KEVIN Rudd and Wayne Swan are setting a painful financial trap. One, which while likely to hurt all of us to varying degrees, would prove devastasting to the most vulnerable among us. That makes behaviour which would be at least distasteful - you are entitled to expect not to be ambushed by your Prime Minister and Treasurer - arguably disgraceful.
The populist bank bashing is part of the mix. There was Swan yesterday attacking the banks for not passing on the Reserve Bank's 25 point official interest rate cut.
That sort of behaviour in Opposition is, if not really fair enough, understandable.
It's just too easy a free kick to let pass. And Opposition Leader Malcolm Turnbull didn't let it yesterday.
It's still stupid and cowardly - playing to the gallery for easy applause. Instead of being prepared to tell people the unpalatable but unavoidable facts.
But in Opposition you are just a voice, you have no initiating power.
It is a very different matter for ministers in government. And none more so than the Prime Minister and the man responsible for our financial health and security, the Treasurer.
They have to be aware of, be careful of, and indeed take responsibility for the consequences of their words, actions and policies.
There are a number of problems with the Treasurer's demand that the banks pass on the RBA cut in full to home loan borrowers.
The Treasurer should know, as the ordinary person does not and to some extent cannot, that the funding costs of the banks did not and will not fall by the full 25 points. Quite simply there isn't 25 points to pass on.
Whether it is the NAB's zero. It did at least try to explain and justify that - which of course attracted zero interest in the media and, seemingly, in the Treasurer's office.
Or the 10 points of the other banks, or some other number, it is impossible to micro-analyse from the outside. It does rather ironically point to the very competition called for when the banks do - did - everything in perfect lockstep.
In demanding the banks nevertheless "pass it on in full" to the politically attractive home loan borrowers, the Treasurer is implicitly demanding they continue to screw especially small and medium business borrowers.
Westpac got it right both in terms of its own funding cost and sharing the lower rate benefit among different borrowers by giving home owners 10 points and SMEs 25 points.
The political bank bashing though plays into a much bigger and more disturbing story. The Government's urging of people to put their necks in a financial noose. And indeed, the country also.
The Government is offering new home buyers up to $21,000 in a free grant - various additional state grants take that up even further.
Add on low interest rates and many more people are now able to buy a home. And crucially, to borrow more and pay more.
While the ability to buy a home is commendable, the ability to "pay more" less so.
Since the grant was increased last October - just exactly as borrowing rates were plunging - two things have happened in the borrowing/housing market.
There's been a dramatic rise in the home loans to first home buyers. And their buying has lifted prices at the bottom end of the market against falling trends almost everywhere else in property.
What happens when rates go up, as they must? By say, 200 points? Adding around $500 a month to repayments on a $300,000 loan?
Or by $1300 a month on a $400,000 loan when and if rates go up by a not unimaginable 400 points.
We start with many more people borrowing more than they can afford in normal times. And end up with borrowers in deep trouble, with the sort of house that is most likely either not to appreciate or to actally fall in value.
That by itself would be bad enough. Then consider how the PM and Treasurer are closing the trap, with their continual stimulus packages to deal with their "rolling national security crisis".
Putting successive $900 cheques in the mail and urging people to save for that inevitable rainy day? Not a bit of it: Spend, spend, spend on anything, urges the Prime Minister.
It gets worse. The cheques are ephemeral and temporary. But the budget surplus is spent. So not only don't you get tax cuts, you face higher taxes. Just when those rates are going up.
Then the trap will be sprung. And who will be mostly caught?
Those on lower incomes. Those who have stretched to buy a bottom-end home. Those who have taken the Prime Minister's casually reckless advice.
