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

[Sasquatch]

37 minutes ago, belfastchild said:

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

Just spoken to our firewood supplier. He's a tree surgeon first and foremost but does sell firewood for cash (no advertising). He's only put his price up by £10 from last winter to £70/m3. I've ordered 6m3. I think he'll sell out very quickly once the weather cools.

[Yadda yadda yadda]

How is the Government going to afford all the costs that are about to hit?

1. Energy subsidy for consumers.

2. Massively increased unemployment as people stop spending and business costs spiral.

3. Increased debt servicing costs from higher interest rates.

4. Higher costs to run services as buildings cost more to heat, vehicles more to run and employees more to keep off the picket line.

5. Reduced income as economic activity collapses.

The public finances will burn. Tough choices will have to be made.

[Axeman123]

9 hours ago, Starsend said:

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

Not meant as critical, but I would say it will take off in anticipation the moment they signal any intention to fire up the printers at a later date.

[Heart's Ease]

Did my usual August winter order for logs and coal. Quite the hike, as we've all noted.

Merchant said he's struggling to get wood pellets because they are sanctioned goods; struggling to get logs because 'germany is buying anything it can get its hands on'.

[Joncrete Cungle]

https://www.youtube.com/watch?v=48VLWRKJCqY

Macro Alf on Jackson Hole, Fed Balance Sheet, US Bank Reserves, Treasury General Account and Reverse Repo.

[belfastchild]

3 minutes ago, Sasquatch said:

Just spoken to our firewood supplier. He's a tree surgeon first and foremost but does sell firewood for cash (no advertising). He's only put his price up by £10 from last winter to £70/m3. I've ordered 6m3. I think he'll sell out very quickly once the weather cools.

We are ahead of GB in the whole energy price thing because no cap here. I paid 140 odds for a m3 delivered during the week. I paid around 150 for 2m3 last year same time.
Larger family run tree surgeon type business. Said that people getting the work done are now asking them to cut the stuff up and leave it. Ive seen people on FB markeplace  trying to sell ringed leylandii type stuff for 50 quid etc 'for firewood'. One cheeky bugger even had 100 quid for firewood but you had to come and chop it down yourself!

[baffledbyzirp]

Reading Sancho's comments about Zoltan Pozsar and those that preceded it by Cattle Prod and Money Scam I was inspired to agree. I actually wrote a reply yesterday but it was so longwinded that by the time I tried to post it the thread (part 3) had expired and my message was sent to limbo. I think that Pozsar is the most informed and intelligent commentator on international finance based on an Americentric approach. His awareness of the implications regarding signals emanating from credit flows, especially the Repo market, are incredible. I also like that he has a Bond villain name.

What struck me from his recent material was that what we call inflation is actually a mean reversion. For the last 30 years assets and services have been bifurcated. On one hand there have been enormous rises for housing, growth stocks, education, residential rents, art, Rolex watches, healthcare, classic cars, trades, i.e. goods and services disproportionately consumed by the 1% and provided internally. By contrast, cheap shit that the lower ranks consume in vast proportions being food, electronics, fast fashion, technology, domestic appliances, small family cars etc. have become ever cheaper. Thus our great moderation was imported essentially to offset domestic increases. The world is patently crazy when a pair of jeans manufactured in Dhaka costs £4 and a cordless drill from China is £10. The costs are not truly reflected in the price because of subsidy, currency manipulation, and uncapitalized economic externalities such as pollution. Furthermore, the inflation figures are doctored to under report increases related to rent and capital prices in the housing sector and hedonic adjustments.

The price rises we are suffering today are a return to reality rather than a radical departure from it. Moreover, our complacency and over-consumption, encouraged by inaccurate price signals, amplified the rise.

When I was a kid a bottle of milk was circa 14p and yet recently 2 litres was only 90p despite inflation. The numbers don't compute. My conclusion is that cheap shit is going to get and stay a lot more expensive while expensive shit is going to become significantly cheaper. Not levelling up or down but the gravitational pull of the middle, a centripetal force. I suspect housing will be insulated to some extent by the levels of demand-supply, our obsession with home ownership, population increase by virtue of immigration and government policy. Farm land must soars as food imports become exorbitant.

We became dependant on cheap imports to support a lifestyle we could not afford, deconstructed our manufacturing industries, got fat and lazy and now cry foul when it is our own lack of foresight and indolence that have brought us to this juncture. Radical and transformative policies are required to stop the rate of decline but, as DB says frequently, collapse is inevitable. Sorry to sound so pessimistic. GLA.

