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

[Bricormortis]

1 hour ago, ThoughtCriminal said:

You really can't go wrong with a Kia. My mother has had her Kia Soul for 9 years and literally not one problem. I know loads of people with Sorrentos and they're the same, nothing but good things to say. 

 

Hybrids are very much a mixed bag. Some are genuinely clever and worth the money: range rover getting almost 50mpg out of theirs is nothing short of miraculous, but for the most part they're just hype.

 

What about a Kia Sportage? 55 mpg if you go front wheel drive version.

 

https://www.copart.co.uk/lot/46260242/clean-title-2020-kia-sportage-2-sandwich

Mechanic told me Kia / Hyundai ( same thing more or less ) is the car he expects to repair least.

[feed]

1 hour ago, AWW said:

I don't think property values bear any relation to rental values. Flats in London/SE yield 2-3%.

Plenty of other government interventions have pushed up prices, but HB isn't one of them.

IMHO of course.

Agree.  I fail to see how HB has pushed up property prices, when the real house price growth happened before 2007.  Adjusted for inflation property went nowhere until we got the insane printing during COVID.  

There are obvious local market variances, foreign money driving the London market for instance.  

[Lightscribe]

26 minutes ago, feed said:

Agree.  I fail to see how HB has pushed up property prices, when the real house price growth happened before 2007.  Adjusted for inflation property went nowhere until we got the insane printing during COVID.  

There are obvious local market variances, foreign money driving the London market for instance.  

House prices may have been tracking inflation pre-covid (London prime peak was around 2015 and propped up with Russian/Chinese/Middle East money - that prop has now gone) but real wage destruction has long been in place before then due to the disinflation cycle (more for less and all that). Wages were in most sectors were either frozen or eroded over that time so houses got more expensive/larger mortgages/multiples.

Combined with low interest rates, it was the only game in town, hence every mother fucker and their dog jumped on board. This was/is supported up and down the country in low income/low work areas by benefits. As DB has said some areas up his way are pretty much mostly benefit recipients.

No way could of prices been pushed up to this degree in areas like that without the government paying for it (or more accurately the tax payer)

 

[feed]

4 minutes ago, Lightscribe said:

House prices may have been tracking inflation pre-covid (London prime peak was around 2015 and propped up with Russian/Chinese/Middle East money - that prop has now gone) but real wage destruction has long been in place before then due to the disinflation cycle (more for less and all that). Wages were in most sectors were either frozen or eroded over that time so houses got more expensive/larger mortgages/multiples.

Combined with low interest rates, it was the only game in town, hence every mother fucker and their dog jumped on board. This was/is supported up and down the country in low income/low work areas by benefits. As DB has said some areas up his way are pretty much mostly benefit recipients.

No way could of prices been pushed up to this degree in areas like that without the government  paying for it (or more accurately the tax payer)

 

Why are you still comparing house prices to wages? 

I find it difficult to understand that people here will comfortably accept that inflation has been well over the government measures for years.  But when it comes to houses that inflation doesn’t apply.  It's prices pushed up / more expensive / compared to historical measures that haven't been meaningful in 20 years.  Owners have profited.    It's as if inflation doesn't exist when it comes to property. 

Have / are the benefits driving inflation? Of course they are, that’s their purpose, to drive inflation in a disinflationary low velocity environment.  Did people benefit from it, well we didn’t end up with a deflationary collapse after the GFC, so sure.  Problem now is we’re out of the disinflationary environment and the state is still trying to prevent deflation.    
 

 

[sancho panza]

3 hours ago, ThoughtCriminal said:

You really can't go wrong with a Kia. My mother has had her Kia Soul for 9 years and literally not one problem. I know loads of people with Sorrentos and they're the same, nothing but good things to say. 

 

Hybrids are very much a mixed bag. Some are genuinely clever and worth the money: range rover getting almost 50mpg out of theirs is nothing short of miraculous, but for the most part they're just hype.

 

What about a Kia Sportage? 55 mpg if you go front wheel drive version.

 

https://www.copart.co.uk/lot/46260242/clean-title-2020-kia-sportage-2-sandwich

How much do you reckon that would go for and how much to repair? I'm not averse to buying a car with damage as long as it's safe.We write off so much these days needlessly.Sportage would be ideal,second hand they depreciate slwoly once the the intial three year damage has been done and I don't .

Having had a Kia and genuinely found them reliable,good to run,Mrs P likes it,I'd buy another.

