# Interest rate cut



## Julia (7 October 2008)

Good Heavens, the Reserve has dropped the cash rate to 6%!!!


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## agro (7 October 2008)

Julia said:


> Good Heavens, the Reserve has dropped the cash rate to 6%!!!




tough times call for tough measures

http://skynews.com.au/business/article.aspx?id=271509


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## Kimosabi (7 October 2008)

Yay, lets fix the problems caused by excessive debt, with.....

*More Debt*

Hahaha, stupid Debt Slaves....


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## agro (7 October 2008)

I read the Fed in the USA is likely to cut rates too


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## Temjin (7 October 2008)

Hurray for the savers! We get punished for not spending!


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## Prospector (7 October 2008)

I think this makes the savers dollars safer though, and will stop any 'runs'
Wow, no-one got that one right. And the share market bounced from red to green!  Mostly.


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## Buddy (7 October 2008)

Temjin said:


> Hurray for the savers! We get punished for not spending!




I agree.
And what's more, with the decline in value of your dollar (ie inflation) you get punished twice.

It's about time the government lightened up on taxing savings. Hah! In my lifetime, NOT!  Wnakers!


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## fodder-oz (7 October 2008)

So lets see how much the banks cut the rates by seeing the Reserve has cut it by a full 1%.. I reckon the banks will only pass on a maximum of .75%

What does everyone think?

Lets hope this brings the markets up from this terrible period.


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## Awesomandy (7 October 2008)

Definitely time to buy gold.


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## Mofra (7 October 2008)

Thank you RBA


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## nikemi (7 October 2008)

fodder-oz said:


> So lets see how much the banks cut the rates by seeing the Reserve has cut it by a full 1%.. I reckon the banks will only pass on a maximum of .75%
> 
> What does everyone think?
> 
> Lets hope this brings the markets up from this terrible period.





I only hope it does not have the same effect as all previous "bail out"s! 

Once the euphoria over the cut wears out and people start to realise that to take such drastic measures RBA finally aknowledges the fact that the situation is worse than everyone wants to admit it is. Then we'll be in for yet another bottom!!!


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## stath (7 October 2008)

fodder-oz said:


> So lets see how much the banks cut the rates by seeing the Reserve has cut it by a full 1%.. I reckon the banks will only pass on a maximum of .75%




That much?  
I think more likely 0.5%, knowing the banks.


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## cuttlefish (7 October 2008)

Awesomandy said:


> Definitely time to buy gold.




ironically though we see bank stocks go to the moon instead.

I mean - the RBA feeling the need to slash rates so dramatically, and the banks not being capable of passing it on, isn't ringing the odd alarm bell about how 'safe and comfortable' the aussie banks are feeling right now?  Apparently not lookng at their share prices today.

I would also have assumed that if the government really thought the banks were in a strong situation they'd be lambasting them for not passing the cuts on to the public - but instead they appear to be supporting the banks decision.


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## professor_frink (7 October 2008)

Wow that's huge.

Doesn't really sit too well with me though. Between this and the sudden change in attitude from the govt about banks passing on any cuts by the RBA makes me think they might be in quite a bit more trouble than they've let on


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## chops_a_must (7 October 2008)

Temjin said:


> Hurray for the savers! We get punished for not spending!



Exactly.

Yay, we get rammed up the **** because we aren't stupid enough to leverage everything up and spend everything we earn. 

Absolute donkeys.


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## professor_frink (7 October 2008)

cuttlefish said:


> ironically though we see bank stocks go to the moon instead.
> 
> I mean - the RBA feeling the need to slash rates so dramatically, and the banks not being capable of passing it on, isn't ringing the odd alarm bell about how 'safe and comfortable' the aussie banks are feeling right now?  Apparently not lookng at their share prices today.
> 
> I would also have assumed that if the government really thought the banks were in a strong situation they'd be lambasting them for not passing the cuts on to the public - but instead they appear to be supporting the banks decision.




beat me to it

What exactly aren't we being told here??


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## gfresh (7 October 2008)

Here is the full policy announcement...



> STATEMENT BY GLENN STEVENS, GOVERNOR
> MONETARY pOLICY
> 
> At its meeting today, the Board decided to lower the cash rate by 100 basis points to 6.0 per cent, effective 8 October 2008.
> ...


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## Bushman (7 October 2008)

Didn't the Fed slash rates 12-months ago? Look where the Yanks are now! Rate cuts are a one-trick pony I say (as in plenty can still go asundry). 

Aussie banks are AA-rated but need to refinance that 30% of foreign debt their business model relies on in the next year or so. Who, who - what are you, an owl (Sorry - favourite quote from 'Heat')?


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## Kauri (7 October 2008)

possibly part of a concerted co-ordinated rate cut initiative by the US, EZ, GB,, etc... interesting... the way the yen carries are coming back points thataway anyways....

Cheers
...........Kauri


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## pepperoni (7 October 2008)

Im a saver and think its great as long as it doesnt draw out the last debt slaves.

Times are inarguably tough and our rates are huge by world standards so why push workers and banks to the wall.

Plus all the debt destruction through defaults should mean some deflationary pressures.


Plus I locked in savings a week or so back at 7.5%


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## Captain G (7 October 2008)

Well, some certainly were in the know that the 1% cut was coming, for I knew something was up by the why the All Ords was rallying all morning, for the 0.5% was already factored in. This is something that really burns me. So much for equal playing fields !! Does anyone else think this or feel this way??


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## ROE (7 October 2008)

We are heading into recession  that the reading of 1% cut ..


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## kitehigh (7 October 2008)

I'm happy to see rate cuts as it puts more downward pressure on the AUD.  The dollar has also fallen significantly against the pound also which I am personally stoked with as I get paid in pounds.

Hey pepperoni that uae job must be looking more attractive with almost a 30% increase in pay since the original offer.


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## [t..o..m] (7 October 2008)

ROE said:


> We are heading into recession  that the reading of 1% cut ..




Dead cat bouncing or a dying cat bouncing?

Most likely the later


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## kitehigh (7 October 2008)

Well at least our CB has a lot of room to move with interest rates, unlike the FED and Japan.


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## gfresh (7 October 2008)

kitehigh said:
			
		

> I'm happy to see rate cuts as it puts more downward pressure on the AUD. The dollar has also fallen significantly against the pound also which I am personally stoked with as I get paid in pounds.




Good for exporters, however don't our banks find it (even) harder to source their borrowing from o/s, as overseas lenders are less willing to invest in a currency that is rapidly losing value? 

Anybody have any thoughts on savings/term deposits on the back of this? Are they going to use the opportunity to shaft the savers? Or are they still going to be so desperate for deposits on their books they keep them (relatively) high?


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## jet328 (7 October 2008)

Bushman said:


> Didn't the Fed slash rates 12-months ago? Look where the Yanks are now! Rate cuts are a one-trick pony I say




Completely agree, this idea that central banks can fine tune the economy by manipulating interest rates is just silly. It was the US fed that sent rates down to 1% after the tech-wreck that created this massive bubble.

Eventually, I think the US fed will lose its ability to control interest rates. With their massive foreign debt I just can't see the chinese, saudis & japanese continue to buy up all this paper. I can understand the reasoning short term, but medium term they are hurting themselves with negative REAL returns

Let the free market set interest rates (probably never would have this bubble, as who would lend below the rate of inflation?)


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## Glen48 (7 October 2008)

.25% work out to 68 cents per day for every $100K so the grand total will be $ 4.76 per week inflation running at 20 degree incline  OZ dollar diving  all looks good.


