Credit deflation and the reflation cycle to come (part 9)

[reformed nice guy]

1 minute ago, Democorruptcy said:

Might need to print a few quid for all those lumpy lump sums.

True. It's a massive unfunded liability anyway that is structured as a pyramid scheme. You need both a persistently increasing public sector and money printing. It's just of balance - if you slow down public sector growth your increasing the need for immediate money printing and vice versa. We are screwed either way

[Chewing Grass]

19 minutes ago, Democorruptcy said:

Might need to print a few quid for all those lumpy lump sums.

Just sack State Employees for using the wrong pronouns, no need for redundancy payments.

[SpectrumFX]

13 minutes ago, reformed nice guy said:

True. It's a massive unfunded liability anyway that is structured as a pyramid scheme. You need both a persistently increasing public sector and money printing. It's just of balance - if you slow down public sector growth your increasing the need for immediate money printing and vice versa. We are screwed either way

The recent changes to the university pension scheme provide a potential model to follow. They put a cap on the DB element, and put all of the contributions over that cap into a parallel DC pot.

One of the benefits of that approach is that you can drag your feet on inflating the DB cap to progressively switch a larger percentage of the pension over to DC.

The irony of all of this is that the vast majority of public sector workers have no idea of the value of their pension, and would gladly give benefits up for a little bit more money now.

 

[Jay]

3 hours ago, MrXxxx said:

Anyone got UK miners?...well worth watching this morning as AAL have been offered a buy out by BHP.

Me..only a small holding..think it’s an all share deal..undervaluation of aal..

adds a bit of fizz but still way below what it has been..

[kibuc]

Newcore knocks it out of the park with its updated PEA. Using NPV5 is, naturally, a joke, but it's still the standard for some reason. I'll leave it to the mintwit experts to crunch the details, but just by comparison to its peers who use the same silly costs of money, NPV-to-capex and IRR are something to behold.

https://newcoregold.com/news/newcore-gold-announces-positive-updated-2024-preliminary-economic-assessment-for-the-enchi-gold-project-ghana/

West Africa is gradually becoming my favourite region for undervalued gold juniors and explorers.

Edited April 25 by kibuc

[HousePriceMania]

Had to laugh at this one.

 

 

[wherebee]

15 minutes ago, HousePriceMania said:

Had to laugh at this one.

 

 

wrong conclusion.

 

japanese people =/= african americans.

[Axeman123]

4 hours ago, Harley said:

Like I previously mentioned, the technocratic loves, often infatuated with fakery, think they can game/fake this one (war economy) by getting the "benefits" without an actual war.  

Indeed. The cold war was the perfect war for that, since it both went on forever and needed massively centralised economic control, and arguably the system has been scratcing around for a replacement ever since.

Technocrats even have a history of declaring wars on abstract concepts (poverty) and normal human emotions (hate).

4 hours ago, baffledbyzirp said:

The iron was not suitable for use in armaments and only 26% was melted down for use in defence

I was about to post that. Its all about forcing people to sacrifice towards a goal, at which point they experience cognitive dissonance if they don't buy into the goal, which is most easily releived by buying into it. Its all nudges, even back then.

Today we see the same with washing and sorting recyclables in our household waste that will just be sent to a chinese landfill. IMO a return to a war economy is going to mean a return to lots of additional daily sacrifices forced on us all, just to exploit that psychological mechanism. I suspect the future UK will have North Korean characteristics imposed by centralised nudge: parades with mandatory attendance and cheering, denounciation of each other for inadequate enthusiasm etc.

3 hours ago, Pip321 said:

So knowing that what governments focus on is not for our benefit….it does beg the question, why the huge focus on virtue signalling and climate change. It’s not for the greater good….I know that  

Midwits are generally "in charge" now at the national level, since that isn't a highly prestigious job anymore. The real power and prestige is in the supranational orgs. Midwits are drawn to repeat high status ideas, to impersonate higher intelligence people for advancement. To differentiate themselves from the pack and compete they will double down and goldplate every idea. The Emperor's New clothes was written a very long time ago, but it still holds true.

[Pip321]

1 hour ago, SpectrumFX said:

The recent changes to the university pension scheme provide a potential model to follow. They put a cap on the DB element, and put all of the contributions over that cap into a parallel DC pot.

One of the benefits of that approach is that you can drag your feet on inflating the DB cap to progressively switch a larger percentage of the pension over to DC.

