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

[Axeman123]

1 hour ago, JMD said:

he remarked that the value the bankers estimate if company is listed in the US is usually 2-3 times that of a UK listing. 

At least partly that is because they are allowed more lattitude in stating profits etc for shareholders, so higher profits on paper = higher valuation.

[JoeDavola]

1 hour ago, One percent said:

You are very well positioned Joe. Moving forward, I would suggest buying somewhere and paying the mortgage down asap.  Then, it doesn’t matter if your job goes, you will only need to earn enough to pay utilities and food. 

Gonna have to buy soon as depressingly prices continue to soar faster than most people could ever save.

[One percent]

19 minutes ago, JoeDavola said:

Gonna have to buy soon as depressingly prices continue to soar faster than most people could ever save.

Weird isn’t it. 

[Sasquatch]

1 hour ago, snaga said:

but where do you put that 25%?

I can access mine now, but havn't as I'm already maximising family ISAs (which could also be targetted).  I could clear the mortgage, but I've got 30 months left fixed at 1.6% so not worth it. So for now leaving it in my SIPP seems like the best option.

I have thought the same. I'm 57 so already able to access. Mrs S is two years behind me. We will need to clear our mortgage in early 2028 at the end of our fixed rate. I also want to keep maximising isa contributions and we won't be able to do this from earnings in a couple of years time as we wind down the business. The lump sums from the SIPPS will allow this for a little longer. We then have the ability to draw down income from our SIPPs up to or perhaps slightly over the current £12,570 tax threshold and then top up from the isas as and when needed.

I've been going spreadsheet mad the last couple of months trying to chart a path into retirement....and also the best way of winding down the business. 

I've actually found it quite stressful. There's no professional advice available as IFA's are all stuck in their ruts.

This place has been invaluable over the last few years. Many thanks to all who regularly contribute to this thread and to @spunko for hosting the whole shebang.

[PETR4]

20 hours ago, M S E Refugee said:

 

 

The most interesting snippet in this video is that in a high inflation environment banks won't lend for long durations due to value erosion of the loans.

This means large purchases like houses revert to cash. Without the financialisation of pricing, the purchase price will drop.

From that I infer the trigger for rolling back house purchase lending will be the scrapping of 35 year mortgages.

[Long time lurking]

 

[Axeman123]

15 minutes ago, PETR4 said:

The most interesting snippet in this video is that in a high inflation environment banks won't lend for long durations due to value erosion of the loans.

This means large purchases like houses revert to cash. Without the financialisation of pricing, the purchase price will drop.

From that I infer the trigger for rolling back house purchase lending will be the scrapping of 35 year mortgages.

It makes total sense that in a flat or falling inflation market lenders will happily hug base rate on lending, and think of only margin, whereas in an environment of long-term higher expected inflation they will want a larger margin on any fix or even insist on lending at floating rates.

[Eventually Right]

8 minutes ago, Long time lurking said:

 

Is that actually true?

I ask because the source is a (clearly massively lefty) science teacher

[Harley]

1 hour ago, snaga said:

but where do you put that 25%?

I can access mine now, but havn't as I'm already maximising family ISAs (which could also be targetted).  I could clear the mortgage, but I've got 30 months left fixed at 1.6% so not worth it. So for now leaving it in my SIPP seems like the best option.

I've identified quite a few options.  Sure, not as good as a pension tax shelter, but that's before factoring the real risks of said shelters.  As always, a bit of a spread for me.

[Democorruptcy]

On 10/04/2024 at 14:35, DurhamBorn said:

I think they will cut in June because the reverse repo is nearly empty and they need to kick in a private sector credit cycle or the US government goes bust.Inflation will not come into it now.PMs know the above.This shake out will clear some weak hands and might throw up the chance to add to some positions before the real moves begin.

It seems a bit hopeful to say it's stabilized based on the chart. It had gone up for 2 months and then dropped back. Tax receipts are supposed to help?

Quote

 

The drawdown of balances at a key Federal Reserve facility appears to have bottomed out for now, providing a liquidity cushion for the central bank’s reserves during tax season.

Use of the Fed’s overnight reverse repurchase agreement facility — where counterparties like money-market funds park cash to earn 5.3% — has plummeted some $1.75 trillion since June. That’s when the government suspended the debt ceiling, unleashing trillions of dollars of Treasury bill supply and giving investors an alternative to just holding money at the Fed.

The funds in the facility began to stabilize in recent weeks, settling around $440 billion, close to the lowest level since 2021. Last month is when tax receipts began to ramp up, filling the government’s coffers and leading the Treasury to slash
T-bill issuance. With more money to put to work than collateral available, eligible counterparties are shifting back to the Fed’s RRP.

The shifting dynamics may also give the central bank more time to decide when to slow and eventually stop the reduction of its balance sheet — a process known as quantitative tightening — because there will still be cash parked at the RRP even as tax payments drain a chunk of bank reserves.

https://www.bloomberg.com/news/articles/2024-04-09/ebbing-drawdown-of-fed-repo-facility-offers-cushion-for-reserves

 

 

[Harley]

2 hours ago, DurhamBorn said:

Problem for me though is im just under IHT at all times,so my SIPP is crucial because it shields a mill.If i draw more from the SIPP (the 25% lump sum for instance) i go way over IHT.Iv got trusts,that are 40% tax,so i pay the grandkids the tax allowance each year enough to get all the tax back but my daughter is getting sick of opening me bank accounts with cards etc so i can draw it out etc.If/when my dad dies the problem gets much worse,and if my brother then dies,whos money is in the trust then it gets crazy bad.The ISA of course is capital gains free so i can get the big profits out,but then need to get rid.I could buy all the kids a BTL,but they might end up splittin up etc and losing half.These allowance freezes are a nightmare.Its why im spending a lot now,because i have to try to keep things just growing or steady,could do with a BK just to wipe half my wealth out 

I'm struggling.  Don't want to exceed the IHT limit so the kids get it at the risk they don't due to pension changes, etc when you can gift it to them now, but then worried they'll split up, etc.  I don't think giving someone money in your will stops them splitting up, etc any more than giving it to them before you die?!  Not my specific area and I'm sure you know better but then there is the old adage of not letting the tax tail wag the dog!

PS:  Nothing to do with me, none of my business, I'm just thinking aloud!

Edited April 11 by Harley

[Mandalorian]

1 hour ago, DurhamBorn said:

Problem for me though is im just under IHT at all times,

Well just don't die then.

[ThoughtCriminal]

Ok, which one of you fuckers was it?

"Yes, we at DOSBODS oil Corporation have very much oil for you. Please deposit $400 million in this Hargreaves Lansdown account. Ta very much".

 

 

[Loki]

3 minutes ago, ThoughtCriminal said:

Ok, which one of you fuckers was it?

"Yes, we at DOSBODS oil Corporation have very much oil for you. Please deposit $400 million in this Hargreaves Lansdown account. Ta very much".

 

 

No refunds 

[Mandalorian]

23 minutes ago, Eventually Right said:

Is that actually true?

I ask because the source is a (clearly massively lefty) science teacher

And if it's false, likely soon a bankrupt lefty science teacher.

[Harley]

50 minutes ago, Sasquatch said:

I have thought the same. I'm 57 so already able to access. Mrs S is two years behind me. We will need to clear our mortgage in early 2028 at the end of our fixed rate. I also want to keep maximising isa contributions and we won't be able to do this from earnings in a couple of years time as we wind down the business. The lump sums from the SIPPS will allow this for a little longer. We then have the ability to draw down income from our SIPPs up to or perhaps slightly over the current £12,570 tax threshold and then top up from the isas as and when needed.

I've been going spreadsheet mad the last couple of months trying to chart a path into retirement....and also the best way of winding down the business. 

I've actually found it quite stressful. There's no professional advice available as IFA's are all stuck in their ruts.

This place has been invaluable over the last few years. Many thanks to all who regularly contribute to this thread and to @spunko for hosting the whole shebang.

Yes, IMO we're pretty much on our own here to do a proper holistic job.  We have a plan which I'd rather not go into (which we'll have to see if it works) but there are possible ways.  It does however require us to start as early as reasonable, certainly in advance of any state pension.

[PETR4]

32 minutes ago, Eventually Right said:

Is that actually true?

I ask because the source is a (clearly massively lefty) science teacher

It appears so!

https://www.cityam.com/jcb-billionaire-and-brexit-champion-lord-bamford-retires-from-house-of-lords/

https://en.wikipedia.org/wiki/Anthony_Bamford

 

[Eventually Right]

11 minutes ago, PETR4 said:

It appears so!

https://www.cityam.com/jcb-billionaire-and-brexit-champion-lord-bamford-retires-from-house-of-lords/

https://en.wikipedia.org/wiki/Anthony_Bamford

 

 

Science teacher:

"Lord Bamford, with a debt of £500,000,000 to HMRC, has retired from the House of Lords and absconded. He anticipates his debt, akin to Michelle Mone's £232,000,000 liability, to be nullified."

CityAM:

"Lord Bamford’s resignation comes after Anthony and Mark Bamford were understood to be the subject of a three-year long investigation by HM Revenue and Customs (HMRC), which could result in a bill as high as £500m according to reports."

[spunko]

Part 9 continues here: