Reply With Quoteeaglem (08-06-23),lsemmens (08-06-23),red star (07-06-23),VroomVroom (13-06-23)
continued interest rate increases
with the RBA continuing to increase interest rates they seem to be now shifting from "bringing down inflation" to "bringing down inflation faster"
It really feels like they have no clue what they are doing here.
the RBA governor was grilled the other week by the senate committee because interest rate increases are now feeding into rental prices that are now the driving force of inflation figures. in essence it is feeding back now into the system increasing interest rates are at this point having the opposite effect
In this video from 18:10 -24:30
and in this video
Lowe argues that the rental price increases are a result of record low availability but wont acknowledge that the as that is the status of the market its increased interest rates that are triggering these rises.
Further more his argument is that more housing needs to be built yet wont acknowledge that the that is becoming harder and people are more reserved to build given the instability in the building market with the building companies going bust largely in line with massive interest rate hikes
so the RBA is stifling supply of housing, then blaming that lack of housing for the price increases in rent because there is low vacancy rates allowing interest rate increases to be passed on.
The RBA are also blaming the cost of electricity going up and one of the reasons given by the market regulator to allow this increase was due to the increasing cost of money directly resulting from interest rate increases.
so i guess my question is, given the blinkered approach the RBA is taking how many more interest rate increases are they going to perform before they trying something else? will they just keep increasing interest rates untill 30% of austrailians are living on the street?
additionally
from 3:15 - 3:53 Lowe says the tool they use to regulate inflation is felt unevenly across the community (neglecting to articulate that it is poorer people who suffer the most)
from 3:54 - 4:30 he then says that if they didn't act it would make inflation higher and would effect more people. (there is no evidence to support the fact that increasing interest rates further would negate this)
As an Australian i feel ashamed that our system relies on crippling the poor and throwing them under the bus to regulate our economy. doing this disproportionately benefits the rich too
eaglem (08-06-23),lsemmens (08-06-23),red star (07-06-23),VroomVroom (13-06-23)
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justification by someone who has never struggled with the cost of life or the cost of credit.........
Lets be real - lots of Phillips mates lost a lot of money during the worlds worst virus - time to get it all back
"edit" forgot to mention the war...
f
有段者
Name me a system that doesn't.....Originally Posted by bazzy
The target population are the middle class with aspirations....the truly poor can't fund jack.
The fact that there's a highway to hell and a stairway to heaven says a lot about the anticipated traffic flow.
unfortunately in reality the poorest are targeted too by the line of rental cost increases that are also a direct result of the interest rate rises.
eaglem (08-06-23)
True, but the really poor haven't the resources to pay the tax increases needed to fund everything. So government targets the middle class...especially those trying to get ahead who may have a little extra to steal.
The fact that there's a highway to hell and a stairway to heaven says a lot about the anticipated traffic flow.
Just remember the RBA is not one person.
There is an an actual Board and all decisions are a product of the Board and just not one person.
Also remember that they have only one job and that is to control Interest Rates to control Inflation.
They cannot control Government, or any other, inflationary spending.
They have no other tools in their scope of authority.
Don't shoot the messenger just because he is the spokesman.
I don't think he presents well either. He should word his comments with more thought.
Also true however they interest rate increases go to the banks profit not to the government.
Edit: i actually tried to reply this much earlier tonight but for some reason it failed to post twice. so that is why i have now posted two responses one after the other
Last edited by bazzy; 08-06-23 at 01:22 AM.
There have been a couple of people who are former board members that have indicated that Phillip Lowe comes into that board meeting with his mind made up and that you don't dare contradict him.
When you look at the findings from the commission into the RBA they have stated that the board lacks the necessary skillet to make monetary policy decisions and that is why they have recommended that the board gets split up into two boards. one to run the central bank and the other to make monetary policy decisions. the monetary board is going to be stacked with members who have appropriate qualifications and skillset to make effective decisions.
one has to take home from that recommendation that the RBA board in its current configuration is not capable to do that effectively it was the outcome.
when you read that report it doesn't take much reading between the lines to validate those comments from former board members when read in the light of the commission outcome.
The banks pay tax on the profit. Whether that tax is adequate, and that profit is excessive is a different issue. THEY are lending you the money and are entitled to make a profit. You go into it with your eyes open...or at least you should.
As for the reserve bank, I've always been skeptical of reports from investigations of these issues. Governments ALL want control of the reserve bank, which is why it is seperated. Would you trust the government to set interest rates? I wouldn't trust a politician with a potato gun.
Lets not forget that the feds HAD a lever on the banking and lending system. It was called The Commonwealth Bank. They sold it to balance the books, just like many bad managers have to do to assets. (I'm an expert in bad management)....
The fact that there's a highway to hell and a stairway to heaven says a lot about the anticipated traffic flow.
Actually the interest rat0e increase is a BASE rate increase, which, in effect, does go to the Govt. (Reserve bank.) The others pass it on and pad it a little to help their profits. The net effect, according to economists is that more is returned to depositors in interest payments and it "encourages" savings, so that mum and dad can get a better return on their savings.
All BS, by the way. All it does is drive spending down ('cause no one has ANY disposable income), Housing prices go up, because no one can afford to build/buy (hence the housing shortage) Wages are forced up to counter the costs of the increased interest rate on ALL borrowings (Remember: the Base rate does not only affect housing, but ALL borrowings). Costs go up to reflect the increased interest rates and so on. Inflation, as an excuse, is a load of fertilizer!!! I would have considered that raising the tax rate would have a better effect on the economy in that the govt gets the money anyway and those that earn more, then pay more tax.
I'm out of my mind, but feel free to leave a message...
Taking money off the wealthy is fine if they are prepared to wear it. Governments are always greedy, and if they take too much then they destroy the wealth and there is no more.
We have an unsustainable welfare system. I don't even pretend to have the solution, but it's obvious there are too many relying on it. Politicians don't necessarily mind that of course as it gives them control over large swathes of the population, and more importantly, votes. He who robs Peter to pay Paul can always count on the support of Paul.
Old political vexations still hold true.
The fact that there's a highway to hell and a stairway to heaven says a lot about the anticipated traffic flow.
unfortunately for the government for them to retain the support from the overwhelming majority being the middle income families they are going to have to do something about this. They will very fast loose support and will become in-electable if middle income families remember them as the government that ignored cost of living pressures and didn't act resulting in families loosing their houses.
That states more about the inability of the board members rather than his.
enf (09-06-23)
if it hits the 17% we copped then you will know what is like to try and keep your head above water
I didn't have a mortgage at the time. I was renting. But we had friends who brought their kids (4) over twice a week for a meal to make ends meet....
I doubt the ALP will let that happen again...they wouldn't be that careless would they?
The fact that there's a highway to hell and a stairway to heaven says a lot about the anticipated traffic flow.
yeah because 17% interest rate on a $100k mortgage when interest rates where that high was a lot harder than 17% interest on a $733000 mortgage.
I get very sick of hearing the "we had it harder" argument from older generations. the data just simply doesn't support that. It is MUCH harder to own a house now than it was back in the 80s
The math shows that a 20% interest rate (rba's 17% plus the average 3% added by the banks) on an average house price in the year of 1988 was $100k the interest accrued at that rate is $20k per year.
the average house price in Australia now days is $733k 20% on that 20% interest is $146,600 for the year.
that is a much larger sum of money for interest to accrue exponentially.
now looking at the statistics the average wage in Australia at that same time was 32k/y notice that is higher than the accrued interest in that year.
The average wage in Australia in 2023 is $70,076 notice that is not even half the interest accrued.
This isnt even taking into consideration the cost of things like power and water and rates and everything else that has gone through the roof in the last year or so.
Last edited by bazzy; 09-06-23 at 12:47 PM. Reason: Corrected error
lsemmens (09-06-23),peteramjet (09-06-23)
No one is saying it was harder...just that it was hard...
Buying and owning a home is almost unnaffordable now, that's obvious.
As for the cost of living increases, they will continue. This government was elected in part due to absolute promises that they would cut the cost of living. They even gave figures. They just plain lied. Add to that the insane rush to power the country on pixie dust, and you have a recipe for disaster, not to mention the real possibility of many vulnerable dying due to the insane costs of heating and power.
Wheres it going to all go?
The fact that there's a highway to hell and a stairway to heaven says a lot about the anticipated traffic flow.
wages were a lot lower at that time my payments went from $69 a month to $151 while wages only increased by 50% to about$ the value of the house increased by 15% to about $90 a week i feel for those on low wages now trying to find the extra money
enf (09-06-23)
Interest rates and wages are only half the issue. The biggest issue we now have is significantly higher cost of living expenses.
While wages may have been lower at that time, a single income couple (on one median income) with a family could live almost anywhere. With that single median income you could support a family, have a mortgage, and live a ‘reasonable’ life.
In todays world, even with a couple on two median incomes, many areas in capital cities are completely inaccessible due to the prices. Due to these prices a mortgage now consumes a far higher portion of those combined incomes (note combined, not single) and families legitimately struggle to keep their heads above the poverty line due to the basic cost requirements of modern life (phone connection, internet, power, heating, etc).
and before anyone jumps in and says these are luxuries. Internet in the modern world is as essential as electricity in that it is needed these days to access your bank. it is also required for a lot of jobs. i know my job has oncall duties and requires internet access to be able to connect in. Mobile phone connectivity in younger generations is our equivalent to land line connectivity in the older generation. it has also become a safety thing now days with increased crime rates (yet another symptom of high costs)
as for the older generations heating is really a necessity, i really concern for my mother who wont even turn the heat on in the coldest of winter.
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