The RBA, The Feds, Rates rises and…. The Economy, what else!!

May 19, 2011 - PRLog -- I know this is one of my favourite battle horses, at the end of the day, this is what everybody is taking about and what makes or break the economy: Interest Rates!!
I’ve been writing about it for a couple of years now, all of a sudden the 2 speed economy it’s a topic on everybody lips.  Speed 1: Miners, speed 2:  80% of the population…..
Recently the  boss of the Bank of Queensland said that another rate rise would “hurt like hell”  no kidding!
According to the RBA Inflation must be curbed, the problem is, the way Inflation is measured is rather deceiving, all the main items  like air travel, fuel electricity and the like will go up regardless of the interest rates setting.   Most if not all of these items are beyond the control of any one company or Government.  Electricity and water pricing have been rising thanks to the stripping of profit, courtesy of the State government, the need to upgrade and repair systems and infrastructure and, in the case of electricity, to pay for “Green Energy” also know as the solar panel tariff... It will not matter much that we will use less electricity because the price is prohibitive, Inflation is measured on the “Price Rise” not the consumption of electricity……… Fuel it’s a world market price, no amount of interest rates rises in Oz will make OPEC reduce the price of a barrel of oil……..
The following  is one of the paragraphs from the latest RBA statement.
"Members noted that the significant divergences between different sectors of the economy presented challenges for policy-making, but that monetary policy had to be set for the needs of the overall economy."
The overall economy is the miner in WA and the farmer on Cape York, the miner might be able to absorb another interest rate rise, I doubt the farmer on Cape York will…. Is all of this going to stop the next rise in petrol prices? Probably not, is it going to fuel more personal bankruptcy ? Probably Yes! Is it going to fuel a resurgence in construction and investment? Probably not!
So why is the RBA hell bent in finding a good reason to raise interest rates? Is it a case of a central planner finding a statistic to justify  a policy? And forgetting about the individuals, lots and lots in this case, that are going to loose the lot?
In Queensland we have so many handicaps that our economy is sort of ticking over, in reverse…, a lot of retailers are on the brink, in Cairns alone 400 small business have closed the door in the past couple of years.
There is no stimulus in the economy, no confidence in the State and Federal Government,  there are a lot of mixed signals from Treasury,  people have stopped spending and are waiting for better time ahead.  
The Real Estate market is at a stand still with no light at the end of the tunnel.   Some of the properties that are for sale might be overpriced, at the same time, you cannot expect to buy a house today for less money that it cost to build it!  
Another rise in interest rates is going to totally kill the property industry.  We are already at a critical stage as far as deficit in available housing is concerned, that’s why rents are sky-high, another rise in interest rates is going to put more pressure on existing rents and make small investors wait for better times before they decide to build.

To add insult to injury, the federal government in the budget has allocated the regional health facilities  funds, what a gift that is: Regional Queensland is home to 1/3 of people living in regional Australia, our funds allocation:  $164 millions of a $1.3 billion program, no where near a third . The electorate of Tony Windsor, one of the independents that’s propping up the Gillard Government, $120 Millions……….. The electorate of Mr Oakeshot, the other independent, $96 Millions………. Bob Katter … $590,000…. Maybe I’m too cynical, but the math doesn’t add up… and another thing : Anna Bligh is the president of the Labour Party!!! Go figure………….

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