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

[King Penda]

3 hours ago, Lightscribe said:

Yessss….yessss

They won’t need a car either….goooood

Less than 15 minutes away from any convenience…. Yessss

https://www.zerohedge.com/economics/climate-authoritarianism-wef-wants-75-less-private-car-owners-2050?ref=biztoc.com

I’d rather own a car than a house so won’t be bothered how much it costs . 

[Yadda yadda yadda]

2 hours ago, DurhamBorn said:

Has anyone had the Telefonica SA divi land yet?,i thought it was due friday,but nothing yet.

In my t212 yes this morning. Not checked larger hl holding.

[Plan-b]

26 minutes ago, Axeman123 said:

UK has features of an EM country

[AWW]

On 16/06/2023 at 12:46, Yadda yadda yadda said:

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.

Ha, we did the same thing in CDT. We also made a junior hacksaw, but all the "dangerous" stuff, like the casting for the handle, was done for us. We just bent a rod and made a threaded blade retainer. All the interesting stuff was reserved for "problem" kids. They got to build go-karts and race them at weekends. Surprisingly, none of them ever stopped behaving like shitheads.

[Plan-b]

17 minutes ago, King Penda said:

I’d rather own a car than a house so won’t be bothered how much it costs . 

Just remember: You can sleep in your car but you can't drive your house. [old Chinese proverb]

[King Penda]

Just now, Plan-b said:

Just remember: You can sleep in your car but you can't drive your house. [old Chinese proverb]

A lot soon will be

[AWW]

6 hours ago, spygirl said:

Distressed IO BTL houses are going to FTBS are a knock down price.

I don't think it will stop there. The SE is full of "accidental" LL who simply never sold a house when moving up the ladder. They will be selling them to pay down the mortgage on their own houses when they come to remortgage and find that they're looking at an increase from £2k a month to £5k.

[sancho panza]

2 hours ago, azzuri82 said:

Yeah it's just one anecdotal of a tiny business, but how many other people are thinking/considering the same extrapolated across the economy, and what does this do to government revenues?

I suspect most people in our position would limp on for another 6-9 months before being forced to throw in the towel, but who is going to work for fuck all?

My missus is a paediatric nurse that specialises in theatre work, and going back to work 2 days from November (mostly just to get her out the house and away from the kiddos for a bit), top of her band so she'll end up with approx. £1,500 net/month for 2 full days, but again, almost zero taxes contributed from her as well.

We're going from massive tax contributors over the last 5 years or say (I reckon we've paid approx. £300k when you tot it all up) to zero.

Making our world smaller, focusing on kids/family, and only doing 'easy' work with little to no stress. We're in the fortunate position to be able to do this - I actually don't know how folk on the treadmill do it - working 2 FT jobs with £400/500k mortgages etc. and looking after kids - these people must be due a mental breakdown of some sorts pretty soon due to debt stress/load.

Thanks for your insights azzuri.I think I remember you being involved in one of the shorting threads sometime back-maybe 2019?would that be tyou?

Until the Ukraine invasion dicussion down ehre of systemic risk was relatively rare but the the Ukriane war and it's effect on the inflation that was alaready running(CPI 5%+) and the govts resposne to it has seen systemic risk disucssion become a daily occurrence.

This thread has had some form over the years for foresight and if you monitor it every day or two,you start to see trends that are indicative in themselves.

we've been hearing more and more about the quiet/great resignation on herer and your testimony sits powerfully amongst it.Thats a lot of tax you pay every year and a lot of hassle you go through to pay it.I'm not surprised you feel like giving up.

think about it,that's two families on bennies on @DurhamBorns close that you won't be paying for any more.

I'm in the NHS and do a shift a week.My life has improved no end since i reduced my hours in 2019.Tiem with the kids is a blessing and I hope you enjoy your new found freedom.Like you I don't know how the 2 FT salary hosueholds do it mentally.I suppose they have no choice.

[spygirl]

35 minutes ago, AWW said:

I don't think it will stop there. The SE is full of "accidental" LL who simply never sold a house when moving up the ladder. They will be selling them to pay down the mortgage on their own houses when they come to remortgage and find that they're looking at an increase from £2k a month to £5k.

Indeed.

You cant 'hand the keys back ...'

Losses on a BTL pofrofolion will see most IO BYL LLs resi be repossesed too.

Theres a lot of losses to suck up.

