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

[JMD]

22 hours ago, DoINeedOne said:

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.

The above laundering story, the recent Track and Trace fiasco, and the Post Office project Horizon scandal, not to mention countless NHS computer project failures - although these are not all directly related, nonetheless they do make me believe that government/complex IT/money combos are a lethal mix and so government operated CBDCs can't happen within any required reasonable timescales. So I think CBDCs will be outsourced to the private sector, maybe Visa or MasterCard or Facebook? I mention because companies like these, or others with 'finance/transaction settlement infrastructure' are I think potential buying opportunities, or at least candidates for inclusion on our fabled(?!) BK wish list.

[Majorpain]

Quote

 

During preventive maintenance checks on the primary circuit of reactor number 1 of the Civaux Nuclear Power Plant (in the Vienne Department of France), scheduled as part of its ten-yearly in-service inspection, some defaults were detected close to the welds on the pipes of the safety injection system (SIS[1>) circuit. The French nuclear safety authority, Autorité de Sûreté Nucléaire (ASN) was informed of this detection.

Checks initiated on the same equipment of reactor number 2 of the Civaux Nuclear Power Plant revealed similar defects.
Today, a decision has been taken to replace the affected parts on the two Civaux reactors, the work being governed by a technical instruction prepared in cooperation with the ASN, which leads to extend the shutdown of the two reactors.

The four reactors of the Chooz (in the Ardennes Department) and Civaux nuclear power plants use the same technology and form the N4 reactor series of the French nuclear fleet. As a responsible nuclear operator, and as a precautionary measure, EDF has therefore taken the decision to shut down the two reactors of the Chooz Nuclear Power Plant so that, proceeding proactively, it can carry out the same checks on the SIS circuit which can only be possible as the reactors are offline. The Chooz number 2 reactor will be shut down on Thursday 16 December and the Chooz number 1 reactor will be shut down on Saturday 18 December.

 

Safety circuit you say?

Cracks in pipes you say?

6GW of power off the Euro grid for the forseeable, another nail in the coffin of this winter.

[Democorruptcy]

1 hour ago, Harley said:

I always had my suspicions that you two were the same.  I've learnt to be careful these last two years!  Still not 100%! 

Anyways, thanks @WICAO as I found your stuff great when I sat down and got a grip of this stuff a few years ago. 

@Democorruptcy I'll still like you even if it's not you! 

I am not WICAO, nor is he me.

[ThoughtCriminal]

That UK electricity price chart isn't showing up so thought I'd put it in.

 

Holy fuck..........

[Majorpain]

1 minute ago, ThoughtCriminal said:

That UK electricity price chart isn't showing up so thought I'd put it in.

 

Holy fuck..........

700mw of wind at the minute, pathetic when just one SMR is 470mw.

[JMD]

Nuclear fusion was always 'at least 30 years away' - ie that's the caveat that scientists frequently attached to any discussions about when to expect this new technology. But Tokamak seem to be ramping up our expectations!!... Well, not really, unfortunately even at their latest UK project sited at a Didcott trading estate, they are estimating the end of this decade to perfect the tech, and then the end of the 2030s for its commercial rollout (timings not in this link but in the original news item that i saw, the Ausie guy at the end did mention them)... Anyway, now just 20 years to wait then?                                                                                                                                                                      https://www.bbc.co.uk/news/av/science-environment-59601560

[DurhamBorn]

41 minutes ago, sancho panza said:

I though there's been some sort of corporate activity.Thanks for the explaantion.

Just checked saxobank and Orange Sa is due on 30 Dec

On another topic DB,been buying a few goldies and telecoms.That round of rate news/inflation seemds to ahve done wonders for them both.

Credit where credit due,you're thesis has been borne out by the data.

Being cheeky,are there any particualrly rubber band looking PM miners you see out there.Dyor natch.

We been buying minera alamos/ alexco plus barrick kinross calls.,but lining up more b2G and yamana from the tier 2s stock wise.

you considering a move back on the great pantehr? they look cheap.

@sancho panza Orange div is in now and quickly into Telenor along with BP divi 

I havent looked at the miners for ages.Im following along my roadmap mostly.Made most of the money on the miners last year and potash etc.Iv sold a lot of the stocks that x3,x4+ etc and been buying more telcos,baccie,some select insurance types,M+G,Abrdn etc.Im now mostly seeing the big profits behind us and to be honest iv made my money for the cycle,very very happy with how we played it.Im now aiming to keep up with inflation from here until 28-30 and if a BK does hit hope to suffer a 30% or less drawdown at trough.

