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

[JMD]

14 hours ago, Harley said:

Anyone gone back to look at their own (and others) posts on this and the preceding thread (part 1) in their perennial search for self improvement?  The good, the bad, the ugly.  Noticed I was talking a lot about out there stuff way back (regulation, meaning of money, coming reset, stores of value) that is all centre stage now in our viral wonderland.

I agree, and your concerns about that 'out there stuff' have become very real, with a more interfering and powerful state encroaching into both our public and private lives being born out by governments cynical/manipulative reaction to the panicdemic.  My personal state of nirvana would be to achieve a store of value outside of the economic system... a 'First Full of... BTC' anyone?!?

[DurhamBorn]

6 hours ago, Nomad said:

Hi I have been following this thread over 2 or 3 years with great interest, thank you to all who contribute. 

I am very interested in future house prices in the south of england. Current prices and sales are crazy. If as is being predicted inflation is going to take hold can people envisage even higher house prices? Personally I dont see how as interest rates increase surely they just become more unaffordable? On the other hand I have been expecting house price falls for 20 years and it hasnt happened yet, so why would this time be any different?

The cycle is against southern housing.A massive amount of mortgage sustaining jobs wont be coming back,the cycle will be more northern industrial based.The old Danelaw areas.It could be they are simly destroyed by infation and flatline nominal,though down nominal and inflation adjusted is likely.

Inflation will mean capital flows to other areas that can make a return,and government wont be getting any printing from the BOE after another 18/24 months maximum,likely much less.

[Green Devil]

1 hour ago, DurhamBorn said:

The cycle is against southern housing.A massive amount of mortgage sustaining jobs wont be coming back,the cycle will be more northern industrial based.The old Danelaw areas.It could be they are simly destroyed by infation and flatline nominal,though down nominal and inflation adjusted is likely.

Inflation will mean capital flows to other areas that can make a return,and government wont be getting any printing from the BOE after another 18/24 months maximum,likely much less.

No more printy printy? 😭😭 Ill believe when I see it! I think if we do get to that stage we really are screwed. 

[jamtomorrow]

More fluttering from the Wealth Tax kites:

https://www.bbc.co.uk/news/business-55236851

This part is comedy gold:

"A 1% per year tax rate could be imposed for five years on wealth of more than £1m per two-person household, the Wealth Commission said."

Best of luck with that one.

By the time anything like this is implemented, they'll have "discovered" that pinning down the net worth of truly wealthy individuals is like nailing the proverbial to the wall. So they'll be coming after mugs like us instead - it'll be more like: anything over £100K and it'll be the SIPPs and ISAs they go for, because they're sitting ducks.

[planit]

Just now, Green Devil said:

No more printy printy? 😭😭 Ill believe when I see it! I think if we do get to that stage we really are screwed. 

Central bankers have been scared of having an economic correction on their watch up to now, they hit the print button as soon as things look dicey.

 

But this will change very quickly if it looks like they might end up destroying the pound. Having your name permanently written as the person who destroyed sterling would be orders of magnitude worse.

 

So the question is:

Can they print forever without inflation taking off (I can't believe Japan is still going)?

 

If it looks as though inflation is getting out of control they will hit the stop button hard and quickly which will cause a huge crash. I agree with DB that they will let inflation go much further this time, over the last 15 years they have always been wary of inflation taking off in their notes but the attitude is different now, no one will want to stop the recovery and by the time they realise it will be too late.

An insane recovery boom over the next 6 months will get inflation going. If people get their confidence back (and it is contagious) the velocity of money recovery spending all the horded money should surprise everyone.

 

[Democorruptcy]

42 minutes ago, jamtomorrow said:

More fluttering from the Wealth Tax kites:

https://www.bbc.co.uk/news/business-55236851

In that article is a link to Argentina doing a wealth tax and what they are supposed to be spending it on:

Quote

 

the money raised, 20% will go to medical supplies, 20% to relief for small and medium-sized businesses, 20% to scholarships for students, 15% to social developments, and the remaining 25% to natural gas ventures.

https://www.bbc.co.uk/news/world-latin-america-55199058

 

 

[DoINeedOne]

 

