting

20 hours ago, Bobthebuilder said:

Just posted a reply to @BurntBread on another thread about the amount of gas boilers in the UK, thought it was interesting so will post here.

In the UK, 85% of homes currently have a gas boiler. The other 15% is made up of LPG, oil, wood, coal, biomass, air / ground source heat pumps, solar, electric and no central heating.

Seems to me, the government has a big job ahead to get everyone to green electric use in 3 years. Another total non-starter from all the environmentalists.

Always appreciate you bringing these points to our attention Bob.The stats are really run against the grain of what the politicians are promisng themselves and the MSM.

85% is a much bigger number than I'd have thought possible.

5 hours ago, belfastchild said:

Was talking to a care home area manager a couple of weeks ago over in England. Talking about corona and masks etc as you do and they said they had 5 staff who refused to have the jab. I said I thought that wasnt too bad but they said it was 1/10 of their full time staff and good workers. They said they were having difficulty getting agency staff to cover at the minute due to the sickies so were crapping themselves if they have to sack them (have already drawn up the papers).
Cant remember exactly the date but they said they had been asked to draw the lists up a couple of months ago.
Filling full time workers with part time single mothers on benefits just isnt a goer for them.

I think they'll run into employment law issues as well as insurmountable operational problems.In Lodnon,I think the situation is severe as a lot more staff are ethnic minorities which are more likely to decline vaccination..If you make someone redundant and they're job still exists then it's unfair dismissal=court case+ legal fees+ pay out.

Unless the law has changed on that.I suspect these carers will be in like Flynn.

I think those that are left without having the 'clot shot' won't be having it.Something like 150,000 NHS staff haven't had it out of 1,300,000(say what!!!) but I'd reason that the bulk of those are patient facing,not admin staff.So if the govt gives marching orders they could be losing 20% of frontline staff or more.They couldn't manage before.

I suspect we'll go down the route of sacking non vacced staff and then re employing agency staff where a blind eye will be turned to vaccination status.

[RickyBacker]

50 minutes ago, janch said:

You don't say it outright but are we to conclude that Apple sales are falling?

On this particular product which was only released about 12 months ago, yes.

[RickyBacker]

12 minutes ago, Transistor Man said:

From an industry where cost always drops: 10-20% price increases.

"Taiwan Semiconductor Manufacturing Co. (TSMC) has reportedly notified its customers about substantial incoming chip production price hikes.

The world's largest maker of semiconductors will increase prices for virtually all advanced and popular process technologies in a bid to improve its gross margins.

Meanwhile, augmented quotes will make costs of products like CPUs, GPUs, SoCs, and controllers higher.

TSMC plans to increase prices of wafer processing using its 7 nm and thinner fabrication processes by as much as 10%, whereas prices of wafers processed using 16 nm-class and thicker nodes will increase by 20% for orders set to be fulfilled starting December, reports DigiTimes citing sources among chip developers.

Just like other foundries, TSMC does not disclose its quotes publicly, but the company intends to increase the price of one wafer processed using its 28 nm to 'nearly $3000 staring from January,' the report says."

This is a big change. I'm not familiar with the chip industry, but as you say, the norm is for cost reduction. The industry that I'm familiar with is usually about 6% cost reduction per annum. 

[Hancock]

6 minutes ago, sancho panza said:

Always appreciate you bringing these points to our attention Bob.The stats are really run against the grain of what the politicians are promisng themselves and the MSM.

85% is a much bigger number than I'd have thought possible.

I think they'll run into employment law issues as well as insurmountable operational problems.In Lodnon,I think the situation is severe as a lot more staff are ethnic minorities which are more likely to decline vaccination..If you make someone redundant and they're job still exists then it's unfair dismissal=court case+ legal fees+ pay out.

Unless the law has changed on that.I suspect these carers will be in like Flynn.

I think those that are left without having the 'clot shot' won't be having it.Something like 150,000 NHS staff haven't had it out of 1,300,000(say what!!!) but I'd reason that the bulk of those are patient facing,not admin staff.So if the govt gives marching orders they could be losing 20% of frontline staff or more.They couldn't manage before.

I suspect we'll go down the route of sacking non vacced staff and then re employing agency staff where a blind eye will be turned to vaccination status.

Boris will presumably uturn on this, as the NHS and care homes will get sued like never before.

If you haven't been jabbed, this could be your route to a wealthy early retirement!

 

[wherebee]

ADE watch (as per previous threads)

• moderna and pfizer both down yesterday by around 1%
• both slipping down over the week
• moderna well down from mid august highs

 

I'm watching these two like hell. If they break lower, I think that's my BK sell signal.

[sancho panza]

7 hours ago, StrugglingMillennial said:

It always takes a day or two for the media to catch up with this thread.

Looks like the driver shortage is really starting to bite.

https://www.dailymail.co.uk/news/article-9927671/Whats-really-driving-food-shelves-HARRY-WALLOP-goes-scenes-investigate.html

Some of the stand out points if this article is representative of teh industry as a whole-very much backs up what I'm hearing from a good friend who drives lorries for a living.

