over9k
So I didn't tell my wife, but I...
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Philip Lowe's days are numbered?
- Thread starter brerwallabi
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But wait, the economy is so much better...
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That's the second photo they've found that makes the guy look totally insane.
The delusions of grandeur sub category.
Or a torturer enjoying his day. Or the mad scientist from Back to the Future.
The delusions of grandeur sub category.
Or a torturer enjoying his day. Or the mad scientist from Back to the Future.
and reminder that 'global inflation' is all Putin's fault because of Ukraine conflict fuelling inflation we are told!
over9k
So I didn't tell my wife, but I...
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Alternatively, the real estate lobby and their propaganda arm known as "the media" and their political arm, known as "the australian liberal party", are unhappy about the fact that their ponzi scheme is being torpedoed and are doing everything they can to smear the guy.
As jordan shanks has pointed out, these officials are not independent. They have masters (politicians) and their masters then have their masters (their donors).
This isn't complex.
As jordan shanks has pointed out, these officials are not independent. They have masters (politicians) and their masters then have their masters (their donors).
This isn't complex.
brerwallabi
The Oracle
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he appeared so jovial at times today I had to turn him off.
over9k
So I didn't tell my wife, but I...
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This is actually overwhelmingly true:
There are also structural labour supply problems for basically all of the world at the moment due to the global baby bust. Ironically, this is also putting a dampener on demand, without which the inflation problem would actually be far worse.
I'm not one to defend senior public officials or the scum that appoint them but there are actually many structural/geopolitical reasons for the inflation we're seeing and they are going to remain for quite some time.
Whether the public (or the politicians that appoint him) are going to accept this is a different question entirely.
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And another thing that I'm not sure has been mentioned yet. What if hypothetically Lowe kept his "promise" and didn't hike rates until 2024, but then those hikes happened at the same (or possibly even quicker, to compensate for the excess heat building up in the economy) cadence that they actually did in the real world? Would that really have made much of a difference in affordability?
I had a bit of a fiddle around with an amortisation calculator to satisfy my curiosity. Let's say someone takes out a 30 year, 1 million dollar loan at 2.5% at the start of 2021. So a monthly repayment of ~3.95K.
After 15 months at 2.5%, the remaining principal has dropped to ~972K. If the loan then becomes 972K at 6% over the remaining 28.75 years, that's a monthly repayment of ~5.92K.
If hypothetically rates were not hiked until the start of 2024, 36 months at 2.5% brings the principal down to ~930K. If that then becomes 930K at 6% over the remaining 27 years, that's still a monthly repayment of ~5.8K.
Ie. If someone is having difficulty with the rate hikes that happened in reality, they would probably still be having difficulty in the hypothetical scenario where the rates were kept on hold until 2024, then hiked at the same cadence as they were in this timeline. Ok, TBF it's an extra 21 months with 2K less expenses, but let's be real, that 2K would get eaten up by lifestyle creep for the vast majority of people, and by the time the rate hikes start in 2024 they would be in an almost identical situation to the one they are in now.
Unless I butchered my calcs somewhere. I did treat the rate hikes as happening all at once to make things simpler, but I did it in both scenarios so the impact shouldn't be all that significant (I think).
I had a bit of a fiddle around with an amortisation calculator to satisfy my curiosity. Let's say someone takes out a 30 year, 1 million dollar loan at 2.5% at the start of 2021. So a monthly repayment of ~3.95K.
After 15 months at 2.5%, the remaining principal has dropped to ~972K. If the loan then becomes 972K at 6% over the remaining 28.75 years, that's a monthly repayment of ~5.92K.
If hypothetically rates were not hiked until the start of 2024, 36 months at 2.5% brings the principal down to ~930K. If that then becomes 930K at 6% over the remaining 27 years, that's still a monthly repayment of ~5.8K.
Ie. If someone is having difficulty with the rate hikes that happened in reality, they would probably still be having difficulty in the hypothetical scenario where the rates were kept on hold until 2024, then hiked at the same cadence as they were in this timeline. Ok, TBF it's an extra 21 months with 2K less expenses, but let's be real, that 2K would get eaten up by lifestyle creep for the vast majority of people, and by the time the rate hikes start in 2024 they would be in an almost identical situation to the one they are in now.
Unless I butchered my calcs somewhere. I did treat the rate hikes as happening all at once to make things simpler, but I did it in both scenarios so the impact shouldn't be all that significant (I think).
over9k
So I didn't tell my wife, but I...
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You also need to think about the fact that their bills have increased significantly in this time as well (inflation).
As I have pointed out many many many times in other threads, we are not living in inflation, we are living in stagflation.
UMike
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"no rate hikes till 2024" Should of seen him out the door a long time ago.
Now it is too little and too late.
The guy is a puppet all right.
Now it is too little and too late.
The guy is a puppet all right.
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Just how true is that last paragraph.From memory he said it was the central scenario that rates wouldn't rise until 2024.
The central scenario by its very nature meaning there are also other scenarios some of which included rates rising much sooner.
Bearing in mind the comments were made in the context of circumstances, the pandemic and lockdowns etc, with no relevant precedent ever. Hence one should consider all scenarios not just the central one as being possible. That's why the other scenarios exist - that sort of thing isn't just done for amusement or because the RBA had nothing better to do.
In my view the real problem is the media and the practice of reporting news "in brief" without telling people they're not actually hearing the full story and there's far more to it. That's what's gotten ordinary people into trouble here - they've heard a headline with one scenario and failed to understand the detail that it's only one of several possible scenarios.
It's not Philip Lowe who's to blame. It's the wretched "30 second sound bite" approach that news media continues to get away with rather than providing proper, in depth coverage of important topics. That plus an education system that fails to teach students how to apply maths and critical analysis to real world situations.
