Aussies and NZers: Four seasons in one protest

[Paxter]

17 minutes ago, Impmk2 said:

I'm not sure pointing at average savings figures, as the RBA has been doing, is a great indicator in a country with wealth inequality at record highs. A quick google tells me that median savings are close to 1/10 of the average. There's going to be a lot of people feeling the pinch for whom those figures are little comfort.

Sure. But that doesn't stop these figures from driving consumption and therefore inflation. The same goes for the government sector, which has been driving significant demand. 

As for the inflation - yes it hurts. And our only real tool to tackle it? Monetary policy. We have know this since Volcker crushed a decade-long inflationary period in the 80s and it hasn't changed. 

[The Anti-Targ]

25 minutes ago, Skyrazer said:

We're a heavily consumerist country that imports a lot and exports little outside of resources and foods. The RBA also needs to maintain the value of the AUD and with pretty much every other country jacking up rates, the RBA has to keep up otherwise the AUD tanks which would leave us in a world of hurt with even worse inflation.

I am of the opinion that rates should have started going up around mid-2021 when the vaccine rollout was well underway and the economy was opening up. This would have helped cool the out of control housing market and perhaps prevented so many from becoming so indebted which has caused the economy as a whole to become so sensitive to IR movements. We're only at 2.35% for goodness sake.

That's true, but the interest bill relative to income on young FHBs at today's interest rates will be higher than the interest bill when I was an FHB because the loan to income ratio when I was a lad was much lower than what it is for today's young'uns. SO my son is experiencing a lot more stress at his interest rate than I did at an interest rate 3% higher. Of course when I took out my first mortgage interest rates were coming down from double figures into single figures, whereas interest rates are now trending up, which creates stress all by itself.

I find it rather nuts that a justification for increasing interest rates is to keep up with the Jonses, or our currency might crash. Currencies crash when the economic fundamentals are bad. If an economy is good foreign investment will happen in productive areas of the economy, based on good returns from profits, rather than interest rates. Having to raise interest rates to maintain the value of the currency seems like an admission that the macro-economic picture is poor, which again suggests raising interest rates will be harmful.

[Paxter]

I'm with @The Anti-Targ on the exchange rate up to a point. You have to let the currency float to some extent or else you are just a complete slave to the Fed (Bank of Japan is currently ignoring the Fed and letting the yen crash to a 25-year low).

But if you completely ignore the rest of the world you could potentially end up with a balance of payments crisis (inability to pay for exports or service foreign debt). 

[Impmk2]

23 minutes ago, Paxter said:

As for the inflation - yes it hurts. And our only real tool to tackle it? Monetary policy. We have know this since Volcker crushed a decade-long inflationary period in the 80s and it hasn't changed. 

Yep, no argument. And if we actually get a solid period of wage increases too this could also help reduce the stupidity of the housing market. But not holding my breath on either front.

[Paxter]

The housing issue is a complete mess and I'm not sure there's much to be done at this point.

We have allowed wealth to accumulate in the hands of investors and homeowners (70% of voters), leaving renters and first-home buyers permafrozen. A similar thing has happened in Canada, NZ, the UK and many large US cities (especially in the Bay Area). Europe has largely avoided it due to their support for renters.

Hard to see much political appetite to change the status quo. And we can't rely on regulators as they don't really have a mandate to identify and address asset bubbles. 

[Skyrazer]

43 minutes ago, The Anti-Targ said:

I find it rather nuts that a justification for increasing interest rates is to keep up with the Jonses, or our currency might crash. Currencies crash when the economic fundamentals are bad. If an economy is good foreign investment will happen in productive areas of the economy, based on good returns from profits, rather than interest rates. Having to raise interest rates to maintain the value of the currency seems like an admission that the macro-economic picture is poor, which again suggests raising interest rates will be harmful.

That's the thing, we rather lack many productive areas that more diverse and advanced economies have. We're heavily reliant on resources and our manufacturing has been all but mostly mulched. Will likely be awhile before the education industry recovers to pre-pandemic levels as well. We don't have as much room to play loose with our currency as a nation like Japan (as per Paxter's example) who has a more diverse portfolio of industries and exports.

Fact is, whenever IRs drop, Australians pour money into property and rates have been going down and staying down for so long that it's causing severe structural problems. We basically ran out of room to move and trying to maintain the climate that has contributed to the predicament we now find ourselves in is folly.

