Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

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


spunko

Recommended Posts

https://www.theguardian.com/money/2020/jan/21/ministers-launch-financial-wellbeing-scheme-to-help-savers
 

In an alarming summary of the state of Britain’s household finances, the Money and Pensions Service (MaPS), a government agency, said 11.5 million people have less than £100 in savings to fall back on, while nine million said they often use credit cards and payday loans to meet essential weekly food and energy bills.
 

I’m probably reading too much into this but interesting timeline for increasing number of savers and reducing number of credit card borrowers, awareness of rates potentially on the up next decade?

Link to comment
Share on other sites

  • Replies 35.1k
  • Created
  • Last Reply
1 hour ago, Barnsey said:

https://www.theguardian.com/money/2020/jan/21/ministers-launch-financial-wellbeing-scheme-to-help-savers
 

In an alarming summary of the state of Britain’s household finances, the Money and Pensions Service (MaPS), a government agency, said 11.5 million people have less than £100 in savings to fall back on, while nine million said they often use credit cards and payday loans to meet essential weekly food and energy bills.
 

I’m probably reading too much into this but interesting timeline for increasing number of savers and reducing number of credit card borrowers, awareness of rates potentially on the up next decade?

Can they not see the irony?...Government telling people how to manage their budget when they don't seem capable themselves, I cite HS2...even their own body the MAS was reformed into this new advice service as they squandered their own £80M budget!...

...so what are they going to do?...increase financial education in schools (good thing), but who is going to provide it?...the financial institutions...the very same industry that couldn't manage its own budget and had to be bailed out by the people that they are offering their `pearls of wisdom` to...oh the irony, you couldn't make it up could you?!

Link to comment
Share on other sites

7 hours ago, DurhamBorn said:

@sancho panza   ,love that term in the article, "de-complexify".I keep saying you want to be at the basic stage in a reflation,but iv never really thought of it in the terms of de-complexify,but that really does explain the same thing.If your selling the potash you dont give a toss how Supermarkets set up their supply chains or who goes under.A lot of what we see from a macro point on a reflation is money pulling back from say a factory in China,to  someone laying fibre cables in Kendal.Iv never looked at that as anything other than a macro situation based on political need and the point in a cycle,but actually that as well is a "de-complexify" situation.Really fascinating way to look at it.Im going to try to think of some way to put this in to cross market work,maybe a score on complexity,lower the complexity,higher the score.

Reminds me of some of the systems theory I studied way back.  Systems evolving and collapsing under their own weight, creative destruction, corruption of purpose, realignment, dynamic equalibrium, and all that.  Systems are not stable but organic, for good and bad.  Andrew Grove was one of the few who understood with "only the paranoic survive".  We certainly have a strategic inflexion point.  My whole life for the last at least 5 years has been all about going back to basics.  The tide will go out regardless of any regulatory dams they build and many will be seen to be swimming naked, something most are already waking up to.  Social, political, economic.  These are the lenses through which I look to invest, spured on by this thread.

Link to comment
Share on other sites

I've been suggesting to people for a while that the situation we're heading to could lead to something akin to a referral to more local economies.

I suppose, combined with less access to personal travel, wet could see the return of local communities by and for local people.

It may be a mini dream, but I'd like that.

Link to comment
Share on other sites

1 hour ago, Barnsey said:

In an alarming summary of the state of Britain’s household finances, the Money and Pensions Service (MaPS), a government agency, said 11.5 million people have less than £100 in savings to fall back on, while nine million said they often use credit cards and payday loans to meet essential weekly food and energy bills.

I've been saying this for a while ad nauseam: people have got no money.  Everything makes more sense interpreted in this context, despite the spin to suggest things are done for other reasons.  PCP, equity release, etc.  Invest accordingly.

Link to comment
Share on other sites

2 hours ago, Barnsey said:

https://www.theguardian.com/money/2020/jan/21/ministers-launch-financial-wellbeing-scheme-to-help-savers
 

In an alarming summary of the state of Britain’s household finances, the Money and Pensions Service (MaPS), a government agency, said 11.5 million people have less than £100 in savings to fall back on, while nine million said they often use credit cards and payday loans to meet essential weekly food and energy bills.
 

I’m probably reading too much into this but interesting timeline for increasing number of savers and reducing number of credit card borrowers, awareness of rates potentially on the up next decade?

Saw this yesterday on Twitter 

22628711_Screenshot2020-01-21at08_31_32.png.d5ece0c618ec9f754b1bd1240ca7d532.png

https://www.bnnbloomberg.ca/50-of-canadians-face-insolvency-amid-debt-hopelessness-survey-1.1376463

Link to comment
Share on other sites

Democorruptcy
10 hours ago, sancho panza said:

Point taken DM.AS I read it I thought £225bn sounded rather large but my faith in ye old Wolf knows no limits. I faithfully reprinted it without a smidgen of circumcision.

