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

[CVG]

1 hour ago, spongeh said:

£1800 per year

Net!

[JMD]

18 hours ago, DurhamBorn said:

My partner is now putting everything into her SIPP over £12.5k.She will now get back 14x the NI increase.She has also "moved" in with my daughter so im claiming the 25% Council tax rebate and that equals the extra NI.My dad is also going to get very infirm over the next few weeks and we will claim attendance allowance,hes going to give it to my kids along with what i am to cover extra into their SIPPs to cut their tax.

DB, in regard 'tax mitigation' stratagies, are you still intending to do the 'multi-generational living' route in future? You mentioned maybe buying a larger property, for you and your dad and I think your son and daughter.                                                                                                                                                                                                           With the real risk of wealth taxes now pretty much baked in, I think your knowledge of family trusts (believe you've said you have knowledge in this area?) would seem a great way, and a very accessible way for many ordinary people, to prevent government from stealing property wealth. However creating a trust structure that is near watertight, and cannot easily be 'undone' by future governments is the challenge I think. Anyway, I ask because if you were to one day go ahead, such information about the pros/cons would I think be invaluable to many on this thread. 

[JMD]

8 hours ago, Harley said:

"It's the balance sheet stupid"........

"Stronger balance sheet players will snap land and construction sites. SOEs will snap some assets".  

I've mentioned the emerging importance of the oft ignored balance sheet over the P&L E's for some time.  And that, on the average, is as much a country/regional play as it is a specific company risk. 

Many well known companies in the US and elsewhere have had their balance sheets hollowed out.  Many, stripped of high asset values, especially intangibles (even just goodwill!), have negative equity.

And yet they still have the bid.  But when it turns.......and how much will go private?

I agree Harley, the solvency of a company is crucial. But in regard to judging the balance-sheet, could you please give some more info on the country/region metric you mention? Perhaps you could elaborate on the criteria you use, and is it sector specific?

[Gin]

17 minutes ago:

Industry sources have told the BBC that four firms have asked larger players to bid to take over the supply to one million customers.

 

The price rise has left some companies unable to provide their customers with the energy they have paid for.

 

https://www.bbc.co.uk/news/business-58610561

[Don Coglione]

4 hours ago, Harley said:

That's going to be an interesting dynamic seeing as the past approach was to employ more people (e.g. automatic to manual cash washing).  Will local supplying firms appear, will our balance of trade suffer, how will it be financed, impact on owner cash flows, etc?

I know that was a typo, but it was a bloody accurate one!

[Errol]

 

[invalid]

4 hours ago, Gin said:

I am a sole trader. I have manhandled furniture for 38 years . I am 66 years of age . I have not made a fortune and the wonderful guys that worked with me stayed with me for for over 35 years . We used to have conversations about our backs giving way or ending up with a slipped disc etc. Even though I have had three hernia ops which were a result of too much testosterone and ego.  (It sometimes happens when working with friends and wanting to keep your end up during a heavy working day ).

I would not change it for the world. I realise that heavy lifting/ manual labour when done right is good for the soul and body.

Heavy work is therapeutic .

 

Had an extension built on the house. Got a a few grand knocked off the bill for digging out the footings myself. The builder thought I was mad.

I did it all my self, by hand with a spade, fork and bucket.

I rather enjoyed doing it.

 

 

[Majorpain]

2 hours ago, Gin said:

17 minutes ago:

Industry sources have told the BBC that four firms have asked larger players to bid to take over the supply to one million customers.

 

The price rise has left some companies unable to provide their customers with the energy they have paid for.

 

https://www.bbc.co.uk/news/business-58610561

 

Quote

Four small suppliers ceased trading in recent weeks, including Edinburgh-based People's Energy, which supplied gas and electricity to about 350,000 homes and 1,000 businesses, and Dorset-based Utility Point which had 220,000 domestic customers.

