Centurion

And if you believe that then you also believe that Kevin Rudd would actually do any better with things that he has absolutely no control over.

But heck - I'm sure working families would be better off as he claims. The annoying bothersome things like the technicalities of how that would be achieved clearly shouldnt be discussed before the election.

He's a politician. I trust him

spartacus

Bit of a vicious circle:

Consumers spend (too much - low interest rates).
Inflation going up.
Interst rate going up.
Production cost going up.
Consumer spends more.
Inflation going up.
Interst rate going up.
Production cost going up.
Consumer spending more.

7-7.5% has always been the historical average. We've had a lot lower than that for a long time now. The law of averages is just working itself out.

Nu-Shooz

So we live in a country where we can't spend too much, otherwise they will punish us.

spartacus

I'm not saying it's right. Interest rates are a very blunt tool for controlling spending, and generally hurt those who can least afford it and who probably haven't been doing the lavish living anyway.

worzel

That is one way to put it! Growth of around 3% per year is considered good as people's standard of living is improving steadily. But more than that there is a risk of boom and then bust when confidence collapses. The German economy was managed very well along these lines for many years making them an economic powerhouse and rebuilt the country from nothing after the war but that all went wrong when they took back east germany.

Nu-Shooz

Communism!

spartacus

Also interseted to know who you consider 'they' to be.

Andy

Nu-Shooz

Not sure myself, maybe the banks, the politicians. I'm sure a number of people decide.

worzel

Actually, I do understand some of that - I did a module in economics as part of my accountancy training 15 years ago. But I still don't know the answers to the questions I asked, but thanks for trying.

worzel

Actually quite the opposite

worzel

But I thought his policy on finances was "me too" - he would do the same as John Howard (except that Peter Garrett admitted they would ignore what they are telling us now when they get in).

Not sure how that gives him licence to blame Howard for the interest rises though.

ozzieeagle

Why are interest rates being cut in America then ? You can't have it both ways.

This government has given too much back in tax cuts, buying votes and fueling inflation, and not spent enough on national infrastructure. Problem is I havn't read anything where Labour will do whats needed in this country, which is a national water grid. We are in a golden era at present and the stupid politicians, wont see beyond the next election term.

BTW, getting constant reports this week, of a drop in the price of flats across the south of england, at circa 12 pct in the last quarter. 61 mortgage lenders also got retrenched from one company.

spartacus

Flats are always the first to suffer due to lack of first time buyers, markets pulled up by the top-end and pulled down by the bottom.

Amazulu

US has a sub-prime mortgage crisis. We don't.
Australian tax has been too high for too long. That is now changing. Gov has a huge surplus and can afford to give tax cuts and invest in infrastructure. That they don't is ridiculous.

I like tax cuts.

ozzieeagle

So do I but it's as bad for the Economy as any non production linked wage rise, if not worse, as more people get money for 'nout.

Anyway dont take my word for it, try the reserve bank themselves.

So I think we can apportion at least some blame at Howards feet for this current rate hike.


http://www.theage.com.au/news/federa...940985025.html

Massive water infrastrucure improvments, would have kept inflation down, made the country far wealthier than it is now, especially if they could have opened up arid land, and is probably only affordable at the scale that is needed at present.