[Jeor]

Totally agree that while the RBA's rate is only 2.35%, the loan-to-value ratio is so much higher. I hate it when older people say "I had to pay off my mortgage at 17% rates, what are you young people complaining about" when they don't realise their loan was probably only 3 times their income. Now it's often 6 times income and climbing fast.

I liked Fed Chair Powell's Jackson Hole address, particularly where he pointed out that "without price stability, the economy doesn't work for anyone". A case could be made that unemployment is just as significant (hence the ongoing debate about getting the right balance between raising rates and recessions) but inflation is The Enemy. You only have to look at the UK right now, with its spiralling energy and food costs, to know what can happen. Imagine if everyone's power bills (residential and commercial) tripled virtually overnight. Inflation is an economic evil that cannot be avoided by anyone, as it impacts necessities like energy, fuel and food, and then everything that businesses pass on.

It must absolutely be actively sought out and destroyed, and interest rates are the only real proven method of doing that.

[Paxter]

Exactly. This is why I have been calling for restrictive (not neutral) rates since early this year.

There is basically nothing more important in any economy than anchoring inflation expectations. Even high unemployment is preferable as it can be ameliorated by redistributive policy. It’s very hard to do this with inflation (as Truss and Von Der Leyen and co will soon discover). 

[Jeor]

I don't know that Truss could have done much else with the energy crisis, freezing power bills but early indications are that the cost of doing that will be potentially into the hundreds of billions of pounds, more than the emergency pandemic jobs payments. That boggles the mind and shows you how quickly inflation can ruin things.

Even renewables aren't a panacea for this. China is having blackouts because the  drought is sapping their hydroelectric capacity. Until battery technology improves, storage isn't going to smooth things out effectively. I think with energy policy it has to be a case of diversification (build up resilience by having multiple generation strategies) and education (build a culture of power-saving habits in the general populace and industry).

We're kicking ourselves for not installing solar on our roof the past year or two. Our house was a bit of a fixer-upper and we prioritised other issues, thinking La Nina meant we didn't get that much sun anyway. But it would have been handy to have that now! Our latest quarterly power bill came in at $900 (to be fair we are a family of five - two kids and a mother in-law living with us, with all the associated energy costs that comes with!).

[Paxter]

The reality is that we and the rest of the world could and should embrace nuclear energy. Storage only gets you so far.

We are lucky in Ontario to be majority nuclear powered (around 60%). Our electricity bills are around $100 per month (two people working largely from home). 

[Impmk2]

Nuclear power in the Australian context is a way to avoid doing anything climate change for 20 years, while trying to look like you're doing something. There's a reason Dutton is embracing it.

It's an issue that's been looked at over and over again by the CSIRO and other energy experts over the past decade. Frankly I tend to trust that more than the pronuclear crowd on the internet.

[Paxter]

1 hour ago, Impmk2 said:

Nuclear power in the Australian context is a way to avoid doing anything climate change for 20 years, while trying to look like you're doing something. There's a reason Dutton is embracing it.

It's an issue that's been looked at over and over again by the CSIRO and other energy experts over the past decade. Frankly I tend to trust that more than the pronuclear crowd on the internet.

Wow 2/2. Compared to Dutton and Joyce in a 48-hr period!

Now I just need an Abbott comparison. I do like speedos...

[Impmk2]

That wasn't at all a comparison... He just happens to be the highest profile politician supporting nuclear power in the country right now. But sure whatever floats your boat.

Seems you have an issue with me. I should probably stop trying to engage. 

[Paxter]

10 minutes ago, Impmk2 said:

That wasn't at all a comparison... He just happens to be the highest profile politician supporting nuclear power in the country right now. But sure whatever floats your boat.

Seems you have an issue with me. I should probably stop trying to engage. 

Sorry, my tone was lost in forum translation lm - I was posting in jest. No issue at all and I enjoy the exchanges between us. 

ETA: To declare my bias, I have long been a nuclear energy lover. I always looked with admiration on countries like France that produce a lot of energy without relying exclusively on fossil fuels. 

[Jeor]

It's all fine... @Paxter is a good sport! He puts up with my Liberal views from time to time, after all. Though I do find it amusing that he agrees with Dutton on something.

To a layman, nuclear power seems reasonable - we have plenty of desert to store all the radioactive crap and we're not at risk of the usual natural disasters (earthquake etc) that cause problems in Japan. But I'm sure there's a lot more to it than that.

