I have been waiting for the explosion all day, and the longer it takes, the more ominous it seems.

Joe Hockey's idea that the government should regulate bank interest rates is, as his colleague Don Randall said in an interview, "lunatic".

Business isn't worried about the price of money at the moment, it's worried about its availability.

The reason that bank interest rates are running higher than the ones set by the RBA, is that the RBA rates are not properly reflecting the borrowing costs of the banks.

For decades now the RBA has had only persuasive power to set interest rates, but everyone seemed to think they were somehow powers of command.

The error of this view has been practically apparent for a while as the banks set their rates on the basis of how much it costs them to borrow, not what rate the government will borrow from them.

Anyone seeking to run the economy of Australia has to understand this. Hockey must understand it, and is making an opportunistic play.

Abbott must understand this, and by not countermanding his Treasury Spokesman, it suggests at best he is prepared to profit (if that is the right term) from his spokesman's opportunism or at worst, it is a considered move by the team.

Everyone expects politicians to be opportunistic, but they can't be opportunistic on everything. This is an issue where the Liberal grass roots will rise up.

The Liberals need to get used to the idea they will not be back in government soon and that quick fix strategies will not help them to get there any sooner.

*it suggests at best he is prepared to profit (if that is the right term) from his spokesman's opportunism or at worst, it is a considered move by the team.*

Exactly. IMHO, the present liberal bunch have made it quite clear
that they won't let ideology or facts interfere with political
point scoring. Just look at Abbott's suggested payments to
working mothers, paid for by increased company taxes, as an example.

Most of the general public simply don't understand bank funding,
so bashing banks or bashing Coles/Woolies is an easy option for
both politicians and tv programmes who want a bit of cheap
sensationalism.

I thought that Hockey had already backflipped on this.

Crikey reported it this afternoon as:

"At a press conference this morning [Hockey] pulled back significantly, and used as his cover a call for a "social compact" and a fundamental debate about the responsibilities of major banks and how they should be regulated. He is not, he made clear, calling for regulation of interest rates."

Mind you, the idea of Hockey being given any portfolio more complex than ordering two lattes to go is too horrific to contemplate.

Graham with the US Federal Reserve printing another $ trillion, it is putting upward pressure on our rates.There should be a tax on US Fed phoney money to create stability here.

The Board of the RBA needs a more representative membership that represents the interests of all Australians.Currently Corporate Aust determines monetary policy and they modify the money supply to suit their interests.

The ABC reports it a bit differently http://www.abc.net.au/news/stories/2010/10/21/3044519.htm?section=business. It's a pretty major issue and I don't think Abbott has any alternative but to humiliate Hockey. Looks like Hockey's doing the gradual backdown and hoping it will disappear next week. It won't. Labor will play and replay the tapes mercilessly. Better to have a stoush within the leadership team than have Abbott tarred with this brush.

Looks like it was probably a brain explosion, despite the senator raising it last night.

I am heartened to see GY say this.
Labor is not keeping Liberals out of power that is some thing they are doing them selves.
I have got it wrong before but truly think Malcolm Turnbull is looking better every day.
He for sure, would never propose such lunacy.

Belly,Malcolm Turnbull is all about the big end of town.He wants the carbon tax and the derivative market that will feed off it.

This GFC is far from being over.The USA is in real trouble with very low rates,high unemployment and a shrinking manufacturing sector.They with their phoney money,are exporting their disease here.The elites are reducing their debt by creating cyber money.These flawed policies will only push rates higher thus causing more unemployment.We are not immune.With house prices 40% over valued,an increase in rates will see many more mortage defaults and unemployment increase.

Abbott hasn't over-ruled Hockey because Abbott finds economics "boring". He doesn't understand it, so he needs time to read up on exactly what Hockey said, then ask his advisers for their opinion, then if the nasty topic hasn't gone away after a day or two, he'll go on National TV and mouth the opinion of his advisers (because he finds economics boring, and doesn't understand it).

samsung.I say more power to Joe Hockey.He knows something is fundamentally wrong but has yet to see the big picture.

