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eshmun

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Ok... that is really weird.Like really weird.You'd think that would have come out just after the RC... not now?There's something going on we don't know about.

Oh hang on, they're dismantling responsible lending laws...

 

The retail credit market is going to go into frenzy: My cycle trader mate always said the 20's would be a credit fuelled frenzy... I could never see how..I do now.Even the RBA has run out of government bonds to buy: so either the govco has to start spending silly by writing even more bonds (how good is deficit spending???) or it's gonna have to hit the open market....

Either way, prices off almost every asset, regardless of fundamentals, is going to explode.I hate it, but I'm going to have to join the party.

 

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Gidday Mags, I presume you are referring to this report from the NAB as reported by ABC News

The metaphorical 'shelf' for three-year government bonds is almost empty, according to the National Australia Bank (NAB).

 

The Reserve Bank Of Australia has been buying up government bonds to maintain record-low interest rates

According to the National Australia Bank, the RBA will own nearly all April 2024 bonds by the middle of this year

Economists say this will make it unlikely that interest rates will move significantly lower from their current rate

In its latest monetary policy update, the NAB said the Reserve Bank of Australia (RBA) had been buying them up at quite the rate.

 

"We note that at the current rate [of Reserve Bank bond buying]… the RBA will own nearly all April 2024 government bonds by mid-2021."

 

In other words, the Reserve Bank has almost bought all available three-year government bonds.

 

The Reserve Bank has been busy buying up Commonwealth Government securities over the past few months.

 

In its November policy update, it announced it was ramping up its bond-buying program to full-blown quantitative easing (QE).

 

"The purchases of $100 billion will take place over a period of approximately six months, with weekly purchases of around $5 billion," the update stated"

The focus of purchases will be bonds with residual maturity of around 5 to 10 years but may also include bonds outside of this range, depending on market conditions."The Reserve Bank has been buying these government bonds in order to push up their prices and lower their yields.

 

Bond yields move inversely to their prices.

 

So, an obvious conclusion to make is that if, by mid-2021, the Reserve Bank has no more three-year government bonds to buy, it can no longer influence (or put downwards pressure) on the benchmark yield for the banks' fixed mortgage products."Unless the RBA is prepared to buy more bonds, which it's hard to do anyway because it has just about all of them, it's hard to see that yield going any lower.

 

"Consequently it's hard to see 3 year [mortgage rates] going any lower."

 

The NAB also points out in its research note that once the three-year government bond shelf is empty, the money market might view this as a signal interest rates could rise.

 

"We expect the RBA will outline an exit strategy by mid-2021, while being mindful that ending [its three-year bond buying program] is likely to see yields rise across the curve as the market interprets the RBA's shift as a signal for higher rates in the future."

Maybe the Govt will just issue more bonds for the RBA to buy. Now that they have dipped their toes into the world of printing money, may as well go for a full body immersion.

Mick

 

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Yep...

So either RBA let's rates rise, or they buy more govco and private co bonds/assets to keep interest down.....

Which do you think they'll choose?

Only a fool could even entertain the idea of letting rates rise (yes, I was that fool for 15 years up until about 2019 when I finally found all the pieces to the puzzle.).

The RBA, and the banks, will create cash like never before. The govco and it's citizens will borrow like never before, and then one day, a switch will flick and inflation will be uncontrollable, and get worse, spinning out of control until the currency crashes.

And of course, the 80% will own assets, thinking they are wealthy (by assets, aussies only real own real estate don't they), and they will learn the hard way, that debt fuelled markets effect the price on the way down, much more rapidly than on the way up. When a young person, after taking out their first mortgage, says "it will take me a lifetime to pay it off", they are unaware, that they are actually speaking the truth.

/shrug/Such is life, financial and empire cycles: It's happened for thousands of years: the biggest revolutions in history have occurred because of fiat currencies collapsing. This time will be no different: Just this time our iPhone, facebooking crowd will be completely caught off guard.

 

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Who'd own a bank eh?

https://www.zerohedge.com/markets/jp-morgan...anking-blitz-uk

 

J.P. Morgan is preparing to expand its consumer business beyond the U.S. for the first time ever, starting with a digital only retail bank in the U.K., according to a new BNN Bloomberg report. The bank is going to start by offering mobile checking accounts, which will then be followed by products like credit cards, mortgages and auto loans.

 

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Some time ago, WBC got a 1.3 bill fine from AUSTRAC which is the biggest fine in OZ corporate history. See Austrac

 

Today, APRA announced it is closing th biggest case in corporate history. SeeBusiness daily

So the shareholders of WBC are stung for 1.3 billion, when they did nothing wrong.

The ones who did the wrong? No one went to jail, no one got banned, no one even got fired.

Now thats what I call executive privilege.

Mick

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