House prices
exactly frog. well said
Agree, last decade has been an abberation.
looking forward to reading this:
https://www.penguin.com.au/books/the-price-of-time-9780241569160
a history of Interest
I don't dispute that all those things were big mistakes. But whether they were just due to central banks getting things wrong, or due to the level of interest rates they had to maintain to keep inflation within their targets given the ideological environment in which they operate and over which they have little control, is the debate.
If one wants to argue that the inflation targeting regime is wrong then you are going against the 200 year evolution of economic theory and practice and/or would need to come up with Nobel Prize winning research in economics to present an alternative monetary framework.
Lots of people are trying to. No one has had any success yet, regardless of the junk the ABC keeps publishing about alternatives, and the review into the RBA just confirmed this by further reinforcing the inflation targeting regime in particular by recommending that it be set in stone in legislation.
Stiglitz is just tinkering at the edges and asking if the target needs to be 2-3% or maybe a little higher.
He's not questioning the overall paradigm.
gsco wrote:Real income per capita is the total income of everyone earned over a period added up in the economy divided by the number of people, adjusted for inflation. In other words, it's the total wages paid to everyone over a period, divided by the number of people, adjusted for inflation.
So if everyone gets a payrise equal to inflation (or higher) then won't this mean real income per capita goes up and hence productivity goes up (well on paper anyway) and hence the RBA's dilemma is solved?
frog wrote:Working from home has created a massive productivity boost for Australia. We all deserve pay rises.
Just ask these weekday punters:
Wow so perfect..Greenmount part of superbank has got to be the most perfect long wave in oz..Not that many drop ins either really for how crowded that lineup looks..most are way out on the shoulder, im guessing the sweep isn't as strong there paddling back out.
Never will never have surfed the super bank but on schoolies trip i surfed to myself or with one bible bashing missionary every morning on the goldy..some 1-3 second tubes 1 day but never anyone else out.
Some sort of large shark im guessing bronzy or tiger went past one day but minded his own business and straight past..Never fazed me then but would now..
Don, if I understand correctly, then no, because by total income it is meant wages to workers and the distribution of profits to owners (their income) as well as retained earnings.
Remove the confusion of inflation from the picture by imagining that it is 0.
If people are more productive then the economy produces more output or value per hour worked. That additional value/output produced can then be distributed to "workers" and/or owners.
This increased distribution to workers is what is measured by (real) "wages growth". If the economy and labour markets are working efficiently, then this distribution to workers will take place. For instance you could imagine the share of wages in total output remaining constant, and hence going up with productivity, and while even at the same time total profits also go up in line with productivity.
If workers were not more productive, but pushed for and got higher wages, then simply profit margins will be squeezed. If it kept happening then businesses will fall over and people lose their jobs. This puts a limiting factor on wages growth - it is constrained by productivity growth.
One might argue that this is all just capitalist bullshit and "exploitation" but I recommend living in say China for the logical outcome and practical reality of ideas about socialism and communism.
I can guarantee that even the most die hard communist fans will hightail it back to Australia with their tails between their legs and start preaching the output of the IPA, CIS, Menzies Institute, etc, like it is gospel. You'll start door-knocking and spreading the word like mormons.
Disclaimer: apologies for people in economics if I don't explain this stuff very well.
The history of the 2% inflation target shows it was a policy stumbled upon that has since had theory and jargon invented to justify it.
https://mises.org/power-market/origins-2-percent-inflation-target
"Mr. Brash remembered the former finance minister telling the media he was “aiming for inflation of around zero to 1 percent.” Brash recalls that “it was almost a chance remark,” yet it sparked one of the most destructive policy decisions of all time, which has only worsened since."
Maybe it is a good thing, but its origins suggest we be sceptical. A policy of massive consequence stumbled upon by New Zealander's chance remark!!?? Two per cent inflation compounded can make you poor pretty quickly if you don't speculate. Should we all be a nation of speculators on stocks and housing to avoid poverty and maybe prosper?
As with a lot of Central Bank actions, it is a lot more mumbo jumbo and fancy words and less science than we are led to believe.
