Obama fans have had their adrenaline rush, now it's my turn to have mine

[JohnK]

You're right - i'm above the poverty line, but still find it hard to fathom how I can hold down a steady decent paying job, as does my wife, yet it seems multitudes of other people can go around spending lots of money on cars, plasmas and the like and I can't. Go figure. Oh, and dont interpret that as jealousy, good luck to them, I just wish I knew how they did it (so I could). But the current crisis would suggest they've done it by spending more than they earn, and they're paying for it now.

I know many people getting personal loans to buy flashy cars. Some do it through expensive leases and keep the car for 2 years and then upgrading to another expensive flashy car. The plasma screens can go on the credit card along with the other revolving debt.

 

[Alanslegal]

but claiming it's to stimulate the economy is rubbish. It was vote buying at it's grubbiest.

Having said that, I'm sure as hell more likely to spend $1k in a market stimulating manner, than someone who's so in debt they need to put the $1k into paying down debt. Or the multitude I see whom most of the $1k has been shot into their left forearm.

Why would anyone want to buy votes just under 3 yrs out from the next federal election? It doesn't make sense to me. Come this day in 2011 I'm sure most folks who received the bonuses would have forgotten it esp. if their finances tightened even further and the doom & gloom of the falling economy still lingers in the air. If you want to buy votes, buy them just prior to the election not years away - I believe that's what Johnnie did & why he always won! OR was it because the children were really not thrown overboard incidents?

Yes most of us here on AFF would use the bonus, if given, for whatever reasons and so would those persons who received it. Whether they put it through their left foream or not, the $$$ was spent, the supplier/seller would have got some $$$ and I'm sure they would have put it to good use too. That supplier probably bought a playstation3 or what not - we just do not know. Yes my wording for "good" isn't the right word but it shows how the $$$ is circulating, goodly or badly.

If for example the general population receiving the $$$bonus I am very positive that some would also spend it on the pokies, support their whatever addiction, put some towards the mortgage, credit card or loans and some would spend it. So you can't just say those who received the bonuses are complete dimwits who did not spend the bonus correctly because I bet that if most of us got it, the above spending examples would definitely be applied to us as well.

 

[oz_mark]

If for example the general population receiving the $$$bonus I am very positive that some would also spend it on the pokies, support their whatever addiction, put some towards the mortgage, credit card or loans and some would spend it. So you can't just say those who received the bonuses are complete dimwits who did not spend the bonus correctly because I bet that if most of us got it, the above spending examples would definitely be applied to us as well.

While the fiscal stimulus was a good Keynsian response to some problems, in this case I am not convinced the government truly grasped the problem that was faced (credit crunch from years of excessive debt fueled over consumption), and therefore I remain to be convinced the solution they applied was correct. What I was after was some evidence that it ended up making any difference to the position we are in now.

(Getting people to buy playstations, wide screen TV's etc hardly seems appropriate given our balance of trade position!)

 

[Moody]

Assumptions make an ....well you know how the rest of it goes.

Yes - I have made an cough of myself! I never considered that the "doc" in your name could stand for spin-doctor.

But please pray tell how injecting cash directly into the economy is not a stimulant? Perhaps you can also inform the RBA governor that reducing interest rates by 300 basis points is also a waste of time. In fact why don't you personally tell every single economist in Australia that they have no clue about how things work. They'll thank you for it, really they will.

Sorry if this seems too strong but your comment about the "multitude I see whom most of the $1k has been shot into their left forearm" is infantile, derogatory, elitist, and points to a failure of character.

But no doubt you would have wisely spent any cash that came your way and not wasted like they did. Though as you don't spend it on houses, cars, plasmas, etc. I am a little bit concerned that you may instead blow it on the pokies!

 

[docjames]

I guess my comfort level for debt is less than many in the community, and that's why they have stuff I don't!

 

[Alanslegal]

While the fiscal stimulus was a good Keynsian response to some problems, in this case I am not convinced the government truly grasped the problem that was faced (credit crunch from years of excessive debt fueled over consumption), and therefore I remain to be convinced the solution they applied was correct. What I was after was some evidence that it ended up making any difference to the position we are in now.

I would also agree that the govt didn't grasp the problem entirely and it appears to be almost a knee-jerk reaction, remembering Kevin07 and his group couldn't give exact fisical data/projections when questioned by the oppposition.

