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frozen_out

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Posts posted by frozen_out

  1. Misinformation at its best, it seems. And it is repeated by the folks on here while we had a seemingly inside poster who put the facts straight, namely there is no collapse in trade, but only in shipping rates for an oversupply of ships.

    It's been explained a number of times already - the same story with oil and basic commodities. The last decade, particularly in China, saw an extraordinary cycle of investment in capacity.

    You don't need a collapse in demand, you just need normal demand and industries that have been in relative equilibrium for years, with value extraction at appropriate rates fall into total dissaray. This will take years to play out because we installed enough capacity for decades of growth in a few years.

    There was a stat a while ago that China used more concrete in the previous 3 years than the US used in a decade tells you everything you need to know.

  2. Yeah I know, perhaps my phrasing was ambiguous. My question is why aren't they cross checking the OFSTED register first and stopping the tax credits of everyone not registered or with an up to date inspection? That would weed out most of the pee takers for hardly any effort.

  3. http://www.dailymail.co.uk/news/article-3429180/Now-taxman-goes-childminders-HMRC-sends-thousands-letters-demanding-information-work-nannies-claim-tax-credits.html

    Great news! HMRC and the DWP have finally got round to cracking down on the Working tax credit childminder scam.

    That will really put paid to alot of fradulent claims.

    Some of the wailing and gnashing of teeth in that story is unbelievable. Although there should be a much simpler way to check up as all childminders should be registered and checked by OFSTED. No Ofsted registration, no tax credits. No OFSTED inspection, no tax credits. There can't be many people minding their mates kids as a hobby who are also OFSTED registered, surely?

  4. Valueless economy at work again. No value in shipping. The Chinese will do what they always do- subsidise the rest of the world's shipping out of existence. Eventually they'll realise they have an issue when they gut the value out of so much of the world's economy that no one can buy anything they make.

  5. Plus that graph ends in the middle of 2013 when it was around the 1000 mark. A third of that now.

    It was 898 when it opened in 1985.(equivalent to $2000 today).

    P.S. Another record low today of 317.

    .

    The index measures the cost of shipping doesn't it? It's important to distinguish cost and value in this situation.

    Efficiency and investment in capacity work to drive costs down and value up, so there is no good reason why the cost of shipping over the last 30 years should increase in line with inflation.

    The 2001-2008 years were the abberation.

  6. The idea of years of cheap oil is a non starter. No investment in maintenance and infrastructure will affect production and $30 won't fund it. Gas prices will be higher in 2017, or there could be shortages.

    But clearly, the highs of $140 were equally stupid. Especially when the profits were blown on large scale corruption. (Petrobras, etc.)

    I'm wondering if the US will lean on Saudi at some point.

    The world 'survived' for years at $10-15. Low prices for oil and steel should mean that capex investment is off the scale right now. Low energy costs can't possibly be fundamentally bad for the economy, so something else is going on.

    I would argue that the economy is so fundamentally FUBAR after what happened in 2001-2010 that what we are seeing here is not an industry unable to get enough value from low prices, but an industry unable to extract enough value from normal prices.

    IMO what we need is for no one to blink and just keep pumping until the petrochems oversupply and the pain of normal oil prices washes through the economy and 'normal' is reestablished at ca. $30. It will probably take 5-10 years. So strap yourself in.

  7. This time IS different to 2008. Just before the last bust all commodities were trading at record highs. Now we're at record lows. What kind of economy can't cope with either low or high prices?

    What I can't understand is if oil is cheap and steel is cheap why is capex falling? The 3 components of capex: steel, energy and labour should be at rock bottom prices. Instead of a tidal wave of job losses the world should be booming off the scale on the back of this.

    What the hell is going on? One of our analysts is of the opinion that the aim of sustaining a glut of cheap oil is to attempt to prevent a catastrophic failure of the Chinese economy. Sounds feasible

  8. That is where reality and theory start to diverge IMO. Both parties want the BTL`er for the most part to hold his position, pay the mortgages and a bit off the top to the tax man, not to panic and flood the market with property. I don`t believe they will want to force too many into bankruptcy as this means no mortgage paid and no tax? How it plays out will depend on the sentiment of BTL`ers, I believe many will try to hold on by not declaring if they can, trying to raise rents, and generally just being in silly childish denial. Some will have moved already and be shifting property (Fungus would like people to believe he is in this camp, but I don`t believe his sort of money is on the table at this point in the game)

    I agree with this. Due to the tax changes the BTL volume will be stripped out of the market going forward, this will cause prices to fall. The question is if this is a simple tax grab by the government or a means of bringing about a HPC. I can't see it being the latter.

