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

[Harley]

1 hour ago, Cattle Prod said:

I noticed in March that they did this in Italy, I was wondering if they would use this 'method' here. Has to be political.

And financial (as all roads lead there), or the "political economy" as it were, which gives a bit of a pass to discuss things here, although nice if we could complete that last yard linking it to the macro picture, as discussing stuff like  WFH, behavioural changes, etc are doing.  Again though, I feel covid needs to be seen in terms of the trends and changes already underway maybe rather than as a source in it's own right.  For example, maybe Extinction Rebellion would have stopped us all commuting to our offices anyway!

PS:  I always thought the seeds were planted to a macro turning but that the behavioural bit was missing and could not see how that could change other than, as they say for bankruptcy, very slowly at first and then bang.  This must be the game changer though so game on?

[Majorpain]

1 hour ago, Cattle Prod said:

I noticed in March that they did this in Italy, I was wondering if they would use this 'method' here. Has to be political.

"Following the science" remember?    Various people/organisations have been given more than enough rope to hang themselves, general population will be mighty peeved if it turns out that they were locked indoors and lost their jobs for something that is only a problem for a very small % of the population.  Probably a good thing that they don't know how close it came to causing the "big kahuna".

Lot of economic/political/social moving parts spinning around at the moment, its hard to keep track of their interactions for the big picture view.

[jamtomorrow]

14 minutes ago, Errol said:

Agree completely.

Commuting isn't coming back in anything like the way it used to be. Most London businesses have told staff to stay at home until next year (at least). And even post-pandemic home working is the way forward. Most businesses will move to 4 days a week at home or just tell staff to 'do what they like' (like Amazon/Facebook have). Staff are happier and more productive at home. They also save £400 a month or more and 3hrs a day or more in time (I notice the politicians never mention the massive train ticket costs).

London and other cities will need to adapt to footfall being down 50% or more on a regular basis.

Boris is trying to hold back the future. He is trying to keep us in an analogue world when the world is now digital. He is also confusing work as being a place, rather than an activity you can do anywhere.

And somebody spare a thought for the office landlords. Oh the humanity!

In all seriousness, I'm wondering whether this is where "back to the office, fun's over" has come from - CRE landlords must be staring right down the barrel.

Rishi's dangled the carrot, stick coming next for homeworkers? They'll demonize us first, but the financial disincentives won't be far behind.

[Harley]

13 minutes ago, jamtomorrow said:

And somebody spare a thought for the office landlords. Oh the humanity!

In all seriousness, I'm wondering whether this is where "back to the office, fun's over" has come from - CRE landlords must be staring right down the barrel.

Rishi's dangled the carrot, stick coming next for homeworkers? They'll demonize us first, but the financial disincentives won't be far behind.

Dear Auntie.  We still have LAND and BLND in some income portfolios.  We are currently fooked, so very fooked.  Will we become more fooked or could something amazing happen, like it all gets sold off as hospitals or executive (remember them?) apartments?  Or the government sponsored property fairies come out, again?  For now, just off to lay some foundation stones, some ruddy big ones, and by hand, in the expectation of being too knackered to care!

[The Idiocrat]

6 minutes ago, jamtomorrow said:

And somebody spare a thought for the office landlords. Oh the humanity!

In all seriousness, I'm wondering whether this is where "back to the office, fun's over" has come from - CRE landlords must be staring right down the barrel.

Rishi's dangled the carrot, stick coming next for homeworkers? They'll demonize us first, but the financial disincentives won't be far behind.

For once, I hope the green lobby does something useful and brings "shame" to unnecessary commuting.

[Majorpain]

11 minutes ago, jamtomorrow said:

And somebody spare a thought for the office landlords. Oh the humanity!

In all seriousness, I'm wondering whether this is where "back to the office, fun's over" has come from - CRE landlords must be staring right down the barrel.

Rishi's dangled the carrot, stick coming next for homeworkers? They'll demonize us first, but the financial disincentives won't be far behind.

It all hinges on productivity IMO, if homeworking is as productive as office work then UK Plc saves a huge amount on oil/transport needs and the economy will in theory be able to grow far faster than previous.  Only drama is prices are set at the extreme's, and if the numbers of companies saying they cutting back on office space turns out to be true then a lot of the city centre stuff will become a liability, not an asset.  

The quiet roads at rush hour over the past few months have also been a revelation, no need for expensive road/rail capacity upgrades (used 110% rush hour, 10% rest of day) if you can connect 1,000's of people digitally through just one fiber cable.

[jamtomorrow]

3 minutes ago, Majorpain said:

It all hinges on productivity IMO, if homeworking is as productive as office work then UK Plc saves a huge amount on oil/transport needs and the economy will in theory be able to grow far faster than previous.  Only drama is prices are set at the extreme's, and if the numbers of companies saying they cutting back on office space turns out to be true then a lot of the city centre stuff will become a liability, not an asset.  