With hybrids it's mcuh more about recoomendation by people who've had them.Lad at our work used to design Land Rovers and said to me when I was weighing whetehr to get one for mrs P that if it was his moeny he wouldn't touch LR with a bargepole and would go japanese or korean.

I think @Cattle Prodmakes an exxcellent point that it's good to hedge your fuel risk and I think he's said before the heavy types of crude you need for diesel are in shorter supply and I'd like the option of having a plug in hybrid(one that can run on petrol as well if needed),lots to think about ehre.I like the look of thsoe Outlanders but Mrs P needs 7 seats for all the kids.To be fair,I am tempted to go for an otulander myself.

But this is what ahppens to me buying cars,couple of recomendations and then three months disappears before I resurface with the best deal I can get and wife who says I've been totally distracted for that period of time

 

[JMD]

9 hours ago, tank said:

The world will continue to need a reserve currency and I can't see anything replacing the US$. 

The US still has the biggest and most technologically advanced military in the world, a stable legal system and a developed economy. Only a complete fool would write them off, imo. They've had a dribbling, dementia ridden, old man in the WH before and survived. The US President is just a political figurehead and isn't really in charge.

Yes, the Dollar will be 'rebranded' in order to secure the US another 10 years of hegonomic dominance. Currently, it's the 'Classic Reserve' World currency, but soon it will become the more niche 'Premium Reserve' Western-world-only currency...  Other - lesser - world currencies arriving soon!!

[King Penda]

8 hours ago, tank said:

The biggest beneficiaries of large scale welfare spending are not the tax credit Karens and Shazzas, certainly not the £75 a week doleys.

It's those who own and rent property, plus all manner corporate rentiers from media to fast food. Shazza rents using HB, she then spends every penny she gets getting daily food deliveries, her Sky, Netflix etc and so on. She saves nothing. No wonder the government are keen to hand her more. Despite what Johnson and Sunak say in public, what they really want is to inflate the debt away.

Not a popular view on here, but a lot of the older folk you refer to are very aware that they benefit from the welfare spend as a large chunk of it is funneled into the property market via HB. It sets a floor under rents and, in turn, pushes up the value of property across the board. Most people over 50 who work and own property have benefited from HB even if they don't BTL. Many will own housing that is now x2/3/4+ what they paid. Remove the bennie prop and the housing market collapses.

It’s also forcing people to take on larger and larger morgages 

[sancho panza]

12 hours ago, Noallegiance said:

Huge £341 million deal for gas-fired power station at Saltend agreed (msn.com)

Intersting that they forsee 30% hydrogen output by 2027....

4 hours ago, Cattle Prod said:

The relative value of it is easy to control, keeping rebellious EM countries using it is much more difficult.

Their number 1 ally in Asia sitting just off the Chinese coast, hosting a couple of US army divisions and a US naval fleet is about to merrily bankrupt itself too I suspect, without some help from a weaker dollar. Dollar down for me, and the Fed has no dollar mandate.

Couple of key points right there CP.Big issue is keeping BRICS(particualrly) but also others using USD to borrow/buy commodities,they let it run up too much and the sytem blows up and I suspect ther'yre well aware(as we discussed on here a few years back) that this will be the dollar's last crisis as the world's reserve currency.

Those countries will weigh the benefits of dollar pricing but fundamentally,the Fed needs to keep it within a range,not too low-as that will hammer dollar savers,not too high-as that will hammer dollar borrowers.

I'm with you & Luke groemn here that Fed will have to let DXY drop for myriad reasons.

I've also said for some time that once a weak dollar pahse is in play then some sort of big kahuna credit event won't be far away and things will get very interesting.

[sancho panza]

4 hours ago, Axeman123 said:

My limited understanding is that banks are shrivelled to a nub of thier former selves, having been regulated out of all the lucrative risky stuff that got them in trouble in 2008, and no longer represent a systemic risk. Non-bank entitites are now doing all the systemically risky stuff that banks used to, and are completely unregulated.

Whether that means these non-bank entities are not systemically important and can be allowed to implode or alternatly that governments will have to bail-out hedge funds etc remains to be seen.

