Credit deflation and the reflation cycle to come (part 8)

[M S E Refugee]

7 minutes ago, Axeman123 said:

Just for context, is this a meaningful % or not?

I've no clue, I only look at bullionvault from time to time but more often than not there's a withdrawl notice for the DOCTOR.

[Alex]

An aside: any EU residents here know of a good share-dealing platform in Germany? I'll dig for recommendations elsewhere too but any suggestions would be helpful.

[Castlevania]

5 minutes ago, Alex said:

An aside: any EU residents here know of a good share-dealing platform in Germany? I'll dig for recommendations elsewhere too but any suggestions would be helpful.

Degiro or Interactive Brokers

[ThoughtCriminal]

1 hour ago, spygirl said:

UK has Dogger Bank, already home to world largest windy mills.

https://doggerbank.com/

DB has a nice shallow water, ideal for windy mills ,which is why theres so many deployed there.

Its also go the infrastructure in place and access to national grid.

Theres is little to no reason why wed need to look at floating windy mills, which are more expensive and unproven.

 

 

 

 

Yes, and the results are in from Germany and Denmark:  the more wind you have the more expensive your electricity becomes 

[Axeman123]

Catherine Mann of the BoE doing a Jerome Powell impression today.

Quote

“They’re pricing in too many cuts – that would be my personal view – and so in some sense, I don’t have to cut because the market already is.”

“Wage dynamics in the UK are stronger and more persistent than the wage dynamics in either the US or the euro area,” she said.

“Underlying services dynamics are also stickier more persistent than either the US or the euro area. So on that basis, it’s hard to argue that the BoE would be ahead of the other two regions, particularly the US.”

and

Quote

“There has been a substantial easing, even since the vote last week,” she said about market rates. “I think that perhaps markets are a bit too complacent about how long they think the BoE overall – the MPC – will hold rates.”

My bold on the identical wordings previously used by J-Pow.

The BoE being six months behind the Fed with this messaging implies to me cuts could lag them by a similar degree, so June US first cut gives us winter 2024/5 here.

https://uk.finance.yahoo.com/news/bank-england-mann-markets-expect-104737644.html

[Mandalorian]

4 hours ago, ThoughtCriminal said:

Man oh man are we fucked..........

 

 

Publicly owned?  The public are going to own it?  Great.  I'll sell my free shares.  Like I can do with my NHS ones.

Oh.  He means STATE owned.  So shite then.

[onlyme]

Just now, Mandalorian said:

Publicly owned?  The public are going to own it?  Great.  I'll sell my free shares.  Like I can do with my NHS ones.

Oh.  He means STATE owned.  So shite then.

We had a functional energy supply until the cu*ts in parliment gleefully blew it up and went about shutting it down in every way possible.

Nothing short of an act of terrorism, treason most likely too. Follow the money,

 

 

[goldbug9999]

17 hours ago, Funn3r said:

"Hey Pablo, did ya hear, you can now mine this bitcoin and there's money in it.

Let's give it a go I mean we already have the drills and mining equipment how hard can it be"

Well there is apparently a few thousand bitcoin on a lost hard drive in a landfill site in Wales so you could literally mine for bitcoin.

Edited March 26 by goldbug9999

[spygirl]

Il post in full.
Ex BoE, so even more than paid for him....

Unwinding British QE may end up costing £100bn. Could that have been avoided?

The Bank of England can learn from history

https://www.ft.com/content/d5b62867-1663-4986-bb5d-79b8d11925cd

William A. Allen worked for the Bank of England from 1972 to 2004, and is now a visitor at the National Institute for Economic and Social Research. He is the author of ‘International Liquidity and the Financial Crisis’, ‘Monetary Policy and Financial Repression in Britain, 1951–1959,’ and ‘The Bank of England and the Government Debt: Operations in the Gilt-Edged Market, 1928–1972’.

By the time the Bank of England’s quantitative tightening programme is completed, quantitative easing will have cost British taxpayers £100bn, according to the latest forecasts from the Office for Budget Responsibility.

That is a dreadfully large amount of money. The final figure won’t be known until the vehicle in which the assets bought in the programme — the Bank of England Asset Purchase Facility Fund (APF) — is wound up many years from now, but it’s hard to see how it won’t be big and negative. It will be a constant drag upon the UK’s economy.