I think arjay you are being a little shallow here.
You warn us constantly about world debt,about our financial future.
I truly am not approaching this thread as Labor vs Liberal.
This proposal is insanity, it interferes with the very things that hold our economy in good stead.
Big end of town? what party in the end is not so controlled.
It is for his understanding of the economy I think Turnbull is the next Liberal leader.
I am afraid, true,of the lack of understanding shown in a poll today in our national paper at the time I posted this, support for this stupidity is just over 50%
We,all of us, should be afraid if a politician can get support like that for something that would bring such harm.

Samsung Abbott studied economics at university. It's true he's perceived to have a weakness there, but I think the issue lies elsewhere.

I think that problem is that Abbott is too soft as a leader. He's actually a very nice, likeable guy, which came through during the election. People were surprised after the caricature they had been fed for years to find that out. It partly explains why he did so well.

It also partly explains why no-one has jumped on Hockey.

Watching Heather Ewart on TV last night it was pretty clear this was Hockey going solo. I heard some news earlier on where he was backing away, which would indicate that he'd been taking lots of phone calls from colleagues and branch members asking him what the hell he thought he was doing.

But he's done the damage, and I suspect if Abbott loses the Liberal leadership this will be seen as the beginning of the decline.

Very amusing Graham 'the Liberal grassroots'. Pardon me, who is that?

Like the ALP 'grassroots', it seems like the Liberal ones have been lost overboard a long time ago.

Hockey is OK as a hot-air merchant, speaking about whatever topic he is given, but he hardly cracks it as an economic spokesperson does he? And Abbott's own mouth has suggested that he has no idea at all, or interest in, economic issues.

Mind you, I am amazed that Swan has lasted so long, one can hardly say 'well'. Maybe Tanner helped him?

As for this, "For decades now the RBA has had only persuasive power to set interest rates, but everyone seemed to think they were somehow powers of command" what about our sky high credit card rates, or pawnbrokers fleecing people with even higher rates, or payday lenders?

And how can a 'grassroots' Liberal ever be supporting interest rates being held down artificially, any more than welders wages on off-shore rigs should be, if they slavishly long for 'free markets'?

The 'old paradigm' of the RBA setting rates should have been dropped years ago, to be 'free market' consistent.

In that respect, Hockey exposes himself as being nothing more than a hotair merchant, and in that sense, he's done us all a great service.

Abbott's problem is who to replace him with, although Robb probably is gathering his chums around him for the day when Hockey decides to 'spend more time with my family', the usual face-saver for dud politicians.

An interesting concept, The Blue Cross. But I don't think it will fly.

>>The 'old paradigm' of the RBA setting rates should have been dropped years ago, to be 'free market' consistent.<<

When you think that one through, I think you'll find that the concept of completely "free market" interest rates would be highly damaging. With all the export earnings sloshing around the economy at the moment looking for a home, inflation is a very real possibility. Particularly when key overseas markets will need to continue to operate at a rate close to 0%, simply in order to keep things moving at all.

The RBA has a mandate, described in the 1959 Reserve Bank Act

"It is the duty of the Reserve Bank Board, within the limits of its
powers, to ensure that the monetary and banking policy of the
Bank is directed to the greatest advantage of the people of
Australia... in such a manner as... will best contribute to:

(a) the stability of the currency of Australia;
(b) the maintenance of full employment in Australia; and
(c) the economic prosperity and welfare of the people of
Australia."

It's motherhood, of course, but someone has to do it.

I guess the decision comes down to "whom do you trust"? The financial markets, or the government?

Much as it pains me to say it, in this particular instance I would suggest that the commercial instincts of the open market would rapidly override any considerations of "the economic prosperity and welfare of the people of Australia".

We'd find ourselves as a Provincial Economic Zone of China quicker than you could say Guangzhou.

Pericles, I hope it does not, but I was trying to highlight the falsity of the idea of 'grassroots Liberals' existing anymore.

They really cannot have it both ways, anymore than the 'Fabians' of the ALP, both of whom believe absolutely in 'the free market' but get upset when banks move rates above the RBA settings, wages for 'wurkers' rise beyond the required 'below inflation' levels of EBAs, while the hoary old falsity of peanuts vs. monkeys is applied to CEOs packages.

