6.25% hopefully this will be last for 6 months they reckon.

High interest rates make Johnny Howard cry

http://www.abc.net.au/news/newsitems/200611/s1783709.htm

"I will not put interest rates up in my next 3 years"

"I will keep interest rates low"

/quote John Howard

2 years and 6 rate rises later...

I am glad i cannot afford the extra $300 a month my home loan now costs me, fortunately i start a new job monday so i can afford it.

Edit:
Yes i know the RBA controls interest rates but the government has a major say in rate rises.

Think this is the 2nd or 3rd rates rise since I got a mortgage only a few months ago :(

Time to send the GF out to work on the corner.

It is times like this I am actually proud to say I didn't vote for that f***er.

The amount of stupid people who fell for his scare tactics amaze me. Specially after his track record with the GST!

he didn't get in on majority rather preferencial votes.

I thought most Federal Governments (on both sides) won on preferences due to the large number of marginal seats in Austraia?

I don't believe johnny howard has very much to do with interest rates at all...

RBA is pretty independent of Johnny from what i know.

What is this likely to do for rentals market? I just got f***ed sideways by a 20$ / week increase which s***s me to tears, but I don't have time to move at the moment so looks like I have to cop it sweet.

Johnny's actions though force the RBA to raise rates, like giving people tax cuts.

RBA is pretty independent of Johnny from what i know.

My understanding is they look at how much Australia spends and if we're consuming (throwing away our money) more than usual they then raise the rates to control us like lab rats.

What is this likely to do for rentals market? I just got f***ed sideways by a 20$ / week increase which s***s me to tears, but I don't have time to move at the moment so looks like I have to cop it sweet.

AFAIK you should only get a rental increase when its time to renew your lease or if its forced during the lease you can tell the lessor to stick it and you can move out without penalty.

At lease time though, you could expect another increase.

Well Johnny does have influency on the rates coz he has an influency on people's income.

By reducing tax means people have more money to spend on things, people spending more = inflation.

also he introduced the first home owners grant and the baby bonus which both gave people money.

First home owners grant caused the housing market price bubble.

Baby bonus influced the rate rises because people had more money ... money they usually wouldn't have had.

Johnny's actions can only do so much to counter market forces. In reality it's economic and foreign market forces that have the biggest impact on our interest rates and there's nothing a government from either side politics can to to control interest rates in the long term.

Edit: ^^ Yes you are right about those effects, but they are minor compared to other money flows.

last edited by Chakas at 16:21:57 08/Nov/06

Chakas, johnny could do heaps of things to stop inflation, he'd just get voted out if he did.

Like what? Close off the market? There isn't that much a government can do to control an open market, only tweak the direction it is heading.

I think the issue is that Johnny said that a government CAN control the RBA and if Labour get in they will make the RBA make interest rates rise.

He can't now turn around and say 'Well, we actually have no control' and not get a back lash

Like reduce government spending...cbf going through it now but you obviously don't understand inflation :p

Ok r_mazing what about this scenario that was threatening to happen recently:
Israel goes nuts in the Middle East, Iran etc gets involved and the whole region becomes destabilised. Oil prices rise sharply with the expectation of reduced supply and petrol is $5+/L. The flow on effects throughout the economy are enormous and the CPI spikes as a result of so many increased transport costs being passed on. What does the government do? Yes they can try and curb consumer and government spending but there's only so much they can practically do there to keep the economy going and inflation down. In reality there are much bigger forces than government spending pushing the economy.

yeah him and Costello wants to freeze wages and stop us spending but the next 12 months he has no choice but to f***ing spend spend spend out of the warchest he created by f***ing the guts out of the country to get re-elected.

++inflationary pressures there.

Hey chakas i highly doubt that petrol prices are the reason for the disparity in infaltion rates between countries.

http://www.photius.com/rankings/economy/inflation_rate_2006_0.html

I would have thought that was just 1 example r_mazing. Multiply that by the number of different basic resources that can impact on the CPI, factor in political and economic situations of our import and export partners, look at trade networks and see that different countries impact on eachother to different extents and then you might get a better idea of how such a disparity can occur (at least partially) independently of domestic politics.

stoked that i got my home loan interest locked for a few years, so i can continue getting ahead

also renters, get used to it, your rent is going to keep going up suckers!!!!!!

also renters, get used to it, your rent is going to keep going up suckers!!!!!!