Central Banks, when trying to influence the economic weather, are often more like cloud seeders spreading silver nitrate from bi plane to try to create rain than masters of the universe pulling levers to steer the economy.
frog wrote:The history of the 2% inflation target shows it was a policy stumbled upon that has since had theory and jargon invented to justify it.
https://mises.org/power-market/origins-2-percent-inflation-target
"Mr. Brash remembered the former finance minister telling the media he was “aiming for inflation of around zero to 1 percent.” Brash recalls that “it was almost a chance remark,” yet it sparked one of the most destructive policy decisions of all time, which has only worsened since."
Maybe it is a good thing, but its origins suggest we be sceptical. A policy of massive consequence stumbled upon by New Zealander's chance remark!!?? Two per cent inflation compounded can make you poor pretty quickly if you don't speculate. Should we all be a nation of speculators on stocks and housing to avoid poverty and maybe prosper?
As with a lot of Central Bank actions, it is a lot more mumbo jumbo and fancy words and less science than we are led to believe.
Central Banks, when trying to influence the economic weather, are often more like cloud seeders spreading silver nitrate from bi plane to try to create rain than masters of the universe pulling levers to steer the economy.
I would challenge this frog. When you say that central banks are like cloud seeders can you please reference the exact models that are not working?
Flollo,
The comment of cloud seeding is to imply the observed truth that Central Banks can influence events to a much lesser extent than they are given credit for.
- Ben Benanke's observed that the art of setting monetary policy was 98% talk and 2% action.
- massive (billions and billions and billions of dollars) of QE has been proven by the Fed's own research to move the interest rate dial by a measly 1% and the RBA by 0.3% That was their big new shiny tool post GFC. Their biggest new program ever was a bit of a damp squib. What does this say about their true level of power to move the economy?
- the most active, aggressive Central Bank in history in Japan has been stuck with economic stagnation for 30 years - it should have had spectacular growth if their interventionist policies were even somewhat effective.
- data shows that the Fed tends to follow interest rate shifts set by markets more so than set them - they often pretend to be leading but really follow.
- the Feds own minutes during the 2008 crisis showed they did not forsee it or really understand it. If a storm of the century occurs and the weather forecasters did not foresee it or understand it, would you assume them to have great power or weak power? Logic of history says less - they are really stumbling in the dark a lot of the time looking at past data and cover this up with mumbo jumbo financial jargon word salads.
- their forecasts for growth are always wrong.
- private sector money flows outweigh in scale and speed the measured parts of the economy on a massive scale. These just cannot be measured or analysed directly - there is no data (Eurodollar flows). This is a bit like weather forecasting pre satellites. They can only observe local obvious weather and make decisions on that.
Commonsense indicates that the world economy is a massively complex system comparable to weather in scale and interactivity of a multitude of forces. Why small moves in one variable - interest rates - their main tool - would affect such a massive system is logical.
Not quite pissing in the wind to change the weather, But, CBs are definitely not pulling levers that have clear or powerful effect. Central banks up to Volcker were seen as a bit of a joke. Then the Volker myth was grasped and built into the current hype and Fed watching obsession for a range of reasons. It suits the Fed - amplifies their limited power. And, markets love a simple narrative. Watch the Fed.
Wilhelm what a great and very relevant point you bring up, and I like all the links you provide.
Kahneman is a legend in behavioural economics.
In a simplified way, the classical economic theory is a very elegant, beautiful, axiomatic mathematical theory or "bunch of models" of things like markets, the overall economy, financial markets, people's economic decisions and behaviour in markets, etc.
The classical theory is axiomatically or mathematically derived based on ways of quantitatively defining assumptions about people's behaviour and economic and financial activity and markets. The point is, it's just a "bunch of models and predictions" and "remember that all models are wrong; the practical question is how wrong do they have to be to not be useful," a quote attributed to the legendary statistician George Box. One of its strengths is its elegance and tractability. But it is not always perfect, like any model.
Behavioural economics can be viewed as an attempt to improve models in economics and the overall body of economic knowledge by relaxing certain axiomatic assumptions about the behaviour of people, and then deriving new models based on these new assumptions. But it is also just a '"bunch of models and predictions" with certain policy prescriptions attached. And it's also not perfect, including because it may be viewed in many ways as more mathematically complex and less tractable to work with.
Classical and behavioural economics, the models and their predictions and policy prescriptions, as well as more machine learning or pure statistical type models, are all used by governments, the private sector and central banks etc in making predictions about the economy and policy decisions etc.
