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

[Alifelessbinary]

3 hours ago, Errol said:

China can help with this.

I don’t doubt that China will be looking into this, but over the long term the terms of the deal will cost more than exporting the raw materials. The risk of nationalisation causes most capital to avoid such investments.

Over the last decade I’ve travelled through parts of Africa and was surprised how despised the Chinese were. To be fair to the Chinese they’ve invested heavily and smartly, as part of the Belt and Road initiative, however the terms are always unfavourable and the initial benefits go to a small corrupt elite ( a common theme throughout history).

I was surprised that most people are ambivalent about the old colonial powers, but in most cases it’s been decades since they held any real power, apart from the French colonies who are more vocal.

[sancho panza]

random new years day observation.futures market called the bottom in GDX nearly to the week as commercials started moving deeper net short a week later.

A super indicator,can't be timed off but sure rhymes

 

 

[sancho panza]

food for thought

I think we're either going down 30%(2002,1974) or up 30%(1953 or 1938).

My money is on the former but it's worth stressing we are 92%-94% in equities.Lowest level of cash in a long,long time.

Interesting times

 

https://abnormalreturns.com/2023/01/01/sunday-links-the-role-of-work/

[Long time lurking]

7 hours ago, No One said:

Zimbabwe, a nation of illiterate peasant farmers is not able to add value in the EV Battery chain. Seriously they have to be a mongst the dumbest of all the types of Africans, then there is the capital needed to set up a battery factory

I think the statement was more a political dig my guess would be at Europe ,where there are a few huge battery plants in the pipe line,the EU destroyed what was the bread basket of Africa and Europe for out of season produce via tariffs 

The EU caused huge damage to African agriculture via tariffs 

[Red Debt Redemption]

On 31/12/2022 at 12:03, Lightscribe said:

Yup exactly, Digital ID incorporates the health passport on the back of the COVID vaccination/test. No need for visas etc as it will all be on the Digital ID. Almost borderless travel and as you say, drop visa entry requirements to minimum just to get the numbers.

They certainly won’t tell you how many will be coming in (lucky the next census is a decade away) and if anyone shouts from the rooftops quoting any ONS statistics they’ll be stoking fear, divide and hatred (aka domestic terrorism).

Cbdc, covid, digi Id is little to do with it.

The elephant is the room is we are an ageing population that requires more and more care, bennies, pensions as they age. 

Couple that with a less than replacement TFR since 1973 and you NEED immigration just to keep the plates spinning.

Doesn't matter who, what, why, where gets in Government or what their policies say on immigration. You ARE having it regardless because indigenous population won't pump out enough kids because.. -developed countries lifestyle, culture, economic situation etc.

 

[SpectrumFX]

45 minutes ago, Red Debt Redemption said:

Cbdc, covid, digi Id is little to do with it.

The elephant is the room is we are an ageing population that requires more and more care, bennies, pensions as they age. 

Couple that with a less than replacement TFR since 1973 and you NEED immigration just to keep the plates spinning.

Doesn't matter who, what, why, where gets in Government or what their policies say on immigration. You ARE having it regardless because indigenous population won't pump out enough kids because.. -developed countries lifestyle, culture, economic situation etc.

 

How does that work if the immigration that happens is largely people who end up being in net receipt of the "care, bennies, and pensions" that you already can't fund.

Doesn't that just make the situation worse?

[SpectrumFX]

Burry calling out the politicians.

 

[No One]

9 hours ago, Long time lurking said:

I think the statement was more a political dig my guess would be at Europe ,where there are a few huge battery plants in the pipe line,the EU destroyed what was the bread basket of Africa and Europe for out of season produce via tariffs 

The EU caused huge damage to African agriculture via tariffs 

The breadbasket of Africa was Rhodesia and it was destroyed by black communists paid for by China and North Korea who promptly kicked out thw whites who made the whole thing work, then to pay the promises made to the communist soldiers they devalued the Zim Dollar to levels not seen since weimar.

[Pip321]

10 hours ago, sancho panza said:

food for thought

I think we're either going down 30%(2002,1974) or up 30%(1953 or 1938).

My money is on the former but it's worth stressing we are 92%-94% in equities.Lowest level of cash in a long,long time.

Interesting times

 

https://abnormalreturns.com/2023/01/01/sunday-links-the-role-of-work/

That’s interesting….for me it depends on underlying economic factors (which are negative) and blips by government intervention in the short term (which are unpredictable). But over just a year it’s unpredictable. Like you though…I think the grinding falls in stocks will continue 

The Wealthion & Macro observers are all cautious but FOMO and a rally keeps many in. 