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## kitehigh (7 October 2008)

gfresh said:


> Good for exporters, however don't our banks find it (even) harder to source their borrowing from o/s, as overseas lenders are less willing to invest in a currency that is rapidly losing value?
> 
> Anybody have any thoughts on savings/term deposits on the back of this? Are they going to use the opportunity to shaft the savers? Or are they still going to be so desperate for deposits on their books they keep them (relatively) high?




I remember taking out a loan for a property back when the AUD was down in the 50 cent range and I had no problem in getting money from the bank. So I'm not sure if our banks find it harder to source capital or not.

Sorry can't help you in regards to bank deposits, I put all my money into my offset account.


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## lular (7 October 2008)

Just a thought, could this lead to a glut of property on the market with some seeing it as a good time to offload a stressed morgatge?

I dont understand the fundamentals, I would appreciate other oppinoins.


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## Tysonboss1 (7 October 2008)

we should see more support for some of the high yeilding stocks now as some move away from cash and into higher yeilding stocks, a few I would look at is, APA, MCW, FKP etc etc. and I will probally be ripped for this but I think BBI is a fantastic yeilding stock at it's current price.


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## [t..o..m] (7 October 2008)

Westpac cuts home loan rate by 0.8%

http://tradingroom.com.au/apps/view_article.ac?articleId=227606


Umm that was quick


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## Shrewd Crude (7 October 2008)

*Go kiwi*

The RBNZ has a meeting on the 23rd I think... rates are likely to be slashed by half a percent... some speculation about .75%... yeahhh hahhehghhghgh... go kiwi.... 

.^sc


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## korrupt_1 (7 October 2008)

imho.. 1% was overdone...

should have given the market what they wanted... 50bp... the effect would have been the same...

save the extra 50bp for when the Aussie market is screwed again...

eg.. why overdose on andrenaline when half would have restarted the patient's heart?


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## Nyden (7 October 2008)

What is the RBA doing? Are they out of their freaking minds? Can they not see the huge dollar decline; and what that is going to do to inflation?

... ugh, I'll be opening a foreign currency account this week, I'm jumping ship with regards to the AUD ... once it hopefully picks up a tad  At least enough to hedge the losses yet to come

Sorry gents, Australian economy is stuffed : Everyone keeps saying Australia is in an excellent position to ride this out, I tend to believe we're actually in one of the worst. I just didn't foresee the RBA doing what it's doing.


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## BradK (7 October 2008)

chops_a_must said:


> Exactly.
> 
> Yay, we get rammed up the **** because we aren't stupid enough to leverage everything up and spend everything we earn.
> 
> Absolute donkeys.




Hey Chops... Another 1% to come I just heard Ross Greenwood say. Couldn't have happened to a nicer bloke.


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## nikemi (7 October 2008)

korrupt_1 said:


> imho.. 1% was overdone...
> 
> should have given the market what they wanted... 50bp... the effect would have been the same...
> 
> ...




I am with you on this one - now they only have 6 more tries before they run out of options while 50bps would have bought them more time.  

But on the other hand the sooner we get to the bottom the sooner we can start the actual recovery process. Honestly I am sick of this up and down all the time. People (me including) get itchy when they are out of the market for too long then prematurely jump right back in at the lightest hint of good news only to realise that "yes" it can still get lower.


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## Nyden (7 October 2008)

pepperoni said:


> Plus I locked in savings a week or so back at 7.5%




A lot of good that does you if your spending power is slashed by 30% in a month. Only for imported goods? Oh wait; that's everything isn't it


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## jono_oz (7 October 2008)

Hmmmm having read a number of these forums - I suspect that most of you would have found something to bitch about no matter what the fed did. All negative of course, as I am quite sure that the doom and gloom gets most of you off each day  Watching peoples super and investments go to the wall is obviously more fun than I imagined, and as many members here have said - they want to see blood on the streets before they will be happy we have hit the bottom. 
Of course I secretly hope that a large portion of that blood is theres!


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## YELNATS (7 October 2008)

Nyden said:


> What is the RBA doing? Are they out of their freaking minds? Can they not see the huge dollar decline; and what that is going to do to inflation?




What are they doing? They're finally admitting they got it horribly wrong with all their trigger-happy 25 bps rises over the last couple of years, particularly those ones earlier this year which has pushed us to the brink of recession.

The writing was on the wall for all to see but the RBA.


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## roland (7 October 2008)

Oh well, I spent the day increasing the buy price of all our imported computer products - up about 10% since a couple of weeks ago. So let's see. stock market is stuffed for profits, bank interest drops for savings returns and all my prices have had to go up.

My business is officially stuffed, my wife had to go out and get a job today since our 2 x retail businesses no longer provides an income


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## kitehigh (7 October 2008)

roland said:


> Oh well, I spent the day increasing the buy price of all our imported computer products - up about 10% since a couple of weeks ago. So let's see. stock market is stuffed for profits, bank interest drops for savings returns and all my prices have had to go up.
> 
> My business is officially stuffed, my wife had to go out and get a job today since our 2 x retail businesses no longer provides an income




Sorry to hear that Roland, I hope things improve for you.

Its a tough business being in retail.


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## Nyden (7 October 2008)

roland said:


> Oh well, I spent the day increasing the buy price of all our imported computer products - up about 10% since a couple of weeks ago. So let's see. stock market is stuffed for profits, bank interest drops for savings returns and all my prices have had to go up.
> 
> My business is officially stuffed, my wife had to go out and get a job today since our 2 x retail businesses no longer provides an income




Exactly!

Believe me, very little good will come out of any interest rate decreases. House values are still going to plummet, people are still going to lose their jobs, Australia is still going to suffer huge losses in export revenue (as commodities continue their decent down), and many folk are still going to default on their mortgages.

All the RBA have done is drag those of us who are *responsible* (and not losing money every day) down the drain with the rest of the fools.



Yes, enjoy your mortgage savings. Even though your grocery prices, petrol, and just about everything else sky-rockets ... sigh, end rant 

Oh, and Yelantis - the recession we're going to have in Australia has essentially nothing to do with where our rates were. The recession is going to happen because there's probably going to be a global recession.


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## ROE (7 October 2008)

roland said:


> Oh well, I spent the day increasing the buy price of all our imported computer products - up about 10% since a couple of weeks ago. So let's see. stock market is stuffed for profits, bank interest drops for savings returns and all my prices have had to go up.
> 
> My business is officially stuffed, my wife had to go out and get a job today since our 2 x retail businesses no longer provides an income




I been there but at receiving customer end  my toys went up 5% the day I order till the day I get it cos our Dollar drop


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## Herlequin (7 October 2008)

[t..o..m] said:


> Dead cat bouncing or a dying cat bouncing?
> 
> Most likely the later




I'm going for Dead Cat only. I think there will be panic selling but after this period we can expect a sudden reversal. yes i know saying 'The market is going to fall and then go back up' is a little 'duh '. but after the panic selling there will be a recorrection of price.

that being said keep those stops tight cause its gonna be one hell of a ride.


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## nunthewiser (7 October 2008)

Nyden said:


> Exactly!
> 
> 
> 
> Yes, enjoy your mortgage savings. Even though your grocery prices, petrol, and just about everything else sky-rockets ... sigh, end rant




BINGO! not too mention the maybe rush for the doors soon from cashed up depositors to maybe greener pastures elswhere .... gold? .um what happens when depositors leave a bank ?