Particularly ref the age of lorry drivers.My friend was saying he knows a couple who sued to alternate shifts so both could work and pick up kids etc,since Covid,she's stopped work and he's gone onto part time hours with no significant loss in disposable income.

'The impact this has on family life has driven many younger drivers out, with the result that 62 per cent of the workforce is over 45.'

'The hourly pay for drivers at GXO has just increased from £14.76 to £17.76. '

'On a normal day, Cliff Chegwidden, the transport operations manager, should have between 175 and 185 staff lorry drivers at his disposal, plus 60 to 80 drivers from outside agencies. They start at 4am delivering products to supermarkets.

'We're only operating 166 [staff] drivers today,' he says. But that's not the problem. 'The real issue is agency drivers. Those numbers have fallen dramatically to six at its worst last week. Today, it's 12. It's absolutely diabolical.''

'Up until earlier this year, he estimates that as many as 80 per cent of his drivers were non-British. 'We've been a heavily European site since the Poles came in 2007 or so,' he says. 'Then, in 2015, it became mostly Bulgarians, Romanians.''

[Loki]

14 minutes ago, sancho panza said:

'Up until earlier this year, he estimates that as many as 80 per cent of his drivers were non-British. 'We've been a heavily European site since the Poles came in 2007 or so,

The exact time the arse fell out of construction then.

 

 

My response below:

[sancho panza]

Wolf St-can't ever thank @Majorpain enough for bringing him to my attention.

For those who wonder where the Big kahuna deflationary wave will come from,here's one element(ignoring junk bond markets/office blocks/residential mrotgages etc)

I've jsut used one of the foure xamples he gives.The haircuts loomign are sizeable especially given how many banks are levereaged more than 30-1

Remember ten years ago when retial was still strong,some of these loans would have been graded reasonably well and I do wonder hwo and when these loans are readjsuted in terms of risk weighting on a banks balance sheet

https://wolfstreet.com/2021/08/25/mallmageddon-whats-a-live-mall-not-a-zombie-mall-worth-heres-how-far-the-value-of-four-live-malls-collapsed-this-summer/

Mallmageddon: How Far the Value of Four Live Malls, Not Zombie Malls, Collapsed this Summer

by Wolf Richter • Aug 25, 2021 • 92 Comments

Leaving Big Holes in CMBS as mega-landlords, such as Bookfield and Westfield’s owners, walk away.

By Wolf Richter for WOLF STREET.

Westfield Palm Desert Mall (Palm Desert, CA): -74%.

The 1-million sq. ft. Westfield Palm Desert Mall, along with other Westfield malls, is owned by European commercial property giant Unibail-Rodamco-Westfield which, bucking under $32 billion in debt, vowed in February to get rid of all its US malls. One way of getting rid of a mall is to walk away from it and let lenders take the loss.

A 575,000-square-foot portion of the mall, not including the anchor stores, serves as collateral for a $125 million loan that was securitized in 2014 into CMBS. To sell the CMBS to investors, the portion of the mall was appraised at $212 million.

Investors felt secure by this conservative structure. What could go wrong with lending $125 million on $212 million worth of collateral?

What went wrong was the brick-and-mortar meltdown that started in 2017 and which has now turned into mallmageddon.

In November 2019, Sears announced that it would close its store at the mall. The former Sears store, which wasn’t part of the collateral, remains empty. An empty box for an anchor store is deadly for a mall. The other anchor stores at the mall, a Macy’s and a JC Penney, are also not part of the collateral. JC Penney filed for bankruptcy in 2020.

In May 2020, the Unibail-Rodamco-Westfield defaulted on the loan payment. In June 2020, the $125 million loan was transferred to special servicing for payment default.

Unibail-Rodamco-Westfield has already shed several Westfield malls by giving them back to the lenders. In November 2020, ratings agency Fitch expected that either a deed-in-lieu or a foreclosure would be the likely outcome.

Now, the lenders have taken control. Management will be “transitioned” to a third party. Lenders are trying to sell the mall, and Unibail-Rodamco-Westfield will wash its hands off another American mall. The lenders will take the losses.

But how much are the lenders expected to lose? The special servicer had the collateral portion of the mall appraised twice: In March, at $65.9 million; and in August, according to Trepp, at $55.2 million.

This cut the “value” of the collateral from the $212 million “value” with which the CMBS was sold in 2014 to $55.2 million now amounts to a haircut of 74%.

If the mall can actually be sold for $55.2 million, and before fees and other charges, lenders, having lent $125 million against $212 million in collateral, would pocket a loss of 56%.

 

This summer, the collateral’s value was reduced from $101.7 million at securitization to $34.7 million, a haircut of 66%.

If the collateral is actually sold at $34.7 million, the lenders – having lent $59.5 million on $101.7 million in collateral – will book a loss before fees and costs of 42%.

