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

[Loki]

5 minutes ago, 5min OCD speculator said:

I'm not even worried for myself.....I have offspring who I care a great deal for and I'm worried for their future.....I guess that's why I get 'annoyed' occasionally.....

We all seem to agree it'll end up in a trainwreck, the extent is unknown......and yes the 'roadmap' here is very insightful and thought provoking!

Completely understandable.  You'll be in a better position than a lot of folks with the info here.  Durhamborn is using the same strategy for his kids...only so much you can do about 'the system' though

[sancho panza]

5 hours ago, Democorruptcy said:

As you know I'm in Wales so still in lockdown. Nothing is happening because hardly anything is coming to market (most recent £680k last sold £285k in 2005) and viewings aren't allowed. Here I don't see my competition as local folk who might be going to lose their job, it's people in secure public sector jobs (!) buying holiday homes to retire to later on. Like a Policeman who bought one he doesn't want to live in for 10 years so it's gone as yet another rental. Looking at some places in England mentioned on here, it seems a lot of sales have fallen through. If I was there I'd be trying some very low ball offers hoping to catch some fear. 

Lot of second home owners/landlords are 55+ according to govt.AS DB says,just wait till they're pensions start imploding.

I'd also question how many genuinely secure public sector jobs there are.Nurses,Ambulance staff,Dr's,teachers….lot of councils will get thinned out if @spygirl is right about balanced budgets,lot of back office will be gone.

Landlordism only works when you either get nice tenants that pay on time or less desirable tentants who pay you a 15% yield when they get round to it.Anything in the middle is a lot harder work than the propaganda on 118 would have you believe.

 

4 hours ago, TheCountOfNowhere said:

This'll make some on here chuckle.  Killer Bunny is back on TOS predicting pretty much what DB has predicted for a couple of years now.

The funny bit was I had to block him on twitter for his tweets about HPCers being idiots, they were all wrong, house prices aren't going to fall, rates are going up.

He's back, self proclaiming he was right all along.

He'll be along her soon enough....

His 2002 STR call was the stuff of internet legend.

3 hours ago, Barnsey said:

Wise words @Loki, I was getting a little too optimistic about making some low ball offers straight out of the gate but I think it’s going to take a little time for sellers to realise the gravity of the unemployment situation and the lags at play. Forget all the optimists saying it’s only affecting the low earning renters. What I DO know is the market ain’t going up from here, so at best I’m just losing rent money, but it’s impossible for the housing market to not be affected by the highest unemployment numbers since the early 90s (and that’s EXCLUDING furloughed). The fear of unemployment even for those in “safe” jobs is a mightily powerful force.

What has been a sudden shock is actually going to be more drawn out than I initially thought thanks to all the forbearance and furloughing, and there inevitably will be a small number of buyers who will succumb to committing even in these crazy times. So even though I’ve been waiting to buy for several years now, with various calculations and plans fixating on 2020, I’m now probably looking to buy early 2021, about 6 years after friends jumped into the bubbly SE market which we’ve recently relocated away from.
 

It’s been a real draining slog on my self esteem to be honest, 5 years of waiting for a decent housing market correction is a rather long time when life just seems to be passing by ever more quickly, and I can’t wait to actually just get it over with, but Im pretty sure I can find the strength to hold on a few more months!

Look at the UB count,up 850,000 to 2.1 million in a month.Give it two months and the EA's will come off furlough and into the figures,similar time to the people who've been flogging brand new cars to people on min wage via PCP/lease........I could go on.The debt bubble has burst.

At the same time cable is 1.22 and prices for staples will be rising from hereonin.

We'll get to the stage soon,where the hosue you're living in will be dropping more every month than your  rent I suspect.That changes the mentality of both buyers an sellers.

 

2 hours ago, Democorruptcy said:

The longer the lockdown in Wales goes on the more it suits me. Ideally when it's lifted, initially travel would be allowed within Wales but not by people coming from England. That would reduce competition and give us locals more of an advantage.