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## M34N (7 October 2008)

1% was a good move by the RBA in my opinion. They wanted to:

a) boost confidence,
b) make sure the banks actually passed on a MINIMUM .5% rate cut, which they now have no reason not to do,
c) prevent the inevitable drop of rates next month,
d) look like they were doing something serious

All points achieved, no-one can say this doesn't inspire SOME confidence back into a panicked market.

Well done to them. They overdone the rate rises that we had earlier this year/late last and are simply correcting them back down to where they should be.


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## nunthewiser (7 October 2008)

M34N said:


> 1% was a good move by the RBA in my opinion. They wanted to:
> 
> a) boost confidence,
> b) make sure the banks actually passed on a MINIMUM .5% rate cut, which they now have no reason not to do,
> ...




Totally agree and blessem for creating a nice lil sucka rally i reckon

oops sorry disagree with last 2 lines

as you were


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## Nyden (7 October 2008)

M34N said:


> 1% was a good move by the RBA in my opinion. They wanted to:
> 
> a) boost confidence,
> b) make sure the banks actually passed on a MINIMUM .5% rate cut, which they now have no reason not to do,
> ...




I can appreciate that; but should people have confidence in this panicked market? I honestly believe not; and think that people *should* be scared, and should be reducing their portfolios.

Why would the RBA want to follow the route the US took? Look where they're at now; reducing rates obviously does not help, at all.


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## M34N (7 October 2008)

nunthewiser said:


> Totally agree and blessem for creating a nice lil sucka rally i reckon
> 
> oops sorry disagree with last 2 lines
> 
> as you were




No doubt it's going to create a 'sucker rally' as you put it, but longer term, it will help restore confidence, let banks get back to lending and maybe inspire people to start borrowing again, leading to the next bull market so we can all get on with life!

What else are they supposed to do, otherwise? You get blamed for creating sucker rallies if you lower rates, or blamed for causing chaos if they don't do anything. At least they're doing what is desperately needed for markets that are clearly crying out for action.


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## Macquack (7 October 2008)

nunthewiser said:


> BINGO! not too mention the maybe rush for the doors soon from cashed up depositors to maybe greener pastures elswhere .... gold? .um what happens when depositors leave a bank ?




Barring sticking it under their pillow, it becomes a deposit for somebody else. If you buy gold, the vendor deposits that money. Its crap that money can disappear from the system. Somebody did very nicely out of the sub-prime debacle (eg loan originators, real estate agents, developers etc).


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## M34N (7 October 2008)

Nyden said:


> I can appreciate that; but should people have confidence in this panicked market? I honestly believe not; and think that people *should* be scared, and should be reducing their portfolios.
> 
> Why would the RBA want to follow the route the US took? Look where they're at now; reducing rates obviously does not help, at all.




Like I just said above to nunthewiser, they didn't have a choice but to take action. Longer term it will help, and it helps shorter term lowering rates, dropping the lending costs and preventing this downward spiral that the market is in.

After all, what are they there for?


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## nunthewiser (7 October 2008)

M34N said:


> No doubt it's going to create a 'sucker rally' as you put it, but longer term, it will help restore confidence, let banks get back to lending and maybe inspire people to start borrowing again, leading to the next bull market so we can all get on with life!
> 
> What else are they supposed to do, otherwise? You get blamed for creating sucker rallies if you lower rates, or blamed for causing chaos if they don't do anything. At least they're doing what is desperately needed for markets that are clearly crying out for action.





lol people borrowings are what set this snowball rolling in the first place .. lower rates and let them borrow more ??? aint no bullmarket for a while in my view but hey what would i know im just a bogan that can spot desparation when i see it


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## Nyden (7 October 2008)

M34N said:


> After all, what are they there for?




They should only be there to regulate the dollar; and to ensure that the money I have today will be worth just as much tomorrow.

We are after all a 'free market', and all this government intervention is nonsense.

Our assets were overvalued; and they were nicely deflating. Now governments are trying to stop this ... and help those that were greedy and foolish.


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## M34N (7 October 2008)

nunthewiser said:


> lol people borrowings are what set this snowball rolling in the first place .. lower rates and let them borrow more ??? aint no bullmarket for a while in my view but hey what would i know im just a bogan that can spot desparation when i see it




So by that logic, they should of;

1) kept rates steady?
2) raised rates?

Indeed.


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## BradK (7 October 2008)

jono_oz said:


> Hmmmm having read a number of these forums - I suspect that most of you would have found something to bitch about no matter what the fed did. All negative of course, as I am quite sure that the doom and gloom gets most of you off each day  Watching peoples super and investments go to the wall is obviously more fun than I imagined, and as many members here have said - they want to see blood on the streets before they will be happy we have hit the bottom.
> Of course I secretly hope that a large portion of that blood is theres!




That is right jono. There is alot of _shaudenfreud_ around here - smart arses who 'picked it' and got out early, who are critical of people getting AVERAGE mortgages (mind you, they probably were not so critical when they were SELLING the house) and a huge lack of sympathy to the plight of fellow Australians. 

To them I say - I hope your savings get savaged by inflation, and your returns get decimated by low interest rates! 

Think I am going the same way as Wayne on this forum. 

Brad


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## M34N (7 October 2008)

Nyden said:


> They should only be there to regulate the dollar; and to ensure that the money I have today will be worth just as much tomorrow.
> 
> We are after all a 'free market', and all this government intervention is nonsense.
> 
> Our assets were overvalued; and they were nicely deflating. Now governments are trying to stop this ... and help those that were greedy and foolish.




Well they intervened when the economy was going up over the past 5 years and kept raising rates, and now they are lowering it when the economy is going backwards. I don't see the problem with this intervention to be honest.

They put rates too high to begin with to be honest, and now they are lowering them back down to where they should be. But again, that's my opinion.


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## Nyden (7 October 2008)

BradK said:


> That is right jono. There is alot of _shaudenfreud_ around here - smart arses who 'picked it' and got out early, who are critical of people getting AVERAGE mortgages (mind you, they probably were not so critical when they were SELLING the house) and a huge lack of sympathy to the plight of fellow Australians.
> 
> To them I say - I hope your savings get savaged by inflation, and your returns get decimated by low interest rates!
> 
> ...




You do of course realize that if our dollar is "savaged by inflation", then folk holding stock will get hit with an even bigger double whammy? Loss of money through declining prices, and loss of value behind the money!

You seem to indulge in schadenfreude as well; hoping that those of us who were just "lucky smart arses" will lose out here? I'm quite sure there was very little luck involved with dodging a lot of these losses. Just responsibility, and hard work (studying, reading, looking out for signs). I took a few losses about a year ago when I sold out; where's your bleeding heart for me?


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## nunthewiser (7 October 2008)

M34N said:


> So by that logic, they should of;
> 
> 1) kept rates steady?
> 2) raised rates?
> ...




im no economist but does no one doesent pour fuel on a fire re letting ppl think they can use and borrow cheaper money . 
however
as a trader i say BRING IT ON ..........gawd bless a sucka rally


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## MrBurns (7 October 2008)

The RBA has either lost the plot or know something we don't , ie: this is worse than we all imagine.

Either way it's bad news.

I think the banks wont lower deposit rates as they need the money, but there's no competition is there so perhaps they will stick the boot in.

I'm opening an account with the CBA to play them off against the NAB, might work.

As far as 







> There is alot of shaudenfreud around here



 goes there was a lot of that too when the smart arses were "topping up their portfolios" and bragging about their "property portfolios" when Henry the chimp could have got a loan so they will learn a lesson and a big lesson, no sympathy from me. They'll go home whimpering to mummy and daddy to bail them out.


