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

[Sugarlips]

3 minutes ago, WICAO said:

I'm finally getting one.  I joined TOS in 2007 and have rented ever since.  I've now found my home and it's now time to put down roots and build a house and also turn that into a home.

Still no debt for me though.  Just a modest well thought out (hopefully) place and so I'll be paying in bits of paper, the buying power of which is fast being destroyed.

Given my life stage prices can go up, down or sideways for any length of time.  I no longer care.  This is going to be my home for hopefully a long time.

Congratulations! Can I ask are you an owner/builder or buying something off the plan? As is oft discussed here most areas are off the chart to buy now and build costs are rocketing too - how do you square that with giving up your hard earned cash? No wonder you had to depart HPC!

[DurhamBorn]

30 minutes ago, HousePriceMania said:

This you mean

 

I kind of get what you are saying but I am say here wondering if the system is so broken the old rules don't apply and or there is a conspiracy and "you will own nothing" etc is their aim. Look at the Omicron bollocks over the last week or so just as the BoE have no choice but to raise rates, this thing feels as corrupt as f**k to me. 

The uncertainty is the problem for me and the unfairness of the system they have created, this is proper totalitarian shit and it's been coming since Bliar took over, grabbing little bits of freedom and control with each passing year.  I thought Brexit might wake them up but it's full steam ahead with Banker Sunak in control.

Will they raise IRs, yes at some point, but as you say it'll be 5% below inflation so they can rob people and it'll only be when they think their asset bubbles can be supported by the wage rises.  They want a permanently high plateau, max debt in effect.

Is there any way to protect yourself from this, probably not, at least not that I can see.

Out best bet is a proper BK and fill your boots but when the people at the top are willing to rob 70 million people and inflation is immaterial to them then I think that's becoming more and more unlikely without some sort of once in a 200 years type collapse, which I am not ruling out, the US stock market looks bat shit crazy.

So basically, I have no idea what to do now to protect my family and children from the systematic onslaught on our freedoms and finances.

Old rules always apply,this last cycle though they have stretched them to levels you would never expect,but the outcomes are the same,inflation runs.If it was different then inflation wouldnt be tracking my roadmap almost to perfection.My model shows they need to lift everything 30% ie take 30% of private assets through inflation ans some tax increases.That is what they are trying.As @sancho panza fantastic post above they are spreading the pot thinner trying to hold on to a huge state.Even the Fed cant control the long bond forever.The rubber band is stretched to extreme levels and dislocation will be (and already is) the result.

Plenty of quality stocks around the world.Iv just bought a small tranche of Telenor for instance.Im not bothered about BK etc or big drawdowns.Im in areas that can hold their own with inflation,and be the last things given up in an income squeeze as the distribution cycle embeds its tentacles everywhere.

Iv been buying Wetherspoons as well this week and have ladders set on it.In Durham yesterday they were busy enough while others were quiet (and much much cheaper).

 

[ThoughtCriminal]

27 minutes ago, WICAO said:

Hi everyone

Some of you may remember me from TOS.  Given that I'm in the process of building a home HPC is no longer a relevant forum.  So in search of a new home I've been accepted here by the looks of it.  Came here for this great thread even though my investing style is a little different and currently working for me.

Bloody hell, the Ghost of Christmas past. We've mused about you from time to time on here.

 

Welcome to the madhouse   👍

[Majorpain]

 

BOE rate increase, can the economy withstand a whole 0.25% interest rate???!!

[DurhamBorn]

Ok,now lets see if my outlier thesis that they increase rates but try to keep some QE going happens.

 

[HousePriceMania]

3 minutes ago, ThoughtCriminal said:

Bloody hell, the Ghost of Christmas past. We've mused about you from time to time on here.

 

Welcome to the madhouse   👍

I thought this was the sane house 

Just now, Majorpain said:

 

BOE rate increase, can the economy withstand a whole 0.25% interest rate???!!

 

Is that a parody account ?

