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

[TMM]

On TOS someone said they thought we were all being encouraged to take out long fixes, with early redemption penalties, so that once we were all fixed, the government/banks could take rates negative. 

[SpectrumFX]

4 minutes ago, TMM said:

On TOS someone said they thought we were all being encouraged to take out long fixes, with early redemption penalties, so that once we were all fixed, the government/banks could take rates negative

We couldn't take rates negative unilaterally. We'd have to be following the Americans. Otherwise we'd all be taking wheelbarrows of cash down to Tesco's to buy a loaf of bread in short order.

[Axeman123]

11 minutes ago, TMM said:

On TOS someone said they thought we were all being encouraged to take out long fixes, with early redemption penalties, so that once we were all fixed, the government/banks could take rates negative. 

Isn't it all estate agents on there now?

[Chewing Grass]

40 minutes ago, MrXxxx said:

https://www.msn.com/en-gb/money/other/homeowners-urged-to-check-their-mortgage-terms-to-avoid-potentially-devastating-worst-case-interest-rate-rise-of-35percent-in-2023/ar-AAQ7pBB?li=BBoPWjQ

OK, although the 'Daily Mail' article is slightly alarmist, the writing is now 'on the wall' for all to see, and any overextended 'home owner' that fails to address the issue now has nobody to blame but themselves, as the government will not [hopefully!] be bailing them out this time with some ridiculous scheme.

This would potentially see mortgage repayments rise by a quarter.

If you can't afford the payments to rise by 1/4 you shouldn't be in the house, especially if you can't 'afford' that on two wages.

In fact you shouldn't have been given the mortgage in the first place if that is the case.

[AWW]

14 minutes ago, TMM said:

On TOS someone said they thought we were all being encouraged to take out long fixes, with early redemption penalties, so that once we were all fixed, the government/banks could take rates negative. 

IMHO rates can't be taken negative by retail banks. While many people don't realise that getting 0.1% on their deposits is a several % loss each year vs inflation, if they saw their balance actually shrinking in their account, they'd take the money out straight away. There would be runs on every bank with retail depositors.

[Axeman123]

6 minutes ago, Chewing Grass said:

This would potentially see mortgage repayments rise by a quarter.

If you can't afford the payments to rise by 1/4 you shouldn't be in the house, especially if you can't 'afford' that on two wages.

In fact you shouldn't have been given the mortgage in the first place if that is the case.

Plenty of stuff online about cutting regular outgoings to prepare for a mortgage application, and then returning to max spending once you are in. Hence the phenomena of FTBs suddenly getting a PCP Audi after a month or two in the property. Any money left each month after essentials is fair game for most people it seems.

[Erewhon888]

2 hours ago, Chewing Grass said:

You have to keep your eye on the enemy all the time, I believe it is called 'intelligence'.

Indeed, but the discriminating Dosbodders can outsource simple collection. In intelligence work we were always taught to focus on "aggregation and inferencing". The purpose was to attain "actionable intelligence" which followed the inferencing made on the aggregated raw intercepts. Put more crudely, there are plenty of Internet points already doing basic monitoring of the outpourings from the "presstitutes" to use Paul Craig Roberts preferred term for the propagandists.

[Animal Spirits]

@DurhamBorn What's your current assessment on the probability of the OBR's alternative bank rate scenario occuring?

https://obr.uk/download/economic-and-fiscal-outlook-october-2021/

 

 

[King Penda]

19 hours ago, stoobs said:

In theory, 100% IHT over a certain threshold would be the ultimate fix for our broken system. Make as much money as you want during your life but you can’t take it with you and you can’t pass it down indefinitely to future generations. It would wipe out thousand year old distortions in a generation, and prevent the offspring of the current lucky winners from dominating the next thousand years. The poorest children would be several hundred thousand pounds behind the richest, rather than several billion. That kind of a gap can be overcome during a lifetime using wit and graft. Everyone has a fighting chance.

