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

[M S E Refugee]

28 minutes ago, sancho panza said:

I read the following tweet off X and it made me think of this post H.

I've been clear,I think a lot of unrest is coming where disposable incomes get squeezed and the middle classes become poor.The irish elite are starting to get some pushback already.

Whats gone on in the UK under the current elite since 1997 has been the stuff of the 1780's France as you allude.They jsut don't get how serious the situtaion is

We either fight back against our elites or we end up being slaughtered like the Ukrainians.

[Harley]

1 hour ago, PETR4 said:

https://www.google.com/finance/quote/GBP-EUR?window=5Y

Sterling has broken 1.18 against the EUR. It's been bouncing off 1.175 for the last year.

A move on the way to 1.20 as rates potentially diverge?

Thoughts?

EURGBP (the inverse) monthly has been in a down channel since Dec22 (GBP strengthening).  The weekly is more a:

The entry was a bit vague so could possibly break out in the opposite direction.  But whatever is getting closer.

Edited April 27 by Harley

[MrXxxx]

I was reading this article and it got me thinking:

https://www.msn.com/en-gb/money/other/blow-for-homeowners-as-major-mortgage-lenders-pull-dome-of-the-cheapest-two-year-fixed-rates/ar-AA1nKK4R?ocid=mailsignout&pc=U591&cvid=e2a12287e5de40c8a942e515b2be2f65&ei=95

..2I can understand why the BS/Banks are raising their fix rate mortgages i.e. SONIA rates; these led by sentiment of the future borrowing costs of money and very much US movements, but why are some withdrawing their tracker mortgages?"...could it be that Tracker rates are based on BoE rates plus a %, and they [banks/BS] think the BoE might  drop rates before the US, so leaving them in a situation where their borrowing costs based on SONIA are proportionally higher than their borrowers costs?

This also made me laugh QUOTE:

"However, while rates are on the rise, it's not all bad news for landlords, according to Chris Sykes, technical director at broker Private Finance.

'Some prospective landlords may be eyeing the market with optimism,' says Sykes.

'Rents have risen and in some areas housing prices have become reasonable which increases rental yields. 'One could say in 2022, sellers held the upper hand; 2023 favoured buyers. Now, in 2024, we find ourselves in a balanced market. 

'Additionally, several lenders have eased buy-to-let stress rates recently, which makes it easier to only require a minimum of 25 per cent deposit in many cases and possibly increase the amount of mortgage you can get. 

'This will leave landlords with more cash and liquidity to put towards renovations for investment property or potentially buy more properties. "

 

Yeah right, Didn't you know there's not a better time to get into the BTL market!

[DurhamBorn]

3 hours ago, sancho panza said:

I read the following tweet off X and it made me think of this post H.

I've been clear,I think a lot of unrest is coming where disposable incomes get squeezed and the middle classes become poor.The irish elite are starting to get some pushback already.

Whats gone on in the UK under the current elite since 1997 has been the stuff of the 1780's France as you allude.They jsut don't get how serious the situtaion is

I think its certain,well unless we saw huge changes quickly.I think the elite have lost sight of just how violent western men and women are once they turn.The breeding is pretty much the most fierce tribes to ever walk the planet breeding together over 2500 years.There was huge anger over immigration anyway,but now they are importing fighting age men who offer nothing but crime,scrounging and rape its off the scale.The pushback is starting,the Irish might be first but its happening in Italy and parts of France as well.The irony is the elites really might unite western people,but not in the way they planned,more like unite against them and the invasion.Looks to me like Farage might get involved at some point before the next election.Musk looks key in the US etc keeping X free speech.

I think here the people will destroy the Tories first for betraying them,complete wipe out,then Labour will suffer the same fate.We will need mass re-patriation though,so its going to have to be far right cross the west.Might take a few cities burning to get it going.

 

Edited April 27 by DurhamBorn

[Harley]

19 minutes ago, DurhamBorn said:

......they are importing fighting age men....

Indeed.

Edited April 27 by Harley

[Long time lurking]

1 hour ago, PETR4 said:

https://www.google.com/finance/quote/GBP-EUR?window=5Y

Sterling has broken 1.18 against the EUR. It's been bouncing off 1.175 for the last year.

A move on the way to 1.20 as rates potentially diverge?

Thoughts?

