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

[JohnnyB]

Peston on the news yesterday blaming wage increases on inflation being sticky. No consideration that money-printing enabled benefits and pension +10%, and minimum wage rises could be a bigger driver.

I genuinely don't believe the +7% that got published recently on wages. Certainly the house-buying demographic (younger, professional jobs) aren't getting this.

[JoeDavola]

6 minutes ago, JohnnyB said:

Peston on the news yesterday blaming wage increases on inflation being sticky. No consideration that money-printing enabled benefits and pension +10%, and minimum wage rises could be a bigger driver.

I genuinely don't believe the +7% that got published recently on wages. Certainly the house-buying demographic (younger, professional jobs) aren't getting this.

That 7% is influenced by the amount of minimum wage workers who got big percentage increases.

Most earning middle wages got nowhere near 7% unless they moved jobs.

Edited June 22, 2023 by JoeDavola

[Pip321]

36 minutes ago, crashmonitor said:

Economist on Sky News not mincing his words re. BOE incompetence, he seems quite angry. He thinks they have to go 0.5%...I'm not so confident. Tenreryro and Dinghra aren't going to u-turn are they. Even a 0.5% would be a total embarrassment for Bailey.

 

The trouble is with human nature, if you have made cataclysmic mistakes and  are getting pilloried you double down and get bloody minded. Bailey has never even apologised.

 

Hopefully I'm wrong on this. We can count on Cath Mann to go 0.5% or even 0.75%  that's it.

It probably shows the importance of being able to sack people who were wrong because you are not bound by your previous behaviour, like a double or quits gambler trying to redeem your reputation.

 

 

Thx. Just wish people would hit the ‘workers wages driving inflation question’, sky news is better at reporting detail than most (BBC awful) and this was a nice post……

Still no mention of benefit and public sector pensions driving inflation.  

Workers ‘earn’ their wages by doing stuff….pay them or don’t but let’s not bitch about them wanting more money on neutral news channels. Report the news.

We either need trains or we don’t….if there is a queue of people wanting to work on trains, teach at schools, police the streets them pay then less……if there isn’t and you need them to stay they pay them more.

A symptom that we have neither socialism or capitalism at work….just a bunch of politicians/bankers getting what they can from the system blaming anyone but themselves. 

Edited June 22, 2023 by Pip321

[Wight Flight]

9 minutes ago, ThoughtCriminal said:

Does anyone see a downside to just handing it back and walking away? At this point I don't see any other option as he's heading for a nervous breakdown or suicide.

Yes. The bank will sell it cheap and chase him for the deficit.

At least if he remains in control he can minimise his loss.

[AWW]

Got to love the reporting on interest rate hikes. Look at this photo.

Where's the photo of someone with some savings who would like a return approaching inflation without having to waste their time researching equities and managing a portfolio?

[stoobs]

17 minutes ago, Democorruptcy said:

The governor puts forward the amount he thinks will gain a majority and they vote yes/no on that figure. If you want to keep your position, you don't vote against the boss.

Has the MPC ever voted 'no' (even once)?

Also I wonder what would happen if there was a no and a non-majority (e.g. the 9 members split equally between 3 different rates)?

[Lightscribe]

43 minutes ago, ThoughtCriminal said:

I was going to call this an anecdotal but it's more of a fucking tragedy.

Good mate of mine has just revealed to me the world of shit he's in with his rental property.

With rate increases he's now paying over 200 a month more on the mortgage (interest only), tried selling it for a year and was offered 10k under asking but "I know what it's worth, I'm not letting it go cheap". I told him to take the offer at the time as it would have paid the mortgage off and left him with a few grand "profit".

Fast forward a year and he's spent over 12k on mortgage repayments, maintenance etc so is now looking at a big loss. Renting it out again but losing 150 a month doing so.

Does anyone see a downside to just handing it back and walking away? At this point I don't see any other option as he's heading for a nervous breakdown or suicide.

