The state of the economy at the street level

satanoperca said:

Really.
"Banks obtain funding from four main sources: retail deposits, wholesale deposits, wholesale debt and equity. Excluding equity, around one-third of major banks’ funding is from retail deposits. These are sourced from households and small- to medium-sized businesses. Another third of non-equity funding is from wholesale deposits, such as those from large corporations, pension funds and the government. Short- and long-term wholesale debt account for most of the remaining third of funding."

"The share of funding sourced by the major banks from wholesale debt markets was little changed over 2018. Within this, the major banks shifted their funding slightly, moving away from short-term debt toward long-term debt (Graph 4). A large share of wholesale debt funding for the major banks is sourced from offshore markets, mainly in US dollars."

Just collecting some value.

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Pretty much just a long winded version of what I said,

Eg, deposits, bonds and some other securities.

glad you proved my point for me.

As your cut and paste describes, a whopping one third of funding comes from retail deposits, that would cover a ship load of retail lending, another third comes from wholesale deposits, which include Nan and pop’s super fund, that would begin to cover the business lending etc.

tech/a said:

The state will find you work---comrade!

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Smurf1976 said:

I've always thought it somewhat bizarre that governments seem so proud about their ability to get their own budget into anything other than a truly disastrous position and yet claim to be "managing" the entire economy.

If someone's going to actually manage the economy, most of which is in private hands, then it ought to be beyond question that their own house is in order.

A step further back from that, I've always found the argument about governments being no good at running relatively simple businesses to be a strange one. If you can't employ the right people and leave them to run the water or power supply well then pretty clearly you're going to be way out of your depth trying to run an entire government. The claim amounts to someone applying for a job as a general manager and arguing that they'd be a good GM on the basis that they were a terrible worker and an even worse supervisor. A strange logic indeed.

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Absolutely. The idea that Government's "run" the economy is puerile. They can certainly have impacts on the broader economy in terms of the level and timing of spending (or tax), but even then the impact is overstated.

Today's "Big Announcement" is an example - infrastructure spending of $3.8 billion "brought forward" sounds a lot, but it is effectively zero stimulus in a 2 trillion dollar economy. I don't think the punters (or most media commentators) know their millions from their billions from their trillions, and pollies on all sides make the most of it. We would need about ten times that amount of money, preferably injected at the household level or in small business, to raise the economy out of the doldrums.

Where Government does make a difference is when they undertake genuine reform - like the Hawke/Keating stuff in the 1980s - floating the dollar, banking reform, CGT and FBT, lowering tariffs and superannuation. Those things have taken decades to have full effect. Since 1996, the number of genuine economic reforms can be counted on the fingers of one hand - and you'd still have enough fingers left over to greet Tony Abbott from the other side of the street. I'd list GST and the NDIS. Gillard's Carbon Tax would be there too if it hadn't been repealed. You can argue the merits of these individually, but they have changed the economy and people's lives.

As for Government's management of its own budget and programs, I think we use the wrong indicators and yardsticks. Few programs are actually subject to genuine effectiveness or efficiency review and politicians take no notice anyway. The "Welfare Card", as one example, has been reviewed and found to be costly and ineffective. But it is "popular" with those who want to control the lives of welfare recipients (particularly if they are aboriginal) so we will see its expansion. Personally, I think that one is a massive rort anyway with the only real beneficiary being the company that manages the program at more than $10,000 per user (don't ask who owns the company or how much they donate back to political parties). "Job Search" agencies and "Offshore Detention Centres" have similar stellar rationales. We need much more public input and transparency around all Government spending.

Governments also smother their agencies in interference and multiple objectives. Investment decisions are politicised and only rarely could they be compared to private sector criteria. A successful, well managed government program is more likely to have its funding cut than one that is a rort for pollies to pork barrel with. Look at these "Regional Jobs" programs.

Jack Aubrey said:

Since 1996, the number of genuine economic reforms can be counted on the fingers of one hand

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Trying to be politically neutral in making the comment but my overall perception is that Australian society, and politics is one part of that but certainly not the only part, has become far more conservative and risk averse than it was back in the Hawke - Keating days.

Hawke and Keating themselves would perhaps be viewed as too radical and politically incorrect by today's standards for the simple reason that whatever they thought, they weren't afraid to say it and nor were they afraid to scare the **** out of people if that's what needed to be done.

