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

[ILikeCake]

2 hours ago, Mapper said:

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?

I've never fully understood it.  Interestingly, I think water supply is due to go the same way.

[Transistor Man]

2 hours ago, Mapper said:

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?

I don’t know how it works, but I think the small-suppliers buy hedging contracts to try and manage their exposure. 

[Majorpain]

3 hours ago, Mapper said:

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?

Yes, they go to a wholesaler and buy it off the market, so in reality it will be someone like Drax/Centrica/EDF who will agree to produce 1000MW at £50 MW/H over a time period.  Electricity is near enough on/off, what has happened here is generation capacity has run out and the companies with no plants are going bust because they cant afford to buy it from the wholesaler.  It works better with gas because you can actually store that.

Its a stupid system because they reduce rates for consumers at the cost of investing in new plant, and it takes as long as it takes to build a new power plant to fix (2 years?).

[ThoughtCriminal]

Definitely no panic in government 🤡🤡🤡

[Bricormortis]

[ThoughtCriminal]

 

 

More renewables 🤦‍♂️

 

These fucking stupid bastards. 

[Majorpain]

6 minutes ago, ThoughtCriminal said:

 

 

More renewables 🤦‍♂️

 

These fucking stupid bastards. 

If by "Renewables" then he means "Nuclear", then yes!

[ThoughtCriminal]

7 minutes ago, Majorpain said:

If by "Renewables" then he means "Nuclear", then yes!

Agreed. But unfortunately we both know they dont! 

 

France must be laughing its tits off at us. 

[Mapper]

38 minutes ago, Majorpain said:

Yes, they go to a wholesaler and buy it off the market, so in reality it will be someone like Drax/Centrica/EDF who will agree to produce 1000MW at £50 MW/H over a time period.  Electricity is near enough on/off, what has happened here is generation capacity has run out and the companies with no plants are going bust because they cant afford to buy it from the wholesaler.  It works better with gas because you can actually store that.

Its a stupid system because they reduce rates for consumers at the cost of investing in new plant, and it takes as long as it takes to build a new power plant to fix (2 years?).

So, this is electricity they are arbitraging?  Well, well!

I thought it was gas, which as you mention would work if you could store it. Presumably they would have to lease somewhere to store the gas, as it surely wouldn't make sense to build their own.

As I think @Noallegiance lamented upthread, it all comes across as a bit spivish. People just trying to squeeze in somewhere and cream off a bit of profit for little work.

 

[Gin]

5 minutes ago, Mapper said:

So, this is electricity they are arbitraging?  Well, well!

I thought it was gas, which as you mention would work if you could store it. Presumably they would have to lease somewhere to store the gas, as it surely wouldn't make sense to build their own.

As I think @Noallegiance lamented upthread, it all comes across as a bit spivish. People just trying to squeeze in somewhere and cream off a bit of profit for little work.

 

Spivish indeed but they thought they were being altruistic. Another form of virtue signalling maybe...but making tidy sums while they do it.

[ThoughtCriminal]

As its a Sunday i hope people dont mind indulging me as i have a bit of a dilemma thats occupied my mind for a few months now. Hoping the hive mind can help settle my indecision. 

 

I have two adjacent properties up here in Teesside, both rented out. One was my house, next door was grandparents that i inherited. No mortgage in either, rent is 500 PM. 

 

Tenant in my house is perfect: never complains, keeps it clean etc. Grandparents house is opposite, succession of shit heads, dirty, damaged house, behind with rent etc. Just kicked the latest one out. 

 

Prices were low 60s for over a decade but last year or so they've shot up to 75ish. 

 

Cant decide whether to sell up, hang on like a greedy bastard and see if they keep going up, or bite the bullet and rent it out again. 

 

Not looking for a "what should I do" solution as i know that's on me. More of a "what would you do and why". 

[M S E Refugee]

I have watched Michael Gentile a few times and he is very bullish on the Precious Metal stocks.

