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

[marceau]

1 minute ago, DurhamBorn said:

Yep that was how Sunak planned to remove the assets.His aim was to stop the next generation getting them.IHT allowance is a joke now its frozen.Pension lifetime allowance still ok,but with no inflation link could be cut in half again.

IHT really is terrible though.Im not married so only have the basic allowance and three kids.Pension shields much more,but that might be a target,include it in inheritance would blow things out the water.I dont know how Sunak can even stand there in front of Tory members when all his policies have been to remove them of their assets and give them to his rich mates through Labour voters.Hopefully Truss offers him some crap job where he has no power.

 

They think they can run the wealth extraction machine on full speed with inflation, while making the treasury figures look better through the tax bands. They're wrong, but they'll only discover why once they're past the point of no return.

I don't think Truss is going to be any different, you're not getting a change of course from a rather dim Oxford PPE who owes everything she has to the existing system. Most significant thing to come out of her during this campaign is the revelation that she's in regular contact with Blair.

 

[Starsend]

42 minutes ago, marceau said:

There was another way with less inflation, but it's almost certainly not going to be taken. The path they're on also makes it likely that the tax bands won't move much, or may even stay frozen. Theft of middle class wealth on a massive scale.

Yep, been clear for some time that it will be Financial Repression for the rest of the decade. Indeed, we've already had it for some time but they'll tighten it considerably further using more and more tools.

If you know their game though then you have a chance to avoid the worst of it. Most people are toast though. Mmmm toast.

[onlyme]

39 minutes ago, Lightly Toasted said:

It's bad, but not yet that bad:

 

Aberdeen Live missed a bit.

Demand destruction on top, next year's overall bill factored in......

https://www.thescottishsun.co.uk/money/9279176/i-own-chinese-takeaway-10k-energy-bill-kill-business/

The owner also said he noticed a dip in the number of times regulars were popping in as people are left unsure of what they can afford as bills continue to rise. 

He said he was facing an 'impossible task' as he's looked at other offers to cover his gas and electricity but said: "it still adds about £45,000 to £50,000 a year onto the electric and gas combined together."

 

[marceau]

Just now, Starsend said:

Yep, been clear for some time that it will be Financial Repression for the rest of the decade. Indeed, we've already had it for some time but they'll tighten it considerably further using more and more tools.

If you know their game though then you have a chance to avoid the worst of it. Most people are toast though. Mmmm toast.

The key thing to watch is tax receipts, once they fall below inflation on an annualised basis a big red light will go on, 2 years below and alarms go off. The 12 months after that will see capital controls.

[Axeman123]

1 minute ago, marceau said:

The key thing to watch is tax receipts, once they fall below inflation on an annualised basis a big red light will go on, 2 years below and alarms go off. The 12 months after that will see capital controls.

Observation from Luke Gromen (on the video I posted earlier) was that the USA was having an emerging markets type crisis, and would need to take emerging market measures - capital controls would certainly fit with that.

Dave Hunter's prediction for a short sharp (~12 month) recession that feels like a depression might see tax receipts never fall below inflation on an anualised basis. Interestingly that almost implies a BK as favourable for government over a slow one.

[feed]

23 minutes ago, onlyme said:

Aberdeen Live missed a bit.

Demand destruction on top, next year's overall bill factored in......

https://www.thescottishsun.co.uk/money/9279176/i-own-chinese-takeaway-10k-energy-bill-kill-business/

The owner also said he noticed a dip in the number of times regulars were popping in as people are left unsure of what they can afford as bills continue to rise. 

He said he was facing an 'impossible task' as he's looked at other offers to cover his gas and electricity but said: "it still adds about £45,000 to £50,000 a year onto the electric and gas combined together."

 

Opened in '82.   All it shows is how many businesses only exist because of cheap energy.  That it's Aberdeen is just added irony. 

[marceau]

23 minutes ago, Axeman123 said:

Observation from Luke Gromen (on the video I posted earlier) was that the USA was having an emerging markets type crisis, and would need to take emerging market measures - capital controls would certainly fit with that.

Dave Hunter's prediction for a short sharp (~12 month) recession that feels like a depression might see tax receipts never fall below inflation on an anualised basis. Interestingly that almost implies a BK as favourable for government over a slow one.

