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Credit deflation and the reflation cycle to come.


DurhamBorn

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25 minutes ago, Democorruptcy said:

Is Erdogan ahead of his time? Helicopter money for the debtors?

Re China I was watching Dr Carney at the Treasury Select Committee meeting yesterday. They asked him to make predictions about the world economy and mentioned China. He said he thought China was slowing and that each -3% reduction in their GDP would mean a -0.5% reduction in ours. He mentioned them going into recession at -1.2% but said even at a catastrophic -10% GDP deep recession for them, he thinks our GDP would drop by 3%.

He also assured them that we cannot have another credit crunch. He talked about the counter cylical buffer I've mentioned before. He said it's risen to 1% but if necessary he would cut it to 0%. He said this would free £11.4bn of capital that "grossed up" would be £250bn of lending and net lending in 2018 was only £65bn, so years of credit supply when demand would probably be weaker.

I really don't think that it would end up being a linear function all the way to 'catastrophe'.

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25 minutes ago, Democorruptcy said:

Is Erdogan ahead of his time? Helicopter money for the debtors?

Re China I was watching Dr Carney at the Treasury Select Committee meeting yesterday. They asked him to make predictions about the world economy and mentioned China. He said he thought China was slowing and that each -3% reduction in their GDP would mean a -0.5% reduction in ours. He mentioned them going into recession at -1.2% but said even at a catastrophic -10% GDP deep recession for them, he thinks our GDP would drop by 3%.

He also assured them that we cannot have another credit crunch. He talked about the counter cylical buffer I've mentioned before. He said it's risen to 1% but if necessary he would cut it to 0%. He said this would free £11.4bn of capital that "grossed up" would be £250bn of lending and net lending in 2018 was only £65bn, so years of credit supply when demand would probably be weaker.

I think the bazookas have been primed.The only problem is that he needs willing debtors and whilst it's easy to get the marginal debtors to take on even more debt they know they can't pay,those with some assets are far more cautious

 

With reference to Erdogan, I think he's front running a Western CB experiment.The reaons it will fail-as I've said multiple times before-are that the CB's are targetting money supply measures as opposed to finding ways of lifting velocity.I'm not an academic economist but it's quite obvious to me that many neo classicals suffer research bias.There are socio economic groups where velocity has plummeted over ten years years and others where total non mortgage debt (which was likely unpayable even ten years ago) has doubled .As long as the wheels keep turning for the latter group then the CB's can keep trying these prime and pump tricks.I jsut think they're running out of road.

Our collective efforts are spent trying to navigate the effects of these doomed policies until we reach the point where they get cleaned out and capitalism returns.

 

7 minutes ago, dgul said:

I really don't think that it would end up being a linear function all the way to 'catastrophe'.

If your an academic who lives in an Ivory tower on a public sector pension it does.

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Gold Going into February
By: Marty Armstrong
Thursday, January 17, 2019
5c40b34f94cd150b9c0153cf

Gold has been starting to realign rallying with the stock market. This is a good sign for the long-term. 

5c40b3e994cd150b9c01541e

 

The strongest target remains in mid-February (week of 11 Feb). Gold is simply being driven by the political events as are the currencies and share markets. This is reflecting that people just do not know what lies ahead on the horizon.

Only a Monthly Closing above 1362.50 would signal a breakout and that does not really appear likely until 2020.

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1 hour ago, Viceroy said:
Gold Going into February
By: Marty Armstrong
Thursday, January 17, 2019
5c40b34f94cd150b9c0153cf

Gold has been starting to realign rallying with the stock market. This is a good sign for the long-term. 

5c40b3e994cd150b9c01541e

 

The strongest target remains in mid-February (week of 11 Feb). Gold is simply being driven by the political events as are the currencies and share markets. This is reflecting that people just do not know what lies ahead on the horizon.

Only a Monthly Closing above 1362.50 would signal a breakout and that does not really appear likely until 2020.

Interesting Viceroy many thanks. 

Is he expecting the DOW to punch on up from here straight to the 28000 mark and on? 

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Democorruptcy
2 hours ago, dgul said:

I really don't think that it would end up being a linear function all the way to 'catastrophe'.

I was hoping he would throw in linear gold and stock movements, just for fun.

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Iv been buying/adding to silver miners the last few days,

Endeavour Silver Corp,Alexco Resource Corp,Fortuna Silver Mines,Great Panther Silver and International Tower Hill Mines.

I see silver 16.25,maybe down to 15.60 then start a run to $22/23 and maybe $27 within 24 months.During the reflation/next cycle ahead minimum target is $180 by 2027 with a potential for $700+.That seems a crazy price,but back tracking the price to 2011 and the liquidity printed since and to come makes that price a maybe.$400 of it might be a final parabolic blow off though.Im leaning more and more to holding onto my miners through any falls and averaging more into them as a whole.I think its highly likely there are going to be some 100+ baggers among them in the next decade (and of course a victim or two along the way so a spread and caution is always needed).

The signs are more and more that the debt deflation is underway and margins are being destroyed across many sectors "want and/or debt financed".Countries are pulling away from each other and populations are pulling away from their governments.Of course the dumb press and media will have lots of things to blame,but once the Fed tightened into a system as leveraged it was certain.

https://www.thetimes.co.uk/article/credit-card-debts-deal-fresh-blow-to-battle-scarred-provident-financial-ttcjvftm5

That above is very telling.Vanquis is where people go to rebuild their credit profile/have access to some finance while impaired.Its usual people do everything not to default on those.The fact that even they,last chance saloon are seeing defaults says its getting bad out there.For youngsters sake and the people who havent joined in the madness i really hope most of the pain in the UK falls on house prices as is likely,but it might be that a distribution cycle alongside investment fees slowly push almost everyone to the poor house.

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4 minutes ago, DurhamBorn said:

Iv been buying/adding to silver miners the last few days,

Endeavour Silver Corp,Alexco Resource Corp,Fortuna Silver Mines,Great Panther Silver and International Tower Hill Mines.

I see silver 16.25,maybe down to 15.60 then start a run to $22/23 and maybe $27 within 24 months.During the reflation/next cycle ahead minimum target is $180 by 2027 with a potential for $700+.That seems a crazy price,but back tracking the price to 2011 and the liquidity printed since and to come makes that price a maybe.$400 of it might be a final parabolic blow off though.Im leaning more and more to holding onto my miners through any falls and averaging more into them as a whole.I think its highly likely there are going to be some 100+ baggers among them in the next decade (and of course a victim or two along the way so a spread and caution is always needed).

The signs are more and more that the debt deflation is underway and margins are being destroyed across many sectors "want and/or debt financed".Countries are pulling away from each other and populations are pulling away from their governments.Of course the dumb press and media will have lots of things to blame,but once the Fed tightened into a system as leveraged it was certain.

https://www.thetimes.co.uk/article/credit-card-debts-deal-fresh-blow-to-battle-scarred-provident-financial-ttcjvftm5

That above is very telling.Vanquis is where people go to rebuild their credit profile/have access to some finance while impaired.Its usual people do everything not to default on those.The fact that even they,last chance saloon are seeing defaults says its getting bad out there.For youngsters sake and the people who havent joined in the madness i really hope most of the pain in the UK falls on house prices as is likely,but it might be that a distribution cycle alongside investment fees slowly push almost everyone to the poor house.

Hi DB -- does that mean you're moving away from your up-down-up-upupup model, and into an up-flat-up-upupup model?

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Democorruptcy
2 hours ago, sancho panza said:

I think the bazookas have been primed.The only problem is that he needs willing debtors and whilst it's easy to get the marginal debtors to take on even more debt they know they can't pay,those with some assets are far more cautious

 

With reference to Erdogan, I think he's front running a Western CB experiment.The reaons it will fail-as I've said multiple times before-are that the CB's are targetting money supply measures as opposed to finding ways of lifting velocity.I'm not an academic economist but it's quite obvious to me that many neo classicals suffer research bias.There are socio economic groups where velocity has plummeted over ten years years and others where total non mortgage debt (which was likely unpayable even ten years ago) has doubled .As long as the wheels keep turning for the latter group then the CB's can keep trying these prime and pump tricks.I jsut think they're running out of road.

Our collective efforts are spent trying to navigate the effects of these doomed policies until we reach the point where they get cleaned out and capitalism returns.

I had a look for the transcript of Dr Carney's chat but couldn't find it. I found a couple of good ones though

Mortgage prisoners

I thought the state aid implications of an online sales tax in here was hilarious

Re Erdogan, I've just watched last night's BBC program about Chavez, it wasn't an happy ending! Ooooppsss spoiled it! 

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1 minute ago, dgul said:

Hi DB -- does that mean you're moving away from your up-down-up-upupup model, and into an up-flat-up-upupup model?