Thanks for correcting my error.

I wasn't suggesting you were talking bollocks or were in error, it was Wolf!

We all like a bit of doom and gloom and I'm sure he'll deliver some more later.

Link to comment
Share on other sites

3 minutes ago, Harley said:

And who blew that bubble?  Central bankers, not fit for purpose.

I think the main villain is the welfare state,or means tested benefits.Whats the point of saving if it means no welfare,and also why save if you have kids?,the tax credit income is certain every month.Of course the banks printing has paid for it mostly.The government have spent the last 20+ years working out how to keep the people who work working to pay for the rich and the benefit claimsHTB is simply designed to trap young people into working to pay a mortgage forever.The no1 thing to keep someone working is so they "dont lose my home".Thats what the last election result was about.People are one notch from revolution over it.They are sick are seeing half the country live off their backs.

Link to comment
Share on other sites

23 minutes ago, DurhamBorn said:

I think the main villain is the welfare state,or means tested benefits.Whats the point of saving if it means no welfare,and also why save if you have kids?,the tax credit income is certain every month.Of course the banks printing has paid for it mostly.The government have spent the last 20+ years working out how to keep the people who work working to pay for the rich and the benefit claimsHTB is simply designed to trap young people into working to pay a mortgage forever.The no1 thing to keep someone working is so they "dont lose my home".Thats what the last election result was about.People are one notch from revolution over it.They are sick are seeing half the country live off their backs.

A villan for sure, and well articulated about the enslavement.  Fortunately, we don't have to pick just one, no room 101!  Just to say the intellectual arrogance (or maybe just support for troughers) shown by our "experts" is the same sort of thing that has cost millions of lives in the past.  Intellectual Canutism at best!

PS:  One recent economic conference I attended had a presentation by one of the key economists reviewing public finances.  Take out welfare costs, let alone the NHS, and not much left to play with.  The vast majority of public expenditure is predetermined, hence the gimmicks to make it sound like things are being done.  Gonna take a lot to change things, plus big balls, or the more common bankruptcy and asset stripping by the IMF, World Bank, etc and their clients.

Link to comment
Share on other sites

11 hours ago, sancho panza said:

Point taken DM.AS I read it I thought £225bn sounded rather large but my faith in ye old Wolf knows no limits. I faithfully reprinted it without a smidgen of circumcision.

Blimey, Sancho, is that what they do at those Leicester hospitals?!

Link to comment
Share on other sites

On 18/01/2020 at 21:57, TheCountOfNowhere said:

1990 had higher inflation that 1982.

2011 higher than 1983/1984.

Its all over the shop. 

Given they make up the numbers we could be anywhere. 

Add housing into the mix and inflation been through the roof since QE started. Highest inflation in British history perhaps. 

Nothing makes sense in the land of unregulated banker money printing madness

Count, I agree with your alarm, so not directing my response specifically at you ...yes, we could say we are down the rabbit hole/through the looking glass (where things no longer make sense), etc.

But as you hint, it is really more about what/how 'we' choose to measure things (or don't!) that's totally skewed and illogical (cant help thinking back again to the Mad Hatter and the Bad Queen).

So is it even possible to compare our economy with past environments? Although perhaps its a bit like attempting to compare todays so-called 'elite' athletes with those of recent eras, which are better - and again what are we really measuring? The comparison between athletics and economics is not just figurative but literal I think - after all don't steroids do for todays athletes, as what Reaganite policy did for the moribund global 70's economies, in terms of debt fuelled pumping.            

 Its often said that Adam Smith wouldn't recognise our 'free-markets' let alone what passes for 'capitalism'. Sadly so true I think.

Link to comment
Share on other sites

2 hours ago, Harley said:

A villan for sure, and well articulated about the enslavement.  Fortunately, we don't have to pick just one, no room 101!  Just to say the intellectual arrogance (or maybe just support for troughers) shown by our "experts" is the same sort of thing that has cost millions of lives in the past.  Intellectual Canutism at best!

PS:  One recent economic conference I attended had a presentation by one of the key economists reviewing public finances.  Take out welfare costs, let alone the NHS, and not much left to play with.  The vast majority of public expenditure is predetermined, hence the gimmicks to make it sound like things are being done.  Gonna take a lot to change things, plus big balls, or the more common bankruptcy and asset stripping by the IMF, World Bank, etc and their clients.