But, like it or not, the losses are there and have got to be paid. Perhaps the most important thing, right now, is to try to understand how we got here. It’s a sound principle of public finance that somebody identifiable should be responsible when debts are incurred. In this case, accountability for the losses is obscure.

 

In launching quantitative easing, the powers that be (or, rather, were), took a risk. Initially, QE provided a positive tailwind to the public finances; now, it is backfiring. 

So the fundamental question is one of risk management — whose responsibility was it?

In an August 2016 letter from then-Governor Mark Carney to then-Chancellor Philip Hammond, the former said that role lay with the Bank, which “[a]lthough indemnified . . . risk manages the APF on behalf of HMT”.

So, on paper, it was Threadneedle Street’s job. But this framing never made real sense. Whatever Carney said, the Treasury’s indemnity is, and was, the practical expression of the Treasury’s acceptance of responsibility for the risks.

The nature of the risks depends on the nature of the assets. The Bank of England Governor and executive managers decided early on that the APF would confine its purchases as far as possible to gilts, and the Treasury did not demur. The decision implied a lot of interest rate risk. For the Bank, it was a matter of doctrine, not financial risk management. The Monetary Policy Committee was allowed no say in the matter. 

The MPC must focus on the overall impact on money stability, on achieving the inflation target, and on getting inflation down from the current 10% back to the 2% inflation target. The MPC is aware of the cash flow consequences, but the MPC is thinking about its objective, which is for monetary stability for hitting the inflation target.

This is a bad principle, and a bad approach. The losses from QE cannot be seen as separate from monetary policy: they are so large as to significantly increase the risk of the public finances becoming unsustainable and of fiscal dominance of monetary policy. That would undermine the MPC’s objective, and the MPC should be concerned about it.

But this is all theoretical — what about the actual monitoring of risk? Initially, senior bank staff apparently didn’t understand the interest rate risk, or even realise that there was any risk, based on the findings of the House of Commons Treasury select committee’s January report on quantitative tightening.

Much lower down the hierarchy, risks were carefully quantified and reported throughout — but nobody did anything about them. Perhaps this was understandable in the early days, when QE was an emergency measure, but — as it metamorphosed into the main instrument of monetary policy — a reassessment was badly needed.

Was it essential that QE be carried out exactly as it was? Was there no other, less financially-risky policy that could have achieved the same macroeconomic result?

Actually, maybe there was. Purchases of privately-issued assets (or loans against such assets) might have achieved the same result — or probably better, because they would have made it easier for banks to meet new regulatory liquidity requirements, and thus to extend more credit after the crisis. And they would almost certainly have been much less costly.

Unfortunately, once QE as we know it was in train, none of the people who really mattered — Treasury officials and the executive managers of the Bank — seem to have thought very hard about the alternatives. The doctrine of concentrating on gilts prevailed without much recorded debate or explanation. 

If you can’t see where responsibility lies, then the management structure isn’t working — and needs to be redesigned. The Treasury obviously needs to pay closer attention to the risks against which it has issued indemnities. Yes, it should not have taken the temporary cash flow surplus from the APF and frittered it away — thanks, George Osborne — but, moreover, in over-respecting the Bank of England’s independence it surrendered its own objectives for debt management.

The Bank, meanwhile, needs to stop ignoring the side-effects of its decisions. A good start would be to consolidate its decision-making committees into a single executive board, which in setting policy would consider its effect on all of the Bank’s objectives. And the Bank should get closer to the Debt Management Office.

 

To be fair, the Bank has evidently recognised that there are problems with its structure, and has, for example, revised the ‘concordat’ that prevented the MPC from expressing a view about what assets the Bank should buy in QE. But even if it wanted to, the Bank couldn’t make the necessary comprehensive reform without new legislation. The QE episode shows how expensive malfunctioning structures can be.

This is not a proposal to weaken the independence of the Bank of England or modify its objectives. Its purpose is to recognise the fact that actions taken in pursuit of one objective can prejudice other objectives. Refusal to face that fact is the real threat to the Bank’s independence.

[spygirl]

16 hours ago, desertorchid said:

Fink is salivating because it makes Blackrocks job even more efficient and cost effective. He focused on "customised strategy" They can essentially, likely through AI, have even better oversight of portfolios with much improved strategy development based on improved data. The financial markets are light years ahead of most other industries wrt to AI/blockchain etc.

ZIRP n QE make Blackrock/Fink.

