The proper way to atone for prior missteps is not to whine and make regretful noises, but to make sure to get it correct the next time!
So here we are on another Tuesday, gearing up to watch the rate that stops the nation. …or at least the economic zone.
Let’s have at it
Yes 25bps. CBs are making their next big mistake with smaller rate rises. Markets are partying again and we will end up with an even higher terminal rate.
Anything other than 50bps will be a fucking mockery
Should really be 75-100bps, but we know that’s never going to happen.
25bps just announced, so mockery it is.
lowe: “of course it is different this time”
hey …it is different this time…it’s never been worse
Do you think that every time RBA hikes 25bps and Fed hikes 75 that there is anyone feeling of anxiety or guilt in the RBA. Like the day after you sleep with something you really shouldn’t have?
Being that they have long experience with rooting the populace without lube, I am very sure that there is zero regret from them
Considering the Fed is using language about having to keep hiking hard to avoid an even “more severe recession”. It makes you wonder how fucked we might be here. Australia seems to be stuck with this economic exceptionalism and are still talking about a soft landing. Will we be so lucky this time?
Short answer is no, but they will print like mofo’s in order to try to save it.
Whatever they are saying they are hiking hard to cause a recession. That is how inflation will be driven down.
If you were to destroy the financial system and the economy would you have done anything different to what they did so far?
crank interest rates to 20%+ 30 years ago and leave them there.
“We must destroy the village to save the village”
The RBA can’t respond or follow the Fed higher – the only release valve left in the system is the AUD…. if the Fed keeps hiking, and hiking for a while, do not be surprised to see the AUD fall to the mid 40c.
It’s a rock and a hard place though.
Higher rates and a low AUD will both fuck the place, just in different ways.
yeh, this is true. The real question is distributional. That is – who exactly pays.
surveys of the Church of Propadee congregation reveal a clear preference for a low AUD.
I’ve described the potential dynamic before:
so banks are saved, which is the name of the game
also borrowers are saved (silver medal)
the pain is handed to everyone else.
On the other hand, a crashing AUD is far less appealing to the predatory migrant that is simply scouring the global for the best economy to affix themselves too.
Yeah offshore buyers might find our housing more attractive, but just how many nations currencies are going to be falling slower than the AUD. The US is strangling them all. The UK has similar lending term structures as Australia, hence they’re going to be in a similar position as ourselves – no real benefit to the expats living there.
True but of the two I would prefer a lower AUD – it puts less of a crimp on inelastic consumer spending, in terms of food, rent and local services. We all still have to eat and catch trains, etc. Cost of goods may sky rocket, but they’re gunna do that anyways. But yeah, compared to the Fed they have far fewer options open to them.
I think a low AUD will impact those more than you are thinking, and local “services” are likely to be the first things jettisoned in hard times given they are mostly luxuries.
where do you think it will hit significantly, the imported inflation due to low AUD?
Running shoes? Cosmetics? Floor tiles? TVs and washing machines? Jeans?
Energy prices, quite a bit of food is imported(especially the cheaper options), along with packaging for locally produced.
Any and all consumer goods given we make nothing any more, so kitchen appliances, clothes, tv’s, baby products, furniture and on and on.
New car prices will push up so used car prices will also push up higher again on further increased demand.
Even something as basic as steel is heavily imported now.
Are you kidding? We make nothing here anymore, practically. And anything we do make that is exported, locals pay export prices anyway which will be jacked up “because inflation”
Ergo EVERYTHING is impacted.
+umpteen to this..”locals pay export prices…”
I’d agree that our lack of domestic manufacturing would hurt us more relatively than other countries, that will also be in the same boat as us.
i would chime in to also say (agree, I think) that the “imported inflation” bogeyman tends to be significantly overstated.
whilst it’s true that we don’t manufacture goods here & so have to import – the fact is, very little of the average EZFKA Unit budget is directed that way.
most of the budget goes to
very little of that stuff is imported, with the notable exception of liquid transport fuel. The machinery to produce it might be, but the capital cost of that is amortised over a long time.
Say you go spend $200 at a restaurant – it’s all staff and rent and ingredients costs. None of that is imported. Yeah, they use some Asian-manufactured kitchen equipment and imported plates, but their cost is a tiny fraction of your bill.
you take the bus – the costs are all driver, maintenance, fuel. The bus itself runs for 20 years and provides millions of passenger-trips. If the cost of the bus doubles (because it is imported), that would only add a cent or two per trip.
same deal for train.
Quite a lot of it is, especially the cheaper options. That will be the killer. If you think food is not imported you haven’t spent much time looking at labelling in the supermarket.
As always the relatively wealthy won;t have it bad, the poor will just get shafted.
