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

[Cattle Prod]

23 minutes ago, DurhamBorn said:

n government force buyers into their debt (in the UK forcing pensions into Gilts,in the US primary dealers etc) it

Watching now for pension funds in the UK to get the toe up the hole 

Edited February 6 by Cattle Prod

[DurhamBorn]

10 minutes ago, Cattle Prod said:

Watching now for pension funds in the UK to get the toe up the hole 

There is a huge difference in the macro of this compared to the economics.They are using the old failed models where they think its a circle.They cannot grasp in a distribution cycle its a disaster.They cannot tax anywhere near enough,so they need to consume all private savings.The direction is that nobody will work soon outside of very well paid jobs.No kids,no disabilty real or made up then they will take everything.They are now trying to force all saved labour into their free stuff consumption machine.Incredible stuff.

[Errol]

2 hours ago, geordie_lurch said:

Tucker is going to interview Putin which should be interesting especially as the changes coming from the Ukraine war are reshaping the world quicker than we can say macro Well worth watching this short explanation clip.

 

Watch The Putin Interviews with Oliver Stone. Everything you need to know is in it. There's a transcript book version as well which is very good.

[wherebee]

2 hours ago, Hardhat said:

I imagine it will be heavily stage managed and the Russian side will get to sign it off before it's broadcast, so I doubt we will learn anything new or that any revelations will come off it. Bit of a coup for Tucker Carlson though, which is I suppose why he's doing it. 

What it does do is trap Putin by setting his words in stone re Europe, etc.  If he says 'I will never invade Europe unless they do X or Y', it actually helps peace in that up to know all sorts of commentators can claim whatever they want re his intentions.  Just as Hitler signing the peace deal in 1939 and then invading anyway meant that the west was quickly united against him - it removed any ability to argue 'ah, he isn't really a danger'

If Hitler had NOT invaded in 1939 after the peace agreement, there would have been no war and much less suffering overall, as the west could not have got a coalition to invade Germany.

[Don Coglione]

27 minutes ago, Errol said:

Watch The Putin Interviews with Oliver Stone. Everything you need to know is in it. There's a transcript book version as well which is very good.

 

[JMD]

8 hours ago, BurntBread said:

No. it's essentially a book about money in all its forms, and other economic issues are covered only insofar as they relate to the nature of money.

I agree with you that property (or rather scarce land) is likely to be a means for the wealthy to extract from the less-wealthy, regardless of the money system. However, Lyn is clear that fiat+finance greatly accelerates this process, because the runaway values of property are partly down to the erosion of fiat, and the landed have access to cheap finance, which the poor don't, and this lets them "short" fiat for extra cherries on the top of that trade.

Thus, LVT is probably the only actual solution, but hard money and less financialisation would still be a restraining force.

Yes I should have been more clear that the "real estate problem' I was attempting to describe is because land assets fall under the category of economic rent, which is an archaic mechanism and terrible for it to be still operating today. It allows the owner/rentier of scarce/monopolistic resources to gain - often extreme - unearned monetary value and other influence... imo becoming a modern day Lord of the Manor and where the ordinary workers are effectively mere serfs.

I think understanding the negative consequences of how economic rent works in the physical world helps show what is similarly happening across the internet and where for example companies like Amazon are already enthroned as the new rentier monarchs of the digital realm! 

The last few years have been a brutal learning curve for me. The (implied deep essential) meaning of the political phrase '...its all about the economy stupid' is almost triggering(!). As for democracy, well yes we all know that concept is little more than a fairy tale.   ...Tbf most people probably already knew this stuff was crap but just didn't want to think it out loud. But I expect that was when we thought our leaders at least had half decent plans for the country in which our own interests figured (hopefully!) somewhere near the top, or at least in the third quartile. As they say, interesting times lie ahead.

Edited February 7 by JMD

[sancho panza]

there's some good data amtongst this on cinem admsisions.Looks like discretioanry spending has been struggling to recover psot coof

think these figures arent adjsuted for inflation,which makes them possibly worse

soem spending appears to have changed for good

https://www.cinemauk.org.uk/the-industry/facts-and-figures/uk-cinema-admissions-and-box-office/monthly-admissions/

Edited February 7 by sancho panza

[Royston]

5 hours ago, sancho panza said:

there's some good data amtongst this on cinem admsisions.Looks like discretioanry spending has been struggling to recover psot coof

think these figures arent adjsuted for inflation,which makes them possibly worse

soem spending appears to have changed for good

https://www.cinemauk.org.uk/the-industry/facts-and-figures/uk-cinema-admissions-and-box-office/monthly-admissions/

I'm sure those figures mustn't be adjusted for inflation, I'd be very surprised if cinema attendance is higher now than it was in the mid-2000's.

