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

[Yadda yadda yadda]

1 hour ago, desertorchid said:

Well done to the BOE and the Treasury

 

Laugh or you'll cry time. Although that has been clear for a while. I always multiply the MoM figure by 12 for an approximate annualisation. Not good. Inflation will come down over the next few months but they're going to have to blow up the economy to get it to 4% let alone 2%. 

[MrXxxx]

15 minutes ago, Yadda yadda yadda said:

Laugh or you'll cry time. Although that has been clear for a while. I always multiply the MoM figure by 12 for an approximate annualisation. Not good. Inflation will come down over the next few months but they're going to have to blow up the economy to get it to 4% let alone 2%. 

Even if you just take a very simplistic view that values revert back to the norm/average [this being 2%], then 13 years at near zero means that an equivalent 13 years above this value are required to revert back to the norm....it's also interesting that politicos now make/reinforce more statements such as "We are going to/our target is to half the inflation rate by..." rather than "We are going to/our target is to get inflation back to 2% by..."

Edited June 21, 2023 by MrXxxx

[crashmonitor]

Two year Government Bond yields up to 5.11% from 4.93% last night. That's the borrowing floor of all debtors.

 

It's out of your hands you absolute idiot Bailey 

 

https://www.theguardian.com/business/live/2023/jun/21/uk-inflation-cost-of-living-squeeze-food-energy-interest-rates-mortgages-business-live

[Virgil Caine]

13 minutes ago, crashmonitor said:

Two year Government Bond yields up to 5.11% from 4.93% last night. That's the borrowing floor of all debtors.

 

It's out of your hands you absolute idiot Bailey 

 

https://www.theguardian.com/business/live/2023/jun/21/uk-inflation-cost-of-living-squeeze-food-energy-interest-rates-mortgages-business-live

The bond market was already signalling that inflation was likely to come in higher than expected before the figures were announced today. It proved a much more reliable indicator than any media commentator.

Edited June 21, 2023 by Virgil Caine

[Sugarlips]

 

 

[HousePriceMania]

49 minutes ago, Yadda yadda yadda said:

Laugh or you'll cry time. Although that has been clear for a while. I always multiply the MoM figure by 12 for an approximate annualisation. Not good. Inflation will come down over the next few months but they're going to have to blow up the economy to get it to 4% let alone 2%. 

1% rise from the BOE tomorrow/thursday ? 

I read today banks wont repo houses now.  So why pay the mortgage.

It's clown world now.

[Loki]

Just now, HousePriceMania said:

1% rise from the BOE tomorrow/thursday ? 

I read today banks wont repo houses now.  So why pay the mortgage.

It's clown world now.

Is that where you end up just renting from the bank on a perpetual self-repair self-insure lease?

Can't go wrong with bricks and mortar 

[Option5]

4 minutes ago, HousePriceMania said:

1% rise from the BOE tomorrow/thursday ? 

I read today banks wont repo houses now.  So why pay the mortgage.

It's clown world now.

The banks will make up some of the losses by paying lower rates on savings and deposits.

[AlfredTheLittle]

6 minutes ago, HousePriceMania said:

1% rise from the BOE tomorrow/thursday ? 

I read today banks wont repo houses now.  So why pay the mortgage.

It's clown world now.

Mortgages and rent both unaffordable, but no need to pay rent as the courts don't work so you can't be evicted, and no need to pay mortgage as the courts don't work so you can't be evicted, and politicians won't let the banks evict you anyway.

They've found the perfect solution, house prices can stay high so everyone feels rich, but nobody has to pay anything.

[Sugarlips]

2 minutes ago, AlfredTheLittle said:

Mortgages and rent both unaffordable, but no need to pay rent as the courts don't work so you can't be evicted, and no need to pay mortgage as the courts don't work so you can't be evicted, and politicians won't let the banks evict you anyway.

They've found the perfect solution, house prices can stay high so everyone feels rich, but nobody has to pay anything.

Meanwhile silver back to $23, insurance is cheap.

[jamtomorrow]

The scapegoating of central bankers has been discussed a few times on here, so not all surprising to see it materialize. Interesting question is, will it turn into scapegoating of central *banking*?

Must be a few populist pols looking at this and seeing the obvious opportunity.

 

[RWJ]

1 hour ago, MrXxxx said:

0.25 or 0.5 tomorrow?....let be honest if they do the former it is going to make FA difference, its got to be 0.5, and we know what that means for the mortgage rates...I can see the BS/Banks pulling already, and can hear the BTL crowing now!

I should get a confirmation email from Marcus later on today so I'll let you know.

[Democorruptcy]

100% debt to gdp, worst since 1961

[stoobs]

1 hour ago, Yadda yadda yadda said:

Laugh or you'll cry time. Although that has been clear for a while. I always multiply the MoM figure by 12 for an approximate annualisation. Not good. Inflation will come down over the next few months but they're going to have to blow up the economy to get it to 4% let alone 2%. 

MoM^12 makes more sense, which for 0.7% MoM equates to ... 8.7%.

Suggests it's not about to drop meaningfully anytime soon.

