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

[HousePriceMania]

Pinched this from TOS.

Natwest having problems or are the just c**ts ?

[Harley]

4 minutes ago, Axeman123 said:

I take your point.

I am struggling to picture anyone long-term winning though. Sure governments kicked the can for a generation, and politicians like say Tony Blair got wealthy. But even then if the entire west went Venezuela who would be confident of staying comfortable in the aftermath? Even george Soros is only alive because he has the protection of the NATO etc nations, what would his life expectancy be under BRICS as global hedgemon? The only "win" possible - that I can see - is either: create a game of thrones tournament-world and try to get to the iron throne, or take things to the brink/buy up assets/pull the plane out of it's dive. I can't see any of the movers (that we see) actually thriving in the former scenario.

At a lower level, nearly everyone that has done well off the mania just keeps doubling down. I can't see any of them not ending up working in Wilkos aged 70 and telling anyone that will listen "I used to be rich..."

At some point I'm going to have to give up my gaff I have worked so hard on and the somewhat independent lifestyle it provides.  Either that or get a live in helper.  Just go somewhere warm where the help is cheap and the health service is relatively cheap and effective, aka not here and not in it's "pole".  OK, I'll probably be machetted to death in me bed at some point but there you go.

[DurhamBorn]

6 minutes ago, Harley said:

Do you have any idea just how many holdings I already have!  I'd be better off buying low div stocks 'cause at least I could dump them with ease!  At least also tell us when you sell 'em!

Stop complaining you love it.I sold some HL on a 20% profit and added Ninety One.Sold down BT at the high £1.80s bought more VOD and Turkcell.I havent sold out of anything much lately,but what i have done is sold down some holdings by 50% to 75% and invested it in very similar companies,but ones with exposure outside of the west.

Im having to navigate family wealth here with confounding calls on sterling.Roadmap says above average performing currency mid cycle,yet its flashing very high collapse risk as well.That is throwing me.The risk is almost all due to bennies and public sector pensions and the government trying to protect half the country from the disastrous choices of the last 20 years.We are consuming too much and the pain needs to be allowed to run so price signals can work,protecting half of the country just increases the pain on the rest and the currency will end up doing the work.

Liquidity shows sterling should slowly rise from here,but there are structural forces at work that could see a collapse.

[Errol]

6 minutes ago, HousePriceMania said:

Pinched this from TOS.

Natwest having problems or are the just c**ts ?

Everyone should be taking out £300 a day from the cash machine until they reach a certain level of cash that they need on hand (say 6-12 months of living expenses). Get the money out of the system - and on the level of cash machine withdrawals there are no questions.

[DurhamBorn]

8 minutes ago, HousePriceMania said:

Pinched this from TOS.

Natwest having problems or are the just c**ts ?

Or maybe just protecting the 85 year old who comes in wanting £5k to pay the pikey waiting outside who said they had a tile off and the house would fall down if it wasnt done there and then.?

[Axeman123]

Interesting stuff about the neutral rate, ties into the BK without positive real rates thesis.

(still reading through myself)

Edit: Direct link as it is buried in the replies on twitter:

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2022/decomposing-the-drivers-of-global-r-star.pdf

[Errol]

 

[onlyme]

3 minutes ago, Axeman123 said:

Interesting stuff about the neutral rate, ties into the BK without positive real rates thesis.

(still reading through myself)

Central banks are largely responsible for both of those.

Misallocation of funny money, whipsawing inflationary and investment cycles and pricing couples of childbearing age out of having children and concentrating the money into the hands of a tiny proportion of the population.

They employ nearly 5000 staff not to notice the obvious.

[DoINeedOne]

Just now, DurhamBorn said:

Or maybe just protecting the 85 year old who comes in wanting £5k to pay the pikey waiting outside who said they had a tile off and the house would fall down if it wasnt done there and then.?

