News
Your House Vs. Your Income
Labour cost pressures remain weak (Graph 5.7). The wage price index (WPI) increased by 0.6 per cent in the June quarter and by 2.3 per cent over the year – the lowest annual outcome since the index was first published in the late 1990s.
Rates and the Punter
We are always asked our opinion as to which way lending rates will be moving next. Our standard response is to point towards the RBA statements and recent economists but politely dodge the question. As part of our credit licence we cannot give specific advice.
The End of Employment
The headlines of a few months ago citing a professional body that predicted a very high percentage of jobs will be lost to automation (or robots) are now this months worm food. Still let’s reflect on where we currently stand compared to just two decades ago.
More Car Lease = Less Home Loan
When we first purchase a home we breathe a sigh of relief. After a while though (and perhaps a pay rise or two later) we start thinking about our second largest asset. Ours car.
Bring Out Your Dead
A few weeks ago, I wrote an article entitled “Picking Winners”. It has since been pointed out to me by a few readers that the opposite is in fact true in banking. That is, banks look into a crystal ball and through the eyes of their credit management try and pick the losers. In other words industries and companies – that in their view – will not survive the current economic cycle. An edict then goes out to all credit foot soldiers that they are not to approve loans to these industries. The phrase “we’re full on this industry” comes to mind.
What You Don’t See
Some foreign banks – and I’m looking at the American and British banks now – tried to take the locals head-on in the retail banking space. This was folly because the locals had developed a branch network over a century or more of operating (the internet was not yet used in Australia). So they failed.
When Banks Raise Rates
By the end of last week all four of Australia’s major banks had raised rates on housing finance. They were joined by – what was once – Australia’s largest investment bank.
Picking Winners
As we head into Melbourne Cup week – traditionally the end of the year and the beginning of the festive season – I thought it would be worth reflecting on the businesses that could have been if governments had decided to pick winners and back certain industries. Our politicians are quite adamant that they do not engage in this practice.
Politically Incorrect
When I was a humble bank employee (around six months ago), I practiced the politically correct rules that an employee of a bank must if he is to survive in the 21st century.
What You Can Get Used To
It’s amazing what was once abhorrent to us becomes normal. As a young idealist you may have once said that I will never work in a dead-end job. However the realities of life force most of us to compromise those hard and fast ideals and settle for regular pay. In politics we vote for governments of both colours to lock up men, women and children whose only crime was to flee death and seek out a better life for their children. If we told our younger selves that’s what we would be doing as adults, we may not have been too pleased with ourselves (apologies to people who always thought this was a good idea).