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

[geordie_lurch]

9 hours ago, Bricormortis said:

american inflation figures tomorrow. Markets not happy already.

Yeah there's been a leak that they are very bad as this Tweet indicates Also as Wall Street Silver also says "Just remember, whatever they report … the real number is worse."

 

[DurhamBorn]

Looking at Bojo's speech yesterday 3 things come from it.First,he is finished.2nd BTL is finished outside of big providers and very low leverage owners.3rd the government know there is zero point working and their only answer to tackle that is to take even more off workers and give to other workers to keep them working.The benefits to bricks policy wont work,its a disaster.Banks wont lend on it.Housing benefit is slashed once kids are 18 etc,no single person working full time would get any housing benefit.Mass immigration and bennies are the systemic risks to the UK (they drive the printing) yet Bojo's plan means immigrants on bennies with 5 kids could buy a house from day 1 paid for by workers who cant afford one and inflation on everyone else.

Its incredible to see such lunacy from them,horrific in every way.However it does show they know the system is fucked without massive action.Work doesnt pay and saving doesnt pay.I think Brown was now only our 2nd worst PM.

[wherebee]

11 minutes ago, DurhamBorn said:

Its incredible to see such lunacy from them,horrific in every way.However it does show they know the system is fucked without massive action.Work doesnt pay and saving doesnt pay.I think Brown was now only our 2nd worst PM.

Go home, DB, you're drunk.

[marceau]

58 minutes ago, DurhamBorn said:

Looking at Bojo's speech yesterday 3 things come from it.First,he is finished.2nd BTL is finished outside of big providers and very low leverage owners.3rd the government know there is zero point working and their only answer to tackle that is to take even more off workers and give to other workers to keep them working.The benefits to bricks policy wont work,its a disaster.Banks wont lend on it.Housing benefit is slashed once kids are 18 etc,no single person working full time would get any housing benefit.Mass immigration and bennies are the systemic risks to the UK (they drive the printing) yet Bojo's plan means immigrants on bennies with 5 kids could buy a house from day 1 paid for by workers who cant afford one and inflation on everyone else.

Its incredible to see such lunacy from them,horrific in every way.However it does show they know the system is fucked without massive action.Work doesnt pay and saving doesnt pay.I think Brown was now only our 2nd worst PM.

Just posted on another thread, but I'll repost here. This Lifetime ISA exemption for bennies is insane.

£4000 per year exemption plus a 25% uplift by govt. So sign up for LISA at 18, stick in £4000 each year, get your £128k at 50, plus the govt gives you an extra 32k. 

So a £160k deposit all paid for by the govt and you claim bennies for the whole period while building it up. And that's assuming they don't inflation link the amounts.

I can't believe it. Not even Brown would have come up with something so stupid.

Edit: This effectively raises the capital limits on UC from 16k to 160k PLUS anything that is placed into a SIPP. Why the fuck would anyone work when you can get all of that AND claim bennies to cover all of your living expenses.

[Yadda yadda yadda]

12 minutes ago, DurhamBorn said:

Looking at Bojo's speech yesterday 3 things come from it.First,he is finished.2nd BTL is finished outside of big providers and very low leverage owners.3rd the government know there is zero point working and their only answer to tackle that is to take even more off workers and give to other workers to keep them working.The benefits to bricks policy wont work,its a disaster.Banks wont lend on it.Housing benefit is slashed once kids are 18 etc,no single person working full time would get any housing benefit.Mass immigration and bennies are the systemic risks to the UK (they drive the printing) yet Bojo's plan means immigrants on bennies with 5 kids could buy a house from day 1 paid for by workers who cant afford one and inflation on everyone else.

Its incredible to see such lunacy from them,horrific in every way.However it does show they know the system is fucked without massive action.Work doesnt pay and saving doesnt pay.I think Brown was now only our 2nd worst PM.

Has he really said that "wage restraint is needed to prevent inflation sparking a recession" whilst increasing benefits? I cannot stomach watching him talk. Or any of the others. The working man and woman has been abused by government throughout his leadership. Before that too but he has somehow accelerated the beatings.

Complete collapse of public finances appears to be the only way out because they refuse to take any unpopular action until it is forced upon them. Not just cowardly but stupid. The people they would be unpopular amongst wouldn't vote for them anyway.