    There is a view espoused on here that the banks have been stress tested and are now in a position to see out a HPC. This doesn't quite square with the view on this thread that the banks have mispriced their BTL risk, the fact that they might have mispriced their risk does make them vulnerable (and if it doesn't, what's the issue with them mispricing the risk in the first place?)

    IMO there will have to be some attempt somewhere to allow underwater BTLers to exit the market in an orderly way. Regardless of the banks' ability to weather a significant HPC a disorderly, panicked housing market is not good for the wider economy. History teaches us this much.

  9. The great thing about boomers is that they think they acquired it all through hard work.

    Anyway, back on topic... The problem with a lot of developments is that associated local infrastructure doesn't get upgraded at the same time, meaning that the new houses do lead to a noticeable decline in local quality of life.

    Rather than protesting against against the houses what they should be saying is 'build the new houses, and whilst you're at it upgrade the roads, junctions and roundabouts, build us a new school, and put us a park in with some astroturf playing pitches and floodlights. Ta.'

  10. The volumes over the period you're talking about drove the biggest bubble in history. It's difficult to advocate a return to those levels. The volumes now are coming off the biggest crash ever at the back end of 2008, I'm surprised they're within touching distance of 100k a month (that second chart is way out of date BTW) I didn't think we see that for at least a generation after 2008. We never bottomed out at sub 20k either, which was my prediction at the time.

    The fact remains that the most consistent leading indicator of HPI is volume. Until that consistently increasing rise in volume post 2009 starts to reverse there's nothing to get excited about HPC wise.

    Which leaves the other questions. Assuming we could double volumes and halve prices how does that help the banks make more money? It would make for a more robust market long term, but there'd be a serious bit of pain during the transition. I'm not even sure the transition could be managed properly as it would involve crashing the volume to reset prices, then allowing the volume to increase to bubble levels without creating a bubble. Theoretically a great outcome, my kids would love it.

  11. If I understand your argument Venger, what you're saying is that a fall in house prices will be (is being?) precipitated to enable banks to increase the mortgage volume so they can make more money?

    If I am understanding you, how do you square that with:

    a) volumes being pretty healthy right now

    B) volume historically being the most consistent leading indicator of HPI

    c) all things being equal, lending on 3 houses at 150k makes the bank no more money than lending on one house at 450k

    What would be interesting is if the government/banks could look at ways to break the link between volume and HPI. Not sure if it's even possible.

  12. Agreed. Which leads to further questions - what is value and can fair value ever be known? Or are we all just pissing in the wind of an insane fantasy and winning or losing at any particular moment in time?

    As an example, I work in an industry where value is pretty much dictated by legislation (in fact many industries are like this, directly or indirectly). We're always looking for value growth above GDP and it seems that it is almost always created artificially. When we run out of levers to pull to 'create' this value what then? How many levers are available and when will they stop being pulled?

  13. For some reason I can't quote on this forum (another Win8 bug I can't fix) but the Coventry are talking about the valueless economy I've mentioned once or twice. What they're saying (I think) is that they have nothing worthwhile to invest savings in. They can't get a return on your capital other than by lending it on property and propping up house prices. The yield on BTL may be low (about to get lower), but it's something. Another recent example of this is the crisis in UK steel due to Chinese steel dumping. There is no value in steelmaking because the Chinese have outrageous capacity and will sell at a loss to keep their factories open. Europe can't compete with this, and the same is true of chemicals, mining and oil extraction. There is almost no value in the activities that should be most value creating.

    I can't see how this is unwound without at least a generation of pain globally.

  14. I find what shops have to offer increasingly irrelevant. I'm also having difficulty with clothing; more than once now have bought items that I can't believe were intended for a human being, such is the weirdness of their proportions. The worst ones were trousers from Primark - I can't accept that they could ever have been tried on, and fitted, any living person anywhere. Before anybody scoffs, I've had similar experience with merchandise from supposedly "better" outlets. And no, I'm not piling on the pounds....

    I'm convinced this is related to maximising the items of clothing per unit of fabric. It's why there's such a trend for skinny fitting garments and the fact anyone with regular sized waist and thighs can't fit into anything from primark.

    I had some boxers from matalan, medium as per, and there was so little fabric in the gusset it felt like I was being garroted.

  15. Past year..

    * Oil prices collapsing

    * Metal prices collapsing(copper most importantly for me)

    * Car prices falling

    * consumer goods mostly falling

    * Food prices still outstanding(that's my view)

    * Holiday prices lower

    World growth is struggling, China major concerns, EU has a huge comic cartoon weight weighing 1 million tons suspended by rope with 1 million tons and 1 ounce hanging over it that will snap at any time. Worlds downtrodden are now heading for EU with UK a popular destination..

    All this and more and somehow in a prices falling dangerous world house prices and renting are being kept sky high. And David Cameron's answer is to get FTB's in incredible dangerous debt often helped by the taxpayer and then wants them to feel grateful for it.

    Nobody knows how this madness is going to materialize into a collapse, it could be anyone of a dozen things that will take just one to finally give in in order to see the rest follow. My betting is on anther Banking crisis or even failure to fix the last one properly, but Hey! who knows

    It's the valueless economy. Metals have become so cheap it's barely worth digging it, oil has become so cheap it's barely worth drilling it, China has screwed basic commodity chemicals to the point where some basic feedstocks are more valuable than the products they make, production gas become so efficient that it's easier to make money on the loans that allow people to buy a car.

    At some point all of this will unwind, but how or when is anyone's guess.

  16. I didn't do particularly well with my 2015 predictions, not bad but no cigar.

    2015 Predictions

    1. No party can achieve a majority in the May elections, still less the 325 or so seats needed for a reasonably stable working majority. So two predictions, first there'll be another coalition. And secondly, despite the new fixed term parliament legislation, there'll be another election before 2020.

    2. Base rates will not exceed 1% in 2015.

    3. Nominal UK house prices won't move up or down by more than 2% during 2015.

    4. The US dollar will continue to strengthen.

    5. FTSE dominated by Eurozone developments in 2015. If Mario Draghi prevails with meaningful QE then the FTSE will top 7000, more likely he won't and the FTSE will fall below 6000 on fears of a Euro exit and subsequent break up.

    6. Despite oil prices increasing in the second half of 2015 inflation will remain well below the 2% target.

    Let's see if I can do better in 2016,

    1. Nominal UK house prices -2% in London, +3% outside London.

    2. Peak pessimism occurs in spring 2016, after that Oil, Commodities, and FTSE 100 stage small recovery ending year slightly higher than they began.

    3. The US has a particularly bad tempered Hilary vs Donald election, Hilary wins (but failing health means she doesn't make a second term).

    4. If there's no UK interest rate rise soon then it'll be too late to have one before the European vote in the second half of 2016. If we vote to leave then there won't be an interest rate rise at all in 2016. More likely we'll vote to stay in and there will be a single, quarter point increase in the autumn. The most obvious black swan that could overturn all this and see interest rates move up sharply is a balance of payments crisis, but on balance I don't think that will happen, at least not in 2016.

    5. The tide really turns against small BTL landlords, and BTL moves towards being a big player enterprise with pension funds and big builders taking a stake.

    6. China doesn't collapse, but makes progress on rebalancing and new, more modest growth rates appear secure. India becomes the new China. Russian-Western relationships slowly thaw. Brazil becomes a basket case and the IMF are forced to intervene.

    7. A frontline country, maybe Mexico, maybe Columbia, throws in the towel on fighting the war against drugs for the benefit of the US and legalises all drugs.

    8. UK RPI finishes 2016 at about 1%.

    I think no. 5 is interesting. One interpretation of the tax on BTL is to raise the barrier to entry for new players and small players. It would be a paradigm shift in the UK and perhaps move us more in line with Europe and Scandinavia where BTL doesn't really exist. Subletting though does, and in a big way.

    My prediction is that residential housing purchases will fall back to about 70-80k/month as people expect a glut of BTL property into the market. The volumes will be low enough to cause prices to decline by ca. 25% over 18 months. The market will be seriously subdued but will not implode.

  17. I'm dubious as to how bad sales have been as retailers always bang on about that before Xmas and thus 'massive discounts' will be on offer, which the press then dutifully report. It's likely they were ok but due to credit card use.

    Certainly, offers post Xmas have been crap. I've seen very little that is genuine offer and not some made up discount. The signs fool many people but not all. Those who aren't financially illiterate probably wont be buying the 'reduced' tat. The big online stores like Amazon have had nothing of note discounted whatsoever.

    As I said further up - the pricing algorithms are very sophisticated these days. I guess sales can be matched to inventory almost in real time and prices adjusted accordingly daily.

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