They are the shepherds and we are the sheep

Treasurer Frydenberg met with RBA Governor Lowe today.  It seems it was such an important meeting, a media announcement was warranted.

So says Treasurer Frydenberg:

The combination of the tax cuts, the interest rate cuts, the infrastructure spending, the regulatory changes that APRA have made which are going to provide a boost to the housing market

Not sure why a further boost to housing market is good policy, but do the APRA “changes” include the arbitrary and capricious $500 million additional capital hit on WBC and NAB announced today … putting upward price pressure on them?  Oh.  The charge was based on a “culture report”.  Perhaps re-education camps are the next APRA regulatory tool.

So says Governor Lowe:

The outlook is being supported by our lower interest rates, by your tax cuts, by higher levels of investment in infrastructure, by a pickup in the resources sector and the stabilisation of the housing market in Sydney and Melbourne.

Our lower interest rates.  Your tax cut.

Baaaaah.

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21 Responses to They are the shepherds and we are the sheep

  1. Wayne From Perth

    Yes ‘you and your’ I presume the Minister went to the RBA. The arrogance of the RBA is concerning. After all they are only public servants and while held in awe by some commentators their track record does not inspire. Just before the GFC if I recall correctly they were talking about raising interest rates. They did not have an inkling of what was coming.

    And don’t get me started on the credit card debacle. Does anyone know the actual final price of anything anymore when bought using a card given the myriad add on percentage charges being imposed.

    I recall when Turnbull was in power he and the then Treasurer were photographed heading to the RBA offices almost cap in hand to discuss interest rates. Not a good look when the PM and Treasurer of Australia have to call on a Statutory Authority instead of the other way around.

    To call on the GG or the High Court would be understandable but not a Statutory Authority.

    Time to sheet home to the PM and the Treasurer the full responsibly for managing the economy by bringing the RBA back under Treasury control. It’s what they were elected to do.

  2. Lilliana

    The combination of the tax cuts, the interest rate cuts, the infrastructure spending, the regulatory changes that APRA have made which are going to provide a boost to the housing market

    Boost to the housing market – what about boosting investment in productive assets. We are a joke, nothing more than a population Ponzi scheme.

  3. Howard Hill

    Boost to the housing market – what about boosting investment in productive assets. We are a joke, nothing more than a population Ponzi scheme.

    That’s all we do here now, build houses and create poofters. That’s all they know.

  4. John A

    Wayne From Perth #3102617, posted on July 11, 2019, at 3:52 pm

    Time to sheet home to the PM and the Treasurer the full responsibly for managing the economy by bringing the RBA back under Treasury control. It’s what they were elected to do.

    No, no, a(nother) thousand times, no!

    Neither the government nor the RBA is “responsible” for managing the economy. That’s centralist, totalitarian talk which will only ever get us more booms and busts, stupid asset inflation (housing prices), and all manner of Keynesian rubbish.

    The government was not elected to manage the economy but to manage their own finances and hopefully maintain budget surpluses sufficient to repay that astronomical debt which THE GOVERNMENT incurred in trying to manage the economy.

  5. Leo G

    The outlook is being supported by … the stabilisation of the housing market in Sydney and Melbourne.

    Yes, there has been some settling in that market.

  6. Wozzup

    I am never one to reject lower taxes and even perhaps, reduced interest rates in some circumstances (though my position on the latter is with considerable trepidation because we all know what prompts that move and it aint because the economy is going swimmingly. Not to mention the fact that people like me rely on sound interest rates for a solid part of their income).

    As to the piffle being spoken by the Treasurer and Governor Lowe (and a conga line of Treasurers and RBA Governors before them) I think the sheep got it about right……………………….
    BAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!

  7. Tel

    Our lower interest rates. Your tax cut.

    Think of it in terms of money printing. If I owned the printing press and I dialed it up to print a little faster, that sure as heck would be my interest rate cut once I figure out what I’m spending that lot on.

  8. Frank Walker from National Tiles

    LOL

    We give them happiness, and they give us authority.