Latest Wealthion podcast with Michael Lebowitz looking at 2023 references US Treasury bonds and bonds more generally as being a real option particularly if inflation begins to fall, earnings fall and all that brings with it. I am looking at that for balance and try lock in decent fairly risk free yields. I may even throw a cash ISA into a 3/4/5 year fixed if the rates nudge up anymore (maybe 5% of investable money) . 

I am currently heavily in cash and making a little money (high % return but on low volume) on side bets. Plan is to move more into PMs, EMs and commodities/natural resources but as ever watching for any dips first to eke out even more value.

I note you say you are heavily invested in equities….but I imagine they are very selective (rather than all lumped in a global equity tracker), so maybe not a bullish ‘overall’ as some may read that😉.

[Lightscribe]

7 hours ago, SpectrumFX said:

How does that work if the immigration that happens is largely people who end up being in net receipt of the "care, bennies, and pensions" that you already can't fund.

Doesn't that just make the situation worse?

Because UBI CBDC benefits will use expiring money so it won’t matter how many are claiming it as it can be controlled. That’s the crux of why the central banks will be introducing it, because it can be created and destroyed when necessary.

Forget about balancing books, debt/earnings ratios and borrowing from Peter to pay Paul.

That’s why it will mostly likely run alongside the digital £ in the beginning and may be called a different name (e.g. Britcoin). Benefits will be issued in that currency which will be able to be used on designated services and products (e.g. Energy/food/rent) and then that exchanged by the vendor.

https://www.msn.com/en-us/money/news/“digital-currency-yuan-comes-with-an-expiry-date-spend-or-it-will-vanish”/vi-AA12ze8O

https://cryptotvplus.com/2022/12/chinas-digital-yuan-comes-with-an-expiration-date/

[Lightscribe]

7 hours ago, Red Debt Redemption said:

Cbdc, covid, digi Id is little to do with it.

 

Yes, it has nothing to do with Covid, but that doesn’t matter it’s one of the angles (health security) of how they’ll sell it to the public as well as immigration security (because as you say we’ll have high immigration whether anyone likes it or not).

The Digital ID is a stepping stone and a necessary component in the introduction of CBDCs. That’s why there is a deathly silence from any government officials, parliamentary debates or our beloved mainstream media.

Funny that as there’s normally wall to wall coverage on things that they ‘want’ you to hear about, almost like the transition to a new monetary financial system isn’t really newsworthy (or of course they don’t want people picking up pitchforks just yet).

https://www.thetimes.co.uk/static/digital-id-framework-smart-technology-biometric-data/

https://fintechmagazine.com/digital-payments/eu-consortium-to-deliver-controversial-digital-id-wallets

[Harley]

42 minutes ago, Lightscribe said:

Because UBI CBDC benefits will use expiring money so it won’t matter how many are claiming it as it can be controlled. That’s the crux of why the central banks will be introducing it, because it can be created and destroyed when necessary.

Forget about balancing books, debt/earnings ratios and borrowing from Peter to pay Paul.

That’s why it will mostly likely run alongside the digital £ in the beginning and may be called a different name (e.g. Britcoin). Benefits will be issued in that currency which will be able to be used on designated services and products (e.g. Energy/food/rent) and then that exchanged by the vendor.

https://www.msn.com/en-us/money/news/“digital-currency-yuan-comes-with-an-expiry-date-spend-or-it-will-vanish”/vi-AA12ze8O

https://cryptotvplus.com/2022/12/chinas-digital-yuan-comes-with-an-expiration-date/

I still can't see that working.  You can't magic up real stuff, especially imports.  Not that they won't do it, take all our money, and leave us in a ditch.  It's just another cult.

[DurhamBorn]

8 hours ago, Red Debt Redemption said:

Cbdc, covid, digi Id is little to do with it.

The elephant is the room is we are an ageing population that requires more and more care, bennies, pensions as they age. 

Couple that with a less than replacement TFR since 1973 and you NEED immigration just to keep the plates spinning.

Doesn't matter who, what, why, where gets in Government or what their policies say on immigration. You ARE having it regardless because indigenous population won't pump out enough kids because.. -developed countries lifestyle, culture, economic situation etc.