I'm just pointing out whether or not people think the bonuses are a good or bad, or whether there are better choices in using that $10.4billion, some cash stimulus is on the balance of probabilities better than none.

 

[docjames]

But please pray tell how injecting cash directly into the economy is not a stimulant?

Did I say that? My point is it is not sufficient to stave off a downturn, and thus, is a waste of money.

Perhaps you can also inform the RBA governor that reducing interest rates by 300 basis points is also a waste of time. In fact why don't you personally tell every single economist in Australia that they have no clue about how things work.

Not every economist in Austrlia thinks the handout was a good idea. Just the ones the government were listening to.

When did we start discussing interest rates? I have never said they are a waste of time, they are one of the best (and perhaps only) tool we have. A crude tool, yes.

Sorry if this seems too strong but your comment about the "multitude I see whom most of the $1k has been shot into their left forearm" is infantile, derogatory, elitist, and points to a failure of character.

Having fun insulting me? Tell me how giving out $1k in cash stimulates the economy if it is used to buy drugs on the black market? And dont try and argue "it's a mall number" because it's not. You clearly know that's what I was implying - sorry if I was too flippant for you to comprehend.

But no doubt you would have wisely spent any cash that came your way and not wasted like they did. Though as you don't spend it on houses, cars, plasmas, etc. I am a little bit concerned that you may instead blow it on the pokies!

Irrelevant given I didnt get the cash. But it would stimulate the economy.


Since you're so desperate to know, if I had $1k given to me, I'd probably spend it either on soemthing nice for my wife, and/or give some/all of it away to a charity. but I suspect you wont believe me on that one since you've decided I'm like KRudd (all spin!).


Got any other complaints about my opinion?

 

[JohnK]

So you can't just say those who received the bonuses are complete dimwits who did not spend the bonus correctly because I bet that if most of us got it, the above spending examples would definitely be applied to us as well.

Would it have been better if the money was wasted on status runs or mileage runs?

In fact why don't you personally tell every single economist in Australia that they have no clue about how things work. They'll thank you for it, really they will.

In my opinion the majority of economists have no idea what is going on at any point in time. Most of their decisions are based on guess work and looking at trends of what may have happened during a similar period in the past. Does any economist really know how long the current global economic crisis will last or how badly the world is going to be affected?

 

[oz_mark]

In my opinion the majority of economists have no idea what is going on at any point in time. Most of their decisions are based on guess work and looking at trends of what may have happened during a similar period in the past. Does any economist really know how long the current global economic crisis will last or how badly the world is going to be affected?

Only a couple saw the current situation coming.....

 

[docjames]

Would it have been better if the money was wasted on status runs or mileage runs?

But they could be economically stimulating:

Taxi to a/p b/c start too early for SWMBO to drive you
User charge x 5 places visited
Do some random shopping whilst walking to QP
QF has to purchase supplies etc for all your drinks in the QP
QF has to buy fuel / clean a/c etc etc
Taxi home (because too many drinks in QP)


:mrgreen::mrgreen::mrgreen::mrgreen::mrgreen:

 

[Platy]

In fact why don't you personally tell every single economist in Australia that they have no clue about how things work. They'll thank you for it, really they will.

Perhaps we should. Tell them, I mean. But I wouldn't expect any thanks for it.

It is clear that no government knows what to do for the "best" in the current situation. To stimulate or not (whether on trivial personal spending or infrastructure), if so, how much, do nothing, do something else, re-nationalise finance institutions, etc.

One suspects that the economic models simply aren't good enough to capture the behaviours of the system well enough to be able to use them to predict how to manipulate the system into a preferred trajectory.

Economists don't have a clue. Thus nor do Gov's.

In the vacuum, choices will be made on political expediency and they may or may not hit lucky with the outcomes of their hit and hope measures.

 

[Platy]

What I was after was some evidence that it ended up making any difference to the position we are in now.

I don't see how you will ever know!

 

[docjames]

I have edited my post in this thread (#60) which was made flippantly in haste (whilst under some stress) and apologise to anyone offended. It was insensitive at best, and offensive and incompassionate at worst.

I would like to clarify the INTENT (but unfortunately not the outcome) of my post was to suggest there are/were a large number of people not helped by the $1k handout.

Lets leave it at that.

 

[Moody]

I have edited my post in this thread (#60) which was made flippantly in haste (whilst under some stress) and apologise to anyone offended. It was insensitive at best, and offensive and incompassionate at worst.

