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

[Joncrete Cungle]

23 minutes ago, Bobthebuilder said:

Great post.

Not many people realise that lovely bird song they hear is in fact the bird shouting "THIS IS MY MANOR, COME ANYWHERE NEAR ME AND I WILL KICK THE SHIT OUT OF YOU"

The Blackbirds in my garden look at me as if I owe them money.

[Democorruptcy]

5 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.

Yes I got mine out before DB. My IFA gave me a 'Yes' to the transfer so it was easy. The firm he worked for has since gone bust and there isn't a month goes by when I don't get an email from some chancer begging me to sue his firm for poor advice. I assume the compensation claims might be why the firm went bust and there lies the problem. Nobody these days wants to risk saying 'Yes' in case they get sued and the providers that did accept a transfer even if the advice was a 'No', now won't take the money.

[Mikhail Liebenstein]

5 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.

I think DC schemes are fine if you can do the leg work to ensure your not invested in overly safe, non growth assets.

A lot don't check and sit in 'lifestyle' funds which hardly grow. Or start buying bonds, which are really designed for income, too early. 

I've always sat as much as possible in equity funds, and even with periods of volatility they always end higher after 18 months.

My drawdown strategy might be to hold say 2 years cash, and leave the rest in stocks to avoid selling equities at a loss.

[Ash4781b]

4 hours 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 don’t know Birmingham. So-called has article that commuter cars being stripped for parts. No idea how common it is. 

https://www.bbc.co.uk/news/uk-england-birmingham-65767351
 

 

[Ash4781b]

3 hours ago, Sugarlips said:

Now 4.61...

get Kwarteng back!

Is it spiking because the markets see Labour getting in? Tory party is infighting?

[Wight Flight]

Just now, Ash4781b said:

Is it spiking because the markets see Labour getting in? Tory party is infighting?

I would have thought that had been priced in for months.

[Plan-b]

4 minutes ago, Ash4781b said:

I don’t know Birmingham. So-called has article that commuter cars being stripped for parts. No idea how common it is. 

https://www.bbc.co.uk/news/uk-england-birmingham-65767351
 

 

It used to be common many years ago particularly amongst the younger generation when times were more like the present, high prices, high inflation, people losing or without jobs no doubt bennies are more generous these days but not for everyone.

Back then if someone said where did you get your new parts they would say 'from CPS' I eventually learned that meant Car Park Spares. 

[leonardratso]

woke guy next to me at work wasnt too impressed with my 2nd screen showing my T212 pies, nosey fucker;

Edited June 12, 2023 by leonardratso

[Axeman123]

1 hour ago, M S E Refugee said:

An interesting Ad campaign from HSBC.

"All our branches are safe spaces...": unless the abuser actually marches in to drag you away, because I doubt anyone working there would get involved.

[sancho panza]

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.

 

 

 

There's a point at about 3 minutes where he explains why banks and BS's are incetivized to keep lending even into an unsteady marekt and that's because the new business drives gross income which allows them to cover their operating costs.

This was something noted in the examination of BS balance sheets in the banking thread where BS's like the Cov/Skipton etc who are holding a lot of dodgy legacy laons,keep expanding their balance sheets when common sense would make you think the opposite direction would be a safer idea.

It's an interesting observation and one which makes a lot of sense.Especially given the fact that on Natwest's balance sheet-for example-there are a lot of legacy loans from 2006-2012 marked as stage 2,and very few of the more recent loans 2020-2022 are marked at stage 2.

He goes for an around 40% down on UK hosue rpices,but allows for the possibility of 70-80% which I think is reasonable-presuming that's nominal.

The one unknown is what a 20% mark down will do to marginal banks and BS's.

 

[Jay]

2 hours ago, DurhamBorn said:

The incredible thing is none of them understand the macro drivers of this.The reason inflation is increasing/high is nothing to do with rates.Its been driven by bennies and state pensions and they are inflation linked so they just consume more and more and the economy cant heal.They all think the economy will increase production,but it wont,its a distribution cycle and cant.The reason mortgage rates are shooting up is because gilts are pricing in the fact we are on a systemic collapse roadmap.BTL is an innocent in this in a way,not that i give a fuck they are about to be destroyed,after all its a business so they keep saying and in that case they should of used the 20 good years to pay down the loans,interest only to max out lifestyle etc means the cycle rips you a new one now.

