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

[Harley]

23 hours ago, wherebee said:

The challenge is recruitment of new people you don't see daily.  Although I think even then, remote management techniques will be supercharged, and the benefits in terms of costs from no huge offices to rent will outweigh the negatives.  Plus, sick rates should go through the floor.  No more commutes to get infections booming.

Periodic physical get togethers in a controlled environment.  As a Carnival shareholder I have access to a number of cruise liners which would be excellent for such things!

[Harley]

21 hours ago, The Idiocrat said:

Good point. I also wonder what will happen to office politics - there are always those toxic, bitchy people who talk behind people's backs and shit stir about their colleagues......

The Return of the Village Gossip!

[Harley]

20 hours ago, JMD said:

But didn't they go bust after accounting scandal?, one of the first of the so called 'big 5'. Are you purposely trying to trigger us? 

AA was just a bit ahead of its time!

[Harley]

16 hours ago, Eventually Right said:

I still feel it’s a risk though-we're in fairly unprecedented times economically, and by the time of the budget, the scale of the mass unemployment problem may be coming clear, giving Rishi cover to make radical changes

I really would like it if he took this chance to tidy up our tax system, especially after the feet of extra tax code pages Brown produced.  I would go so far as to ask, maybe personal income tax allowances aside, all personal and corporate allowances, exemptions, etc were just removed, all of them!

[jamtomorrow]

14 minutes ago, Harley said:

I really would like it if he took this chance to tidy up our tax system, especially after the feet of extra tax code pages Brown produced.  I would go so far as to ask, maybe personal income tax allowances aside, all personal and corporate allowances, exemptions, etc were just removed, all of them!

Taxes on work will have to be rolled back almost completely anyway, as we enter work's end-game - the politics will force Government's hand (because "work good, indolence bad" is so ingrained in us), and the "working" tax base will have shrivelled to the point where it won't much matter either way (we're not there yet, but the final capitulation could be Hemingwayesque).

I'm expecting we'll end up flirting with Georgism for a bit (out of sheer necessity).

[Harley]

On 18/07/2020 at 07:42, jamtomorrow said:

Surprised it'll be as many as 3,500, and the solar farm part seems a bit bonkers - let's just start making batteries at scale in this country please, no need for the greenwash complications: https://news.sky.com/story/uks-first-battery-gigafactory-could-create-3-500-jobs-12030416

(DB, I'm guessing you'll enjoy the warning in bold - everyone's at it!!!!) 

The country's first so-called battery "gigafactory" has moved a step closer after a site in South Wales was identified as the preferred location.

Britishvolt said it had signed a memorandum of understanding with the Welsh government to develop its plans for the "green" factory, which would mainly produce electric car batteries under its own solar power, on the former RAF base at Bro Tathan in the Vale of Glamorgan.

It hoped that up to 3,500 jobs would be created following an initial investment of £1.2bn, but warned its deal was subject to financial backing from the UK government's Automotive Transformation Fund aimed at boosting the shift to electric vehicles.

<snip>

Another scheme where it would have been cheaper to pay everyone to ride in taxis?

[dgul]

8 minutes ago, Harley said:

Another scheme where it would have been cheaper to pay everyone to ride in taxis?

'BritishVolt' is a tech startup with no real history, that is hoping to be in receipt of £1.2 billion over a 12 month timeframe!

The CEO has an MBA from Cardiff (ie 'local', even though he is (/seems to be) from Abu Dhabi), plus a few years working for Jool (vaping, I presume).  He's set up a few companies, none of which have any existence on the internet, which sounds a bit weird to me.

His expertise is in 'financial services'.  What's that got to do with the necessary skills to get a startup moving to the point where it is employing hundreds and having billions in investment?

This is bonkers.  It looks just like a scam.

Of course the 'financial services' experience is actually pivotal -- he's seen scope for a massive flood of money coming from government and can see the potential for a multi-million salary -- impossible to imagine for any industry other than that currently supported by the people with money (this was fintech, and is now 'green').

