Credit deflation and the reflation cycle to come (part 3)

[Long time lurking]

https://thephilosophicalsalon.com/a-self-fulfilling-prophecy-systemic-collapse-and-pandemic-simulation/

 

https://thephilosophicalsalon.com/the-central-bankers-long-covid-emergency-noise-and-conspiracys-best-kept-secret/

[mcdongle]

13 hours ago, Bricks & Mortar said:

I wasn't really sure, but instinctively thinking this can't be right.  So, I did some thinking overnight, and googling this morning.

I reckon, LNG is not the same as natural gas.  It's cooled down to a liquid state and put in a pressure sphere to keep it that way.  It takes up 1/600th of the volume, according to wikipedia.

So, the 20 tankers, and their 3.3m cubes, will decompress to 1980 million cubes, and replace 22 days of the Yamal at full capacity.  Europe needs about one tanker per day to replace it, if my maths is right, (I haven't started on the sherry yet.)

It's 5000 miles from Houston to Milford.  = 4344 nautical miles.  Or, 9600 nautical miles round trip.

If the tanker travels at 15 knots, a round trip takes 640 hours, or 26.6 days.  Add a couple days for load/unload, and its 30 days.  So, we need about 50% more tankers than the 20 to replace the Yamal altogether.

And, as if by magic, Zerohedge has another story, referencing the Bloomberg one of a day earlier, where the number of tankers has indeed swollen to 30.

We're gonna be alright folks.  Merry Christmas.  Sherry time!

https://www.zerohedge.com/commodities/us-sends-fleet-lng-ships-fuel-starved-europe

Thanks for that, The headache over this has gone ..Merry Christmas

[Sugarlips]

How broke does the ‘richest country in the world’ have to become in order to not be able to pay its own employees..?

https://www.bitchute.com/video/6qEaobc0Vxl2/

[Sugarlips]

All these US metrics are deteriorating 

[Errol]

 

[Democorruptcy]

12 hours ago, Sugarlips said:

All these US metrics are deteriorating 

Is The Fed balance sheet really only $8.57 trillion? I had no idea it was so low.

[dnb24]

8 minutes ago, Democorruptcy said:

Is The Fed balance sheet really only $8.57 trillion? I had no idea it was so low.

It was only $900 billion at start of 2007

[Castlevania]

1 hour ago, Democorruptcy said:

Is The Fed balance sheet really only $8.57 trillion? I had no idea it was so low.

That’s the Fed as opposed to the US government. I misread it earlier and thought the same I.e. that’s low.

[sancho panza]

6 hours ago, dnb24 said:

It was only $900 billion at start of 2007

Incredible to see how that's happened

Who'd have thought all that dollar printing would bring commodity led price inflation the world over?

Wolf brings the recent hike action together.Looks transitory to me.

https://wolfstreet.com/2021/12/22/end-of-easy-money-global-tightening-in-full-swing-fed-promises-to-wake-up-in-time/

The Czech National Bank dished out another surprise today, raising its main policy interest rate by 100 basis points to 3.75%, the highest since February 2008, and the fifth rate hike this year. A hefty rate hike had been expected, but not this hefty: None of 11 analysts polled by Reuters predicted a 100-point hike.

At its prior meeting on November 4, the CNB had jacked up its policy rate by 125 basis points, the biggest shock-and-awe rate hike in 24 years. Since June, when it began its rate-hike tango, the CNB jacked up its policy rate by 350 basis points, from 0.25% to 3.75%.

The Central Bank of Russia, on December 17, raised its policy rate by another 100 basis points to 8.5%, its seventh rate hike this year, totaling 425 basis points, from 4.25% to 8.5%, pressured by surging inflation, particularly food price inflation. Overall inflation in Russia hit 8.4%, food inflation hit 10.8%.

This makes the Central Bank of Russia the only central bank whose rate hikes have actually caught up with inflation. Interest rates that are below the rate of inflation are still stimulative and inflationary; Russia has reached some level of neutral.

Since July, the Bank of Russia has been using the term “persistent” in its statements to describe this inflation, while the Fed’s Powell was still clinging ludicrously to “transitory” and “temporary.”

The Bank of the Republic (Colombia), also on December 17, hiked its policy rate by 50 basis points to 3.0%, the third rate hike in a row, totaling 125 basis points since liftoff at 1.75% in September. Inflation hit 5.3% in November.

The Bank of England, on December 16, raised its policy rate by 15 basis points for liftoff, to 0.25%, dishing out a surprise to markets, after having walked back expectations of a rate hike at this meeting. Inflation in the UK surged to 5.1% in November, the worst in 10 years.

Norges Bank, the central bank of Norway, also on December 16, hiked its policy rate by 25 basis points to 0.5%, its second rate hike, after its September liftoff from 0%. Inflation in Norway jumped massively from 3.5% in October to 5.1% in November, the worst since 2008.

The ECB, also on December 16, announced a sharp reduction of QE, from an average of €92 billion a month currently, to about €40 billion by March, and to €30 billion in Q3, and to €20 billion in Q4.