[Yadda yadda yadda]

7 minutes ago, marceau said:

Just posted on another thread, but I'll repost here. This Lifetime ISA exemption for bennies is actually insane.

£4000 per year exemption plus a 25% uplift by govt. So sign up for LISA at 18, stick in £4000 each year, get your £128k at 50, plus the govt gives you an extra 32k. 

So a £160k deposit all paid for by the govt and you claim bennies for the whole period while building it up. And that's assuming they don't inflation link the amounts.

I actually can't believe it. Not even Brown would have come up with something so stupid.

Who, except for @King Penda, has £4k per year to save whilst on benefits? Why should working people give those on benefits £4k per year to save up?

It is the most ludicrous policy I've heard of. If I ignore immigration policies. They're so bereft of ideas that it is comical.

[King Penda]

8 minutes ago, Yadda yadda yadda said:

Who, except for @King Penda, has £4k per year to save whilst on benefits? Why should working people give those on benefits £4k per year to save up?

It is the most ludicrous policy I've heard of. If I ignore immigration policies. They're so bereft of ideas that it is comical.

I know of one person other than me that will admit to being able to save either the rest won’t can’t or could but spend for the sakes of it

[Boon]

I know a chap on other forum who probably could save it.

He doesn't because of the savings rules, although he hinted at doing other things to circumvent it (maybe holding cash). Instead he spends his money doing lots of travelling. Admittedly not luxury, staying in hostels/flying Ryanair but seems to go away every month at least.

Do remember him saying that he gets over £1k a month and this is after rent/council tax.

One of those on disability benefits, but not disabled enough to not have a normal life.

[DurhamBorn]

25 minutes ago, wherebee said:

Go home, DB, you're drunk.

Bojo is worse.Browns policies were insane,but could of been slowly rolled back,and the Tories did start to do it quite well,very well if they had kept their bottle.The policies now are horrific.They are the Tories knowing things needs massive reform,but instead of thinking through it with long term policy instead they come up with things like yesterday.They know if things dont change more and more will end up on benefits,but their answer to it is nuts.

[AlfredTheLittle]

16 minutes ago, Yadda yadda yadda said:

Who, except for @King Penda, has £4k per year to save whilst on benefits?

 

Pretty much anyone with kids. My ex, for example, has to run a big almost new car to make sure she doesn't go over the savings limits. I don't think that's unusual.

[Majorpain]

In completely unexpected news 

Bank of England says top UK banks no longer "too big to fail"

The Bank of England said on Friday it was satisfied that Britain's top banks could be shut down without putting at risk the stability of the financial system or disrupting customers, but it found shortcomings at three major lenders.

https://uk.finance.yahoo.com/news/bank-england-says-top-uk-064150430.html?guccounter=1&guce_referrer=aHR0cHM6Ly9kdWNrZHVja2dvLmNvbS8&guce_referrer_sig=AQAAAMQIq1_fHlLcN6f0jrcMK_mh4q6yNg96hXX5hhA2p2Z-YAVaePEt55bYsZpL5g5DYdMQdowIN4BeD2Fy-VF6bEZeK4nru9ulfrXm_ANRE9waSW1SPHXGBAFLd1gaRWepgVIpruslaLAD_SQANwQkBYTWAwS3KaqFhcX-QaL6AdLO

 

[JREWING]

27 minutes ago, DurhamBorn said:

Looking at Bojo's speech yesterday 3 things come from it.

First,he is finished.

However it does show they know the system is fucked without massive action.

Work doesnt pay and saving doesnt pay.

I think Brown was now only our 2nd worst PM.

Bozza is simply following orders until his expiry date and then someone else cums in with a bigger jar of lube.
The world’s changed, old rules simply do not apply anymore; you either adapt or spend your life fighting a cause which simply is impossible to beat, its broken beyond repair; awaiting a new world. They have two things, an equipped military/police force and a money printer. 
We are all f00ked. First Covid, then Ukraine, now cost of living crisis, next complete control of your finances. The future looks very bleak.  
Doing the rounds on social media.

