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

[Lightscribe]

7 minutes ago, feed said:

indeed.  It surprises me that after all of the data we have, people still think house prices are anything other than the availability of credit.  

Not only that but they think supply/demand is driven by mass migration even though they will never afford to buy houses. It was just the availability of cheap credit all along. Mass migration is a boon for ever increasing wealth divide between the haves and have nots in a disinflation cycle.

Ultimately when that turns into an inflationary cycle, it’s destructive as the money has flowed to the top of the pyramid whilst the support at the bottom has been eroded away.

Norway goes some way into understanding this with its sovereign wealth fund which is now worth $1.3 trillion. With a 5.4 million population that’s enough for $244k per man, woman and child.

[DurhamBorn]

2 hours ago, JohnnyB said:

Also the only attraction for a good chunk of the population NOT to go on the tax credit/housing benefit part time route is that you don't build up any housing equity so end up a bit screwed later on when the bennies disappear but still full rent. Hard work to do full time hours but worth it to whittle down mortgage.

On lower wages this was previously still just barely achievable before (not in hellhole London though) however the gigabubble housing price rises since Covid and the QE 15% inflation kicking in means this option is falling out of reach for millions. And then you really are better lowering hours and -maxxing.

Exactly.Thatcher knew this.The key thing to improve the economy,make the family more resilient,improve life chances for children etc was for a working person of any wage to pay down a mortgage and own outright by mid 50s at the latest.That then meant (in todays money) a £150 a week pension on top of the state pension was a secure position.Most could easily hit that with even low rates saved into pensions.If people wanted to retire early they saved more,over paid the mortgage.

The hugely generous benefit system on housing and mass immigration who can access that has changed everything.Now workers on even bigger salaries really struggle to buy,and when they do its much later pushing back the age when they can retire,or work less.The other half who dont work ensure they have an easy time when they are young and fit,but will find they are on £77 a week at 45 to 50 once the kids go over 19 and then will be working on NMW mostly paying full rent.

Bennies and mass immigration have been a disaster for ordinary UK people.Once they understood this they voted in the Tories so they would turn that around,but instead they have just added to the problem.Its a sad state of affairs when young workers need a huge collapse that will see massive violence in cities just to be able to have a decent home and build capital.

[Dogtania]

11 hours ago, Sasquatch said:

I've been selling some of my records this past month. Directly to a dealer that I know. He's seeing decent trade in his shop  at the moment but I'm not convinced it will continue for too much longer....

I visited an hmv and fopp shop at the weekend.  First time in years and was shocked by the vinyl prices. Seemed to be almost £30 for a 'bog standard' album.  Maybe I've just not kept track or the cost of producing compared with say CDs is being reflected.

I did know a lot of older vinyl had been growing in value for a while.  For someone with the space and enjoys music there must be worse bets, granted not sure I'd like the idea of starting a collection at such prices.... Though not sure I'd be inclined to sell either.  Poor man's art market an analogue?

Lego not so sure.  More one dimensional and imo even if a great toy it's still plastic tat at the end of the day.  Saying that I was in a lego shop recently and was tempted by the statue of liberty, was 'only' £40 odd but liked the look of (as an ornament not investment).

[Dogtania]

25 minutes ago, DurhamBorn said:

Exactly.Thatcher knew this.The key thing to improve the economy,make the family more resilient,improve life chances for children etc was for a working person of any wage to pay down a mortgage and own outright by mid 50s at the latest.That then meant (in todays money) a £150 a week pension on top of the state pension was a secure position.Most could easily hit that with even low rates saved into pensions.If people wanted to retire early they saved more,over paid the mortgage.

The hugely generous benefit system on housing and mass immigration who can access that has changed everything.Now workers on even bigger salaries really struggle to buy,and when they do its much later pushing back the age when they can retire,or work less.The other half who dont work ensure they have an easy time when they are young and fit,but will find they are on £77 a week at 45 to 50 once the kids go over 19 and then will be working on NMW mostly paying full rent.