If we want a 'free market', lets get on with it and drop all constraints, including WHS, environmental safeguards, border controls, wage controls, do away with health systems, publci schools, roads railways, housing, taxes, everything that holds back the purity of 'the market'.

Or, let's stop being silly and talking about 'free markets' at all, and get back to the serious task of living collectively within an acceptable framework, which is one that will always be 'under discussion' rather than 'fully formed' I suspect.

A 'mixed economy' might be a starting point.... regulations that are policed a good follow up, curbs on excess, including on interest rates, is not a bad idea.

But Hockey demanding them shows he has gone gaga and forgotten he is not a Fabian but a neo-liberal, like all of the rest of them in Cardinal Abbott's gang.

Not sure what your point is Blue Cross. Of course there is a Liberal grass roots. That's why Malcolm Turnbull was ousted as leader. They didn't support his climate change policies. They were unhappy with Abbott's parental leave scheme, but he got away with that one.

They're not as numerous as they used to be, and they are older, but they definitely exist.

As for a free market in interest rates - we've essentially had that for decades now. Governments nudge them around via repurchasing rates and expectations of increases in money supply, but when you can borrow in any currency anywhere and take the interest rates that apply to that currency, then you have a pretty open market.

A large proportion (maybe most) of our bank debt is sourced internationally. They accept whatever rates they have to so that they can get the deposits. And they have to pass them on.

Graham

Maybe, not being a Liberal myself, I saw the ousting of Turnbull, who seems to be more 'liberal' than Liberals want, as evidence that there were no liberals left, and therefore no Liberal grassroots.... in the sense that Menzies liberal Liberalism is dead and gone.... as has Chifley's notion of 'Labor' gone down the plug 'ole too.

When Fraser left, that was it, so I thought.

Of course, if the new Liberals are all grassroots neo-Liberals, that is another matter.

But maybe a new name is needed?

TBC I believe you are wrong, conservatives like every party have grass roots.
And in time Abbott will fall due to these grass roots.
The idea however that Hockey put forward is from the heart of confrontation for confrontation sake.
A great amount of conservative public statements are as silly as this.
Turnbull is the next leader and conservatives next Prime Minister.

Perhaps the biggest mistake that the liberals made, was not
realising that they needed Costello to stay around, more then
Costello actually needed the job.

Belly, but how does one define 'grassroots' anymore?

If I can take a liberty with you, you do not sound as if you are very keen on the new 'grassroots' of the ALP.

The uni' educated politics undergrad who scores a Party or union job and works as a 'shinyarse' for years, never touching a tool, shovel, truck, blackboard even, and passing through the ranks as if s/he (but still mostly he) were a MENSA gifted individual.

Meanwhile, there is Belly, up to his armpits in sweat and smoko, trying to smooth over the latest forelock tugging exercise to BIG $$$ from Rudd, Gillard, Tanner, Swan, or some total disaster from the joke minister of the decade, Garrett, and so on.

You may well regard yourself, I think with some justification, as being part of the 'grassroots' of the ALP, but your ALP has evaporated, and the new one is barely distinguishable from Graham Young's beloved Liberal Party.

However, I do believe you could be right about Turnbull, who, whatever his ego driven short comings are, sounds to me to be a reasonable person, and someone the Liberals need to hang on to and reward with a real job, with the view of another Lazurus, but of the Howard kind, not the Peacock one.

In fact, Turnbull sounds as if he is the only intelligent person in the parliamentary neo-liberal mob today.

Yabby, Costello would have been a bigger disaster than Abbott. Abbott couldn't win the election even when it was handed to him on a platter. Costello would have performed even worse as leader.

There's "reasons" why Howard never handed over the leadership to Costello, and those reasons all concern Costello's abilities. Costello was assisted by the biggest mining boom ever, and any treasurer could have easily built a surplus over that period. Gee, even if Wilson Tuckey was treasurer in that period he would have been able to produce a great surplus. Costello didn't have either the ticker or abilities to succeed as either PM or opposition leader.

