Credit deflation and the reflation cycle to come (part 4)

[Virgil Caine]

1 hour ago, Axeman123 said:

New Javier Blas article on Bloomberg, Headline:

Listening to European Electricity Traders Is Very, Very Scary

"Every week, the people who trade electricity in the UK get to quiz the managers of the national grid for an hour. The conference call, which anyone can monitor, offers an insight into what the men and women on the front line of the power market are worried about. Listening to them is getting scarier by the week — and suggests keeping the lights on this winter will be a lot more challenging than European governments are admitting...But the industry’s teleconference suggests the problem is broader than just rising costs. Increasingly, the words “emergency” and “shortages” are being used, with participants focusing on when, rather than if, a crisis will hit...Here’s a question from last week’s session: “Are you war-gaming possible options for if/when cross-border trading collapses under security of supply pressures this winter?” And another: “Can we have a session where we talk through the emergency arrangements?” Another participant said that the forecast for demand-and-supply electricity balance showed “how bad the winter could be for anyone who can do the maths.” The same caller was blunt about the grid’s own predictions: “I don't think you believe what you've written, and nobody else does.”. One intervention was particularly revealing. “Based on where winter ‘22 products are trading, where does this position yourself with respect to securing power over the winter?” asked one participant. The background? In the forward market, UK power for December 2022 is fast approaching £1,000 per megawatt hour, up 50% from current prices. The implication? Power shortages"

https://archive.ph/jyljT#selection-3525.0-3943.28

Nothing we haven't discussed before on here, but expect this in the Daily Mail within the week IMO.

Just confirms much of what has been discussed on here. At the moment the media and politicians are framing it as a price problem when the reality is that the market signals are actually screaming that it is a supply problem. The only solution is to cut usage which means physical restrictions on use and power cuts. Unfortunately no one wants to be first mover in making that happen.  The U.K. is doubly fucked because of its over reliance on gas for electricity generation.

[DurhamBorn]

11 minutes ago, Virgil Caine said:

Just confirms much of what has been discussed on here. At the moment the media and politicians are framing it as a price problem when the reality is that the market signals are actually screaming that it is a supply problem. The only solution is to cut usage which means physical restrictions on use and power cuts. Unfortunately no one wants to be first mover in making that happen.  The U.K. is doubly fucked because of its over reliance on gas for electricity generation.

Coal in the UK is producing more electric than wind tonight.Our entire energy policy has been a disaster.

[Virgil Caine]

17 minutes ago, DurhamBorn said:

Coal in the UK is producing more electric than wind tonight.Our entire energy policy has been a disaster.

Precisely. How can you run an electricity grid using an energy source that might supply 40% of your power one day and nothing the next day. 

[onlyme]

3 minutes ago, DurhamBorn said:

Coal in the UK is producing more electric than wind tonight.Our entire energy policy has been a disaster.

Have no fear, years of investment into clean and efficient coal burn delivered results, fluidised bed combustion and other tech which resulted in......

A high density housing development by Bloor homes when the lot was torn down. 

http://photomemorabilia.co.uk/FBC/CRE_history.html

[Loki]

2 minutes ago, onlyme said:

Have no fear, years of investment into clean and efficient coal burn delivered results, fluidised bed combustion and other tech which resulted in......

A high density housing development by Bloor homes when the lot was torn down. 

http://photomemorabilia.co.uk/FBC/CRE_history.html

FOR FUCKS SAKE

[Virgil Caine]

4 minutes ago, onlyme said:

Have no fear, years of investment into clean and efficient coal burn delivered results, fluidised bed combustion and other tech which resulted in......

A high density housing development by Bloor homes when the lot was torn down. 

http://photomemorabilia.co.uk/FBC/CRE_history.html

The bastards won’t even let you have a proper coal fire at home. 

[DurhamBorn]

2 minutes ago, onlyme said:

Have no fear, years of investment into clean and efficient coal burn delivered results, fluidised bed combustion and other tech which resulted in......

A high density housing development by Bloor homes when the lot was torn down. 

http://photomemorabilia.co.uk/FBC/CRE_history.html

My mates dad worked for a company in the next town called Underground Mining Equipment,they were working on some fantastic carbon capture back in the 80s,government werent interested and they and their stormtroopers ie Police Officers closed down the industry.

[Virgil Caine]

3 minutes ago, DurhamBorn said:

My mates dad worked for a company in the next town called Underground Mining Equipment,they were working on some fantastic carbon capture back in the 80s,government werent interested and they and their stormtroopers ie Police Officers closed down the industry.

Truth is a ton of coal and a fire with a back boiler will be a very useful asset this winter if anyone still has them.

