Aussie dollar to drop below 66c - "benign" collapse ahead

[smk762]

If public servants didn't pay income tax, how would you work out how much HECS to deduct or second income etc. If there are two public servants on 75,000 doesn't mean they're in the same tax bracket at the end of the financial year. How would work out real estate income losses?

Easy. Eliminate HECS and make everyone pay for their own education.

Or make it free like it was better yet, make fees tied to grades to disincentivise slack students. HD students pay minimal, failures pay through the nose.

 

[mmm....shiney!]

There is no such thing as free education. Someone has to pay for it.

 

[SpacePete]

There is no such thing as free education. Someone has to pay for it.

Ultimately nothing is free.

TANSTAAFL - There ain't no such thing as a free lunch

TANSTAAFL indicates an acknowledgement that in reality a person or a society cannot get "something for nothing". Even if something appears to be free, there is always a cost to the person or to society as a whole, although that may be a hidden cost or an externality. For example, as Heinlein has one of his characters point out, a bar offering a free lunch will likely charge more for its drinks.

 

[SpacePete]

Or make it free like it was better yet, make fees tied to grades to disincentivise slack students. HD students pay minimal, failures pay through the nose.

Incentive based fees is an interesting proposal.

There are a number of pros and cons around free education. But the following is an interesting conjecture based on OECD data:

While this data shows it is possible for a government to provide free, quality, mass higher education, it also suggests higher rates of participation are only possible with a co-contribution from the student to offset the cost of providing more places. In Australia's case the government could be contributing more and the student less.

The future of free higher education in Australia

A return to free higher education would come at great cost, as it would involve dismantling the immense structure and economy of HECS-HELP, which have been in place for a quarter of a century. In contrast, Germany has managed to return to free education in great part because tuition fees were relatively low (about $1,500) and introduced only eight years ago.

For Australia, abolishing HECS would involve the same scale operations as abolishing the GST. And making it free might even increase inequality, if the supply of university places was limited in order to pay for it. Free higher education might be desirable but fair and equitable higher education is essential.
https://theconversation.com/should-we-follow-the-german-way-of-free-higher-education-23970

 

[hawkeye]

If public servants didn't pay income tax, how would you work out how much HECS to deduct or second income etc. If there are two public servants on 75,000 doesn't mean they're in the same tax bracket at the end of the financial year. How would work out real estate income losses?

How can you claim losses when you never paid tax in the first place? All that happens currently is that if a public servant makes real estate losses they get to receive more taxpayer money than they otherwise would have. Which is ridiculous when you think about it. Currently, if you have 2 public servants on the same salary but one has RE investments and the other doesn't then the one with RE losses effectively gets paid more than the one who doesn't. Sounds like a scam to me.

You losses in RE should simply be losses. Accept your bad luck or poor decision making. Whichever is applicable.

 

[smk762]

To simplify the theoretical, lets assume that only the income derived from working in the public service is declared as tax free. They'll still pay GST, CGT etc. Additional income would be taxed according to the rate based on total income (i.e. no tax free threshold). Any losses would be proportioned in line with the proportion of additional vs total income .

Eg. 40k tax free via public service employment.
20k additional income from personal services etc. taxed at 32.5% (equivalent to $37,001 $80,000 bracket)
15k RE losses

Additional income is 1/3 of total, so you only get to claim 5k worth of the losses.

Alternatively, I agree losses should be losses across the board to all taxpayers, punishment for bad investment. Those who don't invest shouldn't be liable for paying for the failed speculative greed of those who do.

 

[mmm....shiney!]

Those who don't invest shouldn't be liable for paying for the failed speculative greed of those who do.

Neither should those who don't utilise a service be liable for it's funding.

 

[smk762]

Those who don't invest shouldn't be liable for paying for the failed speculative greed of those who do.

Neither should those who don't utilise a service be liable for it's funding.

Agreed. In a perfect world...

Alternatively, only those that voted in the current government should pay tax.

 

[wrcmad]

Those who don't invest shouldn't be liable for paying for the failed speculative greed of those who do.

Neither should those who don't utilise a service be liable for it's funding.

Agreed. In a perfect world...

Alternatively, only those that voted in the current government should pay tax.

And only those who pay tax should be allowed to vote.

 

[smk762]

LoL. GST for all, income tax only for primary voters of the winning team. Imagine the comedy potential when minor parties come in at an all time high. Moot argument though, whoever wins will just cut income tax and raise the GST. Everybody wins!

 

[hawkeye]

Those who don't invest shouldn't be liable for paying for the failed speculative greed of those who do.

Neither should those who don't utilise a service be liable for it's funding.

Agreed. In a perfect world...

Alternatively, only those that voted in the current government should pay tax.

Well, it's funny how the majority of us manage to live and work in that "perfect world" but for some reason government workers aren't willing to offer their services on the open market.

And only those who vote should pay tax.

FIFY

 

[smk762]

You offering me a job? or should I quit and join the dole queue waiting for something to open up at McDonalds?
Workplace turnover is pretty high apart from the guys within a decade of retirement, so I assume these are the "some" you refer to?

I've followed a few leads, but none of the work offered has offered the same potential for satisfaction as occasionally being involved in bush fire suppression support. I'm happy with the opportunities I'm given to build my resume and experience, despite having to wait for someone to retire to even have a chance at promotion. Thank you, generous tax payers of Australia for granting me this precious gift.

Anyone else want to offer up their profession so we can critique it?

 

[Savocado]

*Yawn* Yeah it's going down, how much? when?

I have been hearing how much it's going to fall and when and how etc etc for a long long time.

It never falls by much and generally bounces back.

I think it'll take longer to fall than most expect.

 

[smk762]

Lower dollar is offset by increased export earnings -
http://www.theaustralian.com.au/bus...nings-in-2013-14/story-e6frg926-1226731581477

The link is almost a year old, but on track with AUD value forecasts so far.

BREE anticipates the Australian dollar, which is trading around US93.7 cents today (Oct 2013), will average US91 cents this financial year and fall to US86 cents next year, where the agency assumes it will remain up until 2018.

Here's a more recent one - http://in.reuters.com/article/2014/09/15/column-russell-commodities-currency-idINL3N0RG12G20140915

If the relationship between coal, iron ore and the Australian dollar in the 2008 crash and recovery had been replicated in the present commodity price weakness, the Australian currency should be somewhere around 75 U.S. cents.

 

[wrcmad]

And only those who vote should pay tax.

FIFY

-1
Only those who make a contribution, should get a say on it's distribution.
Anyone who disagrees is most likely supported by the public purse (or has an awesome accountant ).

 

[hawkeye]

You offering me a job? or should I quit and join the dole queue waiting for something to open up at McDonalds?
Workplace turnover is pretty high apart from the guys within a decade of retirement, so I assume these are the "some" you refer to?

I've followed a few leads, but none of the work offered has offered the same potential for satisfaction as occasionally being involved in bush fire suppression support. I'm happy with the opportunities I'm given to build my resume and experience, despite having to wait for someone to retire to even have a chance at promotion. Thank you, generous tax payers of Australia for granting me this precious gift.

Anyone else want to offer up their profession so we can critique it?

I was going to claim that I wasn't passing judgement and you read it wrong, but if I'm being honest with myself I probably was, at least at some level. I try to restrict my criticism to the system or people who have specifically done wrong because I know that the system is all-pervasive and it's very hard to stay out of it completely, but sometimes get too enthusiastic and moralistic. I have worked on govt contracts in the private sector in the past and, considering how keen private consultancies are on govt contracts, I probably will in the future, even though I don't like them. We all make our own compromises, so I apologise for the swipe. You're right, it was unwarranted.

Only those who make a contribution, should get a say on it's distribution.\

I've made many contributions but never had a say in it's distribution. Voting has been completely useless and in fact, when I think about it rationally it makes sense that it's useless. So to clarify the, admittedly vague, point I made, all those who believe in democracy and want to pay for it can do so and the rest of us will keep our money and live in the real, rational world.

 

[smk762]

I'm not a fan of "the system" but I understand how to work within it to protect against it. Akin to tax minimisation.

 

[SpacePete]

All signs point to down. More reporting on economic analysis below.

Australian dollar could fall to 73 US cents: analysts

Economists at one of the major investment banks say the Australian dollar could fall as low as 73 US cents.

UBS economists Scott Haslem and George Tharenou say their application of a range of models suggests the dollar could correct lower to between 73 and 83 US cents.

That is below their own forecast, which is for the dollar to be worth 85 US cents by the middle of next year.

UBS says based on iron ore prices, the dollar would be worth around 73 US cents, while a broader commodity prices basket would put a reasonable value around 82 cents.

Using their own replica of the Reserve Bank's fair value model, the analysts say the dollar should fall to 83 US cents.

A large part of the Australian dollar's weakness is expected to be due to increasing US dollar strength.

Yesterday the Australian dollar broke convincingly below 90 US cents after the conclusion of the September US Federal Reserve meeting, which saw committee members lift their forecasts of where US rates would be by the end of next year.

The UBS economists say the story of rising US interest rates is likely to dominate currency trade in 2015.

"Most leading indicators suggest the US economy is strengthening relative to other countries, while diverging rates policies ought to be US-dollar supportive," they noted.

"Finally, the starting position of USD valuation is also favourable, with the real effective exchange rate close to a 40-year low."

China weakness weighs on iron ore outlook

While that US economic strength pushes the greenback up, slowing Chinese economic growth is likely to weigh on the Australian dollar.

..."There is no sign that demand for steel can improve in the short term," China-based Cao Bo from Jinrui Futures told Reuters.

"I don't think we've seen the worst for the iron ore and steel markets."

Such weakness in iron ore prices is likely to heighten pressure on the Australian dollar to fall.

Interest rate implications

...the potential for a sustained drop in the currency to happen sooner rather than later.

That would implications for the timing of the first Reserve Bank interest rate increase.

"If this were to be the case, we would likely bring forward our current forecast for the RBA to begin tightening policy from early 2016," the Bank of America Merrill Lynch Australian chief economist wrote in a research note.

http://www.abc.net.au/news/2014-09-19/australian-dollar-could-fall-to-73-us-cents/5756598

 

[tolly_67]

If you keep everything in perspective, we are really only falling against the u.s. dollar.
If you look at all other major currencies over the past year we are either neutral or have gained against them.
If we drop to 66 cents then you can bet that the Euro, pound, yen etc will all be down....big time....and the u.s. dollar index will be over 100 and climbing...

 

[SpacePete]

AUD continues its drop. Now under 90 and still falling. It could accelerate through 80 if the US raises rates.