I've seen no end of these idiot local councillors who haven't got a scooby going around telling visitors to do one.Oblivious to the fact that they subsisdise their lifestyle.

Wales is in for a hard landing,jsut not as hard as Scotland.

5 hours ago, Democorruptcy said:

As you know I'm in Wales so still in lockdown. Nothing is happening because hardly anything is coming to market (most recent £680k last sold £285k in 2005) and viewings aren't allowed. Here I don't see my competition as local folk who might be going to lose their job, it's people in secure public sector jobs (!) buying holiday homes to retire to later on. Like a Policeman who bought one he doesn't want to live in for 10 years so it's gone as yet another rental. Looking at some places in England mentioned on here, it seems a lot of sales have fallen through. If I was there I'd be trying some very low ball offers hoping to catch some fear. 

Lot of second home owners/landlords are 55+ according to govt.AS DB says,just wait till they're pensions start imploding.

I'd also question how many genuinely secure public sector jobs there are.Nurses,Ambulance staff,Dr's,teachers….lot of councils will get thinned out if @spygirl is right about balanced budgets,lot of back office will be gone.

Landlordism only works when you either get nice tenants that pay on time or less desirable tentants who pay you a 15% yield when they get round to it.Anything in the middle is a lot harder work than the propaganda on 118 would have you believe.

 

4 hours ago, TheCountOfNowhere said:

This'll make some on here chuckle.  Killer Bunny is back on TOS predicting pretty much what DB has predicted for a couple of years now.

The funny bit was I had to block him on twitter for his tweets about HPCers being idiots, they were all wrong, house prices aren't going to fall, rates are going up.

He's back, self proclaiming he was right all along.

He'll be along her soon enough....

His 2002 STR call was the stuff of internet legend.

3 hours ago, Barnsey said:

Wise words @Loki, I was getting a little too optimistic about making some low ball offers straight out of the gate but I think it’s going to take a little time for sellers to realise the gravity of the unemployment situation and the lags at play. Forget all the optimists saying it’s only affecting the low earning renters. What I DO know is the market ain’t going up from here, so at best I’m just losing rent money, but it’s impossible for the housing market to not be affected by the highest unemployment numbers since the early 90s (and that’s EXCLUDING furloughed). The fear of unemployment even for those in “safe” jobs is a mightily powerful force.

What has been a sudden shock is actually going to be more drawn out than I initially thought thanks to all the forbearance and furloughing, and there inevitably will be a small number of buyers who will succumb to committing even in these crazy times. So even though I’ve been waiting to buy for several years now, with various calculations and plans fixating on 2020, I’m now probably looking to buy early 2021, about 6 years after friends jumped into the bubbly SE market which we’ve recently relocated away from.
 

It’s been a real draining slog on my self esteem to be honest, 5 years of waiting for a decent housing market correction is a rather long time when life just seems to be passing by ever more quickly, and I can’t wait to actually just get it over with, but Im pretty sure I can find the strength to hold on a few more months!

Look at the UB count,up 850,000 to 2.1 million in a month.Give it two months and the EA's will come off furlough and into the figures,similar time to the people who've been flogging brand new cars to people on min wage via PCP/lease........I could go on.The debt bubble has burst.

At the same time cable is 1.22 and prices for staples will be rising from hereonin.

We'll get to the stage soon,where the hosue you're living in will be dropping more every month than your  rent I suspect.That changes the mentality of both buyers an sellers.

 

2 hours ago, Democorruptcy said:

The longer the lockdown in Wales goes on the more it suits me. Ideally when it's lifted, initially travel would be allowed within Wales but not by people coming from England. That would reduce competition and give us locals more of an advantage.

I've seen no end of these idiot local councillors who haven't got a scooby going around telling visitors to do one.Oblivious to the fact that they subsisdise their lifestyle.

Wales is in for a hard landing,jsut not as hard as Scotland.