[mcdongle]

I posted the other day about the US restricting gas and oil exports.... Happening quicker than i thought..

 

 

[Starsend]

2 hours ago, Cattle Prod said:

Leads and lags. Gold anticipates, like from 2018 on. It anticipates M2 more than inflation, but both come in waves, or pulses. When gold moves, it'll be anticipating the next wave or pulse, the current one is long priced in. It's not in reverse either, just rangebound. Waiting. Interminably waiting...

Edit:

Gold is currently still exactly 50% up from the 2018 lows, before the whole shitshow started. Not bad, when you consider @DurhamBorns entire cycle inflation is around 65%. And it'll add another 50% soon enough, but only when the least amount of people possible are positioned to benefit. 

Exactly, it primarily tracks money supply. So many people struggle to understand this simple fact.

It will take off again the moment they fire up the printers.

[Starsend]

8 hours ago, PETR4 said:

Hi all, after lurking for years I think I finally have something of value to add to the “best thread on the internet”!

In answer to:

“@Starsend Posted yesterday at 12:31

I'd like to see somebody do some real analysis into what will happen to my BP shares in the event of hyper-inflation / a new currency. There must be plenty of examples in history but nobody ever talks about the things we all want to know.”

There is a very good answer to this in Brazil and Petrobras.

Since 1967 the Brazilian currency has changed 7 times, most recently to the Real in 1994 to end Brazil’s hyper inflation

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

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

Petrobras has been around since 1953 and is a major component of the IBOVESPA, Brazil’s stock market.

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

I couldn’t find any price data on the internet for Petrobras prior to 1994, however I did find this re-indexed IBOVESPA chart going back to 1963 which covers all the currency switch overs and the hyperinflation. The 35 times increase is the hyperinflation era.

https://media.moneytimes.com.br/uploads/2022/02/image5-5-1536x1083.png

It’s in this larger article (browser will translate) about investing in Brazil:

https://www.moneytimes.com.br/conteudo-de-marca/depois-do-resultado-de-petrobras-petr4-e-hora-de-comprar-analista-que-lucrou-600-com-a-queda-da-acao-muda-de-ideia-e-recomenda-compra-brdfa020/

Brazil and Petrobras have obviously had there losing and winning streaks over the years and that chart has some savage pull backs, but overtime and through adversity Petrobras has held its value against fiat currencies. I think political confiscation during a crisis would be the bigger risk. In Brazil they froze cash accounts and forced conversion onto a new currency in 1990. I don’t think they took people’s stock portfolios, and the extreme measures didn’t work in the long run anyhow!

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

https://www.chicagotribune.com/news/ct-xpm-1990-03-25-9001240707-story.html

As an aside, Brazil’s a fantastic country. I think most dosbods would love it!

Thanks all for such an amazing meeting of minds and talent.

Welcome and brilliant first post; just the kind of information I'm interested in. I'll have a good read through the links over the weekend.

[Bus Stop Boxer]

This is great.

 

[Mapper]

14 hours ago, Starsend said:

New video by Alasdair Macleod. Not watched it yet but looks like a bit of a chuckle, saving it for this evening with a beer and some popcorn.

 

In that interview, he mentions Halford Mackinder.

Halford Mackinder came up with the The Heartland Theory in 1904. This divided the world into "islands", the centre of the main island being ruled by Russia.

I came come across it for the first time in this video a few months ago. It paints a picture of the invasion of Ukraine from the Russian point of view.

I don't think it's been mentioned here before. It is certainly worth checking out.

 

[Lightscribe]

5 hours ago, Starsend said:

Exactly, it primarily tracks money supply. So many people struggle to understand this simple fact.

It will take off again the moment they fire up the printers.

Yes, but is that pivot actually coming? Or are they going to crash this shit straight through the floor?

 

[Formerly]

There's a lot of talk of "currency events" regarding GBP. Is one not already underway?

GBP to USD. We've gone from around 1.4 to 1.17 in a year.

 

 

[Noallegiance]

6 hours ago, Starsend said:

Exactly, it primarily tracks money supply. So many people struggle to understand this simple fact.

It will take off again the moment they fire up the printers.

This doesn't agree with the derivative...

[Democorruptcy]

Oh dear....

Quote

 

New energy price cap adds £660 to cost of charging electric car at home

Some electric cars will be more expensive to charge than they would be to fill with diesel or petrol

https://www.which.co.uk/news/article/energy-price-cap-adds-660-to-charging-an-electric-car-aIvCc0A54RFe

 

 

[M S E Refugee]

1 hour ago, Noallegiance said:

This doesn't agree with the derivative...

