Credit deflation and the reflation cycle to come.

[A_P]

16 hours ago, DurhamBorn said:

Ok ,we hit the range my road map said on gold today $1460-$1528.Its been an incredible ride really.We nailed it to the mast and got the time bang on late May,after a few false dawns.

 

There were obviously a number of false dawns, timing off as to be expected. Initially calls were for December 17 and subsequently 4-6 months afterwards regularly as goalposts moved. Looking back and forward on the most recent may call do you believe the roadmap is still as accurate and true as ever? Considering that for the most part at least up till July pretty much every asset class had a bumper first six months.

[A_P]

3 hours ago, Bobthebuilder said:

I have just spent the last half hour reading through the last few pages of this thread. I do feel its the most important thing ive read in the last 10 years.

Everything rings true.

My grammer is awful and i cant put it into words very well, but what im seeing among people around me (friends, family etc) ticks every box you lot are talking about.

1. Those in debt are running ever faster into the black hole.

2. A few of the more clued up are starting to notice food and utilities bills increasing.

3. Many small builders i know are having jobs cut back (customers just cant get the credit to do all the works they wished for).

I am lucky, i have no debt and i have a good cushion (for now).

I wish i could put it better, i feel something has change recently. Interesting times ahead.

I felt the same living in the SE. Seeing those rabid crazies going for the yellow stickers in waitrose and Marks is a sight to be hold. Also my circle of friends struggling with living costs (whilst having up-teen holidays a year). Funny thing is since moving to NI i get a very different picture. Asda is a pleasure to shop in by comparison. No fighting of yellow stickers, in fact they mostly sit there all day ha. Also I was in a provincial town a few saturdays back and haven't quite experienced a british town that busy in a long time. Bit of a shock to the system and I even ended up making a few purchases, which is a rare occurrence.

Although consumer credit is down, whilst mortgage lending is up, I'm not so sure credit is hard to come by. A recent CC application took all of one minute on the app and i even got to choose my own credit limit tells me they're making it easier and easier. I understand some of the new app challenger banks are now doing instant lending via short term loans.

I think it's easy to lulled into a false sense by what see around us, I know I'm guilty of it. 

[Harley]

1 hour ago, Democorruptcy said:

Re Sterling surely once Brexit is decided one way or another, it's got to go back up?

And the FTSE go down less than the others?  The world ETFs have been on a tear but not so much the supposed worldly FTSE.  Would be nice if it turns out squirreling money away in the beaten down FTSE was a smart/lucky move, either for an upside or relatively limited downside.

[Harley]

Quite a bit of negativity here about bonds.  Just as demand for them increases as the retiring baby boomers presumably follow the standard advice (or by default through lifestyle pension systems) and steadily increase their bond allocations/purchases.  Could get ugly or set a floor?

[Harley]

14 minutes ago, A_P said:

I think it's easy to lulled into a false sense by what see around us, I know I'm guilty of it. 

We have been subjected to the classic boiling frog....

https://en.m.wikipedia.org/wiki/Boiling_frog

[dgul]

44 minutes ago, Harley said:

Quite a bit of negativity here about bonds.  Just as demand for them increases as the retiring baby boomers presumably follow the standard advice (or by default through lifestyle pension systems) and steadily increase their bond allocations/purchases.  Could get ugly or set a floor?

Surely the BBs are already fully in bonds (the youngest are about 55).   We're also at the point where the eldest BBs will start dying off.

But isn't it less relevant now -- the demand for bonds at the moment isn't set by natural forces (retirees, etc), but a safe haven play (or even, a play on people playing the safe haven play*) -- as soon as bonds appear poor value then investors will move out of them?

[* ie, investment bankers have bought bonds knowing that in uncertain times their price will be bid up]

[working woman]

 

This is my first post. I have been a reader of TOS for over 10 years and discovered this thread not long after it started. i am finding it fascinating. Thank you to everyone who contributes.