[C-gull]

On 25/08/2021 at 15:32, Chewing Grass said:

Volunteers equals vaxxed and unpaid, a businesses wet dream if there are enough of them you can trust.

What I want explained to me is where are these volunteers coming from; if you can't pay people to do the work what makes you think there's a bunch of saps willing to do it for free?

Edit: I see that I was late to the party making this particular point

[Chewing Grass]

2 minutes ago, C-gull said:

What I want explained to me is where are these volunteers coming from; if you can't pay people to do the work what makes you think there's a bunch of saps willing to do it for free?

Sarcasm, although there are a few folks daft enough to do it for 'social credit' on certain digital platforms as long as they can get enough selfie's in.

[Talking Monkey]

5 minutes ago, C-gull said:

What I want explained to me is where are these volunteers coming from; if you can't pay people to do the work what makes you think there's a bunch of saps willing to do it for free?

There's no way they'll be able to get a sustained amount if volunteers. There may be a fair few who give it a go for a day but that's it only a tiny portion will come back a second day

[NogintheNog]

4 hours ago, sancho panza said:

I think they'll run into employment law issues as well as insurmountable operational problems.In Lodnon,I think the situation is severe as a lot more staff are ethnic minorities which are more likely to decline vaccination..If you make someone redundant and they're job still exists then it's unfair dismissal=court case+ legal fees+ pay out.

 

You'd have thought so wouldn't you, but.....

Wrote to my MP as I think it's the thin end of a wedge, and got this reply;

Quote

That is why the Government has taken steps to require care providers to deploy only staff who have been vaccinated within older adult care homes. This measure will protect the people most at risk in our society: around 90 per cent of those who died from COVID-19 were people over 70. The decision follows extensive consultation with care home staff, providers, residents and families. The measures have been approved by the House of Commons and are subject to a 16-week grace period. I can assure you that this was debated thoroughly and many Members, including myself, scrutinised the proposals closely.

 

 

Importantly, it is already lawful for a care home to dismiss unvaccinated front line staff, (provided that certain conditions have been complied with) under statute and at common law. Care homes have an overriding duty of care to its vulnerable residents. In the current context, it is entitled to make vaccination a condition of continuing employment. An employee who refuses is either failing to follow a reasonable management instruction or giving rise to some other substantial reason sufficient to justify dismissal - both of which are potentially fair reasons under s98(2) of Employment Rights Act.

 

 

 

It is then incumbent on employers to comply with the procedural requirements under s98(4) including a fair consultation & consideration of alternative roles (if any exist). Something like a remote administrative role might be an example.

 

 

 

Failing all that, any ensuing dismissal is already highly likely to be fair. The new Regulations formalise that but don’t materially alter the existing principle in employment law, despite what some constituents seem to think.

And there you have it!

By the way I have a parent in a Nursing home with Dementia. There was a 7% increase in fees last year and another 7% this year. My parent will run out of money much quicker than we thought....

Inflation, inflation....

[DurhamBorn]

Iv noticed today quite a few fund manager type companies,M&G,Schroders etc who seem to be building stakes in each other the last few months.It could be a case of they see value in the sector,or it could be they are expecting the sector to consolidate.Iv tried to see what M&G holds in its big Prufund and only 13% is property,and a lot of that will be industrial.It could be these big firms have looked at their models on inflation increasing and rates etc and see a lot of surplus.The risk though of course is they will all hedge with derivatives and that could be where the most damage in any BK is done.Iv picked up a few M&G though for now.

[DurhamBorn]

My partner is  nurse ,but works in care for the council.Their service is hugely top heavy.Manager after manager on top money doing very little.A lot are retiring.The responders are mostly 45+,a lot of them 57+,very few young apply,and then hardly any last.They have a constant advert up,but are getting no interest.The younger ones dont want weekend nightshifts,they get no extra allowance for it because it comes off their tax credits etc.

My partner is saving everything down to £12.5k into her SIPP and will be able to retire whenever she wants.I cant see the service lasting.If the government holds out on the Universal Credit £20 uplift being stopped then maybe they understand the structural problems.

[sancho panza]

1 hour ago, NogintheNog said:

You'd have thought so wouldn't you, but.....

Wrote to my MP as I think it's the thin end of a wedge, and got this reply;

And there you have it!

By the way I have a parent in a Nursing home with Dementia. There was a 7% increase in fees last year and another 7% this year. My parent will run out of money much quicker than we thought....

Inflation, inflation....

I'd take issue with a few bits of his reply.Must stress I'm not a lawyer but I can afford one.

Overall,writes likes a lawyer public school male type,presumably Tory

In answer to  his/her reply posted below.

1) He/she appears to be conveniently ommitting any reference to the Equalities Act,the provisions of which,would overwrite any contract term deemed to conflict with it.

There's clear evidence that this will indirectly discriminate against ethnic minorities who are more likely to not be vaccinated.

2) Sections of the Nuremberg code possibly might apply but you'd need a legal opinion on that as to how they might apply.

