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

[spygirl]

6 minutes ago, janch said:

This.  He's right .  Most of the private sector got to grips with their pensions years ago.  For years people working in the public sector knew the pension was one of the biggest perks of the job. 

Most people would be shocked to see how much of the council tax they pay goes on paying the pensions of retired council workers.  Councils used to publish the figures on a flyer which came with the council tax bill to show where all the money goes.  Not any more and it's tucked away in their accounts.

As @spygirl says overgenerous benefits and pensions will make the pain much worse for the people who actually pay the tax.

Cutting them would be political suicide but letting them "wither on the vine" as inflation rises may be an easier way out for the government.

Council pensions are *LEGALLY* meant to be fully funded, with no recourse to current tax payers.

Theres always problems with jobs for the boys and girls and idiot nephews.

In general, Im non anti make-work for the less productive. Charity, private sector, whatever. No issue.

I am *VERY* anti make work in public sector, where the cost is grossly underestimated and falls on tax payers, destroying local enterprise.

Theres still ~2m extra public sectorworkers to get rid after Brown's 'employ everyone!' scheme.

And thats not taking into account the productivity gains that the private sector has seen from automating everything.

 

 

 

[spygirl]

4 minutes ago, Talking Monkey said:

But aren't a lot of these pensions inflation linked

Ah just read they usually have a cap at 5%

Im not sure on the cap.

Ive not found it documenred.

[Harley]

Just to give back to those switching me on to some great macro, etc sources (podcasts and Youtube)....

Started with George Gammon who had TC on discussing Telsa, etc so went to TCs podcasts.  TC then had a podcast with Grant on who seems excellent.  So went to Grants podcasts with Bill Fleckenstein starting at the beginning with The End Game part 1 (currently listening, warning profanity!).

The podcast urls:

Rebel Capitalist: https://feeds.simplecast.com/xOsRQ_c8

TC's Chartcast: https://feeds.buzzsprout.com/758369.rss

The Grant Williams Podcast: https://feed.podbean.com/ttmygh/feed.xml

Works well while ground clearing!

 

 

[sancho panza]

It's the fear more than anything.....

 

[Majorpain]

48 minutes ago, spygirl said:

Same goes for the large switch.

There no point pulling a Waawee swithc apart when - poof! - the next software update puts loads of crap on their.

And you cannot pull apart software.

I can embeds stuff in large application that act as security. My current favourite is a large distributed application then embeds the LUA interpreter.

I hide the LUA byte code in updates then activate it on an install.

 

All the machine manufacturers these days go on about how the "4.0 factory" will be so much more efficient with machines talking to each other, Security is always somewhere near the bottom of the list.  Its all good, until idiot employee downloads ransomware and everything gets encrypted and locked as happened to someone a couple of years ago!

[sancho panza]

discussion on here about the size of robinhood interest,interesting to see who's going to lsoe the msot of their savings when TSLA plummets

[spygirl]

24 minutes ago, sancho panza said:

discussion on here about the size of robinhood interest,interesting to see who's going to lsoe the msot of their savings when TSLA plummets

Tesla need to buy GM or another ICe cr maker - after its gone bust.

[Craig]

1 hour ago, sancho panza said:

It's the fear more than anything.....

 

 

That's Glasgow in the picture if I'm not mistaken, so it's probably fear of being assaulted that's keeping people off the streets...

[Harley]

@sancho panza a theme from all the podcasts I posted earlier has been inflation and people's expectations rather than the other monetary mechanics.  The speakers have all hovered around the psychological factors without mentioning monetary velocity which gives a vent to it in formulaic terms. One interesting set of thoughts was people, faced with the new experience of shortage (eg. Loo paper!) have realised the idea of availability at a price, a willingness/acceptance to have to pay more to get.  And that supply shocks as things get back to a form of normal will exacerbate the mind shift to having to pay for something.  Add to that the increased cost of service delivery (e.g less crowded hence more expensive restaurants).   All in all a seminal mind shift from the disinflationary era mindset all most have known.  And the thought that employers may have to pay more to entice workers back.  Coronavirus could be the catalyst for a change in v.

[Popuplights]

6 hours ago, wherebee said:

OK - after sorting out a load of admin shite I've got about 5k free to invest.  Going to go all in Tesla, to the MOON!

Hope you have a time machine!!

[sancho panza]

1 hour ago, Harley said:

@sancho panza a theme from all the podcasts I posted earlier has been inflation and people's expectations rather than the other monetary mechanics.  The speakers have all hovered around the psychological factors without mentioning monetary velocity which gives a vent to it in formulaic terms. One interesting set of thoughts was people, faced with the new experience of shortage (eg. Loo paper!) have realised the idea of availability at a price, a willingness/acceptance to have to pay more to get.  And that supply shocks as things get back to a form of normal will exacerbate the mind shift to having to pay for something.  Add to that the increased cost of service delivery (e.g less crowded hence more expensive restaurants).   All in all a seminal mind shift from the disinflationary era mindset all most have known.  And the thought that employers may have to pay more to entice workers back.  Coronavirus could be the catalyst for a change in v.

