Well, the Interest Rates are going up… never mind the fact some banks raised them anyway last month, the Reserve Bank raised the official interest rates by 25 basis points which lead the Commonwealth Bank to raise its lending rates by 30 today.
Whilst the interest rates are one thing, I want to make 2 comments.
1. This is not a result of a Labor Govt. Do NOT listen to the likes of Malcolm Turnbull that may (will) come out and say that Labor is “mismanaging” the economy. This is a load of rubbish and is pure out and out politicking point scoring. The real reasons stem from a Liberal govt coveting the US foreign policy whilst at the same time providing tax cuts whilst maintaining a massive budgetary surplus. Perhaps if they had invested in infrastructure rather than our back pockets we wouldn’t be this flush with cash.
2. Second, there is another way to relieve the inflation in the market. What about income and GST tax increases? Would that be political suicide? At the moment our increased interest rates means we are relieved of dollars via our mortgage payments and other investments and that money goes into the banks for the benefit of shareholders. We spend less as a result and inflation subsides. But what if we lost our dollars via increased taxes and then those dollars were then shipped into the Governments coffers for the benefit of all via hospitals, education et al? Again, we wouldn’t be able to spend as much but at least the dollars would be put to the general good.
I presume this makes me a Communist as well, but maybe they were on to something!
4 comments:
I have a few things to say about interest rates.
1. It's not Labours fault. The catalyst for these rate rises was put into motion a long time ago and cannot be stopped by labour now. The lending market deregulation back in the 80s made this situation a possibility, not the lack of action of a government in power less than 2 months. People are stupid.
2. Everyone is standing around saying 'tsk tsk' on housing affordability, yet no one is willing to do anything about it. This will ensure prices will tumble and as someone who was sidelined by the greedy speculators way back in 2002, I can't say I'm unhappy to see these people now going to the wall for their greed.
3. To those people who are struggling to pay loans. I can't feel sorry for you. Really. No one ever told you to borrow your maximum capacity and participate in the biggest world wide pyramid scheme of this generation. You chose to believe the spruiker rubbish and bought in the hopes of future CG growth to offset debt. FOOLS! I worked during the last recession and saw what 17% rates does. Over the life of an average home loan (25-30 years) you can expect interest rates to go over 10% at least twice, and likely 3 times based on historical trends. If you were stupid enough to think the government would halt this cycle, then you deserve to lose out. Sorry, but it's about as honest as I can be on the issue.
4. It's laughable to note that whilst CBA put rates up just .05% above the standard RBA rate, last rounds of rises they were actually 10 points behind the other banks. My how we are quick to ignore the fact when they go below the radar, but any margin above and it's somehow criminal? Please note that over the last 12 months the CBA is still behind the other big 3 in rate rises.
This country needs to step back and take a good hard look at itself. We've experienced the biggest housing boom in our history over the last decade and our totally immoral and irresponsible approach to credit addiction has to stop. Do NOT believe the rubbish the spruikers will tell you - the Real Estate industry is ludicrious and totally immoral in it's constant bombardment about how housing will continue to rise and keep borrowing. They're just looking for the next sucker to take their overpriced hot potatoe and hope it will be you.
Interest rates will only start to fall when inflation is under control. It's really that simple and this little blip is still a long way off from restoring that balance.
I fully expect interest rates to get well over 10% before a slide back and history shows that this is not only likely, but most probably necessary too.
As someone stuck renting because of the greedy actions of the speculators, I can't say I'm in the least bit sorry this situation has come about. This country needs a strong and swift kick up the arse concerning greed, debt and speculation and whilst rates are a blunt tool, they are also effective and I'll shed not a tear for those who fall by the wayside as part of this process.
Australia has gone to hell over the last decade because of the immoral and greedy people in this country looking for a fast buck, it has to stop.
Geez DM, get your own blog :)
Good idea Clay. I might just do that mate. Cheers for the idea.
Here Clay : http://outerwire.blogspot.com/
Link it up man.
Cheers
Post a Comment