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

[Jay]

11 hours ago, Bobthebuilder said:

I know a lass, who almost went on the game during lockdown, because that cunt made getting SEISS so difficult to get.

You might be able to break his leg face to face, but he will not change.

"But no one ever changed the church by pulling down a steeple
And you'll never change the system by bombing number ten
Systems just aren't made of bricks they're mostly made of people
You may send them into hiding, but they'll be back again"

 

Wow..the saddest post I have read the credit thread..some of us have gotten out of the gutter and forgotten it exists and what it looks like..hope she is ok..

we talk about societal collapse, recession, stagflation, deflation and war..what it actually means and consequences..once it moves from posts to actual reality will be a punch in the face..the law of unintended consequences means stories like that become common..bad times and things happening to good people..a lot of good people…you can get a flavor of this by watching programmes from the 70s and 80s..grim..on the plus side better community spirit..

Don’t really fancy going back to that..a good reality check and time to count my blessings..I will survive but many won’t..I am now inspired to do my bit by increasing my tax bill by making more profits..be lucky..

[tank]

23 minutes ago, DurhamBorn said:

The voters voted for the right policies,even staunch Labour areas around me,ex mining areas voted Tory to slash welfare and immigration,Tories did the opposite.Read the room wrong,or deliberate.

Very deliberate.

Welfare and immigration ARE a huge part of the current UK economy.

This is a rentier nightmare 40 long years in the making and there is no winding it back without pissing off a lot of very powerful and wealthy individuals who have controlled British politics since the 80s. Forget fat Shaz and Karen getting their nails done while ordering another takeaway. The Tory Party don't dole out the bennies due to some handwringing, benevolent sympathy for single mums. 

[HousePriceMania]

32 minutes ago, DurhamBorn said:

My roadmap says UK collapse 100% certain on the present runway.So from the macro,and the energy situation we have a pincer movement.He is right to mention though 100% can quickly become 50% before events happen.He is also right to mention the two items that the BOE must do.Increase rates if Truss wins,refuse to QE if Dishi wins.The first option is the right one,but to save systemic collapse house equity will have to be destroyed.

 

I've said for some time, the chouce is:

1. House price collapse

or

2. Everything collapses, including a house price collapse

 

The problem is, the MPs are up to the necks in pwopatee and I fully expect them to select thinking it will stop their house price collapse.

At the end of the day the British establishment will still own all the land/iundustry/government/palaces/Army...so I dont think they'll care.

I'd say 2 is nailed on.

I am looking at buying a house but even with the threat of rate rises, -ve sentiment, people going over the edge ( I know a couple ) there is literally just shit for sale and insane prices.

 

[Yadda yadda yadda]

1 minute ago, Pip321 said:

It’s a great question.

In the context of agreement with Baffled and Plan B (with his Dr Tim note) what worries me most isn’t where we are now (bad enough). What worries most is that despite where we are today the stock market is ok, house prices bubble along, interest rates still very low, gold/silver stay low and the narrative from main stream media is dreadful….and the population in the West seems oblivious to what is happening. I think they believe it’s Putins fault and ‘when’ he loses the war it will all be okay again. 

Truss is talking the talk….but I guess once in charge will realise the task ahead, then kick the can and try get out alive with lots of money/influence behind her. That not a criticism of her specifically but politicians are no longer ‘visionaries or world changers’. Loved to be proved wrong  

Re the energy bills we (the west) either concede to Russia ie make a strong moral vocal objection to Ukraine invasion but still do business with them (that should have been ‘plan a’ by the way) or we hold our position and wait for the government to start digging the hole deeper and send everyone more money. I think the energy crisis in Germany is more pronounced and will be very telling of what the West decide.

I think MSE has the right approach. Gold and Silver….not to make a killing but to hedge to avoid losing everything. 

The West at least partly provoked the Ukraine war. Yes, both sides are using it for other purposes. There was no need for overtures to Ukraine. The involvement of the Biden family in oil and gas business in Ukraine was clearly utterly corrupt. Especially when Biden had control over massive 'aid' payments to the country.

The US will be fine. They have their own energy. They're sacrificing Europe and European leaders are traitorous scum for going along with it.

