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

[DurhamBorn]

The best workers decide iv got enough im sick of funding the scroungers.Scroungers dont want a job.

https://www.telegraph.co.uk/business/2021/10/17/missing-workers-fuel-britains-inflation-fears/

“We’ve had a couple of people who were not due to retire for five or six years, and are saying, ‘you know what, I’ve got enough in my pension pot, Covid has made me re-think, I’d rather retire to do something I really want to do’,” 

One problem is a rise in those neither working nor looking for a job. They are “inactive”, rather than unemployed. This category is up 350,000 among those of working age, focused among the oldest and youngest.

[Loki]

13 minutes ago, DurhamBorn said:

The best workers decide iv got enough im sick of funding the scroungers.Scroungers dont want a job.

https://www.telegraph.co.uk/business/2021/10/17/missing-workers-fuel-britains-inflation-fears/

“We’ve had a couple of people who were not due to retire for five or six years, and are saying, ‘you know what, I’ve got enough in my pension pot, Covid has made me re-think, I’d rather retire to do something I really want to do’,” 

One problem is a rise in those neither working nor looking for a job. They are “inactive”, rather than unemployed. This category is up 350,000 among those of working age, focused among the oldest and youngest.

And linked at the bottom of that article...

https://www.telegraph.co.uk/business/2021/10/17/millions-mobile-customers-see-bills-hiked-warns-vodafone/

 

Get a load of this drivel too 

https://www.telegraph.co.uk/business/2021/10/17/world-energy-watchdog-guides-us-painless-net-zero/

[M S E Refugee]

28 minutes ago, DurhamBorn said:

The best workers decide iv got enough im sick of funding the scroungers.Scroungers dont want a job.

https://www.telegraph.co.uk/business/2021/10/17/missing-workers-fuel-britains-inflation-fears/

“We’ve had a couple of people who were not due to retire for five or six years, and are saying, ‘you know what, I’ve got enough in my pension pot, Covid has made me re-think, I’d rather retire to do something I really want to do’,” 

One problem is a rise in those neither working nor looking for a job. They are “inactive”, rather than unemployed. This category is up 350,000 among those of working age, focused among the oldest and youngest.

I am seeing a lot of this at work, quite a few have retired or are going to before Christmas and also we have people who are in their 50's and early 60's going part-time.

[Democorruptcy]

On 14/10/2021 at 22:04, Hunty said:

Not sure if this is relevant. My eldest brother retired 6 weeks back, turned 66 in September.

He lived his life like everyday was the last, never a thought for the future, worked every day from 16 to 66, I actually don't ever remember him getting sick. He pissed most of his cash up the urinal, invested the rest in easy lady's. His last wife took his house and the car.

He's rented the last 15 year's, just a flat, but perfect for a single man. When he retired I thought, well waited for the knock at the door. I would have put him up if only for sloppy seconds, he's a charmer.

F**k how wrong was I. His rent is now paid, no council tax, bus pass. 180 quid a week. He was only on 8.79 an hour when working, 40 hours a week. Don't think he's no worse off.

I guess he's used to living on x amount which is the secret. Want for little and enjoy you're free time is the secret. Ignore the media noise about needing this and that for retirement. Unprogram yourself from the state mind games.

That's the sort of post that makes me think I might as well go 'all in', instead of bugger about thinking about divis etc. The state will look after me? Of course it could just be because I've always been a gambler and can't kick the habit.

[Option5]

5 minutes ago, M S E Refugee said:

I am seeing a lot of this at work, quite a few have retired or are going to before Christmas and also we have people who are in their 50's and early 60's going part-time.

That's OK unless inflation makes their pension pot worthless.

[Phil]

2 hours ago, SillyBilly said:

I honestly don't know how some SME firms are surviving this inflation spike, liquidation bow wave coming perhaps.

I have a small business and at one point our cashflow was -£300k where we expected to be as our stock value went from £500k at start of the year up to £800k inside first 6-7 months of year. Inflation on basically everything we buy. Given we price quarterly at best in terms of contracts we were (and still are) constantly chasing this cash deficit. We pay 95% of our suppliers on the usual 30 day terms or so yet some of our biggest customers (Multi-nats) buy from us on 60 day terms (max we allow). So we have an entire quarter for instance of absorbing inflationary increases (and paying for them inside 30 days) BEFORE we can even move the price. Then when we do move the price we wait for 60 days to get paid for it. So we're in effect 5 months behind what is happening. But all that while prices continually go up so when we have adjusted our price in a new quarter it is behind the curve again and we're chasing across the same cycle. We have survived because we carry quite a bit of cash on the balance sheet relative to a lot of small businesses but this year has been a massive eye opener as to how easy it is to lose even a fundamentally profitable business due to inflation and cashflow.

