Aust. low inflation & RBA meeting 01 May 2012

[McLovin]

But if they think that's going to save retail, manufacturering or house prices, they are being optimistic imho.

Indeed. Kochie, Greenwood, Margie Osmond, they'll all be out tonight telling everyone how great it is. It's like driving a car with flat tyres, even though you're pushing the accelerator down to the firewall, the thing just won't go.

The funny thing is, if economists got out of their CBD offices and went and spoke to small business owners they would have known that the economy has been in the toilet for 18-24 months. Sometimes staring at statistics won't tell you everything.

 

[joea]

I think the RBA is too late for manufacturing, because of the punishment from the high $A.
I now expect some parts of Australia to fall into recession.

I see Wayne Swan has taken credit for the rate cut.
My logic then says he must be responsible for the economic slump in Australia as well.

I think he won his economics degree "in a raffle"!

joea

 

[Julia]

We get the full statement on May 4, so expect more detail on the 'why' then. Expect something re European probs back in the spotlight, growth in the US coming in slower etc. Low inflation here in Aust. has given them room to move.

Let's hope the statement on 4 May does something to dispel Swannie's insistence that the rate cut is entirely due to his magnificent fiscal management.

This is no suprise.! It has been mentioned prior to the cut today, that there would possibly be at least 0.75% cut before December.
If you look at the interest rate around the world, you will see they are close to zero.
At the very least Australia has room to move.

You can't compare the Australian situation with that of the countries with the ultra low interest rates, so it's not really relevant is it?

May be the RBA thinks only half will get passed on anyway so to get a 25bps impact on the economy they'd need a headline cut of 50bps.

But if they think that's going to save retail, manufacturering or house prices, they are being optimistic imho.

Yep, agree on both points.

I see Wayne Swan has taken credit for the rate cut.
My logic then says he must be responsible for the economic slump in Australia as well.

I think he won his economics degree "in a raffle"!

joea

I felt quite ill watching him on "7.30" this evening.
Could add to your comments above but in the interests of not using bad language on ASF, I'll refrain.

 

[Knobby22]

I remember the Coalition slogan that you will always get lower interest rates under them.

A pretty low point that helped them lose the election and one that is being disproved at present.

It's all about liquidity and confidence, both seem to be dropping quite quickly at present.
With the Fed budget sucking more liquidity we could be in for some more rate cuts.

Might get interesting.

 

[young-gun]

It must be worse than I thought? Are they joking or are we heading for GFC II?

the world never left the first one?

 

[Uncle Festivus]

the world never left the first one?

I think we are only just now hitting the stimulis bubble highs globally, so unless they keep printing then something has to give?

Apparently the RBA believes HSBC's China figures over the official Chinese manufacturing data - HSBC shows already in contraction while the official data shows expansion???

Jim Chanos - 'Chinas' banks are built on quicksand'

Looks like a call to CBA or St George today to see who still has the best at call online account rate........

Must......not......let.....property....prices.....fall....to...realistic....values........?

 

[joea]

I remember the Coalition slogan that you will always get lower interest rates under them.

A pretty low point that helped them lose the election and one that is being disproved at present.

No doubt they would like to re-phase that statement.!!
It is interesting that they lost the election, with money in the bank and the economy in not bad shape. The pendulum has now swung to enormous debt, and rate decreases to help pull the economy out of a dive.

Why has the current Government been over optimistic with the future economic figures?
They have basically spent the money, they THOUGHT they were going to accumulate.

I think it has something to do with the following::
http://www.theaustralian.com.au/bus...-per-cent-growth/story-e6frg9qo-1226344106993

So if Gillard goes, will Wayne Swan remain as treasurer.?

Yes interesting times ahead indeed.
joea

 

[joea]

You can't compare the Australian situation with that of the countries with the ultra low interest rates, so it's not really relevant is it?

I will have to explain a little better.
I was not comparing Australia interest rates with other countries, I was commenting on how they moved on their rate decrease much quicker than Australia.

To confirm this, we may see Stevens admit they have not correctly estimated the current state of the Australian economy.(or maybe he has.)

joea

 

[moXJO]

I will have to explain a little better.
I was not comparing Australia interest rates with other countries, I was commenting on how they moved on their rate decrease much quicker than Australia.

To confirm this, we may see Stevens admit they have not correctly estimated the current state of the Australian economy.(or maybe he has.)

joea

Given the amount of stimulus that flowed through I think they were close to getting it right. We still have room to play with interest rates while other countries are up the creek.
If we do get constant deflation I dread to wonder how badly current locked in wage costs will affect business which in turn spirals into job losses.