The quiet roads at rush hour over the past few months have also been a revelation, no need for expensive road/rail capacity upgrades (used 110% rush hour, 10% rest of day) if you can connect 1,000's of people digitally through just one fiber cable.

That's what *should* happen. But how do landlord types squeeze ever-increasing economic rent out of that kind of setup? My expectation is they won't go quietly.

[JMD]

1 hour ago, Cattle Prod said:

I noticed in March that they did this in Italy, I was wondering if they would use this 'method' here. Has to be political.

Yes i agree, and as i have said before, the Covid-eCONomy will turn out to be bigger than that quaint old Greta Thunbergian Green Economy. Ok, not an easy claim to make but...

The political 'war' (...will it all be over by Christmas i ask, where have we heard that before!?) being fought(formulated?) against the virus, along with the increasing controls (hijacking?) of the economy, not to mention the psy-ops (one for Harley maybe?) being ramped-up all around, are surely topics for discussion here? 

I'll end by saying that the political reaction to the virus both scared and angered me from the off. 'Scared' me for the above obvious reasons - but i'm also 'Angry' because i have now become what many/most might term a conspiracy theorist - Despite formerly never really entertaining others who believed in 'those types of weird/conspiracy ideas'. I console myself by saying that the Moon Landings, Alien abductions and Yetis are different stories from Covid-19... the yet-to-be-written history books, or maybe even the next 10 years - if things happen/unravel as expected - will tell.  

 

[JMD]

1 hour ago, Errol said:

Commuting isn't coming back in anything like the way it used to be. Most London businesses have told staff to stay at home until next year (at least). And even post-pandemic home working is the way forward. Most businesses will move to 4 days a week at home or just tell staff to 'do what they like' (like Amazon/Facebook have). Staff are happier and more productive at home. They also save £400 a month or more and 3hrs a day or more in time (I notice the politicians never mention the massive train ticket costs).

London and other cities will need to adapt to footfall being down 50% or more on a regular basis.

I agree. And despite my recent 'conspiracy post', this is where i show i am as conflicted as the rest. That is to say I want our politicians to show some political vision and address those ideas you mention above.

For example, the devastating social consequences of future mass unemployment could be 'solved' by instructing companies to operate a 3-day week. I say 'social', but its a start. and will leave the economics to Rishi et al.

[JMD]

1 hour ago, Cattle Prod said:

I wonder is Boris's about face to do with councils, and the fact that they are all bust @spygirl A massive drop off in rip off rates for the blood sucking councils must surely be the straw that breaks the camel. The whole lot of them are going to be be bailed out, which will be a national scandal. I think he's less worried about unemployment. Very few work in a sandwich shops as a career, it's a few quid when youre young for the most part. If you are the business owner, well, that's capitalism. High street has been dying for years, and a sandwich shop hardly has a unique selling point. Put your energy somewhere else.

Sorry CP, but i disagree with your last point about where to expend effort. Encouraging a 3-day week with UBI top-ups (my personal hobby-horse!) is surely where we will end up... so why shouldn't government start doing this type of thing now and save a lot of pain, worry, and not to mention social dislocation with lots of bored young men driven to radical politics... or is that what 'they' want to see happen?

(btw, i did see what you did there, green hydrogen/gas pumping eh?!)

[AWW]

9 minutes ago, JMD said:

For example, the devastating social consequences of future mass unemployment could be 'solved' by instructing companies to operate a 3-day week. I say 'social', but its a start. and will leave the economics to Rishi et al.

There's an argument that we should absolutely move to a 3-day week. The industrial revolution saw us stop working 14-16 hours, 6 days a week. However the computing and communications revolution has seen us stay on a 40-hour week, but one that includes about 15 hours of useless meetings, 10 hours of fucking around on your phone, 5 hours of lunch and maybe a couple of hours per day of actual productive work (for us office bods).

Either that, or incentivise one parent to stay at home. Many households have two full-time earners, which is a fairly recent development ostensibly to keep up with insane living costs, encouraged by governments that like the extra tax revenue. IMO, society would benefit massively from having kids brought up by their actual parents, rather than being chucked in the nursery for 10 hours a day from the age of 6 months. In my social circle, I'm the only one who's the sole breadwinner, and it's not because I'm the only one on decent money.

Personally, I think we've pissed away the potential benefits of the computing revolution and, rather than enjoying a lot more spare time, bid up house prices instead.

[JMD]

1 hour ago, Harley said:

And financial (as all roads lead there), or the "political economy" as it were, which gives a bit of a pass to discuss things here, although nice if we could complete that last yard linking it to the macro picture, as discussing stuff like  WFH, behavioural changes, etc are doing.  Again though, I feel covid needs to be seen in terms of the trends and changes already underway maybe rather than as a source in it's own right.  For example, maybe Extinction Rebellion would have stopped us all commuting to our offices anyway!