My guess is Yen-$    Yen-£  borrowing/moving in Yen and investing in either 

Yen interest rates are still almost zero yet 4-5% on short term US`t and Gilts against a back drop of a devaluing currency 

Japan was always the weakest link they are almost a decade ahead of the rest in the great game of zirrp ,they can`t match interest rates because it will blow up their pensions and banking 

When i look at the four major currencies when one rises i look for the one that`s falling ,as it`s like a seesaw effect one is normally relative to the other 

Many far more knowledgeable than me have made the argument that the the four central banks have routinely supported each others markets/bonds/currencies in a ill scratch your back if you scratch mine way ,if that's correct it`s looking like something is starting to break as the yen looks to be in free fall ,it don't look good for the USA either as yields are rising again

[feed]

It's going to take a while. 

High taxation and high inflation will decimate the middle class eventually.  But they're not hurting yet. not really.  The lower middle class, maybe starting to feel it.  But they're just a couple of generations away from being working class and despise them more than anything else anyway.  

No one cares about the poors and there is always going to be some people on the positive side of high(er) rates.  Even if it's just the mid+ ranked public sectors.    

It's going to take at least this Labour term if not another to impact the real middle class to the point where they do anything about it..    

[Funn3r]

7 hours ago, DurhamBorn said:

Thats before the huge increases in NMW etc that kicked in this month.The NMW is so high now (simply because of bennies) companies cannot afford staff.Our local workmans club is in serious trouble for instance.They need two staff ,but sometimes the club is very quiet so they are looking at £30 an hour just on those wages .Business formation,real ones will fall off a cliff.Our bigger companies being bought out reducing our stock market to a backwater and no formation.

Taxation is crippling the wealth producing.Labour will no doubt decide to take industries under government ownership,making it worse.It seems collapse will have to happen as there is no talk of cutting the state at all.

Got gold?,Got SEDY?,Got EMs?.Got energy?,

[janch]

4 hours ago, ashestoashes said:

next the civil service

Anecdotal from my son who is an IT contractor at MOJ at present and also knows people in the MOD.  Everything is grinding to a halt eg in the courts etc as no department is allowed to spend their budget.  He and his mates are concerned their contracts may not be renewed even though there is plenty of work.  

He doesn't know about other parts of the civil service. ..... I suspect DWP and HMRC are busy.

[Mandalorian]

5 hours ago, sancho panza said:

In 2004 NMW was £4.85,adjsuted for inflation today that'd be £8.42.Now I know inflation figures are  unrelaible but the point remains.

the otehr flip side is that as you raise NMW,people like ambulance staff who arent far off min weage start thinking screw this,I'll get a job at aldi.coppers too.away from the met,young coppers starting out now are on bugger all for the abuse they take.

 

Two thoughts from this.

1.  I suspect the true inflation figure is reflected in what NMW now is compared to what it should be in theory.  I.e.  The Government KNOW the stats are bullshit.  But they aren't paying for NMW so they use the real figures for the increase.

2.  And that's the big problem.  I have a friend on £26k.  In a job that causes him some stress for dealing with morons in management.  And it's a 'responsible' job.  He's twigged minimum wage "switch brain off and don't do any work at home" job is £24k full time.  He's voting with his feet.

[Shamone]

3 minutes ago, Mandalorian said:

minimum wage "switch brain off and don't do any work at home" job

Don’t tell me, stacking shelves at Tesco. Good luck with that. 

[Mandalorian]

Just now, Shamone said:

Don’t tell me, stacking shelves at Tesco. Good luck with that. 

OK.  I won't tell you.

[SpectrumFX]

23 minutes ago, Mandalorian said:

OK.  I won't tell you.

It's an interesting topic for discussion.

What are the best jobs if you want an easy life?

I'll start a thread.

[DurhamBorn]

1 hour ago, feed said:

It's going to take a while. 

High taxation and high inflation will decimate the middle class eventually.  But they're not hurting yet. not really.  The lower middle class, maybe starting to feel it.  But they're just a couple of generations away from being working class and despise them more than anything else anyway.  

No one cares about the poors and there is always going to be some people on the positive side of high(er) rates.  Even if it's just the mid+ ranked public sectors.    

It's going to take at least this Labour term if not another to impact the real middle class to the point where they do anything about it..    