Higher rates n QT will make him.

Hes putting 2 n 2 together and coming up with 5.

[Alifelessbinary]

19 hours ago, Long time lurking said:

I read that like the China are going to collapse stories ,people just fail to understand what it`s all about and how much things have changed in the last 4 years 

For a start you have completely missed the whole point when you compare the European union to what the BRICS are trying to achieve ,they are completely in comparable 

 

Ultimately I’m looking for safe places to park my capital and I tend to use forward trends to help boost my returns. While I don’t believe China will crash, I also don’t believe they are destined to become as powerful as some assume just to the impending demographics issues and ragging trade wars.

BRICS has the potential to create an interesting trading block, but it’s still early days and I’m yet to be convinced that it’s the future. While the US is declining they will continue to have the strongest stock market for the rest of this century. 

I probably should’ve compared BRICS to similar loose trading arrangements rather than Europe.

If you believe BRICS is going to create the best investment opportunities I’d be interested to know how you think they’d materialise and how we can invest, as I’m always keen to hedge?

[Frank Hovis]

1 minute ago, Alifelessbinary said:

Ultimately I’m looking for safe places to park my capital and I tend to use forward trends to help boost my returns. While I don’t believe China will crash, I also don’t believe they are destined to become as powerful as some assume just to the impending demographics issues and ragging trade wars.

BRICS has the potential to create an interesting trading block, but it’s still early days and I’m yet to be convinced that it’s the future. While the US is declining they will continue to have the strongest stock market for the rest of this century. 

I probably should’ve compared BRICS to similar loose trading arrangements rather than Europe.

If you believe BRICS is going to create the best investment opportunities I’d be interested to know how you think they’d materialise and how we can invest, as I’m always keen to hedge?

 

The best long term historic returns have always come from big companies in developed economies.

Back in my early investing days, first half of the nineties, BRICS were the new kid in town as were "emerging economies".

Put your money into those and you can see huge returns because they have a lower start position.

It never paid off, they tended to have one good year followed by half a dozen bad ones.

These days I hold a weighted global developed economies / large companies fund as my main and it does consistently well. I am slightly underweight in the FTSE 100, partly because I have other sterling holdings and partly because I don't rate the UK economy's future.

[Long time lurking]

4 minutes ago, Alifelessbinary said:

If you believe BRICS is going to create the best investment opportunities I’d be interested to know how you think they’d materialise and how we can invest, as I’m always keen to hedge?

I don`t look at BRICS in investment terms ,i look at whats happening in geopolitical terms ,IMO you have to understand that before even considering thinking about investments 

Most look at what happens in China and think what would happen if the same happened in the west ,the two financial systems are not comparable hence why most are completely wrong ,until those people understand the difference they will continue to be wrong ,and it`s those differences that pose the greatest threat to the western system especially so if it`s exported to the rest of the world ,this is what the MSM are referring to as their "competing system" now 

All i can say is that China are looking to the underdeveloped south as their future markets 

[JMD]

16 hours ago, Lightscribe said:

Of course. It’s not for the betterment of the plebs, convenience comes with consequences.

For them and big government, you have instantly retrievable data on anyone at anytime.

For them individually tailored data is worth a fortune.  For governments, tax evasion and money laundering gets ever more difficult.

 

That EU announcement sounds significant.

Seems that the monetary-reset-solution path is now crystal clear. Effectively ban self-custodied crypto wallets, because for transacting legal payments, etc, you will be forced to put all assets/personal keys onto platforms such as CoinBase. Also tokenise all financial assets, stocks, gold, property, etc. Aim to do this before 2030 - just in time for the 'planned'(!) monetary collapse - and crucially whereby only assets on approved crypto trading platforms will be allowed to to be transferred across the 'financial moat' and into the government approved utopian/dystopian CBDC.

What a terrifyingly elegant and ugly solution. It sounds much like what Clive Thompson began warning about last year in his podcasts. 

Edited March 26 by JMD

[JMD]

5 hours ago, MrFanciful said:

Cocoa just went above 10000. Up 1000 since yesterday morning.

Each time the subject of runaway cocoa prices is posted, for some strange reason it seems to trigger me into recalling that Mel Gibson film Apocalypto!!  

So is it just me, or can I blame this thread for heightening my sense of existential reality and doom!

