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Credit deflation and the reflation cycle to come.


DurhamBorn

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25 minutes ago, UnconventionalWisdom said:

I agree with you. Like getting a house as quickly as possible, no matter the price, young people have success defined for them. Family member,s school and TV/films tell them the path they should follow and it's only decades later, saddled with stupid levels of debt that it dawns on them that this may not actually be the right path. By that time it's too late

for a male its to late once they have a kid with a woman and a morgage ,has the house is effectivly hers...the man is staying there from her good grace alone or am i being to cynical.

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5 hours ago, DurhamBorn said:

Crest Nicholson saying no pick up in demand for houses,down loads again.Airlines and hotels hitting the buffers as well,deflation is upon us.I like the transports for the next cycle mainly as i think the government will help younger people with free travel (lots of unemployed) and people will have to give up their lease cars etc.Plus prices should go up quicker than costs.The key to them though is depreciation topping out at the top of the buying cycle,that could see cash flow improve and debts come down.The market is going to be horrible with sectors getting hit,the question is will sectors looking very cheap for the next cycle see 10% more falls or 30%+.My focus at the moment is holding solid in the miners,there are plenty o FTSE 100 and 250 bargains around not to rush into them,they might get cheaper yet.

Agreed, I can see schemes like this becoming more common, Stagecoach being well placed to benefit:

https://www.google.co.uk/amp/s/amp.theguardian.com/cities/2018/oct/15/i-leave-the-car-at-home-how-free-buses-are-revolutionising-one-french-city

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13 minutes ago, stokiescum said:

for a male its to late once they have a kid with a woman and a morgage ,has the house is effectivly hers...the man is staying there from her good grace alone or am i being to cynical.

No. This is why MGTOW is growing exponentially.

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48 minutes ago, MrXxx said:

I think it says a lot about our students and their lack of critical thinking skills that the majority don't know (until it's too late) they are getting shafted for 6.5% whilst RBS get away with 1%...if they did they wouldn't allow themselves to get sidetracked with the minor `political` issues, and would be lobbying both their home and term time MPs!

Honestly people are 17 when they make this decision... their parents aren't always clued up. Like mine, they saw it as a success for me to go to uni (mum didn't go and she was very keen for me to go). And to be honest when I was 17 it was the best option available to me. Better than working in a shop or a pub, which I did anyway. At least I was learning something. Just wish I wasn't still paying through the nose for it (circa 250 /month, but the highest it's ever been with a lot of overtime was 560) and it's deducted automatically from the monthly gross so it means I can't budget wthe repayment or pay back a regular amount. Whatever I earn it's a percentage.

I didn't even get asked for my degree when I started my current career. I started as a labourer!

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1 hour ago, sancho panza said:

@Barnsey talking of underfire sectors I was interested to see Inchape down £0.80 at 536 today

https://uk.reuters.com/article/britain-stocks/update-1-ftse-100-swings-back-down-as-earnings-cause-havoc-airlines-dive-idUKL8N1WX5DE

'Shares in car dealership Inchcape tumbled 13 percent after HSBC analysts slashed their target price on the stock, flagging risks to earnings as new car volumes in the UK and Australia are falling.

Inchcape’s decline contributed to a 2 percent fall in European auto and suppliers’ shares after Goldman Sachs warned of a “challenging” quarter for the sector.'

Inchcape have a loooooong way down to go, obviously extremely susceptible to the consumer cycle, target <100 imo until it's even worth a look. Motorpoint (MOTR, up 7% today) better placed in any kind of recovery due to low costs and aggressive subprime lending to those who really need a car in the aftermath.

