Whose Crystal Ball Is Telling The Truth?

The bank monopoly beat up, not their share holders but, their customers.

However, APRA's chairman Wayne Byers just last Friday said, "rules that have forced banks to hold more capital have made them safer and as such investors should require marginally less return".

It seems that Byers crystal ball is cloudy. He does not realise that there is a monopoly. In a monopoly the free market doesn't set prices - the monopolist does.

Byers' crystal ball is equally foggy on his claim that Sydney particularly, and then Melbourne prices are booming out of control and that he has to prick that balloon by restricting loans to investors. He is ignorant to the fact that the previous cycle saw Sydney and Melbourne "ballooning prices" go higher than they currently are. Then as now, more supply came into the market to correct it and level off price gains.

Who is protecting us from the banks? It is supposed to be the RBA and APRA who instead are urging profit gouging of the monopolists?

Let's look at the facts. Are our banks less profitable and need saving? Which Australian companies enjoy such a huge return in equity as the big four who reap a huge 14-18%? The smaller regionals are still healthy at 9-11%. The average on the stock exchange is at 5% for other businesses!!

DO OUR MONOPOLIES THEREFORE NEED TO BE MADE SAFER?

As I said at the outset of Byers actions, it will come back to haunt him. I also questioned, not only his lack of knowledge of property history, but also that his sense of timing was as diabolical as the RBA was in 2009 raising rates and killing off the green shoots of recovery in the economy. It's happening once again, as we are climbing out of the post mining "boom" (in reality it was really a mirage that only helped 4% of the population connected with the mining).

Back then we had 4.3% unemployment. Then we had the RBA setting about wrecking the economy by foolishly raising and raising and raising rates. Your Club alone protested every meeting of the RBA at their offices around the country. Then we rightly said that the RBA should lower rates to 2.25%. Stevens took unemployment up 50% before he agreed and belatedly lowered rates. By then the damage was done. The media somehow aren't holding Stevens accountable.

The RBA minutes don't even comment on all the unemployment they caused! This is despite them maintaining full employment is the main charter of the RBA!

WINNERS AND LOSERS!

So we poor consumers agree that there are no politicians out there helping us. We agree that, like the RBA, Byers is going to escape criticism when his ill-conceived actions come home to roost.

We realise this will come in the form of widening unemployment in the construction industry that was supposed to save us. This lack of supply will inevitably see rising prices. It's incredible that the RBA and APRA don't understand this first law of economics - that price is set by the law of supply and demand!

SO HOW DO YOU BECOME A WINNER FROM THIS?

We realise now that Byers is our best friend. We realise now that he is creating a construction shortage. We carefully pick out what to buy and what not to buy and take advantage of this. Less bananas in the store and a rising population equals rising prices.

HOW ELSE CAN CONSUMERS WIN?

Avoid the monopolists. Avoid the big four and the dozen banks that they have gobbled up which they are using to mislead you into believing they don't own.

Our aim with the Rate Club is to marshal the mortgages in sufficient quantity that we can attract a great deal for you not from the big four. Let's be meaningful in bringing competition back into the banking sector.

Let's tell the banking monopoly where they can go!

I love property.

Regards,

Kevin Young

Club Founder