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

[sancho panza]

2 hours ago, DurhamBorn said:

.You really couldnt make it up the policy errors they keep making.They simply cant bring themselves to accept the Shangri La they created is collapsing.

 

Nicely put DB and it's not jsut on the monetary front it's looking glum

I've psoted before that the key short back in 2000 was the lower high on the monthlies.It's only viewable in the rear view.Also this does bear out David Hunters melt up thesis that was widely poopooed by the poopooers.........

I'm not mvoing shrot yet,I think there may be more to come in this move,but the big kahuna starts when this baby starts cresting.

Context

The lower high short in sept 00

current

[sancho panza]

2 hours ago, Pip321 said:

I began to follow the 118 property website when c24 was introduced ie restricting of mortgage interest tax relief. I was paying a fairly hefty £1k a month interest.

I was disgruntled at the change and was looking at ways to mitigate rather than pay off my debt. However a few things became apparent.

1) many of the posters were talking of payments of £60k and I genuinely thought the meant a year….really I did….but I realised they meant a month 🤢

2) all the the posters were fuming about the change….as entitled as a fat lass on benefits. 

3) many had leveraged against the gains ie buy house for £100k which is now worth £200k with a debt of £180k……so they had reborrowed and used the money to buy more houses and a little treat such as a Range Rover for £70k

Now I knew 3 was possible but respect for debt and a knowledge rates can rise….I used to sell to crystallise gains. But the other reason you don’t do what they had is CGT. You sell the house for £100k and pay say £28k CGT then the equity is effectively minus £8k. Mention that and the response is NEVER SELL. Hmmm…..never say never 😉

I also realised we have 2m landlords. With cheap money, interest only mortgages and an ability to leverage then if left as it was then the 2m landlords might acquire the 20m uk properties and rent them out to the rest of the population. Hardly fair for an essential need…..(although tbf I might argue our essential services should all be non profit ie water etc but that’s another degree of argument) 

Anyway, It was the entitlement and a likening to being treated like Jews during the holocaust 🤦🏻‍♂️……that confirmed where I stood, ie firmly in favour of higher rates and C24 albeit at a potential cost to me.

Many of these guys will be tied in. Effectively they have already spent the gains assuming property can’t fall and there will never be a scenario where they need to sell.
Some individuals borrowed more than a medium/large engineering firm using expensive tooling with 40 staff might borrow. It all became too casual and too easy. The fully leveraged multiple residential property owning model is dying…..but I would say it was always dead and was just a matter of time until the luck ran out. 

It's pretty impressive how much some of these BTLers were allowed to borrow and how they were allowed to lever the equity into even more leverage.

As I've bored on before,our family friend and their 25 BTL's is going under on legacy laons from the 07 era,which is jsut incredible.Having looked at NatWest/some big BS's books,where the data is avalaible is amazing how long regulators have allowed these turd loans to stew in the toilet basin.It really does take your breath away.

2 hours ago, Lightscribe said:

It’s becoming more apparent that we are an outlier economy (which we already knew on here), a housing market with an economy pension liability attached.

 

 

[sancho panza]

16 hours ago, honkydonkey said:

Does anyone know if you can buy YARA on the Norway exchange in NOK with Interactive Brokers @Cattle Prod rather than the YARIY on the US markets in USD.

Spent the last 24 hours building a 2% postion in yara amongst other things like doing the aldi shopping with a lunatic 2 year old.Bought the last batch this am in a UK broker.Amazing how the price moved from teh bottom yesterday

Very pleased to get in at this price with a decent first ladder.

Bizzarrely,the big cause of problems yesterday was saxobank where you couldn't buy the USD version or the NOK.Ridiculous for a broker of their size.Ended up shuffling BATs at HL and buying the ADRs at saxo, using HL for NOK.

Reminds me of the many on here who have said IB is much better.Really need to start the transfers

 

Edited June 16, 2023 by sancho panza

[Axeman123]

3 hours ago, wherebee said:

rent caps and rent freezes

Just as the solution for mortgage payers suffering seems to be our  government demanding (with implied menances) forebearance from lenders, so the "bailout" of tennants if it comes will be funded by landlords. IMO there just isn't the fiscal headroom for big handouts, and the global pattern of rent caps being discussed by governments IMO shows a co-ordinated shift towards comand economy. Just like with QE and NIRP the beleif in the corridors of power will be that it will be a free lunch if everyone is doing it.