My mum recently drew out some money at the internal bank machine as banks near us don't have counters any more just a member of staff wondering around looking lost with an iPad

 

She said there was a kid in a hoodie behind her acting weird, about an hour later in the supermarket some women with a pile clothes over their arm took her bag

Until my mum noticed and grabbed it, the women said sorry must of got caught on the coat hangers 

Anyway the police said its happening alot people watching people in banks and following them else where sadly its mostly pensioners in the banks

Mum said she her english was bad and looked eastern European 

So we now at the point that because my mum can't use banking apps or doesn't want too any large withdrawals i need to go with her

 

 

In another story my barber said people have seemed to notice there's not many cameras on the high street and there has been a-lot of attempted robberies people running into shops trying grab cash 

 

All fun and games....

[Axeman123]

12 minutes ago, DurhamBorn said:

Or maybe just protecting the 85 year old who comes in wanting £5k to pay the pikey waiting outside who said they had a tile off and the house would fall down if it wasnt done there and then.?

Maybe, but based on my experience with RBS (same group) the staff just want to diddle themsleves and refer everyone to online banking. Everything seems to just be such an effort for them, and they seem to live in terror of having to fill out a form.

Most of them will be getting their cards once the branches merge, so I have some sympathy.

[CannonFodder]

1 minute ago, DoINeedOne said:

My mum recently drew out some money at the internal bank machine as banks near us don't have counters any more just a member of staff wondering around looking lost with an iPad

 

She said there was a kid in a hoodie behind her acting weird, about an hour later in the supermarket some women with a pile clothes over their arm took her bag

Until my mum noticed and grabbed it, the women said sorry must of got caught on the coat hangers 

Anyway the police said its happening alot people watching people in banks and following them else where sadly its mostly pensioners in the banks

Mum said she her english was bad and looked eastern European 

So we now at the point that because my mum can't use banking apps or doesn't want too any large withdrawals i need to go with her

 

 

In another story my barber said people have seemed to notice there's not many cameras on the high street and there has been a-lot of attempted robberies people running into shops trying grab cash 

 

All fun and games....

Where are you in the UK?

Quite a lot of that on the past hence the card withdrawl cap.

Other favourite was to mug people of card and pin at about 23.45 to get two days of withdrawl before and after midnight.

Lot of cctv now is broken, not watched, not maintained, dirty lenses and crims can be reasonably confident that and police appepite to pursue 50 quid theft not going to threaten them

[DoINeedOne]

4 minutes ago, CannonFodder said:

Where are you in the UK?

Quite a lot of that on the past hence the card withdrawl cap.

Other favourite was to mug people of card and pin at about 23.45 to get two days of withdrawl before and after midnight.

Lot of cctv now is broken, not watched, not maintained, dirty lenses and crims can be reasonably confident that and police appepite to pursue 50 quid theft not going to threaten them

South East, Sidcup area

[marceau]

32 minutes ago, Axeman123 said:

I take your point.

I am struggling to picture anyone long-term winning though. Sure governments kicked the can for a generation, and politicians like say Tony Blair got wealthy. But even then if the entire west went Venezuela who would be confident of staying comfortable in the aftermath? Even george Soros is only alive because he has the protection of the NATO etc nations, what would his life expectancy be under BRICS as global hedgemon? The only "win" possible - that I can see - is either: create a game of thrones tournament-world and try to get to the iron throne, or take things to the brink/buy up assets/pull the plane out of it's dive. I can't see any of the movers (that we see) actually thriving in the former scenario.

At a lower level, nearly everyone that has done well off the mania just keeps doubling down. I can't see any of them not ending up working in Wilkos aged 70 and telling anyone that will listen "I used to be rich..."

Western leaders had a cushy number, but for some reason it wasn't enough. So they dug out and sold off their own foundations. Nobody is going to 'win' out of this.

It's the biggest reason I find the general house price obsession so puzzling. Houses worth a paper fortune - in a nation that's burning down around them. You can have the most luxurious 'green zone' imaginable, but nothing lasts forever, and at some point either you or your descendants are going to end up outside....

[Boon]

7 minutes ago, marceau said:

 

It's the biggest reason I find the general house price obsession so puzzling. 

I do not.

It is the only way for the average Joe to get debt in large amounts. And with the general price rises it is the only asset most will have that will have made them money and also is currently worth a lot in absolute terms. Some keep eyes on the market for negative reasons, ie highly leveraged. A movement in the market either way has a very disproportionate effect on their overall valuation. 

