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

[Sasquatch]

I've converted a bit more of my fiat this week.

 

[Democorruptcy]

42 minutes ago, Cattle Prod said:

Unlike the oil companies, the utilities are captive in the UK. I suspect they are moving this way because someone told them that BP and Shell make very little profit in the UK, and possibly can't steal their worldwide earnings. Oil companies are mobile, utilities are stuck here.

Interesting that DRX, SSE, CNA are all having a terrible day so far but NG is only -1%, I thought they would also be in the naughty corner.

[working woman]

OK, so this is a Distribution cycle, or as someone up thread has just said, a Redistribution cycle, which seems more likely / appropriate. 

The question is, what is the new way that the money is going to flow. How is it going to be redistributed.

I can definately see it going into Green stuff, but what about other things.

Having read the last few pages it seems likely to be taking even more money via taxes and  inflation on everyday living expenses, from the productive workers and giving it to the Benefits class and the Wealthy, the latter the same old. 

Am I missing anything else?

Most working people / employees have wealth in their house, savings/investments and pensions, plus their monthly salary.

As we are in the majority, and an easy target it looks like it is going to be us. The wealthy and businesses influence law making.

I'm quite shocked to DB's post about how much his neighbour gets. I know other Dosbodders are on benefits and have posted what they get.  I got my calculator out and based on working 37.5 hours a week, she is getting more per hour than a single person working full time on minimum wage. That is not right.

To get this straight, I am going to pay higher fuel bills this winter, which will lead to a windfall tax, which will be paid to people receiving more than I and my husband make per hour working. 

My experience of the benefits class in my my family:

I have family members who pleaded poverty and said at one point, all they ate was beans on toast - morbidly obese.  Went to visit and for breakfast, we all had a a huge breakfast, then followed by several digestive biscuits and a cup of tea. 

The fathers never paid a penny towards their kids - that is wrong and needs sorting.

I have family coming over from Australia, one been on OZ benefits for years due to depression. Funnily enough, they come over every year for 2 months in our summer and she manages to drive all over the UK and Europe for miles. I often go away with them for a week or two, never seen her depressed. I love them dearly but................

She has just asked me to help her buy a car for their next trip, research help, not cash.  It was a big fat no from me, I work for a living, they have all the time in the world.   Funnily enough they never tell their friends they come to Europe every year. They all work and I suspect it wouldn't  go down well. This year, they are spending 3 nights in a chateau at 4-500 a night, to indulge their dreams of buying, doing up and living in a chateau.

Meanwhile, I'm now off to work and likely to be a punch bag for my boss who is highly stressed as her assistant has just left. If she starts, I will politely suggest she takes a 5 minute break and go and have a cuppa. Not putting up with that crap.

 

 

 

[M S E Refugee]

36 minutes ago, HousePriceMania said:

I love a bit of gold in the morning

It's like it's rigged.

I dont Sunak would become king, unless the bankers really are deciding who is PM

This arrived this morning, a 1oz 2015 Gold Year of the Sheep.

It has been the Year of the Sheep every year since 2019.

[Democorruptcy]

47 minutes ago, DurhamBorn said:

Take a look at Sterling today,markets showing the government just what happens when they start to launch direct theft.Capital goes somewhere else.This government won a landslide because the people wanted right wing policy,they got the most left wing in our countries history.Incredible stuff.

80 seat majority kaput already and after the election I thought they were good for a long long time. Which voters do the Tories think they appeal to now? Inflation stuffs the poorer end, RPI 11% base rate 1% stuffs savers, now they are taking capital from investors, Brexit hasn't reduced immigration, all they have is making people feel wealthy by being in more debt to service high house prices and mortgage rates going up is going to make them squeal.

[Democorruptcy]

36 minutes ago, Sasquatch said:

I've converted a bit more of my fiat this week.

 

Those look like proper coins, not like those chocolate ones that @HousePriceManiabought in a little string net.

[Chewing Grass]

Speaking of Windfall taxes this was the verdict on 1981.

In 1981 Margaret Thatcher levied a 2.5pc windfall tax on banks who were making vast profits on their loans, after interest rates hit 17pc, while paying out little or nothing in interest to savers. It raised around £400m, or £3bn in today’s money, according to the Institute for Government think tank. 

The government of the day, which was facing record levels of inflation and vast public debt, much like now, also levied a supplementary petroleum duty on oil companies which were seen to be profiting from higher commodity prices. 

History repeating itself, and the government has shit its pants through gorging itself on cheap money which didn't exist in the 1970s.