I am female, early 50's, married, with no children. We have downsized to a small flat, with a small mortgage and both work part-time. My husband is a care-worker and I work part-time in fashion retail and have also started as a self employed cleaner for apartment blocks.  We have both always worked, and are cautious/balanced with money and have small private pensions. We live modest lifestyles and are not likely to be wealthy.

This morning, having read the last few pages of this thread, I have been thinking about our own personal finances and jobs, with regards to what may be coming down the pipeline and discussed the situation with my husband and how we can best prepare for it. 

interestingly, my husband says he has never experienced a boom or a bust in his personal finances. He says he only knows if there is a boom or a bust in the economy from reading the newspaper headlines. I on the other hand have always been very aware of booms and busts and can "sense" when things are changing or aren't right.

We compared our jobs / career choices, which is interesting.  He has always worked for non-business organisations, such as a gardener for a council, a sports groundsman for two public schools, a private gardener (full time!) for a very wealthy family. He is currently a currently a care worker for people with learning disabilities and loves it.

I on the other hand have mainly worked for businesses, which have all struggled or gone bust and therefore have been very aware of economic cycles.

- I have seen the 80's boom, living in London at the time and witnessed the rise of the "Yuppie" and the "Loadsamonies"

- Then I graduated straight into the 1990's recession, witnessed a slow jobs market, high interest rates (10% +) and low property prices. iWe bought a 50% share in a 1 bed flat with a 9% mortgage interest rate. Many of our neighbours in the flats had negative equity and when they had children, couldn't afford to move up the chain to a house so lived in flats for several years until the housing market picked up again and they had positive equity in their flats. 

- Saw the next boom before the 2009 Credit Crunch,

- Saw the slower economy afterwards and then the last few years with the Brexit uncertainity.  

I have worked in retail on and off and as a Sales Assistant I have noticed that towards the end of a boom, some, (not all), "wealthy" "middle class" people become quite obnoxious, treat sales assistants appallingly and have an entitled mentality, demanding discounts even when you aren't in a position to give one. When a crash happens, these people disappear,  what happened to their "money"? I am guessing it was all bought with credit cards??

In the last few months I have noticed a rise in "entitled" attitudes. They are always expecting shops to be on sale. If they don't get a discount on the item they want, they won't buy the item and walk off in a huff.  

 

• On an off over the last 30 years I have worked for Fashion Retailers as a Sales Assistant. I have seen retail change so much. In the 1980's and 90's Sales Assistants jobs were usually full time. Now they are mostly part-time with small contracts, 4,12,16 hours. It is rare to get a 20 hour contract. Retailers want total flexability from their staff, to be at their beck and call when they need them. I remember saying to one Manager a few years ago how it was unrealistic to expect to hire someone on the basis of giving them a 4 hour contract and not allow then to work for someone else. 4 hours would pay you about £30 a week and no-one could survive on that. 
• Until last year, I worked for a privately owned so called "middle class "lifestyle" fashion retailer. (100+ stores) I am still in touch with old colleagues who say redundacies amongst junior Managers are currently being made and all Sales Assistants are having to reapply for their jobs, with a reduction in contract hours.  
• I currently work part-time for another retailer, a lower end private fashion retail chain (100+ stores).  Obviously, like elsewhere, sales have dropped and the Owners/Managers are worried. For a 6 week period my  Store Manager who is 27, is now having to join in on weekly 1.5 hour conference call with the owner who is looking for ways to improve the business. Many of the customers are baby-boomers, 60+ who are used to spending money on clothes every week and own huge amounts of clothing.  It is going to be interesting when that age group passes away. The company is targeting the younger woman in their 30's and 40's, but they don't shop in the week as they are busy working full-time to pay off huge mortgages. They may shop online at work, but even online sales seem to be dropping off. The Baby-boomer grandparents also provide free childcare which will also come to an end in the next 10 years as they pass away.

There is a definate change in the air.

in the last year, in preparation for what is coming we have taken on an allotment, to grow our own food, which I think we will be glad of in the coming years. We have nearly paid of any non-mortgage debt and I am avidly following this thread. Yes, cashflow will be king in the years ahead as will be being part of a strong community network who can help each other out.