3) The reasons those care home residents died was because Matt Hancock and the Tory govt sent covid +ve patients back to care home homes where the staff were untrained and illequipped to deal with them, the returning patients infected lots of other vulnerable people who died.Vaccination of care home staff wouldn't have stopped that.

4) the evidence is relatively clear that vaccines don't reduce viral load and therefore transmission(although I would defer to more knowledgeable minds @dnb24 ?anyone else).For a contract term to be reasonable there has to be some evidence that it is.

5) He/she appears to be making the argument that it's enforceable under a contract term which I'd argue that it isn't.

6) As for section 98(2) Employment Rights Act 1996.He/she is likely referring to this clause which refers to the health of an employee.From my layman's reading of this he/she is claiming the dismissal will be on the grounds that the carer is unhealthy because they're unvaccinated.Yet if someone can't have the vaccine for religious reasons or because they have an allergic reaction,the govt is claiming they'll be kept on ....which blantantly infringes rights under the Equality Act 2010.

The reality is that they're hoping no carers will challenge it whereas they know there's a load of wealthy Doctors who will.

 

All in all this will end up costing the old folks the most.Less carers and paying more for them.Another expensive Bozza bodge job.

'

In subsection (2)(a)—

(a)“capability”, in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality, and'

https://www.legislation.gov.uk/ukpga/1996/18/section/98

98General.

(1)In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show—

(a)the reason (or, if more than one, the principal reason) for the dismissal, and

(b)that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2)A reason falls within this subsection if it—

(a)relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b)relates to the conduct of the employee,

[F1(ba)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(c)is that the employee was redundant, or

(d)is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

[F3(2A)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3)In subsection (2)(a)—

(a)“capability”, in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality, and

(b)“qualifications”, in relation to an employee, means any degree, diploma or other academic, technical or professional qualification relevant to the position which he held.

 

MP's reply

'That is why the Government has taken steps to require care providers to deploy only staff who have been vaccinated within older adult care homes. This measure will protect the people most at risk in our society: around 90 per cent of those who died from COVID-19 were people over 70. The decision follows extensive consultation with care home staff, providers, residents and families. The measures have been approved by the House of Commons and are subject to a 16-week grace period. I can assure you that this was debated thoroughly and many Members, including myself, scrutinised the proposals closely.

Importantly, it is already lawful for a care home to dismiss unvaccinated front line staff, (provided that certain conditions have been complied with) under statute and at common law. Care homes have an overriding duty of care to its vulnerable residents. In the current context, it is entitled to make vaccination a condition of continuing employment. An employee who refuses is either failing to follow a reasonable management instruction or giving rise to some other substantial reason sufficient to justify dismissal - both of which are potentially fair reasons under s98(2) of Employment Rights Act.

It is then incumbent on employers to comply with the procedural requirements under s98(4) including a fair consultation & consideration of alternative roles (if any exist). Something like a remote administrative role might be an example.

Failing all that, any ensuing dismissal is already highly likely to be fair. The new Regulations formalise that but don’t materially alter the existing principle in employment law, despite what some constituents seem to think.'

 

 

[dnb24]

28 minutes ago, sancho panza said:

I'd take issue with a few bits of his reply.Must stress I'm not a lawyer but I can afford one.

Overall,writes likes a lawyer public school male type,presumably Tory

In answer to  his/her reply posted below.

1) He/she appears to be conveniently ommitting any reference to the Equalities Act,the provisions of which,would overwrite any contract term deemed to conflict with it.

There's clear evidence that this will indirectly discriminate against ethnic minorities who are more likely to not be vaccinated.

2) Sections of the Nuremberg code possibly might apply but you'd need a legal opinion on that as to how they might apply.

3) The reasons those care home residents died was because Matt Hancock and the Tory govt sent covid +ve patients back to care home homes where the staff were untrained and illequipped to deal with them, the returning patients infected lots of other vulnerable people who died.Vaccination of care home staff wouldn't have stopped that.

4) the evidence is relatively clear that vaccines don't reduce viral load and therefore transmission(although I would defer to more knowledgeable minds @dnb24 ?anyone else).For a contract term to be reasonable there has to be some evidence that it is.

5) He/she appears to be making the argument that it's enforceable under a contract term which I'd argue that it isn't.

6) As for section 98(2) Employment Rights Act 1996.He/she is likely referring to this clause which refers to the health of an employee.From my layman's reading of this he/she is claiming the dismissal will be on the grounds that the carer is unhealthy because they're unvaccinated.Yet if someone can't have the vaccine for religious reasons or because they have an allergic reaction,the govt is claiming they'll be kept on ....which blantantly infringes rights under the Equality Act 2010.

The reality is that they're hoping no carers will challenge it whereas they know there's a load of wealthy Doctors who will.

 

All in all this will end up costing the old folks the most.Less carers and paying more for them.Another expensive Bozza bodge job.

