Now, I know that some of you have no interest in sport so the fact that I’m using a sporting analogy may put you off, but if you just remember it’s an analogy and stick with it, you’ll soon see that it was an appropriate comparison. On the other hand, when I start talking about AFL football some of you won’t see past the fact that I’ve suggested that Port may lose a game some time in the near future and you’ll be sending off a complaint about my lack of understanding about their invincibility and that last week’s game was never in doubt even if it relied on a kick after the siren.
Anyway, when trying to tip future winners, all one can do is rely on past results even though past success is no guarantee of what’s going to happen this week. Given that Port have won several games in a row and West Coast have lost several games by huge margins, when Port eventually comes up against West Coast it seems reasonable to bet the house on Port. (No, I’m not encouraging gambling and the Sportsbet ad that pops up is just coincidence!)
Except that it’s never reasonable to bet the house on anything because the future is always uncertain. It’s only in retrospect that we can say: “Well, that was obvious, wasn’t it?” The difficulty of making predictions is that they’re about the future and one can never be sure. If Port did struggle to beat West Coast in a future game, we wouldn’t know if West Coast have made a stark improvement or whether Port have gone off the boil but the week after’s results may go some way to answering that question, but until the future happens, your guess is as good as the average economist on whether Phil Lowe will raise interest rates this afternoon.
So, just like footy tipsters examining the entrails of the previous games, economists look at economic data to predict the future and the past doesn’t tell us the future, it only gives us likely outcomes. When it comes to interest rates, we have economists trying to predict the likely outcome of the decision which is all about what the prognosticators at the Reserve Bank are predicting about the likely direction of inflation and how many interest rate rises they need to inflict on the poor people with mortgages and businesses with loans in order to stop them doing things like expanding their businesses, going to work, paying their bills, eating and living in a house.
Yes, I said that it’s wrong to bet the house on anything but I was overlooking the fact that it’s fine to bet the house when you’re Reserve Bank governor and it’s someone else’s house. Mr Lowe has made it clear that he wants to keep his job and it’s been made pretty clear that he feels the best way to do that is to ensure a hundred thousand or so lose theirs, taking the unemployment rate up to a more acceptable 4.5%.
Some economists are concerned that in spite of the interest rate rises, the economy remains stubbornly healthy. Some people are continuing to spend and, even though the most recent inflation figures suggest that it’s on the way down, there’s still concern that only some things are coming down. Wages, for example, are almost keeping up with inflation and this is a terrible thing because it enables people to spend. Nobody seems to be pointing out that some people will actually have more disposable income, owing to the great interest they’re receiving on their bank deposits or superannuation payments, but hey, they’re not the ones that interest rates are targeting because they’re the sort of people who might be economists.
Of course, everything that happens now is Labor’s fault. I’m not trying to suggest that Labor can get away with blaming world events outside their control or the previous government forever… That’s the prerogative of the Liberal Party… I heard Jane Hume on the radio yesterday and it was a fascinating interview. I don’t think I’ve ever heard anyone contradict themselves in the space of two questions quite as often. For example, the government should be doing more to help people with the rising cost of living, but it shouldn’t be spending anything to do it and, yes, we voted against the energy relief package, and yes, it may have brought inflation down by three quarters of a percent, but the problem is that it’s only temporary, and while giving people money might be inflationary the Stage 3 tax cuts are just fine because some of the cuts are to people on $60,000 and they need help and surely you wouldn’t want to hurt the struggling peasants…
Mind you, I am only loosely quoting here so Senator Hume may say that my interpretation is only loosely based on reality, which is appropriate given her description of the world isn’t even that.
Well whatever happens with interest rates this afternoon, I’m looking forward to Uncle Phil’s advice in the next few days where he suggests that if we’re struggling we can do something like spending less, taking on extra work or selling one of the children which both brings in extra revenue AND reduces expenditure. I’m surprised that he hasn’t suggested it already!
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13 rate rises and one the biggest causes of inflation ie loose tax regulations, remains willfully ignored by MSM. Encouraging investors to go into every more debt is apparently highly sensible in 2023. It’d be funny if one day a boss of the RBA came out and, in an effort to win a Querdenken Award, holds up a mirror to govt as to why 80% of inflation is linked to pollies gaming the tax system.