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17 minutes ago, UnconventionalWisdom said:

I agree with you. Like getting a house as quickly as possible, no matter the price, young people have success defined for them. Family member,s school and TV/films tell them the path they should follow and it's only decades later, saddled with stupid levels of debt that it dawns on them that this may not actually be the right path. By that time it's too late

Exactly this. Only that the general populous will blame the likes of Brexit or whatever the MSM narrative is once that time comes around. The real cause... boomer voting policies, government handouts to house builder CEOs with HTB and props, selling off of council housing to the BTL infestation, tax credits/HB more lucrative than working, massive student loans/debt etc etc will all be swept under the carpet.

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27 minutes ago, Sideysid said:

Exactly this. Only that the general populous will blame the likes of Brexit or whatever the MSM narrative is once that time comes around. The real cause... boomer voting policies, government handouts to house builder CEOs with HTB and props, selling off of council housing to the BTL infestation, tax credits/HB more lucrative than working, massive student loans/debt etc etc will all be swept under the carpet.

yes ive just been to poke the tw. boys on lse chat.left a link to here no idea if any of them dare follow the path to the rabbit hole or not.they are in thrall to a couple of posters who blame there woes on brexit and refuse to admit the worlds economys are fubar.to make matters worse i had an internal server error and it posted it about 8 times ffs.

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17 minutes ago, Barnsey said:

Inchcape have a loooooong way down to go, obviously extremely susceptible to the consumer cycle, target <100 imo until it's even worth a look. Motorpoint (MOTR, up 7% today) better placed in any kind of recovery due to low costs and aggressive subprime lending to those who really need a car in the aftermath.

I shut my short on Inchcape Fri under the mistaken presumption we'd get a bounce.........lulzz about as good at timing that as my PM purchases last year which are virtually all in the red..I'll have a butchers at MTOR.Cheers for the heads up.

 

iirc,Inchcape are higher end Jag/Merc/Toyota.....someone on here was talking about how his company was keeping diesels an extra year.

Either way,new car sales are going down I suspect.Lookers/Inch/Pendragon........

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21 minutes ago, sancho panza said:

I shut my short on Inchcape Fri under the mistaken presumption we'd get a bounce.........lulzz about as good at timing that as my PM purchases last year which are virtually all in the red..I'll have a butchers at MTOR.Cheers for the heads up.

 

iirc,Inchcape are higher end Jag/Merc/Toyota.....someone on here was talking about how his company was keeping diesels an extra year.

Either way,new car sales are going down I suspect.Lookers/Inch/Pendragon........

I think Motorpoint will probably position wisely to scoop up all the ex lease and PCP cars in the crisis, as they do now, and take advantage of vulnerable subprime customers thereafter (something else they do rather well).

Very much solidifying their place as the Carmax of the UK (https://en.m.wikipedia.org/wiki/CarMax) if all goes well and they make it out the other end, new car market will be on its ar** for a while to come, some predicting it'll never return as it was due to the changes lined up ahead for motoring in general.

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26 minutes ago, Barnsey said:

I think Motorpoint will probably position wisely to scoop up all the ex lease and PCP cars in the crisis, as they do now, and take advantage of vulnerable subprime customers thereafter (something else they do rather well).

Very much solidifying their place as the Carmax of the UK (https://en.m.wikipedia.org/wiki/CarMax) if all goes well and they make it out the other end, new car market will be on its ar** for a while to come, some predicting it'll never return as it was due to the changes lined up ahead for motoring in general.

I think staying solvent will be the key.At the bottom they could be a great buy

Doug Short has an interesting series of data on vehicle miles travelled and the behavioural changes that are occuring.

https://www.advisorperspectives.com/dshort/updates/2018/09/26/vehicle-miles-traveled-another-look-at-our-evolving-behavior

The Population-Adjusted Reality

Total Miles Traveled, however, is one of those metrics that should be adjusted for population growth to provide the most meaningful analysis, especially if we want to understand the historical context. We can do a quick adjustment of the data using an appropriate population group as the deflator. Let's use the Bureau of Labor Statistics' Civilian Noninstitutional Population Age 16 and Over (FRED series CNP16OV). The next chart incorporates that adjustment with the growth shown on the vertical axis as the percent change from 1971.