'

In subsection (2)(a)—

(a)“capability”, in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality, and'

https://www.legislation.gov.uk/ukpga/1996/18/section/98

98General.

(1)In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show—

(a)the reason (or, if more than one, the principal reason) for the dismissal, and

(b)that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2)A reason falls within this subsection if it—

(a)relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b)relates to the conduct of the employee,

[F1(ba)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(c)is that the employee was redundant, or

(d)is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment.

[F3(2A)F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3)In subsection (2)(a)—

(a)“capability”, in relation to an employee, means his capability assessed by reference to skill, aptitude, health or any other physical or mental quality, and

(b)“qualifications”, in relation to an employee, means any degree, diploma or other academic, technical or professional qualification relevant to the position which he held.

 

MP's reply

'That is why the Government has taken steps to require care providers to deploy only staff who have been vaccinated within older adult care homes. This measure will protect the people most at risk in our society: around 90 per cent of those who died from COVID-19 were people over 70. The decision follows extensive consultation with care home staff, providers, residents and families. The measures have been approved by the House of Commons and are subject to a 16-week grace period. I can assure you that this was debated thoroughly and many Members, including myself, scrutinised the proposals closely.

Importantly, it is already lawful for a care home to dismiss unvaccinated front line staff, (provided that certain conditions have been complied with) under statute and at common law. Care homes have an overriding duty of care to its vulnerable residents. In the current context, it is entitled to make vaccination a condition of continuing employment. An employee who refuses is either failing to follow a reasonable management instruction or giving rise to some other substantial reason sufficient to justify dismissal - both of which are potentially fair reasons under s98(2) of Employment Rights Act.

It is then incumbent on employers to comply with the procedural requirements under s98(4) including a fair consultation & consideration of alternative roles (if any exist). Something like a remote administrative role might be an example.

Failing all that, any ensuing dismissal is already highly likely to be fair. The new Regulations formalise that but don’t materially alter the existing principle in employment law, despite what some constituents seem to think.'

 

 

https://lawyersforliberty.uk/mandatory-vaccination/#law

English law

It is an established principle in English Law that an individual with the capacity to consent cannot and should not be compelled to have any medical treatment against their wishes.

The Public Health (Control of Disease) Act 1984 (section 45E) provides that Regulations made under certain sections of that Act “may NOT include provision requiring a person to undergo medical treatment… ‘Medical treatment’ includes vaccinations and other prophylactic treatment”.

We would argue that this principle, enshrined in our domestic law, would make it inequitable and potentially unlawful for anyone – employer, service provider or other organisation – to seek to mandate the vaccine.

At present, no one can be coerced into vaccination, and employers cannot require it as a condition of employment. 

However on 14 April 2021 the government launched an open (public) consultation on proposals to require staff in care homes for older adults in England to have a Covid-19 vaccine as part of their conditions of employment.

The government is considering amending the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014. This would mean older adult care home providers could only use those staff who have received the COVID-19 vaccination (or those with a legitimate medical exemption).

If the government goes ahead with this, it may pave the way for other employers to demand vaccination as a condition of employment.

 

[dnb24]

I would add that any half decent lawyer or even layperson  would be able to destroy any argument in court for mandating vaccination utilising the plentiful research about viral loads, inability of vaccines to prevent transmission, inability of vaccines to prevent symptoms and inability of vaccines to protect others etc. However this last 18 months has shown that those arguments don’t matter if the political will doesn’t want it to matter.

[eek]

5 minutes ago, dnb24 said:

I would add that any half decent lawyer or even layperson  would be able to destroy any argument in court for mandating vaccination utilising the plentiful research about viral loads, inability of vaccines to prevent transmission, inability of vaccines to prevent symptoms and inability of vaccines to protect others etc. However this last 18 months has shown that those arguments don’t matter if the political will doesn’t want it to matter.

That's fine but pandemics Trump virtually anything else so it really wouldn't surprise me if no vaccination meant no work available.

And no work available at most care homes doesn't mean the sack as most workers aren't on that sort of contract nor been there the 2 years required.

 

 

[Loki]

13 minutes ago, dnb24 said:

an individual with the capacity to consent

Remember when they changed the criteria for admission to the looney bin in the COVID Act (Paraphrased)

[sancho panza]

2 hours ago, DurhamBorn said:

My partner is  nurse ,but works in care for the council.Their service is hugely top heavy.Manager after manager on top money doing very little.A lot are retiring.The responders are mostly 45+,a lot of them 57+,very few young apply,and then hardly any last.They have a constant advert up,but are getting no interest.The younger ones dont want weekend nightshifts,they get no extra allowance for it because it comes off their tax credits etc.

My partner is saving everything down to £12.5k into her SIPP and will be able to retire whenever she wants.I cant see the service lasting.If the government holds out on the Universal Credit £20 uplift being stopped then maybe they understand the structural problems.

I think there are real structural issues looming in the NHS care sector if you're partner's experience is anything to go by ref recruiting.