[Heart's Ease]

https://www.telegraph.co.uk/business/2023/06/21/uk-inflation-rate-mortgages-live-ftse-100-markets-news/?li_source=LI&li_medium=liftigniter-rhr

The Bank of England will raise interest rates to 6pc by the end of the year, markets predicted today, after underlying inflation hit its highest level in 31 years.

Traders fully priced-in that policymakers will be forced to increase the Base Rate to the highest level since February 2000 by December. 

It comes as underlying inflation hit its highest level in 31 years last month in a blow to mortgage holders ahead of the Bank of England’s interest rate decision tomorrow.

Also from the Telegraph feed:

Britain’s soaring benefits bill drove up public borrowing to its highest May level outside of lockdown, according to official figures, pushing the UK’s debt share above the annual size of the economy for the first time since 1961. 

 

The Government borrowed £20bn to plug the gap between tax receipts and public spending in May.

 

This is more than double the £9.4bn borrowed in the same month a year ago, according to the Office for National Statistics (ONS). 

 

It is also the second highest May borrowing since monthly records began in 1993, only behind the first Covid lockdown in May 2020. 

Edited June 21, 2023 by Heart's Ease
Sorry about gigantic text am on phone

[crashmonitor]

10 minutes ago, jamtomorrow said:

The scapegoating of central bankers has been discussed a few times on here, so not all surprising to see it materialize. Interesting question is, will it turn into scapegoating of central *banking*?

Must be a few populist pols looking at this and seeing the obvious opportunity.

 

Karen Morgan was on R4 this morning, saying we absolutely need 0.5%, the inflation is now almost all domestically generated ( services up 10%. If they don't do it then international Markets will sell...they are not to be taken for fools. Morgan and Mann my pin ups just now, well maybe not Mann.

 

[Yadda yadda yadda]

5 minutes ago, stoobs said:

MoM^12 makes more sense, which for 0.7% MoM equates to ... 8.7%.

Suggests it's not about to drop meaningfully anytime soon.

Yes but that involves getting a calculator out, which I couldn't be bothered to do. Or pen and paper or firing up excel.

I do think inflation will fall as domestic energy prices decline. Not going to fall anywhere near enough.

[DurhamBorn]

One part of me is enjoying see the roadmap play out,and being very pleased with the work.Watching the polos and elite screw up so badly and all the little cross market things now happening.However its also shocking to think there are answers,but they are so wrapped up in their insanity they cant even mention them.

Il repeat to the press reading this.Unless they slash bennies and state worker pensions (and link state pension to wages only) then we are speeding up to systemic collapse.This inflation,all of it,is caused by the fact we dont produce enough for the demands placed.We have had that building a long time BUT the killers is the massive ramping up of benefits.Half the country being inflation linked means the economy cant heal,because we need to consume around 26% less as country as we then re-build productive capacity.With the set up now it means bennies lose nothing,and so workers not on bennies need to lose around 50% spending power.If that happens most workers would be better off on bennies,so at around 20% down more and more stop work,so the collapse speeds up.My macro on this is clear.

So where now.Well the next couple of years will consume around £350billion we dont produce.Pensions have already lost around a third to pay for bennies so far,now its very likely housing wealth will be taken.I have had 40% down inflation adjusted for a long time,i think that might be a little low,but still middle of the call.We are down around 19% already.

I dont think the polos will try to deal with anything,the Tories will be wiped out,Labour will try to take wealth,it will,maybe for a year,but the systemic items will grow.

The worst thing for me is none of this needed to happen.In the end allowing half the population to live off the other half will ensure they all end up with nothing.

BTL will be destroyed of course and thats a very good thing,we knew that here a few years ago when we predicted 12% inflation when everyone said 2%.However lots of people who work and have mortgages are going to be destroyed,the very ones who work,the few paying in.Our polos are such cowards,or such idiots none of them can stand up and tell the truth about this inflation.

Il add for them something else about to happen.EM currencies are about to start to get stronger as their economies are seeing inflation fall.That means 85% of the worlds population might end up with buying power increasing against sterling.If they think its bad now,just wait for that.

 

 

[stoobs]

9 minutes ago, Yadda yadda yadda said:

Yes but that involves getting a calculator out, which I couldn't be bothered to do. Or pen and paper or firing up excel.

I do think inflation will fall as domestic energy prices decline. Not going to fall anywhere near enough.

I just do it in my head.

I'm "just an effing calculator", at least I'm pretty sure that's what those kids were shouting at me the other day.

[montecristo]

33 minutes ago, Option5 said:

The banks will make up some of the losses by paying lower rates on savings and deposits.

Not to date.  Savings rate will be 6% + after tomorrow.  They are over 5.5% now.

[Sugarlips]

3 minutes ago, DurhamBorn said:

One part of me is enjoying see the roadmap play out,and being very pleased with the work.Watching the polos and elite screw up so badly and all the little cross market things now happening.However its also shocking to think there are answers,but they are so wrapped up in their insanity they cant even mention them.