 

The problem is thats the worst answer to this cycle.We need less immigration.Why?,because we are a net consumer of energy,food,and goods,we dont produce enough,or better a surplus.This is a cost push inflation.Thats why it keeps getting worse because they dont understand the macro.I know 100% the BOE are using the wrong roadmap for the cycle as are the government.Aged demographic doesnt matter,its the incomers consuming what they have not produced on top of 10million of our own the same.Remove 50% of the working age welfare budget you have no problems with pensions at all,zero.Pensions are a natural process paying fit working age is not.We are starting to collapse (NHS,Dentists etc) because we are importing consumers of them who dont produce.If we reduced immigration to 30k a year ,very skilled only and other reforms in energy production etc we would grow per capita.There are millions being paid to do nothing.The polos think fiscal spending on them will spur consumption,it will,but when you dont produce it just means more inflation.278 single mother on bennies on the council estate in my town.There is no shortage of care workers etc,its just they pay them £20k+ to sit at home doing nothing.

[SpectrumFX]

54 minutes ago, Lightscribe said:

Because UBI CBDC benefits will use expiring money so it won’t matter how many are claiming it as it can be controlled. That’s the crux of why the central banks will be introducing it, because it can be created and destroyed when necessary.

Forget about balancing books, debt/earnings ratios and borrowing from Peter to pay Paul.

That’s why it will mostly likely run alongside the digital £ in the beginning and may be called a different name (e.g. Britcoin). Benefits will be issued in that currency which will be able to be used on designated services and products (e.g. Energy/food/rent) and then that exchanged by the vendor.

https://www.msn.com/en-us/money/news/“digital-currency-yuan-comes-with-an-expiry-date-spend-or-it-will-vanish”/vi-AA12ze8O

https://cryptotvplus.com/2022/12/chinas-digital-yuan-comes-with-an-expiration-date/

That's an awful lot of effort for what is essentially a form of rationing to deal with a fundamental imbalance between productivity and consumption.

Making everybody's lives shiter and shiter while continuing with policies that continue to grow that imbalance is a bizarre political choice, and in the long run utterly unsustainable.

As Milton Friedman said

"Open borders or a welfare state, pick one".

We've* picked open borders. Therefore, from where we are it looks far more likely to me that we'll go the other way, and the welfare state is a dead man walking.

That which can't be paid won't be paid

*Well the political establishment picked it. The voters picked the welfare state, but nobody seems to care what they think.

 

[sleepwello'nights]

6 minutes ago, DurhamBorn said:

Aged demographic doesnt matter,its the incomers consuming what they have not produced on top of 10million of our own the same.Remove 50% of the working age welfare budget you have no problems with pensions at all,zero.Pensions are a natural process paying fit working age is not.

I wonder whether our aging demographic is a problem for the future. A cursory internet search brought up reports that showed the ageing demographic is slowing. These are figures up to 2018. So I would imagine the up to date figures may reveal the trend reversing. The report linked below states the increase has stalled since 2012.

 The other issue to bear in mind is that as you age your consumption decreases. There is less demand for material possessions.The only increase I preceive is in health care. 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/923899/Mortality_insights_December_2019.pdf

[DurhamBorn]

28 minutes ago, Harley said:

I still can't see that working.  You can't magic up real stuff, especially imports.

The only way to save the economy itself on their present policies is to cut consumption by around 20%.Of course i saw this five years ago and i thought once it arrived polos would invest in energy,production etc to close that 20% gap (it was 16%,but its growing).However they are doing nothing to close the gap,they have instead decided workers,savers etc will have to lose 40% to make up for bennies and public sector pennsions losing nothing.Insane,yes,but that is the clear outcome if we carry on.Already this year workers have lost around 8% compared to bennies and 6% compared to retired public sector.Bennies are more because they got £700 extra bung for energy.

The only question on the present roadmap is when do enough stop working for it to collapse.The answer is now,because some things are collapsing already,yet no reverse in policy.

[CannonFodder]

14 minutes ago, DurhamBorn said:

The problem is thats the worst answer to this cycle.We need less immigration.Why?,because we are a net consumer of energy,food,and goods,we dont produce enough,or better a surplus.This is a cost push inflation.Thats why it keeps getting worse because they dont understand the macro.I know 100% the BOE are using the wrong roadmap for the cycle as are the government.Aged demographic doesnt matter,its the incomers consuming what they have not produced on top of 10million of our own the same.Remove 50% of the working age welfare budget you have no problems with pensions at all,zero.Pensions are a natural process paying fit working age is not.We are starting to collapse (NHS,Dentists etc) because we are importing consumers of them who dont produce.If we reduced immigration to 30k a year ,very skilled only and other reforms in energy production etc we would grow per capita.There are millions being paid to do nothing.The polos think fiscal spending on them will spur consumption,it will,but when you dont produce it just means more inflation.278 single mother on bennies on the council estate in my town.There is no shortage of care workers etc,its just they pay them £20k+ to sit at home doing nothing.

