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Banks, behaving badly
Mags
post Posted: Jan 20 2021, 11:14 AM
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In Reply To: mullokintyre's post @ Jan 20 2021, 11:02 AM

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.


 
mullokintyre
post Posted: Jan 20 2021, 11:02 AM
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In Reply To: Mags's post @ Jan 20 2021, 09:25 AM

Gidday Mags, I presume you are referring to this report from the NAB as reported by ABC News
QUOTE
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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Mags
post Posted: Jan 20 2021, 09:25 AM
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In Reply To: mullokintyre's post @ Jan 19 2021, 04:07 PM

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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henrietta
post Posted: Jan 19 2021, 09:18 PM
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In Reply To: mullokintyre's post @ Jan 19 2021, 04:07 PM

You probably complained about how long it took them to respond to your complaints. wacko.gif

Cheers
J



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"Sometimes I sits and thinks, and sometimes I just sits." Satchel Paige

"No road is long with good company." Traditional

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nipper
post Posted: Jan 19 2021, 04:11 PM
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In Reply To: mullokintyre's post @ Jan 19 2021, 04:07 PM

at least you didn't have to click on a link and give your account details smile.gif



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Jan 19 2021, 04:07 PM
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The CBA must have had a quiet period where its staff don't have a lot to do.
Its the only reason I can think of as to why they sent me the following email:
QUOTE
We have reviewed our complaint records and found that we may not have given you contact details of our external dispute resolution scheme when you raised a complaint with us.

Complaint Reference Date Raised
XX-XXXXX 2011-09-26

We are sorry for this error. To put things right, we're letting you know who you can contact.

What do you need to do?
You don't need to do anything if you're satisfied with the way we handled your complaint(s).

If you'd like to discuss your complaint(s), please contact us on 1800 805 605.

If you remain dissatisfied, you can contact the Australian Financial Complaints Authority (AFCA) on 1800 931 678 (Mon-Fri, 9am-5pm AEST/AEDT), or email info@afca.org.au, or mail GPO Box 3, Melbourne VIC 3001. AFCA's website is www.afca.org.au.

We're here to help
If you have any questions or if we can help in any way, please contact us on 1800 805 605.

Yours sincerely,
Commonwealth Bank of Australia

WTF??? 2011?
I have no idea what I complained about.
Must be a case of covering their collective arses.
Mick




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mullokintyre
post Posted: Jan 14 2021, 05:47 AM
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Is it possible that the wall street banks may at last get someone in a regulatory position who will not do their bidding??
From Wall street on Parade
QUOTE
On January 7, Senator Sherrod Brown of Ohio, the Ranking Member of the Senate Banking Committee, released a statement indicating that he is to become the new Chair of that Committee. The announcement came as the Democrats are set to take control of the full Senate from Republicans as a result of the Georgia runoff.

Yesterday, Brown went a step further and held a conversation with major media outlets to discuss the agenda he will set as the new Chair of Senate Banking. The formal appointment process making Brown the official Chair has yet to occur, thus Brown is the “presumed” Chair.

We get the feeling that Senator Brown took the very wise and preemptive step of getting mainstream media to announce his Chairmanship yesterday because he clearly understood that Wall Street’s mega banks would be fighting behind the scenes in an effort to prevent him from advancing to Chair.

Wall Street despises Brown because he has an institutional knowledge of their patterns of crimes against the public and the regulations that they have succeeded in getting the Trump administration to gut in order to make those crimes evermore opaque and lucrative.
Brown reserved his harshest criticism for Brian Brooks, the Acting Comptroller of the Office of the Comptroller of the Currency (OCC), the regulator of national banks, which includes the mega banks on Wall Street. Brown told Brooks the following:

“One West, the bank that you and [Treasury] Secretary Mnuchin and Joseph Otting [former head of the OCC in the Trump administration] worked at, was known as a foreclosure machine. It makes no sense that the outgoing President handed the wheels of the economy to so many people who had a hand in crashing it in 2008.

“Even though you’re running the OCC without the approval of the Senate, you’ve made sweeping changes to regulation to benefit the same corporations you used to lobby for. It’s exactly this kind of self-dealing that’s eroded so many Americans’ trust in their government and the economy. And last week, 80 million American voters rejected that thinking.”

