House prices
well the answer could take up 100s of pages. Overall my thesis I've formed since coming back to Aus at the start of covid is we're kind of getting things around the wrong way.
We're kind of still going towards the right economically, but towards the (fake) left culturally and socially.
Australia needs to return to the centre economically, and nip in the bud the (fake) "progressive" cultural/social path we're on that abandons certain traditional family, gender and other (Christianity-inherited) social values.
We used to be a very centre economic and cultural country, with strong values.
This thread is about property prices so I'll focus on that, but also regarding homelessness, it seems that the main cause of the increasing homelessness and overall social hardships people are facing is property ownership and rental affordability and availability.
We've experienced such a massive property boom that property owners need to accept taking a hit on the value of and income generated by their property portfolios, both prices and rentals, as simple as that.
The important point is: Wages are never going to grow fast enough to rebalance property and rental affordability. If median/mean property prices and rents from now on just went up in line with median/mean wages, then we will just retain the same level of unaffordability and inaccessibility.
Wages don't grow at 10% per year. Quite simply, property prices and rents need to be stagnant for like a decade or two while wages are allowed to catch up. But governments are doing everything in their power to prevent this, even by working directly against the current efforts of the RBA.
The solution is simple:
Massive levels of immigration, further 1st home buyers and other purchasing incentives, investment property tax incentives, restrictions on land releases, taxes surrounding land banking, rules and taxes surrounding airbnb and properties sitting vacant, etc - these all need to be very strongly tilted away from favouring those who already own property, particularly rental properties...too bad for them.
A full blown strategy focused on the supply of not just houses/units for sale but also for rent needs to be implemented in Australia, across a generation or two, and sustained across many political cycles by both sides of politics, to the disadvantage of those implementing it and other property portfolio owners...too bad for them. Rules and incentives also need to be tilted towards increasing the capacity of the building industry (which is currently being allowed to go bust and shrink). Governments also have a strong role to play in the provision social housing.
Regarding wages and productivity, as we're seeing splashed across the news right now, the only long-term driver of wages growth is productivity growth. The RBA is exactly right in this regard. But in Australia we're still having many of the drivers of productivity growth and technological innovation gutted, particularly education, and just being "left to the market". Also, simply reducing taxes and creating a more profitable business environment doesn't necessarily translate into business innovation and productivity growth. There is a large role for governments to play. The markets can't do everything.
Australia seems to still be wedded to the "leave everything to the private market" neoliberal model (while inheriting the US's woke culture wars). But that just doesn't work. It leads to the very imbalances that we're seeing. The ALP doesn't seem to have the backbone to tackle pretty well any of this.
(btw this was a bit of a mind dump while writing computer code and lecture notes, and I'd love to write something more coherent and "academic".)
Bank of Canada did a surprise 0.25% hike overnight in the face of stubbon inflationary demand, now at 4.75%. Apparently Fed odds are higher for July now too. Genie is out of the bottle.
As I'm seeing someone grow in the construction industry and I see the constraints presently, good luck to lifting it's output quickly: all indicators are pointing the other way. Otherwise gsco solution above is quite spot on, but flies in the face of Equity Mate which is replacement religion of country.
Productivity: what a challenge it will be to re-establish productive industry again, the land cost/bureaucracy/withering of technical skills and everything we've lost in the last 2 decades, especially the car industry in 2017, is a huge task to surmount. Got so annoyed at the stupidity that I taught myself machining, and it takes time and money to learn! This sort of stuff won't happen overnight, but if we want to be first world, we will have to value-add.
Recently bought a moka coffee pot at about $60 so I am part of the inflationary problem.
It comes down to good old fashioned greed , air bnb has to have some serious changes immediately just to take some of the pressure off . I certainly don’t have the answers but tax reform is way overdue in this country. Show some balls Albo and lead don’t follow.
Thanks for your response @gsco and flollo.
I think I tend to agree with most of what you have written there, but still would think that implementing some of these policies would be politically difficult if not impossible.
