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

[Majorpain]

42 minutes ago, HousePriceMania said:

The answer to this turns out to be Nationwide BS.
 

Can anyone explain to me what the question means ?

I assume it's not good.

IIRC its the measure of the banks actual reserves (that they use to magic up money from), so if the bank has £1m in cash and £10m of loans its CET1 ratio is 10%.  That ratio dropping either means its collateral is falling in value or its loans are either increasing in size or becoming more risky so the bank needs to allocate more collateral to compensate.

Basically the riskier the activity the more the bank needs to hold in reserve to compensate for the risk, its part of the Basel stuff brought in after 2008.  It does change over time.

DYOR and everything as this stuff is rather complicated.

[HousePriceMania]

2 minutes ago, Majorpain said:

IIRC its the measure of the banks actual reserves (that they use to magic up money from), so if the bank has £1m in cash and £10m of loans its CET1 ratio is 10%.  That ratio dropping either means its collateral is falling in value or its loans are either increasing in size or becoming more risky so the bank needs to allocate more collateral to compensate.

Basically the riskier the activity the more the bank needs to hold in reserve to compensate for the risk, its part of the Basel stuff brought in after 2008.  It does change over time.

DYOR and everything as this stuff is rather complicated.

It's a useful summary.

 

NW, risky, got it 

[Noallegiance]

40 minutes ago, DurhamBorn said:

My gran had a pint glass in the cupboard with £100 in for emergencies.It went down to £86 before anyone knew there was an emergency.She had to use it for something.Unless she could build it back up before things got worse she would go under before everyone else who still had the £100 in a glass.Tier 1 gets drained first when there is stress.

She was lucky I only charged her £14.

I'm a heck of a specimen.

[Democorruptcy]

38 minutes ago, Castlevania said:

Possibly worth hiding the quoted text so that anyone who has no interest in reading it can easily skip.

Can you do a using the 'hide' option for dummies? Cheers.

[Barnsey]

Apologies can't remember which recent video I saw this info on, but terminal rate for Fed seems to be around 3%, reached within a year or so. The key thing the markets still expects is a rapid reverse when something breaks, but that doesn't seem to be what the bond market is predicting, more of a stabilisation around 2.7%. Very much a rapidly moving target though. 

Random thought of the day, anyone reckon there will be a glut of cheap motor homes for sale in the next year after the mad demand last year?

 

[Democorruptcy]

6 minutes ago, Barnsey said:

Apologies can't remember which recent video I saw this info on, but terminal rate for Fed seems to be around 3%, reached within a year or so. The key thing the markets still expects is a rapid reverse when something breaks, but that doesn't seem to be what the bond market is predicting, more of a stabilisation around 2.7%. Very much a rapidly moving target though. 

Random thought of the day, anyone reckon there will be a dearth of cheap motor homes for sale in the next year after the mad demand last year?

 

I was reading this earlier

https://www.dosbods.co.uk/topic/20150-the-motorhome-in-the-coalmine/#comments

[Pip321]

Demand for baccy and alcohol up….good news for the baccy boys in here. 

The irony on the BBC headlines ‘Pressure builds on Sunak to act on rising living costs’.

Come on now Sunak…we need more money because these drinks and fags don’t pay for themselves.

Prioritisation is going to be a really steep learning curve for some…and indeed too steep for some. 

[Castlevania]

11 minutes ago, Democorruptcy said:

Can you do a using the 'hide' option for dummies? Cheers.

There should be an option if you’re on a proper computer.

If on mobile to get a box like the below put the word spoiler in between [ ] brackets (no spaces), enter your text, then end it with /spoiler again in square brackets.

 

 

[HousePriceMania]

Straw poll....are you up or down this week ?

10 minutes ago, Pip321 said:

Demand for baccy and alcohol up….good news for the baccy boys in here. 

The irony on the BBC headlines ‘Pressure builds on Sunak to act on rising living costs’.

Come on now Sunak…we need more money because these drinks and fags don’t pay for themselves.

Prioritisation is going to be a really steep learning curve for some…and indeed too steep for some. 

If people are drinking at home then pubs and restaurants are ****ed

[DoINeedOne]

20 hours ago, Harley said:

This podcast sooooo belongs here it makes you wonder.  Got loads of the themes mentioned here, but some are only mentioned in passing (like buying fixed debt companies) so needs attention.

 https://anchor.fm/stephen-clapham1/episodes/Episode-9---Two-Capital-Cyclists-e1h4g9m

Napier and co, of course!

Interesting podcast well timed too as i just finished reading the book "Capital Returns"

[Democorruptcy]

12 minutes ago, Castlevania said:

There should be an option if you’re on a proper computer.

If on mobile to get a box like the below put the word spoiler in between [ ] brackets (no spaces), enter your text, then end it with /spoiler again in square brackets.

  Reveal hidden contents

 

Testing the square brackets with a share tip

never pay when sharing

[HousePriceMania]

Yikes !!!

[Democorruptcy]

9 minutes ago, HousePriceMania said:

Yikes !!!

Rubbish. It's only the lowest since 2008, it's a series of lower lows since 1974.

[Axeman123]

An interesting signpost re capital controls and trapping people in "approved" asset classes in this article:

https://uk.finance.yahoo.com/news/fca-willing-regulate-crypto-cost-concerns-remain-130042769.html

"The chair of the FCA, Charles Randell, said in a speech at Queen Mary University of London that the FCA's success in regulating speculative crypto is going to be judged and questions need to be answered.