I’ve looked at the analysis. My conclusion is different to yours.
with negligible exceptions, all fresh meat and fruit and vegetables are local.
a lot of pasta and rice is imported, but local is available.
thats 80% of your diet right there.
imports are things in cans and jars (beans, corn, fish, jam). It’s there, but it’s at the margin.
Quite a bit of meat is imported from https://scottsdalepork.com.au/blog/where-is-your-pork-coming-from
Fresh fruit and veg cost quite a bit more than the imported canned stuff, and given how much ostensibly fresh is frozen it wouldn’t surprise me if quite a bit is imported as well.
How much people are effected depends on income as always, as your reference to restaurants show. The people who are going to be impacted are not regularly going to restaurants.
The effects are at the margins, but the margins are what matter. People who are barely able to afford their mortgage aren’t eating a diet of predominantly fresh fruit and meat. They are eating cheaply and if the cheap stuff goes up they may no longer be able to afford that mortgage.
You forgot the first bit:
im trying to explain how the supermarket and green grocer food is local, not just the restaurant food.
I agree that the margins matter, but I think you’re overestimating the impact on things like food.
id say that most of the impact is likely to be indirect. If foreign-sourced food falls always as competition, margins on the local stuff will fatten somewhat.
(in all, that’s not a bad thing, right? That’s what wage rises are made of… in theory)
And I think you are underestimating, especially for the lower income brackets.
The higher cost nice supermarket and green grocer food. The cheaper stuff is almost always imported.
Also from the maker pushing it’s australianness
How hard can it be to make brine and salts…
Also the label made in australia doesn’t actually mean very much.
And of course we have the argument that basic foods are already inflating heavily. MY shopping bill has increased massively in the last year. What do you think the cause is if it’s all local peachy? Wages?
possibly… but it looks increasingly likely that the real life experiment is about to be run and we will find out.
greengrocer and supermarket food is just what people eat. It’s not “nicer”.
What do you think people eat, if not that?
I also can’t help but note that the AUD has fallen significantly in the last year and grocery bills have climbed significantly in the same timeframe.
uh huh, and quite a bit….transport and whatnot getting it in the neck with diesel cost
Lower AUD increases fuel costs which drive machinery to harvest, transport and distribute food.
Some food is imported.
Alcohol – will go up indirectly because wages will go up, because everything else goes up. But yes not directly AUD impacted
Transport – you’re forgetting fuel and power costs respectively. We have more and more imported parts and machinery.
Utilities – are you living under a rock? Everything is privatised and we’re obviously paying export prices for everything we do produce.
In summation I’m not sure how you went from “inflation is the devil” to “a lower AUD won’t drive much inflation”
It will absolutely drive inflation just like 10 years ago the high dollar reduced inflation via cheap imports
…as an aside, old Phil couldn’t quite bring himself to say “devil”, and went with “evil” instead, the other day.
changed the words in the speech to come across as more inclusive/less religious.
Anyhow, I understand what you’re saying. And I agree directionally. But I urge you to reconsider the likely quantum of the impact of lower AUD on the regular EZFKA unit household budget.
I think “low AUD = skyhigh costs” is a bit of a kneejerk reaction, and the truth is somewhat different.
most food is local (exceptions would be things like canned food, rice, pasta)
Transport is mostly fuel costs, which I’d conceded upfront.
utilities aren’t actually export competitive except on fuel (which element I’d conceded)
this leaves the durables … but due to their nature their impact on budget will be slow. Also muted, because if the cost of replacement is higher, then existing durables will be kept in service rather than dumped and replaced.
and a quiet query from me…how is ezfka growing this affordable food with fertiliser prices where they are? …and prices will be rising further I fear.
How is ezfka going to maintain its machinery fleet?
imported spares are usurious now and getting worse.
New machinery is becoming out of the question.
$7/kg for seconds carrots?
I can’t see RBA letting AUD go that low. The same way we lost manufacturing due to higher AUD, a low AUD will also kill off many companies. Inflation on imports, debt denominated in USD, etc.
I am cheering on much higher US interest rates and RBA forced to defend AUD. That is worst case scenario for Aus propadee.
there is an important time dimension to this.
for example, if the expectation is that Fed will do a round trip from here to 5% then back down to 2% all within 24 months, you could actually get away with treading water at ~~3% all this time (and just watch the AUD sink to, say .50, then eventually recover to .70)
whereas if the Fed looks like it will hike and hold for a longish time, somewhere along the line, defending AUD might be necessary…
Personally, I do believe that capitalism needs a solid positive interest rate in order to function. Also that labour must be valued. In other words – both capital scarcity and labor scarcity are desirable: they’re what leads to good system optimisation for efficiency, etc.
But I don’t drive the bus, see.
Something drastic would need to happen. Bond markets are over 4% all the way out.
