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

[Long time lurking]

2 hours ago, Lightscribe said:

Because of magical 16hr bennie jobs. Our economy revolves around made up part time and grifter gig workers to meet the tax credit threshold so it makes it look like we have a lot more employment on paper than we do. Clever eh?

38% of universal credit claimants are working ,almost all of those on working tax credits have now been transferred to UC 

[Errol]

28 minutes ago, Long time lurking said:

 

Such drivel. Is this the best they can manage? It's just pathetic. They make me sick.

[sleepwello'nights]

10 hours ago, Axeman123 said:

What if the assets are debts of others? If a deceased individual can't owe a debt transferable to heirs, can they be owed one on the same terms? Debt is already extinguished on death of the borrower, if it exceeds the assets in the estate. The alternative would create a perverse incentive to simultaneously run up debts and claims on the debts of others and hope to be outlived by the creditors.

Exactly. Debt jubilees had the same effect. It made the lender far more careful in assessing the credit worthiness of the borrower. 

Edited May 8 by sleepwello'nights

[Red Debt Redemption]

10 hours ago, montecristo said:

Labour

 

10 hours ago, montecristo said:

Reeves has said they won't raise SPA.  1st time I have heard a politician saying that life expectancy is decreasing instead of the usual SPA must be raise as people are living longer.

 

"Labour will not raise the state pension age if it wins the next general election, Rachel Reeves has said.

The state pension age is already set to increase from 66 to 67 in 2028 and then to 68 by the mid-2040s amid an ageing population.

But Ms Reeves, the shadow chancellor, said there was no “justification” to increase the threshold despite warnings it may have to rise to 70 by 2040 to balance the public finances.

In a phone-in on LBC Radio, she said: “What you’d need to see for any further increases in the state pension age is life expectancy increasing and sadly it’s going backwards at the moment, but also healthy life expectancy, and sadly that is also going back at the moment.

“So I don’t think there’s any justification for further increases in the state pension age.”

https://www.telegraph.co.uk/politics/2024/05/08/labour-not-raise-state-pension-age-rachel-reeves-election/

Well ain't that handy unsustainable pension crisis solved brah!

[Yellow_Reduced_Sticker]

On 07/05/2024 at 16:16, Onsamui said:

We frequent Turkey a lot (had a villa there a few years' ago), going for full 90 days this  year in two tranches.  We know lots of expats and turks, bar owners, restaurants owners, bankers (we have investments there), estate agents (one of which said to us last year around September, don't buy yet, bubble is due to pop).  We are not sure about buying again as it is a right 'faf' but when we had residency for a few years it was great for coming and going when we wanted and for however long we wanted.  Turks are great, generous, except where money is involved.

 

interesting...

 

Turkey always reminds me of one of my all time favorite films, Midnight Express ...for those that don't know ...in 1978 Billy Hayes, an American college student, is caught smuggling drugs out of Turkey and thrown into prison.(based on a TRUE STORY)

 

If you lot haven't seen it, watch it here for FREE!

The book is even BETTER!

 

Edited May 8 by Yellow_Reduced_Sticker
.

[Axeman123]

54 minutes ago, sleepwello'nights said:

Exactly. Debt jubilees had the same effect. It made the lender far more careful in assessing the credit worthiness of the borrower. 

Its the one arguement in favour of the existence of IVAs, bankruptcy, and lenders having to accept an offer of £1 a week from a borrower in arrears etc (even though some scummers taking the piss out of it in a calculated way is sickening): it means the lender has skin in the game when assessing credit risk. The same holds true as an arguement against debtors' prisons etc (even though the idea is appealing).

[Alex]

12 minutes ago, Axeman123 said:

Its the one arguement in favour of the existence of IVAs, bankruptcy, and lenders having to accept an offer of £1 a week from a borrower in arrears etc (even though some scummers taking the piss out of it in a calculated way is sickening): it means the lender has skin in the game when assessing credit risk. The same holds true as an arguement against debtors' prisons etc (even though the idea is appealing).

They have no skin in the game because the money they lend isn't real.

[Axeman123]

16 minutes ago, Alex said:

They have no skin in the game because the money they lend isn't real.

