What was the LNP's slogan again: oh ye "The adults are in charge". LOL
Unless people live under a rock, falling interest rates is a sign of a very sick economy, fullstop. When interest rates get well below 1% that is a sign that interest rates as a stimulus to the economy is not working, full stop. (For people making deposits during a negative interest rate it means you are paying the banks to hold your money at a cost to you rather than receiving interest from the banks on your deposit.)
Australia's growth over the last few years has been driven by one great Ponzi scheme been house price growth backed by immigration. But once the Ponzi falls everything else falls with it and the next stop without government action becomes deflation. There is enough data showing an increase in people with negative equity and also people who have sold houses below purchase price and that is a bad sign for spending in the Australian economy.
https://www.perthnow.com.au/business/housing-market/perth-property-values-lag-as-recovery-in-sydney-and-melbourne-gathers-pace-says-corelogic-data-ng-b881339576zhttps://au.finance.yahoo.com/news/half-new-sydney-melbourne-apartments-now-valued-purchase-price-205347988.htmlhttps://www.abc.net.au/news/2019-05-02/negative-equity-on-the-rise-as-house-prices-continue-to-fall/11061780And how is the Australian government addressing this - silently blabbering on that they have stopped the boats whilst immigration numbers just move silently to flying into Australia LOL. The LNP economic policy is simply one about immigration been the avenue for false economic growth. Lets keep things the way they are and pray to God in the 'Hillsong tribe' that things don't tank.
Whenever the economy comes up all the LNP (and many on these threads) can say is it is Labor's fault or it would be worse under Labor etc LOL or lets talk about this and that but not the economy.
Who has been in government the last 6 years by the way and why is the economy such a mess. You would think with the rubbish posted on these threads that the ALP has been in charge last 6 years. So a recap of the mess:
1. Spiralling debt with no return since the LNP doesn't really like spending on infrastructure, they just like spending and not collecting revenue LOL. Then the latest tax cuts - especially the $1080 offset has the smell of Rudds $900 cheques that many posting here have bagged in the past. I think the $1080 might help the economy, but the economy is in far worse shape than when Rudd gave the cheque.
2. Love of Laffer means more govt debt, full stop. Laffer only works when you have other policies that discourage the benefits of tax cuts either flowing i.) to offshore multinational/non residents of Oz or ii.) into unproductive sectors like housing. A lesson on Laffer and budget deficits - refer USA since Reagan economics LOL.
3. Low interest rates and low inflation is a sign of a sick economy. Even the RBA is worried - the RBA has no further triggers to unleash if the economy tanks further btw so back to govt. The RBA is thinking about cutting rates again - what a laugh. How low do interest rates need to go to stimulate activity is the question without a change in government policy??.
4. Underemployment is rife despite the official unemployment rate been 5% because people want to work more hours and now the workforce is loaded up with casual and part time workers who want more hours (unlike the 1980s where full time work was the norm). If we had this unemployment rate in the1980s there would have been wages growth - i thas finally dawned on the head of RBA too to look beyond headline employment ABS numbers because according to the ABS work 1 hour a week you are considered employed (despite clearly you been underemployed).
The economy is sick because lack of wages growth, cost of living going through the roof (i.e. just look at your electricity bill last 5 years), people were dipping into savings to make ends meet last 10 years but now the savings ratio is close enough to zero and there is no more fat to have and an average income to house price ratio of north of 5, and an inability to pay of loans in less than 10 years means the economy is sick. What is happened is more and more people are in debt for far longer and that means less money to spend and when you have a cumuatative total of a greater proportion of the pop in debt than say the 70s and 80s at a particular point in time well it means now you have less discretionary income to spend.
The Gen x and baby boomers who post here who say I had it tough bla bla bla haven't a clue what high mortgage costs on disposable income mean for many many many years for an economy when people can't pay a mortgage off quickly. And people can't live in the regions because there are no jobs. And two parents work these days.