""We've experienced such a massive property boom that property owners need to accept taking a hit on the value of and income generated by their property portfolios, both prices and rentals, as simple as that.""
True and I really don't care if the paper value of my home increases or not as I have no intention on moving in near term and bought a home rather than investment. Saying that, some owners will be able to take a hit, but what about the new home buyers who took out a loan in the last 5 years and say for example paid $750,000 for a modest home. They cannot repay loan, so default and sell at say $350,000. They then have a lifetime of debt to repay and nothing to show for it.
Price readjustments are going to hurt the same people who are hurting the most from interest rate hikes.
100% in agreement that incentives have to be moved away from the financialisaton of home ownership. Capital gains, neg gearing, Airbnb with people with multiple properties needs to be looked at and changed. I would argue that this needs to be a gradual process as otherwise political backlash would be too strong and whole house of cards could collapse. I still have trouble getting my head around why Australia with such a huge land mass with small population has this situation.
Re productivity, it seems as far as industry groups go there is never the right time to increase wages. AI and robotisation is going to increase productivity of many industries without human input. How does the tax system wages etc accommodate this?
Anyway I have to get back to work, this was written as quick brain dump also, so probably not making as much sense as I would like and may sound simplistic.
Thanks for taking the time, now get back to your lecture notes. :)
Also, house values going down could just lead to more cleaning up by the cashed up.
https://www.theguardian.com/australia-news/2023/jun/08/a-quarter-of-home...
What’s Phillip Lowe’s deal. I’m not sure how we got where he is but I’m sure there was some hard work along but daresay he is doing pretty well for himself, but the comment for people that are struggling “to work more” just did not sit well with me. Quick google and turns out I’m not the only one and there is similar comments going back.
To tell the people who are struggling that they have to work more seems fucking so out of touch with majority of our population. Nothing about what can we do with the top earners.
Help me understand!
velocityjohnno wrote:Bank of Canada did a surprise 0.25% hike overnight in the face of stubbon inflationary demand, now at 4.75%. Apparently Fed odds are higher for July now too. Genie is out of the bottle.
As I'm seeing someone grow in the construction industry and I see the constraints presently, good luck to lifting it's output quickly: all indicators are pointing the other way. Otherwise gsco solution above is quite spot on, but flies in the face of Equity Mate which is replacement religion of country.
Productivity: what a challenge it will be to re-establish productive industry again, the land cost/bureaucracy/withering of technical skills and everything we've lost in the last 2 decades, especially the car industry in 2017, is a huge task to surmount. Got so annoyed at the stupidity that I taught myself machining, and it takes time and money to learn! This sort of stuff won't happen overnight, but if we want to be first world, we will have to value-add.
Recently bought a moka coffee pot at about $60 so I am part of the inflationary problem.
That is $60 well spent.
Nick Bone wrote:What’s Phillip Lowe’s deal. I’m not sure how we got where he is but I’m sure there was some hard work along but daresay he is doing pretty well for himself, but the comment for people that are struggling “to work more” just did not sit well with me. Quick google and turns out I’m not the only one and there is similar comments going back.
To tell the people who are struggling that they have to work more seems fucking so out of touch with majority of our population. Nothing about what can we do with the top earners.
Help me understand!
Maybe went to same school as Joe Hockey with his advice of 'get a good job' or his observation of 'poor people don't drive cars.'
Wilhelm Scream wrote:#Dismal
https://www.atlassian.com/blog/productivity/the-problem-with-productivit...
I get it and don’t disagree but you need a new formula to replace the old one. There’s a whole bunch of qualitative information in the article which is great for discussion but weak when measuring population level impacts. It’s also good that Atlassian has the means to hire a work futurist type of role whose job is to basically think about these things. Most don’t have that luxury so they resort to established frameworks, even when they’re not the best solution out there.
Interesting Wilhelm S.
From the article- seems to defy basic logic, no?
"This means that, in the most recent year, large numbers of students and working holiday makers arrived, but very few left. The speed of the increase in these arrivals has been much greater than policy makers had envisaged".
"The high level of net migration is largely due to people remaining in Australia instead of leaving. Almost all of these people were already working in Australia and were already housed".
They were housed already?
How?
Very interesting Wilhelm
Productivity may be the only long term driver of wage inflation, but to paraphrase Keynes "nobody gives a flying fuck about the long term when the need to feed ya kids, pay for petrol and have a roof over your head is right now term". And that means wage growth is only determined by bargaining power, being a function of supply and demand dynamics. Right now we know that supply of labor across many sectors is down, so demand for labor is up, Up, UP! But the ability to demand higher wages continues to be stifled, thanks to the erosion of collective bargaining abilities across many sectors (some days I really wish I was part of the Nurses Union... no, I am not in the healthy sector). Linking wage deflation and productivity so strongly is straight out of the neolib playbook. It's one of many reasons (and now the latest) trotted out when we hear from the economic elite "we can't talk wage uplift until..." There's a bit of change in the works but it'll take a long time to filter through, and of course, if the powers that be shit the bed and send the economy to the wall, there goes the ability to get a pay rise!
As I've said before, pollies won't change the rules as they'll personally suffer and it's political suicide give 1/3 of voters have a mortgage and who knows what % have debt-free investment propertieis of the 1/3 that don't. Too bad we don't have asset register rules for pollies that require them to update it in < 20 business days. If you start seeing them offloading properties, you know changes are coming (specifically to negative gearing, CGT, stamp duty and even zoning regs). It's possible to do it based on the current asset register and listing and sales data from other sources (RE.com.au and RP data), but I CBF.... if someone wants to "short the aussie real estate market", that would be one of the indicators you'd want to watch. But until then, carry on.
AirBNB has run a masterclass in PR and obfuscation. I saw firsthand the effect of COVID in early-mid 2020 on the rental market here on the Sunshine Coast. For years the cry was "these properties have no bearing on the rental market supply!!!" Then someone had sex with a pangolin or something, travel ground to a halt and WHOOOSH, look at the listings gooooooo! Someone inside Noosa Council told me that they saw rental listings in Noosa Shire almost quadruple. The line that "these properties are too expensive for people to rent long term anyway" is baloney. Part of why they're so expensive is because of the commodification of them and the effect that had on their market values. Pay a motza for the house (or another and another) and the ONLY way to pay them off within a decade by the time you turn 65 is to bang them on AirBNB/Stayz. It's self-fulfilling ya see?
I am one of those people are getting railroaded by rate rises. I sold a place with 55% equity (thanks to hard yakka improvements and a stupid market)...and bought a place for nearly twice the price...because we had to move for work. I didn't make the move based on the RBA's supposed "promise". Besides, the RBA couched their statement in ambiguous language. So this line that everyone "bought on that promise" is also bullshit (I know others who also sold/bought at the peak and RBA statements had nothing to do with it). I have however been caught out by how fast they've gone up. When we got the debt fixed rates were low 4s I think and I was like f-k that let's go variable, much lower, it'll take a while to reach low 4s.... and fuck me sideways here we are looking at mid-5s and beyond. Mind you, take a look at fixed rates right now, if you want to get a feel for where banks think things are heading... the 2 and 3 year fixed rates are LOWER (not by much though) than the current 1 year rates at a bunch of banks.
I guess the media can't/won't talk about it, but it seems to me China suddenly mandating that all their Australian uni students (100k-150k of them!) had to rush back to Australia to complete their degrees was not a coincidence. The rhetoric about a rental crunch was already well and truly entrenched in the media and the effect on inflation and the savvy Chinese saw another way to punish "us" (for Scummo's grandstanding) while at the same time removing the bogus trade bans. Indeed, you could argue they realised the trade bans were having no effect on the broader economy and saw a much more severe way to hurt Australia.
