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

[BWW]

2 hours ago, HousePriceMania said:

and will stay at 15+ for ....

and svr or 2-5 year fixed rates for mortgages will hit ....

??

[Democorruptcy]

2 minutes ago, Axeman123 said:

Thing is though, all of that implies the flow is now against net zero and they are fighting a rear guard action. I will take that as a good sign.

The 13F filings for positions as they were at the end of June had to be done by last week. Maybe there were some changes that upset the climbies?

[M S E Refugee]

6 minutes ago, Funn3r said:

How does this work exactly? Sounded so interesting that I started reading on ebay, and seems like 

SILVER FLORIN GEORGE V COINS 

SILVER CONTENT:
1911 TO 1919 IS 0.925 SILVER
1920 TO 1936 ARE 50% SILVER

So I looked at a 1915 coin which the seller is offering for £12.99 - the weight is not specified but wikipedia puts it at 11.3 grams if I read that right. Say that's 0.4 of an ounce assuming that the worn condition of the coin has not reduced that.  

So you're paying over 30 quid/ounce for .925 silver. Why is this better than to buy modern .999 Britiannia even though it's got VAT?

The Sterling stuff is usually expensive but the pre 1947 Silver can be bought for a little above spot.

I also use topcashback and Nectar points to bring down the price.

Last week when the Silver price was a bit higher I bought 1KG of 50% Silver for £281 so basically that works out at £562 per kilo if I bought double the amount.

 

[Harley]

1 hour ago, sancho panza said:

Have you got a view MS on the possiblity of a sterling crisis before end 2023(sterling crisis defined as cable<1).

Also have you got a take on where UK IR's will need to go to get infaltion under control and whtehr they will be succesful.No pressure jsut interested in yor take.

This mess is unfolding quicker than I expected UK wise and I'm pretty releived we've alreayd moved our allotments into USD/PM exposure/Oilies before now.I'd hate to be selling cable at $1.18 but it might be better than parity in 6 months

also @baffledbyzirp

I'm moving my remaining UK bonds to USD bonds (incl. TIPS) despite the loss they're carrying.  I can't see the win.  Rates go up to stop currency decline or a currency decline.  I'm sure Sterling is due for a technical bounce regardless of rates but also sure that'll wash out over time.  I don't expect great things from USD or TIPS either (The Market Huddle just covered a bit on TIPS and the dearth of liquidity in 2020 is a concern).  Why bonds?  A good TIPS yield (very much atm) and overall asset allocation. 

[Harley]

1 hour ago, moneyscam said:

Hey SP. I would be guessing as much as anyone else even if it's an educated guess. Bear in mind that as far as fiat fx goes it's a relative game of who is the least ugly. Can cable go below parity? Absolutely because of massive balance of payments deficit and increasing budget deficits - the dreaded twin deficits that only the US can sustain (for a time) as USD is reserve currency. It is because of this reserve currency status that as things break down further I can see further flows to the USD and thus cable being pulled below parity. End of 2023 is a realistic scenario but I wouldn't bet the house on it as there are a lot of things that can happen between now and then.

As for interest rates, normally I would argue you need positive real rates so way above where we are now. However I think the inflationary shock which leads to demand destruction and reduction of aggregate demand will do most of the heavy lifting and so rates will not need to go above current inflation to achieve this outcome.

Forex trading is where the money is at the moment! 

[BWW]

4 hours ago, Democorruptcy said:

Right, so now my taxes are only going to keep zombie companies going instead of zombie households? Keep that executive pay flowing? Sorry but I'd like a return to capitalism, businesses going bust if they aren't viable instead of them keeping profits but any losses socialised and paid by taxpayers. It's subsidy after subsidy, let's have a good clearout, no pain no gain.

Whilst I agree, you have businesses like pubs whose real estate should be protected as pub or sell to state at cost.

They should also be supported with tax breaks. No duty on alcohol consumed on premises, reduced vat for eat/drink in. bysiness rates scrapped perhaps in exchange for being required to share parkingand public toilets with non customrts.

Food producers should also get tax breaks where needed.

Support businesses that make community or are essential for survival. Let the others sink or swim.

[Starsend]

Evidence, what kind of man goes after a kid's ice lolly!

[marceau]

13 minutes ago, Starsend said:

Putin and his mates stole billions from the Russian people.

He's a cunt. Our cunts are even bigger cunts. I don't see your point in comparing really. They're all cunts to me in different ways.

Putin was the least worst option given what had happened to Russia in the 90s. If you are genuinely interested there's a good book called 'Godfather of the Kremlin' which details the period of Putin's rise. The author, Paul Klebnikov, was killed for his writing.