I dont rent, but what a c*** of a thing to say.

not everybody can afford to buy Spook. dick.

I hear you Chakas: Australia is going through some awesome times with our mining resources so we gots money right now yo.

baby bonus & tax cuts would have placed upward pressure on inflation but not enough to make much of a difference. more important are things like the certain housing markets still performing strongly, the resource boom, and strong domestic demand.

edit: also john howard is a tool for saying he could do anything to influence interest rates, except very indirectly through macroeconomic variables which he doesn't have much control over anyway.

r_mazing that inflation data is quite out of date. and also you do realise that consumption makes up 70%+ of GDP right? it's far more likely that the inflation is being caused by strong consumption for the reasons i listed above than by government spending.

last edited by taggs at 18:33:38 08/Nov/06

can you guys stop calling him johnny as if you're old mates with him..

I lol haughtily at anyone that blames John Howard for interest rate rises, as if he is out to get hard working Australian's just like you kat!

gimme my baby bonuses back

Sweeeeeeet. Keep rising. Please keep rising. Come on, you know you want to...

Sif 6.25 is high anyway.

But seriously, bring on the 18% interest rates please :D

I think the issue is that Johnny said that a government CAN control the RBA and if Labour get in they will make the RBA make interest rates rise.

He can't now turn around and say 'Well, we actually have no control' and not get a back lash

funny

"I will not put interest rates up in my next 3 years"

"I will keep interest rates low"

/quote John Howard

2 years and 6 rate rises later...

funnier.

The campaign was "We'll keep interests rates low" If you don't think 6.25% is low you are a complete f***ing idiot. Other statements were "We'll keep downward pressure on interest rates" and "Interest rates will and have always been lower under a coaltion government" This is a factual statement and 6 rate rises since the election don't change this fact.

Interest rates are obviously controlled by the Reserve Bank, which makes decisions based on the health of the economy, which is to a lrage degree controlled by the government.

Yes, there have been 6 rises in 2 years from RECORD lows. Anything under 8% is historically low and anything under 10% is a roaring succes for a labor government.

Example: Peter Beattie by some stroke of genius causes fuel prices in QLd to drop to 65c a litre. (Yes I know he has no control unless he wants to subsidise, but this is a hypthetical) He then runs an election campaign saying he'll keep fuel prices low and wins. Then in the next two years fuel prices rise to 80c litre. Is he a liar or is the fuel price still low??

*The above is a moronic example provided for morons who think 6.25% is a high interest rate.

I just find it hillarious people will get themselves into debt and not even contemplate a rate rise, having some foresight people it's not all going to be peaches and cream forever, even splitting your loan and fixing a portion of it will help

p.s. if you can't afford to service the loan from a .25% increase I have serious soubts as to how you got the loan in the first place. Additionally for *some* of those that are whinging, I bet they either smoke or drink, quit one its a luxury or you'll spend $X amount of a new dvd burner or hard drive, that's money that could go to the mortgage

but anywho as spidz says they were at a record low for so long

So how may rises per year are 'acceptable'? How high can it go until we have the ability to complain?

How much buffer do you think someone should have in the bank to absorb the rate hikes?

So what if my mother had a 17% interest rate in the 80s. That doesn't help me today and it doesn't mean that Johnnie is any less of a lying bastard

I took all my loans based on an 8% interest rate, unless i can service the debt at 8% I don't take the money.

most brokers like to suggest to borrow on a 1% margin, but I like my play money.

So what if my mother had a 17% interest rate in the 80s. That doesn't help me today and it doesn't mean that Johnnie is any less of a lying bastard

well no it doesn't make him any less of a liar, but in regards to interest rates it does. He said he'd keep them low and he has, he said they are always lower under his government and they are.

So how may rises per year are 'acceptable'? How high can it go until we have the ability to complain?

you can complain all you like, this will confirm that you are completely uninformed on the issue. Kind of like a morning show host.