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## chops_a_must (7 October 2008)

BradK said:


> Hey Chops... Another 1% to come I just heard Ross Greenwood say. Couldn't have happened to a nicer bloke.



Right... because everyone in debt isn't a complete bitch to savers right?



roland said:


> Oh well, I spent the day increasing the buy price of all our imported computer products - up about 10% since a couple of weeks ago. So let's see. stock market is stuffed for profits, bank interest drops for savings returns and all my prices have had to go up.
> 
> My business is officially stuffed, my wife had to go out and get a job today since our 2 x retail businesses no longer provides an income



Yep, this is what happens. Those not saving create a situation where they cause buying power and relative wealth to collapse, with completely innocent victims like above.



Nyden said:


> All the RBA have done is drag those of us who are *responsible* (and not losing money every day) down the drain with the rest of the fools.
> 
> Yes, enjoy your mortgage savings. Even though your grocery prices, petrol, and just about everything else sky-rockets ... sigh, end rant




That is precisely the problem. There isn't much incentive to save. Might as well just piss it up against the wall. 



nunthewiser said:


> BINGO! not too mention the maybe rush for the doors soon from cashed up depositors to maybe greener pastures elswhere .... gold? .um what happens when depositors leave a bank ?




Yes BradK, this is entirely the problem.

Mortgage holders are the savers' bitch right now. If savers walk out on your bank, bye bye home.


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## BradK (7 October 2008)

chops_a_must said:


> Mortgage holders are the savers' bitch right now. If savers walk out on your bank, bye bye home.




These are tenuous times all round for savers and mortgage holders. My beef is with the cashed up sticking the boot into mortgage holders 'Oh, you just want a McMansion, and a plasma, and a new car and you are not prepared to wait' at every opportunity in such a condescending way. On this forum, news.com.au etc. 

In the past 7 years with every television station under the sun promoting do-ups and sells and the market going crazy - lots of first home buyers were scared of missing out on a home of their own and jumped. So, that the average price of homes was driven up to 7 times annual income. 

Some of these smug cashed up people were probably not too high and mighty to off their homes for 7 times annual income when it came to a sale. 

And before you target me, I had a one bedroom, followed by a two bedroom, and now a modest 3 bedroom home in a reasonable suburb (not blue ribbon at all). Thankfully, I have managed to stay far below the average prices in debt. Thanks to a build and sell in Perth in 2003-2004.  

The problem started when housing became A COMMODITY rather than a place to raise a family. Yes, everyone jumped on. Have I done well from real estate? YES! BUT, now I realise that rising house prices help NO ONE except for the mortgage industry and flippers. 

In the interests of an example and to generate discussion about actual figures, I will go out on a limb and say that my mortgage is $180K on an $85K income. So, interest rates, while helpful to have a cut - I am not at the bone. Yes, people borrowed to the hilt - friends on the same income have $400K mortgages - but they fell for the con. 

The con perpetuated from the BANKS and the MEDIA that property always goes up. Some would say that they are stupid and need to take responsibility - and now people are actually WISHING THAT THEY AND THEIR FAMILIES LOSE THEIR HOMES as if they deserved it! I actually see this on news.com.au all the time. 

And I think - what a lack of genorosity and a dog eat dog world we live in. 

That is why I think at a time like this, and I hate to say it here, Marx has ALOT TO SAY. 

Brad


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## Buddy (7 October 2008)

In these time, I think we need a new financial system...............
Those that borrow, particularly for leveraged investments, should have to pay tax on the borrowings.  
Those that save should not only be not taxed on the earnings but should get a tax rebate.

Hey guys, any chance of that one getting a run with the polies?


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## chops_a_must (7 October 2008)

BradK said:


> These are tenuous times all round for savers and mortgage holders. My beef is with the cashed up sticking the boot into mortgage holders 'Oh, you just want a McMansion, and a plasma, and a new car and you are not prepared to wait' at every opportunity in such a condescending way. On this forum, news.com.au etc.
> 
> In the past 7 years with every television station under the sun promoting do-ups and sells and the market going crazy - lots of first home buyers were scared of missing out on a home of their own and jumped. So, that the average price of homes was driven up to 7 times annual income.
> 
> Some of these smug cashed up people were probably not too high and mighty to off their homes for 7 times annual income when it came to a sale.



Or some of us could actually be too young to look at owning a house, except being on the way to affording one, the proper way.

And really, I don't, and nor should anyone have any sympathy for people that have got in over their heads with discretionary and luxury spending.


----------



## xoa (7 October 2008)

> 'Given that background, the board judged that a material change to the balance of risks surrounding the outlook had occurred, requiring a significantly* less restrictive stance of monetary policy*'




"Less restrictive monetary policy" is exactly what caused the mess in the first place.

Debt is the problem, not the solution. It's like using kerosene to put out a fire.

Expect our savings rate to sink further into negative territory, and inflation to go through the roof. If our economy isn't already sick, it will be soon.


----------



## chops_a_must (7 October 2008)

BradK said:


> That is why I think at a time like this, and I hate to say it here, Marx has ALOT TO SAY.



Oh yeah, and I agree with that.


----------



## The Mint Man (7 October 2008)

Temjin said:


> Hurray for the savers! We get punished for not spending!



Haha, that'll teach ya!:

Well personally I'm all for it, the cut that is. 
I used to be a saver until I used that money to buy a house almost 2 1/2 years ago, our loan was funded literally on the day of the first (of many to come) .25% interest rate rises, I also chose to fix it for 3 years at that point... the bank (which bank) passed on that rate rise to us before realising, albeit a year later, that they were actually wrong to do so under our contract... so they gave my money back, can you believe it?. So effectively I did not catch any of the recent rate rises.

I come off the fixed period mid 2009 so one can see why I'm quite happy at todays developments. At this point it would seem that I will (most likely) come off the fixed period reasonably unscathed in regards to my home loan, I may even be better off by that time, who knows?. So yes I am very happy!!

As for the points about our declining dollar (which I have watched with dismay via my forex trader program) and the effect this will have on petrol, grocery prices etc. this to me is the lesser of two evils simply because I can control what I spend on those products by not buying top of the range, not consuming as much, not splurging on that TV (how dare I say that). On the other hand, it's impossible to control what you spend on a loan when you don't control how much interest you will pay. 

Temjin and others, It is important to realise that while you will suffer from lower interest rates on your savings, many more will benefit and at the end of the day their interests outweigh yours. Unfortunately for you it is as Simple as that!
When your leaning one way and everyone else is leaning the other, eventually you will be pulled over kicking and screaming.... but I'm guessing you already understand this concept considering your on a forum that analyzes a market that experiences this on a daily basis.

Cheers


----------



## chops_a_must (7 October 2008)

The Mint Man said:


> It is important to realise that while you will suffer from lower interest rates on your savings, many more will benefit and at the end of the day their interests outweigh yours.



Not correct.

A negative savings rate is what brought the US down, and if we head towards that, our banks are absolutely rooted, and everything that goes with it.

If no-one is saving, no-one can then go on to buy your asset for more than you paid.


----------



## robots (7 October 2008)

hello,

just keep putting it away,

20-30% of gross income is the way, chuck it somewhere brothers

thankyou
robots


----------



## Aussiejeff (7 October 2008)

Buddy said:


> In these time, I think we need a new financial system...............
> Those that borrow, particularly for leveraged investments, should have to pay tax on the borrowings.
> *Those that save should not only be not taxed on the earnings but should get a tax rebate*.
> 
> Hey guys, any chance of that one getting a run with the polies?