Lovely lad, type you could call at 3am and he'd be there no matter what, but fuck me people just won't take telling.

 

You have to take into account that places like this forum is an outlier.

Krusty and Phil are still on tv lamenting how much ‘potential for investment’ there is in rural barn conversions.

The majority of the country still thinks house prices are going up and the landlord game is  still a win-win (including in other sections of this forum)

We’ve got 20 years of hard-wired media and government gas lighting to unwind. Help to buy, stamp duty holidays etc, has enabled the one way consensus and everyone thinks the government will prop. (TBH I wouldn’t put it past both parties in their manifestos next year) 

This time however it’s different (it really is) and the UK is going to slapped round the chops with a wet fish.

We have an a housing market with an economy attached, when this unwinds it will be biblical (watch the statistics change as EEs go home through lack of construction work and the government importing en masse to offset it)

Edited June 22, 2023 by Lightscribe

[Milfhunter2021]

Boom and the UK economy is not recoverable .... laughing 

Property will be valueless in Britain soon... that is the plan all along . 

When the economy is bankrupt , they will come for assets that cannot be moved... 

"You will own nothing and be happy" ....  all part of the plan . 

https://finance.yahoo.com/news/uk-debt-exceeds-100-gdp-063352276.html

Edited June 22, 2023 by Milfhunter2021

[Plan-b]

20 minutes ago, Lightscribe said:

You have to take into account that places like this forum is an outlier.

Krusty and Phil are still on tv lamenting how much ‘potential for investment’ there is in rural barn conversions.

The majority of the country still thinks house prices are going up and the landlord game is  still a win-win (including in other sections of this forum)

We’ve got 20 years of hard-wired media and government gas lighting to unwind. Help to buy, stamp duty holidays etc, has enabled the one way consensus and everyone thinks the government will prop. (TBH I wouldn’t put it past both parties in their manifestos next year) 

This time however it’s different (it really is) and the UK is going to slapped round the chops with a wet fish.

We have an economy with a housing market attached, when this unwinds it will be biblical (watch the statistics change as EEs go home through lack of construction work and the government importing en masse to offset it)

Agree - and a good post.  I'd say we have a housing market with an economy attached.

[Milfhunter2021]

I'd rather be the German economy than the British economy right now.  (Big smile) .

Best of all .... who in Europe will want British workers after bankrupting their own economy ... (skill or no skill) no business will want idiots that voted for bankruptcy ... which is what the UK did ... after Brexit . 

No German family business will take British workers.... why would we ... you were stupid enough to cause the problem... why would we want Brits ... 

This was the "Brexit dividend" that was promised.... 

Notice how Germany is not borrowing anywhere near what the UK is right now... laughing at the ONS stats as I type... 

@VeryMeanReversion @Undertaker1968 @Bear Hug @UmBongo @AlfredTheLittle @ohmyholygrail @One percent @Van Lady @Upsettah @ad_ceng 

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/december2022

 

 

 

 

 

Edited June 22, 2023 by Milfhunter2021

[Lightscribe]

54 minutes ago, Plan-b said:

Agree - and a good post.  I'd say we have a housing market with an economy attached.

 that’s what I meant.

I thought I was reasonably well versed in finance in 2007 when I sold up as I could see 2008 coming a mile off. I thought it all hit pretty quickly at the time.

Knowing what I do now, this has seemed like an oil tanker changing direction. But to people out there with no economic knowledge at all, this is hitting like the speed of a freight train.

Thats sentiment for you, but when it changes there’s no stopping it.

Edited June 22, 2023 by Lightscribe

[Milfhunter2021]

How funny the UKs answer to mortgage crisis ... import more people (even Labour could not beat that policy) .. 

Oh sorry its Zelda the computer game that caused inflation not lots of money printing ... during lockdowns. 

The British live in fucking Disneyland .... that is why their economy is fucked ... 

