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Is recession looming?

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Nimrod103
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Re: Is recession looming?

#636583

Postby Nimrod103 » December 28th, 2023, 9:26 am

funduffer wrote:
Nimrod103 wrote:
There is a limit to the amount of debt which countries can build up, and many western countries including the USA are now approaching it. It will be interesting and not a little nerve wracking to see how much more debt we can take on.

Without recourse to further debt, governments can only bribe the electorate by paying Peter (their supporters) by taxing Paul (their ideological enemies).


Debt as a % of GDP - USA 110%, Japan 214%, so USA nowhere near any limit.

If you want the main influences on GDP growth - then they are, in my opinion low birthrate/increasing longevity, climate change and inequality.

Low birthrate can be fixed by increasing immigration - as Japan are finding out

Climate change will need public investment, particularly in renewables, which improve energy self-sufficiency. Food security will become a problem and UK is in a poor position.

Inequality can be fixed by progressive taxation policies - call it socialism if you like. Too much wealth in the hands of the few will lead to civil strife and does nothing to promote growth. Trickle down has never worked.

FD


The debt limit for a country depends on who holds that debt. Japan gets away with its high debt because it is held domestically, with a culture that encourages domestic savings. The USA probably has headroom because it issues the World's dominant currency, and is the World's most productive economy. How much more borrowing can the UK do? We may soon find out.

GDP growth depends a lot on the cost of energy. The UK has electricity costs 75% higher than the USA, combined with an anti-investment culture. No wonder it is cheaper to import immigrants instead of increasing automation. Wind power may give us electricity self sufficiency (when the wind blows), but don't let us fool ourselves that it is cheap.

Food security is not an issue while we can still import avocados. But should the need arise, I am sure we can change our diet to one of turnips and potatoes. The main issue is just the sheer number of unproductive mouths we have to feed here.

Too much wealth in the hands of a few leads to greater investment and greater productivity. That is what happened in the Industrial Revolution. Spreading the money around just leads to more people who prefer and can eat avocados when they should be eating potatoes.

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Re: Is recession looming?

#636591

Postby Mike4 » December 28th, 2023, 10:13 am

Nimrod103 wrote:
GDP growth depends a lot on the cost of energy. The UK has electricity costs 75% higher than the USA,


THIS needs unpacking and examining.

As I understand it, the price of electricity in the UK is unconnected with the cost of production, but pegged to the price of gas. There may be good historical reasons for this but as we slowly switch to renewables and nuclear, it needs reconsidering and I see no sign of that happening.

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Re: Is recession looming?

#636595

Postby servodude » December 28th, 2023, 10:38 am

Mike4 wrote:
Nimrod103 wrote:
GDP growth depends a lot on the cost of energy. The UK has electricity costs 75% higher than the USA,


THIS needs unpacking and examining.

As I understand it, the price of electricity in the UK is unconnected with the cost of production, but pegged to the price of gas. There may be good historical reasons for this but as we slowly switch to renewables and nuclear, it needs reconsidering and I see no sign of that happening.


Bingo.
The prices to the consumer (including industry) here are helluva artificial and designed to pluck the goose more as the actual costs of production are falling drastically.
Unless you have your own hypothecated supply from renewables you are not getting the benefit from the decades of advancement in technology - and are being exploited to shore up retrograde and legacy companies and market models

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Re: Is recession looming?

#636613

Postby Oggy » December 28th, 2023, 11:55 am

Renewables are of course a scam. Not only are they heavily subsidised by the taxpayer, the promised benefits in terms of lower prices have not materialized. The old chestnut trotted out by energy companies that the price of electricity is based on gas is total BS considering most electricity is now generated by wind - up to 70% of it these last few weeks.

Rip off Britain strikes again and HMG does nothing.

funduffer
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Re: Is recession looming?

#636656

Postby funduffer » December 28th, 2023, 3:28 pm

Oggy wrote:Renewables are of course a scam. Not only are they heavily subsidised by the taxpayer, the promised benefits in terms of lower prices have not materialized. The old chestnut trotted out by energy companies that the price of electricity is based on gas is total BS considering most electricity is now generated by wind - up to 70% of it these last few weeks.

Rip off Britain strikes again and HMG does nothing.


I am afraid you need to better understand how electricity is priced, as you are far away from reality. Try this simple explanation:

https://www.sustainabilitybynumbers.com ... ty-pricing

FD

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Re: Is recession looming?

#636667

Postby Oggy » December 28th, 2023, 3:59 pm

The price is still broadly related to the price of gas - as others have pointed out. The pricing philosophy outlined in your link is also deliberately opaque and needs to reflect the lower prices we were all promised and is made possible as a result of generating electricity by renewables.

We are not seeing the cost benefits. All of us are being ripped off....again.

Nimrod103
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Re: Is recession looming?

#636700

Postby Nimrod103 » December 28th, 2023, 5:46 pm

funduffer wrote:Try this simple explanation:

https://www.sustainabilitybynumbers.com ... ty-pricing

FD


Quite interesting summary, but worth also reading the two comments afterwards for how the renewable industry costs are inflated. I'm also not clear as to whether gas and coal generating costs are forced up by the need to buy carbon credits.

