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

[Popuplights]

17 hours ago, DurhamBorn said:

My 15 year old PUG makes me feel good every day.Knowing it costs me £24 a month (parts/MOT/repairs over 12 months).I have been looking though,im going to buy something probably 5 years old around January.

I love bangernomics. If you don't care about image, running an older car is one of the most economical things you can do. Let some other mug pay the depreciation. It also means not giving a shit about where you park it, about minor scratches of dings. Very liberating.

33 minutes ago, Shamone said:

 

 

[DurhamBorn]

23 minutes ago, Popuplights said:

I love bangernomics. If you don't care about image, running an older car is one of the most economical things you can do. Let some other mug pay the depreciation. It also means not giving a shit about where you park it, about minor scratches of dings. Very liberating.

 

The big change came around 2003 onwards as cars became very reliable,didnt rust anymore and hadnt yet got massive amounts of sensors.My PUG has loads of scratches and like you say if it gets another i hardly bat an eyelid.There does come a time though to get another and i think at 15 i might have to.Il see what the test says in October.

[Bobthebuilder]

4 minutes ago, DurhamBorn said:

The big change came around 2003 onwards as cars became very reliable,didnt rust anymore and hadnt yet got massive amounts of sensors.

I have a vw caddy 2011, its fit for the scrap heap really the mechanics are sound but a lot of the sensors are kaput, too many bloody computers in them.

[Popuplights]

12 hours ago, wherebee said:

The big risk is that someone invents/releases a free energy source (think fusion/alien tech).

It's always 30 years away mate....

[AWW]

1 hour ago, Shamone said:

Too right. Most people don’t realise the mugs they are being taken for.

They do, but what are you supposed to do? Three grand month just about covers rent, utilities, council tax and food for us. Sticking under 50k would mean no holidays, no eating out, no pub, no activities with the kids. Unfortunately, pols who should be in favour of low taxes have conceded the argument to the left.

[leonardratso]

as in the last 5 months?

[AWW]

They've just conceded even more ground over the last five months. And put the NHS onto a pedestal that will prevent any meaningful reform happening for a generation.

[sancho panza]

18 hours ago, JMD said:

SP, interesting comments you make on the NHS. I agree but when you mention the 'shite employees have to take...', it reminds me how this rather depressing state of affairs applies across all public services. It's also I think why those same public services can't attract talented senior staff of character and skill that could help transform our public services. Ie there is too much beurocracy, too much blame-game/and today we can add pc shame-game to the list.

It's the lack of leadership issue that transcends so many of our public service failings.

You can see the overly politicised process ends up with poor leaders in leadership positions because the ones who'll tell you what you don't want to hear struggle to rise through the ranks.Norman Dixon in his seminal work,'The Psychology of Military Incompetence', reasoned that the soldiers who rise through the ranks during peacetime tend not to be the sort of people you want leading a wartime army.

I have friends in the Police who complain about the exact same thing-overly politicised senior ranks.

Two short stories here.Firstly,Mrs P works for a large US mulitnational and it's a pleasure to behold how they nurture future potential future leaders.In the ambulance service from what I've seen,if you have the right contacts and make the right noises in contrived interviews then you're in at the senior level.

Second story really sums up where we are.A colleague at work has talented graduate Electircal engineer hubby.He recently went for two interviews for software engineering jobs.One with UK mulitnat for where during the interview he was given multiple scenarios and had his knowledge tested.The second was with the NHS and they spent the whole time asking what the values of the NHS was and discussing it's mission statemtn.She said,he'd prepped really hard for the interview and they barely asked him a thing about the job he was going to do

13 hours ago, AWW said:

I don't think many working age Brits will move to continental Europe for the tax regime. Not enough for it to become a problem for HMG. Just too much of a culture shock, Brits generally won't speak the lingo. However, I do think plenty will leave London/SE if working from home does indeed become the new normal. So badly-run London/SE councils will be even more fucked than they already are, and London shitholes that have been recently gentrified by the arrival of the quite- well-off will return to being badlands.

COuld really open up the future for some offshore havens.Top rate of tax on the Isle of Man is 20%,no CGT,no IHT.

I can really see London emptying out.Pay to shit ratio almost as bad as being a one year police man.