[Lightscribe]

5 minutes ago, Funn3r said:

How does this work exactly? Sounded so interesting that I started reading on ebay, and seems like 

SILVER FLORIN GEORGE V COINS 

SILVER CONTENT:
1911 TO 1919 IS 0.925 SILVER
1920 TO 1936 ARE 50% SILVER

So I looked at a 1915 coin which the seller is offering for £12.99 - the weight is not specified but wikipedia puts it at 11.3 grams if I read that right. Say that's 0.4 of an ounce assuming that the worn condition of the coin has not reduced that.  

So you're paying over 30 quid/ounce for .925 silver. Why is this better than to buy modern .999 Britiannia even though it's got VAT?

The problem is that physical has left paper prices. I was getting old pre-1920 silver coins up until a year or so back for around the price of spot.

The attraction is that when our currency goes down the toilet (and others too) is that small little coins have predefined verification and weight.

If gold starts running to anywhere near the price it should be, then silver will too. Having the ability to exchange small transactions for physical silver could be more advantageous than cutting/clipping etc.

[BWW]

4 hours ago, RJT1979 said:

What's to stop Russians in the UK now killing celebrity children or politicians children in revenge. Popcorn 🍿 

please tell me not carrie's dog.

it.s all getting very fishcalledwanda.

[Funn3r]

7 minutes ago, Lightscribe said:

The problem is that physical has left paper prices. I was getting old pre-1920 silver coins up until a year or so back for around the price of spot.

The attraction is that when our currency goes down the toilet (and others too) is that small little coins have predefined verification and weight.

If gold starts running to anywhere near the price it should be, then silver will too. Having the ability to exchange small transactions for physical silver could be more advantageous than cutting/clipping etc.

Fair enough if you can shave a little off the price by buying old 50% silver. It's going to make a difference if you're buying a literal shed-full, which I am not as I have no space.

Does not address what I said though; why not just buy modern ones as the price difference is not huge. I mean when there's no internet and you're trying to buy half a turnip by candle-light then surely trying to convince the turnip baron to accept this shitty old florin "it's 50% silver honest trust me" will be a harder sell than a shiny one in a box with "Royal Mint".

[ThoughtCriminal]

You know the drill by now.

 

Germany is fucked.

[baffledbyzirp]

1 hour ago, sancho panza said:

Have you got a view MS on the possiblity of a sterling crisis before end 2023(sterling crisis defined as cable<1).

Also have you got a take on where UK IR's will need to go to get infaltion under control and whtehr they will be succesful.No pressure jsut interested in yor take.

This mess is unfolding quicker than I expected UK wise and I'm pretty releived we've alreayd moved our allotments into USD/PM exposure/Oilies before now.I'd hate to be selling cable at $1.18 but it might be better than parity in 6 months

also @baffledbyzirp

SP, I agree with MS that those who claim to know, generally know nothing, and those of us who are honest, are simply reading the tea leaves.

What is certain is that the UK and £GBP face headwinds. There are an awful lot of moving parts and most of them are aligned negatively;

1. We are entering recession

2. Inflation looks set to be circa 10% into next year

3. Consumer confidence has been devastated, which will reduce discretionary spending possibly leading to a liquidity trap

4. Strategic blackouts and electricity rationing are likely during the coming winter depending on the severity of the weather

5. GBP is historically low against a basket of currencies, especially the USD

6. Our Balance of Trade and Public Sector Borrowing Requirement are enormous and can't be easily reversed

7. The onshoring of manufacturing, which DB predicts, is occurring at a glacial pace, in the meantime imports are crucial

8. North Sea oil acted as a bulwark against currency devaluation and propped up our exports in the 70s but is not available to the same extent today

9. Autumn is typically the season when disaster strikes

10. There is universal worker dissatisfaction regarding wages unless you are a FTSE 100 boss according to this morning's Guardian

11. Net migration at 1,000,000+ p.a. 2020-2023

12. A bloated public sector approaching 50% of the workforce if you include indirect employment

13. A benefits bill that is plainly unpayable

14. War in Europe and potential conflict in Iran or Taiwan

Given the adverse factors listed above I suspect that the economy is going to take a pasting over the next six months. I believe that input costs, especially fuel, are reducing globally, so inflation may reduce without CB meddling, which is too-little-too-late as ever. In order to curb inflation you need to be in front and above the curve as per the Taylor Rule. Our panjandrums are trying to steer a tiger by grabbing its tail. Once the public stop spending inflation will self-correct, but not without enormous suffering for the leisure and retail sectors, adversely impacting the tax take. Printing-Spending-Inflation-Cost of living crisis-Consumer confidence impairment-Reduced spending-Deflation.

Is Sterling in peril? Yes. Is the Euro equally feeble? Yes. What are the alternatives? PMs, dollar denominated investments, EMs, land as opposed to property, real assets, Swiss Franc, index linked products. 