[Harley]

1 hour ago, Plan-b said:

Dr Tim Morgan is extremely bearish on the UKs chances

Let's be absolutely clear and get to the current front of it all.  The UK has not had "proper" and real growth for a very long time.  We've not just recently entered the zone, we've been in it for decades.  Many talk as if we've not been there long and can exit without paying a price.  They've been japping like that forever while it marched on.  The hole is now simply too deep to climb out of like that.  Maybe we're stuck, good or bad, and RIP the "growth model".  We need to be honest, "come to Jesus", and then move on to whatever takes its place.  But we won't, they won't, they can't, so Schumpter it is.  Schöpferische Zerstörung.

[Starsend]

2 hours ago, Barnsey said:

Are you writing for the Telegraph now @DurhamBorn?

https://www.telegraph.co.uk/news/2022/08/17/entitlement-britain-becoming-poor-country-many-people-dont-care/

Britain has turned into a three-speed society, with some people, including blue-collar workers in warehouses, in factories, in delivery vans, as well as plenty of white-collar professionals, working flat out, much harder than they ever did before, their output closely monitored and controlled by technology, but with their pay held back by productivity constraints.

The picture is different in office-based sectors where the working-from-home and HR cultures have spiralled out of control, and there has been a proliferation of non-jobs across the corporate world. Office workers spend too much time communicating with each other, which is easy, rather than creating value, which is hard. Poor, lazy, tick-box management is rife, some of it caused by regulatory idiocies. Many corporate types are resting on their laurels, insulated by cheap credit, lulled by rocketing house prices into thinking they have made it in life and can relax.

Last but not least, parts of the economy are suffering from the continued dysfunctionality of the welfare state: despite Universal Credit, there are insufficient incentives for some groups to increase their working hours. This is an important reason why so many vacancies for lower-paid jobs remain unfilled, and, combined with our poor education and skills, for our extreme reliance on immigrant labour.

All three challenges need to be addressed differently. We need to be honest about the new British disease: our staggering lack of competitiveness, poor levels of investment, the low quality of so many of our schools, the weakness of our skills, the disaster that is our infrastructure, our sky-high taxes, our deadly bureaucracy, and that fixing all of this will be painful. Incentives to work and invest need to be turbocharged: far too many people pay far too high marginal tax rates, and many youngsters are discouraged by our broken housing market.

Firms will need to be encouraged into investing a lot more. The economy requires more competition. The public sector needs radical reform and contraction. Crucially, higher interest rates would lead to a more rational allocation of capital, and the demise of wasteful low-return jobs and practices. One of the biggest barriers to change is the prevalence of middle-class Nimbyism, or at least the idea that things are good enough as they are, and that all new development – of homes, airports, power plants or water reservoirs – must be stopped.

Capitalism itself cannot survive another decade of zero growth in real incomes. The public only tolerates the profit motive and freeish markets if people feel that a rising tide is lifting all boats; but as incomes stagnate, they become ever more sceptical. But Britain is suffering from zombified social-democracy, over-regulation and monetary socialism, not from genuine capitalism. We wouldn’t be stagnating if a few million acres had been handed over to housing, or if monetary policy wasn’t obsessed with a proto-Keynesian desire to bail out the over-indebted, or if a flat tax had been introduced in 2010, or if the Oxford-Cambridge-London triangle had been turned into a giant high-productivity science enterprise zone.

Boris Johnson was meant to understand all of this but sadly didn’t, and three years have now been wasted. Liz Truss, a principled libertarian, does get it, and, crucially, isn’t scared of being blunt. The Tories can’t afford to mess this up again: it’s Truss’s way, hard graft and all, or a Labour landslide in 2024.

Usual complete rubbish written by some spazzer journalist. No real mention / understanding of two of the biggest elephants in the room, mass immigration de-motivating and de-skilling people and sky high house prices making people think - why bother. I recall myself some fifteen years ago deciding not to bother taking further expensive professional exams because of the influx of cheap labour pushing down my wages - decided to focus on getting out instead. He like so many idiots assumes that we have  mass immigration because we are so shit that we can't manage without them when the truth is that we had managed fine without them for, well, a long time pre-Blair; people have been de-skilled as a result of the influx and companies no longer needing to waste their money training people. What they have done with housing and immigration has had a gigantic negative impact on people's motivation to work in this country,

He mentions a decade of zero growth in real incomes - hilarious and if only. They've fallen massively in real terms for most.

He then falls for the bullshit that Truss is different this time. She isn't. When will people understand that the Prime Minister cannot make a difference regardless of who they are. It's the entire Conservative party that is the problem, the entire establishment.

[M S E Refugee]

10 minutes ago, Pip321 said:

I think MSE has the right approach. Gold and Silver….not to make a killing but to hedge to avoid losing everything.