The supply issue has been compounded, as others have said, but land banking by the likes of Stockland, Lendlease, etc. But also by State Govts not backing those local governments that have wanted to increase the density of certain areas (and put in better public transport and greenspace with it). Nimbyism is only part of it and honestly from what I've seen working in planning, is not as big a reason behind the lack of it as you'd think. Imagine being Stockland and owning a fuckload of land in bumfuckville north of Brisbane and hearing the State planning team are proposing to quadruple the amount of medium density zoned areas and put in more parks and rec centres and bike lanes and electric tramways across Brisbane... you'd flip ya shit... how are we going to sell these blocks of former-koala-habitat a 90minute drive from the CBD for a massive profit with 6 years!!??? Would you take steps to stop it if you were Stockland et. al..?
Anyway, this has been another work-paid brain dump/rant... seems to be the day for it.
I think we're going to see more of that here, possibly by end of the year.
I suspect your average pleb is on the verge of cracking the shits big time.
To commit the cross-thread sin.... but the last time the world started to get going on climate action, there was a GFC and climate stuff pretty much took a back seat for 10 years. Can't help but start worry that the music/the opening track of this album sounds eerily similar to one released in 2007...
Widespread striking and winning collective bargaining pay rises would be a win for the little guy, and a sign that the inflation has become entrenched.
CB's might back off like Arthur Burns, or go even harder like Paul Volcker to get resultant inflation under control. Or both, if you read your history.
Imagine where the rates end in that case!
Here comes the recession we had to have take two.
"Recession now major risk in next 12 months, economist warns
Think of Australia's $2.2 trillion economy. Now flip a coin.
According to a leading economist, that is the 50 per cent risk the Australian economy falls into a damaging recession at some time in the next year, following 12 punishing rate hikes which have so far failed to substantially rein in inflation.
Millions of households are this morning trying to work out how they will afford their mortgage repayments after the Reserve Bank's decision to again lift rates yesterday."
More here https://www.9news.com.au/national/rba-rate-hikes-50-per-cent-risk-econom...
"..."...the recent increase in net-overseas migration has been due to policy changes that enabled people to remain in Australia rather than policy changes that enabled people to arrive."..."
so... the conversation is choosing retrospective anomaly to spruik their usual idelogical position...
how surprising
the people are concerned about the 600 000 projected future migrants and the effects (plus the 100s of 1000s of enabled crack slippers the government doesn't tell us about)
not the people who are already here
but carry on conversation...
… “ enabled crack slippers “ ….
Why did I immediately think of @ info’s usual bs when I read that?
From the conversation article linked above:
"The very unusual movements during the pandemic have produced a temporary surge in net migration, which we can expect to last for two or three years. After this, net migration should return to pre-pandemic levels as the number of migrant departures ticks upwards again"
Pre pandemic levels were roughly ~ 230k pa.
That's more than 3 times higher than long term averages at ~70k pa.
Really.
GuySmiley wrote:… “ enabled crack slippers “ ….
Why did I immediately think of @ info’s usual bs when I read that?
because you assumed wrong
Im referring to the very large numbers that exploit the education 'industry' backdoor that governments are all too well aware of and ignore
and various other visa scams, like what I heard on rn last week where a chinese 'agent' is lining up and facilitating bogus skills shortage positions to sell visas to scammers
the fact she could offer an express service for a measely 30k because she could buy high level immigration officials for pittance, shows both the extent and the patheticness of the situation
that isn't intended as criticism of visa agent btw, can't blame her
it is about the extent and patheticness of corruption
Instead of “vanlifers” or “backpackers”, should we instead call them “homeless migrants” or is that a bit wiffy?
sypkan wrote:GuySmiley wrote:… “ enabled crack slippers “ ….
