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The Forum > General Discussion > Lower interest rates good or bad?

Lower interest rates good or bad?

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Seems the reserve bank has nearly told us the next move will be down
Good or bad? it along with Scomos new first home buyers and an easing in what is needed to get a loan, will impact
But that too, good or bad, if more buy homes now what happens if interest rates rise back to once normal
Will housing prices return to rising or continue to fall
why would banks and investors want to lend if the profit is not much more than one percent
Posted by Belly, Monday, 27 May 2019 4:19:53 PM
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This is good.

The RBA, at instructions from government, creates inflation which is effectively a tax on savings.

Due to inflation, just in order to keep what we have, we are forced to invest it, but then we pay tax on the interest so we must earn even more to be ahead of inflation, or use different and tricky schemes like superannuation. All this complicates our lives, steals our precious time and feeds a herd of accountants, banks, brokers, "fund managers", "financial advisors" and similar parasites who contribute nothing real to the quality of our lives.

No inflation = some return to simplicity, so I support the reduction of interest all the way down to zero.

Should there be less lending, this is good too for it will break this culture of debt, for a debt is like slavery: let people first work and earn, then only buy/build their house with their own money. Another good outcome is that people will delay having a family, thus bring less babies into this already overcrowded world.
Posted by Yuyutsu, Monday, 27 May 2019 11:01:52 PM
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Lower interest rates are good, because they enable long term investment decisions to be made. It's unlikely they'll ever again rise to the levels of the late 20th century, but it would be better if permanently low interest rates were actually a policy target.

As a trend, house prices will continue to rise, though obviously there will be short term variation based on interest rates and the strength of the economy.

I've previously stated that I think to slow the rate of house price growth, there should be a broad based land value tax (which should eventually replace the GST) but that it must be phased in slowly with plenty of warning to avoid unfairly disadvantaging existing property owners. I'm still of that opinion.

>why would banks and investors want to lend if the profit is not much more than one percent
Firstly because that's better than no profit at all.
Secondly, considering the vast sums banks deal with, one percent can be extremely lucrative.
Thirdly, when the RBA reduces interest rates, it reduces the rate at which banks can borrow rather than the profit they can make.
Posted by Aidan, Tuesday, 28 May 2019 12:12:41 AM
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Find both answers interesting and well thought out yuyutsu however do the government hold true power over what the reserve does
Not sure they do, see America and the troubling Fed Reserve
Much can be said about that, but not saying ours is near as worrying
Small investor, say self managed super, no way you can bank it and keep up with inflation
Shares? well if you get in at the right time houses and land would be my choice
Interest rates rise, due to inflation? say homeloans go to 5 percent, [in truth been higher]
Yes future planning and development are good points IF you trust interest rates not to rise suddenly and sharply
Posted by Belly, Tuesday, 28 May 2019 6:15:12 AM
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Dear Belly,

I don't know about America, but in Australia government dictates to the RBA to try and keep inflation between 2%-3%.

This is a deliberate policy to agitate the economy and disallow (or punish) peace and stability.

Without this policy, the average person need not even know, how less so spend time on, what are shares, markets, investments, funds, trusts, superannuation, accountants, auditors and all that: you do your honest work by day (not to belittle night shifts) then sleep soundly at night, knowing that the money you earned is safe, see you through life and old age and the only way to lose it is if you spend it away too early. Then, if you have one or two children, then at some stage you use some of this money to provide them with houses, so they too never need to bother with interest-rates or even see a mortgaging bank from the inside.

This pushing of "economy" in our face makes us run around like rats: it diminishes our spare time and feeds hordes of parasites who never created anything good in their professional life, only shuffled paper (and its digital equivalent). If you are lucky and are not ripped off by their "services" then you can have some temporary relief, but never peace: even in old age you are required to remain vigilant about just keeping your hard-earned money - is this how life is meant to be?
Posted by Yuyutsu, Tuesday, 28 May 2019 8:33:18 AM
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To start with Belly, current interest rates are similar to what they were for a centaury or more. It was your beloved Keating who mucked with his leavers & gave us 17% interest. Great for me at the time, with no debt & money in the bank, but disastrous for farmers, many companies, & home buyers.

My first home loan in 1960 was at 3.85%, so less greedy banks got along quite well on much smaller margins.

These rates don't do much for many pensioners trying to preserve some savings, me included, but they are really great for our kids, with large mortgages, & kids to educate. So on average good, we oldies have mostly learned to manage, & the kids need all the help they can get.

Aidan, "I've previously stated that I think to slow the rate of house price growth, there should be a broad based land value tax (which should eventually replace the GST) but that it must be phased in slowly with plenty of warning to avoid unfairly disadvantaging existing property owners. I'm still of that opinion".

What utter garbage Aiden. You would have those who have paid their way, supported those who don't for years, & have managed to actually acquire an asset, should then be taxed a second time on that asset they have worked for. With your bludger attitude, no wonder more people are getting sick of the continual growth in the welfare bill
Posted by Hasbeen, Tuesday, 28 May 2019 9:16:48 AM
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Bad. Very bad. Low interest rates are a sign of a moribund economy - one few would wish to invest in. Low interest rates encourage people who are already spendthrifts to spend more; it's a crude bludgeon rather than a sophisticated economic tool. And, of course, it penalises pensioners and self-funded retirees relying on whatever savings they have put aside. The elites - the bludgers who come up with such stupidity - are not affected, of course.
Posted by ttbn, Tuesday, 28 May 2019 9:38:43 AM
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Dear Belly,

If the interest rates were never lowered -
the rates would continue to rise beyond
reasonable limits and people wouldn't
borrow.
The banks need to lower the interest rates
so that people can borrow. That's what makes
the economy go round.
Posted by Foxy, Tuesday, 28 May 2019 9:49:37 AM
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Those that have paid their way?
Let me tell you about a young man, he returned home on the death of his dad [who was 54 years old]
He had no choice, 5 siblings still to feed and mum needed him
That man to, had to help out with 5, often only three, of his mums grand kinds [his sisters]
Some one had to
He tried buying a couple of blocks of land, only 4.500 at the time, mum found better use for that money
He could have been any of thousands who never had a chance to save, he however was me
Mum died kids gone I pumped every cent I could in to super
Next job, higher income, put and extra 200, every week, in to it
Weird but true I spent all leave and some wages, before calling on the pension
Not everyone squandered their wages away
My home, is now worth two and a half times what I paid [cash] in 2002
Those blocks of land? 110.000 each
Posted by Belly, Tuesday, 28 May 2019 12:41:06 PM
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Foxy and others yes true but remember no investment yet known can forever give positive returns
Fannie May and Freddie Mac drove the subprime mortgage that brought about the GFC
My thoughts are these, the recent decline, around ten percent, in housing in Sydney at least,calmed the market
Some buying at the top, lost ten percent
Others Who bought very early, made up to one hundred percent
Question will lower interest rates drive house prices up
If so, and if many buy into a rising market, at low interest rates?
What happens if inflations returns
It will return only when is not known
Any downturn in the economy, after a small boom, will harm those highlighted borrowers surely
Posted by Belly, Tuesday, 28 May 2019 3:37:36 PM
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Manipulation is outdated !
Posted by individual, Tuesday, 28 May 2019 10:17:12 PM
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indy what?'
Let me say I hope I am wrong, but two stories [no not trying to target scomo] warn us this morning in the news
Not posting links, unsure of the mid campaign warning so reducing my posted links
But SMH one about the coming rate cuts and warns the deficit may not come
Another too teling home loan borrowers the five percent deposit plan may not be the best option
We will talk more about this,no matter who had won the election the trouble ahead would still come
Posted by Belly, Wednesday, 29 May 2019 7:09:16 AM
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The growth of un-affordability in housing is a huge social problem. Once upon a time only the poor were totally restricted to the confines of the greedy landlord and his rental properties. Post WWII saw a boom in home ownership in Australia, and it was something that many ordinary Australians aspired to, and achieved in their lifetime. This is no longer the case as home ownership has gone beyond the reach of many.

Home ownership is good social policy, it is a benefit to society. Owning ones home brings a stability and satisfaction that renters can only dream of. Three things have fuelled rampant inflation of the property market, particularly in Sydney and Melbourne, foreign access to the market, tax concessions to landlords, and limited supply in a growing market. Government must act to curtail these factors that are crippling the market for the most under resourced group, the first home buyer. If action is not taken then home ownership with continue to be nothing but a dream for more and more ordinary Australians.
Posted by Paul1405, Wednesday, 29 May 2019 7:46:33 AM
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Home ownership is good social policy, it is a benefit to society. Owning ones home brings a stability and satisfactio
Paul1405,
I couldn't agree more ! Where the problem starts is that many don't own homes for that reason, they're buying up to manipulate the housing market for nothing but profit. Homes should not be allowed to be an investment other than a roof over your head.
Posted by individual, Wednesday, 29 May 2019 9:52:52 AM
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Paul,

As far as the price of housing is concerned there are many factors, and in the political debate, what is often forgotten is that house prices would come down if one could build houses cheaper.

One of the major cost in building is the direct and indirect taxes on housing tacked on by local government and councils. For houses in Sydney the cost is between $400k and $500k on average. This combined with a slow release of land pushes the cost of building sky high.

The negative gearing tax would have dropped house prices which would (and did) dramatically reduce the construction of new houses. This pushes up rents and the least wealthy suffer.
Posted by Shadow Minister, Wednesday, 29 May 2019 11:06:12 AM
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All three posts interesting and while not posting a link the SMH has yet another story about housing
Seems Sydney lost around 18 percent Melbourne not much less
The storey, backed by experts, predicts this year the house prices will stabilise
Too that lower interest rates will let more into the market
Not however seeing any return to steep price rises
Still international events could, maywel, have impacts we don't yet see.
Posted by Belly, Wednesday, 29 May 2019 12:05:19 PM
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Indy, that would be an extremely radical move, excluding landlords from the equation. Both politically and practically impossible. The problem for my younger family members, they all aspire to home ownership. The problem is saving the deposit while paying rent, then purchasing something with a manageable mortgage.
Posted by Paul1405, Wednesday, 29 May 2019 12:19:07 PM
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Paul with the politics of envy as usual. Always the down trodden by the evil landlord or equivalent. No young folk can afford a home. God you must live a miserable life.

I have an acreage development between my place & the main road, here are a couple of case studies of folks there.

One couple, he's a corporal in the army, she's a check out chick. Not exactly rich people, but they bought out here because it was cheaper than the city. Built a nice home, & are doing well. Those 1.25 acre $75,000 blocks are now worth $195000, so by having a go, rather than whinging they are set for life. Yes they struggled for a couple of years, & don't have much spare cash now, but are getting there.

Another couple, bought a block of land out Penrith way, with $4000 deposit years back. They couldn't afford to build, but sold it a couple of years later for a large profit. They turned their $4000 & 2 years repayments into $32000. Came up here Bought a house & land package in an outer suburb. 3 years later Brisbane had engulfed them & they sold it. Thry now had $90,000. Did the same again & in another 5 years had enough for a nice home on 2.5 acres out here, & love it.

Yes out here doesn't suit everyone. Quite a few have hated the extra commuting tine, & not lasted very long, but it proves it can be done by ordinary folk, at least if they get out of Sydney/Melbourne rat race.

Some of the new developments are not that nice, with postage stamp size blocks, but hell, but surely better than a flat in Annandale or a tenement in Glebe. You just have to stop winging into your beer & have a go.
Posted by Hasbeen, Wednesday, 29 May 2019 1:29:37 PM
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http://www.smh.com.au/business/the-economy/rates-could-fall-as-low-as-0-5-percent-amid-warnings-of-gfc-like-slowdown-20190529-p51sdd.html
Posted the link the basis it adds to the discusion
It say interest rate here could go as low as point five perecent.
And talks about the world economy in general
Well worth the read
Posted by Belly, Wednesday, 29 May 2019 4:30:28 PM
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From my observations I found that this deposit for a house argument is somewhat misrepresented.
Many young Australians travel overseas as much as they can & when the dough runs out they come home again. Now, just think if they used that travel money for a deposit for a block of land/hous/apartment ectc. Would it still be too difficult for them ? The real problem is not affordability, the problem is not wanting to spend the money on property but travel instead !
Posted by individual, Wednesday, 29 May 2019 4:44:53 PM
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Again Hassy your senility cuts in, and lack of comprehension.

//Always the down trodden by the evil landlord//

It was Individual who said "Homes should not be allowed to be an investment other than a roof over your head."

The only thing worse than an old fool is a silly old fool, and you demonstrate that time and again on this Forum.

Now direct you barb in the right direction, or are you to gutless as usual.
Posted by Paul1405, Wednesday, 29 May 2019 5:35:15 PM
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Well indy you get a bit far out in that post, very much doubt those saving for a home are the people traveling overseas
In fact they in my view, are the ones living a simple quiet life to save money
Hasbeen again see,s a world that exists only in his head, not the real one
This morning's walk in the print media, seems to point to a steadying in house prices, not continuing falls
Will it stabilise? or will it continue to grow again?
Will very very low interest rates feed a price rise or just let more borrow
And will borrowing at low interest let homeowners just suffer more if the rates return to higher levels
Posted by Belly, Thursday, 30 May 2019 6:19:18 AM
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Hi Belly,

I don't think a lot of people understand the cost of living pressure young families are under when trying to save for a home deposit. I hate to bring up family business, but for instance the daughter, their 10 year old car, the alternator went this week. Yesterday the mechanic come up with $1500 worth of work that needs doing. Sell the old car, buy a newer one? The $130 school shoes Mum and I bought the young bloke at the beginning of the year, falling apart need replacing, the $25 K-mart specials don't suit his wide foot. Every week there seems to be some unexpected cost put on them. I can see how hard it is, even with good jobs to save for a deposit.
Posted by Paul1405, Thursday, 30 May 2019 8:34:35 AM
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What kind of stupid are you Paul. I guess any green must be stupid to start with.

Your post is exactly what I said. Low interest rates are pretty bad for retirees, but great for kids trying to pay off a home, run a couple of cars, & bring up kids.

Currently you lefties expect them to support so many bureaucrats, welfare recipients & a huge academia, they need all the help they can get. These interest rates help, but getting some bludgers off their back would also help.

We oldies can get by without oversees trips & the like, but kids need shoes, shirts & in large cities a lot of transport.

Tell your daughter to take a TAFE home mechanics course. She at least would learn enough to know if some mechanic was ripping her off. Knowing a bit about cars is rather useful. 17 years ago I bought a couple of wreck 1980 Triumphs for $1200, & spent a year, & very little money turning them into one reasonable car. I joined the club & it is amazing how many are happy to help with the things you know nothing about.

10 years & 75,000 kilometres later I spent another 5 months turning it into a really nice car. It was now too good for shopping centre car parks, so I bought at auction a hail damaged, low mileage Mazda for not much more than the train fare to go to pick it up. 7 years & 60,000 later I bought the first repair parts it's needed, a pair of bushes for $46.

Continued
Posted by Hasbeen, Thursday, 30 May 2019 10:49:17 AM
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Cars don't have to be expensive, if you make then your slave, rather than slave for them. My cars are worth about what I have spent on them, while in the same period my ladies new cars have cost well over $50,000 in depreciation, & tens of thousands in dealer servicing. Her cars have spent more time off the road waiting for warranty replacement parts, than have my old things.

Learning a little about cars can be valuable. Oh & who is the "silly old fool" you, your daughter or me?
Posted by Hasbeen, Thursday, 30 May 2019 10:49:45 AM
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Paul yes mate well,aware, and it has always been true
We went hungry often
Found single mums, time and again, living in caravans and not being paid, [traffic controllers] as yet another contractor went broke
But started up the next day, under another name
Special hell waits for those engineers who took lucrative redundancy pack then started such labour hire firms working for? their old bosses
One even came back, yes true, as a contractor doing the job he was paid to leave.
Posted by Belly, Thursday, 30 May 2019 11:57:58 AM
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Finance & economic "experts" only know one method, manipulation !
A single mother with two kids would definitely out-perform the "experts" in matters of managing money !
The only reason why big business & the experts manage to survive is because of the uneven tax rules. Give an ordinary blue collar worker the same tax rate as a company or an organisation & they'd put the "professional experts" to shame.
Posted by individual, Thursday, 30 May 2019 2:01:46 PM
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Dear Hasbeen,

«Low interest rates are pretty bad for retirees»

This is short-sighted: low interest rates reduce inflation and inflation is a retiree's worst peril.

Yes, when inflation rages, a shrewd young energetic person can vigilantly research the markets to find the best investments and beat the noxious combination of inflation and tax over the nominal "profit", but the elderly ought not be expected to bother with all that, they should just be able to enjoy their savings peacefully and not even fill tax-returns for just wanting to keep what they already have.
Posted by Yuyutsu, Thursday, 30 May 2019 3:18:05 PM
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yuyutsu not sure that is true
In fact not really sure if high or low is better
But after reading international investor advice we MAY be headed for a brief recession?
If so what comes after
After things settle down again and interest rates, as they always will, rise
Some will be hurt surely
Buy when prices are low, interest too, and surely if rates rise but prices do not?
Posted by Belly, Thursday, 30 May 2019 4:50:56 PM
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Dear Belly,

High inflation is probably "good" for sophisticated/informed investors, because they also get high interest. It is also "good" for government because they collect much "income"-tax over no real income.
However, the average elderly person with savings is not up to it, so they lose and as a double-whammy they then need to fill in tax-returns and/or manipulate their superannuation, which is difficult for frail old people. Life should not be a rat-race, constantly chasing the wind just to keep what you already earned.

Well some people feel helpless so they allow others to manage their savings, but in most cases, sadly, they are ripped off by those they trust.

As for a recession, it is indeed likely soon, mainly because of the Trump/China affair. Before the elections I expected a serious deep one, but now I think that it will only be shallow and short-lived. Still, I think that interest-rates and inflation will then remain positive but low for a few more years, which is good.
Posted by Yuyutsu, Thursday, 30 May 2019 9:58:40 PM
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//my ladies new cars have cost well over $50,000 in depreciation, & tens of thousands in dealer servicing. Her cars have spent more time off the road waiting for warranty replacement parts, than have my old things.//

//Learning a little about cars can be valuable. Oh & who is the "silly old fool" you, your daughter or me?//

Hassy are you putting your lady in that category? Don't look like she took your advice, or is she also enrolled five times a week in the Hassy Car Mechanics Class.

p/s Modern cars leave a lot to be desired, often the "home mechanic" can do little with them. Hassy not all are living in your fantasy world of 1950.

BTW, as a young bloke I spent many hours working on old cars. It was not so difficult then.
Posted by Paul1405, Friday, 31 May 2019 6:13:13 AM
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yuyutsu I actually think the recession may be both deep and long
Any disruption to world trade may build its own momentum
In fact n my view such a recession may bring about an overhaul of future trade and financial matters
We can only hope we are both wrong, that no recession comes but it is swimming against the tide of true expert opinion
China seems to want true power and influence, at any cost, America slumbers while Trump is in office
Posted by Belly, Friday, 31 May 2019 7:17:10 AM
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Dear Belly,

Both China and America are bad influences - we better learn to live without both.

A disruption in world trade can be a good thing, so long as it happens gradually. We should be producing all we need locally in Australia, including food, fuel, clothes, cars and farm-machinery. The only thing we cannot produce on this small scale is hi-tech gadgets, which we better do without anyway. I just hope we have sufficient time to adjust before hunger sets in.

As for the next recession, we can only wait and see.
Posted by Yuyutsu, Friday, 31 May 2019 3:23:31 PM
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yuyutsu agree both are not setting examples for any country to follow
But world trade? dare we dump it? interesting report from America this morning
American big business commenting about Trump's trade war, and its implications
Seems Pinocchio [Trump] thinks America should build its own factories to compete/remove the need, with imported Chinese products
Business man pointed out just on prices American made may cost three hundred percent of Chinese one
Posted by Belly, Friday, 31 May 2019 3:34:27 PM
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Dear Belly,

«Business man pointed out just on prices American made may cost three hundred percent of Chinese one»

Yes, but the quality... I had so many Chinese-made things break down or malfunction - what do they care? Chinese culture has no sense of ethics.

Anyway, we don't want American goods either, we should produce our own.
However, it is best if we start now so as to make the transition as gradual as possible.
Posted by Yuyutsu, Friday, 31 May 2019 4:08:50 PM
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had so many Chinese-made things break down or malfunction
Yuyutsu,
I had the same experiences with Australian made, customer Service is the #1 let-down in Australia.
Posted by individual, Saturday, 1 June 2019 5:43:23 AM
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You get what you pay for gentlemen
My quoted story was from an American toy makers with 30 years in that business
He may be right, 50 years ago we made electronics, even had our own big brands
Japan first, then many Asian manufacturers now make it, and in truth it is good
SMH today, story about the coming financial crisis, surely we know it [call it a correction] has to come
We can only hope those about to be hurt come out ok
Posted by Belly, Saturday, 1 June 2019 7:37:27 AM
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You are right for once Paul. Yes my lady is a fool where money is concerned. She also is a fool about cars.

Although a very intelligent lady otherwise, she wastes money on our kids, just like most mothers. But it is with cars she is worst. She easily could learn something about them, but refuses to. Thus as she spends a lot of time driving at night, she is scared of breakdowns.

She is even silly enough to think that driving a new car will prevent, or at least greatly reduce the likelihood of having them. Silly girl. To make matters even worse she has twice bought not only European cars, but French European cars. How silly can anyone get?

Yes she has been one of those more interested in Bluetooth, the number of phone charging outlets & cup holders etc., than the record of service reliability of cars, but she is waking up at last & now has a Mazda, the new Toyota for reliability.

At least we don't borrow money to buy cars, or anything else for that matter, so are not effected by interest rates.
Posted by Hasbeen, Saturday, 1 June 2019 11:41:07 AM
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http://www.smh.com.au/business/markets/wall-street-tumbles-as-tariff-man-trump-throws-markets-into-a-tizzy-20190601-p51tey.html
One day, hopefully not this day, a headline like this will signal the next GFC is here
It will not take much, we have seen grim predictions like this many times
One day, as it must, the correction will arrive
Posted by Belly, Saturday, 1 June 2019 11:41:48 AM
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Hasbeen we have that in common, I never borrow to buy anything
My current car, a 4x4 Suzuki was bought with cash
As good as it was when new it cost far less than ten thousand
The next, maybe my last will too, shame is some are so deep in debt they will never get out
Interest rates,some have convinced me it [lower] is a help in getting the economy going
But surely that says,it too is going in the end, to lead to inflation
Posted by Belly, Saturday, 1 June 2019 3:57:24 PM
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http://www.abc.net.au/news/2019-06-03/rate-cuts-and-recession-can-our-luck-continue/11172000
While it is clear we have finished with the thread we are not finished with the subject
Just maybe it will overwhelm us in the next 12 months
Posted by Belly, Monday, 3 June 2019 6:29:40 AM
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We have become a Harvey-Norman society, buy now pay a heavy price later ! The new Chinese Silk Road too will have a huge impact here.
Posted by individual, Monday, 3 June 2019 7:57:34 AM
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Not all of us indy but yes too many, any understanding of Capitalism shows we need credit, but some over use it
Posted by Belly, Monday, 3 June 2019 11:48:56 AM
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Capitalism as we've come to know it can not continue for much longer, it is unsustainable in its present form.
The formulae need to change in order to spread the wealth wider. Societal pressure will dictate that change very soon. Too much has been syphoned off by the elites who are gradually losing control over the masses who are eager to see just a little more equality.
Public Service salaries will be the first to be scrutinised as soon as the graphs are diving.
Posted by individual, Monday, 3 June 2019 10:41:24 PM
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Some thoughts that come to mind on this thread...

Keynes vs Friedman

Keynes - Lived in the depression and believed that government action through manipulation of Government Spending, Taxation and Reserve Bank Interest Rates could have ended the depression earlier.

Friedman - Lived during the Vietnam War and believed that government action caused Stagflation (portmanteau)- a condition where there was low investment to develop businesses (Stagnation) but high consumer demand causing inflation.

Some commentators see Keynes and Friedman as reflecting the "left and right" of politics.

Gross National Product = Government Spending + Investment + Consumption + Net Exports

GNP = G + I + C + X

X = Exports - Imports

There are variables that distort markets.

Fiat and non-Fiat money- seems to be important for understanding the relationships between the Reserve, Retail Banks, Lenders, and Borrowers.

Macro vs Micro Economics

Both Property Markets and Research & Development rise with low interest rates. If the Reserve Bank lowers interest rates to stimulate R&D and job and wage rises- the simultaneous rise in property markets seems to negate the benefit of the R&D. There seems to be a paradox here.

Property Owners and Property Renters view the markets differently- there are standard ways of addressing paradoxes. Property Owners benefit from Capital Appreciation growth and Rental income and Rental growth, property capital growth is linked positively with inflation. Renters want to keep their rent cost stable.

The view of what is approapriate policy depends on how real estate is viewed in society- is it viewed as just another form of business, is it viewed as speculation, there are also historical views such as family ownership of land where land cannot be bought and sold, and others.

There seems to be a misunderstanding of the role financial risk plays in society by those without money. Perhaps there is a similar misunderstanding of the role of stability for those with money
Posted by Canem Malum, Tuesday, 4 June 2019 3:31:27 AM
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R&D seems to be critical for development at a national scale. It can be hard to pin down an approapriate definition of R&D. Adam Smith the "Father Of Economics" seems to follow this theme. Smith seems to take a dim view of market "speculation" citing tobacco stockpiling during the US War Of Independence. There have been cases where R&D policies have been implemented successfully and wildly unsuccessfully.

Understanding Economic case studies can be challenging in part due to the paradoxes that arise
Posted by Canem Malum, Tuesday, 4 June 2019 3:32:11 AM
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Economic Liberalism Vs Protectionism

The Government powers of regulation of industries including the finance industry and critical infrastructure such as utilities.
Posted by Canem Malum, Tuesday, 4 June 2019 3:40:26 AM
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Individual Calem Malem, in no way do I think or prose Capitalism is or should be dead
This World has had many other ways, not one proving it is as good
But it can evolve, in fact will, no matter what we think
Right now it focuses on wealth creation, for the few, at the expense of the many
If, and it seems so, a GFC is about to come, it may bring about the change to Capitalism
No one side of politics holds the blame for that coming problem
But all sides, including those countries ruled by dictators, need change
Any system, must, as always, reward effort, for that reason socialism is a non starter
Posted by Belly, Tuesday, 4 June 2019 7:43:45 AM
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The Change is already in the making ! What we have to be so extremely careful about is vital communication equipment manufacture.
Such equipment must really be manufactured here, not in any other country for obvious reason.
Security is vital & must not be jeopardised because some greed mongers want more profit at the cost of the nation's security.
Outfits such as Internet providers must prevent from having our passwords etc at the hands of people in other countries.
Greed may be good for some but it is also the downfall of everyone else ! Foreign investment must not go as far as land ownership & or control of vital infrastructure. This nonsense has to stop. Clive Palmer was ridiculed (by the insipid) for exposing such cases.
Cash for Visa too is something that needs sorting out.
Posted by individual, Tuesday, 4 June 2019 9:30:40 AM
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individual while not sure what it has to do with the subject the ability to hack in to any computer made in any country is here to stay
One day we may get better security but for the very reason of security government will always want a way of seeing what we are up to
Australian National University is the latest victim along with every one who had dealings there in the last twenty years
Posted by Belly, Tuesday, 4 June 2019 12:05:37 PM
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http://www.smh.com.au/business/markets/global-factors-trump-home-grown-issues-with-rba-cut-20190604-p51ubu.html
Well as expected the cut came
The link has it right, not much anyone in this country could do about it
Implications? endless
We can only sit and wait,and hope it is a long wait
To overspend now, just because it is cheaper to borrow may be very foolish
Posted by Belly, Tuesday, 4 June 2019 4:54:55 PM
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I'm not much of an economist, I find too many variables and too many factors to get a clear understanding on it all.
I do however 'cut to the chase' in such matters and ask who/what is behind all this?
You see we have seen a very un-charactaristic cycle of the GFC, this time around.
If we look at previous recessions/GFC's, they have been around ten year cycles, (roughly).
This one has well and truly surpassed previous cycles, why?
I have always been convinced these events are 'caused', they are not merely natural events by an unchecked economy.
Having said this I look to the most influential of the world and their mindset and what grand plans they have in place.
There is only one group or name which fits this criteria.
They control or own nearly all the banks in the world.
I won't mention names for fear of the 'scoff team' re-butts.
This crowd actually own the Reserve Bank, oh, and BTW, it's not actually a bank, it's a private company, just another one they own.
In the US they 'sell' the money to the US, it does not belong to the Govt.
And so it goes on.
So I ask if these GFC's and recessions are not a natural phenomenon, then who is causing them and why?
I believe I know the answer, but I would rather someone else find out as well, then it will be better accepted by my detractors.
Posted by ALTRAV, Wednesday, 5 June 2019 10:35:30 PM
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ALTRAV,
It's not who you think.

Though the details are complicated, the basic idea is very simple: there's not enough money going into the economy.

The government (more specifically, the RBA) can cut interest rates to encourage the private sector to put more money into the economy (borrowing it into existence). Conversely if they raise interest rates, that encourages the private sector to take more money out of the economy (paying down their debt).

Alternatively the government can put money into the economy (run a deficit) or take money out of the economy (run a surplus). At this stage of the economic cycle, running a surplus is grossly irresponsible, but most people still believe the opposite to be the case.
Posted by Aidan, Thursday, 6 June 2019 2:26:38 AM
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I doubt the banking system is regulated enough to control when and if we have a recession
Too many variables and too many finding ways around not actually having the finance to invest in the first place
After the GFC we heard reforms had came about that made it impossible to take place again
They got that wrong
Greed plays a role so does folly as some chase impossible dreams that investing can be risk free
Nevertheless, despite so many condemning it, world trade,[any disruption] is playing a roll in the uncertainty
Posted by Belly, Thursday, 6 June 2019 6:01:29 AM
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http://www.smh.com.au/politics/federal/a-recession-may-be-inevitable-even-desirable-20190605-p51urg.html
I think the author of this was one of those who would have become PM if he did not try to do what John Howard later did
Introduce the GST, Labor first mentioned doing it but fought it?
As for recession we need to have?
Great deal of harm and pain in that,but if it leads to improvements who can say
Posted by Belly, Friday, 7 June 2019 5:57:29 AM
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reward effort, for that reason socialism is a non starter
Belly,
True, that's Putin's success for pulling the USSR out of the bad old days & making it the success story it is now ! The way they're going they'll soon be THE success Nation of the world.
Posted by individual, Friday, 7 June 2019 7:29:18 AM
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It indy would then be a nation built on crime Putin is no demi God he is a criminal at the head of a nation of criminals
China, Indea, and maybe other Asian countries will be the ones that over take America
Posted by Belly, Friday, 7 June 2019 2:47:43 PM
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Hi Individual,

I agree with Belly on Putin - Russia's image is huge and scary, but its economy is no bigger than ours or Italy's, hardly world powers. It's hemmed in by too many other powers, which contend for its heartland of Central Asia. Yes, I think that China will curry favour with the EU, India, etc., and build up its economic and political links vis-a-vis the US in the next decade or so. It has limited time before its population starts to level off around 2050, and then decline sharply.

Joe
Posted by Loudmouth, Friday, 7 June 2019 4:11:24 PM
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IF pundits views are right, if we are headed for a GFC China,while wounded by it, may emerge better after it
Right now America is playing to Trump's tune, dangerous at best
At some future time Trumps victims may get the upper hand, a very real loss for that country
Posted by Belly, Friday, 7 June 2019 6:34:21 PM
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Another reason I call Aussies morons, is this.
With all the doom and gloom befalling us day by day, I still hear the cries of wage increases.
Now I have admitted repeatedly that I am no economist, but it seems neither is anyone else, including those who profess to be economists.
I have watched for decades while the unions have blackmailed and threatened their way across the industrial and workplace landscape to force industries and govts to increase wages.
This has proven again and again to be the worst decision of all.
WHY?
Because increasing wages only increases the cost of living and the cost of exports.
Ever wonder why items seem more expensive or just harder to buy as the years went on, even though you are (seemingly) getting more income?
Well, every time your wages go up, so does the goods or services you are involved in.
The company just doesn't increase the price of the product or service at the extra amount they have to pay out each week.
No, they add an amount to help their internal bottom line, so they up the ante' just that little bit more.
So it goes that the only good, (if that's what it is) that comes of it is that imports become more affordable, and there-in lies the final nail in our economic coffin.
We buy more imported foreign goods, thereby depleting our economy and help to bolster other countries and their economy.
Another real winner is the fact that no-one, (except me) challenges Local, State or Federal govt charges.
Whilst our incomes and the economy are either stagnant or receding, why are these mongrel govt departments still increasing fees and charges?
Their reasoning is unjustified and I say let's attack these issues before we are distracted by the bigger ones, which we will find almost impossible to affect any real change without the co-operation of those within the various levels of govt.
Posted by ALTRAV, Saturday, 8 June 2019 4:25:53 PM
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http://www.smh.com.au/politics/federal/seven-graphs-which-reveal-the-australian-economy-is-not-going-well-20190606-p51v7o.html
Nothing like the truth/reality following a rant
Australia,under both sides of government has an outstanding record of growth and finacial stability
We seem to be in strife now, or should I say soon, but so too are our trading partners
Link is interesting and we all, should be prepared for a slowdown
Posted by Belly, Saturday, 8 June 2019 6:10:10 PM
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Dear Belly,

According to an article I read in The Guardian
recently - the Reserve Bank has cut interest
rates to their lowest point ever. We're told
that it's now at 1.25% down from 1.5%.

That's good news for those with variable-rate
mortgages, who'll be paying less interest on
their loans. But it's bad news for people looking
to put their money into savings accounts.

We're also told those with a mortgage, the actual money
they'll save depends on whether their bank passes
on that cut to their customers, and on what kind
of deal the customers have with their bank.

Of the big 4 banks, Commonwealth and NAB have passed
on the full rate cut of 0.25% to their borrowers.
Westpac has passed on 0.20% and ANZ has passed on 0.18%.

Some small banks have passed on the full rate cut.
Others haven't.

It is expected that the Reserve Bank of Australia will cut
once again this year and potentially as much two times
in 2020.

Economists are predicting that either way, it's good news
for borrowers. Growth in home lending is slowing down
and banks are keen for new business. What we're seeing at
the moment is bigger banks are forced to be more
competitive than they used to be.

If you don't have a loan but do have a savings account -
it's generally bad news for you. It's a tough time for
people trying to save when interest rates are cut.
They tend to be cut on term deposits
and savings accounts. But there are still differences in the
interest rates you can get. CEO of Choice - Alan
Kirkland advises that it is definitely worth shopping around.

He advises that customers should do their research and
shop around and also directly ask their bank for a new
deal. It would be worth it.
Posted by Foxy, Saturday, 8 June 2019 7:18:16 PM
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Foxy indeed and the infamous action of the ANZ stands out
IF lower interest rates brings new investors to the housing market, then a GFC comes about what are the implications
After we emerge from such an even, what if interest rates return to say 4 percent on housing, implectations?
With pay rise stagnation but rising interest rates how many will not be able to pay the debt
We live in interesting times
Posted by Belly, Sunday, 9 June 2019 6:24:39 AM
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Altrav- Good to hear from you again.
Posted by Canem Malum, Sunday, 9 June 2019 12:26:56 PM
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Dear Belly,

We certainly live in interesting times indeed.
Look what's going on around us.
Posted by Foxy, Sunday, 9 June 2019 1:40:42 PM
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Thanks CM, been away but still kept an eye on OLO, even so the topics have been a little routine and somewhat irrelevant or mundane.
I usually step-up if I find the topics affect us and our health and wealth.
I am back now and waiting for some interesting and engaging topics.
Thank you.
Posted by ALTRAV, Sunday, 9 June 2019 1:54:49 PM
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Foxy if only, if only I didn't think I see suffering and pain coming for big numbers in a GFC
If only I did not believe the promised deficit will not come
And too am baffled by a two point five percent growth rate we heard about during the election campaign, has not become a one point eight one a month later
Never mind, seems many think I am always wrong here so maybe, with luck I am
NSW Labor is a few weeks away from counting the members votes, we elect leaders,two horse race both fine candidates
My pick [have voted] was for the woman,we will soon know
Posted by Belly, Sunday, 9 June 2019 2:16:33 PM
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you are spamming me are you not?? sell your products with honesty
Posted by Belly, Thursday, 13 June 2019 7:41:21 AM
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