[WICAO]

Just now, ThoughtCriminal said:

Bloody hell, the Ghost of Christmas past. We've mused about you from time to time on here.

 

Welcome to the madhouse   👍

I hope they were good musings :-)  My ears haven't been burning so I'm guessing so...

It's been some journey with some real ups and downs but life right now (ignoring the elephant in the current world room which I really am just doing my best to stay away from) is really really good so it's been all worth it.  It can be really difficult to run against the herd for so long but when it's the right thing to do for oneself and ones family it makes it so worth it.

Thanks for the warm welcome.

[Axeman123]

2 minutes ago, DurhamBorn said:

Ok,now lets see if my outlier thesis that they increase rates but try to keep some QE going happens.

 

another waypoint ticked off, bravo sir!

[WICAO]

6 minutes ago, Sugarlips said:

Congratulations! Can I ask are you an owner/builder or buying something off the plan? As is oft discussed here most areas are off the chart to buy now and build costs are rocketing too - how do you square that with giving up your hard earned cash? No wonder you had to depart HPC!

Still learning all the lingo but what I've done is firstly bought some land in a location that gives us some real benefits and that also won't flood or burn.  I then found a 'volume builder' (had to work with a few to figure out who would get us there) who would allow us to heavily modify a 'standard design' so that it would do what we wanted.  They'll just deliver the house.  We'll then do everything around the house ourselves.  By doing that our price per m^2 is about as low as possible in the current mad prices world because we weren't starting from scratch and we get volume builder pricing.

[drosser]

 

20 minutes ago, ThoughtCriminal said:

Bloody hell, the Ghost of Christmas past. We've mused about you from time to time on here.

 

Welcome to the madhouse   👍

 

On 15/12/2021 at 10:05, Democorruptcy said:

I know a few on here were following WICAO's blog, he's done an update and still in Oz

https://www.retirementinvestingtoday.com/2021/12/transitioning-musings-on-2021.html#more

[WICAO]

1 minute ago, drosser said:

 

 

Oz is working well for us.  Really loving the outdoor life and hope we'll be here for a good while.

Don't post so much on the blog anymore.  It served a really useful purpose for a lot of years (started it in 2009) and a lot of people have told me it really helped them as well, some very significantly so given what they've shared, so really glad I did it.  Also owe a debt of gratitude to a lot of readers who contributed over the years to what I am today so the least I can do is post occasionally to let them know what's on the other side of FIRE given the majority of blogs are on their journey and not living it.

[Noallegiance]

24 minutes ago, DurhamBorn said:

Ok,now lets see if my outlier thesis that they increase rates but try to keep some QE going happens.

 

 

[Starsend]

55 minutes ago, WICAO said:

Hi everyone

Some of you may remember me from TOS.  Given that I'm in the process of building a home HPC is no longer a relevant forum.  So in search of a new home I've been accepted here by the looks of it.  Came here for this great thread even though my investing style is a little different and currently working for me.

Good to see you on this thread WICAO. I've followed your blog with great interest.

I believe you're in Australia now? I'll be heading that way myself to work for a year or two (soon as things get back to some sort of normality).

[WICAO]

Just now, Starsend said:

Good to see you on this thread WICAO. I've followed your blog with great interest.

I believe you're in Australia now? I'll be heading that way myself to work for a year or two (soon as things get back to some sort of normality).

Thanks for the welcome Starsend.  Glad you've found the blog interesting.

Yes, we're in Oz now.  Our journey was UK to Cyprus to UK to Oz so we took the long way here 

Good luck with the work.  I'm down to 4 days 100% Work From Home now and that balance is working well for me right at this point.

[HousePriceMania]

9 minutes ago, Noallegiance said:

 

Who was the 1.  

10 minutes ago, WICAO said:

Oz is working well for us.  Really loving the outdoor life and hope we'll be here for a good while.