Sorry so long, I have so much more to say, as the voice of an ordinary working class person, but my husband wants his laptop back. 

 

 

 

[Gin]

Apologies to just break in like this but can anyone confirm what the consensus is on physical gold prices in GBP from here.?

[Majorpain]

26 minutes ago, Gin said:

Apologies to just break in like this but can anyone confirm what the consensus is on physical gold prices in GBP from here.?

My crystal ball is in the shop sorry, possibly looking at $1500+ gold and $26 silver if your a betting man.  £/$ is of course heavily dependant on Brexit and only a fool would make predictions on how the market is going to react to developments on that front.

[Gin]

2 minutes ago, Majorpain said:

My crystal ball is in the shop sorry, possibly looking at $1500+ gold and $26 silver if your a betting man.  £/$ is of course heavily dependant on Brexit and only a fool would make predictions on how the market is going to react to developments on that front.

Thanks..I really should have said in what direction prices will be going..but yes that answers my question..up!?

[Majorpain]

27 minutes ago, Gin said:

Thanks..I really should have said in what direction prices will be going..but yes that answers my question..up!?

Your asking a question that no one mortal 100% knows the answer to!  Place your bet in the casino if you dare!

[BearyBear]

1 hour ago, Gin said:

Apologies to just break in like this but can anyone confirm what the consensus is on physical gold prices in GBP from here.?

I think looking at gold prices in GBP doesn't make any sense. In USD a key resistance level is just a few % away at 1550ish.

[Gin]

59 minutes ago, BearyBear said:

I think looking at gold prices in GBP doesn't make any sense. In USD a key resistance level is just a few % away at 1550ish.

Well I am thinking of selling some Sovereigns I have and GBP is what I will get for them..a price graph for the last twenty years in GBP/USD looks similar but shows a much more marked rise when valued in GBP for the last year.

ps & is actually showing an all time high.

https://www.bullionvault.com/gold-price-chart.do

[Starsend]

8 hours ago, DurhamBorn said:

The Fed started to tighten Bob 18 months ago,thats what happened.The size of the debt being serviced by the amount of liquidity in the economy decides how much is left for other things.Susan doesnt understand why she has less money,but she knows it.The key question now is what do governments do?.Do they tax and spend or do they print and spend,or both?.All roads point to a debt deflation in the private sector (not just the struggling defaulters,but strong companies de-leveraging after industry consolidation) and government having to take up the slack.

In simple terms the backbone of the economy cant afford the commitments made by governments and debtors.So its inflate or collapse,the middle ground roads have almost slipped out of view.

As we have always said on this thread,little or no debt and cash flow will be crucial,for individuals and companies.

I don't think they can raise taxes any further without taking less in. They've introduced shed loads of new taxes over the last few years already, dividends etc.

Many people are choosing to work less because of low wages and high taxes. They'll print, you can rely on politicians to take the laziest route.

[Starsend]

17 hours ago, sancho panza said:

There's not a day goes by I'm not grateful for having a bit of leeway between me + Mrs P and the bread line.I've been lucky in life but some of my mates from school are working at Asda/driving,watching as their rents rack up and their wages decline in real terms.

People are surviving by either borrowing or jsut not buying certain things any more.

perchance,I happened upon an old council tax bill for a hosue I've piad for in Leicester for 20 years.I remember it being something like £300 in the 90's.Back then a call centre wage was circa £12k,maybe more.Not much more today tbh.

As you say ,the trigger will be small but once pulled,it'll take some rate hikes to nip it.

I'm paying twice as much in council tax as I was about 15 years ago - for a smaller house. Oh and my earnings are less in nominal terms and also taxed much more heavily. They've made such an almighty mess with their greed that when she blows she's gonna blow big time.

[Chewing Grass]

6 minutes ago, Starsend said:

I don't think they can raise taxes any further without taking less in. They've introduced shed loads of new taxes over the last few years already, dividends etc.