If i was buying it would be Alexco,Yamana and Harmony.I keep adding physical silver as well.Panther is terrible,but id be tempted with a few.I think the difference is im not actually bothered about increasing capital now,just staying retired at 49 and keeping in front of the inflation hammer.

Interest rate increases mean increasing cost of capital but increasing prices,with the lag great for cyclicals,horrible for growth.

[JMD]

22 hours ago, HousePriceMania said:

The MPC have lost the plot it seems 

 

 

 

But the plot is a 'penny dreadful', and not worth the paper (fiat!) it is written on!

[belfastchild]

48 minutes ago, Cattle Prod said:

Allowing for speculation, users of wholesale electricity are going to have to pass this on to consumers as soon as possible or go bust

 

CP Ive been posting links here and in other threads about NI price rises in energy.
Heres this weeks https://www.bbc.co.uk/news/uk-northern-ireland-59641234

I dont say this weeks in jest, for the same customers heres Novembers https://www.bbc.co.uk/news/uk-northern-ireland-59233950

heres Octobers https://www.bbc.co.uk/news/uk-northern-ireland-58480550

Read that and weep people. Over here the price cap is on energy suppliers profits, not on the prices paid by customers, the cost increases get passed on directly. So in the links above gas went up 35% in October, 38% in November for outlying towns and Belfast gets staggered ones.

News last week about the currently free EV car charging and that they will have to bring in charges. Ive never seen EV charging spots so busy. Its free and the free work charging is gone because people arent in work and cant afford to charge at home, parasitic ev charge loss in cold weather can be ridiculous now prices are up.

My electricity costs have went from 16.96p plus vat to 21.07p a unit plus vat in a year. Doesnt sound like a lot but in percentage terms it is. It will go up again next month, Im sure.

GB customers are in for a big shock when the price cap gets lifted and it will have to get lifted substantially not just to cover costs at the time but the losses in this interim (or will have to be changed completely).

The UK has got away with duct tape and prayers in the electricity network for years now, french nuclear bailed them out and now french nuclear is also creaking supplying them, the germans, italians, swiss etc etc.

This is really the only quarter I pay for electric (solar, battery backup). Bill up to this week is 77 quid, I just got paid 69 quid for yearly export. Ive moved to a new supplier with 50 quid off my first bill (probably what my bill will be for the next quarter). When I moved I checked the keypad rate, 29p + VAT IIRC (we dont have standing charges here for tariffs other than e7 - why I havent moved as yearly standing charge is about 2/3 what I pay annually).

EV owners and ASHP north of watford will be getting crucified this winter, and if it drops to below zero for a sustained period they may not be as they wont be going anyway and sitting in the cold and dark.

49 minutes ago, Starsend said:

Hard to tell what the feck is going on with energy prices. My guess is that it's mostly broken markets / speculators. Is there really that much of a short fall of electric?

https://www.gridwatch.templar.co.uk/

[DurhamBorn]

@WICAO good to see you here,i retired for the 3rd time in my life in Feb ,first time for 5 years when i was 30 so i could travel the UK seeing different women and living like a dandy on internet dating sites,i had an amazing time,including dating a girl who played hockey for England,in her gear sat on me with hockey stick behind my neck etched into my memory  ,then at 39 for 8 years when i was self employed,but working an hour a day mostly and then now.Iv never had so many job offers since Feb,crazy amount,even offered back at GSK where i worked for 10 years.There is a slight chance i might do a few months every couple of years,but not unless the pension lifetime allowance goes up and inheritance tax allowance.

FIRE mentality from 1991 for me and the skills to get there and some lucky friendships has given me a great life and for coming from one of the poorest towns in the country leaving school at 16 one im proud of.

[JMD]

22 hours ago, AWW said:

https://www.seba.swiss/media-and-investors/media-and-investors/seba-bank-launches-landmark-first-regulated-gold-token-to-enable-digital-ownership-of-physical-gold

This sort of thing has the potential to massively increase physical gold buying. It makes buying physical gold as easy as buying crypto. And it's totally different to an ETF - to sell the token, you have to own the gold.

Intersting, I wonder if the other well known gold deposit/custody companies will follow? Cuts company costs. Plus I presume this allows easy fractional ownership for the investor, and also fractional selling - so I wonder does this effectively offer easy low cost trading potential of the physical for the individual investor? ...if so would this new market ramp up the gold price?

[Underwhelmed]

7 minutes ago, JMD said:

Intersting, I wonder if the other well known gold deposit/custody companies will follow? Cuts company costs. Plus I presume this allows easy fractional ownership for the investor, and also fractional selling - so I wonder does this effectively offer easy low cost trading potential of the physical for the individual investor? ...if so would this new market ramp up the gold price?

