Credit deflation and the reflation cycle to come (part 5)

[HousePriceMania]

When's Sunak leaving ?

 

[DurhamBorn]

1 hour ago, HousePriceMania said:

When's Sunak leaving ?

 

The one to watch is the 15 year,thats the one pension schemes etc tend to use.Thats the one that gives a good idea on long term interest rates.Its the one that will of cut CETV pension transfer values by over a third to a half.DB pension transfer window has mostly been slammed shut.

[AlfredTheLittle]

22 minutes ago, DurhamBorn said:

The one to watch is the 15 year,thats the one pension schemes etc tend to use.Thats the one that gives a good idea on long term interest rates.Its the one that will of cut CETV pension transfer values by over a third to a half.DB pension transfer window has mostly been slammed shut.

Here it is: 

[Pip321]

6 minutes ago, DurhamBorn said:

The one to watch is the 15 year,thats the one pension schemes etc tend to use.Thats the one that gives a good idea on long term interest rates.Its the one that will of cut CETV pension transfer values by over a third to a half.DB pension transfer window has mostly been slammed shut.

Funnily enough this weekend I was trying to compare and work out what my CETV would look like nowadays but struggled to get even a guesstimate.

I transferred out in Dec 18, the offer just seemed huge verses the small pension (after early withdrawal adjustments etc) that I was about to claim at 50 years old, (50 because it was an old protected scheme). I could of course have left the pension to accrue but the scheme goal posts kept moving so much I wanted my 25% out.

Would be interesting to know how much lower  the transfer values are now.

If you estimate about half then it wouldn’t have been viable…..although interest rates are much higher and investment returns therefore ‘in theory’ will be higher, the whole point for me was it was never about return on capital it was all about receiving a disproportionately large chunk of cash that didn’t need to make any real return to compete with the DB pension.

Of course inflation is now a factor but I have the solace of knowing that my DB pension was capped at 5% increases, so that’s the benchmark if I want to keep pace. As it happens I am ok with current strategy driven by this thread. Just wish I had joined the party a few years earlier. 😉

[DurhamBorn]

1 hour ago, Pip321 said:

Funnily enough this weekend I was trying to compare and work out what my CETV would look like nowadays but struggled to get even a guesstimate.

I transferred out in Dec 18, the offer just seemed huge verses the small pension (after early withdrawal adjustments etc) that I was about to claim at 50 years old, (50 because it was an old protected scheme). I could of course have left the pension to accrue but the scheme goal posts kept moving so much I wanted my 25% out.

Would be interesting to know how much lower  the transfer values are now.

If you estimate about half then it wouldn’t have been viable…..although interest rates are much higher and investment returns therefore ‘in theory’ will be higher, the whole point for me was it was never about return on capital it was all about receiving a disproportionately large chunk of cash that didn’t need to make any real return to compete with the DB pension.

Of course inflation is now a factor but I have the solace of knowing that my DB pension was capped at 5% increases, so that’s the benchmark if I want to keep pace. As it happens I am ok with current strategy driven by this thread. Just wish I had joined the party a few years earlier. 😉

You will be pleased to know i did a transfer at the best point in 400 years,and invested most of it in oil potash and telcos,oil and potash right at the lows.Its all mingled in,but i suspect iv at least doubled it.I knew a few who were holding on a few years before leaving who at the time had transfer values of over half a mill,i doubt they would even get them done now.

[sancho panza]

23 minutes ago, DurhamBorn said:

You will be pleased to know i did a transfer at the best point in 400 years,and invested most of it in oil potash and telcos,oil and potash right at the lows.Its all mingled in,but i suspect iv at least doubled it.I knew a few who were holding on a few years before leaving who at the time had transfer values of over half a mill,i doubt they would even get them done now.

Mrs P has about ten years in of a final salary scheme that closed in 2022.

The only prolbem is that when I read the small print the inflation linkage is only up to 2.5% CPI.Firstly that's pretty dire in an era when 5% may be consdiered low and sustained double figure runs quite possible.

I know you've said before that it's ahrd to do due to regulatory pressure but is there a legal right people have to trsnfer out do you know?

Appreciate if anyone else knows. iirc @Democorruptcy did a final salary transfer as well.

[janch]

4 hours ago, afly said:

I love this. Electric vehicles powered by filthy coal. 