This reduction is a two-step process: First, the end of its €72 billion a month Pandemic Emergency Purchase Programme (PEPP) by March. To ease the blow of the €72 billion cut, the ECB will raise its classic QE program from €20 billion a month now to €40 billion in March, cutting on net its total QE by €52 billion a month by March.

The Bank of Mexico, also on December 16, surprised markets by raising its benchmark rate by 50 basis points to 5.5%, the fifth rate hike in a row, totaling 150 basis points. Inflation in Mexico has jumped to 7.4% in November, the worst since January 2001.

The Central Bank of Chile, on December 14, dished out a 125-basis-point rate hike, to 4.0%, in line with expectations, following the shock-and-awe surprise 125-basis-point rate hike at its October meeting, and the fourth rate hike since the cycle started in July, totaling 350 basis points.

The National Bank of Hungary, also on December 14, hiked its policy rate by 30 basis points to 2.4%, the seventh rate hike in a row, from liftoff in June at 0.6%. Inflation has spiked to 7.4% in November, the worst since 2007, up from 6.5% in October, and from 5.5% in September. So this is moving fast, much faster than the rate hikes, but at least it’s doing something, unlike the Fed.

The State Bank of Pakistan, also on December 14, jacked up its policy rate by 100 basis points, to 9.75%, after the shock-and-awe 150-basis-point hike in October, and a 25-basis-point liftoff hike in September from 7.0%. The three rate hikes totaled 275 basis points. Inflation in Pakistan spiked to 11.5% in November.

The Central Bank of Armenia, also on December 14, hiked its policy rate by 50 basis points to 7.75%, seventh rate hike in this cycle, from liftoff at 4.25%. Inflation jumped to 9.6% in November.

The Central Reserve Bank of Peru, on December 11, hiked its policy rate by 50 basis points to 2.5%, the fifth rate hike in a row, since liftoff at 0.25%. Inflation was at 5.7% in November.

The National Bank of Poland, on December 8, hiked its policy rate by 50 basis points to 1.75%, third rate hike in a row, totaling 165 basis points, from liftoff at 0.1%. Inflation spiked to 7.8% in November, from 6.8% in October and 5.9% in September – now moving very fast, and the central bank is falling way behind, but not as far behind as the Fed.

The Bank of Brazil, also on December 8, hiked its policy rate by another 150 basis points, to 9.25%. Since March, when the rate hikes started, it has jacked up its policy rate by 725 basis points, from 2.0% to 9.25%, as inflation shot straight up starting last year, to 10.7% in November, the worst since 2003, driven by all the usual suspects, from fuel to housing costs.

The Bank of Korea, on November 25, during its final meeting in 2021, raised its policy rate by 25 basis points to 1.0%, following its 25-basis-point hike in August. Inflation has jumped to 3.7%, the worst since 2012.

The Reserve Bank of New Zealand, on November 24 during its final meeting in 2021, hiked its policy rate by 25 basis points to 0.75%, the second rate hike in a row, after having ended QE cold-turkey in July, and after having created the worst housing bubble in the world.

The South Africa Reserve Bank, on November 18, during its final meeting in 2021, hiked its policy rate by 25 basis points to 3.75%, marking liftoff. Inflation hit 5.5%.

The Central Bank of Iceland, on November 17, hiked its policy rate by 50 basis points to 2.0%, fourth rate hike since liftoff in May from 0.75%. Inflation has surged to 5.1%, the highest since 2012.

The Bank of Japan, like the Fed and the ECB, has not hiked rates yet. And unlike the Fed and the ECB, it is not yet under red-hot pressure from inflation and housing bubbles. But ahead of the Fed and the ECB, the BoJ has ended its super-massive QE in May, after beginning the taper in the fall last year, when Abenomics came to an end with the exit of Prime Minister Shinzo Abe. And so one of the biggest money printers in the world has stopped printing money, which is a start.

And where is the Fed? Powell, after downplaying inflation all year, finally declared that inflation is a “big threat.” The Fed has cut its asset purchases, promised to end them entirely no later than March, discussed Quantitative Tightening, and put some timid rate hikes on the table for next year. But all this is too little too late, as inflation in the US has reached the worst level in 40 years, and is worse than in many of the countries listed here that have already jacked up their policy rates multiple times to tamp down on inflation, while the Fed’s policy rates are still near 0%, and it’s still printing money.

 

[sancho panza]

US national debt/4 to allow for trend watching versus Fed balance sheet.What happens when the Fed unwinds QE?Sustainable meh!

 

[CannonFodder]

Thank you SP; wondering if this will create a weak dollar if everyone else is raising but fed not.

USTs will be increasingly sold in these countries as less attractive investment.

[Juniper]

3 hours ago, CannonFodder said:

Thank you SP; wondering if this will create a weak dollar if everyone else is raising but fed not.

USTs will be increasingly sold in these countries as less attractive investment.