The Euro will fail ultimately because of design flaws as per Wynne Godley's analysis. GBP has the ability to survive but we must acknowledge our limitations as a country and forsake our seat at the top table, concentrating instead on domestic rather than international matters. Which currency will be the first to default and set the whole edifice at risk of collapse? Take your pick. There may be trouble ahead. The mighty dollar reigns supreme by virtue of its reserve currency status. The tide has changed, the BRICS no longer to be vassal states who can have their accounts frozen, assets seized and their access to international financial plumbing denied at Uncle Sam's whim. The dollar will be the last to go despite inherent flaws and deficits that are unpayable.

 

[Bus Stop Boxer]

3 minutes ago, Funn3r said:

Fair enough if you can shave a little off the price by buying old 50% silver. It's going to make a difference if you're buying a literal shed-full, which I am not as I have no space.

Does not address what I said though; why not just buy modern ones as the price difference is not huge. I mean when there's no internet and you're trying to buy half a turnip by candle-light then surely trying to convince the turnip baron to accept this shitty old florin "it's 50% silver honest trust me" will be a harder sell than a shiny one in a box with "Royal Mint".

Theres so much BS on YT re physical silver shortages.

When these vids crop up on my feed,  I just check in at Bairds, and every time there is no supply issue for bullion Sovs or silver Brits. There has only been one time in a decade where there was a wait for Sovs or Brits.

Even then Baird were still selling their bullion silver rounds Rabbits Monarchs Eagles etc...

Main reason to buy old silver coins on ebay is to avoid VAT. My mate has been doing this for over a decade.

Hes now in to full on fine pieces mind.

That is a different ball game all together. Very very bouyant i'm told.

[M S E Refugee]

8 minutes ago, Funn3r said:

Fair enough if you can shave a little off the price by buying old 50% silver. It's going to make a difference if you're buying a literal shed-full, which I am not as I have no space.

Does not address what I said though; why not just buy modern ones as the price difference is not huge. I mean when there's no internet and you're trying to buy half a turnip by candle-light then surely trying to convince the turnip baron to accept this shitty old florin "it's 50% silver honest trust me" will be a harder sell than a shiny one in a box with "Royal Mint".

There's a 40% difference in price between the pre 1947 Silver compared to the new 1oz Britannia's for a comparative amount of Silver.

[Funn3r]

3 minutes ago, M S E Refugee said:

There's a 40% difference in price between the pre 1947 Silver compared to the new 1oz Britannia's for a comparative amount of Silver.

I must have got my maths wrong then as it seemed only slightly cheaper to me. I am not a maths person trust me. Maybe I was wrong in believing that value of 11.3g for florin weight. Or maybe as you said I should be focusing on the 50% silver ones rather than 100%

[nirvana]

54 minutes ago, Errol said:

Gold in GBP isn't

GBP=monopoly money bro, DXY 109 incoming? is uncle dave on holiday at the moment? 

[marceau]

5 minutes ago, baffledbyzirp said:

Once the public stop spending inflation will self-correct, but not without enormous suffering for the leisure and retail sectors, adversely impacting the tax take. 

 

 

Agree with everything apart from this bit. Demand destruction will NOT change the inflation trend. It does nothing to change the relationship between productivity and promises. If the tax take drops it sends inflation HIGHER, as that gap widens.

Decreases in the inflation print from reduced activity are therefore temporary, leading to the whipsaw effects seen in every prolonged inflationary period. See 1970s UK chart for examples of how big these swings can be even in relatively benign conditions, see emerging market inflations for more extreme versions.

[nirvana]

1 hour ago, Plan-b said:

It's the pound that's fuct not gold 

sure, but what that's really telling you is that for the last 10 years you shoulda been in USD and BTC not feckin shitty pounds  AKA Gold has gone nowhere against the 'mighty dollar' 

 

[M S E Refugee]

17 minutes ago, Funn3r said:

I must have got my maths wrong then as it seemed only slightly cheaper to me. I am not a maths person trust me. Maybe I was wrong in believing that value of 11.3g for florin weight. Or maybe as you said I should be focusing on the 50% silver ones rather than 100%

Here's a useful calculator for you.

https://www.gerrardsbullion.com/sell/sell-silver-online/silver-coins-prices/

[Harley]

48 minutes ago, baffledbyzirp said:

SP, I agree with MS that those who claim to know, generally know nothing, and those of us who are honest, are simply reading the tea leaves.

