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

[Long time lurking]

 

[DoINeedOne]

8 minutes ago, belfastchild said:

Fuck sake, I dont know what to watch tonight, now. Margin Call, The Big Short, I am Legend or Terminator!

I am Legend, or maybe the TV series Last of us 

Thats my input for today 

night everyone

[Long time lurking]

12 minutes ago, marceau said:

They enabled productive expansion that would have been impossible through domestic means. Every T-bill that flowed into China increased govt spending capacity, credit capacity, productive capacity. The flows acted as a steroid for decades; there's nothing 'natty' about Chinese growth.

The key question for China is, can they hold on to the gainz?

How did  they,they are fixed term rates they do not provide liquidity ,that`s what drives spending capacity ,and they have reduced purchases and holdings consistently since 2012 ish 

Now tell me where did they get the dollars to buy the UST`s in the first place

UST`s and the $ are not the same thing 

Edited March 12, 2023 by Long time lurking

[darkmarket]

4 minutes ago, marceau said:

They enabled productive expansion that would have been impossible through domestic means. Every T-bill that flowed into China increased govt spending capacity, credit capacity, productive capacity. The flows acted as a steroid for decades; there's nothing 'natty' about Chinese growth.

The key question for China is, can they hold on to the gainz?

Edit - I've edited your quote as I assume that's what you mean.

Not unrelated is the influence of near-zero rates and demanding pension promises in pushing funds to look for outsized returns in China and emerging markets. The issuance of treasury notes is perhaps more related to enabling high-deficit spending within the US to continue, with welfare acting as a cushion for the blow of unemployment created by outsourcing to a country where trade unions have been illegal or toothless. All of this is equally true for the UK and the EU.

Aside from holding on to the gains, another rhetorical question is whether they'll be able to repatriate any that survive.

[marceau]

1 minute ago, Long time lurking said:

How did it they are fixed term rates they do not provide liquidity ,that`s what drives spending capacity ,and they have reduced purchases and holdings consistently since 2012 ish 

Now tell me where they they got the dollars to by the UST`s from 

The liquidity, treasury purchases etc were enabled by increased productive capacity, itself enabled by balance of payments. It is not a direct process. What point are you trying to make here?

 

[marceau]

1 minute ago, darkmarket said:

Not unrelated is the influence of near-zero rates and demanding pension promises in pushing funds to look for outsized returns in China and emerging markets. The issuance of treasury notes is perhaps more related to enabling high-deficit spending within the US to continue, with welfare acting as a cushion for the blow of unemployment created by outsourcing to a country where trade unions have been illegal or toothless. All of this is equally true for the UK and the EU.

Aside from holding on to the gains, another rhetorical question is whether they'll be able to repatriate any that survive.

Yes, the treasury purchases were a win/win, at least until ZIRP became structural. Effectively laundering capacity by cycling China's own expansion back through the US, thereby enabling further expansion. Rinse, repeat.

As for the gains, they have the infra and the businesses and the tech. They didn't have that before. Whatever happens it's a win for them.

[Errol]

47 minutes ago, HousePriceMania said:

 

 

Lovely man. He deserves to lose big time.

[darkmarket]

5 minutes ago, marceau said:

Yes, the treasury purchases were a win/win, at least until ZIRP became structural. Effectively laundering capacity by cycling China's own expansion back through the US, thereby enabling further expansion. Rinse, repeat.

As for the gains, they have the infra and the businesses and the tech. They didn't have that before. Whatever happens it's a win for them.

I was quite worried about this, given I don't want to see China's governance model and influence to extend globally. But I'm coming to the view that it's something of a Pyrrhic victory.

The manner in which it obtained its assets has meant that it never had to enable sufficient freedom domestically for a culture of innovation to blossom. Instead, the Party says we want to dominate EVs, for example. The slave-masters/'entrepreneurs' copy or steal the IP necessary to get started, and the competition is based on who can bribe their local Party least and get a reasonably stable workforce for least. The edifice is very brittle, nobody has any attachment or personal engagement. A far cry from Pininfarina.

Nevertheless, to a degree design of iterations depends on mastery of the previous innovation, and for a few years they may retain an element of that. I'm not confident in their ability to use it to create an edge, and Putin's announcement of his intention to enter their target industries makes me think the eventual winners will emerge from a US-RU rivalry, ideally a relatively harmonious one.