And if it goes up to 9%? Do we sit here and say "But it is still lower than un the 80s" and tell you to stop complaining?

well no it doesn't make him any less of a liar, but in regards to interest rates it does. He said he'd keep them low and he has, he said they are always lower under his government and they are.

You think three rates in one year keeping it low? Keep it in perspective spidz. This isn't the 80s. You can't compare the economy and rates then to what is now!

last edited by Kat at 21:12:13 08/Nov/06

in the defense of 'younger' people (and yes that includes me) even at 17-18% interest rates, the proportion of income going to servicing a homeload is HIGHER today then it was in the 80's (if I could be arsed I'd google it and get many articles) so don't let your parents tell you we have it easy.

Still you make sacrifices if you want to own a place, don't go out as much, but the 'no frills' branded food stuff etc etc (all this isn't got me, I like my toys, booze and fun along with nice food, but thems the sacrifices you need to make) hence my cashola aint in a house but in managed funds :)

It is times like this I am actually proud to say I didn't vote for that f***er.

It's times like this I'm glad I did.

33$ extra a month is better then 66$ extra.

rba targetting cpi has to be the most dumb thing.

- good way to create asset bubbles when money starts moving from cpi goods into non-cpi goods and then the rba expands the money supply in response to the perceived deflation

- cpi goods which have unexpected changes in price which are mostly a non-monetary phenomena : petrol, bananas

why not just target the money supply directly..

i'm sure bananas aren't a significant factor in the CPI but petrol is, why would you exclude it?

http://www.rba.gov.au/Statistics/cashrate_target.html

He came in, in 1996. It was 7%.

lol. yeah the interest rates were ~18% in the 80s... but inflation was ~15%, so the real interest rate was effectively ~3%. real interest rates have been pretty constant over the last couple of decades if i remember correctly. though admittedly that isn't much consolation to the poor bastards trying to service those loans.

hast: you're completely right about the futility of the rba trying to combat supply shocks with demand management. monetary policy isn't the answer in those situations - though cpi is the most relevent measure of inflation to their goal so that's why they use it.

edit: oh and many economists do advocate targeting the money supply, there's a school of thought based on it called monetarism founded by one of the most influential economists ever Milton Friedman. the downside to monetarism is that you lose control of the interest rates. though monetarists would argue that isn't all that big a problem.

last edited by taggs at 21:40:01 08/Nov/06

Spidz is a died in the wool little john fan boi and would have his poo babies if he could.

Little johny was all to keen to claim the economic booms were his doing (when in reality we have Hewson and Keating to really thank for them). We are only just starting to see the effects of little Johny's management now. Its the war, its the oil prices, its the bananas ...

And as for interest rates being low ? ... who cares... housing is more unaffordable then ever in Australia. ie. the percentage of average wages required to service a home loan today is higher now then when the interest rates were 15+%

And is it really that low any way (7.5-8%) ? ... meh America is what 5.5-6% on a standard homeloan ? The UK is ~5% ?

If you want to be depressed ...
http://www.demographia.com/dhi-ix2005q3.pdf
a year old but interesting
http://www.economist.com/finance/displayStory.cfm?story_id=4079027

Older still
http://www.pc.gov.au/inquiry/housing/finalreport/housing.pdf
But it shows all sorts of interesting things, like rental yields dropping to very low levels, and first home owner rates dropping while investor rates increase.

I just wish I had purchased in 1999 ...

i think they should target a monetary aggregate and not inflation.

obes: only turkeys have left wings

That article on the economist was good obes thanks.

Also Kat do you have a turd where your brain should be?

Howard has continually reiterated that he would keep rates lower then a labour government, not he would keep rates from rising or low. That doesn't constitute a promise in my books, or at least one he can't possibly break, he loses election rates go up he can say they would have been lower, he wins rates go up he can say they would have gone up further. I fail to see lies or anything like a lie, but hey if you bought it I have a jar full of God here very cheep just $5000.

remember labor. they're the one's who couldn't balance a budget if it was sitting in front of them wrapped in a big red ribbon. at least johnny gets the basics right like a balanced budget, instead of a $13billion black hole every year stoking up their foreign interest furnace.

and i can't believe some of the retarded comments like "they shouldn't have done the baby bonus or tax cuts". Well what else is the govt going to do with the money - that's right f***ing spend it on s***!