As someone who did see it coming, my experience is most (referring to people in general not specifically on ASF) just didn't want to know. At best it would be a polite changing of the subject, at worst it would be a flat insistence that it won't happen.
Which brings me to another point. A wise person listens attentively to those they disagree with, focusing on and analysing the argument being presented and considering its validity. A fool leaves the room or gets upset that someone offended them. That goes for everything in life.
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price control doesn't work the way you want ( if you are a tax-addicted government )
you either get shrinkflation , or lower quality merchandise , or less goods for sale , so therefore i drop in tax revenue
if you give me a 2% profit margin after tax ... i will go off and learn to fish , and i hate fishing ( rather than wade through all the paperwork to be WOKE , diversified and climate scam compliant )
PS the government shouldn't have been involved in business at all look at their finest train wrecks , Medibank Private , Commonwealth Bank , PMG ( which turned into Telecom, then Telstra , soon into the NBN , but also the semi-privatized Australia Post )
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I'll argue it depends on which government.
We do have some good examples of things done by the states. Not all of them, but some are certainly good enough to give even big business a serious challenge.
As two random examples well there's plenty of cities in the world running traffic control systems developed by the NSW government. Meanwhile Tasmania has a significant presence overseas in the hydropower and water management industry.
So there are examples of governments doing things well. Not a huge list but they do exist. I'm not familiar with details but there's a few medical ones too. Plus a few other random inventions - perhaps the oddest being flat glass cooktops.
I'd agree the federal government doesn't have a particularly good record but for the states it's better.
over9k
So I didn't tell my wife, but I...
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Another musing:
We saw this total denial of the coming trainwreck in the GFC. Remember, when it comes to circular flow, confidence is everything. No politician, public figure etc is going to get up and be like "Yeah things are about to hit the fan". In fact, after the GFC, there was an infamous interview with someone in europe (I can't remember who) that, after being caught lying when he knew things were about to hit the fan basically just said look, when things are looking like going as bad as they were, you actually HAVE to lie.
The more I think about it, the more the parallels between the two events look quite astounding honestly. It's the same freight train heading towards us, it's the same "it isn't happening, but if it is, it's not that bad" from the authorities, it's the same "we didn't do this, some other factor caused it", it's the same "we didn't drop the ball, nobody saw this coming", it's the same everything.
About the only difference is that at least some of the unforeseeable stuff (russian oil sanctions etc) were actually unforeseeable and are actually a significant factor this time around. Other than that, it's the same thing all over again.
We saw this total denial of the coming trainwreck in the GFC. Remember, when it comes to circular flow, confidence is everything. No politician, public figure etc is going to get up and be like "Yeah things are about to hit the fan". In fact, after the GFC, there was an infamous interview with someone in europe (I can't remember who) that, after being caught lying when he knew things were about to hit the fan basically just said look, when things are looking like going as bad as they were, you actually HAVE to lie.
The more I think about it, the more the parallels between the two events look quite astounding honestly. It's the same freight train heading towards us, it's the same "it isn't happening, but if it is, it's not that bad" from the authorities, it's the same "we didn't do this, some other factor caused it", it's the same "we didn't drop the ball, nobody saw this coming", it's the same everything.
About the only difference is that at least some of the unforeseeable stuff (russian oil sanctions etc) were actually unforeseeable and are actually a significant factor this time around. Other than that, it's the same thing all over again.
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Are you hinting at the R word? Or are you just talking about politicians/bureaucrats in general?
IMO For the economy to move forward, then everything needs to pop.
Prices are too high- housing, rent, food, electricity.
Either we continue on until we get catastrophic strain and the machine breaks down. Or the rba pops the whole thing and we get a reset.
You can only fiddle with the economic clock for so long.
Prices are too high- housing, rent, food, electricity.
Either we continue on until we get catastrophic strain and the machine breaks down. Or the rba pops the whole thing and we get a reset.
You can only fiddle with the economic clock for so long.
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Lowe could have redeemed himself by smacking the market with a 50 points increase for this month.
But low and behold, he now appears to want to save his ass and go easy, short term gain for long term pain, reduce the masses upset. Weasel.
But low and behold, he now appears to want to save his ass and go easy, short term gain for long term pain, reduce the masses upset. Weasel.
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Reset = recession ?
At the minimum. We need massive deflation, but that would be extremely painful.
But if inflation (for example) is running near 10%. Your buying power is cut in half every 5 years.
Normally you get a recession that resets prices. Sometimes it's a worldwide depression. It's been a long time since we have cleared the desks.
Alternatively the government starts taxing everything.
Currently it's self feeding. Young people see the prices of housing and think "never affording a house. So spend every dollar they have.
Exactly. I get the hate, but he (and his board) have one arrow in their quiver. Policies to help the economy, boost productivity, and control inflation, is what the government should be doing. If anything, the gov was working against the RBA by cutting things like stamp duty or easing loans, and allow an already overheated market by nuclear. All of us here know that investments can't go have infinite growth ... it can't all be peaks.
I'm not sure Lowe was left with other options. All the gov's (not just the current but previous) are avoiding any policies that would cool the housing market. It's political death.
I've noticed a lot of parallels myself. I vaguely remember some articles coming out every now and then showing the amount of personal debt growing past the point that was around prior to the GFC. There were a few other things too. But those were quickly forgotten or dismissed as fear mongering. I definitely see this as a GFC like scenario.
Also, as for people now complaining about interest rates, have a look at: https://www.rba.gov.au/statistics/cash-rate/ . Look at where interest rates have been in the past. I remember growing up with it being around 5-7%, and its now at 3%. A lot of people now complaining are around my age or older, so this shouldn't be anything new to them. Not to be callas, but all investments carry a risk.