2 hours ago, Pip321 said:

1) many of the posters were talking of payments of £60k and I genuinely thought the meant a year….really I did….but I realised they meant a month 🤢

Those same tossers will have been the ones crying that the changes to tax deductability of interest would make their business loss making. Those changes would have only resulted in an increased tax bill less than or equal to 20% of the gross rent, in other words they weren't just paying £60k/month on mortgages, they were doing it for less than £15K month profit! How could anyone build sufficient contingency and improvements funds from such a slim margin? Answer: they couldn't!

2 hours ago, Plan-b said:

The West/NATO countries had better start to either make friends with or invade and take the oil of OPEC and other oil producing countries. Perhaps Ukraine and Syria are the start of more serious energy supply confrontations? Maybe.

This is what is meant when NATO/US politicians say "if Russia wins in Ukraine, its over!". The US has functioned like an empire and used destabilisation to control the worlds biggest resource reserves. Without Russia put decisivly back in it's box (or better yet decolonised into a patchwork quilt of warring ethnostates) that game is over.

1 hour ago, M S E Refugee said:

If we were to rejoin I wonder how many indigenous Brits would up sticks and go to cheaper Sunnier climes in the EU?

The UK would be left with a rapidly diminishing tax base and an ever increasing amount of parasites.

1 hour ago, Lightscribe said:

I think that’s the idea. Or they are making very good progress towards it through ‘incompetence’.

Only a potential digital ID will make sure that any ‘tax owed’ will follow you wherever you go.

An interesting development is that Australia now not only requires you to severe ties and count days etc to cease being tax-resident there, but now AIUI you would also have to become tax-resident somewhere else and additionally IIRC there is a black list of countries that wouldn't count for this. Otherwise Australian tax residence (and liability) would continue. You could imagine the black list growing to encompass any country offering a significant tax saving over time, and not just "tax-havens".

I expect this approach will slowly spread accross the high-tax countries, and come here too. It really IMO would pay to get non-resident under current rules before then.

[DurhamBorn]

I love reading the insane comments of our MPs.Todays is them all saying Boris's political career is all over.It shows how stupid they really are.Whats happening could ensure he is part of a new party.He might choose not to,but it is choice.Labour moving ahead more in the polls with such a terrible front bench shows how bad things are.

[Cattle Prod]

43 minutes ago, sancho panza said:

Nicely put DB and it's not jsut on the monetary front it's looking glum

I've psoted before that the key short back in 2000 was the lower high on the monthlies.It's only viewable in the rear view.Also this does bear out David Hunters melt up thesis that was widely poopooed by the poopooers.........

I'm not mvoing shrot yet,I think there may be more to come in this move,but the big kahuna starts when this baby starts cresting.

Context

The lower high short in sept 00

current

Interesting point SP. There are some differences this time around though which must have wrong footed a lot of traders, as the market likes to do. The 2000 lower high was a negative MACD monthly cross, this time it's positive. It also retraced exactly 50% of first downmove back then. This move has already retraced almost to the .786 Fibb. I don't know what's going on, I guess 5% in Treasuries isn't good enough with inflation running higher, and people are still chasing the dragon? You can imagine the FOMO a la David Hunter if this goes to ATH... there is enough energy in the RSI to run like this till year end...As you say, that would be a generational top.

Today:

2000:

I notice that monthly RSI got to 88 prior to that, riding on the 2dotcom changes everything" narrative. Now, it's the "AI changes everything" narrative, almost exactly one generation later. Lots more irrational exuberence is still possible.

For a great insight into why this happens, I recommend "Chimp Empire" on Netflix. It's by a crew embedded for over a year with habituated chimps in Uganda, the chimps basically ignore the humans, and go do their chimp thing. You will see a lot of behaviour that is immediately recognisable to us, particularly in the pub on Friday nights. The point is, our brains change slowly. There is zero chance the next generation of traders will have learned anything from the dotcom bubble. They will be driven by the same chimp impulses, finding the tree that is fruiting, or catch a tasty monkey, gorge yourself, and go fucking crazy if you see someone getting more than you.

[Cattle Prod]

3 hours ago, Plan-b said:

Hubbert’s Peak is Here

The only source of growth over the past decade, the shales, are now beginning to show signs of exhaustion.

I don't know how accurate this report is but hopefully @Cattle Prod will give it a once over, it seems legit to me.

https://blog.gorozen.com/blog/hubberts-peak-is-finally-here

The West/NATO countries had better start to either make friends with or invade and take the oil of OPEC and other oil producing countries. Perhaps Ukraine and Syria are the start of more serious energy supply confrontations? Maybe.