Im trying to look more at this,its pretty obvious the retired and bennies are doing fantastic from inflation linking,but its really making a growing gap between private sector workers and pensions etc.I used the example back in the thread where just two years increases in a retired coppers pension (not counting the state pensions),was well over a third of lifetime pension savings for an ordinary worker,just the increase.That is insane.Worse,there is no escape valve,no limits to it,no cap.We will be in the situation soon where Labour try to steal pensions from people with £100k to give to people with pensions in the real world worth £1 million.Its reached the stage where they are pushing one household into poverty who work long hours just to give to the person next door with three cars and a huge pension.

I track lots of data and although im not putting the effort in i used to iv never ever seen so many indictors flash extremes.I think over 25 years of doing this iv seen 3 or 4 things flash red ie expect something to collapse,mostly just before 2007.Today 16 indicators are vertical.

[feed]

27 minutes ago, DurhamBorn said:

Im trying to look more at this,its pretty obvious the retired and bennies are doing fantastic from inflation linking,but its really making a growing gap between private sector workers and pensions etc.I used the example back in the thread where just two years increases in a retired coppers pension (not counting the state pensions),was well over a third of lifetime pension savings for an ordinary worker,just the increase.That is insane.Worse,there is no escape valve,no limits to it,no cap.We will be in the situation soon where Labour try to steal pensions from people with £100k to give to people with pensions in the real world worth £1 million.Its reached the stage where they are pushing one household into poverty who work long hours just to give to the person next door with three cars and a huge pension.

I track lots of data and although im not putting the effort in i used to iv never ever seen so many indictors flash extremes.I think over 25 years of doing this iv seen 3 or 4 things flash red ie expect something to collapse,mostly just before 2007.Today 16 indicators are vertical.

When i left Rotherham over 25 years ago, the damage done by immigration could already been seen.  20 years in Essex and i still barely see immigration and that i do see, is almost all EU. The most common none English language i hear is Italian.  Crime is still for the most part is local smack heads and pikies.    

Good for me, i get it, not everywhere is here, and if i travelled a few miles south to basildon, it'd be a different story.  But that's sort of the point, the affluent and middle class still aren't seeing any real negatives. There are still plenty of pockets of wealth that don't have to deal with any of it..  

A guy i worked with around 8 months ago, said he was happy to pay more tax for nurses to get a better wage. He couldn't tell me how much a nurse earned, of course. But he was/is on the same wage as me and his wife 1 grade higher. Combined income ~£180K, around 30, no kids. Fixed mortgage.  

The working poor are being sacrificed.  But aren't they always.  

But if Labours school fees goes through and middle class kids get bounced into state schools, even decent ones.  We may see the start of a rebellion.   

Edited April 27 by feed

[Lightscribe]

https://x.com/radarhits/status/1784217489636786674?s=46
 

https://x.com/fixthefed/status/1783914133420724247?s=46

Question is, when does Japan start offloading UST?

[Lightscribe]

3 hours ago, DurhamBorn said:

I think its certain,well unless we saw huge changes quickly.I think the elite have lost sight of just how violent western men and women are once they turn.The breeding is pretty much the most fierce tribes to ever walk the planet breeding together over 2500 years.There was huge anger over immigration anyway,but now they are importing fighting age men who offer nothing but crime,scrounging and rape its off the scale.The pushback is starting,the Irish might be first but its happening in Italy and parts of France as well.The irony is the elites really might unite western people,but not in the way they planned,more like unite against them and the invasion.Looks to me like Farage might get involved at some point before the next election.Musk looks key in the US etc keeping X free speech.

I think here the people will destroy the Tories first for betraying them,complete wipe out,then Labour will suffer the same fate.We will need mass re-patriation though,so its going to have to be far right cross the west.Might take a few cities burning to get it going.

 

You can see the Irish not taking it lying down, they’re akin to the French. They have a genetic inbred link to know when they’re being fucked over. 

Us on the other hand… I haven’t the faith you have. Too placated with BTL, house prices and ever lasting cheap debt. 

Only have to look at the differences between the farmers protests between us and everywhere else.

[Noallegiance]

I don't think degradation in living standards will take as long as some may think.

Combined with DBs indicators I think there is a debt-fuelled denial that's kicked in to keep up the pretense. We have 2-3 generations of people who have a big enough cohort that believes that they can buy whatever they want, whenever they want it. No drama. A higher house price or lower rates with higher wages will pay it off. Or the government will do something.

That game began changing 15-20 years ago. We're now seeing that 'new' set of conditions become rapidly more obvious and decisive.