I think Rafi Farber will be correct and many assets will hyper-deflate against Gold and Silver.

[Starsend]

2 hours ago, M S E Refugee said:

https://www.dividendmax.com/united-states/nyse/shipping/zim-integrated-shipping-services-ltd/dividends

https://www.dividendmax.com/united-states/nasdaq/shipping/star-bulk-carriers-corp/dividends

https://www.dividendmax.com/south-africa/johannesburg-stock-exchange/energy/thungela-resources-limited/dividends

I have been buying these inflation busting dividend payers in my Freetrade ISA.

I've also bought back into Thungela.

That top one, nearly 40%, just cannot see that one lasting - then again if you got two years of that.

Are their profits so high purely because shipping rates exploded for a while, when all those containers rates shot up through covid? If , they've got to come right down at some point surely?

[feed]

11 minutes ago, tank said:

Very deliberate.

Welfare and immigration ARE a huge part of the current UK economy.

This is a rentier nightmare 40 long years in the making and there is no winding it back without pissing off a lot of very powerful and wealthy individuals who have controlled British politics since the 80s. Forget fat Shaz and Karen getting their nails done while ordering another takeaway. The Tory Party don't dole out the bennies due to some handwringing, benevolent sympathy for single mums. 

Must be time for your daily, evil tory mass immigration post.

They did it to prevent deflation.  And if they continue to do it, in an inflationary cycle, they’ll get a currency collapse.

So take your pick.  It stops now or it stops after the collapse.   
 

[Harley]

15 minutes ago, Jay said:

Wow..the saddest post I have read the credit thread..some of us have gotten out of the gutter and forgotten it exists and what it looks like..hope she is ok..

we talk about societal collapse, recession, stagflation, deflation and war..what it actually means and consequences..once it moves from posts to actual reality will be a punch in the face..the law of unintended consequences means stories like that become common..bad times and things happening to good people..a lot of good people…you can get a flavor of this by watching programmes from the 70s and 80s..grim..on the plus side better community spirit..

Don’t really fancy going back to that..a good reality check and time to count my blessings..I will survive but many won’t..I am now inspired to do my bit by increasing my tax bill by making more profits..be lucky..

Or just read up on Venezuela.

[Starsend]

1 hour ago, DurhamBorn said:

They get lots of their ideas from this thread and out work,then flesh it out into articles.They never credit us though.To be fair though at least they are getting it out there.They need to really push the bennies and public sector unfunded pensions consuming so much while producing nothing as the main problem.I was talking to an old squeeze yesterday,she is an estate agent/letting agent in my home town.She said they had let 65 houses this year,only 4 paid their own rent,61 bennies.She said she saw working kids looking in the windows,but pushed out by bennies

Out of interest, how do you know that? Wouldn't surprise me though, very few journalists seem capable of producing their own decent work these days.

 

Shocking figures about the number of people paying their own rent, completely unsustainable.

[Starsend]

1 hour ago, baffledbyzirp said:

The burden of increased heat and energy costs will certainly hit the private sector hard. I imagine that leisure and retail will be in the front line. How much will it cost to provide heating and lighting within a shopping centre? Pubs and restaurants face a combination of factors; higher wages, higher product costs, increased rates and fuel/ heating at a time when consumers are tightening their belts. Energy dependent industries including steel, aluminium, glass, chemicals and heavy manufacturing will cease to be viable.

However, my primary concern is for the public sector, particularly local authority funded services. Schools, libraries, hospitals, swimming pools and public spaces are going to become uneconomic to run and maintain. The only option is to let them rot or increase taxes, either locally or centrally. What will the response of TPTB be? No party will win an election on a platform of increased taxes given the current economic situation. More printing and fantasy economics is a possibility, but at some point the market will realise that the funny money they are being offered in return for tangible goods is worthless. 

The inescapable conclusion is that our whole system, fragile and bankrupt though it is, depends on cheap energy. We relied on Russian fuel to insure international spot prices remained payable. Collectively the West told Russia to shove their oil and gas. Russia duly obliged and started to export increased volumes to India, China, Africa and Saudi. The West gave a massive leg up to its main competition and committed economic suicide to prove a point. Our moral superiority will not keep us warm this winter.

I cannot imagine how much it's going to cost to heat public swimming pools this Winter, especially if it's a cold one. I reckon councils will just shut them down saying it's too expensive.