I was talking to one of my customers (paints/industrial cleaning products) this last week who said 1st Jan 2022 it is a 25% increase on EVERYTHING he sells. It is that or curtains. I think the consumer has been sheltered from 90% of the inflation thus far as producers first waited to see if is was transitory (it isn't), then taken a hit with the speed in which they can move their own prices (supermarkets/retain chains can lock you in) and now they have no choice but to start passing every penny on as can't sustain any more cost increases.

We spend £4k a month on electricity and I am getting concerned this could be £5.5k a month by the time we come to renew within 24 months. Add on forthcoming business rates review (deferred originally due to COVID), a forthcoming 31.6% increase to our corporation tax which doesn't seem to have caught any attention from the public...from 19% to 25%. Our debts we have to pay AFTER we have posted a profit and paid tax on it so this is an issue. And an 11% increase to our employers NI bill (13.8% to 15.3% is an 11% increase in this tax). The government is raping us (SMEs) on the altar of the sacred NHS. Of course add in significant wage inflation, the aforementioned inflation across pretty much every business consumable and stock item and then you have the perfect storm. 

For the first time in years we saw INTRA month pricing on some commodities we buy this month. They won't even fix for a month before prices ramp up again. 

Have you thought fuck it. Sell the business. It's gonna be epic not in a good way. Fare play for keeping going but is it worth the risk? Asking as everyone isn't gonna be as informed as yourself. 

[Democorruptcy]

On 15/10/2021 at 16:23, Festival said:

Not sure this belongs on this forum but i'll try anyway given how much people on this forum know about investing.

 

At what age do you think you should start drawing down on the capital sum (ie SIPP, ISAs and any other assets) as opposed to limiting spending to the income you earn (eg dividends, final salary pension, interest etc). I'm 55 in good health, have a good understanding of current income from shares etc and my expenditure today and what I will get from state pension etc. However although I'm really close to putting my SIPP into drawdown I've not yet pulled the trigger as I dont know how quickly the capital sum will erode if you start taking a bit more than the annual income each year. Does anyone have a ready reckoner or a rule of thumb they use?

Two things to consider

1. Will you be working again? Once you drawdown your SIPP does it mean you cannot contribute as much?

2. Do you have anybody to leave your cash to when you snuff it? Not wanting to wish you an early death but your SIPP is inheritance tax free if you die before 75 up to the lifetime limit. Taking cash from a SIPP instead of an ISA doesn't make sense with that in mind.

Live long and prosper!

 

[Democorruptcy]

On 15/10/2021 at 23:10, Hunty said:

Over cautious buddy. You'll probably have no quality of life post 78. Post 72 you'll see your spending habits severely decrease. I sometimes cannot believe the over estimation some folks make on retirement cash flow needs. As a species up to 100 years ago we never lived past 50. Now folks plan for good health and active life styles post late 70's. 

I always say, give up work for a year in your 40's, see how your spending habits change. Then do it again in your 50's coinciding with ailments and niggly health issues. Next stop 60's, lack of sleep, feeling drained. 

I think many overly compensate for retirement that they never actually realise, it's why the city spivs drive Italian cars and us mere mortals fret and worry whether we have enough to stop contributing to their tax take.

Take a year off work, see how you fill your time, watch what you spend. The shit the BBC tell you, what you need is nothing like reality.

I've been retired a year, your whole mindset changes. 

If you're a champaign Charlie you'll work till you drop. If you've never been a Champaign Charlie then when your retired you'll live within your means and not require funds to match a life style you've never had and probably never wanted.

Looking back, if I were 66, house paid for, full state pension, no savings, no council tax, full pension priveledges, I'd take that without working my bullocks off for a private pension which I could not spend.

I took a year off work at 42. I haven't bothered going back.

[Noallegiance]

https://www.reuters.com/business/bank-england-will-have-act-contain-inflation-bailey-2021-10-17/

[SillyBilly]

41 minutes ago, Phil said:

Have you thought fuck it. Sell the business. It's gonna be epic not in a good way. Fare play for keeping going but is it worth the risk? Asking as everyone isn't gonna be as informed as yourself. 

Personally I can't until the end of 2023 so would be academic now. I sold my house and everything I had to put in but still borrowed an ungodly sum to buy it and leveraged it all against the business. I don't finish repayments until back end of 23. I doubt I would sell anyway unless forced to, I do enjoy it, despite the strain. As long as I get the site paid for (that covers me if it does go south) I will do my best to run it as best as I can, for as long as I can. Naturally I have to have an insurance policy for myself should it go belly up but I don't think you should run a century+ old business if you aren't going to at least put up a fight for it. I am more about financial independence and not being beholden to anyone than I am quitting work and retiring. I'll be as happy as a pig in muck working a 60-80 hour week IF I don't need to work. 

[Wheeler]

I'm not sure how they plan to do it - build a couple of dozen new nuclear power plants maybe!