The reality is that the bulk of the more senior non Doctor staff are genereally in a decent place to retire.

In the NHS a lot will have defined benefit schemes,houses paid off that were bought in the mid 90's,also of a maturity where they just don't want the stress/aggro/night shfits/vaccine.

The structural problem is that these people carry out roles that need experience eg triaging A+E,mentoring.

They can't be replaced in a hurry.

[DurhamBorn]

22 minutes ago, sancho panza said:

I think there are real structural issues looming in the NHS care sector if you're partner's experience is anything to go by ref recruiting.

The reality is that the bulk of the more senior non Doctor staff are genereally in a decent place to retire.

In the NHS a lot will have defined benefit schemes,houses paid off that were bought in the mid 90's,also of a maturity where they just don't want the stress/aggro/night shfits/vaccine.

The structural problem is that these people carry out roles that need experience eg triaging A+E,mentoring.

They can't be replaced in a hurry.

Then government pays twice,pension of those retired and wages of new recruits if they can get them.Iv just been in Tescos to stock up on Mutti pizza sauce and lager while its on offer.I noticed 8 staff around the shelves etc.None were working 6 were on their phones,2 were talking.Ok its late etc,but the work ethic isnt there anymore.I dont blame them.They were all under 25.Probably cant get their own place,see loads of bennie claims with the houses and the boomers with the full trolleys.We are in a very very serious mess.I cant see any way out,but really big wage inflation and even that might not work.

[sancho panza]

34 minutes ago, DurhamBorn said:

We are in a very very serious mess.I cant see any way out,but really big wage inflation and even that might not work.

On that note,was jsut reading Dr Tim's latest.He's been dwelling down here.The darkness is strong with him...he really could do with a few pizza recipes spread amongst the misery....

Current inflation isn't transitory he reasons,neither is the current trend of declining disposable income.Lot of other wise things in there too.Anyone who can read this and not look to invest in oil is probably in the worng place.

 

Underlinings mine

https://surplusenergyeconomics.wordpress.com/2021/08/25/209-a-path-of-reason-part-two/

 

In the previous article, we sought out a logical and evidential alternative to the continuity assumption that the economy can shrug off resource and environmental limitations in order to grow in perpetuity.

We demonstrated that the economy is an energy system – not a financial one – and that the fossil fuel dynamic on which the vast and complex economy of modern times was built is fading away, with no fully sufficient alternative in sight. The equation which calibrates prosperity in terms of energy use, value and cost has become a constrained equation, the constraints being (a) the relentless rise in the ECoEs of fossil fuels, and (b) the limits of environmental tolerance.

This does not, of itself, vindicate collapse theories, but it does mean that the world is getting poorer. The downturn in prosperity per person was preceded by a long period of deceleration, first identified (though not explained) in the 1990s, when it was labelled “secular stagnation”. Much of our economic experience in the intervening quarter-century has been characterized by failed efforts to use financial policies to ‘fix’ an economic problem which is not financial in nature, and thus cannot be countered using credit or monetary adventurism.

The onset of involuntary “de-growth” has profound implications for the four components of the economy which we can categorize as the household, business, government and financial sectors. Of these, the most important – and the easiest to project into the future using the SEEDS model – is the household sector. Simply stated, the average person will get poorer, on a continuing rather than a temporary basis, and his or her discretionary prosperity will be eroded by relentless rises in the real cost of essentials. At the same time, he or she enters this era with uncomfortably elevated levels of debt and quasi-debt commitments.

Through its effects on households as consumers, producers, savers, borrowers and voters, this process will shape the future development of the financial system, business and government.

The faith mistakenly placed in the ‘perpetual growth’ assumption has been strong enough to ensure that there has, thus far, been little awareness of, and even less planning for, the downtrend in global prosperity. Decision-makers in government, business and finance still seem to think that we can muddle through using denial, wishful thinking and a cocktail of things that Smith and Keynes didn’t actually say.

Financial – the high price of failed fixes

The immediate battleground for the conflict between continuity and reality is the financial system. Efforts to use financial policies to ‘fix’ the process of economic deceleration and decline have driven an enormous wedge between the ‘real’ economy of goods and services and the ‘financial’ economy of money and credit. Between 2000 and 2020, each dollar of reported “growth” was accompanied by more than $3 of net new debt creation and an increase of nearly $4 in broader financial commitments – and even these numbers exclude the emergence of enormous “gaps” in the adequacy of pension provision. Buying $1 of largely cosmetic “growth” with upwards of $7 of forward financial promises is not a sustainable way of managing an economy.

This has put the authorities between the Scylla of runaway inflation and the Charybdis of sharp rises in the cost of money. To be clear, finance ministries can run enormous fiscal deficits, and central banks can monetize the ensuing increases in debt, but neither can create the new sources of low-ECoE energy without which the economy must contract.