Im still leaning towards silver to $22/23 then hit hard in a big debt deflation.However everything i see in my road map apart from that short term hit (less than a year) points to the biggest silver bull market in history.So im starting to think perhaps il simply average in if silver does indeed go below $10 and then sit back.If im wrong on the dip and silver starts to trend then all is good.If im right and there is one last big sell off then take advantage.Im pretty confident $180 is a minimum for silver by 2027ish.There is also the option that if silver does indeed hit $22 to perhaps top slice.

The Royal Mint has also seen a big increase in people buying gold and silver coins.

https://gulfnews.com/business/markets/brexit-turmoil-spurs-uk-investors-to-buy-gold-1.61496692

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Yellow_Reduced_Sticker

"UK house prices fall at fastest rate in six years on back of Brexit – Rics"

https://www.theguardian.com/money/2019/jan/17/uk-house-prices-fall-at-fastest-rate-in-six-years-on-back-of-brexit-rics

-Thanks for that 'Barnsey' ...had to post this again cos its such GOOD News for me, (and no doubt others here:) in fact i don't give a monkeys if ALL my miners go to ZERO...just as long as SE house prices COLLAPSE by at LEAST 50% from current BS insane values!

Property Pessimism

The outlook for U.K. house sales is the worst it's been this century!

https://www.bloomberg.com/news/articles/2019-01-17/u-k-home-sale-expectations-dip-to-two-decade-low-rics-says?srnd=premium-europe

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9 hours ago, Thorn said:

Interesting Viceroy many thanks. 

Is he expecting the DOW to punch on up from here straight to the 28000 mark and on? 

He says DOW is definitely heading higher over time, but pausing for now..possibly until the new 8.6yr cycle starts in Jan 2020...until then it may consolidate or dip during 2019.

However any dip would be a set up to shake out the bulls and ultimately be the trade of our lifetimes.  He says today

"..Something needs to happen between now and January 2020 that begins to seriously undermine the confidence in government. The Democrats are acting absurd. If Trump says the sky is blue they would say it is black. They must oppose whatever Trump says just to win the White House in 2020. Government will no longer function. The damage the Democrats are doing on all levels being aided by the Neocons who just want war and are not loyal Republicans, is really profound. From here into 2032, do not expect government to function. It has become permanently polarized. This is NECESSARY to aid the shift from Public to Private Confidence going into 2032. The Republicans and Democrats can no longer work together to run government. God help us for whoever follows Trump will be a full fledged pro-government person who will do whatever is necessary against the people. Trump is ONLY the reaction - not a change in trend. Those who hate Trump hate anyone who disagrees with their politics. This hatred is pervasive. In South Carolina, a friend reported that a car in a parking lot with a Trump sticker was shot numerous times as a warning to Trump supporters. The 2020 election is likely to be the most violent in American history. This is all part of the collapse in faith in government unfolding into 2032...There is just nobody willing to run for office who is now middle of the road. All we will get are extremists from both sides..."

Sounds like 2020 will be the start of the bull markets in equities, commodities, precious metals and inflation.

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2 hours ago, Viceroy said:

He says DOW is definitely heading higher over time, but pausing for now..possibly until the new 8.6yr cycle starts in Jan 2020...until then it may consolidate or dip during 2019.

However any dip would be a set up to shake out the bulls and ultimately be the trade of our lifetimes.  He says today

"..Something needs to happen between now and January 2020 that begins to seriously undermine the confidence in government. The Democrats are acting absurd. If Trump says the sky is blue they would say it is black. They must oppose whatever Trump says just to win the White House in 2020. Government will no longer function. The damage the Democrats are doing on all levels being aided by the Neocons who just want war and are not loyal Republicans, is really profound. From here into 2032, do not expect government to function. It has become permanently polarized. This is NECESSARY to aid the shift from Public to Private Confidence going into 2032. The Republicans and Democrats can no longer work together to run government. God help us for whoever follows Trump will be a full fledged pro-government person who will do whatever is necessary against the people. Trump is ONLY the reaction - not a change in trend. Those who hate Trump hate anyone who disagrees with their politics. This hatred is pervasive. In South Carolina, a friend reported that a car in a parking lot with a Trump sticker was shot numerous times as a warning to Trump supporters. The 2020 election is likely to be the most violent in American history. This is all part of the collapse in faith in government unfolding into 2032...There is just nobody willing to run for office who is now middle of the road. All we will get are extremists from both sides..."