[jamtomorrow]

6 hours ago, JMD said:

I think understanding the negative consequences of how economic rent works in the physical world helps show what is similarly happening across the internet and where for example companies like Amazon are already enthroned as the new rentier monarchs of the digital realm! 

This is such an interesting topic, and about to become horribly relevant to all of us - but particularly those of us still working - as we get caught between the pincers of dwindling energy density and AI takeover (which I'm sure will proceed apace once we get past the backlash coming at the end of this hype phase).

We've only been able to ignore questions of ownership and control over factors of production because the energy "pie" has been growing fast enough to deliver, on average, increases in prosperity for the masses, year on year, simultaneously with increases in economic rent.

With that trend reversing, things are getting spicey.

In this context, I'm broadly sympathetic with Georgist ideas (LVT being a prime example), but I find the effects on incentives to invest in productive capital concerning, particular in the current circumstances in the UK where we're running on the dregs of that capital.

[belfastchild]

10 hours ago, Cattle Prod said:

This is undoubtedly true, in that it can unify the poor against the sermoniser! Believe it or not I used to hear a playground taunt in school in the late 80s e.g of “You took the soup Mahon ya prick” … took me a while to figure out it went back to 1847 when the Protestants ran soup kitchens in famine Ireland in return for renouncing your Catholic faith and anglicising your name. So an O’Mahony became “Mahon” and a 150 odds years later kids are still taunting and shaming each other over how their poverty forced them to renounce who they were. That kind of forced unification of society backfired spectacularly, sadly. If you kick someone when they are really down they won’t forget it for generations - that’s a lesson our current governments need to re learn.

My granny used the phrase for politicians quite a lot 'sold their souls for penny rolls, soup and hairy bacon'. Stemming from the same thing. I learned it from my granny who probably learned it from hers who was around at the time.
Here we both are, 3 generations later passing it on.

[Democorruptcy]

The world's largest offshore wind developer has blown it.

Quote

 

Wind developer Ørsted is axing its dividend, cutting jobs and exiting several offshore wind markets as it tries to shore up its balance sheet and refocus following a troubled year. 

The world’s largest offshore wind developer, which is 50.1 per cent owned by the Danish state, said it would “pause” dividends for 2023-2025, cut 600-800 jobs around the world and exit offshore markets including Norway, Spain and Portugal. 

About 250 workers are expected to lose their jobs in coming months. Mads Nipper, president and chief executive, said the moves were needed to make Ørsted a “leaner and more efficient company”. 

Ørsted is trying to restore confidence after shares tumbled last year as it abandoned two US offshore wind projects because of rising costs, and it recorded higher than expected impairments.

https://www.ft.com/content/cb191b4d-6960-414a-9692-06489dc847fa

 

 

[ashestoashes]

3 minutes ago, Democorruptcy said:

The world's largest offshore wind developer has blown it.

 

Should have stuck to their original name Dong energy

[belfastchild]

5 minutes ago, Democorruptcy said:

The world's largest offshore wind developer has blown it.

 

Doesnt look good for this years UK offshore wind auctions. Last years didnt get a bid.
No bids this time and the EV and heat pump revolution will get kicked further into touch.
They arent backtracking on the green targets because they want to, they have to.

[DoINeedOne]

 

[No One]

11 hours ago, DurhamBorn said:

When government force buyers into their debt (in the UK forcing pensions into Gilts,in the US primary dealers etc) it removes investment from the productive economy.The polos and central banks thought it did not matter because the liquidity would go to consumers through government spending on bennies and pensions that would be spent and end up in growth in the private sector they could tax.They thought they could simply be first in the chain instead of last.What they did not understand is this is a cost push inflation cycle and when they and their clients get the cash before the inflation it makes everyone want in on the deal.The private sector has no incentive to invest,unless they can capture inflation and increase prices faster than inputs.Iv said before,but what i track in the UK is now vertical.The state is consuming so much the productive economy cannot compete.Im almost pleased Labour get to inherit it,because their work during Brown created it.

 

 

When you say what you capture is now vertical does that mean you have a spreadsheet with a chart? Is your roadmap an actual calculation?

[DurhamBorn]

27 minutes ago, No One said:

When you say what you capture is now vertical does that mean you have a spreadsheet with a chart? Is your roadmap an actual calculation?

