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

[Phil]

2 minutes ago, ThoughtCriminal said:

Fuck me, this bastard just comes out with it: "it's the end of the era of abundance".

To which he might as well add, "so go and fuck yourselves".

 

Ultimately, in the end, it is "our" fault as we elect these cunts.

 

The tragedy is that people like us get swept along with the sub normal IQ masses.

 

No idea what the French banking shill nazi fag is saying due to being an uneducated non bilingual pleb. 

[Lightscribe]

2 hours ago, SpectrumFX said:

The trick is to do it discretely. You don't announce that you're nicking the pensions. You've got to be a bit sneaky.

Most public sector workers haven't got a Scooby doo how their pension works, and will pay little attention to incremental tweaks to rules and regs.

As I mentioned earlier I've already had a government pension have the indexation switched from RPI to CPI. The unions took the government to court over it, and the government won. The legal precedent is that they can do what they like with the indexation.

Therefore, all they need to do is create a brand new "terrible indexation rate for pensions" (but obviously for marketing reasons call it "the really great indexation rate for pensions"), and have it run under real inflation by as much as needed.

The other way that's even sneakier would be to leave the pensions on CPI, then change anything else linked to CPI that you don't want to fiddle to some new measure, and "amend" the CPI calculation so that it massively understates true inflation.

Easy peasy.

Yup exactly that. New inflation linked index will be based on Covid masks and sanitiser. They’ll call it PPI… oh shit that’s already a thing.

[Pip321]

Out today with the dog and picked 4 big punnets of blackberries which are super sweet. No one is picking them….but they are paying £2 for a tiny punnet at the supermarket.

More tomorrow, to be bagged and frozen for my porridge and also apple and blackberry crumbles. 

As part of my annoying (and hopefully recognised somewhat slightly tongue in cheek advocacy of M&S) the advantage I have with M&S over Aldi is today I saved £2 a punnet whereas at Aldi you would have only saved £1.39 a punnet. 

That’s not just logic…..that’s M&S logic.😆 

Joking apart these blackberries are perfect now for picking, a bit of fun and save those inflation busting prices. Genuinely picked up many months of my daily supply. 

[dnb24]

1 hour ago, CannonFodder said:

It may be more politically expedient to let things collapse then come in afterwards and save it.

Easier to explain to plebs why difficult decisions needed

Inflate and rob private capital, stop assets handed down and keep serfs working.

There is an assumption on here that they will try and stop it.

Plenty of hyperinflations where elites stayed in power - hungary etc.

Did well too as could mop up good assets from those with cash flow issues. Elites got richer in collapse

Best to map out thepros andcons to the elites (not the country orthe people) of each option.

 

100% - as db says lags and leads- there is still plenty of wokeness out there- and plenty of green agenda types- they won’t change their tune until they experience hardship, whether that’s happens before economic collapse or after remains to be seen. As it stands today- there is still plenty of road left for things to get a lot worse- imo we are nowhere near that inflection point where people change their tune from one of  something ethereal as “saving the environment”, “climate” or “discrimination” to something tangible as saving themselves and their family.

[One percent]

21 minutes ago, Lightscribe said:

Yup exactly that. New inflation linked index will be based on Covid masks and sanitiser. They’ll call it PPI… oh shit that’s already a thing.

They will call it Foresight Underpinning Credit Knowledge Undertakings. 

[Starsend]

23 minutes ago, Pip321 said:

Out today with the dog and picked 4 big punnets of blackberries which are super sweet. No one is picking them….but they are paying £2 for a tiny punnet at the supermarket.

More tomorrow, to be bagged and frozen for my porridge and also apple and blackberry crumbles. 

As part of my annoying (and hopefully recognised somewhat slightly tongue in cheek advocacy of M&S) the advantage I have with M&S over Aldi is today I saved £2 a punnet whereas at Aldi you would have only saved £1.39 a punnet. 