Apparently in the US since the BLM riots all the U Haul trailersr and trucks have been heading out of teh big cities because people are so enamoured of the idea of defunding the police.

[sancho panza]

Didn't realsie @DurhamBorn had such a strong Frecnh accent-death of the 60/40 portfolio,inflation etc etc

This one from Macrovoices really is straight from this thread.If I could advise worth the full lsiten if you have time and also well worth registering to access the chart package which runs alongsdie the interview.I have done a precy for the time poor,but it doesn't do the guy jsutice.

Ticks so many boxes from thsi thread nad particualrly interesting to see this guy discussing generational inequity being at the root of political instability .

I've said before that the one size fits all inflation measures we use covers all manner of ills, in terms of not showing how different income or age deciles suffer different experiences of the same economy.soemthing that echoes with my experience of watching the young kids coming through at work carrying £50k student debt,35 year mortgages,high rents etc etc

 

https://www.macrovoices.com/875-macrovoices-232-vincent-deluard-the-nuclear-winter-of-60-40-portfolio

The Nuclear Winter of the 60/40 Portfolio

12 Minutes-Nuclear winter of the 60/40 portfolio-decade of negative real returns looming for traditonal portfolio.Cure is to reduce the starting price of the portfolio=massive repricing of financial assets,

People who rely on these return expectations-pension fund industry will not be able to generate the returns they need.

 

17 minutes secular inflation returning-six hrosemen of inflation-all 6 horsemen here

     1) asset price bubbles-forward p/e ratio of MSFT,AAPL etc

     2) central bank bubble-explsoion liquidity

     3) protectionism-post covid-prices moving up

     4) huge corporate detb problem and public debt-inflation is used to deal with it in a not so difficult way

     5) price manipulation-central banks skewing pricing

     6) generationla divide-wealth and income gap between young and old-inflation only way to bridge that gap

MMT will be steered away from bailing out bond and equity holders towards direct deficit monetization and giving moeny directly to individuals.

 

23 minutes-too early to call the death of the USD-we're entering a secular bear market for the USD.

.

25 minutes-cautiously optimistic on Europe.Germans/Dutch engaging willingly in stimulus to Southern Europe.

 

28 minutes-politcal unrest-driven by generational inequality-

inflation measures cover huge inequalities eg housing,medicare

We need these infaltion measures to revert ie asset prices down,rents down.

 

 

33 minutes-why no inflation thus far-since 09 expansive monetary policy has been offset by fiscal tightening/banks deleveraging.

Financial system not set up to absorb $3 trillion USD in three months.

When economy normalizes-savings rate will drop/govts will spend-inflation likely to appear by Dec 20

 

36 minutes-case for gold today is the argument that 5 years ago was used against it ie no intrinsic value,no limit to upside or downside as it has no uses, no dividends(so no risk of a divi cut), gold doesn't produce anything(real yield collapsing),

 

39 minutes-Lat Am-equities are at generational lows,great way to trade the USD,AMZN worth 3x the Brazilian national index whilst AMZN makes a fraction of the profits.

 

 

 

 

[sancho panza]

12 hours ago, BurntBread said:

Nitrate s produced with oil, and P & K are both mined (needing machinery, oil and mining rights). However, potassium is not a scarce element, and given enough energy, it might even be possible to extract it from seawater (albeit having access to deposits which can be obtained at a low energy cost would be hugely profitable in a high-cost-of-energy environment). Phosphorous though is on the ACS list of endangered elements. I would think that companies with access to scarce deposits could really have the world's nuts in a vice (so to speak) in the not too distant future.

Anyway, several of these companies have both P & K, so all's good, but just wondered whether it would be worth splitting them out to have diversity across phosphorus & potassium.

Great psot BB,in all honesty,I'm a spray n prayer for a reason.I don't have any great insights or knowledge to offer but very willing to learn from those that do.

I merely pick a secotr and have a look at the mian players in this case fertilizer.I wasn't aware of the points you raised really or the possible trades that might flow off them.

Personally,I'd leave the machinery makers to it at the mo,as I'm not a fan of complex trades

11 hours ago, Cattle Prod said:

I suspect shale decline curves has been explained to Uncle Warren and he no sees there will be not enough cashflow to pay down the debt, particularly aftee doubling down with Anadarko, which was crazy.