I'e been noticing more anti EV discussion on the radio recently plus article in yesterday's MoS.  They all point out the downsides of not enough charging stations or it taking ages to charge the battery.  Also exorbitant price, "range anxiety" and different charging points having different systems to use them etc etc. 

I don't have any direct experience but I detect a turn-around in sentiment in MSM.  Are TPTB changing their minds on EVs?

[Yellow_Reduced_Sticker]

3 hours ago, M S E Refugee said:

Hopefully this will turn around my Thungela position I'm down 43%.

I hoping that buying Coal Mining shares during the Summer will pay off this Winter.

 

Been watching this one as VERY INTERESTED in Thungela Resources...

 

Personally I think (looking at the chart) it's got further to fall around to the £4.50 area, but what do I know!!!

 

Last September 2022, Chief Financial Officer Gideon Frederick Smith SOLD 60,000 shares, mostly at average price of R 379.83 each, for a total of R 22.7 million, around £1.1 million.

 

COUGH...cough...How CONVENIENT to sell at around the TOP high share price!

 

I'm thinking of emailing him AND asking when he's BUYING back in?!

 

[belfastchild]

18 minutes ago, janch said:

I'e been noticing more anti EV discussion on the radio recently plus article in yesterday's MoS.  They all point out the downsides of not enough charging stations or it taking ages to charge the battery.  Also exorbitant price, "range anxiety" and different charging points having different systems to use them etc etc. 

I don't have any direct experience but I detect a turn-around in sentiment in MSM.  Are TPTB changing their minds on EVs?

Ive thought this would be the direction eventually. Birth to Grave pollution figures will come out and that will be the end of EVs as big heavy, fast beasts. They are still the thing for small city cars though and hybrids are a better use of the battery capacity than pure EV until better tech gets sorted out.

Just mentioned in another post, solar is shite here in NI today so if Im charging my EV its 15% coal! Been a long time since day to day transport was coal powered.

[RWJ]

52 minutes ago, sancho panza said:

Mrs P has about ten years in of a final salary scheme that closed in 2022.

The only prolbem is that when I read the small print the inflation linkage is only up to 2.5% CPI.Firstly that's pretty dire in an era when 5% may be consdiered low and sustained double figure runs quite possible.

I know you've said before that it's ahrd to do due to regulatory pressure but is there a legal right people have to trsnfer out do you know?

Appreciate if anyone else knows. iirc @Democorruptcy did a final salary transfer as well.

I found it impossible to transfer out @sancho panza.  The main reason cited was that I am under 50.  Made a thread on it:-

 

[DurhamBorn]

56 minutes ago, sancho panza said:

Mrs P has about ten years in of a final salary scheme that closed in 2022.

The only prolbem is that when I read the small print the inflation linkage is only up to 2.5% CPI.Firstly that's pretty dire in an era when 5% may be consdiered low and sustained double figure runs quite possible.

I know you've said before that it's ahrd to do due to regulatory pressure but is there a legal right people have to trsnfer out do you know?

Appreciate if anyone else knows. iirc @Democorruptcy did a final salary transfer as well.

In theory it should be easy,but its very very difficult to get an IFA to ok one.Before you got around it by being an "insistent client" ie they said we dont think its a good idea,you say,thankyou,iv read your report but would like to go ahead anyway.As long as it wasnt "reckless" some would do it.I got mine done that way,but by letting them think they would manage the money for 30 years,but i launched a transfer on them within an hour of the money landing with them.They were not amused,but nothing they could do.The problem now is the platforms like Transact etc and AJ Bell wont accept money in from insistent clients,so now the only route is to get a yes from an IFA.If i was doing it now i would forge up an NHS letter that i had cancer or something so you wanted to transfer  before it was all lost.I told them id had kidney cancer so had a big risk i wouldnt live long.They thought it was recent ie a year,not 25 like it was and crucial you let them think they will manage the money for years,thats where they make money for 5 minutes work a year.

I wanted to do a £100k one my partner had,but the IFA she went to would not do it until she was 50 and by then her fund had cut transfer values by 40% etc so she hasnt done it.The IFA said no rush etc,they are clueless and all bought the idea rates would never go up.