That’s not just logic…..that’s M&S logic.😆 

Joking apart these blackberries are perfect now for picking, a bit of fun and save those inflation busting prices. Genuinely picked up many months of my daily supply. 

I'm going later. Where I walk there is an astonishing amount and nobody picking them. I doubt I could pick them all if I went everyday for a month.

As you point out, they're not cheap in the shops. Will be picking enough to freeze and keep me going over the winter. I use them in health shakes so they get mixed in with other stuff and liquidized.

[ThoughtCriminal]

Finding myself ultra tempted by X3 leveraged LNG ETFs. Someone stop me 😂

[sancho panza]

@Cattle Prod @JMD & other holders

https://www.oedigital.com/news/498975-ombrina-mare-dispute-italy-has-to-pay-190m-euros-to-rockhopper-exploration

Italy will have to pay 190 million euros to the oil and gas company Rockhopper Exploration for breaching its obligations related to the company's Ombrina Mare field in the Adriatic Sea.

The oil company - now mainly focused on Falkland Islands' Sea Lion project - started arbitration in March 2017 after Italy in 2016 imposed restrictions on offshore oil and gas operations in its waters within 12 miles of the coast of Italy, and after the country's Ministry of Economic Development of Italy informed Rockhopper Exploration that the production concession covering its Ombrina Mare field area would not be awarded, despite the Ombrina Mare project having completed all the required technical and environmental authorizations.

Samuel Moody, CEO said: "We are delighted to have won our case. A huge amount of work has been involved since we acquired Mediterranean Oil & Gas Plc in 2014 and commenced the Arbitration in 2017.  I would like to pay tribute to our team for their dedication over such a long period.  We will update the market in due course once we have been able to analyze fully the results of the arbitration and its full, very positive financial implications for Rockhopper. This positive milestone builds on our recent transaction with Navitas and while work still needs to be done on Sea Lion, we believe after collection of the award, it will make a material contribution towards our share of the development costs."

[DoINeedOne]

15 hours ago, sancho panza said:

Here's some rough calcs for how quickly a single earner,with wife and two kids on £50k will get drawn down with a negative real rate similar to now.

                                                            Year 2021                 Year 2022 (2% pay rise 10% CPI with main rises in fuel similar to now)

Take home pay per month                 3100                      3162

Mortgage (£250k with 70% LTV)       @3%  830              @5% 1024

Council tax                                             180                           194

Diesel                                                       200                          280

Heating                                                   150                           300

Food                                                         600                          750

Water/phone                                           100                          110

Disposable income                                1040                         504

So whilst there are some thins th family could -wife work etc,it's interesting tosee how quickly that disposable drops to where the family are only another 10% CPI year or an interest rate rise from facing stark choices.

I've been a doom monger for years.Msot of my friends and family think I'm mad,but even in my darkest doom mongering hours I never thought the UK situation would unravel as quickly as it appears to be.

The more I do the maths,read the thread and then read the politics,the more I raise my probability of a currency crisis(my definiton= cable <1)

The implications for the UK banks if the above happens pretty much ensures a huge chunk of demand destruction.

 

There are different types of inflation from my point of view,so if we get a debt deflation it may not actually lead to much demand destruction if the price of essetnials rockets.

For me there are four main types-cost push eg oil supply reduced,demand pull,wage price spiral and Mugabe style printing.

Current UK inflation is a mix of 1,2 and 4 imho.

So if a family spends £1000 a month on food and fuel 50% on each.Then price of oil rises,they can afford elss food but still spend their £1000 on food and fuel then the price inflation has merely changed shape not gone.

So for the debt deflation to reduce prices we need a large enough drop in aggregate demand to offset the rising cost of essentials

 

Whilst it's simple maths last night i was staring at those calculations above for about 5 minutes, just shows how quickly shit can start eating away at your income £20 here, £50 there and by the end of the month your questioning where is it all gone

 

Most people i know don't track there spending just moan about being skint

[Yadda yadda yadda]

Cross posting this from a thread upstairs.