Very likely they will have to use inflation.They are already going to change RPI to CPIH index for inflation.That will then mean smaller increase's for any pensions etc linked to RPI

https://www.ftadviser.com/pensions/2019/09/04/pension-inflation-measure-to-change/

The key problem they have is they need to stop people inheriting lots of money who might use it to retire.They have already managed the pushing back of the state pension for people who actually work to 68 .However they need to make sure people cant bridge the gap from 55 to 68.Its almost certain they will increase the private pension age from 55 to 58,or even 60.Its supposed to be going to 58 in 2028 already though no legislation.

Iv planning to remove £12.5k a year from my SIPP at 55 after taking the full 25% tax free lump sum.

Link to comment
Share on other sites

4 hours ago, MrXxxx said:

Can they not see the irony?...Government telling people how to manage their budget when they don't seem capable themselves, I cite HS2...even their own body the MAS was reformed into this new advice service as they squandered their own £80M budget!...

...so what are they going to do?...increase financial education in schools (good thing), but who is going to provide it?...the financial institutions...the very same industry that couldn't manage its own budget and had to be bailed out by the people that they are offering their `pearls of wisdom` to...oh the irony, you couldn't make it up could you?!

HS2 is insane.Local metro systems on a loop would be far better linking provincial towns..The irony is they sell it as people wanting to get to London 20 minutes faster,when in 20 years it will be people wanting to be out of London 20 minutes faster.

Link to comment
Share on other sites

TheCountOfNowhere
8 minutes ago, DurhamBorn said:

HS2 is insane.Local metro systems on a loop would be far better linking provincial towns..The irony is they sell it as people wanting to get to London 20 minutes faster,when in 20 years it will be people wanting to be out of London 20 minutes faster.

They want to get trains into London 5 minutes earlier. 

 

My solution, get the trains to leave 5 minutes earlier and tell the lazy bastards to get up earlier. 

24 minutes ago, JMD said:

Count, I agree with your alarm, so not directing my response specifically at you ...yes, we could say we are down the rabbit hole/through the looking glass (where things no longer make sense), etc.

But as you hint, it is really more about what/how 'we' choose to measure things (or don't!) that's totally skewed and illogical (cant help thinking back again to the Mad Hatter and the Bad Queen).

So is it even possible to compare our economy with past environments? Although perhaps its a bit like attempting to compare todays so-called 'elite' athletes with those of recent eras, which are better - and again what are we really measuring? The comparison between athletics and economics is not just figurative but literal I think - after all don't steroids do for todays athletes, as what Reaganite policy did for the moribund global 70's economies, in terms of debt fuelled pumping.            

 Its often said that Adam Smith wouldn't recognise our 'free-markets' let alone what passes for 'capitalism'. Sadly so true I think.

It's a new paradigm... Until it isn't 

Basic arithmetic has stood the test of time... Fiat currencies have not 

It's all very interesting to watch but I always get the feeling that its going to end badly for millions. 

Link to comment
Share on other sites

43 minutes ago, DurhamBorn said:

HS2 is insane.Local metro systems on a loop would be far better linking provincial towns..The irony is they sell it as people wanting to get to London 20 minutes faster,when in 20 years it will be people wanting to be out of London 20 minutes faster.

https://audioboom.com/posts/1699786-rory-sutherland-at-the-spectator-s-stop-hs2-debate
 

Always been a big fan of Rory and his way of thinking, he is the vice chairman of Ogilvy Advertising and has some good books too on thinking differently, his view on HS2 why get there faster just put decent WIFI on trains be so much cheaper O.o


https://twitter.com/rorysutherland worth a follow if on twitter

Link to comment
Share on other sites

On 19/01/2020 at 10:47, DurhamBorn said:

Thats right,dis-inflation is a trending lower of inflation.Its why almost everyone gets it wrong when we get a cycle turn.The key for macro strategy is the fact dis-inflation has lots of cross market affects.In its first instance it leads to a fall in the cost of money (interest) and that is the no1 driver of everything in a money system like we have.

The simple Broccoli example above is a nice easy way to see it.The price has hardly increased for 12 years,an average of 0.4% a year,,sometimes it jumped up a bit (weather/fuel spikes),but the trend has been getting cheaper compared to incomes.That means extra income has been able to go on other things,holidays,lease cars,houses,imported goods etc.

Now there is nothing stopping the price dis-inflating much longer.However,as the economy slows (Fed tightened liquidity) governments now need to invest.The political cycle demands it,as does the macro situation.That will put demand up for inputs,workers,energy etc.The broccoli farmer will see his margins go to zero as these input costs go up,and he will have to increase prices.Everyone across the economy will follow.

Now most of the things people need are cheap right now,and a few increase's wont hammer people at first,but its the direction.Its also the transfer of money.That 10p on Broccoli isnt all going to the farmer or supermarket,its going to the oil company,the potash maker,the tractor spares maker etc.

