I can't access a link, but I caught the Fin Review lead today. It said in essence that Australia was heading toward stagflation, that the RBA will not be dropping rates further. In order to fight the inflation demon rate rises may be on the cards if people don't back down on pay rise demands. This of course leaves unemployment continuing upwards and hence the call for reduced real wages to make 'business more profitable'. Of course inflation is the 'official' inflation rate. Not the one you meet in the shops and utilities bills each week. Link here for anyone with an account: http://www.afr.com/p/national/real_wages_have_to_fall_HHMIUNokVSQ7UHdKUsguSL [youtube]http://www.youtube.com/watch?v=D5WJm2cKkCQ[/youtube]
Ya gotta love the audacity of a Govt organisation (RBA) demanding the private sector to be more profitable. Qld Premier Campbell Newman said that to the coal companies upon entering office (he wanted them to give him more royalties). The coal companies are now teaching him why he should keep his stupid, greedy, mouth shut.
What a bag of doodoo. IMF has 'warned' Australia not to raise interest rates. So rates up means AUD up, more business pressures, more grief, more unemployment as economy and loan rates shred businesses. If rates kept low more inflation, reflated RE bubble, stock market madness continues, no saving and lower AUD with current rising unemployment unabated. Much more doodoo!
The Industry liaison office for grants and taxpayer assistance to struggling banks (RBA) will duly consider the best outcomes for disadvantaged banks to help them achieve profits in the face of tragedies of their own making, ensuring socialising losses in the face of diminished privatised profits for the betterment and welfare of injured bankers otherwise left to fend for themselves in a cruel world of personal accountability. RBA governor says $8.8 billion injection was prudent, but will not give detail about talks with Joe Hockey. http://www.abc.net.au/news/2013-12-18/glenn-stevens-appears-before-economics-committee/5163566
In the same paper yesterday was the story of real estate growth! Falling wages and higher house prices? Only in a centrally planned and managed economy. It's all about the banks and house prices. Interest rate rises will decimate housing and all those dependent on debt servicing. Thank god for Canberra and the RBA. What would we do if rates were determined by the market and selling the RBA Trillions (hundreds of billions, actually) of dollars in otherwise unrateable, self-rated Residential Mortgage Backed Security derivative products (was illegal)?
Surely the RBA don't really believe inflation is driven by people demanding pay rises. Like the people hold the economy to hostage by being just too greedy and forcing it on your employer to cough up or else! :lol:
Added Line: The money supply of course is not the key factor, it's not the economic system that the RBA is tweaking that would have an inflationary effect at all, but the people that are operating within it that are reacting unfavorably.
Me too. Brilliant album. Seemed a very appropriate song. 'People get ready. There's a train a-coming. Don't need no baggage. You just get on board. '
Real wages have to fall huh? Looking at the value of the AUD over the past year or so it looks very much like real wages have already fallen a lot.
Lets hope Tapis oil prices don't rise too much.. We have to pay for oil in US $ so that doesn't augur well for petrol prices. Another downside for a low AU$ is that imported price of goods go up. Whitegoods, cars, hardware etc up = inflation? Exporters of farm produce will get a boost but the miners may miss out as most of their ore contracts are in US$. If prices increase, workers will have no choice but to chase wage rises. Regards Errol 43
Looking at the real world data from the ABS (cat # 5204) I can't see what you're talking about. In fact since Jun-2009 company profits have been getting smaller as a share of value added.
Wouldn't it help if profits fell? Rreduce executive wages buy 80 percent Would make australian companies more compeditive.
How about the "need" to keep businesses solvent so that they can continue to trade? I guess that you have never run a business and so engage in the socialist fantasy that profits are greed. When things are good businesses make more profits and wages rise. When things are bad why shouldn't workers take a cut the same as the business has to? If workers have a problem then they should stop working for someone else and go and mortgage their houses and start working 7 days a week with no safety net or entitlements and take on a whole lot of risks and then they can see how it feels to be called greedy for trying to make a profit from their labours in order to be able to feed and clothe themselves.
This sort of comment assumes that managers and CEOs aren't actually worth paying anywhere near the "obscene" amounts of money that they receive. If that's really true then surely there would be opportunities for entrepreneurs to set up alternative business structures that did not result in such obscene salaries, slash the cost of their products and simply out compete the silly, inefficient businesses overpaying their management staff. The CEOs are simply just another expense that entrepreneurs wish to cut along from their production structure along with the wages of their plebeian slaves. On a separate note CEO salaries of existing companies have been declining overall (both their fixed as well as forgoing their incentive-based bonuses etc)
Very true. But don't lump the tens of thousands of small to medium business owners in Australia who provide the majority of the nations jobs who are facing the fact that in order to keep their doors open at all they have to reduce their costs. If someone doesn't pay a "worker" they are set upon by FWA, if a business owner doesn't pay him or her self some weeks as there is no money left after expenses and wages no-one seems to care but them. Until the day that the business owners simply decides to close the doors. Then people pay attention.
IMO the unions can be credited with the denomination of labour into "units" - they dictate that all labour is equal, do equal work, and deserve equal pay. That is a unit.
Real wages do have to fall in America Unions never fight for lower wages when there is deflation, they always fight for higher wages. But before wages can fall... taxes must fall. If the cost of living goes down, wages can go down without forcing everyone to change their spending habits (too much). To the degree taxes come down, wages can come down To the degree retailers carry over the savings - wages can come down. I believe everyone is so devoted to greed, this domino effect wont happen Just look at the price of a cup of coffee considering the coffee market price. Once you are in a socialist system you cant really get out until you go the full circle.
Business people often say they provide jobs. They only provide them because they can't get profit Without them.They would sack the lot tomorrow if they could do without them, and increase profit. Yet they always praise themselves for creating jobs.
