It is funny (not ha ha) that in Australia people are calling for the resignation of the Reserve Bank of Australia head, after he supposedly said;
“I’m sorry that people listened to what we said and then acted on that and now find themselves in a position they don’t want to be in,” he said.
"Listening" to the reserve bank meant that people were supposedly making decisions that they would not raise interest rates until 2024, so they bought their heavily inflated homes. However, while I don't think that I will go as far as defend the RBA,
Wasn't it fucking obvious they would have to?
When inflation is running rampant, the only mechanism the RBA has is to increase interest rates, and when the value of houses in Australia have increased in price by upward of 40 percent in the last two and half years on the back of the lowest interest rates ever seen, people should know that they can only go one way.
And sure, the argument can be made that "they promised" not to raise them until 2024, but I would like to know how this is significantly different in the affects it has on what most people have, a twenty five to thirty year loan. The only difference prolonging the interest rate hike would make is, it would kick the can a little down the road, but in the meantime, inflation would get worse anyway. So, rather than paying more for home loans, the very same people would be paying more for everything else instead.
The level of irresponsibility on the part of average people is incredibly high these days, where there is a constant blame on every poor outcome they get, based on their own decisions. I would suggest that no one made the decision to buy a house on a few words from the RBA, but rather, they made the decision to buy based on their FOMO in the market, deciding to buy a house in a heavily inflated market because they couldn't control themselves and they wanted "their" house.
No one made the decision to buy for them.
The RBA didn't at least and if anything, it was the culture of wanting to own a "piece of the Australian dream" at any price that was the largest driver. The average level of fiscal responsibility and apparently economic literacy is incredibly low at the moment, which seems to be driven in large part by the have now, pay later mentality that increases debt to satisfy the instant gratification, on-demand society in which we live. Everything is at our beck and call.
If we are hungry, there is a 24-hour store open. If we are bored, there is a screen feed available. If we are horny, there is an app to provide a partner.
We live in a world where patience isn't required so is it really any wonder that people can't delay their gratification when it comes to economic decision-making? It shouldn't, but it does, because while people want to be free to make their own decisions, they want to be protected when the decisions they make are fucking stupid.
It comes down to greed where we want what we want now, like Veruca Salt demanding from her Daddy, because we have been spoiled by choice and hold the misaligned belief that we are entitled to have whatever we want, whenever we want it. It doesn't matter if what we want is not good for us and has a detrimental effect on our quality of life, because when that happens, we will blame others for our decisions, like all the people who blame McDonald's for getting fat, as if they were forced to roll their car up to the drive-thru window and order three Big Macs, two large fries and a chocolate bloody thickshake.
The advertising!!
But, you know it is bullshit, right? Isn't it the same with bankers and politicians? People know they are full of shit yet when what they say conveniently supports our greedy decision making, we choose to believe them blindly.
Skin in the game.
We are the ones who have to live without our decisions, who have to lay in the bed we have made for ourselves, so when we are making the biggest financial decisions in our lives, we should bloody well get a second opinion and do our own due diligence. Which means getting a third and fourth opinion too perhaps, if we are unable to work this crap out for ourselves.
For ourselves.
This is a big problem, because we want the good results for ourselves without the potential of the bad result, even though the decisions we make are clearly riskier than we treat them. Pretty much, all the people who have bought a house in the last two years should have known that the decision they were making is riskier than it has been for a long time, because for a long time there was stability. And in terms of interest rates and inflation, it isn't like people weren't talking about how printing massive amounts of money and crushing supply chain possibilities wasn't going to lead to inflated prices.
All of this was being discussed, but because people hear what they want to hear, they weren't listening to anything that went against what would get them what they wanted. It is no different to the people who give up their private keys in Discord to people who offer free tokens with a million rocketship emojis - just at a much larger scale.
Getting a resignation from a single person does nothing for them, as they will still be stuck with an over inflated house purchase and a mortgage they will struggle to manage. But they will feel like they have made a difference, by "punishing" the head of the RBA. At the end of the day, people will have to live with the decisions they make, no matter who they blame and at the end of the month, the mortgage payments will still be due.
Taraz
[ Gen1: Hive ]
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Well people gotta learn one way or another. Or not, either way, but that won’t stop them from having to deal with their consequences.