Bennies and mass immigration have been a disaster for ordinary UK people.Once they understood this they voted in the Tories so they would turn that around,but instead they have just added to the problem.Its a sad state of affairs when young workers need a huge collapse that will see massive violence in cities just to be able to have a decent home and build capital.

Not arguing on the points and the whole right to buy did really help some that's for sure.  I have had previous collegues that become lifelong Tory just because they got a foot up with right to buy etc.  Some could be a bit bitter here and say another boomer perk.  Seemed to make a difference at the time and certainly helped many but from my perspective I just see a few more rich older guys that got a free payout at the expense of younger generation.  

Was it not a one time thing, benefiting just that generation only?

[Axeman123]

2 hours ago, jamtomorrow said:

Edit to add: from Ripple's perspective, a UK base of ops might be somewhat preferable to El Salvador if they can get close enough on the regulatory side, with it being a bit less murdery - for now

The big prize from Ripple's point of view would likely be a white-listed fiat on-ramp and access to above board banking. Freezing out all competitors would also be a big coup for them no doubt.

While things have likely moved on, here is an example of Tether's fairly recent arrangements:

https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/

Short version: Bank Fraud/Money laundering missrepresenting retail fiat deposits as real estate transactions using shell corporations, Buying a stake in a bank to get around compliance, resulting hundreds of millionsof dollars frozen by regulators.

(That link is excellent btw, highly recommended reading)

[Sasquatch]

Good morning all.

Some nice bits of silver have been added to my collection.

The only form of dollar I currently trust...

 

[DurhamBorn]

2 hours ago, Lightscribe said:

Pension credit. Gov pays the rent as well as bennies to the equivalent for anyone who hasn’t got their stamps or savings threshold.

They do,but its the gap from say 45 to 67 without the big bennies.They changed the rules on Pension Credit for couples as well,you only get it when both sides of the couple are state pension age,not just when the first one is as it used to be.So if someone is 67 and partner is 63 no Pension credit until he is 71 and shes 67.UC instead,but state pension is higher than couples UC,so nothing,they would have to live off one state pension.

I told Blairs agent at the time at a council vote count that Browns tax credits etc would be a disaster long term for the working class,he said it was short term until wages increased,like a tax cut.Brown hoodwinked Blair on them.

[TNS]

Dare I mention Gazprom and has any A/GDR holder here looked into the Gazprombank transfer option (new shares, type C account) ?

Also, is GAZ.DE an GDR ? Trying to find info is a royal PITA!

[DurhamBorn]

22 minutes ago, Dogtania said:

Not arguing on the points and the whole right to buy did really help some that's for sure.  I have had previous collegues that become lifelong Tory just because they got a foot up with right to buy etc.  Some could be a bit bitter here and say another boomer perk.  Seemed to make a difference at the time and certainly helped many but from my perspective I just see a few more rich older guys that got a free payout at the expense of younger generation.  

Was it not a one time thing, benefiting just that generation only?

RTB was a fantastic policy.Most who bought had paid full rent for decades.However at the time BTL wasnt a thing in most places so nobody expected them to be bought up.I remember our local council estates,after RTB and they started to look much nicer as people took pride in their homes once bought.House prices were very stable after it.The discounts were too generous yes,but it wasnt RTB that caused the housing problem.It actually freed up more houses for FTBs because lots who bought sold and bought a new house,it kicked off more house building,and early 90s housing was still decent.

[JMD]

4 hours ago, Plan-b said:

There is only one solution:

 

Hmm, Is that Kiev?

[Sasquatch]

57 minutes ago, Dogtania said:

I visited an hmv and fopp shop at the weekend.  First time in years and was shocked by the vinyl prices. Seemed to be almost £30 for a 'bog standard' album.  Maybe I've just not kept track or the cost of producing compared with say CDs is being reflected.

I did know a lot of older vinyl had been growing in value for a while.  For someone with the space and enjoys music there must be worse bets, granted not sure I'd like the idea of starting a collection at such prices.... Though not sure I'd be inclined to sell either.  Poor man's art market an analogue?