I saw an argument for a strong dollar this morning from Chase Taylor of Pinecone Macro:

It does make sense that energy may be a strong influence given the current prices. Currency still proves too complex for my understanding so I just thought the different perspective was interesting.

Jesse Felder talked on macrovoices last week about a ‘trifecta’ of rising energy prices, rising dollar and rising interest rates leading to an earnings recession…perhaps an option for where we’re headed? @sancho panza this is similar to your theory but I’m not sure your thoughts on the dollar?

[DoINeedOne]

Interesting little Twitter thread

 

 

 

[DurhamBorn]

7 hours ago, Juniper said:

I saw an argument for a strong dollar this morning from Chase Taylor of Pinecone Macro:

It does make sense that energy may be a strong influence given the current prices. Currency still proves too complex for my understanding so I just thought the different perspective was interesting.

Jesse Felder talked on macrovoices last week about a ‘trifecta’ of rising energy prices, rising dollar and rising interest rates leading to an earnings recession…perhaps an option for where we’re headed? @sancho panza this is similar to your theory but I’m not sure your thoughts on the dollar?

Earnings recession for anyone who cant put up prices with inflation.Its the distribution cycle kicking in.Energy costs are ground zero first.Then tax as government tries to give more free money to cover up the massive hit.Then everything else.

Houses will give up lots of equity to pay a good chunk of it.

[Bobthebuilder]

1 hour ago, DurhamBorn said:

Houses will give up lots of equity to pay a good chunk of it.

With what I have learned about bank mortgage lending this last couple of days, a large amount of equity is gonna go up in smoke I think, and the banks are prepared for it.

[Phil]

46 minutes ago, Bobthebuilder said:

With what I have learned about bank mortgage lending this last couple of days, a large amount of equity is gonna go up in smoke I think, and the banks are prepared for it.

So only distressed sellers then. 

[Bobthebuilder]

4 minutes ago, Phil said:

So only distressed sellers then. 

Try to raise the money to buy it and then let me know.

[Phil]

Just now, Bobthebuilder said:

Try to raise the money to buy it and then let me know.

I agree. I think the housing market has totally stopped functioning. It will be totally fubared with lots of debt prisoners, which will lead to relationship breakdown and the banks owning. The knock on is the debt stays with the debtor and their credit file is then fubared so that’s them for 6 yrs.  I think there will be a window for them who have a reasonable deposit, full time job and little to no credit as well as having unicorns as pets.

[Bobthebuilder]

1 minute ago, Phil said:

I agree. I think the housing market has totally stopped functioning. It will be totally fubared with lots of debt prisoners, which will lead to relationship breakdown and the banks owning. The knock on is the debt stays with the debtor and their credit file is then fubared so that’s them for 6 yrs.  I think there will be a window for them who have a reasonable deposit, full time job and little to no credit as well as having unicorns as pets.

I have been looking to help a family member who will be homeless soon, bank says no. I am not rich, but doing OK and if I can't help him then anyone else in his position is fucked.

[RJT1979]

Just now, Bobthebuilder said:

I have been looking to help a family member who will be homeless soon, bank says no. I am not rich, but doing OK and if I can't help him then anyone else in his position is fucked.

Everyone needs to stop helping. Then prices free fall

[Phil]

1 minute ago, Bobthebuilder said:

I have been looking to help a family member who will be homeless soon, bank says no. I am not rich, but doing OK and if I can't help him then anyone else in his position is fucked.

Sorry to hear. Hope it works itself out. Strong men/women make…. and all. I’m in the same situation to be fare. It’s one of the reasons I hate this shithole and our glorious leaders. Rant over.

[Plan-b]

Surely housing can never be allowed to substantially fall, if it does then the banks go with it. Perhaps the currency will be devalued instead so any property falls to the casual observer look small.

This seems to be the way of every currency in history. 

[DurhamBorn]

2 minutes ago, Plan-b said:

Surely housing can never be allowed to substantially fall, if it does then the banks go with it. Perhaps the currency will be devalued instead so any property falls to the casual observer look small.

This seems to be the way of every currency in history. 

Banks can take 40% off without a care.Higher rates mean profits shoot up.Leveraged BTL will take a lot of heat.Might not be losses,more equity going up in smoke and profits.

[Bobthebuilder]

2 minutes ago, Plan-b said:

Surely housing can never be allowed to substantially fall, if it does then the banks go with it

Check out banking shares since 2007.

[Lightscribe]

22 minutes ago, Plan-b said:

Surely housing can never be allowed to substantially fall, if it does then the banks go with it. Perhaps the currency will be devalued instead so any property falls to the casual observer look small.

This seems to be the way of every currency in history. 

As I’ve said before on here. The BK will bankrupt the majority of the population through stocks/pensions/houses/debt/cost of living.

Too big to bail out so planned controlled economic demolition and asset forfeiture. Very few (like us on here) will be able to economically survive the decade. We won’t be left alone either, all assets will be fair game and taxable for the benefit of the many rather than the few.

That then paves inroads for UBI, social credit scores and CBDCs.