Credit deflation and the reflation cycle to come.

[Barnsey]

17 minutes ago, wherebee said:

Really?  Importing millions of africans and middle easterners into europe each year does not seem to be leading to population decline to me....

Do you really think countries are allowing this chaos to happen out of the kindness of their own heart? They're playing the long game.

[wherebee]

2 minutes ago, Barnsey said:

Do you really think countries are allowing this chaos to happen out of the kindness of their own heart? They're playing the long game.

we've got a million other threads covering that point in off topic.  

 

To bring this back on topic re credit deflation, even if population replacement happens in numbers allowing for pop growth, the financials are still fucked as the new population will never be as productive as the old population.  Average IQ, gratification impulse, and social cohesion costs have baked in worse figures.

[kibuc]

8 minutes ago, stokiescum said:

do you think we will be allowed to leave ?

Very much so, in fact my confidence in a no-deal Brexit increases with every passing day.

[King Penda]

Just now, kibuc said:

Very much so, in fact my confidence in a no-deal Brexit increases with every passing day.

i hope your right,its my pesimistic nature and the fact no ones managed to leave yet that sets my spider sense tingeling.

[zugzwang]

Heywood, YdF and the Little Professor conducting a joint bull session in Atlanta.

Dovish.

Heywood: "I won't resign even if POTUS asks me to!"

https://www.nytimes.com/2019/01/04/business/economy/jerome-powell-fed-reserve.html

[King Penda]

wtf just noticed on bloomberg that trumps top financial advisor says no sight of resession.full steam ahead ..

[Talking Monkey]

7 hours ago, DurhamBorn said:

When i say collapse,i mean the financial system as we know it,and our social systems.Welfare,pensions etc.It will be very very painful.Id expect the east to suffer the same fate,it will be worldwide.Of course we are so far away from it at the moment a lot can change.Its a road map based on where we are now,likely CB action to a likely debt deflation,and then the likely macro path due to that action.A lot can change in that time.What is pretty certain is the direction these things will take,its just the scale we cant be sure of,a road map is just that,we use liquidity models and cross market work and add on leads and lags.Gold is a very good example.Our road map says it is going to $1500.It is already up $100.Even if it turns down now (it might but we still expect $1500) our road map was correct.They arent trading calls they are macro calls.

Consider a hungry person heading out of his house.We know where the eating places are in his town.The last one is 10km away.After that the next town is 30km away so unlikely he goes there.Our roadmap would consider how long he has gone without food,how much fuel in the tank,how much liquidity in his pocket,where he usually goes etc.The road map is his house to the final place 10km away.The cross market work is the variables that might change where he stops to eat.Road maps can fail.His car might not start,but once he is away,we know then the cross market things come into play and that decides most of how for along the road he goes.If he only has $4 and the place 10km away does all you can eat for $3.80,his tank if full of fuel,its mid afternoon and hel get there just as the best food comes out etc we know thats the likely end of the road map.However if his bet he has running comes up as he is driving he might pull into his favourite place at 5km where its more expensive.Liquidity has changed his mind and direction.It didnt change the fact he was hungry,just where he ate and how far he went.However while the horse race was running he was still heading out towards the cheap place,there is a lead and a lag before his liquidity increased and he changed his route.

Its sounds simple,but that is very much how liquidity is the backbone of choices in the economy.The Fed started to tighten 2 years ago.That was the point the road map fell into place.

 

Thank you DB

[Barnsey]

1 hour ago, wherebee said:

we've got a million other threads covering that point in off topic.  

 

To bring this back on topic re credit deflation, even if population replacement happens in numbers allowing for pop growth, the financials are still fucked as the new population will never be as productive as the old population.  Average IQ, gratification impulse, and social cohesion costs have baked in worse figures.

Without also wanting to divert the conversation much, as I said, they're playing the long game, it's their kids brought up through the domestic education system that they're really after.

[Talking Monkey]

2 hours ago, Barnsey said:

Germany actually needs another 9 million. Politically they can no longer do this so automation investment will be huge.

My view is once automation gets going it will quickly outstrip population decline

[Talking Monkey]

2 minutes ago, Barnsey said:

Without also wanting to divert the conversation much, as I said, they're playing the long game, it's their kids brought up through the domestic education system that they're really after.

There will be no jobs for them Barnsey 20 years out automation will have taken huge swathes of work

[zugzwang]

1 hour ago, stokiescum said:

wtf just noticed on bloomberg that trumps top financial advisor says no sight of resession.full steam ahead ..

Larry Kudlow. 

He said the exact same thing in 2007. And again in 2008. Incredibly, he was still arguing against the possibility of a recession in 2009!

