Interest rate cut

[chops_a_must]

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?

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.

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.

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.

 

[BradK]

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

 

[Buddy]

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?

 

[chops_a_must]

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]

'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]

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]

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]

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]

hello,

just keep putting it away,

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

thankyou
robots

 

[Aussiejeff]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.

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

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]

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

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.