11 June 2023

Hurting enough? There's got to be a better way to run the economy

| Ian Bushnell
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RBA Governor Philip Lower delivering a speech

Philip Lowe has lots of ‘useful’ tips for Australians doing it tough. Photo: Screenshot.

Is Philip Lowe the most hated man in Australia?

The Reserve Bank Governor isn’t out to win popularity contests, that’s for sure, and he remains committed to his ultra-orthodox approach to crushing inflation.

No one really believed that cheap money would last forever or even until 2024, to be honest, but the relentless, almost monthly chipping away at confidence and the economy in general, along with his gratuitous advice to the Australians who are bearing the brunt of interest rate rises in the middle of a cost of living crisis, has everyone reaching for the pitchforks.

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Lowe tries to explain that he is really looking out for our best interests and always offers some useful tips, such as shacking up with a few extra people to save on rent. Or the latest – spend less and work harder, or words to that effect – so we can reduce consumption and boost productivity, which apparently is plummeting.

Nice to know that after 30 years of neo-liberalism, the loss of collective bargaining, collapsed wages, a casualised workforce and soaring energy and house prices, that Australian workers are bludging again.

And every month, the grounds for jacking up rates seem to shift. The latest is the minimum wage decision, despite even the OECD confirming the Australia Institute’s much-criticised assertion that profits have been feeding inflation.

What will it be next month? Because Lowe has already flagged more rate rises are on the way.

It’s not just what he says but the manner in which he says it that is a turn-off. That exasperated tone as he tries to simplify matters to people who can’t grasp what is obvious to him.

What’s obvious to them is that the repayments for the humungous mortgage they’ve had to sign their lives away for have burst through what buffer they may have had, or their landlord has decided the already sky-high rent can go stratospheric, or their job may not be that secure because the price of getting inflation down will be 100,000 of them.

What many can’t quite follow is that Lowe seems to rely on out-of-date data but won’t pause to see how previous rate rises are washing through the economy or what other factors may be having an effect, especially with all of the future indicators pointing down and growth evaporating.

That soft landing is looking more precarious with every rate rise.

We know that the crunch is being borne disproportionately by the young, while older Australians who have small mortgages or none at all are doing nicely, thank you.

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Reserve Bank governors aren’t great communicators, and at present, their only tool seems to be the blunt one Lowe is wielding, but is it really like the 1970s?

Do we have to have a recession?

Because the way economics seems to work, according to Lowe and others, is that it’s the same people who cop it in the neck, and we’re really sorry but that’s just the iron law.

No wonder they call it the dismal science.

Perhaps it’s time to start looking at the problem differently, more creatively and not through the eyes of the past.

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Banking appears to be racketeering, by pervue of govt writ……

Oh look, another recession we had to have under Labor

There’s no point getting mad at the RBA. Their hands were tied once the catalyst of lockdowns were enacted.

We dont need central banks – period.

Central banks have destroyed economies globally for years, Its banksters at work…..

Peter Herman8:13 pm 12 Jun 23

@stephen Saunders….at least Albo is trying to do something that LNP had 9 years to do and didn’t do it
The previous LNP installed Lowe when Morrison was the treasurer of this great country and we went downhill after that
Dr Lowe should go and take his other mob with him
He has no idea what is being done….he is just trying to make himself look ‘intelligent’
He is fat from that

HiddenDragon7:53 pm 12 Jun 23

“And every month, the grounds for jacking up rates seem to shift.”

It was just the same when, in pre-pandemic times, rates were cut or held steady – regardless of economic fundamentals – with the blatantly obvious purpose of propping up and further inflating already mad asset prices.

In those days, the usual pretext was economic statistics selected and interpreted with Kardashian-level artificiality along, at times, with some forlorn waffle about breathing those elusive “animal spirits” into a lazy, bloated economy run by people (of all political persuasions) who were too busy working out how best to buy votes and feather their mates’ nests with the windfall revenues from the epic mining boom and the housing price bubble to be bothered turning their minds to building a robust economy which will survive the end of that boom and the popping/deflation of the bubble.

Sadly, the RBA and the others who have had their sticky mitts on the levers have been all too successful in propping up asset prices (hence the extra pain that many Australian mortgagees are now feeling compared to their counterparts in less over-priced countries) but have failed dismally in building a more resilient economy. The Albanese government has some policies which will help with the latter, but it is clearly also infected with a large dose of Magic Pudding thinking, so progress will be patchy.

If Lowe can deliver more home truths, such as his recent effort to turn the public debate on to our awful productivity performance, on the way out and after he starts collecting his very, very nice pension he will be doing us a favour – even if it does not always feel like that to those on the receiving end.

Stephen Saunders10:53 am 12 Jun 23

Look over there, at Global Climate Warrior Albanese. In the nick of time, saving the Planet. Look over here, at Bad Old Phil Lowe. Cruelly stiffing, our suffering home buyers.

That 715K migration over 2023-25? Thank god for our World’s Best Treasurer. It is Best Practice don’t you know? All the Anglophone Nations are Immigration Raptors.

Once again Bushnell pushes the blatant mistrust that Lowe has been providing “advice” to struggling people.

He did no such thing, recognising facts is not providing advice.

As housing costs increase, the average amount of people per house will grow.

As housing costs increase, people have less disposable income, so will spend less and increase working hours where possible.

Those points aren’t remotely controversial regardless of what Joe Bloggs on Twitter might think.

And I’ll definitely take the Reserve banks ability to look at all the most recent data and make the most reasonable and balanced decisions over what “many people” (who?) might think over the currency of their economic data.

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