[Noallegiance]

4 minutes ago, Majorpain said:

In completely unexpected news 

Bank of England says top UK banks no longer "too big to fail"

The Bank of England said on Friday it was satisfied that Britain's top banks could be shut down without putting at risk the stability of the financial system or disrupting customers, but it found shortcomings at three major lenders.

https://uk.finance.yahoo.com/news/bank-england-says-top-uk-064150430.html?guccounter=1&guce_referrer=aHR0cHM6Ly9kdWNrZHVja2dvLmNvbS8&guce_referrer_sig=AQAAAMQIq1_fHlLcN6f0jrcMK_mh4q6yNg96hXX5hhA2p2Z-YAVaePEt55bYsZpL5g5DYdMQdowIN4BeD2Fy-VF6bEZeK4nru9ulfrXm_ANRE9waSW1SPHXGBAFLd1gaRWepgVIpruslaLAD_SQANwQkBYTWAwS3KaqFhcX-QaL6AdLO

 

Two things spring to mind:

Timing

and

Holy crap

 

They haven't said "They're fine". They've said "Yeah they can go bust. No biggy".

[Joncrete Cungle]

1 minute ago, Majorpain said:

In completely unexpected news 

Bank of England says top UK banks no longer "too big to fail"

The Bank of England said on Friday it was satisfied that Britain's top banks could be shut down without putting at risk the stability of the financial system or disrupting customers, but it found shortcomings at three major lenders.

https://uk.finance.yahoo.com/news/bank-england-says-top-uk-064150430.html?guccounter=1&guce_referrer=aHR0cHM6Ly9kdWNrZHVja2dvLmNvbS8&guce_referrer_sig=AQAAAMQIq1_fHlLcN6f0jrcMK_mh4q6yNg96hXX5hhA2p2Z-YAVaePEt55bYsZpL5g5DYdMQdowIN4BeD2Fy-VF6bEZeK4nru9ulfrXm_ANRE9waSW1SPHXGBAFLd1gaRWepgVIpruslaLAD_SQANwQkBYTWAwS3KaqFhcX-QaL6AdLO

 

I thought a law had been passed forcing banks to separate their retail banking operation from the rest of the business? So in the event of a collapse the retail arm is more likely to survive while the hedgefund side implodes?

https://www.bankofengland.co.uk/prudential-regulation/key-initiatives/ring-fencing

[Democorruptcy]

Do banks still do any loans that don't have the riskiest part backed by taxpayers? What more does the BoE want taxpayers to do?

[DurhamBorn]

22 minutes ago, Yadda yadda yadda said:

Who, except for @King Penda, has £4k per year to save whilst on benefits? Why should working people give those on benefits £4k per year to save up?

It is the most ludicrous policy I've heard of. If I ignore immigration policies. They're so bereft of ideas that it is comical.

Most of the union members i workers with in Red Wall seats voted Tory for 3 reasons.Get Brexit done,stop immigration,sort out and cut bennies.Boris has got the first done in name and done the opposite on the others.They havent a clue why those working people voted for them.They wont next time.They will lose the Red Wall for doing the opposite of why they were elected.Its incredible.They know work doesnt pay and housing is a disaster,but wont do what is needed.Stop all immigration,cut benefits slowly but over a long time.

Only inflation linked income will save people so bennies and retired state workers.The US had a civil war over much less.

[Noallegiance]

The Joker is the Chief Tory Party policy advisor, I reckon:

“Nobody panics when things go “according to plan”. Even if the plan is horrifying.”

[feed]

They still don't believe in an inflation problem.  The great inflation it took three / four years before they even considered inflation and how long before Volcker came along.  

If it rolls over, moves into disinflation for a little while or a recession becomes more obvious they'll claim victory.  It's going to be years before they move on inflation.  They still believe it's print and it (supply) will come.  

[geordie_lurch]

Thread favourite Lyn Alden with another of my favourites Adam with their respective takes on where we are currently and heading

 

[HousePriceMania]

49 minutes ago, Yadda yadda yadda said:

Has he really said that "wage restraint is needed to prevent inflation sparking a recession an interest rate rises and collapse of his house price"

 

[Axeman123]

20 minutes ago, DurhamBorn said:

Bojo is worse.Browns policies were insane,but could of been slowly rolled back,and the Tories did start to do it quite well,very well if they had kept their bottle.The policies now are horrific.They are the Tories knowing things needs massive reform,but instead of thinking through it with long term policy instead they come up with things like yesterday.They know if things dont change more and more will end up on benefits,but their answer to it is nuts.