Il repeat to the press reading this.Unless they slash bennies and state worker pensions (and link state pension to wages only) then we are speeding up to systemic collapse.This inflation,all of it,is caused by the fact we dont produce enough for the demands placed.We have had that building a long time BUT the killers is the massive ramping up of benefits.Half the country being inflation linked means the economy cant heal,because we need to consume around 26% less as country as we then re-build productive capacity.With the set up now it means bennies lose nothing,and so workers not on bennies need to lose around 50% spending power.If that happens most workers would be better off on bennies,so at around 20% down more and more stop work,so the collapse speeds up.My macro on this is clear.

So where now.Well the next couple of years will consume around £350billion we dont produce.Pensions have already lost around a third to pay for bennies so far,now its very likely housing wealth will be taken.I have had 40% down inflation adjusted for a long time,i think that might be a little low,but still middle of the call.We are down around 19% already.

I dont think the polos will try to deal with anything,the Tories will be wiped out,Labour will try to take wealth,it will,maybe for a year,but the systemic items will grow.

The worst thing for me is none of this needed to happen.In the end allowing half the population to live off the other half will ensure they all end up with nothing.

BTL will be destroyed of course and thats a very good thing,we knew that here a few years ago when we predicted 12% inflation when everyone said 2%.However lots of people who work and have mortgages are going to be destroyed,the very ones who work,the few paying in.Our polos are such cowards,or such idiots none of them can stand up and tell the truth about this inflation.

Il add for them something else about to happen.EM currencies are about to start to get stronger as their economies are seeing inflation fall.That means 85% of the worlds population might end up with buying power increasing against sterling.If they think its bad now,just wait for that.

 

 

I wasn’t around for the IMF intervention in the ‘70’s, not many alt options to the above?

This clusterfuck reminds me of the ERM debacle in the ‘90’s.

As you say the collapse is speeding up, are you seeing it as this year now?

I do have a small amount of sympathy for those left holding the bag in terms of we are supposed to live in a society not an economy.

[Yadda yadda yadda]

9 minutes ago, DurhamBorn said:

One part of me is enjoying see the roadmap play out,and being very pleased with the work.Watching the polos and elite screw up so badly and all the little cross market things now happening.However its also shocking to think there are answers,but they are so wrapped up in their insanity they cant even mention them.

Il repeat to the press reading this.Unless they slash bennies and state worker pensions (and link state pension to wages only) then we are speeding up to systemic collapse.This inflation,all of it,is caused by the fact we dont produce enough for the demands placed.We have had that building a long time BUT the killers is the massive ramping up of benefits.Half the country being inflation linked means the economy cant heal,because we need to consume around 26% less as country as we then re-build productive capacity.With the set up now it means bennies lose nothing,and so workers not on bennies need to lose around 50% spending power.If that happens most workers would be better off on bennies,so at around 20% down more and more stop work,so the collapse speeds up.My macro on this is clear.

So where now.Well the next couple of years will consume around £350billion we dont produce.Pensions have already lost around a third to pay for bennies so far,now its very likely housing wealth will be taken.I have had 40% down inflation adjusted for a long time,i think that might be a little low,but still middle of the call.We are down around 19% already.

I dont think the polos will try to deal with anything,the Tories will be wiped out,Labour will try to take wealth,it will,maybe for a year,but the systemic items will grow.

The worst thing for me is none of this needed to happen.In the end allowing half the population to live off the other half will ensure they all end up with nothing.

BTL will be destroyed of course and thats a very good thing,we knew that here a few years ago when we predicted 12% inflation when everyone said 2%.However lots of people who work and have mortgages are going to be destroyed,the very ones who work,the few paying in.Our polos are such cowards,or such idiots none of them can stand up and tell the truth about this inflation.

Il add for them something else about to happen.EM currencies are about to start to get stronger as their economies are seeing inflation fall.That means 85% of the worlds population might end up with buying power increasing against sterling.If they think its bad now,just wait for that.

 

 

Spot on. It it amazing what I've learned over the last few years. Knowledge has become crystal clear. It takes a while to sink in but ultimately it resembles common sense.

That last paragraph is another driver of inflation here.

[Sugarlips]

 

 

[Yadda yadda yadda]

4 minutes ago, Sugarlips said:

I wasn’t around for the IMF intervention in the ‘70’s, not many alt options to the above?

This clusterfuck reminds me of the ERM debacle in the ‘90’s.

As you say the collapse is speeding up, are you seeing it as this year now?

I do have a small amount of sympathy for those left holding the bag in terms of we are supposed to live in a society not an economy.

It looks likely to be worse than both of those examples to me. Definitely worse than ERM and probably worse than the IMF, if only because I doubt they will step in to anywhere near the required extent and strings would be those of a puppeteer. Likewise not around for the IMF situation.

[DurhamBorn]

Notice what is driving up the deficit,bennies,and the reason?,we dont produce what we consume,so it has to come from consuming saving labour,DISTRIBUTION cycle and inflation.

https://www.telegraph.co.uk/business/2023/06/21/britain-debt-100-pc-gdp-borrowing/

Good old Durham there top of the league for where nobody needs to work.

“This increase was largely because of inflation-linked benefits uprating,” the ONS said 

Tax take should increase though because wage increases come through over the year where the bennies cost lands all at once from April,but it shows how this just builds and builds.