J has been freaking out about the inflation thing for the better part of forever I feel.
Good man! :D
No they (governments) do not give a fuck, the whole debacle was a hard sale to many hopeful. A few very clever Dicks are placing the pieces on the chess board, entitling them to more!
When they "lockdown, strongly advise", I hope lessons have been learned to think for yourself. Stopping economies the way they did, with no vote by the people, a handful made decisions, is not democracy.... this must stop!
Highest interest rates paid in South Africa in 1985 - 22.15% mostly due to apartheid sanctions, again in 1998 - 25.5% selling the local currency short!
Consistently rates came down thereafter 2000-2020, promising to improve life for all, bank assistance given to new home owners hand over fist...., now moving up once again, many will lose their homes not factoring in interest rate hikes.
Sorry does not cut it, we vote people in to steer the country, highly paid at that, if they cannot do what is expected of them it's time people stood together, strongly object bringing these "Leaders" back into line.
No one is forced to buy, rich owners of land and buildings, raise ridiculously high rental onto properties, brings about the same result, people struggle financially to place a roof over their head.
Precisely. And the average person is just a pawn in the game, hoping to survive, but ultimately will be sacrificed.
The current economy and the systems that keep it this way are fundamentally broken, but the only way out of it is to take responsibility for ourselves, but that requires a little more economic literacy than people currently have. The vast majority still believe that they will be looked after by governments - left right, up, down -they will never act in the best interest of the people.
Too much has been sacrificed here, next will be uprising, which will not be the first either.
And that's ha ha - I thought at first. I also hate such apologies from politicians and the like... But after reading the post to the end, I realized that I fall into this trap every time, too. No, I wouldn't take out a home loan. But I would be outraged at the words, calling them lies. I think that's where my slippage was. In the attitude toward the words of the promises. Something to think about once again...
!invest_vote
Promises are worth so little these days, because everything is disposable. I don't get how we keep falling into the same traps over and over, without learning much at all. Suckers for punishment?
😅 Yeah, emotional defect rather...
:D
I do agree with all of this, but can't help feel there is a lot of responsibility that should be placed on media, the government and general Aussie culture for the whole FOMO if you don't own a home. Plus, the pressure of seeing houses go up and up and up with no end in sight. I've seen mates buy houses for silly money and whilst it's okay for me to judge them and say they SHOULD have known, the pressures to own your own home are pretty strong here. I can't see this conservative country changing their thinking about how we live for a long time. Also fucking developers buy up land with council in kahoots and push these shittily built houses on people who have little choice as you can't find rentals in this country either due to the rise of Airbnb. You and me might have sat tight but we aren't other people. Plus, lucky we bought when we did, we own our own home .. but in this region prices aren't dropping, wages are static, and interest rates are up, so even if we sold there's no where to go sensibly sideways even. Apart from Tassie, and they don't have an Aldi 🤪😂
For sure, though at the same time, the media is like McDonald's advertising, isn't it? Shouldn't we know they are full of shit?
This is another problem too of course, where there is the money from investors able to buy in with very little risk and can afford to wait it all out. It is interesting to note how many building companies are failing too at the moment.
For a lot of people, this is going to take two decades to balance and even then, the only reason is that they would have paid off their mortgage.
I never fall for advertising but many do .. it's insidious and relentless and preys on emotions, and not everyone is literate in that regard.
So now it's a common sense level of knowledge that the real estate prices are about to drop?
This isn't about real estate prices, it is about inflation. Pump massive amounts of debt into an economy, inflation increases. Once inflation increases, interest rates will follow. When there is a 40% nationwide bump in housing prices in around a year, be wary.
Usually, real estate is very slow to react to downturns because banks and large investors have a tendency to play the game in a corrupt way. They don't reevaluate the price until the markets reached an equilibrium due to stagnation.
Liquidity is rising, Real Estate creates more profits than s*itcoins with 0 risk. Prices drop, well as long as it's not 2008 at least, they will just give themselves quasi-unlimited creditworthiness and sit on the assets. Maybe flip them from one fund to another from year to year.t
Buying the top of a market that has been so inflated of any asset will likely see a dump at least in the short term. For those who overextended themselves with debt that they aren't able to service if interest rates increase a couple percent (like many have), they are going to struggle to survive in that short term, which is the issue for many in Australia (and likely other places) at the moment. In Finland for example, there was only marginal increases in real estate value.
