Credit deflation and the reflation cycle to come.

[spygirl]

8 hours ago, macca said:

Not so sure.. I know clever accounting allows profits to be pushed through madeup expenditure to decrease tax.. Like Starbuck U.K. and their £3 paper cups.. We don’t make any profit.. looksee we spend all our money on these special cups that are sent from this tax haven.. 

I can’t say I’ve spent hours investigating my accusation but like most charts I’m sceptical of their legitimacy..

Like a BOE inflation report I’m not so sure, especially when the founder is the richest man on the planet from a company that paid no tax as it makes no profit? 

Amazing..

Its not clever accounting.

Bezos is taking the equity and the cash generated by the business and spendign it.

Starbucks $3 cups????? Starbucks there is a case - sort of - its trasnfer pricing for stuff like use of the name by Starbucks UK.

But the main reason why starbucks does not make a profit is that it operates on thin margins - once you paid for all those people working in  tarbuks, at a hefty wge/h, plus those employer taxes you dodnt see....

Starbucks might not pay much coprtate tax but I can guarantee is pays millions in payroll. And it hands over millions in VAT, acting as a n unpaid UKGOV tax collector.

Agian,. you need to look at what coutns as profit. You are cohfusing with revenue.

.

 

[Harley]

2 hours ago, spygirl said:

Its not clever accounting.

Bezos is taking the equity and the cash generated by the business and spendign it.

Starbucks $3 cups????? Starbucks there is a case - sort of - its trasnfer pricing for stuff like use of the name by Starbucks UK.

But the main reason why starbucks does not make a profit is that it operates on thin margins - once you paid for all those people working in  tarbuks, at a hefty wge/h, plus those employer taxes you dodnt see....

Starbucks might not pay much coprtate tax but I can guarantee is pays millions in payroll. And it hands over millions in VAT, acting as a n unpaid UKGOV tax collector.

Agian,. you need to look at what coutns as profit. You are cohfusing with revenue.

Can I see the analysis of Starbucks' profits please?  And their transfer pricing justification?  

I pay VAT and buy stuff, keeping people in work and paying their wages.  Does that mean I don't need to pay income tax?

 

[Dogtania]

Starbucks and hefty wages?  Assume in composite it is 😉

[spygirl]

43 minutes ago, Harley said:

Can I see the analysis of Starbucks' profits please?  And their transfer pricing justification?  

I pay VAT and buy stuff, keeping people in work and paying their wages.  Does that mean I don't need to pay income tax?

 

Starbucks operate at very thin operating margins.

Sure, the gross profit on a cup of coffee is big.

However theyve rent rates and staffing costs.

Take those away, shove in some transfer pricing and bang no profit.

Here's there accounts:

https://beta.companieshouse.gov.uk/company/02959325/filing-history

Turned over 380m.

Operating profit of 6.3m - 2%.

Shit businesses.

If you want to gripe about something, try griping about what UKGOV does with all the money thats skimmed off Starbucks.

 

 

 

 

19 minutes ago, Dogtania said:

Starbucks and hefty wages?  Assume in composite it is 😉

They are paying people to make and serve coffee. A task 99% of UKPOP is entireely able o do itself.

They are hefty wages, considering th skills and effort required.

[reformed nice guy]

48 minutes ago, spygirl said:

They are paying people to make and serve coffee. A task 99% of UKPOP is entireely able o do itself.

 They are hefty wages, considering th skills and effort required.

The wages that they are paying to the "baristas" is funds that should be spent investing in automation. The low wage, unlimited employee pool prevents this business advancement. It is a misallocation of resources.

[spygirl]

23 minutes ago, reformed nice guy said:

The wages that they are paying to the "baristas" is funds that should be spent investing in automation. The low wage, unlimited employee pool prevents this business advancement. It is a misallocation of resources.

Its up to them as a company. Their money; their choice.

 

 

[Harley]

2 hours ago, spygirl said:

Here's there accounts:

https://beta.companieshouse.gov.uk/company/02959325/filing-history

Had a quick look.  Note 24 of interest - exemption from reporting related party transactions.  Royalties and lease costs total some £60m.  Could look at the UK parent too but I'm not the Crickhowell team.