The BOE is lost here,they have zero understanding of the cycle,they are flapping around and cant understand it.They need to get some strategists on advising them who understand the drivers.

Notice today Tuffnells now gone under.Can keep up with inflation pressures.That will really hurt lots of companies who use them,and force up prices,inflation feeding itself,but then bennies go up with that inflation again,so the nnext courier goes down,cant get staff etc.Thats the road we are on.Everything goes down because they dont understand the cycle.Funny enough i had an email last week from them.Please enter your forecasts into a competition ,no thanks,il give you a day a week in Darlo at your new offices fees to be negotiated.

Notice how Catherine doesnt understand the bennie interaction in rents.She doesnt understand the UK cant price discover because monentising welfare budgets is backstopping more and more,until,,,,,,,,,,,,,,,,,,,,

Fantastic post..the speed of events is really taking me by surprise..it really is a tipping point…they ain’t cutting benefits or pensions..it’s systemic collapse but way worse than I expected..we are participating in historic events..even now I find it difficult to accept as possible..the wounds are too deep..change and a way lower standard of living for most..within 2 years..quite sad really..be lucky..

[sancho panza]

59 minutes ago, Ash4781b said:

I don’t know Birmingham. So-called has article that commuter cars being stripped for parts. No idea how common it is. 

https://www.bbc.co.uk/news/uk-england-birmingham-65767351
 

 

These sorts of crime are high profit low risk for the thieves.Low risk of being caught and even after being caught,suspect punishment won't be that harsh.

Mrs P had her spare tyre nicked from Heathrow car parks(Sorrento)-cost of repairs circa £600;

I work in a city of 300,000.Sat night,spoke to a policeman.I alwasy ask how many are on.Bascially in the run up to 2200 hrs there was 6 double manned cars and 2 solo cars.We took two coppers to hospital with us guarding patient.That left 5+2 for a city of 300,000.

That's insane.Pub fight kicks off,you're on your own most likely.Get burgled or have someone robbing your car....same,same,same.

It's depressing.The public have no idea how thin the blue line is and it's not really the coppers faults.It's their bosses who thought it was a good idea to stop recruting ex squaddies and hire Psychology grads instead.It was the polos who shrank the rosters down from circa 60 odd in 2008 to under 20 now.

It's instituional decay plain and simple as laid out by @ThoughtCriminal. Most of our institutions are going the same way.

https://news.sky.com/story/public-trust-in-police-is-hanging-by-a-thread-watchdog-admits-12898981

Public trust in the police has fallen to the lowest level ever - and time is running out to restore it, the policing watchdog has warned.

Chief constables are being urged to concentrate on crimes that matter most to people, get the basics right in investigations and restore the abandoned policy of neighbourhood policing.

 

His Majesty's Chief Inspector of Constabulary Andy Cooke says they should be forced to do all of this by law - and he is demanding new legal powers to make chiefs follow his rules. He also wants a role in their appointment.

Mr Cooke said: "There are clear and systemic failings throughout the police service in England and Wales and, thanks to a series of dreadful scandals, public trust in the police is hanging by a thread. We have a small window of opportunity to repair it."

He described the criminal justice system as "dysfunctional" - revealing that in October last year the backlog of crown court cases was the highest ever recorded.

"In too many cases victims lose confidence in the system and withdraw from the process entirely," he said.

"Forces need to show professionalism, get the basics right when it comes to investigating crime, and respond properly when someone dials 999.

Edited June 12, 2023 by sancho panza

[Loki]

2 hours ago, M S E Refugee said:

Kind of confirms everything you need to know about CBDC's.

"NO NOT LIKE THAT REEEEEEEEEEEEEEEEEEE!!"

[Van Lady]

1 hour ago, Cattle Prod said:

My blackbird is called Kevin, after Kevin the teenager, I decided to mimic his song one day having a beer in the garden and he had a meltdown, ripping all the moss off the pond stones and chucking it around. God knows what I said to him, I assume it was bad things about his mother. He has a white spot on his head and now comes to check me out every day, having a little tweet at me. I assume it’s:

”I’m watching you son, I’ll fuck you up”

”Blergh you ma a is fat crow”

I’m trying very hard to whistle better.

