Credit deflation and the reflation cycle to come (part 6)

[Long time lurking]

 

They are clearly working for their own agenda now 

Edited July 5, 2023 by Long time lurking

[King Penda]

1 hour ago, Calcutta said:

Living in a shared house isn't so bad, bit cramped when the kids are round, and I have to be pretty meticulous when it comes to storage space.

You never know who you'll end up living with, most of the time it's EEs who work weird shifts and I hardly ever see. There's a black guy downstairs who has his room just so he's got somewhere to hide from his girlfriend and an old guy whose grandkids live round the corner that gets drunk and falls down the stairs from time to time.

It's not ideal, but a damn sight better than living with a bird hassling me or making a mess I have to clean up.

If I was skint, or lonely, then I suppose it would be pretty grim. But tbph if I was skint or lonely I'd fuck off back to India and live on a train station platform till I'd figured out another plan. Or find some fat Shaz and ponce off her Tony Tokens for a bit.

I tell any young lad who'll listen, nothing keeps you warm at night like a pile of cash. Everything else is easy fixed.

 

It’s true zero debt and enough cash to last you 12 months and there’s no fear of anything .I simply don’t care if I work 12 or 60 hours a week.

[Yadda yadda yadda]

30 minutes ago, DurhamBorn said:

And its bennies causing it.I did a quick look at how rate increases will work compared to bennies and government spending.3% increase in rates removes £45 billion from spending.Government inflation linking across all spending increases £110 billion.I think terminal rates are 6.3% to cancel out government inflation creation.Thats not counting the private sector.The private sector needs around 2.8% at the moment on my model,but falling at the moment due to energy pull backs (could be short lived),so BOE rate now to force out inflation should be 9.1% on my model.Everything below that level is "distribution" so at the moment we are consuming around 4% of saved wealth,thats cash,pensions (the gilt bit) and soon housing equity.Until those numbers reverse houses are no go investments.

When do you expect the terminal rate to hit? Do you, like me, expect rates to rise beyond 6% and then reduce for a while before ramping back up well beyond 6% peaking in 2025-26?

Is there a strong possibility that there is some kind of rates induced financial crisis that causes rates to be temporarily slashed, perhaps later this year?

[Stuey]

3 minutes ago, King Penda said:

It’s true zero debt and enough cash to last you 12 months and there’s no fear of anything .I simply don’t care if I work 12 or 60 hours a week.

Make it 12 years bro. And even that is not really counting bennies, interest on savings 

[Noallegiance]

[King Penda]

1 minute ago, Stuey said:

Make it 12 years bro. And even that is not really counting bennies, interest on savings 

Impressive 

[King Penda]

9 minutes ago, Yadda yadda yadda said:

When do you expect the terminal rate to hit? Do you, like me, expect rates to rise beyond 6% and then reduce for a while before ramping back up well beyond 6% peaking in 2025-26?

Is there a strong possibility that there is some kind of rates induced financial crisis that causes rates to be temporarily slashed, perhaps later this year?

We might get a cut has a Christmas present then reversed in January just has the credit card bills land on doormats 

[Loki]

1 minute ago, King Penda said:

We might get a cut has a Christmas present then reversed in January just has the credit card bills land on doormats 

Yeah I think that's feasible, a bit of festive GDP stimulation and morale boosting

[Long time lurking]

5 minutes ago, Yadda yadda yadda said:

When do you expect the terminal rate to hit? Do you, like me, expect rates to rise beyond 6% and then reduce for a while before ramping back up well beyond 6% peaking in 2025-26?

Is there a strong possibility that there is some kind of rates induced financial crisis that causes rates to be temporarily slashed, perhaps later this year?

