Recession likely in Australia
- Thread starter greedy saffa
- Start date
Lowering interest rates doesn't help everyone.
And surely the government has no control over the RBA?
GP
I disagree.
Common Wisdom is lower rates helps everyone.
Business pay less for money tooperate, expand, pay wages, buy stock..
Home Owners pay less to own
Investors can charge less to renter
Investors buy in and cause work for builders
Low Income Earners with CC debt pay less in cards
I tis oftern said welf funded retiree and pensioners miss out but it does help Pensioners that rent or are still buying, have debt, pay utilities, etc.
The $1400 for Pensioners would have been better paid via them to utilities.
They are asksing for inflation to fire!
Peter
dropping rates also drops the dollar which would hurt export industries i believe - or is that the other way around?
Other way. Lower $ makes our products cheaper OS, our tourisim cheaper to come here, etc..
Lower $ makes Fuel more expensive.
But economic activity encourages a strong $. So lower rates = activity = higher $.
Peter
yeah got it - thanks for clearing that up 
That's what the RBA tell us, and it's what the Gov tell us when rates go up! But when rates go down, who ever is in power takes the credit.Lowering interest rates doesn't help everyone.
And surely the government has no control over the RBA?
GP
Oh well such is life.
Maybe we need a thread on how to influence the government of the day? Lobby groups come to mind.
Regards
Graeme
Lowering interest rates doesn't help everyone.
And surely the government has no control over the RBA?
GP
GP
It does actually, (as peter nicely explained) and it also keeps our loan repayments low so we have less reason to put our rents up.
I also don't buy the argument about the RBA being totaly independent.
If our government appoints at least some of the board members, then surely the RBA would take notice when the government asks them not to struggle our economy.
The RBA should have seen that the inflation they were worrying about was imported and it would have dropped eventually.
They also did nothing when the credit squeeze came along and banks were forced to put up rates at the same time as petrol prices were going through the roof.
So we had petrol going up affecting everyone including primary producers, transportation costs going up affecting travel, goods and groceries & interest rates going up forcing us to put up rents.
Then one day the RBA woke up and decided to go hard in the other direction
and the government instead of sitting down and working together with the RBA on a solution they decided to go their own way and to spend our surplus.
I don't know about you but I have little confidence in the RBA and the government.
and the government instead of sitting down and working together with the RBA on a solution they decided to go their own way and to spend our surplus.
I don't know about you but I have little confidence in the RBA and the government.
Not to mention how dissapointed I was seeing our prime minister announcing on TV that we are having the worst economic crisis in our lifetime.
I thought, what is this guy doing?
Even if we were having it that bad, which we are not, he shouldn't have said it on national tv because if we know that difficult days are coming we are less likely to spend the money he is handing over
I thought, what is this guy doing?
Even if we were having it that bad, which we are not, he shouldn't have said it on national tv because if we know that difficult days are coming we are less likely to spend the money he is handing over
So how will your Mum and Dad go when the interest received on their annuity drops to near zero?
No but in this instance it would have been very appropriate.
Also, such talk doesn't help our share market or our $
Well they're certainly not helping me at the moment. But then, I'm probably close to the (reasonably) well funded (almost) retiree group, with no debt.
GP
Yeah. I used to like the way Peter Costello would get on public television and "comment" that he didn't think interest rates needed to be raised at that time.
Not that it was up to him, and not that he was trying to influence the RBA or anything...
GP
Dear All,
1. It was reported in the local Australian Newspapers today that "KEVIN Rudd has (now) warned about the risk of Australia sliding into recession, saying the "buffer" of safety remains too thin despite estimates of continuing economic growth."
http://www.theaustralian.news.com.au/story/0,25197,24521439-5013871,00.html
2. The Sdyney Morning Hearld newspapers has also reported that "200,000 jobs to go as businesses hit wall"
http://www.smh.com.au/news/national/200000-australian-jobs-to-go/2008/10/18/1223750399529.html
3. Despite estimate of continuing economy growth of less/about than 2.25% in Australia, as previously projected by the RBA, the present risk of the Australian Economy falling into an official Recession in 2009 has now been increasingly "heightened".
4. This follows the continuing unfolding of the global Credit Crunch Crisis, which has since developed into a severe global financial crisis with the American Economy, Japanese Economy and most of the European Economies slowing down to the extent of falling into an official Recession in 2009.