At the beginning of 2021 there were 70 energy suppliers in the UK. Industry sources say there may be as few as 10 left by the end of the year.

The end of summer is the time of year when credit balances are at their highest as customers have been paying their usual monthly amount but not using much energy for heating their homes.

Ofgem may have to allow the cost of those balances to be spread across the industry - adding hundreds of millions of pounds to energy bills through industry-wide levies.

 

Bit of a trainwreck, government well intentioned price cap meets hard reality of rapid price rises of producing and delivering the goods.  Then there is the vapourware utility companies, with no generation capacity of their own, who at the worst possible moment find out their business model is bust.  Must have been quite lucrative only needing a fancy website and backend software, rather than a Billion pound power plant!

Centrica's time to shine?

[Gin]

4 minutes ago, Majorpain said:

 

Bit of a trainwreck, government well intentioned price cap meets hard reality of rapid price rises of producing and delivering the goods.  Then there is the vapourware utility companies, with no generation capacity of their own, who at the worst possible moment find out their business model is bust.  Must have been quite lucrative only needing a fancy website and backend software, rather than a Billion pound power plant!

Centrica's time to shine?

Yes , the owners of Peoples Energy started their business by crowdfunding...they should have opened up a nuclear power plant instead . Some people never learn .

 

https://www.insider.co.uk/news/peoples-energy-begin-repay-crowdfunders-13700660

WIKI : Co-founders David Pike and Karin Sode launched a crowdfunding campaign in 2017 to launch the company with the promise of returning 75% of profits back to customers. On 31st July 2017, the company successfully raised £487,815 from 2,059 supporters in 199 days. The company received their Ofgem licence and launched in August 2017

 

https://www.insider.co.uk/news/peoples-energy-begin-repay-crowdfunders-13700660

 

I wonder if the crowdfunders will get any money back ..some stumped up £10,000 to help start Peoples Energy .

[Noallegiance]

10 minutes ago, Gin said:

Yes , the owners of Peoples Energy started their business by crowdfunding...they should have opened up a nuclear power plant instead . Some people never learn .

 

https://www.insider.co.uk/news/peoples-energy-begin-repay-crowdfunders-13700660

WIKI : Co-founders David Pike and Karin Sode launched a crowdfunding campaign in 2017 to launch the company with the promise of returning 75% of profits back to customers. On 31st July 2017, the company successfully raised £487,815 from 2,059 supporters in 199 days. The company received their Ofgem licence and launched in August 2017

 

https://www.insider.co.uk/news/peoples-energy-begin-repay-crowdfunders-13700660

 

I wonder if the crowdfunders will get any money back ..some stumped up £10,000 to help start Peoples Energy .

For me this typifies 'business' over the last 30 years.

Of course, I only know what I know now from the last 10+ years of education, but retrospectively most of my adult life has been saturated with salesmen with nothing to sell and leeches with nothing to give.

Mediocrity is truly the standard of excellence when all one needs is a combination of debt, a moderate (at best) 'idea', a collection of mugs who know no better, debt, a backstopping government, debt, sub-quality everything, a widespread lack of understanding of value, and did I mention the debt?

[DurhamBorn]

3 hours ago, JMD said:

DB, in regard 'tax mitigation' stratagies, are you still intending to do the 'multi-generational living' route in future? You mentioned maybe buying a larger property, for you and your dad and I think your son and daughter.                                                                                                                                                                                                           With the real risk of wealth taxes now pretty much baked in, I think your knowledge of family trusts (believe you've said you have knowledge in this area?) would seem a great way, and a very accessible way for many ordinary people, to prevent government from stealing property wealth. However creating a trust structure that is near watertight, and cannot easily be 'undone' by future governments is the challenge I think. Anyway, I ask because if you were to one day go ahead, such information about the pros/cons would I think be invaluable to many on this thread. 

