Politicians Missing In Action

Treasurer Scott Morrison has emphatically signalled he opposes more interest rate cuts by the Reserve Bank of Australia, arguing monetary policy has "exhausted its effectiveness".

"Its ability to impact and influence is diminishing," Mr. Morrison told The Australian Financial Review in Washington on the weekend.

The point is that this may be so overseas, where rates have come down to 0.25 per cent, but certainly not in Australia, where cash rates are sitting at a world high of 1.5 per cent. And certainly not in a situation where our banks, unlike those overseas, have refused to play ball. They have withheld from the market a full one per cent of the RBA’s cuts, a cut that the rest of the world has passed on. A cut that they can well afford, given that their inflow of funds is at world-record low interest rates, especially given that the banks are fixing many of these low rates now for ten years! It exposes their lie to the media that they can’t afford to pass the rate cuts on. It shows the media as either compliant or complicit in this rip off.

- complicit if they knew that the banks could afford to pass this on and haven’t, - complicit if they knew that in the past banks up until Rudd always did pass on these cuts, and - compliant – if they simply were unprofessional and failed to check the facts on the banks’ claim.

Where are our politicians?

Again I ask, are politicians getting special treatment and are therefore unaware of the financial squeeze that the banks are applying to ordinary people to drain their funds into the bank's coffers to satisfy a stupid APRA request for a stronger financial base for our banks.

They are already the strongest in the world with foundation funding on mortgages that are full recourse. These are far safer than the non-recourse loans in the U.S where defaulting borrowers can simply post the keys back to the bank and have no further liability to them.

Why aren’t the politicians asking APRA for a white paper to justify their incredible clamp-down on investors in the property market? A market that was supposed, according to the RBA, to supply jobs to replace the mining sector. Why did APRA take the foot off the accelerator and jump on the brakes in defiance of the RBA?

There is no white paper. There is no research. There is only incompetence. I ask again, where are our politicians?

Until next time,

Kevin Young Founder of Property Club