In reality, it would never be allowed to happen, globally, all at the same time. The rules would be applied, equally and fairly to all those below the 0.1% ensuring those multi-century empires continued and no upstarts could ever make up the ground to join them.

I could name you 3/4 of the richest people in this country and they would all be local to me there wealth was self made

[King Penda]

13 hours ago, MrXxxx said:

https://www.msn.com/en-gb/money/other/homeowners-urged-to-check-their-mortgage-terms-to-avoid-potentially-devastating-worst-case-interest-rate-rise-of-35percent-in-2023/ar-AAQ7pBB?li=BBoPWjQ

OK, although the 'Daily Mail' article is slightly alarmist, the writing is now 'on the wall' for all to see, and any overextended 'home owner' that fails to address the issue now has nobody to blame but themselves, as the government will not [hopefully!] be bailing them out this time with some ridiculous scheme.

Get ready for much gnashing of teeth from people that have never seen interest rates go up 

[MrXxxx]

On 30/10/2021 at 10:07, Majorpain said:

Was just having a conversation with someone who recommended Tesla back in 2018, i said it wasn't for me and its gone up 10x since which he has been winding me up about!  

However, by owning a chunk of oil/miners myself i know that it doesn't matter who the biggest car manufacturer in the world is, they will be using some of my fuel to power it and my minerals to build it.  It can't be too far off the time when financial reality reimposes itself and quaint things like "supply and demand" and "resource depletion" take precedence over "speculative hype", "FOMO" and "futures manipulation".

And your commodities are broad market I.e oil can be used not only as a fuel but as a base for plastics, whereas a Tesla EV is only a vehicle so is a narrow market.

[MrXxxx]

On 30/10/2021 at 10:12, Errol said:

This really isn't true - or at least, it's only true if you buy rubbish equipment.

A top, very top of the line custom built gaming PC was about £2500 10 years ago. Now if you go to buy a similar top of the line custom built machine it is £3500. Gaming monitors are the same - what cost £300 ten years ago might cost £500-600 now.

I'm sure there are other examples - like televisions. The absolute top of the line TV from 10 years ago has an equivalent that often costs more today.

The deflation only applies to tat and cheap nonsense.

Only partially true. The latest tech always garners a premium, but as it is progressively taken up this premium drops rapidly as the development costs are spread across a greater number of units. In addition, as even newer tech is introduced the current tech becomes `second generation` and so is `tricked down` the product line...it doesn't have to be tat/cheap nonsense, although you can but this as well.

[ThoughtCriminal]

Uh oh........ 

[wherebee]

18 minutes ago, ThoughtCriminal said:

Uh oh........ 

shit.

Unified action with China?  Taiwan attack incoming?

[desertorchid]

2 minutes ago, wherebee said:

shit.

Unified action with China?  Taiwan attack incoming?

or

 

The Queen is dead

[Barnsey]

14 hours ago, Chewing Grass said:

This would potentially see mortgage repayments rise by a quarter.

If you can't afford the payments to rise by 1/4 you shouldn't be in the house, especially if you can't 'afford' that on two wages.

In fact you shouldn't have been given the mortgage in the first place if that is the case.

Having been through the process earlier this year, this ain't 2006 redux, borrowers stress tested for 6-7% rates. Whether their income or spending has remained the same since getting for the mortgage is another matter...

[DurhamBorn]

1 hour ago, Animal Spirits said:

@DurhamBorn What's your current assessment on the probability of the OBR's alternative bank rate scenario occuring?

https://obr.uk/download/economic-and-fiscal-outlook-october-2021/

 

 

My inflation target for the cycle is roughly the same as it was two years ago (cycle start last April) 63% compounded cycle inflation (cycle end fuzzy but 2029/30).There is an outlier rates go double figures late in cycle,but that would need a BK now and more stimulus.

I have two aim from the start of the cycle.Increase assets by 63% AND an income to live off.

My 2nd i am expanding.Get as much from the government,and give them as little as i can.