5. The recent unexpected 1% Official Interest Rate Cut announcement made by the RBA in October 2008 and Kevn Rudd's recent announcement to implement A$10.4 Billion Economic Stimulus Package to "revive" the rapidly slowding down Australian Economy, recent falling commodities prices and market demand for Australian iron ores by China and India, are all part of the various on-going positive indicators of this heightened risk of the Australian Economy falling into an Recession in 2009.
6. For your further comments and discussion, please.
7. Thank you.
regards,
Kenneth KOH
1. It was reported in the local Australian Newspapers today that "KEVIN Rudd has (now) warned about the risk of Australia sliding into recession, saying the "buffer" of safety remains too thin despite estimates of continuing economic growth."
http://www.theaustralian.news.com.au/story/0,25197,24521439-5013871,00.html
2. The Sdyney Morning Hearld newspapers has also reported that "200,000 jobs to go as businesses hit wall"
http://www.smh.com.au/news/national/200000-australian-jobs-to-go/2008/10/18/1223750399529.html
3. Despite estimate of continuing economy growth of less/about than 2.25% in Australia, as previously projected by the RBA, the present risk of the Australian Economy falling into an official Recession in 2009 has now been increasingly "heightened".
4. This follows the continuing unfolding of the global Credit Crunch Crisis, which has since developed into a severe global financial crisis with the American Economy, Japanese Economy and most of the European Economies slowing down to the extent of falling into an official Recession in 2009.
5. The recent unexpected 1% Official Interest Rate Cut announcement made by the RBA in October 2008 and Kevn Rudd's recent announcement to implement A$10.4 Billion Economic Stimulus Package to "revive" the rapidly slowding down Australian Economy, recent falling commodities prices and market demand for Australian iron ores by China and India, are all part of the various on-going positive indicators of this heightened risk of the Australian Economy falling into an Recession in 2009.
6. For your further comments and discussion, please.
7. Thank you.
regards,
Kenneth KOH
Heres the latest article
Australia 'will be in a recession by Christmas'
AUSTRALIA will be in a recession by Christmas but a rash of interest rate cuts will allow the economy to recover fast, Goldman Sachs JBWere says.
Chief economist Tim Toohey told ABC-TV a very weak June quarter will not be bettered by September economic figures, which are likely to show the economy is deteriorating.
A recession is two consecutive quarters of negative growth.
"We think it's quite likely that by the time Christmas rolls around, Australia will be in its first recession since this expansion began 17 years ago," Mr Toohey said.
"The fall in the Australian dollar that we've already seen over the last six to eight weeks is equivalent to around about another five rate cuts by the way we do the calculations."
He said every 2.5 per cent cut in the trade weighted index equalled one rate cut and the official cash rate would fall to 4.5 per cent by March and most will be passed on to mortgage holders.
The fragile state of the global economy will be revealed this week as key economic growth figures are released in Australia and overseas.
The local share market is expected to open 20 points lower this morning after a lacklustre showing on Wall Street on Friday night with volatility expected to continue.
Investors on Tuesday will get a clearer picture on future interest rate cuts.
The Reserve Bank of Australia board will release minutes of its October meeting, where it spectacularly slashed 100 basis points of the official cash rate.
Governor Glenn Stevens also is addressing the America Chamber of Commerce in Australia
Economists are tipping a cut of at least 50 basis points on Melbourne Cup Day to bring official rates to 5.5 per cent.
"I think the RBA will try to get rates below 5 per cent fairly quickly - it could be as much as 75 basis points cut in November and then the remainder in December," Commsec chief equities economist Craig James said.
"So I think by Christmas we'll see a cash rate of around about 5 per cent or a little bit below."
The Commonwealth Bank expects rates to reach 5 per cent in March.
Harvey Norman chairman Gerry Harvey yesterday said he expected rates to be as low as 3 per cent in the near future and the retailer, which has stores in every town in Australia with more than 10,000 people, now is releasing sales figures every Tuesday.
Retailers generally release sales figures quarterly.
"If there's a mechanism that can produce what's happening out there in the marketplace at the moment ... If we put those figures every week, we'll give you an indication of what's happening in the marketplace now," Mr Harvey told Ten Network.