PS:  I always thought the seeds were planted to a macro turning but that the behavioural bit was missing and could not see how that could change other than, as they say for bankruptcy, very slowly at first and then bang.  This must be the game changer though so game on?

Excellent point Harley. Plus the government is front and center in charge of this health crises (i.e. Greta and her ilk have been politically quarantined, oh the irony). Which sort of links to my theory about the covid crises 'outdoing' the green agenda.

And our benign leaders are saving our lives to boot, so no one can argue back, lest they be termed Callous-Covid deniers (only a matter of time i think).

(i also see what you did there!)

[Loki]

36 minutes ago, JMD said:

Despite formerly never really entertaining others who believed in 'those types of weird/conspiracy ideas'. I console myself by saying that the Moon Landings, Alien abductions and Yetis are different stories from Covid-19...

Think of them as deliberate obfuscation and muddying the waters.

You're not a "conspiracy theorist". You are questioning the motives of a group known to lie, cheat, and deal behind the scenes.  Anyone who doesn't do this is the loon in my view. It's like Stockholm syndrome 

[DurhamBorn]

whats happening is the cycle turn we predicted.Government is in massive trouble,the huge over spending on welfare and wages and pension has slammed into a deflation,and people dont fancy the old ways anymore.Government will have to inflate,and invest massive amounts into new areas.I noticed today that the head of Vodafone had been telling government the margins werent high enough to invest here,exactly as predicted and governments will all be chasing investment so will allow much higher margins.

Its all coming along nicely.Councils should get interesting,those horrific organisations are one of the main reasons ordinary workers are skiny been fleeced for massive council tax,it will get fun when they try to force through even higher increases.

[JMD]

1 hour ago, The Idiocrat said:

For once, I hope the green lobby does something useful and brings "shame" to unnecessary commuting.

I think the government is well ahead of you. Surely 'saving lives' is more powerfully moral than a putative 2-inch rise in sea levels?

[DurhamBorn]

32 minutes ago, AWW said:

There's an argument that we should absolutely move to a 3-day week. The industrial revolution saw us stop working 14-16 hours, 6 days a week. However the computing and communications revolution has seen us stay on a 40-hour week, but one that includes about 15 hours of useless meetings, 10 hours of fucking around on your phone, 5 hours of lunch and maybe a couple of hours per day of actual productive work (for us office bods).

Either that, or incentivise one parent to stay at home. Many households have two full-time earners, which is a fairly recent development ostensibly to keep up with insane living costs, encouraged by governments that like the extra tax revenue. IMO, society would benefit massively from having kids brought up by their actual parents, rather than being chucked in the nursery for 10 hours a day from the age of 6 months. In my social circle, I'm the only one who's the sole breadwinner, and it's not because I'm the only one on decent money.

Personally, I think we've pissed away the potential benefits of the computing revolution and, rather than enjoying a lot more spare time, bid up house prices instead.

House prices and welfare.Both are linked and both massive problems.Welfare pays more than most wages for anyone with 2 kids.The reason we lost the advantages was because Labour got in in the 90s.Brown destroyed our economy.

[JMD]

43 minutes ago, AWW said:

There's an argument that we should absolutely move to a 3-day week. The industrial revolution saw us stop working 14-16 hours, 6 days a week. However the computing and communications revolution has seen us stay on a 40-hour week, but one that includes about 15 hours of useless meetings, 10 hours of fucking around on your phone, 5 hours of lunch and maybe a couple of hours per day of actual productive work (for us office bods).

Either that, or incentivise one parent to stay at home. Many households have two full-time earners, which is a fairly recent development ostensibly to keep up with insane living costs, encouraged by governments that like the extra tax revenue. IMO, society would benefit massively from having kids brought up by their actual parents, rather than being chucked in the nursery for 10 hours a day from the age of 6 months. In my social circle, I'm the only one who's the sole breadwinner, and it's not because I'm the only one on decent money.

Personally, I think we've pissed away the potential benefits of the computing revolution and, rather than enjoying a lot more spare time, bid up house prices instead.

I very much agree.... But not just the reduced working week, but so many other social ills of today just wouldn't exist. Lots of opportunities missed and many strides forward lost, since the 1970's when these types of economic problems should have been addressed. I think mostly due to shortsighted economic hang-ups over the need for an ever increasing gdp. I notice the tide may now have turned, with many questioning why not pivot to a gdp steady-state economy, and with other economic metrics taking priority.  