When we understand money as a claim on the output of the real economy, it becomes clear that the rampant creation of money and credit can only result in the accumulation of excess claims. These cannot, by definition, be met ‘at value’ by a contracting economy. This means that the value supposedly incorporated in these excess claims must be eliminated, either through the soft default of inflation or the hard default of repudiation.                      

The conundrum facing the authorities is simply stated. If they continue with negative real interest rates, which deter saving and encourage borrowing – and if they carry on believing that ever-larger injections of stimulus can somehow return the real economy to “growth” – they will drive the system into an inevitable process by which inflation destroys the purchasing power of money.

If, on the other hand, they decide to defend the value of money by raising rates into positive real territory, they will trigger slumps in the values of assets, and set a cascade of defaults running through the system.

The current policy is one of ‘hoping for the best’, assuring the public that the current spike in inflation is a “transitory” phenomenon caused by the coronavirus pandemic.

There are two main reasons for knowing that this explanation is false. First, ‘we’ve heard it all before’. The term “transitory” is the 2021 equivalent of the promise that the introduction of QE and ZIRP back in 2008-09 were “temporary” and “emergency” expedients. The more direct analogy is with the 1970s, when inflation was deemed a “temporary” problem, and governments even introduced the concept of “core” inflation, which excluded those very items (energy and food) whose prices were rising most dramatically at that time.

The second factor arguing against the “transitory” description of inflation is that soaring prices take on a momentum of their own. Rises in the cost of living prompt demands for higher wages, which in turn raise producer costs and push prices higher. To a significant extent, inflation is a product of expectation, a form of self-fulfilling prophecy that gives the authorities a rationale for understating what’s really happening in an effort to damp down public expectations. This, though, cannot work when consumers can see the prices of goods and services rising. This time around, the long-standing inflation in the prices of assets reinforces perceptions of inflation at the consumer level.

Where the inflationary issue is concerned, we need to be clear about causation. The chain of events began with a deterioration in the energy equation which determines prosperity. The authorities sought to counter this deterioration in ways which have led, with grim inevitability, to where we are now.

The policy of ‘credit adventurism’ – of making debt more readily available than at any time in the past – started a rise in asset prices, and created a surge in debt. When these trends crystalized in the 2008-09 GFC, the authorities responded with ‘monetary adventurism’, taking the real cost of money into negative territory.

This boosted asset prices still further, and created yet more debt, much of it channelled through the shadow banking system rather than through the more regulated channel of mainstream banking. Now we are in the grip of reckless stimulus, being carried out in the desperate hope that injecting ever more deficit finance, and persuading central banks to monetize most or all of it, will somehow reinvigorate the real economy (which it won’t), without triggering runaway inflation (which it will).        

The outcome of the inflationary conundrum is likely to follow the pattern set in the late 1970s and the early 1980s. First, the authorities dismiss inflation as a passing phase, and refuse to raise rates to counter it. Latterly, they take a reluctant and belated decision to act, raising rates in a macho demonstration of resolve.

That’s when asset prices collapse, and a wave of defaults rips through the system.

Back in the 1980s, this process triggered a sharp recession, but this proved temporary, because ECoEs remained low, and the economy remained capable of growth.

Neither condition prevails today. ECoEs have risen from 1.8% in 1980 to 9.2% now. Recovery in the 1980s involved the restoration of positive trends which had driven prosperity steadily upwards between 1945 and the disruptive and inflationary first oil crisis of 1973-74. Today, by contrast, inflation risk comes in the context of a long period of economic deceleration which, in the West, segued into deterioration between 1997 and 2007.

The first set of charts illustrates the magnitude of financial imbalances, comparing debt – and broader financial assets, which include the shadow banking system – with reported GDP and underlying prosperity. Full financial assets data isn’t available for the global economy as a whole, so the left-hand chart illustrates a group of 23 countries for which numbers are available and which, between them, represent four-fifths of the World economy.    

Fig. 1

Households – leveraged hardship

In any case, the financial system faces challenges which are far broader than the comparatively straightforward (though daunting) choice between inflation and rises in rates. This is where trends in the critically-important household sector shape the outlook. 

The average person in the West has been getting poorer over an extended period, though this reality has been masked by financial manipulation. Trends in prosperity, set against debt per capita, illustrate this situation as it has affected France, Britain and Canada (see fig. 2). Debt, it must be emphasised, has to be considered in the aggregate, including the government and business sectors, not just household indebtedness. Even these debt numbers exclude per capita shares both of broader financial assets and of off-balance-sheet commitments such as the underfunding of pensions.

In France, prosperity per person reached its zenith in 2000, since when the average person has become poorer by 8% (€2,540), whilst his or her share of debt has increased by 91% (€59,500). The inflexion-point in Britain occurred in 2004, since when prosperity has fallen by £4,600 (16%) whilst debt per person has increased by £23,800 (39%). The average Canadian has become 12% poorer, and 60% deeper in debt, since 2007.

Fig. 2

 

One of the myths of the contemporary economy is that sharp increases in indebtedness are cancelled out by rises in the prices of assets.