Give it a few years.  He'll have built the factory but it won't work*, and the company will get some sort of weird investment -- this will actually be a bailout, but won't be advertised as such.  The most likely scenario is the Welsh Government will buy half the company for hundreds of millions, will tell everyone that they've got a bargain, then they'll buy the other half for even more.

I suppose at that point the grim reality will start to seep out.

[* Too expensive.  Customers using others.  Raw materials in short supply.  Labour problems -- Dunno what it'll be, but it'll definitely be someone else's fault]

[DurhamBorn]

18 hours ago, StrugglingMillennial said:

Just a quick question for the more experienced traders.

Is a ISA trading account better over a standard one, obviously not having to pay tax is always a winner but is it worth it considering the yearly charge on your account?

Thinking of opening one with Hargreaves Landsdown.

Always use ISA the fees are tiny compared to the massive tax advantage,they might cut the amount you can save in future etc,most fees on the platforms come from owning funds,individual shares only have the platform fee,and once portfolio gets a decent size its tiny.

[DurhamBorn]

1 hour ago, jamtomorrow said:

Taxes on work will have to be rolled back almost completely anyway, as we enter work's end-game - the politics will force Government's hand (because "work good, indolence bad" is so ingrained in us), and the "working" tax base will have shrivelled to the point where it won't much matter either way (we're not there yet, but the final capitulation could be Hemingwayesque).

I'm expecting we'll end up flirting with Georgism for a bit (out of sheer necessity).

I think they will lift NI allowance to £12.5k a year then merge with income tax so that pensioners etc take a big hit on earnings over £12.5k,iv structured my SIPP and ISAs as if that is certain to happen.

[JMD]

5 hours ago, Cattle Prod said:

Its still definitely a punt, and msy well be uneconomic. My rationale was that it was too big a resource to be left sitting there much longer when Alaska is losing oil revenue. Army Corps if Engineers approved an export route around a lake I think. I top sliced it and will probably sell most toward the end of summer, definitely before US election.

I'm planning similar before summer end, to consolidate/rebalance what I own. I bought knowing that I'd make mistakes. But nothing beats actually owning equities as opposed to running a virtual portfolio. For example I've learnt that I personally can only beat gdx/gdxj by small margin. Ok only a limited test period but given the additional risk, etc, i've decided to hold less individual miner stocks and instead buy more miner funds for long term holds.

[JMD]

Many good comments about wealth taxes on here recently. I agree that this will be the government focus now and in future, while also reducing work taxes in order to help make work pay. So double whammy for people like us who are trying to build or maintain wealth.                                                                                                                                                            Previous debates here have talked about physical silver/gold, forest/land and bitcoin as good strategies for holding wealth assets outside of the system and at arms reach from government, etc. These are all excellent suggestions as we ordinary folk haven't got the luxury of using offshore tax havens etc, so are massively constrained in what we can do.                                                                                                                                                                  My question is are there other strategies (apart from PM's, land, crypto) that people here are thinking of doing, perhaps they are currently only researching an idea, or maybe a friend has mentioned an idea that at first sounded unworkabe but might like to share here for analysis or comment?                                                                                                        For example, classic cars have been mentioned here and for those with mechanical skills I think this is a excellent idea. For context I have only recently/belatedly come to realise the actual risk of wealth taxes - whether they be in the form of ISA/pension tax changes or enforced bond buy-ins - and because I think these or other similar policies will happen I am seeking to invest and/or position part of my portfolio away from the rapacious gouging of government. Not easy to do, but definitely not impossible to achieve. 

[AWW]

The type of classic cars that are in budget for most people here will be money pits rather than money makers. That ship has sailed. The car I bought in 2012 has more than doubled in value, but I'm probably only just even on it after 8 years running costs. Which I'll happily take, but it's not a path to riches.

That said, when I bought my 355, what I really wanted was a Ferrari F50, but I couldn't stretch to £250k. They're now over a million... should have borrowed!

EDIT: They're actually going for more than 2 mil now. Fuck.

[JMD]

16 minutes ago, AWW said:

The type of classic cars that are in budget for most people here will be money pits rather than money makers. That ship has sailed.