Silver must be the cheapest thing on the Planet at the moment.

[Democorruptcy]

Uncle Jay's full speech including the 'pain' bit

Quote

 

Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.

The U.S. economy is clearly slowing from the historically high growth rates of 2021, which reflected the reopening of the economy following the pandemic recession. While the latest economic data have been mixed, in my view our economy continues to show strong underlying momentum. The labor market is particularly strong, but it is clearly out of balance, with demand for workers substantially exceeding the supply of available workers. Inflation is running well above 2 percent, and high inflation has continued to spread through the economy. While the lower inflation readings for July are welcome, a single month's improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down.

We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2 percent. At our most recent meeting in July, the FOMC raised the target range for the federal funds rate to 2.25 to 2.5 percent, which is in the Summary of Economic Projection's (SEP) range of estimates of where the federal funds rate is projected to settle in the longer run. In current circumstances, with inflation running far above 2 percent and the labor market extremely tight, estimates of longer-run neutral are not a place to stop or pause.

July's increase in the target range was the second 75 basis point increase in as many meetings, and I said then that another unusually large increase could be appropriate at our next meeting. We are now about halfway through the intermeeting period. Our decision at the September meeting will depend on the totality of the incoming data and the evolving outlook. At some point, as the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases.

Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy. Committee participants' most recent individual projections from the June SEP showed the median federal funds rate running slightly below 4 percent through the end of 2023. Participants will update their projections at the September meeting.

 

 

[Sasquatch]

8 hours ago, Virgil Caine said:

Truth is a ton of coal and a fire with a back boiler will be a very useful asset this winter if anyone still has them.

 

The coal delivery man was in the village yesterday. Full lorry as he drove past our house. Empty half an hour later. There are a surprising number of houses still burning coal round here. Lots with wood burning stoves as well (including two in our house). The main local supplier of firewood ran out of stock over the summer. Apparently will have more next month.

I reckon a lot of people will be sold 'wet' wood this winter and then wonder why their stove is performing poorly.

[belfastchild]

1 minute ago, Sasquatch said:

 

The coal delivery man was in the village yesterday. Full lorry as he drove past our house. Empty half an hour later. There are a surprising number of houses still burning coal round here. Lots with wood burning stoves as well (including two in our house). The main local supplier of firewood ran out of stock over the summer. Apparently will have more next month.

I reckon a lot of people will be sold 'wet' wood this winter and then wonder why their stove is performing poorly.

Ordered wood this week, paid almost double what I paid last year (bought half the amount for roughly the same money). Said the same thing, prices going up because they are running out of firewood, everyone stocking up. Footfall in the yard with people with trailers/filling the boot is per hour what it used to be per day.
Said they cant compete on price with the new starters as the new guys dont have the overheads, of course the new guys sellnig a ton of firewood on fb marketplace for just under the established peoples prices dont say if its hardwood/softwood seasoned/fresh etc.

Apologies, just catching up with the posts but someone mentioned the UK energy price problem being a supply, not a demand problem and for me that hits the nail on the head. Ive been chicken little about the UK energy supply for a couple of winters now and its been french nuclear and mild weather that has saved the grid from brownouts/blackouts.
In the energy threads I see posts about bennies people not paying and just using or using more, people not paying for electric etc etc. Thats not really an issue when its turned off. I remember my mate telling me that during the 70s there were certain areas where the electricity didnt go off here, not even the rolling blackouts. It was where the guys who decided on which sections of the grid get cut etc had family living (his dad was one of the network planners so they, his granny and the inlaws all stayed on). That was easier to do back then and with the different uk suppliers you cant really tell which areas arent paying etc but something to keep an eye on.

[Jay]

10 hours ago, Noallegiance said:

Ignore the person. Listen to the words. 

 

The population was 30% less, less ageing and diverse, manufacturing was big and then there was North Sea..we had just joined the ec…and then interest rate rises with people on small mortgages and there were the Falkland a little later..plus she did have a proper police force..

very different now a couple of generations later…it is now a very tough gig…with tough solutions ahead..

[Barnsey]

All but confirmed now:

Economy - Kwasi (+ John Redwood & Rees Mogg)

Immigration - Braverman

Benefits - Chloe Smith

Defence - Wallace (+ Mordaunt)

Chief Whip - Coffey

Leader of the House - IDS

[M S E Refugee]

Rising gas prices could drive Polish energy firms into bankruptcy https://www.rt.com/business/561546-poland-energy-firms-bankrupt/

[Errol]

Government will need to give money to everyone or nobody. You can't have a situation where the feckless and those on benefits receive massive amounts of money to help and those who are actually working are forced to pay full whack.