Population Adjusted Age 16 and Over

In the big picture, there are profound behavioral issues apart from gasoline prices that are influencing miles traveled. These would include the demographics of an aging population in which older people drive less, continuing high unemployment, the ever-growing ability to work remote in the era of the Internet and the use of ever-growing communication technologies as a partial substitute for face-to-face interaction.

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7 hours ago, Democorruptcy said:

I wondered if this might be a turning point for Centrica?

 

As per the discussion we had a while back,Centrica shares got mullered for dropping 600,000 of their lower margin customers last year.Many on here were pointing out that they could easily win market share back when they felt like it.

I agree,it could be a turning point.Pople who picked some up before the divi in Feb are up 8% on that alone.

 

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Democorruptcy
2 hours ago, Hardhat said:

I'm quite keen on this idea. Put all assets in gold. Bury gold in safe location. Take out huge unsecured loans. Pay off student debt. Go bankrupt. X marks the spot.

How's that for a debt deflation ? 😉

If your "Put all assets in gold" involves purchasing via bank account/card, it might be an idea to close the account you use, well before your "Go bankrupt" phase.

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43 minutes ago, Democorruptcy said:

If your "Put all assets in gold" involves purchasing via bank account/card, it might be an idea to close the account you use, well before your "Go bankrupt" phase.

not if you buy in cash from a shop..

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5 hours ago, sancho panza said:

https://www.investing.com/equities/flybe-group

 

As well as EZY dropping 5% Flybe dropped 40% .All time low of 18 pence. ..............................I use them for travelling as much as I can.Great little airline....I'll miss them if they go pop.

I'm guessing you've not been unfortunate enough to experience the regular delays on their prop services to the Hebrides (previously run under the 'LoganAir' brand) and Glasgow and Edinburgh - Belfast. From my limited experience of FlyBe on the above routes fairly regularly - 2-3 hour delays are commonplace - I'd estimate around 50% of my booked flights with them have been subject to such delays. Granted, it might just be very bad luck - but after about 7-8 bookings over 2 years and 4 extremely long delays, we just gave up booking with them.

If you've travelled Easyjet recently - they are a shadow of the company they were 10+ years ago. Completely demoralised staff who don't seem to give two hoots, ageing aircraft, poor onboard customer service etc.

I had a flight with Jet2 recently, we took Easyjet on the way out to Crete and Jet2 on the way back - like night and day. The aircraft was more spacious/modern, onboard services/food/drink/snacks available much better, staff were much more helpful and cheery, just all round a much better experience. Will be avoiding Easyjet in the future if it can be helped.

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10 hours ago, Hardhat said:

Honestly people are 17 when they make this decision... their parents aren't always clued up. Like mine, they saw it as a success for me to go to uni (mum didn't go and she was very keen for me to go). And to be honest when I was 17 it was the best option available to me. Better than working in a shop or a pub, which I did anyway. At least I was learning something. Just wish I wasn't still paying through the nose for it (circa 250 /month, but the highest it's ever been with a lot of overtime was 560) and it's deducted automatically from the monthly gross so it means I can't budget wthe repayment or pay back a regular amount. Whatever I earn it's a percentage.

I didn't even get asked for my degree when I started my current career. I started as a labourer!

So ignorance should absolve someone of all their poor financial decisions?...."I didn't realize an interest only mortgage meant my house wasn't paid off at the end"..."i didn't realize investments could go down as well as up"...

If after 12 years of our finest education and purportedly to be the `Cream of the Crop`, hence why they are going to university, why can they not understand something as simple as the difference between two percentages?...unless of course?...

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17 minutes ago, MrXxx said:

So ignorance should absolve someone of all their poor financial decisions?...."I didn't realize an interest only mortgage meant my house wasn't paid off at the end"..."i didn't realize investments could go down as well as up"...

