Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

Credit deflation and the reflation cycle to come.


DurhamBorn

Recommended Posts

Chewing Grass
4 hours ago, DurhamBorn said:

Its very interesting the companies that do well.People often think things like cinema do badly,but they actually do very well.People like to escape during hard times and a £5  film is cheap .Mcdonalds have pricing power.In a recession its likely they can squeeze suppliers,squeeze their workers and squeeze any landlords at the same time as being able to put a few cents on a meal without affecting sales.

That reminds me of my late grandmother, born in the edwardian era, saw the 1920s and 30s, raised two kids through WW2 and lived off a pension supplemented by shares until she was in her 90s.

When asked why all her shares were in British American Tobacco and Whisky Distillers her answer was that people smoke more and drink more when times are bad.

She also liked both.

Link to comment
Share on other sites

  • Replies 11.2k
  • Created
  • Last Reply
Bobthebuilder
5 minutes ago, Chewing Grass said:

That reminds me of my late grandmother, born in the edwardian era, saw the 1920s and 30s, raised two kids through WW2 and lived off a pension supplemented by shares until she was in her 90s.

When asked why all her shares were in British American Tobacco and Whisky Distillers her answer was that people smoke more and drink more when times are bad.

She also liked both.

About 40% of my portfolio is in companies that i use on a weekly basis.

Link to comment
Share on other sites

sancho panza
On 04/01/2019 at 08:40, spygirl said:

NW is a funny one.

NW has away been mainly a London/Se lender.

Now its the last idiot ;large lender standing.

Its book is made up of IO BTL and London/Se HTB.

NW *is* the London/SE market now.  No ther lenders really that active.

Here's how itll pan out -

NW stops lending, London/Se prices fall, which causes NW to cut back lending more, which causes London/Se prices to fall.

 

NW will be ground zero of this banking collapse in the UK.The big boys have used the last ten years to offload all the crud borrowers onto the Coventry,Hinkley &Rugby(net interest margin under under 1.5%) and NW etc tec

 

On 04/01/2019 at 09:36, UnconventionalWisdom said:

Powell has been keen to stress that he will support main street at the expense of wall street. Supports your theory. 

https://www.forbes.com/sites/johnmauldin/2019/01/02/powell-may-mark-the-beginning-of-an-independent-fed/#15fdf8d16779

I've been saying for sometime that Powell is a wild card here.He has no formal miseducation in neo classical economics.

On 04/01/2019 at 11:01, UnconventionalWisdom said:

This article speaks of a similar future 

http://charleshughsmith.blogspot.com/2019/01/the-crisis-of-2025.html?m=1

 

I am guessing the political movement demanding QE for the People will come to power by 2021. The money creation will begin in earnest and a few years later, inflation will start rising, much to the surprise of proponents of QE for the People.
At that point the proponents and the ruling elites will be trapped: they won't be able to withdraw all the benefits ("free money") of QE for the People, nor can they reverse runaway inflation without drastically reducing the creation of currency.
Various politically expedient policies will be tried--wealth taxes, the issuance of a new currency, perhaps even a state cryptocurrency--but none of these can reverse the underlying dynamic.
The currency devalues and then collapses, along with the "wealth" that it represented.
This is the predictable path because it's the only one that's politically expedient and doesn't cause much financial pain until it's too late to stave off collapse.
 

Western welfare states are doomed.UK hasn't run a fiscal surplus in 25 years..........................

On 04/01/2019 at 11:22, zugzwang said:

Consumer credit annual growth eased to 7.1 percent in November from 7.4 percent in October, the slowest increase since March 2015 amid heightened Brexit uncertainty.

Credit card lending went up 7.9 percent (vs 8.3 percent in October) and other loans and advances increased 6.6 percent (vs 6.9 percent in October).

Possibly people borrowing to live Zug.All teh RPI linked incomes are in pensioner cohorts.All the RPI busting council tax bills on the younger cohorts trying to raise families on real term declining wages.

Link to comment
Share on other sites

sancho panza

 

On 04/01/2019 at 15:06, 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.

I really don't think Corbyn has a chance of getting in.If he does it will play out exactly as you say,currency collapse and capital flight within 6 months.The only strength Corbyn has is that he makes may look electable-and vice versa.They are equally poor leaders in my eyes.