Someone mentioned this a while back but Barclays are shwoing awful timing as ever.This is what ahppens when you bail out failed finacial instituions so that they fail to learn the lessons they need to in temrs of leverage

Remember barclays Dowd Buckner leverage ratio circa 50/1

https://www.moneyexpert.com/news/barclays-to-buy-specialist-lender-kensington-mortgages/

Barclays to Buy Specialist Lender Kensington Mortgages

Barclays has snapped specialist lender Kensington Mortgages for £2.3 billion, part of a scramble for mortgage books as interest rates rise, despite the threat of recession.

Kensington offers loans to customers often declined by traditional high-street lenders, including the self-employed and others with multiple or variable incomes. The Maidenhead-based business also lends to first-time buyers and borrowers over 55. Its 600 employees service an estimated £8.7 billion of third-party mortgages in addition to the firm’s own £1.2 billion mortgage book.

70% of that mortgage book is made up of loans to owner-occupiers, while 30% is buy-to-let.

Barclays has forecast the value of that mortgage book will hit £2 billion when the deal completes in December and says that value will determine the final sale price.

Kensington’s mortgage book will make a rather small addition to Barclays' existing £156 billion of mortgages but will position the bank to serve neglected kinds of borrowers.

However, non-traditional borrowers are also riskier and will be more vulnerable to the ongoing cost of living crisis, potentially pushing up defaults. Additionally, the housing market, superheated since reopening following the first lockdown two years ago, is also showing signs of slowing down and some analysts are warning of an impending crash.

“We wonder about the logic of expanding into a riskier part of the mortgage spectrum at this point in the cycle,” Citigroup analyst Andrew Coombs told the Financial Times.

But Russ Mould, the investment director at AJ Bell, said the acquisition makes sense in the long run. “The timing might seem a bit odd given cracks appearing in the property market. However, Barclays is clearly taking a long-term view and its purchase of Kensington Mortgages together with a book of UK home loans is a logical strategic move,” he said.

[JMD]

On 28/06/2022 at 04:43, wherebee said:

excellent debate.  All but one of the panellists know the facts.  Look at the body language.  Europe is fucked.

You would NEVER see this sort of debate on UK TV.

Wherebee, just need to say what a great find that is. As you say the discussion points made are nothing we on here don't already know BUT really shows how full on retard spastic 'our (so called) BBC' news programmes are (yep it's made me angry!)... Plus it had a great host, a sardonic French political commentator, who'd have guessed they exist!? Puts the Beeboid Fiona Bruce and NewsNight crew types into context.

[JMD]

21 hours ago, Transistor Man said:

Yep, it's a real book, written by the man himself

Rumour has it that he is Nicola Sturgeons brother in law!...  Apparently, they are very close politically and she gets most of her indyref2 ideas from him!!

[Yadda yadda yadda]

4 hours ago, geordie_lurch said:

For those worrying that you aren't able to time or get ahead in these markets

 

"Dad, what are they doing"

"Son, they're doing that to keep warm."

"But it is very hot today"

"Er..."

"Mum, I saw you doing that with John, Paul and Steve. You didn't have many clothes on, were you hot too?"

[Yadda yadda yadda]

27 minutes ago, sancho panza said:

Someone mentioned this a while back but Barclays are shwoing awful timing as ever.This is what ahppens when you bail out failed finacial instituions so that they fail to learn the lessons they need to in temrs of leverage

Remember barclays Dowd Buckner leverage ratio circa 50/1

https://www.moneyexpert.com/news/barclays-to-buy-specialist-lender-kensington-mortgages/

Barclays to Buy Specialist Lender Kensington Mortgages

Barclays has snapped specialist lender Kensington Mortgages for £2.3 billion, part of a scramble for mortgage books as interest rates rise, despite the threat of recession.

Kensington offers loans to customers often declined by traditional high-street lenders, including the self-employed and others with multiple or variable incomes. The Maidenhead-based business also lends to first-time buyers and borrowers over 55. Its 600 employees service an estimated £8.7 billion of third-party mortgages in addition to the firm’s own £1.2 billion mortgage book.

70% of that mortgage book is made up of loans to owner-occupiers, while 30% is buy-to-let.

Barclays has forecast the value of that mortgage book will hit £2 billion when the deal completes in December and says that value will determine the final sale price.

Kensington’s mortgage book will make a rather small addition to Barclays' existing £156 billion of mortgages but will position the bank to serve neglected kinds of borrowers.

However, non-traditional borrowers are also riskier and will be more vulnerable to the ongoing cost of living crisis, potentially pushing up defaults. Additionally, the housing market, superheated since reopening following the first lockdown two years ago, is also showing signs of slowing down and some analysts are warning of an impending crash.