Thanks for that PB, I'll have a read. 

I'm well familiar with Hubbert's peak, it's simple, just a Gaussian/normal distribution. It's very common for natural resources, you'd get a Hubbert's peak for fruiting trees in Uganda for a given week for example (time constrained as the fruiting repeats). The point is, finite resources increase, flatline and decrease. It is predictable, and irreversible. So I think the West/NATO has known this since the big discoveries in Texas in the 30s. They locked in Saudi in 1945, almost 80 years ago, when we were still going up the left side of this curve, knowing that this day would come. And much of the warring over the last 50 years has been to try and maintain access to those resources. They have been invading and taking oil out of OPEC for decades.

The scary thing is that OPEC has turned its back as we are about to go down the other side. Isn't that interesting timing? Almost like OPEC and other oil producers know what is happening?! And the tell is indeed the US shale production peaking. That is the only thing that added supply growth over the last ten years, and they don't fear that any more.

I'll go and see what these GoRozen boys have to say, they are pretty good I find.

[mh9000]

@Cattle Prod I’m you’ve said before that the UK North Sea offshore won’t be able to help us out like the 80s as there’s no new fields and existing ones coming to end of their life ? Is that right or is it potentially there if leaders weren’t such fuckwits.

(Putting aside the lack of political support and long time to install/commission to first oil/gas as well)

[Pip321]

59 minutes ago, sancho panza said:

It's pretty impressive how much some of these BTLers were allowed to borrow and how they were allowed to lever the equity into even more leverage.

As I've bored on before,our family friend and their 25 BTL's is going under on legacy laons from the 07 era,which is jsut incredible.Having looked at NatWest/some big BS's books,where the data is avalaible is amazing how long regulators have allowed these turd loans to stew in the toilet basin.It really does take your breath away.

 

Agree…..and it sit uncomfortably for some, but the truth was this was an opportunity to leverage, buy residential in the dips, sell after a sparkly make over and all costs could be more than paid for by tenants. However the key was to sell rather than borrow more because selling locks in gains and crystallised CGT issues. The other rule was to ensure you weren’t relying on the rent to live on….it was to repay debt or improve the property. 

If you followed that model then anything bought is 2007 should be owned outright now or sold at a profit….whereas your friend still is moaning on about mortgages. 

The houses I own stand me at almost nothing, a bit like owning a dividend paying share since 2000 where you reinvest the divi and also the share price has also grown in value. As I say, an uncomfortable truth is some may have done well from this at the cost of making a whole generation poor. 

Only solace is almost all of the leveraged multiple property LLs I know just do not sell and also insist on maintaining a lifestyle rather than either adding value to the houses or paying down debt. They are doomed 😉

[invalid]

16 hours ago, Plan-b said:

Fossil fuels the greatest bargain discovery for all of history its the only reason the modern world exists, the surplus energy created has enabled man to pursue science and learning and much more without having to produce anything in return for the energy invested.

When its gone it will take a while but eventually it'll be like a return to the dark ages because of the loss of a myriad materials produced from fossil fuels cannot be made any other way.

The planet cannot support anything like the current world population without Fossil Fuels.

The loss will be catastrophic.

 

Making good use of the abundance of fossil fuel energy at our disposal I have created a time travel machine and travelled to the future. It turns out that time travel requires astronomical amounts of energy.  I know that some people are bemoaning the fact that this scientific feat completely exhausted all our fossil fuel reserves, but surely a good thing as we no longer need to worry about CO2 emissions from fossil fuels.

 

Anyway, thought I would share with you all some photos from my trip to the future. looks like in the future they have devised interesting ways to keep fit and active! Sorry the photos are all in black and white, something to do with time travel paradox means only black and photos can be bought back from the future.

 

 

 

 

 

 

[Cattle Prod]

1 hour ago, mh9000 said:

@Cattle Prod I’m you’ve said before that the UK North Sea offshore won’t be able to help us out like the 80s as there’s no new fields and existing ones coming to end of their life ? Is that right or is it potentially there if leaders weren’t such fuckwits.

