Do both of these important people lack coal face experience and coal face contact?
First, Morrisson returns from overseas saying low-interest rates haven't helped the economies and tells this to Lowe. The problem is that low rates have been successful overseas. The US had 10% unemployment when we had 4%. Now through low rates driving the economy, driving employment, the situation has switched. Our high rates in comparison have delivered us 10% underemployment.
The US meanwhile, has got their own unemployment down the sub 4% with increasing full-time jobs.
It's a similar story in the UK where their rate of 0.5% has delivered a similar turnaround since 2008. So what well of knowledge was Morrisson drinking from when in Europe?
RBA Governor Lowe. For the first time since 2007, it appears that a Reserve Bank Governor is listening to a Treasurer. The easing bias has gone and instead the shutters have gone up on such. In a speech this week Lowe said "the build up in household debt is a cause for concern and a problem."
If Lowe had some real coal face experience and if he was a member of the Property Club he would know that there is a thing called good debt. This is where Australians have been putting their money. Into good debt and rising assets.
They see that Superannuation is an inflationary cost hurting them and that they have to fend for themselves knowing that Super will be a failure in their retiring years. Hence their debt is good debt for direct share ownership and direct property ownership. Mainly property. This good debt will look after them far better than Super in retirement. Why are APRA and Lowe attacking these people?
So let's go back in history. In 1973, the average dwelling then was $18,000. By 1993, property had gone up to $145,000. This proves that our canny household debt was well invested. Moving forward with the same inflationary figures over the last twenty years, we see that the average dwelling in twenty years time could be worth $2.5 million!
So Mr. Lowe is the household debt really a problem??
As Lowe is now listening to the Treasurer, I have a suggestion for the Treasurer. Pick up the phone and remind Lowe that the banks are sitting on a whole 1% of RBA reductions that they haven't passed on. Remind Lowe that up until Kevin Rudd it was standard practice that all banks passed on all rate drops in full. What has changed since 2007? A series of very weak Treasurers.
I think we would all like to see our Ministers lead their departments, not follow. Let's see if Morrisson can start this new trend and force these lower rates into the market. Even if the RBA doesn't recognise the harm of its high comparative rate, at least the consumers will have more cash in their pocket to spend to create real increases in jobs and incomes.
Over to you Mr. Treasurer!
Regards,
Kevin Young Property Club Founder
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