Risk for thee. Safety net for me.

They never learn.  They never learn.

Safely ensconced in his comfortable, airconditioned and security protected office in Martin Place, RBA Governor Phil Lowe has climbed up onto his box to lecture Australian business. The source of his knowledge on and of business being unclear given he has never worked in business and probably considers business as nothing more than a transmission mechanism for his games of price and exchange rate manipulation through monetary policy.

But from his elevated position, Governor Lowe decrees:

As borrowing rates were lowered, Dr Lowe hoped that businesses would take advantage of the extraordinary conditions.

“It is important that we guard against becoming too risk averse,” he said.

“I understand that in an uncertain world, it can be hard to take on risk and there can be a natural tendency to avoid new risks.”

“But, if businesses are to seize the opportunities that are out there to grow and to increase Australia’s productive capital base, some degree of risk taking is necessary,” he said.

Great.  Brilliant.

So how much of your $1 million plus salary do you Governor Lowe propose to put at risk with a link to unemployment, GDP and other performance indicators?

At the moment, your salary, your superannuation and your employment are entirely guaranteed (at no risk to you) by the tax payer and businesses you are lecturing on risk.  You’re not talking any risk Governor.  Go on.  Take some.  We dare you.

Come on.  Take your own medicine.  How about putting 80% of your generous salary and 100% of your superannuation at risk – you know so that you aren’t “becoming too risk averse“.

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30 Responses to Risk for thee. Safety net for me.

  1. Destroyer D69 says:

    The interest rate changes have reduced the income from my small term deposit by 99.9%. So much for being able to be responsible and saving for the future………

  2. Judge Dredd says:

    Here’s a tip RBA; how about no.
    -From a small business owner.

    They are desperate to continue the debt fueled economy, but eventually you can’t kick that can down the road any longer. There’sa reason why usury is a sin and why in times past there have been debt jubilees.

  3. Tezza says:

    He might be doing just that, for all we know.

  4. Rusty of Qld says:

    Tafkas, getting sick and tired of all these bureaucrats and politicians whom have never had their lively hood on the line from day to whilst living off the blood,sweat and tears (taxes) of the battlers, rather than surviving on their own exertions? I’ve been sick of them for decades.

  5. Angus Black says:

    Amazing how many decisions – overwhelmingly in the public sector but surprisingly heavily in the large-private sector – are made by those with absolutely no skin in the game.

    Less amazing is how generally badly both governments and the large privates are managed.

  6. Angus Black says:

    …badly, but expensively, I should have said.

  7. Suburban Boy says:

    We have also seen calls from some quarters for governments to borrow big to pay for infrastructure, because interest rates are so low that the interest expense is easily affordable.

    It seems that in the 21st century no-one ever has to repay the principal on their loans.

  8. craig says:

    I just want to string this bloke up by the wrists and legs and kick him in the balls 238 times. What a tool.

  9. Mark M says:

    Build back better, Phil.

    You know you want to.

  10. H B Bear says:

    Interest is only one cost of doing business in Australia. It is rarely the major cost for most businesses. At current interest rates, changes in interest rates are likely to be of little consequence.

    Someone should explain this to Phil one day. Maybe he should put his house on the line, go guarantor to a couple of small businesses and find out.

  11. Grids says:

    That’s if you can get a loan. Hey Mr Bank my business got smashed by government policy, policy which may kick back in at a moments notice such as SA yesterday, I have burnt through my savings, the economy is way down, would you like to give me money?

  12. H B Bear says:

    He might want to sign on as a director, become liable for OH&S and really make it interesting.

  13. thefrollickingmole says:

    They are desperate to continue the debt fueled economy, but eventually you can’t kick that can down the road any longer.

    100,000 new ponzi-herds all able to borrow or otherwise in-debt themselves to the tune of $250,000 or so will keep the can kicking along a little further.