[Harley]

20 minutes ago, Yadda yadda yadda said:

The West at least partly provoked the Ukraine war. Yes, both sides are using it for other purposes. There was no need for overtures to Ukraine. The involvement of the Biden family in oil and gas business in Ukraine was clearly utterly corrupt. Especially when Biden had control over massive 'aid' payments to the country.

The US will be fine. They have their own energy. They're sacrificing Europe and European leaders are traitorous scum for going along with it.

Boris blew his Churchillian moment.

[Starsend]

36 minutes ago, Harley said:

Woodside's chart seems to have sorted itself out a bit at long last.  It's been emotional.  Shows a bit of a symmetrical triangle formation atm which is quite common across the sector.  There I go again being too optimistic.  AUD stocks rarely do well for me.

I'm thinking of dumping my BP and buying Woodside. Couple of reasons, firstly the constant squawking for windfall taxes on BP (not sure if the Aussies are clamouring for the same with Woodside though), bigger dividend, better long term growth prospects and I read something briefly which I need to investigate further about BP selling off Mexican assets so they could invest further into green shit.

[M S E Refugee]

15 minutes ago, Starsend said:

That top one, nearly 40%, just cannot see that one lasting - then again if you got two years of that.

Are their profits so high purely because shipping rates exploded for a while, when all those containers rates shot up through covid? If , they've got to come right down at some point surely?

Shipping is a very cyclical business, the good thing about Zim is they are an Israeli company so I would expect them to be very shrewd.

I know that in the Oil Tanker business that many old vessels were scrapped when metal prices were high and those Ships haven't been replaced.

Also with the West's crazy sanctions Shipping may do well, who knows!

[Lightly Toasted]

1 hour ago, Plan-b said:

Dr Tim Morgan is extremely bearish on the UKs chances

"If the new PM goes for tax cuts, the Bank will have to counteract with rate rises."

He's only considering the case where there's a pure tax giveaway; maybe he thinks tightening elsewhere is politically impossible. Personally I think it's essential.

Anyway, it's more complex than he implies.

[feed]

12 minutes ago, Lightly Toasted said:

"If the new PM goes for tax cuts, the Bank will have to counteract with rate rises."

He's only considering the case where there's a pure tax giveaway; maybe he thinks tightening elsewhere is politically impossible. Personally I think it's essential.

Anyway, it's more complex than he implies.

And pretending the BOE has much choice doesn't help.

They're sandwiched between the FED with a high DXY on the verge of pause or pivot and the ECB terrified of moving because of Italy and others.  +/- 0.5 is about all the manoeuvrability they've got, and what difference will that make.    

 

[Axeman123]

I am oddly upbeat about the UKs prospects.

Watched the Panorama about the failed mini-bonds etc under Bailey's watch at the FSA on iplayer last night. Nothing in that was new, and yet suddenly it is front and centre. That doesn't just happen. I take this as a sign Bailey is on the way out, and a shift in monetary policy is coming.

Truss is really telling it like it is. We have all been here before where they make the right noises and then carry on with business as usual of course, but this time feels different. Even lefty newspapers are starting to sound like us on here. The overton window has shifted dramatically, and that generally precedes action. Even Pishy has been trying to outdo her on DOSBODianism, the consensus in the leadership contest would have been considered radical just a year ago!

I agree that Britain is on a knife edge, but I see signs that the right people get it and have sensible plans. Maybe I am just a dreamer of course.

[Bobthebuilder]

1 hour ago, Jay said:

Wow..the saddest post I have read the credit thread..some of us have gotten out of the gutter and forgotten it exists and what it looks like..hope she is ok..

we talk about societal collapse, recession, stagflation, deflation and war..what it actually means and consequences..once it moves from posts to actual reality will be a punch in the face..the law of unintended consequences means stories like that become common..bad times and things happening to good people..a lot of good people…you can get a flavor of this by watching programmes from the 70s and 80s..grim..on the plus side better community spirit..

Don’t really fancy going back to that..a good reality check and time to count my blessings..I will survive but many won’t..I am now inspired to do my bit by increasing my tax bill by making more profits..be lucky..

This thread inspired me to look back at programmes from the late 1970s early 1980s, start of the deflation cycle. This is why I post up Jack Hargreaves films from time to time, almost a melancholy feeling that runs through them, as if he knows he was at the end of a big cycle, and life would never be the same again.

The metal hook in this short clip is a cooking iron to hang a cooking pot or kettle over a camp fire.

My wife managed to get the lass a temporary job at her place, saved her arse some what.

[ThoughtCriminal]

1 hour ago, M S E Refugee said:

I think Rafi Farber will be correct and many assets will hyper-deflate against Gold and Silver.

