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

[supernaut]

Can they really be that thick, clearly you can bullshit a bullshitter.

[Animal Spirits]

2 hours ago, Harley said:

Maybe he wants out.

That would seem likely. I'd suggest it was about prestige and then Covid came along...

Doesn't come across with conviction but he's only had Sir Kneel as competition and I suppose he hasn't shown himself to embrace wokeism directly. David Cameron more or less labelled him an opportunist, they obviously know each other well:

[Barnsey]

Many of the cry babies today seem to have forgotten that we have stubbornly high above pre-covid personal savings, higher rates only exacerbates this, and we all know the BoE doesn't want this.

[Hancock]

15 minutes ago, Barnsey said:

Many of the cry babies today seem to have forgotten that we have stubbornly high above pre-covid personal savings, higher rates only exacerbates this, and we all know the BoE doesn't want this.

Stick rates up a few percent see house prices crash, then people will empty their accounts to buy somewhere to live and furnish it ... they might even borrow money in addition to spending their savings ... and as its a place to live the borrowings will be at a level they can pay back.

Be boom time all over again! 

[Loki]

5 minutes ago, Hancock said:

Stick rates up 

BoE, colourised ~2021.

[MrXxxx]

On 03/11/2021 at 13:52, Bricormortis said:

 

I.m guessing thats what they thought in Venesuala, the more the currency went down, the more the stock value in Bolivars rose....until...........The most nuts stock market chart I have ever seen

That's not 'Catching a falling knife', that's catching the whole bloody cutlery set!

[Democorruptcy]

52 minutes ago, Barnsey said:

Many of the cry babies today seem to have forgotten that we have stubbornly high above pre-covid personal savings, higher rates only exacerbates this, and we all know the BoE doesn't want this.

Aren't we in a housing boom? That must increase savings overall? Anybody downsizing finishes up with extra savings as do people who own more than one property and perhaps selling the holiday home. FTB's have to save more for a deposit.

[Yadda yadda yadda]

32 minutes ago, Hancock said:

Stick rates up a few percent see house prices crash, then people will empty their accounts to buy somewhere to live and furnish it ... they might even borrow money in addition to spending their savings ... and as its a place to live the borrowings will be at a level they can pay back.

Be boom time all over again! 

Most of the so-called excess savings are in the hands of existing homeowners. That is what I reckon anyway. Who were the financial winners out of covid lockdowns and payments? Benefits cases, who will have mostly spent their money. Not least because they lose benefits if they save but also because they don't worry about their financial futures. That is somebody else's problem. Also business owners who got bounceback loans. Mostly homeowners. Other groups that saved money are some middle class work from home types who saved on commuting. Plus the people who go on multiple holidays a year but couldn't. Some furloughed workers may have saved some money or paid off debts (which probably counts as saving) but not a lot compared with others. Overall most of the saving will have been done by those who own homes as that group includes most people with a lot of disposable income. Especially people who bought 15+ years ago.

I think they will be forced to put up rates, just not quite yet. Velocity will rise again and rates will follow. Slowly at first and then all of a sudden.

 

[Yadda yadda yadda]

10 minutes ago, MrXxxx said:

That's not 'Catching a falling knife', that's catching the whole bloody cutlery set!

Awesome!

What happened? Looks like they just scrubbed some noughts from the unit of measurement. I was going to call it a currency but that didn't seem appropriate. The graph brings to mind a trader climbing to the top of his office building, taking a look at his desk, thinking "nah, not today" before jumping out of the window. The hearse to the morgue seems to be a flat route but on close inspection isn't.

[Hancock]

13 minutes ago, Yadda yadda yadda said:

Most of the so-called excess savings are in the hands of existing homeowners.

 

Mixed bag, but there are millions of under 50s with a shit load of savings waiting for a HPC.

Breaks my heart that i was one of the few honest people to only get 25% of previous years earnings for my BBL, could have got another 37k if i wasn't such an idiot!

[Hancock]

9 hours ago, sancho panza said:

Think your spot on there Harley>Johnson's really messed the UK up.There's only so long you can cover up the mess at Dover,the fiscal issues,the energy shortfall,inflation,housing market,bennies bill etc etc...