Yes we are thinking about it.I have council land on the side and behind my house so we are thinking about buying it and then extending my house.We are leaning towards that rather than buying something new.We have will trusts set up at the moment that become live on death.The problem with having trusts live is the tax on them,you pay 45% on any income.People can claim it back against their personal tax,so a none taxpayer could take £12.5k from a trust,the trust pay the tax then the person claim it back,but its a chew on.Our trust in mainly to protect my brother.He has learning difficulties,but lives a good independant life,but if he got left half my dads assets he would lose,give away or spend the lot in no time at all and then be skint.The trust is mainly so myself and my kids can give him money from it,but to replace a car,fix his roof etc,not so he can lend £20k to Susan who he met walking the dog thursday afternoon who is now his friend.It also means he cant just leave it to anyone and it stays in the family if he dies.

On wealth tax i think changes to pensions relief and new higher council tax bands are the most likely changes.Pensions tax relief is hugely generous for 40% taxpayers and must be a target.Its also going to be an even bigger escape route for people to retire early and the government will want to cut that down.

[ThoughtCriminal]

7 hours ago, Hancock said:

Wouldn't they just bring in a quilt and sleep from 10-6.

I had the pleasure of spending some time inside Northallerton (maybe you worked there) would be a cushy job to get on nights if you had the ability to get 6 hours sleep on the job.

They did in the 80s but in my time we had to do frigging "firewatch" every 30 mins with an electronic tagger, so no sleeping. 

 

I was at Holme House in Stockton, just up the A19. 

 

Were you a one time only visitor? 

[Harley]

3 hours ago, JMD said:

I agree Harley, the solvency of a company is crucial. But in regard to judging the balance-sheet, could you please give some more info on the country/region metric you mention? Perhaps you could elaborate on the criteria you use, and is it sector specific?

Top of me head....

I limit myself on the balance sheet side (I have others) to the current ratio (above 0.9), total debt to equity ratio (below 0.6), intangibles less than 10% of equity, and a book to equity ratio of under 3.  I may break any of these rules (up or down) when I look in aggregate at a company.

Hits could come from anywhere although Asia provides the best hit rate as does the resources sector.

 

[Majorpain]

34 minutes ago, Gin said:

Yes , the owners of Peoples Energy started their business by crowdfunding...they should have opened up a nuclear power plant instead . Some people never learn .

 

https://www.insider.co.uk/news/peoples-energy-begin-repay-crowdfunders-13700660

WIKI : Co-founders David Pike and Karin Sode launched a crowdfunding campaign in 2017 to launch the company with the promise of returning 75% of profits back to customers. On 31st July 2017, the company successfully raised £487,815 from 2,059 supporters in 199 days. The company received their Ofgem licence and launched in August 2017

 

https://www.insider.co.uk/news/peoples-energy-begin-repay-crowdfunders-13700660

 

I wonder if the crowdfunders will get any money back ..some stumped up £10,000 to help start Peoples Energy .

There wont be anything in the business asset or cash wise for them, it was a cash burning nightmare.  Assets of £71k and Liabilities of £6m is criminal.

Not bad news for everyone, Directors were paid 150k + Pension each last year for the privilege of running the "People's" supplier!  Solidarity Comrade!  

[JMD]

11 hours ago, Yadda yadda yadda said:

Enjoyed reading that post. Good to see workers getting rewarded. I think that nightshift should be paid more. It damages health. £14ph for shelf stacking would be reasonable. To me nightshift should be at least 25% uplift and more like 33%.

Plus should get time and half o/t, and double time on bank holidays, oh and free meal when doing 12-hour shifts... My Dad got this (and more!) when he did his factory work. I was shocked when I learned, must have been about 20 years ago now, that these types of terms were becoming rare to find. Now pretty much extinct unless employee is lucky to be member of a powerful union.

[JMD]

11 hours ago, Barnsey said:

£25k for shelf stacking in the NE with the cheapest living costs in the UK is pretty darn good if you ask me. Wage inflation is going to kill smaller businesses.