Samsung, you clearly did not watch too many parliamentary debates,
where Costello used to chew em up and spit em out, on a regular
basis, based on his reasoning skills. Keating was another great
performer and also one who with hindsight we can see, made changes
to the Australian economy that had to be made.

But many of the Australian public prefer a crawler, which is why
Howard did well for so long. Its also one of the reasons why
we have so many mediocre politicians.

Costello was unelectable as PM and Howard knew this. And the irony of this was that Howard himself was dumped by the electorate. They were the Batman and Robin of politics, but were eaten up and spat out by Superman (Rudd) and Wonderwoman (Gillard).

Poor Peter, always the bridesmaid, but never the bride.

I have to agree with Yabby on the Costello skills in 'this place'.

I thought he was very amusing, and effective, and just as good as Keating for his acerbic lines.

But, his politics did not appeal at all.

And Yabby is also correct on 'the masses' here, who cringe away from any hint of conflict, part of our dulling down education system and the overall coercive nature we thrive on in Oz.

*Costello was unelectable as PM and Howard knew this. And the irony of this was that Howard himself was dumped by the electorate.*

Samsung, far more likely IMHO, Howard let his own ego get in the way
of his integrity and it backfired on him. He did after all have
an agreement with Costello, which he never kept.

I once sent Costello a dirty email about something, where I strongly
disagreed with him. His staffer replied that my proposal conflicted
with his ideology. I might have agreed to disagree, but I did respect
the fact that he had a clear ideology and was guided by that. Unlike
many politicians, whose desire to be elected trumps everying else.

Nobody knows how Costello would have gone, once freed from the
Howard shackles. Gillard only really came out of her shell, once free
from Kevin's apron strings. Deputies can't really say what they
think, they have to toe the line.

As we know, the public in democracies, often get it wrong. So
George Bush was elected twice, net result, he nearly bankrupted
the American economy and nation, its going to take them years to
try and dig their way out of the mess. The American public are
paying a high price.

So I guess people get the politicians that they deserve. Which
leads me back to my original point. Costello once noted that
as a politician he gave his advice freely and most took no notice.
As a lawyer, he charged them and then his advice was worth something
and respected. Food for thought.

TBC in a forum such as this we kid ourselves that all views have value.
Nice if true but it is some times a lie.
Forelock pulling to my party.
Can you truly think that?
Now be fair dinkum am I to regard your posts as your thoughts or your party's.
They come from you surely.
This thread questions a man I thought more of, he in one statement suggests undoing years of reform bank financial, business our country's very future is threatened by silliness.
In fact some within my party are DEEPLY offended by my view that NSW Labor is dead,oh yes sections will get new life, new spring in the feet, and return to government in the next election.
But as always, I stand for my party and its roots, in this case people from all walks of life who do not want conservative government.
But have no choice but to eat the elephant in March.
Last minute attempts to win those people back insult us all, an effort two years ago would not have.
So TBC if you want me to value your opinions think about our posts.

The big banks have the freedom to follow their own interest rate policy is because during the GFC, the loan guarantees the Rudd government gave only to the banks wiped out the competition.

Joe Hockey called for Wayne Swan to take action on the gouging by the big banks which could include legislation. He did not actually call to legislate interest rates, this was a deliberate misinterpretation by Wayne Swan.

An action that Labor could follow would be to help restore the competition that they wiped out.

If Joe had been talking about introducing some more competition into banking, then he might have had a viable argument, but he specifically addressed the issue of interest rates. Even so, you can't guarantee that banks will set rates at a level which equates to the one set by the RBA. They are a retailer, and like any retailer have to take into account their cost of goods, no matter how much competition there is. And we wouldn't want to go back to the era when Keating let all the foreign banks in and they made reckless loans in an effort to buy market share.

TBC, political parties change over time. I well remember the Fraser era and he wasn't all that popular within the Liberal Party at the time. It was at the end of his period when there was pressure to open up the economy. Many of us had come to the conclusion that trying to restrict lending and exchange rates was actually hurting the people it was supposed to be helping.

The same process was going on in the Labor Party. Fraser has never understood economics that well and would prefer to try to tell people what to do than to let them do it for themselves. It's the wrong approach and introduces all sorts of problems.

