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New RBA Financial Aggs Are Out

Discussion in 'The Economy' started by Chris C, 30th Apr, 2009.

  1. Chris C

    Chris C Well-Known Member

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    Well the RBA has released that latest financial aggregates up until the end of the March quarter, and there doesn't seems to be any major surprises.

    I guess you could see that as a positive or negative. On the positive side things don't seem to have gotten drastically worse in March. On the negative side, they definitely didn't get better... this article summarised it well:

    Private lending sinks to 15-year low | RBA

    I personally think the really key point to take out of the latest data is that the housing credit growth is really holding the system together at the moment. If the government pulls the FHOGs at the end of June I think things may start to unwind rather quickly compared to our moderate decline at the moment.

    I hate the principle of FHOGs, let alone the FHOG boost, but at this stage it is looking more and more like one of those necessary evils (bit like the US bailouts... terrible in principle but really quite vital) and it may be more prudent to slowly ween Australia off them over 12 - 18 months rather than removing the boost and FHOG altogether.

    The only other thing that worried me a little was the quite significant falls in Money Base and M1 levels... I'll be very interested to watch these over the coming months. It might be time to go pull out a couple hundred dollars or so and put it under the mattress for safe keeping.

    General thoughts?
     
    Last edited by a moderator: 1st May, 2009
  2. bigbuddha

    bigbuddha Well-Known Member

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    Chris C,

    unforunately, i think the US bailouts are terrible in principal and terrible in practice. Billions wasted on savings firms which went under anyway. Bear Stearns anyone.
     
  3. Chris C

    Chris C Well-Known Member

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    Don't get me wrong, I think it's criminal that the situation was ever allowed to eventuate, and I have been advocating for a while that it's not enough just to target inflation rate and leave the rest up to the banks... though maybe the even bigger issue was AIG.

    :rolleyes:

    However I tend to side with the argument that at bare minimum the US bailout bought the banking sector some time to work through things. Ultimately you can't have the financial system freeze up like it did - this fall apart very quickly when credit stops flowing (but that's part of the problem IMHO).

    That said I'm not writing off the chance that many of these banks that were bailed out may still go under (or at least be zombie banks for all intents and purposes). I'm very interested to see even after all the bailouts which banks are still insolvent, I'm on the edge of my seat waiting for the "stress test" report. I'm sure in between all the lies and spin that the government, treasury and FED will sprinkle on it there will be some facts that will have a big baring on the market for the month of May...
     
  4. bigbuddha

    bigbuddha Well-Known Member

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    Although probably impossible now, the FED should be disbanded and american banks and auto's left to fail. The FED is just the govt's inflationary machine used to covertly tax it's citizens through inflation. the money supply multiplier that is the FED has led us all down a dangerous and distatrous path.

    I think you said you where studying money supply economics at uni. I hope to god they they have started to teach Austrian School Economics instead of the Keynesian crap.
     
  5. Chris C

    Chris C Well-Known Member

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    LOL once again this is one of those principle vs practice dilemmas.

    I like the principle, though it would be very scary to see in practice... with independent central banks running the show around the world, the Keynesian system is now so deeply entrenched that its removal would almost certainly result in worldwide anarchy.

    Unfortunately most people living in democratic societies are not keen on a temporal phase of "survival of the fittest" as we moved towards a new system of economic management.

    :D

    I chat with my lecturer from time to time, and he reckons there has definitely been a lot more buzz in the economics community about the future of monetary policy. I think this is at least positive...

    I personally advocate that we look for a more tightly regulated markets and central banking system, to make a transition to a more Austrian style of economic management more orderly, but when you are dealing with a ship as big as the Australian economy you need to turn it slowly or risk capsizing, with a lot of people being thrown overboard.
     
  6. Billv

    Billv Getting there

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    That's what none wants to happen.

    The FHOG in Australia is in fact not costing us very much because a lot of the money the gov gives will come straight back in the form of GST or fed & state gov charges.

    It also boosts employment because of a chain reaction.
    People who buy a house also buy furniture, they'll probably fix the place a bit
    or modify it so trades people will get some work they pay taxes so the government money comes straight back.

    And with any newly built property they are also addressing the housing shortage at the same time.
     
  7. bigbuddha

    bigbuddha Well-Known Member

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    BillV

    Hmm... any government program which hands out money definitely does cost people and the community. Government handouts like the FHOG are the causes for massive increases in inflation and preventing what would be normal market corrections.

    Artificially providing individuals with savings/deposits only deprives later generations who wish to purchase property as current prices and future prices remain and will be inflated over and over again.

    Also in regards to property booms, they are generally proceeded and caused by stupid and lax lending perpetuated by central banks and in turn retails banks.

    Why not just let prices correct to the downside which in turn will provide people with the opportunity to go into the market at reasonable prices. Which in turn will flow onto other markets you mentioned before
     
  8. Billv

    Billv Getting there

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    Now that's an idea
    and they should tell me when they are about to do that
    so that I sell my IP's before the crash and then go out and buy more for less :D
     
  9. Chris C

    Chris C Well-Known Member

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    Well the new Financial Aggs, came out on Friday. Nothing really new... just the FHO's still propping up the system, but conversely there isn't anything to be overly positive about with these figures. Coupled with the severe drop in business investment that was recently reported you'd have to think the green shoots that people are talking about aren't really spouting in the Australian economy as yet.
     
  10. AsxBroker

    AsxBroker Well-Known Member

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