[JMD]

2 hours ago, WICAO said:

In my previous line of work if you made mistakes you got fired.  If you didn't add value you got fired.  If you didn't delver to plan you got fired.  At least you knew where you stood I guess 

I've never heard of a 'mistaken diagnosis' before but that's just me.  These guys are supposed to be the 'best of the best' given their big salaries, pensions and housing allowances.  As a collective they should know history (because while it doesn't repeat it does seem to rhyme), they should be able to model, they should have macro, they should have micro and they should have a pair of balls to do what is right.  If they have those skills I don't see how you can end up with 'mistaken diagnosis'.

Ahh, but economics is an art not a science, and so it's practitioners cannot really be blamed for expressing their creativity!!                                                                                                                                                        For example, so called 'hedonic (from the Greek word hedonism) price adjustment' is an abomination (probably invented in a 1920s Berlin back alley!!), and yet is used extensively and very creatively to hide inflation. Why on earth use enjoyment/pleasure factors when a purely utilitarian metric would do far better job of measuring price rate increases (rhetoric Q).

[feed]

11 minutes ago, Democorruptcy said:

80 seat majority kaput already and after the election I thought they were good for a long long time. Which voters do the Tories think they appeal to now? Inflation stuffs the poorer end, RPI 11% base rate 1% stuffs savers, now they are taking capital from investors, Brexit hasn't reduced immigration, all they have is making people feel wealthy by being in more debt to service high house prices and mortgage rates going up is going to make them squeal.

Majority is gone sure. But 

 

Which is why they’ll not go (directly) after pensions or property and why we’ll see modest (nominal) increases in property prices.  And of course, they saved all the oldies from covid. 

They’re idiots on the macro, but genius when it comes to getting people to vote against their own self interest.  
 

[Noallegiance]

8 minutes ago, Chewing Grass said:

Speaking of Windfall taxes this was the verdict on 1981.

In 1981 Margaret Thatcher levied a 2.5pc windfall tax on banks who were making vast profits on their loans, after interest rates hit 17pc, while paying out little or nothing in interest to savers. It raised around £400m, or £3bn in today’s money, according to the Institute for Government think tank. 

The government of the day, which was facing record levels of inflation and vast public debt, much like now, also levied a supplementary petroleum duty on oil companies which were seen to be profiting from higher commodity prices. 

History repeating itself, and the government has shit its pants through gorging itself on cheap money which didn't exist in the 1970s.

And they stayed in power for another 16 years.

[M S E Refugee]

100 Roubles=$1.75

 

[Chewing Grass]

8 minutes ago, Noallegiance said:

And they stayed in power for another 16 years.

They had Nationalised Industries to flog off and were awash with oil, we haven't, its gone.

[Yadda yadda yadda]

1 hour ago, Cattle Prod said:

Unlike the oil companies, the utilities are captive in the UK. I suspect they are moving this way because someone told them that BP and Shell make very little profit in the UK, and possibly can't steal their worldwide earnings. Oil companies are mobile, utilities are stuck here.

A tax on electricity generation will hit BP and Shell to an extent through their renewables. Going after electricity screws their energy transition agenda. The government is like a drunk that gets barred from one pub after the other until they're reduced to meths. Be better for all if they just got on with it and knocked back the Kool aid.

[DurhamBorn]

33 minutes ago, working woman said:

OK, so this is a Distribution cycle, or as someone up thread has just said, a Redistribution cycle, which seems more likely / appropriate. 

The question is, what is the new way that the money is going to flow. How is it going to be redistributed.

I can definately see it going into Green stuff, but what about other things.

Having read the last few pages it seems likely to be taking even more money via taxes and  inflation on everyday living expenses, from the productive workers and giving it to the Benefits class and the Wealthy, the latter the same old. 

Am I missing anything else?

Most working people / employees have wealth in their house, savings/investments and pensions, plus their monthly salary.

As we are in the majority, and an easy target it looks like it is going to be us. The wealthy and businesses influence law making.

I'm quite shocked to DB's post about how much his neighbour gets. I know other Dosbodders are on benefits and have posted what they get.  I got my calculator out and based on working 37.5 hours a week, she is getting more per hour than a single person working full time on minimum wage. That is not right.

To get this straight, I am going to pay higher fuel bills this winter, which will lead to a windfall tax, which will be paid to people receiving more than I and my husband make per hour working. 

My experience of the benefits class in my my family:

I have family members who pleaded poverty and said at one point, all they ate was beans on toast - morbidly obese.  Went to visit and for breakfast, we all had a a huge breakfast, then followed by several digestive biscuits and a cup of tea. 

The fathers never paid a penny towards their kids - that is wrong and needs sorting.

I have family coming over from Australia, one been on OZ benefits for years due to depression. Funnily enough, they come over every year for 2 months in our summer and she manages to drive all over the UK and Europe for miles. I often go away with them for a week or two, never seen her depressed. I love them dearly but................