For example, you can keep interest rates artificially low, but it has an effect on your capital account. Life gets very difficult if you try to maintain a high exchange rate at the same time. And in the end, the market rules, but you damage a whole lot of businesses who draw up their plans on the basis that you can deliver what you say you can, when you can't.

While everyone knows Mr Hockey is blowing hot air it seems rather trivial then the consistent half truths or lies that our PM tells. Whether it is releasing children from motels (razor wire) or not putting a price on carbon or being in coalition with the Greens. Yes Jo is being dishonest but a rank amateur compared with the PM.

Yabby,Obama has done more to bankrupt the US economy that Bush with all these bailouts and counterfeit money.They are both irresponsible and incompetent.
Graham is on the right track in talking about more competition.The big four banks made a net profit of $22 billion.This is after all the exorbitant payouts to executives.Joe is correct in wanting to curb their excesses.The first big one is to remove from them the power of the fractional reserve lending.

The last two posts ignore forum rules, diverting the thread.
Now why do it?
Runner seems to do it more than any one and his post adds nothing to the debate.
IF Australia ever controls bank interest rates we over night will be a third world economy.
I again ask is this a result of the easy poll increased standing Liberals have got from flaming, yes public statements about problems we do not have.
This clearly seems to be an attempt to look for support from people who over commited them selves and who should have known what we all do rates will rise back to former highs, hopefully not the 1990,s but the early 2000 for sure

The "independence" of the RBA in setting interest rates is a great help to our economy. Notice how the banks are extremely quick to apply RBA interest rate rises, but extremely slow to apply RBA interest rate falls.... that's because "true" competition between the banks just doesn't exist.

Well we already knew Hockey was part of the lunatic fringe. :) Nick Minchin and his free market comrades must have been squirming in their lounge chairs after that faux pas.

Abbott won't say anything because he is hoping it will all go away - maybe he can bring up Afghanistan again. It worked to distract from the shaky audit debacle.

Hockey is totally unbelievable. Have you noticed whenever he makes a statement he betrays his own incredulity with himself and the usual Opposition spin without substance. I can almost hear a little voice in his head saying "what the hell am I saying it is a load of hogwash but my mouth is working so I have to keep going" and on he ploughs. He did the same with defending WorkChoices with the same lack of sincerity which was confirmed by his admissin that WC went too far.

Nothing like an opposition who wants to keep the government honest but can't get their own house and costings in order nor can they coordinate their own spin.

So Pelican,Joe Hockey is part of the luntic fringe because he has a differing opinion? Kevin Bracken is also part of the lunatic fringe according to Julia Gillard because he looked at scientific facts.

What still remains is that while everyone is condemning Joe Hockey for wanting to regulate interest rates, he never called for this at all. Everyone is condemning him for a straw man set up by Wayne Swan.

We see the headlines in the media "Wayne Swan warns the banks on raising rates", but when Joe Hockey urges him to actually do more than puff and spin, Wayne twists his words.

After receiving a whipping from the miners, the last thing Wayne wants to do is make enemies of those who could really show him up as a financial newbie.

GrahamY:>>The reason that bank interest rates are running higher than the ones set by the RBA, is that the RBA rates are not properly reflecting the borrowing costs of the banks.<<

Graham a lovely thought, but let us look at why credit ratings were implemented. The better the credit rating the lower the risk factor and the cheaper the money. Australia is AAA+ yet the funds our banks source attract a third world credit cost, which is passed onto us. The poor banks, bless their cotton sox are just keeping their heads above water here in Oz, thanks for your thoughtful consideration of an issue that is of concern our banks.

*Joe Hockey called for Wayne Swan to take action on the gouging by the big banks which could include legislation.*

Well that is the first question. Are the banks really gouging?
25% of the ASX is made up of bank values, simply because its such
an enormous industry, with around 2 trillion $ in loans outstanding.

When you add it all up, after all costs, the banks are left with
around 1% net. So if their margin between what they charge and what
they pay were to change by just 0.5%, their profits would halve.