I don't like his chances, but Trump was no better than his predecessors in reigning in the crims that run the wall street banks.
Maybe this time.
Mick



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mullokintyre
post Posted: Nov 12 2020, 12:04 PM
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Anyone who thinks that things are going to change susbatially under a Biden Presidency is dreaming.
The power brokers are still there, still pushing their own agendas, still screwing the non elite American public.
From Wall street omn Parade

QUOTE
After successfully warding off barbarians outside the gates of the local election offices during the count of mail-in ballots, President-elect Joe Biden now has a new army of barbarians to deal with. According to the Center for Responsive Politics, using data collected by the Federal Election Commission, the industry category called “Finance, Insurance & Real Estate” donated a stunning $201,675,240 to Biden’s campaign and PACs supporting him. Add to that the category of “Lawyers and Lobbyists,” which donated $52,378,087, and you’re looking at a cool quarter of a billion dollars.

The bulk of the $52 million that came from “Lawyers and Lobbyists” was donated by the lawyers and partners of the big law firms that represent the biggest Wall Street banks and securities firms. Big donors to Biden and the Democratic Party in the 2019/2020 cycle hail from such law firms as Kirkland & Ellis; Paul Weiss; Akin Gump; Sullivan & Cromwell; Covington & Burling; and Sidley Austin, to name just a few.

The current head of the U.S. Department of Justice, William Barr, hails from Kirkland & Ellis, as does Deputy Attorney General Jeffrey Rosen. The former head of the criminal division of the Justice Department, Brian Benczkowski, who stepped down in July, also came from Kirkland & Ellis.

Covington & Burling similarly staffed up President Barack Obama’s Justice Department with Eric Holder as Attorney General and Lanny Breuer as head of the criminal division. Covington & Burling is also the law firm that fronted for Big Tobacco’s crimes against the American people for four decades. (See our 2012 article, Was the U.S. Justice Department Sold to the Highest Bidder.)

The current Chairman of the Securities and Exchange Commission, Jay Clayton, was a former law partner at Sullivan & Cromwell. Clayton represented 8 of the 10 largest Wall Street banks in the three years prior to landing the top post at the SEC in the Trump administration.

One name noticeably missing among the big law firms whose lawyers and partners are supporting Biden and the Democratic party is the law firm, Jones Day. That’s the law firm that sent 12 of its law partners to staff up the Trump administration on the very day Donald Trump was inaugurated.


The politics may have changed, the money has not.
Mick



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Mags
post Posted: Oct 26 2020, 07:06 PM
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In Reply To: nipper's post @ Oct 26 2020, 12:55 PM

Yep, more and more of the same.
It's exponential: Remember how hard bush had to work to get his sept-11 stimulus through, it took months.... That was $700m.
obumma then pumped one through, that took a few weeks... $1.4 trillion...
Now under trump how much did they put in??? And did it in hours...

Just look locally: The budget for Aus is 5 times more than rudd put in... 5 times!!
Did we have endless debate on tv and radio about how the stimulus was bad??? reckless???Nah, most people just grabbed the $750 hitting their bank accounts...
Interestingly, the small business circles I move in, are hard working honest people, and most received no support at all from the government.....
And now, they all have the same conclusion: why am i hiring, when staff literally do not benefit my business financially???
My personal business, my net profit is $15k better off when I work alone. Yes, that's right: a staff member costs me $300 per week. That's how hard it is to employ people in this country. Government has made hiring too expensive, and the school system has made them useless.

And now the UBI crap being trotted out. That tax concessions given to the super system cost the budget horrifically, and that policing self funded retirees costs more than if they gave them the pension anyway...
It doesn't take a rocket scientist to work out what's going on here: Everything is pointing to an utter collapse of the currency. People earning more to stay home, 80% of households paying no net tax, government departments costing more than the problems they're policing etc etc... It's a complete disaster.
And many, many smart individuals can see this: and all they are doing is feathering their nest. Post war these same people were entreprenuers who hired people: Now they see no benefit in staff, so they have none. Big business and investors have no desire for workforces: Company announcing staff cuts will see it's share price rise, every time.
it's a compete disaster: Feathering your nest is THE ONLY answer.
And use the knowledge of the coming economic blow up: USE and ABUSE, is my slogan. 7 in 7 is another one, from the financial sector: by (20)27 you need 7 figures, and cash out, because the years after that are going to be hell.
The stock markets are going to do what Aussie housing did since 2000: Regardless of your knowledge or skill level, almost any investment is going skywards: Just don't be that greedy sucker that's unable to take a profit and walk away.
But the economic vacuum that's coming on the currency collapse, will suck all your wealth via inflation in the blink of an eye. Don't laugh, this is coming. Remember how stupid it sounded that you'd have give people money to take oil away... well, oil did turn negative... and so to will most people finances.



