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

[JMD]

2 hours ago, Starsend said:

Crikey, I didn't realise there were so many peasants in this country, £20,000 a year wtf! All they'd get out of me for that would be a loud fart on my office chair then I'd announce I'm done for the day. 

I expect most of those earning under £20,000, and all of them earning under £12500, are working P/T... Am not judging those individuals, instead i blame the crazy incentives/disincentives inherent in the welfare/tax system...  They used to talk about the 'Brain Drain', but the new worrying trend is the 'Brawn Drain'!!

[DurhamBorn]

6 minutes ago, Starsend said:

Interesting website that, some great photo's.

Have to say I'd be bloody tempted to dig some of my own coal if it's that accessible near you. Filthy work but if it gets bad enough this Winter...

Its quite a way in the seam,but  a rope and pulley system would get the bags out.Some youngsters know about it of course and go into the first bit,but they dont go past the crawl bits.There used to be some real easy ones near me where they just capped off the drift,but you could dig away the soil and get in.At Cockfield fell you can still see where the coal is at the surface,lots of Iron Age holes there where they dug the coal out,they werent daft.

[Stuey]

9 minutes ago, Majorpain said:

Yes, if they think you can actually pay, when the fixed deal ends you automatically go onto their pay as you go market rate supply.  However, some of the businesses are such a lost cause that the suppliers don't actually want to deal with them at all, when none of the energy companies want to supply you what are you going to do?  This is proper uncharted waters territory.

Really big (but risky) companies can be handled with next-day payment but the admin cost of that would be horrendous, probably one FTE. 

[Axeman123]

17 minutes ago, HousePriceMania said:

Inflation linked bonds anyone ?

Oh, not for the little people ?

https://www.zawya.com/en/markets/fixed-income/uk-gets-strong-demand-for-ultra-long-inflation-linked-bond-nifjqqv7

Remeber when they declined to issue 50yr bonds locking in record low rates, which would have inflicted losses on bankers? Now they are rushing out exactly what they need, inflation protection at the taxpayers' expense. Remind me who he works for again?

"The price paid suggests investors expect RPI to average around 3.4% over the lifetime of the bond" So when we have an inflationary decade they presumably appreciate strongly, as that average expected inflation level to term drifts higher and hence the value of inflation protection rises.

[sancho panza]

2 hours ago, Starsend said:

Crikey, I didn't realise there were so many peasants in this country, £20,000 a year wtf! All they'd get out of me for that would be a loud fart on my office chair then I'd announce I'm done for the day. 

There's a lot of full time workers on circa £20k.Which is why so many are opting out to go on TC/UC give up work.

Band 2+3 NHS is around that level ie HCA's ,ECA's on ambulances.You'll get a bit more for unsocial but for all the sh1t you tkae in A&E and pre hospitally,I'm amazed they keep anyone at all.

As for carers, who are mainly min wage,I'm amazed they can recruit anyone at all.

2 hours ago, Cattle Prod said:

They also reduced capex by roughly the extra they had to pay in windfall taxes so far, it seems to me, and pretty much said that the tax means less availabe for investment. And increased buybacks . If the government cant interpret that as two fingers from the biggest producer in the north sea, they are completely blind.

There was a few interesting things in the release

Nice to see them paying down debt while they can.Interesting their market cap is £4bn,heading towards an FCF yield of circa 25% to 35% in 2023..........

Decl:long

https://www.reuters.com/business/energy/harbour-energy-ups-buybacks-300-mln-after-free-cash-flow-jump-2022-08-25/

LONDON, Aug 25 (Reuters) - Harbour Energy (HBR.L), the UK North Sea's biggest oil and gas producer, increased a share buyback programme by 50% to $300 million on Thursday as it reported first-half free cash flow of $1.4 billion.

Harbour, which is set to produce just over 200,000 barrels of oil equivalent this year and reduced its net debt to $1.1 billion from $1.7 billion in March, expects to pay $500 million in UK tax for 2022.

Around $300 million of this is due to a 25% windfall tax on oil and gas producers introduced in May, said Chief Executive Linda Cook.

Having reduced its debt, Harbour also has less stringent requirements from its lenders to hedge its output.

At current levels, it is required to hedge 40% of its output 12 months out and a third of its production in the following year with no requirements three years out.

Harbour, which pays $200 million in annual dividends, reduced its investment programme by $100 million to $1.2 billion for the year "primarily due to the delayed arrival of two drilling rigs in the UK", it said.

For the full year, Harbour forecasts its free cash flow to reach $1.8 billion-$2 billion. It expects to be debt free next year, assuming an average oil price of $100 a barrel and gas price of 200 pence per therm this and next year.

The lower second-half free cash flow is due to the higher tax payments, more spending on drilling and lower production in the period, Cook said.

In terms of its non-UK portfolio, Harbour said it expected to submit a development plan for the giant Mexican Zama field next year with a final investment decision by the end of 2023.

[Noallegiance]

35 minutes ago, DurhamBorn said:

..you need 11 year olds to squeeze in those bits....