Just been walking through central London. A couple of thoughts occured to me.

 

1) there are massive numbers of tourists in London at the moment.  Lots of yanks lured by the cheap pound. Surely similar with the Euro. Tourist cities attractive to Americans such as Paris, Rome, Florence, Venice plus southern Ireland as a whole will have their service sectors boosted by this influx. A bit of a cushion against rising energy ahead of the winter. Additionally these are areas where energy is a lower percentage of outgoings.  Rents and wages are higher than in other places but energy costs are similar. Expect £7 per pint in central London soon but there will be people paying that as they're used to 8 USD. They may not be decimated to the extent that happens elsewhere. Longer term that changes.

 

2) this idea of market failure and implied need for rationing creates disincentive to act first. The first nation to ration gas will reduce European demand and thus the price. Especially if it is Germany. A reduction of 20% in German consumption would surely see a big drop in price. Acting first and alone means your country takes the brunt of the hit. Similar applies to electricity.

[DurhamBorn]

33 minutes ago, dnb24 said:

100% - as db says lags and leads- there is still plenty of wokeness out there- and plenty of green agenda types- they won’t change their tune until they experience hardship, whether that’s happens before economic collapse or after remains to be seen. As it stands today- there is still plenty of road left for things to get a lot worse- imo we are nowhere near that inflection point where people change their tune from one of  something ethereal as “saving the environment”, “climate” or “discrimination” to something tangible as saving themselves and their family.

The problem is its the woke who have the inflation linked bennies and public pensions.

[JMD]

47 minutes ago, sancho panza said:

@Cattle Prod @JMD & other holders

https://www.oedigital.com/news/498975-ombrina-mare-dispute-italy-has-to-pay-190m-euros-to-rockhopper-exploration

Italy will have to pay 190 million euros to the oil and gas company Rockhopper Exploration for breaching its obligations related to the company's Ombrina Mare field in the Adriatic Sea.

The oil company - now mainly focused on Falkland Islands' Sea Lion project - started arbitration in March 2017 after Italy in 2016 imposed restrictions on offshore oil and gas operations in its waters within 12 miles of the coast of Italy, and after the country's Ministry of Economic Development of Italy informed Rockhopper Exploration that the production concession covering its Ombrina Mare field area would not be awarded, despite the Ombrina Mare project having completed all the required technical and environmental authorizations.

Samuel Moody, CEO said: "We are delighted to have won our case. A huge amount of work has been involved since we acquired Mediterranean Oil & Gas Plc in 2014 and commenced the Arbitration in 2017.  I would like to pay tribute to our team for their dedication over such a long period.  We will update the market in due course once we have been able to analyze fully the results of the arbitration and its full, very positive financial implications for Rockhopper. This positive milestone builds on our recent transaction with Navitas and while work still needs to be done on Sea Lion, we believe after collection of the award, it will make a material contribution towards our share of the development costs."

Thanks SP, the RKH price has spiked 86% on that announcement!! 

In other news... i was just reading David Hay's latest free newsletter, this week its on the Canada housing market (one of your speciality topics!). There might not be too much that's new in his report for you, however I personally didn't realise (i just assumed it was a north american thing) that Canadians can't hand their house keys back like their southern cousins can.

Hay does a weekly market analysis on a different topic each week. And sometimes individual stock deep dives, so worth a sub i think, particularly as its free! (btw his 'tracked portfolio' is something he introduced recently so still taking shape and so currently looks a bit weird).

Making Hay Monday - August 22nd, 2022 - by David Hay (substack.com)

 

[HousePriceMania]

2 hours ago, ThoughtCriminal said:

Fuck me, this bastard just comes out with it: "it's the end of the era of abundance".

To which he might as well add, "so go and fuck yourselves".

 

Ultimately, in the end, it is "our" fault as we elect these cunts.

 

The tragedy is that people like us get swept along with the sub normal IQ masses.