[size=+2]BUDDY for PM!!!!!  YAYYY!!! [/size]


----------



## BradK (7 October 2008)

chops_a_must said:


> Oh yeah, and I agree with that.




Something we agree on. Finally. 

Discretionary and luxury spending? We are talking about people who STOPPEd discretionary and luxury spending a LONG time ago

Brad


----------



## IFocus (7 October 2008)

Prospector said:


> I think this makes the savers dollars safer though, and will stop any 'runs'




Saving the Banks is the issue RBA spooked by Europe's issues once you get into bailing out banks or even giving savings guarantees it game over or at the very least backed into a corner for a very long time.

If the RBA / government can maintain confidence in our banks then they have a better chance of sourcing funds and maybe, maybe soften the blow that coming.

Next problem will be rising unemployment and that will bring pain for many


----------



## chops_a_must (7 October 2008)

BradK said:


> Discretionary and luxury spending? We are talking about people who STOPPEd discretionary and luxury spending a LONG time ago



Buying a house _is_ a luxury.


----------



## pacestick (7 October 2008)

alan kohler suggests malcolm Turnbull putting politics in front of good fiscal managemt in calling for full rate  cut to be passed on
      ak said " Hes Just playing politics " in response to a question on what he thought of turnbull calling for full rate cut to be passed on


----------



## marklar (7 October 2008)

I'm curious if anyone has figures on how much of Australia's taxation revenue is based on Capital Gains Tax?  This financial year just gone there will be some CGT, but at the moment I'm sure there are plenty of folks that are sitting on significant paper losses wondering what to do.

m.


----------



## Indie (7 October 2008)

Nyden said:


> You seem to indulge in schadenfreude as well; hoping that those of us who were just "lucky smart arses" will lose out here? I'm quite sure there was very little luck involved with dodging a lot of these losses. Just responsibility, and hard work (studying, reading, looking out for signs). I took a few losses about a year ago when I sold out; where's your bleeding heart for me?




Couldn't agree more with your sentiments. 

I'm not a market professional but I know how to do my research thoroughly. It took big balls to pull a large amount of leveraged money out of the stock market in December and also sell my house a couple of months later. And my broker urged me weekly for 4 months to come back into the market, warning me that "the market rises quickly" - but I held strong. There were so many sheeple out there who did their best to undermine my confidence and treat me as if I was a raving mad man. Anyone who had to guts to deleverage and take their profits - hats off to you. The writing was on wall for anyone who made an effort to seek sources of information outside of mainstream media. 

I'm just and average guy with an average education who has taken the time over the last year to understand what "money" actually is. Where the F*** is my broker now? Trying to sell his bullsh** to the next guy.


----------



## The Mint Man (7 October 2008)

chops_a_must said:


> Not correct.
> 
> A negative savings rate is what brought the US down, and if we head towards that, our banks are absolutely rooted, and everything that goes with it.
> 
> If no-one is saving, no-one can then go on to buy your asset for more than you paid.



I appreciate your opinion as this is what makes a public forum, however, I have no idea what your response is referring to? No one said not to save especially me. In fact if you read my post I said from the outset that I used my savings to get a foot hold in the property market. I have always been a saver and I advocate that to anyone who will listen, especially younger people, (although I'm not that old myself).

Rates have gone down, you will get less from your money if you simply keep it in a standard savings bank account.... deal with it! 
Anyway, you don't have to keep your money there. There are many other options such as good dividend yielding shares (and we all know there are a heap of them around at the moment) or fixed termed deposits that you could put your hard earned into. Hell, go and buy some gold if that takes your fancy. 
If you want to get into the property market you could also set up one of these new first home buyers saving accounts, a luxury most of us here have never had. With tax breaks as an added bonus, if that doesn't encourage saving among a few smart young people I don't know what will

Cheers


----------



## nioka (7 October 2008)

Maybe, just maybe, the rate drop is designed to discourage people from selling good company stocks at below value and going "cash". Maybe, just maybe, it will keep more money invested in PRODUCTION of more real wealth.
( just trying to think outside the square with the help of felix)


----------



## wallyt99 (7 October 2008)

Nyden said:


> Exactly!
> 
> Australia is still going to suffer huge losses in export revenue (as commodities continue their decent down), and many folk are still going to default on their mortgages.
> 
> ...




Australia runs a relatively small trade deficit.  Around $2 Billion.  To say everything is imported gives little credit to our export industry.

The reduction of cost of our dollar will see an increase in exports and a reduction of our deficit....possibly into a surplus.

Our biggest export partner is Japan.  You expouse the value of the Yen, yet give no credence to this.



The one thing you are right about is petrol prices.  They will go up.




Some people get off on scaremongering.


----------



## Julia (7 October 2008)

BradK said:


> That is right jono. There is alot of _shaudenfreud_ around here - smart arses who 'picked it' and got out early, who are critical of people getting AVERAGE mortgages (mind you, they probably were not so critical when they were SELLING the house) and a huge lack of sympathy to the plight of fellow Australians.
> 
> To them I say - I hope your savings get savaged by inflation, and your returns get decimated by low interest rates!
> 
> ...



Brad, a couple of weeks ago you were furious with the banks.
You later suggested you had been quite unreasonable in what you said.

Now it seems, for reasons known only to yourself, you are being malicious towards depositors.  Why?
As one of many people with savings who have done it fairly hard over the years to get to a position of financial security, I really take exception to your comments.

With this interest rate cut, all the attention has been on the relief to mortgage holders.  I have not heard one public comment about the disadvantage it will mean to depositors who are seeking some sort of security for their capital, rather than risk further depreciation in the volatile stock market.

I don't know what your problem is, but if you have to strike out at someone to make yourself feel better, maybe think a bit more carefully about the target.

I'm trying hard not to sound as angry as I feel.


----------



## Julia (7 October 2008)

BradK said:


> T
> And I think - what a lack of genorosity and a dog eat dog world we live in.
> 
> 
> Brad



Good God, you have the nerve to post this after your previous ill tempered comments!!!


----------



## Gundini (7 October 2008)

robots said:


> hello,
> 
> just keep putting it away,
> 
> ...




Must admit that is very amusing robot...


----------



## moXJO (8 October 2008)

chops_a_must said:


> Not correct.
> 
> A negative savings rate is what brought the US down, and if we head towards that, our banks are absolutely rooted, and everything that goes with it.
> 
> If no-one is saving, no-one can then go on to buy your asset for more than you paid.




There needs to be a balance between spending for the growth of the nation and saving. I think Australia has tipped the balance in favor of splurging with the best of them which is a big concern.

I was talking to a couple at a BBQ the other day that mentioned they had spent $70k (on $hite) in a matter of weeks and how it was nothing these days. This is a family with 4 kids mortgaged to the hilt two big shiny cars etc. And this is a common theme among most people I know. The other thing I notice is the size of the houses I am working on now. It can take 3-4 times as long. And I could probably fit 2-4 of the houses I use to work on back in the late eighties inside them. I can't understand how they can afford all these extravagant lifestyles of changing cars every year and renovations and holidays. Perhaps I need to change careers.


----------



## Kimosabi (8 October 2008)

M34N said:


> 1% was a good move by the RBA in my opinion. They wanted to:
> 
> a) boost confidence,
> b) make sure the banks actually passed on a MINIMUM .5% rate cut, which they now have no reason not to do,
> ...




All this drop in Interest Rates means is that we are in Recession, our debt masters just haven't told us about it yet.