Cue Fraser Nelson -

Boris Johnson recently hosted a dinner in No 10 for Tory MPs past and present who, like him, entered Parliament in 2001. To his surprise, David Cameron accepted the invitation. As they all sat down for dinner, the ever-competitive Prime Minister thought he’d have a bit of fun at his predecessor’s expense. He was about to launch a window-sill insulation scheme, he said – and he thought he’d call it “Greensill.”

When Cameron’s turn to speak came, he said that he ran No 10 in the glory days when there was food on the shelves and Tories who actually cut taxes. A decent joke. But Boris’s was better.

No one forgets a lobbying scandal. Cameron won two elections, he transformed both welfare and secondary schooling. But he will spend the rest of his days tainted by his lobbying for the now-collapsed Greensill. Sir Malcolm Rifkind, Stephen Byers and Neil Hamilton all ended up with similar stains on their reputations. When Owen Paterson accepted £9,300 a month from corporates – far more than his MP’s salary – scandal was sure to follow. A scandal now magnified several times over by No 10’s ineptitude, with career-ending effect.

ADVERTISING

Like so many political misjudgments, this started with an attempt at decency. Johnson likes to stand by his friends and allies even (perhaps especially) when that means taking fire. When Priti Patel’s former civil servants were accusing her of bullying, he asked MPs to “form a square around the Prittster” to defend her.

He thinks Paterson was wrongly accused of breaking lobbying rules by a biased Westminster sleaze watchdog – one who was, once, out to get him. He felt a particular sympathy for Paterson whose wife had taken her own life as this investigation dragged on. His majority meant the Tories could change the rules, which would create a fuss. But then again: so what?

It is not clear how much thought was given to all of this. It seems to have followed the Richard Branson logic of “Screw it: let’s do it” – or, as Jacob Rees-Mogg later put it, “Let justice be done, though the heavens fall.” Various Tory MPs pleaded with the whips not to go through with this madness. Whatever the details of the case, they said, people would just see a Tory caught with his snout in the trough, then let off the hook by his fellow Conservatives. How could they vote for what would be seen, by the public, as a stitch-up?

As with the National Insurance tax rise, the Conservatives were given no time to think – or rebel. They were given their orders and obeyed, knowing it would be another Charge of the Light Brigade. It was bound to fail. And even the attempt would cause permanent damage, making it easier to cast Tories as cheats and liars: dodging sleaze rules, reneging on manifesto pledges. They were doing it because a Westminster victory was guaranteed: they are up against a Labour Party so inept as to be a danger only to itself. Sir Keir Starmer actually had the votes to defeat the Government over the Paterson affair, but failed to organise his own troops on time. Only public outcry forced No 10 to change its mind.

Power corrupts, absolute power corrupts absolutely – and a majority of 80 gives the Prime Minister the kind of power that turns a brain fart into law within 24 hours. There is pitifully little scrutiny or questioning. No one to point out that this demented plan would fail because all parties needed to agree any changes to a parliamentary watchdog. No one to point out that, like the expenses scandal, this isn’t about the technicalities but a wider principle. About trust in politics.

Most of the expenses transgressions were within the rules. The helipad maintenance, the moat-dredging and even the sleazy video – all were approved by the relevant authorities, bought at the taxpayers’ expense. Perfectly legal, but still outrageous. The distinction between the two was lost on politicians so settled in the Westminster bubble that they could not see how all of this looked to people outside it. Back then, Johnson – as Mayor of London – was one of those who grasped this at once. He still teases Michael Gove about the “financial origins” of his £331 Chinon chair.

I am among Paterson’s admirers: he is a man of energy and tenacity. But on this issue, his judgment failed him. The rules might have permitted him to double his salary by shilling for corporates, but should he have done so? To accept £100,000 a year for advising any corporation was always going to raise questions about where his loyalty lay. The Prime Minister ought to have known this. As he wrote in these pages at the time, the expenses scandal showed that “the public is utterly fed up with politicians who seem to be actuated by their financial circumstances”. True then, and true now.