 

Another banker plant
 

 

[sancho panza]

4 minutes ago, JMD said:

Thanks SP, the RKH price has spiked 86% on that announcement!! 

In other news... i was just reading David Hay's latest free newsletter, this week its on the Canada housing market (one of your speciality topics!). There might not be too much that's new in his report for you, however I personally didn't realise (i just assumed it was a north american thing) that Canadians can't hand their house keys back like their southern cousins can.

Hay does a weekly market analysis on a different topic each week. And sometimes individual stock deep dives, so worth a sub i think, particularly as its free! (btw his 'tracked portfolio' is something he introduced recently so still taking shape and so currently looks a bit weird).

Making Hay Monday - August 22nd, 2022 - by David Hay (substack.com)

 

There's only 12 states in the USA that are non recourse.The biggie is obviously Cali which if Wolf St is right will be the epicentre of the coming collpase.Hence why US banks need larger capital cushions to a degree

la this talk about non recourse states is very 2008 isnt it? If all lending in the UK was non recourse,I suspect the banks would lend more carefully

https://www.legalmatch.com/law-library/article/what-is-a-recourse-state.html

Which States Are Considered Non-Recourse States?

There are currently 12 non-recourse states: Alaska, Arizona, California, Connecticut, Hawaii Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington. In non-recourse states, the lender may foreclose, but as mentioned, they must accept whatever they receive from the foreclosure sale, which usually spells out a loss.

 

[sancho panza]

Telegrpah.Energy bills going up 5 times 2021.........even taking away some %age for the guy talking his book,that's a fair chunk of GDP let alone household spendies.

https://uk.finance.yahoo.com/news/energy-bills-increase-equates-adding-140733767.html

Tom Haynes

Mon, 22 August 2022, 3:07 pm

Looming energy bill increases will be the equivalent strain on household budgets as adding an extra 9p on the basic rate of income tax, a supplier warned today.

On Friday, Ofgem will announce the energy price cap for October, which limits the amount providers can charge customers on a standard variable tariff. Current forecasts estimate the upcoming increase will push annual household bills over £3,500.

But Greg Jackson, CEO of Octopus Energy, said British customers were being asked “to pay the price of gas which is being weaponised by Putin”.

 

Appearing on the Today programme this morning, Mr Jackson said: "You can't expect the energy customers, or indeed the retailers to carry the cost of a war."

“We need more help for customers from the Government,” Mr Jackson said.

“Let’s put it in perspective: the UK’s energy bills are going to go from £15bn in a normal year to £75bn this year – that’s the equivalent of 9p more on the basic rate of income tax.

[Axeman123]

18 minutes ago, sancho panza said:

There's only 12 states in the USA that are non recourse.The biggie is obviously Cali which if Wolf St is right will be the epicentre of the coming collpase.Hence why US banks need larger capital cushions to a degree

la this talk about non recourse states is very 2008 isnt it? If all lending in the UK was non recourse,I suspect the banks would lend more carefully

https://www.legalmatch.com/law-library/article/what-is-a-recourse-state.html

Which States Are Considered Non-Recourse States?

There are currently 12 non-recourse states: Alaska, Arizona, California, Connecticut, Hawaii Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington. In non-recourse states, the lender may foreclose, but as mentioned, they must accept whatever they receive from the foreclosure sale, which usually spells out a loss.

 

Idaho and Utah were iirc both surprisingly bubbly on the way up, this may explain part of the appeal. A free leveraged bet with potential loss limited to a small down-payment.

[JMD]

Marathon 2022 Q1 Commodity Resource report, is a few months old but still good info. plus contains some interesting graphs... 

