Westpac: Deep recession imminent, RBA to boost QE

Bill Evans with the video:

Nothing there that I disagree with, except perhaps the speed of rebound. It looks like NSW is locked down until it gets enough vaccinated folks…

Houses and Holes
Latest posts by Houses and Holes (see all)

Comments

  1. Display NameMEMBER

    Stand by for more reduced rates. Because this works so well….to pump asset prices, increase inequality, and generally contribute to the financialization of the country.

    Central Banks have far exceeded their competence and usefulness. They are a net negative influence.

    • And they are not accountable to the public as cannot be voted out!…basically globally taking on bigger roles and influencing peoples daily lives more than ever in history…..

      • They are not irrelevant if they are empowered to do proper MMT with cash to the means tested individual rather than cash to the business.

    • DN
      CB haven’t even really started what they will do.
      The issue is now it causes inflation.

      IMO you’ll see interest rates rise significantly in H2 & they will need to increase QE but it won’t be enough

      They have created a complete mess…….

    • I agree completely but the thing that has changed over the last 50 years is that today’s workers also define their problems in monetary terms. Access to capital, wide spread capital availability and the cost of capital are crucial parts of any discussion of Australian labour use and Asset creation (mostly housing). Long gone are the days when the workers movement defined its success as full employment with a high volume of output (new assets) created with the available labour force (goods produced per unit of manhours). Today you’ll struggle to find anyone, other than a rusted on Marxist, that defines the aggerate (Labour/Goods Output) relationship without including “capital” as an absolutely essential part of the loop.
      Completely lost in this discussion is the concept that Labour can organize itself without the permission of Capital. It follows that Capital also has reduced its value if it fails in the task to organize labour in such a manner as to address the most critical needs of the society.
      What I find even more intriguing today is the acceptance of laws/ social customs which effectively limit the value of self organized labour. Zoning permissions would be very high on my list of laws specifically passed to limit the value of self organized labour and thereby ensure that Capital continued to be a critical part of any Asset creation loop. What’s even more amazing is the wide spread acceptance and even support that these laws have within the “worker” community. Such is our hunger for money that we’ve completely forgotten the role that money should play within the community. We’re giving Capital a free pass on the social obligations that come hand-in-hand with the role which capital plays.

        • Thanks for the feedback, unfortunately (for me) I tried having this discussion a few weeks back at the local Pub while addressing a bunch of Tradies. Eloquent as always, the collective told me to STFU and stop talking such utter BS.
          You can’t do anything without money!
          Hmmm I thought about a reply but all that I could think of was how sad it was that this group felt powerless to act (in their own interest) without permission. Captured, completely captured, mind, soul and body all slaves to capital. Of course I kept that last thought to myself valuing my own dental health.

          • dodgy as, ever had that same conversation with people who don’t make, or haven’t got so much money, and never will? The response they give is more or less the same, which is dumbfounding. What has this place, probably the world too, become?

            Get the deep gut feeling it will descend to worse, and stay there.

          • What’s the problem with the workers holding the capital. The problem with capitalism is that people who do very little other than financial engineering own the capital.

          • @MycrawI’m a little lost, Workers do hold the capital in that collectively they give capital value.
            Without the value to create something capital is well ammm worthless.
            We might be transitioning to a world where the top !% simply doesn’t need the other 99% (AI and robotics etc) but were definitely not there yet.

            IMHO the problem today is that Workers generally don’t see themselves as “workers”, their self image is that of small scale businessmen and small c capitalists and they’re the first to pat themselves on the back for their astute investing when heir house price doubles. In this sense the “workers” are captured but that’s the thing only they can free themselves from this enslavement. This freedom begins with the acknowledgement that their collective labour creates value. Their labour is theirs s to sell or deploy in such a manner as to create durable assets. Any system which denies collective labour the right to create enduring assets is corrupt and needs to be expunged.

    • Jumping jack flash

      The capacity to reduce rates is limited these days, but there are other things they can do that are equivalent.

      My opinion is that there will be more stimulus. Much, much more. Its very easy to stimulate (usually, but Scomo seems to have a problem with getting it right for some reason!)
      CPI increasing – as a result of stimulus spending – is equivalent to a rate cut.
      UBI (which technically can be thought of as stimulus)

      And so is QE where the government basically pays the banks a portion of their expected interest to keep rates down or lower mortgage rates.

      I’m sure our glorious leaders with planet-sized brains can think up others.