Much of this is classic overcorrection in No 10. This time last year, what the Prime Minister thought was seen as an almost peripheral issue in a machine run by Dominic Cummings. Now, what he says is enacted at once – even if it’s sure to end in disaster. Mark Spencer, the Chief Whip, assured Downing Street that the mission to save Paterson would be fine. Even the Tory party machine was not consulted.

So within the space of a few weeks, the Prime Minister went from needling Cameron about lobbying scandals to plunging the Tories into a scandal of his own. Had he sought advice, he would have told Paterson to take his punishment quietly and be back by Christmas. The watchdog could have been reformed a few months later, in consultation with Labour, at a time when neither party would have anyone under investigation. The Johnsonian impulse, this time, ended up crushing the man he intended to help.

Thoughtlessness, arrogance, complacency, being tone deaf to public opinion – in the past few days, the Tories have exhibited the traits of an exhausted government in its dying days. And that’s before the inflation that the Bank of England now expects to eat away any rise in wages for the next two years (if it doesn’t tip the economy into another crash). The difference from the 1990s is that there is no Tony Blair to capitalise on these errors. But now, as then, it’s becoming easier to see how a Tory government ends.    

 

 

[Yadda yadda yadda]

3 minutes ago, Hancock said:

Mixed bag, but there are millions of under 50s with a shit load of savings waiting for a HPC.

Breaks my heart that i was one of the few honest people to only get 25% of previous years earnings for my BBL, could have got another 37k if i wasn't such an idiot!

Those are the pre-covid 'normal' savings that are expected to be there. There are now billions of extra savings. If people think those savings are earning good interest they will keep the savings. If they think they're losing value to inflation they will spend them. These are windfall savings without a purpose. So keeping rates low will encourage spending whilst increasing rates will encourage saving. This is the point that I think was being made.

I think we can go further and say that people looking for a house price crash to spend savings - rather than borrow 90% - will wait for further rates rises once they start going up. They will want a proper crash.

I also think that if rates stay low and inflation rises that will cause velocity to increase as those with spare savings buy that holiday or car or extension or whatever else. Therefore increasing inflation is now baked in. Rate rises will follow and houses will crash in the bubblier areas. Unless there is a mechanism for inflation to disappear prior to a recession and I can't see that.

Holding rates down today has lowered the pound and will therefore push up imported inflation. Can't have that too many times. They're running out of options. DB is convincing when he says they want to capture inflation in the tax take before it appears in the Government interest bill. Rates will lag but it is a balancing act.

[Axeman123]

15 minutes ago, Hancock said:

Thoughtlessness, arrogance, complacency, being tone deaf to public opinion – in the past few days, the Tories have exhibited the traits of an exhausted government in its dying days. And that’s before the inflation that the Bank of England now expects to eat away any rise in wages for the next two years (if it doesn’t tip the economy into another crash)...But now, as then, it’s becoming easier to see how a Tory government ends.

The thing that blew my mind was last night Owen Patterson announced he would do the same again, and called for the resignation of the Commissioner! That was the really tone deaf and politically incompetent part, no-one told him to keep his head down after the vote!

[Hancock]

4 minutes ago, Axeman123 said:

The thing that blew my mind was last night Owen Patterson announced he would do the same again, and called for the resignation of the Commissioner! That was the really tone deaf and politically incompetent part, no-one told him to keep his head down after the vote!

This comment from that article sums up politics over the last few decades.

[MrXxxx]

2 hours ago, Animal Spirits said:

That would seem likely. I'd suggest it was about prestige and then Covid came along...

Doesn't come across with conviction but he's only had Sir Kneel as competition and I suppose he hasn't shown himself to embrace wokeism directly. David Cameron more or less labelled him an opportunist, they obviously know each other well:

They look like a reject bunch of 1980's New Romantics!

[reformed nice guy]

13 minutes ago, Yadda yadda yadda said:

Those are the pre-covid 'normal' savings that are expected to be there. There are now billions of extra savings. If people think those savings are earning good interest they will keep the savings. If they think they're losing value to inflation they will spend them. These are windfall savings without a purpose. So keeping rates low will encourage spending whilst increasing rates will encourage saving. This is the point that I think was being made.