Don't post so much on the blog anymore.  It served a really useful purpose for a lot of years (started it in 2009) and a lot of people have told me it really helped them as well, some very significantly so given what they've shared, so really glad I did it.  Also owe a debt of gratitude to a lot of readers who contributed over the years to what I am today so the least I can do is post occasionally to let them know what's on the other side of FIRE given the majority of blogs are on their journey and not living it.

IRs up.

You should join every day.

You're having the opposite effect of @Yellow_Reduced_Sticker

[Bricormortis]

7 minutes ago, WICAO said:

Thanks for the welcome Starsend.  Glad you've found the blog interesting.

Yes, we're in Oz now.  Our journey was UK to Cyprus to UK to Oz so we took the long way here 

Good luck with the work.  I'm down to 4 days 100% Work From Home now and that balance is working well for me right at this point.

Did you not like Cyprus ?

[WICAO]

2 minutes ago, HousePriceMania said:

Who was the 1.  

IRs up.

You should join every day.

You're having the opposite effect of @Yellow_Reduced_Sticker

When the last bear turns bullish it's...

[WICAO]

3 minutes ago, Bricormortis said:

Did you not like Cyprus ?

We look back on Cyprus incredibly fondly and understand why a lot of people choose to call it home. 

If I had my time again we probably should have given it a longer chance but no regrets given we're we now find ourselves.  Not sure of the etiquette regarding links here (please let me know if I should delete) but if you'd like the gore it starts here http://www.retirementinvestingtoday.com/2019/06/back-to-powerful-fi.html

That said for us as a family we're now in a much better position here in Australia than Cyprus but that's for our situation.  So it's been worth it for us.  I can think for others Cyprus would be very agreeable and if Australia was off the table I'd look at going back.  I'd go to Cyprus long before I returned to the UK but I'd probably give Portugal a go on the way.  

Australia has some real negatives.  For example the bureaucracy and cost to make it hear was certainly a toll.  We're also a very long way from anything, including the UK.  

[MrXxxx]

https://www.msn.com/en-gb/money/news/bank-of-england-opts-for-pre-christmas-interest-rate-hike-despite-omicron-fears/ar-AARS66r?ocid=mailsignout&li=BBoPWjQ

Well after 'choking' last month and 'wrong footing' many they daren't not this month...that said, 0.15% will have no effect, and is purely symbolic.

[Castlevania]

28 minutes ago, HousePriceMania said:

Who was the 1.  

The Argentine.

[HousePriceMania]

Just now, Castlevania said:

The Argentine.

They are renowned for the sane monetary policies.

What the *** are non-brits doing controlling the british monetary supply !!!

Thank god the tories are fighting the globalists.

12 minutes ago, MrXxxx said:

https://www.msn.com/en-gb/money/news/bank-of-england-opts-for-pre-christmas-interest-rate-hike-despite-omicron-fears/ar-AARS66r?ocid=mailsignout&li=BBoPWjQ

Well after 'choking' last month and 'wrong footing' many they daren't not this month...that said, 0.15% will have no effect, and is purely symbolic.

Yip, from approx 0 to approx 0.

If they had gone to 0.5% or better 1% it would have send out a clear message, therefore the message is clear, business as usual.

[Barnsey]

BRILLIANT 

 

[Starsend]

Some of you might remember a discussion on here a few months back about re-mortgaging your house to take advantage of ridiculously cheap money. Bit of mixed opinion as to how difficult it would be. I've just completed on a re-mortgage so thought I would share what I learned.

I owned the house outright and work fulltime on a fairly decent salary. I wanted to borrow about a third of the value of my house on a 5 year fix.

I ended up with a five year fix from one of the big lenders at 0.99%. They paid the legal costs and the valuation cost. There was a fixed fee of £750 which was all I had to pay. The process was easy.

Some of my observations.

Most of them didn't really seem to care what you were doing with the money, they were happy to lend for home renovations, a new car, a holiday home. I spoke to three lenders. One of them wanted to stick their nose in and release the money when I could show an offer had been accepted on a holiday home. I told them all that I didn't want any restrictions as I wanted to be able to buy at my leisure when the right property came up with nobody breathing down my neck.