Don't think it is much different from the crash in 1929 in the US (was reading a book on it). There even the most average people were obsessed with stocks, because they had made people money and also could get leverage on it.

[AlfredTheLittle]

1 minute ago, Boon said:

I do not.

It is the only way for the average Joe to get debt in large amounts. And with the general price rises it is the only asset most will have that will have made them money and also is currently worth a lot in absolute terms. Some keep eyes on the market for negative reasons, ie highly leveraged. A movement in the market either way has a very disproportionate effect on their overall valuation. 

Don't think it is much different from the crash in 1929 in the US (was reading a book on it). There even the most average people were obsessed with stocks, because they had made people money and also could get leverage on it.

What's the book, is it worth reading? Anyone else got recommendations for a good book about 1929?

[Boon]

1 minute ago, AlfredTheLittle said:

What's the book, is it worth reading? Anyone else got recommendations for a good book about 1929?

The Great Crash of 1929, by Galbraith (you can get it free on pdfdrive).
Not very long tbf, but a good read. 

 

[marceau]

4 minutes ago, Boon said:

I do not.

It is the only way for the average Joe to get debt in large amounts. And with the general price rises it is the only asset most will have that will have made them money and also is currently worth a lot in absolute terms. Some keep eyes on the market for negative reasons, ie highly leveraged. A movement in the market either way has a very disproportionate effect on their overall valuation. 

Don't think it is much different from the crash in 1929 in the US (was reading a book on it). There even the most average people were obsessed with stocks, because they had made people money and also could get leverage on it.

You're right. I suppose I'm not puzzled by the behaviour of the herd (they don't think at all), but by the behaviour of the leaders and thinkers.

[HousePriceMania]

1 hour ago, DurhamBorn said:

Or maybe just protecting the 85 year old who comes in wanting £5k to pay the pikey waiting outside who said they had a tile off and the house would fall down if it wasnt done there and then.?

How often does that happen ?

When did the bankers become protectors of the people ?

1 hour ago, Errol said:

Everyone should be taking out £300 a day from the cash machine until they reach a certain level of cash that they need on hand (say 6-12 months of living expenses). Get the money out of the system - and on the level of cash machine withdrawals there are no questions.

or buy gold.

[wherebee]

1 hour ago, DurhamBorn said:

Or maybe just protecting the 85 year old who comes in wanting £5k to pay the pikey waiting outside who said they had a tile off and the house would fall down if it wasnt done there and then.?

Some of that, I am sure.  The relatives always complain and try to sue the bank, even when the victims have been warned it's a scam.

But the drive to do away with cash is real and is constant.  The coming crash will, I think, make many more people how having the ability to pay and sell in cash is vital.

[No One]

3 hours ago, HousePriceMania said:

Pinched this from TOS.

Natwest having problems or are the just c**ts ?

 

Barclays customers claim they are losing a vital financial safety valve during the cost of living crisis after the bank abruptly withdrew their unused overdraft facilities. The bank has written to a number of its current account holders informing them that their overdraft limit will be removed with a month’s notice because they have not used it for 12 months.

Many say they were counting on the provision in case soaring bills tip their accounts into the red. They now face paying high interest rates and charges if they are forced into using an unauthorised overdraft. Andrew Davey, who has banked with Barclays for more than 30 years, was informed that his £1,400 overdraft was being withdrawn as he had not used it in the past year.

“I asked if they could just reduce it to £400 as I wanted it as a safety cushion in case of account issues, and spent 40 minutes providing all my financial information, including my income and a very detailed breakdown of expenditure,” he says.

He adds: “I have just received a text to tell me that my request was not accepted, and it will be removing all my overdraft facility. I really cannot understand why they are pushing customers away.”

Clare Illingworth Leach has banked with Barclays since 1980 and has a £150 overdraft which she has never yet used. “I received a letter stating that it would be removed. So did all the people I know who bank with Barclays,” she says. “I sent them a letter, as invited, asking them not to remove my modest overdraft facility. They ignored me and revoked it without replying. I am housebound [and] on a very small income, and I wanted to retain it as a cushion in case of fraudulent transactions depleting my account, which has happened twice in five years.”