According to Simply Wall St many of them are cheap as chips and pay decent dividends and yet I am bigly in the red.

[M S E Refugee]

4 minutes ago, ThoughtCriminal said:

As its a Sunday i hope people dont mind indulging me as i have a bit of a dilemma thats occupied my mind for a few months now. Hoping the hive mind can help settle my indecision. 

 

I have two adjacent properties up here in Teesside, both rented out. One was my house, next door was grandparents that i inherited. No mortgage in either, rent is 500 PM. 

 

Tenant in my house is perfect: never complains, keeps it clean etc. Grandparents house is opposite, succession of shit heads, dirty, damaged house, behind with rent etc. Just kicked the latest one out. 

 

Prices were low 60s for over a decade but last year or so they've shot up to 75ish. 

 

Cant decide whether to sell up, hang on like a greedy bastard and see if they keep going up, or bite the bullet and rent it out again. 

 

Not looking for a "what should I do" solution as i know that's on me. More of a "what would you do and why". 

Is the money worth the grief?

[ThoughtCriminal]

Just now, M S E Refugee said:

Is the money worth the grief?

This is what i keep swinging back and forth on. Greeds a hell of a thing. 

[DurhamBorn]

The simple way to look at the energy market is this.The government created a system where nobody could make a profit over the cycle but where new players could make money over a few good years when supply and demand was balanced and consumers over pay in spring summer.The directors stuff their salaries and pensions during this period.Big utilities then struggle to invest so instead try to cut costs to get closer the the companies who will only be here for half a cycle.Those directors then walk away in autumn and all the cash balances from customers is lost,but the regulator makes the rest of the industry cover it in levies,so in the end customers who were paying slightly more to keep a decent industry.

The whole system is a disaster,and its based around wanting to squeeze down profits for utilities so instead the government can increase tax.

I can tell you though government MPs have been visiting Centrica's Rough field the last month and spending lots of time with them.The sector is now in play and at the point in the cycle where the big boys will sweep away the small stuff.

BP probably needs Rough if its to build its hydrogen plant on Teesside and the generators need it to be able to burn hydrogen at some point.A deal or takeover is likely.

SSE if it splits will also become a target.Id rather it didnt and just kept plugging along as i locked in a divi at 7.4%.

We got the timing badly wrong on Centrica,but have done fantastic on the rest of the buys in the sector.Its ironic on Centrica that the part they want to sell,upstream is the part protecting them during this dis-location.

[DurhamBorn]

23 minutes ago, ThoughtCriminal said:

As its a Sunday i hope people dont mind indulging me as i have a bit of a dilemma thats occupied my mind for a few months now. Hoping the hive mind can help settle my indecision. 

 

I have two adjacent properties up here in Teesside, both rented out. One was my house, next door was grandparents that i inherited. No mortgage in either, rent is 500 PM. 

 

Tenant in my house is perfect: never complains, keeps it clean etc. Grandparents house is opposite, succession of shit heads, dirty, damaged house, behind with rent etc. Just kicked the latest one out. 

 

Prices were low 60s for over a decade but last year or so they've shot up to 75ish. 

 

Cant decide whether to sell up, hang on like a greedy bastard and see if they keep going up, or bite the bullet and rent it out again. 

 

Not looking for a "what should I do" solution as i know that's on me. More of a "what would you do and why". 

I think property in the area will do well over the cycle,or at least avoid the massive losses elsewhere,but at the same time now is a very good time to unload one easily if you wanted to.Id sell it and split the money across 14 telcos,oilies and goldies and across markets,countries.Then collect the divis.You still own one property there so are then more diverse in your assets.Depends on how much you own in other assets of course.

If your close to 50 you could also feed the money into your SIPP so getting a 20% or 40% uplift in tax back.

Not advice,DYOR etc

[eek]

27 minutes ago, ThoughtCriminal said:

As its a Sunday i hope people dont mind indulging me as i have a bit of a dilemma thats occupied my mind for a few months now. Hoping the hive mind can help settle my indecision. 