I got accepted for ESA this week,only £75 a week,but if i can stretch it for 6 months,its 1.5 years council tax.An old guy i worked with 30 years ago told me to go to the quacks every 5 or 6 years for anxiety etc,just chuck the pills in the bin,blag it,then when needed at some point you have a long history of it that you managed well,but its got on top of you.Worked a treat and because Drs dont work now,just get massive salaries i didnt even have to go,just a 5 minute phone call and a sick note provided.

Im going to get my dad to feign something next and claim attendance allowance for him,its none means tested.It will cover his and two other council taxes.

 

 

[DurhamBorn]

Macron dead on the money here,unlike our dozy leaders.Fully admits transition will mean much higher prices.He is also right that it is needed to help force the change.The only missing bit is the fact its oil companies making the massive cash flows who can build renewables at scale with free cash,not debt.Those renewables only companies will be trying to raise finance in a rising rate cycle.They complained BP over paid for the wind rights,missing the point,they can and dont care,the old boys are now on the block and they have massive firepower.

https://www.ft.com/content/8385f5d8-b045-46a7-a822-47a9ba09e219

“What is happening now is ironic, because we are building a system where in the medium and long term fossil energy will cost more and more, that’s what we want [to fight climate change],” he said. “The problem is that industries and households will need to be accompanied in this transition . . . or it won’t be sustainable.”

[Loki]

1 minute ago, DurhamBorn said:

the old boys are now on the block and they have massive firepower.

I love this line 

[Chewing Grass]

1 hour ago, wherebee said:

shit.

Unified action with China?  Taiwan attack incoming?

Just stocked up on my supply of tealights, couldn't get any 8 hour ones at the wholesalers, got a huge bag of 4 hour ones in the knowledge that in reality they are probably 'safer'.

[Errol]

1 hour ago, ThoughtCriminal said:

Uh oh........ 

 

Probably just got sick of trying to help by supplying gas, and in return getting attacked on all sides by US vassal states and idiots. In addition, there is substantial troop movement by Ukraine up to the contact line in Donbass and Russia is already moving its own heavy equipment up in response.

[Loki]

2 hours ago, ThoughtCriminal said:

Uh oh........ 

Reflected here, I have not seen nuke at redline capacity for a long time. Looks like they are trying to get every megawatt they can from nukes.  Wind doing OK today though. 

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

[MrXxxx]

16 hours ago, MrXxxx said:

https://www.msn.com/en-gb/money/other/homeowners-urged-to-check-their-mortgage-terms-to-avoid-potentially-devastating-worst-case-interest-rate-rise-of-35percent-in-2023/ar-AAQ7pBB?li=BBoPWjQ

OK, although the 'Daily Mail' article is slightly alarmist, the writing is now 'on the wall' for all to see, and any overextended 'home owner' that fails to address the issue now has nobody to blame but themselves, as the government will not [hopefully!] be bailing them out this time with some ridiculous scheme.

https://www.msn.com/en-gb/money/homeandproperty/housing-market-crash-expert-predicts-crisis-date-as-interest-rate-rise-expected/ar-AAQ9b3P?ocid=mailsignout&li=AAnZ9Ug

More 'writing on the wall', this time from the Daily Express....will those who have waited for the crash over the last 15-20 years finally be rewarded for their patience in the next 5 years?

[Majorpain]

47 minutes ago, Loki said:

Reflected here, I have not seen nuke at redline capacity for a long time. Looks like they are trying to get every megawatt they can from nukes.  Wind doing OK today though. 

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

They do it every year, they go offline for maintenance/refuelling before winter so they can max them out over the winter months.

[ThoughtCriminal]

Absolutely superb thread for anyone interested in the madness that is Tesla. 

 

My favourite takeaway: 

"Tesla's jumps are in the hundreds. The one-week move in Tesla was equivalent to the combined market cap of the 3 largest UK companies: AstraZeneca, Unilever & Shell." 

 

Madness.