That said, when price picks up, if Oxy survives, it'll be re rated I'm sure. Maybe he doesn't have as long as he thinks that will take to wait!

I have an interest.I ditched all out shale exposure in early Feb...............except Occi........debating whether to take the pain.Thought it significant Uncle Wozza was opting out.

[sancho panza]

11 hours ago, Cattle Prod said:

This is a fair point, Sancho. I have to admit my perception of the public sector is that everyone has been there for ages, which of course isn't true.

That said, I think a poorly paid new entrant to the public sector will have better union representation and protection against inflation both in pay rises and pensions, than a poorly paid new entrant somewhere in the private sector. There still could be a lot of friction. And of course all the early retirees will be golden. I'm going to start digging into how much of my council tax is going on those pensions. Quite a lot I suspect.

What drives me absolutely insane about the public sector us that they will cut front line services first and retain an army of useless managers and pencil pushers in the offices. I'd be interested to hear your take on this. Cutting Leicestershire police like that is scary, have they cut the non front line positions by two thirds too?! It smacks to me of a "punish the public" mentality to me. If they're going to cut budgets, lets make sure it's visible etc etc 

Some of my council tax goes to Surrey Police, and I have no issue with that. I prefer local taxation, philosophically. But councils are largely fifedoms and unaccountable, I hope they get the shock DB mentions.

the excellent Macrovoices podcast above discusses the infaltion issue with reference to younger generations.(thanks as ever for bringing that site to my attention)

I think there are genuine issues of intergenerational inequity within the public sector.Particularly with regard to student debt.Nurses now incur £50k in debt for a job that starts at £24k on Band 5 and peaks at the top of Band 5 fi you don't preogress(as I understandit).Those nurses are then trying to buy houses at ten times local salary in Stalinist dumps like Leicester.The finacial outlook for nurses has changed massively over the last ten years and not for the better.

AS you say,it really is about the fact that they'll sacrifice frontline services happily whilst retaining huge HR/back office capacity.In this day and age there's no real need for county police forces each with their own back office.You could even question whetehr we really need as many firemen given how few hosue fires there are(msot cities have more firemen on duty then police and they rarely leave the station)

Leicestershire police have apparently 2089 officers(304 are specials),budget £169mn....................we can do maths on here can't we?from 2018

from 2010

https://www.theguardian.com/uk/2010/apr/04/police-pensions-budget-20bn

Fears that the burgeoning costs of Britain's public sector pensions will restrict the country's ability to cut its debts are underscored by new figures showing that police forces are paying out more than £2bn a year to retired personnel.

The figure – a fifth of the Home Office's budget for the police forces of England and Wales – can largely be attributed to shifting demographics. At a time when the average age of a retiring officer completing full service has dropped to 51 and life expectancy rates are increasing, many ex-officers will enjoy pensions for longer than they have worked.

 

 

 

ANd then there are the councils.I can't think of a much bigger drain on taxpayers than district councils.Places like Hinkley & Bosworth have a population of 110,000 , and 420 staff some of whom are earning some eye watering salaries given their jobs comapred to the private sector,especially given there's near zero risk they'll face the axe.

https://www.hinckley-bosworth.gov.uk/info/200026/council_departments_and_staff/353/staff_and_senior_salaries

from 2010 or so,but it makes the point that 20% of council revenue goes on pensions.

https://www.taxpayersalliance.com/council_spending_uncovered_ii_no_3_pensions_ljfyl_rqs9kanp9hwr5igfxm7oi

 

'Revealed for the first time: over 3,500 local councillors now take gold-plated local government pensions

• Local Authority staff pensions cost £4.5 billion in 2007-08, excluding teachers and firemen 
• Pensions cost 19% of council tax revenue – equivalent to £1 in every £5 of council tax raised 
• Average council now spends over £9.8 million on employer pension payments - up 7% from last year

 

 

 

[Nippy]

On 15/08/2020 at 22:45, Majorpain said:

if i was to play devils advocate and go Malthusian, there are not enough resources to make enough productive work for the 6 Bn odd people on the planet.  Mix that with some automation for the lower skilled and what you should really see is the value of labour (wages) fall dramatically in a simple supply/demand equation, that will obviously go down like a lead balloon.  Its been covered up so far by drawing wealth from the future through debt

You're not being a big enough devil. Someone on here said that money is not wealth, and no-one disagreed. The MMTers say that debt is not wealth borrowed from the future for the simple reason that only wealth created now or in the past can to be consumed now. MMTers also reckon that for businesses to survive, Joe Public has to be able to buy the product (Henry Ford also argued this), so somehow or other, the population will always be able to afford to buy stuff in the shops, so long as production does not fall. Automation will help keep production up. This means of purchasing stuff might even be Citizens Income.