 

https://apple.news/AKA7p2rmvRumc27epo1ValA

Exclusive: Government Set To Announce Ambitious Carbon Emission Reduction Target For Power Sector By 2035

 

Written by: Noa Hoffman

Sector-specific carbon emission reduction targets for the year 2035 – which will be announced by the government in its Net Zero strategy this week – are set to be far more ambitious for the power sector than others, including transport and heat and buildings.

In a major publication outlining the UK’s strategy for achieving net zero, due to be published next week ahead of November’s COP26 summit, the government is expected to clarify carbon reduction expectations in sectors including power, industry, transport, fuel supply and hydrogen.

Energy sector sources have told PoliticsHome the following reductions for 2035 are expected to be announced:

Power: 80 – 85% reduction in carbon emissions

Natural resources, waste and fluorinated gases: 39 – 51% reduction in carbon emissions

Fuel supply and hydrogen: 53 – 60% reduction in carbon emissions

Transport: 47 – 59% reduction in carbon emissions

Industry: 63 – 76% reduction in carbon emissions

Heat and buildings: 47 – 62% reduction in carbon emissions

The government has previously announced major climate commitments, including achieving net zero by 2050 and reducing emissions overall by 78% in 2035 when compared to 1990 levels.

However, this is the first time a sector-by-sector breakdown setting specific emission reduction targets has been publicised.

The expectation for the power sector to reduce emissions by 80 – 85% is particularly important, as earlier this month the government committed to completely decarbonising the power system by 2035.

The 47 – 62% target for heat and buildings could be perceived as relatively low, but an expert in the sector told PoliticsHome the figure reflects the level of behavioural change needed among consumers, the need to transform millions of homes across the UK, and the fact that the government has been unable to agree on the Heat and Buildings Strategy, which has been delayed since the spring.

“The government's hopes of being viewed as a climate leader when it hosts COP26 in November are poised to a large extent on the reception to its long-awaited Net Zero Strategy,” Michael Thorogood, Political Consultant for Energy, Utilities and Climate at Dods Group told PoliticsHome.

“Having described its own carbon emission reduction targets as the most ambitious in the world, the government have been criticised for failing to explain how its interim targets on net zero will be achieved. While some detail is forthcoming, the announcement of a transitionary route for major UK sectors will be welcomed by stakeholders, enabling more targeted policy development and longer-term planning for industry, which could encourage greater investment in lower carbon technologies.”

Alongside announcing sector emissions reduction targets, PoliticsHome has also learnt that next week the government is expected to recognise the role of engineered greenhouse gas removal projects.

According to sector sources, government will commit to funding engineering-based approaches to removing greenhouse gases. It is hoped this will address residual emissions from sectors unlikely to fully decarbonise by 2050.

“While interim targets provide a crucial roadmap, they will need to be underpinned by clear market signals to encourage private sector investment and behavioural change,” Thorogood told PoliticsHome.

“Stakeholders will be hoping that the government have also devised a clear strategy for public engagement, as well as recognition of the crucial role of greenhouse gas removal technologies to support harder-to-decarbonise sectors in achieving net zero.

“Despite their importance in keeping the Sixth Carbon Budget within reach, these are areas where the government has previously been criticised for making little progress.”

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “We will publish a comprehensive Net Zero Strategy ahead of COP26, setting out the Government’s vision for transitioning to a net zero economy.”

 

[Chewing Grass]

1 minute ago, Wheeler said:

In a major publication outlining the UK’s strategy for achieving net zero, due to be published next week ahead of November’s COP26 summit, the government is expected to clarify carbon reduction expectations in sectors including power, industry, transport, fuel supply and hydrogen.

Got to get the willy waving in early.

[Harley]

On 16/10/2021 at 15:12, JMD said:

Really would like to see a worked example Harley. Some of your deep-dive commentary would also be good, if you were able to share... You see at present I am buying divi payers, energy etc, and am hoping this will allow me to extract the 'classic 4%' from my sipp whilst also allowing the capitol to grow slightly over time. Tbh it looks (far too?) easy to achieve this at the moment, and I'm sure next cycle will throw up a whole new set of investment type problems to contend with. So for example, any insights into reducing risk for buy/hold type stocks, etc, would be great to hear more about. As you say, the 'rule of thumb' type information provided on web sites, etc, are not that relevant for most people.

On 16/10/2021 at 10:53, Festival said:

Thank-you Harley. Would be interested in the worked example if and when you have time

Working me rocks off atm with a million things to do before the rainy weather sets in and me knee's crapped out.  But I will give it a go this coming week as I need to brush up on things.  Dear person I know is on his last few days.  Makes you think or at least validate what you're doing.

[Loki]

9 minutes ago, Cattle Prod said:

Note that China will be sending hard won dollars back to the US for this...when are they going to break out the gold?!

