They will have to say the banks when the time comes. That is going to cost a lot of money. It basically will mean transferring a ton of debt from the private balance sheet to the public. Have a look at the private debt to get a sense of what the public debt may look like not far in the future. EDIT: and of course that 1.37 trillion GDP is at the height of a commodity boom.
It's not (at least not directly) The point was rather, if the economy is doing so well, then why are rates being cut? If the economy was steaming ahead, you'd think that the opposite action would be occurring - that is, putting the brakes on gently by increasing rates, etc. Personally I think the high AUD is stupid, but others seem to enjoy it. One positive is that it might make our assets too expensive for foreigners to buy en masse, and the negative is the obvious lack of a competitive export sector.
I understand oz is not in an emergency & where the debate started & am still waiting for your answer to the original question .. did you forget or did you hope i would forget ?
Interesting debate, I didn't say that Australia was technically in an emergency either. Aren't semantic arguments fun? All Swan does is spin spin spin. As Kyle Bass pointed out, he has to. That doesn't make it acceptable of course. It's semantics on the word 'emergency', by you and Swan. An emergency situation, from which an emergency level of interest rates would occur, implies (due to the language) that a crisis has occurred and a greater threat is imminent. Just because the S hadn't HTF yet, doesn't mean that a crisis isn't on the horizon. Again, semantics, like the 'official definition of a recession' that was so convenient for us a few years ago. So, are you still enjoying this debate about nothing?
If Aus was in an emergency, that would probably be a good time to invest! We are not currently in an emergency, but I would think that there isn't an enormous room for booming in the next 10 years. But threads like this with such differing opinions remind me that one cannot know, and I am happy to have taken the guess work out of the equation
evasion tactics , When in doubt speak in circles .Its good to imply something with your post..... even better if you can back it up with facts. No semantics emergency means emergency .
Swan started with evasion tactics, then you played on that to imply that he is right because there is no technical emergency. Fine then, explain the low rates. If 3% rates were considered 'emergency' in the past, why are they not considered emergency now? I'd argue that rates are low to attempt to prevent an emergency (of the mortgage and business debt variety). Funny, when most economists were predicting no rate cuts, and rate cuts is what we got. Spooked the RBA is. Semantic emergency it is not. Thankfully I only committed to calling Swan a 'spin doctor', so maybe I can stop playing your semantic game now.
I agree. The emergency (from my perspective) is the high valued $AUD. I am currently working in the power industry in NSW. Since 2009, the total and average NSW power demand has been dropping and is in a downtrend for the first time in more than 30 years. This is in the environment of more air-cons and electronic equipment in the home than ever before. The political spin docters will have you believe this is due to solar schemes, efficiencies, carbon tax etc. It is all total bollocks. The real reason the power demand is dropping is because manufacturing is dying - and the trend is continuing as we speak.
That is very interesting and makes a lot of sense. I wonder at the same time why electricity prices have been rising, because they were doing that before any carbon tax annoucement too. Is it because they can raise prices? Expenses are going up? Too much debt? Less demand but need to keep revenues up?
Prices are rising because power infrastructure costs are rising. Years of neglect by successive state governments has finally come home to roost. The reason the govt now wants to privatise the power industry in NSW is not because they want the dollars (although that is a bonus), but because they can't afford to maintain/repair the infrastructure - why do you think they are virtually giving it away? The only saviour is that more power stations will not have to be built anytime soon, because demand is actually dropping. From the point of view of the power stations, the wholesale price recieved for electricity has not risen for years. Even though coal prices have risen multiples, the electricity price has remained quite stagnent, and should remain so for a while given the dropping demand. The other reason for rising prices is the Rudd/Wong (and state) solar panel scheme debacle, and the renewable energy target of 20%. As is not publicised very often in MSM, renewable energy currently is not very economically viable on it's own, so margins are achieved by on-selling the REC's. Electricity retailers are required to buy REC's created by renewable energy suppliers in a ratio to match the "black" power they sell (legislated). This cost is passed on to the retail consumer. So, basically, the public (and comercial sector) is subsidising the renewable energy targets by way of a synthetically high retail electricity price. Oh, and as a side note, the REC's you may have recieved for installing solar panels on your roof were created out of thin air by the govt. of the day (like printing cash), and dumped on the REC market to pay for the subsidies to house holders, collapsing the REC market while competing with the exact suppliers of renewable energy that the govt. required to achieve it's targets, and managing to send some renewable energy suppliers broke in the process. The whole system is fkd up.
Low rates don't mean there is an emergency. Cutting rates by a whole percentage point in one go indicates an emergency. The last time that occurred, it happened to be a cut from 4% to 3% so we now seem to associate "3%" with "emergency". If we'd gone from 5% to 4% then that would have indicated a financial emergency too and we'd think of 4% as "emergency rates" instead.
Oh now the emergency is the HIGH AUD hahahaha......i give up you guys just twist it to suit your arguements .
Its not an emergency it just hurts our exports. Literally though Australia is heaps protected we have one of the best natural resources in the world we arent anywhere near 150% debt to GDP ratio etc inflation is under control (sort of) though our property market is starting to hurt seeing i work in data mapping for real estate the high end of town is suffering hardcore the 5 million + range in the real estate industry is gone its taking 2=3 years for people to see those prices (aka hunters hill etc)
You know with all these things being said in here about how Australia is different and special, I think we can safely coin a new term, Australian Exceptionalism. I would argue Australia is much less protected than say the US, which has actually quite a diverse economy in comparison. Australia is almost entirely dependent on one sector which is almost entirely dependent on one country, China. All mining booms come to an end, but the thing about this one is you have a heavily over-leveraged banking system with loan books more weighted towards housing loans than almost anywhere in the world. If you get the end of the mining boom coinciding with the end of the property boom, which is looking increasingly likely, I wouldn't make any bets regarding Australia being a protected country. I tend to think Aussies in general seem to equate geographic isolation with economic isolation, but they really don't correlate in any particular way.
Its commonly referred to as island mentality Island mentality refers to the notion of isolated communities perceiving themselves as superior or exceptional to the rest of the world. This term does not directly refer to a geographically confined society, but to the cultural, moral, or ideological superiority of a community lacking social exposure. Island mentality can be characterized by narrow-mindedness, ignorance, or outright hostility towards any artifact (concept, ideology, lifestyle choice, art form, etc.) originating from outside of the geographic area inhabited by the society. The term "island mentality" is also used in some psychological research[which?] to describe individuals who dislike or have problems with relating to others, and then live as loners or "islands". This concept (in which people may feel inferior, afraid, or alone) has little to nothing to do with the above terminology. http://en.wikipedia.org/wiki/Island_mentality
"but to the cultural, moral, or ideological superiority of a community lacking social exposure" :lol: remind you of anyone
I didn't twist anything, that is my opinion. :/ Laughing and claiming spin is the lamest of responses - the response one gives when they have no response of substance. I'd ask you to refute the point properly (as you would of auspm) but I'm not getting drawn into your arguements this year, and don't care less either.
