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

[King Penda]

5 minutes ago, HousePriceMania said:

 

6 to 7% mortgage rates anyone ?

What will student loans hit

[feed]

There will be 10 of thousands of hours of recordings of Truss in meetings. Along with all other senior politicians. 
They will all have been scrutinised to find anything; a slip of the tongue, an out of context comment, a misheard reply.  
Anything for this kind of headline.  
The question is who leaked it and why? That Truss is being attacked this hard, is interesting.  

But still, a Truss government either delivers changes inline the change in the cycle from disinflationary to inflationary.  Reducing government spending and reducing taxes or they deliver a currency collapse.  Everything else is noise. 

That people still get hung up on individual politicians or guardian headlines, in a macro thread, really surprises me. 
 

[Axeman123]

1 hour ago, Democorruptcy said:

It's a pity the Governor of the Bank of England is a man rewarded for failure!

Panorama did a program last night that was scathing about Bailey...

I think he will be the fall guy, and the mood music for it has started.

1 hour ago, Yadda yadda yadda said:

Unless they do an emergency raise, which would signal panic and draw in speculators to short the pound.

As Luke Gromen says, emerging market crisis requires emerging market strategy. We need a short squeeze in the pound, and ideally multiple emergency rate increases.

[Axeman123]

18 minutes ago, HousePriceMania said:

6 to 7% mortgage rates anyone ?

 

[DurhamBorn]

16 minutes ago, HousePriceMania said:

 

6 to 7% mortgage rates anyone ?

They are slow arent they,i said 3.5% was the likely destination 6 months ago on here.The question then is though will they try to cut quickly if inflation rows back to around 7% as im expecting if sterling doesnt collapse.

Its funny how things never really change,i also suspected that they would only kill house prices when bread started to inflate away and thats whats happened.

Hopefully it will kill of some BTLs who are buying up here and importing bennies and immigrants here.

Goverment needs a fiscal move as rates increase,Sunak would do it through bennies,Truss through tax cuts,lets see.

[Boon]

12 minutes ago, feed said:

There will be 10 of thousands of hours of recordings of Truss in meetings. Along with all other senior politicians. 
They will all have been scrutinised to find anything; a slip of the tongue, an out of context comment, a misheard reply.  
Anything for this kind of headline.  
The question is who leaked it and why? That Truss is being attacked this hard, is interesting.  

 

Seems a bit of tit-for-tat after Sunak's comments at Tunbridge Wells.

I don't even think it is that bad. It'll get people riled up, but only the people that aren't voting for her anyway.

And without the media frothing it up it is patently true. The question that nobody will ask is why there have been so many Eastern Europeans coming here to do poorly paid jobs while so many households are in receipt of benefits?

The evidence is just clear that the current benefits system does not incenvitise work for a lot of people.

[Pip321]

25 minutes ago, HousePriceMania said:

6 to 7% mortgage rates anyone ?

I am reviewing my mortgages today because Barclays put all its rate up yesterday causing a stir in the market. 

The BM Mortgages variable rate is already 6.09% for existing customers.

The thing to consider is whilst BM do offer fixed rates there is a fee and if no fee then certainly a hefty t tie in.....so if someone had half an eye on the exit door and wants to sell they can't really go fixing. 

I think the way this plays out is those who are thinking of selling eg waiting for a tenant void etc will actually proactively move to selling (i.e. serving notice and start marketing) or lock in and take the hit on capital values (if they can afford to). Another option is to repay the debt but I imagine few have that luxury. 

Most BTL landlords are financially fairly useless but will probably be supported by brokers (not sure if that's better or worse). 

Either way....this really really modest interest rise so far is already starting to cause impact for the leveraged because these debts aren't £70K, they are often £400K. As the thread has played out and DB says its not the % rise that matters it is the rise proportionate to what someone is already paying. 

 

[feed]

15 minutes ago, Boon said:

The evidence is just clear that the current benefits system does not incenvitise work for a lot of people.

It was never meant to incentivise work.  It was to prevent deflation.   Post GFC. 

All of the QE, printing, property props, free benefit money, NHS/public sector spend, state pensions.  
They managed 2% inflation. 

Broken now of course.  The macro that enabled or even necessitated those polices is over. 

[Yadda yadda yadda]

41 minutes ago, Democorruptcy said:

Why are you expecting any reaction to it? The BoE have been signalling it could be going to 13% in the Autumn. The 10% was already priced in.

 

9.9% was the BoE prediction for this July, An increase of 0.5% over June. Instead they have a 0.7% monthly increase in the annual rate. A significant difference. The anticipated peak of 13.3% is due in October, reported November, when the energy price cap is raised. Wouldn't be surprised if they hit 14%. There are clearly risks that sterling collapses and we go higher still. The graph below shows that no increase is expected for August or September. Time will tell...

The value of sterling is finely balanced. It could be a relatively small surprise that tips it over the edge.

[HousePriceMania]

48 minutes ago, Democorruptcy said:

Why are you expecting any reaction to it? The BoE have been signalling it could be going to 13% in the Autumn. The 10% was already priced in.

 

That's just so they could cut rates when things improved before then 

45 minutes ago, King Penda said:

What will student loans hit

What will student loans hit

[Axeman123]

47 minutes ago, feed said:

The question is who leaked it and why? That Truss is being attacked this hard, is interesting.

