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

[Loki]

48 minutes ago, One percent said:

Rookie question incoming.  What are ‘capital controls’ and what do they look like please?  

They look like this:

CONTROLS

[One percent]

2 minutes ago, Yadda yadda yadda said:

No they're not currently formally in place. There are regulations on areas like Crypto that could be argued to have that effect. Crypto is a method of moving large sums across borders.

Capital controls would be brought in to defend the pound. We don't export enough so excess sterling either buys dollars and weakens the pound or it buys UK assets. The latter has a multiplier effect leading to the profits buying more assets or dollars. As you would expect there is no free lunch - a balance of trade deficit makes the country poorer over time. At some point the UK is no longer credit worthy in the eyes of exporting nations or they can't find any assets they want to buy. At that point we have to equalise imports to exports.

I'm sure that an old edition of Top Gear, lamenting the decline of UK car manufacturers, pointed out that in 1948 we only imported 57 cars* whilst we exported 10s of thousands. This was because of capital controls and the imports were luxury cars. The rich are too important to inconvenience. The modern version would restrict foreign holidays. Arguably climate legislation will be used as a form of capital control. Using less imported fuel and travel less means spending less on foreign goods.

*It was a two digit number.

Lol, you must have known that is impossible these days.

Thanks, still out of reps.  
re the bolded bit, we can but dream.  

[Bobthebuilder]

What is the hive minds thoughts on Abrdn at this price point? I am currently 30% down, but thinking off another small ladder.

[Funn3r]

56 minutes ago, darkmarket said:

Capital controls are restrictions on the transfer of a currency outside the jurisdiction of issuance.

I'm too young to remember personally, but they were a feature of British life between WWII and the Thatcher era.

I remember them. I went on a school trip and I had a "British Visitor's Passport" issued at the dole office. I remember because the girl there had a micro-skirt popular at the time and I had a good gawp at her knickers. I took the passport to the local bank branch and they stuck a piece of paper in the back and wrote down my tiny allowance of French francs and Deutschmarks.

[Axeman123]

47 minutes ago, One percent said:

It amazes me that other countries have all sorts of rules (rightly imho) about who can buy property, who can take money out and how much. Yet our illustrious leaders will sell anything to anyone.  Apparently, Whitehall, which houses most of gover Has been sold off and is leased back.  

Balance of trade comes into play. Most countries want their imports to be balanced by exports of high value manufactured goods or services. Stopping their trade partners buying up assets and land actually forces them towards this. The UK doesn't have those exports to make in any where near the value of our imports, so when we give foreigners our pounds for imports they either have to sell them for their own currency (and drive down the value of the pound) or buy UK assets.

@DurhamBorn (quite rightly) likes to equate the printing and benefits bill: a similar relationship exists between fat Tracey's kids' trampoline she bought from China with her benefits, and Chinese buying up central London and major UK companies. It isn't a fault, it is intentional govt policy to balance the trade. Lax money laundering controls for overseas buyers are the same.

Just wait until the assets available to buy run out though...

43 minutes ago, One percent said:

Huge swathes of property are owned and left empty by foreigners who see it (rightly at the moment) as an investment.

Some of them just want an asset denominated in a strong-ish currency.

 

[sancho panza]

Anecdotal alert- from a lad I've known for years from army.does a bit of driving a few days a week on the agency to pay his living costs and ale money.very switched on.warned me ages back plasterboard deliveries for new build sites had plummeted.

 

refering to the corn exchange in Leicester.A  pub near the market.

'[26/02, 15:42] As an indicator of the current state of the economy. I'm sat in the corn exchange having a pint and the shop robbers are outside offering frosties corn flakes.
Things are getting bad.'

'[26/02, 15:49] I've just had a pint with one of Timmys mates.
I've known him through Timmy for probably 12 years - never been in the army or ta but a good bloke. Works for the job centre middle to upper management. He told me that things are worse for him (the job centre) than at any time he can remember.
I asked if it's worse than 2008 he said far worse.
On the positive he said they had the budget increased and they are recruiting 80 people in Leicester - he's given me a link I'm applying. It would be good to be in a growth industry for a change! 😃'

 

 

[One percent]

14 minutes ago, Axeman123 said:

Balance of trade comes into play. Most countries want their imports to be balanced by exports of high value manufactured goods or services. Stopping their trade partners buying up assets and land actually forces them towards this. The UK doesn't have those exports to make in any where near the value of our imports, so when we give foreigners our pounds for imports they either have to sell them for their own currency (and drive down the value of the pound) or buy UK assets.

