OT: Current Affairs and Politics

[hindy111]

Again your tone suggests that it could have been avoided and because of this "people will be financially ruined".

How could it have been avoided ?

You said ^^ that banks were offering 5 years fixed at 1.95%. I don't think you understand how fixed bank mortgage rates actually work. The pool that they lent you that money came from the fixed investment rates that they gave Aunty Gladys at 0.25% fixed for 5 years. After your fixed rates expire, the next offering will be based on what they are now offering Aunty Gladys. (it's actually more complicated and linked with bond rates, but same same for this purpose).

Variable interest rates are a different beast and reflect the wholesale cash rate set by the Reserve Bank. The banks just put a margin on that rate.

Yes. They never should of dropped them so low in the first place.

 

[Bandwagon]

The reserve bank made that statement on low interest rates BEFORE Russia invaded Ukraine. The war in Europe caused inflation. Mostly around supply chains and the cost of energy. You make it sound like the reserve bank had a choice.

For what it's worth, the Reserve Bank said last week that they think that inflation peaked over Xmas and some economists are predicting rates to start coming down next year.

Anyway, it's not as if every second merkin wasn't warning that "interest rates can't stay that low forever" Banks have been stress testing mortgage applications* since before covid.


*

What is a Mortgage Stress Test?

A mortgage stress test revolves around predicting future affordability. It is seen by many borrowers as just another hurdle to overcome, but it’s important to understand why it was introduced and who it is meant to protect.

mortgagerequired.com

This is revisionism at it's finest, firstly and most importantly inflation was baked in well before Russia invaded, and it's cause was stimulatory policy in a supply constrained environment, central banks were running the line that inflation was transitory, and would normalise after covid.

They were wrong, plain and simple. Yes the war has exacerbated the problem, but no f**king way it caused the problem, government and central banks created the problem, they really sat on their hands on this and merkins are getting burnt because they got it wrong.

Again your tone suggests that it could have been avoided and because of this "people will be financially ruined".

How could it have been avoided ?

The simple answer is by getting it right and correcting policy earlier. I mean it's not expected that they're gonna make the right call all the time, but when they get it wrong, call it what it is, it's not like they haven't been wrong before.

Fact is they watched housing prices jump 30+% in twelve months or so, with rents increasing by more than that in some places, the stock market was also going bananas, and there is no doubt they were well aware of the fact that it was cheap money driving that. They always had the option of raising rates earlier, or even signalling to the market earlier that they were prepared to do so. They could have put a dampener on asset prices, and that would have fed into inflation.

They didn't.

 

[Bandwagon]

Yes. They never should of dropped them so low in the first place.

There was a point where them being that low was well justified, things coulda got well nasty, but you're correct in as much as that's part of the root cause, they never should have kept them that low, for that long.

 

[the phantom menace]

The consequence of Lidia Thorpe leaving The Greens is that, having been elected on a party ticket, she gets 5+ years as an independent Senator before facing re-election. Probably not what the people who voted for her had in mind.

Whilst she will be a very noisy senator, Labor have the numbers to pass things without her..

View attachment 70067

She always seemed a bit unhinged, and in things for herself and her own brand - or her own (future) standing within indigenous 'small p' politics?

Thorpe seems to have used her Greens Senate preselection/election to essentially gain status/five years as an Independent senator - something she wouldn't have gained if she stood as an Independent in the first place... #narcissist?

Anyway, the Greens now look much less "extreme" and more middle of the road pallatable without her.

 

[Gronk]

This is revisionism at it's finest, firstly and most importantly inflation was baked in well before Russia invaded, and it's cause was stimulatory policy in a supply constrained environment, central banks were running the line that inflation was transitory, and would normalise after covid.

They were wrong, plain and simple. Yes the war has exacerbated the problem, but no f**king way it caused the problem, government and central banks created the problem, they really sat on their hands on this and merkins are getting burnt because they got it wrong.



The simple answer is by getting it right and correcting policy earlier. I mean it's not expected that they're gonna make the right call all the time, but when they get it wrong, call it what it is, it's not like they haven't been wrong before.

Fact is they watched housing prices jump 30+% in twelve months or so, with rents increasing by more than that in some places, the stock market was also going bananas, and there is no doubt they were well aware of the fact that it was cheap money driving that. They always had the option of raising rates earlier, or even signalling to the market earlier that they were prepared to do so. They could have put a dampener on asset prices, and that would have fed into inflation.

They didn't.

So which country with simliar supply chain and energy issues managed to avoid inflation by actioning your solution ?

When should have the Morrison government pulled the trigger ? What was the line in the sand moment ?

 

[Soren Lorenson]

“But Interest Rates Were 17% in My Day!” Complains Man Who Bought House for $67,000 — The Shovel

"We had to save up for weeks just to get a deposit!"

www.theshovel.com.au

 

[T.S Quint]

“But Interest Rates Were 17% in My Day!” Complains Man Who Bought House for $67,000 — The Shovel

"We had to save up for weeks just to get a deposit!"

www.theshovel.com.au

 

[Gronk]

It's satire, Gus.

 

[Soren Lorenson]

Do just a little research Gus.

 

[T.S Quint]

He's getting smahed on Twitter apparently.
How long until he deletes this tweet and blocks a million people?

 

[Bandwagon]

So which country with simliar supply chain and energy issues managed to avoid inflation by actioning your solution ?

When should have the Morrison government pulled the trigger ? What was the line in the sand moment ?

Mate, like I said.....

central banks were running the line that inflation was transitory, and would normalise after covid.

.....it was a common theme the world over, just because the RBA wasn't on it's pat malone, doesn't mean they didn't get it wrong.

As for the Morrison government, that's a different kettle of fish, obviously if you have an independent central bank setting interest rates, the government isn't pulling that trigger. Governments will do shit to win votes, the RBA has no such concern, unless of course independence is a farce.

 

[hindy111]

In my opinion by dropping rates it helped prop up rich peoples properties. They didn't want them to fall. Instead they exploded.
The issue is now they are dropping and rates are going wild. There are people who purchased in the last 6yrs that will be fine. But a lot will be in trouble.
Especialy the one who purchased when the market went up 30%

 

[Bandwagon]

Anyways, satire aside, 566.80/ week is 30k / year, if a house is 67K that's 2.25 x average annual earnings.

Median Sydney house is about 1.2 million give or take, with average Australian full time wage now around 70k, so that's 17 x average full time earnings.

Or put it another way, if you borrowed that 67k @17% interest only, your interest bill would be 11,390, or about 39% of your average annual earnings. If you did the same today @5%, with 1.2million that'd give you an interest bill of 60k, or 89% of average earnings.

 

[Bandwagon]

In my opinion by dropping rates it helped prop up rich peoples properties. They didn't want them to fall. Instead they exploded.
The issue is now they are dropping and rates are going wild. There are people who purchased in the last 6yrs that will be fine. But a lot will be in trouble.
Especialy the one who purchased when the market went up 30%

It propped up asset prices across the board, so of course rich folks benefited more because they have more assets.

If you bought pre 2020 you'll be ok, you might struggle if you've over committed but you can still sell without doing your arse, but yeah like you say, if you bought at the top or thereabouts you're f**ked if you can't afford to hold, because not only do you lose on the sale price, you also lose on the costs of buying and selling, and if you've bought for near a million, thats a fair whack in and of itself.

 

[the phantom menace]

Meanwhile here's today's NSW LNP screw-up...

Ayres under fire in scathing report into Barilaro trade job scandal

The former Liberal minister who lost his cabinet position amid the John Barilaro scandal is a key target of the report, which described the process as a ‘jobs for the boys’ appointment.

www.smh.com.au

 

[Bandwagon]

Meanwhile here's today's NSW LNP screw-up...

Ayres under fire in scathing report into Barilaro trade job scandal

The former Liberal minister who lost his cabinet position amid the John Barilaro scandal is a key target of the report, which described the process as a ‘jobs for the boys’ appointment.

www.smh.com.au

Bruz

The gift that keeps on giving.

 

[Gary Gutful]

The consequence of Lidia Thorpe leaving The Greens is that, having been elected on a party ticket, she gets 5+ years as an independent Senator before facing re-election. Probably not what the people who voted for her had in mind.

Whilst she will be a very noisy senator, Labor have the numbers to pass things without her..

View attachment 70067

This shit annoys me. Happens on both side of politics and its really ordinary.

 

[Gary Gutful]

Again your tone suggests that it could have been avoided and because of this "people will be financially ruined".

How could it have been avoided ?

You said ^^ that banks were offering 5 years fixed at 1.95%. I don't think you understand how fixed bank mortgage rates actually work. The pool that they lent you that money came from the fixed investment rates that they gave Aunty Gladys at 0.25% fixed for 5 years. After your fixed rates expire, the next offering will be based on what they are now offering Aunty Gladys. (it's actually more complicated and linked with bond rates, but same same for this purpose).

Variable interest rates are a different beast and reflect the wholesale cash rate set by the Reserve Bank. The banks just put a margin on that rate.

Ping @hindy111 - Gronk has you covered on this one. Stick to painting letterboxes.

 

[Gary Gutful]

Anyways, satire aside, 566.80/ week is 30k / year, if a house is 67K that's 2.25 x average annual earnings.

Median Sydney house is about 1.2 million give or take, with average Australian full time wage now around 70k, so that's 17 x average full time earnings.

Or put it another way, if you borrowed that 67k @17% interest only, your interest bill would be 11,390, or about 39% of your average annual earnings. If you did the same today @5%, with 1.2million that'd give you an interest bill of 60k, or 89% of average earnings.

I reckon you took off your socks and shoes to calculate all of this.

 

[Bandwagon]

I reckon you took off your socks and shoes to calculate all of this.

Nah, I just visualise my toes.