Interesting

From The Age:

The Reserve Bank is expected to respond within a fortnight by raising official interest rates by 0.25 of a percentage point, adding $50 a month to repayments on an average $250,000 home loan.

So here we go again. Inflation is up and the global economy is stuffed, so once again it's time for Mr. Average to foot the bill. Is it just me, or does there seem to be a direct correlation between tax cuts and interest rate rises? And why do banks always have to make $4+ billion? Why can't they just make $1billion? It's still a hell of a profit.

Then I read this:

But they believe an increase is less likely if global sharemarkets resume the falls of recent days.

Now I thought that market crashes were bad. I mean back in the 80's we had people literally jumping out of windows and interest rates that were well over 10%. But being a mortgagee that is not a shareholder, except where I'm forced to be thanks to the advent of compulsory superanuation, it seems perhaps that this is not such a bad thing after all.

But I think Tim Colebatch sums it up quite well in this artice when he says:

And you can see why. Our financial system for decades placed a premium on safety: the system might have been low-yield, but it was secure and transparent. But in the 1990s and 2000s, financial institutions have put a premium on profits: the system is now high-yield, insecure and so opaque that no one knows who owes what.

"financial institutions have put a premium on profits". He puts it so eloquently doesn't he. What he really means to say is "financial institutions are greedy bastards that don't give a rats arse about you or your house, so long as they can squeeze a profit out of you."

But don't worry to much. Financial institutions will continue to make their obscene profits. They have to, "the shareholders demand it!" And besides, now that they've shifted the cost of their silly mistakes to Mr. Average, and now that they've got 3 million Mr. Averages to give them an extra $50 a month (do the math) whenever they cock it up, they're not likely to ever make a loss themselves, are they? A "downturn" (maybe only $3.9billion) is about as bad as it gets these days...