Ok, but developing the whole 'hobby idea' a llittle more, perhaps adding value to a rundown asset, or making a collection of individually or nominally worthless items, is maybe a way of making a hobby or specialist area of knowledge pay you back dividends! Wouldn't make lots of money I guess but might be a 'worth'while pastime.

[Boon]

If you have a long enough time horizon and can accept being illiquid, virtually anything with a semblance of being collectable could be better than holding cash.

For instance a can of coke which hasn't been opened....seems stupid but if you had bought a stash 20 years ago @ 40p each you could probably sell them off for many multiples of the price.

The thought of buying even the crummiest Sony Walkman on sale in Argos in the 90s' at £10-15 and not opening it would have seemed like a crappy investment strategy at the time but today you could recoup many times your outlay.

 

[stoobs]

8 hours ago, jamtomorrow said:

Obvs gold types like a bit of the old inflation anyway, but rather enjoyed this analogy -

 

Ruining a diner. That would take a serious amount of ketchup.

[Bobthebuilder]

1 hour ago, JMD said:

Ok, but developing the whole 'hobby idea' a llittle more, perhaps adding value to a rundown asset, or making a collection of individually or nominally worthless items, is maybe a way of making a hobby or specialist area of knowledge pay you back dividends! Wouldn't make lots of money I guess but might be a 'worth'while pastime.

This is a good idea. I am sure we all do it to some extent, cars, guitars, cb radios,vinyl lps, paintings, antiques, etc, etc. I would see it as using some capital to do a worthwhile hobby that has some good re sale value.

All the best wheelers and dealers i know have been doing this for years.

[Option5]

31 minutes ago, stoobs said:

Inflation comes like ketchup out of a glass bottle. You keep slamming the bottle, but nothing happens. Until more comes out than you wished for. Your diner is ruined.”

Heinz ketchup glass bottles have a 57 moulded into the bottle at the most effective point to hit the bottle to encourage shear and free the ketchup. Hitting the bottle on the bottom leads to the scenario described above.

[jamtomorrow]

1 hour ago, JMD said:

Many good comments about wealth taxes on here recently. I agree that this will be the government focus now and in future, while also reducing work taxes in order to help make work pay. So double whammy for people like us who are trying to build or maintain wealth.                                                                                                                                                            Previous debates here have talked about physical silver/gold, forest/land and bitcoin as good strategies for holding wealth assets outside of the system and at arms reach from government, etc. These are all excellent suggestions as we ordinary folk haven't got the luxury of using offshore tax havens etc, so are massively constrained in what we can do.                                                                                                                                                                  My question is are there other strategies (apart from PM's, land, crypto) that people here are thinking of doing, perhaps they are currently only researching an idea, or maybe a friend has mentioned an idea that at first sounded unworkabe but might like to share here for analysis or comment?                                                                                                        For example, classic cars have been mentioned here and for those with mechanical skills I think this is a excellent idea. For context I have only recently/belatedly come to realise the actual risk of wealth taxes - whether they be in the form of ISA/pension tax changes or enforced bond buy-ins - and because I think these or other similar policies will happen I am seeking to invest and/or position part of my portfolio away from the rapacious gouging of government. Not easy to do, but definitely not impossible to achieve. 

Art? I mention this in almost complete ignorance of the art market (might be as bad a bubble as classic cars?), and more from the point of view of liking a nice bit of art anyway. Certainly *seems* like the well-orff like to load up on the stuff and do alright out of it, on intergenerational timescales.

Also The Monuments Men is a great film.

[dgul]

1 hour ago, Boon said:

If you have a long enough time horizon and can accept being illiquid, virtually anything with a semblance of being collectable could be better than holding cash.

For instance a can of coke which hasn't been opened....seems stupid but if you had bought a stash 20 years ago @ 40p each you could probably sell them off for many multiples of the price.

The thought of buying even the crummiest Sony Walkman on sale in Argos in the 90s' at £10-15 and not opening it would have seemed like a crappy investment strategy at the time but today you could recoup many times your outlay.

 

That's not true.

Some things do better than cash.  Some things don't. 