Why did I immediately think of @ info’s usual bs when I read that?because you assumed wrong
Im referring to the very large numbers that exploit the education 'industry' backdoor that governments are all too well aware of and ignore
and various other visa scams, like what I heard on rn last week where a chinese 'agent' is lining up and facilitating bogus skills shortage positions to sell visas to scammers
the fact she could offer an express service for a measely 30k because she could buy high level immigration officials for pittance, shows both the extent and the patheticness of the situation
I think the problem with people like Guy is they really dont understand how lucky they are to live in prosperous democratic country, so dont understand what others are willing to do or pay to get to be a part of it, be it through legal means, gaming legal loopholes or illegal avenue's.
Its not just us we all know USA & Europe have huge problems in around this issue too.
Finally the OECD have confirmed what INET and The Australia Institute have been saying since late 2022...... two thirds of the inflation we've seen is from profit gouging by corporates using the supply chain woes (fixed nearly a year ago) and the War in Ukraine as PR cover....
Oil price is down 41%, fertiliser is down 40% (tied to oil price), timber down 50% and shipping costs (per container) down a massive 81% compared to this time last year. What. The. Flying. Fuck.
And pretty much crickets from the RBA or the govt on this. How the fuck is this discrepancy not the only headline when it comes to inflation????
Time for Lambie, Greens, One Nation and Wilkie to form an unholy alliance and start screaming this every time they're in front of a camera or microphone.
mowgli wrote:Finally the OECD have confirmed what INET and The Australia Institute have been saying since late 2022...... two thirds of the inflation we've seen is from profit gouging by corporates using the supply chain woes (fixed nearly a year ago) and the War in Ukraine as PR cover....
Oil price is down 41%, fertiliser is down 40% (tied to oil price), timber down 50% and shipping costs (per container) down a massive 81% compared to this time last year. What. The. Flying. Fuck.
And pretty much crickets from the RBA or the govt on this. How the fuck is this discrepancy not the only headline when it comes to inflation????
Time for Lambie, Greens, One Nation and Wilkie to form an unholy alliance and start screaming this every time they're in front of a camera or microphone.
True dat!
mowgli wrote:Finally the OECD have confirmed what INET and The Australia Institute have been saying since late 2022...... two thirds of the inflation we've seen is from profit gouging by corporates using the supply chain woes (fixed nearly a year ago) and the War in Ukraine as PR cover....
Oil price is down 41%, fertiliser is down 40% (tied to oil price), timber down 50% and shipping costs (per container) down a massive 81% compared to this time last year. What. The. Flying. Fuck.
And pretty much crickets from the RBA or the govt on this. How the fuck is this discrepancy not the only headline when it comes to inflation????
Time for Lambie, Greens, One Nation and Wilkie to form an unholy alliance and start screaming this every time they're in front of a camera or microphone.
Infuriating isn't it. Saw petrol spike to 207c a litre over the weekend (jumped 32c overnight), which is as high as it's ever been, and yet you read those stats about cost of oil down that much and yet we're still copping the high prices. Same for energy companies around the globe, the same year we cop big increases in prices, they are reporting record profits and do so with a straight face. Crooks.
Hard to see how for non-discretionary items these profit gougers will ever bring the prices down, and we'll continue to hear of record profits year after year.
mowgli wrote:Finally the OECD have confirmed what INET and The Australia Institute have been saying since late 2022...... two thirds of the inflation we've seen is from profit gouging by corporates using the supply chain woes (fixed nearly a year ago) and the War in Ukraine as PR cover....
Oil price is down 41%, fertiliser is down 40% (tied to oil price), timber down 50% and shipping costs (per container) down a massive 81% compared to this time last year. What. The. Flying. Fuck.
And pretty much crickets from the RBA or the govt on this. How the fuck is this discrepancy not the only headline when it comes to inflation????
Time for Lambie, Greens, One Nation and Wilkie to form an unholy alliance and start screaming this every time they're in front of a camera or microphone.
I've been singing this song for some time. Fuel prices are exhorbitant given the significant drop in oil prices. Energy costs are also being ripped off for no apparent reason in increase in their generation costs either. Look at these coal and gas prices. Almost 1/4 of what they were at their highest peak spring last year.
What a farce.