[Bobthebuilder]

29 minutes ago, DoINeedOne said:

I am Legend, or maybe the TV series Last of us 

Thats my input for today 

night everyone

I would recommend the new German all quite on the western front film, the opening 15 minutes are superb, makes you realise government has been lying to its people for a long time. 

Edited March 12, 2023 by Bobthebuilder

[JMD]

4 hours ago, Ash4781b said:

Their model (my assumption) is higher employment taxes, increased immigration to cover reduced workforce participation (that’s covered with benefits). If over 50’s withdrawal labour I fear that breaks the economic model. Then I’d expect based on history for ‘easy’ options for them to open up even more immigration. I think what they could of done was freeze benefits in line with inflation. I took the view that politically they couldn’t freeze the state pension but if they do one they have to do the other.
 

Then there’s the longer term where the think they want to get rid of pension credit. But I think many are planning to rely on that ! 

I agree, for the reasons you state, that mass immigration is here to stay. The polos will pretend to fight it but they are lying.

I hate to admit or accept this because I think this effectively means the UK will not exist in say 25 years time (a country without borders is not really a nation, whatever the progressives like to tell us). Of course saying 'will not exist' means different things to different people, but not for this thread. However I think the statistics speak for themselves. Officially in England and Wales, 17% of the population were born abroad. And that is just the tip of the problem because in the main successive generations don't integrate. Plus we all know the unofficial - real- figures will be higher, and getting increasingly worse all the time. 

[JMD]

4 hours ago, Red Debt Redemption said:

I can tell you what golds not about.

But I thought the age of the car was over?!

[marceau]

1 minute ago, darkmarket said:

I was quite worried about this, given I don't want to see China's governance model and influence to extend globally. But I'm coming to the view that it's something of a Pyrrhic victory.

The manner in which it obtained its assets has meant that it never had to enable sufficient freedom domestically for a culture of innovation to blossom. Instead, the Party says we want to dominate EVs, for example. The slave-masters/'entrepreneurs' copy or steal the IP necessary to get started, and the competition is based on who can bribe their local Party least and get a reasonably stable workforce for least. The edifice is very brittle, nobody has any attachment or personal engagement. A far cry from Pininfarina.

Nevertheless, to a degree design of iterations depends on mastery of the previous innovation, and for a few years they may retain an element of that. I'm not confident in their ability to use it to create an edge, and Putin's announcement of his intention to enter their target industries makes me think the eventual winners will emerge from a US-RU rivalry, ideally a relatively harmonious one.

There is no way of knowing where China will go from here. Only that the paradigm of the last 40 years is almost certainly  over, so a new one will have to start. 'Freedom' in the American sense is (rightly imo) regarded by them as an enemy political weapon, so it's highly unlikely to apply to whatever they're going to do. Ditto Russia - just unknowable imo.

The US, on the other hand, seems more predictable. They've got a clear set up to take advantage of their economic postion, and factionalism within the US govt apparatus means that one way or another there's a limit to the damage political stupidity can do to their prospects of exploiting that set up. This banking 'crisis' doesn't seem that significant to me, but it'll be interesting to see how it is handled. I suspect that the economically-minded factions of US gov will be happy to see business duffers and bullshitters go to the wall, clearing out dead wood while knowing that they have the liquidity mechanisms to prevent a wider crisis. This isn't the same system that went down in 2008. Guess we'll find out next week.

[Sugarlips]

 

[Loki]

10 minutes ago, Sugarlips said:

 

The replies are great, very telling pic if it's legit too

[Sugarlips]

1 minute ago, Loki said:

The replies are great, very telling pic if it's legit too

At least no one is jumping out.

Yet..

 

[darkmarket]

17 minutes ago, marceau said:

This banking 'crisis' doesn't seem that significant to me, but it'll be interesting to see how it is handled.

I expect its significance to be more outside the borders of the US. Markets will test the Fed's resolve in its current path, media and the VC community will continue shrieking like teenage girls, but in the end the levels of fragility are much greater in Italy, Spain, France, the UK or China.

[F150]

Hope they raise rates tomorrow

[Noallegiance]

39 minutes ago, Bobthebuilder said:

I would recommend the new German all quite on the western front film, the opening 15 minutes are superb, makes you realise government has been lying to its people for a long time. 

Holy God the fight in the bomb crater.

Saving Private Ryan? Pah. Kids film.

[Long time lurking]

1 hour ago, marceau said:

The liquidity, treasury purchases etc were enabled by increased productive capacity, itself enabled by balance of payments. It is not a direct process. What point are you trying to make here?