The lack of reform and overall progress since then, which is right across the board it's not limited to anything in particular, has a lot to do with our current economic stagnation I think.

We need to return to that era of bold and brave and throw out the conservatism if we're to fix the situation in my view. I say that intending to be neutral politically - I don't care which party does it but the current era of tip toeing around at snail's pace and not wanting to upset anyone ensures we're going slowly but surely backwards.

Smurf1976 said:

Trying to be politically neutral in making the comment but my overall perception is that Australian society, and politics is one part of that but certainly not the only part, has become far more conservative and risk averse than it was back in the Hawke - Keating days.

Hawke and Keating themselves would perhaps be viewed as too radical and politically incorrect by today's standards for the simple reason that whatever they thought, they weren't afraid to say it and nor were they afraid to scare the **** out of people if that's what needed to be done.

The lack of reform and overall progress since then, which is right across the board it's not limited to anything in particular, has a lot to do with our current economic stagnation I think.

We need to return to that era of bold and brave and throw out the conservatism if we're to fix the situation in my view. I say that intending to be neutral politically - I don't care which party does it but the current era of tip toeing around at snail's pace and not wanting to upset anyone ensures we're going slowly but surely backwards.

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Yes, Hawke and Keating made major structural reforms but they didn't usually take them to elections.

I can't recall them saying they would sell the Commonwealth bank or reduce tariffs or float the dollar as election policies , they just did it after they got in. So is this what it takes to achieve real reforms ? Lie, or at least don't tell the public what you are going to do , ie the Abbott approach "it's better to seek forgiveness than ask permission".

Smurf1976 said:

Trying to be politically neutral in making the comment but my overall perception is that Australian society, and politics is one part of that but certainly not the only part, has become far more conservative and risk averse than it was back in the Hawke - Keating days.

Hawke and Keating themselves would perhaps be viewed as too radical and politically incorrect by today's standards for the simple reason that whatever they thought, they weren't afraid to say it and nor were they afraid to scare the **** out of people if that's what needed to be done.

The lack of reform and overall progress since then, which is right across the board it's not limited to anything in particular, has a lot to do with our current economic stagnation I think.

We need to return to that era of bold and brave and throw out the conservatism if we're to fix the situation in my view. I say that intending to be neutral politically - I don't care which party does it but the current era of tip toeing around at snail's pace and not wanting to upset anyone ensures we're going slowly but surely backwards.

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So true. Most of the so-called "reforms" proposed in the last twenty years have been tinkering around the edges and, if ever implemented at all, have been so watered down as to be meaningless.

The thing I most remember of the Hawke/Keating era (apart from Rumpole's observation of them not taking things to elections) was that they were fully prepared to take on "their own side" to get stuff through. They weren't shy of a fight.

I can't even imagine the current government taking on their backers or the ALP doing something the unions objected to. This has become a total no-go area now that leaders can be deposed between elections if the backroom boys or backers want it done.

SirRumpole said:

Yes, Hawke and Keating made major structural reforms but they didn't usually take them to elections.

I can't recall them saying they would sell the Commonwealth bank or reduce tariffs or float the dollar as election policies , they just did it after they got in. So is this what it takes to achieve real reforms ? Lie, or at least don't tell the public what you are going to do , ie the Abbott approach "it's better to seek forgiveness than ask permission".

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In reality, it is probably the only way, there are so many convoluted conflicts of interest now no one knows what anyone really stands for.
IMO policies on both sides, are formulated to in some way enhance the Party backers positions and most adversely effect the engine room which is the tax payer.
I'm struggling to think of anything that has been done in recent history, to further Australia's productivity, by either side.
The current personal tax reductions are probably the first thing in 10 years IMO.

I know the left tendencies of some of the posters but keating hawks but also Howard with the GST, and he took it to the pool ,just to bring a bit of historical balance
But nothing i agree since Rudd's mining tax started the Judas on both sides right and left

SirRumpole said:

So is this what it takes to achieve real reforms ? Lie, or at least don't tell the public what you are going to do

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Think of any major achievement of society, anything at the national or at least state or regional level, and invariably there's someone driving it would could be described as a benevolent dictator.