I would like to clarify the INTENT (but unfortunately not the outcome) of my post was to suggest there are/were a large number of people not helped by the $1k handout.

Lets leave it at that.

Cool - sorry if I overreacted.

The cash injection was definitely a shotgun approach to fiscal stimulus (as are interest rates as pointed out), but when you have a large boulder coming at you there is not much time to run scenarios past the economic boffins for their combined wisdom. I missed out because of my socio-economic status, but as I have pointed out most people in my situation now have an extra $1K per month to play with (based on the typical Sydney mortgage).

Am I putting this up my arm/nose or pussing it against the wall? No more than usual. Is it initially going on debt reduction? Of course it is because my bank now charges me less interest. Does some of it actually flow into the greater economy? Yes - because rather than hunkering down in a depressed state about the end of the world, I am bringing forward plans to make some large purchases.

Although the size of the crisis surprised most economists (who are really just glorified weather predictors) the dangers of the subprime mortgage market had been known for some time. Unfortunately the sharing of the poison didn't lessen its effect - just made sure that everyone was impacted when the dominos started to fall.

They also know that stimulating the economy now may stop a worldwide recession turning into a depression. It's like climate change - they know what each lever does but not what the overall impact will be. So they throw a bag of cash into the air and hope that most of it is put to productive use, and to be honest - a cashed-up drug dealer is more likely to spend it and stimulate the economy than a paranoid pensioner.

 

[Platy]

It's like climate change - they know what each lever does but not what the overall impact will be. So they throw a bag of cash into the air and hope that most of it is put to productive use, and to be honest - a cashed-up drug dealer is more likely to spend it and stimulate the economy than a paranoid pensioner.

Seems to me that despite the rhetoric of left and right there is surprising commonality in interpretation and analysis on the parlous economic situation expressed in seemingly divergent posts.

IMHO your analogy to climate models are well advised although in writing that I am not encouraging a debate on such........

 

[simongr]

I missed out because of my socio-economic status, but as I have pointed out most people in my situation now have an extra $1K per month to play with (based on the typical Sydney mortgage).

Sadly having spoken to my lender yesterday, they have not reduced the lending at all since the rates started to come down and might reduce it if there is another rate cut - sadly as well I can not move my mortgage for three more years and by then rates will be on the rise...

 

[oz_mark]

Sadly having spoken to my lender yesterday, they have not reduced the lending at all since the rates started to come down and might reduce it if there is another rate cut - sadly as well I can not move my mortgage for three more years and by then rates will be on the rise...

Am I right in assuming that there is at least some element of your loan that is on a fixed rate?

Had some colleagues lock in to fixed rates when things started moving upward, and now they regret doing that. I guess not so many months ago, there was an assumption that rates were going to rise somewhat further than they did.

 

[simongr]

Loan was 106% of value and lender is issuing no new loans (owned by Merrill Lynch) thus no competitive imperative to reduce rates.

Loan is capped and that was just before the last 2-3 rates rises but essentially I can do nothing given they have no need or desire to reduce rates...

 

[oz_mark]

Loan was 106% of value and lender is issuing no new loans (owned by Merrill Lynch) thus no competitive imperative to reduce rates.

Oh, them!

I though ML was looking to sell them off.

 

[Moody]

Loan was 106% of value and lender is issuing no new loans (owned by Merrill Lynch) thus no competitive imperative to reduce rates.

Loan is capped and that was just before the last 2-3 rates rises but essentially I can do nothing given they have no need or desire to reduce rates...

My wife once bought a house at the limit of her ability to repay, so she fixed the loan with St George to guarantee no nasty surprises. Three and a half years later (into a 5 year fixed period) she was married to me and needed to sell because we had bought a new house together and she was up the duff. Once the property was sold St George gave the final payout figure which was quite a bit less than expected. When we queried the high amount of fees they said that they were because she broke the loan agreement off early. "But interest rates have remained stable and there is only 1 more year to go in the fixed period!", we said. They then pointed to subclause 16.5.1.1 that said that if the loan was terminated even a single day early they could charge full penalty fees.


So be aware that most banks take a practical view of these arrangements (i.e. - will pro-rata the penalty depending on how long is left to go on the fixed loan), but St George will screw you for every penny they can. Whether the situation will change now that Westpac is taking over is unknown, but we will never again do business with St George and would caution others not to assume that they will treat you fairly. It is easy to be wise after the event but Merril Lynch has also never come across to me as an ethical organisation, even for a bank.