I think most in the game have 6% pencil in by the end of the year,i`m seeing 7-7.5% being quoted by the end of next year ,but  3-5 year fixed term savings don`t reflect that they are in fact on par or even below what you can get on 1-2 year now the best ISA`s are now 5-5.4%  1-5 year fixed term 

[montecristo]

[Lightly Toasted]

30 minutes ago, DurhamBorn said:

And its bennies causing it.I did a quick look at how rate increases will work compared to bennies and government spending.3% increase in rates removes £45 billion from spending.Government inflation linking across all spending increases £110 billion.I think terminal rates are 6.3% to cancel out government inflation creation.Thats not counting the private sector.The private sector needs around 2.8% at the moment on my model,but falling at the moment due to energy pull backs (could be short lived),so BOE rate now to force out inflation should be 9.1% on my model.Everything below that level is "distribution" so at the moment we are consuming around 4% of saved wealth,thats cash,pensions (the gilt bit) and soon housing equity.Until those numbers reverse houses are no go investments.

As I see it, they have two traditional tools for managing recessionary periods, when the economy needs to contract following a period of excess:

1. increase interest rates, supposedly to reduce "excess" demand.

2. hand out more benefits, to put a floor under that demand in order to prevent a depression -- a so-called "automatic stabiliser" mechanism. This (+ political cowardice) is the reason for inflation-linking benefits.

Neither tool addresses domestic supply-side problems and because of this, they only work during normal times, i.e. when there's plenty of foreign supply expansion, printer paper, resources and Western credibility left. The authorities have not realised (or wilfully ignore) that we are no longer in normal times.

It brings to mind a Larry Niven fantasy setting in which Aborigines (having progressively used up all their continent's non-renewable magic) chant/wave defunct spells and sticks in the centre of Australia, doing stuff that used to work but doesn't any more.

[MrFanciful]

Deleted

Edited July 5, 2023 by MrFanciful
Quote wrong person

[MrFanciful]

11 minutes ago, Noallegiance said:

Gov doing less would be a start.

[King Penda]

I’ve just checked my bin it’s bin day tommorow and it made me chuckle . When I say I spend less than 20 a week on food I’m not actually joking . No waste in my bin next doors is aready full of takeaway wrappers . Im not inflation proof but I’ve more resilience to it than most people.

[Noallegiance]

First it's bags of nothing at the LME, now this.

Our society is a thin veil for the rife corruption and theft.

[Noallegiance]

1 minute ago, King Penda said:

I’ve just checked my bin it’s bin day tommorow and it made me chuckle . When I say I spend less than 20 a week on food I’m not actually joking . No waste in my bin next doors is aready full of takeaway wrappers . Im not inflation proof but I’ve more resilience to it than most people.

I think this of myself, too.

Five people in my house. Every week the same - half full cardboard, food caddy, one plastics bag, one black bag. That's it.

I look down our street every morning and it's like people have had another Christmas.

[King Penda]

5 minutes ago, Noallegiance said:

I think this of myself, too.

Five people in my house. Every week the same - half full cardboard, food caddy, one plastics bag, one black bag. That's it.

I look down our street every morning and it's like people have had another Christmas.

We don’t recycle anything but I put everybody’s bin out has I’ve got a key to the gated access. The Muslim Kurds next door have started drinking ironically 

[Axeman123]

Every now and then we see signs that someone gets it:

Rishi Sunak draws up plans to drop £11.6billion climate pledge

Quote

The briefing note, which was given to ministers and shared with The Guardian, said: “Our commitment to double our international climate finance to £11.6billion was made in 2019, when we were still at 0.7 [per cent of GDP spent on international aid] and pre-Covid.”

Quote

Expectations about the UK’s ability to support the global fund has come under increased strain amid new pressures, such as support in Ukraine being included in the aid budget. To meet the £11.6billion target by 2026, Whitehall insiders have calculated that it would have to spend 83 per cent of the total aid budget on the international climate fund.

The Government recently cut international aid spending to 0.5 per cent of gross national income.

Shared with the Guardian = kite being flown.