IMO it is more complicated than that.

• The reserves backing the credit creation weren't themselves created by the lender in the same transaction.
• The profits they wish to retain are reduced by loan write offs.

[Chewing Grass]

Interesting bit on the 1920s Peoples Car, comparing 2015 equivalent wages and car price back then.

YearAv Income / year2015 equivalent

1930 Wages £195 16s 2015 £11210.84

1930 Car £130 or £135 with Pytchley  Sunshine Roof £7443.36

We have been financialised to death by economic parasites.

https://www.austin7.org/Other Articles/A7 Launch Prices/

[Hardhat]

Right enough tangents, let's get back on topic.

Who's your pick for Eurovision winner, @DurhamBorn @Castlevania?

[HousePriceMania]

5 minutes ago, Hardhat said:

Right enough tangents, let's get back on topic.

Who's your pick for Eurovision winner, @DurhamBorn @Castlevania?

"Boom Bang-a-Bang"  of course.

https://en.wikipedia.org/wiki/Boom_Bang-a-Bang


 

[Noallegiance]

I just watched Rachel Reeves on LBC.

What a cunt.

[wherebee]

2 hours ago, Long time lurking said:

 

if you want to buy in the UK, find a place you can stand for 20 years and go balls deep looks like the rational call.  Blue, Red, Purple, none will stop the housing market on principle...

[Long time lurking]

2 minutes ago, wherebee said:

if you want to buy in the UK, find a place you can stand for 20 years and go balls deep looks like the rational call.  Blue, Red, Purple, none will stop the housing market on principle...

I would not bet against that ,but looking at what the US are doing now regarding Japan`s currency crisis it`s hard to see how that can last for any amount of time all things considered ,as always interest rates are key ,last time around Zirp save the day ,i don`t think they can go there again any time soon if ever 

Inflation is the big one though ,when money starts chasing hard assets so who knows 

As for team reds promises in an election year ,when the last time a party actually delivered on what they promised saying and doing are gulfs apart in that scenario, regardless it will be a coalition  government so fuck all will get done ,,go long on stab proof vests  

[wherebee]

4 minutes ago, Long time lurking said:

I would not bet against that ,but looking at what the US are doing now regarding Japan`s currency crisis it`s hard to see how that can last for any amount of time all things considered ,as always interest rates are key ,last time around Zirp save the day ,i don`t think they can go there again any time soon if ever 

Inflation is the big one though ,when money starts chasing hard assets so who knows 

As for team reds promises in an election year ,when the last time a party actually delivered on what they promised saying and doing are gulfs apart in that scenario, regardless it will be a coalition  government so fuck all will get done ,,go long on stab proof vests  

Yeah, I'm thinking that the playbook from Germany is the one.  If you can get a FIXED rate loan for 5-10 years, and you have enough income to cover the ongoing payments, you'll be sitting pretty.

[Plan-b]

1 hour ago, wherebee said:

if you want to buy in the UK, find a place you can stand for 20 years and go balls deep looks like the rational call.  Blue, Red, Purple, none will stop the housing market on principle...

The retirement property plan.

£300k-ish home owned and paid for, equity release the feck out of it, lets say for arguments sake 50%, the interest to be paid on that should ensure that there's little left at the end.

Take the £150K and...

If you want to gift your ungrateful brats their inheritance early do so and then maybe keep £50K and have some fun with it.

Alternatively the brats deserve FA so buy yourself a Lamborghini and indulge in coke hookers and vodka until death the combination of those should prove to be a timely death.

After all the state is likely to take most of the value from your home whilst it practices painful expensive palliative medicine on you for your final years.

I'm not into giving the UK anything given it's behaviour especially over the last few years. The whole set of ideas sound great to me.

Edited May 8 by Plan-b

[tank]

4 hours ago, Long time lurking said:

 

Given the performance of the UK property market over just about everything else since the fag end of the last century, housing really is the only game in town and all post Thatcher UK governments rise and fall on the back of it. 

Either way, only a mug would bet against further increases in UK property values as the entire apparatus of the British state is behind it and the same applies in most other developed countries.

You cannot beat the power of the state. 