*because during the GFC, the loan guarantees the Rudd government gave only to the banks wiped out the competition.*

Not so. Fact is many overseas banks packed up and left, as they no
longer had access to cheap overseas money. The Govt was prepared
to guarantee funding for any institution that came under the
durestriction of the banking regulator, which is fair enough.
Guaranteeing funds to just any financial institution would have been
full of risk, not a wise thing to do with taxpayers money.

As it turns out, banks payed for this and AFAIK the Govt pocketed
an extra billion $ or so, at no cost.

Banks, in their time of need, turned to shareholders to cough up
billions of $ of extra tier 1 capital. Those shareholders are
entitled to a return on that investment. As it happens, the largest
shareholders are in fact super funds, so profits go into the accounts
of most working Australians, even if they are not aware of it.

Yabby I have not been on forum for long but on two previous occasions when I slighted the banks and their exorbitant ROI you defended them with almost exactly the same rhetoric disguised as insightful verbiage. Whose puppet are you socking?

Sonofgloin, if you check the timing of my post, it was around
60seconds after yours. In other words, I did not write that post in
60 seconds, but was responding to a post by Democritus, of
6.30am this morning.

If you don't understand the fundamentals of Australian banking,
that is your choice and not my problem. You are of course free to
show where my points of reason are based on rhetoric and not fact.

You are also free to invest your hard earned savings in bank
shares and risk losing the lot if things go wrong, as recently
happened to some investors in the USA and UK.

Just a suggestion. Investors won't risk losing their shirts,
without compensation for taking that risk. Investors are the
last in the queue, should things go wrong, as they have in other
parts of the world, due to the GFC.

First we should look at what Hockey said.
Then at the implications of doing what he said.
Understanding that banks exist for profit and that our banks came out of the GFC much better than any others.
Arjay, for a bloke so concerned,often quite rightly,about world finances you get very lost here.
Self interest drives in my belief, some who want low interest rates but not low earnings.

Arjay the reason I put a smile after that sentence was to indicate humour given the 'lunatic fringe' comment by Liberal MP Don Randall when he mistalkenly assumed the comment about interests rates came from the Greens.

http://www.businessday.com.au/business/hockey-cops-friendly-fire-for-lunatic-rates-call-20101021-16ump.html

If the Greens had come out (instead of Hockey) with that statement - the 'lunatic fringe' comments would have been fast and furious and without mercy from the Coalition.

No problem here with differing opinions it is just hypocrisy that gets my wick.

You're 100% right pelican. Randall's "lunatic fringe" comment would have been repeated by all people Liberal if what Joe Hockey said, had been said by anyone from Labor or the Greens.

Randall's political mistake with his dumb comment shows how disingenuous politics has become in Australia. Disingenuous on BOTH sides.

Yes indeed but my idea, that such comments are being made in the hope of turning some from the government seems true.
This idea is strange to the point of stupidity, so too are comments being made on the Murry Darling.
If Abbott was Prime Minister, IF it was Labor making such just plain stupid comments,we would see much more media coverage.
In the end Abbott's being hurt by a policy that confrontation, at any price, on any issue is a policy .
At a time Labor is not looking brilliant the opposition seems intent on looking worse.

"Randall's political mistake with his dumb comment shows how disingenuous politics has become in Australia. Disingenuous on BOTH sides."

Spot on samsung.

Politics and policy has become a sporting event and like some sporting events blind faith and dogma influence the mindless barracking from the sides where facts cannot be separated from spin. Both sides do it - the Afghanistan trip was one equally embarrasing on both sides with the reversion to kindergarten politics.

The Murray Darling debate is another example with commentary influenced purely by political position as oppossed to commonsense and practical analysis.

Of course since changes were made to things like the Trade Practices Act, all Australian working people and consumers are subjected to the nonsense that markets forces alone will deliver a better standard of living.

The opposite of course is the truth. As an older worker on a fixed wage, the massively rising prices of things such power, fuel. food etc are all climbing at rates well beyond that of the so called inflation index. This is having the effect of reducing my living standards practically minute by minute and my assets and the things I have worked for are disappearing, swallowed by the fact that my wages are not rising to compensate for the rising cost of living.

