Banks

[Julia]

Thanks for interesting response, satanoperca. I particularly note your phrase here

I laugh, as soon you will not have a job to pay the mortgage.

This is precisely the point Joe Hockey attempted to make in his interview on 7.30 this evening.

You're competing in a global market. It's up to Australia to facilitate such competition if we don't want to see people like you moving offshore. I wish you all the best for the future, and hope (probably vainly) that eventually conditions back here will see you able to return your business here.

 

[pixel]

By this I presume you mean that, due to the wonders of globalization and labor arbitrage, you can now employ Indian, Chinese or whatever labor at a fraction of the cost of employing someone locally. True enough, we can't compete with people who can be exploited by paying them subsistence wages, often in substandard working conditions we would never except, in their home country all done under the guise of being "competitive". What of the decimation of people's jobs and futures locally in the name of ever greater profits? Such is the essence of capitalism where profit motive overrides all other considerations.

Sorry for the diversion off topic but satanperca, you are just contributing to the very problem you are highlighting here. Sounds like you have essentially offshored your business already with just a satellite office in Aus. How many local jobs were trashed in the process I wonder? How many loyal, hard working local staff were told to train offshore workers to replace themselves prior to being sacked? What's the human cost of your business decision? Care to share that part of your business success story?

How do you know that Asian workers of the kind satanperca employs are exploited and paid subsistence wages? I have friends in India, who live the life of Riley on a fraction of what it would cost them here. It's the unaffordable housing, the lack of infrastructure, and a generation that has been dumbed down by decades of neglect, that has caused this problem. And once our kids had been taught how "precious" they are and how they deserve a luxury home with home cinema and all electronic gizmos, they "need" all of that, even if their standard of education is barely sufficient for a job at the lowest end of the spectrum. Add to that the new-found "logic" that it's "the Bosses' fault" if such an under-educated kid cuts his finger at slicing onions, or gets zapped by a life wire because he forgot to switch off the fuse.

The red tape all this has created for businesses, just so "Policies and Procedures" can be shown to exist (usually on the top shelf in the Safety Officer's den), has just about halved productivity rates here as compared to smarter countries. And they're the ones we have to compete against globally.

If I were still employing people that are required to think and manufacture good quality products, I'm sure I'd be, if not ahead of satanoperca, then at least hot on his heels.

 

[Zedd]

I don't think the average Australia really understands the international competitive world we live in today. Why should I pay a graphic designer $75K here when I can employee three for that price in Vietnam

...

I ask you this, while we have a central bank determining interest rates and not the market

The salaries paid in Australia ARE set by the market. So like it or not, in the current economic climate the salaries paid, are salaries earned, as the unemployment rate wouldn't be where it's at if businesses weren't profiting, even while paying some of the world's highest salaries.

As for the central bank - They're in charge of monetary policy to try and keep inflation within a desired band. Much like the government, while its actions have an effect on the market, their purpose is not an economic goal but a social one - stability. The RBA rate has nothing to do with risk vs return, or rewarding or punishing people. Pure and simple, it is to maintain the inflation rate within the desired band to avoid as much as possible large booms and busts.

Maintaining a low, yet positive inflation figure makes it easier for employers to adjust wages in real terms, rather than reducing wages in absolute terms, or worse laying off staff. A low and positive inflation rate is exactly what this country needs in order to get our wages back to a more competitive level, while maintaining low unemployment.

 

[Zedd]

I have friends in India, who live the life of Riley on a fraction of what it would cost them here. It's the unaffordable housing, the lack of infrastructure, and a generation that has been dumbed down by decades of neglect, that has caused this problem.

I had to laugh at this. Are you honestly comparing the affordability of suitable housing, the level of infrastructure and our literacy/education levels to India and saying we're left holding the wooden spoon?

 

[doctorj]

we now have to pay an additional "insurance premium" to protect ourselves against loss of income.

This is very eloquently put. Why shouldn't savers pay a premium to protect their savings? Who should pay it for you?

In actual fact, this is just a storm in a tea cup. It's the bank lobby mobilising savers to fight in their corner because they don't want to pay a fee for something they have already, but funded by the taxpayer. It may slightly increase the cost of deposits slightly for Australian banks - but they will still want to maintain their deposit base given the challenges they face on the funding side.

 

[FxTrader]

I don't think the average Australia really understands the international competitive world we live in today.

Really! You think that when the average Aussie sees the made in China label on just about everything, does more and more shopping online and steps into a JB HiFi filled with only foreign made goods they don't understand what's happening with global sourcing and competition?

Why should I pay a graphic designer $75K here when I can employee three for that price in Vietnam, all trained by our own institutions, RMIT. How does a bookkeeper demand $35 an hour when I can have a suitably trained person in Malaysia for $15, or an IT person $100K when I can have a team for that in India - ah the cost of living and supporting property prices.