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Re: Is recession looming?

#662184

Postby TheMotorcycleBoy » April 30th, 2024, 3:31 pm

funduffer wrote:
Oggy wrote:Renewables are of course a scam. Not only are they heavily subsidised by the taxpayer, the promised benefits in terms of lower prices have not materialized. The old chestnut trotted out by energy companies that the price of electricity is based on gas is total BS considering most electricity is now generated by wind - up to 70% of it these last few weeks.

Rip off Britain strikes again and HMG does nothing.


I am afraid you need to better understand how electricity is priced, as you are far away from reality. Try this simple explanation:

https://www.sustainabilitybynumbers.com ... ty-pricing

FD

Thanks for sharing. It's horrendous, and utterly corrupt. There are (IMHO) far more "fair" ways of calculating energy costs.

For fox's sake, we've got computers and stuff, that could easily average out the real costs, presumably on a daily basis.

Matt

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Re: Is recession looming?

#662186

Postby scrumpyjack » April 30th, 2024, 3:47 pm

Oggy wrote:Renewables are of course a scam. Not only are they heavily subsidised by the taxpayer, the promised benefits in terms of lower prices have not materialized. The old chestnut trotted out by energy companies that the price of electricity is based on gas is total BS considering most electricity is now generated by wind - up to 70% of it these last few weeks.

Rip off Britain strikes again and HMG does nothing.


Much of the subsidy comes not from the taxpayer but from the standing charge on consumers electricity bills. That's where my feed in tariff payment comes from. Rather silly that the loading is on the electricity standing charge, not the gas one as it should be to encourage any switch from gas to leccy

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Re: Is recession looming?

#662211

Postby MuddyBoots » April 30th, 2024, 8:01 pm

funduffer wrote:
Oggy wrote: Renewables are of course a scam. Not only are they heavily subsidised by the taxpayer, the promised benefits in terms of lower prices have not materialized. The old chestnut trotted out by energy companies that the price of electricity is based on gas is total BS considering most electricity is now generated by wind - up to 70% of it these last few weeks.

Rip off Britain strikes again and HMG does nothing.


I am afraid you need to better understand how electricity is priced, as you are far away from reality. Try this simple explanation:

https://www.sustainabilitybynumbers.com ... ty-pricing

FD


Thanks for the link. It says
"It costs very little to produce solar and wind, whereas coal or natural gas can be expensive because you have to buy the fuel to keep the plant running."
Unfortunately there's no scales on the graph to help us compare £ per MWh but as a rough visual guess I'd say that gas is about 10x more expensive to produce than renewables. And if the renewables firms are being paid the same price for their electricity as the gas firms, that represents a huge subsidy already so why do we need green levies added to our bills as well?
Presumably the cost of production per unit includes absorbed depreciation of the generating plant, so they're earning back the capital costs of construction, which I think is what we were told the levies were for. So it sounds like someone could be making a large profit margin out of renewables.

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Re: Is recession looming?

#662799

Postby Gilgongo » May 4th, 2024, 12:48 pm

We're probably way off topic now but...

MuddyBoots wrote:So it sounds like someone could be making a large profit margin out of renewables.


Well yes, but not for the reasons people seem to think. The way prices are determined (in the UK and most other countries) for things like energy and many other "uniform goods" is a product of free market capitalism working in the way Margaret Thatcher et. al. intended: to promote efficiency and lower prices (eventually!) without government help.

A simple example: Two wheat farmers, one very modern and automated with low production costs of £2 a tonne, one traditional with loads of expensive manual labour setting costs at £10. Both farms produce the same quality. Both are required to supply demand.

• The more expensive farm will not sell below £10 or it would make a loss.
• The more efficient farm can sell at £10, because that’s what consumers (currently) pay.

So there's a uniform price because the good is uniform, and that price will be determined by the cost of the marginal producer. Same thing for electricity.

If you want it any other way, you'd need to artificially lower the price to put the inefficient firms out of businesses faster. But in doing so, you'd also be removing some incentive from the efficient firms to get more efficient and do it that way. Or at least that's the theory.

If you think that what's happening is that renewables are being given undeserved subsidies, then that's a different matter. But the idea there is to kick start the market because you may have noticed there's a war on called "climate crisis".

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Re: Is recession looming?

#662820

Postby vand » May 4th, 2024, 2:37 pm

If we want to get back on topic, the last NFP out of the US was pretty weak - below consensus on all 3 key area of new jobs, wage growth and hours worked. Add to that the weak 1.6% Q1 GDP number that almost got buried last week and it is obvious that the US is cooling off pretty fast since that mega 5% Q3-23 print.
Of course 1.6% is not recession, but the momentum is heading that way if they are not careful and continue with the higher for longer rates narrative.

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Re: Is recession looming?

#662930

Postby 1nvest » May 5th, 2024, 12:56 am

This guy advises President Biden on economic matters

https://content.invisioncic.com/l328053 ... 8d0c26.mp4

If Biden wins again ... depression looks certain to follow. But that looks unlikely, his support is pretty low https://youtu.be/zEkY4JAkdwI

Trump is desperate to win, so even if he's in Jail he'll be able to secure a Presidential Pardon.

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Re: Is recession looming?

#662946

Postby GoSeigen » May 5th, 2024, 8:07 am

Mar 2022: "I find it difficult to imagine how the rocketing energy and general prices aren’t going to tip us into a recession within,well, let’s say a year."

Nov 2023 "10Y/3M spread is now inverted.
About a clear warning of US recession as you will ever get. [...] On an anecdotal level, I am hearing and sensing that most companies have done a full 180 in terms of hiring and now looking to cut jobs
"

Today:
vand wrote:If we want to get back on topic, the last NFP out of the US was pretty weak - below consensus on all 3 key area of new jobs, wage growth and hours worked. Add to that the weak 1.6% Q1 GDP number
[... ]Of course 1.6% is not recession, but the momentum is heading that way


From the above track record I surmise the OP has no real grasp of what's actually going on, he's just pushing his own narrative, evidently because he's not long the markets, hoping for a "crash" -- of which we have had two in the past four years, is that not enough for some people?

In 2022 the S&P was more than 30% below current levels. In 2022 it was more than 55% below current levels. Was he taking advantage of those "crashes"? I bet not!

I call the markets up a year from now and vand still waiting for his "crash".

GS

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Re: Is recession looming?

#663044

Postby vand » May 5th, 2024, 7:03 pm

GoSeigen wrote:Mar 2022: "I find it difficult to imagine how the rocketing energy and general prices aren’t going to tip us into a recession within,well, let’s say a year."

Nov 2023 "10Y/3M spread is now inverted.
About a clear warning of US recession as you will ever get. [...] On an anecdotal level, I am hearing and sensing that most companies have done a full 180 in terms of hiring and now looking to cut jobs
"

Today:
vand wrote:If we want to get back on topic, the last NFP out of the US was pretty weak - below consensus on all 3 key area of new jobs, wage growth and hours worked. Add to that the weak 1.6% Q1 GDP number
[... ]Of course 1.6% is not recession, but the momentum is heading that way


From the above track record I surmise the OP has no real grasp of what's actually going on, he's just pushing his own narrative, evidently because he's not long the markets, hoping for a "crash" -- of which we have had two in the past four years, is that not enough for some people?

In 2022 the S&P was more than 30% below current levels. In 2022 it was more than 55% below current levels. Was he taking advantage of those "crashes"? I bet not!

I call the markets up a year from now and vand still waiting for his "crash".

GS


Nobody gets everything right, but remind me in the UK at least what we have just had in the last 2 quarters..? Starts with "re" and rhymes with "tession"

And I did I say that would cause a market crash? I mean, I may well have, but I am not stupid enough to conflate the economy and the stock market

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Re: Is recession looming?

#663177

Postby Whatsitworth » May 6th, 2024, 7:17 pm

The one thing that stood out to me from the Berkshire annual meeting was how bearish the old geezer from Omaha was

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Re: Is recession looming?

#663242

Postby 1nvest » May 7th, 2024, 8:44 am

Whatsitworth wrote:The one thing that stood out to me from the Berkshire annual meeting was how bearish the old geezer from Omaha was

With the more recent loss of his mentor (Charlie Munger) and hit with facing his own mortality, and BRK being little different to a closet index tracker over the last 20 years

Image

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Re: Is recession looming?

#663699

Postby bungeejumper » May 10th, 2024, 1:06 pm

vand wrote:Nobody gets everything right, but remind me in the UK at least what we have just had in the last 2 quarters..? Starts with "re" and rhymes with "tession"

My old boss used to have a cartoon strip from the Wizard of Id pinned to his wall. The head of the Treasury comes in and tells the king that he's got some good news and some bad news.

"Okay," the king sighs, "it's been a long week. Tell me the good news."

"Sire, the recession is finally over!"

"Splendid! Excellent! And the bad news?"

"The depression is about to start". :|

BJ

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Re: Is recession looming?

#663717

Postby GoSeigen » May 10th, 2024, 3:23 pm

vand wrote:Nobody gets everything right, but remind me in the UK at least what we have just had in the last 2 quarters..? Starts with "re" and rhymes with "tession"



So he's a bull now. TF for that, no more doom and gloom.


GS
P.S. What in God's name is tession? And what does it rhyme with?

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Re: Is recession looming?

#664448

Postby 1nvest » May 15th, 2024, 3:30 pm

vand wrote:Recessions are always multi-factoral and so just blaming it on one thing is overly simplistic, but sometimes it is clear what breaks the camel’s back, and I think that $130 oil and £1.70 petrol, and doubling utility prices will do it.

State over regulation and regularly changing the rules, and a dumb workforce - even have to import workers to do jobs such a plumbing and from the global arena perspective the UK looks to be one of the least attractive places to invest (list) in.


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