In simple terms the economy starts to divert money from a trampoline manufacturer in China (the consumer has less money),to the oil companies,the energy companies.

In a disinflation you want to be as near to the consumer as you can be .In a reflation you want to be as far away as you can be.Or in areas where the consumer is forced to swap.An example would be drop the 2nd car and use public transport,or keep the car an extra two years (transfer money from car dealers to car repair).

DB, am I right in thinking (simple question, but still learning here) if past government's didn't take the easy - tax and spend - (bribery) policy option - for example in the form of spending on farm subsidies in the case of our broccoli farmer - then that farmer could have set 'real' prices and contributed positively to the 'real' economy? Instead mallinvestment and other inefficiencies build, eventually leading to macro deflation/reflations, with mini boom/bust business cycles happening along the way.    

Link to comment
Share on other sites

Does anyone have thoughts on so called 'junk' silver coins - for example as alternative investment for buying new Brittanias? I'm thinking it looks pretty good as I believe the price paid is close to the silver spot price.

These ones are from the US, and US coins pre-1965 are 92% silver. For the UK, for similar silver content its pre-1920 coins, but the coin market here is a lot smaller.

https://www.ebay.co.uk/sch/i.html?_from=R40&_nkw=junk+silver+coins&_sacat=0&_sop=16

 

I know some here attend auctions in order to get cheap old UK silver coins, perhaps they could comment as per the comparable prices, etc? But is this a way of filling yer boots!?

Link to comment
Share on other sites

reformed nice guy
Quote

"The fall in its mobile phone business is in line with expectations, and Dixons Carphone has said that it expects this to be a "trough" year for the mobile phone business. Mobile sales have been under pressure because people are moving away from high-value monthly contracts and are upgrading their handsets less frequently."

https://www.bbc.co.uk/news/business-51187979

People are upgrading their phones less frequently. In my opinion phones seem to be one thing that people upgrade first. Most would rather have a good phone even if their garden is a mess, their furniture is getting a bit tatty and the wallpaper is starting to peel at the edges.

 

Link to comment
Share on other sites

On 19/01/2020 at 11:37, Harley said:

 

Combined (with the original Treasury one), probably your best ever posts on the subject.  To have a version of the big picture (I personally buy into, although worry about what peversions TPTP are capable of) should provide tremendous comfort and support for many.  A really top job! 

We maybe just need to complete the series with a simple timeline (maybe with proxy dates) showing which sectors to be focussing on and why. 

It's more the phasing/sequencing than actual dates (for reasons you've previously mentioned).  Now that would be a roadmap. 

Someone produced something along those lines (but more generic and not sequenced) a while back.

Harley, great point re. 'simple timeline' and 'sector sequencing'.

People will make their own decisions on what to buy. And of course timing the market is a fools game. But I think we are mostly here for understanding and buying into the macro cycle turn/trends - so I agree that a timeline and sector sequencing would be very great help. It could potentially become a regular, perhaps quarterly update, in order to provoke further discussion?  

Link to comment
Share on other sites

Anyone have a spare rope lying around? :S

https://www.theguardian.com/business/2020/jan/20/uk-house-prices-rise-at-fastest-rate-on-record

Quote

The average price of properties coming on to the market jumped by 2.3%, the biggest rise for the period since the property website started its house price index in 2002. Nearly 65,000 UK properties were marketed over the month, with an average asking price of £306,810.

Miles Shipside, a director at Rightmove said the election result had provided a “window of stability” for potential movers after a period of instability since the Brexit vote, which had caused some to put off a move.

He said: “The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home movers to hesitate. There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market.

*ASKING* prices

Link to comment
Share on other sites

TheCountOfNowhere
27 minutes ago, Barnsey said:

A week before @ukpropertylion reported CURRENT asking prices had fallen q4 of 2019 and now down 7% from peak. 

That's a sample size of 400,000... No adjustment etc. 

Odd. 

I know who I trust. 

P s... All media outlets contacted are ignoring the figures 

 

It seems initial asking prices numbers supplied by the agent to estate agents are more thought of that actual numbers available publicly. 

 

Link to comment
Share on other sites

On 19/01/2020 at 12:33, TheCountOfNowhere said:

Are they in debt? 

Might be a buy on Monday 

Re Halfords... I asked peoples views about the company a few months back and I think a good discussion was had, but summing up my views on their financials at the time: 'seemingly unmovable 300M debt, static 550M t/o for last 5 years, declining 20M profit (compared to Games Workshop's 30M profit makes pretty pathetic reading)'.

 

I've just seen DB figures, which differ from mine (I think I used investing.com) - but  prepared to accept DB's being the accurate ones - and very scary to think I got the figures so wrong! So was I being unduly unfair to Halfords?    

 

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...