Many thanks for this H.I've been on nights so jsut psoted some randoms while I surfed after wkaing up,so not acutally been through the last two days posts yet.I'll catch up later but very interested in these developments as you say,lights the way to higher prices for a lot fo things.I was thinking today, that when oil starts moving up,could see a wholesale change in western manufacturing as jobs come back due to transport costs.Like you say,psychologically,people may well be ready for higher prices post covid.

Edit to add-the empty shelves in shops were the first of many British people's lifetimes.............all of a suddne ,quite happy to pay three quid for a bag of pasta when faced with hungry kids.

Funnily enough was jsut looking at the FTSE 100 and thought of you,Saw Ferguson at £66/BKGH at £44 and wondered if you had any thoughts as to who's bidding these up?Is it divi buyers.

 

@DurhamBorn @kibuc

Interesting to see Fresnillo starting to move towards  the front of the herd....

 

 

 

[Harley]

Just back from a back breaking day of ground clearance in which one of the podcasts I listened to was:

The Grant Williams Podcast: The End Game Ep. 2 - The Lord Of The Dark Matter:

https://mcdn.podbean.com/mf/web/ep7h9i/TEG_0002.mp3

"The End Game" series of podcasts is, as implied in the title, trying to explore the same themes as this thread!

Almost as big a thud for me as when I found this thread!  Just so much macro in this one to ponder I don't know where to start summarising. 

However, a bit upset he was so negative about the prospects for individual process orientated fundamental value investors in the current system!  Essentially, only 10% of equity volume is discretionary so you can be the best in the world but get wiped out by the 90% non-discretionary. 

Part of the overall theme of "corrupted" markets lacking price discovery, apart from currencies and commodities.  I rambled on back before covid about value, etc and these and many other people I'm listening to are on the same page, with more advanced clarity, hence my excitement!

To me this all emphasises the need to optimise a bigger narrative than just the current financial markets.  I personally believe optimising say wealth exclusively in terms of the current financial set up (and given the emerging social trends such as wealth grabs) could yield a sub-optimal, even bad, outcome.  Alternative ways of measure, thinking, asset classes, etc are key as the current system is increasingly not fit for purpose.

PS:  Learnt a new concept, "float", to go with "short vol" from MacroVoices (another superb show).

PPS: A four week old podcast and things are already starting as discussed.  Look at silver and copper!

[sancho panza]

6 hours ago, Harley said:

Just to give back to those switching me on to some great macro, etc sources (podcasts and Youtube)....

Started with George Gammon who had TC on discussing Telsa, etc so went to TCs podcasts.  TC then had a podcast with Grant on who seems excellent.  So went to Grants podcasts with Bill Fleckenstein starting at the beginning with The End Game part 1 (currently listening, warning profanity!).

The podcast urls:

Rebel Capitalist: https://feeds.simplecast.com/xOsRQ_c8

TC's Chartcast: https://feeds.buzzsprout.com/758369.rss

The Grant Williams Podcast: https://feed.podbean.com/ttmygh/feed.xml

Works well while ground clearing!

 

 

Just listening to TC's podcast.Very itneresting but takes time to wamr up.

The Rebel Cpaitlaist link doesn't seem to work.ANy chance you can repost plese?

[Harley]

18 minutes ago, sancho panza said:

Just listening to TC's podcast.Very itneresting but takes time to wamr up.

The Rebel Cpaitlaist link doesn't seem to work.ANy chance you can repost plese?

Sorry about that.  Probably one for a podcast app.  Here's the web site:  Rebel Capitalist: https://the-rebel-capitalist-show.simplecast.com

Also on YouTube as "Rebel Capitalist".

Agree about TC.  But IMO worth it.  Probably think the same about Rebel but it's the guests that make it and the questions.

 

[sancho panza]

18 minutes ago, Harley said:

Sorry about that:

Rebel Capitalist: https://feeds.simplecast.com/xOsRQ_c8

 

Cheers Harley.

Very much so.Harks back to the comment that CP made a while back that it was a 2% drop in supply that led to the spike in 2007/8 but rather the perception of it.SImilarly,like Williams is saying,it's the perception with regard to price inflation.People have had a taste of the hard choices pertaining to scarcity and likeyou,I think that whilst it's not been the suoer tanker hasnt competed it's eight mile turn,it's defin itely begun it.

Very much the same with job insecurity.MRs P 12 years younger than me,never known a time for unemployment like the 1990's .This covid epsiode has given people the realistic prospect of seeing people close to them lose their income.Game changer imho.