United States Government Bonds – Yields Curve (worldgovernmentbonds.com)
Australia not far behind at the long end implying rates will converge.
Bonds – prices (asx.com.au)
Agreed. I would add higher taxes. Or rather, taxes better spent. Scrap superannuation. The 10% employer contribution plus all the money saved on super tax concessions for the rich are more than enough to fund a decent retirement and healthcare for all retirees. Of course Labor will share that pool of money with immigrant parents ffs.
yeha, I see the market pricing, but, as you know the market pricing isn’t exactly an infallible predictor.
The US chart you linked to has the historical dotted lines showing this – the long end has seen about 50bps of repricing in just the last month and over 100bps in the last 6 months.
I’m not actually disagreeing overall in relation to convergence tendency. But I do think that RBA is tempted to drag its heels and see how much work it can get the FX rate to do. Remember commodities are still very very strong, so the AUD rate gets a bit of a free kick through that (ie it can tolerate more interest rate differential with relatively less response)
A Honda Civic is already a $50k car it’ll be $65k if we have a dollar in the 40s.
uncle says that smart money buys the Corolla and not the Civic.
also, I think you’ll find that, in aggregate, it’s quite possible to purchase significantly fewer new cars, and let the average age of the fleet creep up as existing cars are kept on the road for longer and longer, instead of being scrapped.
Cuba is an extreme example of this…
which is to say, a dollar in the 40s can be lived with. Ways can be found to cope.
It may not, it all depends on how much of the village the US wants to burn down in order to save the village. I would put the chances higher than most people think, especially if they strangle it enough to cause a commodity collapse.
Do you think that every time RBA hikes 25bps and Fed hikes 75 that there is anyone feeling of anxiety or guilt in the RBA. Like the day after you sleep with something you really shouldn’t have?
pandemic amnesty? 😂 😂 😂
“….Emily Oster may have said a few reasonable things in the depths of her pandemic moderation, but she can take her proposal for pandemic amnesty and shove it all the way up her ass. I’m never going to forget what these villains did to me and my friends…..”
I read that this morning, and I wholeheartedly concur with his sentiments.
The covid tyrants, and I include my ex employers in this, can go fuck themselves
I’ll never forget and never forgive.
Right on brother. I too will never forget.
Coughid really shone a light on numerous facets of this disfunctional place called EZFKA
Some who feels much the same as Eugyppius…
Aaannnnd….the Bad Cat gives Oster both barrels, follows up with a butt stroke, thrusts in the bayonet and furiously stomps on her corpse.
Revenge is the term I’m looking for.
Hear Hear, I want jail time for the ones that pushed the crap on us.
In this country this shall be when never happens, or not even then.
Besides, greasing up pikes with polies is like shooting the messenger (‘zdat an upside down pun?) to protect those whose name shall never be said,
I understand that ezfka is largely a place to comment and hang out and bounce ideas and links around, however I do miss more of the longer pieces, including the satire, which in my view has huge potential for bringing over new readers and commenters.
Anyone can post. You too.
Meanwhile, tyranny with a cool name creeps a little closer in the UK….
oster can get fkt
Guaranteed to have a closet fall of tiny hats.
I’m thinking natural justice. Impalement. Heads on spikes. That sort of thing.
much more exciting than the melbourne cup isnt it
instead of some horse breaking its leg and getting the curtain put up around it, we will have the same thing happen to “savers” or FHBs
probably why she was turfed the way it went down. when you’re phone is being admitted into un security council meeting as evidence of a terrorist attack – bad look 🙁
surely a representative sample
yeah should have gone with anonymous sources instead…
Nice to know that even in a biased survey where a tiny portion of unvaccinated population make up 37% of respondents, that the majority of people who got vaccinated would do it again.
They’re either deluded or employing ‘cope’.Nothing stopping them from boostering themselves to infinity.
Please get boosted people! enjoy your shit health and reduced lifespan.
this is kind of the same phenomenon as people who put ukrainian flags and 3 syringes in their twitter bio
Its a way for people to feel very special, when in fact they are ordinary
“im an exceptionally rare unvaccinated person who is far superior to these other people”
The reality is the vaccine made almost zero difference to anybody in either direction
except all the people that died from it.
and for the 99.99% of people who didn’t die from either covid or the jab?
I guess they are in the same boat as the 99.99% of people who didn’t get birth defects from thalidomide…
I don’t usually reply to you for obvious reasons
but thought this might be instructive for the general ezfka’er
Almost every mother who used thalidomide got birth defects in their child
Even after one single tablet
Which is why it is not even remotely comparable you absolute imbecile
who’s areshole did you pull 99.99% out of?
Excess deaths are much higher than that in the UK health data, and only in those who have been vaccinated.
