Rate cut coming?

[Jovial Monk]

Inflation falls as food, electronics get cheaper

Posted 2 hours 22 minutes ago | Updated 18 minutes ago
A private sector measure of inflation has recorded its first fall in almost two years.

http://www.abc.net.au/news/2011-09-05/i ... er/2870572

This is that private mob, they have been on the money last few times. So, there should be a case for a cut and absolutely none for a rise.

A cut would be a first step to stop Australia sinking into the new Long Depression that is settling in around the world: there was no jobs growth in the US last quarter, the UK unemployment rate is growing, etc.

[Plough]

A rate cut is warrented and required. It will take preasure off mortgage holders and business and will probably cause the $A to soften.

[Jovial Monk]

Yeah.

If rates are cut and real estate settles down a bit then acton could be taken to remove negative gearing and apply full capital gains tax (apart from family home if sold after say 10 years.)

It is an area ripe for reform.

[Plough]

Yeah.

If rates are cut and real estate settles down a bit then acton could be taken to remove negative gearing and apply full capital gains tax (apart from family home if sold after say 10 years.)

It is an area ripe for reform.

Not sure I agree with you on the removal of negative gearing and cgt concessions. Whilt generous they do encorage investing and by default saving for the future. I hate that the govt trys to get a good chunk of profits made on investing through CGT. They dont take on the risk and as the market has shown over the last 2 or 3 years there is no guarentee of making profit.

[Jovial Monk]

No, they don't. People buy established homes and just hold them for a certain amount of time. No benefit.

[Plough]

No, they don't. People buy established homes and just hold them for a certain amount of time. No benefit.

Yes there is, they provide a valuable rental service for people who can not affort to buy. Also many people build and take the risk that over time the asset they have created will increase in value. These are also often used to provide that valuable rental service.

[Jovial Monk]

Actually, many of these speculators (that is what they are, not investors) keep the houses empty, no tenants to vandalise the place and get the negative gearing and tax free capital gains. No use to anyone.

Some even put solar cells on the roof and get the tax benefits of that plus a cash flow because the house being empty uses next to no electricity (a security system maybe) so all the electricity generated by the panels is income to them.

[Plough]

Actually, many of these speculators (that is what they are, not investors) keep the houses empty, no tenants to vandalise the place and get the negative gearing and tax free capital gains. No use to anyone.

Some even put solar cells on the roof and get the tax benefits of that plus a cash flow because the house being empty uses next to no electricity (a security system maybe) so all the electricity generated by the panels is income to them.

Some would do this. Not many could actually afford to do this, they would, in my experience, be in the minority. If, however they can afford to do this good luck to them.

[Jovial Monk]

Good luck to them? Fuck them! They reduce the stock of rental properties and slime a profit just from inflation and nominal price movements. If they want to do it they can pay the full tax on it, then maybe your and my tax might go down!

[Jovial Monk]

Couple of contradictory indications besides inflation dropping:

Car sales get boost in August

New motor vehicle sales were significantly higher in August compared to the same time a year earlier.

And:

Job ad fall 'does not bode well'

The number of jobs advertised on the internet and in major metropolitan newspapers has fallen for a second straight month.

The fall comes amid the release of a number of different indicators showing the economy's performance remains mixed.

I think the jobs might be the important indicator. And bodes no good for the future!

Need the ETS and the MRRT implemented soon as for the tax reforms they will allow, tax cuts for low earners, cut to company tax etc. Interest rate cut or two first might be good as well, would like to see 75 basis points cut in next 6 months, one tomorrow (25bp) one Nov of 50bp then leave for a while at that.