One of Australia’s biggest walking contradictions, “Aussie” John Symond, last week launched a scathing attack on the RBA for maintaining a stance which doesn’t make Aussie John as much money as he could be making.
In a speech to the Australia-Israel Chamber of Commerce in Brisbane, Symond attacked the RBA for being “asleep at the wheel” by not lowering interest rates sooner. At the same time, Aussie John launched a strident defence of Australia’s property market, saying he was “confident, notwithstanding a lot of hype from offshore analysts about a housing bubble, of Australia’s fundamentals”. He continued: “Their argument is that most housing markets around the world have gone through a bust, so why not Australia?”
Symond is no doubt talking his own book — literally. His company, with a multi-billion loan book, makes money from people borrowing to purchase properties — a stiff (continued) correction to the Australian housing market won’t help his bottom line.
Symond’s comments, of course, aren’t necessarily backed by fact or logic. The so-called offshore analysts are critical of Australian housing market precisely because of the fundamentals that Symond refers to. Specifically, Australian property has globally low rental yields (of around 3%) and Australia is a global leader in housing debt. Australia’s mortgage debt to GDP of almost 90% is higher than that of the US before the global financial crisis. Quite simply, Australian banks have allowed the price of housing to completely outstrip its intrinsic value due to their willingness to lend. Even after the GFC, the big four banks (ably assisted by mortgage brokers like Aussie) continued to lend on loan-to-valuation ratios of 90% or even 95%.
Aussie John then noted the RBA has “left interest rates comparatively high … for the last 12 months [and] Blind Freddy could see inflations was not a problem, so why was the RBA holding off?”. Symond is perhaps forgetting the millions of Australians who encounter worse living standards when interest rates fall. Pensioners on fixed income or savers are all materially worse off when the RBA lowers rates. No doubt lower interest rates are better for Aussie John, his paymasters at the Commonwealth Bank and his over-leveraged clients, but that is not the only concern of the RBA.
Symond’s rhetoric is hardly surprising: while portraying himself as a friend of the battlers, he has long since progressed from his days of struggle. Symond, who narrowly avoided bankruptcy in the 1980s after striking a deal with lenders, lives in one of the nation’s most expensive homes, a $50 million mega-mansion overlooking Sydney Harbour in Point Piper (Australia’s most prestigious suburb). The pile comes complete with 75 metres of water frontage, a home theatre and two swimming pools.
Aussie John is also famous for rallying against the big four banks, only to sell a third of his company, Aussie Home Loans, to the biggest bank in Australia, CBA, in 2008. But don’t expect to see it on Aussie’s webpage — the About Us page doesn’t refer to CBA anywhere, not does Aussie’s Wikipedia page which appears to have been penned by the group’s PR department.
Since when did it become an entitlement that people who want the security of capital guaranteed investments – ie money in the bank were somehow entitled to a high return.
In polite terms we might call “savers” the passive economy – but with the growing sense of entitlement to having high returns but low risk – the term parasite economy might be closer to describing this new sense of entitlement.
It’s time someone with authority in the area of economics put it in simple terms – if you want high interest rates then expect high inflation rates – and watch what that does to the value of passive bank deposits.
Once upon a time many of these retired “savers” had their money in mortgage funds and enjoyed much higher returns – but when they found out that nothing is free in life – they ran back to the security of the banks – but low risk and sleeping well at night was not enough for the grey haired legions of the passive economy – they also now expect to get a high return – and not have to spend any of their capital to finance their endless overseas holidays.
The interest rate imbalance that Australia is currently operating under is doing untold damage to businesses exposed to forex risks. Simpletons that suggest that hedging is the answer – are exactly that – simpletons – with no understanding of how forex exposed businesses actually operate. The high Australian dollar has been a problem for vastly longer than the typical forex hedge would cover.
Glen Stevens as usual is driving backwards looking in the rear view mirror. He and his deputy should retire and let fresh thinking direct the RBA going forward. And either the RBA or the government should face up to the reality that the current agreement between the government and the RBA is out of date and needs to be expanded to include the currency. Which according to the RBA Charter is meant to be of equal priority for the RBA to manage along with domestic monetary policy.
[Quite simply, Australian banks have allowed the price of housing to completely outstrip its intrinsic value due to their willingness to lend.]
It’s classical, that difference between historical sales evidence and the hyper-inflated pricing levels set by the vested interest industry players and fueled with low-doc borrowed money supplied by the likes of our vested interest “Aussie” Johns.
In fact, his argument is so blatantly self vested interest that it’s almost shameful. Complete disregard for the welfare of individuals and families from the impact of neck-noosing mortgages just to improve his selfish bottom line.
@Simon Mansfield – “Since when did it become an entitlement that people who want the security of capital guaranteed investments – ie money in the bank were somehow entitled to a high return.”
When I see you laying it on the line and risking life and limb, separation, depression, anxiety, being shunned for what you believe in, speaking the truth for no reward and always considering the wider community at the behest of your own self….then I will be impressed.
Seems the wiki page was edited on the 15th Oct to add back in the CBA 33% ownership (with citation).
And you have no vested interest, Aussie Rob?
“..but low risk and sleeping well at night was not enough for the grey haired legions of the passive economy – they also now expect to get a high return – and not have to spend any of their capital to finance their endless overseas holidays…”
No, your right and I agree with your manifesto. Old grey haired people have no right to live and should be categorised as useless eaters and their lives terminated at age sixty five.