Central banking is in many ways a quite small community in which kind of "everyone knows each other". They all basically attend academic and industry conferences together, publish academic research together, have a foot in the door of academia, are up to date on the latest published research and models, all know which models each other are using, basically all use very similar models, etc. They're kind of pretty up to date with things.
It's not like they're somehow addicted to or fixated on the classical theory and ignoring the models and developments of the behavioural theory, or developments outside the general area of economics like in the machine learning and AI community.
The body of classical and behavioural economic knowledge evolves via a scientific process of model development and statistical testing against the data. It's a highly lively and vibrant community, and central banks are right in the thick of it all, particularly via the revolving door between academia and central banks.
And central banks are not working together and engaged in some kind of deep state conspiracy to oppress the masses.
"and central banks are right in the thick of it all, particularly via the revolving door between academia and central banks"... and private banks too?
Interesting walk through history revealing the truth about Paul Volcker - the supposedly all powerful Fed president "conquering the great inflation" of the 70s. Not what the myth suggests in terms of the Fed's understanding of the situation, confidence in their own tools and speed of impact of the tools used.
"In Tuesday’s minutes of the meeting of the RBA board on June 6, was this sentence: “… members observed that some firms were indexing their prices, either implicitly or directly, to past inflation.”
"Research from the Australia Institute shows that 69 per cent of excess inflation (above the Reserve Bank’s 2.5 per cent target) since end-2019 arose from higher corporate profit margins, while only 18 per cent was due to labour costs."
https://thenewdaily.com.au/finance/2023/06/22/price-control-inflation-al...
As I said the other day, companies are hiking their prices just because they can.....not because their costs have increased. It's a very fast spiral of death then with the RBA left no where to go but to continue rising interest rates to squash demand even if companies continue to rise their prices (when their costs aren't rising as much also).
donweather wrote:"In Tuesday’s minutes of the meeting of the RBA board on June 6, was this sentence: “… members observed that some firms were indexing their prices, either implicitly or directly, to past inflation.”
"Research from the Australia Institute shows that 69 per cent of excess inflation (above the Reserve Bank’s 2.5 per cent target) since end-2019 arose from higher corporate profit margins, while only 18 per cent was due to labour costs."
https://thenewdaily.com.au/finance/2023/06/22/price-control-inflation-al...
As I said the other day, companies are hiking their prices just because they can.....not because their costs have increased. It's a very fast spiral of death then with the RBA left no where to go but to continue rising interest rates to squash demand even if companies continue to rise their prices (when their costs aren't rising as much also).
yep
to this and your posts above
I would add that australia is still seriously booming, usa not so much
and while it's not cool to say, there must still be huge wages pressure bubbling away under the surface atm
I don't mean to bag labor (this time), but they have acted quite decisively, and even desperately, to increase wages, not least age care, which got a significant across the board increase
they didn't really have a choice, as they were acting in an environment of decades of suppressed wages for many sectors, but to argue these actions will not contribute to inflation is pure fantasy, denial, or misinformation
boomers apparently still spending as much as ever on nice coffee's and stuff - cash
and a shitload of migration pushing inflationary pressure on rents, houses, and everything too...
seems we're caught in a bit of an inflation trap, and labor keeps stoking it with everything they do
often with little choice, but they're seemingly increasingly desperate or delusional about some of the stuff they're up to
they've slotted straight into scotty mode from my observations... judging thier opposition hopeless and impotent... (correctly) ...they've gone all power drunk and reckless...
From todays ABC.
Housing market recovery paves the way for new record high prices
Kate Ainsworth profile image
4h ago
By Kate Ainsworth
KEY EVENT
If you're thinking the housing market is teetering on the edge, new forecasts are suggesting otherwise.
Research by property marketplace Domain suggests Australia's housing market will have recovered from the 2022 downturn in the coming financial year, with some capital cities to see new record high house and unit prices.
The Domain Forecast Report expects house prices in Sydney, Adelaide and Perth will reach a new record high, while unit prices will jump in Brisbane, Adelaide and Hobart.
Here's a quick rundown of how much house prices are expected to rise in the capitals:
Sydney: 6-9%
Melbourne: 0-2%
Brisbane: 1-4%
Perth: 1-3%
Adelaide: 2-5%
Hobart: 3-5%
Canberra: 2-4%
Domain's chief of research and economics, Nicola Powell, says strong demand is responsible for the higher prices in the near future.