 

I already made it up thread 

 

[ThoughtCriminal]

2 hours ago, darkmarket said:

That's a book which I found fairly convincing initially, but over time much less so. The sleight of hand is, as is common, related to what's missing.

The context for the relatively successful period in Western European affairs is more closely related to the encroachment of the Ottomans and the failure of the holy wars ostensibly aimed at driving them out. An interesting book partly on this subject is The Alexiad, which claims the target was less the Infidel and more the Byzantines. The nature of the failures lend credence to that viewpoint.

Those failures, the return of the texts of Ancient Greece which had been suppressed by the Romans, and the economic and military demands of the time were what led to industrialisation. A reasonably coherent Christian culture, combined with intellectual curiosity and freedom and need to innovate, led to radical changes which allowed for trade with the New World and access to previously monopolised trade routes.

What we're seeing now from China is an attempt to dominate the land route from it to Western Europe, and to end the freedom of the seas guaranteed by the Anglo-Saxon influence on world affairs. This is leveraged by transfers of intellectual property and capital that have no precedent in history, on the pretext of a Russian threat.

The idea that all this will lead to a coherent BRICS bloc, all of whose members have extremely different cultures and economies, is highly speculative. Until Lula's dubious victory, Brazil was already being exiled from the group. Russia-China tensions are being papered over, but Putin just announced a direct challenge to China's economic plans for 2025 and beyond. India has territorial disputes with China that brought the countries to war only a few decades ago. There are huge problems.

That's before you consider the governance model Xi is applying. After the insanity of zero-covid there, and his influence on other countries via global institutions often created by the UK, I find it hard to believe people still give him credence, aside from Putin who has little choice. China's internal politics and economy are one disaster after another. The three-child policy, if successful, indicates an imminent colonial policy that the African dictators who are enjoying Xi's largesse now won't easily be able to explain.

The world is in a very difficult place, there are no saviours. Perhaps the most dangerous element is the false dichotomy of Xi's neo-Maoist communism and Soros's totalitarian interpretation of liberalism. I will continue not to invest in either.

But they're not doing any of it because they love each other, they're doing it because they despise the Americans.

 

Western civilisation is going down the toilet. Just look around you. Do you think you could conscript an army out of the human excrement that makes up 50%+ of most western nations? We're obese, entitled, narcissistic nihilists, circling the toilet bowl of history.

[Long time lurking]

22 minutes ago, F150 said:

Hope they raise rates tomorrow

That may well happen nothing like a crisis as an excuse for a emergency rate hike after all the FED want to create a recession 

[Loki]

What do people think will happen to UK rates?  Continue to follow the might USD/Fed or continue higher to reflect the increased risk of GBP?

[Bobthebuilder]

32 minutes ago, Noallegiance said:

Holy God the fight in the bomb crater.

Saving Private Ryan? Pah. Kids film.

The opening sequence that shows how the dead men's uniform and boot's were considered more valuable than the soldiers lives is eye opening. The casting of the lead actor is genius. Can't recommend it highly enough. 

[darkmarket]

7 minutes ago, ThoughtCriminal said:

But they're not doing any of it because they love each other, they're doing it because they despise the Americans.

 

Western civilisation is going down the toilet. Just look around you. Do you think you could conscript an army out of the human excrement that makes up 50%+ of most western nations? We're obese, entitled, narcissistic nihilists, circling the toilet bowl of history.

I'm glad it's not my job, and I wouldn't sign up to fight for globohomo, but I wouldn't be too pessimistic. The question is relative, and I wouldn't want the job in China or in India either. I think the problems are more material and structural, supply chains first and foremost.

The apparent hatred for the West existed long before the spread of cultural Marxism here. It's often as simple as a facile way to shore up a population disaffected by the inhumane treatment they receive in their own societies. Given the rates at which they emigrate and keep their capital abroad, you'd have to worry about treason too. Pepe Escobar and his re-hashed Frantz Fanon fantasies are a bit tired, they won't really wash with the average Chinese zoomer.

I'm glad you mentioned the endemic obesity by the way, all the more reason the war on smoking should be put to an end.

[belfastchild]

7 minutes ago, Bobthebuilder said:

The opening sequence that shows how the dead men's uniform and boot's were considered more valuable than the soldiers lives is eye opening. The casting of the lead actor is genius. Can't recommend it highly enough. 

I dont think that was in the 1979 film with 'john boy' walton. The crater scene was as was the ending.
Its worth a watch as well if you dont have netflix.