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The Forum > Article Comments > Costello’s destiny call? > Comments

Costello’s destiny call? : Comments

By Dino Cesta, published 1/5/2009

The planets may no longer be aligned to Peter Costello’s aspirations: he may have forgone his opportunity.

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Rache,

Interest rates never reached 22%, the highest was 17% under labor when growth rates dropped to close to zero. (an economic achievement).

The highest growth rates and lowest average interest rates occurred after 1996.
Posted by Shadow Minister, Wednesday, 6 May 2009 11:27:09 AM
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Looks like Costello loses going by the above write-ups so far.

If the earlier political climate was any example, certainly Costello was one who gained from the illicit boom which grew from the late 1970's Get Big or Get Out deregulationary spinnaway.

Only thing we could say for Costello that though he might have wondered where all the profit was coming from, he knew how to save it rather than worry about it.

Now with the financial turn down rather than the uppity up up, one wonders what would be his jingly recipe right now?
Posted by bushbred, Wednesday, 6 May 2009 4:07:14 PM
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Shadow Minister,

In April 1982 the home loan rate was 13.5 per cent.

But it was a time when banks were regulated, home loan rates were capped by the government, and you would probably only get two-thirds of the loan to buy a house.

You would either have to have a huge deposit, or would have to get the rest of the loan at a finance company or credit union at a much higher rate, and end up with a cocktail of loans.

The Reserve Bank stats don’t show what credit unions rates were at this time, but large businesses were paying 17.5 per cent to borrow money, and the first reference to building society rates was 14.8 per cent in December 1982.

There was also no Reserve Bank cash rate target on which interest rates are based on today and which the Reserve uses to guide monetary policy.

The equivalent - the rate at which banks borrow and lend to each other - was purely set by market rates.

And on April 8, 1982 the 90-day bank bill rate did indeed hit 22 per cent.

Official market rates on that day at the so-called 11am call were 17.50-18.50 per cent, and the 24-hour call rate was 20.50 per cent.

If this seems like a selective definition, then it's no more so than the spin of "interest rates always being lower" under the Libs.
Posted by rache, Thursday, 7 May 2009 1:20:35 AM
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Rache,

In 1981/2 the US treasury bond interest rates were between 15 and 20%.

The interbank capital exchange rates would be in that order as those are the rates that banks lend to each other, and the US market is where the majority of Aus banks get a large chunk of their funding.
The 13.5% cap was to reflect the long term bond rate and to give short term relief to bond holders.

In 1990 the US treasury bond rate was about 8%, and the 17% rate reflected the long and short term rates and was entirely home grown.

http://www.treasury.gov.au/documents/1496/PDF/01_Debt.pdf

Perhaps this will enlighten you. Note Chart 5 and the positive correlation between labor and public debt.

To quote "Socialism is great until you run out of other people's money to spend."
Posted by Shadow Minister, Thursday, 7 May 2009 9:04:55 AM
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Shadow Minister,

To paraphrase that Margaret Thatcher quote - "Capitalism is great until you run out of other peoples assets to sell".
Posted by rache, Friday, 8 May 2009 1:18:56 AM
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