[DurhamBorn]

4 minutes ago, JMD said:

I very much agree.... But not just the reduced working week, but so many other social ills of today just wouldn't exist. Lots of opportunities missed and many strides forward lost, since the 1970's when these types of economic problems should have been addressed. I think mostly due to shortsighted economic hang-ups over the need for an ever increasing gdp. I notice the tide may now have turned, with many questioning why not pivot to a gdp steady-state economy, and with other economic metrics taking priority.  

The left were defeated so moved into all the institutions.They gained control outside of control.Take 1p off a single mother who has never worked the whole left machine goes into over drive.Cut a factory wage by £3 an hour due to Romania moving here,not a word said.Decent people have been taking it from all sides.Work doesnt pay,so why work?

[sleepwello'nights]

14 hours ago, sancho panza said:

 

Projecting the Diamond Princess mortality rate onto the age structure of the U.S. population, the death rate among people infected with Covid-19 would be 0.125%. But since this estimate is based on extremely thin data — there were just seven deaths among the 700 infected passengers and crew — the real death rate could stretch from five times lower (0.025%) to five times higher (0.625%).

How does that compare with the data from the US aircraft carrier. I recall the infection rate was slightly higher and the age of the crew is lower.

[sleepwello'nights]

6 hours ago, 5min OCD speculator said:

Bollocks! Anyone who says this is a cunt....it only helps a few individual dipsticks for a short period of time cos undoubtedly they'll just get into even more debt longer term

How does this sit with the inflation lovers?

Just googled Russel Napier, he even looks like a cunt 

Just goes to prove my point; money is an illusion..

[reformed nice guy]

I was reading "Dying of Money: Lessons of the great German and American inflations" by Jens Parsson and chapter 43 had some interesting insights:

"The stock market is the original home of inflationary madness in the early phases of any inflation. Later the stock market may fall into disrepute, but that is as misplaced as the original madness"

"The stock market dances to an inaudible tune that is played for it by the government's money inflation or deflation, just as all the members of society dance to the same tune every moment of their everyday lives without being able to identify the source."

"A rising stock market is a danger signal of the first order, and a falling stock market is a sign of returning reality"

"many of the most useful and basic kinds of business had been relatively disfavored by the inflation, their stocks had suffered accordingly, and in the purging of the inflation both their business and their stocks' values could be expected to improve at least as much as the prices of goods. Successful self-defense in the stock market was a matter of projecting oneself mentally into the post-inflationary world for a look around, seeing which businesses would thrive as well as ever and which would not, and then returning to inflation's midst to buy the stocks of companies which would be thriving later and were doing at least passably well even then"

https://recision.files.wordpress.com/2010/12/jens-parsson-dying-of-money-24.pdf

@DurhamBornis your real name Jens Parsson?

[jamtomorrow]

33 minutes ago, DurhamBorn said:

Work doesnt pay,so why work?

Work, as we know it, is over - we're already witnessing the effects of its slow death, and its final demise at the hands of automation is a baked-in certainty.

The only interesting questions (to me) are: when is the final capitulation? What on earth will the world look like when the moral primacy of work has been toppled? (As it will have to be)

[logana]

5 hours ago, AWW said:

Also, weaker and more susceptible people die first. When there are no weak or susceptible people left, the death rate drops off. 

Fat people...

[Harley]

2 hours ago, JMD said:

(i also see what you did there!)

Warning, lovefest coming! 

I love your (and others) last few posts and not just because you told me off and I'm going all doggy and rolling over in submission!  Although tbh, being remarkably thick over some things, I didn't quite understand, nor do I understand the above.  Not that it matters as call me old fashioned but if a good neighbor asks me to turn the music down, I just do!  So please, no explanation!

No, regardless whether we agree or not (I first need to think on), a bit of focus on the "soft" side of this (politics, psychology, behaviours) is fascinating as we are observing something as it unfolds, real time, around us.  It's all happening right here right now and it's not about the loo paper!  And it's these soft areas that I now pay more attention to after years following the hard stuff.  Focussed discussion is good as context is everything to stay on top of all this stuff and work out a way forward.

Conspiracy or not is now irrelevant as "they" have either front run this or have now used the opportunity it presents.  I was listening to Grant Williams and was caught by surprise after a long analytical podcast when he ended by saying he mentioned to his wife that this all sounds too much of a cock up to there being nothing more to it.  Chilling.

I've been saying it well before covid, optimising financial strategies, etc within the current financial/regulatory/political/social setup may prove to be suboptimal.

[JMD]

1 hour ago, sleepwello'nights said:

Just goes to prove my point; money is an illusion..

But is money an illusion?

I get where your coming from and I'm not trying to be argumentative. Its rather that Yuval Harari says many interesting things in his books 'Sapiens' and 'Homo Deaus' about human belief systems, institutions and trust. Isn't the money concept all about trust?

Sounds a silly thing to say, but the Pacific Islanders and their 'boulder money' taught me what money is, very humbling i think.   

https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money?t=1594994091489