 

Edited March 26 by JMD

[Errol]

57 minutes ago, JMD said:

That EU announcement sounds significant.

Seems that the monetary-reset-solution path is now crystal clear. Effectively ban self-custodied crypto wallets, because for transacting legal payments, etc, you will be forced to put all assets/personal keys onto platforms such as CoinBase. Also tokenise all financial assets, stocks, gold, property, etc. Aim to do this before 2030 - just in time for the 'planned'(!) monetary collapse - and crucially whereby only assets on approved crypto trading platforms will be allowed to to be transferred across the 'financial moat' and into the government approved utopian/dystopian CBDC.

What a terrifyingly elegant and ugly solution. It sounds much like what Clive Thompson began warning about last year in his podcasts. 

Gold held completely outside the system will be crucial.

[Long time lurking]

 

[Long time lurking]

2 hours ago, JMD said:

That EU announcement sounds significant.

Seems that the monetary-reset-solution path is now crystal clear. Effectively ban self-custodied crypto wallets, because for transacting legal payments, etc, you will be forced to put all assets/personal keys onto platforms such as CoinBase. Also tokenise all financial assets, stocks, gold, property, etc. Aim to do this before 2030 - just in time for the 'planned'(!) monetary collapse - and crucially whereby only assets on approved crypto trading platforms will be allowed to to be transferred across the 'financial moat' and into the government approved utopian/dystopian CBDC.

What a terrifyingly elegant and ugly solution. It sounds much like what Clive Thompson began warning about last year in his podcasts. 

They are all scrambling about trying to counter what the BRICS are proposing ,unless they know something that's not in the public domain they are just guessing like the rest of us ,the only thing that is in the public domain at this point in time Regarding the BRICS is they have a transaction messaging system up and running ,i`m guessing here but i suspect the digital part is purely the security aspect (block chain) of that system ,at this point it`s being used for trading in local currencies 

Until they have that rolled out to all members and functioning beyond the trial phases they can not have a BRICS currency

It`s the P2P instant payment aspect that worries the western system ,as it will be almost charge less,just look at the value of the daily world trade ,who gets a fraction of every dollar pound euro yen exchanged ,,,it`s the money changers at the temple problem on steroids all over again

[Errol]

Just now, Long time lurking said:

It`s the P2P instant payment aspect that worries the western system ,as it will be almost charge less,just look at the value of the daily world trade ,who gets a fraction of every dollar pound euro yen exchanged ,,,it`s the money changers at the temple problem on steroids all over again

It goes without saying that the Western nations and their banks will have no control, input or profit from the BRICs payment system. The payments won't even be visible to them.

[Long time lurking]

1 minute ago, Errol said:

It goes without saying that the Western nations and their banks will have no control, input or profit from the BRICs payment system. The payments won't even be visible to them.

That is the problem ,they simply can`t skim of every single transaction ,which is ten`s of trillions every day

As the old saying goes every war is a bankers war ,but this is a once in 500 year war as that`s how long one set of bankers have controlled the worlds transactions

[leonardratso]

https://news.sky.com/story/international-paper-boxes-clever-with-5bn-plus-ds-smith-counterbid-13102280

[DurhamBorn]

1 hour ago, leonardratso said:

https://news.sky.com/story/international-paper-boxes-clever-with-5bn-plus-ds-smith-counterbid-13102280

I thought International Paper might counter bid.Im not too happy about losing DS Smith,even for the nice profit.We are losing one free cash flow producing company after another.We are losing companies because they are hugely undervalued due to government forcing pensions into gilts and the lack of retail investing being big in the UK.

[spygirl]

Can my partner give me his rental income so his salary is under £100k and we can claim benefits?’

Tax tips: a reader fears losing out on childcare benefits

https://www.telegraph.co.uk/money/tax/partner-give-rental-income-salary-claim-childcare-benefits/

[Axeman123]

Here is a hell of a chart, showing just how concentrated the UK economy is (linking back to my barbershop analogy from the other day):

[Long time lurking]

6 hours ago, Long time lurking said:

It`s the P2P instant payment aspect that worries the western system ,as it will be almost charge less,just look at the value of the daily world trade ,who gets a fraction of every dollar pound euro yen exchanged ,,,it`s the money changers at the temple problem on steroids all over again

Quoting myself for context ,if the below is true things make a lot more sense ,WeChat  

 

Edited March 27 by Long time lurking