Edited May 8 by tank

[ashestoashes]

buffet thinks stocks are in a bubble and correction will come

 

[sancho panza]

via Daily Sceptic

Another successful industry going down tut pan

Luckily we can all claim bennies forever...

Cant beleive we even have to have this deabte

https://www.proactiveinvestors.co.uk/companies/news/1047074/lloyds-and-high-street-lenders-debank-hundreds-of-defence-companies-1047074.html

Lloyds Banking Group PLC (LSE:LLOY) and other high street lenders have begun debanking hundreds of defence companies as they become more strict on their internal ethics policies, sparking fears that the UK's national security may be at risk. 

Santander and Lloyds were named as lenders which closed the accounts of around 300 "public administration and defence" companies throughout last year, reports from the Telegraph revealed on Wednesday. 

Other leading lenders failed to provide a breakdown of their debanking statistics, indicating the figure may be higher. 

While some of the accounts were removed for prolonged inactivity, others were cut due to the ethical concerns surrounding working with a weapons company.  

Treasury Committee chairman Harriett Baldwin said: “We cannot have organisations in this country systematically debanking legitimate firms or industries because their board turns its nose up at their line of work.

"If their work is legal then they should be able to access a bank account.”

[Red Debt Redemption]

6 hours ago, Plan-b said:

The retirement property plan.

£300k-ish home owned and paid for, equity release the feck out of it, lets say for arguments sake 50%, the interest to be paid on that should ensure that there's little left at the end.

Take the £150K and...

If you want to gift your ungrateful brats their inheritance early do so and then maybe keep £50K and have some fun with it.

Alternatively the brats deserve FA so buy yourself a Lamborghini and indulge in coke hookers and vodka until death the combination of those should prove to be a timely death.

After all the state is likely to take most of the value from your home whilst it practices painful expensive palliative medicine on you for your final years.

I'm not into giving the UK anything given it's behaviour especially over the last few years. The whole set of ideas sound great to me.

Add in the part that where your line ends as ungrateful brats don't have kids, good retirement though.

[Ash4781b]

10 hours ago, Long time lurking said:

 

Blimey she praised the current government!

All the politicians will be scared off radical changes in this area because of what happened at least the perception of Truss/Kwateng event and blame assigned.  Essentially one scenario I have been thing about is gilt yields spiking more on Labour majority.  However, it’s baked in to the current expectations. The Truss thing just imo exposed the reality of the UK economic position - not great. Also ‘anger’ in media - why don’t the cut the rates! We’ll see today what they jump on when I expect Bailey will talk of rate cuts?

I interpreted the video as no change to policy and they don’t understand the issue. So unlikely to be a big housebuilding programme ( they will build less ) and more multi living hmo’s as net migration in range of 0.5mn - 1mn per year fuels household formation. They may even be pursing a model where food imports can rise and rise so just close the farms and build over them? 

 

[Onsamui]

On 06/05/2024 at 19:02, DurhamBorn said:

If i didnt have the kids and grandkids who i fear i might/will have to defend at some point,or my partner id be off to Thailand.I might or might not if i did buy a cheap one bed flat here in case i wanted to return and maybe do half and half.I just thought yesterday in Tesco,this country is gone.Big fat Africans,most English women over 35 like house ends,half the young lads like soft dough balls.

We are intending to be out of the UK for 6 months of the year - three trips planned, two already paid for just Thailand, Samui, obviously, but around Fisherman's and Big Buddha and not Lamai again, thankfully. So should achieve that. So sick of the UK.  

Edited May 9 by Onsamui

[Onsamui]

9 hours ago, Yellow_Reduced_Sticker said:

 

interesting...

 

Turkey always reminds me of one of my all time favorite films, Midnight Express ...for those that don't know ...in 1978 Billy Hayes, an American college student, is caught smuggling drugs out of Turkey and thrown into prison.(based on a TRUE STORY)

 

If you lot haven't seen it, watch it here for FREE!

The book is even BETTER!

 

The jails are still gruesome I am reliably told.  However, it is acceptable to shoot someone below the knees, they quite often do. If someone rips a restaurant off, word gets around.  Last year a couple kept on leaving bars etc and not paying.  All of a sudden their faces were plastered all over social media, they were caught at Dalaman airport.

