Beware when politicians suggest that things are looking up!

Beware when politicians suggest that things are looking up!


What we are seeing today is that a statement such as this,  generally refers to the cost of living which shows no signs of abating anytime soon. Solid economic growth still likely, index shows which is somewhat contradictory, because while  Australia can expect a solid growth rate in the first half of 2011,the annualised Westpac – Melbourne Institute growth rate is  already being revised down. With the leading index coming in at 4.6 per cent in September and remaining above the long term trend of 3.1 per cent, it should also be noted that it is well down from the 10.3 per cent index recorded in March this year.

Julia Gillard’s  Fort Fumble urgently needs an economic architect given Canberra’s delusion: the budget is the economy which now has our elected federal Government at scary cross roads – OECD takes aim at Labor policies. “Australia’s proposed mining tax is too low; the goods and services tax should be higher and extended to food, and the approach to the national broadband network conflicts with international studies.”  In a hung parliament, the words ‘looking – up’ should be  removed from political rhetoric  along with the hopeless policies that shadow the Gillard/Swan shaky leadership foundations. The problematic elephant (aside from the NBN) that constantly circles the ALP ring  of confidence is the time to clear the decks of the Rudd mistakes. This  is not likely anytime soon, as the polls are recording a revolt of disappointment which is hardly a policy affirmation for economic reforms. More voter angst!



A stunning revelation when RBA expected higher rate rises by banks based on strengthening economic activity and rising inflation which makes for interesting times and it is more than likely, that the annualised Westpac – Melbourne Institute growth rate will continue its decline. Nobody would have been surprised to read that banks’ fattened margins exposed when figures released by the Prudential Regulation Authority revealed that the banks’ average cost of funding  loans, escalated by less than the RBA cash rate in the year to June. The figures revealed that the Reserve cash rate climbed 1.36 percentage points between June quarters 2009 and 2010. The average rate by the big banks to secure funding, climbed 0.88 points. Given the banks are well ahead of the official RBA cash rate it is highly unlikely that the RBA will raise the cash rate at its next meeting  in December (the next scheduled meeting is not until February 2011). Just as interesting Reserve Bank data unfairly abused in rates debate and a strange sequence of events as banks slower to lift deposit than interest rates which would not surprise anyone.


A great read Re – regulating the banks in public view by Dr. John Hewson “While legislation to give/increase the powers of the ACCC  in relation to “price signalling” etc and bans on mortgage exit fees etc are likely to be helpful, they are, in reality, unlikely to make much substantive or sustainable difference. Look at the way other “oligopolists” such as Woolworths and Coles consistently snub their noses at the ACCC, as do the oil companies. Of course, substantial penalties and making “cartel behaviour” a criminal offence, with the risk of jail for the senior executives involved, as in some countries in the airline industry, may give such processes real teeth, but none of our political leaders have yet been prepared to go that far.”  I always enjoy reading the blog comments “Margaret Thatcher’s often repeated line, “there is no such thing as a society. Just individuals and families.” Treasurer Wayne Swan is due to release Fort Fumble’s response to the “Bank Debate” next month probably sometime between Christmas and New Year.

12-11-2010 4-04-30 PM

Probably, it will  coincide with Australia’s broadband release as Conroy defies pressure to release NBN report which (conveniently) just so happens to occur after Parliament has risen for the summer break. In a perfect Parliament, politicians who approve taxpayer funded policy initiatives that turn out to be costly “white elephants”, should immediately resign – as is generally the case in big business.  Rest easy as Prime Minister Julia Gillard vows to put fine tooth coomb through NBN on behalf of Fort Fumble, which is getting very interesting given bid to gag minister in Senate.

For example: NSW could have been $4.6b ahead if the state government (Fort Crumble) had borrowed to fund the building of all tollways built in the city. The NSW state election is due in March 2011 – Keneally welcomes Labor exodus which is actually more like a mass evacuation.  Unfortunately premier “Bambi” has resisted the lead of her fellow politicians.

Things are looking up: rents to rise as home building lags as economic forecaster BIS Shrapnel predicts renters (one third of our market) will have to get used to annual increases of between 5 to 7 per cent in Perth, Brisbane and Sydney and 3 to 5 per cent in Melbourne, Hobart and Adelaide over the next 24 to 36 months. Data from the Australian Bureau of Statistics (ABS) identifies that building approvals fell to a 15 month low in September. Throw in Melbourne, Sydney and Brisbane which are in the top 10 most expensive markets in the world and you can draw two conclusions. Tax receipts from small businesses to Fort Fumble will continue to decline and the budget deficit will continue to grow as Sydney No. 2 in prime rents.

Yes, the cost of living is certainly looking up!

“There is no such thing as a society. Just individuals and families – Margaret Thatcher”

Cheers ^__^

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13 Responses to “Beware when politicians suggest that things are looking up!”

  • Warwick Kent says:

    Your statement re bank interest margins attributed to APRA is not correct and has been debunked by the Australian Bankers’ Association – full media release is on their website but includes the following: “This false conclusion is based on manipulation of newly released APRA data by the Australia Institute (AI)”.

  • Thanks Warwick – for the correction.

    In the article that I was referring it stated “The Australian Bankers Association confirmed the calculations were correct. But it said they didn’t reflect banks’ actual cost of funds.

    ”To be honest we can’t work this out,” said chief executive Steven Munchenberg. ”Performing the same calculation we get the same result, but I know it is not right because if it was we would have been being beaten to a pulp with this by the government and the opposition.”

    I went to the Australian Bankers Association website –

    Media reports wrong –
    Banks’ margins have not increased

    Sydney, 17 November, 2010: The Australian Bankers’ Association (ABA) said the media reports claiming that bank margins have increased are incorrect.

    “The Sydney Morning Herald” and “The Age” today reported that: “The big four banks have fattened their margins while complaining about being squeezed, new figures reveal.”

    This false conclusion is based on manipulation of newly released APRA data by the Australia Institute (AI).

    But the APRA data show clearly the claim of margin increases is wrong:

    1. The net income margin fell from 2.0% in 2009 to 1.9% in 2010 (See Tab 6 in the APRA excel worksheet)1.
    2. The margin decline is also revealed when comparing June quarter 2009 and June quarter 2010. Again, the recorded decline is from 2.0% to 1.9% (See Tab 6 in the APRA excel worksheet).

    The reason margins have declined is because banks have not been passing on the full effects of rising funding costs.

    That margins for most banks are falling, has also been confirmed in the Reserve Bank Board’s Monetary Policy Meeting Minutes, released yesterday.

    Australia Institute miscalculation

    If the AI’s claims were correct, margins would have increased. Both APRA and the RBA have confirmed margins are falling.

    Steven Münchenberg, Chief Executive of the ABA, said: “The AI’s manipulation of APRA data involves a simple but fundamental mathematical error. It has effectively assumed that the difference in the average cash rate in June quarter 2010 and the average cash rate in June quarter 2009 applies for the full year.”

    “In effect, by comparing only two data points, the AI has assumed that all rises in the cash rate made over the twelve month period apply to the whole twelve months, giving the figure of 136 basis points. When properly averaged, rather than just added up, the AI’s own methodology gives an answer of 68 basis points. This is a fundamental flaw in the AI claims.”

    For further information:

    Heather Wellard
    Director, Public Relations

  • Ann says:

    The NSW Premier fell off her bike this morning when the handle bar came off. How apt.

    One commentator this morning asked if anyone had seen Joe with an allen key.

  • The handle bars were the only thing left to come off the Kristina’s ALP bike. The wheels and the chasis came off a long time ago.

  • Gordon says:

    Steve, it looks like the whole of Fort Crumbled, bicycle, puppet premier and all, collapsed long ago through incompetence and corrupt selfinterest. It’s taken some people a long time to wake up, though it seems that many of the rats will be gone by March.

    Monty Python has a couple of pointers here – the resting parrot (Keneally) and the wounded knight (all of them). So why aren’t we all laughing?

    And without defending the banks (who can look after themselves), there may be a point missing in the debate. RBA knew the higher cost of funds meant the banks would nearly double an official 25bp increase. In the absence of that, the official increase would likely have been 50bp, so the net outcome was about square.

  • Ann says:

    I think the Reserve will take a break now and reassess in February after Christmas sales data comes through.

  • Ban Ann says:

    Real insightful, Ann. Why don’t you go out on a limb and predict what the Christmas sales data might be, e.g. up? down? by percentage?

  • Ann says:

    Christmas Sales will be down on 2009. Post Christmas sales will be up on prior year

  • Ban Ann says:

    Ann, it’s yesterday’s news. It took you several days to read archived online news articles to develop your ‘prediction’. Yet again you demonstrate you are the master of driving while looking in the rearview mirror. You illuminate/elucidate absolutely nothing.

  • Ann says:

    Thanks Patricia, I have my finger on the pulse, just dont ckeck your posts daily

  • Ban Ann says:

    Ann, there is copious evidence you do; BTW, your posts do not reflect well on the education you received at Middle Harbour PS.

  • Ann says:

    I think they have learnt their lesson that you don’t preference the Greens.

    This causes major issues for the Green’s now, they will have to moderate, or slip away like the Democrats. Not to extinction, but to a much lower percentage of the count after distribution.

  • Ann says:

    Interesting Wikileaks development today with KRUDD. Who has rat f****d who?

    Someone has had huge access to confidential document, that could only happen in the information age where everything is on a server somewhere. Unlikely to have happened in the old pen and papers today.

    I know the Australian Defence Bases prohibit any USB on the base and disable USB ports as its just too easy. They you have had examples of Corporates in Australia that have proven an executives used a particular brand of USB stick when taking files and leaving a company.

    Also just goes to show how governments can shut down websites and what will happen heaven forbid in the next war, with the cyber army.

    Are we relying too much on computers and networks and the internet.

    The other interesting point in RuddGate is that should a conflict erupt over our North Asian friends, the western world will suffer cause it has let so much manufacturing go, and it will be near impossible to produce what is needed to sustain an economy.

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