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


spunko

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5 hours ago, DurhamBorn said:

Rach keeps saying "we want lower tax for WORKING people",its subtle,but no mention of retired,asset owners etc.The tax thresholds will remain frozen and its almost certain they will remove allowances.I think they will add 3 more levels to council tax for instance and make the top 2 very steep.That will be to try to hold council tax increases down at the lower end.I think she will do something with pensions and IHT.If i was advising her,i would say to do one of three things.First,increase the IHT threshold to £1million BUT include pensions and scrap the family home allowance.At the same time make lifetime gifts all count towards the allowance.

2nd,she could give pensions their own IHT allowance.She could do £325k ,or ,more likely,set it at £500k,the beauty of that is it would mean those with the £1mill pensions would be better off running down to £500k and paying their income tax.

The third option would be to simply include pensions in IHT after 75,but that would cause lots of problems,and i dont think she would go that far.

They have gone back on bringing back in a lifetime allowance,but there is no way they will allow £2mill+ pots to be passed on tax free.The easy sell would be the first one.Give everyone a £1mill IHT allowance,but include everything,including any gifts over say £5k a year.

Certain she will be looking at the above.

 

Agreed, more bands at the top end and a revaluation which will put much more of the burden on the South and lower council tax in the Midlands/North etc

https://ifs.org.uk/articles/council-tax-needs-urgent-reform-not-being-frozen-time-1991

Let's not forget Reeves wrote about this back in 2018 (I think) so very likely given the close working partnership with the IFS of late

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19 minutes ago, Barnsey said:

Agreed, more bands at the top end and a revaluation which will put much more of the burden on the South and lower council tax in the Midlands/North etc

https://ifs.org.uk/articles/council-tax-needs-urgent-reform-not-being-frozen-time-1991

Let's not forget Reeves wrote about this back in 2018 (I think) so very likely given the close working partnership with the IFS of late

Turns council tax into more of a wealth tax.It would also see bigger houses being sold for HMOs as well.Of course the real problem with council tax is council sending,but no way Labour would do anything with that.I think they will re-value and/or introduce two or three new bands at the top that are much higher than now.Property and pensions are sitting ducks for Labour.Of course it will mean rising house prices up here,we already have a flood of southerners arriving.Some selling in the south and retiring here,others southern bennies being shipped up by their councils.

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15 minutes ago, DurhamBorn said:

Turns council tax into more of a wealth tax.It would also see bigger houses being sold for HMOs as well.Of course the real problem with council tax is council sending,but no way Labour would do anything with that.I think they will re-value and/or introduce two or three new bands at the top that are much higher than now.Property and pensions are sitting ducks for Labour.Of course it will mean rising house prices up here,we already have a flood of southerners arriving.Some selling in the south and retiring here,others southern bennies being shipped up by their councils.

Fairly simple mechanism to level up areas of the Midlands and North by encouraging/relocating wealthier homeowners and the benefits that can bring, the mortgage squeeze has already kick started this trend as we predicted some years back.

Edited by Barnsey
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If this is as low as inflation gets, what happens if the Fed doesnt cut but then misses the window because inflation creeps back up? Will they be able to cut with inflation rising?

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3 minutes ago, Sidd said:

If this is as low as inflation gets, what happens if the Fed doesnt cut but then misses the window because inflation creeps back up? Will they be able to cut with inflation rising?

Interesting question. At some point the signs of a slowing economy will convince them it is time to cut, if they have to do so in the face of rising official inflation figures then they will likely do so regardless. The official figures are such a joke anyway I doubt the Fed would have trouble claiming the rising inflation would be revised away in future anyway. Those figures are also controlled by partisan DEI hires, who would gladly revise them to provide cover for a rate cut to help Biden IMO.

The best time for the Fed to do a first cut (starting from here) is going to be the 18th September meeting, late enough it doesn't look like a bung to Biden but not so late it looks like one to Trump ready for when he gets in. The next opportunity to cut failing that would be at the following Fed meeting on November 7th, which is 2 days after the Presidential election and would be a terrible look for a non-political fed. The only alternative for a pre-election cut would be the 31st July meeting, although the whipsaw effect of announcing that intention when markets are only pricing in a ~9% probability of it currently would be significant.

In the event of an announced September cut at tomorow's Fed meeting the market euphoria many of us expect to follow would presumably run its course between now and the actual cut at the September Fed meeting.

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The end of the Petro-Dollar?

image.png.4b7665c755984656bda3154ca8c3ee24.png

https://www.bizcommunity.com/article/saudi-arabias-petro-dollar-exit-a-global-finance-paradigm-shift-670911a#

A few minor sources are quoting this, not seen any MSM comment so far except a new defence treaty with the US.- https://www.reuters.com/world/us-saudi-arabia-close-finalizing-draft-security-treaty-wsj-reports-2024-06-09/

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Joncrete Cungle
20 minutes ago, ThoughtCriminal said:

This is comedy gold. Dumb bitch took on an interest only mortgage, no means in place for paying it off. Bank want the 170k she owes them and she's screaming on the radio that "Something must be done to help me! It's the government's fault!".

I can't fucking take it anymore, just stupid, irresponsible bastards everywhere you look. 😂

 

She isn't loosing her home, it's Lloyds home. Will there be some sort of bail out for these fuckwits? :Sick1:

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12 hours ago, SpectrumFX said:

This goes back to @DurhamBorn's point that the benefit recipients and public sector workers are index linked. It doesn't matter to them how small the pie gets. Their slice is guaranteed.

They're all blind to the fact that the whole system can collapse and leave them (and everybody else) with nothing. It's now a matter of faith that the government can simply magic up the money to fix any problem.

It's not a 'matter of faith' but reality and these folks on benefits, plus the public sector pension tit, are perhaps not as blind or stupid as many on here think.

The government can and will 'magic the money' up by printing it and or raising more revenue via taxes. They possess the institutional and legislative levers to do both.

Yes, neither is particularly desirable but as long as the major central banks operate in unison as we've seen in recent years, the can will continue to be kicked indefinitely.

Edited by tank
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1 hour ago, SpectrumFX said:

Until it can't be.

Have you noticed that the interventions get larger and larger? The foot's getting weaker, and the can's getting bigger.

The end game of all this is a catastrophic collapse in the real economy.

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

Ludwig Von Mises

Malthus had a view on this as well..demand destruction..there is another way which is even more unpalatable…it seems the 30s are coming back rather than the 70s..be lucky..

 

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35 minutes ago, Axeman123 said:

"I'm paying over a thouand pounds a month...which is not enough apparently!"xD - The fucking entitlement of it. 

Normally this sort of story would be suppressed, or heavily caveated as an exception to the norm, to avoid startling the housing market. If we see a wave of these sorts of stories I would take it as a sign of game on for house prices to move sharply down, pumping abandoned in favour of bleating for special treatment.

On to some good news:

Pishys election gambit almost certainly was inspired by advance knowledge of this.

It rained al spring.

Doesnt take a genius.

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8 hours ago, ThoughtCriminal said:

This is comedy gold. Dumb bitch took on an interest only mortgage, no means in place for paying it off. Bank want the 170k she owes them and she's screaming on the radio that "Something must be done to help me! It's the government's fault!".

I can't fucking take it anymore, just stupid, irresponsible bastards everywhere you look. 😂

 

She sounds thick, pissed and mental.

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