Seems we should cut the entire aid budget IMO, remind me...wasn't it "only" an unfunded £2B tax cut that allegedly caused the Truss budget melt-down...

https://www.gbnews.com/politics/rishi-sunak-climate-change-pledge-dropped-rumours-latest

[Long time lurking]

Not long now for the 6% mark to be breached ,are we going to get to the next scheduled rate setting meting ?

[sancho panza]

This needs pointing out for a variety of reasons.Where's the doom porn on TV?

I blame Brexit.

https://dailysceptic.org/2023/07/05/across-europe-deaths-are-far-higher-now-than-they-were-in-the-pandemic-years-of-2020-and-2021/

Across Europe Deaths Are Far Higher Now Than They Were in the ‘Pandemic Years’ of 2020 and 2021

by Nick Rendell

5 July 2023 9:00 AM

In the year from week ending June 5th 2022 to week ending June 4th 2023 the U.K. recorded 1,059 excess death per million people. The odd thing about this is that excess deaths in the U.K. in 2023 are higher than the excess deaths in the same period in 2020-21 in 13 of the 27 EU nations!

If the people of Austria, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Luxembourg, Malta, Netherlands and Sweden were so worried about the likelihood of dying that they acquiesced in locking themselves up, voluntarily trashed their economies and stopped their kids going to school back in 2020-21 (well, Sweden didn’t, but the rest did), why don’t we feel the need to do the same now? We have more excess deaths now than they had then.

If YouGov did a poll tomorrow asking whether or not we should, right now, go back into lockdown, how many thumbs up would it receive? Very few, I should hope. But if U.K. citizens don’t think it’s a good idea now, why did the Germans or the Finns or the Greeks think it was a good idea in 2020 and 2021? Could it be that they were manipulated? That they weren’t given the whole picture? That they were ‘had’?

Let’s try and put some perspective on this number. We can think of 1,059 excess deaths per 1,000,000 of population in several ways. As a straight percentage let’s round it down to 0.1%. This means that we expect 0.1% of the population to die in addition to the number of people we might ordinarily expect to die in the year. Or, if you prefer, an additional one person in a 1,000 will die in the year.

In the U.K. roughly one person in 100 dies every year, i.e., 1% of the population. But if we’re experiencing excess deaths at a level of 0.1% then we can expect that about 1.1% of the population will die this year. Let’s take the example of a large town or small city with 100,000 inhabitants. In a normal year we’d expect 1,000 deaths. With this year’s higher level of excess deaths, the funeral directors would expect to see 1,100 deaths. That’s all very straightforward.

In case you’d forgotten, let’s remind ourselves that the period from April 5th 2020 to April 4th 2021 included the two big spikes in fatality in Spring 2020 and winter 2020-21. It’s also the period that ended before the vaccine rollout was in any way complete. While about 50% of the U.K. population had received one dose of vaccine by then, in the EU the figure was only about 20%. This period was very much the year when we would have expected to see peak ‘all-cause’ pandemic excess deaths in the U.K. and across Europe with very little amelioration from vaccines or prior infection.

 

But the fun doesn’t end there. Figure 2 picks out the U.K. and 13 EU countries with excess all-cause deaths in the 12 months to April 2023 (the latest date for which figure were available for all countries) greater than 750 per million. Back in 2020-21 this level of excess deaths would have put you mid-table in the EU excess death league. Clearly, in 2020-21 it was considered essential to lock down populations with these modest levels of excess death (or indeed, lower).

Figure 2

In figure 2 all-cause excess deaths for the 12 months to April 4th 2021 are indicated by the blue bar and for the 12 months to March 26th 2023 by the orange bar. In eight of the countries – Germany, Finland, Austria, Latvia, Greece, Estonia, Netherlands and Ireland – excess deaths in 2022-23 have been higher than in 2020-21. In Germany for example, excess deaths in 2022-23 have been four times higher than in 2020/21. In Finland in 2020-21 fewer people than normal died, while now they have excess deaths that would have placed them in the top half of the EU death league back in 2020-21. Ireland and Greece have almost twice the level of excess deaths in 2022-23 that they had in 2020-21.