None of them gave a monkeys about borrowing for a car, didn't even ask what type of car. All they were concerned about was affordability. In the case of a holiday home they wanted to know that you had an idea what you were going to buy and what the running costs would be.

The whole process was remarkably easy, most of it done over a couple of phone calls.

If anybody wants any further details as to what lender I used then just PM me, not sure if these five year 0.99% deals are even available now or if so for how much longer.

 

 

 

 

[Don Coglione]

4 minutes ago, Starsend said:

Some of you might remember a discussion on here a few months back about re-mortgaging your house to take advantage of ridiculously cheap money. Bit of mixed opinion as to how difficult it would be. I've just completed on a re-mortgage so thought I would share what I learned.

I owned the house outright and work fulltime on a fairly decent salary. I wanted to borrow about a third of the value of my house on a 5 year fix.

I ended up with a five year fix from one of the big lenders at 0.99%. They paid the legal costs and the valuation cost. There was a fixed fee of £750 which was all I had to pay. The process was easy.

Some of my observations.

Most of them didn't really seem to care what you were doing with the money, they were happy to lend for home renovations, a new car, a holiday home. I spoke to three lenders. One of them wanted to stick their nose in and release the money when I could show an offer had been accepted on a holiday home. I told them all that I didn't want any restrictions as I wanted to be able to buy at my leisure when the right property came up with nobody breathing down my neck.

None of them gave a monkeys about borrowing for a car, didn't even ask what type of car. All they were concerned about was affordability. In the case of a holiday home they wanted to know that you had an idea what you were going to buy and what the running costs would be.

The whole process was remarkably easy, most of it done over a couple of phone calls.

If anybody wants any further details as to what lender I used then just PM me, not sure if these five year 0.99% deals are even available now or if so for how much longer.

 

 

 

 

That is interesting, especially as I predicted (based on my own experience) that you wouldn't get the money!

As I posted at the time, Natwest wanted to know my inside leg measurement, never mind exactly what I wanted to do with the money, hence our deciding not to pursue the free money.

Well done.

[DoINeedOne]

14 minutes ago, Don Coglione said:

That is interesting, especially as I predicted (based on my own experience) that you wouldn't get the money!

As I posted at the time, Natwest wanted to know my inside leg measurement, never mind exactly what I wanted to do with the money, hence our deciding not to pursue the free money.

Well done.

Same i go to pay in £1000 cash and they think im Pablo Fucking Escobar and yet in the FT today

The sight of people lugging £700,000 in black bin bags through a West Midlands shopping centre to a NatWest branch was just one startling red flag among multiple warning signs the UK bank missed in failing to prevent a £365m alleged money laundering scheme.

Over a period of five years Fowler Oldfield, a Yorkshire gold dealer with a predicted annual turnover of £15m, deposited £365m with NatWest including £264m in cash. Some individual deposits were unusually large £42m in cash was paid into a branch in Southall between 2015 and 2016; £750,000 was dropped off in Halifax within three days. At the NatWest in Walsall shopping centre where £6.6m cash was deposited, including £700,000 paid in on September 14 2015 bags were splitting open due to the volume of notes and branch staff had to transfer them into stronger hessian sacks, Southwark Crown Court heard during the bank’s sentencing hearing this week.

The money filled two floor to ceiling safes at the branch and even then more had to be stored behind the bank’s grilles. “Someone was walking through the streets with black bin liners of cash,” said Clare Montgomery QC, prosecutor for the FCA. Yet no suspicious activity report (SAR) was raised by NatWest with the National Crime Agency before 2016, when West Yorkshire police said it was investigating Fowler Oldfield. NatWest, which is majority owned by the British government, this week paid the penalty for its deficiencies, with a criminal conviction and a £264.8m fine for breaching anti-money laundering regulations between November 2012 and June 2016.

