This cartoon from The Australian made me laugh
http://www.theaustralian.com.au/news/opinion
If its not still the one I saw ill explain it.
Its title "Wayne's 32 point plan"
Steps one to 31, Wayne Swan's looking very angry pointing at a bunch of bankers saying "If you guys raise interest rates i'll be very cross." and step 32, same situation except now he's saying "...I am now very cross" lol
Simply telling the banks to not raise interest rates further beyond what the RBA does is just ridiculous! If he doesnt want rates to move maybe he should try some tighting of fiscal policys especially those involving the final stages of the stimulus that is being pumped into an economy that is almost running at capcity while the rest of the world falls behind.
The banks cant help it if the US Feds decide to pull another US$500 billion out of no where!
Now I know you may argue that this increases liquidity and money supply and therefore should reduce the cost of funding but I'd like to argue the contrary in Australia's position.
Australia's unique position of strength is the banking sectors peril. It is a well known fact that 40-50% of money that is handed out in home loans in Australia is funded through international money markets. The position of strength in terms of our currency means that although the money supply has increased, Australian banks have to borrow more money in US$ terms to lend to Australians in AU$. So although there's more money out there, we need more of it anyway. The strength of our mining sector fueling our trade surplus's makes borroing money from international money markets more expensive. Although most resources contracts and so on are traded in US$ meaning the devaluing of the US$ through "quantitative easing" will reduce the amount of money flooding into Australia through the resources sector, I believe the net effect of the QE will be what I have stated previously (ie increase the number of $$ Australian banks need to borrow from overseas to fund AU$ for Australians).
I believe it is PARTLY this logic that is causing banks to be cautious of the next 12 months as well as hinting towards the fact that they will most likely need to raise rates above RBA increases.
So back to the spin master Swan, he is just attempting to create the illusion that he cares about the hard working average Aussie homeowner, that he cares about hard working small business owners and the farmers and everyonen else that is effected by interest rate hikes.
If he really cared he wouldnt just give the banks a "frowning of a lifetime" [Simpson's quote hehe] HE WOULD ACT.
There ARE things that CAN be done to help here at home to ease what is to come.
CUT FRIVILOUS SPENDING! CUT THE LAST OF THE STIMULUS!
I was never a fan of Swan and never will be, but there is always a path to redemption for anyone, we'll just have to see if he has the spine to take it.
I'm not holding my breath though.
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- funny swan cartoon, but serious message.
This cartoon from The Australian made me...
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