"Population pressures will lead the charge in factors driving housing demand and property prices higher over the next 12 months," she said.
"Australia has seen an exponential increase in temporary and permanent migration since the international border reopened in late 2021 to alleviate skills shortages.
"Of course, unlike natural population growth, those arriving from overseas aren’t already housed.
"This puts us in a position where in the next financial year alone, nearly 130,000 extra dwellings will be needed, with the Eastern Seaboard receiving the largest share of migrants."
freeride76 wrote:From todays ABC.
Housing market recovery paves the way for new record high prices
Kate Ainsworth profile image
4h ago
By Kate Ainsworth
KEY EVENT
If you're thinking the housing market is teetering on the edge, new forecasts are suggesting otherwise.Research by property marketplace Domain suggests Australia's housing market will have recovered from the 2022 downturn in the coming financial year, with some capital cities to see new record high house and unit prices.
The Domain Forecast Report expects house prices in Sydney, Adelaide and Perth will reach a new record high, while unit prices will jump in Brisbane, Adelaide and Hobart.
Here's a quick rundown of how much house prices are expected to rise in the capitals:
Sydney: 6-9%
Melbourne: 0-2%
Brisbane: 1-4%
Perth: 1-3%
Adelaide: 2-5%
Hobart: 3-5%
Canberra: 2-4%
Domain's chief of research and economics, Nicola Powell, says strong demand is responsible for the higher prices in the near future."Population pressures will lead the charge in factors driving housing demand and property prices higher over the next 12 months," she said.
"Australia has seen an exponential increase in temporary and permanent migration since the international border reopened in late 2021 to alleviate skills shortages.
"Of course, unlike natural population growth, those arriving from overseas aren’t already housed.
"This puts us in a position where in the next financial year alone, nearly 130,000 extra dwellings will be needed, with the Eastern Seaboard receiving the largest share of migrants."
I'm always wary of real estates talking up the housing market......kinda like used car salesmen talking up every used car in their lot.
You might be right Don.
I'm just quoting verbatim from ABC news- take it for what it's worth.
Note the difference from 1 month ago on the curve :0
velocityjohnno wrote:Note the difference from 1 month ago on the curve :0
These are some good yields. You reckon it might be a good time to go into bonds? Interest rates will probably start dropping off in the next year or two?
Was certainly getting interested just before that last rate rise - but that's me, everyone else form their own view! The old man scored a yield with a 7 in front of it at the very last dip in price before the GFC and I regard him as a kind of genius as a result, and would love to emulate timing like that. Will keep watching as the 'shock' rise pummelled the ones I was looking at on the announcement. The more inflation, the more chance of shock rises.
When it comes to the when, I look for certain patterns playing out in the prices and was pretty sure a completion was happening - until the actual announcement! Sometimes I see the big picture clearly (that's a great feeling) and sometimes it's opaque to me, hard to access, hidden so to speak. You can also go here
https://www2.asx.com.au/markets/trade-our-derivatives-market/derivatives...
and form your own view on when the market (which will change it's view as new information arises) reckons it'll be. Not a precise method, but adds to the weight of evidence.
gsco any extra ideas to add?
Can you explain a yield curve inversion and what it means in layman's terms? What are the buyers of the bonds at different durations doing that makes the curve invert, and why do they do that, assuming they know a contraction in the economy is coming? I've read many explanations of this, and they seem to differ, or get lost in the terminology and confuse.
Might be a good time to go back and revisit the economic clock so we can all pin the tail on the economy donkey of where we are at.
https://boursecommunications.com.au/the-investment-clock/
Where do all of you reckon it's at?
Anyone got any anecdata of what's happening in the real economy where they are? I'd be interested to hear.
A non technical explanation of the yield curve inversion - what it signifies, not the maths. The yield curve is the cumulative results from the myriads of decisions made by those deeply embedded in the financial plumbing where absolutely huge flows of money and associated collateral swirl and surge within the financial system.