[Pip321]

The property bulls are coming out now….even on here people thinking no point fighting it. It’s once we are all absolutely certain property can’t fail….that’s when it does. Seen it plenty of times 😉

So where are we now? 

An old friend has been following ‘another sites’ advice and has been moving property from their individual name in company name for VAT, Sec 24 and IHT reasons. HMRC have contacted him….looking into it under the Tax Avoidance remit. Normally I might chuckle but he’s a really nice guy and he is really worried….looks like HMRC are interested in property which is a sitting duck.   

Happened to mention this HMRC issue to another friend who has a lots of rentals….I explained I wasn’t sure why people go through all these hoops because you can still deduct interest albeit at 20% rate which for me is fine.

He didn’t understand how I could be under 40% tax rate before a deduction of interest. I explained Mrs Pip shares so it’s half each. He still didn’t understand. We realised the examples he knew were collecting a rental amount and paying more interest in a month than I do in a year. Some people are in BTL really big eg mortgage payments if £20/30k a month…..and they surely are on borrowed time.

Property was a get rich slow scheme and it was simple. Save tons of money, borrow even more, buy 2/3 houses cheaply, let the tenant pay the mortgage and you absolutely keep working to pay for your own bills. After 20 years you own everything outright with an income from 2/3 houses. Notice my initial starting point was save tons of money….if you can’t save don’t even bother, you need to be someone where a new boiler, 4 months missing rent, new windows doesn’t touch the sides. Old landlords were misers for a reason….the flash new landlords are doomed to fail. 

However what happened was it works for 2/3/4 houses so numpties scaled it up, took equity for more and more. So each house technically makes a profit….and rather than pay down the debt they go interest only…and use the profit to give up work, buy a white jacket, Rolex and a Range Rover

And rates go up….and its gone!!!

I am seeing more and more larger scale BTL’ers struggling.

I have been looking into a repossession for sale at £150k (maybe worth £250k if you factor in some other messy things that need sorting on the title), the charge with BoS is £270k and the second charge is £450k to another individual. It looks like some people have really gone balls deep and used property for a lifestyle not an investment. But the guy has 10 companies registered and I imagine they are factored into this borrowing. Lots of other huge debts registered on those companies too though. 

No-one borrows for example £3m and buys shares and then gives up work. These guys have gone on a sugar rush, fuelled by impossibly low rates and with Section 24 and normal rates, even 3% base is huge verses 0.1%. then unless they have been paying off debt (or saving the money to repay the debt when needed) then I think they are shafted.

Selling….now that’s where for these guys it gets messier. Say they have done well and bought for £100k and selling for £350k and sitting in a £250k profit. CGT due is £70k. However they owe £300k in the house because they have been drawing equity. Why draw equit? Because rent alone doesn’t pay for a Range Rover and the Maldives. So after tax they are sitting on negative asset positions…not because they have ‘lost money’ but because they have already spent it.

The government can keep pissing about trying to fuel house prices and with some success. But I think the best they can hope for is maintaining the current status quo with gradual falls v inflation.

I still think buying your main home is a different prospect because rather than pay rent you in theory can pay to own the house and after 25 years you can be debt and rent free. Depends on location and circumstances of course. It might not be the very best use of money but for the majority who are crap at saving it is a ‘forced saving scheme’…just buy well and something that you won’t need to sell (subject to moving for a job etc). It’s not an investment rather a different way of spending rent. My lad pays £650 mortgage and the neighbour rents £1200 pcm plus the neighbour does not get to use the garage🤦🏻‍♂️

Interesting times….not a property thread I know but it’s a key asset for most. I will keep selling my rentals as they fall empty to rebalance my wealth, two sold last year….so 1/2 more and will be much better balanced. I do acknowledge I am property bearish bias due to previous over exposure.  

[feed]

1 hour ago, Ash4781b said:

Blimey she praised the current government!

Labour have won the election, so long as they don't scare the olds into coming out and voting conservative.
As  in the locals, it's dissatisfaction with the conservatives not faith in labour that'll win it.

We're going to get a lot of no change from the more presentable labour MP's for the next few months.