Barclays says it has been reviewing overdrafts since last year to protect customers from unaffordable levels of debt. It says: “We review all personal arranged overdraft limits at least once a year, taking into account all the financial information we have about each customer.

“Where this suggests that a personal arranged overdraft limit may be too high, we will plan to reduce it to a lower limit, taking into account how much of the overdraft has been used over the past 12 months. If the overdraft hasn’t been used at all for a long time, we may remove it.”

‘The practice of slashing and removing overdraft limits is hardly within the spirit of the regulations
Martyn James, Resolver
It adds: “If customers feel they are able to afford their current limit, they will need to provide additional information to confirm their income and expenditure, so we can meet our requirements as a responsible lender.”

Some customers have speculated that the move is to protect Barclays’s own finances, since overdraft facilities, whether used or not, have to be funded and shown as debt on the accounts of the bank.

Andrew Hagger, a personal finance expert at website Moneycomms.co.uk, says he is unaware of other banks doing the same thing, but he expects to see the practice become more widespread as the financial crisis bites.

“Barclays [and other banks] will undoubtedly have reviewed underwriting and risk strategies, as they know some customers are going to face financial difficulties as the cost of living crisis rumbles on,” he says. “Some customers will have been granted overdraft limits when the economic situation was far more positive and stable, but now the landscape and their disposable incomes look very different.”

According to complaints website Resolver, while other banks are also removing overdrafts, Barclays appears to be the biggest offender. “Banks have a responsibility to ensure customers don’t get into debt,” says spokesperson Martyn James.

“But given the fact that credit card interest rates are reaching the highest levels since the 1990s, and other forms of lending are also creeping up to their highest rate in decades, the removal, or reduction, of overdraft rates seems counterproductive as millions of households struggle to make ends meet. The practice of slashing and removing overdraft limits is hardly within the spirit of the regulations.”

Banks have a regulatory requirement to treat customers fairly, and financial regulator the Financial Conduct Authority says it is monitoring the situation with overdrafts.

It says: “When making changes to available credit, we expect firms to consider the circumstances of their customers, including any vulnerability, to communicate clearly, and to allow people time and opportunity to challenge and complain if they disagree.

“With the cost of living rising, more consumers may need to turn to the credit market, including overdrafts. Lenders need to treat people fairly as individuals and consider their needs.”

 

[No One]

It seems that the Banks are withdrawing liquidity to shore up their own balances in different ways.

They know something Joe public does not.

[DurhamBorn]

3 hours ago, AlfredTheLittle said:

What's the book, is it worth reading? Anyone else got recommendations for a good book about 1929?

Its best to ignore 29 and concentrate on the decade after because we are more that decade than 29,Ken Burns The Dust Bowl is a documentary and book that explains it very well and the lead up (that helped cause 29,tractor loans) @Yellow_Reduced_Sticker might even find us somewhere to watch it or the book.

[DurhamBorn]

9 minutes ago, No One said:

 

Barclays customers claim they are losing a vital financial safety valve during the cost of living crisis after the bank abruptly withdrew their unused overdraft facilities. The bank has written to a number of its current account holders informing them that their overdraft limit will be removed with a month’s notice because they have not used it for 12 months.

Many say they were counting on the provision in case soaring bills tip their accounts into the red. They now face paying high interest rates and charges if they are forced into using an unauthorised overdraft. Andrew Davey, who has banked with Barclays for more than 30 years, was informed that his £1,400 overdraft was being withdrawn as he had not used it in the past year.

“I asked if they could just reduce it to £400 as I wanted it as a safety cushion in case of account issues, and spent 40 minutes providing all my financial information, including my income and a very detailed breakdown of expenditure,” he says.

He adds: “I have just received a text to tell me that my request was not accepted, and it will be removing all my overdraft facility. I really cannot understand why they are pushing customers away.”