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nipper
post Posted: Oct 26 2020, 12:55 PM
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In Reply To: Mags's post @ Oct 26 2020, 12:10 PM

Mags, so how do we dig ourselves out of the hole? Keep digging, seems to be the answer, so far.
I am in the same camp as you; ride this bronco, be alert to change. I have given up trying to predict outcomes.

on the matter of Banks: Surviving but not altogether thriving
QUOTE
... Because mortgages make up about 70% of their lending book, the big revenue driver for banks is housing credit growth. Twenty years ago, this was running at close to 15%, but in the past decade we've seen this drop down to half that. And, there's questions about whether can continue even at this rate due to the gearing in Australian households....
....Due to the reduced economic activity expected in the next couple of years, the Reserve Bank is likely to keep interest rates low. Again, this is not good news for Australian banks since they price off of the short end of the curve. For banks' net interest margins to increase, short end rates need to go back up, which means the RBA needs to feel so good about the economy that they start to raise the cash rate again. And because banks are highly leveraged, changes in profitability are magnified...
....Add to this competition. Banks have had a four pillar structure and that's been supportive of returns. However now you have got competitive threats from companies outside of the banking sector, mainly tech firms. None of these tech firms have a banking licence (or want one) and yet all of them are making incursions into financial services, mostly in the payments area. This is not because they want to be banks; it is because they want to reduce friction for their core services ...

We are not going to see strong dividends paid out for a while, but the banks do still return their cost capital ......
https://www.sharecafe.com.au/2020/10/19/sur...ether-thriving/


QUOTE
UK economist John Maynard Keynes in 1936 spoke of the liquidity trap when describing the limits of low-interest rates as an effective policy tool. He described situations when uncertainty is so great that even low-interest rates would fail to generate enough demand to ensure full employment. But Keynes was indicating that low interest rates could be ineffective as a macro tool. The worry after 12 years of low and negative rates is that these settings produce side effects that make them counterproductive. Ten side effects stand out.

A core concern is that the Keynes liquidity trap concept seems to underestimate the dampening effect of emergency measures. Low rates seem to dent consumer spending and business investment because they signal that authorities are gloomy, even panicked.

A second side effect is that low interest rates have encouraged so much borrowing that consumer, corporate and government debt have reached an unprecedented level of GDP in many countries. This could prove a systemic risk. Even without such mishaps, future repayments are likely to reduce consumption and investment.

Another side effect is that low and negative rates can lift asset prices. Lower interest rates push investors into riskier assets and argue for higher prices on property and shares, asset gains that tend to boost inequality. More tellingly, negative policy rates helped push bond prices so high that yields went negative... and widely so. The concern is that, if low and negative rates help the economy as intended, interest rates will move higher and puncture asset prices.

A fourth problem is that low and negative rates trouble the business models of insurers and pension funds that typically use the safety and positive returns of government bonds to help meet long-term liabilities. A fifth spillover is that low and negative rates squeeze bank margins, perhaps to the point of threatening financial stability. Any crimping in bank margins brings a sixth problem; that at some level, low rates could backfire by forcing banks to restrict lending ... a level known as the 'reversal rate'.

A seventh handicap is that central banks have faced political pressure for hurting savers and rescuing reckless borrowers. An eighth side effect is low and (especially) negative rates can, perversely again, force people to save more to attain a targeted level of savings.

A ninth drawback is that low rates can encourage unproductive investment. A tenth criticism is that low rates help embed economies in the 'debt trap'. This term describes how indebted economies need more debt to overcome the problems left by past debt. But at some indeterminant point this strategy must miscarry....
https://www.sharecafe.com.au/2020/10/15/sup...h-side-effects/



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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