When will you economic Einstein's realise that all money must be spent eventually, it merely depends on whether it is spent in an efficient or inefficient manner (by the government or taxpayer). It is far better for the free market to spend excess money that for the government to waste it on bureaucracy as it inevitably does.

The Coalition has repaid $90b of labor's debt and it has made Aus globally a very resilient country. A return to Labor would mean we start spending like a drunken sailor and that means a return to high inflation and interests rates.

Today's younger voters (<30) have never experienced the pain small business and home owners experienced in the 80's so they are complacent. I suppose you have to get burnt to truly understand. And if you newb first home owners are hurting from the last few rate rises, it is because you are over geared and did not calculate your repayment capacity with a 2% buffer like any sane person would.

To you I say, suck it in. Sell your house and buy something a little smaller.

last edited by infi at 01:19:36 09/Nov/06

It is times like this I am actually proud to say I didn't vote for that f***er.

He wasn't the f***er going out and spending money he barely has on frivolous things he didn't need such as vanity plates.

also renters, get used to it, your rent is going to keep going up suckers!!!!!!

Says the person who didnt buy till he was what...30? Making you a sucker for probably 9-12 years.

it merely depends on whether it is spent in an efficient or inefficient manner (by the government or taxpayer).

Many economic arguements are that the taxpayer (ie decentralised) spends the money more efficiently because they reap the benefits of their spending etc and they have the specific knowledge.
But like everything there is pros and cons!
The interest rates at the moment really aren't that bad, and your money is getting taxed less so you should be able to afford the payments. But yeah 2% buffer for sure! (at least)

wait, so you voted for Mark Latham?

lol

Many economic arguements are that the taxpayer (ie decentralised) spends the money more efficiently because they reap the benefits of their spending etc and they have the specific knowledge.

i agree, and peter costello in particular has always said that, if after we balance the budget there is money left over, it should be returned to the tax payer.

taxation doesn't solve any of the problems being caused by the current economic boom. the government's policies have nothing to do with this:

THIS IS ABOUT CHINA PEOPLE - smell the roses!

wait, so you voted for Mark Latham?

yeah the cabbie and journo basher. top bloke.

And if it goes up to 9%? Do we sit here and say "But it is still lower than un the 80s" and tell you to stop complaining?

Theyve been going up a quarter of a percent each time.
If it suddenly increased to 9% that would be a little bit different.

You think three rates in one year keeping it low?

They were tiny f***ing rises you crazy bitch! They could have made 20 increases and still end up with the same figure.

f***, all it would take for them to fool you is to make one big rise and then a heap of tiny decreases that makes no difference.

When every single one of you that took out a loan without considering an interest rate hike - all you people that are now complaining about your extra 100 bux a month - you were doing exactly what john howard 'supposedly' did when he 'supposedly' promised that interest rates would not go up. You took the economic climate at that time and you banked on it for your personal gain. John Howard supposedly won his campaign on the back of fear of terrorists and lies about interest rates? (well he said hed keep it low and its still damn low but facts dont mean s*** right)

You got your house on the back of a loan @ an all time low but you did not budget for a f*** up like this because you are the kind of people that jump to blame the government for something which, as has been said multiple times, is mostly out of their control. You are blind. You are the same people that let your faith blind sense and stop stem cells from saving lives because you never learnt about anything usefull at school but still think you are qualified to actually be worthy of an opinion (half of you are the people that didnt finish high school or worse - did - and still list your tafe qualifications like it means something or say you manage an office when you are a PA... yeah.) You are the same people that would rather drink no water than 'recycled' becuase if naomi robson says that water which is actually cleaner than what you drink now is straight from the toilet then she must be right, she wouldnt lie to us becuase only John Howard does right?!?