[JMD]

Hi All… I have recently discovered your fantastic credit deflation/reflation blog. Thank you DurhamBorn for creating blog, I’m finding it very informative from a ‘layman perspective’. My knowledge of investment world is fairly basic but I do want to learn - mainly because I will soon have opportunity of ‘transferring out’ of my employer’s Defined Benefit pension and am being offered very high transfer value and feel would be stupid not to take advantage of this. However, before I transfer/sell out of my Defined Benefit scheme I’d ideally like to understand more about common pit-falls and how to position correctly for upcoming cycle.

I do have a basic 'beginners' question regarding another pension I hold - this one happens to be a Defined Contribution pension. I wish to rebalance the funds in the DC pension but the provider has limited fund choice. I want to move out of equity funds and into a ‘safer’ alternative - a bond-fund (my provider has Blackrock over 15 year UK gilt fund). But having read warnings on this blog about bonds/bond funds, should I stay away from all bonds (UK gilts/US treasuries, etc)? Or perhaps could I invest in bond fund - but aim to cash-in *before* signs of recession - particularly if recession doesn’t materialise until end of year/early next year? This pension provider doesn’t offer TIPS funds, otherwise I guess it would be a complete no brainer to use TIPS? …Their key feature being index linked, assuming the next cycle is high inflation/hyperinflation?   

[Errol]

Just FYI:

The Basel III rules due to be introduced on 31/3/19, move gold to the position of a Tier 1 asset at 100% valuation. Effectively, monetary gold is considered risk free.

This is part of the BIS/Central bank plan. There has been little discussion of this rule change. They will accumulate gold in massive quantities and then 'allow' it to rise 10 fold over the course of time - thereby fixing the solvency issues they all face.

[DurhamBorn]

8 hours ago, JMD said:

Hi All… I have recently discovered your fantastic credit deflation/reflation blog. Thank you DurhamBorn for creating blog, I’m finding it very informative from a ‘layman perspective’. My knowledge of investment world is fairly basic but I do want to learn - mainly because I will soon have opportunity of ‘transferring out’ of my employer’s Defined Benefit pension and am being offered very high transfer value and feel would be stupid not to take advantage of this. However, before I transfer/sell out of my Defined Benefit scheme I’d ideally like to understand more about common pit-falls and how to position correctly for upcoming cycle.

 

I do have a basic 'beginners' question regarding another pension I hold - this one happens to be a Defined Contribution pension. I wish to rebalance the funds in the DC pension but the provider has limited fund choice. I want to move out of equity funds and into a ‘safer’ alternative - a bond-fund (my provider has Blackrock over 15 year UK gilt fund). But having read warnings on this blog about bonds/bond funds, should I stay away from all bonds (UK gilts/US treasuries, etc)? Or perhaps could I invest in bond fund - but aim to cash-in *before* signs of recession - particularly if recession doesn’t materialise until end of year/early next year? This pension provider doesn’t offer TIPS funds, otherwise I guess it would be a complete no brainer to use TIPS? …Their key feature being index linked, assuming the next cycle is high inflation/hyperinflation?   

 

Hi and welcome.Bond funds are two things.One corporate bonds,full of trash bad,government bonds full of thrash but own printing press good.At least for now until inflation gets going a few years down the road.Iv got some money stuck in a pension that has rubbish choices,but its a money purchase part of a final salary pension so i cant transfer and SIPP it without getting lots of advice and hoops on the final salary part.It shows how rubbish most pensions are.Somehow global growth that owns big wedges of Amazon doesnt appeal.

[DurhamBorn]

1 hour ago, Errol said:

Just FYI:

The Basel III rules due to be introduced on 31/3/19, move gold to the position of a Tier 1 asset at 100% valuation. Effectively, monetary gold is considered risk free.

This is part of the BIS/Central bank plan. There has been little discussion of this rule change. They will accumulate gold in massive quantities and then 'allow' it to rise 10 fold over the course of time - thereby fixing the solvency issues they all face.

I think we will see it 7x Errol by 2027/28 ,or if it hits sub $1000 in a sharp quick deflation then im signed up to 10x.I really hope we are all having a good talk in a few years about if 7x is the top or not .Imagine silver though Errol once the CBs pretty much confirm gold is money.$200 will seem a fair price by the end of the cycle.