But profits are up!!!
andy-mac wrote:But profits are up!!!
Yes well let's see how good profits are when the BIG R arrives!!!
Only one making $ through a recession is PWC!!! ;)
donweather wrote:andy-mac wrote:But profits are up!!!
Yes well let's see how good profits are when the BIG R arrives!!!
Only one making $ through a recession is PWC!!! ;)
It's Labor's fault! :)
corporate profits vs wages:
people are really jumping on that latest rise in profits, but inflation has been strong the whole time, particularly during that recent dip.
It's not corporate profits driving the current inflation. But people will believe whatever they want I guess. We're in a post-truth world.
Thanks GSCO. Interesting. I value all the contributions in here.
there's a number of things driving inflation right now, corporate profits is one of them, but it's not the only one or even the main one.
gsco wrote:corporate profits vs wages:
people are really jumping on that latest rise in profits, but inflation has been strong the whole time, particularly during that recent dip.
It's not corporate profits driving the current inflation. But people will believe whatever they want I guess. We're in a post-truth world.
I'm not suggesting profits are DRIVING inflation. I am questioning whether the increase in costs for fuel and electricity are justified given the significant drop in oil and coal/gas costs from the peak of spring last year. If fuel and electricity costs were to come down AND corporate profits went up because of this then I'd be questioning the profits. But I believe the hike in fuel and electricity is playing a huge part in our inflationary pressures....and for that I'm questioning why these fuel and electricity costs haven't come down!!!! Why isn't the Gov investigating these? ACCC even? Same goes for airlines and flights. Fuel costs are back to pre-covid levels but do you think we'll ever see pre-covid level airfares again.............NOPE!!! Did someone say Qantas just made a record profit!!!
donweather wrote:gsco wrote:corporate profits vs wages:
people are really jumping on that latest rise in profits, but inflation has been strong the whole time, particularly during that recent dip.
It's not corporate profits driving the current inflation. But people will believe whatever they want I guess. We're in a post-truth world.
I'm not suggesting profits are DRIVING inflation. I am questioning whether the increase in costs for fuel and electricity are justified given the significant drop in oil and coal/gas costs from the peak of spring last year. If fuel and electricity costs were to come down AND corporate profits went up because of this then I'd be questioning the profits. But I believe the hike in fuel and electricity is playing a huge part in our inflationary pressures....and for that I'm questioning why these fuel and electricity costs haven't come down!!!! Why isn't the Gov investigating these? ACCC even? Same goes for airlines and flights. Fuel costs are back to pre-covid levels but do you think we'll ever see pre-covid level airfares again.............NOPE!!! Did someone say Qantas just made a record profit!!!
To be fair, airlines got screwed over more than anyone during Covid with huge losess, we are lucky most of them are still operating , you would expect they would have to have record profits for a few years just to make up for the losses or break even.
Still seen some good deals to Indo of late though.
gsco, am I correct in assuming the left X-axis is regarding corporate profit, and the right side is wrt to wages? If so....using you're own graph, from 2016 to 2022:
Corporate profits are +150%
Wages only +20%.
#fair&balancedgraphing
Don. You’ve been sympathetic for the banks but to hell with dem god damn airliners!!!
indo-dreaming wrote:donweather wrote:gsco wrote:corporate profits vs wages:
people are really jumping on that latest rise in profits, but inflation has been strong the whole time, particularly during that recent dip.
It's not corporate profits driving the current inflation. But people will believe whatever they want I guess. We're in a post-truth world.
I'm not suggesting profits are DRIVING inflation. I am questioning whether the increase in costs for fuel and electricity are justified given the significant drop in oil and coal/gas costs from the peak of spring last year. If fuel and electricity costs were to come down AND corporate profits went up because of this then I'd be questioning the profits. But I believe the hike in fuel and electricity is playing a huge part in our inflationary pressures....and for that I'm questioning why these fuel and electricity costs haven't come down!!!! Why isn't the Gov investigating these? ACCC even? Same goes for airlines and flights. Fuel costs are back to pre-covid levels but do you think we'll ever see pre-covid level airfares again.............NOPE!!! Did someone say Qantas just made a record profit!!!
