thanks rsj , i did post my gold trading plan on the board last week or so, as they say plan the trade, trade the plan, all the best in the new year.
good luck
busmaster.
UK ECONOMY
(266 posts) (11 voices)-
was looking at the poor fig, for the service sector pmi, this is not good at all and it is not looking good one bit for 2013 , also most of the cuts are only starting to bite in 2013 , and add on to that much higher food prices,
you know was having a bit of a think a recession every now and again is actually a good thing imho it clears the system so to speak say every 10-12 years , this one is one of the really bad ones due to loss of control of the financial industry , looking back it probably started when Clinton [i think] repealed the glass/ steagall act ,and then we in the UK followed [thatcher] and allowed a free for all practically unregulated in real terms financial service sector , and we all can see the out come ,it has to be that banks that fail go to the wall , insurance services that fail go to the wall ,and not propped up under the banking umbrella ,aka the tax payer .
and for a government that says its focused on growth and jobs all i have seen so far apart from all the retric, is they keep making it easier for employers to sack people ,
sorry nearly went of on one,
i know that all the new technology that comes out year on year creates jobs however i do think it puts more people out of work and we need to address this , as just by the growth in population it stands that the number of people looking for work ,and a means to live a decent life is also growing , but this would mean a whole new outlook on life
better stop now getting to deep,
my gold short have now taken 50% and banked the profit ,and moved stop down to point of entry $1669,the way ahead for gold will be decided by the fed , but bear in mind the debt celling is fast approaching, so will growth get the USA out of the mess maybe or will they still have to print it is sure going to get very interesting from know on and will give those trade gold some good if not nerve wracking opportunities both long and short, but take care and dyor, in two week,s time of to a sunny warm and dry Antigua for a few weeks .
good luck
busmaster. -
Three pretty disastrous data points from the uk this am.. Weak consumer spending and higher savings rate. Declining house prices. And higher government spending given falling personal tax receipts. When you put all three together its the greek deflationary scenario rather than the US inflationary scenario.
But look a bit more closely some of the data and you seen business investment is up (this is very good!). Corporate profits are strongly up. Businesses create jobs not the government so this is encouraging. The entrepreneur in the UK is alive. There are some structurally encouraging signs.
Unfortunately businesses are less than 50% of the economy and consumers 75%. Consumption and house prices are what really drive the uk economy so as long as that trend keeps going the uk is in trouble. All eyes to the BOE. They stepped off the gas in terms of expansion of their balance sheet back in August and the effects of this are already been felt.
There are a mix of different macro events here. The euro zone remains weak with no balance sheet expansion until spain presses the button. Japan (world's second largest economy, with China) is monetarily expanding again and the US aggressively so. Chinese consumer lending is starting up once again.
Overall this is an inflationary world environment. The UK's BOE needs to understand that it alone cant affect world inflation. If inflation is seen in the UK at present it is due, in great part, to world monetary issues as much as its own monetization of debt. But the key point here is nominal inflation levels will go much much higher than the BOE's target in the future. E.G. How will they monetize when would inflation is at 5%? Better do it now whilst world rates remain subdued.
Sitting on their hands, as today's rate setting committee minutes show (8-1 against more easing) will quickly destroy the UK's economy. There is no self sustaining recovery in the uk so therefore much much more monetary easing will be needed. Importantly, much better to do that easing now, whilst inflation is subdued, than try and ease when world inflation is much much higher. Your window BOE is today not tomorrow.
Investments wise. The cyclical story is weak in the Uk. UK listed large corporates will play off world events but uk retail (and property tied to retail) looks a complete disaster. Consumer staples will be ok but discretionary should be in trouble. UK construction cos like MGNS and a few more are suffering margin erosion but their order back log and lack of debt will see them through for a year or so. Balfour Beaty is suffering now from the uk and euro zone problems. I believe there is more pain to come for Balfour before we see reflationary 'growth' action from euro and uk governments. Balfour has much upside on this basis and starting to show nice ratios but id wait a little longer on Balfour.
We have a system of grace and favours. Balfour is well tied into this system so she will come good but not yet. I own MGNS but not Balfour yet.
Rich
p.s. the new FHA rules in the states (which effectively are the legal limits on debt muliples etc.. 43% debt interest to disposable income..
Whereas in the uk common place to see 45% and above debt interest to disposable income. And remember here too the fact that most US home owner debt is fixed rate not variable like the uk. Here the 'average' for camden in the uk. Simple a stunning number.
"The London Borough of Camden is the most expensive local authority district, with mortgage payments absorbing 56.5pc of disposable incomes on average."
Encouraging consumers to load up on variable rate cheap mortgages via government funding for lending etc is madness.. simply madness. Bond rates are rising. Gilts are falling ie rates rising. The 33yr bull run in bonds may well be in their final days. The consequences for uk consumers (house prices and uk bank and pubic sector balance sheets) is unimaginable.
Rich
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come on s&p its almost xmas
http://www.zerohedge.com/news/2012-12-13/sp-cuts-uk-outlook-negative -
Posen adding his view to those that see a prolonged suspension of the uk's qe program.
I can't see how the uk would survive for more than a few quarters without qe. If the boe really are serious here the uk economy will fall off a cliff is my view. there has to be more qe. Any policy route that limits its further expansion will be disastrous for gdp, housing market etc etc. Lets hope its simply rhetoric.
http://www.bloomberg.com/news/2012-12-01/posen-sees-boe-putting-qe-on-hold-indefinitely-.html -
Search for "UK" in this wildy
http://www.zerohedge.com/news/2012-11-24/goodbye-petrodollar-hello-agri-dollar
imho -
http://www.food-security.co.uk/cgi-bin/FS4D/index.html
This is worth a read imo and they want to build more housing in the countryside
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hi rich. hope you and the wife are well , we are just grateful we did not suffer [but for some damage to the garden ] in the very bad storms we have had in the west country ,
any way back to the post , Paul tucker must be feeling sick, also Osbourne stated the new chap is doing a great job in Canada, ie Canada did not have to bail out the banks ect, well that's very true, but Canada like Australia the governments did not relax the banking laws in there countries to make them a free for all ,like the UK and USA did and the rest of the so called modern world.
good luck
busmaster. -
Goldman Sachs do it again... http://www.bloomberg.com/news/2012-11-26/canada-s-carney-chosen-by-osborne-to-replace-king-as-boe-chief.html
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Hey Rich.....welcome back.
So we are curently in the process of arranging to sell a house in the UK and to my suprise prices arent too far off where they were at the peak of the market a few years ago.....it may all be estate agent BS but I am cautiously optimistic with the sale....Ill keep you all posted.
Luck all
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and now 100% mortgages care of central and local government..
http://www.ft.com/cms/s/0/095b26ce-3588-11e2-bf64-00144feabdc0.html#axzz2DKSi1jWB
You recall i called ltsb and was offered 4.5 times salary at 85% mortgage to capital value before. Of course if you can get mortgage rates down to zero and remove caps on multiple of salary and enable 100% mortgages then of course you can get a huge property boom in the short term. The hang over bust would be devastating however. But who cares.. more debt please..
These guys will help increase total debt..
http://www.bbc.co.uk/news/uk-20252160
We have seen it all before. So many times before. Its ponzi economics in motion. There should be no surprise on the outcome of such a 'strategy'.
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Yes, plenty of material for writing an angry letter to your MP in there. Along the lines of: how about cutting government spending before going looking for more sources of income ? Or how about witholding any further payments to the EU until the auditors sign off the accounts for the first time in 18 years ?
Having said that, and while I'm not inclined to defend the Lib Dems, the article needs to be read with the Telegraph's clear anti Lib Dem agenda in mind. If you read what Cable actually said he said nothing about a major tax raid within weeks, just that "There are arguments around taxation, property taxation – I don’t know where that has got to but it will be resolved in the next few weeks"
He knows that it's not down to him to decide, he's only the Business Secretary...
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More central bank magic..
Q. What do make of the changes in inflation measures..
A. There are the announced changes to cpi which i welcome. There are also changes being worked on by the ONS regarding the rpi vs cpi. I think any work that closes the gap between the two measures should be welcomed. The RPI in particular is based on some outdated indexing methods and needs to be improved on.
hahah, the rpi is nearly 1% over the cpi so of course the rpi is wrong and out dated and needs to come down. The CPI as well is being changed and is also to fall due to "more effective and MODERN" statistical methods.
I cant watch any longer. What happened to King's heart and honesty? Leaves an unpleasant taste in the mouth is the least you can say.
Rich
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BOE and King in Q&A.. I quote.. (its live so im paraphrasing).
Q. Did you set up the qe program with payments of the coupons back to government in mind?
A. To be honest we didn't think about what would happen to the coupons when we set up qe. I don't think anyone on the committee thought we would still be doing qe some several years later so therefore we didn't think about coupon accumulation.
Thats really something.. when qe was announced i immediately asked what would happen to the coupon payment. Why me and not the BOE is an interesting and surprising question to ask.
Rich
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Sure you have seen the nos..
http://uk.reuters.com/article/2012/11/13/uk-inflation-idUKBRE8AC0BB20121113 -
Enjoy the beers RSJ.. My simple explanation..
The BOE electronically creates pounds. The UK government issues debt to the market. It sells this debt to official primary banking dealers. (These dealers take a margin). The BOE then buys uk government debt in the secondary market from these bank primary dealers. (The banks pocket another margin). The BOE then owns the uk government's debts. The UK government pays the BOE interest therefore. The BOE then sends this interest back to the UK government.
The only middle men involved are the banks (who take a margin - twice). But you might well ask why doesn't the uk government just cut out the middle men and simply electronically create what it needs. Why have a gilts department, primary dealers a gilts treasury team, etc, etc. Each of these layers of bureaucracy require processes and staff and IT systems. The costs are immense. It would be far simpler for the uk government to simply electronically credit itself its borrowing needs. This would doubtless save the uk tax payers billions in staff and system costs and bank commissions. But it would be very transparent.. and therein lies the problem of such man-overs.
For now it works and the BOE should do much more whilst it can get away with it would be my call. Eventually the uk's debt will only be owned by uk pension funds (driven by legal solvency legislation to buy uk debt) and the BOE. Foreign buyers will eventually wake up to what is occurring.
And this is nothing new of course the US has been doing it for the last few years very successfully.
For note thee FED is the most profitable private enterprise in the USA now. Profits are close to $100bn p.a.
I hope Osborne uses the bonanza well. 35bn more than funds the interest on the UK's public debt for a whole year. It is around 2.5% of uk annual gdp. Its a huge sum of money but is nothing compared to the 375bn of gilts held on the BOE's balance sheet. What will happen to this debt is a good question? I hope the BOE buys much more whilst it can. Say take qe up to 600bn and then write off this debt or waive the interest on this.. perhaps on a national emergency.. ie a war of some kind. This would be perfect. It would sustain the British way of life for a decade or so if they can manage this process effectively. Its sheer brilliance.
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I am going out tonight. A few Caledonian ales, maybe some No1 maybe some independant brewers. My guess that after 4 beers the preceeding article will make complete sense.
As of now is just a game of Monopoly. To be sad I checked the rules of Monopoly.http://www.hasbro.com/common/instruct/00009.pdf
From the above link are rules from the bank. They are just as crazy as real life. See the last sentance below!!!"Besides the Bank's money, the Bank holds the Title Deeds, and the houses and hotels prior to purchase by the players. The Bank pays salaries and bonuses. It sells and auctions properties and hands out the proper Title Deed cards when purchased by a player, it also sells houses and hotels to the players and loans money when required on mortgages.
The Bank collects all taxes, fines, loans and interest, and the price of all properties which it sells and auctions. The Bank "never goes broke." If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper.""Crazy !
imho
rsj -
Now this is alchemy! im serious this is a brilliant move.. 1/3rd of uk debt is owned by the BOE now. Why not cancel this debt. Its truly brilliance and the BOE should be praised by all uk citizens. Whether they can do the trick again is another matter but who cares. 1/3rd of uk debt has been cancelled effectively and this is fantastic. Rich
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I assume that hes the "other" guy in the running for taking the reins off Merv?
That charecter from the massively effective FSA is a legend for sure. I remember in the states during the early days of the crisis money being handed out to the population so they could get spending again......then when they all decided to spend it on paying off their debt some politicos moaning about how un-american they were all being! Bad slaves!
Id say this wouldnt of gone un-noticed UK side and any handouts would surely be in the form of coupons redeamable at shops rather than your actual cash?
Anyway a story worth watching over the next few months for sure.
Luck all
P.S I bet O is wondering why he bothered to show up for any of the political debates/rallying before this storm showed up.....I notice his approval rating has soared on the back of his handling of the disaster.
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Almost comical if it wasn't so serious..
House prices and rents spiraling upwards as incomes collapse.. The difference money printing, savings and debt. A perfect Keynesian recovery.. When the game is up the wake call will be unimaginable to the man on the street.
Dont worry there is demand for uk housing. Never mind the underlying economy. It doesn't matter as demand is immense so the cry goes from the housing boom mantra.
All ponzi debt schemes "work" until prices stop rising.
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