 

[joea]

Given the amount of stimulus that flowed through I think they were close to getting it right. We still have room to play with interest rates while other countries are up the creek.
If we do get constant deflation I dread to wonder how badly current locked in wage costs will affect business which in turn spirals into job losses.

Yes we still have room to move. But wonder why we were not lower before Christmas with still 3.5% to play with. I just get this strange feeling the cuts are not producing the desired relief.
Job losses. A mine went into administration this week, 325 jobs gone and 200 contractors put off.(zinc price).

As for stimulation and the rest of Labor taxes, I do not believe we got "bang for our buck".
On the face of it, they are playing today with tomorrows money.
Better off looking after our "back paddock", than sprouting to the rest of the world how good our economy is.
Will be interesting to see what the banks do. Individually or as a group.
joea

 

[young-gun]

I think we are only just now hitting the stimulis bubble highs globally, so unless they keep printing then something has to give?

Apparently the RBA believes HSBC's China figures over the official Chinese manufacturing data - HSBC shows already in contraction while the official data shows expansion???

Jim Chanos - 'Chinas' banks are built on quicksand'

Looks like a call to CBA or St George today to see who still has the best at call online account rate........

Must......not......let.....property....prices.....fall....to...realistic....values........?

i agree the stimulus is currently in full force. when you pump 1 trill into an economy like the US it doesnt stay local, it filters throughout the global economy. as is all stimulus.

whoever sat down and thought that creating a stimulus bubble on top of an already enormous(biggest in history) debt bubble should be removed from any position that allows them to make such decisions(so basically everyone involved).

ive heard china are quite good at manipulating figures?

will be interesting in the next day or so to see which banks pass on how much of the cut. would be amusing if they passed on none at all.

i think its become quite evident in the states and other nations that low interest rates dont save housing

 

[young-gun]

As for stimulation and the rest of Labor taxes, I do not believe we got "bang for our buck".
On the face of it, they are playing today with tomorrows money.
Better off looking after our "back paddock", than sprouting to the rest of the world how good our economy is.
Will be interesting to see what the banks do. Individually or as a group.
joea

is this not exactly the underlying problem with the global economy? why pay for today what you can pay for in 10 years with the miracle of debt. in fact, why even bother paying of that debt? how about we refinance with mroe debt so we dont have to pay that off.

youre absolutely right, we're just heading down the same path as everyone else. you think we would observe and learn from others mistakes. embrace the downturn and our down time will be far less in the long run.

 

[Starcraftmazter]

The question now, is it too late.?

The April PMI Manufacturing Index was announced today at 43.9. That is a drop of 5.6 points.
I think if it goes below 42, we are in trouble. This is a severe contraction in our economy.
joea

Rate cuts will not save manufacturing, "high" rates (which are actually quite low by historical standards) have nothing to do with why manufacturing is doing badly.

Must......not......let.....property....prices.....fall....to...realistic....values........?

I would be really very surprised if this rate cut has any significant impact on the housing market. If anything, it will panic people out of buying a house right now.

Winter is coming, RP Data no longer does seasonal adjustments, I predict carnage.

 

[joea]

Rate cuts will not save manufacturing, "high" rates (which are actually quite low by historical standards) have nothing to do with why manufacturing is doing badly.

Well I am aware of that! But it appears the economic "experts" in Labor are not!
They appear to think a rate cut solves all problems.(the campaigning they have done)
No mention of the $A.

These experts see a rate cut, or "throwing millions at it", solves the problem.
Or we could suggest that Labor is holding back manufacturing, to balance the mining boom.

$A comments from RTT.

http://www.readtheticker.com/Pages/...orites-are-about-to-leaving-the-party-2012-05

"expert".... x == unknown quantity. pert== drip under pressure.

Tony Shepherd from business council of Australia suggest that Wayne Swan will solve all our problems with his budget next week, and it will all be achievable. He must have had a sneek preview. Or maybe he has just come back from the moon.
I did not know Richard Branson has his space flights operating yet.

joea

 

[joea]

Well it now seems the RBA are working with stale data.

I think its a strange world we live in, when $30 million can be wasted on fuel watch, and the economic data to the RBA is not up to date.

http://www.smh.com.au/business/rba-hurt-by-lack-of-funds-20120504-1y4g0.html

One would think that many Australians has lost money because of an incorrect call on rates. (rate decision after election 2007 I think, when it was increased, then a number of decreases.)
I just don't get it any more!!
joea