The outcome marked the first criminal prosecution brought by the Financial Conduct Authority (FCA) using anti-money laundering laws. “NatWest is responsible for a catalogue of failures in the way it monitored and scrutinised transactions that were self-evidently suspicious,” said Mark Steward, director of enforcement and market oversight at the FCA, who added that the bank’s actions had created “an open door for money laundering.”  Eleven individuals have pleaded guilty of money laundering offences relating to cash being delivered to Fowler Oldfield and a further 13 have been charged. The case underlines the FCA’s wider determination to crack down on a tide of dirty money that is estimated to cost the UK economy £100bn each year and has raised searching questions about weaknesses in banks’ ability to stop the fraud.

Red flags missed Fowler Oldfield became a NatWest customer in 2011. From late 2013, at least 50 UK bank branches suddenly started to receive millions of pounds in cash deposits, with £1.8m a day being paid in at one point, Southwark Crown Court heard. Staff in branches and cash centres, who were responsible for handling these cash deposits, reported their suspicions to colleagues. Some 11 internal alerts were raised and NatWest’s own automated anti-money laundering system was triggered 10 times. At the NatWest in Walsall shopping centre where £6.6m cash was deposited bags were splitting open because of the volume of notes and branch staff had to transfer them into stronger hessian sacks, Southwark Crown Court heard during the bank’s sentencing hearing this week.

But no appropriate action was ever taken by the bank, the FCA said. Even at the Walsall branch, staff had intended to raise an internal alert but no record was found by the bank. Many cash deposits highlighted in the case were made via “quick drop” business machines in branches that did not require interaction with bank staff even though this method had been flagged as a concern in the UK government’s 2015 national risk assessment of money laundering, the regulator noted. NatWest’s Washington cash centre in north east England raised the alarm as the cash literally failed the smell test.

Staff noted that the banknotes would “at times carry a prominent musty smell, indicative of long storage rather than business use.” Employees were also troubled by the “unusual high volumes” of Scottish notes being deposited by Fowler Oldfield, which was based miles from the Scottish border. The NCA, investigating Scottish banknotes in England and possible links to criminal activity, was alerted but no SAR was raised. A manager about to retire at NatWest’s cash centre in Basingstoke, Hampshire in 2015 shared his concerns with a financial crime manager about “the most suspicious potential money laundering he had seen in his career”. But the bank said there were sufficient explanations, the court heard. NatWest’s failures There were significant gaps in NatWest’s processes.

Its automated transaction monitoring system incorrectly identified some cash deposits as cheques which carried a lower money laundering risk. The bank failed to classify Fowler Oldfield as a high-risk customer for two years.

The only SAR raised to the NCA was in relation to the accounts of a hair extensions supplier that had received about £387,000 from Fowler Oldfield. No SAR was submitted about the gold dealer itself. The internal alerts were investigated at an office in Hertfordshire where some staff were inexperienced and keen to close cases in 30 days, the court heard.

Justice Sara Cockerill, who sentenced NatWest, pointed out the “glaring nature of some of the failures” in the bank’s systems and said without them “the money could not be effectively laundered.” John Kelsey Fry QC, acting for the bank, told Southwark Crown Court that staff “didn’t miss” the activity. “The quality and adequacy of that scrutiny is another matter”. Alison Rose, NatWest’s chief executive, has expressed her “deep regret” about the failures.

The bank now employs 5,000 dedicated staff and will spend £1bn between 2021 and 2025 improving its anti-financial crime work. No action is being taken against any current or former employee of NatWest. Roger McCormick, senior visiting fellow at Bayes Business School, said: “It is disconcerting that even a complex and sophisticated set of procedures for anti-money laundering can let you down if there is a failure of common sense at human level and an apparent inability to act effectively on what seems to have been an obvious set of red flags.” The case also underlined the lack of sophistication of some financial crime: “The absolute brass neck of people who were willing to bring so much cash for laundering into a bank branch and hand it across the counter in plastic bags reminds us that a great deal of crime happens in plain sight,” said Mark Mullen, chief executive of Atom Bank.