[Festival]

1 hour ago, DurhamBorn said:

100% agree,it sounds crazy,but its buy Teesside and the Humber,sell London this next cycle.My partner is pestering me to buy a flat on the east coast when the whack arrives,she has family in Scabbie and Brid and they are lovely people and one is a builder.Could do a lot myself and hed sort anything tricky.

https://www.rightmove.co.uk/property-for-sale/property-66873363.html

https://www.rightmove.co.uk/property-for-sale/property-78393886.html

Lots of long lease and freehold available

Got to love those prices - and the East Coast Main Line for the day or so a week you needed to commute. 

[sancho panza]

2 hours ago, DurhamBorn said:

Exactly why i told me son to carry on and buy.He moves in in two weeks.He could of walked,but the house he has got is in a great spot,he paid roughly 2004 price,is slightly cheaper than the HTB new estates here,but is far far superior (1978,big plot,not overlooked at rear,lovely south facing garden) and when they come up in the area they are snapped up very quickly and of course we are one of the cheapest places in the country,he paid £127k for a lovely semi.

I guided him to a 10 year fix at 2.64%,zero fees,10% overpayments allowed,after 5 years no lock in at all but still fixed for 5 years.Thats a stunning deal.

He has £32k of silver at yesterdays prices and will owe about 107k on mortgage.They will over pay about £6k a year and then if/when silver increases they will sell and clear mortgage.So say its 7 years,£42k+ 7 years repayments £17k,mortgage £48k,silver around $25 will clear mortgage.Of course i expect much higher silver prices,so likely they will clear mortgage and have £50k/£100k left over before they are 30 years old.

The interest costs should end up £18k before they pay it off so if they live to 80 interest will of cost £320 a year average or £25 a month so £25 a month instead of £550 a month rent for similar house.

At that sort of price he's buying on somewhere near an 8% yield which is where the maths moves against renting.Down here places on 8% yields are in not so nice places.But then if prices drop yields will rise(but possibly not as much)

Love the silver aspect of this trade DB,quite shrewd.I'd love to be the bank manager when they ask how he'll pay the loan off and he dumps the silver on the table.:-)

10 year fixes at that rate are too good to miss especially if you're looking at a ten year paydown. @Barnsey ref staffs what sort of rental yield are you currently paying?

 

[JMD]

1 hour ago, DoINeedOne said:

worth a listen to the whole thing but its also what you mentioned at the time stamped part of the video 50:00 ish

Apparently its land set aside for companies wishing to move there factories away from China which is twice the size of Luxembourg

 

It will be fascinating to see who/what type of US companies are the first to invest in the new Indian enterprise zone. I wonder how slowly such companies will extracate themselves from China... Slowly, or perhaps like removing a plaster, best to just let rip!

Interesting that such a single large part of India is being allocated in this way. Shows how centrally run India is - which is good for quick growth i suppose - maybe India really could become the new (improved) 'China'?

[sancho panza]

1 hour ago, Loki said:

Slightly off topic but I'm seeing more references online to The Fed, not in a money printing/stealing wealth context but in the context of The Fed eventually being the owner of everything, in return for issued debt, their only product.

Beyond my pay grade, on the surface it sounds like a reasonable take but as always bound to me more to it than that.

The BoJ owns 45% of Japanese ETF's,the Fed is working to a well established neo classicalplaybook but for me,CB's buying stocks is the end of capitalism until the market reasserts itself with a devastating deflation.

1 hour ago, Festival said:

My thesis is we are about to see the end of peak London. A combination of COVID 19 and improved tech will increasingly see companies aggressively reduce their central London office presence. Financial services is largely a boomer product other generations need it much less. At the same time  the brightest and best graduates from uni will no longer automatically head to London as a career location and even if they do graduate recruitment numbers are way down on previous years and that will likely continue as it did in the early 80s for a few years given the size of the recession.

 

London is a very expensive place to do business.

Covid has speeded up a lot of longer term processes one of which is increased working from home.ALl stockborkers used to need a physical presence in the city,not any more.My phone brokers are all at home at the mo for example.