  9. Squirrel

    The sound bite from that encounter had a whiff of hostage video about it, which, of course, brought to mind this gem-like exchange from Yes Minister –

    James Hacker : I suppose we have got rather fond of one another. In a way.

    Sir Humphrey Appleby : In a way, yes.

    James Hacker : Like a terrorist and his hostage.

    Bernard Woolley : Which one of you is the terrorist?

    James Hacker , Sir Humphrey Appleby : [pointing at the other] He is!

  10. Elderly White Man From Skipton

    Australia is fast moving toward the sort of policymaking that made Indonesia great. All the grown ups have ignored the extent to which the asset price-cheap debt-commodity boom tango has delivered a fantasy land that will not survive the likely instability implied by an inverted yield curve in almost all markets. Instead we get fake budgets that rely on bubbles and weird taxes and fake policy like the default pricing imposed on utility companies that has achieved zip other than to further entrench the investment malaise. As an investor I’ve had no domestic stocks for over five years for the simple reason that I think our corporates are living in la-la land.
    Populism is upon us and it’s a cancer.

  11. Frank Walker from National Tiles

    Australia is fast moving toward the sort of policymaking that made Indonesia great.

    Good grief, it’s Testpattern.

  12. Elderly White Man From Skipton

    Hiya Frank. Tell me, when you come up for air, do you always vomit?

  13. Frank Walker from National Tiles

    Only when I’m greeted by your buffoonery.

  14. Mother Lode

    He wasn’t, by chance, talking to Friedeggburger when he said that? It would actually make sense as your (the government effected) tax cuts and our (the RBA effected) cut in interest rates.

    Doesn’t make the interest rate cut any smarter, mind you. But at least he admits to owning the ensuing failure.

  15. John Bayley

    Anyone who thinks that the price of money should be ‘managed’ by a central planning agency is a statist, pure and simple.
    Printing unlimited quantities of confetti leads to the kind of situations now observable in Europe, where not only bankrupt governments but even junk-rated companies are starting to see their bonds trade at prices that will produce negative returns to maturity, where the likes of Italy and Greece now have bonds with yields below those of the USA, and where borrowers are paid to borrow & savers are charged for saving, like in Denmark.
    Even crazier example is Japan, where the BoJ now owns not only most of the bond market, but also a substantial part of their stock market. All bought with the printing press.
    What we are seeing as a result is ‘zombies, zombies everywhere’, an ‘everything bubble’ and essentially no price discovery on anything.
    What we are seeing is socialism by the back door.
    This is what the likes of the RBA have produced and they know of no way out apart from digging the hole even deeper.
    In other words, this is the equivalent of Alice in Wonderland economic management.
    Sack. Them. All.

  16. Spall

    Not ideal rhetoric from Mr Lowe…. he might have a chat to his media unit about that. And the image of politicians going cap in hand to government authorities is a worry. And yet… wasn’t it Milton Friedman (or one of the Austrians) who said key regulators should be independent, because the outcome would be worse if they were at the beck and call of their political masters? You don’t want totally subservient regulators. There’s a balance somewhere.

  17. @Spall

    1 – it was not the Governor who went to the Treasurer but rather the Treasurer who went to the Governor.
    2 – the RBA is not a regulator, it is a market manipulator – a manipulator of the price of money. It is yet, to TAFKAS’ knowledge, been investigated by ASIC or APRA for its market conduct.
    3 – Regulators and central banks are an extension of the executive. They cannot be independent.

  18. Spall

    Fair enough. Just on the third point TAFKAS, you might be right in practice, but s 11 of the RBA Act does set out a fairly convoluted process for a Treasurer to call the shots on policy if the RBA digs in.

  19. The Beer Whisperer

    Seems appropriate.

  20. Just take a look at these stats below, I guess the sheep baah so loud?
    The Australian economy grew by just 0.4% in the March quarter, contributing to a 10-year low growth rate of 1.8%, and two consecutive cuts in the cash rate of 0.25% by the RBA in June and July.

    In the latest decision, the RBA has suggested its aim is to drive unemployment lower than 5.2% and lift wages to help move inflation into the 2%-3% target band.

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