I'd be so much better off doing steady fixed nights rather than working in passenger transport where I start work from 0220 and can finish at that time on lates, and everything in-between. My body is wrecked (especially digestive system) and only in my mid thirties.

Really makes you think doesn't it?

All these posts regarding wages increasing to attract workers, have made me recall that 'fair pay' court case ruling, which was lost last year by Tesco(?). That are challenging. But It concerned many thousands of till operators, going back 20 years and more, claiming that their work was as 'valuable' (silly concept) to the company as warehouse operatives, doing shifts and in cold and dangerous conditions. Deeply suspect reasoning - but because of perceived sexism or bias, of course the courts found on the side of the mostly female till operators... I think this is another example of Tesco and others probably now in real panicks over how much this levelling up of wages, and fairness agenda, is going to cost them if say their new minimum company wage is to bemome at say a warehouseman's rate, of perhaps £16/hour?   Talk about a perfect storm!!

[JMD]

10 hours ago, Hancock said:

Surely its a job that they'll be able to produce robots/conveyor belts to do it once wages get too high. 

Agree with what you say about changing shifts, when i've all of a sudden got to do a week or 2 on nights it destroys my mind and body.

Yes it's what I predict will happen. Robots to replace lower skilled type jobs (and middle class type ones btw) - but it will take longer than people expect, despite the tech being ready, because I think cosy deals will need to be struck between government and the supermarkets, allowing a phased shift to p/t working and also the take up of UBI. So maybe take remainder of this decade if I were to hazard a guess. Thing is retail will accommodate the government timetable, because after all  business needs a stable customer base that is able to continue to spend in its shops.

[DurhamBorn]

2 hours ago, Majorpain said:

 

Bit of a trainwreck, government well intentioned price cap meets hard reality of rapid price rises of producing and delivering the goods.  Then there is the vapourware utility companies, with no generation capacity of their own, who at the worst possible moment find out their business model is bust.  Must have been quite lucrative only needing a fancy website and backend software, rather than a Billion pound power plant!

Centrica's time to shine?

The whole sorry saga is a national disgrace to be honest.Government allowed these cash burning companies to feast on the easy bit and force the big players to pay social levies etc.So the companies who actually built generation etc decided they needed to get their cost base down and down to compete instead of investing.Government should of been happy to let Centrica yield 6% to shareholders increasing at 3% a year while slowly investing in the company.Instead they screwed them all over to try to knock a few quid from bills that simply went to councils instead on council tax.The big players need to play this right.They need to get the customers from the failed companies,but at the same time let the government suffer etc .Its no good seeing new players sprouting up again with the same business models.No doubt the directors all made out like bandits stuffing their pensions etc.

[JMD]

9 hours ago, Harley said:

That's going to be an interesting dynamic seeing as the past approach was to employ more people (e.g. automatic to manual cash washing).  Will local supplying firms appear, will our balance of trade suffer, how will it be financed, impact on owner cash flows, etc?

For me those hand car-washes were an arch examplar of how brocken the economy was. Bit like farmers going back to using horse drawn ploughs. Nothing wrong with manual labour of course, but it was really just a symbol of regressive exploitation, short sighted and harmful economic policies, and of incapable politicians totally devoid it seems to me of leadership and moral responsibility...                                                                       This was of course not aimed at your specific post Harley, it's just that every time I pass by one of those hand car washes my blood boils!! And despite Brexit those businesses seem to be around in the same numbers as before, is that others impression? 

[Phil]

25 minutes ago, JMD said:

For me those hand car-washes were an arch examplar of how brocken the economy was. Bit like farmers going back to using horse drawn ploughs. Nothing wrong with manual labour of course, but it was really just a symbol of regressive exploitation, short sighted and harmful economic policies, and of incapable politicians totally devoid it seems to me of leadership and moral responsibility...                                                                       This was of course not aimed at your specific post Harley, it's just that every time I pass by one of those hand car washes my blood boils!! And despite Brexit those businesses seem to be around in the same numbers as before, is that others impression? 