Really you want to get stuff at the 'worthless' stage and wait until they're 'worth something.

I did this with ancient computers 15 years ago -- they were all going into skips, or could be picked up for peanuts at car boot sales.  My 'investment' is now worth 10's of thousands of £s.  

The question is (should be) -- what's next?  It definitely isn't 'virtually anything'.  Furthermore, it almost certainly isn't 'anything that's considered collectable' (as you're then playing with others who bid up prices).

[I'm not sure about the 'worthless' stage -- but what it does mean is that there's not so much risk of loss 'by getting it wrong', even if there is a cost involved in storage.  Classic cars might be worth something, but if you get the timing wrong you might be £10k down and you've got the hassle of storage.]

[My guess for something for 'not quite right now' -- the original purpose-built bitcoin mining rigs.  The early ones are now at the 'worthless' stage.  Give it 15 years and they'll be wanted for museums]

[Castlevania]

36 minutes ago, Bobthebuilder said:

This is a good idea. I am sure we all do it to some extent, cars, guitars, cb radios,vinyl lps, paintings, antiques, etc, etc. I would see it as using some capital to do a worthwhile hobby that has some good re sale value.

All the best wheelers and dealers i know have been doing this for years.

If you do go down this route buy stuff that you like or can use, so a painting that you’ll take pleasure from having on the wall; a vinyl record you’ll enjoy listening to; a guitar that you enjoy playing etc. If it doesn’t work out and it’s worth less than you paid at least you can enjoy simply having it.

[Castlevania]

13 minutes ago, dgul said:

That's not true.

Some things do better than cash.  Some things don't. 

Really you want to get stuff at the 'worthless' stage and wait until they're 'worth something.

I did this with ancient computers 15 years ago -- they were all going into skips, or could be picked up for peanuts at car boot sales.  My 'investment' is now worth 10's of thousands of £s.  

The question is (should be) -- what's next?  It definitely isn't 'virtually anything'.  Furthermore, it almost certainly isn't 'anything that's considered collectable' (as you're then playing with others who bid up prices).

[I'm not sure about the 'worthless' stage -- but what it does mean is that there's not so much risk of loss 'by getting it wrong', even if there is a cost involved in storage.  Classic cars might be worth something, but if you get the timing wrong you might be £10k down and you've got the hassle of storage.]

[My guess for something for 'not quite right now' -- the original purpose-built bitcoin mining rigs.  The early ones are now at the 'worthless' stage.  Give it 15 years and they'll be wanted for museums]

I do think part of the bubble in classic stuff is due to zero interest rates. Some of the video games that I own now sell for stupid prices. I really should sell a lot of them.

[Option5]

2 minutes ago, Castlevania said:

Classic cars might be worth something, but if you get the timing wrong you might be £10k down and you've got the hassle of storage.]

I'm up on my Lancia at 50% of the current valuation, however I keep it as it's a "liquid" assert, in that I can always sell it for something quite quickly. Unlike housing that can take a long time to sell.

It's also handy that it's LHD which means I can take it other countries to sell.

[sleepwello'nights]

No ones mentioned fine wines yet. A truly liquid asset . 

 

[DurhamBorn]

https://www.bbc.co.uk/news/uk-wales-53465239

This will be a big test.I expect we night see an arc furnace on Teesside to melt down scrap,but if the government let Port Talbot do it then the UK wouldnt be able to produce the steels for ships etc anymore.This is the last stage of the cycle.Government has allowed industries to get down and down over 40 years.If you have no proper blast furnaces you cant produce anything that needs steel in a war situation.Lets see if this develops.

[AWW]

3 hours ago, Bobthebuilder said:

I would see it as using some capital to do a worthwhile hobby that has some good re sale value.

This is how I see it. I don't view the things I buy as having cost me what's written on the price tag. I view them as having cost purchase price minus selling price, over whatever period I own them for.

Cars, (Push) bikes and gadgets are my material vices. I always buy high milers, last year's frame and groupset, or last year's Macbook or whatever, then sell after a couple of years. You get to use nice stuff for less overall cost than buying the latest cheap shite that goes in a skip after 3 years.