Even by the non existent standards of his profession, a certifiable lunatic.

http://nymag.com/intelligencer/2018/03/new-trump-economist-kudlow-has-been-wrong-about-everything.html

[BurntBread]

9 hours ago, spygirl said:

Im sticking my neck out.

The slowdown caused by the more debt riddled orgs and assets falling down as IR are raised will be more than cancelled out from the increased demand from the West running away from China.

 

You've said this a couple times, and I don't see anything wrong with the idea that production and (to a slightly lesser extent, because of automation) jobs, will be coming back to the West. As you say, China is no longer cheap, and they haven't managed to get quality up enough to justify high wages.

What seems less likely to me is that this could balance the debt deflation or liquidation of companies in the West: the time-scales seem wrong. Jobs moving back to the US is a multi-year, or multi-decade trend; but unemployment is very saw-toothy in a recession. Look at the US Bureau of Labor Statistics historical series for unemployment rate below. It confirms your point that the labour market is white-hot in the US at the moment ... but the upswings are FAST: six months or so. Also, just from the most naive look at the time between recessions, they may be quite close to the end of a cycle on that graph.

I would guess that even if everything you said were true in the long-term, the updraft in unemployment, while it lasts, will swamp the longer trend of jobs coming "home".

 

[spygirl]

1 minute ago, BurntBread said:

You've said this a couple times, and I don't see anything wrong with the idea that production and (to a slightly lesser extent, because of automation) jobs, will be coming back to the West. As you say, China is no longer cheap, and they haven't managed to get quality up enough to justify high wages.

What seems less likely to me is that this could balance the debt deflation or liquidation of companies in the West: the time-scales seem wrong. Jobs moving back to the US is a multi-year, or multi-decade trend; but unemployment is very saw-toothy in a recession. Look at the US Bureau of Labor Statistics historical series for unemployment rate below. It confirms your point that the labour market is white-hot in the US at the moment ... but the upswings are FAST: six months or so. Also, just from the most naive look at the time between recessions, they may be quite close to the end of a cycle on that graph.

I would guess that even if everything you said were true in the long-term, the updraft in unemployment, while it lasts, will swamp the longer trend of jobs coming "home".

 

No.

US is different.

One, despite what you think, Amrican retire 5 y earlier tgan eutopeans. Their state pension is not not too bad. And free healthcare.

Opiods have wiped out about 10% of working population.

If you want a job, dont dribble tgen youll get a good wage at the mo. Its really that hot in US. And has been for 2 years.

[MrXxx]

4 hours ago, DurhamBorn said:

Tough call because we always ignore politics as it doesnt have much affect on things medium term.People think it does,but it doesnt.Corbyn and his front bench wouldnt last long in government.The markets would shut them out,just when they need access.I see little chance of debt forgiveness because we already have that in the system.You go bankrupt.The HTB homes in my area are now about £120k for 3 beds but they are well down already on sale prices.One estate being built already has lots for sale.The ones with photos of baby wallpaper on an empty house tell a story.

Yes, a very sad story!...at least I have the following generation to pay my pension/healthcare, who will pay it for them?:(

[leonardratso]

14 minutes ago, MrXxx said:

Yes, a very sad story!...at least I have the following generation to pay my pension/healthcare, who will pay it for them?:(

what story is this?

[MrXxx]

3 hours ago, leonardratso said:

on the dole.

Well unless they were asylum seekers they would have had to work/contribute for six months before they did....and then after that, once their six months of benefits are up they have to do it all again...The Germans are not a soft `touch` like the UK...

[MrXxx]

34 minutes ago, leonardratso said:

what story is this?

Sorry, not very clear...I was focussing on DBs sentence about empty houses with baby wallpaper...young couples won't be starting families until they own a house, if they can't afford to buy this means lowered birth rates.

[spygirl]

1 hour ago, BurntBread said:

You've said this a couple times, and I don't see anything wrong with the idea that production and (to a slightly lesser extent, because of automation) jobs, will be coming back to the West. As you say, China is no longer cheap, and they haven't managed to get quality up enough to justify high wages.

What seems less likely to me is that this could balance the debt deflation or liquidation of companies in the West: the time-scales seem wrong. Jobs moving back to the US is a multi-year, or multi-decade trend; but unemployment is very saw-toothy in a recession. Look at the US Bureau of Labor Statistics historical series for unemployment rate below. It confirms your point that the labour market is white-hot in the US at the moment ... but the upswings are FAST: six months or so. Also, just from the most naive look at the time between recessions, they may be quite close to the end of a cycle on that graph.