Marathon-2022-Q1-Update-Macro.pdf (marathonresourceadvisors.com)

[HousePriceMania]

12 minutes ago, sancho panza said:

Telegrpah.Energy bills going up 5 times 2021.........even taking away some %age for the guy talking his book,that's a fair chunk of GDP let alone household spendies.

https://uk.finance.yahoo.com/news/energy-bills-increase-equates-adding-140733767.html

 

 

Tom Haynes

Mon, 22 August 2022, 3:07 pm

Looming energy bill increases will be the equivalent strain on household budgets as adding an extra 9p on the basic rate of income tax, a supplier warned today.

On Friday, Ofgem will announce the energy price cap for October, which limits the amount providers can charge customers on a standard variable tariff. Current forecasts estimate the upcoming increase will push annual household bills over £3,500.

But Greg Jackson, CEO of Octopus Energy, said British customers were being asked “to pay the price of gas which is being weaponised by Putin”.

 

Appearing on the Today programme this morning, Mr Jackson said: "You can't expect the energy customers, or indeed the retailers to carry the cost of a war."

“We need more help for customers from the Government,” Mr Jackson said.

“Let’s put it in perspective: the UK’s energy bills are going to go from £15bn in a normal year to £75bn this year – that’s the equivalent of 9p more on the basic rate of income tax.

And house prices ?

[DurhamBorn]

9 minutes ago, sancho panza said:

Telegrpah.Energy bills going up 5 times 2021.........even taking away some %age for the guy talking his book,that's a fair chunk of GDP let alone household spendies.

https://uk.finance.yahoo.com/news/energy-bills-increase-equates-adding-140733767.html

 

 

Tom Haynes

Mon, 22 August 2022, 3:07 pm

Looming energy bill increases will be the equivalent strain on household budgets as adding an extra 9p on the basic rate of income tax, a supplier warned today.

On Friday, Ofgem will announce the energy price cap for October, which limits the amount providers can charge customers on a standard variable tariff. Current forecasts estimate the upcoming increase will push annual household bills over £3,500.

But Greg Jackson, CEO of Octopus Energy, said British customers were being asked “to pay the price of gas which is being weaponised by Putin”.

 

Appearing on the Today programme this morning, Mr Jackson said: "You can't expect the energy customers, or indeed the retailers to carry the cost of a war."

“We need more help for customers from the Government,” Mr Jackson said.

“Let’s put it in perspective: the UK’s energy bills are going to go from £15bn in a normal year to £75bn this year – that’s the equivalent of 9p more on the basic rate of income tax.

At £6k a house on energy its still only half what welfare costs each household.Of course over half the households get something back,but when you in the part who dont.......

[belfastchild]

Finally got off my arse and cleared enough room to order some seasoned hardwood logs.
Just ordered 1m3 for a little bit less than 2m3 13 months ago (140 delivered)....
Apologised saying the prices had gone up a lot and said they are flat out with people stocking up, getting a delivery in a half hour (they are 15 mins from me).

I probably couldnt fit 2m3 in but it would have been nice looking at it rather than for it.

[ThoughtCriminal]

Here's Luke Gromen to cheer us up. 

 

He's done a new interview if you click the link.

[Noallegiance]

Someone's poked the uranium stocks today.

[jamtomorrow]

11 minutes ago, Noallegiance said:

Someone's poked the uranium stocks today.

Sprott showing signs of life too - must be the news on Jap nukes

[ThoughtCriminal]

And there it is.

 

"Well at least you're not being bombed. Stop whining".

 

They really do despise us.

[DurhamBorn]

32 minutes ago, ThoughtCriminal said:

And there it is.

 

"Well at least you're not being bombed. Stop whining".

 

They really do despise us.

Handy excuse though isnt it.We know its the polos mistakes,but blame the Ruskies.Of course the Brics are using this chance to  trade in their own currencies and slowly remove themselves from the dollar and others.Putin is playing a blinder and good on him.He is simply trying to ensure their way of life is preserved where here 50% of the marriages on Netflix are gay,the other hald black and white.Our beaches invaded with 3rd world scum,every part of our culture and who we are being destroyed.Its the woke left and the state at war with white working and middle class boys and men,not the Ruskies.