Will they need to yet do you think? I'd assumed it was to give the dollar its final kicking at the end of this cycle

[JREWING]

2 hours ago, Democorruptcy said:

That's the sort of post that makes me think I might as well go 'all in', instead of bugger about thinking about divis etc. The state will look after me? Of course it could just be because I've always been a gambler and can't kick the habit.

What do you mean All In Dem. Your cash stash all in equities? Miner's look cheap on the edge of a tear up?

[JREWING]

21 hours ago, DurhamBorn said:

https://www.nature.com/articles/d41586-021-02789-9?fbclid=IwAR0C7rurCyOVkFjBZrQbPZkoxAXNezP4pdmCRKIc2rKaKQim6-W6JMfHD5M

Think BAT will be just fine,im sure after 12,000 years ending up the biggest, a cash flow yield of around 8 is a tad low.

Where do you see BATS DB? Seems cheap ATM.

I read you're post late last night but you edited it out.

£250k an achievable amount in a SIPP to retire at 55. But to achieve more comfort you mentioned £320k to £380k I think. Are these your target's.

Quite a realistic amount considering the uplifts we've seen in the Oilers and are going to see in the PM miners. I even see Tabaco much high. Telcos seem to be drifting down. BT and Vod is it a debt thing or with BT no div?

[Hancock]

Who was the bloke on this website that is obviously hung like a donkey, and said interest rates would rise in November?

https://www.telegraph.co.uk/business/2021/10/17/governor-bank-england-signals-interest-rate-rise-could-come/

Andrew Bailey has given his clearest hint yet that the Bank of England is about to raise interest rates in an attempt to combat a jump in inflation.

The BoE Governor suggested yesterday that Threadneedle Street is preparing to lift rates from their current all-time low of 0.1pc, with speculation it could act as soon as next month.

It comes as officials race to dampen down inflation, which is currently running at 3pc and is expected to climb further over the winter months as energy prices spike and supply chains buckle under the weight of chronic shortages.

Speaking in an online panel, Mr ­Bailey said: “Monetary policy cannot solve supply-side problems – but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations. 

And that’s why we at the Bank of England have signalled, and this is another such signal, that we will have to act. But of course, that action comes in our monetary policy meetings.”

The Bank’s Monetary Policy Committee will next announce a decision about rates on Nov 4. 

Markets believe a rate increase to 0.25pc is increasingly likely after concerns were raised by several policymakers about inflation in the past few weeks. Such a move would lead to an immediate increase in costs for nearly 2m households with variable mortgages.

[AWW]

9 hours ago, Hancock said:

No matter what a person does, if a company wants them to stay overnight then they pay, it most certainly doesn't come out of the workers wages. Fact i'm travelling for 6 hours on my own time pisses me off!

When I was contracting, I always charged for travel time. Even better, most places weren't set up for hourly billing; half a day was the least I could bill. For an hour on a train.

I'm a permie now, but still only travel during the daytime. Colleagues are happy to get a 6am flight in order to fit in a full working day when they arrive where they're going. Fuck that.

[Hancock]

10 minutes ago, AWW said:

When I was contracting, I always charged for travel time. Even better, most places weren't set up for hourly billing; half a day was the least I could bill. For an hour on a train.

I'm a permie now, but still only travel during the daytime. Colleagues are happy to get a 6am flight in order to fit in a full working day when they arrive where they're going. Fuck that.

The return journey will be on their time, its an easy job so i thought best to let this one go. If there is a next time it'll be for my day rate and on their travel time!

[Bobthebuilder]

5 hours ago, Harley said:

Dear person I know is on his last few days.  Makes you think or at least validate what you're doing.

Mate of mine is lying up in a hospice with a bad ticker at the mo, its all a bit shit.

[wherebee]

21 minutes ago, Bobthebuilder said:

Mate of mine is lying up in a hospice with a bad ticker at the mo, its all a bit shit.

double jabbed?

[Barnsey]

 

[StrugglingMillennial]

I just saw this on the daily mail and it made me chuckle https://www.thisismoney.co.uk/money/investing/article-10073599/Buying-shares-buy-let-Portfolio-app-good-investment.html

Anything to try and keep the can rolling, although it may be an indicator that we are getting close to a 2008 moment with property when silly things like this start to get into the main stream.

[MrXxxx]

12 hours ago, Cattle Prod said:

He also said rule in financial represssion was get your money out of the country. Not easy with a SIPP or ISA, but let's see how they do it first. Probably a percentage of mutual funds first up

Probably a bit of a naive statement but if the funds are not inside a SIPP or ISA and are in stocks rather than the bank, are they not outside the country/claws of the government?

[MrXxxx]

12 hours ago, Chewing Grass said:

Got to get the willy waving in early.

The problem with most UK governments though is they suffer from chronic erectile disfunction!