[DurhamBorn]

https://www.dailymail.co.uk/money/markets/article-8523327/Budget-defecit-400bn-year-cost-pandemic-spirals.html

I think it might of been at the start of this thread or just after i said i expected £700 billion+ from the BOE to be printed to make up for the dis-inflation since 1982.

Roll to today and now the OBR is saying it might be a deficit of £660 billion.

So its looking like my macro numbers on this before any of this happened were bang on the money for the scale.

It should be noted that £700 billion is the dis-inflation printed back,thats the tipping point for a reflation to really go full on.

A few bad hits mixed in but portfolio is flying now with the profits far outweighing the laggards and whacks in some areas.I keep tilting towards the areas to soak this inflation ahead.

As Harley says,value is hated and such a small part of the markets,but inflation will unleash it and remember this.Liquidity simply moves.There is a massive amount of liquidity in big tech and gilts/treasuries etc.When it smells inflation the scale of buying in inflation assets will create a bubble in many areas.

Potash 5x

Oil 5x

Silver 10x

Gas 4x

Telcos 3x+divs

Government is in a huge hole.They have taxed the decent to death and allowed a massive client state to develop that now can not be paid for.Not even close.The structural deficit is probably £160 billion and growing.

[Harley]

2 hours ago, DurhamBorn said:

Government is in a huge hole.They have taxed the decent to death and allowed a massive client state to develop that now can not be paid for.Not even close.The structural deficit is probably £160 billion and growing.

That leaves, apart from the printing, pensions, negative rates and other financial repression, wealth (ISAs, second homes, etc), and bust ups with the public sector and client state.  Maybe even a tax on world income regardless of residency like for the Americans.  Not a nice place to be living in terms of service delivery, standards of living, security, and manipulated social and intergenerational strife.  Hopefully the music will be good though like last time, indeed better as this will be worse.

[wherebee]

4 hours ago, Harley said:

That leaves, apart from the printing, pensions, negative rates and other financial repression, wealth (ISAs, second homes, etc), and bust ups with the public sector and client state.  Maybe even a tax on world income regardless of residency like for the Americans.  Not a nice place to be living in terms of service delivery, standards of living, security, and manipulated social and intergenerational strife.  Hopefully the music will be good though like last time, indeed better as this will be worse.

The first sniff of this and my British passport goes in the bin.  I was expecting it at some point, but not yet....

[MrXxxx]

4 hours ago, Harley said:

apart from the printing, pensions, negative rates and other financial repression, wealth (ISAs, second homes, etc),

Yes, my `ears pricked` last night when I heard mention of CGT being a target...makes S&S ISAs even more valuable, until they stop them.

[MrXxxx]

2 minutes ago, wherebee said:

The first sniff of this and my British passport goes in the bin.  I was expecting it at some point, but not yet....

Can someone explain this tax implication...is it that you get taxed regardless of where you are domiciled, and so based on your citizenship?....if so, any other nations have  this policy?

[nirvana]

2 minutes ago, MrXxxx said:

is it that you get taxed regardless of where you are domiciled, and so based on your citizenship?....if so, any other nations have  this policy?

yup.apparently the Yankees go after you for tax anywhere in the world if you're a US citizen! you can run but you cannot hide 

[Castlevania]

3 minutes ago, 5min OCD speculator said:

yup.apparently the Yankees go after you for tax anywhere in the world if you're a US citizen! you can run but you cannot hide 

Yeah. Boris Johnson ended up having to pay CGT on the sale of his main home to Uncle Sam.

[nirvana]

there's an interesting debate about whether 'personal tax' is legal is the US......it's all to do with the 16th amendment.....

watch Aaron Russo's 'Freedom to Fascism' it's a good watch...

quote 'Through interviews with various individuals including former IRS agents, Russo sets forth the tax protester argument that, "there is no law requiring an income tax", and that the personal income tax is illegally enforced to support the activities of the Federal Reserve System'

[sleepwello'nights]

14 minutes ago, MrXxxx said:

Can someone explain this tax implication...is it that you get taxed regardless of where you are domiciled, and so based on your citizenship?....if so, any other nations have  this policy?

Its complicated, in essence if you are a UK resident you may be liable for CGT on the disposal of overseas assets. Non-residents are liable for CGT on UK assets. You also have to grapple with the concept of "Domicile".

https://www.litrg.org.uk/tax-guides/other-tax-issues/capital-gains-tax/capital-gains-tax-individuals-not-resident-uk#:~:text=CGT generally only applies if you are resident,may be liable to CGT when you return.

[DoINeedOne]

@Harley I think i posted it before but the interview with Grant Williams and Anthony Deden was one i ended up saving a interesting guy not all doom and gloom either