Sounds like 2020 will be the start of the bull markets in equities, commodities, precious metals and inflation.

That fits with “You Will Never Receive Anything Back From The State When You Get Old”... isn’t the Yellow Vest movement about XS tax - like the cost and tax for buying and having your own yellow vest- and people starting to get fed up

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On 13/01/2019 at 00:34, stokiescum said:

its about flexability i think,being able to adapt and take advantage of the system legaly but the key to that is massive saveings or low debt.take me the x is at my house her house lies empty she is exchanging in 3 weeks.due to domestic violence he basicly drove her nuts she got sectioned.she has had her pip assesment back.

basicly any time within the next 18 months i can be her carer,ok its only 280 a month but reduced council tax i have a lodger he brings in 220 and i would be allowed to earn 120 a week thats basicly 1 shift at work.now id pay no tax and get 1k a month for what is pretty much early retirment.now you say what happens in 18 months the odds are certain she goes to her doctors with anxiety etc and is given another 18 months.the ability to even concider this option is low debt if you have saveings over 6k they wont let you do it.but you need your debt low enough that it becomes an option.if i was renting it becomes even more profatable has your rents paid.so theres my plan b if work pisses me off or my mum requires help id simply do the above and deprive the state of her care fees and the states paying me to do it.and her income is unaffected and trust me she is geting north of 2.3k a month without the domestic violence father of her new kid paying maintanence to his kid ,the new csa have just been put on his case.

 

does anyone know anything about ggp aka greatland

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reformed nice guy
20 hours ago, Democorruptcy said:

I think Hitachi just want more governbankment subsidy to build Wylfa. Otherwise the odds are getting too risky for them to gamble even more of their own money. Our governbankment looks shambolic and already had one vote of no confidence. Hitachi may be worried about Corbyn stood in the background with his plans to re-nationalise utilities.

Also if our energy prices are too low for firms to invest, what about the governbankment's energy price cap that Centrica are going to fight in the courts? Hitachi must be fuming that instead of them getting more governbankment subsidy, lower energy prices means energy suppliers are going to have to subsidise consumers to spend money at Primark!

 

https://www.newstatesman.com/politics/economy/2019/01/british-high-street-crisis-due-debt-not-brexit

An article in the Newstatesman blames consumer debt for todays drop in consumer spending

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22 minutes ago, reformed nice guy said:

https://www.newstatesman.com/politics/economy/2019/01/british-high-street-crisis-due-debt-not-brexit

An article in the Newstatesman blames consumer debt for todays drop in consumer spending

At last, someone speaking sense.  But I would add a general skintness due to significantly lower real wages and far high inflation in the things that really matter than that (and those items) quoted.  Brexit is not a carpet.  Plenty more chickens coming home to roost out there.  Blaming Brexit is increasing looking very, very silly.  On a par with a dog and my homework!  If you already want to believe it you will, if not then tut tut and find someone a bit more honest and smart to talk to!

"What the UK economy really needs is a write-off of unsecured consumer debt – not just to save the high street, but to save the whole economy".

Oh dear I was waiting for that!  What does prudent old me get then?

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Democorruptcy
21 minutes ago, reformed nice guy said:

https://www.newstatesman.com/politics/economy/2019/01/british-high-street-crisis-due-debt-not-brexit

An article in the Newstatesman blames consumer debt for todays drop in consumer spending

She doesn't understand the problem. Her two answers to too much consumer debt
 

Quote

 

Over the long term, the only way to deal with rising debt is to increase wages. This will require a massive increase in workers’ bargaining power, as well as a much higher – and better enforced – minimum wage

What the UK economy really needs is a write-off of unsecured consumer debt – not just to save the high street, but to save the whole economy. 

 

Up minimum wage so prices increase for everybody and people just above minimum wage then become poorer as well as thoe on minimum wage

Write off debt so people don't learn a lesson and we have moral hazard.

I looked at her other stuff, she thinks HPI should be maintained to fuel consumption.

This is the central problem that a house price crash creates for the UK: it undermines the only remaining engine of demand – debt-fuelled consumption

My solution is to gradually wind down lending multiples for mortgages to 3x Main + 1x Second income. Then people would have a disposable second income again. People are borrowing to spend because banks are extracting too much money from them via houses. Lower house prices tied to wages again, also reduces demand for BTL, it's not much good without a capital gain.

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Right, Freetrade update again 😊

Got some shares , some I’ve paid the £1 to get they done imediately, others to be done on their “free batch” that happens at 16:00.