Lego not so sure.  More one dimensional and imo even if a great toy it's still plastic tat at the end of the day.  Saying that I was in a lego shop recently and was tempted by the statue of liberty, was 'only' £40 odd but liked the look of (as an ornament not investment).

It's crazy out there at the moment. I've just sold 23 records for £500. The dealer will sell them on for double this. Nothing particularly exciting as well. I've got loads of duplicates and reckon now's the time to cash in. 

[RJT1979]

4 minutes ago, Sasquatch said:

It's crazy out there at the moment. I've just sold 23 records for £500. The dealer will sell them on for double this. Nothing particularly exciting as well. I've got loads of duplicates and reckon now's the time to cash in. 

What ones? I have hundreds of trance vinyl from 99 to 03. Don't think worth more than 3 quid each though. I did look

[Pip321]

1 hour ago, feed said:

indeed.  It surprises me that after all of the data we have, people still think house prices are anything other than the availability of credit.  

 

1 hour ago, Lightscribe said:

Not only that but they think supply/demand is driven by mass migration even though they will never afford to buy houses. It was just the availability of cheap credit all along. Mass migration is a boon for ever increasing wealth divide between the haves and have nots in a disinflation cycle.

Ultimately when that turns into an inflationary cycle, it’s destructive as the money has flowed to the top of the pyramid whilst the support at the bottom has been eroded away.

Norway goes some way into understanding this with its sovereign wealth fund which is now worth $1.3 trillion. With a 5.4 million population that’s enough for $244k per man, woman and child.

I think it’s fair to say there is always demand for housing….well, most housing. I bought in 1986, sold in 1989 to rented and bought in 1991….when we bought both times I would have sold my right arm for the house. And even during those early 90’s when prices plummeted there was still demand.

So now what we need to talk about is price….I paid whatever I could. Indeed in 1991 my employer let me borrow an unheard of 8x income (albeit with some huge pay awards pending) just to get what we wanted.

However, if I couldn’t borrow that I would have still done everything to buy but the price changes. If no one can borrow, or rates aren’t at a 3000 year low, then prices fall.

So for me supply and demand are relevant (ie houses in some parts of Teesside are £25k) but the overriding factor for the price achieved has been ability to borrow and price of borrowing. 

If tomorrow for some reason we decided to outlaw all new mortgages….transactions would fall but for those who need to sell those prices would fall.

[CannonFodder]

Cant decide if this is watch what they do not what they say or generally clownworld incompetence 

 

 

[Dogtania]

29 minutes ago, RJT1979 said:

What ones? I have hundreds of trance vinyl from 99 to 03. Don't think worth more than 3 quid each though. I did look

This is going back a couple of years but I doubt it's changed.  The old electronic stuff didn't seem to be worth a dot bar maybe something iconic.  Probably just more niche than anything but saying that I couldn't believe the prices that 80's funk or disco stuff was being priced at.... Though the electronic stuff kind of generic and a lot produced (as much as I like some of it).  Or maybe time to get rid of the Jimi Hendrix's and buy the £3 trance hits (or techno!)

[Sasquatch]

47 minutes ago, RJT1979 said:

What ones? I have hundreds of trance vinyl from 99 to 03. Don't think worth more than 3 quid each though. I did look

Lots of 1970's rock. Couple of late 70's Black Sabbath. Strawbs x 2. Quintessence x 2. A rare Van Morrison one (Hymns of the Silence). A scratched copy of Electric Ladyland. Also some 60's folk and a couple of jazz records. 

Don't know anything about trance. Sorry! I think it's a bit niche for dealers.

[BWW]

On 01/06/2022 at 09:37, Lightscribe said:

Not only that but they think supply/demand is driven by mass migration even though they will never afford to buy houses. It was just the availability of cheap credit all along. Mass migration is a boon for ever increasing wealth divide between the haves and have nots in a disinflation cycle.

But a LL buys the house and sap taxpayer [you] pay the rent. What's the difference. Still a demand increase.