[Sugarlips]

6 hours ago, Bobthebuilder said:

I have a vw caddy 2011, its fit for the scrap heap really the mechanics are sound but a lot of the sensors are kaput, too many bloody computers in them.

How many miles?

i just got an email offering a free 10 year warranty and 10 year roadside on a new Octavia, never seen 10 years before.

At AU$27k it’s about the same price as the equivalent model was 10 years ago. Using DB’s roadmap I wonder how much they’ll be in another 10 years, double?!

Wife has a 9 year old povo speck Octavia  (bought s/h) but it’s still only got 50,000 Kms on it so no point for us, raised an eyebrow though as all the s/h cars are selling fast at very inflated prices in Perth post-pandemic. 

A 10 year warranty offer could be a better deal than buying a bundle of trouble like the Caddy example as decent late model cars will likely retain their value in an inflationary environment.

[Bobthebuilder]

5 minutes ago, Sugarlips said:

How many miles?

60K.

But it has broken down so many times, under warranty and out. 4 injectors, control box, clutch and on and on. Was tax deductable so i didnt care but falls foul of Sadiqs new emission BS so in the bin it goes. I wont be playing his game anymore so small petrol car it is. The goverment think all us sole traders will be rushing out to buy new vans, will we fuck? Small petrol for me.

[AWW]

1 hour ago, sancho panza said:

with the NHS and they spent the whole time asking what the values of the NHS was and discussing it's mission statemtn.She said,he'd prepped really hard for the interview and they barely asked him a thing about the job he was going to do

I worked as a software developer in the NHS in the mid-00s. Amazingly, given the government of the time, the place really wasn't that politicised, however it was filled with incompetents, particularly in junior and middle management. My manager had a bit of self-awareness and generally left his team to get on with things however we wanted, but he wasn't adding any value for his £50k a year (this was in Yorkshire, in the mid-00s, so pretty fucking well paid for someone who wouldn't have got past being a bank clerk in the private sector).

[JMD]

6 hours ago, Popuplights said:

It's always 30 years away mate....

...like cancer cures tantalising always being 5 years away.                                                                                                                    Peter Thiel (excuse mentioning him again) says it is all about exaggeration in order to attract funding, nothing particularly insightful there you might think, however more worrying is his view that (as a sector investor himself) biotech research is mostly about research teams conducting overlapping, or irrelevant blind alley projects. He favours large government/military funded and run projects like the 5 year Manhattan atomic bomb, or the 10 year moon landing projects. Interesting in the context of this thread, ie large infrastructure projects. However as Thiel himself points out, today the government and the military don't have the caliber of personel that existed back in the 50s/60s. The recent covid cockup, policy origination and pitiful implementation I guess prove his point.

[wherebee]

57 minutes ago, Sugarlips said:

How many miles?

i just got an email offering a free 10 year warranty and 10 year roadside on a new Octavia, never seen 10 years before.

At AU$27k it’s about the same price as the equivalent model was 10 years ago. Using DB’s roadmap I wonder how much they’ll be in another 10 years, double?!

Wife has a 9 year old povo speck Octavia  (bought s/h) but it’s still only got 50,000 Kms on it so no point for us, raised an eyebrow though as all the s/h cars are selling fast at very inflated prices in Perth post-pandemic. 

A 10 year warranty offer could be a better deal than buying a bundle of trouble like the Caddy example as decent late model cars will likely retain their value in an inflationary environment.

I'm only seeing 5 year warranty on their websites here in Vic.  Where do you see 10?

I bought an old car when we got back for 5k and it's about to hit 150000km; probably die within the next 12 months so those skodas might be good if the 10 year W is on...

[Sugarlips]

3 minutes ago, wherebee said:

I'm only seeing 5 year warranty on their websites here in Vic.  Where do you see 10?