And it is only the baby boomers who have retired now blabbering on how hard life was - well I would say most people would prefer to pay 18% interest rates when your wage growth is 5% per year and an average wage to house price of 3:1 than the crap you have today. And oh yeah, the 3 bedroom house most blabber about on here was o a 600 square metre plus block that many now can sell the backyard for a mint LOL.People are fighting for less scraps these days and have become hostage to the two political party process, and the LNP are the ones in power the most last 60 years so that is where the blame sits. Who would have thought that today people in their 50s would still be paying a mortgage.
Families are doing it tough because the income to house price ratio has moved from less than 3 times in the 1970s/1980s to over 5 to 10 times in most Australian cities, wages have been stagnant and cost of living has gone through the roof. Here is the Australian debt clock - note most household debt is in the mortgage -
https://www.australiandebtclock.com.au/So going back to the RBA were they to raise rates by 3 percentage points the economy would utterly collapse. Deflation will be the end outcome and just look at Japan since 1989 to work out what that means. The RBA's interest rate reductions are not having the desired effect because of incompetent government policy that doesn't aligh with what low interest rates are seeking to do - the blame should be directed at government not the RBA because monetarism (interest rates) do not send an economy into equiliberium they are a product to stimulate demand but where interest rates are right now they have totally lost effectiveness because government policy is doing the converse. In other words monatarism - the Milton Freidman school of economics by the RBA simply reducing rates - is not going to sort out Australia's problems around consumption, that responsibility is government's to address. Seriously, who would be talking budget surpluses at a time the economy is sick - you need a Keynesian stimulus in infrastructure - i.e. Roosevelt's 1930s New Deal is the best illustration of that - whilst all government does last 20 years is send the budget into deficit by bribing the electorate with short term stimulus that adds nothing to long term growth.
For those lovers of Howard and Costello - the trajectory in debt in the budget is predominantly related to Howard's giveaways which saw revenue as a % of GDP collapse from 25% under Howard to 21% under Gillard. Any drongo can balance a budget in a boom, full stop, i.e. they did too in WA in the 2000s and it was a ALP government in that State, but the way Howard gave away money like a drunken sailor thinking the boom will last forever meant when the GFC hit because of the shrinking revenue pile by Howard, the underlying structural deficit in the budget became there for all to see. Spendng as a % of GDP still remains at the Howard years, meaning there was a lot of middle class welfare handed out by Howard. Or another way to put it we have a revenue and spending problem. How is the Laffer curve working these days LOL Revenue as a % of GDP has finally caught up to the Howard years these days, and hence why the budget is looking like it might get to balance in 2020, but the love of Laffer is now leading to further tax cuts mentality by the LNP and that means more debt again etc etc and cycle continues.
What Australia needs is some infrastructure spending but that won't happen with the laisser faire economics approach of Australian governments of late. As i said eons ago:
"Reading the threads the latest with farmers and lack of water is just another way to say politicians of today are useless, gutless, visionless and stupid. I wrote a post last night but in summary of that post Australia has no aspiration and soon everyone we just see the economy as a Ponzi scheme on how much my house is worth (or how much it is falling now). Visionlesss we will simply export jobs and crowwd our cities further as regional Australia self destructs even further - just look at farming and consolidation of farms into foreign ownership, as we have seen with resources.
The issue been highlighted from farmers plight to lack of infrastructure is essentially one where the government of all influences has lost long term vision. In fact they don't have one and when someone wants to put up some foresight the idiots talk about debt/cost rather than what it means for future generations. In WA some might recall Colin Barnett wanted to pump water from the Ord River inland to Perth but then everyone went ballistic with short term dummy spats about cost, role of private sector, rates of return in the short term as against looking at long term outcomes. This is why Australia is truly stuffed and our long term competitiveness is going down the toilet. farmers are now just pawns in this game too and just show how useless and out of touch the city loving National embers have become of the LNP.
A private monopoly is worse than a public monopoly as you get price gouged. Just look at your electricity bills after privatisations exacerbated by ineffective energy policy. The lack of planning and foresight in water, power generation, transport infrastructure (the list is endless) by government is appalling - it started with privatisation in the 1990s. You know, because the private sector uses high hurdle rates of return in project investments long-life infrastructure is what suffers btw and why Australia lacks foresight in providing long life infrastructure
It is quite simple, today's politician's believe totally in the free market. They do not understand economic principles around long life assets - private sector wants asset recovery (pay back periods) of 10 years or less, whilst for things such as dams, water provision, hydro, ports, rail, gas pipelines etc they don't get there returns for over thirty years (unless they are required as part of a huge resource development). Simple reason, the infrastructure cannot be done in increments - it is one lump sum oversized investment meaning demand needs to catch up to the supply capacity overtime and within your typical discounted cash flow models, where discount rates are used, this means any revenue stream after 10 years is heavily discounted to almost nothing, so the private sector won't build it. Yet governments believe it will be built and the circus continues.
It is a simple concept: "market failure", role of govt in providing 'long life economic asset's, 'free rider', 'public good' - all concepts lost to today's idiots we call politicians. Google the terms if you need to understand there meaning.
Imagine today's morons living in the past - there would have been no Dampier to Bunbury gas pipeline in WA (which in effect was the reason why the NWS project started in the first place , subsequently expanding to LNG and opening up the north west of WA to oil/gas) or the Goldfields Water Pipeline which opened up the Kalgoorlie region in WA and I am sure many of you can think of other examples. Yes they may have come at some point, but when they would have come is anyone's guess. And growth requires labour, capital and technology, so if capital is missing well that means in economic terms negative productivity growth arising a lot earlier and lower growth.
With the way things are will take time before long life infrastructure reappears and when it does we will be playing catch up waiting for the private sector to build it. As I said it might be built as part of a resource development project (ports for example) but then the company concerned will want exclusive use. and not want to share it with anyone else (so hence the role of govt in providing lumpy economic long life infrastructure.
As I said politicians in today's media cycle are only interested in the short term opinion polls as against providing long term solutions to Australia's growth through iconic infrastructure. They are all worse than each other, fighting for how much lower than can drive Australia into the ground the morons. None have a strategic vision for Australia. GDP growth in today's pollies life is about a false economy driven by a housing Ponzi scheme and immigration so the GDP numbers stay positive, but all Ponzis come to an end and what will Australia then do - nothing because the politicians today are inept and just compare todays lawyer/teacher qualified Parliament who know didely squat with yester years policiticians who new plenty and built iconic lasting infrastructure.
All politicians think about is the polls but none are like a Charles Court, WA Minister and then Premier 60s and 70s) who opened up large swathes of WA to mining development, encouraging Australian companies in but the lot of late, at both Federal and State level, are useless and getting progressively useless (a race to the bottom is Australian politics these days).
We have lots of resources but are too stupid to further process them IMO. We are also too stupid, because of our fixation on laisser faire economics to understand market failure concepts and build iconic infrastructure to facilitate economic development. The fools we have in power at State and Federal level these days would never have built Snowy, Dampier to Bunbury Gas Pipeline, Goldfields Water Pipleine etc etc, with the Milton Friedman rubbish economics people use these days.
FFS China is using our coal and gas and raw inputs to produce manufactured commodities and soon they will be using our lithium to produce electric vehicles whilst we have closed our manufacturing sector. Seriously it ain't about labour costs but idiotic governments who can't see the wood from the trees, because if it was all about labour costs why is Germany doing so well then. Distance to markets is not a factor because we export a crap load of coal and iron ore btw so that is not the answer as well - transport costs - but maybe a part answer given they are lower valued economies when compared to resource processed commodities and we can transport them.
China must be laughing at our stupidity."Yes the adults are in charge. What a laugh and silly joke that deserves to be in the humour thread. The adults are in charge - ROFLMAO
Rant Over