I would say the opposite. Brown (starting as chancellor) inherited a sound system, and set about sabotaging it. The only reason his early changes could have been rolled back is that they were covertly laying the groundwork for the more extreme stuff to come. Tax credits and PFI created an impossible situation for any future election campaign; promise the impossible in the form of high spending and low taxes or lose. Just as Thatcher made old labour obsolete, New Labour made sure every subsequent government would be Blairite, regardless of party.

The Tories have oscilated between trying to roll it all back, and doubling down when people get upset. The infamous note "there is no money left" would have been the perfect opportunity for a majority conservative government (that never happened of course) to go scorched earth. Every election since where Blairite fantasy has been sold to the public by Tories to get elected makes it that much harder to tell the truth.

Brown wanted all this, post Brown/Blair governments have struggled to untangle the mess while getting elected. The Tories letting Milliband/Corbyn etc have power by telling unpopular truths wouldn't have been any more noble.

The one argument I can see that "Brexit has been a distraction from more important issues" is that we haven't had a non-brexit general election since the one that gave us the coalition. Rolling back Blairism wholesale has never been at the forefront of any debate.

[Democorruptcy]

Oooopppssss a daisy, somebody didn't see inflation and rate rises coming....

Quote

 

Rishi Sunak has been accused of squandering £11bn of taxpayers money by paying too much interest servicing the government’s debt.

Calculations by the National Institute of Economic and Social Research, the oldest non-partisan economic research institute in the UK, show the losses stem from the chancellor’s failure to take out insurance against interest rate rises a year ago on almost £900bn of reserves created by the quantitative easing process.

The loss to taxpayers is greater than the amount Conservatives have accused former Labour chancellor and prime minister Gordon Brown of costing the UK between 2003 and 2010, when he sold some of the nation’s gold reserves at rock bottom prices.

https://12ft.io/proxy?q=https%3A%2F%2Fwww.ft.com%2Fcontent%2F90025f48-858f-40c5-a011-3f285f05e775

 

 

[Castlevania]

1 hour ago, marceau said:

Just posted on another thread, but I'll repost here. This Lifetime ISA exemption for bennies is insane.

£4000 per year exemption plus a 25% uplift by govt. So sign up for LISA at 18, stick in £4000 each year, get your £128k at 50, plus the govt gives you an extra 32k. 

So a £160k deposit all paid for by the govt and you claim bennies for the whole period while building it up. And that's assuming they don't inflation link the amounts.

I can't believe it. Not even Brown would have come up with something so stupid.

Edit: This effectively raises the capital limits on UC from 16k to 160k PLUS anything that is placed into a SIPP. Why the fuck would anyone work when you can get all of that AND claim bennies to cover all of your living expenses.

What if you generate some capital gains? Let’s say you opened one 5 years ago and had now put in £20k; had £5k topped up from government and you’d made a further 100% gains so have £50k. Can you still claim benefits? Asking for a friend obvs.

[Castlevania]

45 minutes ago, Joncrete Cungle said:

I thought a law had been passed forcing banks to separate their retail banking operation from the rest of the business? So in the event of a collapse the retail arm is more likely to survive while the hedgefund side implodes?

https://www.bankofengland.co.uk/prudential-regulation/key-initiatives/ring-fencing

They’re assuming the loan books are all great. I’m not convinced of that.

[marceau]

The way SIPP and (potentially) LISA now interact with UC throws up some 'interesting' possibilites, as both are 100% disregarded.

18 year old could theoretically work a self-employed 35 hour week in a job that pays £44k, not pay a penny of tax, AND get full UC entitlement, if they could afford to live on the UC amounts alone. They could do this for 21 years to accumulated the full LTA for the SIPP at just over the £1 million mark and reduce earnings to £4K for the remaining 11 years to accumulate the full £160k in the LISA.

So at 50 you have the full pension LTA, plus a nice £160k deposit from the govt, with no tax ever paid, and on full UC the whole time. This is for a single person, numbers obviously go up with kids, disabilities etc..

Am I wrong?

Edit: They would need a way around the minimum income floor, which of course for the pro bennies types doesn't seem to be a problem at all.