[BWW]

On 01/06/2022 at 11:17, CannonFodder said:

Cant decide if this is watch what they do not what they say or generally clownworld incompetence 

 

 

I haven't checked the figures but my impression is that Russia gets about the same as it did a year ago for exports. NG now priced 3-5-10x last years m3 price and still taps fully open to Germany. The only difference in cash terms for Russia is they get to keep all the oil [to sell later] as well as get just as much cash.

Of course they also had to be "awkward" and insist on payments in real money not stuff we can freeze [big deal, they comprehensively won that].

The only effect they will see is their consumers can't buy our goods on the streets of Moscow. The rich are mostly not sanctioned and can just fly to Paris and Milan for shopping.

In addition our pension funds have sold gold mines, oil reserves and steel manufacturing at 10% of real value to rich Russians because hey we don't want to advantage the Ryussians.

It really is clownworld. I see win-win-win-win but all [financial] wins  for Russia and rich Russsians.

Of course meanwhile young men on both sides and the elderly and immobile in Ukraine are losing their lives as we egg them on. So far conscripts on the Russian side only AIUI.

The only thing that's for sure is that our media are utter shite for not reporting this.

[Lightly Toasted]

2 hours ago, Lightscribe said:

Not only that but they think supply/demand is driven by mass migration even though they will never afford to buy houses. It was just the availability of cheap credit all along. Mass migration is a boon for ever increasing wealth divide between the haves and have nots in a disinflation cycle.

Mass migration also drives the above: the state taxes/borrows to fund the required housing. State borrowing used in this way is an obvious credit pump, but taxing has a similar effect too (particularly when the tax-take is based on GDP that is also highly credit driven).

It would be fascinating to discover the ratio of private vs state pumping into the housing market.

1 hour ago, DurhamBorn said:

RTB was a fantastic policy.Most who bought had paid full rent for decades.

They'd paid rent and received the contracted good/service. End of story -- or should be.

Okay, the council was probably crap at maintaining its properties but then the rents were subsidised too and people knew what they were signing up for. There was no moral case for Magic Margaret to wave her wand and sprinkle homeownership over council renters.

There was a political case, however...

As much as I admire[d] Thatcher, this was one of her "feet of clay" moments for me.

[WICAO]

17 hours ago, Stuey said:

By September I think people will be limiting their spend to food, energy, petrol for commuting, and the all-important booze. 

Won't they be making both of those themselves from basic ingredients to save a wedge.

[WICAO]

17 hours ago, Lightscribe said:

It’s a bog. 

I'm fairly new to this place but I still have no idea what bogged actually means...

[Lightscribe]

8 minutes ago, WICAO said:

I'm fairly new to this place but I still have no idea what bogged actually means...

<Takes deep breath> well… it’s best explained in this video.

 

[WICAO]

5 minutes ago, Lightscribe said:

<Takes deep breath> well… it’s best explained in this video.

 

Nope, still no idea.

[Colliedog1]

18 minutes ago, Lightly Toasted said:

Mass migration also drives the above: the state taxes/borrows to fund the required housing. State borrowing used in this way is an obvious credit pump, but taxing has a similar effect too (particularly when the tax-take is based on GDP that is also highly credit driven).

It would be fascinating to discover the ratio of private vs state pumping into the housing market.

They'd paid rent and received the contracted good/service. End of story -- or should be.

Okay, the council was probably crap at maintaining its properties but then the rents were subsidised too and people knew what they were signing up for. There was no moral case for Magic Margaret to wave her wand and sprinkle homeownership over council renters.

There was a political case, however...

As much as I admire[d] Thatcher, this was one of her "feet of clay" moments for me.

My parents took advantage of rtb but they did not agree with it, Thatcher never got their votes. Unlike the majority my parents never moved, a member of the family stills lives in it. The council did sell houses before rtb   as my parents tried to buy. The council wouldn't sell as they were 4 bed family homes. 

[WICAO]

And now my post about bogged is getting bogged 

I give up.  It's time to get back focused on investing...