Geez Rossleigh, you have overlooked that the only realistic outcome from a further increase in the Lowe interest rate is greater profits for the bankers through the unilateral floating point residential loans that mortgagees are encouraged to take out with the unscrupulous lending authorities.
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Floating point loans are a trap set by the banks to make future profits on past historical loans. A much more equitable system would have residential loans taken out for a nominal (say 30 years) at an interest rate fixed for the duration of the loan. Indeed, I vaguely remember that this was the system before about 1970.
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Both Phillip Lowe & Senator Hume have banking experience yet lack the real life experience of managing a business for profit when the banks continually change the loan rules. Think 1980s when fixed point interest rates rose from 14.25% to 22% between April and December the same year. Only the bankers made a profit …..
NEC, you mean like 30 year fixed rate loans still available in the USA?
There’d be lots of borrowers happy with that idea.
But think of the bankers, poor fools, how would they profit if their scam was ended?
No need to think of an answer for that question, I was just being sarcastic.
This link is likely relevant to this thread:
So any financial relief from these banking entities and their major shareholders is about as likely as pigs flying to the moon on water-wings every Friday.
Senator Hume is merely following a long admired tradition in ‘the better economics managers’ horseshit, of only opening her gob to change feet.As for fabulous Phil,he’d better be wearing a cushion down his trousers,because it’s only a matter of time before he gets a hefty punt up his arse and a gold plated DCM.
Geez, Rossleigh, I hope you haven’t put a jinx on Port.
What i dont understand is the delay from perceived evidence to action. When i ran my own business, i knew every day what my incomings and out goings were. Why cant we have a running tally, like an index that gets published everyday. Surely, a modern desktop computer and an operator isnt that hard to conjur up. Members of the RBA can have a daily input. That way we know whats going on. There are no surprises. WTF do i know…………
If They want us to keep buying in to the system , the system will have to change Currently Its kind of like a new way of maintaining slavery. Master always knows best.
They are determined to drive the system rather than focus on their primary goal, stability. When you decided that 4.5% unemployed is a balance point, you run the show.
One thing my poor mind has latched onto is the idea that we cannot have wage increases without productivity increases. So at a time when the planet is groaning under the waste of a consumer society gone mad, we are demanding increases in the measurable products of workers, with more trees down, more dirt dug, more futile dashing about from point A to B. And in the meantime, those jobs that keep people safe and well and cared for cannot be counted as having a productive output.
Indeed, the system itself is quite mad
Lyndal, linking productivity increases to wage increases is a mirage. What manipulators are trying to do is pretend that the productivity gains of the 1980 – 2000s, which were the result of the rapid evolution of computing power and the wide range of application of processes that accompanied it, can be repeated. See ‘productivity’ memes for what they are – an attempt by employers to pocket more profits.
You are right, at a time when authorities are making a song and dance about ‘de-carbonizing’ our consumer habits, how is it possible to use more stuff without further advances in technology? Looks to me that an era of austerity is around the corner.
@ Tim: Agreed. I remember back in the late 60s (50+ years ago) we were discussing the possibility of the 24 hour working week rather than the then 40 hour week.. This work practice has yet to be established. Why would bosses pay workers their true worth in working conditions or co-operative ownership?
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However, the bosses have managed various scams to increase corporate profitability at worker costs by simple means of pay theft, unpaid overtime, failure to pay superannuation contributions and simple skimming off the top. Doubtless there are others as well.
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What we must recognise is that capitalism in Australia and ”the western world” is a parasitic form of economics where a select few demand that all others become wage slaves to keep the select few in the luxurious lifestyle that they chose ….. and the surplus people not required in their darg mills can make their own arrangements.
Love the analogy Rossleigh
@ Tim & Lyndal, entirely agree. Indeed, tying productivity to labour is olde worlde and bs, it’s entirely in the hands of proprietors and management, it’s just another of the mirages peddled by economists and the RBA to beat-up on labour.
In the great rigged game of monetary snakes and ladders, those with their hands on the tilting levers, and their advisors and banking buddies should be well educated, but for 10 years before and after taking up their place at the board, should have divested all shareholdings and participation in trusts and corporations, and have as their sole remuneration a UBI sans manumission.
It makes more sense than the trite yabber yabber emanating from them to date, and behind which government hides.