(Putting aside the lack of political support and long time to install/commission to first oil/gas as well)

Yes, irreversible decline. It's a very good example of Hubberts peak actually. Big fields found first, ramp up, peak, decline. There was a blip from 2005-2016 where tens of billions was spend to add just a little bit more from small or marginal fields. The UK North Sea offshore is in the process of shutting down. Platform removal and well amandonment is a growth sector of the industry. The politicians have just made sure it'll happen even more quickly.

 

It was some effort to squeeze out that blip I can tell you. We could make that tail end more gently sloping if we were allowed to get on with our jobs, but it's going to be steeper.

Edit: you can quickly see that the resources are already around 73% depleted from peak. This partly explains why they now have to run a deficit and worship the bond market in order to hand out the bennies.

Edited June 16, 2023 by Cattle Prod

[onlyme]

Crosses with housing market but commentary on pensions outlook and when it all really started to go wrong two deacdes ago, pertinent.

 

Edited June 16, 2023 by onlyme

[Shamone]

1 hour ago, sancho panza said:

Spent the last 24 hours building a 2% postion in yara amongst other things like doing the aldi shopping with a lunatic 2 year old.Bought the last batch this am in a UK broker.Amazing how the price moved from teh bottom yesterday

Very pleased to get in at this price with a decent first ladder.

Bizzarrely,the big cause of problems yesterday was saxobank where you couldn't buy the USD version or the NOK.Ridiculous for a broker of their size.Ended up shuffling BATs at HL and buying the ADRs at saxo, using HL for NOK.

Reminds me of the many on here who have said IB is much better.Really need to start the transfers

 

I wanted to buy some more YARA but no money!

[Shamone]

36 minutes ago, invalid said:

 

Making good use of the abundance of fossil fuel energy at our disposal I have created a time travel machine and travelled to the future. It turns out that time travel requires astronomical amounts of energy.  I know that some people are bemoaning the fact that this scientific feat completely exhausted all our fossil fuel reserves, but surely a good thing as we no longer need to worry about CO2 emissions from fossil fuels.

 

Anyway, thought I would share with you all some photos from my trip to the future. looks like in the future they have devised interesting ways to keep fit and active! Sorry the photos are all in black and white, something to do with time travel paradox means only black and photos can be bought back from the future.

 

 

 

 

 

 

I used a sickle and a scythe at work once, and a push along barrow for drilling seed.

[Yadda yadda yadda]

17 hours ago, Cattle Prod said:

Now I understand my visit to Brooklands a bit better, how all that stuff could be invented designed and built in England a few short years ago. The PPE politicians inherited a nation of tinkerers, inventors, engineers and utterly fucking wrecked it. They even take the piss out of James Dyson for supporting Brexit it makes you fit to be tied 😬😬😬

Practicality has been stripped out of culture, to a large extent. My Dad went to Grammar School and then studied Physics at University. His schooling wasn't setting him up to work with tools. He hardly knew his father so no male role model at home. School gave him decent woodworking, metalwork and electrical skills. Minor jobs around the home he did and he would have done more if he didn't work long hours. I have folding side tables that he made. He had jobs in reasonably advanced manufacturing. Not on the tools himself but he knew how everything worked and had to make sure quality was spot on. I realise this is all written in the past tense but he is still alive and healthy.

I went to a comprehensive and learned very few practical skills. One of the few things I remember was using some sort heated metal element to bend plastic. Surprisingly I haven't used this skill at home... Discipline was awful. All my practical skills were learned from my Dad or later from YouTube videos. Arguably I have greater need for these skills because rent and mortgage have been a larger proportion of my expenses for longer. Lots of people now have no practical skills and rely on cheap labour - perhaps another reason why they support immigration. Youngsters today, excluding those that go into trades, appear even worse. Although I'm wary of judging purely on experience. Additionally why would you do DIY if you rent? I suppose lower skills in the general population means more demand for tradesmen and higher GDP.

[invalid]

3 minutes ago, Shamone said:

I used a sickle and a scythe at work once, and a push along barrow for drilling seed.

 

Years ago a neighbour used one to cut back his over grown lawn. I have to admit it was quite effective. But it looked like hard graft for even a small lawn. Imagine the work required to hand cut even a small field of wheat.

Give me a petrol powered lawn mower any day.

 

[Froggy2000]

1 hour ago, sancho panza said:

As I've bored on before,our family friend and their 25 BTL's is going under on legacy laons from the 07 era,which is jsut incredible.