Haha yeah, you're insanely expansive already. There probably wasn't too much room to grow into.
Replace “Australia” with any western country, the story is the same.
This can has been kicked since 2008… or even earlier, is this the end of the road?
I don't think it is the end of the road for some kicking the can - but perhaps for many of us who have to keep picking it up.
It will be goal post moving. Once one resigns they will look for blood elsewhere. It’s the failed ideology of the mob that’s the problem. Little to no personal responsibility sadly.
What’s even worse is this is I think intentional so that people demand more control be taken to improve the economy and you know where that solution is going to ultimately hide? CBDC I think. Problem reaction solution..
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Most of the board of the RBA aren't even economists, they are business leaders. They seem to need some lessons in economics -not that the economists did better.
Do they not have fixed rate mortgages over there? I don't know why you would go with anything other than that anyway. It just seems crazy to me. People are really going to start feeling the crunch as inflation edges even higher.
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The fixed rate mortgages are expensive and most didn't take them. Also, they tend to only be for shorter periods of time from what I have seen.
Hmm, interesting. I think ours was 30 years at 3.75% or something like that. It was a bit more upfront, but it was more than worth it in the long run. Especially given where rates are now.
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Lol, I can't believe that calling for the RBA head to resign over comments in the board's guidance from years ago, is an actual thing.
If you're taking out loans without understanding the bare basics of the system you're playing in, I'm sorry but you deserve to lose.
I fucking hate people.
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I think there is some dunning-kruger effect in this - where an article in the paper and a random comment from a loans manager is enough for people to feel they are skilled and knowledgeable.
Is there a club?
Inflation is here to stay. Buckle up. Yeah, getting one figurehead to resign does not fix anything. There are always ten more puppet figureheads in the wings to replace the fall guy.
One of the problems is of course, that they have been crucifying the skilled people for minor mistakes, replacing them with less capable who are making major mistakes - whilst desensitizing the population to what a mistake is.
It annoys me when so many places push out bs information when they know people will look at it. They don't really have any credibility anymore and people are still looking at them for information. I am glad there is some pushback and some consequences for it. As always, the people in power say one thing and then do a different thing.
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Throw out enough information, some will bound to be right.
Yes. That. In financial matters as with anything else, we are supposed to do our own homework. Do I think he cares about what he said? Not really, only that he misspoke and looks rather lame. In the US, we collapsed in a bad way with all the loans that were given out with the loans being approved on a house that wasn't worth the price and they couldn't afford it in reality. If anything in their life changes, even needing a tooth fixed, many are thrown off and do not meet normal payments. Is this affording it?
When I was growing up, not everyone owned a house. If you were born rich or made your way to the affordability range... Now, people feel cheated if they don't get a house after college. I could go on and on, but, long story short, the shaking of the money tree now and then is only going to bankrupt more and more people.
Spillover from the rest of the world isn't helping. We are all in a bad way.
It is crazy, isn't it? The stress testing they have done is far from adequate around the world- especially once things like energy crises come a calling.
Who benefits from low interest rates? Asset owners.
Who own most of the assets? Top 1%?
When people FOMO and promised low interest rates… it seems like people got harvested and put into the impossible situation. What’s next?
Own nothing and be very (un)happy? While the top 0.000001% owns everything?
UBI?
You are seeing where it is all leading - total reliance on the centralized system. The way out? A redefinition of what has value and how that value is interacted with. It has to be decentralized - though the chances of actually getting enough people subscribed is very low.
Gotta try.
I hope some day we will have such executives who at least know to apologize in case of wrong policies that cause economic damage.
Apologies don't do much to change the reality though. Would be nice to have people who weren't assholes and actually had our best interest in mind when making decisions.
I think the issue is that housing was expensive and having a guarantee on fixed interest rates was security. It was an unknown climb to this peak as the issue has been brought on by COVID and a period of mass wealth accumulation however, increasing interest rates hurts families more than where the issue actually is. Corporate profits at an all time high. There is no mechanism to address that other than unions.
Ona thirty year loan? Don't people think ahead?
Only in some sectors and the pressures put on by Covid in Australia are largely self inflicted - look at the elections in Melbourne - a third term for Andrews? People really are suckers for punishment.