[ThoughtCriminal]

Always tickles me when southerners jaws drop up at northern prices and vice versa 😂

 

Of course the southern boys are getting a nice surprise and us northerners are horrified 🤷‍♂️🤣

[Loki]

8 minutes ago, sancho panza said:

CB's buying stocks is the end of capitalism until the market reasserts itself with a devastating deflation.

What a fantastic summation(?) of things SP!

[spygirl]

48 minutes ago, Sasquatch said:

Second one is effectively a flying freehold. Caveat emptor!

Sound idea though.

If we were to sell our house soon, I'd probably have a look at this

https://www.rightmove.co.uk/property-for-sale/property-90634667.html

Ive been in that house many many times.

Like the vineyard round the back?

[Don Coglione]

5 minutes ago, spygirl said:

Ive been in that house many many times.

Like the vineyard round the back?

On the rob?

[spygirl]

Just now, Knickerless Turgid said:

On the rob?

No.

 

[Don Coglione]

1 minute ago, spygirl said:

No.

 

Ah, five quid prossie special then.

[spygirl]

1 minute ago, Knickerless Turgid said:

Ah, five quid prossie special then.

Nope.

Relatives.

[Loki]

1 minute ago, Knickerless Turgid said:

Ah, five quid prossie special then.

My covidbucks are going to last forever 

 

[JMD]

1 hour ago, 5min OCD speculator said:

This is exactly my gripe!!! The fed, print money, buy everything! @DurhamBorn seems to agree with it but it'll be destructive in the end! As well as immoral if you ask me!

It's a PRIVATE BANK too FFS!!.

DurhamBorn, what is OCD on about here? (not a rhetorical question btw!). So do you 'seemingly agree' that the Fed will end up owning the world? 

I know there may be systemic monetary collapse at cycle end - is that what OCD is ramping forward here (in his own inimitable way)?   

It's just that I 'try' to follow the logic flow of this forum (me being pretty ignorant on economics I admit), but the above has got me slightly!! confused. 

[Don Coglione]

Just now, spygirl said:

Nope.

Relatives.

Same thing up there, surely? At least according to the SeXYY one...

[DurhamBorn]

30 minutes ago, sancho panza said:

At that sort of price he's buying on somewhere near an 8% yield which is where the maths moves against renting.Down here places on 8% yields are in not so nice places.But then if prices drop yields will rise(but possibly not as much)

Love the silver aspect of this trade DB,quite shrewd.I'd love to be the bank manager when they ask how he'll pay the loan off and he dumps the silver on the table.:-)

10 year fixes at that rate are too good to miss especially if you're looking at a ten year paydown. @Barnsey ref staffs what sort of rental yield are you currently paying?

 

Exactly ,he is only 22 and his partner 23,but they both have secure jobs and that fix is stunning value given we are starting a reflation.The silver pretty much protects them from getting to the end of the term and rates being 10%.If they are silver will be in orbit.They fully intend to chip about £6k a year +£2.5k capital repayment so will be over half clear by year 7.

[nirvana]

@JMDI'll help a bit  The US government is $22trillion in debt at the latest count (maybe more now) who do they owe this to?

I'll defo leave now...

PS MONEY IS DEBT 

Edit I'm back cos I got that wrong! The US of A has got the people into shit loads of debt! The government and the bankers make out like bandits!!! 

[Castlevania]

1 hour ago, DurhamBorn said:

100% agree,it sounds crazy,but its buy Teesside and the Humber,sell London this next cycle.My partner is pestering me to buy a flat on the east coast when the whack arrives,she has family in Scabbie and Brid and they are lovely people and one is a builder.Could do a lot myself and hed sort anything tricky.

https://www.rightmove.co.uk/property-for-sale/property-66873363.html

https://www.rightmove.co.uk/property-for-sale/property-78393886.html

Lots of long lease and freehold available

In the second link are the doors really short or the ceilings really high? It doesn’t look “right” as if it’s out of proportion.