Had to laugh with you @Kevin Redshaw I hope you like the UK headlines... us Krauts can't stop laughing mate . 

https://uk.yahoo.com/style/relaxing-immigration-rules-could-help-062512225.html

https://uk.yahoo.com/finance/news/legend-zelda-computer-game-release-144353616.html

Edited June 22, 2023 by Milfhunter2021

[Kevin Redshaw]

1 hour ago, ThoughtCriminal said:

I was going to call this an anecdotal but it's more of a fucking tragedy.

Good mate of mine has just revealed to me the world of shit he's in with his rental property.

With rate increases he's now paying over 200 a month more on the mortgage (interest only), tried selling it for a year and was offered 10k under asking but "I know what it's worth, I'm not letting it go cheap". I told him to take the offer at the time as it would have paid the mortgage off and left him with a few grand "profit".

Fast forward a year and he's spent over 12k on mortgage repayments, maintenance etc so is now looking at a big loss. Renting it out again but losing 150 a month doing so.

Does anyone see a downside to just handing it back and walking away? At this point I don't see any other option as he's heading for a nervous breakdown or suicide.

Lovely lad, type you could call at 3am and he'd be there no matter what, but fuck me people just won't take telling.

 

Greed + stupidity = UK shit show

Most Brits don't think, rather they observe, then imitate the behaviour of those they observed.

No thinking, let alone critical thinking.

[Plan-b]

11 minutes ago, Milfhunter2021 said:

How funny the UKs answer to mortgage crisis ... import more people (even Labour could not beat that policy) .. 

Oh sorry its Zelda the computer game that caused inflation not lots of money printing ... during lockdowns. 

The British live in fucking Disneyland .... that is why their economy is fucked ... 

Had to laugh with you @Kevin Redshaw I hope you like the UK headlines... us Krauts can't stop laughing mate . 

https://uk.yahoo.com/style/relaxing-immigration-rules-could-help-062512225.html

https://uk.yahoo.com/finance/news/legend-zelda-computer-game-release-144353616.html

What immigration rules? Come on Lord Hammond at least be honest.

[wherebee]

3 minutes ago, Kevin Redshaw said:

Greed + stupidity = UK shit show

Most Brits don't think, rather they observe, then imitate the behaviour of those they observed.

No thinking, let alone critical thinking.

you're right.  It's almost as if for generations, the formative years in front of UK teachers have completely fucked them up....

[Milfhunter2021]

4 minutes ago, Kevin Redshaw said:

Greed + stupidity = UK shit show

Most Brits don't think, rather they observe, then imitate the behaviour of those they observed.

No thinking, let alone critical thinking.

100% agree... The British think they are clever ... but the reality is ... they are proving to be the most stupid in Europe by far . 

[leonardratso]

hmm, got to agree, lots of useless idiots around. Mind you, your average german is probably an arsehole as well.

[AWW]

Try working with the French if you want to see a misplaced sense of superiority.

[leonardratso]

2 minutes ago, AWW said:

Try working with the French if you want to see a misplaced sense of superiority.

hmm, been there, done that, most nationalities are ok in the main , some pricks, some ok, but the french are a cut above, probably only know/worked with maybe a handful of them, all knobs of the highest order.

Edited June 22, 2023 by leonardratso

[Lightscribe]

25 minutes ago, Plan-b said:

What immigration rules? Come on Lord Hammond at least be honest.

The UK’s visa/passport system will be opened wider than a crack addict whore’s drawers.

Edited June 22, 2023 by Lightscribe

[sleepwello'nights]

11 hours ago, Balding Badger said:

She hasn't got another job, but says they will manage. If I had to nail my colours to the mast I would say she has chosen to be 'unfit for work', albeit my opinion doesn't count for anything.

This is a symptom of the collapse we have been reading about in DurhamBorn's posts.

What you are seeing is a divergence from the new normal of two parents both working. When I was growing up I recall my mother getting a part time job. My father was livid, he took it as her saying that he could not provide for his family. It was a blow to his pride. 

