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

[Chewing Grass]

Nobody other than Nissan is dumping cars in the UK, I've also heard that Hire Car Companies have low stock with some potential hirers being offered Transit Vans instead of cars or base Corsa's. Cheap vehicles were the jam in the sandwich for the likes of Enterprise and their mates.

[Majorpain]

1 hour ago, Cattle Prod said:

Yes, this is nailed on I think. Industry is already starting to squeal. All that's needed is production growth to stop, and it'll be like a light switch. The arb will dissapear, and exports will be restricted then banned. From the worlds largest LNG exporter. Within 18 months IMO.

Before November really, next elections are not looking good for Dems, crashing CONUS gas prices would definitely help and collateral damage of shutting down Europe would be a price they are more than willing to pay.

[ThoughtCriminal]

Goes without saying, but if Germany economy goes under then the EU is fucked

[moneyscam]

53 minutes ago, ThoughtCriminal said:

The more you look at Germany the worse it gets.

Deutschland unter alles rather than uber alles. With the first current account deficit since 1992 there has to be at least one sentient being there who understands the monumental scale of their sanctions fuck up as we all predicted here months ago.

[Starsend]

48 minutes ago, CannonFodder said:

If it yields a return abroad then needs to be on your tax return in most cases.

Dont declare it and these countries share tax info.

Could be the first thing seized by UK with a request to a friendly country to sieze suspiciously accounts of the little people - big people ok.

Ask a canadian trucker.

Electorate be happy with this seizure, people richer than them with overseas account.

Gov needs money, gov asks friends for lists of people with accounts in their countries, gov crosschecks against tax returns, gov seizes through friends and up to you to get back, gov releases stories to press it is tough on overseas tax evasion.

Big people own a company that owns another company that has assets abroad. The company donates all its profits to a charity that upkeeps the castle and estate where the big people reside.

 

If I thought thee was any chance they shared tax info then I'd declare it on my tax return.

I think the UK government would have difficulty seizing accounts held in Singapore without a very good reason. In practise there'd be plenty for them to focus on in their own borders without going after small fry in foreign jurisdictions. 

[moneyscam]

1 hour ago, ThoughtCriminal said:

Down we go......

Thanks, one of my markers for the BK as posted earlier in this thread. I think FX market is pricing in severe Euro recession if not outright depression. This then throws Euro sovvy spreads over Bund into sharp focus hence why ECB announced program to manage these spreads a few weeks ago. It will be like a Draghi 'whatever it takes' redux and they can print an infinite amount to keep Italian BTP spreads capped however that will be at the expense of the Euro.

Half my wealth is currently held in CHF to hedge my sterling portfolio and currency risk and I'm convinced that if the fiat system survives CHF will be one of the clear winners versus the £, $ and euro.

[jamtomorrow]

16 hours ago, Axeman123 said:

We will see (relatively speaking) rapid on/off alternating loosening and tightening to keep the economy swinging back and forth from boom to bust over the coming cycle. Inflation will be allowed to run a bit but reined in with tightening when it looks to be running away, and then reignited with loosening and the cycle repeats. As DB predicted that may even at points involve feet on the gas and brake pedals at the same time, ie QE + rising rates. Presumably the end of the decade calamity will be when that finally loses effectiveness.

TL:DR: Option C, aka ABABABABABAB

Interesting call @Axeman123 - I just (this week) reached the same conclusion but more from the Gromen perspective i.e. policy levers are now so hypersensitive they operate more like an on/off switch than a dial.

Faced with this kind of setup in an engineering system control situation, you'd be looking at something like Pulse Width Modulation (where the effect of the control intervention is determined solely by the duration, or pattern of durations) - exactly what you're describing.

[Loki]

4 minutes ago, jamtomorrow said:

Interesting call @Axeman123 - I just (this week) reached the same conclusion but more from the Gromen perspective i.e. policy levers are now so hypersensitive they operate more like an on/off switch than a dial.

Faced with this kind of setup in an engineering system control situation, you'd be looking at something like Pulse Width Modulation (where the effect of the control intervention is determined solely by the duration, or pattern of durations) - exactly what you're describing.

Fine for electronics but not an ideal way of varying the 'speed' of say, an engine 

[jamtomorrow]

4 minutes ago, Loki said:

Fine for electronics but not an ideal way of varying the 'speed' of say, an engine 

Apologies @Loki if I missed the point but ... modern fuel injectors do indeed work on PWM. ECU just changes the pulse width to deliver more or less fuel.

So watch out for variable FOMC meeting dates!

[CannonFodder]

33 minutes ago, Starsend said:

If I thought thee was any chance they shared tax info then I'd declare it on my tax return.

I think the UK government would have difficulty seizing accounts held in Singapore without a very good reason. In practise there'd be plenty for them to focus on in their own borders without going after small fry in foreign jurisdictions. 