I use around 30 indicators i track,i add and remove the odd one,but the real trick is the multipliers.Its trying to see through the data to the things than cause a much bigger reaction than economists think.Its those multipliers that move the roadmap vertical.Why?,well for example the multiplier i use on "none producing consuming" ie bennies and retired has gone past the point where it can be covered by the productive.So the multiplier is increasing from that into other areas its so powerful,a bit like a huge wave sweeping inland.The indicators are the backbone of the roadmap but those could be done by anyone half decent once they know what they are.The real skill,and although i joke,im very very very good at it is cross market reading it.Its the cross market work from the roadmap that interests me the most.Roadmaps change and are simply a direction tool.Right now the UK one is vertical because the data is horrific feeding in and without massive changes it will see huge changes in society,wealth etc.I spend about 1 hour a month on the road map,i spend sometimes full days doing cross market off it.The BOE models failed because they are rigid based on classical economics and cannot see cross market.Macro strategy is not just the numbers,its what do those numbers mean in the real world.

Simple one,i told the thread about bennies etc passing that point a few years ago.What is happening now?.Huge numbers pretending to be ill to get on disability bennies,nearly 10 million adults deciding not to work.That was cross market from the roadmap due to multipliers.The bennie increases were so large they engulfed the productive economy.The next step is products being not affordable for lots of workers,they cannot cover themselves and the bennies.Its already happened in housing as we know.

[Libspero]

11 hours ago, wherebee said:

What it does do is trap Putin by setting his words in stone re Europe, etc.  If he says 'I will never invade Europe unless they do X or Y', it actually helps peace in that up to know all sorts of commentators can claim whatever they want re his intentions.  Just as Hitler signing the peace deal in 1939 and then invading anyway meant that the west was quickly united against him - it removed any ability to argue 'ah, he isn't really a danger'

If Hitler had NOT invaded in 1939 after the peace agreement, there would have been no war and much less suffering overall, as the west could not have got a coalition to invade Germany.

 

I agree with this.  If Putin were consistent I think the West would be much less nervous..   it's the uncertainty of his intentions that concerns Western leaders and strategists.  I learned long ago that it is always better to give customers bad news straight away rather than say nothing.  However bad you think something is,  if a customer is uncertain they will presume something far worse than the reality 100% of the time.

Returning to Putin,  it is very hard to to be certain what his intentions are,  so people naturally fear the worst.

 

[Cattle Prod]

1 hour ago, Democorruptcy said:

The world's largest offshore wind developer has blown it.

 

“Not a real business”

[Cattle Prod]

1 hour ago, belfastchild said:

My granny used the phrase for politicians quite a lot 'sold their souls for penny rolls, soup and hairy bacon'. Stemming from the same thing. I learned it from my granny who probably learned it from hers who was around at the time.
Here we both are, 3 generations later passing it on.

You got bacon?! Well lah di dah 🤣

[Libspero]

2 hours ago, jamtomorrow said:

In this context, I'm broadly sympathetic with Georgist ideas (LVT being a prime example), but I find the effects on incentives to invest in productive capital concerning, particular in the current circumstances in the UK where we're running on the dregs of that capital.

Devils advocate,  but aren't we a microcosm of global investment more broadly?

Many of us invest in overseas businesses and emerging markets,  but we take the profits here, get taxed on profits here and spend the profits here?

I guess I'm arguing that we still all invest in productive capital,  just not in our home nation.   Or have I missed the point?

[Libspero]

22 minutes ago, DurhamBorn said:

Simple one,i told the thread about bennies etc passing that point a few years ago.What is happening now?.Huge numbers pretending to be ill to get on disability bennies,nearly 10 million adults deciding not to work.That was cross market from the roadmap due to multipliers.The bennie increases were so large they engulfed the productive economy.The next step is products being not affordable for lots of workers,they cannot cover themselves and the bennies.Its already happened in housing as we know.

Would you mind elaborating a little on what you mean by cross market multipliers?

Are you saying that because of the perverse incentive of overly generous benefits, the cost hasn't just gone up in its own right,  but that it has also started impacting other areas (in this case the private sector) because it sucks otherwise productive people out of the workforce raising the cost/availability of labour..  thus has a "multiplier effect" on the labour market?

I think that's how I 'm reading it,  have I got the right end of the stick?

[jamtomorrow]

17 minutes ago, Libspero said:

Devils advocate,  but aren't we a microcosm of global investment more broadly?

Many of us invest in overseas businesses and emerging markets,  but we take the profits here, get taxed on profits here and spend the profits here?

I guess I'm arguing that we still all invest in productive capital,  just not in our home nation.   Or have I missed the point?

I'll skip over your point about global investment because I think that gets into the weeds of whether global supply chains and capital mobility of tomorrow looks like it does today (I don't think it does - at all - but that topic has been much rehearsed here). So taking a parochial view ...

We don't *all* invest in productive capital - we here on this thread seem to, but we're exceptional in that regard compared to the general population.

That said, mass ownership of the means of production would certainly solve the conundrum, but how do you get there, and how do you keep it that way?

Nationalisation doesn't work, because that begets central planning and that begets wanton misallocation of capital.