These money flows and shifts in the quality of acceptable collateral are hidden from any means of measurement or observation by those not directly involved. If the international financial pipelines are cracking, slowing, blocking or shifting and deteriorating only the insiders see it live and know from past experience and talking among themselves what that probably signals for the future. They spot warning signs early. The Fed and financial markets only see vague shadows of this - data is minimal. The insiders have no reason to tell outsiders or counterparties what they are seeing live on their screens or what some huge trader did or did not do one day as this can hurt their profits. Insiders at the horse races sort of thing spotting an out of sorts horse at training and not wanting to move the odds before they place their bets.
A yield curve inversion just reveals that the insiders are seeing trouble ahead and are responding with real money decisions (not Wall St spin) involving trillions of dollars. Trouble brewing can mean every party becomes super conservative in the decisions on collateral backing huge short term loans occurring in scale and speed we would not comprehend - the Euro dollar system. This leads to a collateral shortage which is like the pipelines partially freezing which can become self-fulfilling in that the forecast of trouble itself creates its own ripples.. But no-one wants to be the bag holder - so they must act in self interest not for the good of the system.
Imagine those workers and engineers maintaining the ancient network of aqueducts and plumbing in Rome beneath the pavement. They would see the state of the water flows, regional droughts, rainfall and pipe cracks and blockages largely hidden from the population and the managerial class. If a water shortage looms they know first.
Awesome Frog, wonderfully descriptive.
This was very good following on from frog's post, a layman's explanation of the basic function of the eurodollar system. Informative.
https://theunhedgedcapitalist.substack.com/p/how-the-eurodollar-system-w...
VJ, 7% yield sounds unreal. I wonder if it will get there. On the other hand, I’m starting to see 5%+ savings accounts pretty much everywhere. These are some solid returns for risk free investments. I’m not too fussed about all this other high level stuff, mainly looking for some quality investment opportunities.
5% looks good given our recent past but once you realise your money is still going backwards against inflation it doesn’t taste so great then. Also noting you’re paying tax on that 5% too. But if your superannuation fund isnt making you at least 5% then ditch the useless fckers.
Yeah I know. But inflation is also subjective, not everyone is impacted the same way so there might be a way to make it work. Some stuff has gone up a lot but it doesn’t impact me personally. I’m mainly looking for risk free but liquid options as part of the broader portfolio. Super, with its tax implications, is superior to other investments but it’s not very liquid.
VJ, the shortest answer in finance speak I could give is that the implied yields embedded in the yield curve are believed to be unbiased estimators of future yields.
To explain in ordinary language, imagine a simple scenario in which the yield curve is inverted over two years, as defined by the following two investment avenues for investing in bonds over 2yrs:
(i) invest in a 2yr bond at 3%.
(ii) Invest in a 1yr bond at 5%. Then when it matures in 1yrs time reinvest in another 1yr bond at a currently unknown yield.
So here the short-term yield is higher than the long-term yield: our little yield curve is inverted.
For both these avenues to have the same final profit in 2yrs, the yield in avenue (ii) that you reinvest in must equal 1.04%:
(i) 2yr bond: (1 + 3%)^2 = 1.03^2 = $1.0609.
(ii) 2 x 1yr bonds: (1 + 5%) x (1 + 1.04%) = 1.05 x 1.0104 = $1.0609.
Hence, in our simple example, the market is predicting that in 1yrs time, yields on 1yr bonds will be 1.04%. This predicted 1.04% is called the implied yield, since it's implied by the yield curve (it's embedded in the yield curve).
It's believed that the market on average gets these predictions right (that it's an unbiased estimator of future yields).
So an inverted yield curve is believed to be saying that the market on average is predicting that short-term yields will be lower in the future than they are now. And you can speculate about all the reasons why this might be, for instance as you said the market possibly predicting an economic contraction and hence central banks having to reduce interest rates again in the future.
gsco that's brilliant! Thank you.
I also note the link to the economics course you have posted on another thread, cheers once more. Going through it would be like attaining a diploma I guess. Why not?
So with yield curves being inverted I understand a future lower compensation is inferred. If it were (say) 1s 5s how is that different to 2s 10s? Suggests a shorter timeframe for the perceived bad event?
Going back to anecdata - I'm hearing of things slowing out there from an increasing number of sources. Any one else?
Not sure about the slowdown VJ. It’s very busy where I am and the pipeline is full for the next 2-3 years at least. But a lot of people are thinking about the recession so it will probably come. I don’t think it’s a big deal honestly, the growth we witnessed was extraordinary. You would need a recession of cataclysmic proportions to destroy it and that’s not going to happen. So what if we go down for a few quarters, it’s not the end of the world? We’re kinda way too obsessed about it in Australia.
This one’s interesting. Indians are absolutely killing it in sending money home. That’s more than the whole economy of some countries.
"Going back to anecdata - I'm hearing of things slowing out there from an increasing number of sources. Any one else?"
yep, my little sample of two little self made businesses that sorta boomed through covid have both commented of significant downturn last few months
flollo wrote:Not sure about the slowdown VJ. It’s very busy where I am and the pipeline is full for the next 2-3 years at least. But a lot of people are thinking about the recession so it will probably come. I don’t think it’s a big deal honestly, the growth we witnessed was extraordinary. You would need a recession of cataclysmic proportions to destroy it and that’s not going to happen. So what if we go down for a few quarters, it’s not the end of the world? We’re kinda way too obsessed about it in Australia.
and yep
still boom boom booming in many sectors / areas
and yep, doubt it'll change much in the immediate future, it seems we're firmly heading for a two speed economy
an exacerbation of the recent whittling away of australia's egalitarianism
more haves and have nots for us...
not least being housing
but yeh, coming off such high growth, such short term numbers (corrections) mean little
flollo wrote:Not sure about the slowdown VJ. It’s very busy where I am and the pipeline is full for the next 2-3 years at least. But a lot of people are thinking about the recession so it will probably come. I don’t think it’s a big deal honestly, the growth we witnessed was extraordinary. You would need a recession of cataclysmic proportions to destroy it and that’s not going to happen. So what if we go down for a few quarters, it’s not the end of the world? We’re kinda way too obsessed about it in Australia.
Agree that the growth has been extraordinary and on the 2 speed outcome. For example, local dining looks robust at the same time as others are reducing spending. After covid with the dual outcomes, it seems like a normal thing?! Strange times indeed. It might sound heartless not terming it as a big deal, but I do agree with you and maybe these times are bereft of heart.
In addition to the above, overseas holidays are in full swing. My brother in law who owns a travel agency says he’s never been busier.
https://www.afr.com/life-and-luxury/travel/chasing-aperol-why-everyone-i...
flollo wrote:In addition to the above, overseas holidays are in full swing. My brother in law who owns a travel agency says he’s never been busier.
https://www.afr.com/life-and-luxury/travel/chasing-aperol-why-everyone-i...
Just means the harder everyone is gonna fall!!!
Can’t fault your consistency don :)
Rising corporate profits were the largest contributor to Europe’s inflation over the past two years as companies increased prices by more than the spiking costs of imported energy. https://t.co/iEf6Emu0Rp pic.twitter.com/HYulCZgb8p
— IMF (@IMFNews) June 26, 2023
Brought on by all the stimulus/printing of money through COVID eh?
More fake left woke central bank bashing
1. Why are some companies able to earn higher profits? Wouldn't have anything to do with people having so much money to spend from the massive covid stimulus would it?
2. And actually which companies are the ones predominately earning the higher profits? Separate out the higher profits from mining companies that benefited from the resources price spike and the picture is completely different, as the RBA has conclusively proven.
But yes you're all welcome to keep getting sucked into the progressive left's anti-economics, anti-corporation, anti-market economy fake woke virtue signalling communist struggle agenda.
A spectre is haunting the world again - the spectre of communism.
During times of huge uncertainty like Covid wouldn't companies try to create larger financial buffers by cutting cost where possible (like labour cost) but increasing prices (which eventually leads to increased profit)
If your a company big or small and you dont and your profit margins are small you run the risk of going under when there is a big disruption like Covid with lock downs, supply issues etc
Then Covid ends and the machine starts running again, but you dont decrease prices you actually slowly increase more as everyone else has and is, and you the realise that all that cost cutting you did you can still live without so most remains.
This all results in increased profit
You can see all this in the graph above, just after Covid hit big increase in Labor cost as basically paying people out not to work, profits way down as everything stops, then spike in profits as sell everything thats sitting there with little labour overheads, then things start slowly coming back, you keep a more efficient business model but also increase cost to keep ahead of everyone else increasing cost plus trying to recover loss of income during covid.
Anyway just my take, dont know much about big business.
nahh. just asking for better regulation of excessive corporate greed & profiteering.
gsco wrote:1. Why are some companies able to earn higher profits? Wouldn't have anything to do with people having so much money to spend from the massive covid stimulus would it?
2. And actually which companies are the ones predominately earning the higher profits? Separate out the higher profits from mining companies that benefited from the resources price spike and the picture is completely different, as the RBA has conclusively proven.But yes you're all welcome to keep getting sucked into the progressive left's anti-economics, anti-corporation, anti-market economy fake woke virtue signalling communist struggle agenda.
A spectre is haunting the world again - the spectre of communism.
You're a funny guy gsco!
Craig wrote:https://twitter.com/IMFNews/status/1673287590865412096
Brought on by all the stimulus/printing of money through COVID eh?
No, profits are bought on by companies using "inflation" as an excuse to increase their prices. I've been saying all along this has been happening without any justification for their increase in prices.
bonza wrote:nahh. just asking for better regulation of excessive corporate greed & profiteering.
Definitely. Qantas is the best example of this. Put their hand out for huge Gov assistance when Covid hit but are now recording record profits......without any hint of them paying back any of the huge Gov handouts they got through Covid.
lol but in all seriousness, if governments were worried about inflation they might have wanted to reconsider:
1. deregulating and privatising energy markets and setting up market based solutions for electricity provision which are highly susceptible to resource price shocks
2. spending the post 2014 period preparing Ukraine to go to war with Russia and manufacturing this very war, and then blowing up Nord Stream, and hence creating the very global resource price shock that market based electricity provision solutions can't handle
3. locking the population up and depriving them of their basic rights during covid, and pumping the economy full of money to pacify the population, and then once they're loaded with money release the population back into the world again to go "spending crazy"
The very fact that the governments, NGOs, think tanks, media personalities, etc, who pushed for and did the above are the very same people now just deflecting the inflation blame to "corporate profits" and "Putin" is a complete fucking disgrace.
And not only this, then our ALP govt has the hide to attack and launch an investigation in the the RBA.
Regarding the RBA:
- people started going borrowing and property spending crazy well before the RBA started including inflation and cash rate guidance in their commentary
- the RBA didn't get any forecasts wrong since they gave their inflation and interest rate guidance before the war in Ukraine, after which everything changed. Most central banks around the world did the same thing.
- the RBA engaged in QE and put itself insolvent in order to support the govt's massive covid spending program, which the RBA is now being attacked for doing
Everything that has happened in the media and politics for the past year or so regarding the inflation episode and the attack of the RBA is a complete fucking disgrace and fabrication
"- the RBA engaged in QE and put itself insolvent in order to support the govt's massive covid spending program, which the RBA is now being attacked for doing."
this is the thing...
I know the RBA is supposedly 'independent'
...but of course they work in cooperation with the government...
not just in covid, but in allowing the interest rates to get so low the decade or so leading up to covid
as vj likes to point out, the lowest interest rates for 2000 years or something...
that has to be a significant moment / development / trigger / change...
the insanity is decades in the making
a anomally on top of anomallies
and speaking of anomally...
indo-dreaming wrote:During times of huge uncertainty like Covid wouldn't companies try to create larger financial buffers by cutting cost where possible (like labour cost) but increasing prices (which eventually leads to increased profit)
If your a company big or small and you dont and your profit margins are small you run the risk of going under when there is a big disruption like Covid with lock downs, supply issues etc
Then Covid ends and the machine starts running again, but you dont decrease prices you actually slowly increase more as everyone else has and is, and you the realise that all that cost cutting you did you can still live without so most remains.
This all results in increased profit
You can see all this in the graph above, just after Covid hit big increase in Labor cost as basically paying people out not to work, profits way down as everything stops, then spike in profits as sell everything thats sitting there with little labour overheads, then things start slowly coming back, you keep a more efficient business model but also increase cost to keep ahead of everyone else increasing cost plus trying to recover loss of income during covid.
Anyway just my take, dont know much about big business.
it's hard to know what figures to take seriously, when boom profits one year, are pitted against a locked down population given so much free cash to do nothing...
combine this with measures and methods that just don't seem to hold up in the modern context
and the numbers are all over the shop
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers