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

[Loki]

6 minutes ago, AWW said:

Same here. I had been contracting for a year or so, taking salary up to the 40% tax band and a bit more as divis on the recommendation of my accountant, when I found out that everyone else on my team was paying themselves £8k a year and taking £100k in divis. I asked my accountant why I wasn't doing that. "Because HMRC don't like it." Right, they don't like it - but it it legal? "Yes".

I sacked him but really should have sued him.

To be fair to him, it's legal until it isn't and that can be applied retrospectively.    What are you gonna do, take HMRC to court?

[spygirl]

1 hour ago, No One said:

Following my previous comment on the topic:

I was right

 

I sortof lost interest when he said - a ponzi schme is .... the UK pension scheme is basically a legalised pension scheme

Its not. Hes and idiot.

Its a distribution of UK tax take - a lot of which comes from sources other than income -  to OAPs.

 

 

[spygirl]

The fix for UK pensions is simple - 

1) Ensure migrants do not get anything without payign for it.

2) Move to a contribution based, time limuted working age benefit scheme.

 

[Pip321]

1 hour ago, sancho panza said:

I don't know whats more worrying.....the fact that someone in such an influential economic position pays such a high elvel of income tax or the fact that he's generating such meagre returns on a £14mn portfolio

Something really doesnt add up

https://www.independent.co.uk/news/uk/politics/jeremy-hunt-chancellor-net-worth-b2452218.html

In 1991, aged 25, he co-founded Hotcourses, an educational listings publisher, with childhood friend Mike Elms.

The business provided a database of opportunities in higher education in the UK for prospective overseas students and was sold to Australian student placement company IDP Education in 2017 for £30.1m.

Mr Hunt had stepped down as a director in 2009 prior to his first shadow cabinet appointment but retained, according to Companies House records, a 48 per cent stake in the business, netting him a reported £14.1m, making him one of the UK’s richest politicians.

Extrememly worrying that hes paying 65% and thinks more of the same is a good thing

That’s probably his ‘personal’ tax bill…..he may well have vested interests in businesses from which he does not currently draw an income.

ie it would be interesting to see his assets rather than his income.

My assets are fairly chunky (funny meme of man doing that beardy thing)…..but my income accruing in SIPPs, ISA and even rental (after debt) is virtually all non taxable. 

I appreciate we are saying he is paying lots of tax and my detail explains how I am not….but the similarity is the understatement of actual income/gains v taxable income. Overall this might not be fully reflective of his wealth. 

[AWW]

18 minutes ago, Loki said:

To be fair to him, it's legal until it isn't and that can be applied retrospectively.    What are you gonna do, take HMRC to court?

So what you're saying is, a clairvoyant would be more useful when it comes to tax planning?

[Cattle Prod]

2 hours ago, marceau said:

We ain't gonna get it. Two/three more years of US credit expansion and then the flush gets pulled. The 'cuts' will come from inflation and tax, not reform. Nothing will penetrate the westminster bubble.

2/3 more years is enough for me to escape, here's hoping. I'm terrified of a sterling crisis or capital controls in the next 18 months. 

[Loki]

8 minutes ago, AWW said:

So what you're saying is, a clairvoyant would be more useful when it comes to tax planning?

Pretty much yes just ask those tax avoidance scheme people, they were legal at the time I believe 

[marceau]

4 minutes ago, Cattle Prod said:

2/3 more years is enough for me to escape, here's hoping. I'm terrified of a sterling crisis or capital controls in the next 18 months. 

Anything's possible, but it looks to me like uncle Sam will keep us afloat for a few years yet. Starmer might even get enough space to attempt a brief 'things can only get better' redux. I've been bulk buying sick bags in preparation.

What are your reads on oil btw? My sentiment indicators are suggesting a rally is imminent. I see nothing major on TA though. Oil should peak with the credit cycle, so a move from here could have some real legs.

[DurhamBorn]

2 hours ago, marceau said:

How far out does your roadmap go these days?

I did a refresh on my fag packet UK models and came up with 30-35% annualised inflation print in 30/31, MoM spikes would be even higher. 'The world's most successful multicultural democracy' indeed.

It's obvious that uk gov will have to do a deal as the decade turns. But who with? And what do we have to offer? What is there that's left to sell?

It goes out to 28/29,thats when i see the end of this cycle still.I have 68% inflation from 21 until 28.However after that there is a very big risk we go currency collapse ,very high inflation.The government need to remove the inflation links now because if they dont sterling might lose 90%+.In lots of ways i hope it is sterling that takes the pain because im well hedged for that.Gilts could lose 50%+ wiping out pensions and it might take down someone like Legal and General who have done bulk annuity deals.

Pensions are sleepwalking into disaster "de-risking" because the very things they now own are more likely to go down the most.SEDY is far less risky than a UK gilt for instance and double the yield.

[spygirl]

26 minutes ago, spygirl said:

The fix for UK pensions is simple - 

1) Ensure migrants do not get anything without payign for it.

2) Move to a contribution based, time limuted working age benefit scheme.

 

Id add - theres no fixed level for UK state pension, either absolute (2k.m) or relative - 30% of mean income.

If money goes short then they can cut it, or freeze it.

Everyone born in the UK today - note I use the word 'born' , as I expect the qualification to change - will get a state pension.

Whats not sure is how much itll be.

As it stands, the Treasury are working o nthe assumption that pensioners will get (i ntodays money) ~1200/m state pension plus another ~10l/12l for a personal or company pension.

Theres so many ways UKGOV can claw back money./entitlement - stop crediting NI for people on working age bennies. remove pension credit, raise the years to qualify.

SRA for a WasPI wimmin rose 7 years in 30 years.

 

 

 

 

 

[TNS]

46 minutes ago, AWW said:

Same here. I had been contracting for a year or so, taking salary up to the 40% tax band and a bit more as divis on the recommendation of my accountant, when I found out that everyone else on my team was paying themselves £8k a year and taking £100k in divis. I asked my accountant why I wasn't doing that. "Because HMRC don't like it." Right, they don't like it - but it it legal? "Yes".

I sacked him but really should have sued him.

Should have kicked him in the bollox on the way out the door too! 

[goldbug9999]

50 minutes ago, Loki said:

To be fair to him, it's legal until it isn't and that can be applied retrospectively.    What are you gonna do, take HMRC to court?

You can do exactly that, tax is a matter of law and you can force a decision through to tribunal which is a special tax focused court. HMRC have a history of offering out-of-court settlements, which will often be a massive reduction of amount originally asked for, rather than take it all the way as a judgment against them is quite career limiting. Anyone self employed or contracting with any sense will have insurance to cover the costs in such an eventuality.

Its a common misconception that HMRC can demand whatever they want you just have to pay up, obviously they cultivate that image to stop everyone contesting everything so really they are operating on fear like a protection racket.

Also HMRC prefer to chase cases where there have been hundreds/thousands of identical cases e.g. those dodgy offshore load write-off schemes or where there was a large number of contractors on one project which was dodgy from an IR35 point of view. Right or wrongly they tend to work on a cost-benefit basis for recovered money.

Edited February 12 by goldbug9999

[marceau]

3 minutes ago, DurhamBorn said:

It goes out to 28/29,thats when i see the end of this cycle still.I have 68% inflation from 21 until 28.However after that there is a very big risk we go currency collapse ,very high inflation.The government need to remove the inflation links now because if they dont sterling might lose 90%+.In lots of ways i hope it is sterling that takes the pain because im well hedged for that.Gilts could lose 50%+ wiping out pensions and it might take down someone like Legal and General who have done bulk annuity deals.

Pensions are sleepwalking into disaster "de-risking" because the very things they now own are more likely to go down the most.SEDY is far less risky than a UK gilt for instance and double the yield.

30/31 is my absolute limit, and anything there is likely to be at the front end. I have credit cycle peaking in 27 and everything else rolling out from there.  Looks to me like the bottom isn't far off for US inflation now. Doubt we'll see much below current levels here in the UK before we start to creep up again. We won't be able to keep up with the Americans and they're going to asset strip anything of value on the way up, leaving us with very little on the way down.

Hunt's portfolio didn't seem to have much bond exposure, funny old thing. 

[Loki]

Just now, goldbug9999 said:

You can do exactly that, tax is a matter of law and you can force a decision through to tribunal which is a special tax focused court. HMRC have a history of offering out-of-court settlements, which will often be a massive reduction of amount originally asked for, rather than take it all the way as a judgment against them is quite career limiting.

 

It's still extra stress and paperwork etc for people to deal with.  Even when I've done small claims stuff it's been arduous, and never actually worth the aggro

[DurhamBorn]

1 hour ago, marceau said:

US credit has only barely started expanding. The biggest moves come as the cycle peaks and liquidity starts absolutely flooding into sectors chasing a return. That's still 2/3 years away imo. These pundits are retards, they're off trend (the most basic shit there is), they're off on macro, they're off on sentiment. Just dumbass doom-mongering shit.

Most indices have run too hot, so it's quite likely they'll cool off to digest their moves for a while. Wouldn't suprise me if they came down to test the bottom of their ranges. That would be a big correction, but not a crash. We'll know it's time to buy when all these pundits start wailing it's 2008 all over again, as they surely will.

Liquidity is growing nicely worldwide on my numbers.It why i think we should get a big bull market in EMs.There is even a chance we get a bubble in some EM areas.Of course as a whole real assets (not leveraged like houses) will reset 50% to 100% higher at some point,because thats the amount of liquidity and credit to come to transfer money back to governments from bond holders/savers.It a set up for the biggest theft of savings in history (after the one we just had) and most are positioned in the cross hairs.The assets most likely to side step it and re value up are the very ones hardly anybody owns.The problem for me though is even then i will burst through allowances and the retired coppers,bennies and invaders still get it.

[goldbug9999]

2 minutes ago, Loki said:

It's still extra stress and paperwork etc for people to deal with.  Even when I've done small claims stuff it's been arduous, and never actually worth the aggro

... which is why you have suitable insurance to pay someone to do it all for you.

[Onsamui]

4 minutes ago, DurhamBorn said:

Liquidity is growing nicely worldwide on my numbers.It why i think we should get a big bull market in EMs.There is even a chance we get a bubble in some EM areas.Of course as a whole real assets (not leveraged like houses) will reset 50% to 100% higher at some point,because thats the amount of liquidity and credit to come to transfer money back to governments from bond holders/savers.It a set up for the biggest theft of savings in history (after the one we just had) and most are positioned in the cross hairs.The assets most likely to side step it and re value up are the very ones hardly anybody owns.The problem for me though is even then i will burst through allowances and the retired coppers,bennies and invaders still get it.

Hope so as we have investments in Turkey.

[Onsamui]

42 minutes ago, Cattle Prod said:

2/3 more years is enough for me to escape, here's hoping. I'm terrified of a sterling crisis or capital controls in the next 18 months. 

Me too.

[Harley]

6 hours ago, Axeman123 said:

Surely every day you choose not to sell an asset the price paid resets to the new opportunity cost?

Taking an extreme hypothetical if I bought Harley Ltd shares @ 50p a fair while back which are now paying a 20p dividend I may be pleased as punch with my "40%" yield, but if the share price is now 500p that "40%" is really 4%. It seems a pointless metric to track it in the way you describe, the only purpose seemingly to flatter historic good buys at the expense of feeding poor information into decision making.

Each to their own of course etc. I can understand tracking it for certain shares with a special emotional attachment (eg DB with BATS) or as a bit of fun etc, but I would never want it near any serious analysis.

Not at all.  That 40% yield is still that and the opportunity cost/benefit should be based on that in deciding what to do.  But the total return should be split yield and P&L so you know what that 40% may have cost you, etc.  Two different worlds, depending on what the objective is (e.g. yield v total return).  A bit like the difference between financial and management accounting 

[baffledbyzirp]

12 minutes ago, Harley said:

Not at all.  That 40% yield is still that and the opportunity cost/benefit should be based on that in deciding what to do.  But the total return should be split yield and P&L so you know what that 40% may have cost you, etc.  Two different worlds, depending on what the objective is (e.g. yield v total return).  A bit like the difference between financial and management accounting 

The other consideration, given the diminution in purchasing power over time, is inflation.

If you used the historic cost exclusively there would be no adjustment for the time value of money. In effect you would be using exactly the same formula the government does when it benefits from fiscal drag.

The reality is that an accurate formula is entirely reliant on personal circumstances including age, income, lifestyle, living arrangements etc. Each of us faces different obligations, habits, needs and wants, thus our reaction functions are mutable. 

[Loki]

43 minutes ago, goldbug9999 said:

... which is why you have suitable insurance to pay someone to do it all for you.

So you agree that a crystal ball is necessary to avoid it all in the first place?

[Cattle Prod]

55 minutes ago, marceau said:

Anything's possible, but it looks to me like uncle Sam will keep us afloat for a few years yet. Starmer might even get enough space to attempt a brief 'things can only get better' redux. I've been bulk buying sick bags in preparation.

What are your reads on oil btw? My sentiment indicators are suggesting a rally is imminent. I see nothing major on TA though. Oil should peak with the credit cycle, so a move from here could have some real legs.

Yeah I'm loving the bearish sentiment, and I see some positives on TA (long timescales).  I focus on the supply side of things as I see s strong correlation between price and inventory:

The last bit of that graph is a projection obviously, and I don't think it'll follow it. Early data for 2024 shows inventory is going down at a steep rate. Flat supply, increasing demand (eg airline activity is at record highs. You hear a lot about US production is at record highs. You have to get deep into the data (particlarly the EIA adjustment figure) but I don't think it is. I think it is topping, or has topped, and this will trigger a significant rally whenever the market realises it.

[Axeman123]

22 minutes ago, Harley said:

That 40% yield is still that

I disagree.

Revisiting my example, say you previously bought one share of Harley Ltd for 50p, and now get 20p per anum dividend hence "40%" yield (on your original investment). However Your share has a market value of 500p however, meaning 4% actual yield. If you sold (ignoring CGT for a minute) you could say buy 5 shares of Axe Ltd @ 100p paying 6p dividend. The difference being 30p dividend income vs 20p.

Even if you prioritise income over total return or growth, the 40% figure isn't helpful and if anything it will just reinforce holding anything that has gone up a lot since you bought. If you want a combination of metrics that captures both past good buys and income look no further than actual portfolio value and yield as a % of that.

Just my take on it all though etc.

[AVERAGEUKBLOB]

$105k in my pension now, 60k in another, and 20k in another

basically all in lifecycle funds and general international equity and value equity funds, fuck the stock picking scam

still got $3k in GDX

thank god i only put $100 in vodafone and stopped DCAing into FTUIX ages ago

Edited February 12 by AVERAGEUKBLOB

[Loki]

6 minutes ago, AVERAGEUKBLOB said:

$105k in my pension now, 60k in another, and 20k in another

basically all in lifecycle funds and general international equity and value equity funds, fuck the stock picking scam

still got $3k in GDX

thank god i only put $100 in vodafone and stopped DCAing into FTUIX ages ago

Whoa, let me make sure I get all this down for future reference