Posting more shortly ...B31662E8-7A2A-4B6B-AF7F-20E1D7E36AF8.thumb.jpeg.15dc7cde347acd05d79787fa0cb11265.jpeg

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4 minutes ago, M.C. UK said:

Right, Freetrade update again 😊

Got some shares , some I’ve paid the £1 to get they done imediately, others to be done on their “free batch” that happens at 16:00.

Posting more shortly ...B31662E8-7A2A-4B6B-AF7F-20E1D7E36AF8.thumb.jpeg.15dc7cde347acd05d79787fa0cb11265.jpeg

Surprised you can get SGLN on there already. I probably wouldn't spend £1 unless trades were £100+

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2 minutes ago, A_P said:

Surprised you can get SGLN on there already. I probably wouldn't spend £1 unless trades were £100+

... bear with me (just *SIGH* commuting at the mo)

(indeed , would not pay for such myself - just on the experimentation phase with them 😊 - i.e. M.C. the guinea pig 😂😂😂)

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every cheap 'broker' i went with managed to keep going for a few years at least, eventually they closed and transfered me to another because they couldnt make any money, so im always dubious about 'free' or 'cheap' trading, not that id go crazy per trade, but its like the 'cheap' energy companies, they cant keep it up for long.

We'll see though, but dont be too surprised to get notification to move to another more expensive trading platform eventually.

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SGLN:    price   £19.49
               I've put £40 down and decided to pay the extra £1.00 for "Instant order"
               I've got the shares "immediately"  for £19.4950

CNA:   price   £1.37
             I've put £10 down and decided for a free trade
             at 16:00 I've got the shares for £1.3725

VOD:  price £1.48
           I've put £10 down and decided to pay the extra £1.00 for "Instant order"
            I've got shares "immediately" for £1.4810

BT.A  price   £2.37
           I've put £15.00 down and decided for free trade
           at 16:00 I've got the shares for £2.3845

BAT   price  £25.16
           I've put down £25.29 and decided for free trade
           at 16:00 I've got the shares for £25.4964

And indeed, normally I wouldn't  pay for such low values to commit the trade (i.e. £1.00  each for SGLN and VOD), however I am just trying Freetrade at the moment.

As expected, for "serious trade" (ok, ... please take this in context O.o ) , don't count on the free option in any market condition , in special  on this very volatile moment we are in. (nothing new here , isn't it? xD)

I know they are a startup etc, but assuming they don't "fold" and continue providing the "service": even more shares available now,  including some USA shares and ISA, it is an interesting option, specially considering the "instant trade" for £1 and ISA for £3 per month and FCA compliance "warranties" , it is a worth having an account with them ... I  only guess xD  

DYR and all that ;-)

Cheers,

M.C.

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12 hours ago, leonardratso said:

every cheap 'broker' i went with managed to keep going for a few years at least, eventually they closed and transfered me to another because they couldnt make any money, so im always dubious about 'free' or 'cheap' trading, not that id go crazy per trade, but its like the 'cheap' energy companies, they cant keep it up for long.

We'll see though, but dont be too surprised to get notification to move to another more expensive trading platform eventually.

But iWeb have been in the market for some time and they are far cheaper than HL and the likes!

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17 hours ago, Harley said:

At last, someone speaking sense.  But I would add a general skintness due to significantly lower real wages and far high inflation in the things that really matter than that (and those items) quoted.  Brexit is not a carpet.  Plenty more chickens coming home to roost out there.  Blaming Brexit is increasing looking very, very silly.  On a par with a dog and my homework!  If you already want to believe it you will, if not then tut tut and find someone a bit more honest and smart to talk to!

"What the UK economy really needs is a write-off of unsecured consumer debt – not just to save the high street, but to save the whole economy".

Oh dear I was waiting for that!  What does prudent old me get then?

One of the reasons I tend to keep some debt running on 0% credit cards.

The money I got back from PPI made me realise that being sometimes there are rewards for not being prudent. I was recently told of someone who got a total £10k from PPI. This was someone in a well paid job but over the years had lots of loans. While that sounds great, how much in interest did the loans cost them over those years?

I would like to try and get the best of both worlds, the benefits of being prudent but also having a stake in potential rewards for not being prudent.

I would not be surprised if in around 5-10 years time there is a government debt scrappage scheme. Maybe not quite a write your debts off, but perhaps long term government replacement loans at 0%. If I can borrow at 0% I'll take as much as I can lay my hands on.

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