I would guess that even if everything you said were true in the long-term, the updraft in unemployment, while it lasts, will swamp the longer trend of jobs coming "home".

 

Friday job numbers in. Very very strong.

Have been for minths - there is no spare labour in the US.

Theres be a few pensioners rejoining the labour market.

[wherebee]

always worth a replay.  

 

[M.C. UK]

20 hours ago, DurhamBorn said:

The Fed?.My liquidity road map says the damage they have already done and the lag says they will need to print $12+ trillion to turn the biggest deflationary collapse since the war.Of course that will cause an inflation cycle like the world hasnt seen since the 70s,or even ever.We are talking about a free falling financial system so the liquidity they introduce wont scare treasuries at first.There will be a window.Gold will turn first,my road map is up to $1500 down to $700 (or even $500 for a very small window) then up to $10,000,silver up to $22/23 down to $8 (maybe even $5) then up to $250,maybe $300.Highly indebted companies with strong cash flow will have around 6 years to eat into those debts before rates go over 10%.Companies who have borrowed and can increase prices with inflation with debts locked at low rates will do well (their bond holders creamed).You dont want to be re-financing billions in 2025 though.

Thats the good part,after that cycle we will get a global depression on a scale never before seen.We could be at $400 trillion debt and $2 quadrillion derivatives and the full unwind of that will probably cause world war,collapse of western society etc,or at the least all western social systems,pensions,currency and access to capital markets.Pretty much all wealth will be destroyed.My friend keeps telling me we will consider it once we get into the reflation cycle,but i keep telling him you might be dead by then (hes nearly 80) id like a loose roadmap now 

Thanks DB for the detailed post.

DB (and all) apologies for the hyperbolic statements of my post - I do use  hyperbole  a lot , not sure where I've got this habit from

However , what triggers such sentiment of mine is the consensus believe and even praise  from some that the Fed  police(s)/behavior was what "saved the world of Armageddon predictions of doom"  with monetary policies that followed 2008-2009, and I can quote from Robert T. McGee's book : "Applied Financial Macroeconomics and Investment Strategy":

"Those extraordinary  actions prompted a host of armchair Fed critics to 'fight the Fed'. They were, however, overwhelmingly proven wrong as their dire predictions  of roaring inflation and financial Armageddon failed to materialize.Instead, the Fed's policies  worked to save the US economy from another Great Depression and by 2012 had put the economy on track for a fairly solid and normal business expansion."

Obviously this go on and on praising the actions taken by the Fed to save America (and, well, the "world"), criticizing European and Japanese actions etc etc.

When a rigged game is played, we (me in particular) can't see the woods from the trees - perhaps all intentional from the perpetrators of this awful and disgusting game.

(or... is just me ranting about my incapability of understanding anything about finance/markets/money )

M.C.

[Noallegiance]

Happy weekend everyone!

https://www.businessinsider.com/r-ge-drags-premier-us-corporate-debt-which-posts-worst-year-since-2008-2019-1?r=US&IR=T

[spygirl]

11 hours ago, wherebee said:

always worth a replay.  

 

Its not the bringing back of jobs.

Its the fact you have a Dem president who's let himself be filmed without grasping that the employment and economy is going to turn eventually and hell look like a dick.

 

[spygirl]

8 hours ago, Noallegiance said:

Happy weekend everyone!

https://www.businessinsider.com/r-ge-drags-premier-us-corporate-debt-which-posts-worst-year-since-2008-2019-1?r=US&IR=T

Thats the fall out from GE bascially.

See the

One noticeable feature of a lot of the newer, more profitable US companies is how little debt they are carrying.

Compare US of today with US of 10/20 years ago.

Today Apple - stuffed to the gills with cash. Ignore the share price.

Then - GE - debt monster of fucked up management frigging the numbers.

 

[Id add the GE equity is worthless. Debt owenrs are running the compnay]

[Durabo]

12 hours ago, spygirl said:

Friday job numbers in. Very very strong.

Have been for minths - there is no spare labour in the US.

Theres be a few pensioners rejoining the labour market.

The US posted very strong job numbers in 2007. Doesn't a booming job market mean that interest rates are more likely to rise, which brings us closer to the crash?

[spygirl]

2 minutes ago, Durabo said:

The US posted very strong job numbers in 2007. Doesn't a booming job market mean that interest rates are more likely to rise, which brings us closer to the crash?

Rates plateue then fell in 07/08.

08 was down to huge amounts of bank credit not a hot labour market.

Central banks are always looking in the rear mirror - on a different car.

CBs have enoguh infio - bank credit and labou market and prices to make a better decision.

I dont really know how the US n UK will pan out - noone does.

However .... IRs will be higher.