Oh did I mention that the money the Reserve Bank so lovingly supplies us with is just debt anyway.  So not only do they lovingly charge us interest to borrow their debt money, they further lovingly depreciate our debt money through Inflation as well.







I think the Reserve Bank of Australia's logo tell's the story, they just love ripping the guts out of the Australian People.

And to finish my rant I would love for someone to explain to me why an "Australian Legal Tender" $50 1/2oz Gold Coin costs $925.00 in plastic money.





http://www.perthmint.com.au/catalog...k-lizard-proof-gold-coins.aspx?ProductID=1715

How can an Australian Legal Tender coin be $50.00 and $925.00???

This is a quote from the Mints website on these coins being legal tender:



> *Australian Legal Tender *
> 
> Issued as legal tender under the Australian Currency Act 1965, the coins depict Ian Rank-Broadley's effigy of Her Majesty Queen Elizabeth II on the obverse.




And if anyone would like to know who "REALLY" owns the Reserve Bank of Australia, watch this video:


----------



## robots (8 October 2008)

hello,

would just like to thank the banks, mainly the big 4 for giving people a 80 basis point cut,

this is fantastic news and shows the banks do act responsibly for all and will join in the hard work in keeping australia on top of the world,

thankyou
robots


----------



## Buddy (8 October 2008)

Julia said:


> Brad, a couple of weeks ago you were furious with the banks.
> You later suggested you had been quite unreasonable in what you said.
> 
> Now it seems, for reasons known only to yourself, you are being malicious towards depositors.  Why?
> ...




Julia,
Maybe Brad has a nasty streak in him/her, or is just a ****e stirrer.

And thank you Assiejeff, you are a true Aussie. I am humbled by your words of support, and in the fullness of time I shall do my duty and take up the challenge for the betterment of this great country of ours, currently ruled by Shmocks. BUT I NEED MORE THAN 1 VOTE. 


I watched a strange thing on television last night. In fact the only thing stranger thing I have ever seen was when an alien spaceship landed in my back yard, a little green girl disembarked and spoke to my cat in catspeak.  so...........

There was this ABC reporter (dont know his name) interviewing Malcolm Turnbull about passing on the full cut in interest.  No surprise in what MT was saying - I would probably do the same thing if I was in his position. But what really intrigued me was there was this dumb asses wnaker ABC reporter defending the government and defending the banks. OK, I can live with the fact that you cannot say anything against the labor party and labor government on the ABC - that's a given!  But to defend the banks????????? A true wnaker. It is simply un-Australian not to bash the banks.  This man should be removed forthwith from the ABC, sent to the labour gangs, and fed on stale bread and lard.  Or maybe he should join krudds team.
Off with his head, I say!


----------



## MrBurns (8 October 2008)

robots said:


> hello,
> 
> would just like to thank the banks, mainly the big 4 for giving people a 80 basis point cut,
> 
> ...




I agree that it was the right thing to do but it wont save anyone from what's to come. No point having low interest rates if you haven't got a job.

Malcolm Turbull is going a bit too far insisting that the banks pass on the extra .2% If the banks fall over we're all stuffed, better hold fire on them for the time being.


----------



## Kimosabi (8 October 2008)

I think this picture sums things up nicely...


----------



## Julia (8 October 2008)

> =MrBurns;346177
> Malcolm Turbull is going a bit too far insisting that the banks pass on the extra .2% If the banks fall over we're all stuffed, better hold fire on them for the time being.




I agree.  We're seeing more evidence of this today.
He is, astonishingly, claiming the credit for the RB having moved 100 b.points!

Buddy, I saw that interview last night with Malcolm Turnbull.  Whilst I don't agree with his position, I'd say it was one of the most incompetent bits of journalism I've ever seen on the ABC.  Hope Kerry O'Brien is back soon.


----------



## MrBurns (8 October 2008)

Julia said:


> I agree.  We're seeing more evidence of this today.
> He is, astonishingly, claiming the credit for the RB having moved 100 b.points!
> 
> Buddy, I saw that interview last night with Malcolm Turnbull.  Whilst I don't agree with his position, I'd say it was one of the most incompetent bits of journalism I've ever seen on the ABC.  Hope Kerry O'Brien is back soon.




Yes I really wouldn't have expected the banks to give 80% of that away so it was a good result for mortgage holders. 

I think it reflects the seriousness of the situation that we got a 1% cut in the first place.

Dunno why Kerry O'Brien would be away during this ?


----------



## Tysonboss1 (8 October 2008)

Kimosabi said:


> And to finish my rant I would love for someone to explain to me why an "Australian Legal Tender" $50 1/2oz Gold Coin costs $925.00 in plastic money.
> 
> ]




Much the same way a rare stamp can be worth more than it's face value,

Plus the gold in that coin is alone is worth more than it's face value.


----------



## BradK (8 October 2008)

Buddy said:


> Julia,
> Maybe Brad has a nasty streak in him/her, or is just a ****e stirrer.




Bit of both  dont like to think of it as nasty Buddy! Passionate... sorry for any offence Julia. HOWEVER, I do stand by my comments on anyone who continually puts the boot into overstretched mortgage holders, especially those that have the NERVE to off their baby boomed houses at 7 times annual income. 

If that is offensive - well, I can tell you it is much more offensive being told how irresponsible you are everyday as if being hauled into the prinicipals office. 

Thanks Rudd and the banks for 80 basis points  

Now I can refinance and have my plasma 

Brad

PS. Here is a sampling of comments from today news.com.au to illustrate what I am talking about 

Greed Greed Greed has had its day . people using equity in their house to buy tv's or cars or go on holidays are about to get an costly education . dont you love it when people brag about their property investments - i own $2m in property - never gets mentioned that they owe the bay $1.99million . 

Finally Justice - i am sick of people with no money trying to keep up with the jones's . Easy credit has allowed far too many people to think they are rich. This capitulation will finally seperate the men from the boys ..


----------



## Buddy (8 October 2008)

BradK said:


> Bit of both  dont like to think of it as nasty Buddy! Passionate... sorry for any offence Julia. HOWEVER, I do stand by my comments on anyone who continually puts the boot into overstretched mortgage holders, especially those that have the NERVE to off their baby boomed houses at 7 times annual income.
> 
> If that is offensive - well, I can tell you it is much more offensive being told how irresponsible you are everyday as if being hauled into the prinicipals office.
> 
> ...




I think I understand the point you are generally trying to make. But can you explain what "_especially those that have the NERVE to off their baby boomed houses at 7 times annual income"_ means?

One thing that I am equally "passionate about" is why people that bother to actually save are so severely dealt with by the government and ATO (not to mention Wall St, et al). 

So the government encourages, sorry cancel that - read FORCES, the masses into compulsory superannuation (which is increasingly looking like it is worth SFA) but taxes the crap out of those who actually make the effort to save money, and not rely on debt to finance their lifestyles.  The system as it stands (or did stand), rewards those in debt, are prepared to gamble with other people's money, pay for their "excessive beyond means" lifestyle by debt, and penalises those who pay as they go. Really mate the whole system is cocked up, not sustainable, and is due for a big tumble.


----------



## Julia (8 October 2008)

Yep, I second everything Buddy has said.   Why should those who have lived within their means, resisted buying stuff on endless credit, be constantly penalised?

The rate cut is going to diminish the income of thousands of self funded retirees, and those trying to actually save for home ownership.


