20 thoughts on “Monday Message Board

  1. John, most economists are predicting an official rate cut of at least 1 percentage point tomorrow but my nose tells me the RBA might do the unthinkable and sit tight till next year.

  2. Looks like Harper is on his way out in Canada!!!


    Liberals, NDP firm up deal to topple Tories

    OTTAWA — The Liberals and NDP have reached a deal to bring down the federal Conservative government and form an unprecedented coalition to take its place that would last 30 months and include cabinet seats for both parties.

    Sources confirmed Sunday night that the two sides have ironed out an agreement that would see a cabinet of 24 members — 18 Liberals and six NDP. The Liberals are expected to meet in caucus Monday, where MPs will be able to discuss the arrangement…

    Another rightwing turd flushed!
    (you can keep NZ)

  3. Treasurers cant tell the banks how to run their business – they have to keep % rates up to attract investor capital.

  4. Sounds to me like “Steve at the Pub” is calling for a little bit of financial regulation. I agree with you, Steve.

    The way to make the banks toe the line is to bring in an Act which regulates bank lending practices as follows.

    (a) Home loans, personal loans and consumer credit card loans must be offered without any fees or charges or “honeymoon” rates. The sole charge must always be the interest rate and the interest rate alone. In that way consumers can easily compare loans.

    (b) For each type of loan (home loan, personal loan and consumer credit card loan) there will be a legal spread allowed by the Reserve Bank under the Act. The treasurer may intervene on this matter and over-rule the Reserve though this should be rare. The “legal spread” is the range of rates allowed compared to the official rate. For example, if the official rate was 5% then banks might be allowed to offer home loans at 5% to 7%, personal loans at 5% to 8% and credit on cards at 5% to 9%. This is an example only. I am note sure how realistic the example is. However I do advocate the position that bank profits, interest rates and charges have been excessive for at least a decade and need to be wound back.

  5. PS. If they kick, re-nationalise the Commonwealth and Telstra while we are at it. If Telstra was in government control then the government would be in control of the broadband rollout… and then it might actually get done.

  6. Regardless of the interest rate decision tomorrow, in principle I see no problem with some regulation on banks and retail interest rates. The banks are now the beneficiaries of government guarantees that are at teh finaicial risk of taxpayers, and clearly benefit them in gaining capital. Some quid pro quo seems reasonable.

  7. Ikonoclast,
    For that to work it would imply that banks make lots out of home lending. They are not. Home lending is fiercely competitiveand profit margins (where they exist) are down in the region of basis points.
    The real money in banking is from your favourite whipping boys – businesses. Trying to reduce banking profits would only advantage businesses – but you are happy with that, aren’t you?

  8. “The real money in banking is from your favourite whipping boys – businesses.

    Actually it’s with small business who rely on a relationship with their friendly banker and who have to borrow on the hope of cash flow because they’ve got no real balance sheet.

    Banks fall over themselves to service big business, the way street hookers fight over cashed up sailors who’ve just landed in town.

  9. You guys seem even more drunk with stupidity than usual. A cap on interest rates is irrelevant if the market rate is lower anyway and if not it’s a guarantee of credit shortages (as if we need that right now). One would think that you were actively trying to destroy commerce.

  10. I haven’t read WON, but I head that Adam Smith in WON advocated a cap not far above market rates. Terje’s first point seems obvious, so I wonder what Smith’s reasoning was.

    at any rate, it seems that a major policy priority at the moment is sustaining the horrible housing bubble (a.k.a. Howard’s great economic management), so that even if rates are low, the cost of borrowing for even a crappy fibro shoebox in bumtown is a lifetime of punishing mortgage serfdom. low interest rates aren’t as good as they sound if they’re paying a mortgage that is 15 times median income, I’d rather be paying higher rates on a house that is only 5 times median income like they used to be

    (I know those numbers are wrong but it’s something like that).

  11. John, it seems like my nose got it wrong by throwing caution to the wind for the RBA’s decision to lower the official cash rate by another full percentage point ontop of next week’s ex-gratia payments to pensioners and low-income and decreasing petrol prices is a real christmas bonus for most Australians. All things being equal the RBA will have ‘ample scope’ to lower the official cash rate even further come February. Maybe Labor has got it wright.

  12. Low interest rates wont stimulate the economy – tax cuts will.

    Lets hope that company tax is slashed soon.

  13. Gerard – borrowing from another blog:-

    The citation is Wealth of Nations, book II, chapter 4. He says “In country such as great britain where money is lent to… private people at 4 1/2 (percent), the present legal rate, 5 percent, is perhaps as proper as any.

    The argument is a macroeconomic one,that if you allowed high interest rates a substantial portion of the monwy would go to “prodigals and projectors” who’d be willing to accept high interest rates because they’re confident of their crazy schemes. “A great part of capitall in this country would thus be kept out of the hands which were most likely to make profiatble and advantageous use of it, and thrown into those who are most likely to waste and destroy it. When the legal rate is fixed a little above the market rate, sober people are usually preferred…”

    Rather than a fixed ceiling it would seem from the above and also from comments in reference to the above that what Adam Smith advocated was a ceiling that was some multiple of the market average. Possibly this was intended to be a moving ceiling which merely constrained the spread of interest rates in the market place.

    Personally I would still oppose this. Although it is somewhat less dramatic than a hard ceiling. Clearly this is the sort of thing that Ikonoclast was advocating and I apologise for misjudging it (even though I still disagree with it).

    The best thing we could do to reform credit market is to float interest rates and shift monetary policy back towards managing the value of the currency.

  14. Can anyone recommend a good book / report etc to read up on broadband and the broadband market in Australia, perhaps also covering how the privatisation of telstra impacted on this?

  15. Hello everyone…
    iam pretty new to poker, mostly playing at home with friends. now i also want to play online…so my question is. where do you play onlne? any hints you got for me, what should i look for?

    Greetings and thx to everyone… [img]http://www.einfachpokern.de/smile.gif[/img]

  16. John, yesterday Gillard accused the Opposition of being in tatters after Turnbull was ‘rolled’ in the partyroom over the Fair Work bill and the spat continued with three neo-conversative stooges. Today Hockey made a pledge to walk down Martin Place ‘naked’ if the Federal Government builds an airport outside the Sydney basin. What next?

  17. Steve – sorry I can’t help. However I’d be interested if there are any books on the original nationalisation of telecommunications in Australia. I have a book with a modest account of pre-nationalisation but not much historical detail on the nationalisation itself.

  18. A Thursday thought on Monday message board. The errant ALP MHR from somewhere in Queensland who happened to be ‘johnny-on-the-spot’ with a camera/mobile phone in order to take a shot of an immigration protestor about to douse himself with something inflamable. (The Daily Terror bought the shot and as requested, donated the payment to charity). Broad condemnation of the guy’s ethics.
    Hey, here’s a Labor member who knows how to turn a dollar. Now he’s being further vilified for some strange world government conspiracy views.

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