The only way out is to find a better paying job, but this option is not available to older workers in general.
Loyalty in workplaces has disappeared and for good reason.
Whom after all would be loyal to an employer whom is happy to reside over your reducing living standards whilst feathering their own nest.

Hockey was on the right track except he didn't have the guts to say that we do need to regulate the banks.
Why?, because they clearly cannot be trusted to do the right thing by their customers.

The only standard rising in Australia today is profit margins, thereby widening the gap between rich and poor, and the power the man on the street has to solve his own problems now don't exist.

The thought police are out telling us about the abomination of regulation, so that the status quo can be maintained. All the power rests with the big end of town, whom have a record of looking after themselves at the expense of the ordinary citizen.

Have me cast in stocks and throw rotten fruit at me for suggesting that big business is incapable of honesty or integrity. cont...

The only time the rich are benevolent is when they think they can see Gods door and think they can buy their way into heaven. Why not, its always worked in the past.

Money is power in todays world more than it ever was in the past and in a so called free market in todays Australia, corporations are not even required to tell the truth.

I proved to Telstra that they lied to us when negotiating a contract. They responded by offering a $40 credit. I replied by saying Oh, so you can quantify deception in dollar terms can you?. The sad truth is they can.

Yabby:>> the largest shareholders are in fact super funds, so profits go into the accounts of most working Australians, even if they are not aware of it.<<

Yabby you are so full of it that it "must" be leaking from your shoes. Yes you used the qualification of super funds on the previous two occasions to justify the "good works" of the banking sector as well.

Usury by its nature requires many clients and so it is fair to assume that those wanting to borrow the money or use the facilities are the majority of us. I example the RECORD profit of the Commonwealth bank. Last financial the Commonwealth Bank announced a record yearly profit of more than $5.6 billion.

Some points by the ABC economic correspondent Stephen Long in August this year after the profit announcement.

>> A strong result for shareholders but it has sparked a debate about just how much profit is acceptable.<<

>> And critics, from the left to right, are bemoaning a decline in competition in the industry.<<

>> Commonwealth Bank's net profit, up 20 per cent. Their cash profit, was even bigger at $6.1 billion.<<

>> RALPH NORRIS: We delivered for our shareholders, by raising the final dividend by 55 cents, to $1.70, an increase of 48 per cent.<<

>> The underlying profits of Australian banks are so large that in effect $3 out of every $100 earned in Australia is the underlying profits of the Australian banks.<<

Yabby the measly return that the banks via superfund’s give to the plebs come from his own pocket, it costs the poor bugger $2 every time he wants to get his own money from a hole in the wall. I have had monthly statements with over $100 in transaction fees. The ordinary sod now has account keeping and transaction fees as a regular part of their association with the banks, and you justify the pittance return in percentage terms that the sod gets from his stupidfund as charitable works almost.

Yabby stick your super and banks where the sun doesn't shine for anyone excepting you perhaps.

*Yabby stick your super and banks where the sun doesn't shine for anyone excepting you perhaps.*

Not so, sonofgloin. I simply put reason and knowledge before emotion,
when analysing bank figures. I can't help it, if you are badly
informed.

*it costs the poor bugger $2 every time he wants to get his own money from a hole in the wall. I have had monthly statements with over $100 in transaction fees*

Funny that, it costs me nothing, just a flat fee of 13$ a month,
but I bank with Westpac. You are free to negotiate with your bank.
Running those branches, and those website etc, does not come cheap,
nor does operating teller machines. Did you want something for
nothing perhaps?

Now lets look at cba, I had a quick look at their figures.
6 billion profit on company worth 80 billion. So the return is
a bit over bank interest, but with far more risk.

Total assets on cba books were 646 billion $. 6 billion = a bit
under 1c in the Dollar.

Profit per share 2008 was 3.44
Profit per share 2010 was 3.57

They forgot to tell you that dividends were reduced dramatically
by most banks in 2009, due to the GFC. They then raised extra
billions, in the case of cba it was around 5 billion, IIRC.

Where did their extra profits come from in 2010? Insitutional banking. Not retail banking. Their margin was around the same
in retail banking. They just did more business, as so many
overseas banks turned tail and ran. They even picked up Bankwest for
a song, because of that.

