Wednesday, 28 November 2007
Morning Showers
It's still the rainy season in Brisbane. A few weeks ago, there were rain showers most every evening, shortly after sundown. For the past week or so, it's rained every morning, just after dawn. I caught a rainbow the other day...and saw the end of the rainbow. The end of the rainbow was just over the suburb of Kelvin Grove, which is home to a campus of the University of Queensland.
Sunday, 25 November 2007
A New Day in Australia
After a bit of traveling, I'm back in Brisbane. Where to begin? Perhaps, first, with a bit of local news.
Australians have chosen a new government. After quite some time being lead by the Coalition Liberal Party and John Howard, they have overwhelmingly voted for the Australian Labor Party and Kevin Rudd. In some ways, this is a big deal. I (and probably most Australians) have seen this coming for nearly a year. Mr. Howard was very far down in opinion polls every time I saw them. The final nail in the coffin for his government was perhaps the most telling: the Reserve Bank of Australia raised interest rates.
For my friends in the US, this might seem very odd, since interest rates there are declining rapidly during a financial upheaval. Not so here in Australia, where a typical loan seems to run over 9%, bordering on 10%. Similarly, the saving rates are inverted here...it's very easy to obtain a savings interest rate of 6.5%, even higher, with some careful research. I've even located one reputable bank with an 8% interest rate. This is astonishing! In the USA, I have had a hard time finding a bank that will give me an interest rate higher than 4%, and one bank where I parked some money a short time ago has *reduced* it's interest rate twice in less than three months, from 4.5% to 4.2%. Savings accounts in the US are typically 0.5%; yes, that's 1/2%. People leaving money in standardized savings accounts in the US are giving money away to their banks. I'm beginning to understand what economists really mean when they say the US economy is a consumer economy. It is not in the best interests of a consumer economy to save money...that money should be spent...and it appears the financial system penalizes individuals for trying to hold on to cash.
Rising interest rates here in Australia are perhaps the local equivalent to the credit crunch in the USA, though here, the problems are for entirely different reasons. The Reserve Bank of Australia (RBA) raised rates on evidence of higher than expected inflation...i.e. the economy is doing too well. Australia is in the middle of an economic boom, largely fueled, from what I can tell, by natural resources. This affects everyone in Australia, just as the sub-prime crisis in the USA is affecting everyone there. Here, mortgages will cost more. And after doing a bit of research, I've discovered there doesn't appear to be anything like a true fixed rate mortgage...they all seem to adjust, though much more slowly than ARMs in the USA. So far, I haven't found anyone who will sell a loan for a 30 year term that will stay at the same rate throughout the entire 30 years. So every homeowner and landowner in the country is affected by a rise in the interest rates...perhaps not today, but they will be soon enough. It's also very hard to find credit cards with 0% interest in Australia...in fact, it's hard to find one with an interest rate below 13%. Relatively speaking, there is no cheap money here.
In any case, the RBA raising interests rates during the election cycle seems to have hit the former ruling party quite hard. And, to add insult to injury, John Howard lost his own seat in parliament. I'd say Australians made a very strong statement.
Interestingly, voting is mandatory in the country, and they will track people down. The second day I occupied my flat, there was a note from the local representative of the Australian Elections Commission alerting me to the fact there was no registered voter living in the flat, and they'd be stopping by to help me change my registration if needed. They continued to drop notes until finally catching me at a reasonable hour the following Saturday. I simply showed the nice fellow my US passport, and that's been the end of that. But it was a keen and early lesson on how seriously this is taken. Presumably, turn-out was 100% in yesterday's election. Oh, yes, the election was held on a Saturday. Contrast that with Tuesday elections and oft-declining voter participation in the US.
The new Prime Minister hails from Queensland, the south suburbs of Brisbane, even, so we are likely to see some interesting changes here-about in the coming years. He also speaks Mandarin, and was a diplomat to China at one point in his life. This also suggests interesting possibilities.
It will be interesting to see a government formed, and the effects on Australia. I've seen the results of the quadrennial elections in the US, which can be startling changes of power and focus. I'm keen to see how the locals go about a change of government.
Australians have chosen a new government. After quite some time being lead by the Coalition Liberal Party and John Howard, they have overwhelmingly voted for the Australian Labor Party and Kevin Rudd. In some ways, this is a big deal. I (and probably most Australians) have seen this coming for nearly a year. Mr. Howard was very far down in opinion polls every time I saw them. The final nail in the coffin for his government was perhaps the most telling: the Reserve Bank of Australia raised interest rates.
For my friends in the US, this might seem very odd, since interest rates there are declining rapidly during a financial upheaval. Not so here in Australia, where a typical loan seems to run over 9%, bordering on 10%. Similarly, the saving rates are inverted here...it's very easy to obtain a savings interest rate of 6.5%, even higher, with some careful research. I've even located one reputable bank with an 8% interest rate. This is astonishing! In the USA, I have had a hard time finding a bank that will give me an interest rate higher than 4%, and one bank where I parked some money a short time ago has *reduced* it's interest rate twice in less than three months, from 4.5% to 4.2%. Savings accounts in the US are typically 0.5%; yes, that's 1/2%. People leaving money in standardized savings accounts in the US are giving money away to their banks. I'm beginning to understand what economists really mean when they say the US economy is a consumer economy. It is not in the best interests of a consumer economy to save money...that money should be spent...and it appears the financial system penalizes individuals for trying to hold on to cash.
Rising interest rates here in Australia are perhaps the local equivalent to the credit crunch in the USA, though here, the problems are for entirely different reasons. The Reserve Bank of Australia (RBA) raised rates on evidence of higher than expected inflation...i.e. the economy is doing too well. Australia is in the middle of an economic boom, largely fueled, from what I can tell, by natural resources. This affects everyone in Australia, just as the sub-prime crisis in the USA is affecting everyone there. Here, mortgages will cost more. And after doing a bit of research, I've discovered there doesn't appear to be anything like a true fixed rate mortgage...they all seem to adjust, though much more slowly than ARMs in the USA. So far, I haven't found anyone who will sell a loan for a 30 year term that will stay at the same rate throughout the entire 30 years. So every homeowner and landowner in the country is affected by a rise in the interest rates...perhaps not today, but they will be soon enough. It's also very hard to find credit cards with 0% interest in Australia...in fact, it's hard to find one with an interest rate below 13%. Relatively speaking, there is no cheap money here.
In any case, the RBA raising interests rates during the election cycle seems to have hit the former ruling party quite hard. And, to add insult to injury, John Howard lost his own seat in parliament. I'd say Australians made a very strong statement.
Interestingly, voting is mandatory in the country, and they will track people down. The second day I occupied my flat, there was a note from the local representative of the Australian Elections Commission alerting me to the fact there was no registered voter living in the flat, and they'd be stopping by to help me change my registration if needed. They continued to drop notes until finally catching me at a reasonable hour the following Saturday. I simply showed the nice fellow my US passport, and that's been the end of that. But it was a keen and early lesson on how seriously this is taken. Presumably, turn-out was 100% in yesterday's election. Oh, yes, the election was held on a Saturday. Contrast that with Tuesday elections and oft-declining voter participation in the US.
The new Prime Minister hails from Queensland, the south suburbs of Brisbane, even, so we are likely to see some interesting changes here-about in the coming years. He also speaks Mandarin, and was a diplomat to China at one point in his life. This also suggests interesting possibilities.
It will be interesting to see a government formed, and the effects on Australia. I've seen the results of the quadrennial elections in the US, which can be startling changes of power and focus. I'm keen to see how the locals go about a change of government.
Subscribe to:
Posts (Atom)