The irony of all of this is that the vast majority of public sector workers have no idea of the value of their pension, and would gladly give benefits up for a little bit more money now.

 

This is what they did with our private company pensions…..line in the sand. And it worked better than many think.

Newbies in the DC scheme were paying in 10% and the company 20% so they were delighted. Even AVC schemes which could increase employers contribution a little more….fab scheme. Of course the company will chip away at that in years to come. 

However, the oldies kept their old DB scheme but it stopped from around 2012….but the benefits already (but not yet taken) earned went up (I think with RPI or CPI) per the accrued pension rules. Once taken they then were index linked but capped at 5%. 2012 they could opt to earn ‘extra years’ but based only on the 2012 salary and make up shortfalls in the new DC scheme.

Where it worked well was the old guard left immediately…they thought if they left the business would collapse…..of course, it didn’t. Double bonus for the business….

And yep, increased wages did hugely improve recruitment although retention was tougher because being locked into a pension scheme certainly made people stay. 

 

[M S E Refugee]

Just driving round Carlisle and I have just seen a brand new Police Car, it was a fucking Tesla!

The UK must be loaded!

[sancho panza]

2 hours ago, kibuc said:

For now, they struggle to grant proper access even to markets that they seemingly have on offer.

Just last week I learned the hard way that Impact and Defiance both became "sell only" on II and won't be available for bid anymore. And I moved to II from HL last year mostly because pickings were even slimmer there - 1 in 3 names I was interested in at most.

you should try Interactive brokers.I have one ISA with them so far and they seem pretty good.If they cant get you what you want then it can't be done I suspect.

@Harley also uses them iirc.

ref west africa,you got a take on B2G K? no pressure,realsie you dont bother with tier 2s much

1 hour ago, SpectrumFX said:

The recent changes to the university pension scheme provide a potential model to follow. They put a cap on the DB element, and put all of the contributions over that cap into a parallel DC pot.

One of the benefits of that approach is that you can drag your feet on inflating the DB cap to progressively switch a larger percentage of the pension over to DC.

The irony of all of this is that the vast majority of public sector workers have no idea of the value of their pension, and would gladly give benefits up for a little bit more money now.

 

The Uni scheme is a private one and it looks to my untrianed eye like it's in deep trouble.Wlaks like a ponzi,talks liek  ponzi,I suspcet it's a ponzi.

Crucially it's a 'last man standing ' scheme where if an employer fails the rest pick up the tab.

I have little symptahty for academics in ivory towers that dont see crises coming. but there are also other workers caught in the trap here.

AS a for isntance a mate who works at leicester Uni has a scheme,he pays in £4k pa employer pays in circa £8k,hes been in ten years,another 25 to shove,so all in all £300k going in(not even considering compounding) then they're going to pay him £15k pa at 68.if he dies at 82 then he'll get £210k in pay outs.

the uni pension scheme looks like it needs constant new entrants to keep it solvent .instead of lsitneing to me lets hear from an academic who can see it coming,huge problem looms when deferred members start taking pensions as so many young kids are opting out

from 2020

https://www.hepi.ac.uk/2020/11/24/why-the-pandemic-is-likely-to-produce-a-shift-in-academics-pension-arrangements/

For example, it emphasised that the USS is a private sector, not a public sector, pension scheme. Indeed, it is the largest private pension scheme in the UK.

One thing that has become worse is the USS deficit. On one conservative measure, the deficit rose from £5.4 billion to £12.9 billion in the year to March, before the pandemic took full effect (as assets declined by £900 million and liabilities rose by £6.6 billion).

One thing that was already an issue back in 2018 but is now discussed more is the comparatively high USS opt-out rate – in recent years, between 15% and 21% of eligible new USS members have chosen not to be in the scheme.

Given that the pension contribution of each active USS member unlocks a much larger pension contribution from their employer, it seems odd that anyone would refuse to join (especially now that automatic enrolment is the norm for workplace pensions). But having cash in hand now, perhaps in order to cover childcare costs or rent, can be a more urgent priority than having a greater sum gathering up for use in the distant future.

Quite simply, there are fewer active members whose employee and employer contributions are together expected to cover their own benefits and to fill in any deficit than there are deferred members and pensioners. Only 45% of USS members actively contribute to the USS for there are 205,000 active members, 180,000 deferred members and 75,000 retired members.