Isn't this similar to PAXG?

https://paxos.com/paxgold/

[Yadda yadda yadda]

2 hours ago, HousePriceMania said:

The piggies are squealing.

 

 

This from an editor of a respected newspaper.  has some tory scumbag asked him to say that ?

 

I am allowed to use the C world here but I dont normally, but, i have to say, what a total and utter cunt of a man.

"Coughs" is a bit distasteful in context.

Demand isn't strong, supply is weak.

[wherebee]

2 hours ago, WICAO said:

My understanding so far (which could still be wrong / not optimised but I have taken some advice and will do a bit more as I approach age 55) is that current legislation does not allow me to transfer it to Australia until I'm 55 years of age so it just sits where it is for a few more years.  Even at that point Australia then has contribution caps in place that will limit what I could transfer.  Additionally, there are very limited transfer options.  There is currently only one retail QROPS in Australia and no industry QROPS so think high fees.  I could set-up what's called an SMSF but that has high running costs as it's effectively my own "pension company".

 

SMSF are not that expensive.  I'm setting one up soon.  400 bucks to set up, annual accountants fees of 200 bucksish, and thats regional victoria - be cheaper over in WA.

Compare that to the annual fee you are being gouged for in every single industry fund, the bad prices you get for transactions (my wifes super charged her 10 bucks to move 10k in.  wtf), the bad pricing you get for units, and the shit options (most superfunds in australia don't allow targetted investment; in one of mine 'foreign' is an option, but you cannot find out what the underlying investments are.

Get a SMSF.  you can even buy crypto for it, or physical gold, or property.

[Harley]

45 minutes ago, belfastchild said:

This is really the only quarter I pay for electric (solar, battery backup). Bill up to this week is 77 quid, I just got paid 69 quid for yearly export. Ive moved to a new supplier with 50 quid off my first bill (probably what my bill will be for the next quarter). When I moved I checked the keypad rate, 29p + VAT IIRC (we dont have standing charges here for tariffs other than e7 - why I havent moved as yearly standing charge is about 2/3 what I pay annually).

I'm up to 10kwh battery storage now.  A small solar array but not bad atm.  I hope to switch supplier later to get off peak prices (5p) and ramp up the battery use.  Brilliant tech.  Addictive.

PS:  Using a lot of firewood atm and busy insulating my gaff.  Better get log splitting again......  I absolutely love the lateral thinking, building resilience, etc.

[Craig]

29 minutes ago, Underwhelmed said:

Isn't this similar to PAXG?

https://paxos.com/paxgold/

Good shout. I've got some PAXG sitting in a Nexo account earning 8% interest.

Can't imagine many places offer returns like that, though tbh not sure how long they can afford to offer it either...

[jamtomorrow]

9 minutes ago, Cattle Prod said:

Not much shortfall, but the marginal MW you must have but isn't available has a theoretically infinite price. People have just assumed availability, while markets are priced at the margin etc

Haven't seen much talk of demand elasticity in all this.  Seems very much an unknown factor to me - we've had years of orderly slow-moving energy markets which haven't given many clues about how the demand side will behave in a supply shock situation. Next few months should be very interesting indeed on that score

[JMD]

21 hours ago, sancho panza said:

Quite why we have foreign nationals on our MPC I'll never understand how they get through the vetting.

Yes it is a mystery. But I expect he/she 'got through the vetting' because these days only 'financial/banking' vetting is still allowed (after all it's where true power eminates/resides, and so is very jealously guarded). However, every other type of human discrimination (once a harmless/useful term) now falls under the demagogic catchall spell of racial profiling and is therefore spurned as being pure evil. 

[JMD]

21 hours ago, Don Coglione said:

I wanted 200k (50% LTV).

That's a lot of Teslas.

Tell the bank you want to buy a fleet of Tesla's for a new Uber business idea you have - they will think you are an entrepreneurial socialist genius (ESG(?) box ticked?!) and will literally throw the money at you... oh, and may evan ask if you'd like to appear in their next woke promotional video. 

[DurhamBorn]

3 hours ago, HousePriceMania said:

The piggies are squealing.

 

 

This from an editor of a respected newspaper.  has some tory scumbag asked him to say that ?

 

I am allowed to use the C world here but I dont normally, but, i have to say, what a total and utter cunt of a man.

FT is a joke isnt it.Nominal GDP has nothing to do with it when your printing faster than productivity growth.You get more and more inflation.QE is a direct theft of labour,both in use labour and saved.There is a £200 billion structural deficit.