Their game is to expand economic activity via whatever means they can (no matter how socially destructive) while keeping the treasury receipts trend line above the inflation trend line. This allows them to cream off the top without attracting too much heat.

Their problem is that lack of judgement in these expansions keeps creating black swans that dip them below trend. I'm not  sure that they've actually managed to grow receipts above inflation over the past 20 years, even with QE & ZIRP to prop them up, the dips are too deep.

What kills their system is non-liquidation of debt and eventual realisation of the full life costs on those bad decisions (PFI being a good example of both). This stacks up as time goes on. Does anyone on here believe that we've seen anywhere near the true economic cost of our immigration policies, or energy policies, or dozens of other terrible policies, at this stage? No chance, all the cost is yet to even be acknowledged, let alone paid.

There is no rule that receipts return to normal after recession ends. Economic activity can be permanently destroyed, particularly the stuff arising from intangibles, of which the UK economy has a massive amount. A 6 month recession can gimp receipts for far more than 6 months. A depression can destroy them forever.

[DoINeedOne]

On 04/07/2022 at 16:29, ONC said:

Hi @DurhamBorn

That is funny. I am not normally into prepping. But after reading this thread at the weekend, i too ordered a wind-up lantern!!  At least some preparation if we do have blackouts this winter.  

 

https://www.amazon.co.uk/Rechargeable-Flashlight-Portable-Electronic-Emergencies/dp/B09GVNX1L8/ref=sr_1_2_sspa?keywords=wind%2Bup%2Blantern&qid=1656948148&sr=8-2-spons&spLa=ZW5jcnlwdGVkUXVhbGlmaWVyPUFJTEc3S1BCNkVZOTEmZW5jcnlwdGVkSWQ9QTAwNDA1NTdBNjgxT1kzS0Y5WDYmZW5jcnlwdGVkQWRJZD1BMDk0NzQ5NjJHNFRaSlFPRkxXS0cmd2lkZ2V0TmFtZT1zcF9hdGYmYWN0aW9uPWNsaWNrUmVkaXJlY3QmZG9Ob3RMb2dDbGljaz10cnVl&th=1

I had this sat on the shelf in a dark office, I'm still surprised how well it charges my phone worth the £20 really 

Bought one of these yesterday don't need it but for a tenner its actually pretty good

https://www.amazon.co.uk/gp/product/B09VT6JYLZ/

 

Anyway back to investments

[BWW]

5 hours ago, jamtomorrow said:

Here comes the demand destruction.

Interesting to see a Chinese takeaway move fairly early. It's what I'd expect, hard-nosed business people with a viable exit route shut up shop out of choice, meanwhile the daft twats running all those lifestyle businesses have to cling on because they remortgaged up to the maker's plate to finance the startup costs, and they'd be homeless if the turnover dries up.

This could get very messy.

How long before the trickle of discretionary service businesses shutting up shop turns into a flood of insolvencies?

And how exactly will the Government intervene to prevent all that misallocated capital being (correctly) swept away (like they have done at every opportunity for the last 15 years)?

 

sorry but that just says to me they are lifestylebusiness eejits who dont understand their input costs, rates per unit have increased 3x or 4x at most. if their bill is 10x they are paying due to being underbilled for units used but not billed in the past surely?

they should at least have been monitoring with their own meter reads.

*** after reading the other replies ... my assumption half right ... can also be too high estimate ....

[M S E Refugee]

Germany urges Russia to take back turbine https://www.rt.com/business/560636-germany-russia-gas-turbine/

 

 

[onlyme]

3 minutes ago, BWW said:

sorry but that just says to me they are lifestylebusiness eejits who dont understand their input costs, rates per unit have increased 3x or 4x at most. if their bill is 10x they are paying due to being underbilled for units used but not billed in the past surely?

they should at least have been monitoring with their own meter reads.

Depends, a couple of stepped rises and not submitting readings for a few months you could be mistaken for missing the trend, thinking one big rise would be it, but then finding out those rates themselves were capped and the cap coming off again in October, could come as a surprise quite now much rates were rising. They may already have done as much to reduce usage in response and realised it was going to have pretty much no effect in limiting the price increase - things like shorter opening times and 5 day a week opening.You quickly run out of options.