“We wonder about the logic of expanding into a riskier part of the mortgage spectrum at this point in the cycle,” Citigroup analyst Andrew Coombs told the Financial Times.

But Russ Mould, the investment director at AJ Bell, said the acquisition makes sense in the long run. “The timing might seem a bit odd given cracks appearing in the property market. However, Barclays is clearly taking a long-term view and its purchase of Kensington Mortgages together with a book of UK home loans is a logical strategic move,” he said.

Kensington are the lender offering incredibly low rates on lifetime mortgages. Dodgy as hell.

[JMD]

5 hours ago, ThoughtCriminal said:

You really can't go wrong with a Kia. My mother has had her Kia Soul for 9 years and literally not one problem. I know loads of people with Sorrentos and they're the same, nothing but good things to say. 

What about a Kia Sportage? 55 mpg if you go front wheel drive version.

https://www.copart.co.uk/lot/46260242/clean-title-2020-kia-sportage-2-sandwich

Interesting. Would that sell for maybe only £2k? Plus say £2k to repair?          ...Or am I being a bit humorless and not getting your (nearside) front wheel drive joke?!

[Starsend]

It's hard to overstate how bad our leaders are, they're absolute cretins. When you have the prime minister of the UK coming out with shit like this "toxic masculinity". What hope is there to fix the problems this country faces!

The problem is, you get rid of Boris and the rest are all as retarded. If they weren't he would never have got to be the leader in the first place. I am convinced that we face an epic collapse at some point, there is no way to avoid it with people like this at the helm.

Ukraine war: Johnson says if Putin were a woman he would not have invaded - BBC News

 

[Loki]

1 minute ago, Starsend said:

It's hard to overstate how bad our leaders are, they're absolute cretins. When you have the prime minister of the UK coming out with shit like this "toxic masculinity". What hope is there to fix the problems this country faces!

The problem is, you get rid of Boris and the rest are all as retarded. If they weren't he would never have got to be the leader in the first place. I am convinced that we face an epic collapse at some point, there is no way to avoid it with people like this at the helm.

Ukraine war: Johnson says if Putin were a woman he would not have invaded - BBC News

 

Like Thatcher? 

[Cosmic]

10 minutes ago, JMD said:

Interesting. Would that sell for maybe only £2k? Plus say £2k to repair?          ...Or am I being a bit humorless and not getting your (nearside) front wheel drive joke?!

No its going to go for 12k+ I recon. There is a reserve set too, normally (or at least back when I did Copart stuff) insurers don't do this which means its coming from another source... could be purchased previously, damage was found to be worse than they thought then gets doctored and thrown back...

I bought a Focus ~5y ago looked like less damage than that, but similar, that had a reserve etc. The offside chassis leg was bent and touched the suspension, along with ripples back in to the body. Ended up parting.

My Cat N Ibiza bought at 3yr old from Copart has been an absolute gem though, airbags were not deployed on that one. New front end from another car I bought and parted out at the same time and we're ~£2.5k OTR for a car that's done 3.5years trouble free service for me and still worth that or more.

I'd stay away unless you can get them under the sum of their parts and are prepared to break the ones that are going to be more trouble than they are worth...

[ONC]

Ok, off work with Covid (bored) and just browsing for share ideas. I have ZERO experience of stock picking, so really DYOR,

First, started looking for the worlds most indebted companies (as debt will be inflated away with inflation)

https://en.wikipedia.org/wiki/List_of_most_indebted_companies

1 Volkswagen on top of list, they will probably overtake Tesla in EV. But still an expensive product that people can avoid by running old cars longer. So no good

2. AT&T, Verizon   Already tipped here.

3 Looking down the list I saw  AB InBev, the brewer.  This may have a few good points 

a)  Very global (See below), lots of emerging markets

b) cheap product, always in demand, can pass on inflation?

c) huge fixed debts at very long maturity ( average maturity 16years), (nice to be inflated away)

d) people may stop drinking at restaurants/pub but could instead still drink at home.

E) traded on NYSE:  BUD   So can added to SIPP and no withholding tax?
 

F)  current dividend is low, but has been higher

https://www.tipranks.com/stocks/bud/dividends

 

Does anybody have an opinion on AB InBev ??