YOU took a loan at that percent. You demanded tax cuts and you took baby bonuses. You banked on the times, just like howard, and you want somone else to keep things happy instead of assuming no one but yourself is going to do anything for you and make sure to cover your arse for things like this. You all did exactly the same thing and now it is going to come back and bite your stupid arses becuase maybe howard will be voted out at the next election - probably interest rates will continue to rise and howard will lose the next election...

the sad thing is that the joke will be on every person that votes labor in. We will all be able to choke to death as they come up with zero answers because, sadly, the entire planet is blind to the truth because the masses are unwashed and uneducated and you all sure stink and say some stupid s***.

last edited by qmass at 18:02:04 09/Nov/06

John Howard's government has allowed me to study away from my parents (in reasonable comfort), and not have to pay my tuition fees backt ill I can afford to. I think he's done a good enough job by me, I'd vote him back in again :/

Anybody who got an interest rate based on the low rates of the past few years and expected it to stay there is kinda foolish imo. It's really sad when it causes people to lose their homes over it, since it not only hurts them but can cause problems for their children too.

interest what?

Says the person who didnt buy till he was what...30? Making you a sucker for probably 9-12 years.

my rent was cheap yo (230 a week, which we subletted a further 70 on)

if i had bought a house back then, it mite have prevented me having some fun when i was a junior
that just wouldnt fly

ive probably got more spare cash now, then when i was renting, i just spend it all on the house though

f***, all it would take for them to fool you is to make one big rise and then a heap of tiny decreases that makes no difference.

i think yuo could be onto something!

You know, some people don't like interest rates going up even though they can still afford it when they do.

you know, some people just like to complain

How dare they complain about interest rate hikes. Those selfish bastards!

how dare people understand basic economic cycles

0.0025 ≠ a hike.

Persay: I hope you have never complained about the rain or it being too hot.

reload: It went up. For some that is all that they care about. Most people don't know the ins and outs of the economy and for them more money going out is bad.

So how about these storms eh?

www.understandingmoney.gov.au/

That website is for stupid people. If people aren't doing what they suggest already then they deserve everything they get

Today's younger voters (<30) have never experienced the pain small business and home owners experienced in the 80's so they are complacent. I suppose you have to get burnt to truly understand.

niether have you, ya ninny. i can tell you from personal experience... the 80's were awesome for small business... & 10x better for home owners. back when the federal labor government gave out development grants for research & development!! nowadays you have f*** all chance of surviving as an australian based design or manufacturing concern unless you were established back in the 80s!

That website is for stupid people.

like the kind that blame John Howard for interest rate rises?

the 80's were awesome for small business

QFT.


as well as early 90's. Till the JWE (johnnywinston effect) kicked in.

also renters, get used to it, your rent is going to keep going up suckers!!!!!!

Shrug, I'm in an apartment in an area where they've just put up a jillion new apartments. I can literally walk out the door and pick a place to live because there's so many empty units around the place. All the people that have gotten the new homebuyers thing and have bought a property are now getting hit with the interest rates hikes. If I walk out the door on my apartment and it's empty for even a couple weeks, it totally makes their price hike a waste of time.

If I had more time I would definitely do that (in fact I'm still considering it; there's no way where I am now is worth the extra $20 a week) and play hardball with them - and I reckon I'd be able to force them back. But atm I'm too busy and can't risk being homeless.

I can't believe that eventually the glut of rental properties on the market isn't going to result in lower prices - there are sooo many new blocks of units from the last couple years (and more still going up!)

You know, some people don't like interest rates going up even though they can still afford it when they do.

You know, most people like the extra tax money in their pocket as well but i dont see them complaining about that?

You know, some people don't like interest rates going up even though they can still afford it when they do.

Yes, but I can afford a Twin Turbo Toyota Soarer.
I choose not to.
I choose to spend my money on other things.

Dude, houses and rent are so frickin expensive right now that the average person has to over-commit to get into the market. Unless you want live in a slum.

I don't see the big deal about 0.25% increase no matter which government it came from. I can afford the extra $30/mth or whatever it is because it's smart to budget for things like this.

This thread was interesting until people lost the plot and went on a Johnnie bashing. LEARN 2 UNDERSTAND ECONOMIES before trying to post like you know you do.

Also, Labor squandering money again.