----------



## gfresh (8 October 2008)

:iagree:

It's interesting the different perspective you get on this sort of forum, as compared to most others, and the news outlets. Obviously we're savers, or at least have excess money to invest in sharemarkets (or other investments), so we are probably quite conservative with what we borrow as to what we earn. This seems to be quite in contrast to the general status quo. 

It's disappointing in some ways all the discounts you get for borrowing money, as opposed to good old fashioned savings. This in fact allow others to borrow more, via the good old fractional reserve system. If you borrow to buy an investment property, you receive discounts on the interest paid. You even can claim discounts if you borrow to invest in the sharemarket (via a margin loan).. yet you plonk your money in a bank account, and you get taxed at your normal tax rate. Where is the incentive? None really. 

Expecting this to change is difficult though. I can see the traditional economists side also, that money sitting in a bank account achieves no productive output for an economy. But it does provide one certain thing, stability!


----------



## BradK (8 October 2008)

Buddy said:


> I think I understand the point you are generally trying to make. But can you explain what "_especially those that have the NERVE to off their baby boomed houses at 7 times annual income"_ means?
> 
> One thing that I am equally "passionate about" is why people that bother to actually save are so severely dealt with by the government and ATO (not to mention Wall St, et al).
> 
> So the government encourages, sorry cancel that - read FORCES, the masses into compulsory superannuation (which is increasingly looking like it is worth SFA) but taxes the crap out of those who actually make the effort to save money, and not rely on debt to finance their lifestyles.  The system as it stands (or did stand), rewards those in debt, are prepared to gamble with other people's money, pay for their "excessive beyond means" lifestyle by debt, and penalises those who pay as they go. Really mate the whole system is cocked up, not sustainable, and is due for a big tumble.




Agree Buddy, absolutely utterly agree. 

My point is not to wish bad on savers! Not at all. Point is, it is a bit rich for people who are cashed up AS A RESULT of selling their property(ies) for hugely inflated sums - and then turn around to like people who they sold their nest eggs to and start throwing stones because they are up to the throats in debt. 

Yes, individuals have to take responsibility - but what about the spriukers, the tv shows - the block, morning shows, current affairs shows, r/e industry - who ramped this thing into the middle of 2050. What about the 'educators' - the 'experts' who said that 'property doubles every seven years' - get in now! 

I was entering the r/e market at this time and the key sensibility was 'Urgency'. 

Plasma TV's, holidays, cars, etc. from equity? Not real bright, but read above and I think responsibility must be shared. Also, those VERY people do not need to be told time and again how stupid they are - they KNOW the lessons. Oh yes, believe me they have learned their lesson. 

HOWEVER, WHO ARE THESE PEOPLE that spend on this type of stuff? Not my friends or work colleagues or extended family. Anyway, in seven years I will be debt free - I have one mortgage - no car loans, credit card is paid at the end of every month (I have never paid one cent in interest and I get about $500 worth of gift vouchers every year on rewards to hand out as presents at Christmas each year - so I have Mastercard over a barrell - priceless  ) 

But - this savers vs mortgage thing is class warfare. 

Three ironies: 

1. I am probably the most vocal about it even though I hate it and I'm clearly coming across as a complete tosser
2. Karl Marx has A LOT to say right now about the base and the superstructure! 
3. Islamic banking is looking like a great alternative - shared responsibility - I am going to do some more research on this

Brad


----------



## chops_a_must (8 October 2008)

BradK said:


> My point is not to wish bad on savers! Not at all. Point is, it is a bit rich for people who are cashed up AS A RESULT of selling their property(ies) for hugely inflated sums - and then turn around to like people who they sold their nest eggs to and start throwing stones because they are up to the throats in debt.



Mate, you can't get over the fact that a lot here are savers who have never bought a house, but have saved in order to be able to buy one.

Stop defending those without a brain cell to rub together who made crap calls about their financial lives, and who can't take responsibility for their own actions.


----------



## Tysonboss1 (8 October 2008)

Buddy said:


> The system as it stands (or did stand), rewards those in debt, are prepared to gamble with other people's money, and penalises those who pay as they go. Really mate the whole system is cocked up, not sustainable, and is due for a big tumble.




If it wasn't for leveraged investors, the "Savers" stock piles of cash would not be earning interest at all. You can't have "savers" earning interest without borrowers paying interest.

Secondly our system rewards people that take risks as these people are generally more productive, So offcourse a person who just banks money and earns interest not really taking any risk should not have as big a returns as the person who borrows that money and invests it in somthing that adds to the economy


----------



## chops_a_must (8 October 2008)

Tysonboss1 said:


> Secondly our system rewards people that take risks as these people are generally more productive, So offcourse a person who just banks money and earns interest not really taking any risk should not have as big a returns as the person who borrows that money and invests it in somthing that adds to the economy



But with increased risk, comes an acknowledgement of potentially larger losses. Not many see that either.


----------



## cuttlefish (8 October 2008)

The problem with houses is they are also homes.  This complicates the factors that motivate people to buy and sell them - there's a lot of human factors involved - particularly when people start to have kids and want to create a stable environment for them rather than be subjected to the vagaries of a landlord deciding when they do or don't decide to move house.  

Not all mortgages are motivated by pure greed.


I think its also interesting to see how much rental demand and vacancy rates change when supply of new property into the areas where there is demand dries up.  Inner/middle ring Sydney vacancy rates remain tight and rents have risen significantly due to the slowdown in development in the past few years in these areas.


----------



## Kimosabi (8 October 2008)

Tysonboss1 said:


> Much the same way a rare stamp can be worth more than it's face value,
> 
> Plus the gold in that coin is alone is worth more than it's face value.




You miss the point, it's *$50 LEGAL TENDER.*


----------



## Tysonboss1 (8 October 2008)

chops_a_must said:


> But with increased risk, comes an acknowledgement of potentially larger losses. Not many see that either.




Offcourse, But no one ever got rich without the risk of making a loss.

but their is a difference between taking on a degree of "risk" and being "risky", Avoiding risk all together can be a guarateed way of suffering a loss.


----------



## Tysonboss1 (8 October 2008)

Kimosabi said:


> You miss the point, it's *$50 LEGAL TENDER.*




What is your point then, I understand that it is legal tender, all that means is that it has a minimum value of $50.00 should you decide to do somthing silly like bank it or use it in a cash transation. 

It's actual value would be much greater than face value due to it's gold content. with a coin like this it can be valued in three ways.


it can be valued at face value
it can be valued at it's gold content, which varies due to the spot price of gold
it can also be valued as a collector coin where it's value is decided by condition, rareity and demand

when it comes to selling it you would value it at which ever one gives you the most profit. offcourse the perth mint being a "for profit corparation" is not going to sell a coin with over $500 of gold in it for $50.


----------



## Buddy (8 October 2008)

Tysonboss1 said:


> If it wasn't for leveraged investors, the "Savers" stock piles of cash would not be earning interest at all. You can't have "savers" earning interest without borrowers paying interest.
> 
> Secondly our system rewards people that take risks as these people are generally more productive, So offcourse a person who just banks money and earns interest not really taking any risk should not have as big a returns as the person who borrows that money and invests it in somthing that adds to the economy




I will agree with you to a point. However:-
1) Are you inferring that people who save are not as productive as those that borrow? I hope not because that is pure unadulterated B.S.. No basis in fact, a generality, off the point, and you have provided no proof. Perhaps the people who save money just so happen to have worked very hard to save that money to make available to other people.
2) I think you are confusing financing and arrangements for capital, with productivity. They are not the same animals. I can show you thousands/millions of examples where cash has been borrowed for extremely unproductive purposes.
3) So "savers" (your term, not mine) who are prepared to lend money take less risk that those that borrow money?  I think not. It depends on the purpose for which the funds are being used.
4) "Leveraged investors"? Don't you mean gamblers using other people's money? That's half of how the world (particularly led by the Wall St moguls, er mongrels), got the rest of the world into this mess.
5) "Secondly our system rewards people that take risks..................." Huh? Maybe that's part of the problem that's out of control. And clearly it is! Risk on risk on risk is very risky business. I don't mind risking (real) capital in a business that I think has potential (one example is where I have done exactly that over 8 years ago, and I am still waiting to see the fruits of my investment) but I am not going to risk capital in the B.S. paper that these Wall ST financial geeks have invented.