 

At a previous home I had a blackbird with a white tail feather who visited the garden for years which was nice. I used to say hello how are you today etc but never fed the birds because I had a cat who adopted me and it killed birds all the time.

Sorry off topic.

I wish my dad had been like you @DurhamBorn. He was useless. Very well paid due to working in the nuclear industry and spent it all. Parents had a nice cottage in a lovely village and basically gave it to my nephew when they moved to sheltered accommodation (paid rent for it) but my two kids got nowt. I had to pay for his funeral as there was no money. Ma and Pa died within 2 months of each other. A sibling arranged mothers funeral and as it was so close when father died I offered to arrange his funeral. Nowt left after mother’s funeral was paid for and siblings offered nowt towards it! Oh well. Still annoys me sometimes after over 10 years.

Great thread full of interesting information 

[Loki]

1 hour ago, Wight Flight said:

Local plod keep posting pictures of their tame Seagull.

Stephen.

Possibly not original, but always amusing.

 

He's not tame.  He's waiting. Watching 

[Lightscribe]

27 minutes ago, Loki said:

He's not tame.  He's waiting. Watching 

The dosbods collective won’t know about Norf FC 4chan memes Loki… 

[MrXxxx]

4 hours ago, JMD said:

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?   

OK, here is my attempt at this; probably not very good but I am not an Economics 'wizz kid' like most on here!

So the LTA of house price affordability is ~4 x salary, and the last time it was this was about 1999 [see fig below], about 22 years ago.

[https://www.futureoflondon.org.uk/2015/08/12/affordability/]

 

Now median salaries are as follows

[https://www.statista.com/statistics/1002964/average-full-time-annual-earnings-in-the-uk/]:

1999 = £17,803, so an average house should have cost ~£71,212 [4 x £17,803]

2022 = £33k, so an average house should have cost ~£132k [4 x £33k]

This predicted 2022 value doesn't fit with the long-term average growth rate in UK housing of 1.8% pa [from 1900-2018, see ref below] that gives a figure of £105440, starting with the 1999 figure and compounding for 22 years at 1.8% until 2022; BUT the growth rate to get the actual 2022 figure would be 2.85% pa, that does 'fit' with a shorter-term growth rate specified in this article [https://monevator.com/historical-uk-house-prices/].

NOTE: a caveat of caution should be made here of non-normality, as this Monevator figure is based from 1991-2021 with the last third of this period having exceptionally low interest rates.

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

 

BUT the actual median price in August 2022 [about the peak before the mini-budget crash] was £296k.

 

Now, if we take these figure and project forward another 22 years [and use the tool specified below to 'back calculate' the impact of inflation/inflation value required to achieve the figure], the 2022 '4 x multiplier price' [£132k] compounded over 22 years at a growth rate of 1.8 should equate to ~£196k [£195445], so it could be argued that this is our 'target price' that the actual median price of August 2022 [£296k] should be worth in 22 years time. Accounting for inflation/purchasing power the annual rate of inflation would need to be ~1.9% every year for the next 22 years to achieve this.

Doing the same calculation but using a 2.85% annual growth rate figure on the 2022 '4 x multiplier price' [£132k] compounded over 22 years at a growth rate of 2.85% should equate to ~£245k. To get to this value from the actual median price of August 2022 [£296k] [accounting for inflation/purchasing power] the annual rate of inflation would need to be ~0.85% every year for the next 22 years.

 

So the final answer is that inflation needs to sit somewhere between 0.85-1.9% every year [or an equivalent average value over this period] for the 2022 price to return to a normal 4x median salary house price value. Basically it has got to 'reverse' the damage done by ultra-low interest rates from 2009-2018 that were not historically normal. Note, this forecast makes various assumptions i.e. that wages rise at the same value as inflation.

Hopefully I have this right but please feel free to correct if needed or tell me it's mathematical/economical nonsense. :-)

 

Tool [https://www.rl360.com/row/tools/inflation-calculator.htm?Currency=0&AmtSaved=296000.00&YrsToKeep=22&InflRate=1&Calculate=Recalculate]

Edited June 12, 2023 by MrXxxx

[Chewing Grass]

On 14/04/2023 at 13:46, Chewing Grass said:

Well its Hyundai Tucson shitbox time, deals are dwindling and fashion is probably changing as they become as common as dog turds on the roads.

Down to 11 deals with the cheapest being £396, the dearest £506 and the average £456 thus reversing March prices back to February's.

Unless a new boatload arrives the Tucson's days as a benchmark shitbox may be numbered.

That reminds me, I've neglected the Hyundai Shitbox index for 6 weeks, but good news prospective shitbox owners there are no 5 more deals than last time starting at £386 per month so you can save just under a tenner.

Note: for the value score to fractionally go up its rivals must be getting more 'popular'.

 

[Clueless Imbecile]

I was thinking of opening a SIPP with Hargreaves Lansdown Asset Management Limited. However, one thing I noticed in the trust deed document (linked to in the application process on their website) that made me stop and think, was the following:

 

3 Amendment of the Rules
3.1 The Scheme Administrator may at any time by deed alter add to or delete all or any of the
Rules, with immediate, future or retrospective effect.

 

Stuff like that worries me. I'd have much prefered if they had limited it by stating a number of appropriate reasons under which they could use that clause, and also by giving, say 30 days notice with the option to transfer out if I wasn't happy.

The document states that it "is a personal pension scheme" and:

 

2.7 The Rules shall in all respects be governed by and interpreted according to the laws of
England. The parties submit to the exclusive jurisdiction of the courts of England.

 

....which gives me some confidence. Then again, doesn't the other clause allow them to change all that, with immediate (or even retrospective) effect?

Maybe I'll sleep on it and see how I feel tomorrow. I could consider a different SIPP provider. I thought HL would be good because of the range of investment options and the fees seemed okay.

Am I being paranoid? Does anyone else bother to read the terms?

This is disappointing because I would probably have completed the application process by now if it weren't for that clause worrying me.

 

Cheers,
Clueless Imbecile

Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

 

[Loki]

1 hour ago, Lightscribe said:

The dosbods collective won’t know about Norf FC 4chan memes Loki… 

Oh, they will... 

 

Luv me stonks

Luv me memes

'Ate gettin bogged

Simple as

Edited June 12, 2023 by Loki

[DurhamBorn]

1 hour ago, Jay said:

Fantastic post..the speed of events is really taking me by surprise..it really is a tipping point…they ain’t cutting benefits or pensions..it’s systemic collapse but way worse than I expected..we are participating in historic events..even now I find it difficult to accept as possible..the wounds are too deep..change and a way lower standard of living for most..within 2 years..quite sad really..be lucky..

I find it incredible watching them fail so badly.It really is group think.Its not some devious plan,they really are just shit.The Blair government set in motion the collapse,but i blame this government the most.Why?,because ordinary working people gave them a big win to come in and sort it.They have done nothing.Listening and watching the BOE i can pretty much model their model.I know what they are doing and i know why its such a disaster.They really do think by monetising welfare for government that the demand will allow companies to invest and grow production.They set up their whole model on this classical economic theory.Go through the courses they all took at uni etc.Nearly all of them classical economics.That is why now they cant understand why it just keeps getting worse.Companies cant hire because bennies are front running wages..The rate increases are their answer,but they wont work.

I think my model nailed the numbers because most of the inputs were based on the last distribution cycle with lots of changes.The oil shock was a supply shock,where this time we are seeing the same thing,but from lack of working due to bennies and pensions.This time the economy cant afford energy and it cant afford workes,all because of polos failings funded by the BOE.

The worry is the set up is they take everything before we collapse.We really are in an horrific situation.

[honkydonkey]

Pivoting.

No, it's not French.

 

Edited June 12, 2023 by honkydonkey

[Wight Flight]

11 minutes ago, honkydonkey said:

Pivoting.

No, it's not French.

 

 

That's a zoom.

i think they were the cheap ones.

[Errol]

37 minutes ago, honkydonkey said:

Pivoting.

No, it's not French.

 

 

Revealing just how little the majority of the world cares for the opinion of the West.

UAE celebrating Russia Day in style.

Edited June 12, 2023 by Errol

[Lightscribe]

57 minutes ago, Loki said:

Oh, they will... 

 

Luv me stonks

Luv me memes

'Ate gettin bogged

Simple as

Simple as…