    • OZ battlerMEMBER

      I was planning to move to Brisbane (from Melbourne) about 20min north. I visited with my family in March this year, checked out the housing and viewed the schools. Sent the application for the school and it was a done deal. Less than 6 months later 4 bedroom detached housing has increased 35% and now we are priced out!
      This housing bubble is absolute insanity and ruining lives

  2. adelaide_economistMEMBER

    Lol. This ‘Westpac’ was predicting interest rate rises just three weeks ago. The IQ on the logo makes a funny sight.

  3. I know you maybe won’t agree but QE will be more than 1 trillion AUD over the next 12 or so months
    BIG increases, possible up towards 2 trillion AUD into end of 2022
    The crisis that is going to hit us in Q4, is going to be historic.
    It was going to hit us anyway, offshore banking & derivatives crisis

    The issue now Australia is going into it very fragile.
    They will have to do something to hold our banking system up from collapse. I have no idea but money printing will be the solution

    • Q4 which year BC? I do love moving goal posts. I think it was April last year, then mid year thenH2CY2021 then Christmas, then April this year.

      • Swampy
        I said last year that our banks would be bailed out in April 2020 and they were
        RBA pumped in $300+ billion and Phil Lowe even said the support to the banks this time was greater than 08/09
        I said to you that, I accepted the fact that they will go to lengths to prop things up, beyone what I ever thought
        I never thought they would give $750 per week JK
        I never thought RBA would would give the banks so much free money
        I never thought RBA banks would lower rates so low to ridiculous levels and blow the bubble they have in Sydney…..

        The issue is now printing money causes inflation …..
        You can give me any argument you want, inflation is an issue and will continue to be the more they print

        CB have created an absolute mess

    • Eggplant Wizard

      Still think we’re getting a melt-up before the collapse? There’s precious little time to fit in both a blow off and a historic crash before the end of the year. Would be an unprecedented whip-saw.

      • When the pound fell out of the exchange rate mechanism interest rates went from 8% to 10% to 15% in one afternoon.
        The problem we have now is that nothing has happened for so long, it’s like people don’t expect or have never experienced it.

        • @Dylan @EW
          The market is getting very short AUD & short equities
          My feeling yes higher but the Sydney thing is going to be an epic disaster for us
          These central banks have created
          an absolute mess
          I just don’t know how bill evans can predict 3% growth next year.

          • Jumping jack flash

            “I just don’t know how bill evans can predict 3% growth next year.”

            I agree, maybe he doesn’t get out much and thinks Scotty’s absolutely hopeless effort at stimulus wasn’t all that bad? Or maybe he’s been told that more stimulus is coming?

          • JJF
            There is one thing I do know for a FACT
            STIMMY hand outs borrowing printing lower teh rates will never stop until the whole system blows up

            I don’t care about the theory that’s written by analysts
            I’ve spoken to some big players, property materials packaging food etc etc, packaging for food drinks etc are sky rocketing in price & that’s even if they can get, huge shortages
            Inflation is a problem & these guys believe the price rises are ahead of us

            I’ve heard in pricing, big buyers have said to huge manufacturers/suppliers they will go to the competition & they’ve said fine go, our competitors haven’t got any supply either & their prices will be even higher

            Shortages building products, steel frames going up all over

            Inflation is going to keep rising

            More printing inflation up, interest rates are going to rise in the crisis not fall.

            These imbeciles have created a nightmare

    • working class hamMEMBER

      The feds are out shopping for hoses as we speak, only really debating on whether to use a small number of XXXL or a large amount of XL.
      If this is the one, when will it happen? If I was involved with the LNP, timing this for the 1 in 5 ALP terms would be a high priority.
      Set up the fall for 3 months after the election loss, let ALP do all the hard work and have all their sins washed clean by the “worst financial managers in history”.

    • Jumping jack flash

      We can but hope this will be the case. If they spend a trillion on the banks perhaps mortgage rates will fall to 0.1%?

      It still doesn’t solve the problem of stagnant incomes though, and that’s the big problem now. How can someone earning 60K a year become eligible for a million dollar mortgage, even if they can get one at 0.1% interest? Even a 5% deposit would be too difficult to save.

      It would be better and much more effective to give those trillions to the people to spend. That way incomes will probably rise as a result of the inflation, and it wouldn’t even matter if interest rates rose a little as a result.