Oh, and before I finish my rant. Let's not forget the Harvard Business School.  Their short term visions are not entierly without blame for brainwashing a whole generation into an unsustainable mess.

OK. That's it....................


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## Buddy (8 October 2008)

Tysonboss1 said:


> What is your point then, I understand that it is legal tender, all that means is that it has a minimum value of $50.00 should you decide to do somthing silly like bank it or use it in a cash transation.
> 
> It's actual value would be much greater than face value due to it's gold content. with a coin like this it can be valued in three ways.
> 
> ...





Maybe the point is.........
If the shan hits the fit, then who is going to pay more than $50 for so called "legal tender" of $50, other that if the intrinisic gold value is worth more at the time.

Yes, maybe it is worth $925 or more to a collector. Though in my mind it sounds a bit of a ripoff.


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## Tysonboss1 (8 October 2008)

Buddy said:


> 1) Are you inferring that people who save are not as productive as those that borrow? I hope not because that is pure unadulterated B.S..  Perhaps the people who save money just so happen to have worked very hard to save that money to make available to other people.
> 
> 3) So "savers" (your term, not mine) who are prepared to lend money take less risk that those that borrow money?  I think not. It depends on the purpose for which the funds are being used.
> 
> 4) "Leveraged investors"? Don't you mean gamblers using other people's money?




1, I am not saying that the people who generated the savings are unproductive, But their cash sitting in a safe is extremly un productive, the only way it can become productive is if some one takes it out and uses it.

2, yes the savers take less risk than the borrowers, because whether the investment makes money or loses money the savers still expect their money back with interest,.... notice I said "less" risk, not "No" risk,... nothing is free of risk not even government backed bonds.

3, a leveraged investor is no more a gambler than any other investor,


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## Tysonboss1 (8 October 2008)

Buddy said:


> Maybe the point is.........
> If the shan hits the fit, then who is going to pay more than $50 for so called "legal tender" of $50, other that if the intrinisic gold value is worth more at the time.
> 
> Yes, maybe it is worth $925 or more to a collector. Though in my mind it sounds a bit of a ripoff.




firstly I don't invest in coins or gold,

But from what I can see there are many ways to invest in gold all with there own pros and cons,.... gold coins are just one way, 

the pro's for it are that, the coin will always have a minimum value no matter what happens to the price of gold or collector coin prices, It has the potenial to increase in value with the price of gold, it has the potenial to increase in value if that particule design or year of issue becomes rare or sort after. 

the cons are that you have to pay a premium when you first buy it due to the fabrication costs and retail profit from the perth mint (obviously a coin is more costly to produce than a bar), another con is that you have to store it which may incurr a cost or risk theft, there is also the risk of damage to the coin which lowers it's value.


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## Aussiejeff (9 October 2008)

Getting back on track - ie INTEREST RATE CUT....

At 6am this morning (AEDST), radio news media were positively CROWING to the effect that "Six Of The World's Major Banks Have Rescued The Economy By Cutting A Massive 50BPS - Stock Prices Have Soared As A Result".

Barely one hour later it's ALL GLOOM AND DOOM AGAIN as the Euro and US markets tanked immediately! LOL. The media cracks me up bigtime....

Every time the world's banks cut interest rates in this climate, more and more SAVERS WITHOUT MORTGAGES are going to pull their deposits out and stuff 'em under their mattresses. There comes a point when the equation of the eroding effect of INFLATION and TAXES on INTEREST for bank deposits outweighs any benefit of having money deposited in a bank in the first place! 

SAVERS at many banks worldwide (where interest rates are already at LOW, LOW values ie 2-3%) must be getting close to pulling the pin. You can't just keep lowering interest rates ad-infinitum to satisfy the approx. 25% of the population with mortgages! How can that be fair to SAVERS who are propping up the banks anyway? The banks are going to shoot themselves in the foot AGAIN unless they DON'T drop deposit interest rates - or better still REWARD savers with a 50BPS INCREASE IN DEPOSIT RATES.


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## chops_a_must (9 October 2008)

Aussiejeff said:


> SAVERS at many banks worldwide (where interest rates are already at LOW, LOW values ie 2-3%) must be getting close to pulling the pin. You can't just keep lowering interest rates ad-infinitum to satisfy the approx. 25% of the population with mortgages! How can that be fair to SAVERS who are propping up the banks anyway? The banks are going to shoot themselves in the foot AGAIN unless they DON'T drop deposit interest rates - or better still REWARD savers with a 50BPS INCREASE IN DEPOSIT RATES.



Exactly.


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## MrBurns (9 October 2008)

chops_a_must said:


> Exactly.




Ok they take it out of the bank where does it go, not shares, has to be property or gold, property may get a short term spike out of this.


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## Aussiejeff (9 October 2008)

MrBurns said:


> Ok they take it out of the bank *where does it go*, not shares, has to be property or gold, property may get a short term spike out of this.




Don't you have a mattress???


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## MrBurns (9 October 2008)

Aussiejeff said:


> Don't you have a mattress???




Seriously now.......I think they'll leave it there as long as it looks safe, if not the sale of thick mattresses will go up.


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## Buddy (9 October 2008)

chops_a_must said:


> Exactly.




I agree................:iagree:
And there should be a tax rebate for savers.

Take action fellow citizens. It is now time for all good men savers to rise above this muck of debt and crush our foes.  Let sieze power in this country of ours and promote the goodness of the savers. Let us take the reigns of control of governement, banks, hedge funds, fund managers, pimply faced brokers, etc, etc, and drive them back into the swamp. Where they belong! As to the debt ridden, over leveraged, marginalised, borrowers.....................  hedge hogs and Wall St geeks.

Off with their heads I say.:behead:

Meanwhile, back in central bankers land, a further cut in international interest rates has again seen the ASX plummet in early trading as panic overtakes the market.


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## brettc4 (19 December 2008)

For those interested in Interest Rates around the world. I just stumbled across this website which some of you may find interesting.

http://www.fxstreet.com/fundamental/interest-rates-table/

Cheers
Brett


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## Julia (19 December 2008)

Aussiejeff said:


> SAVERS at many banks worldwide (where interest rates are already at LOW, LOW values ie 2-3%) must be getting close to pulling the pin. You can't just keep lowering interest rates ad-infinitum to satisfy the approx. 25% of the population with mortgages! How can that be fair to SAVERS who are propping up the banks anyway? The banks are going to shoot themselves in the foot AGAIN unless they DON'T drop deposit interest rates - or better still REWARD savers with a 50BPS INCREASE IN DEPOSIT RATES.




I had a term deposit roll over this week at ANZ.  Had intended to withdraw the capital and place with BOQ for better interest rate, but was surprised to find ANZ had raised their T.D. interest rate by 1.5% (from 4% to 5.5%), so perhaps the big banks might be starting to realise that they need to look after local savers.


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