And I might add, why pay someone here to make clothing when it can be done in Bangladesh so much cheaper! Yes, we should all envy the lifestyles of those living in the likes of Vietnam, Malaysia and India. While we live in our overpriced houses they have millions living in squalid huts working for peanuts (their primary competitive advantage). I wonder though when the wages eventually rise in these countries and they aspire to the standard of living we have here, where will the opportunities arise to exploit cheap labor again? Mongolia perhaps?

Globalization is the great equalizer, dragging everyone down to the lowest common denominator. Nothing to celebrate IMO.

 

[satanoperca]

By this I presume you mean that, due to the wonders of globalization and labor arbitrage, you can now employ Indian, Chinese or whatever labor at a fraction of the cost of employing someone locally. True enough, we can't compete with people who can be exploited by paying them subsistence wages, often in substandard working conditions we would never except, in their home country all done under the guise of being "competitive". What of the decimation of people's jobs and futures locally in the name of ever greater profits? Such is the essence of capitalism where profit motive overrides all other considerations.

Sorry for the diversion off topic but satanperca, you are just contributing to the very problem you are highlighting here. Sounds like you have essentially offshored your business already with just a satellite office in Aus. How many local jobs were trashed in the process I wonder? How many loyal, hard working local staff were told to train offshore workers to replace themselves prior to being sacked? What's the human cost of your business decision? Care to share that part of your business success story?

You comments do make me laugh. Ever traveled or spent time in some of those countries you mentioned. I have and find the vast majority happy and willing to work for a better future, not expecting it to be handed to them.

I wonder how many products surround you that are made off shore, your clothes, computer, television etc. Did you stop to consider when purchasing who made them and under what conditions. No. I didn't write the rules, just have to work within them.

As for trashing local jobs, I stuck it out for long enough employing locals, at the cost of my own financial situation. Did you or any one else care, I think not and nor should you. Just another person on their high horse, but are you willing to put your money where your mouth is. Again, I think not.

Do you invest or trade? FXtrader implies you trade, does that benefit greater society or just you. Be careful what you wish for.

Zedd, inflation positive or low we are no longer competitive in the world market, if it wasn't for the dirt we dig up we would be a third world country. We are no longer clever nor inventive.

Pixel +1 to you, someone who has lived and breathed it.

Cheers

 

[satanoperca]

Globalization is the great equalizer, dragging everyone down to the lowest common denominator. Nothing to celebrate IMO.

Exactly, so what do you do to prevent it? As he/she sits in front of a foreign made computer.

Never said I was for globalisation, but have to work with it. I didn't make the rules, I am just a grain of sand on a very big beach.

 

[FxTrader]

I have and find the vast majority happy and willing to work for a better future, not expecting it to be handed to them.

Yes, you must be right. All the people around me working 50+ hours a week are really just lazy bastards looking for a handout, they are just fooling everyone. From a recent article "Nearly 1.7 million Australian employees - that's about one in six - work 49 hours or more each week, the latest census showed." Yep, we Aussies are just plain lazy.

I wonder how many products surround you that are made off shore, your clothes, computer, television etc. Did you stop to consider when purchasing who made them and under what conditions. No. I didn't write the rules, just have to work within them.

I'd say you are doing more than just working within the rules but actively exploiting them.

As for trashing local jobs, I stuck it out for long enough employing locals, at the cost of my own financial situation. Did you or any one else care, I think not and nor should you. Just another person on their high horse, but are you willing to put your money where your mouth is. Again, I think not.

The point is you don't care and neither does any other employer. Profit potential is all that matters.

Do you invest or trade? FXtrader implies you trade, does that benefit greater society or just you. Be careful what you wish for.

Of course I do and internationally as well. My market participation is just that, for profit, just like your trade in human capital is for profit only and not for the lofty claim of benefiting greater society.

 

[Zedd]

We're getting a bit of topic so I'll be brief:

Zedd, inflation positive or low we are no longer competitive in the world market, if it wasn't for the dirt we dig up we would be a third world country

I was clarifying the reason for the inflation target, as you seemed to disagree with the concept. It will help to reduce the cost of wages in real terms, as well a falling AUD. Real wages and the AUD will continue to fall as long as we are uncompetitive in the global arena. I think you'll find we'll stabilise well short of a 3rd world nation.

We are no longer clever nor inventive.

Speak for yourself. In my travels over the last two years I'm confident I can go toe-to-toe with anyone I've met in intellect, creativity and work-ethic and I'm not the best the nation has to offer by far. We might have some tough years ahead of us, but the future is anything but bleak for Australia.

 

[FxTrader]

Exactly, so what do you do to prevent it? As he/she sits in front of a foreign made computer.

Even worse I work for a Japanese car company.

You know, that country where property prices are ridiculous, wages are high, the currency overvalued. Yet people just love to buy the made in Japan label. Why? A perception of quality at the right price. Same is true of Germany. That is the space Australia needs to play in and not offshoring production of everything to the lowest cost location in the name of competition and profit. We can agree on one thing, digging holes in the ground is not the secret to sustainable prosperity and neither is offshoring our skilled workforce.