 

[sancho panza]

only going ot get worse as many find their pension pots aren't as inflation proof was they were told.

https://12ft.io/proxy?q=https%3A%2F%2Fwww.telegraph.co.uk%2Fbusiness%2F2023%2F06%2F19%2Frecord-15m-over-65s-working-cost-of-living-crisis-retiremen%2F

Record 1.5m over-65s still working as cost of living crisis spoils retirement dreams

The number of older Brits in the job market has risen by a fifth over the past five years

More than one in ten people aged 65 or over were either in work or job hunting in the three months to April, new analysis by Rest Less of Office for National Statistics data shows.

12pc of over-65s are still economically active, which is the highest level since records began in 1992.

The number of older Brits in the job market has risen by a fifth over the past five years, from 1.2m in 2018 to nearly 1.5m.

Unemployment levels have also risen by the same amount, as more over-65s seek but struggle to find work later in life.

 

 

Will it be Morrisons or Asda? Two poster boy debt success stories

https://www.telegraph.co.uk/business/2023/06/19/morrisons-price-cuts-aldi-lidl/

Morrisons has kicked off its sixth round of price cuts this year as it scrambles to stop shoppers switching to Aldi and Lidl.

The latest round of price cuts comes as the supermarket battles to reverse declining market share. It has been losing market share to Aldi and Lidl in particular as customers shop around for the best price during the cost of living crisis.

Morrisons’ market share has fallen from around 10pc at the start of the year to 8.7pc today, according to Kantar, and last year the Bradford-headquartered grocer was overtaken by Aldi as the UK’s fourth biggest supermarket.

It is now looking possible that Morrisons could be overtaken by Lidl, too. The German discounter has been rapidly growing its market share over the last year, rising from 6.2pc at the start of 2022 to 7.7pc today.

Morrisons is fighting to lower prices while also shouldering a £5.9bn debt pile leftover from its takeover by the private equity company Clayton, Dubilier & Rice in 2021. Rising interest rates make the cost of servicing this debt pile more punishing.

The supermarket has embarked on a major push to cut its costs by around £700m by cutting down the range of products it manufactures and simplifying the routes taken by its delivery vans to save on fuel.

[sancho panza]

Lot of the wealthy clearly been keeping up with the thread. maybe @azzuri82 links in with your comments

https://www.telegraph.co.uk/business/2023/06/18/rich-high-net-worth-individuals-fleeing-britain/

The rich are fleeing Britain – we must stop the exodus now

We are already seeing plenty of predictions that the rich will flee Britain once the Labour party takes power, fearing a huge raid on their property. And yet, in reality, it is not likely to happen, although not for the reason that most people think. In reality, most of them will already have gone by the time Sir Keir Starmer and Rachel Reeves move into Downing Street.

According to a shocking report last week, the UK is already leading the world in the number of high net worth individuals leaving the country. The small-minded Left, especially on social media, might be pleased by that. But every person that leaves drains the country of tax revenue, spending power – and quite often jobs as well.

It is not the kind of league table that anyone would want to come anywhere near the top of. Henley & Partners this week released a table of the countries that wealthy individuals – which it defines as anyone with investable assets of more than $1m (£780,000) – are getting out of.

China, driven by President Xi Jinping’s crackdown on entrepreneurs, and the increased possibility of a conflict with the United States, tops the ranking with a net loss of 13,500 people. India is in second place with 6,500 departing. And the UK comes in at third, with an estimated loss of 3,200 millionaires over the course of the year.

Shockingly, we have now overtaken Russia as a country that the rich are fleeing, and we are are also ahead of such pillars of stability as South Africa, Nigeria and Argentina. Of all the world’s major economies, we are now the one that rich people most want to leave.

It is hard to blame anyone for that decision. The UK’s tax burden has risen to 70-year-highs, and yet still the Government is chronically short of money. The burden increasingly falls on the rich, with the threshold for the top rate of tax reduced, with corporation tax going up by a third, and with stamp duty rising to punitive levels on properties worth more than £1m (and even higher if you happen to be foreign).

The only prospect of change is a Labour government that wants to impose even higher taxes. The mood of the country is clear. It demands higher and higher taxes on the wealthy to pay for an unreformed public sector that delivers almost nothing and a ballooning welfare bill for five million people who aren’t working. Paying for it all is hardly an attractive proposition.

First, the bulk of income tax is paid by a tiny fraction of the total workforce (the highest earning 1pc pay 28pc of the total) so it only takes a small number to leave to dramatically reduce the amount the Government raises.