You really should do your homework sonofgloin, before waving your
verbal fists around. Its better for blood pressure too :)

.

Australian politics is in trouble.
This thread is much like Canberra, we fight for the sake of fighting.
Left right center get involved in slanging matches.
For the left to support Hockey on this issue,not to even begin to understand the out come of such nonsense wearys me.
We live in a world that no longer is a war place between workers and well off.
Many workers, on the back of international economy, own 3 maybe more houses.
If this country controls interest rates ,over night our dollar would drop well below Americas, our economy would follow.
Unhappy will Gillards as I am I agree with her on Abbott.
We mostly will soon,, he is confrontation at any price.
Australia must be given a chance construct Tony and Julia a reason for a double dissolution election.
On behalf of the majority, give government to one or the other, even work together.
But stop this decent in to lunacy.

Yabby obviously you’re an apologist for the money . All I will say to justify my fury and your complacency is that our Australian banking cartels have the HIGHEST fees of any banking institutions in the OECD, you name the product, and it costs Aussies more. Refute that rather than justifying their profits.

Sonofgloin, I don't need to refute anything. I am simply pointing
out, that many of the headlines reported, are more about spin
and distortion of the actual figures, then reality.

Now watch with bank profits, how the press highlights their increase
over last year, ignoring their massive drop last year over 2008.

Once gain, banks make massive profits, because people borrow massively, not because of massive margins. A 1% return on assets
is hardly a rip off.

No wonder banks are so worried about spreads. If they were to charge
you .5% less and pay me 0.5% more, they would effectively make 0.

Banks are making more money, as they have increased the amounts
loaned and used more shareholder capital to do it. Not because
they have increased their margins. That is the key point here.

Yabby do not give me creative accounting figures, what a joke that you believe the banks run on 1% net, what business runs on 1% net every year, failed ones. Did you see the NBA result of 63% growth in net profits last financial and the ANZ was even higher. Both banks do more business here than os, where did the growth come from. My fiscal situation is certainly not 60% better than last financial; between the banks and the government I am screwed as both plot ways to relieve me of cash without giving anything extra. I respect your right to views Yabby but I don't believe your observations are rational, more like defense diatribe you feel obligated to regurgitate.

*what a joke that you believe the banks run on 1% net,*

Sonofgloin, I really can't help it, if you are financially illiterate
and can't read a basic balance sheet. Mike Smith of the ANZ, once
again quoted that figure on business tv today, for that is roughly
what our banks run on. The reason they make huge profits, is
because they lend out huge volumes of money, something like
2.2 trillion $ between the 4 of them.

The 1% net is on total assets. CBA, if you bother to go to their
website, has total assets on books of 636 billion $. Much of that
is borrowed from overseas.

Now if you go an borrow 100k$ and I lend the bank 100k $, their
net profit is around 500$ from each of us. You are free to take
the trouble to educate yourself, go to the CBA website and look
it up for yourself.

Yes, right now they are all announcing higher profits over last year.
That is because last year they announced massively lower profits
then the year before. Their dividends are still below what they
were, before the GFC. But of course announcing a good figure over
last year, makes the CEO look good.

The extra profits have come from less then expected bad loans, and
alot more business, not from higher margins. Fact is that when
the GFC hit, alot of overseas banks fled and alot of local investors
pulled their money from the sharemarket and put it into the safety
of banks. It was called a flight to quality, as in hard times,
people run for the protection of the safest banks.

Westpac should do even better tomorrow, as they are getting a huge
tax refund worth a few hundred million, for tax wrongly paid earlier.

Mike Smith correctly pointed out today, that before bank deregulation
in Australia, banks used to work on spreads of 500 basis points or
5%. Now they work on spreads down to 100 basis points, depending on
the loan, the average is around 220. So banking is extremely
competitive.

http://cba.republicast.com/ar2010/#p=92&c=0&v=1

There you go Sonofgloin, I'll even hold your hand and take you
to the CBA 5 year financial summary. I was out 10 billion,
total assets are 646 billion, net profit 6 billion, ie 1% net
margin.