 

LIAR LOANS

[MrXxxx]

https://www.msn.com/en-gb/money/other/uk-interest-rates-warning-as-big-tectonic-shifts-to-force-britons-to-pay-more-for-longer/ar-AA1cAqAy?ocid=mailsignout&pc=U591&cvid=20378de6f8364105ba27bfbb2a77ab62&ei=68

£uck me, as his tenure was during this period you would think he would 'keep his head low', but no.....another example just like Blair, their arrogance is immeasurable!

[desertorchid]

5 minutes ago, Froggy2000 said:

LIAR LOANS

Pebble, is that you?

[onlyme]

1 minute ago, MrXxxx said:

https://www.msn.com/en-gb/money/other/uk-interest-rates-warning-as-big-tectonic-shifts-to-force-britons-to-pay-more-for-longer/ar-AA1cAqAy?ocid=mailsignout&pc=U591&cvid=20378de6f8364105ba27bfbb2a77ab62&ei=68

£uck me, as his tenure was during this period you would think he would 'keep his head low', but no.....another example just like Blair, their arrogance is immeasurable!

You mean the UN climate and finance envoy?

The man is a grade A shyster.

Look up his threats to bankrupt companies that don't follow ESG.

[Ash4781b]

8 minutes ago, Yadda yadda yadda said:

Practicality has been stripped out of culture, to a large extent. My Dad went to Grammar School and then studied Physics at University. His schooling wasn't setting him up to work with tools. He hardly knew his father so no male role model at home. School gave him decent woodworking, metalwork and electrical skills. Minor jobs around the home he did and he would have done more if he didn't work long hours. I have folding side tables that he made. He had jobs in reasonably advanced manufacturing. Not on the tools himself but he knew how everything worked and had to make sure quality was spot on. I realise this is all written in the past tense but he is still alive and healthy.

I went to a comprehensive and learned very few practical skills. One of the few things I remember was using some sort heated metal element to bend plastic. Surprisingly I haven't used this skill at home... Discipline was awful. All my practical skills were learned from my Dad or later from YouTube videos. Arguably I have greater need for these skills because rent and mortgage have been a larger proportion of my expenses for longer. Lots of people now have no practical skills and rely on cheap labour - perhaps another reason why they support immigration. Youngsters today, excluding those that go into trades, appear even worse. Although I'm wary of judging purely on experience. Additionally why would you do DIY if you rent? I suppose lower skills in the general population means more demand for tradesmen and higher GDP.

Blimey. I remember a lesson where we took a piece of plastic and folded it over an element. I think I made a folding clip thing. Maybe there was a template lesson. A fair amount in the class went into trades but the school design and technology didn’t teach any of that 😂. In the past generation I think people left school  at 14/15.

[Lightly Toasted]

15 hours ago, Axeman123 said:

Bleak to think about. The idea that dark ages people could only concieve of Roman viaducts etc having been built by giants always seeemed like cope to me, the truth IMO is that few minds could handle seeing what past people were capable of and comparing it to subsistence farming etc - It would just be crushing despair.

[Heart's Ease]

30 minutes ago, Shamone said:

I used a sickle and a scythe at work once, and a push along barrow for drilling seed.

http://thescytheshop.co.uk/

I have one from here....my dad always used a big old English scythe in the long grass around his veg plot. I've got a lighter Austrian scythe to do the same job 50 years later. 

[janch]

4 hours ago, onlyme said:

The way they are going grid power is the one to collapse first. In the past a lot of business could partially and almost fully function -   telephones still work so comms OK, paper based systems, everything on computer it would not just be industry affected almost no systems would work under a power cut, zero data.  In some ways this is a good thing as if this situation is due to incompetence rather than malevolence then an immediate course change would need to be made.

I went to my local Tescos where there was a very noisy generator just outside.  Apparently the store had to close last Saturday as the electrical system failed.  (They probably had the air conditioning blasting and it couldn't take it.) They couldn't even open the doors!  No tills obviously so the only thing to do was close completely.

At least in the 70s during the strikes with power cuts shops could function.  With normal doors opened by hand and cash register mechanical tills, food shopping was still a thing even if occasionally it was done by candlelight.

If the grid collapses.......

[Yadda yadda yadda]

27 minutes ago, Ash4781b said:

Blimey. I remember a lesson where we took a piece of plastic and folded it over an element. I think I made a folding clip thing. Maybe there was a template lesson. A fair amount in the class went into trades but the school design and technology didn’t teach any of that 😂. In the past generation I think people left school  at 14/15.

Our school churned out all sorts of people. From lawyers to trades to drug dealers to burglars.