Small-scale household solar and batteries might ease the load if they were taken up by a large enough proportion of the populace. At the moment, most of the rooftop solar is connected to the grid which has to manage the fluctuations too much. But if most houses had batteries that could smooth out the energy delivery, and say 40-50% of houses had solar/battery installations, I fancy that would have a significant impact on the grid and energy supplies. Currently the figure is about 25% of houses with solar, but most of them without batteries.

On a completely different note, sad to hear of the passing of the Queen. I know most on the board here are avowed republicans (and this reflects the general leaning of the populace, I think), but regardless of the institution of the monarchy, most would respect the fact that the Queen personally has been a great example of duty and service. Even more remarkable considering this narcissistic age of self-promotion and big-noting celebrities and politicians.

[Skyrazer]

2 hours ago, Paxter said:

The reality is that we and the rest of the world could and should embrace nuclear energy. Storage only gets you so far.

We are lucky in Ontario to be majority nuclear powered (around 60%). Our electricity bills are around $100 per month (two people working largely from home). 

Gosh that would be nice. Just paid my quarterly Jun-Jul-Aug power bill which was nearly $500 and I'm just a single guy in a 1-bedroom apartment.

Nuclear definitely has its merits, but that ship has long sailed as far as Australia goes. Only reason Dutton seems to be "supporting" it is purely out of political expediency. If he was actually legit, they would have done something to get the nuclear ball rolling during the 3 terms they were in power but as we all know, when it came to energy policy, the LNP did absolutely squat. If the LNP were to - God forbid - win power again in the next election or so, I highly doubt they'd actually go through with pursuing nuclear in earnest and would just go right back to twiddling their thumbs.

[Paxter]

8 minutes ago, Skyrazer said:

Gosh that would be nice. Just paid my quarterly Jun-Jul-Aug power bill which was nearly $500 and I'm just a single guy in a 1-bedroom apartment.

Yeah it’s cool. We have a lot of hydro here too thanks to the Great Lakes.

And the Bruce Nuclear Generating Station is the second-largest nuclear plant in the world in terms of generating capacity.

Unfortunately Canada’s green credentials are more than slightly marred by our biggest export…

[Impmk2]

3 hours ago, Paxter said:

Sorry, my tone was lost in forum translation lm - I was posting in jest. No issue at all and I enjoy the exchanges between us. 

ETA: To declare my bias, I have long been a nuclear energy lover. I always looked with admiration on countries like France that produce a lot of energy without relying exclusively on fossil fuels. 

No my bad, I had a bit of a thin skin this morning and misread the tone. 

Fwiw I'm not at all anti nuclear. I've dealt with low level radioactive material occasionally throughout my career, and support us having the waste containment site here in SA. I just haven't seen any non-partisan analysis that generation would remotely stack up as things stand. If that calculus changes I'll happily change my stance.

[karaddin]

I'm agnostic on nuclear - if the science and expertise says that it's a worthwhile investment then I have no objections. I just want that to be what drives the decision, not politics.

@Paxter I'd never compare you in a Speedo to Tones, all else aside I'm sure you look a lot better in it. Unless Canada has exacted more of a toll than I expect

@Jeor Sadly housing for 6x your income is still much better than most of it is now. I'm well above the average wage and housing in my area is more like 15x my income. I guess when you're talking household rather than individual that pulls it down a bit. 

I saw an ad last night for land in fucking Menangle for $600k. If you don't know it, that's a village south of Campbelltown with a population of 1200 and isn't even on the Sydney train line, you've got to change at Campbelltown/Macarthur to get onto the urban network. By the time you build a house on that you're almost at $1m for a home in a village with minimal amenities and a poor commute.

[Skyrazer]

5 hours ago, Jeor said:

On a completely different note, sad to hear of the passing of the Queen. I know most on the board here are avowed republicans (and this reflects the general leaning of the populace, I think), but regardless of the institution of the monarchy, most would respect the fact that the Queen personally has been a great example of duty and service. Even more remarkable considering this narcissistic age of self-promotion and big-noting celebrities and politicians.

I'm no monarchist, but you can't deny the absolute presence and recognition the Queen held and it is going to feel sort of surreal going into a world where she's no longer around after being such a prevalent figure for so long.

I know alot of republicans will be licking their lips, but I think any push to become a republic should hold off for a bit while the shock of her passing subsides. Going in too early risks the perception of being insensitive and could end up hurting the movement.

And I say all this as someone who's generally pro-republic.