Do you think there will be anything coming through in the data that convinces them their roadmap is wrong and they reevaluate or if it full steam ahead to the iceberg?

[DurhamBorn]

14 minutes ago, SpectrumFX said:

That's an awful lot of effort for what is essentially a form of rationing to deal with a fundamental imbalance between productivity and consumption.

Making everybody's lives shiter and shiter while continuing with policies that continue to grow that imbalance is a bizarre political choice, and in the long run utterly unsustainable.

As Milton Friedman said

"Open borders or a welfare state, pick one".

We've* picked open borders. Therefore, from where we are it looks far more likely to me that we'll go the other way, and the welfare state is a dead man walking.

That which can't be paid won't be paid

*Well the political establishment picked it. The voters picked the welfare state, but nobody seems to care what they think.

 

You can have both,but it needs to be contribution based welfare with no means testing,10 years NI before bennies,not like ours.Ours is the worst of all as it ensures there is zero point working or saving for huge and rising numbers of people.

[DurhamBorn]

10 minutes ago, CannonFodder said:

Do you think there will be anything coming through in the data that convinces them their roadmap is wrong and they reevaluate or if it full steam ahead to the iceberg?

I dont think they have the capacity to understand things,or for any of them to step out of line its 100% groupthink.One huge problem is their inflation linked pensions.It means they are ok whatever happens,or at least they are last ones standing.The BOE talk about the macro,but the ones doing it are economists.Its apples and pears.The BOE has no macro strategists,the government has no macro strategists.Think about that.None.

I should add from a purely selfish side we should be pleased because it makes it so easy to stay ahead of them,but they are so bad i fear for my children and grandchildren and others.If we go back to 16 it would take a decade to train someone to understand the roadmap and why we would see a cycle turn.The one we are on now i could teach to a class of 5 year olds in a day.Incredible.

[ThoughtCriminal]

12 hours ago, Long time lurking said:

I think the statement was more a political dig my guess would be at Europe ,where there are a few huge battery plants in the pipe line,the EU destroyed what was the bread basket of Africa and Europe for out of season produce via tariffs 

The EU caused huge damage to African agriculture via tariffs 

I know too much about IQ to blame that on the EU.

 

They destroyed their agricultural sector by handing white owned farms to people with the brains of a rocking horse.

 

South Africa has taken the same path with their economy, with predictable results.

 

 

[ThoughtCriminal]

https://www.bbc.co.uk/news/business-64138898

 

Highest number of shop closures in 5 years. I'm sure it doesn't mean anything. 🤡

[Giraffe]

1 minute ago, ThoughtCriminal said:

https://www.bbc.co.uk/news/business-64138898

 

Highest number of shop closures in 5 years. I'm sure it doesn't mean anything. 🤡

you ain't seen nothin yet  

[PatronizingGit]

 

21 hours ago, M S E Refugee said:

About time these 3rd World imbeciles realised that most of them are actually Wealthy Countries if they become organised.

 

Probably the trouble. They cant become organized. China was able to do what it was able to do the last 50 years because it is not, erm 'blessed' with diversity. A lack of dozens of self interested ethnic groups competing with each other simplifies things a lot. 

Even if they are all black, most african countries seem to be fractured by the presence of many rival tribes, and in some cases, religions (ie Nigeria)

[wherebee]

1 minute ago, PatronizingGit said:

 

 

Probably the trouble. They cant become organized. China was able to do what it was able to do the last 50 years because it is not, erm 'blessed' with diversity. A lack of dozens of self interested ethnic groups competing with each other simplifies things a lot. 

Even if they are all black, most african countries seem to be fractured by the presence of many rival tribes, and in some cases, religions (ie Nigeria)

China has many ethnic minorities ('tribes') which do look out for each other. But they are less choppy uppy which is the main difference.

[SpectrumFX]

11 minutes ago, DurhamBorn said:

You can have both,but it needs to be contribution based welfare with no means testing,10 years NI before bennies,not like ours.Ours is the worst of all as it ensures there is zero point working or saving for huge and rising numbers of people.

That's true. The issue we have though in this country is that the politicial set up seems to make benefit reform a non starter. If only Frank Field had been allowed to have a go at it.