Marc van Gerven, who headed the solar, storage and onshore wind businesses at Shell, Eric Bradley, who worked in Shell’s distributed energy division, and Katherine Dixon, a leader in its energy transition strategy team, have all left the company in recent weeks. Dorine Bosman, Shell’s vice-president for offshore wind, is also due to leave the company. Several other top executives in the clean energy part of the business also plan to exit in the coming months, two of the people said. I wouldn’t be surprised if we see more high-profile departures Person familiar with the internal split Not every move is known to be linked to frustration about the pace of change but people familiar with the internal debate said there were deep divisions over the timeframe for reducing the company’s dependence on oil and gas revenues

 

lol

 

 

[wherebee]

1 hour ago, jamtomorrow said:

More fluttering from the Wealth Tax kites:

https://www.bbc.co.uk/news/business-55236851

This part is comedy gold:

"A 1% per year tax rate could be imposed for five years on wealth of more than £1m per two-person household, the Wealth Commission said."

Best of luck with that one.

By the time anything like this is implemented, they'll have "discovered" that pinning down the net worth of truly wealthy individuals is like nailing the proverbial to the wall. So they'll be coming after mugs like us instead - it'll be more like: anything over £100K and it'll be the SIPPs and ISAs they go for, because they're sitting ducks.

For you lot in the UK, you should be diversifying now in my view.  A little something hidden away every month could be very very valuable in years to come.  Doesn't have to be gold or silver - even something as mundane as a very high quality tool for the garage which will have resale value in 20 years....

 

[spygirl]

10 hours ago, Nomad said:

Hi I have been following this thread over 2 or 3 years with great interest, thank you to all who contribute. 

I am very interested in future house prices in the south of england. Current prices and sales are crazy. If as is being predicted inflation is going to take hold can people envisage even higher house prices? Personally I dont see how as interest rates increase surely they just become more unaffordable? On the other hand I have been expecting house price falls for 20 years and it hasnt happened yet, so why would this time be any different?

You are wrongly assuming housing affects interest rates.

Its the other way around.

Despite the BS on 'independence' the FED sets UK rates. More so these days, as the $ is the only game in currencies now, both the Yen and Euro disappearing back into their hole.

The US economy is coming back very strong.

The Us will not be as badly affected as the UK and EU as they just dont have that many poorly old people.

Sure, covid will take out fatties and what.

The US also doesnt have a bloated welfare state, which keeps 30-50% of workign age on some sort of bennies.

The London/South housign market is going to dei on aits arse.

IN ~2000, Id guess guess the London/Souther economy was mainly finsec and retail, with the services around them.

Those sectors are dead now, in terms of large number of well paid employees.

Housing markets are driven by the 30-55 age group.

By bailing out the 30 (no 45) and 55 (now 60) age group of 2008, the BoE/UKGOV basically fucked the then 20-30 year olds of 2008.

Todays 30-55 have to by the houses with real earnings, under 4x  LTE.

Find out the average 30-55 earnings in the South (hint - ~30-50% will be on TCs) and work out selling prices.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[spygirl]

1 hour ago, planit said:

Central bankers have been scared of having an economic correction on their watch up to now, they hit the print button as soon as things look dicey.

 

But this will change very quickly if it looks like they might end up destroying the pound. Having your name permanently written as the person who destroyed sterling would be orders of magnitude worse.

 

So the question is:

Can they print forever without inflation taking off (I can't believe Japan is still going)?

 

If it looks as though inflation is getting out of control they will hit the stop button hard and quickly which will cause a huge crash. I agree with DB that they will let inflation go much further this time, over the last 15 years they have always been wary of inflation taking off in their notes but the attitude is different now, no one will want to stop the recovery and by the time they realise it will be too late.

An insane recovery boom over the next 6 months will get inflation going. If people get their confidence back (and it is contagious) the velocity of money recovery spending all the horded money should surprise everyone.

 

QE does not make a country wealthy- make cake bigger. Just into thinner slices.

Japan is an export machine with a very loyal onshore debt holders. Mrs Yomoko is the modern day equivalent of the No Surrender Jap soldier on a Pacific island.

The UK is not Japan, not by a long shot.

The BoE may choose to drag its heels on rasing rates - it already. All that happens is that earnings get destroyed, which will destroy house prices further.

Te pound like all currencies, wont be destroyed. It will just be worth less n less. Despite the bulshit, the UKGOV have been doing that years.