Looks good value compared to most of the rest of the country.

[JMD]

1 hour ago, Sasquatch said:

Second one is effectively a flying freehold. Caveat emptor!

Sound idea though.

If we were to sell our house soon, I'd probably have a look at this

https://www.rightmove.co.uk/property-for-sale/property-90634667.html

Wow that looks real value for money (inside needs makeover though, so could probably get it for cheaper price), and near Robin Hood's bay eh?, so perhaps a real steal!

I guess that freehold flat is a 'flying' freehold, but what problems would that present practically speaking? I tend to think the pros/cons between leasehold/freehold is finely balanced. Of course happy to be educated if you have some horror stories? I think up north they tend to have more freehold flats and more leasehold houses than we do down south, go figure? 

[janch]

Government is putting some restrictions on its business loans ie freeze on bosses pay; curbs on dividends and share buy-backs. 

Hopefully the zombies won't be able to get up to their usual tricks now............

https://www.bbc.co.uk/news/business-52719997

[Sasquatch]

1 minute ago, JMD said:

Wow that looks real value for money (inside needs makeover though, so could probably get it for cheaper price), and near Robin Hood's bay eh?, so perhaps a real steal!

I guess that freehold flat is a 'flying' freehold, but what problems would that present practically speaking? I tend to think the pros/cons between leasehold/freehold is finely balanced. Of course happy to be educated if you have some horror stories? I think up north they tend to have more freehold flats and more leasehold houses than we do down south, go figure? 

From my understanding flying freehold has issues in terms of mortgage availability and maybe also for building insurance. Of course, a flat in a multi storey building is either this type or leasehold. Both have their issues. I would much prefer to have a simple freehold property. Maybe a little 2 bed terrace but of course the asking price goes up. Of course if silver goes up to $300+, durhamborn would probably be able to buy the entire Bridlington seafront including the beach.

[Harley]

How to keep your shares safe from the threat of a broker going bust

https://moneyweek.com/node/601007?utm_campaign=money-morning-newsletter&utm_medium=email&utm_source=newsletter

Is that it? Did we see the bottom for the stockmarket in March?

https://moneyweek.com/investments/stockmarkets/601350/is-that-it-did-we-see-the-bottom-for-the-stockmarket-in-march?utm_campaign=money-morning-newsletter&utm_medium=email&utm_source=newsletter

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

Harley must ladder!

..........

[janch]

Meanwhile in the US:

 

Otavio Costa:

 

 

 

Record leverage.

 

Small caps have never been so indebted relative to EBITDA.

 

More importantly: Russell 2000 stocks now trade at a historic 15x EV to 2020 EBITDA estimates!

 

Stunning level of optimism priced in the markets these days.

 

 

 

[DurhamBorn]

49 minutes ago, JMD said:

DurhamBorn, what is OCD on about here? (not a rhetorical question btw!). So do you 'seemingly agree' that the Fed will end up owning the world? 

I know there may be systemic monetary collapse at cycle end - is that what OCD is ramping forward here (in his own inimitable way)?   

It's just that I 'try' to follow the logic flow of this forum (me being pretty ignorant on economics I admit), but the above has got me slightly!! confused. 

No because for everything the Fed prints assets that other people own go up in price,with a lag.I dont agree or like the system,but it is what it is.My unborn grandchildren wont say im really pleased  you hated that system grandfather and didnt take part in it,we like living in this rented hellhole.My job is to protect my family in every way i can.

The CBs are simply doing their job within the system we have.Its hyberbole that they only care about the rich.They dont actually give a toss about them.They actually care more about the poor because if we get systemic collapse its not the elite that suffer the most.Most of our problems are governments over spending on welfare,the CBs aided that by printing,but they only really did so during collapse events.In a way they were stuck.If you read the comments though,its obvious they are telling governments you are going to get one chance to invest here,dont come back with the bowl later because we will be fighting inflation.We will flatten the curve so you can borrow very cheaply,but its the last time we can on this scale.