@DurhamBorn (quite rightly) likes to equate the printing and benefits bill: a similar relationship exists between fat Tracey's kids' trampoline she bought from China with her benefits, and Chinese buying up central London and major UK companies. It isn't a fault, it is intentional govt policy to balance the trade. Lax money laundering controls for overseas buyers are the same.

Just wait until the assets available to buy run out though...

Some of them just want an asset denominated in a strong-ish currency.

 

Thanks

[King Penda]

1 hour ago, One percent said:

Ta. From replies, i seem to have got hold of the wrong end of the stick.  Silly me thought it would be a mechanism for protecting British citizens.   

It’s Everyman for himself. 

[One percent]

2 minutes ago, King Penda said:

It’s Everyman for himself. 

Bit misogynistic mate.   

[King Penda]

3 minutes ago, One percent said:

Bit misogynistic mate.   

Me ? Never

[Starsend]

2 hours ago, One percent said:

It amazes me that other countries have all sorts of rules (rightly imho) about who can buy property, who can take money out and how much. Yet our illustrious leaders will sell anything to anyone.  Apparently, Whitehall, which houses most of gover Has been sold off and is leased back.  

HMRC sold most of their buildings off some time ago to a company that they lease them back from.

The company they lease them from are based in the Cayman Islands - a tax haven.

 

[One percent]

5 minutes ago, Starsend said:

HMRC sold most of their buildings off some time ago to a company that they lease them back from.

The company they lease them from are based in the Cayman Islands - a tax haven.

 

And one of their mates is no doubt skimming a load off the transaction.  

[Joncrete Cungle]

2 hours ago, Bobthebuilder said:

What is the hive minds thoughts on Abrdn at this price point? I am currently 30% down, but thinking off another small ladder.

I have added a little bit more to our holdings. Happy to sit, wait, collect divis or sell a portion for profit if it moves higher. Ditto Jupiter, I have about as much asset managers / telcos as I want without being overweight.

[Bobthebuilder]

2 minutes ago, Joncrete Cungle said:

I have added a little bit more to our holdings. Happy to sit, wait, collect divis or sell a portion for profit if it moves higher. Ditto Jupiter, I have about as much asset managers / telcos as I want without being overweight.

I was thinking of selling my remaining TEF Brasil and swap it with the almost 10% divi payer.

[DurhamBorn]

2 hours ago, Bobthebuilder said:

What is the hive minds thoughts on Abrdn at this price point? I am currently 30% down, but thinking off another small ladder.

Iv been buying some back average £1.62 i had sold them all when they ran over £2.10 a while back.They have II a very good business and the Financial Advisor platform business is also very very good.I know lots of boomers who let them fleece them 1.5%+ a year on fees.If lots of housing wealth passes down a lot will end up with them there.

The investment business is the weak link.Its costs are too high and its suffering as institutions etc move more and more to trackers etc.Of course trackers will be a disaster soon once almost everyone is in them.

The divi is now pretty much the same as the capital being produced so it should be safe,but there is a small risk at some point of a 30% cut,small,but there.

When EMs come back into a bull market,as i think they will,it should really help the likes of ABRDN.I also think the industry needs to bite the bullet and merge down.ABRDn could be a target for Aviva or M&G and i would expect a 50% uplift,or if a big Yank outfit fancied a way into the UK.More doubtful.

Asset managers have huge headwinds against them,but iv bought the EM leaning ones because i like these risk/reward set ups when the macro inflects as i think it has on the EMs.

Edited February 27 by DurhamBorn

[Democorruptcy]

A well 'renowned' and much 'loved' share, appears to have found itself in an unusual position today. (I did tap the side of my monitor but nothing changed). I've recorded it for posterity, so that on it's deathbed the share can look back and say to itself "I made it, I was the man".

 

 

[DurhamBorn]

5 minutes ago, Democorruptcy said:

A well 'renowned' and much 'loved' share, appears to have found itself in an unusual position today. (I did tap the side of my monitor but nothing changed). I've recorded it for posterity, so that on it's deathbed the share can look back and say to itself "I made it, I was the man".

 

 

[nirvana]

2 hours ago, Bobthebuilder said:

What is the hive minds thoughts on Abrdn at this price point? I am currently 30% down, but thinking off another small ladder.

it found support at 151p last year.......incoming......needs to hold that

[nirvana]

1 hour ago, King Penda said:

It’s Everyman for himself. 

indeed....

 

[onlyme]

4 hours ago, sancho panza said:

Anecdotal alert- from a lad I've known for years from army.does a bit of driving a few days a week on the agency to pay his living costs and ale money.very switched on.warned me ages back plasterboard deliveries for new build sites had plummeted.

 

refering to the corn exchange in Leicester.A  pub near the market.