Compare the UK agiainst a harder currency country, say, Switzerland.

Weak curencies never worked as a means for economic progress. They wrok even less now as the $ dominates trade. If you curency falls against $ than your ecnomy does too.

 

 

 

 

 

[Democorruptcy]

They are going to financialise water now

Quote

 

Water joined gold, oil and other commodities traded on Wall Street, highlighting worries that the life-sustaining natural resource may become scarce across more of the world.

Farmers, hedge funds and municipalities alike are now able to hedge against — or bet on — future water availability in California, the biggest U.S. agriculture market and world’s fifth-largest economy. CME Group Inc.’s January 2021 contract, linked to California’s US$1.1 billion spot water market, last traded Monday at 496 index points, equal to US$496 per acre-foot.

The contracts, a first of their kind in the U.S., were announced in September as heat and wildfires ravaged the U.S. West Coast and as California was emerging from an eight-year drought. They are meant to serve both as a hedge for big water consumers, such as almond farmers and electric utilities, against water prices fluctuations as well a scarcity gauge for investors worldwide.

https://financialpost.com/investing/water-joins-gold-and-oil-for-first-time-as-traded-commodity-on-wall-street-amid-fears-of-scarcity

 

 

[Harley]

10 hours ago, JMD said:

A reminder of more normal times?... Get with the (global reset) program Harley, surely that was our 'old' normal, with the 'new' normal yet to be defined!!

Cheeky b*gger - I've been warning you guys about this for yonks - and many of my words are not wasted - "a reminder of more normal times" - attention to detail me son, attention to detail. 

[Democorruptcy]

1 hour ago, DoINeedOne said:

 

Marc van Gerven, who headed the solar, storage and onshore wind businesses at Shell, Eric Bradley, who worked in Shell’s distributed energy division, and Katherine Dixon, a leader in its energy transition strategy team, have all left the company in recent weeks. Dorine Bosman, Shell’s vice-president for offshore wind, is also due to leave the company. Several other top executives in the clean energy part of the business also plan to exit in the coming months, two of the people said. I wouldn’t be surprised if we see more high-profile departures Person familiar with the internal split Not every move is known to be linked to frustration about the pace of change but people familiar with the internal debate said there were deep divisions over the timeframe for reducing the company’s dependence on oil and gas revenues

 

lol

 

 

Link https://financialpost.com/commodities/energy/shell-executives-quit-amid-discord-over-green-push

[AWW]

3 minutes ago, Democorruptcy said:

They are going to financialise water now

The unit "acre-feet" suggests that's just a weather future in a slightly different frock, to get some publicity.

[Majorpain]

39 minutes ago, spygirl said:

Japan is an export machine with a very loyal onshore debt holders. Mrs Yomoko is the modern day equivalent of the No Surrender Jap soldier on a Pacific island.

I don't think i'm going to see a more amusing description of a countries savers!

[AWW]

Can we talk about the apparent bubble that is Tesla? I'm starting to wonder if I've been thinking about it the wrong way - what if it's an energy stock? Storage and distribution of energy. The cars are just there to create demand for their storage and distribution tech. Thinking along those lines led me to open a small position at just under $500. Plus, when it joins the S&P 500 in a couple of weeks, the index tracker funds are going to have to buy gobs of it, which I thought made for a decent entry point.

Forgive me dosbods for I have sinned.

[Chewing Grass]

1 minute ago, AWW said:

Can we talk about the apparent bubble that is Tesla? I'm starting to wonder if I've been thinking about it the wrong way - what if it's an energy stock? Storage and distribution of energy.

Still not worth it as there are many other companies and many other technologies in the pond, any lead Tesla has will be short lived. Tesla is a glamour stock for bubble riders and those interested in shiny tech but are not particularly tech savvy.

[Bricormortis]

1 hour ago, Democorruptcy said:

They are going to financialise water now

 

Always was going to happen...I look at how much I pay for a tank of petrol, then think the water companies must envy that price, after all what can you live longer without...petrol or water ? I did have a holding in Mueller water which did quite good, but I transferred it to Shell in a divi seeking tidy up before the recent run up.

[AWW]

You can collect water for free when it falls from the sky though. Try that with petrol.