“Should people be encouraged to believe that these are investments, when they have no underlying value? When the price of Bitcoin can readily halve within six months, as it has done recently, and some other speculative crypto tokens have gone to zero?

“Should a couple with retirement savings of £250,000, ($311,684) which would buy them an annuity of perhaps £6,000 at age 65, be treated as 'high net worth' and encouraged or permitted to speculate on crypto or other high-risk products with these savings?

“Should people without any significant savings or financial experience be encouraged or permitted to buy speculative crypto at all?”

[Plan-b]

1 hour ago, HousePriceMania said:

It's a useful summary.

 

NW, risky, got it 

And you'll be pleased to note that the NW are heavily exposed to the property market

[Loki]

18 minutes ago, Axeman123 said:

permitted

[Starsend]

18 minutes ago, Axeman123 said:

An interesting signpost re capital controls and trapping people in "approved" asset classes in this article:

https://uk.finance.yahoo.com/news/fca-willing-regulate-crypto-cost-concerns-remain-130042769.html

"The chair of the FCA, Charles Randell, said in a speech at Queen Mary University of London that the FCA's success in regulating speculative crypto is going to be judged and questions need to be answered.

“Should people be encouraged to believe that these are investments, when they have no underlying value? When the price of Bitcoin can readily halve within six months, as it has done recently, and some other speculative crypto tokens have gone to zero?

“Should a couple with retirement savings of £250,000, ($311,684) which would buy them an annuity of perhaps £6,000 at age 65, be treated as 'high net worth' and encouraged or permitted to speculate on crypto or other high-risk products with these savings?

“Should people without any significant savings or financial experience be encouraged or permitted to buy speculative crypto at all?”

"Permitted" Cunt needs to remember who's money it is.

As for shitcoin halving in 6 months, so what! So have BP and Shell recently, more in fact. Perhaps we shouldn't be "Permitted" to buy those either. 

[Plan-b]

14 minutes ago, Starsend said:

"Permitted" Cunt needs to remember who's money it is.

As for shitcoin halving in 6 months, so what! So have BP and Shell recently, more in fact. Perhaps we shouldn't be "Permitted" to buy those either. 

Come on mate Shell & BP have not halved in the last 6 months

[DurhamBorn]

1 hour ago, Noallegiance said:

She was lucky I only charged her £14.

I'm a heck of a specimen.

My grandads nickname was Slasher ,you sure ? 

[Majorpain]

Quote

PM vows to 'put arms around' people suffering in the cost of living crisis

I've heard that phrase before...  Matt Hancock going to make a comeback as minister for cost of living?  He did such a good job with the care homes.

[Plan-b]

2 minutes ago, Majorpain said:

I've heard that phrase before...  Matt Hancock going to make a comeback as minister for cost of living?  He did such a good job with the care homes.

Fatso's arms aint long enough

[Axeman123]

5 minutes ago, Starsend said:

"Permitted" Cunt needs to remember who's money it is.

As for shitcoin halving in 6 months, so what! So have BP and Shell recently, more in fact. Perhaps we shouldn't be "Permitted" to buy those either. 

The annuity quoted as paying ~2.5% for life starting at age 65 is the rip off product, but slides neatly under their radar.

I also thought it interesting that they were referencing the american criteria of "high net worth" to access sophisticated financial products. That probably implies an international push for a standardised approach. A rich man's playground?

The reference to "crypto or other high-risk products" implies SIPPs could soon be much more restrictive, or perhaps even restricted to 60/40 etc type funds (no doubt with gilts and ESG components).

A lot to unpack in a short fluff article.

[Yadda yadda yadda]

2 hours ago, DurhamBorn said:

The funny thing is my roadmap was showing that the economy couldnt produce enough for the demands on it.That was the main reason i saw the printing and inflation as certain.Now im able to see why my numbers said that.It also means my back end of the cycle needs looking at.If energy cant respond to the price signals we are in a very difficult place.Its not on TV yet,but the anger from those paying to those getting freebies from the state will be huge.The over 50s jacking in is the first big signal i think of disengage.

Thinking aloud here. This point suggests that the unemployed will eventually be forced into work or penury - possibly even workhouse type arrangements. However, as energy becomes scarcer and the economy contracts some industries will whither and employment alongside them.  In contrast human labour could be used where it becomes cheaper than fuel. An obvious existing example is hand car washes, although that is surely caused by some combination of benefits and unskilled immigration. Could this hybrid income arrangement where the state and employer each pay part of the wages of a worker become even more common, moving up to full time hours? If the unemployed, including those masquerading as unfit to work, are forced into employment but they are economically marginal producers then they will need topping up somehow. We could see areas such as agriculture maximise output through more labour.

On the other hand we have the expected onshoring of production. This will produce jobs but it relies on energy. If we cannot secure an outsize per capita proportion of the world's energy that goes to shit. If we do there will be even more people looking to come here to get their share.

Another option is the state taking up even more of the employment slack. At least we might have very clean streets. Go long broom manufacturers with a water wheel for power.

[WICAO]

1 hour ago, HousePriceMania said:

Straw poll....are you up or down this week ?
...

At this point I'll be down about -0.5%.

Of course all noise in the scheme of the long game I'm playing.

[Starsend]

19 minutes ago, Plan-b said:

Come on mate Shell & BP have not halved in the last 6 months

Not in the last six months, couple years back. BP has still not recovered to it's all time high pre-covid. It was £2 at some point in the last year or two cos I bought it - so it had more than halved.