To be fair, airlines got screwed over more than anyone during Covid with huge losess, we are lucky most of them are still operating , you would expect they would have to have record profits for a few years just to make up for the losses or break even.
Still seen some good deals to Indo of late though.
hang on. Didn’t Qantas etc get massive handouts from the gov during Covid? Are they gonna pay them back with their massive record profits?
mowgli wrote:gsco, am I correct in assuming the left X-axis is regarding corporate profit, and the right side is wrt to wages? If so....using you're own graph, from 2016 to 2022:
Corporate profits are +150%
Wages only +20%.
#fair&balancedgraphing
yes I too noticed the different scales between left and right axis. Very cheeky plot.
yes Don when you look a bit deeper that dip in corporate profits largely coincided with the spike in resource/energy prices. So in a way business absorbed that spike and now profits have recovered after resource prices fell back.
And correct mowgli. The point is corporate profits and wages have both been going up recently in line with their past say 10yr trend. The earlier stages of this trend was during pretty well 0 inflation - in other words, corporate profits are increasing about in line with how they were during a period of 0 inflation (and they're quite volatile right now).
There is nothing really happening now with corporate profits that is outside of the norm of the past decade or so (and share markets also reflect this), and that combined with the dip where business profits absorbed the spike in resource prices, among other reasons, means it's hard to pin the inflation of the past yr or so solely or even largely on corporate profits. Wages and profits have both contributed, as have other things.
There's a lot of political ideology and interests infecting the debate surrounding all this.
donweather wrote:indo-dreaming wrote:donweather wrote:gsco wrote:corporate profits vs wages:
people are really jumping on that latest rise in profits, but inflation has been strong the whole time, particularly during that recent dip.
It's not corporate profits driving the current inflation. But people will believe whatever they want I guess. We're in a post-truth world.
I'm not suggesting profits are DRIVING inflation. I am questioning whether the increase in costs for fuel and electricity are justified given the significant drop in oil and coal/gas costs from the peak of spring last year. If fuel and electricity costs were to come down AND corporate profits went up because of this then I'd be questioning the profits. But I believe the hike in fuel and electricity is playing a huge part in our inflationary pressures....and for that I'm questioning why these fuel and electricity costs haven't come down!!!! Why isn't the Gov investigating these? ACCC even? Same goes for airlines and flights. Fuel costs are back to pre-covid levels but do you think we'll ever see pre-covid level airfares again.............NOPE!!! Did someone say Qantas just made a record profit!!!
To be fair, airlines got screwed over more than anyone during Covid with huge losess, we are lucky most of them are still operating , you would expect they would have to have record profits for a few years just to make up for the losses or break even.
Still seen some good deals to Indo of late though.
hang on. Didn’t Qantas etc get massive handouts from the gov during Covid? Are they gonna pay them back with their massive record profits?
Haha surely you jest!
Or the profitable companies that were gifted $40 billion....
"...Why isn't the Gov investigating these? ACCC even?..."
"...It's Labor's fault! :)..."
you said it!
in jest...
and Im half jesting
but it's a fair question, once upon a time they would've been all over it
but just like the gas debacle... they sure don't seem to bat for little man anymore...
many a (left-ish) commenter wondered why labor didn't go hard on the gas thing when they had such abundant political capital...
this is undoubtably same same
yet the silence is deafening
it's almost like they're bought or something...
donweather wrote:indo-dreaming wrote:donweather wrote:gsco wrote:corporate profits vs wages:
people are really jumping on that latest rise in profits, but inflation has been strong the whole time, particularly during that recent dip.
It's not corporate profits driving the current inflation. But people will believe whatever they want I guess. We're in a post-truth world.