 

That's a whole different thing these days.

[Don Coglione]

55 minutes ago, Starsend said:

You just have to be smart about it. You bury your precious metals in the woods somewhere and come back and get it twenty years later when it's safe to do so. In the meantime you muddle through same as everybody else, maybe using the odd silver coin to keep the wolf from the door if it's safe to do so and isn't going to draw attention.

What kind of life would that be, for 20 years? Most on this site would likely be dead.

[Spiney Norman]

28 minutes ago, DurhamBorn said:

Its where the word bank came from.Soldiers etc used to stick their money "in the bank" actually a hedge/bank near a certain tree or feature and collect later,as you say for many there was no later.

I'm not sure thats correct DB.

I unserstood the word "bank" came from the Italian word "bancho" which means bench. It's were you sat to discuss terms with the money lenders in medieval times.

 

[HousePriceMania]

46 minutes ago, humdrum said:

We are doomed I tell you, doomed.

Things will get worse and worse until they finally start to get better when we will stop taking notice because we rather enjoy being glum.

 

 

 

[ThoughtCriminal]

Great tweet from Gromen

[sancho panza]

2 hours ago, Starsend said:

As always with these people none of them really talk in any detail as to how to protect yourselves, all vague shit like buy gold etc. I'd like to see somebody do some real analysis into what will happen to my BP shares in the event of hyper-inflation / a new currency. There must be plenty of examples in history but nobody ever talks about the things we all want to know.

I think you have to read between the lines a bit.What gromen is actually talking about is a default because that's what coming.He's maybe being polite,doesn't want to get a reputation as a scaremonger etc but that is what he's talking about if you connect the dots.Jubillee/default,Jubillee/default etc.

What runs from a default isn't going to be pleasant and as he otulines in his interview,there is a long history of one ounce of gold buying ten barrels of oil.That's chanigng and as he outlines quite clearly,generally fights over energy resources end in war.

I'm not having a go but if you want real analysis then maybe pay the guy a sub or jsut do it yourself as you are.

As DB alludes below,the key thing to not be in during a hyperifnaltion is cash.

Hyperinflation is a politcal choice and always has been,normally of desperately inadequate govts/leaders.Ours are crap but they're not that crap.More likely is a scenraio where they run inflation at 10-15% and smash bond holders aka pensioners and savers .

list of hyoperinfaltions here.It's quite a rare event given the amount of lunatic govts there are.

https://en.wikipedia.org/wiki/Hyperinflation

2 hours ago, DurhamBorn said:

My last job 85% were in UNITE,nearly all of them voted Tory,I enjoyed telling the shop steward.It wasnt that they were Tory,its just they want welfare sorting,immigration down to a few thousand a year,knife carrying Africans whipped then salted in the public square then dropped off on the Libyan coast.Labour has very little support here.The Tories took the local council estate even and its a rough one.The problem is it takes too long.Even winning a few seats then more could take decades.

Labour and tories have huge structural problems looming.Tory membership is rumoured tio be under 100,000 and average age over 60 ffs.

first past the psot is stacked against new parties.Leicester has 52/54 labour councillors.It's fubar.Cocuncillors earn min £15k,so thats a wall of albour moeny that you have to fight and the opposition don't have any.

2 hours ago, DurhamBorn said:

One share buys 4.5 loaves of Lidl seeded bread.One would buy 4.5 loaves of Lidl seeded bread.Assets have little to fear from a new currency apart from the demand destruction as cash savings are destroyed.You can have a new currency though without changing it.We are getting one now in the UK its called sterling its worth half as much as the last one that was called sterling.The value of it is two sides.How many there are,how many does someone want to sell you an asset,service,goods or commodity.

As Ive said,we're running our lwoest of the lwo cash postions currently despite the fact thatw e're headed into a recession.

Can't believe how quickly they're turning sterling into bog roll.If theyd done it in the time of the coof,they might have been more popular.

[sancho panza]

@JMD never seen that Jurgen before but it masde me laugh.This one was funny as f***.

 

I nkow you're a former Ukip voter like myself.The last bit about the EU/Berlin had me in stitches.

 

[Castlevania]

2 hours ago, WICAO said:

I know it's poor form to quote yourself but I've just seen £1 now buys only USD1.182.  The average UK worker really is getting taken for a ride.

Sony are putting up the price of the PS5 everywhere bar the US due to dollar strength.

[Starsend]

41 minutes ago, Don Coglione said:

What kind of life would that be, for 20 years? Most on this site would likely be dead.

Well it's better than having a crap life for 20 years AND losing all your wealth. At least you could hand your wealth down to your children.

[Axeman123]

Watching the latest Luke Gromen

20 minutes in so far, and wow on his take on the origins of WW2! (A Berlin to Baghdad railway to circumvent the Royal Navy, and comparison to the Chinese belt and road initiative today).

youtube link for those that prefer it over apple podcasts: 

 

[Starsend]

38 minutes ago, sancho panza said:

I think you have to read between the lines a bit.What gromen is actually talking about is a default because that's what coming.He's maybe being polite,doesn't want to get a reputation as a scaremonger etc but that is what he's talking about if you connect the dots.Jubillee/default,Jubillee/default etc.

What runs from a default isn't going to be pleasant and as he otulines in his interview,there is a long history of one ounce of gold buying ten barrels of oil.That's chanigng and as he outlines quite clearly,generally fights over energy resources end in war.

I'm not having a go but if you want real analysis then maybe pay the guy a sub or jsut do it yourself as you are.

As DB alludes below,the key thing to not be in during a hyperifnaltion is cash.

Hyperinflation is a politcal choice and always has been,normally of desperately inadequate govts/leaders.Ours are crap but they're not that crap.More likely is a scenraio where they run inflation at 10-15% and smash bond holders aka pensioners and savers .

list of hyoperinfaltions here.It's quite a rare event given the amount of lunatic govts there are.

https://en.wikipedia.org/wiki/Hyperinflation

Labour and tories have huge structural problems looming.Tory membership is rumoured tio be under 100,000 and average age over 60 ffs.

first past the psot is stacked against new parties.Leicester has 52/54 labour councillors.It's fubar.Cocuncillors earn min £15k,so thats a wall of albour moeny that you have to fight and the opposition don't have any.

As Ive said,we're running our lwoest of the lwo cash postions currently despite the fact thatw e're headed into a recession.

Can't believe how quickly they're turning sterling into bog roll.If theyd done it in the time of the coof,they might have been more popular.

Agreed. I think he said that it's between ten and thirty barrels of oil so we're pretty much in the middle at the moment. It's a pretty solid relationship though and it's fairly obvious why when you think about it.

I have spent some time trying to find out the details of what happens in a hyperinflation, to various different asset classes. Some are obvious like bonds but others like equities it's surprisingly difficult to find good info.

[JMD]

2 hours ago, honkydonkey said:

He wasn't a number, fools. 

He was a letter.

Why be so binary, get with the progressive times bro!  I mean why couldn't he/she have also been a symbol? And then only on alternate Fridays, after all it's absolutely his/her/etc choice!

[King Penda]

1 hour ago, Majorpain said:

Yes, if they think you can actually pay, when the fixed deal ends you automatically go onto their pay as you go market rate supply.  However, some of the businesses are such a lost cause that the suppliers don't actually want to deal with them at all, when none of the energy companies want to supply you what are you going to do?  This is proper uncharted waters territory.

What actually happens if you tell your current supplier your moving but don’t bother getting a new supplier

[DurhamBorn]

52 minutes ago, Spiney Norman said:

I'm not sure thats correct DB.

I unserstood the word "bank" came from the Italian word "bancho" which means bench. It's were you sat to discuss terms with the money lenders in medieval times.

 

Interesting,local saying around here still "put it in the bank" about hiding things in hedge banks.Lots of detectorists think the words meaning is very old back to Roman, I guess words develop in different areas for the same process.

[JMD]

2 hours ago, Mapper said:

WTF happened to the Germans? They used to be such bastions of practicality and common sense. Or was that just a mirage? Maybe, cheap energy masks national lunacy.

I agree that German day-to-day practical stuff is brilliant. Maybe It's just their grand strategic longer-term ('final') solution planning that tends to skupper them?!    ...current evidence shows they haven't quiet managed to beat that particular foible of the Fatherland!

[Stuey]

12 minutes ago, King Penda said:

What actually happens if you tell your current supplier your moving but don’t bother getting a new supplier

It's the new supplier that instigates the change. 

[King Penda]

1 minute ago, Stuey said:

It's the new supplier that instigates the change. 

So what happens if you tell them your moving and to stop ? But don’t actually move ?

[Stuey]

1 minute ago, King Penda said:

So what happens if you tell them your moving and to stop ? But don’t actually move ?

Basically to industry your request doesn't matter. It's all about what the suppliers do, via dataflows with each other and the central hub.

The new supplier requests to take on your supply. The current supplier says yes or no (they can decline if in a fixed term contract or have outstanding debt).

At transfer, they "handshake" on an agreed meter read. 

[DurhamBorn]

3 minutes ago, JMD said:

I agree that German day-to-day practical stuff is brilliant. Maybe It's just their grand strategic longer-term ('final') solution planning that tends to skupper them?!    ...current evidence shows they haven't quiet managed to beat that particular foible of the Fatherland!

All i know is back in the day when we used to go to Amsterdam none of the lads liked a German hooker they were like sacks of potatoes and their chit chat boring.You could always tell the German blokes though Heavy metal crumpled t shirts.I spent 30 minutes with a Slovakian one who had about 8 Turks pestering her at the door she leaned over and said to me "your English" and dragged me in.She said she hated Turks and knew i was English because nice clothes and stylish  yeah i still left 30 guilders lighter.

[ThoughtCriminal]

Talk about prophetic. 😂

 

Great film btw, if anyone hasn't seen it.