[Harley]

3 hours ago, Pip321 said:

My biggest dilemma hasn't been the long term direction but deciding on short term positions in these really nervous times, to try to take small advantages and be on the front foot. Many 'investors' dismiss the short term but it can make a huge difference to your personal sentiment and also to the return.

I am expecting the cycle to be right but bumps along the way depending on numpty panicking politicians perhaps doing really stupid things we have not even thought of yet (not economic things but war/allegiance/declarations). 

My solution....which doesn't even nearly answer your question, is to keep listening and have my eye on the exit and entry door and try ensure I am in assets that I can quickly sell/buy.

How short is your short term?  Right or wrong, I feel I have to play the weekly charts with the monthlies as backups in what I assume are more volatile times (e.g. bear market rallies).  Seems ok at the moment.  No need for me to day trade, enough moves in the weekly charts.  I had though just wanted a quiet life with my monthly charts!

[Harley]

2 hours ago, Lightly Toasted said:

It's bad, but not yet that bad:

https://www.aberdeenlive.news/news/aberdeen-news/aberdeen-takeaway-boss-vows-fight-7442915

The embattled boss of an Aberdeen Chinese takeaway has promised to "fight on" after energy bills that plunged his business into turmoil were reduced.

Martin Tang appealed to provider SSE after he was issued with bills demanding more than £11,000 of extra expenses to power his shop, the Royal Crown in Torry. Martin later announced he was planning to close the store, saying the costs had made his business unviable.

But today, Martin was informed that his bills had been reduced substantially after the company took new meter readings. Rather than having to fork out £10,000 for gas this quarter, he will now only have to pay £3,087, and his electricity bill has been cut from £4,016 to £1,429...

So all BS?  Like saying its £10k versus £900 "previously".  It's bad but that bad?   Usual sensational rather than accurate reporting?  I'm bracing for plenty more.

[BWW]

11 minutes ago, onlyme said:

Depends, a couple of stepped rises and not submitting readings for a few months you could be mistaken for missing the trend, thinking one big rise would be it, but then finding out those rates themselves were capped and the cap coming off again in October, could come as a surprise quite now much rates were rising. They may already have done as much to reduce usage in response and realised it was going to have pretty much no effect in limiting the price increase - things like shorter opening times and 5 day a week opening.You quickly run out of options.

if you are selling takeaway and elec, gas, oil is a significant cost you should be taking readings weekly and know how much yyouuse/owe and what your costs are. otherswise how do you know when you are charging enough to make a profit.

Not as thogh the media are silent about price rises.

 

[onlyme]

14 minutes ago, BWW said:

if you are selling takeaway and elec, gas, oil is a significant cost you should be taking readings weekly and know how much yyouuse/owe and what your costs are. otherswise how do you know when you are charging enough to make a profit.

Not as thogh the media are silent about price rises.

 

For sure, may well be immaterial anyway, no amount of slicing and dicing prices / portion sizes / usage / opening times is going to make any difference in the end for many.

[DoINeedOne]

My partner was moaning on the phone to the water company about costs they were increasing it, they said maybe there's something wrong with the meter we will send someone out

The guy when he check outside said we actually don't use alot of water and the meter is fine, probably should be paying around a tenner less than they said but its to make sure you have credit with them, he actually told us to cancel the direct debit and just pay it as the bill comes in then you only be charged for what you have been using 

What shocked me was he said next door was using around 10X the amount we use they have 2 more children living in their house 

[JimmyTheBruce]

4 hours ago, marceau said:

The problem is that there is private and 'private', the second type is the connected and powerful one, being almost entirely supported by public funds, either directly or via various laundry schemes. These were the cartels that engineered the current system, using the likes of Blair, Brown and their replacements as intermediaries to manage the electoral facade. They don't give a shit about the first type of private, in fact it's to their benefit that the first type suffer, removing competition.

As far as the power players are concerned the only distinction between their types of 'public' and 'private' are how much attention they get while sucking out money. The big boys are heavily stacked against the middle class here, and they are the ones who call the shots. They covertly manage governments, so in a private asset grab it won't be their assets getting taken. 

The theft could go on for a long time under those sorts of conditions.

Agree with this.  I've often wondered at how small the real private sector is when you consider how many businesses are dependent upon the government for income.