I'm not suggesting profits are DRIVING inflation. I am questioning whether the increase in costs for fuel and electricity are justified given the significant drop in oil and coal/gas costs from the peak of spring last year. If fuel and electricity costs were to come down AND corporate profits went up because of this then I'd be questioning the profits. But I believe the hike in fuel and electricity is playing a huge part in our inflationary pressures....and for that I'm questioning why these fuel and electricity costs haven't come down!!!! Why isn't the Gov investigating these? ACCC even? Same goes for airlines and flights. Fuel costs are back to pre-covid levels but do you think we'll ever see pre-covid level airfares again.............NOPE!!! Did someone say Qantas just made a record profit!!!
To be fair, airlines got screwed over more than anyone during Covid with huge losess, we are lucky most of them are still operating , you would expect they would have to have record profits for a few years just to make up for the losses or break even.
Still seen some good deals to Indo of late though.
hang on. Didn’t Qantas etc get massive handouts from the gov during Covid? Are they gonna pay them back with their massive record profits?
Yeah okay i remember talk of it all, but didn't know it happened for airlines, i think ive juyst blocked a lot of Covid out though like it was a bad dream, kind of wasted years.
I do remember being really concerned though during Covid that airline's would go bust, because it would be terrible if we lost airlines especially budget airlines like Jetstar, Virgin, Air Asia etc and flights got super expensive.
Flights for the last 15 years or so have been dirt cheap really, remember the times before budget airlines 20+ years ago a trip to Indo would cost about $800 return even today i wont pay that much.
Have to say im kind of a little worried about airline prices going forward in the future with the phasing out of fossil fuels too.
What do you put inflation down to GSCO?
The 2 main unusual and huge events that have occurred in the past few years are (i) covid lockdowns, demand side massive stimulus and then economies bursting to life again, combined with a near perfectly timed (ii) war driven quite spectacular supply side resources and energy price shock, which has just subsided.
Either of these alone would have been an issue.
Economies were always going to be a bit wobbly coming out of covid while they found their feet again and all that stimulus money worked through the system. The supply side shock then magnified that a hundred times over.
Right now we’re in that classical lag period when various sectors of the economy rebalance to the demand and supply shocks and imbalances that occurred.
There’s no need to look past the very obvious major structural events that just took place.
But of course governments, think tanks, etc are going to try to get as many political runs out of the situation as they can.
The actual economists at the RBA must be just shaking their heads in disgust at the whole circus.
gsco wrote:yes Don when you look a bit deeper that dip in corporate profits largely coincided with the spike in resource/energy prices. So in a way business absorbed that spike and now profits have recovered after resource prices fell back.
And correct mowgli. The point is corporate profits and wages have both been going up recently in line with their past say 10yr trend. The earlier stages of this trend was during pretty well 0 inflation - in other words, corporate profits are increasing about in line with how they were during a period of 0 inflation (and they're quite volatile right now).
There is nothing really happening now with corporate profits that is outside of the norm of the past decade or so (and share markets also reflect this), and that combined with the dip where business profits absorbed the spike in resource prices, among other reasons, means it's hard to pin the inflation of the past yr or so solely or even largely on corporate profits. Wages and profits have both contributed, as have other things.
There's a lot of political ideology and interests infecting the debate surrounding all this.
Calling bullshit on that in the nicest way. Define “corporate” profits for the layman. Inequality measures (plot it) have been consistently rising over the recent decades and rapidly in the last few thanks to pandemic. . No way has wage growth have had any meaningful contribution to inflation in the real world. That really is a cop out. Facto said it right. Dismal science
FR I replied to your q above.
Bonza n mowgli, you’re kind of talking bout 2 different issues here: (i) what caused the current inflation event and (ii) the 2-3 decade increase in inequality and reduction in housing affordability, longer term trends in wages growth, corporate profits and productivity, etc.
I’m currently only talking bout point (i) here.
My point is it doesn’t make sense to say something like “let’s just ignore the major covid stimulus and resource/energy price shock events, and just blame inflation on something else like corporate profits simply because it aligns with my political ideology…”
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers