I think the major players may have decided that the disadvantages of dropping rates out way the advantages. Without rate cuts, and the possibility of rate rises, I see no way forward. It's as if house prices are being used to flog the nation.
I tend to agree, cutting rates further will only fuel the Sydney property market, which could then develop into a bubble if It keeps growing at 15% per year for a few more years.
The problem the RBA has it next months unemployment figures show it is still rising, the RBA will be forced into action. The Government may also have to rethink the budget and move much faster on its infrastructure spending. I think infrastructure spending is a way for the Government to be able to spend more, temporary increase in the deficit. It will win votes, create jobs, provide long term economic benefit for short term political pain. If I was Hockey I would unleash an infrastructure wave soon so it is in full swing in the lead up to the next election.
Something tells me we will hear more about this in the near future.
If unemployment continues to rise the RBA will have to move rates regardless of the effect on house prices. I do not think it will have a huge impact as the Banks are already cutting rates due to competition.
Look at this logically, A Government will do what ever it takes to survive. If it needs to spend big to do it, it will do so. The Government cannot go to the next election with unemployment in the high 6's or low 7's = defeat. So something very soon is going to give, either unemployment trends down which I think it will, or if it keeps rising the Government will have to respond for its own survival. This may mean another large stimulus package but directed towards Infrastructure, plus jaw boning of the RBA to cut rates to 2% or below.
Should the Government embark on stimulus plus the RBA cutting rates, well that is only going to give property prices another big leg up nation wide. However the longer term outlook would be concerning, you could get the bubble so many bears talk about but does not exist today.
I tend to agree, cutting rates further will only fuel the Sydney property market, which could then develop into a bubble if It keeps growing at 15% per year for a few more years.
The problem the RBA has it next months unemployment figures show it is still rising, the RBA will be forced into action. The Government may also have to rethink the budget and move much faster on its infrastructure spending. I think infrastructure spending is a way for the Government to be able to spend more, temporary increase in the deficit. It will win votes, create jobs, provide long term economic benefit for short term political pain. If I was Hockey I would unleash an infrastructure wave soon so it is in full swing in the lead up to the next election.
Something tells me we will hear more about this in the near future.
If unemployment continues to rise the RBA will have to move rates regardless of the effect on house prices. I do not think it will have a huge impact as the Banks are already cutting rates due to competition.
Look at this logically, A Government will do what ever it takes to survive. If it needs to spend big to do it, it will do so. The Government cannot go to the next election with unemployment in the high 6's or low 7's = defeat. So something very soon is going to give, either unemployment trends down which I think it will, or if it keeps rising the Government will have to respond for its own survival. This may mean another large stimulus package but directed towards Infrastructure, plus jaw boning of the RBA to cut rates to 2% or below.
Should the Government embark on stimulus plus the RBA cutting rates, well that is only going to give property prices another big leg up nation wide. However the longer term outlook would be concerning, you could get the bubble so many bears talk about but does not exist today.
Sounds more like hope than think.
In the current climate, I think you need to ask what a rate cut would do. I think nothing except inflate houses. What the rba needs is for the rest of the world to raise rates. We are where we are, and we will stay here till the US raises rates. Then there will be a short sharp period of adjustment. Unfortunately, you may loose a lot of money when this happens.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
In the current climate, I think you need to ask what a rate cut would do. I think nothing except inflate houses. What the rba needs is for the rest of the world to raise rates. We are where we are, and we will stay here till the US raises rates. Then there will be a short sharp period of adjustment. Unfortunately, you may loose a lot of money when this happens.
Won't be an issue for me I planned for raising US interest rates for along time now as I talked about when most people here said I was dreaming and the US would vanish into a black hole. I have been expecting rising world interest rates and it will happen sooner rather then later.
In fact US rates rising will be good for Australia.
Won't be an issue for me I planned for raising US interest rates for along time now as I talked about when most people here said I was dreaming and the US would vanish into a black hole. I have been expecting rising world interest rates and it will happen sooner rather then later.
In fact US rates rising will be good for Australia.
Please explain.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
Won't be an issue for me I planned for raising US interest rates for along time now as I talked about when most people here said I was dreaming and the US would vanish into a black hole. I have been expecting rising world interest rates and it will happen sooner rather then later.
In fact US rates rising will be good for Australia.
A US rate rise would be good for Australia in that it would weaken the AUD. However, what grounds do the US Fed have for raising rates?
Their economy is in terminal decline with every positive NFP print hiding a transition from well paid full time work to low paid part time.
They are still carrying out QE. They may be tapering, but they still have a hefty balance book which they can't afford to unwind.
The Fed are jawboning about possible rate increases to maintain the illusion of confidence in the US economy and therefore, confidence in the US dollar.
The BoE are playing the same game. They are all playing the same game.
They will keep moving the interest rate goalposts for as long as they can get away with it.
Can kicking.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Explain how I will lose a lot of money when I have been predicting the very thing you talk about for some time. This is not an unexpected event or unplanned for by me.
I think the major players may have decided that the disadvantages of dropping rates out way the advantages. Without rate cuts, and the possibility of rate rises, I see no way forward. It's as if house prices are being used to flog the nation.
If unemployment keeps trending up over the next couple of years - and I think this is fairly likely - then there will be immense pressure on the RBA to keep cutting rates, for whatever that's worth and however close we already are to being able to take that no further. The obsession of our political class by the surplus fetish will I think, ensure that monetary policy will be told to do all the heavy lifting.
Quote:
Look at this logically, A Government will do what ever it takes to survive. If it needs to spend big to do it, it will do so. The Government cannot go to the next election with unemployment in the high 6's or low 7's = defeat. So something very soon is going to give, either unemployment trends down which I think it will, or if it keeps rising the Government will have to respond for its own survival. This may mean another large stimulus package but directed towards Infrastructure, plus jaw boning of the RBA to cut rates to 2% or below.
I would like to hope they will Mike but I'm a bit skeptical. Remember how Keating basically engineered a recession then went to the polls after having talked about "the recession we had to have" - and still ended up winning the big comfy chair.
Explain how I will lose a lot of money when I have been predicting the very thing you talk about for some time. This is not an unexpected event or unplanned for by me.
Because there will be a drop in the AUD and a recession, and from your last report your funds were trapped in AUD.
If you were prepared for this, you would be moving your capital to gold or preferably USD. You haven't stated this, so I was just wondering how you have prepared for this eventuality? Or you you just measure you wealth in AUD from one day to the next and forget about lost opportunity?
You said you had prepared (or planned) for a US rate rise. I asked how? Easiest way would be to liquidate your property and take out a US dollars bank account. But you could be more creative. I was just interested in what actions you had taken to prepare and take advantage of the upcoming rise in rates?
You've said yourself that you see little upside in Perth property over the next couple of years, so there seems little point in holding it. You have a real opportunity to make some money here. Or is buying houses all you do?
Senior officials of the RBA yesterday re-iterated my concerns in their speech to the house of reps committee about what growth drivers will replace the enormous mining investment boom and the very cheap borrowing that can't get much cheaper (unless you mean sub-prime type borrowing).......
Quote:
I do not think we can expect to go back to the consumer leading aggregate demand in the way that they did in the period up to 2006. You have all heard my sermon on this before. That was a very unusual period: falling savings, rising borrowing, et cetera. That is all fine, but it is not going to happen again. And I do not think we should try to make it happen again. I think that would be quite risky. So the consumer will play a part—a reasonable part—but not the same part that they once did. That is a legacy of the situation that we have come to. So they would be my views about those dynamics.
He can say that he is worried about the risk of making it happen again all he likes but that is the exact course they have been following. Because it's the only real tool the RBA has to assist the economic growth drive. And I won't be surprised if they end up being obliged to take it as far as it can possibly go - to ZIRP.
At least he admitted that...
Quote:
monetary policy is not the answer really for some of the most fundamental things
Deputy governor Phillip Lowe stated....
Quote:
At the end of the day, monetary policy cannot be the engine of growth in the economy. We can help smooth out the fluctuations, but we cannot in the end drive the overall growth in the economy … I think if we need to invest more and more effectively in education, in human capital accumulation and in infrastructure. Risk taking, education and infrastructure are the things that are going to help us be a high-wage, high-productivity, high value-added economy. The details here are not things that the central bank is expert in, but it seems to me that they are the ingredients to be a successful economy in the next 20 years.
So the RBA can't keep using interest rates as a growth driver for all that much longer because they are almost spent now. Are we suddenly going to become a huge, high-value net exporter like Germany? I doubt it. The government deficit is really the only likely strong, longer-term growth avenue I see at present. But with most of our political class deeply ideologically opposed to it, how long would we have to endure weak, spluttery growth and poor employment outcomes before they would actually bite the bullet I wonder?
Senior officials of the RBA yesterday re-iterated my concerns in their speech to the house of reps committee about what growth drivers will replace the enormous mining investment boom and the very cheap borrowing that can't get much cheaper (unless you mean sub-prime type borrowing).......
He can say that he is worried about the risk of making it happen again all he likes but that is the exact course they have been following. Because it's the only real tool the RBA has to assist the economic growth drive. And I won't be surprised if they end up being obliged to take it as far as it can possibly go - to ZIRP.
At least he admitted that...
Deputy governor Phillip Lowe stated....
So the RBA can't keep using interest rates as a growth driver for all that much longer because they are almost spent now. Are we suddenly going to become a huge, high-value net exporter like Germany? I doubt it. The government deficit is really the only likely strong, longer-term growth avenue I see at present. But with most of our political class deeply ideologically opposed to it, how long would we have to endure weak, spluttery growth and poor employment outcomes before they would actually bite the bullet I wonder?
That's about as political as you can get without being political. It would have been less subtle if they had nuged the govt in the ribs.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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