Just for fun, put yourself for a moment in the shoes of the German, Austrian or Irish equivalent of Lady Hallett. How would you, with a straight face, justify to your fellow countrymen spending several hundred million euros looking into the awful events of the ‘once in a century’ 2020-21 pandemic, when death supposedly stalked the land, resulting in excess deaths far lower than they are now?

[DurhamBorn]

58 minutes ago, Yadda yadda yadda said:

When do you expect the terminal rate to hit? Do you, like me, expect rates to rise beyond 6% and then reduce for a while before ramping back up well beyond 6% peaking in 2025-26?

Is there a strong possibility that there is some kind of rates induced financial crisis that causes rates to be temporarily slashed, perhaps later this year?

They are so shit i simply dont know.Inflation will fall from here,but might be sticky due to lags and nothing has changed on government policy creating the inflation yet.If government cut spending rates could top after the next increase i think,but we would still consume around 4% more of saved wealth.Thats what im tracking mostly,how much policy is out so i ca track wealth consumption/theft.There are lots of cross market things going on now as saving deplete,or i should say as savings move.Right now they are being taken and given to bennies etc by government,then to the Saudis and Chinese etc for energy and oil.Sterling is steady,so that is coming back at the moment,likely they are buying UK assets,but it means UK citizens end up with no savings.The public sector is consuming the savings by transfer.

[Long time lurking]

5 minutes ago, sancho panza said:

This needs pointing out for a variety of reasons.Where's the doom porn on TV?

I blame Brexit.

https://dailysceptic.org/2023/07/05/across-europe-deaths-are-far-higher-now-than-they-were-in-the-pandemic-years-of-2020-and-2021/

Across Europe Deaths Are Far Higher Now Than They Were in the ‘Pandemic Years’ of 2020 and 2021

by Nick Rendell

5 July 2023 9:00 AM

In the year from week ending June 5th 2022 to week ending June 4th 2023 the U.K. recorded 1,059 excess death per million people. The odd thing about this is that excess deaths in the U.K. in 2023 are higher than the excess deaths in the same period in 2020-21 in 13 of the 27 EU nations!

If the people of Austria, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Luxembourg, Malta, Netherlands and Sweden were so worried about the likelihood of dying that they acquiesced in locking themselves up, voluntarily trashed their economies and stopped their kids going to school back in 2020-21 (well, Sweden didn’t, but the rest did), why don’t we feel the need to do the same now? We have more excess deaths now than they had then.

If YouGov did a poll tomorrow asking whether or not we should, right now, go back into lockdown, how many thumbs up would it receive? Very few, I should hope. But if U.K. citizens don’t think it’s a good idea now, why did the Germans or the Finns or the Greeks think it was a good idea in 2020 and 2021? Could it be that they were manipulated? That they weren’t given the whole picture? That they were ‘had’?

Let’s try and put some perspective on this number. We can think of 1,059 excess deaths per 1,000,000 of population in several ways. As a straight percentage let’s round it down to 0.1%. This means that we expect 0.1% of the population to die in addition to the number of people we might ordinarily expect to die in the year. Or, if you prefer, an additional one person in a 1,000 will die in the year.

In the U.K. roughly one person in 100 dies every year, i.e., 1% of the population. But if we’re experiencing excess deaths at a level of 0.1% then we can expect that about 1.1% of the population will die this year. Let’s take the example of a large town or small city with 100,000 inhabitants. In a normal year we’d expect 1,000 deaths. With this year’s higher level of excess deaths, the funeral directors would expect to see 1,100 deaths. That’s all very straightforward.