Their intentions are absolutely honest, it's for the greater good not personal gain, but ultimately they're going to do whatever it takes to make it happen and anyone standing in the way isn't going to stop them.

The alternative of trying to please everyone only works until it doesn't. At some point tough decisions are required in any serious situation and failing to make them ends with stagnation which is where we're at right now.

Some modest pain is a necessary evil, it clears out the dead wood and enables the tree to thrive. What we're doing though is refusing to prune or even to simply remove the obviously dead wood and the tree's looking increasingly sick as a result. The new branches can't grow properly due to all the mess from the dead and damaged ones which we're refusing to remove.

The evidence for that is I think all around you. Everything slowly puttering along but that's all, puttering along not getting anywhere really. Hence the minimal growth of wages, rising underemployment and so on.

Smurf1976 said:

The evidence for that is I think all around you. Everything slowly puttering along but that's all, puttering along not getting anywhere really. Hence the minimal growth of wages, rising underemployment and so on.

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Both sides of politics are addicted to the population growth Ponzi scheme.

They both complain about low wages growth, but refuse to accept the basic economics of price, supply and demand. There is an over supply of labour, hence the price (wages) is stagnant. Employers know that if Person A is not prepared to work for low wages , there are lots of others that will. Hence the rise of part time insecure work, further depleting the ability to spend on anything else but essentials. Further evidence of this is that GDP per head is falling, we are all getting a lesser portion of the pie.

It's about time everyone realises that you can't increase population indefinitely and that other means must be found to solve the ageing population dilemma. Like keeping people healthier into middle / older years, encouraging part time work and job sharing as people get older, and maybe even recognising financially the role of grand parents in child minding and the value this has to the community.

Unfortunately the Coalition is too focussed on being cheap with money and Labor too focussed on the voting value they think they will get from immigrants that they have both lost sight of the long game.

SirRumpole said:

Both sides of politics are addicted to the population growth Ponzi scheme.

They both complain about low wages growth, but refuse to accept the basic economics of price, supply and demand. There is an over supply of labour, hence the price (wages) is stagnant. Employers know that if Person A is not prepared to work for low wages , there are lots of others that will. Hence the rise of part time insecure work, further depleting the ability to spend on anything else but essentials. Further evidence of this is that GDP per head is falling, we are all getting a lesser portion of the pie.

It's about time everyone realises that you can't increase population indefinitely and that other means must be found to solve the ageing population dilemma. Like keeping people healthier into middle / older years, encouraging part time work and job sharing as people get older, and maybe even recognising financially the role of grand parents in child minding and the value this has to the community.

Unfortunately the Coalition is too focussed on being cheap with money and Labor too focussed on the voting value they think they will get from immigrants that they have both lost sight of the long game.

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Maybe that is the long game? Get Australia like every other country, where everyone has to work to make ends meet.
To me there is no other explanation for all sides of politics wanting to keep maximum immigration, it builds the service base for employment, but also builds the labour base for competition.

I was lining up at a shop for the Black Friday sale and got talking to the lady in front of me. Somehow we started talking about Afterpay, and she mentioned how her friend lost her job recently and owes $2000 on her Afterpay account.

More of what we already know, the economy is stalling.

https://www.abc.net.au/news/2019-12...e-teetering-on-the-edge-of-recession/11761358

Im seeing a slight pick up in housing.

sptrawler said:

Maybe that is the long game? Get Australia like every other country, where everyone has to work to make ends meet.
To me there is no other explanation for all sides of politics wanting to keep maximum immigration, it builds the service base for employment, but also builds the labour base for competition.

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Thats the idea. Cheap loans to get money in the system and keep people working.

moXJO said:

Im seeing a slight pick up in housing.

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Certainly seeing that pick up in house prices - but business investment, new car sales and retail continue to slide and wages are going nowhere. Employment seems to be holding but everything is pretty fragile ATM and no sign of where the uptick is going to come from. China's manufacturing is holding up despite the "Trade War" and that is underwriting iron ore prices and volumes.

Jack Aubrey said:

Certainly seeing that pick up in house prices - but business investment, new car sales and retail continue to slide and wages are going nowhere. Employment seems to be holding but everything is pretty fragile ATM and no sign of where the uptick is going to come from. China's manufacturing is holding up despite the "Trade War" and that is underwriting iron ore prices and volumes.