Unions don't address the issues, they are largely an ineffectual tool that drives very average results.
3rd term for Andrews? He has delivered on every front and to associate the pandemic to him shows a lack of understanding on the topic. Ever nation prime ministers and president's tackled it. Morrison shelled out money to businesses who in turn rorted it. While Andrews propped up local businesses.
This goes to also say that we have had the least deaths and it's not because Aussies are super human.
Prior to that Andrews has continued to delivered on every commitment driving Victoria further economically (record high employment rates). Further investment in science, technology, infrastructure compared to the extrem right religious infiltrated Liberals who have sold off assets in the past and privatised much of what we had public. They would have sent us backwards.
When people say "Andrews" it's usually focused just on lock down and removes all the other things. Across the board lock downs occurrd the outcome would have been the same under Libs.
Over 30 years? It's already been a 3rd of that and there was no signs of a global recovery from 2008 financial crisis with many nations still at 150% debt to GDP Australia is less than 30% we are one of the richest nations on the planet and shielded from everything. Now is the time to be investing and building not saving.
The average age of death in Australia and in Finland (that barely had lockdowns) is similar, with the age being above the average age of mortality.
For those who have full home ownership. The "richest on the planet" doesn't equate to well-distributed wealth.
Numbers of deaths between Finland and Australia caused by COVID are starkly different. The economic impacts also hit Finland harder because there was no lockdown but the rich locked themselves down while the poor were thrown to the wolves. The demographics of those dieing and those who did die again are starkly different.
Full home ownership in Australia is trending down and boomers are dieing out. Full home ownership are mainly boomers not millennials. Again the working class is impacted as there aren't many if any Australians that can afford a house outright. Also the average household debt to housing has drastically trended up. Used to be under 500k. Then 500 was an average and now we're looking at the 700 - 750k as the average.
And you are basing this on??
Yet you claim "richest country in the world" - this is precisely why that is full of shit.
There is plenty of data that indicates Finlands failed response it was and is horrendous what occurred.
https://www.latimes.com/business/story/2022-03-31/sweden-covid-policy-was-a-disaster
Furthermore ones ability to purchase one asset isn't an indication of a nation's wealth or wealth distribution. Successive Liberal governments have eroded much of our social safety and privatised much of our assets. Yet Daniel Andrews is a bad person? Liberals would and are worse on the wealth distribution front proven time and time again.
Here's an article on wealth
https://www.afr.com/policy/economy/australians-are-the-world-s-richest-people-20220920-p5bjg4#:~:text=The%20median%20Australian%20adult%20finished,Suisse%27s%20annual%20global%20wealth%20report.
On the statement of unions, incorrect. Union membership is at its record lowest which coincides with the degradation of workers rights and inequality growing. Ontop of Corporate profit all time highs.
Howard succeeded in putting in people's minds that unions are bad.
I think the unions were on the decline well before Howard.
Nope, this is evidenced is much of the Hansard minutes of the time. Howard's union busting reforms weakened unions and are well nick named the Anti-solidarity laws.
The unions busted themselves back in the early 90s - before Howard.
That's not entirely correct work place choices brought in by Howard and the mass casualisation of the work force coupled with anti solidarity laws is what has undermined union membership and enterprise bargaining.
Industries with strong unions have increased benefits and pay.
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1819/UnionMembership
Good fucking lord are you serious?? That's bad bud👀👀
I gotta say this is more than true. Won't really change a thing
People are people.
@stdd denkt du hast ein Vote durch @investinthefutur verdient!
@stdd thinks you have earned a vote of @investinthefutur !
"At the end of the day, people will have to live with the decisions they make, no matter who they blame and at the end of the month, the mortgage payments will still be due."
Actually, you summed it up nicely here.
At the beginning the take the decision of their own self so the is no need to listen to what people said
What would be the correct expression in these cases?
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Inflation is now a big issue in wide world, not only as Australian you people suffering. Just imagine about the affect of inflation to we poor people in underdeveloped country! It affected deadly the life of lower middle class people here and we are victim of inflation as each grocery products increase it's price some predicting the condition could be worse in upcoming days 😥😥😥
Yep, it sucks everywhere and some are going to of course be more affected than others.