Hers has a 2.5% max uplift so is being destroyed at the moment,really i should claim compo from the FSA doing everything they could to stop transfers just because a few idiot welsh steel workers blew theirs on pink diamonds.

Edited June 12, 2023 by DurhamBorn

[working woman]

Re Useless Eaters - yes I have 2 of those living on my balcony - Costing me a fortune in mealworms.  2 Blackbirds that I have nicknamed Poop and Spike - one poops everywhere, the other raises his feathers in a spikey crest. 

Re ESG Lending - Wow!  I am really suprised  that some Lenders are actually going down that route. This is likely all to do with the Sustainable Development Agenda which stated in the early 70's and we currently have Agenda 2030. I am suprised it is being taken so seriously. 

The reason why people are wondering what the hell is going on, asking questions like "is there a hidden agenda", is because yes, there is an agenda, hidden in plain sight, which the public did not vote for at the ballot box. This is Green Party Policy through the backdoor.

Most people, if they sat down and learned about what Sustainable Development is, which is based on Permaculture* and is how traditional communities survive, would likely agree with it, but many are currently anti because they do not understand it, where it came from and more importantly were not  given the option to vote for it.

It is being imposed on people, rather than people choosing it at the ballot box.  

Take a look at the Green Party's  policy on immigration. Whilst they don't have an open door policy - they used to - they are still quite lax.   Yes, I can understand where they are coming from, being caring and compassionate to others etc etc, but ultimately, you cannot swamp a country with more and more people. It eventually makes life unbearable and unsustainable for the original inhabitants.

We are living through very interesting times.   

Edited June 12, 2023 by working woman

[JMD]

1 hour ago, janch said:

I'e been noticing more anti EV discussion on the radio recently plus article in yesterday's MoS.  They all point out the downsides of not enough charging stations or it taking ages to charge the battery.  Also exorbitant price, "range anxiety" and different charging points having different systems to use them etc etc. 

I don't have any direct experience but I detect a turn-around in sentiment in MSM.  Are TPTB changing their minds on EVs?

TPTB have realised the national grid ('smart' or otherwise) isn't capable of charging millions of EVs. I have now come to think 2nd hand ICE cars will not only be tolerated but will be positively encouraged to operate for decades to come. After all its not just the 'evil' oil energy factor, but also the problem of the limited supply of minerals needed for batteries and the manufacture of entire new fleets of cars. 

[M S E Refugee]

2 minutes ago, JMD said:

TPTB have realised the national grid ('smart' or otherwise) isn't capable of charging millions of EVs. I have now come to think 2nd hand ICE cars will not only be tolerated but will be positively encouraged to operate for decades to come. After all its not just the 'evil' oil energy factor, but also the problem of the limited supply of minerals needed for batteries and the manufacture of entire new fleets of cars. 

I am currently on a Train from Birmingham back to Carlisle, our Train was cancelled but luckily we have managed to get on a delayed Train.

It shows how delusional all this Green Bollocks is.

They would have to spend Hundreds of Billions to make the Railway Network half way decent.

It's the first time I've been to Birmingham, what a shithole!

[Sugarlips]

3 hours ago, AlfredTheLittle said:

Here it is: 

Now 4.61...

get Kwarteng back!

[Transistor Man]

23 minutes ago, JMD said:

TPTB have realised the national grid ('smart' or otherwise) isn't capable of charging millions of EVs. I have now come to think 2nd hand ICE cars will not only be tolerated but will be positively encouraged to operate for decades to come. After all its not just the 'evil' oil energy factor, but also the problem of the limited supply of minerals needed for batteries and the manufacture of entire new fleets of cars. 

You are giving them a lot of credit. I think they're clueless. 

[Plan-b]

22 minutes ago, JMD said:

TPTB have realised the national grid ('smart' or otherwise) isn't capable of charging millions of EVs. I have now come to think 2nd hand ICE cars will not only be tolerated but will be positively encouraged to operate for decades to come. After all its not just the 'evil' oil energy factor, but also the problem of the limited supply of minerals needed for batteries and the manufacture of entire new fleets of cars. 

I agree except I think theres no intention to ever provide for millions of EVs. I think an individuals worth will decide who gets the privilege of ownership of private personal transport.

And by worth I mean not only the preserves of the rich and the good, but among the plebs those that are strictly necessary for the function of society.

[Pip321]

2 hours ago, sancho panza said:

Mrs P has about ten years in of a final salary scheme that closed in 2022.

The only prolbem is that when I read the small print the inflation linkage is only up to 2.5% CPI.Firstly that's pretty dire in an era when 5% may be consdiered low and sustained double figure runs quite possible.

I know you've said before that it's ahrd to do due to regulatory pressure but is there a legal right people have to trsnfer out do you know?

Appreciate if anyone else knows. iirc @Democorruptcy did a final salary transfer as well.

There should be a legal right to your money but there is a real mix of our modern society issues that make stuff like this impossible……and it’s educated and well informed customers like you who ends up paying.

Firstly fuckwit customers trying to sue institutions and the government rather than taking responsibility for they actions don’t help.

Secondly a government who pretends they are protecting people by insisting they MUST use an IFA to transfer from a DB pension worth over £30k….however an IFA is probably the person the customer needed protecting from.

Thirdly a corrupt industry made over complex so the industry itself makes more money for itself than it does for its customers. Anyone know a poor IFA?

It’s all shite and I guess you have no legal right….because the laws are not there for your benefit. The government needs a pension industry, it gains from it and it’s their money first and then yours.

I used an IFA who was receptive but I stupidly still use them for an expensive chat each year. I will ditch them but holding on because I want to move my SIPP and he might come in handy for research purposes.

Hope you can get sorted….

[MrXxxx]

On 10/06/2023 at 08:13, crashmonitor said:

Interest Rate Armegeddon UK..... I came across this yesterday. I was surprised he had gotten so many youtube hits. But his delivery is quite amusing. He is a retired London trader but he sounds like a mad American scientist that goes into Beavis and Butt head style giggles as he lays on the doom.

 

Did get me thinking why the heck aren't traders going for a 1992  style turkey shoot ( led by George Soros) whence base rates jumped from 10 to 15% overnight.  Is there a Bankers code that means Central Banking turkeys like Bailey are exempt. Come on we are in a league of our own along with Turkey ( base rate 8.5%)  and Argentina (97%) in the incompetence stakes.

 

 

 

Interesting comparison this gentleman makes at the beginning about mortgages being like bonds..lets take this a bit further....what is the historical real return [1900-2018] on both in the UK?

Bonds ~1.8

Houses ~1.8

[https://www.credit-suisse.com/media/assets/corporate/docs/about-us/media/media-release/2018/02/giry-summary-2018.pdf]

 

Mmmm, so if any asset varies around a mean this means that following a period of being above the mean it usually corrects by dropping through and below the mean before starting the cycle again...now, what has been the return on houses during the ten year period of near zero inflation i.e. real return?

~2.5%, so for the last ten years they have been 0.7% above their LTA EVERY year!

If we go back for the last 30 years its been:

~3%, so for the last thirty years they have been 1.2% above their LTA EVERY year!

[https://monevator.com/historical-uk-house-prices/]
 

Now unless we are still climbing up the peak, 'we' and property prices are only going in one direction to correct to the LTA!

Edited June 12, 2023 by MrXxxx

[DurhamBorn]

13 minutes ago, Pip321 said:

There should be a legal right to your money but there is a real mix of our modern society issues that make stuff like this impossible……and it’s educated and well informed customers like you who ends up paying.

Firstly fuckwit customers trying to sue institutions and the government rather than taking responsibility for they actions don’t help.

Secondly a government who pretends they are protecting people by insisting they MUST use an IFA to transfer from a DB pension worth over £30k….however an IFA is probably the person the customer needed protecting from.

Thirdly a corrupt industry made over complex so the industry itself makes more money for itself than it does for its customers. Anyone know a poor IFA?

It’s all shite and I guess you have no legal right….because the laws are not there for your benefit. The government needs a pension industry, it gains from it and it’s their money first and then yours.

I used an IFA who was receptive but I stupidly still use them for an expensive chat each year. I will ditch them but holding on because I want to move my SIPP and he might come in handy for research purposes.

Hope you can get sorted….