The big 4 wouldn't exist without the government mandating audits.  The housebuilders are given public money via the poor sods signing up to be helped to buy.  The public transport companies all receive government subsidies.  The lawyers get legal aid.  The utilities are being bailed out as we speak, and as for the banks... nuff said.  I'll not mention vaccine manufacturers...

Even the "entrepreneur" who sold hot tubs during lockdown only made a killing because the government gave chavs a load of money to buy hot tubs.

What's left!?

[Pip321]

1 hour ago, Harley said:

How short is your short term?  Right or wrong, I feel I have to play the weekly charts with the monthlies as backups in what I assume are more volatile times (e.g. bear market rallies).  Seems ok at the moment.  No need for me to day trade, enough moves in the weekly charts.  I had though just wanted a quiet life with my monthly charts!

Apologies, I am talking about taking positions in the short term but for long term holds. So by short term I mean week to week reviewing and waiting for dips in prices of shares I already know I want (the usual suspects eg BP, Rio, BAT, PMs plus 20 others). Once bought I don't 'intend' to sell. 

So not trading per se....rather trying to accumulate but at the same time trying to get in during dips and despite my original intention then maybe sell on a mini rally, to try buy back in cheaper and bring my overall cost of purchase down. 

However I am fairly bad at it...sold HL, Fres and Unilever only to watch them go up another 10%. I know I will be able to get back in on these (or at least other stocks we like) because eventually the BK should let me do so.  Just trying to get slightly ahead...whilst desperately trying to avoid holding when BK comes.

So I am clear longer term but quite nervous short term

 

[Lightscribe]

Bit of a drop for PAAS today when the other miners are motoring. Q2 results less than expected.

 

[janch]

42 minutes ago, DoINeedOne said:

cancel the direct debit and just pay it as the bill comes in

I've been doing this and for energy bills.  It's much simpler and also means they don't get my money in advance (although I do miss out on any fixes etc).  Many people use a lot of water with daily showers/baths etc.  I've been thinking we should think back to how things used to be so as to get a handle on what could be coming.  Eg no-one even had a shower unless a hand-held one over the bath.  Lots ddidn't even have a bath.  Water use was much less.  This was comparatively recent eg 70s/80s.  When did it become a thing to have a daily shower yet that is something everyone takes for granted and many have never known anything different.

Similarly we never had shops opening on Sundays or staying open late.  Showing my age I an even remember early closing on Wednesdays when shops closed on Wed afternoons.  It would reduce staffing costs substantially to return to more limited opening hours.  I'm sure there are many other examples eg returning to open coal fires and calor gas heaters etc.

[Loki]

As I work in construction, if it got to the point where I couldn't have a bloody shower every day to get the plasterboard/brick dust off me and out of my hair, I'd just jack it all in as at that point working isn't even providing the dignity of going to bed clean, I'd be better off on the streets not answering to arsehole site managers

[BurntBread]

15 minutes ago, janch said:

When did it become a thing to have a daily shower yet that is something everyone takes for granted and many have never known anything different.

George Carlin (from memory):  "Just wash the four key areas: armpits, crotch, arsehole and teeth. If you're really hard up, you can use the same brush."

[janch]

GSK have plunged today:

https://www.bloomberg.com/news/articles/2022-08-11/sanofi-and-gsk-lead-30-billion-rout-as-zantac-worries-mount?sref=lbQAzuXj

Sorry @DurhamBorn as it was you who used to make it IIRC.  But of  course it was someone elses job to make sure it was safe!

[janch]

2 minutes ago, Loki said:

As I work in construction, if it got to the point where I couldn't have a bloody shower every day to get the plasterboard/brick dust off me and out of my hair, I'd just jack it all in as at that point working isn't even providing the dignity of going to bed clean, I'd be better off on the streets not answering to arsehole site managers

I think you would qualify for an exemption to any restrictions

[M S E Refugee]

10 minutes ago, janch said:

GSK have plunged today:

https://www.bloomberg.com/news/articles/2022-08-11/sanofi-and-gsk-lead-30-billion-rout-as-zantac-worries-mount?sref=lbQAzuXj

Sorry @DurhamBorn as it was you who used to make it IIRC.  But of  course it was someone elses job to make sure it was safe!

https://pubmed.ncbi.nlm.nih.gov/33028965/

It was yet another possible treatment for Covid which was strangely withdrawn after decades of use.