On 04/01/2019 at 15:53, Barnsey said:

I'll start off by saying that I sold off 2/3 off my portfolio today (which was up 6%). Had a bit of a realisation today that I need to preserve capital rather than speculate, especially given the lack of a permanent roof over my head. Seeing so many things roll over it's about time I rediscovered my respect for money and the hard work it takes to obtain.

On Brexit, did you see the poll put today? 57% of Conservatives favour no deal over current deal. Don't think there's going to be any resolution soon unless Germany force EU to make concessions as their recession confirmed in 6 weeks (possibly). 12 month extension likely if EU agree.

On pensions, see Denmark, have 98% now in defined contribution schemes, I think UK and most others will be forced in this direction sadly, inflation will hopefully do the rest. The scale of this crisis cannot be understated if inflation stays low in coming 5-10 years.

As for automation, population decline will offset this, particularly in Germany. Numbers in U.S., UK and France look ok.

 

Wise choice barnsey.Sit it out.Someone wise once sauid.

'It's about the retunr of capital not the return on it.'

 

On 04/01/2019 at 16:59, kibuc said:

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

Absolutelly.Works for me./

On 04/01/2019 at 17:23, zugzwang said:

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

I'm not sure trump gives two hoots about Wall St.When he picked Powell he knew exactly what he was picking.He bitches on twitter but deep down he wants a booming labour market in the rust belt states.

Link to comment
Share on other sites

sancho panza
On 04/01/2019 at 19:38, zugzwang said:

Larry Kudlow. :wanker:

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

Kudlow has a worse record than harry Dent

On 04/01/2019 at 21:42, wherebee said:

always worth a replay.  

 

Obama got Trump elected.

On 05/01/2019 at 09:56, 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?

We don't need rising interest rates for a debt deflation.See Australia.

On 05/01/2019 at 10:26, Cattle Prod said:

I picked up some more silver coins on a trip to Germany recently, very good prices, very smooth process. 16.70 euro for Aus kangaroos. I went to Degussa in Berlin. Cursory look at airport security, nobody in customs at T5. The only catch was I got pinged on the currency, so I'm going to set up a euro account. I'm think I'll drive over when this thing bottoms, and literally back up a truck (well, car :-))

Oil is still moving with the S&P, so I shorted the S&P a while back to hedge, and it's working well. Seems the Chinese were naughty and are responsible for some of the overshoot to the downside. I watch inventories and flows, which are a bit muddy at the moment, but the 'Saudi cutting exports to the USA' point I mentioned (they did it the day after Trump issued Iran waivers) is hitting the mainstream. Oil is currently about $15 undervalued, and I may substantially reduce then for a while. The S&P is following a 2008 pattern which I didn't expect this soon. If it breaks 2600 up I'll stay in fully oil, if it doesn't, I'll ride a smaller position down and ladder in for a 5 year hold.

Anyone else notice the shift to utilities and defensives in recent S&P rallies? 

appreciate the heads up.Had a few busy days at work,jsut at computer having a butchers.

Link to comment
Share on other sites

1 hour ago, sancho panza said:

NW will be ground zero of this banking collapse in the UK.The big boys have used the last ten years to offload all the crud borrowers onto the Coventry,Hinkley &Rugby(net interest margin under under 1.5%) and NW etc tec

 

I

Yeah - I posted on TOS about 4 years ago that I kept minimum balances in NW as I expect them to collapse at some point.  I have to use them for historical reasons, but will not be surprised when they hit the headlines.

Link to comment
Share on other sites

1 hour ago, sancho panza said:

We don't need rising interest rates for a debt deflation.See Australia

1 hour ago, sancho panza said:

Possibly people borrowing to live Zug.All teh RPI linked incomes are in pensioner cohorts.All the RPI busting council tax bills on the younger cohorts trying to raise families on real term declining wages.

For sure, there's a lot of distress spending going on. We all know it anecdotally. Did you read the TUC thing this morning? Unsecured debt's climbing faster than ever. Include student debt and the line on the chart's practically vertical...

I've never believed that interest rates matter! US household debt grew at its fastest throughout the period that Greenspan and Bernanke were doing their 0.25% fan-dance because of the insane leverage that was being created simultaneously through the shadow banking system. At no time during 2004-07 were the Fed, the banks, or the talking heads on CNBC convinced there was going to be a recession.

Fed-Funds-Rate.jpg

 

 

Link to comment
Share on other sites

SP's right about the benefits of the odd walkabout (including long periods of people watching over endless coffees).....