[Virgil Caine]

5 hours ago, jamtomorrow said:

More fluttering from the Wealth Tax kites:

https://www.bbc.co.uk/news/business-55236851

This part is comedy gold:

"A 1% per year tax rate could be imposed for five years on wealth of more than £1m per two-person household, the Wealth Commission said."

Best of luck with that one.

By the time anything like this is implemented, they'll have "discovered" that pinning down the net worth of truly wealthy individuals is like nailing the proverbial to the wall. So they'll be coming after mugs like us instead - it'll be more like: anything over £100K and it'll be the SIPPs and ISAs they go for, because they're sitting ducks.

Wealth taxes are notoriously difficult to assess and they never rarely raise the amounts claimed. The biggest laugh about these stories is that some cited Argentina one of the planets perennial financial basket cases as an example of a how the money might be raised. These exercises also involve a lot of double counting of wealth such as money in savings and pensions. For example, I would hazard a guess quite a bit of money held in savings accounts by those over 65 are in fact lump sums taken at retirement from pensions. It therefore counts as part of the lifetime allowance used when valuing a pension. The money does not exist twice.

[Harley]

1 hour ago, AWW said:

You can collect water for free when it falls from the sky though. Try that with petrol.

Isn't that forbidden in some part(s) of the US? 

[spygirl]

3 hours ago, AWW said:

Can we talk about the apparent bubble that is Tesla? I'm starting to wonder if I've been thinking about it the wrong way - what if it's an energy stock? Storage and distribution of energy. The cars are just there to create demand for their storage and distribution tech. Thinking along those lines led me to open a small position at just under $500. Plus, when it joins the S&P 500 in a couple of weeks, the index tracker funds are going to have to buy gobs of it, which I thought made for a decent entry point.

Forgive me dosbods for I have sinned.

 

2 hours ago, Chewing Grass said:

Still not worth it as there are many other companies and many other technologies in the pond, any lead Tesla has will be short lived. Tesla is a glamour stock for bubble riders and those interested in shiny tech but are not particularly tech savvy.

I'm not interest in Tesla as an investment.

It is interesting as a company.

They genuinely do have a lead of electric vehicles. Iirc Tesla market cap is worth multiples of Ford n GM combined.

Even the non leccy bits are clever - body assembly etcetc.

Just goes to show how shut entrenched management are.

Tesla offers growth.

Ford n GM offers pension liabilities.

[Chewing Grass]

15 minutes ago, Harley said:

Isn't that forbidden in some part(s) of the US? 

The only funny buggers are Colorado who limit it to two Barrels (110 US Gallons), Georgia (you can only water plants with it) and Arkansas where the collection system has to be designed by a certified professional engineer. Everywhere else is free 'n' easy.

[janch]

Higher rate pensions tax relief could face the chop

The Government is facing a large hole in its finances, and while it’s not yet acknowledging the elephant in the room, this almost certainly means tax rises in the near future.The Conservative election manifesto rules out rises to income tax, National Insurance or VAT, which are the three big levers the Chancellor could otherwise pull. That leaves the burden falling squarely on other areas, and pensions could be one of them..........

.............Each £100 contributed to a pension costs a basic rate taxpayer £80, a higher rate taxpayer £60, and an additional rate taxpayer £55.

 

This is from last week's Shares magazine from AJ Bell.  Maybe this is to prepare us for what's to come (instead of a wealth tax?)

[Green Devil]

17 minutes ago, janch said:

Higher rate pensions tax relief could face the chop

The Government is facing a large hole in its finances, and while it’s not yet acknowledging the elephant in the room, this almost certainly means tax rises in the near future.The Conservative election manifesto rules out rises to income tax, National Insurance or VAT, which are the three big levers the Chancellor could otherwise pull. That leaves the burden falling squarely on other areas, and pensions could be one of them..........

.............Each £100 contributed to a pension costs a basic rate taxpayer £80, a higher rate taxpayer £60, and an additional rate taxpayer £55.

 

This is from last week's Shares magazine from AJ Bell.  Maybe this is to prepare us for what's to come (instead of a wealth tax?)

Id say the odds on cutting are 90%. Highly likely IMO. Can't see a wealth tax as too many tories mates affected. Gotta be a pension grab as that is paid by the squeezed middle not the 1%.