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Half All Uk Cos Bust If Bond Yields Stay As Is

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FT: Bond yield warning for UK companies

Half of all UK companies are heading for bankruptcy if government bond yields remain at their current levels, according to Paras Anand, head of European equities at fund manager F&C.
,,,Mr Anand argued if anyone believed such yields were sustainable, then they should also be factoring in the failure of a host of UK companies with large pension scheme liabilities.
“Probably the majority of assets, especially in defined benefit schemes, would be in some form of bonds. The assumptions for returns on these bonds would probably be in the order of 4-5 per cent,” he said.
If you genuinely believe that bond yields will remain at [current] levels then half of UK companies are bust
. As an actuary you are having sleepless nights.”

<_<

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it is the unfortunate result of bailing out the banks.the pensions ponzi is about to fall apart.apart from bond yields,you have collapsing CRE to add to the mix.

Yes, I suppose the key word is 'if' (and by extension for how long).

But yields have been falling, with cyclical blips along the way for 20 years. One has to ultimately understand and address the causes of that. The poor bailing out the rich (>top 1%) via the bank bail outs being just one recent piece of the jigsaw. The others I'd suggest being the relative tranfer and hoarding of wealth by the rich and the transfer of production to slaves without welfare provision in the East. All this excess wealth in the hands of the rich needs to be destroyed or

redistributed, and rather quickly.

The problem seems to be that the Germans don't want to do it, the Chinese don't want to do it, the Swiss certainly wouldn't want to do it and the Oligarchs and Western billionaires don't want to do it. They are dead set on keeping their hoards and they run the governments - thus forcing the losses onto the next tier down and refusing to increase the lot of those at the bottom. Stalemate for now.

Edited by Frank Sidebottom

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Still I believe it's all contained....

The invisible hand is going to deliver the mother of all bitch slaps. Our political masters have bailed out the rich and the bankers at the expense of everyone else trouble is this fraud is unsustainable we will possible either see the mother of all system failures which will be quick and sharp or hyperinflationary collapse. Alternatively the slaves will just carry on giving to the rich.

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Still I believe it's all contained....

The invisible hand is going to deliver the mother of all bitch slaps. Our political masters have bailed out the rich and the bankers at the expense of everyone else trouble is this fraud is unsustainable we will possible either see the mother of all system failures which will be quick and sharp or hyperinflationary collapse. Alternatively the slaves will just carry on giving to the rich.

More and more it feels like your last option is the most likely outcome. Does anyone seriously think the rich/elite etc will allow otherwise?

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More and more it feels like your last option is the most likely outcome. Does anyone seriously think the rich/elite etc will allow otherwise?

It depends on the slaves. Elites are replaceable, throughout history they have been replaced in violent revolution the risk of trying to keep the slaves in servitude runs the ultimate risk of being over thrown.

If someone seeks to lead then we could see violent clashes.

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Still I believe it's all contained....

The invisible hand is going to deliver the mother of all bitch slaps. Our political masters have bailed out the rich and the bankers at the expense of everyone else trouble is this fraud is unsustainable we will possible either see the mother of all system failures which will be quick and sharp or hyperinflationary collapse. Alternatively the slaves will just carry on giving to the rich.

This slave's got gold b1tches!

Just wait for the big sucking sound as pension schemes drop bonds and buy gold. Tick Tock, Tick Tock...

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Still I believe it's all contained....

The invisible hand is going to deliver the mother of all bitch slaps. Our political masters have bailed out the rich and the bankers at the expense of everyone else trouble is this fraud is unsustainable we will possible either see the mother of all system failures which will be quick and sharp or hyperinflationary collapse. Alternatively the slaves will just carry on giving to the rich.

If you've just coined that I think I might have to pinch it. :lol::lol:

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It depends on the slaves. Elites are replaceable, throughout history they have been replaced in violent revolution the risk of trying to keep the slaves in servitude runs the ultimate risk of being over thrown.

If someone seeks to lead then we could see violent clashes.