In case you’d forgotten, let’s remind ourselves that the period from April 5th 2020 to April 4th 2021 included the two big spikes in fatality in Spring 2020 and winter 2020-21. It’s also the period that ended before the vaccine rollout was in any way complete. While about 50% of the U.K. population had received one dose of vaccine by then, in the EU the figure was only about 20%. This period was very much the year when we would have expected to see peak ‘all-cause’ pandemic excess deaths in the U.K. and across Europe with very little amelioration from vaccines or prior infection.

 

But the fun doesn’t end there. Figure 2 picks out the U.K. and 13 EU countries with excess all-cause deaths in the 12 months to April 2023 (the latest date for which figure were available for all countries) greater than 750 per million. Back in 2020-21 this level of excess deaths would have put you mid-table in the EU excess death league. Clearly, in 2020-21 it was considered essential to lock down populations with these modest levels of excess death (or indeed, lower).

Figure 2

In figure 2 all-cause excess deaths for the 12 months to April 4th 2021 are indicated by the blue bar and for the 12 months to March 26th 2023 by the orange bar. In eight of the countries – Germany, Finland, Austria, Latvia, Greece, Estonia, Netherlands and Ireland – excess deaths in 2022-23 have been higher than in 2020-21. In Germany for example, excess deaths in 2022-23 have been four times higher than in 2020/21. In Finland in 2020-21 fewer people than normal died, while now they have excess deaths that would have placed them in the top half of the EU death league back in 2020-21. Ireland and Greece have almost twice the level of excess deaths in 2022-23 that they had in 2020-21.

Just for fun, put yourself for a moment in the shoes of the German, Austrian or Irish equivalent of Lady Hallett. How would you, with a straight face, justify to your fellow countrymen spending several hundred million euros looking into the awful events of the ‘once in a century’ 2020-21 pandemic, when death supposedly stalked the land, resulting in excess deaths far lower than they are now?

[JoeDavola]

15 hours ago, belfastchild said:

Saturday? Saturdays are strictly DD access only.

I hear ya player. I'll come suitably dressed. Wouldn't want the other marina boomers to think you're a poof or anything.

[Stuey]

Yields might just have peaked already. 

https://www.zerohedge.com/markets/futures-tumble-yields-stumble-after-dire-pmis-china-europe

 

[Axeman123]

6 minutes ago, Stuey said:

Yields might just have peaked already. 

https://www.zerohedge.com/markets/futures-tumble-yields-stumble-after-dire-pmis-china-europe

 

In the US perhaps, dollar weakness would tend to accompany them reaching peak rate before the other major economies so that is all very much what I would expect.

Anyway, another wonderful headline:

‘Absolute carnage’ as High Street lenders including Halifax and Santander lift mortgage rates once again

Quote

The unprecedented spate of turmoil in the mortgage market shows no sign of abating with a slew of major High Street lenders once again today pushing up the rates on their home loan deals.

Britain’s biggest mortgage lender Halifax led the charge with yet another bout of repricing described as “absolute carnage” by one broker. TSB, Lloyds and Santander as well as several leading building societies also hiked the cost of their products yet again.

As you would expect just from the headline to start. This OTOH is odd to see openly printed:

Quote

Amit Patel, adviser at Trinity Finance, said: “This is absolute carnage. Halifax has decided to perhaps effectively price itself out of the market to protect its loan book and current obligations to its existing savers and borrowers. This is the new normal, with no apparent end in sight, unless the Bank of England starts lowering the base rate, which looks unlikely.”

Another surprising quote here:

Quote

Paul Welch, CEO at Isle of Dogs-based LargeMortgageLoans.com said: “As long as SWAP rates, the rates which banks pay to borrow money, remain high, fixed rates for mortgages will continue to rise. If core inflation doesn’t come down significantly this month, or God forbid rises, then interest rates and SWAP rates will continue to go up and up.

“It gives me no pleasure to say that we could realistically see some fixed rates reach 7% before the summer is out.”