What is certain is that the UK and £GBP face headwinds. There are an awful lot of moving parts and most of them are aligned negatively;

1. We are entering recession

2. Inflation looks set to be circa 10% into next year

3. Consumer confidence has been devastated, which will reduce discretionary spending possibly leading to a liquidity trap

4. Strategic blackouts and electricity rationing are likely during the coming winter depending on the severity of the weather

5. GBP is historically low against a basket of currencies, especially the USD

6. Our Balance of Trade and Public Sector Borrowing Requirement are enormous and can't be easily reversed

7. The onshoring of manufacturing, which DB predicts, is occurring at a glacial pace, in the meantime imports are crucial

8. North Sea oil acted as a bulwark against currency devaluation and propped up our exports in the 70s but is not available to the same extent today

9. Autumn is typically the season when disaster strikes

10. There is universal worker dissatisfaction regarding wages unless you are a FTSE 100 boss according to this morning's Guardian

11. Net migration at 1,000,000+ p.a. 2020-2023

12. A bloated public sector approaching 50% of the workforce if you include indirect employment

13. A benefits bill that is plainly unpayable

14. War in Europe and potential conflict in Iran or Taiwan

Given the adverse factors listed above I suspect that the economy is going to take a pasting over the next six months. I believe that input costs, especially fuel, are reducing globally, so inflation may reduce without CB meddling, which is too-little-too-late as ever. In order to curb inflation you need to be in front and above the curve as per the Taylor Rule. Our panjandrums are trying to steer a tiger by grabbing its tail. Once the public stop spending inflation will self-correct, but not without enormous suffering for the leisure and retail sectors, adversely impacting the tax take. Printing-Spending-Inflation-Cost of living crisis-Consumer confidence impairment-Reduced spending-Deflation.

Is Sterling in peril? Yes. Is the Euro equally feeble? Yes. What are the alternatives? PMs, dollar denominated investments, EMs, land as opposed to property, real assets, Swiss Franc, index linked products. 

The Euro will fail ultimately because of design flaws as per Wynne Godley's analysis. GBP has the ability to survive but we must acknowledge our limitations as a country and forsake our seat at the top table, concentrating instead on domestic rather than international matters. Which currency will be the first to default and set the whole edifice at risk of collapse? Take your pick. There may be trouble ahead. The mighty dollar reigns supreme by virtue of its reserve currency status. The tide has changed, the BRICS no longer to be vassal states who can have their accounts frozen, assets seized and their access to international financial plumbing denied at Uncle Sam's whim. The dollar will be the last to go despite inherent flaws and deficits that are unpayable.

 

Nice.  I would add on the horizon the possibility of a move to a bipolar world requiring us to pay (higher) tribute to the US.  That'll apply to all those in it's orbit.  The US with it's energy reserves, etc may have played a blinder.  A bit out there and more structural and longer term but they have shown just what they can do.

[Harley]

37 minutes ago, marceau said:

Agree with everything apart from this bit. Demand destruction will NOT change the inflation trend. It does nothing to change the relationship between productivity and promises. If the tax take drops it sends inflation HIGHER, as that gap widens.

Decreases in the inflation print from reduced activity are therefore temporary, leading to the whipsaw effects seen in every prolonged inflationary period. See 1970s UK chart for examples of how big these swings can be even in relatively benign conditions, see emerging market inflations for more extreme versions.

True in that the picture is quite complex.  But then IMO eventually sentiment leads in the end regardless so it becomes less relevant.  I was thinking about this while listening to a critique of Biden's zero percent claim.  That's, at best, just a net figure and depends on weighting, etc.  People live in the real world where they face a particular and personal slice of those numbers and not everything is discretionary.  To me, as typical, the numbers become less significant, just as we have witnessed the fall of the technocrats while adhering to their version of their numerical truth.  I just don't see how expectations can be controlled given the emerging vice grips facing us.  Maybe therefore a move from subtlety controlling expectations to overtly controlling behaviour.  Or it rips where the crowd lets it rip.

[marceau]

Just now, Harley said:

 Maybe therefore a move from subtlety controlling expectations to overtly controlling behaviour.

It is the only way out imo. At the moment muddled authority and responsibility is allowing money to call the shots. You need the man the media was claiming Trump to be. Someone who stands up on TV with a group of hard-looking Generals behind him and says 'it's mine now'. 'Mine' meaning both spoils AND responsibility.

Of course, Trump wasn't that guy. But if we don't get him, this situation just gets worse and worse as the vested interests, cartels and ideologues rip the place apart.

[Plan-b]

38 minutes ago, nirvana said:

you shoulda been in USD and BTC not feckin shitty pounds 

How do you know I wasn't? 

[Funn3r]

44 minutes ago, M S E Refugee said:

Here's a useful calculator for you.

https://www.gerrardsbullion.com/sell/sell-silver-online/silver-coins-prices/

That sounds more like it. Thanks for clearing up.

I think here's where I went wrong