I don't see the big deal about 0.25% increase no matter which government it came from. I can afford the extra $30/mth or whatever it is because it's smart to budget for things like this.

Yeah, there's going to be a lot of complaining about what it does to individuals but that's not the important point. The problem is that with personal debt at all time highs a small change in interest rates has a larger impact on the economy than it did 20-30 years ago. The economy has been thriving on high consumer spending which is all well and good until something external tips the balance and then people are over committed and the economy takes a down turn.

I think the whole point of this thread has been to once again see who is a total moron and doesnt understand anything they like to complain about.

Its obvious that this hike will hurt many people but the people that it hurts are the people not smart enough to budget for something like this and the people that did - will hurt but they will get through much more easily.

I also like to laugh at stupid people becuase I am fortunate to live the lifestyle I do and have the luxury of laughing at stupid people becuase deep down it really really worries me that the majority of decisions that effect me are made by the same stupid people I laughed at growing up - churches, working class idiots that end up in labor (laffo) and just the 'general public' who didnt get the education to make them 'smarter' even though IQ wise they may be exactly the same as anyone else.

lol obes, economics journalists have been predicting the end of the world for years about global property prices.

hast: that's exactly what monetarism is...

chakas: yes, debt levels are at record highs... but so are asset levels, something most DIY economists and naysayers always conveniently forget.

The resource market is in boom. Since noone else has mentioned that, I thought I would.

as you were...

lol qmass = snob

Yes i know the RBA controls interest rates but the government has a major say in rate rises.

No Capto the government has no direct influence over the RBA. The government has indirect control by controlling inflation and consumption, but poor policy has allowed our foriegn imports to creep higher and inflation to be running at around 4%, giving the RBA no option but to raise interest rates to slow inflation.

Its way more complicated than that but that is the simplistic version.

One of the main factors for the high inflation rate is the cost of fuel, well the artificially inflated cost of fuel we see here in Australia, with fuel costing as high as $1.70 from around $1.10 same time last year (when the figures where calculated) thats a very hefty price hike for a commodity that is highly used. The fuel hike also has a ripple effect on the cost of everything due to transportation costs rising, resulting in just about everything going up in price, that coupled with some real dodgy pricing by major retailers.

One more thing to consider in the equation, with the introduction of a global economy, many Australian industries have been lost, from manufacturing to agricultural, now with oil set to rise to $100/barrel within the next 1-2 years and never fall below $50-60 again, it would appear that for such a remote country this may have been a bad decision, expect interest rates to reach %9-10 within the next 1-2 years and inflation to maintain a %3-5.

I have been working in banking/financial for over 10 years, some of my friends have been market analysts for close on 20 years, one in particular I take note when he speaks his opinion, becase he's always pretty close to the mark. The only thing he didn't predict is a drop in oil prices below $70, after all there is no logical market indicators for this action, other than political interaction by the worlds biggest oil consummer...

Enough politics, short and curly of the current situation, expect another 2% in the next 12-18months, so if you a close to your limit now with the mortage, best be thinking about down sizing your mortage...

i'd say the government can influence inflation and consumption to a certain degree but it's downright wrong to say they control it. nit-picking yeah i know :)

as someone in the banking/finance sector surely you have enough knowledge of economics to understand the futility and problems created when trying to correct a supply-side shock (oil prices) with demand-side management (interest rates/monetary policy)?

yes, australia has lost some industries due to globalisation. it's called comparative advantage, and it ultimately results in a far more efficient economy. artificially supporting uncompetitive industries imposes far more costs on society.

i don't keep entirely up to date with market analysis but i was under the impression that the general consensus is that aus would be expecting a downturn sometime in the next 6-12 months. some say we are starting to experience it now. why would interest rates and inflation continue to rise, unless you are attributing it to further supply shocks (oil)?

edit: spelling mang

last edited by taggs at 15:17:42 11/Nov/06

our economy appears to still be booming due to a sea of cheap credit. that is why the RBA needs to raise rates further.

let the hurt kick in and everyone will tighten their belts. we should probably have one more rise before june next year imo

lol qmass = snob

lol, no s*** sherlock, I thought someone would of picked that up after my initial post. :(