By 2019, employees were paying 8% and employers 18%. Today, the contributions are 21.1% for employers and 9.6% from employees (with further increases planned to 23.7% and 11% respectively).

The USS is a last-man-standing scheme, described on one pension website as ‘a multi-employer’ scheme in which ‘the liabilities … pass to the last employer in the scheme where the other employers have ceased to participate or become insolvent.’

A last-man standing scheme does not stop a solvent employer from leaving, as Trinity College, Cambridge, controversially did recently. But this route is not feasible for many: Trinity not only has deep pockets but also had ‘fewer than 20 full-time permanent members of academic staff solely employed by the College in the scheme’. If other employers in a strong financial position were to leave, it would weaken confidence in the USS itself because those that would be left supporting the scheme would be – collectively – less strong than previously. In sort, it would undermine the mutuality that has always underpinned the USS

 

 

[JMD]

5 hours ago, Harley said:

Ah, the old war smokescreen to do the necessary.  Add it to climate change and the rest. 

Finance/economics has been a key driver for most wars.  We normally would have had a war by now to cleanse the system of their accumulated corruption and incompetence.  

Like I previously mentioned, the technocratic loves, often infatuated with fakery, think they can game/fake this one (war economy) by getting the "benefits" without an actual war.  

Probably not.  A virus seems to often end with a blow off top as it burns itself out.  Maybe most wars start this way.

PS:  I doubt they'll be after our metal railings this time round.

I don't know about an actual kinetic war, but I do think the politicaly (covertly) radical and technocratic Starmer is planning 'shock and awe'!

After all the left love to experiment with something grand and socially destabilising...  So maybe a commitment to phase in a Corbin'ista 3-day week for government employees + UBI top-up. Can be blamed of course on the evil threat of Putin or the encroaching menace of A.I.  And policies like these would not only introduce UBI, but also cut expensive pension commitments, plus they'd be implemented by stealth so no one complains.

Edited April 25 by JMD

[Mandalorian]

14 hours ago, wherebee said:

yeah, that's very true.

except, of course, all the times they have fucked up, lost, been embarrassed, etc.  

Remind me about the performance of its stockmarket

[SpectrumFX]

3 minutes ago, sancho panza said:

you should try Interactive brokers.I have one ISA with them so far and they seem pretty good.If they cant get you what you want then it can't be done I suspect.

@Harley also uses them iirc.

ref west africa,you got a take on B2G K? no pressure,realsie you dont bother with tier 2s much

The Uni scheme is a private one and it looks to my untrianed eye like it's in deep trouble.Wlaks like a ponzi,talks liek  ponzi,I suspcet it's a ponzi.

Crucially it's a 'last man standing ' scheme where if an employer fails the rest pick up the tab.

I have little symptahty for academics in ivory towers that dont see crises coming. but there are also other workers caught in the trap here.

AS a for isntance a mate who works at leicester Uni has a scheme,he pays in £4k pa employer pays in circa £8k,hes been in ten years,another 25 to shove,so all in all £300k going in(not even considering compounding) then they're going to pay him £15k pa at 68.if he dies at 82 then he'll get £210k in pay outs.

the uni pension scheme looks like it needs constant new entrants to keep it solvent .instead of lsitneing to me lets hear from an academic who can see it coming,huge problem looms when deferred members start taking pensions as so many young kids are opting out

from 2020

https://www.hepi.ac.uk/2020/11/24/why-the-pandemic-is-likely-to-produce-a-shift-in-academics-pension-arrangements/

For example, it emphasised that the USS is a private sector, not a public sector, pension scheme. Indeed, it is the largest private pension scheme in the UK.

One thing that has become worse is the USS deficit. On one conservative measure, the deficit rose from £5.4 billion to £12.9 billion in the year to March, before the pandemic took full effect (as assets declined by £900 million and liabilities rose by £6.6 billion).

One thing that was already an issue back in 2018 but is now discussed more is the comparatively high USS opt-out rate – in recent years, between 15% and 21% of eligible new USS members have chosen not to be in the scheme.

Given that the pension contribution of each active USS member unlocks a much larger pension contribution from their employer, it seems odd that anyone would refuse to join (especially now that automatic enrolment is the norm for workplace pensions). But having cash in hand now, perhaps in order to cover childcare costs or rent, can be a more urgent priority than having a greater sum gathering up for use in the distant future.