Just fill out an attachment order for Singapore ? Reason - we believe these accounts are to evade taxes. Attach list of 2000 names to order.

Easier for Singapore to grant than an order connected to divorce case for a private individual.

We are delving into the detail. If you wish to hide offshore, it is not hidden if it remains in your own name - first rule of flight club

https://uk.practicallaw.thomsonreuters.com/w-023-4562?originationContext=knowHow&transitionType=KnowHowItem&contextData=(sc.RelatedInfo)&firstPage=true

 

 

[Axeman123]

52 minutes ago, Starsend said:

If I thought thee was any chance they shared tax info then I'd declare it on my tax return.

Key words to research: Tax Treaty 

https://www.gov.uk/government/collections/tax-treaties

Even carribean tax havens share info with the west, in exchange for visa free travel for their citizens. The key loophole is they only share direct ownership information currently, and not ultimate beneficial ownership of complex structures (although that is certainly being talked about for the future, but probably will never happen)

39 minutes ago, jamtomorrow said:

Interesting call @Axeman123 - I just (this week) reached the same conclusion but more from the Gromen perspective i.e. policy levers are now so hypersensitive they operate more like an on/off switch than a dial.

Gromen probably influenced my thinking just as much in fairness, a lot of these ideas mingle and take on a life of their own for me.

A thought that has crossed my mind is concerning why the pivot will have such an outsized effect. Every previous fed pause has been the end of hikes for several years, and followed sooner or later by several 100bps of rate cuts within months. If that expectation gets priced in again, hold onto your hats! If the fed then pumps the brakes on a melt-up within a couple of months of that...BK

[CannonFodder]

1 minute ago, Axeman123 said:

Key words to research: Tax Treaty 

https://www.gov.uk/government/collections/tax-treaties

Even carribean tax havens share info with the west, in exchange for visa free travel for their citizens. The key loophole is they only share direct ownership information currently, and not ultimate beneficial ownership of complex structures (although that is certainly being talked about for the future, but probably will never happen)

Gromen probably influenced my thinking just as much in fairness, a lot of these ideas mingle and take on a life of their own for me.

A thought that has crossed my mind is concerning why the pivot will have such an outsized effect. Every previous fed pause has been the end of hikes for several years, and followed sooner or later by several 100bps of rate cuts within months. If that expectation gets priced in again, hold onto your hats! If the fed then pumps the brakes on a melt-up within a couple of months of that...BK

Agree

The complex structures wont happen as that is for the elites and their escape route.

For anyone thinking of hiding abroad, read a divorce forum first. Hint - if the ex-wife can get your wealth abroad, the gov can too.

The last paragraph on the abortive pivot I can see happening.

I think its important to split out what is good for the system/fed/country from what is good for individual officials in the short term in their posts for promotions pay rises and not being replaced.

 

[wherebee]

1 hour ago, Starsend said:

If I thought thee was any chance they shared tax info then I'd declare it on my tax return.

I think the UK government would have difficulty seizing accounts held in Singapore without a very good reason. In practise there'd be plenty for them to focus on in their own borders without going after small fry in foreign jurisdictions. 

loads of countries share tax info now automatically.  FACTA for the USA, CRS for everyone else.  Singapore shares with the UK.

Having lived in a number of countries, I know just how important it is to not try to hide shit in that way you are suggesting.

[jamtomorrow]

11 minutes ago, Axeman123 said:

Key words to research: Tax Treaty 

https://www.gov.uk/government/collections/tax-treaties

Even carribean tax havens share info with the west, in exchange for visa free travel for their citizens. The key loophole is they only share direct ownership information currently, and not ultimate beneficial ownership of complex structures (although that is certainly being talked about for the future, but probably will never happen)

Gromen probably influenced my thinking just as much in fairness, a lot of these ideas mingle and take on a life of their own for me.

A thought that has crossed my mind is concerning why the pivot will have such an outsized effect. Every previous fed pause has been the end of hikes for several years, and followed sooner or later by several 100bps of rate cuts within months. If that expectation gets priced in again, hold onto your hats! If the fed then pumps the brakes on a melt-up within a couple of months of that...BK

Also, if they do manage to avoid disaster by unintentionally setting up a bullwhip ... the only thing that will matter going forward is the timing of pivots.

50 bps, 100bps, this or that much QE/QT ... doesn't matter. In a system on a hair trigger, it's all about timing and direction.

[Loki]

42 minutes ago, jamtomorrow said:

Apologies @Loki if I missed the point but ... modern fuel injectors do indeed work on PWM. ECU just changes the pulse width to deliver more or less fuel.

So watch out for variable FOMC meeting dates!

Sort of, i meant it's like stamping on and off the throttle

[jamtomorrow]

3 minutes ago, Loki said:

Sort of, i meant it's like stamping on and off the throttle

Ha, that's a good extension to the model - are Jay's feet fast enough??! 