Clare Illingworth Leach has banked with Barclays since 1980 and has a £150 overdraft which she has never yet used. “I received a letter stating that it would be removed. So did all the people I know who bank with Barclays,” she says. “I sent them a letter, as invited, asking them not to remove my modest overdraft facility. They ignored me and revoked it without replying. I am housebound [and] on a very small income, and I wanted to retain it as a cushion in case of fraudulent transactions depleting my account, which has happened twice in five years.”

Barclays says it has been reviewing overdrafts since last year to protect customers from unaffordable levels of debt. It says: “We review all personal arranged overdraft limits at least once a year, taking into account all the financial information we have about each customer.

“Where this suggests that a personal arranged overdraft limit may be too high, we will plan to reduce it to a lower limit, taking into account how much of the overdraft has been used over the past 12 months. If the overdraft hasn’t been used at all for a long time, we may remove it.”

‘The practice of slashing and removing overdraft limits is hardly within the spirit of the regulations
Martyn James, Resolver
It adds: “If customers feel they are able to afford their current limit, they will need to provide additional information to confirm their income and expenditure, so we can meet our requirements as a responsible lender.”

Some customers have speculated that the move is to protect Barclays’s own finances, since overdraft facilities, whether used or not, have to be funded and shown as debt on the accounts of the bank.

Andrew Hagger, a personal finance expert at website Moneycomms.co.uk, says he is unaware of other banks doing the same thing, but he expects to see the practice become more widespread as the financial crisis bites.

“Barclays [and other banks] will undoubtedly have reviewed underwriting and risk strategies, as they know some customers are going to face financial difficulties as the cost of living crisis rumbles on,” he says. “Some customers will have been granted overdraft limits when the economic situation was far more positive and stable, but now the landscape and their disposable incomes look very different.”

According to complaints website Resolver, while other banks are also removing overdrafts, Barclays appears to be the biggest offender. “Banks have a responsibility to ensure customers don’t get into debt,” says spokesperson Martyn James.

“But given the fact that credit card interest rates are reaching the highest levels since the 1990s, and other forms of lending are also creeping up to their highest rate in decades, the removal, or reduction, of overdraft rates seems counterproductive as millions of households struggle to make ends meet. The practice of slashing and removing overdraft limits is hardly within the spirit of the regulations.”

Banks have a regulatory requirement to treat customers fairly, and financial regulator the Financial Conduct Authority says it is monitoring the situation with overdrafts.

It says: “When making changes to available credit, we expect firms to consider the circumstances of their customers, including any vulnerability, to communicate clearly, and to allow people time and opportunity to challenge and complain if they disagree.

“With the cost of living rising, more consumers may need to turn to the credit market, including overdrafts. Lenders need to treat people fairly as individuals and consider their needs.”

 

I had a £15k overdraft with Barclays on a Premier Account they removed it to zero a few months ago.I have been £1.60 overdrawn once in my life for a few days.I went in the branch and got a £500 one back on and told them i didnt want their Premier Account even though it was free,i wanted the bog standard one.Obvious they figured only time ide use the £15k was if i was in serious financial trouble or robbed.I guess they figure millions of their customers will be the same.

[Innkeeper]

Barclays cancelled my Premier Account overdraft a few weeks ago but to be fair I haven’t used the account for years.

Just this morning though, I got a letter from First Direct saying they were removing the o/d facility of £2250 completely even though this account is live with a few DDs going out.

The era of endless access to money is starting to come to an end.....

[leonardratso]

4 minutes ago, Innkeeper said:

Barclays cancelled my Premier Account overdraft a few weeks ago but to be fair I haven’t used the account for years.

Just this morning though, I got a letter from First Direct saying they were removing the o/d facility of £2250 completely even though this account is live with a few DDs going out.

The era of endless access to money is starting to come to an end.....

watch out for closing bank accounts as well, i had an old barclays one years ago with a small o/d facility that i used but then stopped using and maintained a zero balance for years, eventually i closed it and my credit score went down because it meant i had less credit available (ie the small o/d on the defunct barclays account). Not that i gave a shit since i always pay mostly cash for stuff anyway so my credit score is just a number that i dont really care about.