 

[pixel]

I had to laugh at this. Are you honestly comparing the affordability of suitable housing, the level of infrastructure and our literacy/education levels to India and saying we're left holding the wooden spoon?

Stop laughing, Zedd; start thinking.
The point is what level of housing of infrastructure is "suitable"?
Do we really have to waste time, money, energy, and scarce resources on gossip about Hollywood or Bollywood "Superstars"? On mags like "No Idea" and "Women's Daze"? On spacious mansions with 5 bedrooms and 6 bathrooms plus a home cinema? Three car-garage for two people?
Our waste and illusion of "entitlement" is driving our cost of living to extremes. Far more than the tyranny of distance that lengthens the food miles etc compared to more densely-populated areas.

 

[Covalev]

Commonwealth Bank Australia - Earnings more optimised than ever

● CBA reported (company defined) FY13 cash earnings of $7,819 mn (up 10% on $7,113 mn FY12), which was 3% better than both our $7,597 mn estimate and the $7,614 mn consensus average (with earnings surprise to our estimates coming through revenues and, to a lesser extent, bad debt charges).

● What we liked about the result: Reasonable lending balance growth; strong margin expansion; improving asset quality (except in unsecured personal); wealth FUA flows and balance growth; and continued half- early ROE expansion.

● What we didn’t like: FY14E cost headwinds that appear to challenge the prospect for positive FY14E cost/revenue "jaws"; declining collective provision coverage (acknowledging reduced BankWest overlays); and softer-than-expected equity Tier 1 ratio (IRRBB RWA inflation).

● Following the FY13 result we have upgraded our estimates by 1% with an unchanged $71.00 target price and an unchanged UNDERPERFORM rating.

 

[burglar]

Commonwealth Bank Australia - ...

What has just happened here ... a post about a bank?! :

 

[tinhat]

Commonwealth Bank Australia - Earnings more optimised than ever

● CBA reported (company defined) FY13 cash earnings of $7,819 mn (up 10% on $7,113 mn FY12), which was 3% better than both our $7,597 mn estimate and the $7,614 mn consensus average (with earnings surprise to our estimates coming through revenues and, to a lesser extent, bad debt charges).

● What we liked about the result: Reasonable lending balance growth; strong margin expansion; improving asset quality (except in unsecured personal); wealth FUA flows and balance growth; and continued half- early ROE expansion.

● What we didn’t like: FY14E cost headwinds that appear to challenge the prospect for positive FY14E cost/revenue "jaws"; declining collective provision coverage (acknowledging reduced BankWest overlays); and softer-than-expected equity Tier 1 ratio (IRRBB RWA inflation).

● Following the FY13 result we have upgraded our estimates by 1% with an unchanged $71.00 target price and an unchanged UNDERPERFORM rating.

Who's we?

 

[Covalev]

National Australia Bank - Reasons for the discount slowly dissipating

● Following the trading update traders have made compositional changes to our estimates. A low surprise 3Q from NAB, although on balance marginally disappointing; that said, the reasons for NAB's "excess" peer group PE discount are slowly dissipating.
● What traders liked about the trading update: Customer margin improving (headline margins perhaps lower given apparently weaker financial markets income); Good performances overall in the UK (both businesses reporting higher revenues / lower bad debts, with strong UK CRE balance run-off).
● What traders didn’t like: Negative Group cost / revenue “jaws” (with soft Group revenue growth), although underlying cost discipline appears strong; Continued stalled Business Banking earnings momentum; Further UK conduct and redress costs; Modest Group asset quality deterioration with softer (collective and specific) provision coverage.
● NAB trades on 11.4x 12-month prospective earnings (equating to an 11% discount to the major bank peer group vs. 7% four-year average discount) and a corresponding book multiple of 1.8x.

 

[CanOz]

I heard a rumour that during the last G20, there was agreement to the concept of "bail ins" where the depositors of banks will take hair cuts when the bank fails....

Anyone got better detail on this?

 

[McLovin]

I heard a rumour that during the last G20, there was agreement to the concept of "bail ins" where the depositors of banks will take hair cuts when the bank fails....

Anyone got better detail on this?

Not depositors, bondholders. In essence their bonds become common equity. The idea of modern banking is always to ensure depositors lose their money only when every other avenue has been exhausted. The concept of bail ins is designed to lessen the liability on governments if a bank fails.

 

[CanOz]

Not depositors, bondholders. In essence their bonds become common equity. The idea of modern banking is always to ensure depositors lose their money only when every other avenue has been exhausted. The concept of bail ins is designed to lessen the liability on governments if a bank fails.

Yeah ok, got that part. What I heard though was that if, in the event of a possible failure, the depositors would see a portion of their savings converted to some kind of bond....

 

[McLovin]

Yeah ok, got that part. What I heard though was that if, in the event of a possible failure, the depositors would see a portion of their savings converted to some kind of bond....

A Google search seems to show that turning up on conspiracy type websites. I can't find a single credible report that depositors will be bailed in. Have you got one?