Team Truss has it in the bag, and is using the now phony contest to harmlessly fire potential future scandals into the berm. Maybe people within Team Pishy have been co-opted to launder this, as a way to show party loyalty.

[Democorruptcy]

4 minutes ago, Yadda yadda yadda said:

9.9% was the BoE prediction for this July, An increase of 0.5% over June. Instead they have a 0.7% monthly increase in the annual rate. A significant difference. The anticipated peak of 13.3% is due in October, reported November, when the energy price cap is raised. Wouldn't be surprised if they hit 14%. There are clearly risks that sterling collapses and we go higher still.

The value of sterling is finely balanced. It could be a relatively small surprise that tips it over the edge.

It was expected to be 9.9% but is 10.1% on the way to 13.3% = blip minor by BoE standards.

[desertorchid]

1 hour ago, King Penda said:

What will student loans hit

More fiddling.

Capped at 6.3%

https://www.openaccessgovernment.org/student-loan-interest-rates/141380/

[Noallegiance]

48 minutes ago, DurhamBorn said:

They are slow arent they,i said 3.5% was the likely destination 6 months ago on here.The question then is though will they try to cut quickly if inflation rows back to around 7% as im expecting if sterling doesnt collapse.

Its funny how things never really change,i also suspected that they would only kill house prices when bread started to inflate away and thats whats happened.

Hopefully it will kill of some BTLs who are buying up here and importing bennies and immigrants here.

Goverment needs a fiscal move as rates increase,Sunak would do it through bennies,Truss through tax cuts,lets see.

Random conversation with a football dad last weekend. He has a few rentals and bought a couple more last year for £300k+.

I played ignorant.

I'll have a front row seat to one obvious case. Expecting many more to come out of the woodwork in my circles of acquaintances.

It'll be bitter-sweet to witness.

[King Penda]

4 minutes ago, desertorchid said:

More fiddling.

Capped at 6.3%

https://www.openaccessgovernment.org/student-loan-interest-rates/141380/

Fuck so I can’t goad them about that anymore 

[HousePriceMania]

Agree for A or Laugh for B ( though that seems wrong somehow ) and Vomit for dont care

[reformed nice guy]

1 hour ago, GTM said:

It really is difficult to call this. We've managed to stash a little bit of money offshore. I have recently added a little more physical gold, all sadly lost in an unfortunate boating accident. But buying lots of PMs with the £ at $1.20ish is either a stroke of genius or the mark of a lunatic.

Gold performance in most currencies averages about 8.5% per annum over 15 years according to this table so with 10% inflation I dont think its a bad allocation.

 

[Axeman123]

3 minutes ago, HousePriceMania said:

Agree for A or Laugh for B ( though that seems wrong somehow ) and Vomit for dont care

B going to the wall gets politicians strung up from lamp-posts, whereas A doesn't.

I have come around to the view that the callous way houses were pumped to fight deflation will be mirrored in the callous way housing equity will be sacrificed to fight inflation. The BoE never had property-rampers backs, it just saw them as useful idiots.

[Formerly]

15 minutes ago, desertorchid said:

More fiddling.

Capped at 6.3%

https://www.openaccessgovernment.org/student-loan-interest-rates/141380/

It'll make no difference to most as they'll never pay them off. Instead they'll be burdened with another 9% on their tax rates for their working life.

[Noallegiance]

[Bus Stop Boxer]

11 hours ago, King Penda said:

The only good news that I can think

of is that a shag will be even easier to get if you’ve got a job a car and a house but even this is loosing its lustre 

Chickens? Air Rifle? Wood burner?

[HousePriceMania]

U.S. inflation solved

 

 

 

 

This wont end well.

[Starsend]

57 minutes ago, Noallegiance said:

Random conversation with a football dad last weekend. He has a few rentals and bought a couple more last year for £300k+.

I played ignorant.

I'll have a front row seat to one obvious case. Expecting many more to come out of the woodwork in my circles of acquaintances.

It'll be bitter-sweet to witness.

Mostly sweet 

[Starsend]

50 minutes ago, reformed nice guy said:

Gold performance in most currencies averages about 8.5% per annum over 15 years according to this table so with 10% inflation I dont think its a bad allocation.

 

I've held physical gold for prob about that long and I'm very happy with the performance. I spent a bit of time working out that it had probably roughly tracked real inflation rather than made up Government bullshit. That's all I really expect and want it to do. If it does go into a bubble one day then great but I'd have to sell then.

 

[Starsend]

1 hour ago, Noallegiance said:

Random conversation with a football dad last weekend. He has a few rentals and bought a couple more last year for £300k+.

I played ignorant.

I'll have a front row seat to one obvious case. Expecting many more to come out of the woodwork in my circles of acquaintances.

It'll be bitter-sweet to witness.

It's when you see the extent of BTL + add on to that the astonishing over-valuations of house prices that you get a glimpse of the possible size of a real HPC - it would be so epic that it could bring down everything including the banking system.

It makes you wonder how far they'll go with fighting inflation or whether they'll risk hyper-inflation as they think a crash would be too devastating. They've boxed themselves into an incredible position and are trying to walk a tightrope in-between at the moment. It's going to be really interesting seeing how this all pans out.