Many people are choosing to work less because of low wages and high taxes. They'll print, you can rely on politicians to take the laziest route.

I have stopped working extra hours as it is pointless at 1x time, you end up with less per hour and once you are over a certain age there is little benefit in topping a pension up due to the lack of compounding when there are less than 10 years to go.

Your time actually starts to be worth more than the little you get extra plus you also feel knackered after doing 8 hrs.

[Harley]

5 hours ago, dgul said:

Surely the BBs are already fully in bonds (the youngest are about 55).   We're also at the point where the eldest BBs will start dying off.

But isn't it less relevant now -- the demand for bonds at the moment isn't set by natural forces (retirees, etc), but a safe haven play (or even, a play on people playing the safe haven play*) -- as soon as bonds appear poor value then investors will move out of them?

[* ie, investment bankers have bought bonds knowing that in uncertain times their price will be bid up]

Well on the way but not quite there yet (I'm talking US too), and then plus the echo boom. 

The dying off bit is key though.

Yes, the speculative money will pull out and the retirees may well suffer.

[Harley]

2 hours ago, BearyBear said:

I think looking at gold prices in GBP doesn't make any sense. In USD a key resistance level is just a few % away at 1550ish.

Oh yes it does!  Unless your expenses are in USD.  Investment performance across a number of asset classes is very different in different currencies.  Indeed, some investments are effectively no more than vehicles to trade currency.  I keep an eye on the currency impact of returns and often make or lose based as much on currency, especially when things get turbulent.

Just to emphasise, in the case of gold (especially 2008 and 2016):

  Sure, most TA is done in USD but those needing sterling need to go the extra step.

[Starsend]

1 hour ago, Chewing Grass said:

I have stopped working extra hours as it is pointless at 1x time, you end up with less per hour and once you are over a certain age there is little benefit in topping a pension up due to the lack of compounding when there are less than 10 years to go.

Your time actually starts to be worth more than the little you get extra plus you also feel knackered after doing 8 hrs.

Agreed. I base my work around paying the minimum tax possible. I am putting plenty into a pension though. It won't have long to compound but it saves me paying tax now and when I start to draw it down it will be at a rate that doesn't pay much tax either.

[Napoleon Dynamite]

22 hours ago, sancho panza said:

...

Issues with Lloyds for me would centre on them being UK centric,still holding loads of the crap loans written by Haliwide,little hope of expansion into the growing regions of the world.

If you pick apart some of the country ETF's,you can get some emerging market banks that would offer a better prospect imho.

We'll be buying HSBC and Standard at the bottom in 2020/21 but ntohing else UK based.Just my views.

PS a relative was quite high up in RBS(mortgage side) and told me that they still had loads of the old crap loans from 2005/8 on their books.This was back in 15/16.He's left them now.

Shaun Richards discussing the UK banks and why they're (still) doing badly:

https://notayesmanseconomics.wordpress.com/2019/08/06/why-are-the-uk-banks-still-doing-so-badly/

Quote

 what was used to rescue the banks which was cuts in interest-rates and bond yields ( QE) is now crippling them. We are back to the theme of a junkie culture as the (H)opium which rescued the banks now brings in one clattering side-effect. In a world of low and zero interest-rates there is no interest income and without interest income the old banking model is effectively kaput. 

Quite timely given the recent discussion on Lloyds, RBS & HSBC on here.

[Yellow_Reduced_Sticker]

Ain't been on here as real busy, anyway some very nice interesting posts regarding oil from @Cattle Prod

 

I've just logged into my HL acc, and f**k my old boots...portfolio UP 10% AND this is with a buy order i left on their to get more CNA if they hit 79p ...well CNA are now 69p! ha-ha! STILL i'm UP 10% cos of the PM's ..so BIG THANKS go out to: @DurhamBorn

 

The question is do i sell those pm's that have run...? Emm I sold my IBTL a couple of weeks ago thinking they hit resistance, and here we are today and they have GONE UP even MORE lol!

 

So...I think i'll do an Errol, and hope for multi-bagging, cos at the end of the day I'm like most on here and building a portfolio to spit out income for long term...