Just back from a long weekend in Bristol, somewhere I used to live many years ago.  Seems to be booming with entertainment, mainly food related everywhere.  Massive shoebox development had taken place a few years ago.  Not the sleepy anti development place I remember. 

Three demographics now in abundance - students and young British couples with babies doing the entertainment and young foreign couples with kids in IKEA.  Collectively, they seem to be fueling the apparent boom, or at least activity. Certainly student numbers have rocketed over the years.  The malls were pretty dead though, with rubbish sales.  And cash strapped friends from the suburbs were time limited (read fearful) due to the parking costs.

But the student spend is all debt based, something no doubt the tax payer will need to pick up the tab for in the future.  Plus child benefits.  Sure, some development, but it seemed to be mainly debt and welfare based.  I just couldn't stop imagining how very different the place would be should (when) such stimulus ends.  Tumbleweed rolling down the streets and all.

Seemed to exemplify the UK as a whole.  Really internalised the data and desktop analysis at a more personal level.  This really is the end game.  OK, January, but there is a smell of decay and death in the air.

  

Link to comment
Share on other sites

14 minutes ago, macca said:

https://www.thisismoney.co.uk/money/cardsloans/article-6565233/Household-debt-crisis-level-hits-new-high-15-000.html

 

household debt averages new high of 15k per citizen not including mortgages

car sales down 7%

Retailers in trouble.. 

feels like a recession to me.. 

But house prices will go up apparently.. 🤔

Im wondering if those debt figures include lease cars etc.?.Id say a lot of people have zero debt,so that makes it even worse when its an average.Car sales going down are good.Id expect public transport use (buses) to start to creep up soon after falling for many years.One of the reasons iv been buying transports slowly is because i think car use will fall in the next cycle,alongside public transport growth.

Link to comment
Share on other sites

1 minute ago, DurhamBorn said:

Id expect public transport use (buses) to start to creep up soon after falling for many years.One of the reasons iv been buying transports slowly is because i think car use will fall in the next cycle,alongside public transport growth.

I'm not sure because there are more variables than only lack of car affordability. I have a good but old car and I always have one eye on how would I get to work if it was off the road. Takes me 15 minutes by car but hour and a half by buses. No matter how broke I got I would never say you know what public transport is a better option. Unless obviously the bus company decided to go crazy spending and lay on something a bit more convenient. 

Link to comment
Share on other sites

31 minutes ago, DurhamBorn said:

alongside public transport growth.

https://www.theguardian.com/uk-news/2019/jan/03/uk-train-overcrowding-highest-level-in-years-labour

Well population goes down or capacity will have to go up.. 

I agree that the debt concentration must be spread across a smaller percentage of the population.. So individual debt must be massive! I bet renters are among the top percentile due to the huge costs of maintaining rent payments and having some sort of life.. 

with low interest rates most owners with mortgages have never had it so good so should not really be struggling.. 

Link to comment
Share on other sites

2 hours ago, DurhamBorn said:

Im wondering if those debt figures include lease cars etc.?.Id say a lot of people have zero debt,so that makes it even worse when its an average.Car sales going down are good.Id expect public transport use (buses) to start to creep up soon after falling for many years.One of the reasons iv been buying transports slowly is because i think car use will fall in the next cycle,alongside public transport growth.

Significantly higher oil prices after the deflation will push people onto public transport, disgruntled rail passengers are about to see the biggest investment of modern rolling stock in decades, especially on forgotten about networks. Combine this significantly higher reliability with ongoing building of new homes within short distances to stations with extensive parking facilities and things are looking up despite the current negative rhetoric. Another key point is the shift of younger generation to car sharing/uber/hourly car rentals. It'll take a little while yet for the EV market to kick off in a major way.

Link to comment
Share on other sites

Talking Monkey
10 minutes ago, Barnsey said:

Significantly higher oil prices after the deflation will push people onto public transport, disgruntled rail passengers are about to see the biggest investment of modern rolling stock in decades, especially on forgotten about networks. Combine this significantly higher reliability with ongoing building of new homes within short distances to stations with extensive parking facilities and things are looking up despite the current negative rhetoric. Another key point is the shift of younger generation to car sharing/uber/hourly car rentals. It'll take a little while yet for the EV market to kick off in a major way.

Shit does that mean monkey Musk and Tesla are gonna come good

Link to comment
Share on other sites

29 minutes ago, Barnsey said:

Significantly higher oil prices after the deflation will push people onto public transport, disgruntled rail passengers are about to see the biggest investment of modern rolling stock in decades, especially on forgotten about networks. Combine this significantly higher reliability with ongoing building of new homes within short distances to stations with extensive parking facilities and things are looking up despite the current negative rhetoric. Another key point is the shift of younger generation to car sharing/uber/hourly car rentals. It'll take a little while yet for the EV market to kick off in a major way.

Yes oil prices in the next cycle will be the kicker.I think a lot of the problems of public transport is the lack of understanding from the public.Tech is really helping here.It doesnt sound much by being able to track your bus etc make a big difference as does wifi,charging points etc for younger people.I think the people who are going to loose big style are the car makers,there simply isnt going to be the demand there is now.A lot of public transport needs linking up better and i think thats the next step.Car sharing/on demand etc linking up to the trains/buses.

Link to comment
Share on other sites

Bobthebuilder
1 hour ago, Barnsey said:

Significantly higher oil prices after the deflation will push people onto public transport, disgruntled rail passengers are about to see the biggest investment of modern rolling stock in decades, especially on forgotten about networks. Combine this significantly higher reliability with ongoing building of new homes within short distances to stations with extensive parking facilities and things are looking up despite the current negative rhetoric. Another key point is the shift of younger generation to car sharing/uber/hourly car rentals. It'll take a little while yet for the EV market to kick off in a major way.

I hope the Somerset and Dorset railway comes back.

Link to comment
Share on other sites

5 hours ago, Harley said:

SP's right about the benefits of the odd walkabout (including long periods of people watching over endless coffees).....

Just back from a long weekend in Bristol, somewhere I used to live many years ago.  Seems to be booming with entertainment, mainly food related everywhere.  Massive shoebox development had taken place a few years ago.  Not the sleepy anti development place I remember. 

Three demographics now in abundance - students and young British couples with babies doing the entertainment and young foreign couples with kids in IKEA.  Collectively, they seem to be fueling the apparent boom, or at least activity. Certainly student numbers have rocketed over the years.  The malls were pretty dead though, with rubbish sales.  And cash strapped friends from the suburbs were time limited (read fearful) due to the parking costs.

But the student spend is all debt based, something no doubt the tax payer will need to pick up the tab for in the future.  Plus child benefits.  Sure, some development, but it seemed to be mainly debt and welfare based.  I just couldn't stop imagining how very different the place would be should (when) such stimulus ends.  Tumbleweed rolling down the streets and all.

Seemed to exemplify the UK as a whole.  Really internalised the data and desktop analysis at a more personal level.  This really is the end game.  OK, January, but there is a smell of decay and death in the air.

  

I called peak "experience" when the Bryon burger chain started unravelling last year, lots more following. People are up to their eyeballs in it, any slight downward pressure on incomes/jobs and it will cause carnage for the trendy eateries, cafes and other activity based outlets (escape rooms etc.). 

Link to comment
Share on other sites

4 hours ago, DurhamBorn said:

Im wondering if those debt figures include lease cars etc.?.Id say a lot of people have zero debt,so that makes it even worse when its an average.Car sales going down are good.Id expect public transport use (buses) to start to creep up soon after falling for many years.One of the reasons iv been buying transports slowly is because i think car use will fall in the next cycle,alongside public transport growth.

I agree with the car lease thing. In particular, if it's PCP, is the optional final payment (to keep the car) counted as a loan?

Student loans inclusion is probably a big chunk as that would be ~£50k (?) each for recent graduates.  And that will increase pretty rapidly for every new year with new higher fees and above-RPI increases on the outstanding book! 

Although large fraction will never be repaid, it will probably have a similar effect to income tax in general and tax credits in particular: will put some off from earning too much

Link to comment
Share on other sites

8 hours ago, Bear Hug said:

I agree with the car lease thing. In particular, if it's PCP, is the optional final payment (to keep the car) counted as a loan?

Student loans inclusion is probably a big chunk as that would be ~£50k (?) each for recent graduates.  And that will increase pretty rapidly for every new year with new higher fees and above-RPI increases on the outstanding book! 

Although large fraction will never be repaid, it will probably have a similar effect to income tax in general and tax credits in particular: will put some off from earning too much

But any increase in the amount of the student loan won't make much difference I.e it could be £100k, as its the payments (%) and at what point they start...most assume that the full sum will never be paid off, so at 6% it's a pretty cheap `loan` that is eventually forgiven.