 

[sancho panza]

[Bricormortis]

 

" Had Germany spent 580 billion dollars on nuclear ( power ) they would already be getting 100% of their electricity from clean energy sources, and all of their transportation energy "

Michael Shellenberger  why renewables cant save the planet

 

[Axeman123]

55 minutes ago, sancho panza said:

Barclays has snapped specialist lender Kensington Mortgages for £2.3 billion, part of a scramble for mortgage books as interest rates rise, despite the threat of recession.

If they will just be collecting the payments from existing mortgages, then it could be a good or bad idea depending entirely on the price paid. Rising mortgage rates would equal a greater spread over cost of funding. If they are planning to roll out more of this kind of lending it is a disaster.

Random thought: maybe this is a covert bailout of a lender going insolvent, government directed.

[GTM]

1 hour ago, sancho panza said:

Someone mentioned this a while back but Barclays are shwoing awful timing as ever.This is what ahppens when you bail out failed finacial instituions so that they fail to learn the lessons they need to in temrs of leverage

Remember barclays Dowd Buckner leverage ratio circa 50/1

https://www.moneyexpert.com/news/barclays-to-buy-specialist-lender-kensington-mortgages/

Just need Fred Goodwin to come along and get into an auction for them, ABN Amro style, and we are back in 2007.

[Barnsey]

https://www.hotukdeals.com/hot

Lots of good deals popping up now, pretty good sign of demand destruction/recession. Recommend to bookmark. 

In other news, looks like the anti holiday home rhetoric being ramped up big time across MSM, so some kind of coordinated intentional downturn coming along with BTL.

[JMD]

2 hours ago, sancho panza said:

I think @Cattle Prodmakes an exxcellent point that it's good to hedge your fuel risk and I think he's said before the heavy types of crude you need for diesel are in shorter supply...

 

That point about diesel oil shortages made me think about the government pivot (political panic on particulates?!) on car diesel use a few years back, after having  encouraged its use for many years. I mean it's been mentioned before that the whole 'CO2 climate crises' may just be cover for our politicians to begin their control/rationing of the ever dwindling supplies of global fossil fuels... So did government need to quickly cut diesel use and found a convenient health related reason to achieve this?                                                                                                                                                                                         I realise this sounds very conspiratorial, but is it? Is diesel oil in such short supply that curtailing its use globally had to be achieved? I wonder if @Cattle Prodcould comment, not necessarily on the conspiracy, but on any energy pinch points he may be aware of?                                                                           (Ukraine war, new cold war divide, etc, could be just another even larger example of this, but best leave that discussion for after the fog of war has - hopefully very soon - settled)

[ThoughtCriminal]

3 hours ago, sancho panza said:

How much do you reckon that would go for and how much to repair? I'm not averse to buying a car with damage as long as it's safe.We write off so much these days needlessly.Sportage would be ideal,second hand they depreciate slwoly once the the intial three year damage has been done and I don't .

Having had a Kia and genuinely found them reliable,good to run,Mrs P likes it,I'd buy another.

With hybrids it's mcuh more about recoomendation by people who've had them.Lad at our work used to design Land Rovers and said to me when I was weighing whetehr to get one for mrs P that if it was his moeny he wouldn't touch LR with a bargepole and would go japanese or korean.

I think @Cattle Prodmakes an exxcellent point that it's good to hedge your fuel risk and I think he's said before the heavy types of crude you need for diesel are in shorter supply and I'd like the option of having a plug in hybrid(one that can run on petrol as well if needed),lots to think about ehre.I like the look of thsoe Outlanders but Mrs P needs 7 seats for all the kids.To be fair,I am tempted to go for an otulander myself.

But this is what ahppens to me buying cars,couple of recomendations and then three months disappears before I resurface with the best deal I can get and wife who says I've been totally distracted for that period of time

 

Price wise is complete potluck. It only needs one idiot on the day to be bidding against you: I see people pay more than the car is worth quite regularly. It's like eBay on steroids.

 

I imagine that will go for 8-9k, 1100ish fees and delivery. Two curtain airbags, one seat airbag, front passenger door, rear looks repairable is about 2500 repairs. Call it 13k all in. Car is worth about 17000 back on road so 4000 "profit" (not that you're selling) and 7500 saved in what you'd pay used.

 

They're completely safe, I've bought and ran loads of CAT S and N. Even CAT S are relatively minor damage.

 

Like CP said, the right hybrid could be worth a look, given how long you keep your vehicles, as the saving would be substantial for you.

https://www.copart.co.uk/lot/35121882

 

Loads of hybrid outlanders on there