[HousePriceMania]

44 minutes ago, DurhamBorn said:

FT is a joke isnt it.Nominal GDP has nothing to do with it when your printing faster than productivity growth.You get more and more inflation.QE is a direct theft of labour,both in use labour and saved.There is a £200 billion structural deficit.

Im sure he knows that.

I wonder what investment class he's most worried about falling.

[spygirl]

4 hours ago, HousePriceMania said:

The piggies are squealing.

 

 

This from an editor of a respected newspaper.  has some tory scumbag asked him to say that ?

 

I am allowed to use the C world here but I dont normally, but, i have to say, what a total and utter cunt of a man.

This problem with what that bell end Chris Giles is that you keep expanding the money supply/debasing the currency until yield shoot up or stop being bought.

The problem with the argument is that the BoE is buying the fuckign debt - 

https://www.ft.com/content/0e042b87-ef75-4cb7-94be-d57b8f77235c

 

Rates are going up because China is not longer exporting disinflation.

get him to define demand,.

Then ask how the UK DMO andor BoE can influence China.

 

 

[JMD]

12 hours ago, macca said:

To keep stoking the Covid row.. 

Waterford 99.5% of all Adults fully vaccinated.. Highest Covid infections in the whole of Ireland 🇮🇪 

Can anyone explain this? What's the real reason  for vaccine passports?

Unless that pesky 0.5% are causing all the trouble?

Where is this heading? 

It's all a mystery.

I'm still very skeptical over the whole COVID/lockdown politics, etc., but putting that aside for moment... I was listening to a LBC radio interview Tuesday night, unfortunately I can't recall the professor's name they had on but the subject was the Omicron variant and his view was that he fully expected COVID to turn into just a very heavy cold in terms of symptoms within 2 years. Tbh, I was actually taken aback by this type of information being somewhat casually aired and discussed on MSM, especially with the professor also saying that natural immunity was better than inoculation, after all it's been so very long since alternate views have been allowed/sanctioned?                                                                                                      I'm wondering if the politicised 'panic phase' is now ending? Anyway thing is from what we are hearing so far about Omicron, in terms of virulence, hasn't this COVID variant become in effect just another type of cold? 

[Bricormortis]

3 hours ago, belfastchild said:

CP Ive been posting links here and in other threads about NI price rises in energy.
Heres this weeks https://www.bbc.co.uk/news/uk-northern-ireland-59641234

I dont say this weeks in jest, for the same customers heres Novembers https://www.bbc.co.uk/news/uk-northern-ireland-59233950

heres Octobers https://www.bbc.co.uk/news/uk-northern-ireland-58480550

Read that and weep people. Over here the price cap is on energy suppliers profits, not on the prices paid by customers, the cost increases get passed on directly. So in the links above gas went up 35% in October, 38% in November for outlying towns and Belfast gets staggered ones.

News last week about the currently free EV car charging and that they will have to bring in charges. Ive never seen EV charging spots so busy. Its free and the free work charging is gone because people arent in work and cant afford to charge at home, parasitic ev charge loss in cold weather can be ridiculous now prices are up.

My electricity costs have went from 16.96p plus vat to 21.07p a unit plus vat in a year. Doesnt sound like a lot but in percentage terms it is. It will go up again next month, Im sure.

GB customers are in for a big shock when the price cap gets lifted and it will have to get lifted substantially not just to cover costs at the time but the losses in this interim (or will have to be changed completely).

The UK has got away with duct tape and prayers in the electricity network for years now, french nuclear bailed them out and now french nuclear is also creaking supplying them, the germans, italians, swiss etc etc.

This is really the only quarter I pay for electric (solar, battery backup). Bill up to this week is 77 quid, I just got paid 69 quid for yearly export. Ive moved to a new supplier with 50 quid off my first bill (probably what my bill will be for the next quarter). When I moved I checked the keypad rate, 29p + VAT IIRC (we dont have standing charges here for tariffs other than e7 - why I havent moved as yearly standing charge is about 2/3 what I pay annually).

EV owners and ASHP north of watford will be getting crucified this winter, and if it drops to below zero for a sustained period they may not be as they wont be going anyway and sitting in the cold and dark.

https://www.gridwatch.templar.co.uk/

Belfastchild, as  if that wasn't bad enough the cost of petrol bombs must be really starting to hit home.

[belfastchild]

1 minute ago, Bricormortis said:

Belfastchild, as  if that wasn't bad enough the cost of petrol bombs must be really starting to hit home.

Kept some old stale ready mixed with 2 stroke petrol out of the boat... you never know when it might come in handy...