If i had left it with the IFA who did the transfer they pretty much built a 60/40 fund.It would of been up 15% from that date (halfway through the Covid falls) before fees.Fees were 1.8% all in so 6%ish gone from that 15%.So them investing it halfway through the crash they would of made me 9% max in three years so around 12% down inflation adjusted,im up over 100% and my fees are around 0.2% a year.I know for a fact most of their clients go into drawdown at 4% to 5% a year,so if those 60/40 types flatline for a few more years then those pensions are going to start heading down fast,and thats before any inflation increases.Bonds might stop falling and their higher yields start to feed through,but the equity part looks dodgy,a big part in a few mega companies who dont pay much if anything in income.

I have just checked the Vanguard 60/40 and anyone going into drawdown from Jan21 will of seen it flatline before fees,so if in 4% a year drawdown the pot will be around 12% to 14% down with fees.Just 2.5 years in and its starting to looked holed below the waterlind.Jut takes another couple of years flatline an a quarter of the pension will be gone,without any inflation increases.

Edited June 12, 2023 by DurhamBorn

[JMD]

58 minutes ago, M S E Refugee said:

I am currently on a Train from Birmingham back to Carlisle, our Train was cancelled but luckily we have managed to get on a delayed Train.

It shows how delusional all this Green Bollocks is.

They would have to spend Hundreds of Billions to make the Railway Network half way decent.

It's the first time I've been to Birmingham, what a shithole!

I agree, but with reference to upgrading the network. HS2 will probably end up costing £200billion - so unfortunately our government has already spent all the money!?

But It's a common theme and something governments do all the time - and yet the voters never seem to learn and instead appear to desire ever more inefficient bureaucracy, stifling regulation, unfair benefits, and pointless state handouts and charity...  You see it's a slippery slope, with a final destination of penury!!!

 

Btw, you say that Birmingham's a shithole? Did you visit or perhaps get too close to the Bull's Ring !!...  i beleive that's what it's called?!

Edited June 12, 2023 by JMD

[JMD]

43 minutes ago, Plan-b said:

I agree except I think theres no intention to ever provide for millions of EVs. I think an individuals worth will decide who gets the privilege of ownership of private personal transport.

And by worth I mean not only the preserves of the rich and the good, but among the plebs those that are strictly necessary for the function of society.

Ah yes 'Key Workers'?  COVID introduced many new 'useful' terms that will be inflicted upon us in future.

[The Bear of Doom]

1 hour ago, JMD said:

TPTB have realised the national grid ('smart' or otherwise) isn't capable of charging millions of EVs. I have now come to think 2nd hand ICE cars will not only be tolerated but will be positively encouraged to operate for decades to come. After all its not just the 'evil' oil energy factor, but also the problem of the limited supply of minerals needed for batteries and the manufacture of entire new fleets of cars. 

Sounds a bit like Cuba and keeping 1950s American vehicles on the road due to sanctions!

[leonardratso]

first time to birmingham eh? make sure its your last as well. You aint missing owt. Avoid coventry and rugby as well.

[JMD]

57 minutes ago, MrXxxx said:

Interesting comparison this gentleman makes at the beginning about mortgages being like bonds..lets take this a bit further....what is the historical return on both in the UK?

Bonds ~1.8

Houses ~1.8

[https://www.credit-suisse.com/media/assets/corporate/docs/about-us/media/media-release/2018/02/giry-summary-2018.pdf]

 

Mmmm, so if any asset varies around a mean this means that following a period of being above the mean it usually corrects by dropping through and below the mean before starting the cycle again...now, what has been the return on houses during the ten year period of near zero inflation i.e. real return?

~2.5%, so for the last ten years they have been 0.7% above their LTA EVERY year!

If we go back for the last 30 years its been:

~3%, so for the last thirty years they have been 1.2% above their LTA EVERY year!

[https://monevator.com/historical-uk-house-prices/]
 

Now unless we are still climbing up the peak, 'we' and property prices are only going in one direction to correct to the LTA!

Interesting calculation you've done there.

Can I propose a thought experiment - if house prices were too remain at say their current nominal price levels, with inflation doing all the heavy work at removing property value. What average rate of inflation would be needed to reset house prices to their long-term LTA over say the next 10 or 20 years?   

...I wonder, is it near to @DurhamBorn estimated 7% (I believe?) inflation figure?

 

Btw in many countries, Australia and South Africa for example, mortgages are called bonds.

Edited June 12, 2023 by JMD