Yes. Amazing where they and hand wash car places are. Was in temple Normanton yesterday. Fairly quite road. Noticed a disused petrol station, that had been a garage repair centre at one point.

Not selling petrol anymore, or repairing cars looking worn and tatty. But lots of , I assume, engineers and doctors ( from Africa or Calais) enjoying their hobby of washing cars. ( all I really saw was bennies)
 

The  irony of it all. 
I chuckled.

Shit  voted in leaders for you.

[sancho panza]

On 17/09/2021 at 23:08, planit said:

U.S. Crude And Fuel Stocks Fall Below 2018 Levels

U.S. inventories of crude oil and the most used refined oil products have now fallen to below the 2018 levels, energy research service HFI Research has pointed out.

U.S. stockpiles of the so-called big 4—crude oil, gasoline, distillate, and jet fuel—are combined, below 2018 levels now, according to data compiled by HFI Research.

Low stocks of crude and fuels are a key reason why gasoline prices are not falling after the busiest driving season ended.

 

 

Incredible chart there planit.Really does look bleak on that chart.See below for reference to CHina.

On 17/09/2021 at 23:17, DurhamBorn said:

I think US bubble stocks will go down 70% inflation adjusted this cycle,bonds,big losses,but im not convinced everything is going down by huge amounts,unless there is a black swan in the derivatives market where massive amounts of corporate debt implodes.

Hitroical precednet says everything doesn't go down by 70% but rather the areas elevated well above historical norms will do 70% ++.To me that means Big Tech,CRE(peak to trough already well on the way),and the banks....again....

16 hours ago, Barnsey said:

This is the best analysis of Evergrande and contagion risk I've come across, very long thread but worth it. HSBC and miners at risk.

 

Interesting Barnsey.Particularly as below

[Hancock]

More of that temporary inflation to look through -
https://www.telegraph.co.uk/business/2021/09/18/heathrow-dogfight-airlines-plans-double-airport-charges/

Heathrow airport is locked in a dogfight with airlines over plans to almost double passenger charges as it grapples with one of the biggest debt piles in British corporate history.

Leaked proposals, seen by The Telegraph, reveal that long-haul charges will rocket from £38.33 per traveller this year to £67.86 in 2022.

Virgin Atlantic said the increase - along with a rise in other bills - would cost a family of four flying to Florida an additional £200.

Former British Airways boss Willie Walsh, now head of industry body Iata, said: “We’ve heard that inflation is coming back, but that is ridiculous.

[sancho panza]

14 hours ago, ThoughtCriminal said:

The dam inches ever higher.......... 

It really is eye watering how exposed the banks are.Barclays,as I've psoted previously have Dowd Buckners of 50/1 ++ leverage

Equity raising here we come....

Simply incredible that noone thinks the UK are in trouble.....again...

Never mind the US.

[Hancock]

54 minutes ago, sancho panza said:

Incredible chart there planit.Really does look bleak on that chart.See below for reference to CHina.

Hitroical precednet says everything doesn't go down by 70% but rather the areas elevated well above historical norms will do 70% ++.To me that means Big Tech,CRE(peak to trough already well on the way),and the banks....again....

if it comes to people/firms having to sell to pay their loans in a hurry, then surely the BK will be something similar to March 2020.

ie. Another free for all.

[Mapper]

7 hours ago, Gin said:

Yes , the owners of Peoples Energy started their business by crowdfunding...they should have opened up a nuclear power plant instead . Some people never learn .

Can somebody quickly clarify how a business like this works?

They don't extract the gas, store it, pipe it, deliver it etc... They sit between the company that produces the energy and the end user? Do they buy it wholesale and then try to sell it to the public at a lower margin?

If that is the case, I guess they don't have any wholesale storage facilities. So... wtf is happening?