I think we can go further and say that people looking for a house price crash to spend savings - rather than borrow 90% - will wait for further rates rises once they start going up. They will want a proper crash.

I also think that if rates stay low and inflation rises that will cause velocity to increase as those with spare savings buy that holiday or car or extension or whatever else. Therefore increasing inflation is now baked in. Rate rises will follow and houses will crash in the bubblier areas. Unless there is a mechanism for inflation to disappear prior to a recession and I can't see that.

Holding rates down today has lowered the pound and will therefore push up imported inflation. Can't have that too many times. They're running out of options. DB is convincing when he says they want to capture inflation in the tax take before it appears in the Government interest bill. Rates will lag but it is a balancing act.

I think a part of the high savings will be oldies in the 80+ range that have very good pensions and not enough to spend that money on.

[Axeman123]

6 minutes ago, Hancock said:

This comment from that article sums up politics over the last few decades.

Here is a quote from the DM on the matter:

"he made three approaches to the Food Standards Agency relating to Randox and testing for antibiotics in milk in November 2016 and November 2017.

Emails to the FSA apparently read like marketing pitched on behalf of the firm, mentioning 'Randox's superior technology' in helping identify problems. 

He went on to suggest that 'once established the application of the technology could be discussed not just within the FSA but across the whole dairy industry,' something from which the company stood to make large sums of money."

Blatantly attempting regulatory capture. He didn't give a damn about milk safety, just his donor's p&l.

https://www.dailymail.co.uk/news/article-10165101/What-happens-Boris-Johnsons-U-turn-standards-shake-up.html

[Loki]

3 minutes ago, Axeman123 said:

He didn't give a damn about...safety, just his donor's p&l.

I'm seeing a theme here

[Mapper]

2 hours ago, Animal Spirits said:

That would seem likely. I'd suggest it was about prestige and then Covid came along...

Doesn't come across with conviction but he's only had Sir Kneel as competition and I suppose he hasn't shown himself to embrace wokeism directly. David Cameron more or less labelled him an opportunist, they obviously know each other well:

Doesn't that picture make you want to stamp on all of their bollocks?

[JMD]

2 hours ago, Animal Spirits said:

Doesn't come across with conviction but he's only had Sir Kneel as competition and I suppose he hasn't shown himself to embrace wokeism directly. David Cameron more or less labelled him an opportunist, they obviously know each other well:

Ah, is that the Bullingdon branch of the Covid club?! (NB the 2nd from the right has never been identified, am not joking!)

[Sugarlips]

 

[wherebee]

27 minutes ago, Cattle Prod said:

And so they should. Walked past Parliament sq this morning at 9 on the way to work. Insulate Britain had the place gridlocked in three directions, holding up thousands of people trying to make a living. Here's the thing: each row of wastreis sitting on the tarmac had a row of coppers standing in front of them.

So I went up to the nearest two and said "Why are you guarding them? Why don't you remove them from the road?". "Well sir unfortunately there is a process involved...and we stutter ...can't just do that...as much as we'd like to...pause ...I know that sounds crazy but it's the way it is". I wished them luck. I like coppers. But no one else questioned them. It's a only a small ...nudge...but they all add up and we need them going back to their superiors saying "people are getting pissed off about this". We need to be our own nudge unit! And its the clowns in Westminster behind their newly constructed steel barriers via that useless patsy Cressida Dick who are telling them to do this. If they're not careful, they'll lose the coppers too. That'd be fun to watch.

Try holding a sit down outside Parliament to protest the mass rape of children by immigrants.  See how long you sit there.

[Loki]

17 minutes ago, Sugarlips said:

 

Me gusta

[Harley]

5 hours ago, wherebee said:

Try holding a sit down outside Parliament to protest the mass rape of children by immigrants.  See how long you sit there.

Now that's an idea.  Join their demo, protesting about something else and see what happens.

[jamtomorrow]

10 hours ago, Barnsey said:

Stroppy teens all over the city, hilarious