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RBA = Toothless Tiger or Prudent Management

Latest minutes state the last cut was to promote consumer spending. The question is -; Will it ?? OR will people put the money away for a rainy day because the banks seem to be a law unto themselves.

One point is glaringly obvious but nobody -- especially politicians are talking about it. Potentially, the Australian Economy is heading for a large crunch.

WHY ?? = Highest Debt levels, Lowest Monetary Cost (with more to come) a stimulus package for new homes sales in South Australia, increased funding to the UN and IMF protocols and a call from the REI to increase funding for First Time Home buyers.

This is a Fiscal Bubble that will burst as soon as International Trade slows down in a major way. The signs are already there PLUS when the new iron ore body in India ramps up -- What will China do in response to Australian Iron Ore Price Structure. ??

The result will certainly force the RBA to further reduce monetary policy which begs the question -; What is Canberra going to do about it. ?? OR Will the situation conclude with -; Just Business as Usual ??

Tags: Banks, Economy, Monetary, Policy, RBA

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Permalink Reply by Dr Caroline Wright on October 16, 2012 at 6:58pm

I think that there are already signs that the general public are not spending their money. Retail is down and more people are losing their jobs. No job seems to be secure at the moment and the current financial situation is such that people are feeling insecure and are showing a tendency to save what they have rather than spend their money. That way when things continue to decline fiscally they will have something put by to help them through the hard times. Also they need to save for the increases in utilities which will really begin to hit their hip pocket within the next few months.

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Permalink Reply by Ian Davies on October 16, 2012 at 10:38pm

Cutting rates is the biggest crock of crap from failed Keynesians economics loved by Wayne Swan & his politically stacked Treasury. All it achieves is economic (economy wide) shrinkage due to that fact that it only benefits a small percentage. So all going to plan in that regard.

Ramblings from a once SME Director now a S.E part timer.

Less Government borrowings = a lower exchange rate & add this to higher Interest rates & you will stimulate growth.

Unfortunately growth does not help you meet the committed C02 reduction targets (that look like a pie in the sky anyway).

If your going to keep the offshore permit wealth transfer under control, sustainable than very little growth required while all the E.I.T.E industries are driven off shore or closed down IMO.

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Permalink Reply by Alyn Roule on October 27, 2012 at 11:24am

See -; http://www.rba.gov.au/media-releases/2012/mr-12-30.html

The issue of so called -; "Growth" -- is IMHO -- an absolute nightmare in ANY Economic Format.

WHY = Very Simple -- Growth is NOT Sustainable.

Basic Proof = How much did a loaf of bread cost 5 years ago -- 2 years ago -- Today -- = Based on the same growth format -- What will the price be in 2 Years from now ?? -- 5 Years from now. ??

PLUS -; Apply the same structure to every commodity and what do you get ??

The measurement of CPI aims to be maintained between 2 and 4%

Lets be a bit radical -- What if CPI was kept at 0% -- OR Even (-0.5%) per year based on Improvements in technology and Commercial application. ???

Could this actually work ??

How much would Politicians "Scream" ??

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Permalink Reply by Alyn Roule on November 6, 2012 at 6:11pm

RBA keeps rates on hold = Tues Nov 6, 2012.

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Permalink Reply by Alyn Roule on November 9, 2012 at 4:59pm

RBA announces down grade thereby eliminating further cuts before February. However, inflation is not expected to change

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Permalink Reply by Alyn Roule on December 2, 2012 at 2:53pm

Documentary on the current Economy of China demonstrates that "growth" is slowing sharply.

The RBA says -; "Asia Economy trend pace will be supported by growth pick-up in China."

Then -- in the same document = "Iron Ore prices have fallen due to a moderation in current Chinese demand"

So is China picking up OR is it declining ??

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Permalink Reply by Alyn Roule on December 4, 2012 at 1:37pm

Now another "flip" by the RBA

If Economies around the world are picking up then why did the RBA reduce the Cash Rate to just 3% ??

Is this just another measure to help grow the Big 4 Bank's bottom line at the expense of a captured market known as "Home Buyers" ??

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Permalink Reply by Alyn Roule on December 4, 2012 at 4:16pm

$A spiked on news of Rate cut

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Permalink Reply by Alyn Roule on December 4, 2012 at 5:18pm

I am no expert Alan in this area but Economic Principals appear to be subjective from Government point of view which the average investor does not seem to take into account

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Permalink Reply by Stephen Cox on December 4, 2012 at 6:44pm

Alyn the RBA are trying to compensate for the imposible and that is the simple fact Consumer and business confidence is the worst since the depression and it is all because of this incorrigable government and the fact people have no faith in what the future may bring that can be construed as good news except we will hopefully get rid of Gillard and Co.

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Permalink Reply by Stephen Cox on December 5, 2012 at 6:36am

Yes Alan is right and in truth if you managed to speak to anyone who managed to escape the firestorms of WW2 they certainly did not escape with Gold,Diamonds maybe,Gold is simply not portable enough.

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Permalink Reply by Alyn Roule on December 5, 2012 at 2:42pm

As investment goes, I am currently looking at Silver in all forms plus a little green rock (not criptonite) that has a good call via a friend of mine in the US.

Just as a thought -- I wonder if the RBA decisions are linked to the IMF mandate of "Sovereign Borrowing Rules" -- If they are -; That would be a massive Political Corruption scandle.