[Axeman123]

8 hours ago, Bus Stop Boxer said:

 

Haven't watched the video, but I can see quite few similar on my yt homepage. Does anyone else get a "peak tightening" vibe from it all? Here is another with a crazy title, just as an example.

[M S E Refugee]

Sanctions war isn’t going as well as planned – The Economist https://www.rt.com/news/561634-sanctions-ukraine-china-economist/

The West will be decimated well before any of their poxy sanctions work.

[Joncrete Cungle]

9 minutes ago, belfastchild said:

We are ahead of GB in the whole energy price thing because no cap here. I paid 140 odds for a m3 delivered during the week. I paid around 150 for 2m3 last year same time.
Larger family run tree surgeon type business. Said that people getting the work done are now asking them to cut the stuff up and leave it. Ive seen people on FB markeplace  trying to sell ringed leylandii type stuff for 50 quid etc 'for firewood'. One cheeky bugger even had 100 quid for firewood but you had to come and chop it down yourself!

I save such adverts in FB marketplace then swoop when the wood has sat unsold for a while in their garden. Then they change it to FREE to get rid of it.

[onlyme]

3 minutes ago, M S E Refugee said:

Sanctions war isn’t going as well as planned – The Economist https://www.rt.com/news/561634-sanctions-ukraine-china-economist/

The West will be decimated well before any of their poxy sanctions work.

Russsia have had years to adjust their economy and position themselves for resilience, having been hit by sanctions over the years,  The West went on a fantasy trip to running an economy on cheap money and a few corporations and investors running away with the spoils without actually producing anything. Worringly rather than diversifying and correcting tis mistake when you look at the attack on farming (small farmers) and the obvious intent to corporatise that at some point having busted it they seem to be going for the full house.

[Errol]

9 minutes ago, M S E Refugee said:

The West will be decimated well before any of their poxy sanctions work.

They won't ever work. They are trying to sanction the country that survived WWII (destroying 85% of all German forces), the Siege of Leningrad and the Battle of Stalingrad. 

This is not like trying to sanction Cuba or Iran (and even those sanctions don't work).

[Boglet]

31 minutes ago, Errol said:

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.

 

As discussed at length, this already happens elsewhere in the system but it's obfuscated and you need to know how the system works and look closely to really see it. Easy to not bother and ignore it, especially while you're doing OK.

Gas and leccy are a bit different because it's simple, everyone understands it and people are hyper-focussed on energy costs now. If shivering workers see bennies given protection while they get none it will be hard for them to ignore. Dangerous game.

[belfastchild]

Fuck me! Just checked home heating oil prices and they have gone up 150 quid in a week! 750 to 900 for 900 litres!
Knew I should have topped up last week! Looks like everyone had the same idea!

[DoINeedOne]

Forget to post this the other day but always interesting to watching harrys farm i found  a few bits interesting 

most of his neighbours are giving up and doing a government scheme AB15

https://www.gov.uk/countryside-stewardship-grants/two-year-sown-legume-fallow-ab15

How this option will benefit the environment

It provides food for farmland wildlife, such as pollen and nectar for pollinators including bumblebees, solitary bees, butterflies and hoverflies. As well as invertebrate chick food for farmland birds around the sown fallow between April and July. It can also be a useful part of a rotation aimed at reducing blackgrass populations.

Your paid £569 per year according to the video per hectare for 2 years

Some of his neighbours doing this have 250 acres

250 acres = 101 hectares 

101 * £569 = £57,469 

Cant blame the farmers for doing this 

Short interesting video but the parts about the above are around 3:08 and 8:30

 

 

[DoINeedOne]

Also forgot was walking the dog last night and chatting my partner about houses etc... she said 3 people at work are having to find new places to live as landlords are selling up, seems like a regular thing now

[Yadda yadda yadda]

17 minutes ago, Errol said:

They won't ever work. They are trying to sanction the country that survived WWII (destroying 85% of all German forces), the Siege of Leningrad and the Battle of Stalingrad. 

This is not like trying to sanction Cuba or Iran (and even those sanctions don't work).

Less of the Russian propaganda please Errol, it is for peasant consumption. Suffering and death isn't glorious.