      • FUDINTHENUDMEMBER

        Why do people need to save a deposit anyway? Just give em the money. I mean we’ve gone from 20% to 5% to 2%. Why doesn’t govt just guarantee the last bit? Debt and deficit is all over anyway and the result will be infinite house prices which is good for everyone!

  4. Once you start QE you cannot stop it, nobody who has started QE has stopped it, sure they slow it down but then so does the economy and then they start again.

    • Jumping jack flash

      You can’t stop it. It gets baked into the mortgage interest rates. To stop it would be to raise interest rates, and nobody wants that to happen, at least not yet.

      In my opinion QE is a waste these days. We’ve pretty much exhausted its usefulness. The new strategy is inflation, CPI and wage, supported by unprecedented amounts of stimulus in the name of COVID.

    • Mining BoganMEMBER

      You can stop it, but understand that stopping it is like Tony Soprano not hearing Journey playing anymore after Meadow walks through the diner door.

  5. SnappedUpSavvyMEMBER

    if these vaccines turn out to not allow countries to completely open up, like the UK and USA experiment right now, the recession will be a depression of bcnich magnitudes

    • Jumping jack flash

      Once slave imports and wage theft resumes, the economy will not be able to recover. Not just our country either. The world will return to the melt of 2019, and the noose of debt will grow tighter and tighter.

      • Mining BoganMEMBER

        That’s the one nobody wants to remember, that the WuFlu was a godsend for sinking economies that needed a boost.

  6. Being that in order to travel overseas, one will most likely be obligated to get vaccinated, the only vaccine that I am willing to accept in the NovaVax vaccine. Novavax does not use mRNA.
    Novavax uses a traditional vaccine approach of using purified pieces of the coronavirus to spur an immune response in the body. The body can then make antibodies to the spike proteins that cover the coronavirus.
    So far the side effects of receiving the vaccine have been minimal (compared to other vaccines) and here were no reports of unusual blood clots.
    Australia will be getting NovaVax.

    • SoCalSurfCreeperMEMBER

      Vaccination requirements seem to be set by the country you’re visiting. I went to Costa Rica 2 weeks ago. No vaccine requirement in either direction. Covid test only for reentry to US, but they accept the one you do at home BinaxNOW covid19-Ag, using Abbott’s navica App. I pulled the test result straight from the navica app and submitted to United airlines through their app. No paper at all. It was approved before I got near the airport. Some countries want proof of vaccination. Overall international travel seems pretty easy if you plan ahead.

    • Sounds interesting. I’m avoiding the Pfizer et al #clotshots like the….errmmm….plague.

      Two of my colleagues have dropped dead without warning in the last couple of months. Don’t be that guy.

        • No mate. Not been away, not banned. Just been away from the internet for a while. Had surgery, lots of work etc etc. Life getting in the way.

  7. Lord DudleyMEMBER

    If any of those lazy dirty asset-poor PAYE slobs get access to any of this money it will be a travesty. This must be earmarked for Australia’s great risk-taking landlords through various forms of debt relief and subsidies, and provided to Australia’s great job-creating companies via direct payments.

    If any of those lazy asset-poors get any of this money, they will immediately stop working and will do nothing but sit at home playing Super Socialism 64 on their Ataris, and Australia will turn into Venezuela.

  8. Hermit Kingdom

    I think travel stocks, airlines are toast in the coming months.

    Rest of the market should grind higher on rolling lockdowns in the northern hemisphere and giving money to people who have to stay home when those rolling lockdowns come into effect, but you wouldn’t want to be in travel stocks, airlines, restaurants government are going to set fire to those industries once and for all.

  9. Not sure I agree with with Bill.
    It seems BAD news is now good news , so perhaps good news ( coming out of this Covid hell ) will be bad news as reality bites ?

  10. What is exactly the reason why we are doing QE? We have high issuance of credit, high asset prices in everything, costs increasing (as far as I can tell, but ABS disagrees?), interest rates rock bottom, Australian $ too high, etc etc.
    So why are we doing QE?

    • I suspect it’s so the The Great Princes may profit and enjoy their ease while the small people labour and suffer. Just like it’s always been.

    • Even StevenMEMBER

      Because conventional thinking still prevails. Low interest rates will stimulate economy = higher employment.

      But it’s feeding through to higher asset prices (although in fairness we don’t know the counterfactual… A recession? Depression?).

      If Australia had held rates high, we’d be the only country to do so and our currency would be extremely high. Is that a good thing?

      I have a headache. I need to lie down.