[sancho panza]

1 hour ago, DurhamBorn said:

I think we will see it 7x Errol by 2027/28 ,or if it hits sub $1000 in a sharp quick deflation then im signed up to 10x.I really hope we are all having a good talk in a few years about if 7x is the top or not .Imagine silver though Errol once the CBs pretty much confirm gold is money.$200 will seem a fair price by the end of the cycle.

Gold silver ratio out of kilter.My slide rule is running over more SIL components./Just think what ,might happen if gold runs andgold silver ratio goes back to 50 or below

[sancho panza]

10 hours ago, JMD said:

Hi All… I have recently discovered your fantastic credit deflation/reflation blog. Thank you DurhamBorn for creating blog, I’m finding it very informative from a ‘layman perspective’. My knowledge of investment world is fairly basic but I do want to learn - mainly because I will soon have opportunity of ‘transferring out’ of my employer’s Defined Benefit pension and am being offered very high transfer value and feel would be stupid not to take advantage of this. However, before I transfer/sell out of my Defined Benefit scheme I’d ideally like to understand more about common pit-falls and how to position correctly for upcoming cycle.

 

I do have a basic 'beginners' question regarding another pension I hold - this one happens to be a Defined Contribution pension. I wish to rebalance the funds in the DC pension but the provider has limited fund choice. I want to move out of equity funds and into a ‘safer’ alternative - a bond-fund (my provider has Blackrock over 15 year UK gilt fund). But having read warnings on this blog about bonds/bond funds, should I stay away from all bonds (UK gilts/US treasuries, etc)? Or perhaps could I invest in bond fund - but aim to cash-in *before* signs of recession - particularly if recession doesn’t materialise until end of year/early next year? This pension provider doesn’t offer TIPS funds, otherwise I guess it would be a complete no brainer to use TIPS? …Their key feature being index linked, assuming the next cycle is high inflation/hyperinflation?   

 

There's a risk to your capital if rates rise and you want your money out at any point.Bonds are always flogged as safe but they aren't necessarily depending on your position.

I wouldn't try and time the market too muich but rather make long term plans where a decent amount of potential outcomes are covered.

[sancho panza]

Wolf makes a point often raised on here particualrly by spygirl and that is that the last ten years has seen the big banks offload all the crud mortgages onto the BS's.

https://wolfstreet.com/2019/02/27/shadow-banks-take-on-largest-mortgage-risks-federal-housing-administration-fha-on-the-hook/

Today, there’s a new generation of shadow banks dominating mortgage lending. According to a February 2019 report by the Mortgage Bankers Association, the share of mortgage originations by nonbank lenders has surged from 24% in 2008 to 54% in 2017, while the share of large banks has plunged:

[sancho panza]

http://theeconomiccollapseblog.com/

 

https://finance.yahoo.com/news/u-student-debt-serious-delinquency-140103419.html?fbclid=IwAR2m8hTj1WGYWdNsJrsGi26ugyZeJerya25Rw3rwgI8-4HLQR0Iv4KJJ6kw

(Bloomberg) -- Student-loan delinquencies surged last year, hitting consecutive records of $166.3 billion in the third quarter and $166.4 billion in the fourth.

Bloomberg calculated the dollar amounts from the Federal Reserve Bank of New York’s quarterly household-debt report, which includes only the total owed and the percentage delinquent at least 90 days or in default.

That percentage has remained around 11 percent since mid-2012, but the total increased to a record $1.46 trillion by December 2018, and unpaid student debt also rose to the highest ever.

Delinquencies continued to climb even as the unemployment rate fell below 4 percent, suggesting the strong U.S. job market hasn’t generated enough wage growth to help some people manage their outstanding obligations.

Income levels for graduates “are not necessarily high enough for debt payments overall,” said Ira Jersey, Bloomberg Intelligence interest-rate strategist. “If you have a choice to pay your student loan or for food or housing, which do you choose?”

The delinquencies also have broader implications. Because most of the loans are government-sponsored, they probably won’t hurt the economy the way mortgage debt did in 2007, Jersey said. “But incrementally, it does mean higher federal deficits if the loans are not repaid.”

The total in arrears is about twice the amount the U.S. Treasury provided to bail out the auto industry during the last recession.