The big shift is that what people want (holidays, cars, TVs etc) will be replaced by the sheer cost of what people need without being able to put it on tick.

In my opinion, we're about to live through the 'all at once' part of the famed bankruptcy quote.

Edited April 27 by Noallegiance

[Chewing Grass]

2 hours ago, janch said:

Anecdotal from my son who is an IT contractor at MOJ at present and also knows people in the MOD.  Everything is grinding to a halt eg in the courts etc as no department is allowed to spend their budget.  He and his mates are concerned their contracts may not be renewed even though there is plenty of work.  

He doesn't know about other parts of the civil service. ..... I suspect DWP and HMRC are busy.

We build 'safety critical infrastructure' (I shall call it that) and 'outsourced' projects are being cut, these used to be inhoused and cost half as much. We trained our own Engineers and Designers to work on 'unique plant' built in the 50s, 60s and 70s which are now run past their original design life, some by 50 years.

If it cheaper to be seen to be doing something (thinking about it) rather than actually doing Capital Expenditure then that has been 'double plus good' since the Blair Era.

The rest is mostly playing bullshit with 'the regulator' who is another waste of money.

[Noallegiance]

Vouz-da-jai?

[ashestoashes]

25 minutes ago, Lightscribe said:

You can see the Irish not taking it lying down, they’re akin to the French. They have a genetic inbred link to know when they’re being fucked over. 

Us on the other hand… I haven’t the faith you have. Too placated with BTL, house prices and ever lasting cheap debt. 

Only have to look at the differences between the farmers protests between us and everywhere else.

putting access to everything online and linked to social credit score will stop any revolution

[Axeman123]

54 minutes ago, Lightscribe said:

Question is, when does Japan start offloading UST?

AIUI that doesn't help them. The problem is the ability to borrow in yen, convert to dollars, and buy USTs for the yield - the so called "carry trade". If you could borrow at Japanese rates of 0.1% and collect US yields of ~5% and potentially be holding an appreciating currrency while owing a depreciating one, wouldn't you? Dumping USTs and pushing up the US yield actually just makes things worse for Japan!

The only releif will IMO come from the US providing swap lines, effectively exchanging USD for Yen without moving FX markets, so Japan can then sell those USD for Yen to strengthen their own currency. The alternative is to address the root cause by narrowing the yield spread via either lower US rates or higher Japanese ones, although the later would be like a nuclear bomb going off in their domestic economy.

 

[Long time lurking]

1 hour ago, Lightscribe said:

https://x.com/radarhits/status/1784217489636786674?s=46
 

https://x.com/fixthefed/status/1783914133420724247?s=46

Question is, when does Japan start offloading UST?

It`s a hard one to answer is that ,they still are a large manufacturing nation ,this will undoubtedly help in that regard but they also import most of the raw materials

Then they have a huge national debt ,but it`s mostly held by the country itself ,much like China in that respect 

My guess is something is either about to break ,or Japan has given the USA the bird regarding the hypothesis made at the end of the film Princes of the Yen and the lose $-JPY peg 

Long and the short ,they either have a plan ,or the shit is about to hit the fan either way it`s not good for the USA 

Edited April 27 by Long time lurking

[Lightscribe]

12 minutes ago, Long time lurking said:

It`s a hard one to answer is that ,they still are a large manufacturing nation ,this will undoubtedly help in that regard but they also import most of the raw materials

Then they have a huge national debt ,but it`s mostly held by the country itself ,much like China in that respect 

My guess is something is either about to break ,or Japan has given the USA the bird regarding the hypothesis made at the end of the film Princes of the Yen and the lose $-JPY peg 

Long and the short ,they either have a plan ,or the shit is about to hit the fan either way it`s not good for the USA 

Short answer: shit hits fan.

If the BoE and ECB ‘decides’ to follow suit then we’ll see the £ and € follow in short fashion 

https://www.ft.com/content/0112fe8d-856f-43aa-9bbb-c2106b00b5d6

https://archive.ph/8HMB0

Edited April 27 by Lightscribe

[Van Lady]

1 hour ago, ashestoashes said:

putting access to everything online and linked to social credit score will stop any revolution

Hmmmm….I’m not so sure about that.

I’ve read over the years about the so called black market being huge and cash driven.

I’d guess the folk involved in that area of the economy aren’t going to give up quietly.

Edited April 27 by Van Lady