 

BTW, did tescos last night AND NO YRS scavengers there, spoke with one of the staff, and he informed me that they are doing the final reductions at anytime, could be, 6pm,7pm, 8pm, 9pm, so i got nothing....oh bugger that's pissed on my fireworks, but hey oh the staff must be getting pissed off with all the fighting between the EE trash that goes there!

 

EDIT: Here's a PDF of that interesting article Paradigm Shifts by Ray Dalio that DB mentioned a few posts back...

https://gofile.io/?c=ImvJoH

[DurhamBorn]

1 hour ago, Starsend said:

Agreed. I base my work around paying the minimum tax possible. I am putting plenty into a pension though. It won't have long to compound but it saves me paying tax now and when I start to draw it down it will be at a rate that doesn't pay much tax either.

Pretty much what i do.I went back to work last october on about £35k + a pension a year and iv put all of it into my SIPP (and all of that went into PM stocks) because i made the allowance nearly on my business (that i have now closed down).Going forward i would put everything over £12.5k in my SIPP,and il draw down from 55 at £12.5k a year as well.I plan to have full state pension + £2500 a year from another pension,so no income tax and then everything else from within an ISA.I can live very well on £12.5k a year and thats all i want.I should get laid off soon as the credit crunch bites,unless the fall in sterling keeps the lag for another year.

I manage to avoid most VAT as well by buying almost everything 2nd hand,the only one that really hits me is council tax,i hate paying it,but my partner has a council final salary pension coming so i guess i shouldnt complain seeing as that where most of it goes.

[Dogtania]

59 minutes ago, Yellow_Reduced_Sticker said:

 

BTW, did tescos last night AND NO YRS scavengers there, spoke with one of the staff, and he informed me that they are doing the final reductions at anytime, could be, 6pm,7pm, 8pm, 9pm, so i got nothing...

I've heard that to reduce landfill and waste they now give these items away for free 1 hour before closing to any Tesco employee.  Not sure that's the reason but means staff don't have as much incentive or need to mark down if they can blag later.

[leonardratso]

i just averaged up SWERSO and YFGGIA, also averaged down the losers like VOD/CNA, havent paid anything into them for a while so thought id start shifting those average cost per share down a bit, cant be doing with them so high compared to current NAV in case some one decides to take the fuckers out and im way off offer.

1 hour ago, Yellow_Reduced_Sticker said:

Ain't been on here as real busy, anyway some very nice interesting posts regarding oil from @Cattle Prod

 

I've just logged into my HL acc, and f**k my old boots...portfolio UP 10% AND this is with a buy order i left on their to get more CNA if they hit 79p ...well CNA are now 69p! ha-ha! STILL i'm UP 10% cos of the PM's ..so BIG THANKS go out to: @DurhamBorn

 

The question is do i sell those pm's that have run...? Emm I sold my IBTL a couple of weeks ago thinking they hit resistance, and here we are today and they have GONE UP even MORE lol!

 

So...I think i'll do an Errol, and hope for multi-bagging, cos at the end of the day I'm like most on here and building a portfolio to spit out income for long term...

 

BTW, did tescos last night AND NO YRS scavengers there, spoke with one of the staff, and he informed me that they are doing the final reductions at anytime, could be, 6pm,7pm, 8pm, 9pm, so i got nothing....oh bugger that's pissed on my fireworks, but hey oh the staff must be getting pissed off with all the fighting between the EE trash that goes there!

 

EDIT: Here's a PDF of that interesting article Paradigm Shifts by Ray Dalio that DB mentioned a few posts back...

https://gofile.io/?c=ImvJoH

thanks for the pdf, ill probably read it now, have had the web page open at least 3 times to read it and then got distracted by knobbers at work then thats my whole day pissed away with their stupid queries.

[DurhamBorn]

https://www.dailymail.co.uk/news/article-7326881/How-nearly-HALF-British-adults-pay-NO-income-tax-data-reveals-23-million-adults-exempt-PAYE.html