Quite simply, there are fewer active members whose employee and employer contributions are together expected to cover their own benefits and to fill in any deficit than there are deferred members and pensioners. Only 45% of USS members actively contribute to the USS for there are 205,000 active members, 180,000 deferred members and 75,000 retired members.

By 2019, employees were paying 8% and employers 18%. Today, the contributions are 21.1% for employers and 9.6% from employees (with further increases planned to 23.7% and 11% respectively).

The USS is a last-man-standing scheme, described on one pension website as ‘a multi-employer’ scheme in which ‘the liabilities … pass to the last employer in the scheme where the other employers have ceased to participate or become insolvent.’

A last-man standing scheme does not stop a solvent employer from leaving, as Trinity College, Cambridge, controversially did recently. But this route is not feasible for many: Trinity not only has deep pockets but also had ‘fewer than 20 full-time permanent members of academic staff solely employed by the College in the scheme’. If other employers in a strong financial position were to leave, it would weaken confidence in the USS itself because those that would be left supporting the scheme would be – collectively – less strong than previously. In sort, it would undermine the mutuality that has always underpinned the USS

 

 

There was a big fuss about the USS deficit, but it's died down now.

The deficit that they were talking about was an accounting fiction that bore no relation to their actual investment performance. It was based on a calculation of what their financial position would be if the existing pension obligations had to be met by the income they'd receive in a made up scenario where all of the universities stopped trading (so that there were no further contributions to the fund), and they sold all of the pension fund equities and put all of the money entirely in gilts.

The key bit of the accounting fantasy there was the bit about having to be entirely invested in gilts in what was a low interest rate environment. If you work your potential income out on that basis, and then project that low interest environment forward in your income forecast for 50 years it looks like you're fucked.

Because of this fantasy deficit they took a load of measures to reduce employee benefits, which is why I say that they can provide something of a model on how to reduce pension liabilities. They've recently done the work.

As Interest rates have now gone up the same calc says that everything is fine, and they're actually rolling back on some of the benefit reductions. The whole episode was an astounding farce.

I was working in the sector when all of this was happening, and actually left a proper university to go and work in an ex poly so that I could transfer my USS pension into the council scheme.

 

[JMD]

4 hours ago, Pip321 said:

Global warming crisis, emergency powers etc….

Listening to this and whether (weather😉) or not these powers are enacted it makes me realise just how climate change agenda is false. 

I am happy to take as read, there is some truth in climate change but the governments I see do not have our best interests at heart….at all. Ie war, sanctions, monetary printing, spending money on shite instead of things we need, migration etc tv  

So knowing that what governments focus on is not for our benefit….it does beg the question, why the huge focus on virtue signalling and climate change. It’s not for the greater good….I know that  

Likely to ensure less reliance on Russia/ Middle East (because energy is power) and also a handy agenda they might use for control, power and for them to profit from it in the short term. 

Tbh I'm split between TPTB being completely mental, or it's maybe to do with rationing global resources in case fusion tech is still 100 years away from being implemented.

But yes, either way the so called 'climate change' emergency is false.

The recent 'Climate: The Movie' is good, it has many eminent scientists lambasting the climate science consensus, plus also presents an interesting counter theory. Video can be easily found on YouTube.

 

Edited April 25 by JMD

[Onsamui]

Major Banks Debanking Christians | Armstrong Economics Major banking institutions have been weaponized by the government. More attention needs to be paid to this insurmountable issue as the banks now have the authority to search an individual’s transactions and label them a domestic terrorist. The rule of law has been completely abandoned in America – this is no longer the land of the free.........

[Loki]

8 minutes ago, Mandalorian said:

Remind me about the performance of its stockmarket

Is it like this?

https://tradingeconomics.com/argentina/stock-market

[MrXxxx]

2 hours ago, Jay said:

undervaluation of aal.

Agree, but this is as a result of AAL portfolio issues i.e. major holding by SA govt pension so they are unlikely to vote against their own interests, DeBeers link to Botswantan govt etc...these are the factors that BHP insist are 'sorted' prior to deal. That said, if AAL could get them sorted fairly quickly other miners i.e. Rio, Glen may be interested in making a counter offer and this could then change the valuation upwards.

[nirvana]

10 minutes ago, Loki said:

Is it like this?

https://tradingeconomics.com/argentina/stock-market

which begs the question, are all stock markets just a reflection of the money printer?

until the candles go down the elevator shaft that is?

