Market Insights by Kevin Young

The Big Four – A Big Danger

Property Club Insights By Kevin Young

APRA has attacked all consumers and the economy to make the big four “unquestionably strong”. Why? Aren’t the consumers and the economy far more important? Greedy banks gain from your pocket reducing your spending power and the ability to save and invest. I’ve written many times since Rudd, that he’s caused the biggest transfer of wealth in Australia’s history from consumers to a banking monopoly.

ASIC’s Chairman, Greg Medcraft is the only Government head to point this out. He optimistically calls the banking group an oligopoly. The media and the Treasurer just refuse to discuss the topic. The result is that we have the only economy that has more than one bank in the top 10 profitable businesses. While the rest of the world only has one bank in the top 10, we have 4 banks in our top 5!

 If the Big Four Explode so Does the Economy!

We have a serious imbalance in our economy. This imbalance rewards a few CEO’s and shareholders who are producing nothing. Each year they are producing staff and simply giving you other people’s money. Their greed is out of step with their compatriots around the world. It’s time to correct Rudd’s mistake. It’s time to downsize the big four. It’s time to re-introduce competition.

This is so easy!

Simply reverse Rudd’s disastrous plan of favouring the top 5 banks at the time in 2008. This time give the same financial incentives and benefits to the non-top 5. Cash them up, offer them better guarantees and interest rates to compete. At the moment based on their favoured Government position they can borrow 20-year loans (Interest Only of course) from overseas at 0.89%! The competition of borrowing at double this rate they can’t compete. Time to give them the same guarantees as the big four and the RBA extends loans at a more favourable rate than the big four. Let competition return to the banking sector.

Our biggest businesses are struggling under the world high-interest rates. If they want to buy goods and services to expand their business the banks are the winners from the high cost of funds having to be paid. How can our Australian businesses compete with far cheaper funding available to our overseas competition? How can businesses thrive and gain and take over the banks position in the share market? How can our economy become better balanced favouring real producers of real goods and services?

Will this happen? It certainly will at some point and we just have to look back on our current run of Treasurers in comic disbelief. Do you think there is a potential Treasurer out there that can right all these recent wrongs? Let me know. I would certainly be happy to support them. In the meantime what can you do? I’m assisting people to take up loans with the non-majors. So far over the recent 18 months, their businesses have grown 50% at the expense of the majors who still dominate the market though. We need more people moving away from the big four.
Next week we will have more on leaked documents from the big four on how they have been working to a careful pre-determined plan to rob your pocket. What you need to know to protect yourself and regain your own spending power.


Kevin Young