Tag Archives: Economy

Reserve Bank Cuts Interest Rates (Again)

THE Reserve Bank has cut interest rates to 3 per cent, giving homeowners a boost as Australia’s jobs outlook deteriorates.

The move takes the official cash rate to the lowest point since 1960. But there’s no guarantee the cut will be passed on to homeowners by the nation’s big banks. Source: News.com.au

It’s really quite amazing how far the interest rate has come, to it’s lowest point in over 50 years! That’s a big deal. It’s a big deal for home owners also. If you locked your mortgage interest rate in this time last year, I feel sorry for you. If you locked it in last year you’ll be paying over $500 a month more than if you locked in your interest rate on your mortgage now.

I wonder if it will get any lower than what it is now?

K-Rudd’s $12.7bn Stimulus Package

Kevin Rudd last night announced that the Australian government will once again be handing out money to low-middle income earners to help bolster the economy and weather the storm so to speak, encouraging spending and to help secure 90,000 jobs from being lost.

Workers, students and drought-stricken farmers will be showered with $12.7 billion in cash payments to provide short-term stimulus to the flagging economy. Source: The Australian

The Australian Tax Office is currently doing work in preparation for an April deposit into bank accounts for individuals as well as families who fall into the income bracket <$80,000. This group will receive the $950 as promised, and I believe that higher income earners will also receive something too, but not as large (in the order of $200-$300).

So look out for an increase to your bank account around April.

Global Financial Crisis – What Is That?

Lehman_BrothersYou hear the words, “Global Financial Crisis” everywhere these days, in newspapers, television and all over the internet. We all know its bad and we all know its about money and for the majority of us we don’t really need to know ever little detail of the current economic problems, but what exactly is this GFC and how does it affect me, an everyday regular Joe? (from an Australian point of view).

What is it?

Basically the current economic problems the world face all started in September 2008 when a number of financial firms (loans, capital, etc) based out of the United States basically went bust or merged which then resulted in the failure of the business.

In the lead-up to this, many business journals commented about the financial stability of many investment banks, insurance firms and “loaners” (mortgagers) both in the US and Europe basically about what they were doing wrong which led to the sub-prime mortgage crisis felt largely in the US.

This the resulted in a global credit problem. Lenders stopped lending and everyone kind of froze in shock, dragging the rest of the economy with it.

How does it affect me?

Well over the last few months as we’ve seen fuel prices went sky high, then fell to their lowest point in years.

makingcarsIn early 2009 it will be easier to buy cars but up to a point. Anything imported  2009+ will likely be more expensive as most major currencies rally and loose like crazy. This means you may still get a good buy on 2008< plated models and you may have seen some car companies advertise this fact already so if you’re in the market for a new car get in quick.

Electronics have been cheap in Australia the past 6 months or so mainly because our dollar was so high 6 months ago compared to the US dollar so importing these products cost us less money, but same with cars in Australia…this won’t last forever. Many economists believe early Feb 2009 will start to see these products to rise sharply.

Basically, things at this point can only seem to get worse before they get better and we can see evidence of the Australian government trying to allow for this to bolster the economy. You may remember mid December the government gave a ~$1000 bonus to many families to encourage more spending and the fall of petrol prices is certainly helping this to happen also.

What will happen when/if things get worse?

Who knows? Not me anyway. I’m not a business analyst, economist or anything else. I’m just an interested guy and many others don’t really know either. We’ve never really experienced anything like this on such a scale for quite some time but globally a more conservative view on most.

Personally I can’t speak for the rest of the world but in Australia at least, unemployment is rising and as a consequence of that its getting harder and harder to find a job, and many people in jobs are having a hard enough time trying to keep it! I’ve had to take a reduced workload at work for the business to save money and stay afloat during this tough time, but its better than totally loosing my job I guess.

What do you think about the current global financial crisis? How has it affected you?