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A lot of cranes over the skyline in nsw again. It's a really weird economy at the moment. Retail seems stuffed.

I have to admit that I myself stopped buying the latest gadgets about a decade back. Even slowed down on buying tools. Might be an age thing though. Its not just the economy that seems stagnant for ideas. Products seem to be stagnant as well.

"Puttering" was the perfect word to describe the situation.

moXJO said:

I have to admit that I myself stopped buying the latest gadgets about a decade back. Even slowed down on buying tools. Might be an age thing though. Its not just the economy that seems stagnant for ideas. Products seem to be stagnant as well.

"Puttering" was the perfect word to describe the situation.

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I think if you asked a hundred random people what they want but don't have, and specify that the answer can be literally anything so long as it's physically possible with current technology (so no landing on pluto etc), then there'd be very few who'd mention anything which involves a purchase in a retail shop of any kind.

What I expect you'd hear is:

Health - lose weight, get fit, drink less alcohol, eat better, etc.

Work - Improve their employment, business or as a step to get there education.

Finances - Reduce debt or increase investments.

Relationships - Find love or for some people end an existing relationship and move on.

Experiences - Travel mostly but also things like live entertainment, exploring nature and so on.

I'd be seriously surprised if anyone other than children thinking of Christmas presents or those who are genuinely quite poor would mention anything that's bought in a shop. Closest for most would be building materials for a house renovation etc.

Point being that even if someone (eg government) did hand everyone $1000 cash then I can't see too much of that going through the tills at bricks and mortar retailers. A bit would but in reality a lot would be saved / invested, used to repay debt or spent on holidays (mostly overseas), joining a gym or whatever.

If the aim is to stimulate retail in actual shops then about the only thing I can see doing that is to increase the incomes of those at the bottom. Increase the minimum wage and the dole. They're really the only people who don't already have everything anyway.

Smurf1976 said:

I think if you asked a hundred random people what they want but don't have, and specify that the answer can be literally anything so long as it's physically possible with current technology (so no landing on pluto etc), then there'd be very few who'd mention anything which involves a purchase in a retail shop of any kind.

What I expect you'd hear is:

Health - lose weight, get fit, drink less alcohol, eat better, etc.

Work - Improve their employment, business or as a step to get there education.

Finances - Reduce debt or increase investments.

Relationships - Find love or for some people end an existing relationship and move on.

Experiences - Travel mostly but also things like live entertainment, exploring nature and so on.

I'd be seriously surprised if anyone other than children thinking of Christmas presents or those who are genuinely quite poor would mention anything that's bought in a shop. Closest for most would be building materials for a house renovation etc.

Point being that even if someone (eg government) did hand everyone $1000 cash then I can't see too much of that going through the tills at bricks and mortar retailers. A bit would but in reality a lot would be saved / invested, used to repay debt or spent on holidays (mostly overseas), joining a gym or whatever.

If the aim is to stimulate retail in actual shops then about the only thing I can see doing that is to increase the incomes of those at the bottom. Increase the minimum wage and the dole. They're really the only people who don't already have everything anyway.

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Or keep reducing personal taxes, which takes the onus off already stretched retailers, to find more money for wage increases.
The best idea I've heard is to bring forward the already legislated tax cuts.

Smurf1976 said:

If the aim is to stimulate retail in actual shops then about the only thing I can see doing that is to increase the incomes of those at the bottom. Increase the minimum wage and the dole. They're really the only people who don't already have everything anyway.

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Exactly, but doing that would seem like more welfare , tax and spend, just what the LNP campaigned against.

Just another example of ideology getting in the way of what really needs to be done.

sptrawler said:

Or keep reducing personal taxes, which takes the onus off already stretched retailers, to find more money for wage increases.
The best idea I've heard is to bring forward the already legislated tax cuts.

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But the vast bulk of those tax cuts go to those in the top tax brackets (and they are permanent, unlike the offsets already delivered). Nothing that has happened in the past twenty years suggests that those people (I am one of them) put back more than a tiny percentage of their tax cuts into the "real economy" - at least not in their own country. I'd prefer any spending went to both those at the very bottom (Newstart), who will spend it in retail, or to infrastructure spending (including investments public education and health) where the money flows to contractors and other small businesses and increases national productivity over time.