Every high net worth individual who departs may well be taking £200,000 or more of tax revenue with them, and that starts to add up very quickly. Next, we lose not just the direct tax revenue but all the money they spend as well. Once somebody leaves the country, they are no longer creating any jobs, or buying anything, so the second round impact will be even worse.

And finally, we lose the investment they bring with them. If they run a business, it leaves with them, and even if they don’t, they are less likely to invest in UK companies. In reality, it is easy to drive out the rich, but very hard to replace all the money you lose in the process.

[BoSon]

14 minutes ago, spygirl said:

Indeed.

You cant 'hand the keys back ...'

Losses on a BTL pofrofolion will see most IO BYL LLs resi be repossesed too.

Theres a lot of losses to suck up.

 

I know someone that did, around the turn of the century, went working in Aus and didn't have time or desire to sort out the mortgaged house. He came back a few years later so presume his debt was still on the books, but if he'd gone for long enough wouldn't the 6 year rule (or whatever it is) for chasing an unacknowledged debt come into effect?

 

[BoSon]

5 minutes ago, sancho panza said:

Lot of the wealthy clearly been keeping up with the thread. maybe @azzuri82 links in with your comments

https://www.telegraph.co.uk/business/2023/06/18/rich-high-net-worth-individuals-fleeing-britain/

The rich are fleeing Britain – we must stop the exodus now

We are already seeing plenty of predictions that the rich will flee Britain once the Labour party takes power, fearing a huge raid on their property. And yet, in reality, it is not likely to happen, although not for the reason that most people think. In reality, most of them will already have gone by the time Sir Keir Starmer and Rachel Reeves move into Downing Street.

According to a shocking report last week, the UK is already leading the world in the number of high net worth individuals leaving the country. The small-minded Left, especially on social media, might be pleased by that. But every person that leaves drains the country of tax revenue, spending power – and quite often jobs as well.

It is not the kind of league table that anyone would want to come anywhere near the top of. Henley & Partners this week released a table of the countries that wealthy individuals – which it defines as anyone with investable assets of more than $1m (£780,000) – are getting out of.

China, driven by President Xi Jinping’s crackdown on entrepreneurs, and the increased possibility of a conflict with the United States, tops the ranking with a net loss of 13,500 people. India is in second place with 6,500 departing. And the UK comes in at third, with an estimated loss of 3,200 millionaires over the course of the year.

Shockingly, we have now overtaken Russia as a country that the rich are fleeing, and we are are also ahead of such pillars of stability as South Africa, Nigeria and Argentina. Of all the world’s major economies, we are now the one that rich people most want to leave.

It is hard to blame anyone for that decision. The UK’s tax burden has risen to 70-year-highs, and yet still the Government is chronically short of money. The burden increasingly falls on the rich, with the threshold for the top rate of tax reduced, with corporation tax going up by a third, and with stamp duty rising to punitive levels on properties worth more than £1m (and even higher if you happen to be foreign).

The only prospect of change is a Labour government that wants to impose even higher taxes. The mood of the country is clear. It demands higher and higher taxes on the wealthy to pay for an unreformed public sector that delivers almost nothing and a ballooning welfare bill for five million people who aren’t working. Paying for it all is hardly an attractive proposition.

First, the bulk of income tax is paid by a tiny fraction of the total workforce (the highest earning 1pc pay 28pc of the total) so it only takes a small number to leave to dramatically reduce the amount the Government raises.

Every high net worth individual who departs may well be taking £200,000 or more of tax revenue with them, and that starts to add up very quickly. Next, we lose not just the direct tax revenue but all the money they spend as well. Once somebody leaves the country, they are no longer creating any jobs, or buying anything, so the second round impact will be even worse.

And finally, we lose the investment they bring with them. If they run a business, it leaves with them, and even if they don’t, they are less likely to invest in UK companies. In reality, it is easy to drive out the rich, but very hard to replace all the money you lose in the process.

Where are they running to?

With much of the westernised countries all playing the same game surely they'll be at risk of taxation wherever they go, unless there's still some safe havens if wealthy enough but they're not guaranteed to last.

[leonardratso]

.

no idea what happened there - ignore.

Edited June 19, 2023 by leonardratso

[Castlevania]

3 hours ago, HousePriceMania said:

Is it time to start buying yet ?

You might be better off buying heavily out of the money long dated Gilts issued before rates started rising. Gilts are CGT free.

[HousePriceMania]

4 minutes ago, Castlevania said:

You might be better off buying heavily out of the money long dated Gilts issued before rates started rising. Gilts are CGT free.