[Starsend]

4 minutes ago, wherebee said:

loads of countries share tax info now automatically.  FACTA for the USA, CRS for everyone else.  Singapore shares with the UK.

Having lived in a number of countries, I know just how important it is to not try to hide shit in that way you are suggesting.

I'm not suggesting trying to hide it, I said I'd put it on my tax return.

The whole point of my post is that surely it's a little harder for them to steal money that is held in another country. For example, Argentina when they froze all USD accounts overnight and converted them to pesos; did they also freeze Argentinian citizens accounts in USD held abroad and convert them to pesos. No, because they couldn't.

Yes, they can find a way to steal your money if they really want to but they are much more limited in how they do it. In the UK it will most likely be via indirect methods such as taxation / inflation / rules which they cannot impose on accounts held abroad. You will have more protection than holding everything you own in one country if they go full commie.

[CannonFodder]

8 minutes ago, wherebee said:

loads of countries share tax info now automatically.  FACTA for the USA, CRS for everyone else.  Singapore shares with the UK.

Having lived in a number of countries, I know just how important it is to not try to hide shit in that way you are suggesting.

I had a joint account with someone.

One of us changed countries and thereby tax residences.

Bank immediately froze the account (interest paid to people of two tax residences).

Was a complete pain to sort out as both account holders had to appear in person at same time to unfreeze and close account.

Probably more of a crap bank thing but international finances a minefield

[Loki]

6 minutes ago, jamtomorrow said:

Ha, that's a good extension to the model - are Jay's feet fast enough??! 

He'll end up looking like Riverdance 

[DurhamBorn]

My wind up lantern came today,no more standing floor lamp on for me on a night burning leccy,iv also replaced my tropical fish with danios,they dont need a heater 

 

[Lightly Toasted]

1 hour ago, jamtomorrow said:

Apologies @Loki if I missed the point but ... modern fuel injectors do indeed work on PWM. ECU just changes the pulse width to deliver more or less fuel.

So watch out for variable FOMC meeting dates!

Interest rate changes take time to work through the economy -- 18months+ is often cited. In that case with monthly decisions you wouldn't see the full effect of pulse #1 until it was time for pulse #18.

Also, "jagged" policy would discourage investment/activity in itself.

 

[jamtomorrow]

22 minutes ago, Lightly Toasted said:

Interest rate changes take time to work through the economy -- 18months+ is often cited. In that case with monthly decisions you wouldn't see the full effect of pulse #1 until it was time for pulse #18.

Also, "jagged" policy would discourage investment/activity in itself.

 

Right, but in a hair-trigger system state Fed wouldn't be able to maintain a single policy direction for anything like 18 months without blowing up the whole edifice of financial markets one way or another (i.e. long before a policy effect bubbles up in the "real economy")

The policy lever becomes the relative duration of directional policy stances. So Fed might end up going through 18 months consisting of - say - 6 cycles of 2 months dovish + 1 month hawkish. Then maybe they "tighten", and tweak the pattern to 1.5 + 1.5, say.

All the same leads and lags are there, but now system is responding to a PWM signal, rather than the analog signal of QT/QE rates or Fed funds rate.

Of course, Fed credibility will be in tatters after a handful of such cycles. But what else can they do if the system can't "take" coventional analog policy any more?

[Lightly Toasted]

11 minutes ago, jamtomorrow said:

Of course, Fed credibility will be in tatters after a handful of such cycles. But what else can they do if the system can't "take" coventional analog policy any more?

https://www.alcohol.org/alcoholics-anonymous/step-1/

[Lightscribe]

49 minutes ago, DurhamBorn said:

My wind up lantern came today,no more standing floor lamp on for me on a night burning leccy,iv also replaced my tropical fish with danios,they dont need a heater 

 

What happened to the existing tropical fish? Did they end up being ‘released’ back into the wild down the loo?

[Barnsey]

7 hours ago, DurhamBorn said:

Fantastic to see others seeing what we have been seeing.The pensions and bennies up 10%  while wages go up 5% etc is the huge thing for me.Its massive.Il give the simple macro on it if you roadmap it.100% certain systemic collapse.

Iv seen that happening as a tiny outlier and sterling likely to increase,BUT my models didnt input freeloaders getting double the increases of workers.Nobody could expect that lunacy.Now,if i input it collapse becomes CERTAIN.If carried on of course.

The question is really now how it plays out.If they go ahead sterling is toast in the shorter term,but might not be in the longer term.I think the thread needs to really consider asset allocation here with laser focus.One good thing is the market hurts the most it can,so a huge part of the pain in the UK will be on house prices,wipe out of leveraged BTL etc.The state will have to make huge reforms as well.

 

Watch this relativity short clip, how history rhymes eh?