How much will this cost me

[RogerS]

...There's got to be an introductory book for idiots on how all this works - can anyone recommend one?

There are lots. But they won't help because some are written by folk saying QE is good. And some are written by folk saying QE is bad.

If you are really interested then I'd Google "Tim Harford" and "quantitative easing"

For example...https://www.ft.com/content/e3f955ec-80f ... 144feabdc0

 

[Chris152]

...There's got to be an introductory book for idiots on how all this works - can anyone recommend one?

There are lots. But they won't help because some are written by folk saying QE is good. And some are written by folk saying QE is bad.

If you are really interested then I'd Google "Tim Harford" and "quantitative easing"

For example...https://www.ft.com/content/e3f955ec-80f ... 144feabdc0

I'll read that [ugh, i need a subscription...], but was thinking more generally of an account of how money works, especially since what sounds like a big shift in 1971?

 

[RogerS]

You don't need a sub as you can get a certain number of free pages, I believe.

ig around in these archives ?

http://timharford.com/articles/sya/page/4/

 

[rafezetter]

but yeah - lets forget about the "stay at home save the health services of the world [from being swamped]" message. Unless you or ANY of those from that brigade can show me that you are on your uppers, house has been sold and downsized to a caravan to release vital life saving capital, all savings gone and are now about to sell the caravan and become homeless on the streets with your family then yeah - most of what you, and those with the same viewpoint, are saying about how the lockdown wasn't essential has a very hollow ring to it.

Trust me I'm not in that brigade but in about a year or two, plenty will forfill your criteria above. The economic impact of this will be mind blowing.

It could very well be - and it's not something I would be even remotely happy about, but I personally feel, rightly or wrongly, that there are many that want the lockdown lifted to protect personal assets, at the risk of creating a second wave, and that's the context under which I wrote.

The social media backlash against the owner of the Wetherspoons chain was very clear, most people are against it. It's been mostly good that many people during this period have re-assessed the true valuables in their lives, family & friends, and recognised the real heroes of our society, but there are those that still cling to the "old ways" which sounds odd even as I write it - that money is thier god and it seems they would combat it's loss with the lives of other people.

Yes the economy is struggling but we aren't at the point yet where the reward outweighs the risk - there are no breadlines or rioting in the streets and people are not dying by the scores every day from malnutrition.

We are not there yet - no proven vaccine - and still more than enough new cases worldwide to start this whole gadamn thing all over again.

 

[rafezetter]

You make a lot of good points there Terry.

I would add though, while a lot of these industries might be discretionary or "luxury", their existence not only adds a lot to social well being for (some) people but they also employ people and create tax revenue that pays for those essential services that we all need.

Using your example of cutting your own lawn is a good one but I would say it is a little more complicated than that. Changing the example to one that works for this forum. Lets say many members here do not go out for entertainment, pay for movies or buy mass produced furniture. Instead they spend their leisure time making things in their sheds. That is not a loss or zero gain to the economy because they are not spending on those luxury goods. Instead they are buying materials, tools, new or secondhand. Keeping companies like Axminster in business relies heavily, maybe almost entirely on hobbyists. Everyone contributes in their own way, one persons essential is another persons luxury and vice versa.

And to go back to Chris152's point, I am afraid if you think businesses can last 12 months before getting back to normal then please just look at how many business have failed in the last 6 weeks, and those are just the ones who made the news. Our local pub (independent not chain) and a friends pub are both now looking at ways to liquidate the business, they are too small to allow social distancing if they were to re-open and the last 6 weeks have wiped out any buffer they might have had. A lot of small businesses probably have about a month,maybe 2 of buffer built in that would allow them to weather tough times. Government grants might have helped a bit but for many they are just not going to be able to re-open even if it was all lifted tomorrow. Even for big businesses it will tough and their workers, what are 4000 BA pilots going to do? Tesco deliveries?

I do agree with the realities of what's going on, but I do also question the WHY. One of them I feel is our consumptionist society as TN points out - the whole "earn £1 spend 99p = happiness - Earn £1, spend £1.01 = misery" situation. Our society seems to be programmed to spend the £1.01 - and even those who stick to the 99p mark are still in trouble in situations such as this.

I would wager that quite a few of the larger business that have failed recently had shareholders and a company board - they made profits, the board got fat payouts and so did the shareholders, and now the company is failing yet the shareholders are nowhere to be seen.

Maybe more companies in the future might want to consider the system used by Lloyds Bank - the Lloyds names - shareholders get paid in the good times, or have to return that money in the lean times.

or do what the Japanese do - keep a MUCH larger "float" - liquid assets that are easily useable, just like the people who have savings and assets than can easily liquidate.

Buying the largest house you can afford, or the fanciest car is all great while money flows - when it stops and you can't afford it anymore - well that's on you and YOUR choices. Same for companies that leverage existing, yet not fully paid for, assets to open new stores, or to try to expand into other markets etc etc.

Unless I'm mistaken this is how most capitalistic companies work - with no safety net - and this is only 11 years after 2008, so they learned nothing. (apart from banks obviously who seemed to learn they can do pretty much whatever they want)

The scary thing is that (if true) 16 million people only have £100 or less in their bank account / available savings.
That is an awful lot of people just 1 weeks wage away from debt.
my guess an awful lots of people are in the gooey stuff financially right now.

In the last 3 years I earned less than £20,000 after costs - yet because of the way my life has been, and after 2008, I have always been extra cautious about money when I have it - such that I can ride this out without the govt money should I choose to.

Now granted I have no children or non working spouse, but so do quite a few other single people - the largest portion of which are the 18-30 age group - who are now getting a very rude and unavoidable lesson in personal fiscal responsibility.

I would also re-iterate the above about those that spend each month at the 99p mark, have also been doing so without paying heed to 2008, or other previous economic downturns.

I'm not trying to be self righteous even though it may seem that way - I'm simply pointing out that peoples (and businesses and Govts) choices affect thier OTHER choices in times such as now, which seems bizarrely as though it's something most people don't beleive will ever happen to them - except this is the second time in just over a decade.

Those countries with a positive GDP (a cash surplus like we had before Blair) will ride this out no problem, and maybe we should start following thier examples of how they got that way in the near future.

You're not going to like what I'm going to say next but ... leaving the EU may well be one of the things that helps the UK weather the oncoming storm, for a whole bunch of reasons, but the open borders being the predominant one as the very poor EU countries with little to no govt support network, empty out to the countries that do.

 

[lurker]

How many here are old enough to remember Harold Wilson’s “pound in your pocket “.

 

[Garno]

Maybe more companies in the future might want to consider the system used by Lloyds Bank - the Lloyds names - shareholders get paid in the good times, or have to return that money in the lean times.

The Lloyds names are nothing to do with Lloyds bank they are from Lloyds of London a totally different business altogether, this is from Wikipedia

Lloyd's of London, generally known simply as Lloyd's, is an insurance and reinsurance market located in London, United Kingdom. Unlike most of its competitors in the industry, it is not an insurance company; rather, Lloyd's is a corporate body governed by the Lloyd's Act 1871 and subsequent Acts of Parliament. It operates as a partially-mutualised marketplace within which multiple financial backers, grouped in syndicates, come together to pool and spread risk. These underwriters, or "members", are a collection of both corporations and private individuals, the latter being traditionally known as "Names".

The business underwritten at Lloyd's is predominantly general insurance and reinsurance, although a small number of syndicates write term life assurance. The market has its roots in marine insurance and was founded by Edward Lloyd at his coffee house on Tower Street in c. 1686. Today, it has a dedicated building on Lime Street within which business is transacted at each syndicate's "box" in the underwriting "Room", with the insurance policy documentation being known traditionally as a "slip".[1]

The market's motto is Fidentia, Latin for "confidence",[2] and it is closely associated with the Latin phrase uberrima fides, or "utmost good faith", representing the relationship between underwriters and brokers.[1]

Having survived multiple scandals and significant challenges through the second half of the 20th century, most notably the asbestosis affair, Lloyd's today promotes its strong financial "chain of security" available to promptly pay all valid claims. At the end of 2019 this chain consisted of £52.8 billion of syndicate-level assets, £27.6bn of members' "funds at Lloyd's" and over £4.4bn in a third mutual link which includes the Central Fund.[3]

In 2019 there were 80 syndicates managed by 54 managing agencies that collectively wrote £35.9bn of gross premiums on risks placed by 335 brokers. Around 50 per cent of premiums emanated from North America, 30 per cent from Europe and 20 per cent from the rest of the world. Direct insurance represented 68 per cent of the premiums, mainly covering property and casualty (liability), while the remaining 32 per cent was reinsurance. The market collectively reported a pre-tax profit of £2.5bn for 2019, thanks to strong investment income returns.[4]

https://en.wikipedia.org/wiki/Lloyd%27s_of_London

 

[doctor Bob]

Yes the economy is struggling but we aren't at the point yet where the reward outweighs the risk - there are no breadlines or rioting in the streets and people are not dying by the scores every day from malnutrition.

Give it time, as I said you ain't see nothing yet.

 

[Phil Pascoe]

Maybe more companies in the future might want to consider the system used by Lloyds Bank - the Lloyds names - shareholders get paid in the good times, or have to return that money in the lean times.

I think you'll find Lloyd's Bank and Lloyds of London are totally seperate entities.

 

[Trainee neophyte]

Apart from the all too easy typo confusing Lloyds Bank and Lloyds of London, Rafazetter has a point. In the old days, back when we had something approaching a level playing field (free market is too inaccurate a term), shareholders participated in both the gains and the losses of the parent company. These days, with central banks buying shares both indirectly and directly to prop up the price, shareholders can't lose. Neither can the companies, regardless of actual real world performance. Given where we are with a world lockdown, this is going to get worse before it gets better.

https://www.reuters.com/article/swiss-s ... SL8N1B7383

ZURICH, Aug 30 (Reuters) - Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.

 

[Terry - Somerset]

I think the answer is more complex than riots on the streets vs mass poverty , or hunger vs deaths. The UK is a society where laws work largely by consent, not through military or police force.

If unconstrained the virus will spread at a rate of infection of 2.5 - 3.0 - the number of infections doubles approx every 3 days. So after a month (2^10) there will be 1024 times the number of infections than we started with. However you do the sums, daily deaths could readily exceed 10-20,000, possibly more as even minor assistance (eg oxygen, ambulance) would be unavailable. Images of the few months over which it happens will haunt a generation.

But it is clear that the tolerance of the public for constraints will be strained as time passes. Depending on socio-econmoic position of individuals the best strategy for individual survival will be either hermit behaviour (isolation) or disobedience.

Disobedience could manifest itsself as street riots etc, but may be more likely to be the result of individual frustration or economic pressure. Just suppose that in July the skys are blue, the temperature comfortably warm, and the seaside beckons. Tired of constraints, 10,000s individually decide to go to Blackpool, Brighton, St. Ives etc.

The number of people are beyond a simple "move along please" plea. To disperse the crowds will require more. Do the police appear in riot gear, truncheons at the ready, water cannon, horses, dogs, call in the troops, rubber bullets ............. A more likely response will be roadblocks on motorways and 15 miles short of tourist destinations.

We can hypothesise other situations - the police may easily close a single pub that opens - but what happens if 20 in the local area are open? Self employed start working - plumbers, electricians, kitchen fitters etc - there is a backlog of work to do, they are financially stressed, what happens?

IMHO the government will very slowly relax some elements of lockdown, probably at a rate just ahead of the point at which material disobedience kicks in. This also gives them time to build stocks of PPE, antibody testing (?), set up trace and track etc.

Both alternatives are unacceptable - mass deaths, or a second wave forcing a further severe costly lockdown to avoid the death toll.

 

[Trainee neophyte]

I think the answer is more complex than riots on the streets vs mass poverty , or hunger vs deaths. The UK is a society where laws work largely by consent, not through military or police force.

If unconstrained the virus will spread at a rate of infection of 2.5 - 3.0 - the number of infections doubles approx every 3 days. So after a month (2^10) there will be 1024 times the number of infections than we started with. However you do the sums, daily deaths could readily exceed 10-20,000, possibly more as even minor assistance (eg oxygen, ambulance) would be unavailable. Images of the few months over which it happens will haunt a generation.

But it is clear that the tolerance of the public for constraints will be strained as time passes. Depending on socio-econmoic position of individuals the best strategy for individual survival will be either hermit behaviour (isolation) or disobedience.

Disobedience could manifest itsself as street riots etc, but may be more likely to be the result of individual frustration or economic pressure. Just suppose that in July the skys are blue, the temperature comfortably warm, and the seaside beckons. Tired of constraints, 10,000s individually decide to go to Blackpool, Brighton, St. Ives etc.

The number of people are beyond a simple "move along please" plea. To disperse the crowds will require more. Do the police appear in riot gear, truncheons at the ready, water cannon, horses, dogs, call in the troops, rubber bullets ............. A more likely response will be roadblocks on motorways and 15 miles short of tourist destinations.

We can hypothesise other situations - the police may easily close a single pub that opens - but what happens if 20 in the local area are open? Self employed start working - plumbers, electricians, kitchen fitters etc - there is a backlog of work to do, they are financially stressed, what happens?

IMHO the government will very slowly relax some elements of lockdown, probably at a rate just ahead of the point at which material disobedience kicks in. This also gives them time to build stocks of PPE, antibody testing (?), set up trace and track etc.

Both alternatives are unacceptable - mass deaths, or a second wave forcing a further severe costly lockdown to avoid the death toll.

I don't think Bob's worried about a few bored yoofs breaking quarantine rules: people riot when they are hungry, unemployed, and forced to pay poll tax. Or have their work forcibly closed and their communities destroyed. Basically, Brits riot in the 1980s recessions. Are we headed back to the era of awful music and bad hair cuts?

Edit: I've just looked it up, and the poll tax riots were in 1990 - my bad. I'm still right about the haircuts.

 

[doctor Bob]

Apart from the all too easy typo confusing Lloyds Bank and Lloyds of London

not a typo, it's a lack of knowledge.

 

[Blackswanwood]

Apart from the all too easy typo confusing Lloyds Bank and Lloyds of London, Rafazetter has a point. In the old days, back when we had something approaching a level playing field (free market is too inaccurate a term), shareholders participated in both the gains and the losses of the parent company. These days, with central banks buying shares both indirectly and directly to prop up the price, shareholders can't lose. Neither can the companies, regardless of actual real world performance. Given where we are with a world lockdown, this is going to get worse before it gets better.

https://www.reuters.com/article/swiss-s ... SL8N1B7383

ZURICH, Aug 30 (Reuters) - Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.

Is there no end to your extrapolation of oddities from the internet? :lol: :x

Switzerland pursued this strategy of passive investment as part of their monetary policy. They didn’t do it to prop up share prices. It’s not an activity carried out routinely by central banks albeit some countries have sovereign wealth funds which invest excess income in different assets.

If you can point me in the direction of where this share propping activity that means I cannot lose is I will be eternally grateful as I would like some of it. Unfortunately it isn’t happening!!!

 

[Trainee neophyte]

Apart from the all too easy typo confusing Lloyds Bank and Lloyds of London, Rafazetter has a point. In the old days, back when we had something approaching a level playing field (free market is too inaccurate a term), shareholders participated in both the gains and the losses of the parent company. These days, with central banks buying shares both indirectly and directly to prop up the price, shareholders can't lose. Neither can the companies, regardless of actual real world performance. Given where we are with a world lockdown, this is going to get worse before it gets better.

https://www.reuters.com/article/swiss-s ... SL8N1B7383

ZURICH, Aug 30 (Reuters) - Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg, part of a mushrooming stock portfolio that is likely to grow yet further.

Is there no end to your extrapolation of oddities from the internet? :lol: :x

Switzerland pursued this strategy of passive investment as part of their monetary policy. They didn’t do it to prop up share prices. It’s not an activity carried out routinely by central banks albeit some countries have sovereign wealth funds which invest excess income in different assets.

If you can point me in the direction of where this share propping activity that means I cannot lose is I will be eternally grateful as I would like some of it. Unfortunately it isn’t happening!!!

Isn't it? Remember the "taper tantrum"? Looked like propping up the market to me.

Well, we have the Plunge Protection Team, which officially doesn't exist, and then there is this: Edit: I wanted to show a chart showing qe and stock prices, but it didn't show up. Here's an article which goes into the whole thing: https://seekingalpha.com/article/430535 ... ock-market

Of course correlation isn't causation.
https://www.msn.com/en-us/money/markets ... r-BB11B2hh

That would be actively affecting bond prices by buying ETFs (but not bonds themselves, so it's not monetisation or market rigging).

https://www.newsmax.com/finance/streett ... id/904724/

...The two most prominent "convertibles" are the Bank of Japan and the Bank of Switzerland. The Bank of Switzerland now owns $8.8 billion in U.S. technology stocks.

The Bank of Japan’s voracious appetite for Japanese exchange-traded funds also did not abate with the Dow and the Nikkei’s October highs. In fact, the bank bought a record $7.68 billion in October, “apparently aiming to support equities.” Central banks obviously feel safe employing this policy, and the public finds a reason to feel safe because of it...

If one central bank buys into a market, that affects not just the local market, but the entire world. I quite agree that the Swiss bank is doing it to try to keep their exchange rate down, but they are still flooding the market with cash, which is pushing the bubble higher, around the world.

We have Trump complaining that the Fed isn't doing enough to get stock prices up, until they do, whereupon it's the best organisation since sliced bread: https://www.bloomberg.com/news/articles ... m-on-virus

“I am happy with him,” Trump said at a White House news conference. “I really think he’s caught up. He’s really stepped up over the last week. I called him today and I said ‘Jerome, good job.’”

The Fed ventured into unchartered territory Monday by offering to directly finance U.S. companies, jumping ahead of the government, which is still struggling to produce a multi-trillion dollar package of support for American businesses and families.

Powell and his colleagues at the U.S. central bank went all in early Monday with another series of emergency actions to keep credit flowing. In their latest steps, the Fed went beyond its normal parameters to pledge support not only to financial markets but also through lending to businesses, states and municipalities that are buckling as the economy shutters to stem the virus.

The lack of a deal by Congress on the latest fiscal-stimulus measures later Monday contributed to a continued slide in stock markets. Wall Street benchmarks closed Monday at their lowest in more than three years.

Not everything above is direct purchasing of shares, out in the open, but it is all market manipulation of one variety of another. Free market, democratic , non-interventionist, open government. Marvelous stuff.

 

[rafezetter]

Apart from the all too easy typo confusing Lloyds Bank and Lloyds of London

not a typo, it's a lack of knowledge.

Thanks for that generosity of doubt Trainee Neophyte - appreciated.

It wasnt either actually actually Bob - I was on a mental line of thought about those people that get dividends from shares in privately owned companies, where the amount of shareholders is less and the dividends significantly higher - and my understanding is they generally don't then get tapped by the same companies for funds when the company is struggling - but I freely admit that is just my limited understanding.

However that line of thought then jumped the tracks as the remembrance of the Lloyds names appeared about how at first it was just the very wealthy were offered to be a Lloyds name, then as more and more dilution of risk was required, they opened it up to people with income and assets thresholds much lower - and those people who had become a Lloyds name "for the profits" without really accepting the "losses" part could happen (and without the means to soak up potential losses), then started to get stung when Lloyds of London had some heavy losses and people lost life savings and in some cases, homes.

I did say I had been in the insurance / assurance sector myself, but for a different area, and most of that was not information I needed professionally, but I was still aware obviously; However it's been a while and that information hasn't exactly been at the forefront of my mind for almost 30 years. Normally I do factcheck a lot of the time, so as not to look or thought a fool, on this occasion I didn't, and although I still haven't now I'm fairly confident my recollection is a little clearer - or have I got it wrong again?

or I should just keep my mouth shut?

Look - without the pedantry I'd like to think people get my point of saying that the wealthy are more than happy to take the cream off the top in the good times, but are suddenly nowehere to be seen in the lean times - and the people at the bottom pay the price with lost jobs - again.

I think most would find that hard to refute.

 

[rafezetter]

Further to stuff I've said about easing the lockdown I'd like to share some information that was part of an email I was copied into just this morning - this has come directly from one of the scientists working on a vaccine Michelle Baker (via Her Uncle whom my stepmother has known for 45 years) - as part of an interview she did.

------------------

I'm back, thought you might be interested to know, if I haven't told you already, that my niece Michelle is one of the scientists working on finding a vaccine, although she said it is probably a long way off they are hoping to find an antiviral in the meantime.



She is a clever little one, was interviewed recently and the following was in most of the papers here.



Michelle Baker, a world-leading bat immunity researcher based at the CSIRO, agreed that scientists had been waiting for the next coronavirus outbreak and she expected they would become more frequent.

"I wasn't expecting it to be this bad. But I'm not surprised it's a coronavirus at all," she said.

When Dr Baker started in the field a decade ago, she "could review everything we knew about bat immunology in an afternoon. There were no resources, no reagents.

"We have been completely complacent. Not nearly enough research has been done.

"It gets really difficult to get funding when there is not an outbreak. People feel a sense of security. They don't feel it's relevant any more."

"We were just waiting for the next outbreak. I'm not surprised at all. And I hope we can learn from this one. Because they are probably going to become more frequent." - interestingly I just heard this morning on the news that we will get more of them in the future and they could be worse than this one.

She is at the CSIRO in Geelong and there has been a lot in the media recently about 2 scientists from Wuhan who spent time there. I recalled in her early days there she often had post doctorate students working under her and I have just asked her if this chap was one of them and yes he was. She said she doesn't believe the virus came from the lab in China but "who knows". She said the media have been camping out at the CSIRO from 6am and she has been inundated for interviews but "handballed" them to their communications department. She hates being interviewed or televised but sometimes can't avoid it.

I asked her did she think the Govt was premature in relaxing the isolation rules at this stage and she said yes. She said to keep isolating and take care, I will.

----------------

This is literally as close to "the horses mouth" as it gets, and as such I feel vindicated in my beliefs that the threat of a second wave is far from over and relaxing the lockdown is an EXTREMELY bad idea.

oh and then there's this nugget:

https://edition.cnn.com/2020/04/29/asia ... index.html

I reiterate people are stupid and this will happen pretty much everywhere they ease lockdowns.

Edit and I've just heard this on the radio:

Russia records its biggest increase of Covid-19 cases

Russia has recorded its highest daily rise in confirmed Covid-19 cases, with 10,633 new cases listed today a large portion of them are from people WITH NO SYMPTOMS whom have only become aware they have it via screening. It brings the overall number to 134,686. A further 58 deaths have been reported by the country’s coronavirus crisis response centre, increasing the total number of fatalities to 1,280.

The people that have tested positive without screening could well have been behaving as though they don't have it - no gloves, no masks, no close attention to social distancing.

But sure - ease the lockdown - open stuff up - I'm sure you'll be fine, right?

It's unreal that I've been getting angry PM's from people saying I'm risking thier livelilhoods while utterly not getting that what I'm advocating might SAVE THIER LIVES!!!!

*sheesh*.

 

[RogerS]

....
However that line of thought then jumped the tracks as the remembrance of the Lloyds names appeared about how at first it was just the very wealthy were offered to be a Lloyds name, then as more and more dilution of risk was required, they opened it up to people with income and assets thresholds much lower - and those people who had become a Lloyds name "for the profits" without really accepting the "losses" part could happen (and without the means to soak up potential losses), then started to get stung when Lloyds of London had some heavy losses and people lost life savings and in some cases, homes.

.....

Getting 'stung' is an emotive word. Sorry but I disagree...anyone going into a Lloyds Syndicate is responsible for their own actions.

 

[RogerS]

....

I reiterate people are stupid and this will happen pretty much everywhere they ease lockdowns.

.....

Actually I'm all for it. It's the stupid ones who behave as if nothing has happened, queue in NZ for a burger FFS! So they get Covid...great...the cull has started. About time to.

 

[Phil Pascoe]

About time to what?