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Livas1
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So the RBA cuts interest rates again to almost zero.

Good for the sharemarke, bad for interest income for retirees, marginal for home owners with a mortgage, and great for those just entering

Now for the bad news.

The housing bubble will expand a bit more.

The concept of having savings for a rainy day has just been obliterated.

Debt will just keep piling up, but who cares?

This is the new normal, but for how long??

Mick

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Debt will just keep piling up, but who cares?

This is the new normal, but for how long??

 

Until the tax base is unable to make the bond payments.

We are a long way from that.

The housing bubble will expand a bit more.

 

Absolutely, I've had to eat humble pie, and accept I'm wrong on the housing crash. It's not coming (for a while). The dismantling of the responsible lending laws will see Ninja loans right here in Australia: Don't laugh.

It's almost guaranteed: Only today CBA announced, no forced sales until September 2021.That's right. It is a one way market: For the time being.

The concept of having savings for a rainy day has just been obliterated.
Nah, that wasn't today: That was the announcement of Jobkeeper. People honestly believe gov co can bail them from anything now. Next step is the UBI (and I reckon it's coming 100%). Once UBI comes in, watch the inflation rate charge to the sky. Once you remove the incentive to work, and the value of saving for the unexpected, capitalism is dead. In the next few years, self funded retirees are going to recieve the pension: Why? Because, treasury and ATO now agree, it COSTS MORE TO MONITOR THE FEW SELF FUNDED RETIREES THAN IT WOULD TO PAY THEM THE PENSION!!!!!!!

Why save to be a rich retiree, when the government will treat you the same as said rich retiree??

 

The economy, prices, retail, commodities, stocks, etc are all going to become unstable: How can they not? 1/3 of the world in lockdown, and the stock markets have mostly recovered??? C'mon, it's a joke now.

Play the games if you want: Just don't be the last one caught carrying the can

 

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  • 2 weeks later...

RBA boss, Phillip Lowe said there will be no rate rises until wages growth picks up.

I guess then we can assume that there ill be no further rate cuts either.

From Todays OZ

 

Australian workers struggling with a dismal pace of wages growth in coming years will at least not face rising rates, after the Reserve Bank’s minutes from its historic Melbourne Cup day meeting made it clear that the central bank won’t tighten policy until pay packets are lifting “materially faster†than recent levels.

 

The RBA board pulled the trigger on a likely final rate cut from 0.25 per cent to 0.1 per cent and launched a $100bn bond-buying program on November 3 when it “became clearer that unemployment would remain high and inflation subdued for an extended periodâ€, the minutes read.

 

Wages growth is a key driver of inflation, and the lingering impact of the downturn would leave a legacy of heightened spare capacity in the labour market, which was “expected to result in subdued wages growth and inflation over coming yearsâ€.

 

The minutes noted that the cash rate would not be lifted until inflation is “sustainably†back within the bank’s 2-3 per cent target range.

 

“For this to occur, wages growth would have to be materially higher than recent levels,†board members heard.

 

“Given the outlook, the board does not expect to increase the cash rate for at least 3 years,†the minutes read, while noting that the three-year bond rate target would be removed before the cash rate was lifted.Private sector wages inched 0.1 per cent in the June quarter as the pandemic and associated restrictions triggered wage freezes and lay-offs, bringing the annual pace to an all-time low of 1.7 per cent. The Australian Bureau of Statistics will release the September quarter update on the wage price index tomorrow, but the RBA expects annual wages growth will slump to 1 per cent by mid-2021 and stay below 2 per cent for years.

 

Despite positive signs of a relatively rapid recovery from the COVID-19 recession – which was acknowledged by governor Philip Lowe in a speech on Monday night – board members concluded that “the recovery was expected to be protracted and unevenâ€.

 

Dr Lowe has said lowering the unemployment rate was a “national priorityâ€, and the minutes echoed that sentiment.

 

 

Interesting viewpoint, the assumption that Inflation is tied to wages growth.

So what is he going to do if the cost of health, food, transport, energy etc all go up without a commensurate wages rise??

What is he going to do if the punitive action by China gets even more severe and teh AUD, seen as a commodity based currency, falls out of favour and drops like a stone?

Just let it ride??

My opinions of the good Doctor are falling with each announcement.

Mick

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