Are you buying at the minute? I'm still far to heavy in cash, I'm far too pessimistic on stocks so I'm pondering buying more silver and gold.

 

Think SP said being neutral isn't really an option and I have to agree. Sitting in cash waiting for BK is looking like slow suicide.

 

[Starsend]

13 minutes ago, Axeman123 said:

I am oddly upbeat about the UKs prospects.

Watched the Panorama about the failed mini-bonds etc under Bailey's watch at the FSA on iplayer last night. Nothing in that was new, and yet suddenly it is front and centre. That doesn't just happen. I take this as a sign Bailey is on the way out, and a shift in monetary policy is coming.

Truss is really telling it like it is. We have all been here before where they make the right noises and then carry on with business as usual of course, but this time feels different. Even lefty newspapers are starting to sound like us on here. The overton window has shifted dramatically, and that generally precedes action. Even Pishy has been trying to outdo her on DOSBODianism, the consensus in the leadership contest would have been considered radical just a year ago!

I agree that Britain is on a knife edge, but I see signs that the right people get it and have sensible plans. Maybe I am just a dreamer of course.

I hope you're right but personally I don't think so.

I remember Cameron telling it like it was as well, all of them in fact.

I recall reading once how many Conservative party MPs had multiple BTLs, it was something astonishing, 70% or something stupid. No way will they let their little empires go, they'd rather take down the entire country such is their selfishness.

We'll see, I have no doubt some of them understand the problems, it's the entrenched vested interests that prevent the right course of action being taken.

The big mofo crash might be better, I think we'd have a better chance of things getting rebuilt properly then plus huge opportunities along the way for those with an eye open.

[ThoughtCriminal]

Speaking of Thungella........

 

530% in a year!

 

Hope you all choke on your divis.

 

Bastards. 😂

[Axeman123]

Just now, Starsend said:

I hope you're right but personally I don't think so.

I remember Cameron telling it like it was as well, all of them in fact.

I recall reading once how many Conservative party MPs had multiple BTLs, it was something astonishing, 70% or something stupid. No way will they let their little empires go, they'd rather take down the entire country such is their selfishness.

We'll see, I have no doubt some of them understand the problems, it's the entrenched vested interests that prevent the right course of action being taken.

I'd prefer the big mofo crash personally, I think we'd have a better chance of things getting rebuilt properly then plus huge opportunities along the way for those with an eye open.

I totally get where you are coming from. The thing is, I don't see Cameron or other MPs as really running the country. I would compare them to middle management. The real people in charge think in terms of multiple generations of ongoing priviledge.

As an analogy think back to Brexit and the prorogation etc. MPs played their europhile games, right up to the point the country started looking ungovernable as public anger became dangerously intense. I vividly remember one shellshocked-looking Brexit-supporting MP lamenting he would happily see the palace of Westminster bulldozed into the Thames after what was happening there, and it seemed to capture the essence of the times. Almost overnight MPs all fell into line and gave BJ his GE, and we rapidly Brexited without even a murmur of substance. What happened? IMO the real decision makers got scared, and started making phone calls.

[Starsend]

2 minutes ago, ThoughtCriminal said:

Speaking of Thungella........

 

530% in a year!

 

Hope you all choke on your divis.

 

Bastards. 😂

I bought Arch Resources a couples of years back. Not done as well as Thungela but tripled in price. They weren't paying a divi at the time either, they were so beat up. They are now yielding nearly 10% and that's after the price has tripled.

Lovely, filthy, dirty coal.

[feed]

6 minutes ago, Starsend said:

I hope you're right but personally I don't think so.

I remember Cameron telling it like it was as well, all of them in fact.

I recall reading once how many Conservative party MPs had multiple BTLs, it was something astonishing, 70% or something stupid. No way will they let their little empires go, they'd rather take down the entire country such is their selfishness.

We'll see, I have no doubt some of them understand the problems, it's the entrenched vested interests that prevent the right course of action being taken.

The big mofo crash might be better, I think we'd have a better chance of things getting rebuilt properly then plus huge opportunities along the way for those with an eye open.

I don’t think it’s guaranteed, but they’ll throw everything at preventing a real crash or collapse.  The risk with a collapse is it may result in real change.   And no one with real power wants real change. 

Look at what they did to prevent a deflationary collapse.  Imagine what they'll do for an inflationary one. 

Axeman123's, house price inflation to moderate deflation and house price deflation to moderate inflation, may well be on the money.