Loans at least 90 days past due are considered to be in “serious delinquency.’’ The age group transitioning into this category at the fastest pace is 40-to-49 year olds; that’s partly because of parents borrowing to pay their children’s expenses.

[MvR]

2 hours ago, sancho panza said:

Gold silver ratio out of kilter.My slide rule is running over more SIL components./Just think what ,might happen if gold runs andgold silver ratio goes back to 50 or below

Talking of gold and silver,  I just noticed there are now gold and silver ETFs available in my IG ISA.  The gold one is listed as ETFS Gold ( Symbol : BULL ) and the silver one, ETFS Silver ( Symbol : SLVR ).

Both appear to have had KIID documents filed.  Maybe this has been mentioned before here, but just a heads up for those who didn't know. 

[macca]

20 hours ago, spygirl said:

Agian,. you need to look at what coutns as profit. You are cohfusing with revenue.

.

 

My original point where we started.. 

Its not the poor people,  the tax man should be going after, it’s the rich.. 

Its not money that trickles down from the top, it’s corruption.. 

We should not need working tax credits and housing benefits for people to defraud in the first place.. With affordable social housing and wages that reflect living costs the rate of fraud would be significantly less.. 

The problem is the rich.. not the poor.. The rich need to be investigated in a equal tax system, but it’s not equal, they are able to be corrupt free from prosecution.. 

Thats my point. 

AOC on Trump defrauding taxes and using tax payers money to build his empire for free.. worth a look! 

All while 60’000 people die from legalised opioids last year! in order to make a big pharma company richer.. Even though they know the drugs kill people, they make money! So who cares.. 

so even murder is legal if your rich enough.. 

[spygirl]

3 hours ago, macca said:

My original point where we started.. 

Its not the poor people,  the tax man should be going after, it’s the rich.. 

Its not money that trickles down from the top, it’s corruption.. 

We should not need working tax credits and housing benefits for people to defraud in the first place.. With affordable social housing and wages that reflect living costs the rate of fraud would be significantly less.. 

The problem is the rich.. not the poor.. The rich need to be investigated in a equal tax system, but it’s not equal, they are able to be corrupt free from prosecution.. 

Thats my point. 

AOC on Trump defrauding taxes and using tax payers money to build his empire for free.. worth a look! 

All while 60’000 people die from legalised opioids last year! in order to make a big pharma company richer.. Even though they know the drugs kill people, they make money! So who cares.. 

so even murder is legal if your rich enough.. 

AOC is a bit hysterical. And wrong on a lot.

There#s's no point pointing to idiots like Trump, these are few and far between. Besides, the issue with Trump is more to do with the unhealthy link between banks and real estate.

Trump didnt build his empire for free FFS. The story behind trump is he took his dads money and did not icnrease it. For all the blather and defaults, Donal's value add has been negative.

 

You cant just say equal taxation. Tax on what? Income? Wealth? Hair colour?

 

[MrXxx]

7 hours ago, sancho panza said:

http://theeconomiccollapseblog.com/

 

https://finance.yahoo.com/news/u-student-debt-serious-delinquency-140103419.html?fbclid=IwAR2m8hTj1WGYWdNsJrsGi26ugyZeJerya25Rw3rwgI8-4HLQR0Iv4KJJ6kw

(Bloomberg) -- Student-loan delinquencies surged last year, hitting consecutive records of $166.3 billion in the third quarter and $166.4 billion in the fourth.

Bloomberg calculated the dollar amounts from the Federal Reserve Bank of New York’s quarterly household-debt report, which includes only the total owed and the percentage delinquent at least 90 days or in default.

That percentage has remained around 11 percent since mid-2012, but the total increased to a record $1.46 trillion by December 2018, and unpaid student debt also rose to the highest ever.

Delinquencies continued to climb even as the unemployment rate fell below 4 percent, suggesting the strong U.S. job market hasn’t generated enough wage growth to help some people manage their outstanding obligations.

Income levels for graduates “are not necessarily high enough for debt payments overall,” said Ira Jersey, Bloomberg Intelligence interest-rate strategist. “If you have a choice to pay your student loan or for food or housing, which do you choose?”