"The ($10 billion Federal Government spending package) will help, but look, there's a big picture out there - there's a world crisis and regardless of whether you give $10 billion back or not, it's not really going to solve the problem."
He said there had not been any increases in the number of customers defaulting on loans.
Richard Goyder, the boss of Coles owner Wesfarmers, said demand had been stable in its supermarkets but discount department stores Target and K mart were starting to feel the flow on from consumers starting to hoard their cash.
Rival Woolworths reports first-quarter sales on Tuesday. China's gross domestic product figures are expected out on Tuesday as well.
Australia 'will be in a recession by Christmas'
AUSTRALIA will be in a recession by Christmas but a rash of interest rate cuts will allow the economy to recover fast, Goldman Sachs JBWere says.
Chief economist Tim Toohey told ABC-TV a very weak June quarter will not be bettered by September economic figures, which are likely to show the economy is deteriorating.
A recession is two consecutive quarters of negative growth.
"We think it's quite likely that by the time Christmas rolls around, Australia will be in its first recession since this expansion began 17 years ago," Mr Toohey said.
"The fall in the Australian dollar that we've already seen over the last six to eight weeks is equivalent to around about another five rate cuts by the way we do the calculations."
He said every 2.5 per cent cut in the trade weighted index equalled one rate cut and the official cash rate would fall to 4.5 per cent by March and most will be passed on to mortgage holders.
The fragile state of the global economy will be revealed this week as key economic growth figures are released in Australia and overseas.
The local share market is expected to open 20 points lower this morning after a lacklustre showing on Wall Street on Friday night with volatility expected to continue.
Investors on Tuesday will get a clearer picture on future interest rate cuts.
The Reserve Bank of Australia board will release minutes of its October meeting, where it spectacularly slashed 100 basis points of the official cash rate.
Governor Glenn Stevens also is addressing the America Chamber of Commerce in Australia
Economists are tipping a cut of at least 50 basis points on Melbourne Cup Day to bring official rates to 5.5 per cent.
"I think the RBA will try to get rates below 5 per cent fairly quickly - it could be as much as 75 basis points cut in November and then the remainder in December," Commsec chief equities economist Craig James said.
"So I think by Christmas we'll see a cash rate of around about 5 per cent or a little bit below."
The Commonwealth Bank expects rates to reach 5 per cent in March.
Harvey Norman chairman Gerry Harvey yesterday said he expected rates to be as low as 3 per cent in the near future and the retailer, which has stores in every town in Australia with more than 10,000 people, now is releasing sales figures every Tuesday.
Retailers generally release sales figures quarterly.
"If there's a mechanism that can produce what's happening out there in the marketplace at the moment ... If we put those figures every week, we'll give you an indication of what's happening in the marketplace now," Mr Harvey told Ten Network.
"The ($10 billion Federal Government spending package) will help, but look, there's a big picture out there - there's a world crisis and regardless of whether you give $10 billion back or not, it's not really going to solve the problem."
He said there had not been any increases in the number of customers defaulting on loans.
Richard Goyder, the boss of Coles owner Wesfarmers, said demand had been stable in its supermarkets but discount department stores Target and K mart were starting to feel the flow on from consumers starting to hoard their cash.
Rival Woolworths reports first-quarter sales on Tuesday. China's gross domestic product figures are expected out on Tuesday as well.
"financial meltdown takes hold, economic experts have predicted."
These would be the same experts that have been right maybe 40% of the time in the last 10years.
Why are they going to be right this time?
"AT LEAST 200,000 more Australians will be out of work"
And the 200,000 number that would just be someone deciding that 7% unemployment is the long term average (just guessing here) and therefore we will move back to that number.
These guys are the same batch as those that invest our cash in super funds and close the 4 crap ones down and tell everyone how great they are because 1 fund is doing well after 3 years.
In general these experts have less idea than you and me.
I agree that in the USA things are not good. But Australia has the potential to come out of this OK unless too many people listen to the negative doom and gloom. Which is what seems to be happening. It's a self forfilling prophesy.
Oh well
Graeme
*******************
Dear Graeme,
1. I personally agree with you to a certain extent, that the so-called "experts" quoted by the local newspapers, may not be entirely, accurate and correct in their own prediction and data projections.
2. However, we can always use these projections by the private sector, to compare to those provided officially by the RBA or/and by the Australian Treasury, for their accuracy and reliability or/and use them to monitor how exactly the real Australian Economy will eventually perform, on a real time basis.