If after 12 years of our finest education and purportedly to be the `Cream of the Crop`, hence why they are going to university, why can they not understand something as simple as the difference between two percentages?...unless of course?...

They do understand, the two delusions that were most common were I only have to start paying it off when I earn over (then) £20,000 and when I get to 50 it gets wiped.

That anyone under £20,000 doesn't exactly live a life of luxury and 50 is a long time in the future when the government could easily change the rules as mentioned on here were completely lost on them at that age.

It gets better though, parts of the student loans book are being sold by the government to private companies, so if the rules do change the government isn't going to take the hit!

https://www.theguardian.com/education/2018/jul/20/uk-student-loans-600m-lost-repayments-treasury-dfe

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12 minutes ago, MrXxx said:

So ignorance should absolve someone of all their poor financial decisions?...."I didn't realize an interest only mortgage meant my house wasn't paid off at the end"..."i didn't realize investments could go down as well as up"...

If after 12 years of our finest education and purportedly to be the `Cream of the Crop`, hence why they are going to university, why can they not understand something as simple as the difference between two percentages?...unless of course?...

So what you're saying is... not saying that at all Ms Newman!

If you need housing, but you don't want to buy a house, you can rent, or live in a camper van or get a council house.

If you need a degree for your career, you don't have much choice apart from going to university. If you are bright but don't come from money, you need to take out a loan.

It might be a financial decision, but it is essentially made for you by the system. There is only one loans provider. The repayments are deducted automatically and you can't negotiate on them. The govt can retroactively change the terms of the loan. But without one you can't study, and you're back in the stock room at Foot Locker whilst all your mates become brain surgeons.

Of course maybe it's better to educate fewer people to degree level and have them state funded, and reintroduce polys, vocational training or better apprenticeships, as well as some kind of adult learning.

If people want to discuss student loans shall we start a separate thread for this?

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Bricks & Mortar
2 minutes ago, Hardhat said:

So what you're saying is... not saying that at all Ms Newman!

If you need housing, but you don't want to buy a house, you can rent, or live in a camper van or get a council house.

If you need a degree for your career, you don't have much choice apart from going to university. If you are bright but don't come from money, you need to take out a loan.

It might be a financial decision, but it is essentially made for you by the system. There is only one loans provider. The repayments are deducted automatically and you can't negotiate on them. The govt can retroactively change the terms of the loan. But without one you can't study, and you're back in the stock room at Foot Locker whilst all your mates become brain surgeons.

Of course maybe it's better to educate fewer people to degree level and have them state funded, and reintroduce polys, vocational training or better apprenticeships, as well as some kind of adult learning.

If people want to discuss student loans shall we start a separate thread for this?

Upvote for everything, but in particular, the separate thread.

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As a Flybe user on the Sou-BHD route. I choose to fly with them because of the airport and I can get reduced fares using part cash/part Avios. If i was only paying cash I wouldn't use them as they always appear to be more expensive at the time of booking. As I mentioned in 201p's thread, the planes are always full (at least when I fly) so if they're not making money now they won't when the screws are turned.

Here are the passenger numbers

image.png

Although I've yet to experience significant delays, they always seem to have issues getting people boarded in an orderly fashion, which causes minor delays. Which given the size of the prop planes isn't great, how have they not mastered this yet? Must eat into the efficiencies and getting the planes turned around. Put that across the fleet....

https://www.bbc.co.uk/news/business-45897567 Another Airline done.

Cypriot budget airline Cobalt has suspended operations

Have to say I've really gone off travelling of late. I'm only doing it where I have to rather than for pleasure. It's just too cheap to fly now and it's made the whole experience excruciating. It costs the same amount it did when I first started flying as an adult back nearly 20 years ago. Considering inflation and the weakening of the pound, the industry would like to say it's through fuel-efficient aircraft, however, given that the age of the majority of most airlines fleets I call bs. 