The reality, of course, is that increases in the supposed value of property and financial assets cannot be monetized, because the only people to whom a nation’s property or asset stock can be sold are the same people to whom they already belong.

The individual property owner can monetize the gain in property values, but even he or she then needs to obtain alternative accommodation. But homeowners in aggregate cannot do this, and reported aggregate ‘valuations’ are an error rooted in the use of marginal transaction prices to put a ‘value’ on housing stock in its entirety. Essentially, asset prices are functions of the cost of money, and of the quantum of credit in the system. As the economy moves further into de-growth, and as the inflationary spiral has to be countered by raising rates, inflated asset valuations can be expected to melt away like snow on the first warm morning of spring.

The decreases in prosperity cited here may seem pretty modest – the average French person has become 8% poorer over twenty years, the average British person’s prosperity has fallen by 16% over sixteen years, and Canadian prosperity has deteriorated by 12% over thirteen years. People in these countries have, then, been getting poorer at rates at or below about 1% per annum.

In terms of living standards, though, these rates of deterioration have been leveraged by relentless increases in the cost of essentials. In the SEEDS model, the calibration of essentials remains at the development stage, where ‘essentials’ are defined as the sum of household necessities and public services provided by the government. The definition of ‘essential’ varies over time and between countries, such that essentials may defy detailed calibration.

This said, the overall picture seems clear. As prosperity has fallen, the share of prosperity accounted for by essentials has risen. Moreover, the real cost of essentials is being driven upwards, because the energy-intensive character of many necessities creates a linkage between their real costs and rises in ECoEs.

What this leverage means is that, over a twenty-year period in which French top-line prosperity has fallen by 8%, discretionary prosperity – what remains after essentials have been paid for – has slumped by 23%. British discretionary prosperity has fallen by 34% (rather than 16%) since 2004, and the decline of 12% in Canadian prosperity since 2007 has seen discretionary prosperity fall by 24% (fig. 3).

Fig. 3        

 

These sharp falls in discretionary prosperity have not been reflected in actual discretionary consumption – but the gap between the two (which SEEDS can quantify) has been filled by continuous expansions in credit.

In some sectors this effect has been a direct one, and few people now buy a new car, for example, as a one-off purchase. Households may borrow on their own account to pay for, say, a holiday, but the broader effect is that household credit increases are supplemented by government and business borrowing – the former reduces the tax burden on households, whilst, in the absence of business borrowing, employment and wages would be lower, and consumer goods and services would be either more expensive and/or less readily available.

Full circle

There is, of course, a direct connection between an over-inflated financial system and deteriorating household prosperity. As and when a halt has to be called on perpetual credit and broader financial expansion, discretionary consumption will slump.

This of itself will impact the perceived values of discretionary sector businesses, and this trend will be compounded as businesses respond to de-growth tendencies including de-complexification, simplification (of product ranges and processes), adverse utilization effects and the loss of critical mass. At the same time, households will be forced to relinquish many of the outgoings which form streams of income for the corporate sector.

Ultimately, there are adverse feedback loops which connect deteriorating prosperity with a degradation of the financial economy. At the same time, the public is likely to be distressed, not just by the loss of cherished discretionary products and services, but by the widening hardship which occurs as falling prosperity draws ever nearer to the rising cost of necessities. The implications of this dynamic for government and the corporate sector are certain to be profound, but these implications must await another stage in our journey from ‘what we know’ about the present to ‘what we want to know’ about the future.     

In the meantime, here’s a reminder – if a reminder were needed – of how rising ECoEs drive prosperity downwards in a way that is frighteningly not understood by decision-makers in government, business and finance.  

Fig. 4

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[Hancock]

38 minutes ago, DurhamBorn said:

Then government pays twice,pension of those retired and wages of new recruits if they can get them.Iv just been in Tescos to stock up on Mutti pizza sauce and lager while its on offer.I noticed 8 staff around the shelves etc.None were working 6 were on their phones,2 were talking.Ok its late etc,but the work ethic isnt there anymore.I dont blame them.They were all under 25.Probably cant get their own place,see loads of bennie claims with the houses and the boomers with the full trolleys.We are in a very very serious mess.I cant see any way out,but really big wage inflation and even that might not work.

They do a 00 flour for 30p, its soft flour, but when the dough is left out for a couple of days its as good as any of the top brands -- called farina del mio sacco

https://www.tesco.com/groceries/en-GB/products/306806466

Im using 180g of dough and making nice thin pizza, i recommend very lightly grating cheddar with the Mozzarella (get it very fine so it cooks better)

[DurhamBorn]

23 minutes ago, Hancock said:

They do a 00 flour for 30p, its soft flour, but when left out for a couple of days is as good as any of the top brands -- called farina del mio sacco

https://www.tesco.com/groceries/en-GB/products/306806466

Thats really cheap,protein 11.2% as well Caputo is 12.5% so really close.Il give it a whirl.Il give it a 24 hour prove.