She has just asked me to help her buy a car for their next trip, research help, not cash.  It was a big fat no from me, I work for a living, they have all the time in the world.   Funnily enough they never tell their friends they come to Europe every year. They all work and I suspect it wouldn't  go down well. This year, they are spending 3 nights in a chateau at 4-500 a night, to indulge their dreams of buying, doing up and living in a chateau.

Meanwhile, I'm now off to work and likely to be a punch bag for my boss who is highly stressed as her assistant has just left. If she starts, I will politely suggest she takes a 5 minute break and go and have a cuppa. Not putting up with that crap.

 

Just want to clarify its NOT a re-distribution cycle,its a distribution one.Capital is being consumed.It doesnt matter how the pie is taxed and distributed,thats a different thing.The key take is the government is trying to stop the people living off the state,bennies plus state workers who are retired from losing any spending power.To do that means those working or investing in the economy have to lose their spending power AND lose more for the half the government has decided cant lose any.In doing so companies and workers cut investment etc and start to jump sides,worker to bennie claim etc.

The macro of it is distribution.The re-distribution side is cross market work in that its an affect of the cycle.

I would add i see the above as the biggest policy error from a UK government since Suez.Its cranked up the systemic risk.There is a good chance lots of people lose most of their saved labour.They gave peoples taxed labour to freeloaders,now that isnt enough so they are going after the saved labour as well.

[Chewing Grass]

10 minutes ago, Chewing Grass said:

They had Nationalised Industries to flog off and were awash with oil, we haven't, its gone.

Which reminds me I wonder how Sid's portfolio is doing.

Rest of the adverts are quite nostalgic as well.

[One percent]

5 hours ago, Cattle Prod said:

Trial balloon for systemic collapse, @DurhamBorn. Seems like elements of the govt just want to watch it burn.

https://www.telegraph.co.uk/politics/2022/05/23/windfall-tax-could-help-pay-poorest-five-million-get-increase/

The problem is the way in which they define “the poorest”. Hint, it’s no longer those on bennies but the poor saps without children in low paid jobs. They will find themselves on the end of yet another tax hike to pay for this largesse 

[RJT1979]

18 minutes ago, M S E Refugee said:

100 Roubles=$1.75

 

Was it possible to trade this as a UK citizen? Spreadbets? Or would you have needed Russian account? Would you now be able to transfer back to UK bank account to profit? I wanted to buy at 140 but didn't know how to

[HousePriceMania]

35 minutes ago, Chewing Grass said:

Speaking of Windfall taxes this was the verdict on 1981.

In 1981 Margaret Thatcher levied a 2.5pc windfall tax on banks who were making vast profits on their loans, after interest rates hit 17pc, while paying out little or nothing in interest to savers. It raised around £400m, or £3bn in today’s money, according to the Institute for Government think tank. 

The government of the day, which was facing record levels of inflation and vast public debt, much like now, also levied a supplementary petroleum duty on oil companies which were seen to be profiting from higher commodity prices. 

History repeating itself, and the government has shit its pants through gorging itself on cheap money which didn't exist in the 1970s.

That cheap money is going to be very expensive in the end.

[geordie_lurch]

When viewed through the following WEF lens it all makes much more sense. I fear even the smartest ones on this thread simply won't be allowed to profit from the coming distribution cycle as even if we get the right shares, dividends will be cut to pay for such 'windfall taxes' and other shite.

As George Carlin said many years ago - "It's a big club and you ain't in it"

[HousePriceMania]

 

[Bricormortis]

1 hour ago, Axeman123 said:

DXY dipping below 102 now, down from ~105. Shortly after the media were all aboard the "dollar to infinty" train. US 10yr now just above 2.8%, again just after the media were calling for it to go ever higher. There is definitely something to contrarianism.

It could hit 115 plus yet, prior to a drop.

[Chewing Grass]

2 minutes ago, HousePriceMania said:

 

I think that everyone is eating into their float one way or another but a lot of people still think 'there are blue skies just around the corner'.

[Loki]

31 minutes ago, DurhamBorn said:

Just want to clarify its NOT a re-distribution cycle,its a distribution one.

Yes sorry that was me making a communism joke 

[JohnnyB]

Energy bills +£1k coming in October wow

[Yadda yadda yadda]

26 minutes ago, Chewing Grass said:

I think that everyone is eating into their float one way or another but a lot of people still think 'there are blue skies just around the corner'.

A lot are in some way or another. Some are just saving less, some have stopped paying bills. Others are spending less - probably the worst for the economy as retailers, pubs and restaurants will shut.