I bought an old car when we got back for 5k and it's about to hit 150000km; probably die within the next 12 months so those skodas might be good if the 10 year W is on...

Might just be a WA thing not sure.

Correction it's a demonstration cars sale so not brand new but still good in my book:

https://www.skodaperth.com.au/demo-sale/?gclid=Cj0KCQjwsuP5BRCoARIsAPtX_wGMasSL2h1VDzSPVq-Wthb8acYHu7wdVl0IF9qVSmFX_dqX1ScXBv4aApCsEALw_wcB&gclid=Cj0KCQjwsuP5BRCoARIsAPtX_wGMasSL2h1VDzSPVq-Wthb8acYHu7wdVl0IF9qVSmFX_dqX1ScXBv4aApCsEALw_wcB

[JMD]

4 hours ago, sancho panza said:

It's the lack of leadership issue that transcends so many of our public service failings.

You can see the overly politicised process ends up with poor leaders in leadership positions because the ones who'll tell you what you don't want to hear struggle to rise through the ranks.Norman Dixon in his seminal work,'The Psychology of Military Incompetence', reasoned that the soldiers who rise through the ranks during peacetime tend not to be the sort of people you want leading a wartime army.

I have friends in the Police who complain about the exact same thing-overly politicised senior ranks.

Two short stories here.Firstly,Mrs P works for a large US mulitnational and it's a pleasure to behold how they nurture future potential future leaders.In the ambulance service from what I've seen,if you have the right contacts and make the right noises in contrived interviews then you're in at the senior level.

Second story really sums up where we are.A colleague at work has talented graduate Electircal engineer hubby.He recently went for two interviews for software engineering jobs.One with UK mulitnat for where during the interview he was given multiple scenarios and had his knowledge tested.The second was with the NHS and they spent the whole time asking what the values of the NHS was and discussing it's mission statemtn.She said,he'd prepped really hard for the interview and they barely asked him a thing about the job he was going to do

COuld really open up the future for some offshore havens.Top rate of tax on the Isle of Man is 20%,no CGT,no IHT.

I can really see London emptying out.Pay to shit ratio almost as bad as being a one year police man.

Apparently in the US since the BLM riots all the U Haul trailersr and trucks have been heading out of teh big cities because people are so enamoured of the idea of defunding the police.

Yes, reminds me of ex kgb Yuri Bezmenov spelling out back in the 80's how the 'march through the institutions' was happening all around. His now very dated looking - but fascinating - videos are on you tube.                                                                          I think you are correct in pointing out the 'over politisisation' of our institution's. In the case of the police, the senior officers, and the many activist groups, thrive on it, but the rank and file police men/women just become cynical. The thing is that cynicism spreads to infect all police interactions with the public also. I won't labour the point, suffice it to say that this concerns me immensely and I think this type of phycho poisining has already negatively distanced our Robert Peel (and until recently) 'civilian police force' from us the civilians... Over to you Yuri!

[Popuplights]

3 hours ago, JMD said:

have friends in the Police who complain about the exact same thing-overly politicised senior ranks.

Which is exactly how someone called Cressida Dick manages to be in charge of the Met. 

[wherebee]

4 hours ago, Popuplights said:

Which is exactly how someone called Cressida Dick manages to be in charge of the Met. 

I knew some pretty senior police guys back in the 90's/00's in the UK who were proper collar takers.  They all retired/left after being passed over for promotions where a soyboy or a ladyee got it despite less experience at the coalface.

diversity, innit.

[AWW]

To quote my brother-in-law, 18 months away from retiring from the Met, you would have to be a mug to join the police now. Even moreso if you don't tick any diversity boxes.

[M S E Refugee]

Barrick are the top trending stock on Yahoo Finance today, I wonder what price the followers of the avuncular Warren Buffett will bid it up to?

[Loki]

5 minutes ago, M S E Refugee said:

Barrick are the top trending stock on Yahoo Finance today, I wonder what price the followers of the avuncular Warren Buffett will bid it up to?

So tempted to have a dabble.  Will it do a TSLA? That's the question.

[Don Coglione]

Just now, Loki said:

So tempted to have a dabble.  Will it do a TSLA? That's the question.

Having sold out at $24 a few months ago, I shall be sore!

Will this lead to a light being shone on the wider PM miners sector?