    As a chap whos previous business venture had its ability to make money mutilated by the government, then topped off by courts not enforcing contracts you can go get a wooly bull up you, you flogbag.

  14. RobK says:

    At current interest rates, changes in interest rates are likely to be of little consequence.
    That ship sailed long ago. When rates are low the possibility of an increase in the longer term still exists as a risk, especially when rates are fiddled as if it is the driver of the economy. To some extent the existence of the board is increasing business risk, whether it does anything or not.

  15. win says:

    Take heart,these parasitic growths on the wealth producers are getting worried that the serfs and vasels are falling behind in their payments causing risk to Mr Lowe and friends disproportionate and unearned salaries .

  16. Bad Samaritan says:

    Here’s a single question for every economist, finance advisor, or anyone else in the money-go-round biz;
    Do interest rates affect currency rates in that higher rates “defend”‘ the currency and lower rates ‘help lower’ it?

    I would expect 99.99% of the economic fraternity to get the answer hopelessly wrong.

    Professors Sinclair and Kates care to tell us?

  17. candy says:

    I think he’s knocking the stuffing out of many people who are really trying to save and invest even just in a modest level and look out for themselves in the future. why bother?

  18. Joanna Smythe says:

    Why would anyone be stupid enough to take a risk when State Governments are prepared to shut down every time someone gets ill.

  19. MPH says:

    Cost of capital hasn’t been the active constraint on business growth for several years.

  20. Bronson says:

    Is this the best Australia can do? We appear to have a herd of idiots in charge at the moment.
    So for all those businesses that have been shut down by state government fiat and face potential further arbitrary shut downs as outbreaks of covid occur the answer is just keep borrowing, you know it makes sense!

  21. PB says:

    “It seems that in the 21st century no-one ever has to repay the principal on their loans.”

    There was a point in the 90s where the amount of access to credit you could raise became more important then any savings you may have held. The larger the principal you were thought able to service the more “wealth” you could rent. actually fits well with the own-nothing-rent-everything economy our Global Masters are building around us.

  22. Dr Faustus says:

    “I understand that in an uncertain world, it can be hard to take on risk and there can be a natural tendency to avoid new risks.”

    Perfect timing.
    The Oracle speaks on the very day that State Governments go into a paroxysm of lockdown paralysis over a single individual spreading the Rona through his/her family.

  23. Bruce says:

    “Build Back Better”?

    The very people chanting that mantra GLOBALLY, are the ones who broke the joint in the first place.

    “We had to destroy the village to save it”?

    Follow the money; ESPECIALLY the “spillage”.

  24. Colonel Crispin Berka says:

    I’m reminded of a saying which (IIRC) was not originally from WA mining veteran Ron Manners but was recycled by him in several of his books: “The best country to live in, the best country to work in, and the best country to invest in, may not all be the same country, and they’re probably three different countries.”
    Whenever the government makes business more difficult they are basically saying “Love it or leave it” without realising that leaving is always an option. But anyone who leaves has to decide where to move to, and that’s where they’ve got ya.

    Based on The Heritage Foundation’s annual Index of Economic Freedom, Australia’s business environment is still doing fairly well compared to other cultural peers and industry heavyweights.
    We’re even in their top 10.

    Can I suggest that as bad as the absurd cost of regulatory compliance may be here, the possibility of doing better in future doesn’t dampen the relatively good point we’re at today.

  25. Roger says:

    If there is one good thing to come from the government induced covid crisis it is the government’s intention to reform bankruptcy laws and regulations for small businesses.

  26. bollux says:

    For someone who doesn’t make his own decisions but is in lockstep with his overseas instructors, $1,ooo,ooo+ seems a lot for someone incapable of original thought.

  27. Craig:

    I just want to string this bloke up by the wrists and legs and kick him in the balls 238 times. What a tool.

    I admire your sense of restraint, Craig. Really I do.

  28. Squirrel says:

    “Risk”

    Will I wear my grey cardigan today, or will I wear the beige one?

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