Now it is expected that both parents will work, even if the mother's (I refuse to kow tow to the PC concept of equality of the sexes) wage/salary ws only enough to pay for childcare whilst needed.

 

 

 

3 hours ago, Lightscribe said:

Ahh yes, what a heist that was. Selling off swathes of new build flats for half a million on the basis that Westfields would transform Croydon into a commercial super hub of London.

Saffron Square is a highlight there.

 

From wht I read Croydon is now a bastion of diversity. Well its not horribly white, not sure how diverse it is in actuallity. Could be just predominantly black African/Carribbean and Brown Indian/Pakistani.

Racist, moi? 

[sleepwello'nights]

1 hour ago, AWW said:

Got to love the reporting on interest rate hikes. Look at this photo.

Where's the photo of someone with some savings who would like a return approaching inflation without having to waste their time researching equities and managing a portfolio?

Wow, why haven't the advertising agency used a multi-racial couple?

 

[Kendo]

1 hour ago, JohnnyB said:

Peston on the news yesterday blaming wage increases on inflation being sticky. 

It was probably just Peston being Peston and getting muddled up, but I noticed too that he said a couple of times that the BoE would be raising interest rates by 0.5% today. Doubt he’s had a heads-up but intriguing nonetheless.

[Virgil Caine]

2 hours ago, crashmonitor said:

Economist on Sky News not mincing his words re. BOE incompetence, he seems quite angry. He thinks they have to go 0.5%...I'm not so confident. Tenreyro and Dinghra aren't going to u-turn are they. Even a 0.5% would be a total embarrassment for Bailey.

 

The trouble is with human nature, if you have made cataclysmic mistakes and  are getting pilloried you double down and get bloody minded. Bailey has never even apologised.

 

Hopefully I'm wrong on this. We can count on Cath Mann to go 0.5% or even 0.75%  that's it.

It probably shows the importance of being able to sack people who were wrong because you are not bound by your previous behaviour, like a double or quits gambler trying to redeem your reputation.

 

 

Institutions and the people within them often get consumed by the idea that they are omniscient and omnipotent. The BOE and the U.K. Treasury are prime examples. That makes it very difficult for them to adapt or change course in a crisis or to correctly process data that indicates their world view is incorrect. 

[DurhamBorn]

2 hours ago, JohnnyB said:

Peston on the news yesterday blaming wage increases on inflation being sticky. No consideration that money-printing enabled benefits and pension +10%, and minimum wage rises could be a bigger driver.

I genuinely don't believe the +7% that got published recently on wages. Certainly the house-buying demographic (younger, professional jobs) aren't getting this.

Peston is everthing thats wrong with the media/elites etc.He is as thick as pig shit yet drones on to act like he is some expert.All this inflation is being driven by government fiscal spending that has been monetised.Its not even difficult,any macro strategist would be able to spot it within hours of gathering the numbers.The problem is the government and BOE has zillions of "economists",some who claim macro as well,but iv looked at them all,spoken to some,and none are macro strategists.Economics is fluff really,its worthless without deep dive macro.You dont produce enough pigs,so the price goes up,instead of producing more pigs,you print money so the 50% none working can still buy the pigs at the new price.That means those not getting inflation protection (the workers and savers) have to consume less pigs.Classical economics (BOE,government) think by doing this farmers will just produce more pigs.BUT its a distribution cycle.His workers say sorry,im better off not helping you produce pigs,im better off oh this bad back,you know,im off.

The only way the policies would work in this cycle is by ramping up primary production of energy,potash,metals etc etc,instead they have done the opposite with net zero etc.

I mean this,if they had used my work this wouldnt of happened,or to a much less damaging level,and we would be out the other side.When i met with the BOE,it shocked me,they really are useless.They have zero understanding of the real drivers of the UK economy.Its incredible to think it,but its true.They are not some sinister cartel,they are just shit.

Edited June 22, 2023 by DurhamBorn