3. We should never allow these reported projections, to adversely affect our own independant thinking and conclusions, such that they can/will eventually become their own self-fulling prophesy, in their own right.
4. Having said this, you must agree with me that Kevin Rudd and his ALP Federal Government is not really helping themselves or/and the Australian public either, by "urgently" rushing to implement the A$10.4 Billion Economic Security Stimulus Package at the very last minute, unexpectedly, on 12th October 2008;- when they have previously wanted to officially slow down the Australian Economy for fear of a runaway inflation scenario occuring in Australia in 2008 during the first half of 2008.
5. Morever, Kevin Rudd and his ALP Federal Government has rushed to implement the A$10.4 Billion Economic Security Stimulus Package, without first revealing how exactly or/and how badly the Australian Economy has been adversely affected by the global financial crisis to date, or/and the actual revised GDP Growth rate for the Australian Economy which they have officially received from the RBA and the Australian Treasury Dept or/and the IMF which they have used to make their decisions recently to officially reverse their previous policy, at the very last minute, all of a sudden.
6. Consequently, Kevin Rudd and his ALP Federal Government have both failed to properly explain the underlying rationale for their change in policy with respect to their management of the Australian Economy and with respect to their last minute, "desperate" implementation of the A$10.4 Economic Security Stimulus Package, both inside and outside the Australian Parliament, to date.
7. According to Lindsay Tanner, the Australian Finance Minister on his blog site whose URL is given below, the A$10.4 Billion Economic Security Stimulus Package is aimed at properly "insulating" the Australian Economy "pre-emptively" against the various shocks and negative external forces, arising from the recent global financial crisis, in a timely manner, so as to properly re-assure the Australian public of their properly economic management in Australia.
http://blogs.theage.com.au/business/archives/2008/10/ready_to_defend_australias_economy.html
8. However, by their last minute "desperate" attempt in reversing their own policy in managing the Australian Economy, Kevin Rudd and his ALP Federal Government, have further created more doubts and suspicions among many Australian public members regarding their own ability to properly manage the Australian Economy, in the first place.
9. This is as per the existing numerous negative public feedback already given to Lindsay Tanner, the Australian Finance Minister, regarding their recent policy reversal and the A$10.4 Billion Economic Security Stimulus Package implementation, at the same blog-site, as previously referred to, earlier in paragraph 5.
10. So, what is real truth regarding the actual Australian Economy's current status, at this point in time?
11. Is the Australian Economy actually fast falling into an Official Recession by this Christmas 2008, as some Australians has suggested in this forum?
12. Is it, for this very reason which has actually made the last minute implementation for the A$10.4 Billion Economic Security Stimulus Security Package neccessary for Kevin Rudd and his ALP Federal Government, in order to "suddenly" "reverse" their own previous economic policies and/or to properly and timely, revive the rapidly-weakening Australian Economy, at the very last minute on the 12th October 2008, after the RBA has similarly and unexpectedly, cut 1% its Official Interest Rate Policy/Setting on 7th October 2008 previously?
13. Is History set to repeat itself again in Australia in the immediate near future, during the 2008-2009 period? i.e "the Recession that Australia needs to have" again but this time, under Kevin Rudd's new ALP Federal Government, after last 16 years of prolonged economic prosperity under the previous Coalition Federal Government, as previously occured during the last 1991 Recession under Paul Keating's ALP Federal Government's office term period?
14. Despite all these developments and concerns, however, recent survey polls jointly conducted by the Sydney Morning Herald Newspapers and the Nielsen Poll, seems to show a different public opinions outcome concerning his Kevin Rudd's own popularity as the preferred Australian Prime Minister and the preferred outcome for the Australian Government in a 2 Party preference voting patterns.
15. According to this recent Sydney Morning Herald/Nielsen Survey Poll outcome and as reported over this evening TV News, Kevin Rudd seems to have scored a political victory over this issue, as the public opinions has shown that he is still clearly the preferred Australian Prime Minister over Malcolm Turnbull, and that Kevin Rudd and his ALP Party are still the preferred government over the Coalitioin Party, given the 2 Party Voting preferences.
16. For your further comments and discussion, please.
17. Thank you.
regards,
Kenneth KOH
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