In the days of European revolution, the peasant class had access to arms with similar technology to that of their suppressors. In Ireland, the IRA were well funded and consequently well armed. What do today's would-be freedom fighters have to take on the tanks the elite have?

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This slave's got gold b1tches!

Just wait for the big sucking sound as pension schemes drop bonds and buy gold. Tick Tock, Tick Tock...

IIRC, they can't - it's against the rules set by the regulators.

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In the days of European revolution, the peasant class had access to arms with similar technology to that of their suppressors. In Ireland, the IRA were well funded and consequently well armed. What do today's would-be freedom fighters have to take on the tanks the elite have?

Conscience? In that murdering your own people has to be done with great care. It is why June 4th 1989 took so long to quell. There is/was a massive barracks outside Beijing but these are formed from people who live around Beijing. So the CCP has to ship infantry in from far provinces who would follow orders. If you got local beijingers to shoot beijingers some might say hold on these orders are wrong! I know those blokes I grew up with them! Kind of thinking.

Same thing about 90 years ago in the UK. Something called Red Clysdale or something, anyway a northern town just after Lennin seized power had a massive strike and a riot. This town has a massive infantry garrison and on paper could have massacred the crowd. Instead they padlocked the barracks and kept them underguard. They had to bring in infantry from Southern Regions to massacre the crowd.

The British elites know this, Initially brain washing was used to 'make a more effective soldier'. But this wasn't enough as conscience is a powerful thing. So this which is why we have large mercenary detachments, Gurkas and immigrant soldiers. Who will quite happy shoot us because we are alien to them.

THe EU plan is even better as a unified EU army can massacre its own people with absolute ease. If Germany rises up in a mass riot you get British soldiers to murder them. If British public get roudy you can massacre them with French or German soldiers.

There is also the problem of automated weapons like autoguns.

Edited by ken_ichikawa

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the article quoted misses the point that final sal pension schemes simply won't pay out, the companies themselves won't go bust, or am i wrong?

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the article quoted misses the point that final sal pension schemes simply won't pay out, the companies themselves won't go bust, or am i wrong?

The companies will go bust alright but the UK government has something called the pension protection scheme, whereby all loses are made good....

Using the magic printing press... :o

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In the days of European revolution, the peasant class had access to arms with similar technology to that of their suppressors. In Ireland, the IRA were well funded and consequently well armed. What do today's would-be freedom fighters have to take on the tanks the elite have?

If there's civil unrest amongst the proles it's much easier to contain than the middle-class. If the middle-classes revolt the state would have no chance.

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If there's civil unrest amongst the proles it's much easier to contain than the middle-class. If the middle-classes revolt the state would have no chance.

"Sorry I can't stay and help out with the barricades Roland. Tabitha has her violin lesson and it's a nightmare getting the Rangerover parked."

Could you explain what you mean?

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"Sorry I can't stay and help out with the barricades Roland. Tabitha has her violin lesson and it's a nightmare getting the Rangerover parked."

Could you explain what you mean?

The middle class do most of the stuff that keeps the country running, and pay most of the taxes. Without them the economy collapses and the government can't buy any fancy weapons.

In any case, the British military is bust and can't even keep a gang of Afghan tribesmen under control; what chance do they have against tens of millions of pissed-off Britons?

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The longterm trend on bond yields is very clearly downwards.

Its quite a simple reason why. Tons and tons of money chasing little opportunity. Simple supply and demand 101.

Unless the state steps in with truly massive QE and stimulus spending, opportunity will never come. So bond yields will just keep going towards zero, then ultimately stay at zero.

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“Probably the majority of assets, especially in defined benefit schemes, would be in some form of bonds. The assumptions for returns on these bonds would probably be in the order of 4-5 per cent,” he said.

Firstly "probably" indicates pure speculation. And he's wrong - only around half of pension scheme assets are typically bonds.

http://www.investmenttutor.com/news/pensions_watch_archive/xml_023268.html

The current low yields don't affect the returns from bonds bought in the past at higher yields - indeed those bonds are now worth more! The value of the scheme assets has risen.

Not sure quite what this article is on about.

Just wait for the big sucking sound as pension schemes drop bonds and buy gold. Tick Tock, Tick Tock...

Why exactly would they do that? Index-linked gilts are a great matching asset for paying pensions - regular inflation-linked income. Gold is rubbish as you'd have to sell it to pay the pensions and who knows whether gold would be worth $200 or $2000 per oz when you did.

The companies will go bust alright but the UK government has something called the pension protection scheme, whereby all loses are made good....

Using the magic printing press... :o

The Pension Protection Fund (PPF) does NOT make good all losses - just pays some compensation - and is NOT funded by the UK government (printing or otherwise), but rather by a levy on pension schemes.

http://en.wikipedia.org/wiki/Pension_Protection_Fund

:rolleyes:

It's annoying when people post "facts" that can be overturned by a few seconds Googling.

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Civil unrest doesn't have to be violent to bring a government down. How about everyone draws their money out of banks, people don't pay taxes or pay them late.

If there are large scale riots the police won't be able to intervene as they will have to fill out an HSE risk assessment. Plus what are you going to do with the people you arrest, we don't have the prison places and even if we did it costs a fortune to keep someone locked up.

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In the days of European revolution, the peasant class had access to arms with similar technology to that of their suppressors. In Ireland, the IRA were well funded and consequently well armed. What do today's would-be freedom fighters have to take on the tanks the elite have?

Switch the feckers off. Turn off their electric, mobile phones, and internet. Delete their bank accounts, cancel their credit cards. Instruct their security to leave.

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Civil unrest doesn't have to be violent to bring a government down. How about everyone draws their money out of banks, people don't pay taxes or pay them late.

True: just look at the USSR. All those decades of fear, and eventually people just said 'no more' and it all fell down.

Edited by MarkG

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"Sorry I can't stay and help out with the barricades Roland. Tabitha has her violin lesson and it's a nightmare getting the Rangerover parked."

Could you explain what you mean?

Hauliers brought the country to its knees by blockading fuel depots despite your caricature the middle-classes would likely do things in a more strategic and organised way.

They're also not like Chinese students who have only their bicycles to assist them in their fight against the state - in western countries heavy earth moving eqpt and such like is in private hands. In fact, I seem to recall reading somewhere, that in the US the number of military vehicles in the hands of private enthusiasts outnumbers that of the entire US army. Granted they'll be obsolete but, this is a deck stacked very differently to when somewhere like North Korea or China has to quell unrest.

If 'Roland' riots he's certainly unlikely to set fire to cars and throw molotov cocktails around the estate he inhabits or go and smash up the shop fronts in the high st.

If, in a poll tax riot re-run, they go and smash up some bank branches as a protest focus it would just mean the government's got a few less to worry about closing.

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I wonder what the performance of the funds he has managed has been over 1 year and say 5 years.... :lol: I know, of course, which is why I wouldn't believe anything written by him in the FT but would wish him well in finding his next job.

FT: Bond yield warning for UK companies

Half of all UK companies are heading for bankruptcy if government bond yields remain at their current levels, according to Paras Anand, head of European equities at fund manager F&C.
,,,Mr Anand argued if anyone believed such yields were sustainable, then they should also be factoring in the failure of a host of UK companies with large pension scheme liabilities.
“Probably the majority of assets, especially in defined benefit schemes, would be in some form of bonds. The assumptions for returns on these bonds would probably be in the order of 4-5 per cent,” he said.
If you genuinely believe that bond yields will remain at [current] levels then half of UK companies are bust
. As an actuary you are having sleepless nights.”

<_<

Edited by fallingbuzzard

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The longterm trend on bond yields is very clearly downwards.

Its quite a simple reason why. Tons and tons of money chasing little opportunity. Simple supply and demand 101.

Unless the state steps in with truly massive QE and stimulus spending, opportunity will never come. So bond yields will just keep going towards zero, then ultimately stay at zero.

Bzzt, more QE = yet more money chasing little opportunity. Until it hits a singularity and goes Weimar.

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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