Strangely the covid caused myocarditis you keep going on about seems to only be effecting those who have been vaxxed.
You should do some similar analysis on RSA. Explain where all these excess deaths came from pre-vaccine.
Report on Weekly Deaths in South Africa | South African Medical Research Council (samrc.ac.za)
IF you can find the raw data somewhere then I might have a look. My can be fucked factor to actually look for it is non existent though.
Don’t want to talk about anything other than thalidomide? OK.
What percentage of the whole population was effected by thalidomide?
How many people were forced or pressured into taking thalidomide?
When the dust settles on this it will be far more significant than thalidomide was.
Nah my whole fam except my missus is unvaxxed. Gran and sister still ain’t caught coughid
The US VAERS system shows around 15000 hospitalisations for vaccine induced myocarditis/pericarditis, with about 1500 severe injuries and several hundred deaths.
Given that VAERS is widely acknowledged as significantly under-reporting reality, that doesn’t seem like zero difference to me.
The Journal of the American Heart Association, which I believe to be credible, has also just published two articles about treating vaccine induced myocarditis. I don’t think they’d be doing this if the problem was trivial.
meanwhile back at the ranch…brownouts for perth…fukaduk eh? domgas reservation don’t work without investing in generation assets? gee who knew? betcha immigration fixes it.
Gotta love the free market solution that prioritises profits over anything the populace may actually want, like reliable power.
“brownouts for perth”
No. That’s not what it says.
more a personal view tbf
It heavily implies it though.
Why else would they have warning systems for impending blackouts?
A new warning system is being introduced in Western Australia in an attempt to reduce power outages.
People will be notified and asked to reduce their power usage if their suburb is at risk of a blackout.
Russia upset country it invaded has retaliated.
The purpose of the UN deal was supposedly to get the grain flowing again. Unknown how much was used to deliver weapons. The deal was bad for Russia since a lot of their own grain got stuck in European ports instead of going to where it was supposed to go.
In any case it wasn’t meant to be used to stage attacks on each other but hey if Ukraine wants to do that, Russia will reneg.
Just another example of Ukrainian and Western duplicity.
Nah, “upset” is not even wrong word to use.
The Z’s have opened up the corridor knowing that it will be violated sooner or later and now have legit reasons to block the port. It is posturing for history books.
Zero, they have blinked in the UK, they don’t have the balls to crash the economy here with a rise ….
25 is the number, and the number shall be 25. amen and a women.
0.5% would be admitting getting it wrong last month so they will do 0.25%.
.25, they would do zero but they can’t let the spread grow too much with the US
yawn …25bips and didja see the fx crosses fly?.. no I didn’t either …yawn
so now in the interest fo being wrong soonest and mostest …rba pause december snore all thru january and shit the bed in panic february
So much of health care is a money making scam, including the covid hysteria. Here is a recent journal article that looked at the efficacy of healthcare interventions that have been reviewed by the Cochrane collaboration. The short answer is only a measly 6% of healthcare interventions have reliable data showing they benefit the patient. https://www.sciencedirect.com/science/article/abs/pii/S0895435622001007?via%3Dihub
I once did a research paper on evidence based health care and factors of the built environment improving health outcomes based on reduction of meds and length of stay. Daylight and greenery are the two items supported by evidence along with positive distractions such as artwork and music.
Yet the healthcomplex demands these huge follies when we’d be better off attending to patients in caravans in a field.
When you make healthcare a for profit activity all the incentives are to make more money, not to make people healthy.
Remember this anytime you want a privatised health system.
It worked so well with the power grid…
The internet never forgets. Some MB articles from earlier this year 🙂
OCR futures prediction 2.65%.
DLS: “if the RBA were to follow market directions this time, all it will be doing is making room for a depression as house prices halve around the country”
Aussie house prices to be destroyed by eleven rate hikes – MacroBusiness
OCR futures prediction 3.5%.
Leith: “CBA tips the OCR will peak at 1.25%. I am firmly in the CBA’s camp on interest rates for the simple fact that Australians are carrying so much debt that larger rate rises risks crashing the housing market and smashing the economy.”
Mortgaged Aussie households shake in their boots – MacroBusiness
OCR futures prediction 3.5%.
Leith: “The latest forecast from futures markets is now tipping that Australia’s official cash rate (OCR) will hit 2.8% by December before peaking at 3.5% by July 2023. I view the futures market’s interest rate projections as stark raving mad. Be thankful the interest rate lever is with the RBA, not the crazy futures markets.”
Insane markets double down to torch Australian house prices – MacroBusiness
really wonder if maybe a bot wrote these articles
they’re identical just increase the numbers
no actual thought goes into it
i still want to know why higher rates are inflationary when they increase the creation of reserves
this guy suggests something but I feel this Twitter advice is worth what you pay for it