How does one go about doing that ?

[Stuey]

3 minutes ago, HousePriceMania said:

How does one go about doing that ?

Just what I was about to ask! Inflation and rates will be plummeting by year end. 

[HousePriceMania]

1 minute ago, Stuey said:

Just what I was about to ask! Inflation and rates will be plummeting by year end. 

DBs saying worst case 39% interest rates so i'd not be buying just yet 

[TNS]

25 minutes ago, BoSon said:

Where are they running to?

With much of the westernised countries all playing the same game surely they'll be at risk of taxation wherever they go, unless there's still some safe havens if wealthy enough but they're not guaranteed to last.

Middle East. Ultra low taxes in comparison and better weather too!

[Long time lurking]

36 minutes ago, BoSon said:

Where are they running to?

With much of the westernised countries all playing the same game surely they'll be at risk of taxation wherever they go, unless there's still some safe havens if wealthy enough but they're not guaranteed to last.

Portugal have very favorable tax incentives ,well it did have last time i looked

Edited June 19, 2023 by Long time lurking

[Castlevania]

16 minutes ago, HousePriceMania said:

How does one go about doing that ?

https://www.hl.co.uk/shares/corporate-bonds-gilts/bond-prices/uk-gilts
 

[Long time lurking]

14 minutes ago, Stuey said:

Just what I was about to ask! Inflation and rates will be plummeting by year end. 

 

[Stuey]

9 minutes ago, Long time lurking said:

 

Energy prices are down 80+% - this will be feeding through to inflation (possibly deflation) in H2 2023. 

[Axeman123]

1 hour ago, BoSon said:

Where are they running to?

Other people have already mentioned Portugal and Dubai, other tax havens that are attracting wealthy expats are:

• Thailand, Singapore, and Malysia in Asia
• Malta and Cyprus in the Med
• Various Caribbean Islands
• Costa Rica and Panama in Central America

[RWJ]

2 hours ago, sancho panza said:

only going ot get worse as many find their pension pots aren't as inflation proof was they were told.

https://12ft.io/proxy?q=https%3A%2F%2Fwww.telegraph.co.uk%2Fbusiness%2F2023%2F06%2F19%2Frecord-15m-over-65s-working-cost-of-living-crisis-retiremen%2F

Record 1.5m over-65s still working as cost of living crisis spoils retirement dreams

The number of older Brits in the job market has risen by a fifth over the past five years

More than one in ten people aged 65 or over were either in work or job hunting in the three months to April, new analysis by Rest Less of Office for National Statistics data shows.

12pc of over-65s are still economically active, which is the highest level since records began in 1992.

The number of older Brits in the job market has risen by a fifth over the past five years, from 1.2m in 2018 to nearly 1.5m.

Unemployment levels have also risen by the same amount, as more over-65s seek but struggle to find work later in life.

 

 

Will it be Morrisons or Asda? Two poster boy debt success stories

https://www.telegraph.co.uk/business/2023/06/19/morrisons-price-cuts-aldi-lidl/

Morrisons has kicked off its sixth round of price cuts this year as it scrambles to stop shoppers switching to Aldi and Lidl.

The latest round of price cuts comes as the supermarket battles to reverse declining market share. It has been losing market share to Aldi and Lidl in particular as customers shop around for the best price during the cost of living crisis.

Morrisons’ market share has fallen from around 10pc at the start of the year to 8.7pc today, according to Kantar, and last year the Bradford-headquartered grocer was overtaken by Aldi as the UK’s fourth biggest supermarket.

It is now looking possible that Morrisons could be overtaken by Lidl, too. The German discounter has been rapidly growing its market share over the last year, rising from 6.2pc at the start of 2022 to 7.7pc today.

Morrisons is fighting to lower prices while also shouldering a £5.9bn debt pile leftover from its takeover by the private equity company Clayton, Dubilier & Rice in 2021. Rising interest rates make the cost of servicing this debt pile more punishing.

The supermarket has embarked on a major push to cut its costs by around £700m by cutting down the range of products it manufactures and simplifying the routes taken by its delivery vans to save on fuel.

I was in Morrisons last week for the first time in ages.  Not buying food but used their pharmacy.  I thought for a moment the main store was closed, as the lights were out but on closer inspection I could see they were just really dimmed down.  I had to squint to see if there were any customers in the aisles, there was. 

Dunno if it was a temporary issue or if they're dimmed for cost saving but it was quite bizarre as supermarket lighting is normally very bright.