'[26/02, 15:42] As an indicator of the current state of the economy. I'm sat in the corn exchange having a pint and the shop robbers are outside offering frosties corn flakes.
Things are getting bad.'

'[26/02, 15:49] I've just had a pint with one of Timmys mates.
I've known him through Timmy for probably 12 years - never been in the army or ta but a good bloke. Works for the job centre middle to upper management. He told me that things are worse for him (the job centre) than at any time he can remember.
I asked if it's worse than 2008 he said far worse.
On the positive he said they had the budget increased and they are recruiting 80 people in Leicester - he's given me a link I'm applying. It would be good to be in a growth industry for a change! 😃'

 

 

Exteneded family current score - 1 redundant, general small company admin type job, skilled, presentable, capable, interviews for jobs with up to 100 appicants no job yet, anotehr kept job but  significant company redudances and  hiring freeze, another probation period and company openly interviewing for very similar position (here's the but - zoom interview for expereinced Chinese applicant on wage that will go nowhere in London).  Trade work is well down - not unexpected, saw this coming more than year ago, friends who have property lets I do maintenance work for when asked I suggest get rid asap, they have, with increasing discounts, one would be fianncially kiboshed if they hadn't.  Local waste management company yard stacked full of empty skips.

I don't believe one word of any govt/ONS jobs related data release. Yet, they carry on dishing out work visas. Psycopaths or utterly disconnected fuckwits the lot of them.

[Ash4781b]

7 hours ago, DurhamBorn said:

Looking at the state of the UK sterling will need rates 2.6% higher than other relative economies,rising to 4.6% higher later in the cycle unless they sort out spending/immigration/pensions etc if it is to lose real value at around 2% a year.Without those rates currency control will be needed to stop a run.Pretty much half of young people are trying not to ever work due to bennies.Massive structural problems built in with no escape valve.

https://www.bbc.co.uk/news/business-68404573.amp

“Marks & Spencer has announced pay rises for staff from April, as supermarkets fight to keep employees.

It will increase minimum pay for workers outside of London to £12 per hour, with staff in the capital seeing a raise to £13.15 per hour.

The increase means all of its workers will be paid the voluntary Real Living Wage, which is higher than the compulsory National Living Wage.

About 40,000 staff across the food and clothing retailer will get a raise.”

Another day another large percentage wage rise coming in. Presumably supermarkets will aim to push their suppliers but hey they will just import more?
 

A national insurance cut is unlikely to fix things as their core grey vote will not like it one bit. They’ve totally f’d this up freezing personal allowances out to 202x whenever and now having to scramble policy. 
I don’t think Labour will do better. Starmer would bring in special experts like Gordon Brown I think.

[DurhamBorn]

What were we saying a week ago,

https://www.telegraph.co.uk/business/2024/02/27/britain-to-consider-tariffs-on-cheap-chinese-electric-cars/

[AVERAGEUKBLOB]

6 minutes ago, DurhamBorn said:

What were we saying a week ago,

https://www.telegraph.co.uk/business/2024/02/27/britain-to-consider-tariffs-on-cheap-chinese-electric-cars/

https://voca.ro/1dubRzbbGQY1

[DurhamBorn]

37 minutes ago, Ash4781b said:

https://www.bbc.co.uk/news/business-68404573.amp

“Marks & Spencer has announced pay rises for staff from April, as supermarkets fight to keep employees.

It will increase minimum pay for workers outside of London to £12 per hour, with staff in the capital seeing a raise to £13.15 per hour.

The increase means all of its workers will be paid the voluntary Real Living Wage, which is higher than the compulsory National Living Wage.

About 40,000 staff across the food and clothing retailer will get a raise.”

Another day another large percentage wage rise coming in. Presumably supermarkets will aim to push their suppliers but hey they will just import more?
 

A national insurance cut is unlikely to fix things as their core grey vote will not like it one bit. They’ve totally f’d this up freezing personal allowances out to 202x whenever and now having to scramble policy. 
I don’t think Labour will do better. Starmer would bring in special experts like Gordon Brown I think.

It never ends under present policy does it.Bennies inflation linked.Tax allowance frozen so wages lose the 20% tax even if we ingore NI.So bennies pulling more away from work,and for anyone retired etc with a fixed annuity or not on an inflation linked state worker pension their living standards are being destroyed.Worst government in my lifetime,and against Blair and Brown thats saying something.

[Joncrete Cungle]

Been to decent sized manufacturer we deal with at work this afternoon. Everyone there is paid above minimum wage, talk from one manager is no payrises for a few years until min wage rises legally force up pay rates for the lower end. Or things improve for the business.