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

[M S E Refugee]

Apple diversifying production away from China – media https://www.rt.com/news/560996-apple-china-us-vietnam/

[King Penda]

9 minutes ago, DurhamBorn said:

This is where housing wealth has to go to save sterling,rates will increase until house prices collapse.Housing wealth is what will take the massive pain.

Zoopla says my house has gone down by 500 this month that’s 2 months in a row

[onlyme]

9 minutes ago, Plan-b said:

Looks like its happening   https://www.thescottishfarmer.co.uk/news/20600866.irish-dairy-report-recommends-paying-dairy-farmers-eur5000-cull-cows/

Arseholes for even considering this during food inflation and shortages

Malicious or evil even.

[DurhamBorn]

13 minutes ago, Plan-b said:

Looks like its happening   https://www.thescottishfarmer.co.uk/news/20600866.irish-dairy-report-recommends-paying-dairy-farmers-eur5000-cull-cows/

Arseholes for even considering this during food inflation and shortages

Better idea,kick the toffs off the grouse moors in Scotland and the Pennines and plant upland forests again.

[GTM]

18 minutes ago, DurhamBorn said:

Now going forward that assumes government takes the hard choices,so far they have done the opposite of whats needed.My main worry now for my family  is we are on the edge of the event horizon where the state sucks all wealth into the black hole.

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.

[Starsend]

58 minutes ago, GTM said:

This part is utter bollocks. If you go to factories and offices in China, as I have, you'll see that the ones in the factories do indeed work extremely hard. However if you go into the offices it will look very familiar if you are used to working in offices in the UK. On one customer site we had to use a piece of test equipment that was always in use during normal office hours. So we asked if we could stay on site past 5pm and use the equipment. Obviously we would need somebody there to keep an eye on things. Nobody in the office would do it. They finally got somebody to volunteer by paying them overtime.

Truss has the same mindset as the idiot managers I've come across who send projects to China and India because they believe they can get highly skilled, highly motivated workers for a fraction of the price of Western workers. Then can't work out why the hell that what they get back is crap, late and massively over budget. Of course the few who are highly skilled and highly motivated have left for a competitor for double the salary.

Most people work because they have to work and that is true the world over.

Yes it's money and the possibility of a better life, bigger house / car, nice holidays that motivates people to work harder. Her Government has spent the past 12 years pushing up the cost of houses making them unaffordable for most, importing millions and millions of cheap workers to push down wages at the same time and making the work place increasingly alien and unpleasant for many, increasing taxes steadily, encouraging people to stay at home by gifting them a fortune (if you fall into their favoured groups) and generally fucking up everything they touch. They have reduced living standards massively for almost everybody. Labour prior did the same.

They then have the sheer fucking cheek to come out with shit about people not wanting to work hard. To me she is showing quite clearly she's another retarded cunt and it's gonna be more of the same until collapse.

I honestly despair that a single person in the country is stupid enough to vote for any of these appalling parties. They all need hanging.

[Starsend]

12 hours ago, King Penda said:

I know look at entitled to it’s fucking insane 

Every time I've ever looked it says the same thing, FUCK ALL 

[HousePriceMania]

 

6 to 7% mortgage rates anyone ?

[Democorruptcy]

1 hour ago, Yadda yadda yadda said:

That is properly worrying. US inflation moderated last month. What is the difference? Most obvious is exchange rate. We're importing inflation. Record balance of trade deficit too. This is running away in a death spiral. Sterling hasn't reacted much this morning, yet. I would expect it to sell off. The market could be expecting interest rates to rise in response to the higher inflation figure. Perhaps but I would expect sterling to go lower as that rise will be some time off. Unless they do an emergency raise, which would signal panic and draw in speculators to short the pound.

The counter argument would be that the US has raised rates faster. We just need to follow suit. I don't buy that because the interest rate rises haven't had time to have a full impact on demand yet.  We're looking at UK inflation for July here.  There will have been an impact on exchange rates and import prices but not much that will appear in last month's inflation.

Imagine where balance of payments and the exchange rate will be if we have a cold winter. Inflation to the moon. 🚀🚀🚀

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.

 

[Plan-b]

I missed these. Congrats to anyone that held through the rises.

[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