The delinquencies also have broader implications. Because most of the loans are government-sponsored, they probably won’t hurt the economy the way mortgage debt did in 2007, Jersey said. “But incrementally, it does mean higher federal deficits if the loans are not repaid.”

The total in arrears is about twice the amount the U.S. Treasury provided to bail out the auto industry during the last recession.

Loans at least 90 days past due are considered to be in “serious delinquency.’’ The age group transitioning into this category at the fastest pace is 40-to-49 year olds; that’s partly because of parents borrowing to pay their children’s expenses.

Just out of interest, are student loans in the US managed the same way as in the UK I.e payback is only started at a certain salary level and they are cancelled after x number of years?

[MrXxx]

4 hours ago, macca said:

My original point where we started.. 

Its not the poor people,  the tax man should be going after, it’s the rich.. 

Its not money that trickles down from the top, it’s corruption.. 

We should not need working tax credits and housing benefits for people to defraud in the first place.. With affordable social housing and wages that reflect living costs the rate of fraud would be significantly less.. 

The problem is the rich.. not the poor.. The rich need to be investigated in a equal tax system, but it’s not equal, they are able to be corrupt free from prosecution.. 

Thats my point. 

AOC on Trump defrauding taxes and using tax payers money to build his empire for free.. worth a look! 

All while 60’000 people die from legalised opioids last year! in order to make a big pharma company richer.. Even though they know the drugs kill people, they make money! So who cares.. 

so even murder is legal if your rich enough.. 

1. People are not forced to take these drugs.

2. However much some `poor` people have, some cannot manage a budget OR blow it before the next payday on non essentials; I think the advent of the benefits system and reliance on it has propagated this further.

3. Agree, you tax then you tax fairly ,and go after everyone who tries to buck the system with equal vigour.

...and as for big companies not making any money; well according to their balance sheets, you have got to be incredibly naive to believe that one!

[Democorruptcy]

6 hours ago, MvR said:

Talking of gold and silver,  I just noticed there are now gold and silver ETFs available in my IG ISA.  The gold one is listed as ETFS Gold ( Symbol : BULL ) and the silver one, ETFS Silver ( Symbol : SLVR ).

Both appear to have had KIID documents filed.  Maybe this has been mentioned before here, but just a heads up for those who didn't know. 

I googled Errol's Tier 1 comment and found an article that includes a bit about ETF's

https://palisade-research.com/gold-re-monetization-2019/

 

[MrXxx]

18 minutes ago, Democorruptcy said:

I googled Errol's Tier 1 comment and found an article that includes a bit about ETF's

https://palisade-research.com/gold-re-monetization-2019/

 

In regard to the last comment on gold ETF`s (actually ETC`s in this case), surely this is only relevant where it's a synthetic ETF?!

[Democorruptcy]

5 minutes ago, MrXxx said:

In regard to the last comment on gold ETF`s (actually ETC`s in this case), surely this is only relevant where it's a synthetic ETF?!

That sounds very The Big Short!

[UnconventionalWisdom]

9 hours ago, sancho panza said:

Gold silver ratio out of kilter.My slide rule is running over more SIL components./Just think what ,might happen if gold runs andgold silver ratio goes back to 50 or below

Mike Maloney keeps on mentioning the ratio. States in his latest video that he expects more demand for silver due to a reduction in copper (housing) and lead/zinc (cars) mining. 

[spygirl]

51 minutes ago, MrXxx said:

Just out of interest, are student loans in the US managed the same way as in the UK I.e payback is only started at a certain salary level and they are cancelled after x number of years?

No and Yes.

No - yo ustrart [paying them ASAP.

Yes - you cant go bust and clear them.

Student laons that are not cleard by bankruptcy need renaming. Change debt to indentured slavery.

 

42 minutes ago, MrXxx said:

1. People are not forced to take these drugs.

2. However much some `poor` people have, some cannot manage a budget OR blow it before the next payday on non essentials; I think the advent of the benefits system and reliance on it has propagated this further.

3. Agree, you tax then you tax fairly ,and go after everyone who tries to buck the system with equal vigour.

...and as for big companies not making any money; well according to their balance sheets, you have got to be incredibly naive to believe that one!

Both you and MAcca need to get up n running on accountancy.

Look at ta big UK supermarket. Youll see that the compnay is run more for the employees and the HMRC rather than the equity holders.