 

[Mandalorian]

20 minutes ago, Loki said:

Is it like this?

https://tradingeconomics.com/argentina/stock-market

No.  Zoom out

4 minutes ago, nirvana said:

which begs the question, are all stock markets just a reflection of the money printer?

until the candles go down the elevator shaft that is?

 

As long as money is devalued, assets will generally rise.

[kibuc]

28 minutes ago, sancho panza said:

you should try Interactive brokers.I have one ISA with them so far and they seem pretty good.If they cant get you what you want then it can't be done I suspect.

ref west africa,you got a take on B2G K? no pressure,realsie you dont bother with tier 2s much

Cheers. I was surprised to see they're offering SIPPs, must have changed recently, as I remember researching them before my move to II and the lack of SIPP was a major factor.

I opened a trial account with them this morning to get the feel for them. Interesting that they offer AIM-listed Serabi Gold only through Toronto in CAD and Frankfurt in EUR but not London. Impact and Defiance are present, but no Discovery Metals? I guess every broker has to have its quirks

Regarding B2G, they are facing serious cost overrun at Back River. They have already upped their projected construction capex by a handsome 250mil canadian and they pre-sold $500mil of their 2025-26 gold production for around $2200/oz to fund that. Nevertheless, they look cheap IF their construction woes are over and they hit their 2025 guidance (2024 is quite a drop frop from previous years), but it's not my cup of tea anyway due to size.

[kibuc]

LOL

[nirvana]

9 minutes ago, Mandalorian said:

As long as money is devalued, assets will generally rise.

how bout me loaf o bread, is that an asset? I know a bizarre story bout krauts and wheelbarrows in the 30s.......but yeah not many bankers wanna talk about that one eh?

PS for clarity, not saying 'you're a banker'......just saying like bankers in general.....twas Greenspan who said the US will never default cos they can just print infinite money....anyway I'll get me coat......don't wanna sound like I'm at skool again FFS

have fun!

Edited April 25 by nirvana

[nirvana]

5 minutes ago, kibuc said:

LOL

Mr Market no likey.........

no likey, no green lighty

[sancho panza]

51 minutes ago, SpectrumFX said:

I was working in the sector when all of this was happening, and actually left a proper university to go and work in an ex poly so that I could transfer my USS pension into the council scheme.

 

 A shrewd move.The deficit issue will resolve to a degree with higher IRs but the academic I quoted raised a few key issues that won't resolve.

the maths for this uni pension scheme looks really suspect,which you'd expect from the people who educated our central bankers

here's the data.Currently USPS scheme has 528,000 members.£75bn assets.which is £142k per member.but some of those member swont be retiring at 55 like previous cohorts.

whats interesting is that payments in from Unis and workers this year were £2.586bn,payments out £2.252bn.they're jsut about breaking even with their pot sat in the middle.if their investments drop,or the number of claimants rises etc etc then they have a rpoblem.

if we take the £2.252bn and then divide by retirees taking their pension ie 80,901 then the average payout is £27k.

So hang on we have a scheme with an ave annual payout of £27k(I know it's getting reduced) and there's roughly £142k assets per member????

this means lack of or fewer new entrants is a big problem.This will only increase.also if richer unis leave the scheme,same.if unis go bust.same.leicester uni not very well from what I hear

I did the maths for my friend  for if he forgoes the uni scheme and the mployers contribution and literally if he sticks his 10% contribution of £4k in an ISA and genreates a 5% return he'll have £17,287 by year 30

year 1 17287

year 2 16464

year 30 £4k

all in all I reckon he'd have a pot circa £250k bringing him £12,500

BUT thats his moeny he can leave his kids if he dies at 80(ave age death for male).

How the f*** is it that the uni scheme is taking his employer contriubtion and his(£12k=£360k over 30 years) and he gets £15k pa? but then when he dies,the moeny doesnt go to hsi kids?if he retires at 68 and dies at 80 that's £180k right there.where's teh rest?

this is the problem .anyone who can do basci maths and put their moeny in BP can handsomely outperform the USPS offering.

like i say,the maths stinks.I think youve done well to get out there.

https://www.uss.co.uk/news-and-views/latest-news/2023/07/07252023_uss-publishes-2023-report-and-accounts

 

 

Edited April 25 by sancho panza