Articles by Guest Expert

June 15, 2022

It is no surprise that the pandemic has changed how we think about our homes. There is nothing quite like being confined to your home for months on end to make you appreciate having a home that meets your needs or rankles at one that does not. Spurred by the experience of lockdown and self-isolation,…

June 15, 2022

Most Australian voters are either Baby Boomers (born 1946 to 1964), Generation Xers (1965 to 1980) or Millennials (1981 to 1996). And at one time or another most have been told that their generation is better off (or worse off) than the ones that came before it. It’s tempting to think the most recent generation…

June 12, 2022

The Reserve Bank has lifted the cash rate for the second time in two months, this time by 0.50 points to 0.85%. It won’t be the last such hike. Forecasters expect the cash rate to hit 2.5% by the end of next year. This would lift the typical variable mortgage rate to near 5%. Cue…

June 11, 2022

The Reserve Bank Board met last week and pushed up its cash interest rate for the second consecutive month. Why? According to the board’s official minutes, it’s: “to ensure that inflation in Australia returns to the target over time.” Some increase in interest rates is justified simply because, with higher inflation, real interest rates are…

June 8, 2022

By lifting its cash rate by 0.5 points, from 0.35% to 0.85%, the Reserve Bank has added about another $120 per month in payments for a A$500,000 mortgage. If financial markets are to be believed, by the end of this year it will have added a total of $800 per month – and, by the…

June 6, 2022

If your rental is badly damaged and becomes uninhabitable, you may need to relocate your tenants. But who covers the relocation costs? Fire, flood, violent weather, and vandalism… Sometimes, there are circumstances when, through no fault of the tenant or landlord, a rental property becomes uninhabitable. When that occurs, there are two main options. The…

June 5, 2022

Today, the 10 richest people in the world control $1.3 trillion in wealth. This scale of wealth is equal to approximately 1.4% of the world economy, Amazon’s entire market cap, or spending $1 million a day for 3,000 years. In fact, it’s double the amount seen just two years ago ($663 billion). As billionaire wealth accumulates at…

June 4, 2022

Whether they’re providing a service like ride-sharing or acting as a mere source of entertainment, mobile apps have become an integral part of many people’s day-to-day lives. But which apps are most popular among users? This graphic uses data from a recent report by Sensor Tower to show the top 10 most downloaded apps around the world…

A recession in the US usually brings on a recession in the rest of the world, although not always in Australia. Australia has escaped such a recession twice in the past 50 years. We avoided the early-2000s so-called tech-wreck recession, and we avoided the so-called “great recession” during the global financial crisis. Amid ominous talk about yet another US-led global recession, there’s a chance we could escape for a third time. But it will require being prepared to change our budget and interest settings in a heartbeat. That’s something our new treasurer Jim Chalmers – who many don’t realise was an advisor to the treasurer during the global financial crisis – knows a good deal about. The hunt for savings, now and then Right now, Chalmers and finance minister Katy Gallagher say they are going line by line through the budget to look for waste and rorts. They’ll find a lot. That’s how it was 15 years ago for another new treasurer, Wayne Swan, and his finance minister Lindsay Tanner. Swept into office with Prime Minister Kevin Rudd in 2007, in an election marked by plummeting unemployment, a mid-campaign interest rate hike, and growing inflation, they identified A$3 billion they could cut without blinking. It was, said Tanner, “just for starters”. Cuts are easy – at first Incoming governments can always find savings because their priorities are different, and because the outgoing government has grown used to spending big. Desperate to stay in office, the Howard government shovelled $500 cheques to senior citizens on its way out. The Morrison government handed them $250 cheques, dressed up as cost of living payments. Chalmers and Gallagher say they’ll save $350 million instantly by removing funds from the Coalition’s marginal-seat-focused community development program, and millions more by axing the $500 million regionalisation fund announced in the March budget before it gets started. But circumstances can change But even before Swan and Tanner had handed down their first budget in 2008, they were confronted by realities that made them wince. As Swan tells it, he took a call at 6.30am, while sheltering in his car from bucketing rain near a beach on Queensland’s Sunshine Coast, from US Treasury Secretary Hank Paulson. It was January 10 2008, one year into the US sub-prime mortgage crisis. Fifty US mortgage companies had declared bankruptcy. Paulson had asked for the call. As Swan remembers it, Paulson told him: Look, if we can avoid a meltdown in house prices, then we might be able to see a way through this. That was a very big “if”, Swan thought, later writing he suspected the aside might be the real reason for the call. “It seemed a dicey prospect that the health of the entire US economic system was underpinned by the housing market stabilising,” Swan wrote. What if the US housing market didn’t recover? Jim Chalmers on avoiding recession. MUP Swan sought advice from Australia’s treasury, which warned him the risks to the global economy from the US housing market were “substantial”. From that day on, Swan performed a balancing act – as Chalmers, then the treasurer’s advisor, later wrote. On one hand, Australia was facing accelerating inflation, which would necessitate higher interest rates and “savage across-the-board” spending cuts. On the other hand, by the end of the 18 months it would take for those spending cuts to really hurt, the world might be in crisis. Swan withdrew the harshest cuts, warned in his budget speech about “economic turbulence” and looked on in dread as the Wall Street giant Lehman Brothers collapsed and the globe slid into recession. A US recession is entirely possible Fast forward to 2022, and the US economy was once again in trouble, even before Russia invaded Ukraine on February 24. Inflation had climbed above 7% for the first time since the 1979 oil crisis. It is now above 8% and the US Federal Reserve is ramping up interest rates in an increasingly desperate attempt to contain it. The world’s leading economic journalist, Martin Wolf, believes it won’t be able to do it without bringing on a recession. If the entire United States can be made to spend less, it will indeed restrain global prices. (This isn’t true for Australia, which has too few people to affect the global price of commodities such as oil.) But it is enormously hard to get right; all the more so if Americans decide to spend the savings they’ve built up during COVID. Wolf says the Federal Reserve has to run the risk of recession in order to tame inflation. It has to “screw up its courage and do what it takes”. Treasury is on to it Chalmers and his officials are attuned to what’s happening overseas. There’s speculation China’s zero-COVID lockdowns are sending its economy backwards – though there’s also speculation that, even if that’s happening, it’s unlikely to be reflected in China’s official figures. After briefings with treasury officials, Chalmers warned last week that while commodity prices have been stronger than expected, there was no guarantee that would remain the case by the October budget. Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University This article is republished from The Conversation under a Creative Commons license. Read the original article.

June 3, 2022

A recession in the US usually brings on a recession in the rest of the world, although not always in Australia. Australia has escaped such a recession twice in the past 50 years. We avoided the early-2000s so-called tech-wreck recession, and we avoided the so-called “great recession” during the global financial crisis. Amid ominous talk…

May 30, 2022

My grandmother, Claire Hastings, was born in the 1920s on a farm in Armidale, northern New South Wales. That was a relatively common thing, with just 43% of the population living in cities, compared with more than 70% now. She lived in a small wooden hut, with a chicken coop out the front and fields…