Link to comment
Share on other sites

9 hours ago, Bear Hug said:

I agree with the car lease thing. In particular, if it's PCP, is the optional final payment (to keep the car) counted as a loan?

Student loans inclusion is probably a big chunk as that would be ~£50k (?) each for recent graduates.  And that will increase pretty rapidly for every new year with new higher fees and above-RPI increases on the outstanding book! 

Although large fraction will never be repaid, it will probably have a similar effect to income tax in general and tax credits in particular: will put some off from earning too much

I can't speak for PCP but personal lease (PCH? I think it might be called) was the monthly payment x the period, which in my case was 24 months. That was what sat on my credit file at least. Although I would assume similar for PCP as I can't see your average chav borrowing £30k+

What is the upper mulitple income a bank would lend on a personal loan (not asset based) ? My bank is always advertising £30-50k loans but I have no idea their willingness to actually lend that and to who.

Link to comment
Share on other sites

11 hours ago, DurhamBorn said:

Yes oil prices in the next cycle will be the kicker.I think a lot of the problems of public transport is the lack of understanding from the public.Tech is really helping here.It doesnt sound much by being able to track your bus etc make a big difference as does wifi,charging points etc for younger people.I think the people who are going to loose big style are the car makers,there simply isnt going to be the demand there is now.A lot of public transport needs linking up better and i think thats the next step.Car sharing/on demand etc linking up to the trains/buses.

I think this is where the German auto names will succeed, Mercedes already investing heavily in the future of uber like businesses which exclusively use their vehicles along with VW and their EV charging points at Tesco.

Link to comment
Share on other sites

In other wonderful news, Halifax just released house prices figures for Dec, up a whopping 2.2% on Nov vs much lower estimate :PissedOff:

Do I just give up? In the face of huge disruption and uncertainty the british people are still fully behind insane house prices.

Link to comment
Share on other sites

1 hour ago, A_P said:

I can't speak for PCP but personal lease (PCH? I think it might be called) was the monthly payment x the period, which in my case was 24 months. That was what sat on my credit file at least. Although I would assume similar for PCP as I can't see your average chav borrowing £30k+

What is the upper mulitple income a bank would lend on a personal loan (not asset based) ? My bank is always advertising £30-50k loans but I have no idea their willingness to actually lend that and to who.

I think that demonstrates how useless the car debt figures would be.  Ignoring cash purchase, you've got:

  • Personal contract hire (PCH):  You hire the car during the term.  It is a lease.  There might be an option to purchase the car at the end, but that's just a nuance -- it isn't necessary for PCH.  There is no personal debt -- it is held by the lease company. 
  • Hire purchase:  You hire the car during the term and there is an option to purchase at the term end for a pre-determined price.  This sounds like PCH, but in HP there absolutely must be a final option to purchase -- it is in the name.  Again, there is no personal debt involved (although the purchase part at term end might involve some). 
  • Personal contract purchase.  You buy the car at the beginning, but you have a guaranteed price for a sale to the original PCP agency at the end of the term.  You absolutely have debt right from the start.
  • Personal loan.  You take out debt to buy the car.  

So -- four different ways to 'have a car', all of which result in you having a nice car to drive around in, and all of which have an unavoidably requirement to pay monthly instalments, but only two of which increases the personal debt figures.

 

 

Link to comment
Share on other sites

14 minutes ago, Barnsey said:

In other wonderful news, Halifax just released house prices figures for Dec, up a whopping 2.2% on Nov vs much lower estimate :PissedOff:

Do I just give up? In the face of huge disruption and uncertainty the british people are still fully behind insane house prices. 

Is Halifax actual sale prices?  Even if it is its still below inflation, so houses in real terms are losing money YOY.

Some relatives are Architects and were saying that last year was the busiest year for a very long time, so im not too surprised that its feeding into headline figures.  London & SE are showing price reductions now, just as price increases spread from the SE so will price reduction is the current theory.

Link to comment
Share on other sites

UnconventionalWisdom
45 minutes ago, Barnsey said:

In other wonderful news, Halifax just released house prices figures for Dec, up a whopping 2.2% on Nov vs much lower estimate :PissedOff:

Do I just give up? In the face of huge disruption and uncertainty the british people are still fully behind insane house prices.

I'm feeling the same about giving up. How can this continue? FTBs are priced out and there's a massive downturn in BTL due to the tax changes. How are prices still going up? 

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...