Outcome matters, not process. America won the war by staying out for years. Russia took the most casualties. It would have taken even more if it wasn't supplied from the West and if German military production wasn't decimated by the Western bombing campaign. But that is back to process.

As things stand there is no fighting in the USA and they're much less affected by supply shortages.

Yes, the sanctions won't defeat Russia but who says that is their aim? Western Europe is now more subservient to the US than before.

[Jay]

51 minutes ago, Yadda yadda yadda said:

How is the Government going to afford all the costs that are about to hit?

1. Energy subsidy for consumers.

2. Massively increased unemployment as people stop spending and business costs spiral.

3. Increased debt servicing costs from higher interest rates.

4. Higher costs to run services as buildings cost more to heat, vehicles more to run and employees more to keep off the picket line.

5. Reduced income as economic activity collapses.

The public finances will burn. Tough choices will have to be made.

Excellent questions sir…now please tell me the answers..

[Errol]

Almost zero generation from wind today - http://www.gridwatch.templar.co.uk/

[Errol]

1 minute ago, Yadda yadda yadda said:

Less of the Russian propaganda please Errol, it is for peasant consumption. Suffering and death isn't glorious.

That's my point. They are used to hardship in a way that the West isn't. Obviously not good, but they've seen worse. If sanctions against Cuba/Iran etc don't work, why would anyone think sanctions against a country as large, rich and well prepared as Russia would work?

[reformed nice guy]

30 minutes ago, Cattle Prod said:

I'm encouraged by the pragmatic Japanese, and I'd never bet against American innovation,

The "new Americans" are not the same as the old ones. Its a different people so to compare based on history you have to somehow take into account Mexico and other south American countries.....

https://nces.ed.gov/programs/coe/indicator/cge

[Errol]

[Barnsey]

1 hour ago, baffledbyzirp said:

Reading Sancho's comments about Zoltan Pozsar and those that preceded it by Cattle Prod and Money Scam I was inspired to agree. I actually wrote a reply yesterday but it was so longwinded that by the time I tried to post it the thread (part 3) had expired and my message was sent to limbo. I think that Pozsar is the most informed and intelligent commentator on international finance based on an Americentric approach. His awareness of the implications regarding signals emanating from credit flows, especially the Repo market, are incredible. I also like that he has a Bond villain name.

What struck me from his recent material was that what we call inflation is actually a mean reversion. For the last 30 years assets and services have been bifurcated. On one hand there have been enormous rises for housing, growth stocks, education, residential rents, art, Rolex watches, healthcare, classic cars, trades, i.e. goods and services disproportionately consumed by the 1% and provided internally. By contrast, cheap shit that the lower ranks consume in vast proportions being food, electronics, fast fashion, technology, domestic appliances, small family cars etc. have become ever cheaper. Thus our great moderation was imported essentially to offset domestic increases. The world is patently crazy when a pair of jeans manufactured in Dhaka costs £4 and a cordless drill from China is £10. The costs are not truly reflected in the price because of subsidy, currency manipulation, and uncapitalized economic externalities such as pollution. Furthermore, the inflation figures are doctored to under report increases related to rent and capital prices in the housing sector and hedonic adjustments.

The price rises we are suffering today are a return to reality rather than a radical departure from it. Moreover, our complacency and over-consumption, encouraged by inaccurate price signals, amplified the rise.

When I was a kid a bottle of milk was circa 14p and yet recently 2 litres was only 90p despite inflation. The numbers don't compute. My conclusion is that cheap shit is going to get and stay a lot more expensive while expensive shit is going to become significantly cheaper. Not levelling up or down but the gravitational pull of the middle, a centripetal force. I suspect housing will be insulated to some extent by the levels of demand-supply, our obsession with home ownership, population increase by virtue of immigration and government policy. Farm land must soars as food imports become exorbitant.

We became dependant on cheap imports to support a lifestyle we could not afford, deconstructed our manufacturing industries, got fat and lazy and now cry foul when it is our own lack of foresight and indolence that have brought us to this juncture. Radical and transformative policies are required to stop the rate of decline but, as DB says frequently, collapse is inevitable. Sorry to sound so pessimistic. GLA.

I've been reading a lot lately about other emerging markets taking up the slack, so the truth about what lies ahead is somewhere in between I think. Good point on immigration, I think our climate (despite the recent drought blip) will be seen as very favourable in years to come.

[Errol]

Never fear, Ukraine has agreed to help rebuild Britain's transport network!

 

 

[Errol]