 

I have two adjacent properties up here in Teesside, both rented out. One was my house, next door was grandparents that i inherited. No mortgage in either, rent is 500 PM. 

 

Tenant in my house is perfect: never complains, keeps it clean etc. Grandparents house is opposite, succession of shit heads, dirty, damaged house, behind with rent etc. Just kicked the latest one out. 

 

Prices were low 60s for over a decade but last year or so they've shot up to 75ish. 

 

Cant decide whether to sell up, hang on like a greedy bastard and see if they keep going up, or bite the bullet and rent it out again. 

 

Not looking for a "what should I do" solution as i know that's on me. More of a "what would you do and why". 

See if your tenant knows someone to rent t by e other property.

[Errol]

Telling people not to panic is the signal that the situation is dire and everyone should actually be panicking.

[ThoughtCriminal]

12 minutes ago, eek said:

See if your tenant knows someone to rent t by e other property.

Tried and she said "nobody id put my name to" lol

[wherebee]

8 minutes ago, Errol said:

Telling people not to panic is the signal that the situation is dire and everyone should actually be panicking.

This.  Whenever a management team, a government, or a general says don't panic, get the fuck out of dodge.

[ThoughtCriminal]

19 minutes ago, DurhamBorn said:

I think property in the area will do well over the cycle,or at least avoid the massive losses elsewhere,but at the same time now is a very good time to unload one easily if you wanted to.Id sell it and split the money across 14 telcos,oilies and goldies and across markets,countries.Then collect the divis.You still own one property there so are then more diverse in your assets.Depends on how much you own in other assets of course.

If your close to 50 you could also feed the money into your SIPP so getting a 20% or 40% uplift in tax back.

Not advice,DYOR etc

Thanks DB, thats precisely what my "sell up" route would be. 

 

I thought SIPP tax advantage only came from salary sacrifice though? For all that ive seen SIPPs mentioned on here a thousand times ive never done any research to my shame. 

 

Sunday project. 👍

[ILikeCake]

1 hour ago, ThoughtCriminal said:

As its a Sunday i hope people dont mind indulging me as i have a bit of a dilemma thats occupied my mind for a few months now. Hoping the hive mind can help settle my indecision. 

 

I have two adjacent properties up here in Teesside, both rented out. One was my house, next door was grandparents that i inherited. No mortgage in either, rent is 500 PM. 

 

Tenant in my house is perfect: never complains, keeps it clean etc. Grandparents house is opposite, succession of shit heads, dirty, damaged house, behind with rent etc. Just kicked the latest one out. 

 

Prices were low 60s for over a decade but last year or so they've shot up to 75ish. 

 

Cant decide whether to sell up, hang on like a greedy bastard and see if they keep going up, or bite the bullet and rent it out again. 

 

Not looking for a "what should I do" solution as i know that's on me. More of a "what would you do and why". 

 

56 minutes ago, DurhamBorn said:

I think property in the area will do well over the cycle,or at least avoid the massive losses elsewhere,but at the same time now is a very good time to unload one easily if you wanted to.Id sell it and split the money across 14 telcos,oilies and goldies and across markets,countries.Then collect the divis.You still own one property there so are then more diverse in your assets.Depends on how much you own in other assets of course.

If your close to 50 you could also feed the money into your SIPP so getting a 20% or 40% uplift in tax back.

Not advice,DYOR etc

This is exactly what I would do.

1 hour ago, ThoughtCriminal said:

 

 

56 minutes ago, DurhamBorn said:

 

 

1 hour ago, ThoughtCriminal said:

 

 

56 minutes ago, DurhamBorn said:

 

 

[ThoughtCriminal]

Some nice dark humour for a Sunday 😂

[ThoughtCriminal]

Hows that for efficiency? 1 out of 5 working. 

[jamtomorrow]

1 hour ago, wherebee said:

This.  Whenever a management team, a government, or a general says don't panic, get the fuck out of dodge.

Don't panic, but if you *are* going to panic, be sure to panic first