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1 hour ago, Admiral Pepe said:

As a Flybe user on the Sou-BHD route. I choose to fly with them because of the airport and I can get reduced fares using part cash/part Avios. If i was only paying cash I wouldn't use them as they always appear to be more expensive at the time of booking. As I mentioned in 201p's thread, the planes are always full (at least when I fly) so if they're not making money now they won't when the screws are turned.

Here are the passenger numbers

image.png

Although I've yet to experience significant delays, they always seem to have issues getting people boarded in an orderly fashion, which causes minor delays. Which given the size of the prop planes isn't great, how have they not mastered this yet? Must eat into the efficiencies and getting the planes turned around. Put that across the fleet....

Flybe have made 2 big mistakes after a relatively good 3 year run in the aftermath of the recession, got way ahead of themselves buying the majority stake in Finncomm with Finnair in 2011 which they later sold for 1 euro, and big mistake rejecting the takeover bid from Stobart Air. They are a resilient 40 year old airline, essential for the regional airports of the UK, getting rid of their larger Embraer 195s for smaller 88 pax 175s.

I'm confident they'll make it through the next downturn, although Brexit will likely be a significant strain for their more recent route expansion and the share price will likely continue to tumble in the interim.

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1 hour ago, Admiral Pepe said:

As a Flybe user on the Sou-BHD route. I choose to fly with them because of the airport and I can get reduced fares using part cash/part Avios. If i was only paying cash I wouldn't use them as they always appear to be more expensive at the time of booking. As I mentioned in 201p's thread, the planes are always full (at least when I fly) so if they're not making money now they won't when the screws are turned.

Here are the passenger numbers

image.png

Although I've yet to experience significant delays, they always seem to have issues getting people boarded in an orderly fashion, which causes minor delays. Which given the size of the prop planes isn't great, how have they not mastered this yet? Must eat into the efficiencies and getting the planes turned around. Put that across the fleet....

https://www.bbc.co.uk/news/business-45897567 Another Airline done.

Cypriot budget airline Cobalt has suspended operations

Have to say I've really gone off travelling of late. I'm only doing it where I have to rather than for pleasure. It's just too cheap to fly now and it's made the whole experience excruciating. It costs the same amount it did when I first started flying as an adult back nearly 20 years ago. Considering inflation and the weakening of the pound, the industry would like to say it's through fuel-efficient aircraft, however, given that the age of the majority of most airlines fleets I call bs. 

I seem to go through periods of preferring one budget airline over another. I've had it with Easyjet completely now - we've just booked with RyanAir for the first time in around 5 years to go to Berlin in November - although RyanAir are bastards - at least they fuck you over transparently.

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Considering the volume of bad economic news during 2018, does anyone else feel like things should 'officially' be worse than they are being portrayed? It feels weird to me. Is this what the end of a major over-extended credit cycle looks like?

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1 minute ago, azzuri82 said:

I seem to go through periods of preferring one budget airline over another. I've had it with Easyjet completely now - we've just booked with RyanAir for the first time in around 5 years to go to Berlin in November - although RyanAir are bastards - at least they fuck you over transparently.

Have you looked into their new cabin baggage charges? O.o

I stay well away from Ryanair now, made great use of em' back in the day when you got genuine £9.99 returns, although I now hear reports the customer service has improved. Just too risky for me with the ongoing threat of pilot strikes etc. Really sad to hear of your view of Easyjet as I still view them as the best in Europe after Norwegian.

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1 minute ago, azzuri82 said:

I seem to go through periods of preferring one budget airline over another. I've had it with Easyjet completely now - we've just booked with RyanAir for the first time in around 5 years to go to Berlin in November - although RyanAir are bastards - at least they fuck you over transparently.

I won't touch Ryanair again after the strikes last year and they cancelled the whole LGW-Belfast route completely messing up our Xmas plans. It was only our second time using them too and the allure of cheap fares comes back to bite you in the long run. 

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