There has to be a free market in ownership to allow capital to be allocated by the market, but that begets winners and losers which begets concentration of ownership, and - oh look - we're back where we started.

Except now the energy pie is shrinking even faster, and that concentration of ownership looks especially toxic - in poltical-economic terms.

[Calcutta]

1 hour ago, DurhamBorn said:

I use around 30 indicators i track,i add and remove the odd one,but the real trick is the multipliers.Its trying to see through the data to the things than cause a much bigger reaction than economists think.Its those multipliers that move the roadmap vertical.Why?,well for example the multiplier i use on "none producing consuming" ie bennies and retired has gone past the point where it can be covered by the productive.So the multiplier is increasing from that into other areas its so powerful,a bit like a huge wave sweeping inland.The indicators are the backbone of the roadmap but those could be done by anyone half decent once they know what they are.The real skill,and although i joke,im very very very good at it is cross market reading it.Its the cross market work from the roadmap that interests me the most.Roadmaps change and are simply a direction tool.Right now the UK one is vertical because the data is horrific feeding in and without massive changes it will see huge changes in society,wealth etc.I spend about 1 hour a month on the road map,i spend sometimes full days doing cross market off it.The BOE models failed because they are rigid based on classical economics and cannot see cross market.Macro strategy is not just the numbers,its what do those numbers mean in the real world.

Simple one,i told the thread about bennies etc passing that point a few years ago.What is happening now?.Huge numbers pretending to be ill to get on disability bennies,nearly 10 million adults deciding not to work.That was cross market from the roadmap due to multipliers.The bennie increases were so large they engulfed the productive economy.The next step is products being not affordable for lots of workers,they cannot cover themselves and the bennies.Its already happened in housing as we know.

The one that's always stuck with me, and I drag out whenever anyone starts about wars or dinghys or elections or any of that 'news' garbage was along the lines of;

"The economics leads the politics."

Brilliant that is, once fully understood that line opened a window thru which the whole world looks different.

 

[Libspero]

14 minutes ago, jamtomorrow said:

I'll skip over your point about global investment because I think that gets into the weeds of whether global supply chains and capital mobility of tomorrow looks like it does today (I don't think it does - at all - but that topic has been much rehearsed here). So taking a parochial view ...

We don't *all* invest in productive capital - we here on this thread seem to, but we're exceptional in that regard compared to the general population.

That said, mass ownership of the means of production would certainly solve the conundrum, but how do you get there, and how do you keep it that way?

Nationalisation doesn't work, because that begets central planning and that begets wanton misallocation of capital.

There has to be a free market in ownership to allow capital to be allocated by the market, but that begets winners and losers which begets concentration of ownership, and - oh look - we're back where we started.

Except now the energy pie is shrinking even faster, and that concentration of ownership looks especially toxic - in poltical-economic terms.

 

Agreed on the future risks of overseas investment.   In a hypothetical/inevitable stressed future system the risk of capital controls and state confiscation increase considerably.. there is no guarante that the goldilocks free market economies of today will exist tomorrow.

In response to the dilema you pose,  I don't really have an answer. The current freemarket incentivises off-shore investment (for those who partake in such things) because the majority of growth and profit is arguably in emerging markets or technologies.  The only way I can see to change that incentive would be to remove the freemarket and force investment back into the UK.  I can't see that would be popular politically because the effects on price and availability of product would likely be painful for the majority of the population.  It would probably also require a long period of "reskilling" since some production is still surprisingly artisanal and labour intensive.   Not sure there's any easy answer.

[DurhamBorn]

1 hour ago, Libspero said:

Would you mind elaborating a little on what you mean by cross market multipliers?

Are you saying that because of the perverse incentive of overly generous benefits, the cost hasn't just gone up in its own right,  but that it has also started impacting other areas (in this case the private sector) because it sucks otherwise productive people out of the workforce raising the cost/availability of labour..  thus has a "multiplier effect" on the labour market?

I think that's how I 'm reading it,  have I got the right end of the stick?

Exactly that.I had the multiplier at minus from 88 until 96 ie bennies were slowly falling compared to working so the bad incentive was getting less,only very very slowly,but i had it slightly minus.The Brown budgets turned the multiplier to a plus,bennies were then slowly becoming a better and better option.The multiplier grew and grew.It could of been turned when Osborne tried,there was still time and he nearly did,but they bottled the main work.Once the inflation cycle kicked it and the government continued to inflation link the multiplier increased again.So much its now one of the biggest drivers of the collapse.In simple terms the velocity is such that it is bursting up and up through income barriers.Its already past where over 50% would be better not working.Of course what then happens is the inflation then increases again.The bennie system cannot survive in its present form.Labour will try to take the rest of the countries savings to consume on welfare,but the choice will be cut bennies or collapse the state,then bennies go to zero.